IN THE HIGH COURT OF SOUTH AFRICA (NORTH WEST DIVISION, MAHIKENG) CASE NO.: M85/15 In the matter between: THE STANDARD BANK OF SOUTH AFRICA LIMITED APPELLANT and JOHANNES HENDRIKUS LAMBERTUS STEPHANUS BOTES t/a JHLS BOTES VERVOER RESPONDENT JUDGMENT 1
Landman J: Introduction [1] The Standard Bank of South Africa Ltd, the applicant, launched an application against Mr JHLS Botes trading as JHLS Botes Vervoer, the respondent, seeking an order confirming the cancellation of eight installment sale agreements (originally the notice of motion related to nine agreements but the agreement marked E is to be left out of account) and the authorization for the Sheriff to seize and handover eight vehicles being the subjects of the agreements. The application is opposed. The background [2] The following are the essential facts: (a) The applicant concluded nine instalments sales agreements, as envisaged by the National Credit Act 34 of 2005 (the NCA ) with the respondent. The terms of the agreements relate to the sale of various vehicles that the respondent purchased and records his undertaking to fixed monthly payments to the applicant. (b) After initially meeting his monthly payment obligations, the respondent fell into arrears with his payments in respect of all these agreements. 2
(c) On 24 March 2014 the applicant dispatched a notice in terms of section 129 of the NCA to the respondent. It is common cause that the respondent received the notice. (d) On 28 March 2014, as a consequence of the section 129 notice, the respondent submitted a payment proposal to the applicant and after negotiations the parties signed a payment plan agreement on 30 April 2014. (e) The payment plan agreement records that: as at 25 April 2014 the respondent was in arrears in respect of the monthly payments of the nine instalments sales agreements in the amount of R1 834 361.37; the respondent agreed to pay the arrears over a period of nine months in equal instalments of R203 817.93, commencing 7 May 2014; the respondent agreed to pay the ordinary monthly payments timeously in addition to paying the payment of the arrears; and the respondent signed pro forma surrender documentation which would be accepted in the event of the respondent breaching the agreement and failing, after receiving 10 days notice, to remedy the breach. (f) The respondent breached the installment sale agreements and the payment plan agreement by failing to make timeous payment of the arrears and monthly payments. (g) On 5 February 2015 the applicant advised the respondent in writing that he was in breach of the agreements by failing to make timeous payment of the arrears and monthly payments and afforded him 10 days notice to remedy his 3
breach failing which it elected to cancel all the agreements without further notice. It is common cause that the respondent received this letter. (h) The applicant s position is that the agreements were cancelled 10 days later because the respondent did not satisfy the demand. (i) On 11 March 2015 the applicant launched this application. (j) On 17 March 2015 the respondent tendered to pay the arrears in terms of section 129(3) of the NCA. (k) The applicant did not accept the tender. Opposition to the application [3] The respondent opposes the application on the basis that the letter dated 5 February 2015 did not result in a valid cancellation of the restructuring agreement i.e. the payment plan and instalment sales agreements because a second notice in terms of section 129 of the NCA had not been provided. The respondent contends that he was entitled to tender and did tender to pay the arrear instalments that were outstanding in terms of the instalment agreements and that the tender was made in terms of section 129(3) of the NCA without the agreements having been validly canceled. 4
[4] Essentially the question is whether on the facts the respondent was entitled to cancel the installment agreements without complying with section 129 of the NCA (a second time) so that the respondent was entitled to invoke the provisions of section 129(3) and make his tender before the agreements were cancelled. Evaluation [5] The respondent s tender made on 17 March 2015 does not constitute remedial action as contemplated by section 129(3) of the NCA; actual payment is required. But presumably if a consumer tenders payment and it is refused the tender will be sufficient. [6] Section 129(3) reads as follows: Subject to subsection (4), a consumer may at any time before the credit provider has cancelled the agreement, remedy a default in such credit agreement by paying to the credit provider all amounts that are overdue, together with the credit provider s prescribed default administration charges and reasonable costs of enforcing the agreement up to the time the default was remedied. 5
