Concourt: Debtors must receive notice

By Drum Digital
07 June 2012

Defaulting debtors must receive notice before creditors take action against them, the Constitutional Court ruled on Thursday.

Mashilo Shadrack Sebola and his wife applied to the Constitutional Court for rescission of a default judgment on the basis that they had not received a notice from their creditor, and succeeded.

The creditor, Standard Bank, had issued a notice advising them of their rights, including the option to refer the agreement to a debt counsellor.

They were in default of payment under a credit agreement.

The notice did not reach the address to which it was sent and they did not respond because it was sent to the wrong postal address. The bank obtained the judgment.

The couple applied for its rescission on the basis that they did not receive the notice. The High Court in Johannesburg found that proof of dispatch was enough in 2009.

The Sebolas maintained that the National Credit Act, properly interpreted, requires them to have received the notice.

Three friends of the court were admitted -- the Socio-Economic Rights Institute of SA, the National Credit Regulator and the Banking Association of SA.

Justice Edwin Cameron handed down the Constitutional Court's judgment on Thursday by ordering that leave to appeal was granted, their appeal succeeded, the order of the High Court was set aside and the application for rescission was granted with costs.

Standard Bank must also pay the Sebolas' bank costs.

The judgment read: "Where the credit provider posts the notice, proof of registered despatch to the address of the consumer, together with proof that the notice reached the appropriate post office for delivery to the consumer, will in the absence of the contrary indication constitute sufficient proof of delivery."

If in contested proceedings a consumer states a notice did not reach them, the court must establish the truth.

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