32
judgment on the strength of the novating settlement agreement – appropriate
order in terms of section 130(4)(b) to be granted
Costs – non-compliance with s ection 129 of the NCA – consumer being fully
aware of rights , raising non-compliance purely as a dilatory defence, and failing
to exercise rights in terms of NCA pending finalisation of action – consumer
also not indicating intention to exercise rights in terms of NCA in future -
consumer not genuinely interes ted in making use of remedies pro vided by the
NCA - such conduct an opportunistic abuse of the process of court, an abuse
of rights and constitutes a delaying tactic – in court’s discretion consumer
deprived of a costs order .
Headnote : Kopnota
In this matter, the applicant, ABSA Bank Ltd, instituted action in March 2016 against
the respondent , Ms S Goolam, for payment of the full outstanding balance ,
agreed interest and costs in terms of two mortgage loan agreements which
were sub ject to the National C redit Act (‘NCA”) , also claiming an order declaring
an immovable property (being the respondent’s primary residence) specially
executable on the basis that the property was specially hypothecated in terms
of two mortgage bonds registered over the property .
In the action, t he applicant revealed in the particulars of claim that the credit
agreements could not be located, and attached secondary evidence to the
particulars of claim, being information contained in the applicant’s computer
system and blank standa rd terms and conditions that would have been
applicable.
Shortly after the action was instituted , in April 2016 , the parties concluded a settlement
agreement expressly providing that the settlement agreement was a novation
of the underlying credit agreement s, and incorporated certain terms and
conditions attached to the agreement by reference. It was agreed that the full
outstanding balance in terms of the agreements referred to in the particulars of
claim was due and payable , but that the responden t was afforded the
opportunity to pay the admitted amount in instalments. It was agreed that
interest would be payable on the outstanding balance .
The agreement provided that upon default the respondent consented to judgment and
that the property could be declared specially executable.
By agreement the settlement agreement was made an order of court during April 2016 .
However, the court order did not constitute an executable judgment and in
essence was a mere recordal of the fact that the settlement agreeme nt was
concluded.
Upon the respondent defaulting in terms of her obligations , the applicant brought the
present application during 2020 (some four years after the conclusion of the
settlement agreement) for judgment in accordance with the settlement
agreement , as well an order declaring the property specially executable . The
application was simultaneously an application in terms of Uniform Rule 46A for
permission to execute against the respondent’s residential proper ty.
The respondent initially raised the defence that the settlement agreement was void ab
origine due to a misrepresentation. She also denied having concluded any loan
agreement with the applicant. She also brought a counter -application for the
32
setting as ide of the settlement agreement and the order incorporating the
agreement. These defences , as well as the counter -application , were patently
baseless and premised on false evidence . During the hearing of this matter
these defences were jettisoned, and the counter -application was abandoned.
Before the hearing of the matter the respondent was granted leave to deliver a
supplementary affidavit in which the following additional defences were raised :
⎯ If it is held that the respondent concluded the initial credit agreements,
that no credit assessments were done by the applicant prior to the
conclusion thereof , that she was unemployed at the time, and that such
agreement s constituted reckless credit in terms of the NCA, and that her
obligations ought to be set asid e in terms of section 83;
⎯ That the settlement agreement falls within the definition of a credit
agreement in section 8(4)(f) of the NCA, and is subject to the Act;
⎯ That the reckless credit provisions of the NCA apply to the settlement
agreement, that she was similarly unemployed when the agreement was
concluded and that no credit assessment was done prior to the
conclusion of this agreement. Therefore, she contended that her
obligations in terms of the settlement agre ement ought to be set aside in
terms of section 83 of the NCA;
⎯ That the applicant failed to comply with section 129 of the NCA prior to
the launching of the present application, which was allegedly premature
in terms of section 130 ; and
⎯ That the applicatio n failed to comply with Rule 46A, in that no valuation
under oath by a registered professional valuer was attached in support
of the application, as required by the practice in the Gauteng Division.
Held , as to whether the reckless credit provisions of the NCA were applicable to
the original agreements
The agreements were concluded after the NCA was promulgated, but before the
reckless credit provisions in the Act became operative. In terms of Schedule 3
to the NCA (transitional provisions) the reckless cre dit provisions were
expressly excluded from operating retrospectively .
