THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Case No:   766/2010

In the matter between:

SALLY ANN COLLETT

Appellant

and

FIRSTRAND BANK LTD

Respondent

NATIONAL CREDIT REGULATOR

Amicus Curiae

Neutral citation:
Collett v Firstrand Bank (766/2010) [2011] ZASCA 78
(27 May 2011)
Coram:
Mpati P,  Brand, Maya, Malan and Tshiqi JJA
Heard:
4 May 2011
Delivered:
27 May 2011

Summary:
Debt review in terms of s 86 of National Credit Act 34 of 2005 –
right of credit provider to terminate review under s 86(10) – reading
in ‗or High Court‘ in s 86(11)

_____________________________________________________________________
ORDER
On appeal from: Eastern Cape High Court, Grahamstown (Eksteen J sitting as court of
first instance):
The appeal is dismissed.
_____________________________________________________________________
JUDGMENT
MALAN JA (Mpati P, Brand, Maya and Tshiqi JJA concurring)
[1] This appeal concerns the construction of s 86(10) and (11) and s 87 of the
National Credit Act 34 of 2005. Eksteen J sitting in the Eastern Cape High Court,
Grahamstown, granted summary judgment against the appellant in an amount of
R677 254,92 with interest and costs and made an order declaring certain immovable
property executable. The action was based on a mortgage bond hypothecating the
property declared executable. A ‗mortgage agreement‘ is a ‗credit transaction‘ and the
NCA applies to it.1
[2] The appellant was in default with her repayments under the bond and by reason
of her failure to pay any or all of the agreed instalments the whole of the outstanding
amount became due. On 4 January 2010 she applied for debt review in terms of s
86(1). The application was made to Gerhard Stoltz Debt Counsellors and the
respondent was notified of it the same day. On 15 February 2010 Stoltz advised the
respondent that the application was successful and that the debt obligations of the
appellant were in the process of being restructured. A debt restructuring proposal was
circulated to all the appellant‘s credit providers, including the respondent. None of the
credit providers accepted the proposal. On 29 March 2010 Stoltz referred the matter to
the East London Magistrate‘s Court in terms of s 86(8) for an order that the appellant be

1 Section 8(4)(d) and s 1 sv ‗mortgage‘ and ‗mortgage agreement‘.

declared over-indebted; that her debt commitments be re-arranged; that the credit
agreements of those credit providers who terminated their reviews under s 86(10) be
resumed and be included in the debt review; and for costs.
[3] After the matter had been referred to the Magistrate‘s Court and on 7 April 2010,
that is more than 60 days after the appellant‘s application, the respondent terminated
the debt review in so far as it related to the mortgage bond. It did so pursuant to the
provisions of s 86(10). The hearing before the Magistrate‘s Court in terms of s 87, set
down for 10 June 2010, was postponed to 12 August 2010. Summons was issued on 21
June 2010 and served on the appellant on 1 July 2010.
[4] Section 86 sets out the procedure to be followed by the debt counsellor on
receipt of a consumer‘s application for debt review. Section 87 concerns the re-
arrangement of a consumer‘s obligations and the powers of the Magistrate‘s Court to
which the matter has been referred. Sections 86 and 87 are contained in Part D of
Chapter 4 of the NCA, which is entitled ‗Over-indebtedness and reckless credit‘. The
procedure when applying for debt review is contained in s 86 and has been described
elsewhere.2 The sections referred to read as follows:
‘86. (10)  If a consumer is in default under a credit agreement that is being reviewed in terms of this
section, the credit provider in respect of that credit agreement may give notice to terminate the review in
the prescribed manner to—

(a)
the consumer;

(b)
the debt counsellor; and

(c)
the National Credit Regulator,
at any time at least 60 business days after the date on which the consumer applied for the debt review.
(11)  If a credit provider who has given notice to terminate a review as contemplated in subsection (10)
proceeds to enforce that agreement in terms of Part C of Chapter 6, the Magistrate‘s Court hearing the
matter may order that the debt review resume on any conditions the court considers to be just in the
circumstances.

2 Nedbank Ltd & others v National Credit Regulator & another (662/09 & 500/10) [2011] ZASCA 35 (28
March 2011) paras 10 ff.

