Republic of South Africa

IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)

In the matters between:
Case No. 18153/09

and

Case No. 14229/09

and

Case No:11973/09

and

JUDGMENT DELIVERED ON 12 NOVEMBER 2009

BINNS-WARD J:

6] The necessity to read in the italicised words arose out of the need to render the provision in the MCA consonant with s 26 of the Constitution.

7] It follows that it is appropriate when it would appear from the information before the court that the property in question is the defendant's home that the enquiry mandated in terms of s 26(3) of the Constitution should be undertaken when application is made for an order authorising the attachment and sale of the affected property; and not delayed until steps are taken to evict the defendants consequent upon the execution of such an order.

10] In case no. 18153/09, the defendants delivered an opposing affidavit in response to the summary judgment application. In that affidavit the defendants admitted that they were indebted to the plaintiff in the sum of R290 611,09, but averred that they did not know what in what amount they are in arrears in terms of the loan agreement. They pointed out that they had fallen into financial difficulties and had been unable to service all their debt.
11] They testified that as a consequence they applied to a debt counsellor for debt relief. They pointed out that notification by means of NCA Form 17.2 was provided by the debt counsellor to SA Home Loans, dated 7 June 2009, that their application for debt review had been successful and that their debt obligations were in the process of being restructured. The Form 17.2 would appear to have been sent out about two and a half months after the Form 17.1 notice informing creditors that a debt review application had been received.   The Form 17.1 notification is dated 26 March

2009.

12] An instalment offer was submitted to the plaintiff along with the Form 17.2 notification in terms of which a rescheduled debt repayment was proposed which would, if accepted and implemented, have resulted in the debt being fully repaid in June 2025 rather than as contractually determined in December 2021.

13] The defendants averred that they have been making payment every month to 'die Betaaalmeester (DCM)' and that to the best of their knowledge these payments had been distributed to their creditors. I have assumed that this averment was intended to convey that the defendants had implemented the instalment offer, notwithstanding that there had been no indication by the plaintiff or SA Home Loans (Pty) Ltd that the offer had been accepted.

14] The defendants complained that the alleged failure of the plaintiff to respond to the instalment offer, or to make any counteroffer, was in contravention of s 86(5) of the NCA, which requires each credit provider who has been given notice of a debt review to 'participate in good faith in the review and in any negotiations designed to result in responsible debt re-arrangement.'

15] The defendants averred that the granting of summary judgment would result in them losing their home and would infringe their right to access to adequate housing in terms of s 26 of the Constitution. They contended that other less invasive remedies are available to the plaintiff to recover the debt and requested the court to dismiss the summary judgment application with costs. The opposing affidavit made no mention of any application having been made to the magistrates' court in terms of s 86(7)(c) or s 86(8)(b) of the NCA.

16] In case no. 14229/09 the defendants also delivered an affidavit in opposition to the application by the plaintiff for summary judgment. In that affidavit the first defendant averred that he was employed at the Mykonos casino at a monthly salary of R11500. He explained that during 2008, he ran into financial difficulties in that his commitment to creditors, including the plaintiff, was in the sum of R10 150,35 per month and his living expenses over and above that were in the sum of approximately R7 700 per month.

17] He stated that the defendants had approached a debt counsellor for debt review in terms of the NCA on 10 November 2008 and that a Form 17.1 notice was forwarded to their creditors by the debt counsellor on the same day notifying them of the application. On 18 December 2008, a Form 17.2 notice was forwarded to the defendants' creditors, including the plaintiff, advising that the defendants' application for debt review had been successful and that their debt obligations were in the process of being restructured. The said notification was accompanied by an 'installment (sic) offer', which called upon the plaintiff to 'review this Installment Offer and respond, by means of facsimile, within five (5) working days by completing either the "Instalment Offer Acceptance" or the "Counter Installment Offer" section provided on the last page of this Installment Offer.' The annexed instalment offer proposed the rescheduling of the repayment of the debt owed to the plaintiff with the result that it would be redeemed in
November 2028, rather than in May 2022 as contractually stipulated.

18] The defendants in case no. 14229/09 also averred that in the context of a viable debt re-arrangement scheme the sale of their home consequent upon the grant of summary judgment would result in an unjustifiable infringement of their right to adequate housing in terms of s 26 of the Constitution.

Joob Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture [2009] ZASCA 23; 2009 (5) SA 1 (SCA)Soil Fumigation Services Lowveld CC v Chemfit Technical Products (Pty) Ltd (680/2002) [2004] ZASCA 31; [2004] 2 All SA 366 (SCA)2000 (1) SA 268
1976 (1) SA 418
amenability of summary judgment applications to judicial discretion is an important element to ensure that any potential injustice consequent upon the mechanical operation of the remedy is avoided.
21] In my view the considerations raised by the defendants in two of the matters before me do arguably raise triable issues and are in any event of a nature which justify a decision to withhold the grant of summary judgment, at least at this stage. For the reasons set out below, I am concerned that the grant of summary judgment in these cases on the papers as they currently stand will unjustly shut the doors of the court to the defendants. The incidence of the provisions of the NCA in the peculiar circumstances of these matters has led me to the conclusion that it would be appropriate to make orders in each of these cases different from those which would ordinarily issue in accordance with rule 32.

