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[2012] ZANCT 8
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Opperman v Firstrand Bank Ltd a division of First National Bank (NCT/2263/2011/128 (1)(P)) [2012] ZANCT 8 (8 May 2012)
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IN THE NATIONAL CONSUMER TRIBUNAL
HELD IN CENTURION
CASE No: NCT/2263/2011/128 (1)(P)
DATE:08/05/2012
In the matter between:
FJ Opperman........................................................................................................APPLICANT
and
Firstrand Bank Limited a division of First National Bank ….............................RESPONDENT
JUDGMENT
INTRODUCTION
1. The Applicant in this matter is Mr FJ Opperman. At the hearing Mr Opperman represented himself.
2. The Respondent in this matter is First Rand Bank a division of First National Bank. The Respondent was represented by Mr Kannieappan from Glover Incorporated.
3. This is an application for the Tribunal to review the sale of goods as provided for in section 128 (2) of the National Credit Act, 2007. The goods in question involved immoveable property (a house) which had been owned by the Applicant and which was sold at a sale in execution on 25 September 2009.
4. The Respondent, in its answering affidavit, took certain points in limine, namely that:
the Applicant’s wife, Oriel Edith Opperman, should have been joined with the Applicant as they were married in community of property, both concluded the home loan agreement with the Respondent, and the immoveable property was registered in both their names;
the sections of the Act upon which the Applicant relies to bring this application, namely sections 127 and 128 of the National Credit Act, Act 34 of 2005 (the Act) are not applicable to the matter.
5. At the hearing, held on 13 March 2012 the Tribunal decided to hear the parties on the points in limine as, in its view, a finding in favour of the Respondent on these points could dispose of the matter.
6. As far as the first point in limine is concerned, the Applicant explained that he was now divorced and according to his divorce settlement he received the immoveable property which is the subject of this application. The Respondent informed the Tribunal that according to its records, this information had not been forwarded to the Respondent. However, in view of its second point in limine, it decided that it would not pursue this point any further.
7. This judgment relates only to the Tribunal’s reasoning and finding in respect of the second point in limine.
BACKGROUND
8. The Applicant and his wife purchased certain immoveable property (a house), namely ERF 218, Florida Township, in July 1994. In order to finance this purchase the Applicant and his wife borrowed R232,000.00 from the Respondent. As security for this loan they passed a mortgage bond over the immoveable property in favour of the Respondent. This mortgage bond was executed and registered in the name of the Applicant and his wife on 8 September 1994.
9. In 2006 the Applicant and his wife breached the terms of the mortgage bond agreements by failing to pay certain instalments. In terms of the bond agreement the full balance of the bond became due and payable.
10. A Court Order was granted by the High Court of South Africa, (Witwatersrand Local Division as it was previously known, presently the South Gauteng High Court), under case number 2006/7394. In terms of the said Court Order, the Applicant and his wife were ordered to make payment in the sum of R186,872.00 to the Respondent. The said order further declared the immovable property to be executable.
11. The said immoveable property was sold by the sheriff of the High Court at a public auction on 25 September 2009.1 The sale of the property realised the sum of R420,000.00.
BASIS FOR THE APPLICATION
12. The Applicant based his application for the review of sale on sections 127 and 128 of the Act. These sections deal with the situation where a consumer under an instalment agreement, secured loan or lease surrenders goods to the credit provider. The credit provider is then required to follow a specific procedure as set out in the Act before the goods are sold. Once the goods are sold, the consumer may approach the Tribunal for the Tribunal to review the sale of goods. If the Tribunal is not satisfied that the credit provider sold the goods as soon as reasonably practicable or for the best price reasonably obtainable, the Tribunal may order the credit provider to credit and pay to the consumer an additional amount exceeding the net proceeds of the sale.
13. The Applicant argued that these provisions applied to the sale of his mortgaged property because he had entered into an agreement with the Respondent in terms of which the Respondent would attempt to have the property sold via their quick sale process. The Respondent sent an evaluator to his property to value the home. The property was then valued by the independent valuator at R900,000.00.2
14. In terms of the customer mandate signed by the Applicant, the property would be sold for a minimum selling price of R720,000.00 which was approximately 80% of the value of the property. According to this mandate the property would be marketed for 60 days, via recognised property professionals with a national footprint, it would be marketed at 80% of its current market valuation and 4.5% commission would be payable by the seller.
