Interesting ruling on Section 88(3)

Section 88(3) Ruling

If a consumer has a debt restructuring Court Order and misses a payment this enables the credit provider to take legal action against the consumer if they are not happy with the reason or feel that the consumer is willfully not paying what they should. In many ways this part of the NCA protects credit providers from ongoing non payment by consumers with Court Orders. In the past where a consumer has missed such a payment and the matter has gone to court the matter was pretty cut and dried. The Credit Provider would get a judgment no problem. However something unusual happened in the Western Cape High Court recently. The surprise ruling was handed down by Acting Deputy Judge President Desai in the Western Cape High Court under Case No.19252/2012.Liddle and Associates who often deal with debt review matters obtained what they are saying is a “landmark decision for consumers under debt review”

ABSA Bank v McEpieow

In this case, Mr McEpieow defaulted in terms of his debt review order and ABSA Bank decided to go for a  judgment in order to proceed with the sale in execution of his home. Interestingly in a previous case ( FRB v Fester ) the Western Cape High Court held that once a consumer defaults in terms of a granted debt review order, the Bank is entitled to immediately proceed with legal action. Liddle and Associates argued that such a strict interpretation of Section 88(3) is contrary to the spirit and purpose of the NCA especially in this consumers case.

What is interesting is that the Judge agreed with them and said that if a consumer remedies the default “it would hardly be consistent with the provisions of the Act or rather its socially salutary purposed to punish such a debtor in the instances where the default is of no real value or, at least, has insignificant financial consequences”. As a result the Judge turned down the summary judgement application and said if ABSA want to pursue it they must proceed to a full court hearing sometime in the future.

Why did the Judge rule this way?

It seems that the consumer in this matter had been paying more than was required under the Court Order. In fact, the consumer was about R10 000 in advance when the problem arose. This no doubt shows the consumers good intent and probably means that the consumer was actually not in default of the court order when ABSA began the legal action.

Liddle and Associates say this is a ‘a great victory in protecting consumer’s assets under debt review‘.

You can download the judgement here: Case Law ABSA Bank v McEpieow – Section 88(3) had paid more than req