NCA - Impact on sections 57, 58, 65 and AODs
Impact of NCA on sections 57, 58, 65 and AODs

 

<< Back to White Papers on National Credit Act South Africa

National Credit Act of South Africa No.34 of 2005
Impact of NCA on sections 57, 58, 65 and Acknowledgements of Debt

By Andre Maas
 20 June 2007

 Print: Impact of NCA on sections 57, 58, 65 and AODs
Introduction


Although reasonable caution has been taken and a lot of time invested in drafting this paper, this paper is not a legal opinion. This paper is a gathering of threads to use as a guide to understand the workings of the National Credit Act. Please be careful. Do not jump to conclusions. This act works as a whole. It is single body of law spreading over 173 sections, 9 chapters of regulations, and 45 prescribed forms. It replaces and combines into one the Credit and Usury Acts. You can always contact Debtpack directly, if you need assistance or advice with the National Credit Act of South Africa.
read on...read on...read on...


To deconstruct previous complexity the drafters introduce new concepts, new categories, new definitions. They have created new bodies, new tribunals and new officials. IT IS NEW.

The BIGGEST NEW is placing regulatory burden, on the shoulders of Credit Providers. Oh boy, o boy and how their duties, responsibilities and paper trails have increased!

The National Credit Act is all encompassing. If a transaction is not for cash, it is for credit. If it is for credit then you are a credit provider contracting a credit agreement. There is no escape. Read Section 90. “An agreement is unlawful if it defeat the act”.

At it’s heart the National Credit Act prevents exploitative usury. It achieves this by placing the duty to prevent on Credit Provider’s shoulders. This is clever.

As regulating ordinary, non interest bearing, 30 day Accounts would be counter productive, and recognising that Money lending is not core thereto. (i.e. Raising interest and charges is after the fact and incidental thereto), the National Credit Act lumps 30 day accounts and utility bills, under the single catch all phrase, - “Incidental Credit Agreement”. Then right upfront, in sections 4 & 5, the Act, excludes them, largely, from the implications of the Act. Do not take this act lightly. It’s impact will be LARGE! Every Credit Policy, every Credit Granting process, every Collections process, every Legal process is affected.

Debtpack converts Credit Policies into a Credit Solutions.

The NCA places the duty to manage the myriad of details linked to credit granting and enforcement on the credit provider shoulders. To stay out of trouble you need to act in terms of your carefully thought out policies. Turning non core processes to strategic advantage is what we do. Contact Debtpack today for assistance with formulating credit policies.
Article

How do you Pay Off a Capital Amount?

This paper is divided into three parts.

  1. Introduction
  2. Controllable Risk and
  3. Inherent Risk.

Introduction

What are the characteristics of an Incidental Debt Agreement?

In  What is an incidental credit agreement, I stated that the NCR’s definition of a Credit Agreement excludes ‘Invoice Debt’ sold on 30 day account. This is because both of the following elements must be present at the conclusion of the agreement. Namely;
  1. The parties agree that payment is to be deferred; AND
  2. A charge or interest will be raised on the amount deferred.
as charges and/or interest are not raised from the start but only in the event of non payment, a 30 day account is not a Credit Agreement.

But 20 business days after you first raise charges or interest on a 30 day account the NCA deems that agreement to be an Incidental Credit Agreement.

  • The 1st characteristic of an incidental credit agreement is that payment is deferred.
  • The 2nd characteristic is that charges and interest are also deferred until a forthcoming event which may or may not happen. i.e. late payment.

In the same Paper I stated that the Invoice Total is the Invoice Debt. The Invoice Debt does not fall due in a series of instalments.

  • This is Incidental Debt’s 3rd characteristic. It is a Capital Amount.

The NCA aims to control “mashonisas” – “credit sharking” and only needs to intervene once credit related fees and charges are raised, and then only 20 businesses thereafter.
Quite Practical really.

If you pay off a Capital Amount is it a Credit Agreement?

It is the 3rd characteristic of an Incidental Credit Agreement which raises the question: Can you pay off a Capital Amount? Isn’t agreeing to pay a fixed amount off in instalments a Credit Transaction as defined by the NCA?

Section 8(4) which defines Credit Transactions includes an instalment agreement and in subsection (f) says that if an amount is deferred and a charge, fee or interest is payable in respect of the agreement or the amount deferred then it is a Credit Transaction.


