Johannesburg - 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 Group [JSE:SBK], 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. 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.
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 court's judgment 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
Standard Bank must pay the Sebolas' bank costs.