Consequently, the respondent’s challenge in relation to the original credit agreements
had to fail .
Held , as to whether the settlement agreement was a credit agreement in terms
of section 8(4)(f) of the NCA
The correct approach is to first determine whether on a purposive interpretation the
agreement falls within the definition of a credit agreement . A secondary inquiry
is whether on a purposive inter pretation specific sections of the NCA apply to
the agreement.
The terms of the settlement agreement in casu fell squarely within the definition of a
credit agreement in section 8(4)(f) in that an amount that previously became
32
fully due and payable by the respondent was deferred and it was agreed that
interest would be payable in respect of such amount.
Where the settlement agreement was a novation of the original credit agreements , a
purposive interpretation of the NCA does not result in a need to deviate from
the express language of section 8(4)(f). To the contrary, a finding that the
settlement agreement was not a credit agreement in terms of section 8(4)(f),
would have the absurd result that the NCA could be circum vented with impunity .
The present matter is to be distinguished from the situation where the settlement
agreement d id not novate the underlying cause of action and merely provide d
respite for the consumer . In this case the NCA is on a purposive interpretation
not applicable to the settlement agreement at all , because the relationship
between the parties is still regulated by the NCA which is applicable to the
underlying agreement.
This matter must also be distinguished from the situation where the underlying causa
is not subject to the NCA . In such cases it is now trite law that the NCA does
not apply.
Consequently, it was held that the settlement agreement in casu was a credit
agreement as defined in section 8(4)(f).
Held , as to whether the reckless credit provision s were applic able to the
settlement agreement
In accordance with the purpose of the Act, as set out in section 3, the reckless credit
provisions in NCA apply at the stage when a credit grantor has to decide
whether to grant credit to the consumer, i.e. before the conc lusion of an initial
credit agreement.
One of the purposes of the Act is “ providing for a consistent and accessible system of
consensual resolution of disputes arising from credit agreements ”. Accordingly,
the Act provides in section 129 for a mechanism whereby parties may resolve
any dispute under the agreement or develop and agree on a plan to bring the
payments under the agreement up to date , before the debt is enforced by legal
action. This is a form of settlement.
Whilst the legislature made provision for a settlement between the parties, it expressly
provided that such settlement must be the result of the parties resolving the
dispute by agreement. There is no requirement that the credit provider must
conduct a credit assessment before entering into a settlement agreement.
One of the purposes of the NCA is “providing for a consistent and harmonised system
of debt restructuring, enforcement and judgment, which places priority on the
eventua l satisfaction of all responsible consumer obligations under credit
agreements ”.
If the reckless credit provisions of section 80 to 83 of the NCA are to be made
applicable to settlement agreements, it would stifle the resolution of disputes
and / or agree ments to bring arrears up to date as provided in section 129. It
would also frustrate the object of the Act .
In the present matter, the settlement agreement relieved the obligations resting on the
consumer for a period of time, suspended the possible execu tion against the
hypothecated property, and provided for a payment plan directed at the
32
consumer fulfilling her obligations. The application of the reckless credit
provisions to this kind of agreement would be senseless .
The q uestion whether a settlement a greement making the consumer’s obligations
more onerous would be subject to these provisions was left open.
Consequently, it was held that the reckless credit provisions in the NCA was not
applicable to the settlement agreement in casu .
Held, as to whether sections 129 and 130 of the NCA was applicable to the
settlement agreement
The settlement agreement was a novation of the original cause of action and brought
the original action to an end. The settlement agreement constituted a new
cause of action, which had to be enforced by new legal proceedings.
The debt -enforcement provisions contained in the NCA , in particular Section 129 and
130 are prima facie applicable to the application in casu .
Having regard to the purpose of the NCA , there is no reason why a consumer should
not be afforded the express opportunity created by section 129 and 130 to
negotiate a further restructuring of his or her obligations, to set the debt review
provisions of the NCA in motion or resolve disputes by way of the mechanisms
menti oned in section 129.
Consequently, the applicant should have complied with section 129 and 130 of the
NCA before this application was launched and failed to do so.
Held, as to the appropriate order in terms of section 130(4)(b) of the NCA
In the event of n on-compliance with the provisions of sections 129 and 130, section
130(4)(b) obliges the court to adjourn the matter and make an appropriate order
setting out the steps the credit provider must complete before the matter may
be resumed .
