National Credit Act – A Defence Regarding A Section 129(1) Notice Amounting To An Abuse Of Process

Creditor providers know of the difficulties regarding the legal collection of debts, including the requirement of the Section 129(1) notice and its service.  This section reads as follows:

129 Required procedures before debt enforcement

(1)  If the consumer is in default under a credit agreement, the credit provider–

(a)  may draw the default to the notice of the consumer in writing and propose that the consumer refer the credit agreement to a debt counsellor, alternative dispute resolution agent, consumer court or ombud with jurisdiction, with the intent that the parties resolve any dispute under the agreement or develop and agree on a plan to bring the payments under the agreement up to date; and

(b)  Subject to section 130(2), may not commence any legal proceedings to enforce the agreement before-

(i)            First providing notice to the consumer, as contemplated in paragraph (a), or in section 86(10), as the case may be; and

(ii)          Meeting any further requirements set out in section 130.


In the case of Naidoo v Standard Bank of South Africa, Mr Naidoo was sued by Standard Bank after he had fallen into arrears with his payments.

The bank, in its particulars of claim averred the following with regard to the delivery of the section 129(1) notice:

“‘(o)n or about 9 March 2010 it delivered a notice as contemplated by Section 129(1)(a) of the Act to the Defendant [Respondent]’

Mr Naidoo then pleaded stating:

“The Defendant has responded to the Plaintiff’s section 129 Notice. The Defendant’s reply to the Plaintiff was within 20 days of having been made aware of the Plaintiff’s section 129 Notice. The Plaintiff has failed to acknowledge the Defendant’s response to its section 129 Notice.”

After his legal counsel withdrew, the bank took default judgment against Mr Naidoo.

Mr Naidoo then appealed to the Supreme Court of Appeal and alleged that the bank had not strictly complied with Section 129.  He cited non-compliance with the rules laid down in other Constitutional Court judgments placing emphasis on the fact that a credit provider must:

(a)       show that it has effected the notice by registered mail;

(b)       prove that the notice was delivered to the correct post office; and

(c)        in order to prove delivery, furnish a post-despatch (track and trace) printout from the post office website.

The Court found that Mr Naidoo’s defence amounted to an abuse of process given the fact that he admittedly received the notice and dismissed the defence as a “fanciful reliance on a technical argument”.

The appeal was dismissed.


What does this judgment mean for credit providers?

It may look like the Supreme Court of Appeal has relaxed the requirement of strict compliance with the provisions of Section 129, however, this is a very specific set of circumstances.

In this case, the fact that Mr Naidoo admitted to receiving the notice was the deciding factor.

Credit providers are advised to rather comply strictly with all the requirements of Section 129, including the Constitutional Court requirements as set out above.

By Dylan Lowe