A couple nearly lost their home as the bank that held the mortgage bond agreement insisted they pay back the entire outstanding bond for being two weeks late on their payment.
Nedbank took their case to the high court in Pretoria, where it then claimed the payment of more than R2.5 million from Terrance and Sylvia Mbambo.
This was the outstanding amount of the bond at the time that the couple from Meyersdal, Johannesburg, fell into arrears for only two weeks.
The bank initially wanted the court to order that the property was executable and sold so that it could recover the outstanding entire bond balance.
However, the bank abandoned this demand when the matter was argued in court.
But the bank still insisted that the couple had to pay the full outstanding total of their bond debt, even though their R28 000 monthly instalment was only two weeks late and fully paid by the time the summons was served against them.
Judge DS Molefe not only turned down Nedbank’s claim against the couple, but he also slapped the bank with the legal costs.
The judge referred to a landmark Constitutional Court judgment in which it shed more clarity on the National Credit Act in relation to consumers.
The judge said the Constitutional Court’s Nkata judgment impacted significantly on the rights of consumers in their relationship with their banks.
“The Constitutional Court has made it virtually impossible for consumers to lose their homes.
“Even after a long period of being in arrears, if the consumer made up those arrears and the agreement has not been cancelled; the agreement is reinstated,” the judge said.
In this case, Nedbank said it simply acted in terms of the loan agreement which was signed by the Mbambo couple.
In terms of the agreement they had to pay their monthly instalment by the first of each month.
If they failed, the bank was bound by the agreement to claim the entire outstanding balance of the mortgage agreement at the time.
The couple said they paid religiously each month and often even overpaid on their instalment.
But on July 1, 2014, they were only able to pay two weeks later.
The couple on this occasion also paid slightly more than their R28 000 instalment.
Nedbank, however, insisted that they were not punctual regarding their June 1 payment.
Also, that they should thus suffer the consequences.
The couple relied on the Nkata judgment, where Justice Edwin Cameron interpreted the provisions of the National Credit Act (NCA).
At the time, he said it was no longer a case where the powerful creditor could always rule over the weaker consumer.
He said the NCA contained clauses which spared consumers the harshness of an era of debtor-unfriendly laws.
Justice Cameron said laws in the past enabled financial institutions to refuse late payments of bonds and to accelerate the payment of the entire bond, but things have changed.
Nedbank, in this case, insisted that the credit agreement was cancelled as the couple did not pay up when they were supposed to, and that the credit agreement was thus cancelled.
Judge Molefe, in turning down Nedbank’s application, said when the couple paid their instalment - although two weeks late - the credit agreement was reinstated and that the bond agreement was thus not affected.