I ‘Notice’ You ‘Noticing’ Me: A Critical Analysis of the Section 129 Notice of the National Credit Act, and Recommendations for the Implementation of a ‘Specialised’ Foreclosure Notice
Published date | 22 October 2021 |
Author | Singh, C. |
Pages | 56-88 |
Citation | (2021) 33 SA Merc LJ 56 |
DOI | https://doi.org/10.47348/SAMLJ/v33/i1a3 |
Date | 22 October 2021 |
56
https://doi.org/10.47348/SAMLJ/v33/i1a3
* LLB LLM PhD (UKZN).
I ‘NOTICE’ YOU ‘NOTICING’ ME:
A CRITICAL ANALYSIS OF THE SECTION129
NOTICE OF THE NATIONAL CREDIT ACT,
AND RECOMMENDATIONS FOR THE
IMPLEMENTATION OF A ‘SPECIALISED’
FORECLOSURE NOTICE
CIRESH SINGH*
Attorney of the High Court
Abst rac t
Section 129 of the National Credit Act provides that a creditor may not
commence any legal proceedings to enforce a credit agreement before
rst issuing a section 129(1)(a) notice to the debtor. us, in a foreclosure
context, should a mortgagee wish to enforce a mortgage agreement, he
must rst comply with section 129(1) and deliver a section 129 notice
to the mortgagor. Should this not be done, any ensuing foreclosure
proceedings could potentially be excipiable. Accordingly, section 129
has been described as the gateway to litigation and compliance with
this section is paramount for debt enforcement. Unfortunately, section
129 has been the subject of much criticism and uncertainty due to
its ambiguous wording and the resulting interpretation. Much of the
uncertainty relates to the way in which the notice must be delivered and
the contents of the notice. With specic regard to foreclosure proceedings,
section 129 fails to alert the debtor about his rights and remedies and fails
to notify the debtor of the full consequences of foreclosure. Consequently,
the section has been amended several times. Unfortunately, the
amendments have not resolved all the loopholes in section 129,
and some of these amendments have created more uncertainty and
ambiguity. Case law has, however, provided some direction as to the
interpretation of section 129. Despite the amendments and case law
developments, uncertainty still exists, and clarity is urgently required
in relation to the interpretation and application of section 129 during
foreclosure proceedings. It is accordingly suggested that certainty can
only be achieved by implementing a specialised ‘foreclosure notice’.
Keywords: foreclosure, credit agreement, default notice, mortgage,
reinstatement
(2021) 33 SA Merc LJ 56
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I ‘NOTICE’ YOU ‘NOTICING’ ME: A CRITICAL ANALYSIS
57
I INTRODUCTION
e National Credit Act 34 of 2005 (NCA) regulates most credit debt
enforcement proceedings and directly applies to mortgage debt enforce-
ment — otherwise known as foreclosure in South Africa.1 Before the
coming into operation of the NCA, the credit industry was regulated
by the Usury Act 73 of 1968 and the Credit Agreements Act 75 of 1980.
is legislation was largely creditor-orientated and provided limited
debt relief mechanisms to an over-indebted consumer. e introduction
of the NCA added a new dimension to credit debt enforcement as the
Act sought to curb the unregulated and harsh exercise of creditor rights
and created a realm of protection for debtors by levelling the playing
eld between the contracting parties.2
e NCA provides debtors with a framework which was previ-
ously non-existent in South African credit law. e NCA aords debt-
ors a chance to mediate, negotiate, rearrange, and resolve conicts with
creditors. is framework introduced a unique system of debt relief into
South African law by way of the debt review mechanism3 and the right
to debt reinstatement.4 Section 129 of the NCA is one of the measures
1 e word ‘foreclosure’ is not dened in South African law. e term ‘foreclosure’ is a
generic term used to describe the process in which a mortgagee enforces a mortgage agree-
ment by executing against the hypothecated immovable property where a mortgagor fails
to meet his mortgage bond repayments. e term ‘foreclosure’ will be used in this article
to describe the process in which the mortgagee enforces its security rights against the
mortgagor’s home.
