Kwazulu Natal High Court indefinitely postpones default judgment requests

Section 129 of the National Credit Act requires that a notification be sent to consumers that are in debt, advising them of their right to refer a credit agreement to a debt counsellor to resolve disputes prior to proceeding with legal steps to recover the debt. Recently, ABSA had three applications for default judgment postponed indefinitely by the Kwazulu Natal High Court, as the debtors against whom the applications were brought, did not receive the Section 129 notices as required by law. The applications for default judgment brought by ABSA were for home loans. ABSA argued that with reference to the Constitutional Court Judgment, proof of delivery to the correct post office was sufficient. The notices sent by ABSA however returned unclaimed, and as a result, the Kwazulu Natal High Court held that the object of sending the letters by registered post were defeated since they were not received by the debtors, even though ABSA had complied with the requirement of sending them by registered post. The court found, based on the evidence presented to it, that registered post was likely to fail and was far from being a reliable method of getting notices to a consumer in comparison to ordinary post. The Court however gave ABSA the opportunity to make use of the other methods as provided by the Act, namely fax, ordinary post and e-mail, as well as by registered post at the consumer’s chosen domicilium. Acting Judge Peter Olsen said that, “the only advantage of registered post, on the evidence before me, is the facility of proof; and if the experience of ABSA and its attorneys reflects the experience of other lending institutions, what will be facilitated in most cases is proof of failure. In my view it is accordingly worth having another look at ordinary post when registered post has failed, despite the expressed preference of both the Supreme Court of Appeal and the Constitutional Court for registered post.” Furthermore, the Court indicated that there is a “high degree of probability that the consumer has avoided delivery” when registered post fails due to the consumer not collecting the letter. As a result, this “must be put in the scale when balancing the interests sought to be protected.”