Article by Roodepoort Attorney: LEON WOLLNIK
In a recent case, Wolmarans NO and Others v Standard Bank of South Africa Limited [2025] 4 All SA 566 (SCA), the Supreme Court of Appeal examined whether settlement agreements concluded after defaults on credit facilities were valid under the National Credit Act (NCA). The trust itself, being a juristic person with assets above the statutory threshold, was excluded from NCA protection in respect of its own loans.
However, the suretyship agreements binding the trust and its trustees for Mr Wormarans’ overdraft obligations were classified as ‘credit guarantees’ under section 8(5). This meant the NCA applied to the suretyship and, by extension, to the settlement agreements that modified the underlying credit terms.
The court held that these settlements were ‘supplementary agreements’ under section 89(2)(c) and therefore unlawful, as the bank had failed to comply with the mandatory debit enforcement procedures in Chapter 6, including the issuing of a section 129 notice.
The judgment further found that several clauses in the settlement agreements violated section 90 by undermining consumer protections and permitting execution without judicial oversight. Because these provisions were not severable, the entire agreements were rendered void.
As a result, the settlement agreements were declared invalid, the related court order rescinded, and certain claims dismissed. The matter of whether the trust’s immovable properties could be declared executable was remitted to the High Court for determination.
The case underscores the importance of strict compliance with the NCA in structuring and enforcing settlement agreements, particularly where suretyships bring consumer protections into play.
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