ConCourt ruling favours debt defaulters

[MickeyD]

This ruling is going to send shock-waves through the business environment. Obtaining default (debt) judgements is going to become MUCH more difficult!

Johannesburg - Defaulting debtors must receive notice before creditors take action against them, the Constitutional Court ruled on Thursday.

Mashilo Shadrack Sebola and his wife applied to the Constitutional Court for rescission of a default judgment on the basis that they had not received a notice from their creditor, and succeeded.

The creditor, Standard Bank Group [JSE:SBK], had issued a notice advising them of their rights, including the option to refer the agreement to a debt counsellor.

They were in default of payment under a credit agreement.

The notice did not reach the address to which it was sent and 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. 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.

Three friends of the court were admitted - the Socio-Economic Rights Institute of SA, the National Credit Regulator and the Banking Association of SA.

Justice Edwin Cameron handed down the court's judgment by ordering that leave to appeal was granted, their appeal succeeded, the order of the High Court was set aside and the application for rescission was granted with costs.

Standard Bank must pay the Sebolas' bank costs.

http://www.fin24.com/Economy/ConCour...lters-20120607

[Sinbad]

This judgement means notices of default must be sent registered mail and the onus is on the company to prove it was delivered to the right post office. The debtor can also challenge the company's claim that he received it.

This is a band aid solution to the real problem, which is our pathetic postal service.

[wily me]

The reverse are also true, many "defaulters" were tried and convicted in court without hearing one peep from the creditors, this was abused on a massive scale. So many "defaulters" never had the chance or were afforded the opportunity to defend themselves even while they were staying on the same premises before and during such trial years. They just get a default judgement claiming and lodging false prove that they did attempt to "find" the defaulter. Once such judgement was acquired the defaulter had to hire advocates at a huge expense to get such judgement set aside. That is the procedures many businesses rely on.

[OrbitalDawn]

This is a band aid solution to the real problem, which is our pathetic postal service.

Nothing that another 4 month strike can't fix.

[MickeyD]

The reverse are also true, many "defaulters" were tried and convicted in court without hearing one peep from the creditors, this was abused on a massive scale. So many "defaulters" never had the chance or were afforded the opportunity to defend themselves even while they were staying on the same premises before and during such trial years. They just get a default judgement claiming and lodging false prove that they did attempt to "find" the defaulter. Once such judgement was acquired the defaulter had to hire advocates at a huge expense to get such judgement set aside. That is the procedures many businesses rely on.

Quite correct.

[waynegohl]

There was a story in the US about a similar issue where banks were foreclosing on homes illegally. Banks are some of the biggest crooks in this world.

[grantza]

I believe it to be an exceptionally good ruling.
Lets say you want to obtain a default judgement against someone or a company on the sly.
It's very simple to shove anything into an envelope, send by registered post - who is to know the required documentation was actually in the envelope.
You then produce the "proof of postage" & send a summons. This also is easy enough to intercept.
The victim has no idea as to what has happened & you obtain default judgment.
The 1st thing the victim sees is the sheriff of the court arriving to attach goods.

I am not saying that the banks act in this manner, but many big companies sell off their debt books to firms of attorneys etc, this is big business.
Many of these big law firms (who only do debt collection) have very dodgy reputations.
Many of them work hand in hand with the sheriff of the court, & who's to say "additional incentives" are not offered (a national pastime) to the office of the sheriff in order to ensure these firms easily obtain default judgments at minimal cost in minimal time.

A major overhaul of the process is long overdue.

[Chris]

There was a story in the US about a similar issue where banks were foreclosing on homes illegally. Banks are some of the biggest crooks in this world.

But unfortunately they have access to the levers of power...so nothing is going to change.

[MickeyD]

@grantza: I am especially glad of the impact it will have on the debt collection agents. Very shady business!!!

[waynegohl]

But unfortunately they have access to the levers of power...so nothing is going to change.

That's the problem but if enough people band together and get a lawyer or lawyers with enough guts to take them on then the poo will hit the fan.

[Chris]

That's the problem but if enough people band together and get a lawyer or lawyers with enough guts to take them on then the poo will hit the fan.

Yeah but again, many top lawyers have worked for banks...so they can't act against them as far as I'm aware. Lawyers have got a fancy name for that kind of thing but it escapes my mind.

[alloytoo]

This ruling is going to send shock-waves through the business environment. Obtaining default (debt) judgements is going to become MUCH more difficult!


http://www.fin24.com/Economy/ConCour...lters-20120607

What is a summons if not a notice of default?

Ignore a summons at your peril.

[wily me]

What is a summons if not a notice of default?

Ignore a summons at your peril.

If someone received a summons and ignored it then that is a different issue altogether.

[Garson007]

This is why I love our constitution.

[ponder]

Yeah but again, many top lawyers have worked for banks...so they can't act against them as far as I'm aware. Lawyers have got a fancy name for that kind of thing but it escapes my mind.

Makes no sense.