Legal Action Against a Debtor

Legal Action Against a Debtor


The main aim of the new National Credit Act (NCA) is to prevent over-indebtedness and to provide more accessible structures for dispute resolution. Among other solutions, the NCA aims to achieve this by creating a more transparent platform, which bodes well for debtors and creditors alike.

In a major breakthrough since the Act’s inception, credit providers can no longer institute legal action against a debtor without first issuing a letter of demand (a section 129 notice). There has been some debate and speculation about these notices, but a recent Constitutional Court judgement has now finally clarified the issue of delivery.

Delivery of the letter of demand

Although the NCA does not specifically define the word ‘delivery’, section 65 indicates that delivery could include collection from the credit provider, hand delivery to the debtor (at his expense), fax, ordinary post and email. In the case of Munien v BMW Financial Services the court defined ‘delivered’ as follows:

“… unless otherwise provided for, means sending a document by hand, by fax, by e-mail, or registered mail to an address chosen in the agreement by the proposed recipient, if no such address is available, then the recipient’s registered address.

The next area that needed to be clarified was whether the creditor should prove that the debtor actually received the notice.

Many conflicting judgements have resulted since the Munien case and it was only after Rossouw and Another v First Rand Bank Ltd t/a FNB Homeloans that the interpretation became less ambiguous. The Rossouw case was an appeal court judgement and consequently has become the guideline for both proper delivery and proof of receipt of the notice by the debtor.

Due to the findings of this case it is accepted that sending a notice by prepaid registered post to the debtor’s selected residence (domicillium) is sufficient proof of delivery.

Although the court can, at its discretion, let legal action proceed without the prior valid delivery of the letter of demand, it is not advisable that creditors proceed without doing so.

Sebola v Standard Bank – judgement delivered on 7 June 2012

The court found that the banks as creditors must establish delivery of default notices and consumers must have a right to contest the action if the notice was not received.

The facts of the case were as follows:

Mashilo Shadrack Sebola and his wife successfully applied to the Constitutional Court for a default judgment to be rescinded on the basis that they had not received a notice from their creditor.

The Sebolas were in default of payment under a credit agreement. The creditor, Standard Bank, had issued a notice advising them of their rights, including the option to refer the agreement to a debt counsellor (section 129 notice).

The notice did not reach the address to which it was sent because the postal address was incorrect and so they did not respond. The bank obtained the judgment.  The couple applied for its rescission on the basis that they did not receive the notice.

In 2009, the High Court in Johannesburg found that proof of dispatch was enough. The Sebolas maintained that the National Credit Act, properly interpreted, requires them to have received the notice.

The court held that:

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.

The court further held that:

In practical terms, this means the credit provider must obtain a post-despatch “track and trace” print-out from the website of the South African Post Office. As BASA’s submission explained, the “track and trace” service enables a despatcher who has sent a notice by registered mail to identify the post office at which it arrives from the Post Office website. This can be done quickly and easily. The registered item’s number is entered, the location of the item appears, and it can be printed.

The credit provider’s summons or particulars of claim should allege that the notice was delivered to the relevant post office and that the post office would, in the normal course, have secured delivery of a registered item notification slip, informing the consumer that a registered article was available for collection. Coupled with proof that the notice was delivered to the correct post office, it may reasonably be assumed in the absence of contrary indication, and the credit provider may credibly aver, that notification of its arrival reached the consumer and that a reasonable consumer would have ensured retrieval of the item from the post office.

If a consumer states in contested proceedings that a notice did not reach them, the court must establish the truth.

Credit providers and attorneys should therefore generally observe the new developments and take measures to ensure process is delivered.

Nicolene Schoeman-Louw
Nicolene Schoeman – Louw is an admitted attorney of the High Court of South Africa, as well as being a Conveyancer, Notary Public and Mediator. She is the Managing Director of Schoemanlaw Inc Attorneys, Conveyancers and Notaries Public (Schoemanlaw Inc Attorneys) in Cape Town. Visit for more information or email