Nedbank recently asked the High Court to find a consumer in contempt of court and guilty of an offence under the National Credit Act (NCA) after she failed to tell the bank or the sheriff where a motor vehicle was located.
The bank financed the purchase of the vehicle, a 2018 Hyundai Tucson, in terms of a credit agreement concluded in August 2019.
Nedbank obtained a default judgment against the consumer, “CL”, in September 2021 because she defaulted on the payments.
A warrant of attachment was issued for execution the following month, but the vehicle could not be found.
The sheriff served a notice under section 97 of the NCA on CL in March 2022. CL told the sheriff that she and her husband did not know who had the vehicle, nor did they know where the vehicle was.
In her answering affidavit, CL said she had returned the vehicle to the dealership, Sullivan’s Auto, shortly after purchasing it, because it required repairs. CL said she repeatedly sought information on the progress of the repairs. CL was assured she would get the vehicle back, and the dealership would update Nedbank on the issue.
After the lapse of some time, and out of frustration, CL stopped making payments to Nedbank. Her understanding was that Nedbank and the dealership knew where the vehicle was, and she would resume her payments as soon as she received the vehicle back.
CL submitted it was always her wish to settle the matter because she did not want to be engaged in unnecessary and costly litigation. She accordingly tried to find out where the vehicle was.
In November 2022, she contacted the dealership’s sales representative, who told CL that Sullivan’s Auto had closed, but they would try to provide her with feedback within a few weeks. By the end of the month, when CL had not heard from them, she contacted the sales rep again. CL was told that the dealership required until the end of December 2022 to get hold of the vehicle.
Third party in dispute with the dealership
It was only on 24 February 2023 that CL obtained an address at which, so she was told, the vehicle might be. CL was told that the vehicle had been confiscated as “security” by a third party, “IN”, who would not release it until a dispute between him and the dealership had been resolved.
The address turned out to be the location of a student hostel, and the vehicle was not there.
IN and Sullivan’s Auto had a longstanding business relationship before it closed. IN would deliver vehicles, usually in batches, to the dealership, which would sell the vehicles on IN’s behalf and pay him whatever amounts they had agreed upon.
According to the sales rep, CL’s vehicle formed part of one of those agreements.
She said that when CL returned the vehicle to the dealership for repairs, she contacted IN to collect the vehicle and attend to the mechanical faults.
While the vehicle was in IN’s possession, disputes arose regarding payments in respect of the agreements. It was at this time that IN informed the sale rep that he would not return CL’s vehicle to the dealership until he had been paid what he claimed.
Acting Judge Phillipa van Zyl said no further information about the location of the vehicle has come to light. The dealership has confirmed that the vehicle is in IN’s possession. The sales rep confirmed CL’s allegations in an affidavit.
Legal principles and framework
Acting Judge Van Zyl said the issue facing the court was whether CL was in contempt of court, or guilty of an offence in terms of section 97(5) of the NCA.
Contempt in the context of the NCA
Contempt of court has been defined as “the deliberate, intentional (i.e., wilful), disobedience of an order granted by a court of competent jurisdiction”.
Wilfulness is an essential element of the act or omission alleged to constitute contempt. In addition to the element of wilfulness, there must be an element of mala fides.
Once it is shown that the order was granted (and served on or otherwise came to the notice of the respondent) and that the respondent had disobeyed or neglected to comply with it, both wilfulness and mala fides will be inferred. Thus, once the applicant has proved the order, service or notice, and non-compliance, an evidentiary burden rests upon the respondent in relation to wilfulness and male fides – that is, to advance evidence that establishes a reasonable doubt as to whether non-compliance with the order was wilful and male fide, Acting Judge Van Zyl said.
Although the defaulting party may be wilful, such party may still escape liability if they can show that they were bona fide in their disobedience. Where the defaulting party has genuinely tried to carry out the order and has failed through no fault of his or her own or has been unable but not unwilling (for example, by reason of poverty), to carry out the order, proceedings for committal will fail, the judge said.
Section 97 of the NCA
Sub-sections (2) to (5) of section 97 oblige a consumer to inform a credit provider of the address of the premises at which any good that are subject to a credit agreement are ordinarily kept, and the name and address of any other person to whom possession of the goods has been transferred. If, at the time of a request by the credit provider or the sheriff, the consumer is no longer in possession of the goods, the consumer must provide the name and address of the person to whom possession has been transferred.
A person who knowingly provides false or misleading information or who acts in a manner contrary to section 97 with the intention to frustrate or impede a credit provider from exercising its rights under the NCA or under a credit agreement is guilty of an offence.
Default was not wilful and male fide
There was no question that Nedbank had a valid and enforceable judgment against CL, who has failed to comply with all the terms thereof, Acting Judge Van Zyl said.
But the judge could not find anything in the papers that CL was in wilful and mala fide default.
She also could not find, for the purposes of section 97 of the NCA, that CL displayed a clear intent to defraud or mislead Nedbank, or to frustrate or impede the bank in exercising its rights under the NCA.
CL was unable to comply because she did not have the requisite information. She had tried to obtain it, without success.
“It is no use insisting that the respondent must provide the location of the vehicle. It is common cause that she must do so, both because of the court order and the provisions of section 97 of the NCA. On the papers, she cannot do so,” Acting Judge Van Zyl said.
“The approach in respect of disputes of fact in matters of this nature is not disturbed by the evidentiary burden resting on the respondent. The respondent’s version can only be rejected if, on the papers, the court can find that such version is ‘fictitious or so far-fetched and clearly untenable that it can confidently be said, on the papers alone, that it is demonstrably and clearly unworthy of credence’ [quoting the Supreme Court of Appeal in Fakie NO v CCII Systems (Pty) Ltd].”
Acting Judge Van Zyl said CL was “the unfortunate victim of a third-party dispute”.
Nedbank’s application was dismissed with costs.