National Credit Act Section 8(4) - Credit Agreements

(4) An agreement, irrespective of its form but not including an agreement contemplated in subsection (2), constitutes a credit transaction if it is;
  1. a pawn transaction or discount transaction;
  2. an incidental credit agreement, subject to section 5 (2);
  3. an instalment agreement;
  4. a mortgage agreement or secured loan;
  5. a lease; or
  6. any other agreement, other than a credit facility or credit guarantee, in terms of which payment of an amount owed by one person to another is deferred, and any charge, fee or interest is payable to the credit provider in respect of
    1. the agreement; or
    2. the amount that has been deferred.

Thus on the face of it, if a Credit Provider agrees that a consumer can pay a Capital Amount off in Instalments, AND any fee, charge or interest IS payable in terms of that agreement or on the amount deferred, then the parties are concluding a Credit Transaction in terms of the NCA.

Why is this an issue?

  1. You must register as a Credit Provider if you have more than 100 credit agreements.
  2. You must register as a Credit Provider if the Capital owed exceeds R500, 000.
  3. Credit Providers are subject to the Act’s reckless lending requirements.
  4. To ensure that you are not lending recklessly, i.e. sufficient Net Income, you need to check at least the following; previous applications for credit, concluded and existing credit agreements, payment patterns, negative data, administration orders, compromises and debt reviews, judgments; present Income, previous income, assets and liabilities; education level, qualifications, business history, reasons for changing or leaving jobs; identity details such as name, ID Number, birth date, marriage status, family details, contact numbers and addresses. (Credit Bureaus and the NCR will collate and keep all of the above).
  5. Pre Agreement Statement & Quotations must be given.
  6. Small Agreements have a specific formal format.

But this is CRAZEEE!!

The debtor already owes me the money. I am not lending it. It is already lent! It is the Debtor’s default that has caused this and now, now that I want to assist, I first have to establish if the debtor can afford it! Crazeee!

Well the NCA is simply enforcing you to do your homework up front. This is the crux!

What did you agree to up front?
Section 5(3)1 states that a person can only recover a fee, charge or interest “in respect of a deferred amount” if the parties agreed thereto “ON or BEFORE the date on which the relevant goods or services were supplied”.

Thus if you negotiate terms, interest and fees after delivery, one of two things happens.
  1. You conclude a new separate standalone “loan agreement" or “Acknowledgment of debt”.
  2. You “novate” and conclude a new agreement to replace the old agreement.

Loan Agreement

For a proper “Loan Agreement” to be concluded, the following must be certain.

  1. That it is a loan contract; (Your Summons will read “Monies Lent and Borrowed”)
  2. That money was advanced in terms of the loan;
  3. That the loan is repayable.

Point (2) above raises the interesting NCA fact that a consumer cannot waive the “exceptio non numerate pecuniae”. A debtor can thus say, Yes we did agree, Yes I did sign, Yes everything is correct But I never received any money2. The agreement was signed in anticipation of receipt which has not happened. So please give me the money first. Thus for 30 day accounts, a loan agreement is not ideal.

The parties should rather agree to and sign an “Acknowledgment of Debt and Undertaking”. The undertaking being the core of the matter, it doesn’t help if the debtor agrees to owe but doesn’t agree to pay.

Acknowledgement of Debt and Undertaking

In an acknowledgment part a consumer acknowledges that an “amount of money” is owed to the credit provider. In the undertaking part the consumer undertakes to pay the debt. The acknowledgment part is important because it;

  • Defines the Amount owed.
  • It establishes that money is owed.
  • It cancels any underlying non-delivery and/or non-performance issues.

An Acknowledgment of Debt is an ideal “ Liquidated Sum Due”.

Novation
Novation is, literally, the “renewal” of an obligation by discharging it and replacing it by a new one. In our law it has become known as “voluntary novation” in the sense that it is based on a consensual act and the intention to substitute one valid and enforceable obligation by another.

Debtpack’s AOD specifically states that novation does not take place. In other words the underlying reason for the money being owed, is not expunged. This ensures that the AOD cannot be seen a “Loan Agreement”.

If the original agreement enabled credit charges and interest then charges and interest can be passed through to the AOD. If not, you cannot contractually agree to raising charges, fees and interest now [1].

