NEDBANK LTD V MOTAUNG AND THE INTERPRETATION OF SECTION 86(2) UNDER THE MAGNIFYING GLASS

Transcription

1 NEDBANK LTD V MOTAUNG AND THE INTERPRETATION OF SECTION 86(2) UNDER THE MAGNIFYING GLASS

2 Introduction Debt Review Section 86(2) Section 129 notice Does the delivery of a section 129 notice constitute a step to enforce a credit agreement?

3 Nedbank Ltd v Motaung 15 February 2007 Section 129 Notice delivered 1 June 2007 Section 129 came into effect 17 September 2007 Motaung applied for debt review 21 September 2007 issued summons 8 October 2007 served summons

4 Nedbank V Motaung Validity of section 129 notice Section 130(3)(c)(i) defence Section 130(4)(b) or (c)

5 Section 86(2) An application in terms of this section may not be made in respect of, and does not apply to, a particular credit agreement if, at the time of that application, the credit provider under that credit agreement has proceeded to take the steps contemplated in section 129 to enforce that agreement.

6 Purpose of the National Credit Act (NCA) Section 2(1) of the NCA requires that provisions of the act be interpreted in a manner that gives effect to the purposes of the Act. One of those purposes is to protect consumers by providing for: A consistent and harmonised system of debt restructuring, enforcement and judgment, which places priority on the eventual satisfaction of all consumer obligations under credit agreements.

7 Steps contemplated in section 129 Section 129 contains 4 subsections Steps are set out in section 129(1)(a) & (b) - Obligations on credit provider Subsection 2 Application of subsection 1 Subsection 3 & 4 What consumer may or may not do

8 Four Steps Section 129(1)(a) Step 1: The credit provider may draw the default to the notice of the consumer. Step 2: The credit provider may propose that the consumer refer the matter to a debt counsellor, ADR agent, ombud with jurisdiction or consumer court. Section 129(1)(b) The credit provider may not commence legal proceedings to enforce the agreement before: Step 3: The credit provider delivered the notice to the consumer. Step 4: The credit provider met any further requirements of section 130.

9 Step 4 Further requirements S130 Before a credit provider may approach the court to ENFORCE the agreement Consumer must be in default for at least 20 business days; At least 10 business days must have elapsed since the notice was delivered; and The consumer did not respond to the notice; or Responded to the notice by rejecting the credit provider s proposals.

10 Long Road Rephrase Step 4. A credit provider may approach the court to enforce a credit agreement only if: 1. Section 129 notice was delivered; days have elapsed since delivery of notice; 3. Consumer rejected proposals; and 4. Consumer in default 20 days.

11 Alternative Acknowledge that there are no steps listed in section 129 to enforce an agreement. Steps listed in section 129 are requirements to be met prior to enforcement proceedings. Section 130 contains steps to enforce the agreement.

12 Steps to enforce a credit agreement? Heading of section 129: Required procedures BEFORE debt ENFORCEMENT Contradiction between section 86(2) and section 129 s heading

13 Steps referred to in S86(2) At least the service of a summons

14 Enforce No definition in National Credit Act. Heading of Section 129 Section to enforce an agreement a court must be approached. May only approach court if consumer failed to respond to section 129 notice. Enforce means the issuance and service of summons

15 Purpose of Section 129 Draw the default to attention of consumer Propose to the consumer to go to a debt counsellor to agree or develop a repayment plan or to resolve a dispute ABSA Bank Limited v Clyde Burls Johnson You do not make a referral without a purpose Investec Bank Limited and others v Mutemeri The argument that a section 129 notice was to be regarded as a step contemplated in section 129 exposes an anomoly.

16 Other Case Law National Credit Regulator v Nedbank Ltd (Declaratory order) Frederick Potgieter v Greenhouse Funding (Pty) Ltd The Standard Bank of South Africa Ltd v Hales

17 Conclusion Steps referred to in section 86(2) and listed in section 129 is at the least the issue and service of summons. Credit agreements should be included under debt review. the practical difficulties to which the many ambiguities in the Act have given rise, and which are evidenced, amongst other indications, by a recent avalanche of not entirely harmonious judgments from the various High Courts throughout the country on the interpretation and implementation of the Act, would I suggest more felicitously be addressed by legislative amendment