IN THE KWAZULU-NATAL HIGH COURT, DURBAN
REPUBLIC OF SOUTH AFRICA

	CASE NO.12331/09

In the matter between:

BMW FINANCIAL SERVICES (SA) (PTY) LIMITED	Plaintiff

and

FOREFRONT TRADING CC	First Defendant

RANDHAR RAMSUNDER	Second Defendant

J U D G M E N T
								Delivered 17 March 

WALLIS J

[1] On 29 November 2006 the plaintiff, BMW Financial Services (SA) (Pty) Limited, concluded a written instalment sale agreement in respect of a BMW 116i with the first defendant Forefront Trading cc. The agreement was in standard form providing for the payment of fifty-nine instalments of R2843.98 per month and a final balloon payment of R86 960.00. The plaintiff alleges (and it is not disputed) that the first defendant fell into arrear with payments in terms of this agreement as a result of which it has lawfully cancelled the agreement. It accordingly issued summons against the first defendant claiming return of the motor vehicle, damages, interest and costs. The second defendant is joined in the action on the grounds that he is a surety for the debts of the first defendant.

[2] After service of the summons the defendants entered an appearance to defend and the plaintiff brought an application for summary judgment. Although the notice of application refers to both the return of the vehicle and damages it is apparent from the affidavit in support of the application that the application is one directed solely at the first defendant in which summary judgment is sought in respect of the prayer for return of the motor vehicle. It is on that basis that the opposed application was argued before me.

[3] In opposing the application for summary judgment the first defendant raises three preliminary defences and one defence on the merits. The first preliminary defence is an allegation that the application is defective because the deponent to the affidavit in support of the application is not a person who could properly depose to that affidavit. Second it is said that the notice addressed to the plaintiff in terms of s 129 of the National Credit Act 34 of 2005 (the NCA) was sent to the wrong address and did not timeously come to the attention of the first defendant. Third, it is said that an approach has been made to a firm of mediators and accordingly that the summons is premature. Lastly, on the merits, it is alleged that the motor vehicle has always been defective, that the first defendant has a claim for damages against the plaintiff that exceeds the amount of its indebtedness and that the vehicle needs to be retained by the first defendant “for the purposes of expert evaluation to determine the extent of the defects”. I will deal with each of these defences in turn.

[4] Rule 32(2) requires that an affidavit in support of an application for summary judgment be deposed to by any person who can swear positively to the facts verifying the cause of action. In this case the deponent to the affidavit is the Manager: Asset Loss Recovery of the plaintiff.  She claims to have access to all the files and records of the plaintiff in regard to this transaction and to have familiarised herself with all the relevant documents and facts pertaining to the plaintiff’s claim. As a result she alleges that those facts are now within her personal knowledge and she is able to swear positively to those facts. The challenge to her capacity to depose to the affidavit is on the basis that she would not be familiar with the day-to-day accounting records of the plaintiff, nor would she be aware of the pre-legal aspects of the negotiations between the plaintiff and the defendants. As to the former, the deponent claims to have familiarised herself with those records and I can see no basis for disbelieving her on her oath. As to the latter, it is not suggested that the “pre-legal aspects” of the negotiations between the parties preceding the conclusion of the agreement have any bearing on any defence to the claim. It is also alleged that the deponent would not have any knowledge of “the defects evident in the vehicle sold by the plaintiff that form the basis of the action”. However that puts the cart of the defence before the horse of the claim. The claim is not based on the sale of a defective vehicle but on the sale of this particular vehicle. Whether it is defective and whether that gives rise to any defence is irrelevant to the question whether the deponent to the affidavit in support of the application for summary judgment is suitably qualified to depose to that affidavit. In my view she manifestly is and the challenge to her authority must fail.

[5] In terms of ss 129 and 130 of the NCA before approaching the court the plaintiff was obliged to give the first defendant a notice in terms of s 129(1)(a) and to allow the period of 10 days stipulated in s 130(1)(a) to elapse. Such a notice was sent on 8 June 2009 to the address chosen in the instalment sale agreement as the first defendant’s domicilium citandi et executandi. There is no dispute that the letter was sent nor that the address to which it was sent is that reflected in the instalment sale agreement as the first defendant’s domicilium citandi et executandi. Instead reliance is placed upon the fact that in the particulars of claim it is said that the first defendant changed its domicilium citandi et executandi in accordance with a letter annexed to those particulars, dated 10 July 2009 and written on behalf of the first defendant by the second defendant. The opening sentence of the letter reads:
“I confirm I had telephonically advised your office of my change of physical address but this advice was not acted upon. As a result, your letter of demand dated 8/6/09 was never received and I was not afforded the exercise of my rights as provided for in the credit act.”
Based on this it is said in the opposing affidavit that the plaintiff acknowledged the change in domicilium and nonetheless sent the letter to the incorrect address. It is then averred that the notice did not timeously come to the first defendant’s attention.  