The purpose of sect ion 129 is to resolve disputes between the parties, though an
alternative dispute resolution agent, consumer court or ombud. The purpose of
the section is also to enable the consumer to use the mechanisms, including
referral to a debt counsellor, to develo p and agree upon a plan to bring the
payments under the agreement up to date. In the absence of any dispute which
the consumer intends resolving through these mechanisms, or in the absence
of an intention to put the agreement through a mechanism to restruc ture the
obligations with the intention that the agreement will ultimately be fully complied
with, demanding that section 129 should be complied with, is nothing but
fruitless formalism. It was never the purpose of the NCA to facilitate formalism
which wou ld not benefit the consumer in any way.
In the present matter, the respondent raise d non-compliance purely as a dilatory
defence. She failed to indicate any intention to implement any of the remedies
referred to in section 129. Moreover, she stated that s he was unemployed and
32
impecunious. As such, she is clearly unable to co -operate with the development
of a plan to restructure payments with a view on eventually paying the full debt.
It is clear that suspension of the action or application, coupled with a n order regulating
future proceedings, would serve no purpose but to delay the matter, increase
the legal costs and waste valuable court resources.
However , section130(4)(b) compels this court to suspend proceedings and to make
an appropriate order.
No purpose will be served to order the delivery of a section 129 notice , as the
respondent is already aware of her rights. It will suffice to afford the respondent
the opportunity to exercise the remedies referred to in section 129 and make
orders regulating future proceedings.
Held, as to compliance with Uniform Rule 46A
Due to the fact tha t judgment was not granted, the application cannot proceed. In any
event, the applicant failed to comply with the provisions of Rule 46A , and the
application was postponed with leave to supplement.
Held, as to the question of costs
The respondent initially raised defences to the main application which not only had no
merit but was clearly based on false evidence. She falsely denied having
concluded the loan agreements and / or passing the mortgage bonds over her
property. Her counter -application was based on the same false evidence and
had no merit. Consequently, she was ordered to pay the costs of the counter -
application.
By raising the section 129 and 130 defence the resp ondent was evidently fully aware
her rights in terms of section 129 and 130. She failed to make use of these rights
and simply awaited the hearing of the matter. While raising the dilatory defence
that section 129 ha d to be complied with, she did not indic ate what she would
have done, had the credit provider complied with section 129. Nor did she
indicate what she intended to do in future. At the same time, the respondent also
failed to comply with her obligations.
The conclusion is inescapable that the con sumer is abusing the process of court and
is abusing her rights in terms of the NCA, contrary to the purpose of the NCA, to
execute a stratagem to delay the matter and to totally avoid complying with her
obligations.
Accordingly, despite the respondent bei ng successful in opposing the main
application, in the exercise of the court’s discretion the respondent should be
deprived of a cost order . An order was granted that each party should pay its
own costs.

___________________________________________________________________

ORDER
___________________________________________________________________
(1) The respondent’s counterapplication is dismissed with costs on Scale B;
32
(2) The applicant’s a pplication for judgment is hereby suspended in terms of Section
130(4)(b) of the National Credit Act and postponed sine die ;
(3) The applicant’s application in terms of Rule 46A is postponed sine die ;
(4) The respondent is hereby granted leave to refer the settlement agreement to a
debt counsellor, alternative dispute resolution agent, consumer court or ombud
with jurisdiction, with the intent that the parties hereto resolve any dispute under
the agreement or develop and agree on a plan to bring the payments under the
agreement up to date, within 15 days from the date this order is granted.
(5) If, the respondent fails to comply with the order in paragraph (4) above, or the
proceedings referred to in paragraph (4) are terminated, the applicant i s granted
leave to deliver a supplementary affidavit within 20 days after such non -
compliance or termination , in which at least the following aspects must be
addressed:
(a) The failure by the respondent to comply with the order contained in
paragraph (4) a bove, alternatively the termination of the proceedings
referred to therein;
(b) A detailed calculation of the limit of the respondent’s liability in terms of
section 103(5) of the National Credit Act; and
(c) Compliance with rule 46A.
(6) The respondent shall be entitled to deliver an answering affidavit to the aforesaid
supplementary affidavit within 20 days, whereafter the applicant shall be entitled
to reply within 15 days.