87.   Magistrate’s Court may re-arrange consumer’s obligations.—(1)  If a debt counsellor makes a
proposal to the Magistrate‘s Court in terms of section 86(8)(b), or a consumer applies to the Magistrate‘s
Court in terms of section 86(9), the Magistrate‘s Court must conduct a hearing and, having regard to the
proposal and information before it and the consumer‘s financial means, prospects and obligations, may—

(a)
reject the recommendation or application as the case may be; or

(b)
make—

(i)
an order declaring any credit agreement to be reckless, and an order contemplated in
section 83(2) or (3), if the Magistrate‘s Court concludes that the agreement is reckless;

(ii)
an order re-arranging the consumer‘s obligations in any manner contemplated in section
86(7)(c)(ii); or

(iii)
both orders contemplated in subparagraph (i) and (ii).
(2)  The National Credit Regulator may not intervene before the Magistrate‘s Court in a matter referred to
it in terms of this section.‘
Section 88 deals with the effect of debt review or a re-arrangement order or
agreement.3
[5] In her affidavit opposing the application for summary judgment the appellant did
not deal with the merits of the respondent‘s case but only questioned the respondent‘s
right to have instituted action. She stated:
‗As I applied for Debt Review prior to the Applicant issuing Summons against me, and furthermore, as my
Debt Counsellor has referred my application to the Magistrate‘s Court prior to the Plaintiff‘s Summons and
within the prescribed 60 business day period, it should be clear the Plaintiff did not have the right to issue
Summons against me.‘

3 Section 88(3) is of importance:   ‗Subject to section 86 (9) and (10), a credit provider who receives
notice of court proceedings contemplated in section 83 or 85, or notice in terms of section 86 (4) (b) (i),
may not exercise or enforce by litigation or other judicial process any right or security under that credit
agreement until—
(a)
the consumer is in default under the credit agreement; and
(b)
one of the following has occurred
(i)
An event contemplated in subsection (1) (a) through (c); or
(ii)
the consumer defaults on any obligation in terms of a re-arrangement agreed between the
consumer and credit providers, or ordered by a court or the Tribunal.

[6] The question to be decided is therefore whether a credit provider is entitled to
terminate a debt review in terms of s 86(10) after the debt counsellor has referred the
matter to the Magistrate‘s Court for an order envisaged by s 86(7)(c) (and s 87(1)(b))
and while the hearing in terms of s 87 is still pending. In the court below Eksteen J held
in the affirmative. The conclusion of the court below is supported by several provincial
division judgments.4 However, as has become typical of the jurisprudence developing
around the NCA, there is a host of decisions that have taken a different view.5 It is not
possible to do justice to all the considerations advanced in these conflicting decisions.6
They deal with the approach to take when construing the NCA; the question when the
entitlement to terminate the debt review arises and ends; and the meaning of s 86(11),
in particular, which court may order a resumption of the debt review which was
terminated.
[7] The view that the credit provider may not terminate the debt review after referral
to the Magistrate‘s Court is perhaps best articulated by Griesel J speaking for the full
court in Wesbank a division of Firstrand Bank Ltd v Papier (with the NCR as Amicus
Curiae).7 He, quite correctly, pursued a contextual approach to the legislation.8  He
referred to Part D of Chapter 4 of the NCA as introducing the concepts of ‗over-
indebtedness and reckless credit‘ and stated that, ‗[t]he object of this part of the Act is to
provide protection and assistance to an over-indebted consumer in an environment that
encourages participation in good faith by both parties. The mechanisms provided by the
Act are contained in ss 85-88 and consist of debt review, on the one hand, and debt re-

