Credit Law

• Jurisdiction: South Africa
• Citation: 2019/2020 YSAL 398
• Date: 10 March 2021
• Author: Koekemoer, M.
• DOI: https://doi.org/10.47348/YSAL/v1/i1a7
• Pages: 398-433
• Published date: 10 March 2021

398

1. INTRODUCTION

Debt intervention as a debt-relief measure was i ntroduced during this

reporting period. It is a debt-relief measure a imed at alleviating t he debt

burden of low-income consumers. The debt-intervention provisions are

discussed u nder ‘Legislation’ below.

Twelve reported cas es dealt with aspects of the National Cre dit Act (NCA).1

In Benson v Standard Bank of South Africa (Pty) Ltd2 it was alleged that a credit-

provider failed to deliver a s129(1) default notice to the consu mer’s correct

address. A credit-provider is not allowed to commence with enforcement

proceedings to enforce a c redit agreement which is subjec t to the NCA

unless they delivered to a consu mer a default notice which complies with

s129 of the NCA. In this judgme nt the court held that the credit-provider

was allowed to commence debt-enforcement proceedi ngs as: (1) the

consumer failed to prove that the default notice was sent to an i ncorrect

address (not the consumer’s address); and (2) a default notice was attached

to a subsequent application for a money judgment delivered more than

ten days before the credit-provider commenced enforcement proceed ings.

Then, in National Credit Regulator v Southern Afr ican Fraud Prevention Services

NPO3 the court considered whether i nformation concerning the in stances of

fraud committed by a consumer when the con sumer applied for credit could

be stored on a database only for a prescribed p eriod. Moreover, the decision

in Ratlou v MAN Financial Service s SA (Pty) Ltd4 confirmed, similarly to

previous case law on the same topic, that a settle ment agreement intended

to extinguish debt t hat existed under a credit agreement to which the NCA

* BCom LLB (PU for CHE) LLM (Pret) LLD (Pret); Senior Lecturer, Department of

Mercantile Law, School of Law, University of South Africa; Attorney of the High Court of South

Africa. ORCID: https://orcid.org/0000-0002-8880-7399.

1 34 of 2005.

2 2019 (5) SA 152 (GJ).

3 2019 (5) SA 103 (SCA).

4 2019 (5) SA 117 (SCA).

Credit LawCredit Law

Michel Koekemoer*

2019/2020 YSAL 398

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Credit Law 399

https://doi.org/10.47348/YSAL/v1/i1a7

did not apply would also not be subject to the NCA. Furthermore, the court

concluded in National Credit Regulator v Standard Bank of South Africa Ltd5

that the common-law right of set-off did not apply to a credit agreement

that was subject to the NCA. Also, a magist rates’ court must be the court

of first instance where t he monetary amount falls within the ju risdiction of

this court accordi ng to the decision of Nedbank Ltd v Gqirana NO.6 Fur th er,

it was confirmed in Botha v Stand ard Bank of South Africa Ltd7 that even if

the debt that was secured by a mortgage bond later bec ame unsecur ed

debt when this bond was cancelled, such b ond cancellation would not alter

the date upon which the debt prescribe s. The court in Janse van Vuuren v

Roets8 confi rmed that it is impossible for a High Court to g rant an order

which would release a consumer from debt rev iew. In another judgment

concerning the ter mination, exit or withdrawal from debt rev iew, the court

held in Mabuduga v Nedbank Ltd9 that a consumer could no longer withdraw

from debt review as soon as an application for debt review was f iled with

a court. In addition, the court considered i n NPGS Protection & Security

Services CC v Firstrand Bank Ltd10 when judicial oversight in the cas e of the

sale in execution of the prim ary residence of a consumer would be allowed.

The court then held in Shabangu v L and and Agricultural Development Bank

of South Africa11 that an acknowledgement of debt intended to settle debt

incurred under a n invalid loan agreement would also be i nvalid. Finally,

the Supreme Court of Appeal (SCA) in National Credit Regulator v Lewis Stores

(Pty) Ltd12 pronounced on whether the NCA applied to a particul ar extended

warranty concerni ng goods sold on credit. The par ticulars of each ca se are

discussed f urther under ‘Cases’ below.

2. LEGISLATION

2.1 NATIONAL CREDIT AMENDMENT ACT 7 OF 2019

The National Credit Amendment Act (NCAA)13 was signed into law in

August 2019 (GG 42653 19August 2019 assignation of the Nationa l Credit

Amendment Act of 2019, which notice was replaced by GG 42649 of 19August

2019). The date of commencement of the NCAA must stil l be proclaimed.

The NCAA relates to debt intervention where a debt-intervention applicant

5 2019 (5) SA 512 (GJ).

6 2019 (6) SA 139 (ECG).

7 2019 (6) SA 388 (SCA).

8 2019 (6) SA 506 (GJ).

9 2020 (1) SA 599 (GP).

10 2020 (1) SA 494 (SCA).

11 2020 (1) SA 305 (CC).

12 2020 (2) SA 390 (SCA).

13 7 of 2019.

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is an individual who earn s less than R75 00 per month and has uns ecured

debts of up to R5000 0. Therefore, this typ e of consumer is referred to as

a low-income consumer. Debt intervention relates to those measure s

aimed to help the debt-intervention applicant (a consumer) who is unable

to access insolvency-law measures. The intro duction of the NCAA is to be

welcomed from a consumer-protection perspe ctive because the Act will

provide additional protection for low-income consumers who are over-

indebted. Essentially, the NCAA provides low-income consumers with an

alternative to insolvency measures b ecause this ty pe of consumer will not

have sufficient assets to justi fy having sequestration proceedings i nstituted

against them. Debt review may not be a n ideal route for some consumers

when the costs associated wit h debt review are considered and also a s a

result of the difficu lty in terminating debt rev iew.14 Accordingly, a consumer

has a choice to apply instead for debt intervention as opposed to havi ng to

follow the debt-review route.

The purpose of the NCAA inc ludes:

(1) adding as anot her function of the National Credit Regulator (NCR) the

evaluation and referral of debt intervention applications, which a lso

requires provisions al lowing the creation of the capacity of the NCR in

this regard;

(2) adding as an additiona l function of the National Consu mer Tribunal

(NCT) the ability of the tribu nal to consider a referral of a debt-

intervent ion application;

(3) providing that informat ion concerning debt intervention be recorded;

(4) imposing a statutory duty on a debt counsel lor to investigate whether

a credit agreement is indeed re ckless;

(5) permitting a magistrates’ court and t he NCT to determine the

maximum interest, fees or ot her charges concerning a cre dit agreement

when a consumer’s debt is rearranged;

(6) allowing the NCT to rearrange the con sumer’s credit-agreement

obligations and also make a n order concerning an u nlawful credit

agreeme nt;

(7) providing that it becomes mandatory for a credit consu mer to acquire

credit life insu rance in order to secure t he debts under their credit

agre emen ts;

(8) establishing spec ific offences concerning ‘debt intervention, prohibited

credit practices, selling or colle cting prescrib ed debt and related to

failure to register as req uired’;

(9) also providing for penalties related to the newly created offences

mentioned in (8) directly above; and

14 See 3.7 and 3.8 below.

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