By Duncan Wild on 20 February 2014

The applicant, Moshomo Kubyana (“Kubyana“), entered a credit agreement to finance the purchase of the car with the respondent, The Standard Bank of South Africa (“Standard Bank“). This agreement was subject to the National Credit Act 34 of 2005 (“NCA“).

When Kubyana defaulted on the agreement Standard Bank sent a notice of default to Kubyana by registered post under section 129 of the NCA. The notice was not collected and returned to Standard Bank. The High Court found that the NCA did not require personal service and allowed a credit provider to send the notice by registered post. Kubyana had not provided any explanation as to why the notice did not reach him, and in these circumstances the High Court could not refuse judgment based on non-compliance with the NCA.

The Constitutional Court, in a decision authored by Mhlantla AJ (Moseneke ACJ, Skweyiya ADCJ, Cameron J, Dambuza AJ, Froneman J, Madlanga J and Van der Westhuizen J concurring) found that Standard Bank had complied with its obligations under the NCA. In effect it found that the notice requirement under section 129 was important in order to bring the consumer’s attention to his or her rights, and to achieve resolution without the need to go to court.  However, what is required of the credit provider is to take those steps sufficient to bring the notice to the attention of a reasonable consumer.  

Where a consumer has chosen to receive notice by way of post, the credit provider must prove three things:

1. that the notice was sent by registered mail;

2. that the notice reached the correct Post Office branch; and

3. that the Post Office sent a notification of the section 129 notice to the address chosen by the consumer.

This list is not definitive, and it is still open for a court to consider that, in the circumstances, the above steps were not sufficient to bring the notice to the attention of a reasonable consumer. However, the NCA cannot be read so as to allow a consumer to avoid a credit provider enforcing its debt by ignoring notifications from the Post Office.  In the circumstances, Standard Bank had accordingly complied with its obligations and could enforce the debt.

Jafta J wrote a separate judgment, in which Moseneke ACJ, Cameron J, Dambuza AJ, Madlanga J, Nkabinde J, Van der Westhuizen J and  Zondo J concurred, in order to provide clarification of the judgment of the Constitutional Court in Sebola v Standard Bank [2012] ZACC 11 (“Sebola“). Since the Sebola decison, different High Courts had interpreted what it required differently, in particular in Nedbank Limited v Binneman and Thirteen Similar Cases [2012] ZAWCHC 121 (“Binneman“), the Western Cape High Court had interpreted the decision to mean, in effect, that section 129 required only that the credit provider dispatched the notice by registered mail to the provider.  In Balkind v ABSA Bank, In re ABSA Bank Ltd v Ilifu Trading 172 CC and Others [2012] ZAECGHC 102, in the Eastern Cape High Court, as well as ABSA Bank Ltd v Mkhize and Another and Two Similar Cases [2012] ZAKZDHC 38, in the KwaZulu-Natal High Court, the courts considered the Sebola decision to require more than this: that is, proof that the notice had reached the correct post office.

Jafta J held that Binneman was not correct as Sebola could not be read to lay down a rule that said proof of dispatch by registered post was enough. Sebola had found only that a credit provider must “place before the court facts which show that the notice, on a balance of probabilities, has reached a consumer”. The court must be left to determine what facts would constitute adequate proof of delivery in the context of the specific case.

Jafta J, agreed that the appeal should be dismissed.

Download the judgment here.