15. Although the Applicant signed this quick sale mandate and sent this through to the Respondent on 22 September 2009, the property was not removed from the auction list and it was duly auctioned on 25 September 2009.3
ISSUE TO BE DECIDED
16. The issue the Tribunal must determine is whether sections 127 and 128 apply to the Applicant’s case. Pertinently, the Tribunal must determine whether the sale of the Applicant’s immoveable property at a public auction by the sheriff of the court subsequent to an order of the High Court rendering the property specially executable can be reviewed in terms of section 128 of the Act. Further the Tribunal must decide whether section 131 extends the application of section 127 to the Applicant’s case before the Tribunal.
THE HEARING
17. The hearing was held on 13 March 2012. In its answering affidavit the Respondent took the point in limine that sections 127 and 128 do not apply to the sale of immoveable property because these sections apply to the sale of moveables only.
18. At the hearing the Respondent reiterated its view that the sections on which the Applicant had based his application for review do not apply to the sale of immoveable property and that section 131 did not apply in the circumstances of this particular matter. The Respondent supplied the following reasons in support of its argument:
(1) The Supreme Court of Appeal in Roussouw v First Rand Bank 2010 (6) SA 439 (SCA) held that the types of agreements referred to in section 130, namely an instalment sale agreement, a secured loan and a lease as defined in section 1 of the Act all relate to moveable property. Therefore these sections do not apply to the sale of immoveable property. Although the SCA was dealing specifically with section 130 (2), both section 130 (2) and section 127 refer to the same types of agreements. As the SCA found that section 130 (2) did not apply to immoveable property, likewise, section 127 does not apply to immoveable property as the same types of agreements are specified in the sections.
(2) Section 131 refers to the repossession of goods that are the subject of a credit agreement. The mortgaged property was not the subject of a credit agreement. Rather, the Respondent had granted the Applicant and his wife a loan of money and against this loan of money, the Applicant and his wife had granted the Respondent a mortgage bond over the property which they had purchased in order to secure this loan. The heading of section 131 refers to the repossession of goods. Repossession is defined as the retaking of possession when a buyer defaults on payments. In this instance the Respondent has never been in possession of the immoveable property and was merely the grantor of a loan which was secured by way of a mortgage bond.
19. The Applicant argued that the Tribunal should review the sale because he had signed a quick sale mandate which stated that the property would be sold for a minimum price of R720,000.00. The Applicant requested the Tribunal to review the sale and to award him the sum of R300,000.00 which is the difference between the price realised at the public auction and price which he is of the view he could have obtained had the property been sold via the Respondent’s quick sale program.
ASSESSMENT
20. Section 127 provides for the surrender of goods under an instalment agreement, secured loan or lease. Both an instalment agreement and a lease as defined in the definition section refer to the sale or lease of moveable property. A secured loan is defined as an agreement in terms of which a person advances money or grants credit to another and retains or receives a pledge or cession of the title of any moveable property or other thing of value as security for all amounts due under that agreement. Under this section a consumer may surrender moveable property to a credit provider which must then sell the moveable property in order to satisfy the debt which is owed by the consumer to the credit provider under a credit agreement.
21. Section 128 provides that a consumer who has unsuccessfully attempted to resolve a disputed sale of goods in terms of section 27 may apply to the Tribunal to review the sale. If the Tribunal is not satisfied that the credit provider sold the goods as soon as reasonably possible, or for the best price reasonably obtainable, the Tribunal may order the credit provider to credit and pay to the consumer an additional amount exceeding the net proceeds of sale. This section empowers the Tribunal to review the sale, conducted by the credit provider and if it is not satisfied with the sale, the Tribunal may order the credit provider to pay an additional sum of money to the consumer.
22. Section 131 reads as follows:
“If a court makes an attachment order with respect to property that is the subject of a credit agreement, section 127 (2) to (9) and section 128, read with the changes required by the context, apply with respect to any goods attached in terms of that order.”
23. The important point to note about section 131 is that it does not appear to be limited to instalment agreements, secured loans or leases as is done specifically in section 127.
24. The question to be decided therefore is whether section 131 applies when immoveable property is attached by the court in order that it may be sold to satisfy a judgment debt.
25. Section 131 states that where the court makes an attachment order with respect to property that is the subject of a credit agreement, section 127 (2) to (9) and section 128 apply subject to changes which are required by the context.
26. Sections 127(2) to (9) deal with the processes which a credit provider must follow when property which has been sold to a consumer is returned to the credit provider because the consumer is unable to meet her obligations under the credit agreement.