(7) Should the respondent fail to deliver an answering affidavit as provided above
the applicant shall be entitled to enrol the matter on the unopposed roll.
(8) Should an answering affidavit be filed, the matter shall be enrolled on the
opposed motion roll.
(9) Each party is ordered to pay its own costs in relation to the applican t’s application
to date.
32
______ ____________________________________________________________
JUDGMENT
___________________________________________________________________

D Marais AJ

The applicant’s claim
[1] In this opposed application the applicant , ABSA Bank Ltd, seeks an order for
judgment against the respondent , Ms S Goolam, for payment of the amount of
R1 568 641.29 with interest and costs, as well as an order declaring an
immovable property (being the respondent ’s primary residence) specially
executable “in terms of Rule 46A” .1 The applicant also request ed the court to set
a reserve price if the property is sold in execution.
Basis of applicant’s claim
[2] The applicant’s application is based on a settlement agreement , dated 5 April
2016 , which was concluded between the parties after the applicant instituted
action on 10 March 2016 against the respondent for payment of the outstanding
balance in terms of two mortgage loan agreement s concluded in 2006 and 2007,
secured by a first and second mortgage bond , in terms of which the respondent’s
residence was specially hypothecated as security for the debt. It is evident from
the second loan agreement that an additional loan was granted, which was
consolidated with the first loan.
[3] The settlement agreement , which was made an order of court on 21 April 2016 ,
provided that the respondent acknowledge d liability for the amount , interest and
costs claimed in the summons . The respondent acknowledged that she was
liable on the basis o f the agreements relied upon by the applicant in the
summons. However, t he parties agreed that the settlement agreement was a
novation of the original loan agreements between the parties. Furthermore, the

1 I shall later in this judgment deal with the interaction between applications to declare immovable
property specially executable (on the basis that the property constitutes real security, the property
having been specially hypothecated), Uniform Rule 46, and applications for pe rmission to
execute against the primary residence of a person in terms of Uniform Rule 46A.
32
parties attached two documents to the agreement con taining terms and
conditions that would be applicable to the respondent’s indebtedness, which
were incorporated by reference.
[4] The respondent was afforded the opportunity to pay the agreed amount , interest
and costs in instalments , failing which the full balance would become due and
payable . In the event of default, the respondent also consented to judgment for
the amount agreed upon and agreed that the hypothecated property can be
declared specially executable.
[5] It is to be noted that the mortgage bonds contained provisions that the bonds
would cover the respondent’s indebtedness from any cause whatsoever and
would not be affected by any intermediate settlement.
[6] In the present application the applicant alleges that the respondent failed to
comply with th e terms of the settlement agreement, entitling it to the relief claimed
herein. The applicant did not contend that the court order incorporating the
settlement agreement constituted a judgment for payment of the outstanding
balance in itself . Its approach was that the applicant still need ed to obtain a
judgment , based on the consent to judgment contained in the settlement
agreement. As such, the court order making the settlement agreement an order
of court was a mere recordal of the fact that the settlement agreement was
concluded , and did not constitute an executable judgment .
The initial defence raised by the respondent and counter -application
[7] In her answe ring affidavit, the respondent alleged that her late husband handled
all their financial affairs , and when the applicant took steps to enforce the loan
agreement s and mortgage bond s (allegedly already having scheduled a sale in
execution ) her husband prese nted a document to her for signature (being the
relevant settlement agreement) , which she signed without having read the
content . She was allegedly assured by her husband that the document recorded
that the matter was resolved with the applicant, and that the property would not
be sold. She alleged that she subsequently established that she signed a
settlement agreement, after her husband passed away and the applicant
32
contacted her for payment. The respondent also denied having concluded any
loan agreement with the applicant.
[8] The respondent alleged that the settlement agreement was induced by the
misrepresentation that the document recorded that the matter was resolved , and
that the property would not be sold. Although the respondent seeks to suggest
that t he representative of the applicant who was present when she signed the
document failed to inform her of the exact nature of the document, it is clear that
her version was that it was her husband who made the misrepresentation to her.
[9] The respondent also la unched a counter -application , seeking a declarator that
the settlement agreement is void ab initio, and an order setting aside the order
that made the agreement an order of court. This application was based on the
same allegations set out in her answering affidavit.
