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Section 127(1) of the National Credit Act 34 of 2005 (“the NCA”) provides that a consumer under an instalment sale agreement may give written notice to the credit provider to terminate the agreement and return the goods to the credit provider’s place of business. In terms of Section 127(2), the credit provider must within 10 business days give the consumer written notice setting out the estimated value of the goods and any other prescribed information.

This allows the consumer to withdraw the notice to terminate within 10 business days and resume possession of the goods, unless the consumer is in default under the credit agreement in terms of Section 127(3). In terms of Section 127(4), if the consumer responds to the notice in terms of Section 127(2), the credit provider must return the goods to the consumer, unless he is in default under the credit agreement, or should the consumer not respond, then the credit provider must sell the vehicle for the best price reasonably obtainable.

After the sale of the goods, the credit provider must credit or debit the consumer with a payment or charge equivalent to the proceeds of the sale less the expenses incurred in connection with the sale and provide written notice to the consumer in terms of Section 127(5) of the settlement value before the sale and other relevant information resulting from the sale (i.e. the gross amount realised on the sale, the net proceeds of the sale etc.). The above provisions were applicable when the consumer voluntarily surrendered the goods to the credit provider.

If there is a dispute regarding the sale, which presumably also covers the question whether the goods were sold for the best price reasonably obtainable in accordance with s 127(4) (b), and the consumer has not been able to resolve it, he or she may use the procedure envisaged in Section 128 of the NCA by applying to the Tribunal to review the sale.

Therefore the question arises as to whether the provisions of Section 127(2) to (9) are applicable when the credit agreement has been cancelled and the goods have been attached by way of an attachment order. This question arose in the matter of Edwards v FirstRand Bank Ltd t/a Wesbank 2017 (1) SA 316 (SCA), [2016] 4 All SA 692 (SCA) (“Edwards v FirstRand Bank Ltd t/a Wesbank”) where it was discussed that Section 131 states that if a court makes an attachment order with respect to property that is the subject of a credit agreement, section 127 (2) to (9) and section 128, read with the changes required by the context, apply with respect to any goods attached in terms of that order.

Ultimately though, the provisions of Section 129(3) state that the consumer is permitted, before the credit provider has cancelled the agreement to reinstate it by paying the overdue amount and resume possession of the property. In a situation when the credit provider has terminated the agreement, the consumer is not entitled to reinstate the agreement and resume possession of the goods as envisaged in Section 127(2). In the above mentioned case, Edwards v FirstRand Bank Ltd t/a Wesbank, the Honourable Judge of Appeal Cachalia stated “To conclude, I would hold that Wesbank had no obligation to deliver a s 127(2) notice to Mr Edwards after the agreement had been cancelled and the goods attached following the court order”.

Therefore it may be argued that once the credit agreement has been cancelled by the credit provider, the provisions of Section 127(2) to (9) are not applicable and should the credit provider fail to cancel the credit agreement prior to an attachment order of the goods, then Section 127(2) to (9) are applicable read with Section 129(3).