Terminating Debt Reviews: Creditors, Debtors & Debt Counsellors Take Note!
Once an “over-indebted” debtor has applied for debt relief in terms of the NCA (National Credit Act), all recovery proceedings are suspended whilst a debt counsellor formulates a repayment plan for approval by either creditors or the court. The consequent delays have caused much unhappiness in the ranks of creditors when debtors abuse the process solely to avoid or delay payment. But there is a practical solution – where the debtor is in default, you can, 60 business days after the initial application, give notice of termination of the debt relief process. Serve notice on the debtor, the debt counsellor and the National Credit Regulator.
However, an important new restriction to this termination procedure has emerged from a decision in the South Gauteng High Court, namely that such notice of termination cannot be given after the debt counsellor has referred the process to a Magistrate’s Court. This applies even if the debtor has again defaulted on payment, and renders unlawful the (apparently common) practice of terminating debt reviews, whether or not referral has taken place, purely on the ground of continued default. (Note that there is a contrary decision in the Eastern Cape High Court, so there will doubtless be further developments in this field – take advice in doubt!) Critically, the actual “referral” to the Magistrate’s Court occurs only when it has been properly served on the creditor; it has then been “brought before the court”, and the debt review process must continue in that court.
Debtors and debt counsellors – ensure that the referral to the Magistrate’s Court is served on the creditor during the 60 day period. In the case in question, the referral was only served after the creditor had given notice of termination – so the termination was valid, the debtor lost his protection, and the creditor was able to proceed with recovery. Creditors – where no referral notice has been served on you, give notice of termination immediately on expiry of the 60 day period – or face substantial further delay.
Developers, Property Dealers, Buyers, Agents, Builders: New Laws That You Need To Know
The CPA (Consumer Protection Act) will fundamentally change the rights of property purchasers in South Africa. Prepare yourself now – any non-compliance will cost you dearly! The delay in implementation of the Act (deferred at the last minute until 31 March next year) gives you a bit of breathing space – use it to revamp your systems and documentation.
First off, note that the CPA will not apply to every property transaction –
* It is unlikely to apply to property sales in the average one-off “private sale” situation, – it is aimed more at “commercial” sales, such as those by developers, speculators, and other property dealers (the basic test being whether you sell property or property services “in the ordinary course of business”).
* For estate agents however, the CPA will apply both to their general marketing practices, and to all mandates they take from sellers and buyers (even those in “non-commercial” transactions). Agents, as links in the “supply chain”, could also risk liability for the actions of developers, speculators,builders etc.
Where the Act does apply, it requires, amongst other things: –
• “Fair and reasonable” marketing – prohibiting anything “misleading, fraudulent or deceptive
in any way”.
• All documentation has to be couched in “plain and understandable” language.
• “Fair and honest dealing”. Specifically prohibited are “false, misleading or deceptive
representations”, whether by word or by conduct.
• “Fair, just and reasonable terms and conditions”.
• “Fair value,good quality and safety”.
These are all wide-ranging provisions. The “fair value” requirement means that sale prices could be scrutinised for reasonableness, and there is much speculation that “voetstoots” clauses will no longer be enforceable – certainly buyers will have stronger rights to return defective houses and/or to insist on defects being remedied, regardless of any clauses to the contrary in the sale agreement. Importantly, courts will be taking into account not just the sale agreements themselves, but also all prior negotiation, as well as representations made to buyers by both sellers and their agents. In summary: Developers, speculators, estate agents, builders etc – ensure that buyers are treated lawfully and fairly, that they understand exactly what they are buying (and the meaning and effect of all the applicable terms and conditions), and that they get what they have paid for. Keep full written records not only of the sale itself, but also of all related marketing and negotiation. Where appropriate, reduce the risk of dispute by obtaining a full independent inspection report on completion of building work.