NCR Declarator Appeal Decision Given by Highest Court
The much anticipated Supreme Court of Appeal (SCA)judgment on the appeal from the so-called NCR Declaratory judgment has been delivered, in a judgment referred to as Nedbank v The National Credit Regulator (662/2009 & 500/2010)  ZASCA 35 (28 March 2011).
In the original case the National Credit Regulator sort a declaratory order on various vague and contentious provisions of the National Credit Act, specifically regarding debt reviews but also relating to the charging of interest while a consumer is in default with the payment of a credit agreement.
Judge Du Plessis, who gave the initial judgment whose various orders were taken on appeal to the highest court in land, must be happy as none of the orders that he granted or refused were over turned by the SCA.
Of interest to the credit management community the court settled the contentious issue of whether sending a Section 129(1)(a) notice prevent that particular debt from being included in a subsequent debt review application in terms of Section 86. The court held at , “ that by giving the notice envisaged by s 129(1)(a) the credit provider ‘has proceeded to take the steps contemplated in section 129 to enforce that agreement’: a debt review relating to that specific agreement is thereafter excluded.”
It also confirm the procedural steps required for a debt review and debt rearrangement as set out in Section 86 and 87 of the NCA.
The big question was how the court would interpret S105(3) of the NCA, the so-called statutory in duplum rule.
Judge du Plessis in the court below had given effect to the NCR order sort that:
“11. On a proper interpretation of s 103(5) read with ss 101(1)(b)-(g) of the National Credit Act, 2005:
(a) the amounts contemplated in sections 101(1)(b) to (g) which accrue while the consumer is in default may not exceed, in aggregate, the unpaid balance of the principal debt when the default occurred;
(b) once the total charges referred to in ss 101(1)(b)-(g) equal the amount of the unpaid balance, no further charges may be levied;
(c) once the total charges referred to in ss 101(1)(b)-(g) equal the amount of the unpaid balance, payments made by a consumer thereafter during a period of default do not have the effect of permitting the credit provider to charge further interest while such default persists.”
The court upheld this order.
Section 101(1)(b) to (g) covering the charging of:
b) an initiation fee; (c) a service fee; (d) interest, which – ‘(i) must be expressed in percentage terms as an annual rate calculated in the prescribed manner; and (ii) must not exceed the applicable maximum prescribed rate determined in terms of section 105’; (e) the cost of any credit insurance; (f) default administration charges; and (g) collection costs.
The court held that credit agreements charges set out above were determined by the NCA and that : “Section 103(5) does not merely give rise to a ‘moratorium’ on payments whilst the consumer is in default but indeed determines the latter’s obligations under the credit agreement.”
So once the charges referred to in Section 101 (1)(b) to (g) referred to above equal the principal debt then :
:” Any payment made during the time of default which does not have the effect of ending the default simply reduces the outstanding principal debt.”