amicus curiae - Sebola interpretation - Constitutional Court
SERI has been admitted as amicus curiae in an application before the Constitutional Court. The Kubyana case squarely raises issues relating to the proper interpretation of the decision in Sebola and the notice requirements embodied in sections 129 and 130 of the National Credit Act (NCA). The case clearly affects the rights and interests of consumers of credit, many of whom approach SERI for assistance and representation.
Standard Bank argues that neither the NCA nor Sebola should be read “to confer on a consumer the right to sit back and derive an advantage from failing to testify as to facts which fall peculiarly within his knowledge”. SERI's submission argues that it is the duty of a court in credit enforcement proceedings is to establish whether, on the probabilities, a section 129 notice reached a consumer. Evidence of why a consumer did not collect the second 129 notice is immaterial to this enquiry, and proceedings would degenerate into a farce if Sebola were interpreted to require an in-depth examinaton of the reasonableness of a consumer's behaviour and motives in dealing with registered mail.
The case was heard in the Constitutional Court on 7 November 2013. Judgment was handed down on 20 February 2014. The Court held that it need not be established that a distressed consumer knew of his or her options (e.g. debt counselling or other alternative dispute resolution mechanisms) before a credit agreement is enforced against them. The Court found that it is up to a distressed consumer to explain why their attention was not drawn to these options if a matter proceeds to court. The Court’s decision suggests that a distressed consumer who fails to collect his or her registered mail acts unreasonably and "eschew[s] reliance on the consensual dispute resolution mechanisms provided for by the [National Credit] Act".
SERI fears that this goes too far, and does not account for the uneven distribution of postal services across South Africa and the mobility of the South African poor. It may also encourage courts in future cases to assume that distressed consumers act evasively and in bad faith.
We remain concerned that the decision may not do enough to protect distressed consumers who have fallen into arrears on their credit agreements and who are genuinely in need of debt counselling and other alternative dispute resolution mechanisms. These options are a debtor’s last hope of consensually resolving disputes which may result in money judgments being taken against them, perhaps leading to the loss of a home, or other property vital to their well-being. SERI considers that it is credit providers – who are as a rule extremely well-resourced – that are best placed to ensure that every reasonable effort is made to inform a distressed consumer of his or her options, and the rights flowing from them. Distressed consumers should not be required to say why they did not know of rights that were never explained to them. More than anything else, those in distress - whether economic, social or personal - deserve to be treated with dignity, sympathy and respect in the credit agreement enforcement process.
Fortunately, since the Kubyana decision was handed down, the National Credit Act has been amended to provide for delivery of 129 notices either by registered post, or by hand to an adult person at and address designated by the consumer. The consumer gets to decide which of these two modes of delivery is to be used. This legislative amendment, which was no doubt provoked by the Kubyana and Sebola cases, provides a greater degree of protection for consumers in arrears with their debt repayments.