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

v

JUDGMENT DELIVERED THIS MONDAY, 1 MARCH 2010

[1] This is an application for summary judgment. The plaintiff, who is the holder of a first mortgage bond registered by the defendants over a residential property in Wellington, has sued the defendants for
1.1 Payment of the sum of R403 725,38 owing under and in terms of the bond, the defendants having failed to make monthly instalments on due date;
1.2 An order declaring the property hypothecated by the bond to be executable for the amount claimed;
	1.3 Interest on the amount claimed.
The defendants are sued jointly and severally.

[2]    The application for summary judgment is opposed on two bases, namely

[3]     In amplification of their reliance on s 26 of the constitution, the first defendant says

the following in his replying affidavit.

"In amplification of the afore-going I wish to advise this Honourable Court that my family and I have been living in the said immovable property for more than twenty years. We have known no other home but for the said immovable property. In fact, we have access to no other home but the said immovable property in question. The said immovable property has always been paid up until recently when I applied for a second mortgage bond to assist me with an empowerment contract with Lafarge Construction Company in terms whereof I became an owner-driver and had to purchase certain vehicles as part of my obligations. The deal with Lafarge, however, soured and I was left destitute and could not pay off the second bond. I am aware that the constitutional protection extends mostly to indigent persons who own property. I must inform this Honourable Court that the property is located in Newton Township, a formerly 'coloured' township in Wellington and represents a basic residential dwelling."

3

"[40] The purpose of the limitation is important, as the Minister contends. However, when the focus is on the trifling nature of the debt the importance of the purpose is diminished. It is difficult to see how the collection of trifling debts in this case can be sufficiently compelling to allow existing access to adequate housing to be totally eradicated, possibly permanently, especially where other methods exist to enable recovery of the debt. This is not to say that every sale in execution to satisfy a trifling debt will be unreasonable and unjustifiable. There are a number of difficulties with such a conclusion. In the first place, it is not easy to adopt a uniform definition of the concept of a 'trifling debt'. What might seem trifling to an affluent observer might not be trifling to a poor creditor reliant on his or her ability to recover debts. Indeed, not all creditors are affluent and to many who use the execution process, it constitutes the only mechanism to recover outstanding debts.

[41] Another difficulty is that there may be other factors which militate against a finding that execution is unjustifiable. Such factors will vary according to the facts of each case. It might be that the debtor incurred debts despite the knowledge of his or her inability to repay the money and was reckless as to the consequences of incurring the debt. While it will ordinarily be unjustifiable for a person to be rendered homeless where a small amount of money is owed, and where there are other ways for the creditor to recover the money lent, this will not be the case in every execution of this nature.

4

"The only income presently earned by the Defendants is a pension of R1010,00 that my wife presently receives from the National Government. Our expenditure and income is set out in annexure 'A' attached hereto. My wife and I presently enjoy a frugal lifestyle and manage to survive on our meagre income."

Annexure "A" reads as follows:

INCOME AND EXPENDITURE ACCOUNT

INCOME AND EXPENDITURE ACCOUNT
Income

Pension			  R 1,010.00 				

Expenses

Food 				  R 300.00
Electricity			  R 140.00
Transport 			  R 100.00
Medical 			  R   50.00
Clothing 			  R 100.00
Rates				  R 120.00

Free residue available for payment towards bond
				
				R 200.00"

defendant is over-indebted and should make an order in terms of the NCA for "inter alia that a proposal be structured by a debt counsellor and submitted to the plaintiff and failing an agreement being reached between the parties that the matter be placed before a magistrate for adjudication".  To start with, the defendants have ignored the provisions of s 79 of the NCA.  In this section over-indebtedness is described as follows:

" (1) A consumer is over-indebted if the preponderance of available information at the time a determination is made indicates that the particular consumer is or will be unable to satisfy in a timely manner all the obligations
under all the credit agreements to which the consumer is a party, having regard to that consumer's -
10.2	financial means, prospects and obligations; and
10.3	probable propensity to satisfy in a timely manner all the obligations under all the credit agreements to which the consumer is a party, as indicated by the consumer's history of debt repayment.

10.4	any credit facility is the settlement value at that time under that credit facility; and
10.5	any credit guarantee is -

applicable to section 79 and which reads:

" (3) In this Part, 'financial means, prospects and obligations', with respect to a consumer or prospective consumer, includes -
(a) income, or any right to receive income, regardless of the source, frequency or regularity of that income, other than income that the consumer or prospective consumer receives, has a right to receive, or holds in trust for another person;
(b) the financial means, prospects and obligations of any other adult person within the consumer's immediate family or household, to the extent that the consumer, or prospective consumer, and that other person customarily -

(i)     share their respective financial means; and
(ii)     mutually bear their respective financial obligations; and

All that the first defendant has provided in support of his defence of over-indebtedness is that which I have recorded in para [4] above.

[8]      However, should I be wrong in holding that the first defendant has not established
his over-indebtedness, I am of the view that his situation does not entitle him to a
referral to a debt counsellor or to the magistrates' court for adjudication. The objects
of the NCA are recorded in the following manner in a preamble to the act.
"To promote a fair and non-discriminating marketplace for access to consumer credit and for that purpose to provide for the general regulation of consumer credit and improved standards of consumer information; to promote black economic empowerment and ownership within the consumer credit industry; to prohibit certain unfair credit and credit-making practices; to
promote responsible credit granting and use and for that purpose to prohibit
reckless credit granting; to provide for debt re-organisation in cases of over-
indebtedness; to regulate credit information; to provide for registration of
credit bureaux, credit providers and debt counselling services; to establish
national norms and standards relating to consumer credit; to promote a
consistent enforcement framework relating to consumer credit;	"

[9] In all the circumstances, I conclude, however hard it will be for the defendants, that the plaintiff is entitled to succeed with its claims. The bond provides that costs on the attorney client scale are to be paid in the event of the plaintiff having to recover money owing under the bond from the defendants.

[10]   In the result the following order is made:
10.1 Judgment is granted against the defendants jointly and severally, payment of the sum of R403 725.38, together with interest thereon at 9.45% (varying) per annum from 1 November 2009 calculated monthly in advance on the amount owing to plaintiff at the commencement of each month;
	10.2 An order is granted declaring Erf 5252, Wellington, being the property hypothecated by the bond passed by the defendants in favour of the plaintiff to be executable for the amount set out in 8.1.
	10.3 Defendants are to pay the plaintiff's costs jointly and severally on the attorney and client scale.

R B CLEAVER