2 See s 3 of the NCA which states that the purpose of the NCA is to, inter alia, promote
equity in the credit market by balancing the respective rights and responsibilities of credit
providers and consumers. See also Boraine & Renke, ‘Some practical and comparative
aspects of the cancellation of instalment agreements in terms of the National Credit Act
(Part 1)’ (2007) 40(2) De Jure 222; Govender & Kelly-Louw, ‘Delivery of the compulsory sec-
tion 129(1) notice as required by the National Credit Act 2005’ (2018) 21 PELJ 1 at 3.
3 is paper is not intended to provide a detailed exposition of debt review. For an anal-
ysis of the debt review procedure, see Van Heerden & Coetzee, ‘Debt counselling v debt
enforcement: Some procedural questions answered’ (2010) 31(3) Obiter 756; Van Heerden
& Coetzee, ‘Perspectives on the termination of debt review in terms of section 86(10) of the
National Credit Act 34 of 2005’ (2011) 14(2) PELJ 37; Roesto, Haupt, Coetzee & Erasmus,
‘e debt counselling process — closing the loopholes in the National Credit Act’ (2009)
12(2) PELJ 247; Otto, ‘Over-indebtedness and applications for debt review in terms of the
National Credit Act: Consumers beware! Firstrand Bank Ltd v Olivier: Case comments’
(2009) 21(2) SA Merc LJ 272.
4 e right to reinstatement provided for in s 129(3) will be discussed in part IV of this
paper. For an analysis of the right to reinstatement, see Steyn & Sharrock, ‘Remedying mort-
gage default: Nkata v FirstRand Bank Ltd’ (2017) 134(3) SALJ 498; Brits, ‘e “reinstatement”
of credit agreements: Remarks in response to the 2014 amendment of section 129(3)–(4)
of the National Credit Act’ (2015) 48(1) De Jure 75; Brits, ‘Purging mortgage default: Com-
ments on the right to reinstate credit agreements in terms of the National Credit Act’ (2013)
24 Stell L R 165; Scholtz et al, Guide to the National Credit Act (LexisNexis 2009) (loose-leaf)
12.10; and Brits, Coetzee & Van Heerden, ‘Re-instatement of credit agreements in terms of
the National Credit Act 34 of 2005: Quo vadis?’ (2017) 80(2) THRHR 177.
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58 (2021) 33 SA MERC LJ
specically put in place by the legislature to enhance consumer protec-
tion.5 Section 129 provides that if the consumer is in default under a
credit agreement, the credit provider —
‘(1)(a) may draw the default to the notice of the consumer in writing and
propose that the consumer refer the credit agreement to a debt counsel-
lor, alternative dispute resolution agent, consumer court or ombud with
jurisdiction, with the intent that the parties resolve any dispute under the
agreement or develop and agree on a plan to bring the payments under the
agreement up to date; and
(b) subject to section 130(2), may not commence any legal proceedings
to enforce the agreement before—
(i) rst providing notice to the consumer, as contemplated in
paragraph (a), or in section 86(10), as the case may be;
(ii) meeting any further requirements set out in section 130.
…
(3) Subject to subsection (4) a consumer may at any time before the
credit provider has cancelled the agreement, remedy a default in such
credit agreement by paying the credit provider all amounts that are over-
due, together with the credit provider’s default administration charges and
reasonable costs of enforcing the agreement up to the time the default was
remedied.’
Accordingly, it is submitted that the purpose of section 129 is not only
to inform the debtor of his default, but also to notify the debtor about
several remedies available to him under the NCA. e debtor’s remedies
include the right to apply for debt review in terms of section 86 and the
right to reinstatement in terms of section 129(3) of the NCA. One of
the main advantages of debt review and reinstatement is that it places
a moratorium or freeze on debt enforcement proceedings. Debt review
provides the debtor with a mechanism to rearrange his debt obligations
to aordable monthly instalments in terms of a court-approved debt
restructuring order. Importantly, while a debtor is under debt review,
a creditor is prohibited from enforcing any debt enforcement rights
arising out of the credit agreement.6 On the other hand, reinstatement
allows the debtor to cancel the eect of all debt enforcement proceedings
taken against him by his creditor upon settlement of the full outstand-
ing arrears and other default administrative charges. In other words,
once a debtor pays the outstanding arrears and default administrative
costs on his account, his record is wiped clean, and any legal proceed-
ings taken against him are cancelled and of no force and eect.
5 See Govender & Kelly-Louw, (2018) 21 PELJ 1 at 2.
6 See ss 80 and 88 of the NCA.
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