Mostert v Firstrand Bank Limited t/a RMB Private Bank

In March 2005, Mr David Carl Mostert (first appellant) entered into a loan agreement with Firstrand Bank Limited t/a RMB Private Bank (RMB) for R20 million, later increased to R30 million. The loan was secured by suretyships from the Carpe Diem Trust (of which Mr Mostert and the third and fourth appellants were trustees), New Port Finance Company and TPC Marketing, as well as a mortgage bond of R30 million over a valuable property (Erf 382, Bishopscourt) owned by the Trust. Monthly repayments were set at R311,235.06. Mr Mostert failed to make payments, leading to summons in December 2009. A settlement agreement in March 2010 was breached. On 12 September 2011, the Western Cape Division granted judgment against Mr Mostert and the sureties for R33,625,364.58 plus interest and costs, declaring the property specially executable. Mr Mostert gave an undertaking to pay R1 million and quarterly payments of R500,000, which he did not honor. In June 2013, a payment of R925,181 was made. In 2015, New Port (one of the sureties) made payments totaling R7,739,476.40 from proceeds of the sale of Mr Mostert's shares in CSHELL, which had been pledged as security. RMB sought to execute the judgment. The appellants sought to prevent execution, arguing the loan agreement had been reinstated under s 129(3) of the National Credit Act 34 of 2005.

• Whether a credit agreement can be reinstated under s 129(3) of the National Credit Act after judgment has been granted declaring property specially executable
• Whether payments made in 2013 settled the arrears and remedied the default under s 129(3)
• Whether payments made by a surety (New Port) in 2015, derived from enforcement of security, constituted payments 'by or on behalf of the consumer' for purposes of s 129(3)
• Whether new legal grounds raised for the first time in a replying affidavit should be permitted in motion proceedings
• The requirements for remedying default under s 129(3) of the National Credit Act

1. The appeal was dismissed. 2. The appellants were directed to pay the costs of the appeal on the scale of attorney and own client, including the costs of two counsel, jointly and severally.

Section 129(3) of the National Credit Act requires that payment to remedy a default in a credit agreement must be made by or on behalf of the consumer. Payment 'on behalf of' the consumer requires, consistent with common law principles, that the third party making payment clearly profess to pay in the name and on behalf of the consumer/debtor. Payments made by a third party (including a surety) that result from the credit provider's enforcement of security, rather than from the consumer's bona fide effort to remedy the default, do not satisfy the requirement that payment be made 'by or on behalf of the consumer' and therefore do not remedy the default under s 129(3). A surety, while being a 'consumer' under the NCA in respect of the suretyship agreement itself, is not a consumer in respect of the principal credit agreement for which the suretyship was granted.

The court made several non-binding observations: (1) Regarding new matter in replying affidavits: While the general rule prohibits introducing new cases in reply, courts have discretion in exceptional circumstances to permit this, considering factors including whether all necessary facts are before the court, prejudice to the respondent that cannot be remedied by costs or postponement, whether the new matter was known when proceedings commenced, and whether disallowance would result in unnecessary waste of costs. (2) The court noted that the purpose of s 129(1) of the NCA is to ensure consumers are alerted to defaults and advised of options to remedy them, facilitating consensual dispute resolution. This reflects the NCA's core objective of protecting consumers while balancing rights and responsibilities of credit providers and consumers. (3) The court observed that s 129(3) provides a 'novel and extraordinary remedy' available only to consumers in default. (4) The court referenced Sir John Wessels' statement that under civil law, a creditor generally cannot refuse payment from a third party where it makes no difference who performs, provided performance is effective and in terms of the contract, but it must be clear the third party pays for the debtor's benefit. (5) The court noted it was unnecessary to consider whether RMB had demanded payment of prescribed default administration charges or reasonable costs of enforcement, given the findings on the main issues.

This case provides important clarification on the interpretation and application of s 129(3) of the National Credit Act. It establishes that: (1) The remedy of reinstatement under s 129(3) is available to consumers even after judgment has been granted (following Nkata). (2) Section 129(3) requires that payment to remedy default must be made 'by or on behalf of the consumer' - this is a substantive requirement, not merely a formality. (3) Payments made by third parties (including sureties) do not satisfy s 129(3) unless clearly made in the name and on behalf of the consumer, consistent with common law principles. (4) Payments arising from a credit provider's enforcement of security against third parties, even if those parties are sureties, do not constitute payments 'by or on behalf of the consumer.' (5) The decision reinforces that s 129(3) is designed to protect consumers who make bona fide efforts to remedy defaults, not to provide protection where arrears are satisfied through creditor enforcement actions. The case also provides guidance on when courts may allow new legal arguments raised in replying affidavits in motion proceedings, emphasizing factors such as whether new facts are introduced, prejudice to the respondent, and the interests of justice in avoiding protracted litigation.