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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

 

(1)      NOT REPORTABLE

(2)      NOT OF INTEREST TO OTHER JUDGES

(3)      REVISED.

CASE NO: 80202/2017

1/8/2018

 

In the matter between:

 

FIRSTRAND BANK LIM ITED                                            PLAINTIFF/APLICANT

 

and

 

SHOADI EZEKIEL DITAUNYANE                                      1^ST DEFENDANT/RESPONDENT

 

SETSHEGO MERCY DITAUNYANE                                   2^ND DEFENDANT/ RESPONDENT

JUDGMENT

KUBUSHI J

[1]          On or about 25 September 2013 at Pretoria, the plaintiff/applicant in the summary judgement, FirstRand Bank Limited ("FirstRand"), duly represented, and the defendants/ respondents, Mr and Mrs Ditaunyane, entered into a written loan agreement in terms of which the FirstRand lent to Mr and Mrs Ditaunyane the sum of R2 115 000 subject to the terms and conditions contained in the loan agreement. The loan was secured by a mortgage bond over immovable property.

[2]          FirstRand complied with all its obligations in terms of the agreement and advanced the agreed amount to Mr and Mrs Ditaunyane. Thereaft er, Mr and Mrs Ditaunyane fell into arrears with their loan. They later approached a debt counsellor to help with a debt review in terms of s 86 (1) of the Act. The debt counsellor made an offer to FirstRand proposing a debt re-arrangement. In response to the proposal, Mr and Mrs Ditaunyane sent a letter dated 16 May 2016 to the debt counsellor, amongst others, confirming its provisional acceptance of the terms of the re-arrangement proposal as follows:

 

Outstanding Balance                       : R2 028 216, 65

Contractual Interest rate                  : 9, 90%

Monthly Instalment                         : R16 344, 52 per month (Repayment to

cascade as per detailed proposal.)

Concession Term                            : 60 (Sixty) months and thereafter , the

contractual terms and conditions will apply.

 

Monthly Home Owners

Insurance Premium                          :R619, 76

 

[3]          This final acceptance was confirmed subject to amongst others, the conditions that -

"1.          …

 

4.           The abovementioned proposed monthly instalment excludes credit insurance policy premiums. The monthly credit insurance policy premiums must be incorporated in the monthly expenses of the consumer. If a consumer does not make payment of the credit insurance policy premium the credit insurance policy premium may lapse and the consumer may be in breach of the credit agreement, which may lead to enforcement.

 

5.           …

 

11.            This re-arrangement creates a re-arrangement in terms of section 88 (3) of the National Credit Act {Act 34 of 2005). If you default on your obligations in terms of this re-arrangement, we may end the debt review process in respect of this account and enforce our rights under the terms and conditions contained in the original credit agreement."

 

[4]        The magistrate's court for the district of Tshwane Central, held in Pretoria, granted a debt re-arrangement order in favour of Mr and Mrs Ditaunyane on 18 August 2016. In terms on the said order Mr and Mrs Ditaunyane were declared to be over-indebted and FirstRand's acceptance letter dated 16 May 2016 was made an order of court.

[5]        According to FirstRand, Mr and Mrs Ditaunyane have failed and/or neglected to make payment to FirstRand as ordered. FirstRand avers that it is, as a result, entitled in terms of s 88 (3) of the National Credit Act 34 of 2005, to enforce its credit agreement in that-

5.1        Mr and Mrs Ditaunyane are in default under the credit agreement;

5.2        Mr and Mrs Ditaunyane have defaulted on their obligations in terms of the order.

 

[6]          FirstRand proceeded to issue summons against Mr and Mrs Ditaunyane claiming payment of the balance due, together with interest thereon, based on the terms of the written home loan agreement . On receipt of the summons, Mr and Mrs Ditaunyane entered appearance to defend. Following on the appearance to defend Mr and Mrs Ditaunyane's attorneys of record sent a letter to FirstRand's attorneys of record, amongst others, bringing it to FirstRand's attention that their failure to pay the insurance premiums was not caused by any wrongdoing on their part but purely due to the bonafide administrative error on the part of the debt counsellor. FirstRand was also informed that Mr and Mrs Ditaunyane have been advised to make payment in respect of the insurance premiums and the amount in arrears was requested. Whilst awaiting a response from First Rand, Mr and Mrs Ditaunyane deposited an amount of R10 000 in respect of the arrears into FirstRand's account.

[7]          FirstRand did not respond to the letter by Mr and Mrs Ditaunyane' s attorneys but proceeded with the application for summary judgment which was opposed by Mr and Mrs Ditaunyane.