4 SA Taxi Securitisation (Pty) Ltd v Nako & others [2010] ZAECBHC 4; Firstrand Bank Ltd v Fillis  2010
(6) SA 565 (ECD); Firstrand Bank Ltd v Evans (2010) ZAECPEHC 55; Firstrand Bank Ltd t/a First
National Bank v Seyffert 2010 (6) SA 429 (GSJ). Some of the problems encountered with the
implementation of the NCA are discussed in National Credit Regulator Debt Review Task Team May
2010.
5 Standard Bank of South Africa Ltd v Kruger; Standard Bank of South Africa Ltd v Pretorius  2010 (4) SA
635 (GSJ); SA Securitisation (Pty) Ltd v Matlala [2010] ZAGPJHC 70; Wesbank a division of Firstrand Ltd
v Papier (with the NCR as Amicus Curiae) 2011 (2) SA 395 (WCC). In some matters the question was left
open (eg BMW Financial Services SA (Pty) Ltd v Mudaly 2010 (5) SA 618 (KZD) para 23). Others are not
particularly clear on the issue (eg Changing Tides 17 (Pty) Ltd NO v Erasmus & another; Changing Tides
17 (Pty) Ltd NO v Cleophas & another; Changing Tides 17 (Pty) Ltd NO v Fredericks & another [2009]
ZAWCHC 175).
6 A useful comparison of some of the judgments was undertaken by D Pillay J in Firstrand Bank Ltd v
Mvelase 2011 (1) SA 470 (KZP) paras 51 ff.
7 2011 (2) SA 395 (WCC).
8 Para 21 and see Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs 2004 (4) SA 490 (CC)
para 90.

arrangement, on the other.‘9 Proceeding on this basis he held that s 86(10) dealt with
one aspect of the elaborate process as described in the heading to s 86; ‗Application for
debt review‘. This process commences with an application by the consumer in terms of
s 86(1), followed by the notification of the application by the debt counsellor to all credit
providers and credit bureaux.10 The consumer and each credit provider must then, as is
required by s 86(5), comply with the requests of the debt counsellor and participate in
the debt review in good faith.
[8] The debt counsellor must within 30 days determine whether the consumer
‗appears to be over-indebted‘.11 If he determines that the consumer is not over-indebted
he must reject the application12 and advise the consumer of his right to approach the
court directly in terms of s 86(9) within 20 business days.13 Where the debt counsellor
determines that the consumer appears to be over-indebted he must14 ‗issue a proposal‘
recommending that the Magistrate‘s Court make any of the orders provided for by s
86(7)(c) (and s 87(1)(b)). Griesel J concluded that a referral in terms of s 86(7)(c) sets in
motion a ‘debt re-arrangement by the court‘ as opposed to a ‗voluntary re-arrangement‘
in terms of s 86(8)(a). Because neither the NCA nor the regulations contain any time
period within which the referral to court must be made he opined that, having regard to
the context, the answer became clear:
‗The process of ―debt review‖ requires of the debt counsellor to determine, within 30 days, whether or not
a consumer is over-indebted. If not, the debt counsellor must advise the consumer of his or her right ―to
approach the court‖ within a further 20 business days for the necessary order. This leads me to the
conclusion that the period of 60 days referred to in s 86(10) was introduced with the abovementioned time

9 Para 15. This argument was first developed in Standard Bank of South Africa Ltd v Kruger; Standard
Bank of South Africa Ltd v Pretorius  2010 (4) SA 635 (GSJ) paras 13 ff.
10 Section 86(4)(b).
11 Section 86(6)(a) read with reg 24(6).
12 Section 86(7)(a).
13 Regulation 25(5). Section 86(9) provides: ‗If a debt counsellor rejects an application as contemplated in
subsection (7)(a), the consumer, with leave of the Magistrate‘s Court, may apply directly to the
Magistrate‘s Court, in the prescribed manner and form, for an order contemplated in subsection (7)(c).‘
14 Nedbank & others v National Credit Regulator & another (662/09 & 500/10) [2011] ZASCA 35 (28
March 2011) para 29.