[6] These allegations are bereft of any of the detail necessary for them to comply with the requirement of rule 32(2)(b) that the defendant should disclose fully the nature and grounds of the defence and the material facts relied upon therefor. The affidavit does not say to whom the earlier oral communication was made or on what date.  It does not say who made that communication. Lastly it does not say when the notice came to the attention of the defendants. All that one can tell from this affidavit is that on an indeterminate date an unidentified person is said to have told another unidentified person, allegedly authorised to receive this information, that the first defendant had changed its domicilium address. One cannot tell whether, if that communication was ever made, it was made before or after the posting of the s 129 notice.

[7] Those deficiencies alone would warrant the rejection of this defence. However, it faces a further insurmountable hurdle.  That is to be found in the provisions of clause 15.1 of the instalment sale agreement, which deals with the choice of a domicilium address, and provides that:
“Purchaser may change its domicilium written notice delivered by hand or sent by registered post to Seller.”
This provision is not affected by the provisions of s 65 of the NCA, which deal with the delivery of documents to the consumer, not delivery of documents by the consumer to the credit provider. Clearly the purpose of the clause is the useful one of avoiding disputes about changes in the consumer’s domicilium address. As such it seems to be a sensible provision directed at avoiding the very type of contention that is now advanced on the tenuous basis I have already described. Section 90 of the NCA sets out in some detail the provisions of a credit agreement that are unlawful and of no force and effect. They do not include a provision such as that in clause 15.1 of the present agreement. No other basis was suggested for invalidating or ignoring this clause. In those circumstances there was no valid change to the first defendant’s domicilium address prior to the letter of 10 July 2009 annexed to the particulars of claim. It was therefore permissible and indeed required by the provisions of s 65(2) of the NCA that the s 129 notice be sent to that address. This defence must accordingly be rejected.

[8] The next contention on behalf of the first defendant is expressed in the following terms:
“6.1 I aver that on 10 July 2009 I approached SA Commercial Mediators cc to assist me in dealing with the plaintiff. I annex hereto marked RR1 a copy of a letter that was sent to the plaintiff by SA Commercial Mediators cc.
6.2 Despite the plaintiff being aware that SA Commercial Mediators cc was assisting the defendants it proceeded to institute legal proceedings.
6.3 In the circumstances I aver that the summons are premature and in consequence thereof the application for summary judgment ought to be dismissed with costs.”

[9] The letter addressed by SA Commercial Mediators cc to the plaintiff reads as follows:
“I confirm I am presently taking instructions from Mr Randhir Ramsunder of Forefront Trading 34 cc in respect of account number 06112783.
Kindly let me have a copy of correspondence with regard to client’s rights under National Credit Act as a matter or urgency. The urgency arises from your enforcement officer presently waiting at client’s office.”
At the foot of the letter there is an authority by Mr Ramsunder to Mr Munilall of SA Commercial Mediators cc to act as “my Alternative Dispute Resolution Agent in terms of NCA and authorise the release of any documents to him in respect of my account”. It is debatable whether this letter in fact reflects that Commercial Mediators cc were appointed to act on behalf of the first defendant as opposed to the second defendant. However as it refers to the account number of the first defendant I accept in favour of the first defendant that it was written on behalf of both the first and second defendants.

[10] It is apparent from the letter that when it was written the plaintiff had already taken the decision to cancel the agreement in the light of the failure to respond to the notice under s 129 and was seeking to give effect to the cancellation. That is reflected in the fact that the plaintiff’s enforcement officer was at the time waiting at the office of the first defendant. The only reason for that would have been to repossess the motor vehicle. On that basis alone this defence must fail. The entitlement of the credit provider to pursue legal proceedings in order to enforce its rights under a credit agreement arises if at least ten business days have elapsed since the credit provider delivered a notice in terms of s 129(1) and the consumer has not responded to that notice. It is plain on the facts of the present case that the consumer had not responded to the notice within the ten days provided and there is no allegation to the contrary. There is nothing in the NCA that compels a credit provider to accept a belated and out of time response to its notice. Nor is there anything in the NCA that prevents a credit provider from exercising its right to cancel an agreement once it is lawfully entitled to do so merely on the grounds that there has been a reference, however belated, to an alternative dispute resolution agency. In this instance the period of ten days stipulated in the NCA expired by no later than 23 June 2009 at which stage the plaintiff’s entitlement to terminate the agreement and demand repossession of the vehicle accrued. The matter was only referred to Commercial Mediators cc on 10 July 2009, by which stage it is apparent that the decision to cancel had been taken and steps were underway to repossess the vehicle, could not affect the exercise of that right. That was simply too late and did not operate to deprive the plaintiff of its accrued right to cancel the agreement.

