Mr and Mrs Ferris borrowed money from FirstRand Bank in 2007 to purchase their home, secured by a mortgage bond. After falling into arrears, they applied for debt review under section 86(1) of the National Credit Act 34 of 2005. A debt counsellor applied to the Magistrate’s Court, which granted a debt-restructuring order declaring them over-indebted and rearranging their obligations. The order provided that the original credit agreement would revive and be fully enforceable upon breach. Shortly after the order was granted, the Ferrises fell into substantial arrears under the restructuring order. FirstRand issued summons for the full outstanding balance and obtained default judgment after the Ferrises’ defence was struck out. More than six months later, the Ferrises applied to the High Court for rescission of the default judgment, relying on Rule 42(1)(a), Rule 31, the common law, and alleged defects in a section 86(10) termination notice, attorney negligence, and infringement of the right to housing. The High Court refused rescission. Leave to appeal was refused by the High Court and the Supreme Court of Appeal, and the Ferrises then applied late for leave to appeal to the Constitutional Court.
Condonation for late filing was granted; leave to appeal was refused; no order as to costs.
The case clarifies that once a consumer breaches a debt-restructuring order under the National Credit Act, a credit provider may enforce the original credit agreement without giving further statutory notices. It provides authoritative guidance on the interaction between sections 86, 88, and 129 of the Act, and confirms that defective termination of debt review under section 86(10) does not bar enforcement following breach of a restructuring order. The judgment also reinforces strict requirements for rescission of default judgments and limits dilatory defences in credit enforcement matters.