frame in mind so as to allow the consumer and/or debt counsellor sufficient time to ―approach the court‖
for the necessary relief in terms of s 87.15
…
Given the fact that a consumer has a period of 50 business days, calculated from the date of his
application to the debt counsellor, within which to ―approach‖ the magistrate‘s court for an order in terms
of s 87, it could never have been contemplated that the rest of the process – including a hearing before
the magistrate and a re-arrangement order in terms of s 87 – should all be finalised within the remaining
ten business days.16
…
On the interpretation advanced on behalf of the plaintiff herein, the position is quite simple: the credit
provider would be entitled, in each case where a period of 60 days has elapsed without a re-arrangement
order in terms of s 87 having been made, unilaterally ―to derail the entire debt review process‖.‘17
[9] To my mind this is too limited an approach. Section 86(10) must be construed in
view of the other provisions of the NCA, particularly s 86(11). An application by a
consumer to apply for debt review, be declared over-indebted and have his debts
arising from credit agreements re-scheduled are novel concepts introduced by the
NCA.18 Their purpose is to assist not only consumers who are over-indebted,19 but also
those who find themselves in ‗strained‘ circumstances.20 A consumer who finds himself
in either of these circumstances may apply for debt review in terms of s 86(1). He may
do so whether or not he is in arrears under any particular credit agreement. Where the
consumer is not in default of any of his obligations, the credit provider is unable to
terminate the process because s 86(10) gives the right to terminate the debt review only
where the consumer is in default. In such a case the credit provider must await the
hearing in terms of s 87. Nor can the credit provider proceed to enforce the credit
agreement because the consumer is not in default. Where the consumer, however, is in
default the credit provider is entitled to enforce that credit agreement provided the

15 Para 25.
16 Para 26.
17 Para 28.
18 Nedbank & others v National Credit Regulator & another (662/09 & 500/10) [2011] ZASCA 35 (28
March 2011) paras 20 ff.
19 Section 79 of the NCA.
20 Section 87(7)(b) of the NCA (see H C J Flemming Flemming’s National Credit Act 2ed 139 ff).

consumer has not made application for debt review pursuant to s 86(1) and the credit
provider has complied with the requirements of s 129 and 130. In terms of s 86(2) an
application for debt review concerning a particular credit agreement may not be made if
the credit provider has ‗proceeded to take the steps contemplated in section 129 to
enforce that agreement‘.21
[10] The purpose of the debt review is not to relieve the consumer of his obligations
but to achieve either a voluntary debt re-arrangement22  or a debt re-arrangement by the
Magistrate‘s Court.23 The purposes of the NCA include the promotion of responsibility in
the credit market by encouraging responsible borrowing, avoidance of over-
indebtedness and fulfilment of financial obligations by consumers‘.24 Its approach to
over-indebtedness is ‗based on the principle of satisfaction of all responsible consumer
obligations‘.25 By providing for a consistent and harmonised system of debt restructuring
the NCA ‗places priority on the eventual satisfaction of all responsible consumer
obligations‘.26 It follows that the NCA serves not only the interest of consumers: its
construction calls for a careful balancing of all relevant interests.27
[11] The debt counsellor is charged to determine whether the consumer ‗appears‘ to
be over-indebted,28 and must issue a proposal recommending any or all of the orders
set out in s 86(7)(c). The debt counsellor‘s involvement in the debt review is no end in
itself but part of an on-going process culminating in the order of the Magistrate‘s Court
under s 87 (or a voluntary re-arrangement under ss 86(7)(b) and 86(8)(a)). Only then
can the debt review be said to be complete. The role of the debt counsellor does not
end with his referral of the matter to the Magistrate‘s Court. His ‗proposal‘ takes the form
of an application governed by the Rules of the Magistrates‘ Court and he is required to

21 Nedbank & others v National Credit Regulator & another (662/09 & 500/10) [2011] ZASCA 35 (28
March 2011) paras 4 ff.
22 Section 86(7)(b).
23 Sections 86(7) and 87.
24 Section 3(c)(i).
25 Section 3(g).
26 Section 3(i).
27 See Nedbank Ltd & others v National Credit Regulator & another para 2; Firstrand Bank Ltd v Mvelase
2011 (1) SA 470 (KZP) paras 20-21; Rossouw & others v First National Bank t/a FNB Home Loans
(640/2009) [2010] ZASCA 130 (30 September 2010); 2010 (6) SA 439 (SCA) para 17; BMW Financial
Services (South Africa) (Pty) Ltd v Mudaly  2010 (5) SA 618 (KZD) para 16.
28 Section s 86(6)(a).

