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IN THE HIGH COURT OF SOUTH AFRICA

(NORTH WEST DIVISION, MAHIKENG)

CASE NO.: M85/15

In the matter between:

THE STANDARD BANK OF SOUTH AFRICA LIMITED APPELLANT

and

JOHANNES HENDRIKUS LAMBERTUS STEPHANUS

BOTES t/a JHLS BOTES VERVOER RESPONDENT

JUDGMENT

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Landman J:

Introduction

[1] The Standard Bank of South Africa Ltd, the applicant, launched an

application against Mr JHLS Botes trading as JHLS Botes Vervoer, the respondent,

seeking an order confirming the cancellation of eight installment sale agreements

(originally the notice of motion related to nine agreements but the agreement

marked ‘E’ is to be left out of account) and the authorization for the Sheriff to

seize and handover eight vehicles being the subjects of the agreements. The

application is opposed.

The background

[2] The following are the essential facts:

(a) The applicant concluded nine instalments sales agreements, as envisaged

by the National Credit Act 34 of 2005 (the ‘NCA’) with the respondent. The terms

of the agreements relate to the sale of various vehicles that the respondent

purchased and records his undertaking to fixed monthly payments to the

applicant.

(b) After initially meeting his monthly payment obligations, the respondent fell

into arrears with his payments in respect of all these agreements.

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(c) On 24 March 2014 the applicant dispatched a notice in terms of section

129 of the NCA to the respondent. It is common cause that the respondent

received the notice.

(d) On 28 March 2014, as a consequence of the section 129 notice, the

respondent submitted a payment proposal to the applicant and after negotiations

the parties signed a payment plan agreement on 30 April 2014.

(e) The payment plan agreement records that:

• as at 25 April 2014 the respondent was in arrears in respect of the monthly

payments of the nine instalments sales agreements in the amount of R1 834

361.37;

• the respondent agreed to pay the arrears over a period of nine months in

equal instalments of R203 817.93, commencing 7 May 2014;

• the respondent agreed to pay the ordinary monthly payments timeously in

addition to paying the payment of the arrears; and

• the respondent signed pro forma surrender documentation which would be

accepted in the event of the respondent breaching the agreement and failing,

after receiving 10 days notice, to remedy the breach.

(f) The respondent breached the installment sale agreements and the

payment plan agreement by failing to make timeous payment of the arrears and

monthly payments.

(g) On 5 February 2015 the applicant advised the respondent in writing that he

was in breach of the agreements by failing to make timeous payment of the

arrears and monthly payments and afforded him 10 days notice to remedy his

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breach failing which it elected to cancel all the agreements without further notice.

It is common cause that the respondent received this letter.

(h) The applicant’s position is that the agreements were cancelled 10 days later

because the respondent did not satisfy the demand.

(i) On 11 March 2015 the applicant launched this application.

(j) On 17 March 2015 the respondent tendered to pay the arrears in terms of

section 129(3) of the NCA.

(k) The applicant did not accept the tender.

Opposition to the application

[3] The respondent opposes the application on the basis that the letter dated 5

February 2015 did not result in a valid cancellation of the ‘restructuring

agreement’ i.e. the payment plan and instalment sales agreements because a

second notice in terms of section 129 of the NCA had not been provided. The

respondent contends that he was entitled to tender and did tender to pay the

arrear instalments that were outstanding in terms of the instalment agreements

and that the tender was made in terms of section 129(3) of the NCA without the

agreements having been validly canceled.

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[4] Essentially the question is whether on the facts the respondent was

entitled to cancel the installment agreements without complying with section 129

of the NCA (a second time) so that the respondent was entitled to invoke the

provisions of section 129(3) and make his tender before the agreements were

cancelled.

Evaluation

[5] The respondent’s tender made on 17 March 2015 does not constitute

remedial action as contemplated by section 129(3) of the NCA; actual payment is

required. But presumably if a consumer tenders payment and it is refused the

tender will be sufficient.

[6] Section 129(3) reads as follows:

‘Subject to subsection (4), a consumer may at any time before the credit

provider has cancelled the agreement, remedy a default in such credit

agreement by paying to the credit provider all amounts that are overdue,

together with the credit provider’s prescribed default administration

charges and reasonable costs of enforcing the agreement up to the time

the default was remedied.’

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[7] This raises several issues: what is ‘cancellation’ including the validity of

relying on the lex commissoria; were the respective agreements validly cancelled

which requires me to inquire whether a second notice in terms of section 129 was

mandatory?