27. This property is returned to the credit provider either because the consumer surrenders the goods (under section 127) or because a court has issued a writ of attachment (under section 131).
28. Section 131 is discussed in the case of Absa Bank Ltd v De Villiers 2009 (5) SA 40 (C).
The court explains that when a consumer is in default, the credit provider may apply for a court order to attach the goods which were the subject of the credit agreement. (It must be noted that where a consumer does not voluntarily hand back the goods to the credit provider, the credit provider can only regain possession of the goods with a court order even in circumstances where the credit provider is the owner of the goods). The De Villiers case involved the attachment of a motor vehicle which was the subject of an instalment sale agreement. In terms of the agreement, ownership of the vehicle was ceded and transferred to the credit provider. The consumer failed to pay the required instalments and so the credit provider brought an application in terms of s130 (1) for an order authorising the sheriff to attach the motor vehicle and to hand the vehicle over to the credit provider for safe keeping. Because a court attachment was involved rather than a voluntary surrender the matter was governed by section 131. In terms of section 131 the credit provider must then follow the process set out in section 127 (2) – (9) in order to realise the value of the goods. Once the goods have been sold, this amount is credited to the consumer’s outstanding account. If the amount is less than the settlement value, the credit provider may demand payment from the consumer of this outstanding balance. If the consumer fails to pay this outstanding amount within 10 days after receiving the required notice, the credit provider may apply for judgment in terms of the Magistrate’s Court Act for the recovery of the remaining settlement value. If however, the consumer pays the amount demanded after receiving the demand notice, judgement against him or her will be prevented (See section 127 (8) (a) and (b). See also judgment at 49E – 50E).
29. A different process is followed when a creditor seeks to enforce a judgment debt. In order to enforce a judgment debt, one may issue a writ of execution (in the High Court) or a warrant of execution (in the Magistrate’s Court). In both these scenarios, the effect of the writ or warrant is to instruct the sheriff of the court to attach the property of the judgment debtor so that if the judgment remains unpaid after the attachment, the attached property can be sold at a public auction and the proceeds used to pay the money owed to the judgement creditor (see Pete; Hulme; Du Plessis and Palmer Civil Procedure: A practical guide 359).
30. When the Applicant and his wife defaulted on their mortgage loan repayments, the full amount of the loan became due and payable and judgment was taken against them for this full amount. The property which was security for the loan rather than “the subject of the loan agreement” was attached so that the sale proceeds could be used to pay off the judgement debt (or at least a portion of the outstanding judgment debt). It is clear from the facts, as set out above, that the Respondent never at any time had possession of the immoveable property. Neither did the Respondent repossess the property. The property was attached by the sheriff of the court pursuant to a writ of attachment issued by the High Court.
31. Section 131 is not intended to govern the process in the circumstances of this case. The process is governed instead by the High Court Rule 46 which deals with execution against immoveable property when property is sold to satisfy a judgment debt. Sections 127 - 131 are intended to deal with the situation where the credit provider initially had possession of the property (either actual physical possession or ownership was transferred to it), the property was then given to the consumer under a credit agreement and then the property was finally returned to the credit provider (which must assume responsibility for disposing of the property) because the consumer was unable to meet his obligations under the credit agreement. If the property is sold and this governs the full amount of the debt, or the consumer is able to pay off the outstanding amount after the sale, there will be no judgment debt.
ORDER OF THE TRIBUNAL
32. In summary therefore, the Tribunal finds that section 127 and 128 apply to the sale of moveable property only and that section 131 does not apply in the circumstances of this case. The point in limine taken by the Respondent is therefore upheld and the application for the review of the sale is dismissed.
Dated this 8th day of April 2012.
[signed]
_____________________
Prof T Woker
Ms L Best and Adv F Manamela concur in the judgment.
1 The sale took place in 2009 because, when the court order was obtained, the Applicant managed to pay off the arrears and he continued to live in the property. However in 2009, he again fell into arrears and he was informed that the property would be sold at a public auction.
2 At the hearing the Applicant informed the Tribunal that he had previously tried to sell his home on his own and had received an offer of R1 400 000. However, this sale has failed to materialize which was why he had decided to go with the quick sale program offered by the Respondent.
3 There is a dispute of fact regarding why the property was not removed from the auction list. However, it is common cause that the property was auctioned at a public auction, following attachment by the Sheriff of the High Court. This application is based on an interpretation of sections 127 and 128, therefore it is not necessary for the Tribunal to make a finding regarding this dispute of fact.