be present in court, participate in the hearing and assist the court by way of furnishing
evidence, making submissions or answering questions.29 It is no answer to contend that
contextually s 86(10) forms part of s 86 and thus part of the ‗debt review‘ as opposed to
the ‗hearing‘ before the Magistrate‘s Court in terms of s 87. The words in s 86(10) ‗that
is being reviewed in terms of this section‘ rather emphasise that it is not a debt review
pursuant to ss 83(3)(b) or 85(a) and (b). Entirely different considerations apply to the
review under these sections: they are not necessarily initiated by the consumer and the
court has a discretion whether to proceed under those provisions. The credit provider is
not entitled to terminate either of them.  Under ss 86 and 87 there is only one unified
process the purpose of which is the restructuring of the consumer‘s debts by amending
the terms of the credit transaction between the parties. If the parties agree, they may
amend the agreement in terms of s 116 or file a consent order as envisaged by s
86(8)(a). If they do not, the hearing envisaged by s 87 takes place. It follows that I am in
agreement with the conclusion reached in the court below:30
‗I am unable to find anything in the structure of section 86 or of the Act in its entirety which is indicative of
an intention on the part of the legislature to limit the right of a credit provider under section 86(10) to the
process prior to the reference to the Magistrate‘s Court. On the contrary I consider that the credit
provider‘s rights to give notice in terms of section 86(10) continues until the Magistrate‘s Court has made
an order as envisaged in section 87.‘
[12] In the Papier decision31 the court held that the right of a credit provider to
terminate the debt review is forfeited once the debt counsellor brings an application to
the Magistrate‘s Court in terms of ss 86(7) and 87. The argument was that because the
debt counsellor has a period of 30 days within which to determine whether the
consumer appears to be over-indebted, and the consumer a further 20 days, in the
event of a finding that he is not over-indebted, to apply directly to the Magistrate‘s Court
in terms of s 86(9) for an order contemplated in s 86(7)(c), the 60 day period was
introduced to allow either the debt counsellor or the consumer sufficient time to
approach the Magistrate‘s Court as aforesaid. I do not think that s 86 requires the

29 National Credit Regulator v Nedbank Ltd & others 2009 (6) SA 295 (GNP) at 313C-D.
30 Para 18.
31 Para 7.

consumer or his debt counsellor to ‗approach the court‘ within the period of 60 days.
Indeed no time period is specified within which the debt counsellor must make
application to the Magistrate‘s Court. Nor does the NCA require the process of debt re-
structuring to be complete within the period of 60 days after the application was made.
To do so would obviously be unrealistic.  If it is correct, the credit provider will have little,
if any, opportunity to terminate the debt review, that is only the period after the 60 day
period and before the Magistrate‘s Court is approached. A sounder approach is to
recognise the express words of s 86(10) which gives the credit provider a right to
terminate the debt review in respect of the particular credit transaction under which the
consumer is in default, and only when he is default, at least 60 business days after the
application for debt review was made.  It must be emphasised that it is only when the
consumer is in default that the credit provider has this right. If he is not, the debt review
continues without the credit provider being entitled to terminate it. It is not that the credit
provider is ‗derailing‘ the process when he terminates the debt review: it the consumer
that is in breach of contract, not the credit provider. If the consumer applies for debt
review before he is in default the credit provider may not terminate the process. But if
the consumer is in default the consumer is entitled to a 60 business days‘ moratorium
during which time the parties may attempt to resolve their dispute.
[13] This conclusion is supported by s 86(5). Where, as in this case, the consumer
has applied for debt review before the credit provider has proceeded to enforce the
credit agreement,32 the consumer and credit provider are obliged, as s 86(5) requires,
not only to comply with any reasonable request by the debt counsellor to facilitate an
evaluation of the consumer‘s indebtedness and the prospects for responsible debt
restructuring but also to participate in good faith in the review and negotiations.33 This
duty to negotiate does not terminate when the debt counsellor refers his proposal to the
Magistrate‘s Court but continues pending the hearing. This much was conceded by

