The Applicant is a registered credit provider in terms of the National Credit Act 34 of 2005 (Hereinafter “NCA”). The Respondent is a taxi operator. The Applicant had leased two vehicles to the Respondent as taxis to be used in the operation of his business (“the taxis”).
The Respondent was substantially in arrears with the payment of instalments under the leases and the Applicant instituted an action against the Respondent. As a result, on 19 February 2009 the Applicant was notified that the Respondent had applied for debt relief. On 2 March 2009 a debt counsellor found the Respondent be-over indebted and his debt obligations were being restructured. 60 business days lapsed after the date that the Respondent applied for debt-review thus, on 26 May 2009 the Applicant gave notice to terminate the debt-review. On 26 June 2009 a debt-review proposal was issued by the debt counsellor and subsequently declined by the Applicant.
On 26 June 2009 the applicant instituted proceedings for the cancellation of the lease agreement and the interim relief for an order for attachment of the taxis, which would be stored away by the Applicant at its own cost pending determination of the main action brought by the Applicant. The issue faced by the court was whether the NCA affected the Applicant’s right to obtain the relief sought. The question fell to be resolved by applying general interpretative principles.
At common law the attachment of goods pending the outcome of vindicatory or quasi vindicatory proceedings is well established. The NCA does not make express provision for a registered credit provider to obtain an order for the interim attachment of goods.
In defence of the application the Respondent raised several issues which the court addressed in summary below;
- The termination of the debt review was not valid as a debt review process in terms of section 86 (1) of the NCA was in effect when the Applicant terminated the debt review process.
- The Respondent argued that the cancellation of the lease agreement was not lawful. As a result, the right relied upon by the Applicant is inappropriate and additionally the balance of convenience doesn’t favour the grant of the interim relief sought.
- The Respondent submitted that there is a reasonable chance that the credit extended was reckless or it resulted in the Respondent being over-indebted. It was further requested by the Respondent that the court invoke the provisions of section 83 of the NCA which in summary provides for the suspension of reckless credit agreements.
The court held that in terms of the first argument made by the Respondent the Applicant had lawfully terminated the debt-review in terms of section 86 (10) of the NCA. Furthermore, the Applicant gave notice to the debt counsellor and the Respondent of his intentions. The only relief for the Respondent was to revive the debt-review proceedings in terms of Section 86 (11).
The court held that in terms of the second argument made by the Respondent the Applicant had lawfully termination of the debt review and as a result the Applicant was correct in cancelling the Credit agreement.
The court held that in terms of the third argument made by the Respondent in terms of the section 83 certain factors mitigated against the court exercising its discretion to declare the agreement between the Applicant and Respondent reckless. It was held that the Respondent voluntarily initiated the debt review process contemplated in section 86 of the NCA and the Respondent failed to revive the debt-review in terms of section 86 (11). The lease agreement was lawfully cancelled by the Applicant. Therefore, it would not be reasonable nor just to set aside the Respondent’s obligation under the leases and permit the him to retain the vehicles. The abovementioned mitigated against the court exercising its discretion to declare the agreement reckless.
To succeed in having an interim interdict order granted such as in the present case, the Applicant must prove all four requirements of an interdict. The court held that the Applicant had established a clear right to cancellation and attachment of the vehicles in the pending action.
The court further held, “that in respect of the balance of convenience the Applicant’s claim is a vindicatory one the element of irreparable harm is presumed. Having validly cancelled the lease agreements the Applicant as owner of the vehicles is entitled to have the vehicles preserved in their present condition pendente lite.” The Applicant was successfully and costs were granted against the Respondent.
Where the provisions of a statute are of doubtful meaning there is a presumption against an alteration in the common law. A statute must be construed in conformity with the common law rather than against it, except where the statute is clearly intended to alter the common law.
Written by Musa Mathebula and Frank Sebatana