17.5% and how this hadn’t take into consideration the effect on the other creditors.
As a result of these facts the High Court ordered that the 2014 debt restructuring court order be
set aside. And that the Jan 2015 court order changing interest back to 17.5 % be set aside.
Next 2 declaratory orders were made:
DECLARATORY ORDER #1:
It was ordered that a Magistrates Court must not change a contractually “agreed” interest rate.
Obviously this needs to be taken in context since the recent Declaratory Order (made prior to
this case in March 2015) Van der Hoven Attorneys v The National Credit Regulator and 4 others
states that where parties do agree to a reduction it (the interest rate) can be included in the court
order. This would be due to changes to the “agreed” amended agreement between the parties.
Nedbank have issued a statement to the same effect that the law is very clear that, where the
parties have reached an agreement with regards to the re-arrangement of a debt , that any court
hearing the matter has the authority to grant such an order.
DECLARATORY ORDER #2:
It was ordered that a rearrangement proposal in terms of NCA S86(7)(c) which pays (monthly)
less than interest rate increase amount (monthly) doesn’t match the purpose of the NCA and
would be “ultra vires” and a Magistrates Court has no jurisdiction to grant such an order.
This makes sense when enough funds are available to match the interest portion. In this case
clearly at first no such available funds.
QUESTIONS TO CONSIDER:
Such an order could effectively remove debt review as a legal right from those who have too
little in total to cover full un-adjusted interest portions toward their credit agreements even if
over indebted.
Admittedly there is less short term benefit to the credit provider if the consumers debt continues
to grow over time (with the safety net of Sect 103(5) in duplum which insures that a credit
provider gets the full legal limit of recovery from a defaulting consumer).
If all credit providers decided to refuse to change interest rates (which would be their right) most
debt restructuring proposals would probably fall into such a case (where someone, somewhere
among the creditors is getting less than the interest amounts as the debt grows to the legally
built in Sect 103(5) in duplum limit).