As a result Magistrate Dumani N.O. granted an order and the court order reduced Nedbank’s
interest to zero (instead of letting run to induplum)
At R289.15 a month x 260 (the DC had planned for a cascading increase in the repayment amount
over time as smaller debts were settled)
Nedbank were obviously not happy that they had not got to oppose and that the interest amount
had been changed without their consent and wanted to rescind the court order. They then later
applied to the court and rather than hear the whole matter the court changed interest rate back
to the original 17.5 %. Nedbank were still not happy and the repayment amount of R289.15 was
thus too little to cover interest (and don’t forget the credit life insurance of R529.80)
Many banks prefer to recover funds over 60 months (for unsecured credit). It is a target they like
to achieve. If the consumers circumstances did nto change at all (which they likely would over
time) the reality is that even if Nedbank got every cent from the consumer each month (R1600
x 60) this amount would simply be too little as well if the interest rate and credit life payments
were not adjusted). Thus the need for the debt review.
In November 2015 Nedbank’s case was heard by the High Court in Port Elizabeth. We will refer to
the case as : Nedbank V Norris (& Magistrate Dumani N.O.) The judgement was handed down
in March 2016 and has since been much discussed.
After summarising the original loan agreement, the application for debt review and the granted
court order the judgement focused on Jurisdictional matters for a while before looking into the
matter.
The PE High Court pointed to deficiencies in not only the fact that Nedbank never got their day
in court but that the original debt restructuring court application did not have a lot of evidence
in it that Mr Norris was actually over indebted (he obviously was but you have to show it not just
say it)
The High Court (not considering any cascading payment increases over time) pointed out that
the proposed repayment plan of R289.15 x 260 doesn’t add up to total figure owed at zero
interest (never mind the interest). Obviously, cascading payments change that but this is hard to
show without the full cascading repayment schedule.
The High Court then focused on the fact that the Magistrate had reduced interest from 17.5 % to
0% without the creditor agreeing to this/ proposing this. This is not in line with the powers set
out in the National Credit Act regarding debt restructuring.
Next discussed was the irregular manner in which the interest rate was just changed back to