Nedbank Ltd v Swartbooi Unreported Case No 708/2012 (ECP) Termination of debt review in terms of the National Credit Act - not the end of the road for over-indebted consumers : recent case law

• Author: M. Roestoff
• DOI: 10.10520/EJC155515
• Published date: 01 January 2014
• Date: 01 January 2014
• Pages: 140-160

140 2014 De Jure

equality measure. In the case of an EEP that will be fairly easy to do as

the respondent need only show that the measure was properly adopted

in terms of the EEA. In the case of a decision purporting to have been

taken in terms of an EEP, such as in the present case, the respondent will

have to tender evidence showing that the decision was intra vires the EEP

and that it complies with section 9(2) and has properly accounted for all

other relevant considerations, such as those dealt with by the SCA in the

present case. The conclusion following from this argumentation is that if

the SCA had not followed the route it did, by involving section 9(3) and

(5) – and the Harksen test but, had confined itself to an inquiry solely in

terms of section 9(2), it would have reasoned in materially the same way

and would have reached the same conclusion as it in fact did.

K MALAN

University of Pretoria

Nedbank Ltd v Swartbooi

Unreported Case No 708/2012 (ECP)

Termination of debt review in terms of the National Credit Act – not the end

of the road for over-indebted consumers

1Introduction

Before discussing the decision in Nedbank Ltd v Swartbooi it would be

useful, first, to briefly discuss the relevant provisions of the National

Credit Act (34 of 2005) (NCA).

One of the primary aims of the NCA is to provide debt relief to an over-

indebted consumer (s3(g)) by allowing him or her to apply, in terms of

section 86, to a debt counsellor for the review of his or her debt

obligations pursuant to a credit agreement as defined in the NCA (see s8).

On receipt of the application, the debt counsellor must notify all credit

providers that are listed in the application, in the prescribed manner and

form, of the debt review application (s86(4)(b)(i)). Within a period of 30

business days the debt counsellor must determine whether the consumer

appears to be over-indebted (s86(6)(a) read with reg 24(6)). If the debt

counsellor concludes, on account of the assessment, that the consumer

is not over-indebted (s86(7)(a)) the debt counsellor must reject the

application and the consumer may apply directly to the Magistrate’s

Court for a debt restructuring order (s86(9)). However, if the debt

counsellor concludes that the consumer is over-indebted (s86(7)(c)), the

debt counsellor will draft a proposal for the restructuring of the

consumer’s obligations and submit it to all credit providers for their

consideration. It is important to note in this regard, that the NCA does not

Onlangse regspraak/Recent case law 141

require any negotiations in respect of consumers who are found to be

over-indebted (National Credit Regulator v Nedbank Ltd 2009 6 SA 295

(GNP) 317). However, in practice, debt counsellors prefer to negotiate

with credit providers in the hope of reaching a compromise with them.

Negotiations are also undertaken pursuant to the obligation in terms of

section 86(5) “to participate in good faith in the review and any

negotiations designed to result in responsible debt re-arrangement”. If

the parties do not reach an agreement, the debt counsellor must bring an

application to the Magistrate’s Court in terms of section 87(1) for an

order in terms of which the consumer is declared over-indebted and his

or her debt obligations are restructured pursuant to the debt counsellor’s

proposal (s86(7)(c) read with ss86(8)(b) and 87(1)). The restructuring

powers of the court are limited and the court may in essence, only order

that the amount of the instalment be reduced and the payment term be

extended or, in the alternative, postpone the dates on which payments

are due, or extend the payment term and postpone the dates on which

payments are due under an agreement (s86(7)(c)(ii)). The consumer

therefore does not receive any discharge of his debt obligations. It should

be noted in this regard that the NCA aims to provide “mechanisms for

resolving over-indebtedness based on the principle of satisfaction by the

consumer of all responsible financial obligations” (s3(g); our emphasis).

Section 88(3) protects the consumer by providing for a moratorium on

debt enforcement in certain instances. While a consumer is under debt

review, or where a debt restructuring order applies to him or her and the

consumer strictly complies with such order, a credit provider may not

enforce any of its rights in terms of a credit agreement. Section 88(3) is

subject to section 86(10) which allows a credit provider to give notice to

the consumer to terminate the debt review. Section 86(10), which is

especially important for the purposes of this case discussion, provides as

follows:

If a consumer is in default under a credit agreement that is being reviewed in

terms of this section, the credit provider in respect of that credit agreement

may give notice to terminate the review in the prescribed manner to –

(a) the consumer;

(b) the debt counsellor; and

(c) the National Credit Regulator,

At any time at least 60 business days after the date on which the consumer

applied for the debt review.

Where a consumer is under debt review, section 129(1)(b) provides

that a credit provider may not commence any legal proceedings to

enforce a credit agreement before first providing notice to the consumer

as contemplated in section 86(10). In terms of section 130 certain

requirements must be complied with before a credit provider may

approach a court for an order to enforce a credit agreement. Section

130(1)(a) provides that a credit provider may approach the court for debt

enforcement only if, at that time, the consumer is in default and has been