The Constitutional Court recently held that the notice that a credit provider such as a bank must give to a defaulting consumer under a credit agreement (for example a mortgage bond) is sufficiently given if the article is posted by registered post, and according to a track-and-trace report from the post office, is delivered to the correct post office. The Cape Town High Court has extended this finding to the situation where the default notice is subsequently returned to sender.
If the credit agreement chooses a single address for delivery of legal documents and the registered item is delivered to the post office in that area, the bank will have done enough to draw the section 129(1) notice under the National Credit Act to the consumer. That will be sufficient proof of delivery of the notice unless the consumer shows that there was no delivery.
That makes sense because otherwise any consumer could evade the consequences of the law by simply failing to collect the registered item from the post office. The court granted a number of default judgments to creditor banks of defaulting mortgagees on this basis. In one matter the court was comforted by the fact that the bank’s attorney had spoken to the consumer who indicated she could not pay and there was no suggestion that her default was due to inadequate notice.
This is a sensible outcome. Credit providers clearly cannot follow the postal authorities to the appointed delivery address. They will have to do more to prove delivery if there is no specially appointed address for service in the credit agreement. In mortgage bonds the appointed address is usually the address over which the bond is registered and delivery to that address is sufficient even if the consumer is no longer living there or is temporarily absent. Banks should also consider phoning the consumer where possible to alert them to the fact that an application for judgment against the consumer is going to be heard by the court on a certain date. The consumer then has the opportunity to produce evidence of not having received the notice.
A similar matter is going to be heard on 28 June 2012 in the Durban High Court and it must be hoped that the court will follow the sensible decision in the Western Cape.
Aslam Moosajee is a director at Norton Rose SA.