By Duncan Wild on 12 December 2013

The applicants, Destri Ferris and Soraya Ferris, entered a credit agreement with the Firstrand Bank Limited (“Firstrand“). They defaulted on their payments, and applied for debt review under section 86 of the National Credit Act 2005 (“NCA“). The debt counsellor proposed a debt restructuring which Firstrand refused. The matter was referred to the Magistrate’s Court, but then Firstrand terminated the review. Notice was not given to the Magistrate’s Court or the applicants of the termination.  The Magistrate’s Court, being unaware of the termination, ordered a debt restructuring. Firstrand instituted summons against the applicants, and after the applicants attorneys failed to comply with procedural steps in the litigation (without the knowledge of the applicants themselves), a judgment was taken against them in default.

When the applicants became aware of the judgment they applied to have the judgment rescinded, but this was refused. The applicants then appealed to Supreme Court of Appeal but leave to appeal was refused.

The Constitutional Court, in a unanimous judgment by Acting Chief Justice Moseneke (Skweyiya ADCJ, Cameron J, Dambuza AJ, Froneman J, Jafta J, Madlanga J, Mhlantla AJ, Nkabinde J, Van der Westhuizen J and Zondo J), found there was no basis to interfere with the SGHC’s decision. Firstrand was entitled to proceed to enforce the loan agreement under the National Credit Act as the applicants had breached the debt-restructuring order. The requirements for rescission of a judgment were therefore not met.

Download the judgment here.