[10] The applicant denied having made any misrepresentation to the respondent
regarding the settlement agreement . In the summons the plaintiff indicated that
the loan agreements could not be found , and as secondary best evidence
attached blank copies of its standard loan terms and conditions that were
applicable to the loan agreements concluded with the respondent. In the replying
affidavit, the applicant stated that the agreements were located in the interim and
attached copies of the agreements.
[11] The respondent’s denial s of the fact that she had concluded two loan agreements
with the applicant, and cause d two mortgage bonds to be registered over her
immovable property were false and opportunistic . The evidence was
overwhelming that she did execute the various documents. However, in view of
the conclusion of the settlement agreement the respondent’s false denial s are
academic as far as the merits of this matter is concerned.
[12] Furthermore, the defence based on the alleged misrepresentation was without
merit. Apart from the fact that the alleged representations fell short of being a
misrepresentation, the applicant cannot be held responsible for the actions on
the part of the respondent’s husband.
32
[13] In any event, during the hearing of this matter Mr Laher, acting on behalf of the
respondent wisely indicated that no reliance would be placed on the alleged
misrepresentation and that the respondent would not persist with the counter -
application for the setting aside of the agreement or court order .
Alternative defences raised by the respondent
[14] The respondent subsequently , represented by new attorneys, brought an
application to deliver a supplementary answering and at the same time delivered
such affidavit. An order was granted on 13 February 2023, permitting t he affidavit
in terms of rule 6(5)(e) . The applicant, in turn, delivered an affidavit in reply to
this affidavit.
[15] In her supplementary affidavit the respondent contended that if it is held that she
did conclude the loan agreement s with the applicant on 29 September 2006 and
24 April 2007 , they were “credit transaction s” as defined in the National Credit
Act, Act 34 of 200 5 (“the NCA”) . It was alleged that these agreements were
concluded after the commencement of the NCA. She alleged that she was
unemployed at the date of the agreement s, that she would not have been able
to pay the agreed instalments , and that the agreement constituted the granting
of reckless credit as envisaged in section 80 of the NCA. It was contended that
an order should be granted in terms of section 83, setting aside her obligations
in terms of the agreements.
[16] It was also contended by the respondent that the settlement agreement itself
constituted a credit agreement in terms of the NCA and that the applicant did not
conduct any afforda bility assessment before the agreement was concluded. At
the time , the respondent allegedly was still unemployed, and it was contended
that that the settlement agreement also constituted reckless credit .
[17] Furthermore, it was contended that the applicant failed to comply with sections
129 and 130 of the NCA prior to launching the present application for judgment .
[18] In reply the applicant admitted that the loan agreements fell within the ambit of
the NCA but dr ew attention to the fact that the reckless credit provision s of the
NCA only became operative on 1 June 2007 (after the relevant loan agreements
32
were concluded ) with the result that affordability assessment were not necessary
and the reckless credit provis ions are not applicable to the two loan agreements.
[19] The applicant baldly denied that the settlement agreement constituted a credit
agreement in itself or that the applicant failed to comply with the provisions of the
NCA . The applicant d id not present any evidence that an affordability
assessment was done at the time the settlement agreement was concluded, and
it must be accepted on the papers before court that such assessment was not
done.
Reckless credit contention in relation to initial loan agreement s has no merit
[20] The respondent’s reckless credit -contention in relation to the initial loan
agreements ha s no merit. Whilst parts of the NCA commenced on 1 June 2006,
the reckless credit provisions in the Act, contained in Part D of Chapter 4 , only
commenced on 1 July 2 007. Schedule 3 to the NCA , containing transitional
arrangements, provide d that this part of the NCA has retrospective operation only
to the extent that it does not concern reckless credit.
Summary of remaining issues
[21] In summary the remaining issues in this matter were the following :
a. Did the settlement agreement constitute a credit agreement in terms of the
NCA?
b. Was the applicant obliged to conduct an affordability assessment and / or
refrain from granting credit recklessly when the settlement agreement was
concluded , and did the applicant grant credit recklessly in the process ?
c. If it is concluded that the settlement agreement was a credit agreement in
terms of the NCA, and it constitute d a form of reckless credit, what remedy
should be gran ted in terms of section 83 of the NCA ?
d. Was the applicant obliged to comply with section 129 and 130 of the NCA
before launching the present application ? If so, what are the consequences
of non -compliance?