[8] Cancellation of an installment sale agreement before the time provided for

in the agreement would constitute one means of terminating an agreement as

contemplated in section 123 of the NCA. This section reads:

‘(1) A credit provider may terminate a credit agreement before the time

provided in that agreement only in accordance with this section.

(2) If a consumer is in default under a credit agreement, the credit provider

may take the steps set out in Part C of Chapter 6 to enforce and terminate

that agreement.

…

(6) The unilateral termination of a credit agreement by a credit provider as

contemplated in this section does not suspend or terminate any residual

obligations of the credit provider to the consumer under that agreement or

this Act.’

But section 129(3) specifically uses the term ‘cancelled’. According to the usual

cannons of interpretation it may properly be inferred that the legislature meant

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to use cancel or cancelation in its common law contractual sense but with the

added requirements that the credit provider must deliver a section 129 notice so

as to afford the consumer an opportunity of resolving a dispute or making good

his or her obligations.

[9] Mr Cowley, who appeared on behalf of the respondent, submitted that the

applicant’s right to cancel the agreements by employing the lex commissoria is

limited by s 129 read with section 130 of the NCA. The basis of this submission

rests on a dictum in Mhlongo v MacDonald 1940 AD 299 at 310 that: ‘… where an

Act creates an obligation and gives a special and particular remedy for enforcing

it, the remedy provided by the statute must be followed and it is not competent

to proceed by action at common law’.

[10] Mr Viljoen, who appeared on behalf of the applicant, countered this by

pointing out that the lex commissoria is not forbidden by the NCA. This is correct.

See Eiselens ‘National Credit Act 34 of 2005: The Confusion continues’ 75, 3

August 2012 THRHR 386 at 396. It is also true, as Mr Viljoen, submitted that

cancellation of an installment sale agreement must have a contractual basis. See

ABSA v Havenga and Similar Cases 2010 (5) SA 533 (GNP) where Horwitz AJ said

that before a credit provider may cancel an instalment sale agreement there must

be such ‘a right vesting in the credit provider’.

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[11] Clearly the common practice of including the lex commissoria in an

installment sale agreement is permissible. But, while a credit provider may rely on

a lex commissoria to cancel an installment sale agreement, the credit provider is

obliged to comply with sections 129 and 130 of the NCA as enjoined by section

123. See Kubyana v Standard Bank of South Africa Ltd 2014 (3) SA 56 (CC) and

Kelly-Louw ‘The overcomplicated interpretation of the word “may” in sections

129 and 123 of the National Credit Act’ 2015 132 SALJ 245-257. The NCA limits

the effectiveness of a lex commissoria by permitting a consumer to purge or

remedy the default before cancellation, not by paying all the arrears and

accelerated installments, but merely the arrears and other charges before

cancellation. See Firstrand Bank Limited v Nkata (213/2014) [2015] ZASCA 44;

[2015] 2 All SA 264 (SCA) (26 March 2015) at para 12. Once the arrears have been

paid the default is remedied and the credit provider’s right to cancel the

agreement is lost. All is forgiven and, as Rogers J suggested in Nkata v First Rand

Bank ltd and Others 2014 (2) SA 413 (WCC) at para 34 (set aside on other grounds

in Firstrand Bank Limited v Nkata), should the consumer again default, the credit

provider would be obliged to again comply with section 129 of the NCA. Once an

installment sales agreement has been terminated it may not be revived. See

section 129(3) which is reinforced by subsection (4).

[12] When the respondent defaulted in 2014 the applicant furnished him with a

notice in terms of section 129 (1) of the NCA. The parties then entered into a

payment plan agreement. The conclusion of the payment plan agreement is not

the equivalent of ‘remedial’ action contemplated by section 129(3) which requires

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that the arrears and other charges to be paid in order to remedy or purge the

default. Compliance with the payments in terms of a payment plan agreement is

intended to purge the default, and thus may lead to, the remedying of the default

as contemplated by section 129(3). Until then the consumer remains in default;

albeit one that prevents the credit provider from acting upon it. The credit

provider is prevented from acting upon it by virtue of the payment plan

agreement and the provisions of section 130(3) of the NCA that provide:

‘Despite any provision of law or contract to the contrary, in any

proceedings commenced in a court in respect of a credit agreement

to which this Act applies, the court may determine the matter only if

the court is satisfied that-

(a) in the case of proceedings to which sections 127, 129 or 131

apply, the procedures required by those sections have been

complied with;

(b) there is no matter arising under that credit agreement, and

pending before the Tribunal, that could result in an order affecting

the issues to be determined by the court; and

(c) that the credit provider has not approached the court-

(i) …..