[7] This raises several issues: what is cancellation including the validity of relying on the lex commissoria; were the respective agreements validly cancelled which requires me to inquire whether a second notice in terms of section 129 was mandatory? [8] Cancellation of an installment sale agreement before the time provided for in the agreement would constitute one means of terminating an agreement as contemplated in section 123 of the NCA. This section reads: (1) A credit provider may terminate a credit agreement before the time provided in that agreement only in accordance with this section. (2) If a consumer is in default under a credit agreement, the credit provider may take the steps set out in Part C of Chapter 6 to enforce and terminate that agreement. (6) The unilateral termination of a credit agreement by a credit provider as contemplated in this section does not suspend or terminate any residual obligations of the credit provider to the consumer under that agreement or this Act. But section 129(3) specifically uses the term cancelled. According to the usual cannons of interpretation it may properly be inferred that the legislature meant 6
to use cancel or cancelation in its common law contractual sense but with the added requirements that the credit provider must deliver a section 129 notice so as to afford the consumer an opportunity of resolving a dispute or making good his or her obligations. [9] Mr Cowley, who appeared on behalf of the respondent, submitted that the applicant s right to cancel the agreements by employing the lex commissoria is limited by s 129 read with section 130 of the NCA. The basis of this submission rests on a dictum in Mhlongo v MacDonald 1940 AD 299 at 310 that: where an Act creates an obligation and gives a special and particular remedy for enforcing it, the remedy provided by the statute must be followed and it is not competent to proceed by action at common law. [10] Mr Viljoen, who appeared on behalf of the applicant, countered this by pointing out that the lex commissoria is not forbidden by the NCA. This is correct. See Eiselens National Credit Act 34 of 2005: The Confusion continues 75, 3 August 2012 THRHR 386 at 396. It is also true, as Mr Viljoen, submitted that cancellation of an installment sale agreement must have a contractual basis. See ABSA v Havenga and Similar Cases 2010 (5) SA 533 (GNP) where Horwitz AJ said that before a credit provider may cancel an instalment sale agreement there must be such a right vesting in the credit provider. 7
[11] Clearly the common practice of including the lex commissoria in an installment sale agreement is permissible. But, while a credit provider may rely on a lex commissoria to cancel an installment sale agreement, the credit provider is obliged to comply with sections 129 and 130 of the NCA as enjoined by section 123. See Kubyana v Standard Bank of South Africa Ltd 2014 (3) SA 56 (CC) and Kelly-Louw The overcomplicated interpretation of the word may in sections 129 and 123 of the National Credit Act 2015 132 SALJ 245-257. The NCA limits the effectiveness of a lex commissoria by permitting a consumer to purge or remedy the default before cancellation, not by paying all the arrears and accelerated installments, but merely the arrears and other charges before cancellation. See Firstrand Bank Limited v Nkata (213/2014) [2015] ZASCA 44; [2015] 2 All SA 264 (SCA) (26 March 2015) at para 12. Once the arrears have been paid the default is remedied and the credit provider s right to cancel the agreement is lost. All is forgiven and, as Rogers J suggested in Nkata v First Rand Bank ltd and Others 2014 (2) SA 413 (WCC) at para 34 (set aside on other grounds in Firstrand Bank Limited v Nkata), should the consumer again default, the credit provider would be obliged to again comply with section 129 of the NCA. Once an installment sales agreement has been terminated it may not be revived. See section 129(3) which is reinforced by subsection (4). [12] When the respondent defaulted in 2014 the applicant furnished him with a notice in terms of section 129 (1) of the NCA. The parties then entered into a payment plan agreement. The conclusion of the payment plan agreement is not the equivalent of remedial action contemplated by section 129(3) which requires 8