The problem with an AOD is that time does not necessarily solve all things. The consumer can still default, although for less. This is where S57 and S58 become useful but more about that later.
Controllable Risk

Controllable Risk

During the “controllable risk” stage you are deciding and setting up matters so that the enforcement of a “30 day Credit” Agreement during the “inherent risk” stage is easier. 


Credit Value Chain

  • Controllable Risk – those factors which are within your control and you can apply before you give a customer credit;
  • Inherent Risk – the risk that your customer will default on the credit you have granted. This risk differs from organization to organization, because of different types of customers and different collection processes.

>> More about Credit Policy Formulation and the Credit Value Chain

What Must I Decide and Set-Up?

  1. Do I Charge Interest?
    Whether the NCA applies or not turns solely on your decision as to whether you charge fees and/or raise interest or not, when the consumer defaults. If you DO NOT charge fees and/or interest then the Act does not apply!

  2. What Interest Can I Charge?
    The NCA has made this very easy. 2% per month is the rate and I suspect it will stay there.

  3. How do I Calculate Interest
    Debtpack follows the Act’s mainstream choices [3] - (More about the Debtpack software and automating your credit policy)
    1. interest is calculated daily,
    2. interest includes the 1st day and excludes the last day, [4]
    3. interest rate is (2% x 12 months) divided by 365. (.065% p.d.)

  4. Must I compound interest?
    If you want to compound interest then you can but you must add the month’s interest to the
    deferred amount at the end of the month.

    5. Debtpack Does Not Compound Interest.

    Debtpack ONLY calculates simple interest on a daily basis. Debtpack does not compound
    interest. The reason for this is to enable compound interest, we would have to journalize interest earned which means that it becomes income earned and vat and tax must be paid. Secondly 90% of interest raised is never collected which results in reversing the journals.

    >> More about Credit Policy Automation with Debtpack 64-bit

  5. On What do I Charge Interest?

    On a point of detail
    In it’s dealings with Incidental Debt the NCA Act refers to the payment of “an unpaid or an overdue amount” or a deferred amount. Can one say that “an amount divided into instalments” is an amount, which brings us back to the original question “Can you pay an Invoice Amount Off? 

    Fortunately the NCA’s Regulations resolve the dilemma by defining a “Deferred Amount”.

    Regulation 39 Chapter 5 GNR 489

    39. Definitions.-In this Chapter

    1.  "Deferred amount" means any amount payable in terms of a credit agreement the payment of which is deferred and upon which interest is calculated, or any fee, charge or increased price is payable by reason of the deferment, and
      1. the deferred amount includes
        1. any obligation of the consumer that is deferred as per section 8 (3) and section 8 (4) of the Act;
        2. in respect of incidental credit agreements,
          1. the amount on which a supplier of goods or services charges interest or a late payment fee, per section 5 (2) (a), or
          2. the lower price in respect of the agreements referred to in section 5 (2) (b);
        3. the amounts referred to in section 101 (1) (b) to section 101 (1) (g) inclusive;
        4. the amounts referred to in section 102 (1) (b) to section 102 (1) ( f);
    2. the deferred amount is reduced by any amount paid towards the settlement of the deferred amount, or an amount credited to the deferred amount, at the time that such payment is made, or credit falls due, and
    3. the date from which an amount becomes part of the deferred amount, is the date upon which such an amount becomes due or may be levied, subject to the limitations specified in the Act and these regulations.

    The sentence “the deferred amount is reduced by any amount paid towards the settlement of the deferred amount” awkwardly OK’s a series of payments. So an Incidental Debt AOD is OK.

    So in Debtpack, on a daily basis, at 24h00, interest is calculated on the outstanding balance. The outstanding balance consists of the previous days balance, plus credits, minus debits. The overdue balance is multiplied by .065753424 which results in the interest amount due.

    Debtpack has always credited payments as follows; firstly towards interest, secondly towards charges, thirdly to reduce capital. Debtpack also enforces the Duplum Rule that interest and costs cannot exceed the capital amount.

  6. From when can I raise interest?
    The NCA says that the NCA, via an Incidental Credit Agreement deeming provision, applies 20 business days after a late payment fee or interest is first charged or when the full settlement fee first becomes applicable. So not much help there. Can you go back to GO?

    Although the NCA does not say so, contractual interest really only becomes possible once the debtor defaults. So the interest start date cannot go back date to inception date. In fact if you did you fall foul of the NCA’s credit agreement definitions.

