The Impact of the &lt;i&gt;National Credit Act34 of2005&lt;/i&gt; on the Enforcement of a Mortgage Bond: &lt;i&gt; Sebola V Standard Bank of South Africa LTD&lt;/i&gt; 2012 5 SA 142 (cc)

Mmm Fuchs

doi:10.4314/pelj.v16i3.12

Abstract

When a mortgagor is in default and the mortgagee wants to enforce the debt the National Credit Act (hereafter the NCA) may apply. A credit agreement may be enforced in court by a credit provider against a defaulting debtor only once the requirements of sections 129 and 130 of the NCA have been adhered to. If a mortgagor (who is a protected consumer in terms of the NCA) is in default, the mortgagee must deliver a section 129(1) notice to the consumer, thereby drawing the default to the attention of the consumer. For a number of years there has been uncertainty about the interpretation of section 129(1) and how it affects the execution procedure in the case of a mortgage bond over immovable property. The recent Constitutional Court judgment of Sebola v Standard Bank 2012 5 SA 142 (CC) overturns, to my mind, the more reasonable approach to such notices in Rossouw v Firstrand Bank Ltd (2010 6 SA 439 (SCA)). It was held in Sebola that before instituting action against a defaulting consumer, a credit provider must provide proof to the court that a section 129(1) notice of default (i) has been despatched to the consumer's chosen address and (ii) that the notice reached the appropriate post office for delivery to the consumer, thereby coming to the attention of the consumer. In practical terms the credit provider must obtain a post-dispatch "track and trace" print-out from the website of the South African Post Office. There is now a much heavier burden on a bank to ensure that proper proof is provided that the notice was sent and delivered to the correct address. Consequently it places another hurdle in the path of a mortgagee who wishes to foreclose.Keywords: Consumer in default; Debt enforcement; Delivery; Notice of default; Notice requirements; Track and trace print-out

Highlights

MM FuchsWhen a mortgagor is in default and the mortgagee wants to enforce the debt, the National Credit Act 34 of 20051 may apply
Sections 129(1) and 130(1) of the NCA are of cardinal importance and provide for the procedures that should be followed by a credit provider before debt enforcement can take place
Business days and - (a)at least 10 business days have elapsed since the credit provider delivered a notice to the consumer as contemplated in section 86 (9), or section 129 (1), as the case may be; (b) in the case of a notice contemplated in section 129 (1), the consumer has- (i) not responded to that notice; or (ii) responded to the notice by rejecting the credit provider's proposals; and (c) in the case of an instalment agreement, secured loan, or lease, the consumer has not surrendered the relevant property to the credit provider as contemplated in section 127. [My emphasis]

Summary

Introduction

It concerns an application for leave to appeal against a full bench decision of the South Gauteng High Court. Standard Bank obtained default judgment against Mr and Mrs Sebola (consumers) after it had instituted action to declare the. An appeal against the judgment of a single judge of the same court was dismissed by a full bench of the High Court.. The High Court refused to grant the rescission application prepared by the Sebolas in September 2009. Both the single judge and the full bench had to deal with the question of whether or not a section 129(1) notice read with section 130 of the NCA requires that a defaulting consumer should receive the notice

Background

The judgment of Sebola

Conclusion