32 Section 86(2).
33 Section 86(5) provides: ‗A consumer who applies to a debt counsellor, and each credit provider
contemplated in subsection (4)(b), must –
(a) comply with any reasonable requests by the debt counsellor to facilitate the evaluation of the
consumer‘s state of indebtedness and the prospects for responsible debt re-arrangement; and
(b) participate in good faith in the debt review and in any negotiations designed to result in responsible
debt-rearrangement.‘

counsel appearing for the National Credit Regulator, the amicus curiae. Moreover, the
purpose of these negotiations is specifically to ‗result in responsible debt re-
arrangement‘34 which is precisely what the debt review is all about.
[14] The conclusion that the right of the credit provider to terminate the debt review
under s 86(10) can be exercised even after a referral to the Magistrate‘s Court, does not
lead to the anomalous result contended for on behalf of the amicus curiae.35 While it is
correct to say that s 87(1) requires that the Magistrate‘s Court ‗must conduct a hearing‘,
it is not correct to argue that termination of a debt review terminates the hearing.
Section 86(10) entitles a credit provider to terminate the debt review relating to a
specific credit agreement (‗[i]f a consumer is in default under a credit agreement that is
being reviewed‘), not the ‗hearing‘.  The hearing continues and, if several credit
agreements are being reviewed, continues in respect of the others. Although notice of
termination of the debt review is not required to be given to the Magistrate‘s Court but
only to the consumer, debt counsellor and National Credit Regulator,36 the proceedings
are governed by the Rules of the Magistrates‘ Courts which makes adequate provision
for the service of process and notices.37
[15] However, the right of the credit provider to terminate the review is balanced by s
86(11) which provides that if the credit provider has given notice to terminate and
proceeds to enforce the agreement ‗the Magistrate‘s Court may order that the debt
review resume on any conditions that the court considers to be just in the
circumstances‘. It is at this moment that the participation of the credit provider in the
debt review becomes relevant. He is obliged to comply with the reasonable requests of
the debt counsellor (s 86(5)(a)) and to participate in good faith in the review and any
negotiations designed to result in responsible debt re-arrangement (s 86(5)(b)). Should
the credit provider fail or refuse to participate in the review, a resumption of the process
may well be ordered. But where the credit provider on good grounds conclude that the
proposed restructuring will not lead to the ‗satisfaction by the consumer of all

34 Section 86(5)(b).
35 See also Papier’s  case above para 32.
36 Section 86(10)(a) (b) and (c).
37 Rule 9. See GG  33487 of 23 August 2010 and Nedbank Ltd & others v National Credit Regulator &
another above, para 28.

responsible financial obligations‘ (s 3(g) and (i)) or a re-arrangement as contemplated
by s 86(7)(c) the court considering the resumption of the debt review may well refuse to
sanction its resumption. As was stated by D Pillay J in FirstRand Bank Ltd v Mvelase,38
the NCA strikes a balance between the interests of consumers and those of credit
providers –
‗through a push-pull tension which ensures that whenever sections of the NCA tip the scales in favour of
the consumer, countervailing rights of the credit provider in other sections sway the balance in favour of
the latter, and vice versa.‘
[16] Section 86(11) refers to the ‗Magistrate‘s Court‘ that may give the order that the
debt review be resumed.  In his judgment in the court below Eksteen J considered that
where s 86(11) refers to the Magistrate‘s Court ‗hearing the matter‘ it is a reference to
the Magistrate‘s Court to which the debt review has been referred. He reasoned that the
jurisdiction conferred by s 86(11) is specifically restricted to the Magistrate‘s Court in
contrast to the powers enjoyed under ss 83, 85, 129(2) and 130 where reference is
made to ‗the court‘ or ‗a court‘. The debt review process provided for by s 86 in its
entirety falls under the judicial oversight of the Magistrate‘s Court and, for that reason,
he held that only the Magistrate‘s Court had jurisdiction to order a resumption of the
debt review.39
[17] Proceedings to enforce a credit agreement may be commenced in either the
High or the Magistrate‘s Court. Section 86(11) mentions only the Magistrate‘s Court. It
seems to me that the words ‗hearing the matter‘ in this subsection relate to the
proceedings to enforce the agreement and must, consequently, refer to the enforcing
court which may be either the High or the Magistrate‘s Court. The problem, however, is
that s 86(11) does not refer to the High Court at all. This, it was submitted, is an
omission in the legislation that can and should be cured by reading the words ‗or High

38 2011 (1) SA 470 (KZP) para 20.
39 See paras 23 ff.

