An attempt to use the National Credit Act (NCA) to avoid his vehicle from being repossessed by a bank blew in a car owner’s face with a court granting an order to the financier and ordering him to pay legal costs.
Businessman Moleko Malefane had been struggling to make repayments for his Range Rover Sport SVR, which he bought for R2.8m and was financed by BMW Financial Services in 2018.
In October 2021, his account was behind by R46,604,64 and BMW wanted to terminate its contract with him and repossess the vehicle. He claimed his business was affected by Covid-19.
Malefane used the North West High Court to oppose the action, arguing that the company had not complied with the provisions of sections 129 and 130 of the NCA.
The sections provide that when a consumer falls into default in terms of a credit agreement, the creditor (BMW) is required to send a written notice to the defaulting party advising them to refer their indebtedness t to a debt counsellor, a dispute resolution agent, consumer court or ombudsman with jurisdiction. This aids the parties to reach a a resolution l / or develop and agree to a payment plan that will bring the arrears up to date.
Before relevant amendments there were a number of issues pertaining to the actual delivery and receipt of the section 129 notice, with the crux of the issue being whether it is required that the defaulting party must actually receive the notice before the credit provider can approach the relevant court for further legal action.
The consumer has 10 business days from receipt of the section 129 notice to respond, failing which the credit provider may proceed to institute legal proceedings [repossession].
In addition, Malefane argued that he intended to make payment as soon as his business recovered.
In its defence, BMW said it had filed the notice on October 28 in 2021 and that in June of the same year it advised Malefane to apply for debt counselling but 60 days lapsed without this coming into effect while the account remained in arrears.
“The said letter was sent by registered post to the defendant’s chosen domicilium. Proof of dispatch was attached to the particulars of claim. It is clear in the letter that the defendant was informed of the arrears in terms of the agreement with the plaintiff that he intended to take action to enforce the agreement. In addition, a certificate of compliance was attached with section 129 that a notice in terms of section 129 of the NCA was sent but there was no to response.
“There is clearly no doubt that the plaintiff did comply with the provisions of section 129 of the NCA. In his affidavit resisting the summary judgment the defendant [Malefane] does not raise any bona fide defence. Instead, he acknowledges that he is in arrears and will be able to make payment once his income is stable. This is clearly not a defence contemplated in the application for summary judgment. It is my view that the defendant did not raise any valid defence to the plaintiff’s claim and as such the relief as prayed for in the summary judgment application should be granted,” reviewed deputy judge president Tebogo Djaje.
Djaje confirmed the termination of the contract between Malefane and BMW and ordered him to pay for the creditor’s legal costs.
Benay Sager, head of DebtBusters, a debt company, said it was important for consumers to contact their creditors when they have difficulties in making repayment.
“Section 129 of the NCA is legal process and you’d find that many companies would comply with it to protect themselves should there be a legal action taken against them. To avoid all these problems, consumer must not run away from their debts. Go to your creditor and make some sort of payment arrangement. Also, if your address or your contact numbers change the burden is on the consumer to inform the creditor,” said Sager.
He added that debt counselling was an easier way to manage multiple debt and that it was the counsellor’s job to assist consumers to consolidate their debt into one payment .
“If you have one debt with one institution its much easier when you go to them and renegotiate repayments arrangements. Talk to your creditor and see what they can do for you,” said Sager.
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