Edwards v FirstRand Bank Limited t/a Wesbank

The appellant (Edwards), a quantity surveyor, purchased an Aston Martin Vantage Coupe motor vehicle for a contract price of R1,457,958 from the respondent (FirstRand Bank Limited t/a Wesbank) on 24 July 2009 via an instalment sale agreement. The appellant paid a deposit of R145,000 and was due to pay fifty-nine monthly instalments of R23,100. In April 2011, the appellant fell into arrears. Wesbank issued summons cancelling the agreement and claiming return of the vehicle plus shortfall. Summary judgment was granted on 12 August 2011 ordering return of the vehicle. The appellant's appeals against this order were dismissed. The vehicle was repossessed on 6 July 2012. Wesbank sent a notice under s 127(2) by ordinary post on 13 June 2012 to the appellant's chosen domicilium address at 72 Turoco Road, Fourways. The vehicle was sold at auction on 26 July 2012 for R763,800. A s 127(5) notice was sent on 1 August 2012 by ordinary post. The appellant denied receiving either notice, claiming there was no street delivery at his address. The trial court (Monama J) ordered the appellant to pay R668,461.69 plus interest and costs.

• Whether the credit provider complied with section 127(2) of the National Credit Act 34 of 2005 before disposing of the vehicle
• Whether the credit provider complied with section 127(5) of the National Credit Act 34 of 2005
• Whether sending notices by ordinary mail constitutes sufficient compliance with sections 127(2) and (5) of the Act
• Whether section 127(2) applies where a credit agreement has already been cancelled by court order and goods attached
• What standard of proof is required to establish that statutory notices have been given to a consumer
• Whether a consumer who chooses a domicilium address where there is no street delivery can deny receipt of notices sent to that address

The appeal was dismissed with costs. The order of the court a quo in paragraph 25.2 specifying 1 August 2012 was replaced with 13 December 2012 as the date from which interest runs.

The binding legal principles established are: (1) The words "give the consumer written notice" in sections 127(2) and (5) of the National Credit Act do not require that notices be sent by registered mail; sending by ordinary mail suffices. (2) To prove compliance with sections 127(2) and (5), a credit provider must place before the court facts which show that the notice, on a balance of probabilities, has been sent to the consumer (applying the principle from Kubyana v Standard Bank). (3) Where a consumer has chosen a domicilium address and the notice has been sent to that address, the consumer bears the burden of rebutting the inference of delivery and showing that his or her conduct was reasonable. (4) A consumer who unreasonably selects a domicilium address where he knows there is no street delivery cannot escape the consequences of that choice and is deemed to have received notices sent to that address. (5) Section 127(2) of the Act does not apply where a credit agreement has already been cancelled by court order and goods have been attached, as the consumer no longer has the right to withdraw termination and resume possession of the goods. (6) The noble pursuits of consumer protection statutes should not be open to abuse by individuals who seek to exercise those protections unreasonably or in bad faith.

Cachalia JA observed that the draftsmanship of the National Credit Act is "far from being a model of elegance." Shongwe JA noted that while there may be merit in the submission that there is no good reason to differentiate materially between the method of complying with s 127(2) and s 129(1) notice requirements, this issue was not definitively resolved in Baliso v FirstRand Bank Limited t/a Wesbank [2016] ZACC 23. The court observed that the appellant was "a poor witness and highly arrogant" and that it was "strange that he sought to retain and use the vehicle despite his disavowal of the validity of the instrument which found his entitlement to retain and use it." Cachalia JA noted that "human experience has shown that contracting parties often attempt to evade their contractual obligations by denying that they were aware or assented to the terms of an agreement" and emphasized the importance of the caveat subscriptor rule. The court observed that failure to comply with s 127(2) would be detrimental even to the credit provider as recovery of the shortfall could not be pursued, making compliance beneficial to both consumer and credit provider.

This case provides important guidance on compliance with sections 127(2) and (5) of the National Credit Act 34 of 2005 in debt enforcement proceedings. It clarifies that: (1) notices under s 127(2) and (5) may be sent by ordinary mail and do not require registered mail; (2) the credit provider must prove on a balance of probabilities that the notice was sent to the consumer; (3) a consumer who unreasonably chooses a domicilium address where delivery cannot occur bears the risk of non-receipt; (4) the caveat subscriptor principle applies to prevent consumers from evading contractual obligations by claiming ignorance of terms they agreed to; (5) consumers cannot abuse the procedural protections of the NCA by raising unmeritorious defences based on alleged non-receipt when their own conduct caused the non-receipt; and (6) section 127(2) may not apply where a credit agreement has already been cancelled and goods attached by court order, as the consumer no longer has a right to reinstate the agreement. The case demonstrates the court's approach to balancing consumer protection with preventing abuse of the NCA's provisions.