The purpose of credit regulation must be seen as encouraging good faith engagement and promoting consumer rehabilitation, not as punishing transient default that has been remedied.

This was the message of the Pietermaritzburg High Court in an application by BMW Financial Services (applicant) in which they wanted to repossess a vehicle as they claimed the owner had fallen in arrears with his monthly payment.

The financial service provider wanted a summary judgment to be issued against Ndlangia Funeral Services and its owner Lungisani Ndlanga (the respondents).

A summary judgment is a request for a court to rule in favour of one party without a full trial. This is usually when the court finds that there are no genuine disputes.

But by the time the application had served before the court, the respondents had already paid the arrears. The financial service provider, however, still wanted an order allowing it to repossess the vehicle, as it argued the respondents had breached the sale agreement by falling into arrears in the first place (although this is no longer the situation).

Judge Mokgene Masipa remarked that courts must remain alert to credit providers who weaponise technical breach for swift asset recovery, even where the rationale for enforcement has fallen away.

The judge noted that at the time the application for summary judgment was launched, the respondents had brought their account up to date, but this was after the default and the issuance of summons.

In opposing the application, the respondents relied on the absence of arrears and their efforts to make payment to resolve the matter.

The applicant told the court that prior to turning to court, a notice in terms of the National Credit Act was issued to the respondents, and thereafter summons.

The core of the applicant’s case rests on the enforcement of cancellation and return of the vehicle based on the respondents’ failure to timeously meet their payment obligations under the agreement.

Judge Masipa said while it is true that default initially occurred, the agreement was effectively reinstated when the respondents paid the arrears and brought their account up to date. He added that the matter is not one deserving of the stringent remedy of summary judgment.

The continued pursuit of cancellation and repossession in these circumstances raises serious concerns about fairness and proportionality, the judge said.

He added that it would be contrary to public policy for a credit provider to persist with enforcement action, particularly repossession, in circumstances where the defaulting party has rectified its breach prior to the matter being heard.

“Enforcement in such circumstances serves no purpose other than to punish the consumer, and is entirely at odds with the rehabilitative and equitable principles that underpin both the NCA and public policy.”

The judge said the public interest in this matter is real and not incidental. “The applicant is a financial service provider inherently tied to serving vulnerable members of the public. In this case, it would be contrary to public interest and policy considerations to permit the applicant to enforce its rights strictly on the basis of past default, when the underlying indebtedness has been cured.”

He turned down the application for summary judgment and said the matter should be ventilated through evidence.

zelda.venter@inl.co.za

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