In June 2012, the Constitutional Court clarified the requirements surrounding the delivery of the notice that a credit provider must give to a consumer or debtor, in the event of default, (the section 129) letter as required by the National Credit Act (“the NCA”).
In terms of section 129, in conjunction with section 130 of the NCA, a credit provider must provide consumers with a notice in which the consumer is advised about their right to refer the credit agreement to a debt counsellor, alternative dispute resolution agent, consumer court, or ombud to resolve any dispute under the agreement, before taking legal proceedings to recover debts.
As per the Rossouw case, the court was once again faced with the question of whether the NCA requires the consumer to actually receive the section 129 letter, or whether it is sufficient for the credit provider to send the letter to the consumer’s chosen address or draw the consumer’s attention to the fact that the consumer is in default of the credit agreement. Although the Rassouw case merely required the proof from the credit provider that it did send the letter, the Sebola case went further to state that actual delivery is required.
In Sebola v Standard Bank, Mr and Mrs Sebola entered into a home loan agreement with Standard Bank. The agreement allowed for notices to be sent to an address chosen by the Sebolas. When they defaulted on their home loan, Standard Bank sent a section 129 letter by registered post to the selected address. The letter was, however, delivered to the wrong post office and the Sebolas never received the letter. Standard Bank proceeded by taking judgement against the Sebolas and obtained a warrant of execution against the property.
During a High Court application for rescission (where it was established that the Sebolas did not receive the notice), the court rejected the argument which stated that the NCA does not require actual delivery of the section 129 letter. The High Court held that it was sufficient for the credit provider to show that it had sent the notice to the consumer’s chosen address – the credit provider need not show that the consumer actually received the notice.
The Sebolas took the matter to the Constitutional Court and argued that the NCA must be constitutionally interpreted to give effect to the protections envisioned therein.
Judge Cameron ruled that the credit provider must be able to prove that the notice has been delivered to the consumer. This can be done by proving that the letter was sent by registered mail to the consumer’s address and that the notice reached the appropriate post office for delivery to the consumer. If the credit provider cannot prove the above, the credit provider cannot execute against the property until it has met the requirements of the act.
This means that in future credit providers must be able to show that they have sent the letter by registered mail as well as that it has obtained a track and trace printout from the post office to show that the letter was indeed delivered to the correct post office.
About the Writer: Annelene Dippenaar is an admitted attorney, practicing since 2006. She has advised various clients, including registered banks, credit providers and other listed companies on the National Credit Act 34 of 2005. Since 2010 she has been employed by Compuscan, a registered credit bureau, as legal advisor and compliance officer. Annelene obtained a BA. (Law), LLB and LLM at the University of Stellenbosch and is currently writing her doctors thesis.
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