2(1) of the NCA enjoins that the Act must be interpreted in a manner that gives effect to the purposes set out in section 3.

National Credit Regulatorv 

25] The duties of debt counsellors in dealing applications for debt review are provided for in terms of s 86 of the NCA. In all three of the matters with which I am dealing the indication is that the debt counsellor made a finding in terms of either s 86(7)(b) or s 86(7)(c) of the Act. Du Plessis J declared (correctly, in my respectful view) that in either of the aforementioned circumstances there is a duty on the debt counsellor to make application to the magistrates' court for an order to be made in terms of the counsellor's debt re-arrangement proposal. In the case of a finding by the counsellor in terms of s 86(7)(b), the duty to make application to court arises only if the affected credit providers do not voluntarily agree on a plan of debt re-arrangement. In the case of a finding of over-indebtedness in terms of s 87(7)(c), the debt counsellor is obliged in all cases to make application for orders of the nature contemplated in s 86(7)(c) of the NCA. The obligation on the consumer to make an application to court for debt relief, if so advised, arises only if the debt counsellor rejects the debt review application and the magistrates' court grants the consumer leave to apply for the relief contemplated in terms of s 86(7)(c)(i) and/or (ii). (The latter situation does not appear from the information in the summonses to have pertained in any of the three matters with which I am dealing.)

s 86(1)

28] As mentioned, it is not apparent whether or not the debt counsellor involved in each of the matters before me made the required application to the magistrates' court, either in terms of s 86(7)(c) or s 86(8)(b) of the NCA. The nature of the application and the counter-applications for declaratory relief as to the proper construction of the NCA brought before Du Plessis J in the North Gauteng High Court by the National Credit Regulator and by certain leading credit providers suggests to me that there has been widespread uncertainty about the nature of the debt counsellor'sobligations in terms of s 86 of the Act. It would come as no surprise therefore that in many cases the debt counsellors might not have been discharging their statutory responsibilities because of a failure properly to understand the relevant provisions of the

NCA.

29] As also mentioned, the debt reviews in all three of the current cases were terminated by notice given by the plaintiff in terms of s 86(10) of the NCA. The purpose of s 86(10) of the Act, which provides:

'If a consumer is in default under a credit agreement that is being reviewed in terms of this section, the credit provider in respect of that credit agreement may give notice to terminate the review in the prescribed manner to-
a)	the consumer;
b)	the debt counsellor; and
c)	the National Credit Regulator,
at any time at least 60 business days after the date on which the consumer applied for the debt review.',
appears to be to allow the credit provider to insist on timeous compliance by the debt counsellor with the debt review timetable and to afford it the right to pursue recovery proceedings if there is a failure to efficiently comply with the debt review process.  No doubt the notice to the National Credit Regulator prescribed in terms of s 86(10) is intended to afford the Regulator the means of monitoring the proper functioning of the debt review system, including the proper discharge of debt counsellors of their statutory obligations.

31]  Section 129(1)(b) of the NCA provides that the credit

33] In cases such as the three matters currently before me, the defendants should, if they wished to avoid summary judgment on the basis that the claim was subject to uncompleted debt review proceedings (an allegation that has been only suggested rather than unequivalently made in the two opposing affidavits that were filed), have described precisely to what stage their respective debt reviews had progressed and furnished an explanation why they had not yet obtained a debt rearrangement order in terms of s 86(7)(c)(ii) or s 87(1)(b)(ii) of the NCA. However, because of the evident uncertainty that has up to now attended the interpretation and administration of the Act, I consider that it would be appropriate in the peculiar circumstances of the current cases, with their indications that the debt review process might not have been prosecuted properly by the debt counsellor in terms of the relevant provisions of the Act and the regulations made thereunder, to exercise my judicial discretion against granting summary judgment at this stage.

35] I am conscious that in taking the route I propose I shall be departing materially from the approach ordinarily followed in determining a summary judgment application. The practice of this court already recognises that the NCA in effect requires some departures from what is strictly required in terms of rule 32. Consolidated Practice Note 33(2) requires that a credit provider who applies for summary judgment, must in addition to filing an affidavit complying with rule 32(2) also satisfy the court of the matters referred to in s 130(3) of the NCA. It needs emphasising, however, that the special route that I intend to follow in this case should not become an entrenched practice. If a defendant intends to rely on the prejudicial non-compliance by the debt counsellor with s 86 of the NCA that should be set out clearly and with sufficient particularity in the affidavit opposing summary judgment. An indulgent and specially tailored approach is being adopted in the current cases only because of the uncertainty, discussed above, that has attended the proper interpretation and implementation of the Act in relevant respects.

37] The following orders will therefore issue in case no.s 11973/09, 14229/09 and 18153/09, respectively:

b)	The plaintiff is directed through the Sheriff to serve a copy of this order, together with a copy of the judgment on-

e)	The plaintiff is given leave to re-enrol the application for summary judgment on not less than five days' notice to the defendants' attorneys of record for further consideration by me after the expiry of the 10 day period referred to in para, (c), above.
f)	The costs of the summary judgment application, incurred thus far, shall stand over for later determination.

A.G. BINNS-WARD

Judge of the High Court