A creditor’s obligations in terms of Section 129 of the NCA

Creditor provider’s obligation in terms of Section 129 read with Section 130 of the National Credit Act 34 of 2005, with reference to Kubyana v Standard Bank of South Africa Limited (CCT65/13) [2014] ZACC 1

The Constitutional Court handed down judgement outlining and highlighting the creditor’s obligation in terms of section 129 of the National Credit Act as follows:

A credit provider wishing to enforce a credit agreement must deliver a notice to the consumer setting out the consumer’s default and drawing the consumer’s attention to his or her rights.

In addition to compliance with section 129, the creditor must fulfil further requirements in terms of section 130 of the Act, before commencing legal proceedings by ensuring that the consumer is in default and has been in default for at least 20 days and (a) at least 10 days has lapsed since the creditor delivered the notice and (b) in terms of section 129(1) the consumer has not responded to the notice or (c) has responded to the notice by rejecting the credit provider’s proposal.

When a consumer has elected to receive notices by way of post, a credit provider must prove (i) dispatch of the notice by way of a registered mail, (ii) the notice reached the correct branch of the Post office, and (iii) that the notification from the Post Office requesting that the consumer collect the section 129 notice was sent to the chosen address.

In the aforementioned case the Appellant, Mr Kubyana and the Respondent, Standard Bank South Africa Limited entered into an instalment sale agreement for a purchase of a vehicle. The appellant failed to make regular payments and fell into arrears. In 2010 the Respondent sent a notice in terms of section 129 of the act to the appellant. The notice was sent by registered post to the branch of the Post office which the appellant had chosen. Although two notifications were sent to his home requesting that he collect his registered mail, he failed to do so. Five weeks later the notice was returned to the Respondent uncollected.

The respondent approached the court to enforce the debt and the Constitutional Court upheld the decision of the High Court which was in favour of the Respondent and held that it had taken the reasonable steps as contemplated in section 129 of the Act and has discharged its obligations as required by the Act.

It further held that the Act does not allow consumers to frustrate the delivery of the section 129 notice by ignoring notices from the Post Office. It further noted that it need not have to establish that a consumer knew of his or her options as contemplated in the Act before a credit agreement is enforced against them. It is the duty of the consumer to show why their attention was not drawn to the available recourse(s).

Socio Ecomonic Right Institute (SERI) who were admitted as Amicus Currie, argued that the court was flawed when it discharged itself from the duties to establish whether on the probabilities, the section 129 notice had reached the distressed consumer and they were notified of the available mechanisms. According to the institute, the judgement suggests that: “ a distressed consumer who fails to collect his or her registered mail acts unreasonably and “eschew(s)” reliance on the consensual dispute resolution mechanism provided for by the National Credit Act”.

The institute further went to say that the judgement fails to take into cognisance the “uneven distribution of postal services across South Africa and the mobility of the South African poor and does nothing to protect the distressed consumer who have fallen into arrears on their credit agreement and who are genuinely in need of debt counselling and other alternative dispute resolution mechanism (s)”.

This case has since provoked the amendment of the National Credit Act Amendment Act 19 of 2014, which allows the section 129 to be served by registered post or by hand to an adult person at an address nominated by the consumer. The consumer gets to decide the manner of service.