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

Case No 14256/10

In the matter between:
WESBANK, a division of 

and

and
THE NATIONAL CREDIT 

					(J R Gowar)

					(E Kaptein)

									Reportable

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

In the matter between:

WESBANK, a division of 

and

and

					JUDGMENT

GRIESEL J:

Factual background

[3] The credit agreement in question was entered into on 27 March 2007 between the defendant, Mr Deon Winston Papier, as 'consumer', and the plaintiff, as 'credit provider'. It relates to the lease of a 2003 Mazda 6 motor vehicle. In terms of the agreement, the defendant was obliged to pay to the plaintiff an 'initial rental' of R13 157,89, followed by 53 consecutive rentals of R2 772,90 each, payable on the first day of each month, with a final instalment payable on 26 September 2011.

'Should you fail to (1) pay the arrears mentioned above in full; or alternatively (2) return the vehicle as contemplated in s 127 of the Act; within 10 business days of transmission of this letter, our client intends to cancel the agreement and to proceed to take legal action to enforce its rights in terms of the agreement."

[8] On 29 June 2010 the plaintiff launched the present action, seeking to enforce the credit agreement. In its particulars of claim the plaintiff alleged that the debt review process had been terminated by the delivery of its notice in terms of s 86(10), more than 60 business days after the defendant's application for debt review, and that the defendant had been in default in terms of the agreement on the date when the said notice was delivered. The plaintiff further alleged as follows:

'12.5    The agreement is therefore not subject to pending debt review as contemplated in s 86 of the NCA as:
12.5.1. The defendant has not surrendered the vehicle to the plaintiff as contemplated in s 127 of the NCA;
12.5.2. There is no matter arising under the agreement and pending before the National Credit Tribunal that could result in an order affecting the issues to be determined by the court.
13.The matter is not before a Debt Counsellor. Alternative Dispute Resolution Agent, Consumer Court or the Ombud with jurisdiction. 

13.1      The defendant has not:
13.1.1. agreed to a proposal made in terms of sl29(l)(a) of the NCA or acted in good faith in fulfilment of such agreement as no such agreement has been reached;
13.1.2. complied with an agreed plan as contemplated in sl29(l)(a) of the NCA as no such plan has been agreed; or
13.1.3. brought the payments under the credit agreement up to date, as contemplated in sl29(l)(a) of the NCA.
13.2.	More than 10 business days have passed since the delivery of the above notices in terms of s86(10) of the NCA;

[9] The plaintiff accordingly asks for judgment for (a) confirmation of cancellation of the agreement; and (b) delivery of the goods to the plaintiff, together with costs. (The plaintiff also claims payment of damages, together with interest, but only prayers (a) and (b) are relevant for purposes of the present application for summary judgment, with the balance of the relief to stand over for later determination.)

[11]    The defendant also stated:

'Ek wil verder onder die Hof se aandag bring dat daar tydens die aanhoor van hierdie aansoek geargumenteer sal word dat in terme van die bepalings van art 86(11) van die Nasionale Kredietwet, ek die reg het om aansoek te doen vir die herlewing van my aansoek om skuldberading. Ek is meegedeel dat tesame met die liassering van my formele aansoek daar ook aansoek gedoen sal word vir die implimentering van die bepalings van art 86( 11) van die Nasionale Kredietwet.*
[12] The crisp question raised by the defendant's opposing affidavit is whether it is competent for a credit provider to terminate a debt review process in terms of s 86(10) after an application has been lodged with a magistrate's court for an order restructuring a consumer's debts as envisaged in s 86(7)(c) of the Act but before an order has been made in terms of s 87(1). As will appear more fully below, this question has received different answers from different courts.

Discussion

[16]    Subsection 86( 10) provides as follows:

'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.'

[17] The subsection contains no limitation on a creditor's right to give notice of termination, save for the two jurisdictional requirements postulated, namely (a) the consumer must be in default under the credit agreement; and (b) at least 60 business days must have elapsed after the date on which the consumer applied for the debt review. In the present instance, it is common cause that both these requirements have been met: the defendant was already in default when he applied for debt review on 29 September 2009. On 4 June 2010, ie more than 60 business days later, the plaintiff gave the requisite notice in terms of s 86(10). Moreover, more than 10 days have elapsed after the plaintiffs notice before summons was issued, as required by s 130(1). The plaintiff, relying on a literal interpretation of s 86(10), accordingly submitted that it is entitled to enforce the terms of the credit agreement in question by claiming summary judgment.

"The days are long past when blinkered peering at an isolated provision in a statute was thought to be the only legitimate technique in interpreting it if it seemed on the face of it to have a readily discernible meaning." '

	

[27] It follows that, even where the consumer does everything 'by the book', there will inevitably be a large number of cases where the period of 60 days will have elapsed without an order as contemplated by s 87 having been obtained.
[28] On the interpretation advanced on behalf of the plaintiff herein, the position is quite simple: the credit provider would be entitled, in each case where a period of 60 days has elapsed without a re-arrangement order in terms of s 87 having been made, unilaterally 'to derail the entire debt review process'.

[30] I agree with the NCR that such conduct on the part of credit providers is inconsistent with the Act. In my view, this is a strong indicator that a literal interpretation should not be followed. It would be counter-productive and contrary to the whole purpose of the Act to allow a credit provider unilaterally to terminate the consumer's protection at the precise moment when he or she may need it the most. It would be like providing the consumer with an umbrella and then snatching it back the moment it starts raining. This approach would mean that only those consumers fortunate enough to apply for debt review at a favourable time or in a jurisdiction without a long backlog will succeed in having their debts re-arranged by the magistrate's court.

[31 ] The plaintiffs approach also tends to overlook the fact that in the present instance the application for debt review has found favour with the debt counsellor and may likewise have found favour with the magistrate, had it not been for the untimely notice of termination in terms of s 86(10).

[33] The NCR points to a further absurdity that results from a literal interpretation: by allowing termination of matters that have been referred to the magistrate's court for re-arrangement, this encourages premature enforcement in the High Court of credit agreements that were being reviewed in the magistrate's court. This will inevitably drive up the costs of litigation at the expense of those least able to afford it, as the present case illustrates.

[34] To sum up, applying a purposive approach to the relevant provisions, and having due regard to the context in which they appear, I am satisfied that, on a proper interpretation of subsec 86(10), the consumer is protected against enforcement proceedings by the credit provider, not only once a re-arrangement order has been made by a magistrate in terms of s 87, but also while proceedings for such an order are pending. The corollary is that delivery of a notice of termination by a credit provider in terms of s 86( 10) is not competent once any of the steps referred to in ss 86(7)(c), 86(8) or 86(9) have been taken. Obviously this impediment will cease to exist, once a magistrate's court has dismissed the application for re-arrangement or the application has been withdrawn or abandoned.

Conclusion

[37]    For these reasons, an order is granted in the following terms:
(a)	The application for summary judgment is stayed, pending a final determination of the proceedings referred to in para (b) below;

(c)	The clerk of the court is directed to set the above application down for hearing at the earliest available date, after due notice to the parties;
(d)	The costs of the application for summary judgment shall stand over for later determination.

						B M GRIESEL
						Judge of the High Court
TRAVERSO DJP J: I agree. It is so ordered.