Van Louw v Nedbank Limited

In July 2022, the applicant Ronel Candice Van Louw concluded an instalment sale agreement with Nedbank for a 2022 Chery Tiggo 7 Pro vehicle. By February 2023, the applicant fell into arrears on the instalments. Nedbank's external debt collector attempted unsuccessfully to contact her. In April 2023, the applicant applied for debt review through debt counsellor K Schweidler, but no acceptable repayment proposal was provided. Nedbank terminated the debt review process via multiple notices under section 86(10) of the National Credit Act in September and October 2023. On 27 November 2023, Nedbank issued summons for termination of the sale agreement and return of the vehicle. The Sheriff personally served the summons on the applicant on 14 December 2023. The applicant did not file a notice of intention to defend. On 10 April 2024, the Registrar granted default judgment. A warrant for delivery of the vehicle was personally served on 30 May 2024 and the vehicle was removed the same day. The applicant launched an urgent application on 9 July 2024 to prevent sale of the vehicle pending a rescission application under Rule 42(1)(a).

• Whether the default judgment was erroneously sought or granted in the applicant's absence under Rule 42(1)(a) of the Uniform Rules of Court
• Whether the debt review process under section 86(10) of the National Credit Act was properly terminated
• Whether the Registrar was empowered to grant default judgment
• Whether the applicant had a bona fide defence with prospects of success
• Whether the conduct of the applicant's attorney justified a costs order de bonis propriis

The rescission application was dismissed. Costs de bonis propriis on an attorney and client scale were awarded against Mr. Ramabu in his personal capacity.

For a rescission to succeed under Rule 42(1)(a), the applicant must demonstrate that the judgment was erroneously sought or granted in their absence due to a procedural irregularity. Where the Sheriff has personally served the summons and the returns of service are prima facie evidence of their contents, and the applicant had ample opportunity to defend but chose not to, there is no procedural error and the default judgment is not erroneously granted. The protection under Rule 42(1)(a) does not extend to litigants who deliberately choose not to participate. Additionally, where a credit provider has complied with the termination procedures under section 86(10) of the NCA, the consumer cannot rely on the debt review process as a ground for rescission.

The court strongly deprecated the conduct of Mr. Ramabu of Ramabu Attorneys, noting that his actions—failure to file a replying affidavit, condoning the filing of inadequate heads of argument on the incorrect issue, failure to ensure proper representation at the hearing, and the unprofessional behaviour by a representative of his office exhibited in court—fell woefully short of the standards mandated by the Legal Practice Act and the Code of Conduct for Legal Practitioners. The court stated it would refrain from referring the matter to the Legal Practice Council at that stage but would take the conduct into account in evaluating costs.

The case reaffirms the principles governing rescission applications under Rule 42(1)(a) in the context of National Credit Act debt review terminations, emphasizing that personal service and wilful default preclude rescission. It is also a significant decision on legal ethics, demonstrating the High Court's willingness to penalize unprofessional conduct by legal practitioners through costs orders de bonis propriis on an attorney and client scale.