32
e. As the property to be declared specially executable and in respect of which
the applicant seeks leave to execute against in terms of Rule 46( A) is the
respondent’s primary residence, h as the applicant complied with the
provisions of Rule 46A ?
Is the settlement agreement a credit agreement as def ined in the National Credit
Act?
[22] At the outset it needs to be emphasised that this matter does not concern the
situation where the credit provider has instituted action after complying with
section 129 and parties settle the matter in terms of an agreemen t which is not a
novation of the original cause of action and merely provide for the enforcement
of the original obligations, or merely provide some respite for the consumer in
relation to the original obligations. In my view, i n such cases the NCA remains
applicable to the underlying agreement, and the consumer retains the protection
afforded by the Act for that reason, and not because the NCA is particularly
applicable to the settlement agreement. The contrary would lead to absurd
consequences. However, t his court is not called upon to decide this issue.
[23] On the facts before the court, the respondent concluded two loan agreements
subject to the NCA but defaulted in her obligations in terms of those agreements.
Consequently, the full outstanding balance due in terms of these agreements
became due and payable in terms of acceleration clauses in the agreements.
The applicant duly complied with the provisions of section 129 and 130 of the
NCA , and after the respond ent failed to make use of her remedies in terms of the
NCA, claimed the full outstanding balance, with interest and costs . It also sought
an order declaring the respondent’s immovable property specially executable.
[24] It is of importance that the applicant stated in the particulars of claim that neither
the original loans agreements , nor copies thereof could be located, and the
applicant relied on secondary best evidence , by relying on information contained
in its computer system and blank standard terms and c onditions. As such, the
applicant’s claim was constructed on a rather unsteady foundation .
[25] This set the stage for the conclusion of the settlement agreement shortly after
the action was instituted .
32
[26] The settlement agreement recorded that the respondent ac knowledged that she
concluded the loan agreements referred to in the summons with the applicant .
The parties attached the terms and conditions of the loan agreement to the
settlement agreement and incorporated the terms thereof by reference into the
settle ment agreement.
[27] The respondent admitted that she was liable towards the applicant for the
accelerated amount claimed (R1 568 641.29) , intere st (at 8% per annum
calculated and capitalised monthly) and costs on the attorney and client scale .
She also acknowledged that the applicant was entitled to an order declaring her
immovable property specially executable.
[28] The respondent agreed to liquidate this admitted indebtedness in instalments of
R5000.00 per month for a number of months, whereafter the instal ments would
increase to R19 800.00. It was agreed that if the respondent failed to comply, the
full balance would become due and payable immediately, and that the
respondent consented to judgment and agreed to an order declaring the property
specially exec utable.
[29] The parties also agreed that the agreement novated and replaced the terms of
the agreement between them . As stated , the parties attached standard loan
terms and conditions to the settlement agreement , which was incorporated by
reference .
[30] Although t he inclusion of a novation clause in a settlement agreement in respect
of an agreement subject to the NCA would in the normal course not necessarily
be prudent, as will be evident from this judgment, but in view of the lack of direct
evidence of the conclu sion of the loan agreements, the conclusion of a new
agreement novating the original agreement was a reasonable and prudent
safeguard of the applicant’s rights.
[31] In section 8(4)(f) a credit transaction, to which the NCA applies, are inter alia
defined as follows:
“(4) An agreement, irrespective of its form but not including an agreement contemplated
in subsection (2), constitutes a credit transaction if it is -
32
(f) any other agreement, other than a credit facility or credit guarantee, in terms of which
payment of an amount owed by one person to another is deferred, and any charge, fee
or interest is payable to the credit provider in respect of -
(i) the agreement; or
(ii) the amount that has been deferred .”

[32] In view of the fact that the full outstandin g balance of the respondent’s
indebtedness had become due and payable before the action was instituted and
the settlement agreement concluded, t he settlement agreement undoubtedly
contain ed a deferment of the respondent’s debt and provides for payment of
interest in respect of such debt. On a literal interpretation of section 8(4)(f) of the
NCA the settlement agreement falls squarely within th is definition .