(ii) despite the consumer having-

(aa) …

(bb) agreed to a proposal made in terms of section 129(1)(a) and

acted in good faith in fulfilment of that agreement;

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(cc) complied with an agreed plan as contemplated in section

129(1)(a); or

(dd) brought the payments under the credit agreement up to date, as

contemplated in section 129(1)(a).’

When the last payment under a payment plan agreement is made the default is

remedied and should the consumer default once again the credit provider must

comply with sections 129 and 130 of the NCA and provide a section 129(1) notice

to the consumer.

[13] This brings me to the question whether, in this matter, the respondent

remained in default or whether he had remedied the default in the sense

contemplated in section 129(3). The distinction is important because a credit

provider, in my view, is not obliged to provide a section 129 notice to a consumer

who is still in default i.e. who has received a section 129 notice and who is still in

the process or remedying a default with a further notice. The section 129 notice

is still operative until such a time as the arrears described therein have been

discharged.

[14] The respondent admits that he was in default of payments in terms of the

payment plan agreement and that he had defau[plted as regards the monthly

installments save in one instance.

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[15] It follows that the applicant was entitled to invoke the lex commissoria, did

invoke it and was entitled to cancel the installment agreements and payment plan

agreement without the necessity of delivering a second section 129 notice. The

cancellation of the agreements is valid and stands to be confirmed. The tender,

which seems seriously defective, was made after the agreement had been

cancelled and has no legal effect.

[16] It is unnecessary to deal with the other aspects raised in the heads of

argument.

Order

[17] In the premises I grant the following order:

1. The cancellation of the agreement entered into between the applicant and the respondent and attached to the applicant’s founding affidavit as Annexure “B-J” is confirmed;

2. The sheriff or his lawful deputy is authorized, directed and empowered to attach, seize and hand over to the applicant the assets, being certain:-

2.1 Claim A – Deal Number: 01989103/0001

Make/Model/Description: 2012 BELL 770G Motor Grader Registration no/ Vehicle in Identification Number: BMG644393

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Engine number: RG6090G007605 Chassis/serial number: 1DW770GXPCC644393 And 2.2 Claim B – Deal Number: 01989103/0002 Make/Model/Description: 2012 BELL Front Loader Registration no/ Vehicle in Identification Number: JFL2167 Engine number: PE6068H876241 Chassis/serial number: AEBD818EJ00100342 And 2.3 Claim C – Deal Number: 01989103/0004 Make/Model/Description: 2012 Mercedes Benz 3350S/33 Engine number: 542940C0832705 Chassis/serial number: WDB9341616L651598 And 2.4 Claim D – Deal Number: 01989103/0005 Make/Model/Description: 2012 Mercedes Benz 3350S/33 Engine number: 542940C0832331 Chassis/serial number: WDB9341616L651599 And 2.5 Claim F – Deal Number: 01989103/0010 Make/Model/Description: 2013 Mercedes Benz 2650LS/33 Engine number: 542940C0847912

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Chassis/serial number: WDB9342418L678336 And 2.6 Claim G – Deal Number: 01989103/0011 Make/Model/Description: 2013 Mercedes Benz 2650LS/33 Engine number: 542940C0847430 Chassis/serial number: WDB9342416L678339 And 2.7 Claim H – Deal Number: 01989103/0012 Make/Model/Description: 2013 Mercedes Benz 2650LS/33 Engine number: 542940C0848143 Chassis/serial number: WDB9342416L678338 And 2.8 Claim I – Deal Number: 01989103/0013 Make/Model/Description: 2013 Mercedes Benz 2650LS/33 Engine number: 542940C0847459 Chassis/serial number: WDB9342416L678337

3. Costs of suit on the scale as between attorney and client;

4. The applicant is given leave to approach this Court on the same papers duly supplemented, for payment of the difference between the balance outstanding and the market value of each asset in the event of there being a shortfall after each asset has been repossessed and sold and there being a balance outstanding by the respondent to the applicant.

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A A Landman

Judge of the high Court

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Appearances

Date of hearing: 27 August 2015

Date of Judgment: 3 September 2015

For the Applicant: Adv Viljoen instructed by Van Rooyen Tlhapi &

Wessels Inc

For the Respondent: Adv Cowley instructed by Maree & Maree

Attorneys