    Interest can be charged from the date that the debt became both due and payable.

  7. What About Prescribed Interest?
    Prescribed interest has nothing to do with the Incidental Debt. Basically the Act says that if you did not raise interest, then by virtue of this act interest is automatically payable from when the judgment debt is payable. By convention this is the date of service of summons.

    PRESCRIBED RATE OF INTEREST ACT NO. 55 OF 1975

    1.  Interest on a debt to be calculated at a prescribed rate in certain circumstances.—
      (1) If a debt bears interest and the rate at which the interest is to be calculated is not governed by any other law or by an agreement or a trade custom or in any other manner, such interest shall be calculated at the rate prescribed under subsection (2) as at the time when such interest begins to run, unless a court of law, on the ground of special circumstances relating to that debt, orders otherwise.
    2.  Interest on a judgment debt.—
      (1) Every judgment debt which, but for the provisions of this subsection, would not bear any interest after the date of the judgment or order by virtue of which it is due, shall bear interest from the day on which such judgment debt is payable, unless that judgment or order provides otherwise.
      (2) Any interest payable in terms of subsection (1) may be recovered as if it formed part of the judgment debt on which it is due.
      (3) In this section “judgment debt” means a sum of money due in terms of a judgment or an order, including an order as to costs, of a court of law, and includes any part of such a sum of money, but does not include any interest not forming part of the principal sum of a judgment debt.

    So if you decide not to charge interest, then prescribed interest is automatically raised from
    service of summons. The prescribed interest rate is currently 15.5%.

    Debtpack’s Judgments automatically follow this approach if Contract Interest is not entered.

  8. Must I Agree to Credit Terms Upfront?
    If you want to charge fees and raise interest you MUST agree thereto upfront. Why, because the NCA says so [1]. The NCA is mandatory it says - May Only.

  9. Must be able to prove that Credit Terms were disclosed and accepted?
    You must be able to prove that the Credit Provider disclosed and the Consumer accepted that fees may be charged and that interest may be raised, on or before the goods or services were provided. How does one do this as signature does not prove understanding?

    This is where Quickform is invaluable. The consumer’s written acceptance is date and time stamped and a Credit Knowledge Quiz Quickform is available . More about Quickform.

  10. Must Incidental Credit Agreement Changes be reduced to writing?
    The NCA states that from the moment when a 30 day Account is deemed to be an Incidental Credit Agreement, all changes must be reduced to writing and be signed by both parties [5]. Section 117 states that a copy of the amended document must be delivered to the consumer within 20 business days.

    Incidental Credit Agreements do not have to be in writing (although it is strongly suggested that all Credit Terms are agreed to in writing). As soon as the terms change then it must be in writing.

  11. Monthly Statements.
    The NCA states that from the moment when a 30 day Account is deemed to be an Incidental Credit Agreement, the Credit Provider must deliver monthly statements to the consumer [6]. Theformat thereof is a grey area.

  12. Can I charge Late Payment Fees?
    The NCA Section 5(2)(a) specifically makes mention of charging late payment fees.As the charging of this fee occurs prior to the deeming provision, the late payment fee is not regulated by the NCA.

    What, when and how late payment fees are charged is contractual issue between the supplier and debtor.

    Please remember that this does not result in gap to be exploited. A late payment fee is essentially an agreement up front as to the amount of damages that will be suffered on the occurrence of an event. The Magistrate has the discretion to deny the claim.

  13. What other Charges and Fees can I Raise?
    In addition to late payment fees as mentioned above the NCA also refers to charges and fees.

    What, when and how fees and charges are charged is contractual issue between the supplier and debtor.

    Remember that your summons must raise a separate claim for each of these contractual fees. Currently Debtpack only provides for the Tracing Fee’s 2nd Particulars of Claim.

    The most common fees and charges regulated in credit terms are:
    1. Tracing Costs
    2. Attorney & Client Costs
    3. Credit Checks
    4. Letter of Demand
    5. Bounced Cheques
Inherent Risk

Inherent Risk

The “Controllable Risk” stage sets the stage for the “Inherent Risk stage”. Please remember that enforcement, summons and warrant included, are negotiations by other means. It is never too late to settle!!

Enforcing "Liquidated Amounts Due”

This paper is limited to “liquidated amounts due”.