[11] For that reason this defence must also fail. It is therefore unnecessary for me to consider the arguments on behalf of the plaintiff arising from the fact that in terms of s 134(1)(a) of the NCA it was not open to the first defendant to refer the dispute to an alternative dispute resolution agent because the plaintiff is a financial institution. Although that appears to be a correct construction of s 134(1)(a) the fact of the matter remains that the plaintiff chose to send a letter inviting the consumer to refer the agreement to a debt counsellor, dispute resolution agent, consumer court or ombud with jurisdiction. I have difficulty with the notion that where a consumer responds to this invitation by timeously referring a matter to an alternative dispute resolution agent it is open to the credit provider to continue with its cancellation of the agreement on the basis that such a reference is impermissible. If the credit provider invites the consumer to refer a matter to an agency other than one contemplated in terms of the NCA and the consumer does so within the stipulated time period it seems to me that that must necessarily have legal consequences insofar as the credit provider’s right to terminate the agreement or seek relief in the courts is concerned. However, as in this case, the response to the invitation was out of time and clearly at a stage after the plaintiff had elected to cancel the agreement as it was entitled to do, it is unnecessary to explore these issues.

[12] The only defence raised on the merits is the contention that the vehicle is defective. This is a curious defence because it is said in paragraph 8 of the opposing affidavit that the first defendant has sought to return the vehicle and terminate the agreement based on the vehicle’s unreliability. It is also said that the purpose of retaining the vehicle is to provide evidence of the defects, which suggests that once the evidence is to hand the vehicle will be returned. If that is indeed the stance of the first defendant I fail to see why it should not return the vehicle under reservation of its rights and resist any claim for damages if the alleged defects permit it to do so. To claim to retain the vehicle in order to prove the existence of the defects with a promise “not to dispose of, alienate, encumber or in any manner deal with the vehicle such as its value would be depreciated and cause any harm to the plaintiff’s claim” seems to me to smack of trying to have one’s cake and eat it.

[13] Be that as it may and assuming that the vehicle did indeed suffer from latent defects the first defendant was faced with a choice. It could either cancel the agreement, return the vehicle and claim a refund of the instalments paid by it, or it could elect to retain the vehicle and claim a reduction in the purchase price. There are indications in the affidavit that it elected the former course but in that event there is no defence to the claim for repossession of the motor vehicle. There is no indication that the latter course is being followed. Instead there is a reference to a claim for damages. All that is said in that regard is that any such proposed counter-claim would be far in excess of the plaintiff’s claim in the action. That is a remarkable statement bearing in mind that the plaintiff has not yet quantified its claim and can only do so after repossessing of the vehicle.  

[14] On all of these bases it was in any event not open to the first defendant to fail to pay the instalments due in terms of the agreement. It was specifically provided in clause 3.2 of the agreement that the purchaser could not defer payment of or withhold any amount payable thereunder by reason of set-off or counter-claim. That is what the first defendant has purported to do. In the heads of argument delivered on its behalf a different tack was taken. An endeavour was made to rely upon the judgment in B.K. Tooling (Edms) v Scope Precision Engineering (Edms) Bpk 1979 (1) 391 (A). The difficulty with that, however, is that the principle in the judgment is dependent upon the reciprocity of obligations. Here, the plaintiff was contending that instalments due in respect of the purchase price be paid. Those instalments were being withheld on the grounds of defects in the vehicle and a possible counter-claim for damages. Such withholding was impermissible under the agreement and there is no reciprocity between the obligation to pay the purchase price and the right to claim damages. The situation is therefore that the first defendant was obliged to pay the instalments of the purchase price and has not done so. That failure entitled the plaintiff to cancel the contract after giving the statutory notice. The existence of a counter-claim for damages does not provide a defence to the claim for restoration of the motor vehicle.

[15] In the circumstances none of the defences raised by the first defendant to the claim for summary judgment can succeed.  I accordingly grant summary judgment in the following terms:
(1)	The first defendant is ordered forthwith to return to the plaintiff the 2006 BMW 116i motor vehicle with chassis number OP001720 and engine number A315H767, failing which the Sheriff is authorised to attach the vehicle wherever he may find the same and to hand it to the plaintiff.
(2)	The first defendant is ordered to pay the cost of the application for summary judgment.

DATE OF HEARING	2 MARCH 2010

DATE OF JUDGMENT	17 MARCH 2010.

PLAINTIFF’S COUNSEL	MR R.J.A. CALLUM

PLAINTIFF’S ATTORNEYS	LEGATOR, McKENNA INC
			Instructed by 
			SMIT JONES AND PRATT

DEFENDANTS’ COUNSEL	MR M. MANIKAM

DEFENDANTS’ ATTORNEYS	VASU NAIDOO & ASSOCIATES