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

REPORTABLE 
CASE NO. 14597/2011

In the matter between:

FIRSTRAND BANK LIMITED formerly known as FIRST 
NATIONAL BANK OF SOUTHERN AFRICA LIMITED				APPLICANT

And
SHAUN ERROL FESTER 							FIRST RESPONDENT 
MARCHELLE ODETTE FESTER						SECOND RESPONDENT

Coram:			DLODLO, J
Judgment by:		DLODLO, J	
For the Applicant:		ADV. W. JONKER

Instructed by:		Minde Schapiro & smith Inc.
Tyger Valley Office Park II
Cnr. Old Oak & Willie van Schoor Roads
BELLVILLE
(REF. HJ CROUS)
TEL. NO. (021) 918 9006

For the Respondents:	ATTOR. K. ARMFIELD

7 Voortrekker Road
BELLVILLE
(REF. Kim Armfield)
TEL. NO. (021) 949 2211

In the matter between:

FIRSTRAND BANK LIMITED formerly known as FIRST

And

JUDGMENT DELIVERED ON THURSDAY, 15 SEPTEMBER 2011

DLODLO, J

[1] This is an opposed application for summary judgment against the Defendants for payment of the sum of R806 264.88, together with interest, being the amount due in terms of a loan advanced to the Defendants against the security of a mortgage bond over Erf 6594 Kraaifontein. The Plaintiff is also seeking an order declaring the immovable property executable. The immovable property is the Defendants' primary residence and accordingly Rule 46 finds application. The loan agreement and mortgage bond qualifies as credit agreements within the meaning of the National Credit Act 34 of 2005 (the "NCA"). The Defendants do not dispute the conclusion of the loan agreement that monies were advanced, their failure to pay and the amount claimed. The Defendants rely on defences in terms of the NCA and contend that an order declaring the property executable will infringe on their rights in terms of section 26(1) of the Constitution.

NCA DEFENCES:
[2] It is common cause that the First Defendant applied to be placed under debt review in terms of section 86(7) of the NCA, pursuant to which an order was made by the Kuilsriver Magistrate's Court on 22 March 2011 in terms of which the debts of the First Defendant was restructured in terms of section 87 (1) (b) (ii) of the NCA. A copy of the debt restructuring order is annexed as annexure "C" to the summons. It is common cause that the instalment payable by the first defendant in terms of the restructuring order was the sum of R5 472.65 per month, commencing on April 2011. It is furthermore common cause that the First Defendant defaulted with his payments in terms of the restructuring order. The First Defendant admits defaulting for the month- of May 2011, and, furthermore, the First Defendant admits being in arrears with his payment obligations in terms of the debt restructuring order as at the end of July in the sum of R4 648.53 as stated in paragraph 5 of the Practice Note Affidavit. The Plaintiff alleges in its summons that by virtue of the First Defendant's breach of the restructuring order, the statutory bar to proceed to enforce by litigation its rights under the agreements is uplifted in terms of section 88 (3) (b) (ii) of the NCA. The First Defendant contends that it remedied its breach and paid up the arrears during the month of August 2011 and as such, the debt review has not terminated.

DID DEBT REVIEW TERMINATE?
[3] The crisp issue before this court is whether the debt review terminated automatically by virtue of the First Defendant defaulting on its obligations in terms of the restructuring order in terms of section 88 (3), or whether the debt review are automatically reinstated by virtue of the consumer remedying its default of the re-arrangement order. Mr Jonker submitted that the answer to the aforesaid question may be found in the provisions of section 88 (3). It is appropriate to set out the provisions of section 88 (3) of the NCA and it reads as follows:
"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 has occurred:

(c); or

"The second argument raised is, in my view, equally lacking in merit. The Act provides very extensive protection to a consumer who has become overindebted, whether it be of his or her own making or through circumstances beyond his or her control. Not only does a rearrangement afford him or her alleviation from the onerous monthly obligations that he or she has in all seriousness undertaken to his or her credit providers, but he or she also enjoys the protection of s 103(5) against the ravaging effect of escalating interest whilst he or she remains in default under the credit arrangement. If however, he or she fails to embrace this opportunity, or he or she is, notwithstanding this very considerable assistance, unable to comply with his or her restructured debt commitment, the Act permits the common law to run its course. [15] Thus, once the credit review process has commenced, s 88 (3) of the Act prevents a credit provider from exercising or enforcing, by litigation or other judicial process, any right or security under any credit agreement until -'(a) the consumer is in default under the credit agreement; and
(b) one of the following has occurred:

[16] It follows, in my view, as a matter of interpretation, that once the jurisdictional requirement set out in s 88 (3) (a) co-exists with any one of the jurisdictional requirements set out in s 88 (3) (b), the credit provider is at liberty to proceed and to exercise and enforce, by litigation or other judicial process, any right or security under his credit agreement, without further notice."

[5] In the present matter it is common cause that the First Defendant is in default under the credit agreement (being the mortgage loan and bond) and that he defaulted on his payment obligation in terms of the restructuring order. Accordingly, it is common cause that both the jurisdictional requirements set out in section 88 (3) (a) and (b) are complied with. Mr Jonker is correct in submitting that the NCA does not afford me a discretion as to whether the statutory bar is uplifted or not. It remains indeed a purely factual enquiry whether the jurisdictional requirements set out in section 88 (3) (a) (b) are complied with. The true position is that once the Court establishes that both the jurisdictional requirements set out in the aforesaid subsection (a) and (b) have been complied with, I must conclude that the statutory bar was uplifted and the credit provider was fully entitled to proceed by way of litigation to enforce its rights in terms of the credit agreement. It is not in dispute in these papers that the debt review process has been terminated. Mr Jonker's submission that the debt review has automatically terminated and that the Plaintiff was at liberty to proceed and to exercise and enforce, by litigation, its rights and security under the credit agreement without further notice to the First Defendant, is correct and cannot thus be faulted.

[6] The First Defendant requests this Court to order the resumption of the debt review under section 86 (11) or for leave to make such a substantive application. One must of necessity set out the provisions of section 86 (11) of the NCA:
"86 (11)     If a credit provider who has given notice to terminate a review as contemplated in subsection (10) proceeds to enforce that agreement in terms of Part C of Chapter 6, the Magistrate's Court hearing the matter may order that the debt review resume on any conditions the court considers to be just in the circumstances."

"But even accepting for present purposes that execution against mortgaged property could conflict with s 26 (1) such cases are likely to be rare. It is particularly hard to conceive of instances where a mortgagee's right to reclaim the debt from the property will be denied altogether; and it is therefore not surprising that the Constitutional Court noted in Jaftha that in the absence of abuse of court procedure - and none is alleged here - a sale in execution should ordinarily be permitted against even a home bonded for the debt sought to be reclaimed. Nor can the approach differ depending on the reasons the property owner might have had for bonding the property, or the objects on which the loan was expended."

And then further at page 275E:
"Until the defendants in the cases before us could show that orders for execution would infringe s 26(1) the bank was not called on to justify the grant of the orders.   The sole fact that the property is residential in character is not enough to found the conclusion that an infringement of s 26(1) will necessarily occurP

ORDER
[8]   In the circumstances I make the following order:
(a)    Summary judgment is hereby granted against the two Respondents/Defendants for:

(c) An order is hereby granted in terms of which the Defendants are ordered to pay costs hereof on the scale as between Attorney and client.

DLODLO, J