An amount due is in terms of the Magistrates Court Act a liquidated amount due if:
  1. The amount is fixed.
  2. The amount is payable is money.
  3. There is no dispute. Liquidated 30 day Account Amounts Due based on Tacit Agreement

Liquidated 30 day Account Amounts Due based on Tacit Agreement

Example
Credit Provider Dr Smith
Debtor

Mr Debtor

Liquidated Amount Due Based on a verbal agreement, R10,000 is payable.
Debt Type Professional Services Rendered
Mora

Not placed in Mora

Fees None
Charges None
Interest None
Credit Agreement Not in terms of NCA

Stage 1
The first step is to place the debtor in Mora so that the debtor knows that the amount owed is not only payable but due as well [7].

The whole aim of collections is a negotiated settlement. The first step to achieve this is a letter of demand. It has the added advantage that once the notice period has passed the debtor cannot say that the debt is NOT both due and payable.

Negotiation may result in a promise to pay. In Debtpack terminology a promise to pay is an undertaking to settle the full amount outstanding on a specific date.

Negotiation may also result in concluding an acknowledgment of debt and undertaking with the debtor. (An AOD differs from a PTP because it regulates a series of payments). But, in this scenario, as you did not agree to fees, charges and interest up front you cannot add them into the AOD now.

Further “Negotiations” may result in a Return of Service of Summons.

Professional Services Summons
“Payment of R10, 000 for Professional Services rendered by plaintiff to defendant at latter’s specific instance and request, which amount despite demand8 the defendant fails or refuses to pay, plus interest thereon @15.5% from date of service of summons.

Service of Summons generally leads negotiations back to PTP or AOD. I suggest that an AOD and Consent to Judgment be agreed to. But remember in this scenario you cannot add charges, fees and interest. (Prescribed Interest is something the Court Grants)

The fourth negotiation result is a Default Judgment.

The fifth negotiation result is a Warrant of Execution.

Be careful of accidental novation or compromise

In its widest sense, compromise is an agreement by which any doubtful claim is settled between the interested parties. If the claim had its origin in contract, the compromise extinguishes the claim and gives rise to a new obligation. In it’s narrower sense compromise is an agreement between litigants for the settlement of a matter in dispute.

Compromise is not the same as novation. Novation relates to the replacement of one valid contract by another whereas compromise relates to a contract or claim which may be invalid and in respect of which there is doubt or uncertainty.

Section 57 & 58

Section 57 & 58 reduces a AOD’s inherent risk. They both enable you to obtain judgment if the debtor fails to pay. Debtpack enables both procedures.

Section 57 consists of:
  1. the offer;
  2. the acceptance of the offer;
  3. advice of acceptance by registered post
 Section 57 [9]

Section 58 consists of:
  1. the consent to judgement
 Section 58 [10]

Section 65 is the mechanism you use to regulate a debtor’s offers to pay off a judgment debt in instalments. Section 65 [11]
Section 65A(1) is the method you follow to force a debtor to pay a judgment debt off in instalments. Section 65 A(1) [12]
Notes

[1] Section 5(3) A person may only charge or recover a fee, charge or interest
(a) in respect of a deferred amount under an incidental credit agreement as provided for in section 101 (d), ( f) and (g) subject to any maximum rates of interest or fees imposed in terms of section 105; or
(b) in respect of an unpaid amount contemplated in paragraph (a) of the definition of "incidental credit agreement" only if the credit provider has disclosed, and the consumer has accepted, the amount of such a fee, charge or interest, or the basis on which it may become payable, on or before the date on which the relevant goods or services were supplied.

[2] This is one of the issues raised on Carte Blanche re JD Groups Cash Loans to buy furniture.

[3] Chapter 5 GNR 489 of 31 May 2006. Regulations made in terms of the NCA 2005.

[4] Section 103(3)

[5] Section 116

[6] Section 108

[7] Agreeing to a pay by date is not required. It simply comes due on demand you don’t even have to allege that a reasonable time has elapsed.

[8] It is not necessary to allege that a demand was made, unless, in terms of the contract, a demand is a requirement for repayment.

