In a significant ruling, the Johannesburg high court has halted Nedbank's attempt to repossess and sell the modest home of an elderly woman, Karabo Nobuhle Modibedi, and her daughter, Cecilia Mamoabi Modibedi, in Mofolo, Soweto. The court's decision was made in a judgment delivered on Thursday, with high court judge Stuart Wilson ordering the absolute rescission of a 2021 default judgment that had previously declared the family's primary residence specially executable.
The Modibedi family took out a bond of just over R270,000 in 2008 and diligently paid it off for a decade, making regular deposits and complying with their bond obligations. However, in 2018, they faced financial difficulties, and their payment performance deteriorated, resulting in the account accumulating just over R310,000 in arrears. When Nedbank initiated standard pre-litigation steps by issuing a section 129 notice under the National Credit Act (NCA), the Modibedi family responded to the bank in writing on October 5, 2020, requesting to restructure their monthly bond payments.
Despite the family's plea for debt restructuring, Nedbank ignored their letter and rushed to court, obtaining a default judgment against the family in October 2021. During court proceedings, Wilson scrutinized the bank's premature rush to take legal action and granted Nedbank a two-month postponement to search its own records for any kind of interaction with the Modibedis. However, despite the generous time given, Nedbank was unable to produce a single shred of evidence that anyone had ever responded to, or even read, the family's plea for debt restructuring.
Nedbank claimed that they had not been willing to enter into debt restructuring because both mother and daughter were unemployed. However, the Modibedis argued that they had a tenant staying with them at their home and were therefore able to pay something. Nevertheless, it could not be shown that the bank had entered into any discussions with the Modibedis in this regard. Instead, Nedbank attempted to hand the judge a generic call log detailing random telephone chats between the family and call centre agents.
Judge Wilson rejected Nedbank's efforts, stating that the bank's call log recorded "a series of automated or semi-automated telephonic interactions that took place in a parallel universe to the one in which the applicants' letter was received." He found that the National Credit Act strictly bars credit providers from approaching a court if the consumer has responded to a section 129 notice and is attempting to resolve the debt. By moving forward anyway, Nedbank acted illegally.
The judge concluded that the default judgment was erroneously sought and erroneously granted, ordering that the 2021 order be entirely set aside. He also slapped Nedbank with the full legal bill, directing the bank to pay all the Modibedis' legal costs. This ruling has been hailed as a victory for consumer rights under the National Credit Act.
The case highlights the importance of responsible lending practices and the need for banks to engage with consumers in good faith. The Modibedi family's home has been saved from foreclosure, and they can now continue to reside in their primary residence. The court's decision serves as a warning to banks and other credit providers to adhere to the provisions of the National Credit Act and to treat consumers fairly.
Key points
- The Johannesburg high court has halted Nedbank's attempt to repossess and sell the modest home of an elderly woman and her daughter in Soweto.
- The court found that Nedbank acted illegally by ignoring the family's plea for debt restructuring and rushing to court to obtain a default judgment.
- The judge ordered Nedbank to pay all the Modibedis' legal costs, directing the bank to adhere to the provisions of the National Credit Act.