that the arrears and other charges to be paid in order to remedy or purge the default. Compliance with the payments in terms of a payment plan agreement is intended to purge the default, and thus may lead to, the remedying of the default as contemplated by section 129(3). Until then the consumer remains in default; albeit one that prevents the credit provider from acting upon it. The credit provider is prevented from acting upon it by virtue of the payment plan agreement and the provisions of section 130(3) of the NCA that provide: Despite any provision of law or contract to the contrary, in any proceedings commenced in a court in respect of a credit agreement to which this Act applies, the court may determine the matter only if the court is satisfied that- (a) in the case of proceedings to which sections 127, 129 or 131 apply, the procedures required by those sections have been complied with; (b) there is no matter arising under that credit agreement, and pending before the Tribunal, that could result in an order affecting the issues to be determined by the court; and (c) that the credit provider has not approached the court- (i).. (ii) despite the consumer having- (aa) (bb) agreed to a proposal made in terms of section 129(1)(a) and acted in good faith in fulfilment of that agreement; 9
(cc) complied with an agreed plan as contemplated in section 129(1)(a); or (dd) brought the payments under the credit agreement up to date, as contemplated in section 129(1)(a). When the last payment under a payment plan agreement is made the default is remedied and should the consumer default once again the credit provider must comply with sections 129 and 130 of the NCA and provide a section 129(1) notice to the consumer. [13] This brings me to the question whether, in this matter, the respondent remained in default or whether he had remedied the default in the sense contemplated in section 129(3). The distinction is important because a credit provider, in my view, is not obliged to provide a section 129 notice to a consumer who is still in default i.e. who has received a section 129 notice and who is still in the process or remedying a default with a further notice. The section 129 notice is still operative until such a time as the arrears described therein have been discharged. [14] The respondent admits that he was in default of payments in terms of the payment plan agreement and that he had defau[plted as regards the monthly installments save in one instance. 10
[15] It follows that the applicant was entitled to invoke the lex commissoria, did invoke it and was entitled to cancel the installment agreements and payment plan agreement without the necessity of delivering a second section 129 notice. The cancellation of the agreements is valid and stands to be confirmed. The tender, which seems seriously defective, was made after the agreement had been cancelled and has no legal effect. [16] It is unnecessary to deal with the other aspects raised in the heads of argument. Order [17] In the premises I grant the following order: 1. The cancellation of the agreement entered into between the applicant and the respondent and attached to the applicant s founding affidavit as Annexure B-J is confirmed; 2. The sheriff or his lawful deputy is authorized, directed and empowered to attach, seize and hand over to the applicant the assets, being certain:- 2.1 Claim A Deal Number: 01989103/0001 Make/Model/Description: Registration no/ Vehicle in Identification Number: 2012 BELL 770G Motor Grader BMG644393 11
Engine number: Chassis/serial number: RG6090G007605 1DW770GXPCC644393 And 2.2 Claim B Deal Number: 01989103/0002 Make/Model/Description: Registration no/ Vehicle in Identification Number: Engine number: Chassis/serial number: 2012 BELL Front Loader JFL2167 PE6068H876241 AEBD818EJ00100342 And 2.3 Claim C Deal Number: 01989103/0004 Make/Model/Description: 2012 Mercedes Benz 3350S/33 Engine number: 542940C0832705 Chassis/serial number: WDB9341616L651598 And 2.4 Claim D Deal Number: 01989103/0005 Make/Model/Description: 2012 Mercedes Benz 3350S/33 Engine number: 542940C0832331 Chassis/serial number: WDB9341616L651599 And 2.5 Claim F Deal Number: 01989103/0010 Make/Model/Description: Engine number: 2013 Mercedes Benz 2650LS/33 542940C0847912 12
Chassis/serial number: WDB9342418L678336 And 2.6 Claim G Deal Number: 01989103/0011 Make/Model/Description: Engine number: Chassis/serial number: 2013 Mercedes Benz 2650LS/33 542940C0847430 WDB9342416L678339 And 2.7 Claim H Deal Number: 01989103/0012 Make/Model/Description: Engine number: Chassis/serial number: 2013 Mercedes Benz 2650LS/33 542940C0848143 WDB9342416L678338 And 2.8 Claim I Deal Number: 01989103/0013 Make/Model/Description: Engine number: Chassis/serial number: 2013 Mercedes Benz 2650LS/33 542940C0847459 WDB9342416L678337 3. Costs of suit on the scale as between attorney and client; 4. The applicant is given leave to approach this Court on the same papers duly supplemented, for payment of the difference between the balance outstanding and the market value of each asset in the event of there being a shortfall after each asset has been repossessed and sold and there being a balance outstanding by the respondent to the applicant. 13
A A Landman Judge of the high Court 14
Appearances Date of hearing: 27 August 2015 Date of Judgment: 3 September 2015 For the Applicant: For the Respondent: Adv Viljoen instructed by Van Rooyen Tlhapi & Wessels Inc Adv Cowley instructed by Maree & Maree Attorneys 15