The National Credit Act and Legal Notice

The National Credit Act 34 of 2005 (NCA) aims to prevent over-indebtedness and to protect consumers who have entered into credit agreements. The NCA applies to credit providers like:

• Banks
• Micro lenders
• Retailers such as clothing and furniture stores
• Companies, partnerships, close corporations and trusts that provide loans or charge interest on overdue accounts.

According to the NCA, credit providers may not sue a consumer who has defaulted under a credit agreement before a legal notice (in a form of a letter of default) has been delivered to that consumer. This legal notice is often referred to as the “Section 129 notice”. There has been much confusion as to how the notice should be delivered since it was not clearly defined in the Act. Numerous cases have been heard by our courts and have assisted in clarifying what delivery in terms of section 130 means.

What do our Courts say?

• Written notice: The Constitutional Court held that a debtor has to actually receive written notice from the credit provider before the start of any action to recover outstanding money. The credit provider must deliver a notice to a consumer setting out the consumers default and drawing the consumer’s attention to his or her rights. In Sebola v Standard Bank of South Africa, the registered post didn’t come to the debtor’s attention because it was sent to the incorrect address, this was found to be unacceptable.


• “Track and Trace”: The court said that isn’t satisfactory for a credit provider to merely send a notice. A “track and trace” report providing evidence that the registered post actually reached the chosen post office and that the debtor was notified by the post office to collect the registered post would meet the requirements of the said section.


• Attention of the Consumer: The question was asked whether the requirements of Section 129 are met when proof is provided that the registered post reached the correct post office; or are the requirements only met when the notice comes to the attention of the consumer.

Failure to Collect Registered Mail from the Post Office

In the case of Nedbank v Binneman, the notice was returned to the credit provider because the consumer failed to collect the registered mail from the post office. Could they claim that the notice didn’t come to their attention? What if consumers simply ignore the legal notices and create legal havoc?

• This year the Constitutional court in Kubyana v Standard Bank of South Africa held that there is no general requirement that the notice be brought to the consumer’s subjective attention, meaning that the notice was read and understood.
• To do so it said, would be to impose an excessively onerous standard on the credit provider and impossible to fulfil. The Judges in Kubyana concluded that the Act does not allow consumers to frustrate the delivery of section 129 notices by ignoring notifications from the Post Office. The consumer would have to provide a reasonable explanation as to why the notice was not collected.

Physical Delivery, Registered Mail, Fax or E-mail

In terms of the Uniform Rules of Court all notices are to be served, excluding those initiating proceedings, by means of physical delivery, registered mail, fax or e-mail. Substituted service may be used where the party is believed to be in South Africa and the other methods of service have not worked.

Facebook

The credit provider may take additional steps to ensure delivery like sending the notice via fax or email. In the CMC Woodworking Machinery (Pty Ltd v Pieter Odendaal Kitchens case relating to a litigation (not NCA) matter, the judge allowed substituted service and permitted a notice to be sent via Facebook.

For defaulting consumers and defendants who aim to evade legal notices, the long hand of the law will eventually reach you via physical delivery, registered mail, fax, e-mail and even Facebook.