Court‘ into the subsection.40 I agree with this approach: it will avoid the issues that may
arise from two different courts considering related matters.
[18] Often debt enforcement proceedings take place by way of a simple summons
followed by an application for summary judgment. As was said in Joob Joob
Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture,41 ‗summary judgment
procedure was not intended to ―shut (a defendant) out from defending‖, unless it was
very clear indeed that he had no case in the action. It was intended to prevent sham
defences from defeating the rights of parties by delay, and at the same time causing
great loss to plaintiffs who were endeavouring to enforce their rights.‘ Over-
indebtedness is not a defence on the merits.42 However, because of its extraordinary
and stringent nature a court has an over-riding discretion to refuse an application for
summary judgment.43 It would be proper for a defendant to raise termination of the debt
review by reason of the credit provider‘s failure to participate or its bad faith in
participating when application for summary judgment is made. These issues may be
raised, not as a defence to the claim, but as a request to the court not to grant summary
judgment in the exercise of its over-riding discretion. Of course, sufficient information on
which the request for a resumption of the debt review is based must be placed before
the court.
[19] No such request was made by the appellant in the court below. Moreover, the
proposal by the debt counsellor in respect of the mortgage bond the debt review of
which was terminated envisaged a debt re-structuring in terms of which the monthly
instalments payable on the mortgage bond be reduced from R6 644,93 to R3 500,00,
but payable over the same period of time, that is 240 months. This would deprive the
respondent of nearly one half of what it was entitled to under the credit agreement.
Such a proposal is not in accordance with the NCA, particularly s 86(7)(c)(ii), which
places limits on the proposal for the re-arrangement as well as on the order to be made

40 See, in particular, Mercedes Benz Financial Services South Africa (Pty) Ltd v Dunga 2011 (1) SA 374
(WCC) paras 16-23 and 33-44.
41 [2009] ZASCA 23; 2009 (5) SA 1 (SCA) para 31.
42 C van Heerden in J W Scholtz, J M Otto, E van Zyl, CM van Heerden and N Campbell Guide to the
National Credit Act (2008) para 12.16.
43 Joob Joob Investments paras 10-11.

in terms of s 87(1).44 In these circumstances the termination of the debt review by the
respondent is understandable. It follows that the appeal should be dismissed. No order
for costs was sought.
[20] The appeal is dismissed.

________________
F R MALAN
JUDGE OF APPEAL

44 Cf SA Taxi Securitization (Pty) Ltd v Mongezi Moni & others [2011] 2 AEC GHC 11 paras 34 ff.

APPEARANCES:
For Appellant:

SA Collett

Instructed by:

Gerhard Stoltz Inc

East London

Webbers

Bloemfontein

For Respondent:

P F Louw SC, S Eiselen and N Konstantinides

Instructed by:

Glover Inc

Parktown

Rossouws

Bloemfontein

For Amicus Curiae:
A E Franklin SC and A Govender

Instructed by:

Honey Attorneys

Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal

Date:
27 May 2011

Status:
Immediate

Please note that the media summary is intended for the benefit of
the media and does not form part of the judgment of the Supreme
Court of Appeal.

COLLETT v FIRSTRAND BANK

The Supreme Court of Appeal today gave a judgment on the
meaning of sections 86(10) and (11) and s 87 of the National
Credit Act 34 of 2005. The court held that a credit provider is
entitled to terminate a debt review applied for by a consumer even
after the matter has been referred to the Magistrate’s Court for a
re-arrangement order. This right, however, is balanced by the
obligation of both the credit provider and consumer to participate in
the debt review and negotiations in good faith in order to achieve
responsible debt re-arrangement. A failure to do so by the credit
provider may lead to a resumption of the debt review under section
86(11). The Supreme Court of Appeal also held that there was a
lacuna in section 86(11) and read into its provisions after the
words ‘Magistrate’s Court’ the words ‘or High Court’. This will

ensure that the Magistrate’s Court and the High Court hearing
proceedings to enforce a credit agreement may grant an order for
the resumption of the debt review.