[9] 57. Admission of liability and undertaking to pay debt in instalments or otherwise.—
(1) If any person (in this section called the defendant) has received a letter of demand or has been served with a summons demanding payment of any debt, the defendant may in writing:
(a) admit liability to the plaintiff for the amount of the debt and costs claimed in the letter of demand or summons or for any other amount;
(b) offer to pay the amount of the debt and costs for which he admits liability, in instalments or otherwise;
(c) undertake on payment of any instalment in terms of his offer to pay the collection fees for which the plaintiff is liable in respect of the recovery of such instalment; and
(d) agree that in the event of his failure to carry out the terms of his offer the plaintiff shall, without notice to the defendant, be entitled to apply for judgment for the amount of the outstanding balance of the debt for which he admits liability, with costs, and for an order of the court for payment of the judgment debt and costs in instalments or otherwise in accordance with his offer, and if the plaintiff or his attorney accepts the said offer, he shall advise the defendant of such acceptance in writing by registered letter.

(2) If, after having been advised by the plaintiff or his attorney in writing that his offer has been accepted, the defendant fails to carry out the terms of his offer, the clerk of the court shall, upon the written request of the plaintiff or his attorney accompanied by:
(a) if no summons has been issued, a copy of the letter of demand;
(b) the defendant’s written acknowledgment of debt and offer and a copy of the plaintiff’s or his attorney’s written acceptance of the offer;
(c) an affidavit or affirmation by the plaintiff or a certificate by his attorney stating in which respects the defendant has failed to carry out the terms of his offer and, if the defendant has made any payments since the date of the letter of demand or summons, showing how the balance claimed is arrived at:
     (i) enter judgment in favour of the plaintiff for the amount or the outstanding balance of the amount of the debt for which the defendant has admitted liability, with costs; and
     (ii) order the defendant to pay the judgment debt and costs in specified instalments or otherwise in accordance with his offer, and such order shall be deemed to be an order of the court mentioned in section 65A (1).

(3) When the judgment referred to in subsection (2) has been entered and an order made, and if the judgment debtor was not present or represented when the judgment was entered by the clerk of the court and the order made, the judgment creditor or his or her attorney shall forthwith advise the judgment debtor by registered letter of the terms of the judgment and order.

(4) Any judgment entered in favour of the plaintiff under subsection (2) shall have the effect of a judgment by default.

[10] 58. Consent to judgment or to judgment and an order for payment of judgment debt in instalments.—
(1) If any person (in this section called the defendant), upon receipt of a letter of demand or service upon him of a summons demanding payment of debt, consents in writing to judgment in favour of the creditor (in this section called the plaintiff) for the amount of the debt and the costs claimed in the letter of demand or summons, or for any other amount, the clerk of the court shall, on the written request of the plaintiff or his attorney accompanied by:
(a) if no summons has been issued, a copy of the letter of demand; and
(b) the defendant’s written consent to judgment,
     (i) enter judgment in favour of the plaintiff for the amount of the debt and the costs for which the defendant has consented to judgment; and
     (ii) if it appears from the defendant’s written consent to judgment that he has also consented to an order of court for payment in specified instalments or otherwise of the amount of the debt and costs in respect of which he has consented to judgment, order the defendant to pay the judgment debt and costs in specified instalments or otherwise in accordance with this consent, and such order shall be deemed to be an order of the court mentioned in section 65A (1).

(2) The provisions of section 57 (3) and (4) shall apply in respect of the judgment and court order referred to in subsection (1) of this section.

[11] Section 65. Offer by judgment debtor after judgment.—If at any time after a court has given judgment for the payment of a sum of money and before the issue of a notice under section 65A (1), the judgment debtor makes a written offer to the judgment creditor to pay the judgment debt in specified instalments or otherwise and such offer is accepted by the judgment creditor or his attorney, the clerk of the court shall, at the written request of the judgment creditor or his attorney, accompanied by the offer, order the judgment debtor to pay the judgment debt in specified instalments or otherwise in accordance with his offer, and such order shall be deemed to be an order of the court mentioned in section 65A (1).

