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Understanding the Stellenbosch Law Clinic In Duplum Ruling

The recent ruling in favour of consumers in regard to In Duplum has got everyone quite excited (not credit providers admittedly). You may be wondering what all the hubbub is all about and what the Judgment actually says.

A while back, two organisations (Summit Financial Partners & Stellenbosch University Law Clinic) decided to help a group of consumers to get clarity on how much interest and legal fees can be added to their debts when they have fallen behind on payments. These consumers were finding that collections agents were trying to charge them sometimes ridiculous amounts for the debts that they had defaulted on.

‘collections agents were trying to charge them sometimes ridiculous amounts for the debts that they had defaulted on’

Under law and by contract agreement, if a consumer has a debt and starts to miss payments they put the account into default – compared to where it should be. When an account is in default, the credit provider can add the agreed interest to the debt each month.

Older laws had something called in duplum built-in which limits how much credit providers could add to the debt while the consumer was missing payments.

The new National Credit Act (NCA) has a Section called Section 103(5) which refines and updates this in duplum rule.

How Does In Duplum Work?

In duplum is designed to limit the collections fees and interest to only ever equal to the debt owed at the time of default. It allows the debt to “double up” (‘in duplum‘ is similar to the word ‘duplicate’ or copy).


Debt at the time of the default: R1000
Interest and fees added over time:R1000
Total owed ever: R2000

This would mean the total that the consumer would later have to pay back would be limited to only R2000 ever even if they paid it back in bits and pieces over time.

Naughty Collections Agents

Some collections lawyers wanted to add extra fees every single month or each time they call the consumer or sms them or send them a letter even if it meant they went past the in duplum or double up limit. This could potentially mean they would send the consumer a bill for something like this:


Debt at the time of the default: R1000
Interest and fees in excess of in duplum added over time:R5000
Total owed: R6000 and counting!!!


The Big Court Case

The court case revolved around what collections costs are covered by NCA Section 1 (the definition of collections fees), Section 101(1) and Section 103(5) and would, therefore, be limited or alternatively if these extra costs could just build up endlessly even where in duplum applies.

Along with a bunch of affected consumers, various interested parties were part of the court case including credit providers such as Absa, African Bank, Capitec, FNB, Nedbank, Investec, the Banking Association of South Africa and Micro Finance South Africa.

Other parties like the Minister of Trade and Industry, the Minister of Justice and Correctional Services, the National Credit Regulator, the Council for Debt Collectors, the Association for Debt Collectors and several law societies from across the country were also added to the court case.

‘Not all credit providers were opposed to the relief sought and were happy to go along with whatever ruling the court gave’

Not all credit providers were opposed to the relief sought and were happy to go along with whatever ruling the court gave. Many agreed that legal fees are part of ‘collections costs’ as set out in the National Credit Act. Interestingly, the words ‘legal fees’ are not specifically used in the definitions part of the NCA about collections costs (and many other phrases are also not used, obviously). The Act uses a broad term of any ‘charge’ to avoid any such ducking and diving over specific terminology.

Summit and the Law Clinic were asking for 3 declaratory orders (1) that all legal fees, whenever they happen, be included in collections costs mentioned in the NCA, (2) that the Section 103(5) limit must apply at all times before, during and after legal action (3) that legal fees must be agreed upon before they are claimed.

The court was also asked to order refunds of extra fees paid over the in duplum limit to the various consumers in the case.

In just one consumer’s matter, they had borrowed R700 but had missed payments. Then they had been billed for interest and a bunch of legal collections fees. They had already, over time, paid R5100 back towards these fees and were still being asked for another R600 more instead of the in duplum limit of the debt being set at R1400 in total, at most, ever.

The Arguments

The Law Clinic pointed out that even though Section 1 (the definitions) doesn’t specifically mention legal fees the term used (charges) covers this and this can be seen by looking at Part C of Chapter 6 which discusses enforcement by legal proceedings including going to court. So the Act does include legal fees as part of collection costs.

Some of the collections people argued that when consumers don’t pay their contract is effectively cancelled and then they start legal action and so these fees are different to those mentioned in the NCA. The Law Clinic showed that the contracts specifically have sections which cover how legal action will happen if consumers miss payments. So, this means that the legal enforcement is a right of the credit provider set out in the contract and does not cancel it. Other court cases in the past have shown how if you catch up on payments on a car, for example even if the credit provider has been to court and can auction it off, then the contract carries on and the consumer can have the car back.

One of the big reference points for the applicants was the constitutional court case Nkata V FirstRand Bank Ltd in 2014.

The collections agents argued that when a matter goes to court and the judge gives a judgement and permission to collect on a debt it is, in fact, a new legal action and so the costs there would not be limited. The court considered this but found that this legal action is still part of the consumer and credit provider’s contract agreement and only happens due to this agreement. So, NCA Section 103(5) in duplum would apply.

The argument by collections people that the lawmakers never wanted to change the old laws and common law was thrown out since, among other things, the NCA Section 103(5) actually mentions that they did have this in mind when drafting the new Act.

The Ruling

The Court referred to many past judgements where the way the law is interpreted must go beyond just the individual words on the page and the grammar used to perceive the intention of the law. The Court referred to the stated purpose of the National Credit Act to provide protection to consumers from abuses.

‘Past judgements have called for credit providers to behave and act fair but it still seems this is not happening’

Past judgements have called for credit providers to behave and act fair but it still seems this is not happening and the current collections practices are not in line with the intention of the Act. Consumers are still being taken advantage of.

The court was happy that the applicants had brought a sound case before them and argued well for the declaratory orders they were hoping for. It also acknowledged that this may result in some credit providers not making as much money as they had in the past from vulnerable consumers.

a) it is declared that collections costs as referred to in Section 101(1) (g), as defined in Section 1, and as contemplated in Section 103(5) of the National Credit Act, Act 34 of 2005 includes all legal fees incurred by the credit provider in order to enforce the monetary obligations of the consumer under a credit agreement charged before, during and after litigation.

b) it is declared that section 103(5) of the National Credit Act, Act 34 of 2005 applies for as long as the consumer remains in default of his/her credit obligations, from the date of default to the date of collection of the final payment owing in order to purge his default, irrespective of whether judgement in respect of the default has been granted or not during this period.

c) it is ordered that legal fees, including fee of attorneys and advocates, in as much as they comprise part of collection costs as contemplated in section 101 (1) {g} of the National Credit Act, Act 34 of 2005, may not be claimed from a consumer or recovered by a credit provider pursuant to a judgement to enforce the consumer’s monetary obligations under a credit agreement, unless they are agreed to by the consumer or they have been taxed.

It was also ordered that each of the consumers in the case should have their accounts looked at and be refunded any funds that exceed the double up amount at the time of default.

Download the Ruling Here


It is hoped that credit providers may now begin to reign in their collections agents and review their policies with them to ensure that consumers are not being taken advantage of. It is also likely that many consumers will try to get some legal help to recover funds that have been overpaid recently.

The judgement also bears some consideration in regard to Section 103(5) and the role of debt review with regard to curing or not curing the default since declaratory order (b) mentions that the default lasts until the final payment needed to purge the default. There is some debate over the effect of debt review on this state of default at present with different credit providers or even departments within organisations having different views.

Either way, this is a big win for the public who have been taken advantage of by unscrupulous collections agents who have drained consumers of thousands of rand more than the legal limit set by Section 103(5) in duplum.