Absa Bank Limited v Johan Serfontein and Another

ABSA Bank granted an overdraft facility to Johan Serfontein, secured by mortgage bonds over his immovable property, with his father standing surety and providing additional security. After default on the overdraft and accumulation of substantial debt, ABSA and the Serfonteins entered into an acknowledgement of debt incorporating a power of attorney (AOD/POA) in March 2019. The AOD/POA acknowledged the outstanding debt and granted ABSA an irrevocable power, without court order, to sell the property to recover the debt. The agreement also purported to exclude the application of the National Credit Act 34 of 2005 (NCA). ABSA later sold the property pursuant to this power. The Serfonteins challenged the validity of the AOD/POA and the subsequent sale, contending that the AOD/POA was an unlawful supplementary agreement under the NCA.

The appeal was dismissed with costs. The declaration that the acknowledgement of debt and power of attorney was void from inception, together with the declaration that the subsequent deed of sale was void ab initio, was upheld.

The case affirms that post-default acknowledgements of debt can constitute supplementary agreements under the NCA and are subject to its consumer-protection provisions. It clarifies that credit providers cannot circumvent the NCA by obtaining irrevocable powers of attorney or by purporting to exclude the Act’s application, even after default. The judgment reinforces the limited role of common-law parate executie in the post-NCA statutory framework.