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Article by Fawzia Khan, an attorney based in Umhlanga, Durban

It’s fair to say that if you buy a car or even a house at a sale in execution, you will pay far less than its market value. These sales are held when the sheriff of the court is ordered to sell by public auction certain specific property (it could be movable or immovable property) which belongs to a judgement debtor.

The credit provider (usually the banks) once they are authorised by the court, are allowed to sell the property to recover what it lent to you. The amount for which the property is sold is often less than what is the amount you owe the bank. Where does that leave you as the consumer?

Credit sale agreements are governed by the National Credit Act 2005. In the event of a consumer falling into arrears, the Act requires the credit grantor to comply with certain requirement before issuing summons. Sending out a Section 129 letter to the consumer, alerting him to the arrears and inviting him to consider the various debt relief options available, is mandatory.

On 29 November 2019, the Supreme Court of Appeal dealt with a case where D fell into arrears with the monthly repayment of his motor vehicles, where he obtained finance from two different banks, Wesbank and Standard Banks. Both banks then cancelled their agreements and were allowed to obtain return of the motor vehicles. The high court was concerned as to what price the vehicle would be later resold by the banks. Based on that concern, the high court ordered the bank to give written notice to the debtor stating what the vehicle’s estimated value was and also requiring the bank to inform the consumer that the vehicle concerned will not be sold at a price less than such an estimated value, unless so sanctioned by the court.

Wesbank took the High Court’s decision on appeal to the Supreme Court of Appeal. The SCA held that although the concerns of the High Court were legitimate, the provisions of the National Credit Act did not support the stance taken by the High Court. The SCA said that the provisions of the NCA, required for the promotion of a fair and non-discriminatory marketplace, and to regulate consumer credit and to improve standards of consumer information. The SCA said there already were mechanisms in place for consumers to challenge estimated values and prices. These were sections127 and 128 of the NCA. It said that in terms of Section 128 of the NCA, a consumer who contested the sale of the goods had the right to refer the matter to be reviewed by the Tribunal.

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