IN THE HIGH COURT OF SOUTH AFRICA, JOHANNESBURG
(REPUBLIC OF SOUTH AFRICA)		CASE NO 09/8065

In the matter between:

ABSA BANK LIMITED				    Applicant

And

SHAIK, FAZEL         			   		    Respondent

JUDGEMENT 

GILDENHUYS J.:
							
[1] This is an application for summary judgement. The plaintiff’s claim against the Defendant if for payment of the sum of R 1 625 806.14, being in respect of money lent and advanced by the Plaintiff to the Defendant and secured by a first mortgage bond over the Defendant’s immovable property. It is common cause that the National Credit Act applies to the loan.

[2] On 6th February 2009 the Plaintiff transmitted a letter of demand to the Defendant as required under sections 129 or 130 of the National Credit Act. On 24th February 2009  the Plaintiff issued summons against the defendant. On 7 March 2009 the defendant applied for debt review under section 86 of the National Credit Act. On 9th March 2009 the Plaintiff’s summons was served on the Defendant.

[3] The Defendant raised two defences, in his affidavit resisting summary judgement. The first is that the Plaintiff is not entitled to judgement because the Plaintiff did not claim cancellation of the loan agreement.  There is no merit in this defence.  The sum of R 1 625 806-14 became due and payable in terms of an acceleration provision contained in the loan agreement. The Plaintiff seeks enforcement of the loan agreement. By claiming the amount owed, and realisation of the security (i.e. declaring the bonded property executable) the Plaintiff does not claim cancellation – it claims specific performances as it is entitled to do due the Defendant’s default.

[4] I turn to the second defence. It turns on section 86 (1) and (2) of the National Credit Act, which provides as follows:

    1.     A consumer may apply to a debt counselor in the prescribed manner and   
            Form to have the consumer declared over-indebted.
2.        An application in terms of this section may not be made in respect of, and  does not apply to, a  particular
      credit agreement if, at the time of that application, the credit provider under that credit agreement has
            proceeded to take the steps contemplated in section 129 to enforce that agreement.

As I have said, the Defendant brought a debt review application under section 86 (1) on 7th March 2009.

[5] Section 86 (1) and (2) have to be read with section 130 (3) (c) (i) of the National Credit Act which provides the following:

Despite any provision of law or contact to the contrary, in any proceedings commended in a Court in respect of a credit agreement to which this Act applies, the Court may determine that matter only if the Court is satisfied that:
(a)	   the Credit provider has not approached the Court
(i)	  during the time that the matter was before a debt counselor.

[6] The crisp question for adjudication in this application is accordingly the following:  Is it a defence for a debtor in an application for summary judgment to plead that he applied for debt review in terms of Section 86 of the National Credit Act after the issue of the Plaintiff’s summons?

[7] The issue received judicial attention in the unreported judgment of du Plessis J in the case of Absa Bank Limited v Shaik. [TPD case no 22445/07, 16 September 2008]. The facts in that matter are as follows. Om 15 February 2007 the Plaintiff delivered a letter in tems of section 129 (1) of the National Credit Act, calling upon him to pay the arrears due to the Plaintiff under a mortgage bond. On 17th September 2007 the Defendant applied in terms of Section 86 of the National Credit Act to a debt counselor te be placed under debt review. On 21st September 2007 the Plaintiff re-issued a summons against the defendant to call up the mortgage bond. The re-issued  summons was served on the defendant on 8th October 2007.

[9] Du Plessis J reached the following conclusion in his judgment.

	It is for present purpose sufficient to assume that a plaintiff “approaches a court” for purpose of section 
          130 (3) when he institutes action which, in this case, happened on 21st September 2007 after the defendant
          had approached the debt counselor. Importantly, section 130 (3)(c)(i) does not preclude the court from  
	determining the matter after the defendant (consumer) had approached the debt counselor in terms of 
           section 86, but during the time that the matter is before a debt counselor. “The matter” as used in the 
                subsection clearly refers to the subject matter of the case that is before the court. The question in this case
                therefore is whether the present matter between the parties was before a debt counselor when the action
                was instituted. The answer to the question is in the express provisions of section 86 (2) of the Act that 
                provides as follows: “ An application in terms of this section may not be made in respect of, and does not 
                apply to, a particular credit agreement if, at the time of that application, the credit provider under that 
                credit agreement has proceeded to take the steps contemplated in section 129 to enforce that agreement.
                “(My underling) in its summons the Plaintiff alleges that it has complied with the provisions of section
                129 and 130 of the Act.

	Thus when the defendant on 17th September 2007 applied for debt review in terms of section 86 of the Act, 
               the Plaintiff had already “proceeded to take the steps contemplated in section 129 to enforce that agreement”
               In the words of section 86 (2) that I have underlined, the defendant’s application for debt review does not 
               Apply to the credit agreement now under consideration. The defence based on section 130(3)(c)(i) of the 
               Act must therefore fail.

[10] There is support for the above interpretation in Otto , The National Credit Act Explained (2006) at p85. Boraine and Renke, in an article “Some practical and comparative aspects of the cancellation of installment agreement in terms of the National Credit Act 34 of 2005 (Part 2)”, De June 41 (Vol 1) 2008, takes a different view, they say (at p9 note 186): 

S 86(2) stipulates that an application for debt review may not be made in respect of a credit agreement if, at the time of the application, the credit provider under the credit agreement has proceeded to take the steps contemplated in s 129 to enforce the agreement.  It is our submission that, as s 86(2) refers to steps contemplated in s 129 (in other words the whole of s 129 and by incorporation also s 130), and not only to the steps contemplated in s 129(1)(a), to enforce the agreement, the issue of the summons is meant.  To interpret s 86(2) to read that the delivery of the s 129(1)(a) notice to the consumer means that the credit provider has proceeded to take steps to enforce the agreement (with the effect that no application for debt review may be made) would be nonsensical as it is proposed in the s 129(1)(a) notice that the consumer refers the to a debt counselor.  