[12] 65A. Notice to judgment debtor if judgment remains unsatisfied.—
(1)
(a) If a court has given judgment for the payment of a sum of money or has ordered the payment in specified instalments or otherwise of such an amount, and such judgment or order has remained unsatisfied for a period of 10 days from the date on which it was given or on which such an amount became payable or from the expiry of the period of suspension ordered in terms of section 48 (e), as the case may be, the judgment creditor may issue, from the court of the district in which the judgment debtor resides, carries on business or is employed, or if the judgment debtor is a juristic person, from the court of the district in which the registered office or main place of business of the juristic person is situate, a notice calling upon the judgment debtor or, if the judgment debtor is a juristic person, a director or officer of the juristic person as representative of the juristic person and in his or her personal capacity, toappear before the court in chambers on a date specified in such notice in order to enable the court to inquire into the financial position of the judgment debtor and to make such order as the court may deem just and equitable.
(b) A notice referred to in paragraph (a) shall be drawn up by the judgment creditor or his or her attorney, signed by the judgment creditor or his or her attorney and the clerk of the court, and served by the sheriff, or by the attorney of the judgment creditor or any candidate attorney in his or her employ, on the judgment debtor or, if the judgment debtor is a juristic person, on the director or officer summonsed as the representative of the juristic person and in his or her personal capacity, in the manner prescribed by the rules for the service of process in general and at least ten days before the date fixed in the notice for the appearance before the court.
(c) The fees and charges in respect of a notice served by any attorney or candidate attorney shall be determined in accordance with the tariffs prescribed by the rules for the service of process by a sheriff: Provided that no such fees and charges shall be payable unless personal service of the notice has been effected.

(2) If the minutes of the proceedings do not show that the judgment debtor was present in person or represented by any person when judgment was given and if no warrant of execution pursuant to the judgment has been served on the judgment debtor personally, no notice under subsection (1) shall be issued unless the judgment creditor or his or her attorney provides proof to the satisfaction of the clerk of the court that he or she has advised the judgment debtor by registered letter of the terms of the judgment or of the expiry of the suspension ordered under section 48 (e), as the case may be, and a period of 10 days has elapsed since the date on which the said letter was posted.

(3) The court may, at any stage of the proceedings, if a director or officer mentioned in subsection (1) ceases to be a director or officer of the juristic person concerned or absconds, at the request of the judgment creditor, from time to time replace such director or officer by any other person who at the time of such replacement may be a director or officer of the juristic person, and the proceedings shall then continue as if there has been no replacement.

(4) If the court has given judgment for the payment of an amount of money in instalments, no notice under subsection (1) shall be issued unless the judgment creditor has delivered an affidavit or affirmation or his or her attorney has delivered a certificate to the clerk of the court in which is mentioned the outstanding balance of the judgment debt, in what respects the judgment debtor has failed to comply with the court order, to what extent he or she is in arrear with the payment of the instalments and that the judgment debtor was advised by registered letter of the terms of the judgment.

(5) If a judgment debtor fails to satisfy an order to pay the judgment debt in instalments or otherwise, or if an emoluments attachment order has not been satisfied, a judgment creditor may issue anew a notice in accordance with subsection (1).

(6) If the court is satisfied on the ground of sufficient proof or otherwise—
(a) that the judgment debtor, director or officer concerned has knowledge of a notice referred to in subsection (1) and that he or she has failed to appear before the court and on the date and at the time specified in the notice;
(b) that the judgment debtor, director or officer concerned, in the case where the relevant proceedings were postponed in his or her presence to a date and time determined by the court, has failed to appear before the court on that date and at that time; or
(c) that the judgment debtor, director or officer concerned has failed to remain in attendance at the relevant proceedings or at the proceedings as so postponed, the court may, at the request of the judgment creditor or his or her attorney, authorise the issue of a warrant directing a sheriff to arrest the said judgment debtor, director or officer and to bring him or her before a competent court at the
earliest possible opportunity in order to enable that court to conduct an inquiry referred to in subsection (1).
[Sub-s. (6) added by s. 3 (d) of Act No. 81 of 1997.]

(7) A warrant authorised under subsection (6) shall be prepared by the judgment creditor or his or her attorney, signed by the judgment creditor or his or her attorney and the clerk of the court, and executed by the sheriff.

(8)
(a) Any person arrested under a warrant referred to in subsection (6) shall, in accordance with section 35 (1) (d) of the Constitution of the Republic of South Africa, 1996 (Act No. 108 of 1996), be brought as soon as reasonably possible before the court within the district of which that person was arrested: Provided that any such person, if it is not possible to bring him or her before the court concerned, may be detained at any police station pending his or her appearance before that court.
(b) In lieu of arresting a person contemplated in paragraph (a), the sheriff may, if the judgment creditor or his or her attorney consents thereto, hand to that person a notice in writing which—
     (i) specifies the name, the residential address and the occupation or status of that person;
     (ii) calls upon that person to appear before the court and on the date and at the time specified in the notice; and
     (iii) contains a certificate signed by the sheriff to the effect that he or she has handed the original of the notice to that person and that he or she has explained to that person the import thereof.
(c) The sheriff shall forthwith forward a duplicate original of the notice to the clerk of the court concerned, and the mere production in the court of such a duplicate original shall be prima facie proof that the original thereof was handed to the person specified therein.
(d) The provisions of subsection (6) shall mutatis mutandis apply in respect of a notice referred to in
paragraph (b).