[8]          FirstRand in the summary judgment is relying on the provisions of s 88 (3) of the Act which entitles it to proceed with litigation once Mr and Mrs Ditaunyane defaulted. FirstRand's counsel, in support of its claim, referred me to the judgments in 2010 (6) SA 565 (EC) and Ferris and Another v Firstrand Bank Limited and Another[1] wherein it was held that once the restructuring order had been breached the credit provider is entitled to enforce the loan without any further notice.

[9]          Section 88 of the Act provides for the effect of debt review or re-arrangement order or agreement. Subsection (3) thereof stipulates the following:

 

"(3)      Subject to section 86 (9) and (10), a credit provider who receives notice of court proceedings contemplated in section 83 or 85, or notice in terms of section 86 (4) (b) (i), may not exercise or enforce by litigation or other judicial process any right or security under that credit agreement until -

 

(a)      the consumer is in default under the credit agreement; and

(b)      one of the following occurred:

(i)        an event contemplated in subsection (1) (a) through (c); or

(ii)       the consumer defaults on any obligation in terms of a re-arrangement agreed between the consumer and credit providers, or ordered by a court or the Tribunal."

 

[10]       It is not in dispute that, in this instance, s 85 of the Act finds application. In accordance with s 85 of the Act the magistrate's court has in terms thereof declared Mr and Mrs Ditaunyane to be over-indebted and in the same breath made an order contemplated in s 87 (1) (b) (ii) relieving the defendants' over-indebtedness by making an order re­ arranging Mr and Mrs Ditaunyane's obligations.

[11]       Mr and Mrs Ditaunyane are opposing the summary judgment application on the ground that the court order of 18 August 2016 did not order them to pay the home owner's insurance premium of R619, 76 over and above the monthly instalment of R16 344, 52. In the alternative, the defendants' defence is that should the court find that the homeowner's insurance premium should not have been included as part of the instalment payable same should be found to be due to the bona fide mistake on the part of the debt counsellor and not due to any wrongdoing on their part. In argument in court the defendants' counsel submitted that the defendants did not know that they were in default until the summons was served on them.

[12]       The first question to be determined is whether the court order of 18 August 2016 ordered the defendants to pay the home owner's insurance premium of R619, 76 over and above the monthly instalment of R R16 344, 52 which meant that they were to make a monthly payment of R16 964, 28.

[13]       The court order is quite clear and requires no interpretation by this court. In terms of the court order Mr and Mrs Ditaunyane are to pay the amounts as stipulated in the FirstRand's acceptance letter of 16 May 2016. In terms of the said letter the following amounts are to be paid:

13.1    The sum of R16 344, 52 in respect of the bond instalment;

13.2    The sum of R619, 76 in respect of the homeowner's insurance premium;

 

[14]      It, however, appears as if Mr and Mrs Ditaunyane on the advice of the debt counsellor misconstrued the contents of FirstRand's acceptance letter as not excluding the home owner's insurance premium from the accepted repayment proposal. Although the interpretation is clearly wrong I, however, have to accept Mr and Mrs Ditaunyane's explanation that they acted in the bona fide but mistaken belief that the amount of R619, 76 was included in the bond instalment amount.

[15]      FirstRand, correctly so, relies on the Ferris-judgment to enforce its right, but, I am of the view that in the circumstances of this instance Mr and Mrs Ditaunyane should be granted the benefit of the doubt. They have since the re-arrangement was in place, paid the instalment without fail. They only omitted to pay the home owners' insurance premium. The instalment required them to pay an amount of R16 344, 52 and they failed to pay an amount of R619, 76 which when viewed on a monthly basis is only a negligible amount which they would have paid have they known about it. Mr and Mrs Ditaunyane even made concerted effort to pay off the arrears once they became aware of same.

[16]     It is trite that a court has a discretion as to whether to grant or refuse an application for summary judgment. Although Breitenbach v Fiat SA (Edms) Bpk[2] has made it plain that a court should exercise a discretion against granting such an order where it appears that there exists 'a reasonable possibility that an injustice may be done if summary judgment is granted.[3] This in my view is such a case where an injustice may be done if summary judgment is granted. As it is, the defendants are up to date with their restructuring payments.

[17]     I, therefore, make the following order:

1.           The application for summary judgment is dismissed.

2.          Costs are costs in the application.

 

 

 

E.M. KUBUSHI

JUDGE OF THE HIGH COURT

 

 

Counsel for Plaintiff/Applicant                             : Adv. Alex Ellis

 

Instructed by                                                           : Friedland Hart Solomon & Nicolson

 

Attorney for Defendants/Respondents                 : Mr Adriani Geldenhuys

 

Date heard                                                               : 11 June 2018

 

Date of judgment                                                    : 01 August 2018

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