concourt rules for consumers

THE Constitutional Court stood up for consumers’ rights yesterday in ruling that defaulting debtors must receive notice before creditors take action against them, the Socio-Economic Rights Institute of SA (Seri) said.

“The Constitutional Court today acted to protect debtors who default on their credit agreements, handing down judgment in the Sebola case,” the institute said.

It said banks must establish delivery of default notices and consumers must have a right to contest in the case of non-receipt.

An attorney at the institute Osmond Mngomezulu said: “We welcome the court’s comprehensive and meticulous judgment.”

Mashilo Shadrack Sebola and his wife applied to the Concourt for the reversal of a default judgment on the basis that they had not received a notice from their creditor – and succeeded yesterday.

The creditor, Standard Bank, 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 because it was sent to the wrong postal address. The bank obtained the judgment.

The couple applied for its reversal on the basis that they did not receive the notice. In 2009, the Johannesburg High Court 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 – Seri, the National Credit Regulator and the Banking Association of SA.

Justice Edwin Cameron handed down the Concourt’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 with costs.

Standard Bank must also pay the Sebolas’ bank costs.

The judgment read: “Where the credit provider posts the notice, proof of registered despatch to the address of the consumer, together with proof that the notice reached the appropriate post office for delivery to the consumer, will in the absence of the contrary indication constitute sufficient proof of delivery.”– Sapa.