In The National Credit Regulator vs Opperman and Others the Constitutional Court confirmed an order of the Western Cape High Court to declare section 89(5)(c) of the National Credit Act (NCA) constitutionally invalid.

In the case of Opperman vs Boonzaaier and Others the Applicant entered into a loan agreement for the amount of R7 million with his friend, the First Respondent. The Applicant was however not registered as a credit provider, as required by the NCA.

The First Respondent defaulted on the agreement and the Applicant applied for sequestration.

In terms of section 89(5) of the NCA a credit agreement will be unlawful if at the time the agreement was entered into the credit provider was not registered as a credit provider, if so required by the NCA.

In the event of an unlawful agreement, section 89(5)(a) – (c) states that the court must order the following:

    • That the credit agreement is void from the date that is was entered into
    • That the credit provider must refund the borrower all monies paid (including interest) under the unlawful agreement
    • That all the purported rights of the credit provider to recover any money paid on behalf of the consumer are either cancelled or forfeited to the State

Section 25(1) of the Constitution states that every person has a right not to be deprived of his or her property.

The Constitutional Court held that section 89(5)(c) of the NCA constitutes deprivation of property and is therefore inconsistent with the section 25(1) of the Constitution and thus invalid.

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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