[11] I take a different view in my respectful opinion, the (“steps contemplated to ensure the agreement in section 129”), where it appears in sec 86(2) of the National Credit Act, mean sending the requisite section 129 notice followed by steps where by the plaintiff commences legal action. That brings me to the pivotal issue in this case; does legal action commence when summons is issued, or when it is issued and served on the defendant? In the latter case, the mere issue of the summons will not prevent te defendant from making an application for debt review under section 86 of the National Credit Act.

[12] The purpose of the invitation to a consumer to approach a debt counsellor which must ne contained in the requisite section 129(1) letter, has been described by A R Erasmus J in par [18] of his judgement in the matter of Firstrand Bank Limited v Olivier [SECLD, case no 269/07, 8 may 2008, as yet unreported] as follows:

	The NCA, in s 129(1) read with Part C of Chapter 4, would encourage a consumer to approach a 
debt counsellor before the credit provider approaches the court in terms of s 129 and 130. The   reasons for promoting that approach are obvious. It is clearly desirable that parties through the intercession of a debt counsellor attempt to develop and agree on a plan to bring the payments under the agreement up to date. And it is further desirable that this be done before the court is burdened with debt enforcement proceedings and unnecessary costs are incurred.

[13] The defendant need not accept the invitation to approach a debt counsellor. Upon receipt of the section 129(1) letter, the defendant has the option, as set forth by Erasmus J in par [17] of his judgement in the Firstrand Bank case [supra]. Of either – 
(a) referring the agreement to a debt counsellor with the intent that the parties attempt to reach some agreement as to the rearrangement of his payments to the plaintiff or
(b) awaiting the receipt of the plaintiff’s debt enforcement process and only the applying to the court to declare or relieve his over-indebtedness in terms of s 85.

According to this dictum, the defendant’s option to approach a debt counsellor continues up to “ the receipt of the plaintiff’s debt enforcement process”

[14] After and analysis of a number of Court decisions and other authorities, Dodson J came to the conclusion in Mahlangu and Another v Van Eeden and Another [2003] 3 All 321(lCC) at 322d that there is no uniform position in our legal system as to when  proceedings are considered to commence. It all depends on the context. Dodson J found that the cases in which it were stated that proceedings commence with the issue of summons, were decided in the context of statutory time limits which impinges upon the citizens right the litigates. The statement do not hold true for every situation.  The commencement of proceedings when it comes to prescription (“verjaaring”) is considered to be from the time that summons is served. Similarly, it was held in Mills v Skanwell Finance (Pty) Ltd, 1981(3) SA 84(n) that for purposes of determining jurisdiction, proceedings commence with the service and not the issue of the summons.

[15] In the Mills case (Supra) Thirion J, after an extensive analysis of the old authorities, came to the conclusion that at common law proceedings were considered to have commenced from the time of service,  and not the mere issue of the summons. Ellison Kahn came to a similar conclusion in an earlier article 5V “Conflict of Laws”, published in 1971 Annual Survey of SA Law 454 and 457. I am not going to revisit the research undertaken by the learned judges in the Mahlangu and Mills it is there for all to read.

[16] The words “approached the court” in section 130(3) (L) of the National Credit Act. Must given an interpretation which will align it with the common law, unless a contrary intention on the part of the legislature is apparent. See the Mahlangu case (Supra) at 333h – 336c.

[17] In the matter before me, there are no compelling reasons of equity to prefer the date of issue of a summons rather than the dare of service as the date on which the plaintiff has “approached the court”. The defendant was invited in the section 129(1) letter to apply to a debt counsellor for a debt review. That invitation is not infinite it has a cut-off date. I cannot imagine that the legislature could have had a cut-off date in mind which is unknown to the defendant. The defendant will only get to know that the plaintiff has “approached the court” when the summons is served to him.

[18] It is one of the objects of the National Credit Act to promote debt re-organization in cases of over-indebtedness. The Act must be interpreted in a manner which will support that object. Mavundla J hel in the unreported decision of Changing Tides 17 (Pty) Ltd N.O. v Ribisi and Another (Nogaudi, case no 263/09, 5 June 2009) , paragraphs [15] and [18] – 

Ownership of a house by an individual is a contribution towards the government’s framework aspiration reflected herein above. This must also be seen in the context of the provisions of section 3 of NCA which seeks to protect the consumers by inter alia affording them a restructuring of debt payments.

In my view the ethos envisaged by the NCA flowing from the preamble and section 3 taken together with the provisions of section 130(3) and (4) of NCA and the draconian effect of summary judgment proceedings, make it an imperative that the courts in deciding the exercise of their discretion must have regard to the ethos and be slow to shut the door in the face of a litigant.

[19] I conclude that, at the time when the plaintiff “approached the court” in this case matter was already before a debt counsellor. In the result, I cannot grant the application for summary judgement.

[20] The following order is hereby made,

(a)	the application for summary judgement is dismissed;
(b)	the defendant is given leave to defend; and
(c)	the cost of the summary judegment application will be costs in the cause.

_____________________
A GILDENHUYS
JUDGE OF THE HIGH COURT	

APPEARNCES:

For the plaintiff
Mr S J van Niekerk
instructed by
Smith Sewgoolan Inc

For the defendant
Mr H C van Zyl
instructed by
Mabuli & Molele Inc