(9) Any person who—
(a) is called upon to appear before a court under a notice referred to in subsection (1) or (8) (b) and who wilfully fails to appear before the court and on the date and at the time specified in the notice;
(b) in the case where the relevant proceedings were postponed in his or her presence to a date and time determined by a court, wilfully fails to appear before the court on that date and at that time;
(c) wilfully fails to remain in attendance at the relevant proceedings or at the proceedings as so postponed, shall be guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding three months.

(10)
(a) Notwithstanding anything to the contrary contained in this Act—
     (i) the court which authorised the issue of a warrant referred to in subsection (6) and the court contemplated in subsection (8) (a), if the latter court is not the court which authorised the issue of the warrant concerned, shall have jurisdiction to inquire in a summary manner into the commission of an offence referred to in subsection (9), and upon proof beyond reasonable doubt that the person concerned is guilty of such an offence, to so convict him or her and to impose on him or her any penalty provided for in the said subsection (9);
     (ii) the court contemplated in subsection (8) (a), if the court is not the court which authorised the issue of the warrant concerned, shall have jurisdiction to conduct an inquiry referred to in subsection (1) and to perform such other acts as the court which authorised the issue of the warrant concerned could lawfully have performed.
(b) On the appearance before the court of the judgment debtor, director or officer concerned in pursuance of either his or her arrest under a warrant referred to in subsection (6) or the delivery to him or her of a notice referred to in subsection (8) (b), the court shall inform him or her—
     (i) that the court intends to inquire in a summary manner into his or her alleged wilful failure to appear before the court and on the date and at the time specified in a notice referred to in subsection (1) or (8) (b), or to appear, in the case where the relevant proceedings were postponed in his or her presence to a date and time determined by any court, before that court on that date and at that time, or to remain in attendance at the relevant proceedings or at the proceedings as so postponed, as the case may be;
     (ii) that the court, if the court so convicts him or her, may impose on him or her any penalty provided for in subsection (9); and
     (iii) that he or she has the right to choose, and be represented by, a legal practitioner.
(c) A court before which proceedings under paragraph (b) are pending—
     (i) shall have due regard to the following rights, namely—
          a. the right of an accused person to be presumed innocent, to remain silent and not to testify;
          b. the right of an accused person to adduce and to challenge evidence; and
          c. the right of an accused person not to be compelled to give self-incriminating evidence;
     (ii) may adjourn such proceedings to any date on such conditions not inconsistent with a provision of the Criminal Procedure Act, 1977 (Act No. 51 of 1977), and as the court may think fit;
     (iii) if the court is of the opinion that it is in the interests of the administration of justice, may at any time before the judgment debtor, director or officer concerned is acquitted or convicted of an offence referred to in subsection (9) suspend such proceedings and refer the matter to the public prosecutor concerned to take a decision on the prosecution of the said judgment debtor, director or officer for such an offence.

(11) After the court has dealt with the inquiry referred to in subsection (10) (b), the court shall proceed to the inquiry referred to in subsection (1) and deal with the matter in accordance with the other sections of this Chapter: Provided that the court—
(a) if the court is not the court which authorised the issue of the warrant concerned; and
(b) if the court is of the opinion that it is in the interests of the administration of justice, may transfer the matter to the court which authorised the issue of that warrant.

(12)
(a) If the court before which proceedings under subsections (10) (b) and (11) are pending is not the court which authorised the issue of the warrant concerned, the clerk of the former court shall without any delay notify the clerk of the latter court of the appearance of the judgment debtor, director or officer concerned before the former court, and shall inform the judgment creditor or his or her
attorney accordingly.
(b) The clerk of the court which authorised the issue of the warrant concerned shall without any delay furnish the court before which proceedings under subsections (10) (b) and (11) are pending with such records or documents relating to such proceedings as the latter court may direct.
Copyright 2007 by WSI Terms Of UsePrivacy Statement