THE SOUTH GAUTENG HIGH COURT, JOHANNESBURG
Case O9/22247

In the matter between:

and

and

JUDGMENT
Introduction

The respondents' marriage

The applicants' claims

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●	That Second Respondent and I are indebted to the two Applicants,
●	That our bond account fell into arrears,
●	That the Applicants are entitled at law to enforce payment by instituting legal proceedings and that they may seek an order declaring the property in question specially executable."

●	"As at 27 August 2008, the respondents were indebted:

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The respondents' insolvency

Advantage to creditors

●	"If the existence of adequate advantage to creditors depends on the extent to which a specific asset will contribute to the free residue, evidence of a person with appropriate skill must prove what price can be expected on an expeditious sale which is not delayed in order to obtain a satisfactory negotiated price."

The National Credit Act

●	" 1 29     Required procedures before debt enforcement
●	on a plan to bring the payments under the agreement up to date; and
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●	"130 Debt procedures in a Court
●	(1) ... a credit provider may approach the court for an order to enforce a credit agreement only if, at that time, the consumer is in default and has been in default under that credit agreement for at least 20 business days and -
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●	c)...”.

●	" You said that we may approach debt counsellors with our credit agreement. We are able to do so concurrently with our efforts now to settle the arrears with the bank. We have already identified a debt counsellor in Johannesburg who we are visiting in a week's time to assist us to consolidate our debts and to get over with the arrears."

●	"The applicants are not entitled to ignore the respondents' response and/or offer. The (applicants), whilst not obliged to agree to any offer, whether made by the respondents themselves or as a result of the debt counselling process, are obliged to consider the offer and either accept or reject it or participate in the debt counselling process and either accept or reject the offer the process of debt counselling has brought forward, before they can be entitled to proceed to court by way of this application.

●	I therefore find that the applicants have failed to comply with the provisions of the NCA, in particular, with section 130 of the NCA, by failing to respond to the response by the respondents regarding the settlement offer and/or debt counselling process."

●	"It appears to me that it is perfectly legitimate for a creditor to take insolvency proceedings against a debtor for the purpose of obtaining payment of his debt. In truth that is the motive by which persons as a rule are actuated in claiming sequestration orders. They are not influenced by altruistic considerations or regard for the benefit of other creditors, who are able to look after themselves. What they want is payment of their debt, or as much of it as they can get."

●	"The order placing a person's estate under sequestration cannot fittingly be described as an order for a debt due by the debtor to the creditor. Sequestration proceedings are instituted by a creditor against a debtor not for the purpose of claiming something from the latter, but for the purpose of setting the machinery of the law in motion to have the debtor declared insolvent. No order in the nature of a declaration of rights or of giving or doing something is given against the debtor. The order sequestrating his estate affects the civil status of the debtor and results in vesting his estate in the Master. No doubt before an order so serious in its consequences to the debtor is given the court satisfies itself as to the correctness of the allegations in the petition. It may for example have to determine whether the debtor owes the money as alleged in the petition. But while the court has to determine whether the allegations are correct, there is no claim by the creditor against the debtor to pay him what is due nor is the court asked to give any judgment, decree or order against the debtor upon any such claim."

●	"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."

The Debt Counsellor's application to intervene

●	"My direct and substantial interest that stands to be affected by a judgment of the above Honourable Court is that I serve a prescribed function as provided for in the National Credit Act as set out in s 8(6) of the Act.
●	A debt counsellor's position can be compared to that of a trustee in an insolvent estate or an executor in a deceased estate or an administrator in terms of s 74 of the Magistrate's Court Act (administration orders) to a function created by statute in respect of the assets and obligations of the first and second respondents as consumers.

●	I am by statute obliged and entitled to exercise the functions in respect of the credit agreements of the first and second respondents as prescribed by section 86 of the Act.
●	I furthermore have a direct and substantial interest to ensure that no enforcement by a credit provider by litigation or other judicial process takes place against the consumers (first and second respondents) as provided for in s 88(3) of the Act.

●	In terms of section 3 of the Act, the purpose of the Act is, inter alia, providing for mechanisms for resolving over-indebtedness based on the principle of satisfaction by the consumer of all possible financial obligations, providing for a consistent and accessible system of consensual resolution of disputes arising from credit agreements and providing for a consistent and harmonised system of debt restructuring, enforcement and judgment, which places priority on the eventual satisfaction of all possible consumer obligations under credit agreements. To achieve the purposes of the Act, section 8(6) provides for a procedure which I as debt counsellor must implement and it enjoins the applicant to anticipate (sic) in good faith in the review and in any negotiations designed to result in responsible debt re-arrangement."

37.   The role of debt counsellors under the NCA, is confined to the functions they perform in terms of ss 71 and 86. They are facilitators and mediators between consumers who have become over-indebted on the one hand, and their credit providers on the other. The purpose of their intervention is ultimately to afford relief to consumers in distress in appropriate cases. But the debt counsellor's role goes no further than that of mediator and facilitator. He or she does not determine the relief afforded to over-indebted consumers. It is determined by agreement between the consumers and their credit providers or by court order. Debt counsellors do not take control of or assume responsibility for consumers' estates as the Debt Counsellor suggested by his analogy which compared debt counsellors with trustees, executors and administrators. While debt counsellors undoubtedly perform an important function in the implementation of the NCA and the achievement of some of its purposes, their role is not to police the implementation of the NCA or to act as guardians of the pursuit of its purposes.

●	"The issue in our matter, as it is in any non-joinder dispute, is whether the party sought to be joined has a direct and substantial interest in the matter. The test is whether a party that is alleged to be a necessary party, has a legal interest in the subject-matter, which may be affected prejudicially by the judgment of the court in the proceedings concerned.  In the Amalgamated
●	Engineering Union case (supra) it was found that 'the question of joinder should ... not depend on the nature of the subject-matter ... but, ... on the manner in which, and the extent to which, the court's order may affect the interests of third parties'. The court formulated the approach as, first, to consider whether the third party would have locus standi to claim relief concerning the same subject-matter, and then to examine whether a situation could arise in which, because the third party had not been joined, any order the court might make would not be res judicata against him, entitling him to approach the courts again concerning the same subject-matter and possibly obtain an order irreconcilable with the order made in the first instance. This has been found to mean that the order or judgment sought cannot be sustained and carried into effect without necessarily prejudicing the interests' of a party or parties not joined in the proceedings, then that party or parties have a legal interest in the matter and must be joined. '3

39. The Debt Counsellor does not have such an interest in the application for the sequestration of the respondents' estate merely because he is acting as their debt counsellor in terms of s 86 of the NCA. He has no legal interest in the application for their sequestration which might be prejudicially affected by its outcome. His role is not to advance or protect any legal interest of his own. He also does not assume control over or responsibility for the respondents' estate. His role remains one of a mediator and facilitator.

Costs

Order

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25 September 2009