[33] This court is obliged to interpret the NCA in accordance with principles applicable
to the interpretation of legislation, contracts and other written instruments. The
general principle is that interpretation is a unitary process, whereby the language
used, the purpose of the legislation or docume nt, the context in which certain
provisions appear and the surrounding circumstances leading to the creation of
the document are all taken into consideration in deriving the meaning of a
document. In this regard, a sensible interpretation ought to be prefe rred over an
insensible or unbusinesslike one, or one that undermines the apparent purpose
of the document. 2
[34] Section 2 (1) of the NCA provides that the Act must be interpreted to attain the
purposes set out in section 3.
[35] The purpose of the NCA is stated i n section 3 , which reads as follows:
“The purposes of this Act are to promote and advance the social and economic welfare
of South Africans, promote a fair, transparent, competitive, sustainable, responsible,
efficient, effective and accessible credit mark et and industry, and to protect consumers,
by
(a) promoting the development of a credit market that is accessible to all South Africans,
and in particular to those who have historically been unable to access credit under
sustainable market conditions;
(b) ensuring consistent treatment of different credit products and different credit
providers;
(c) promoting responsibility in the credit market by

2 Natal Joint Municipal Pension Fund v Endumeni Municipality Natal Joint Municipal Pension Fund v Endumeni
Municipality 2012 (4) SA 593 (SCA) ; Bothma -Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms)
Bpk 2014 (2) SA 494 (SCA )
32
(i) encouraging responsible borrowing, avoidance of over -indebtedness and fulfilment
of financial obligations by consumers; and
(ii) discouraging reckless credit granting by credit providers and contractual default by
consumers;
(d) promoting equity in the credit market by balancing the respective rights and
responsibilities of credit providers and consumers;
(e) addressing and correcting imbalances in negotiating power between consumers
and credit providers by
(i) providing consumers with education about credit and consumer rights;
(ii) providing consumers with adequate disclosure of standardised information in order
to make informed choices; and
(iii) providing consumers with protection from deception, and from unfair or fraudulent
conduct by credit providers and credit bureaux;
(f) improving consumer credit information and reporting and regulation of credit
bureaux;
(g) addressing and preventing over -indebtedness of consumers, and providing
mechanisms for resolving over indebtedness based on the principle of satisfaction by
the consumer of all responsible financial obligations;
(h) providing for a consistent and accessible system of consensual resolution of
disputes arising from credit agreements; and
(i) providing for a consistent and harmonised system of debt restructuring, enforcement
and judgment, which places priority on the eventual satisfaction of all responsible
consumer obligations under credit agreements. ”

[36] The question whether a settlement agreement which , on a literal interpretation,
falls within the definition of a credit agreement in the NCA is subject to the Act
has been considered in a number of decisions . In Ratlou v Man Financial
Services SA (Pty) Ltd3 the Supreme Court of Appeal had occasion to consider a
settlement agreement which fell within the definition in section 8(4)(f) where the
underlying agreement was not subject to the Act. The co urt held that on a proper
interpretation of the Act, the settlement agreement was not subject to the Act .
[37] In Ratlou the court regarded it as vitally important that the settlement agreement
contained a reference to the underlying agreement (which was not s ubject to the
NCA) and recorded that the agreement was a settlement of the issues relating to
that agreement.4 The court also remarked that i f the underlying causa did not fall
within the parameters of the NCA, then its compromise in terms of the settlement
agreement cannot logically result in the agreement being converted to one that
does.5 In this context the court made the following general remark :6

3 Ratlou v Man Financial Services SA (Pty) Ltd 2019 (5) SA 117 (SCA)
4 Par 20
5 Par 19
6 Par 21
32
“A purposive interpretation and not a literal interpretation of s 8(4)(f) of the NCA is
required because it is quite clear that the NCA was not aimed at settlement agreements.
Its application to them will have a devastating effect on the efficacy and the willingness
of parties to conclude settlement agreements and thereby curtail litigation. ”

[38] The cou rt then referred to several other cases where a purposive interpretation
was applied to reach the conclusion that the settlement agreement was not
subject to the Act, despite the fact that its terms fell squarely within the Act. These
were all cases where the antecedent causes were not subject to the NCA .
In Grainco (Pty) Ltd v Broodryk NO and Others7 the underlying cause was a
claim for damages . In Hattingh v Hattingh8 the settlement agreement embodied
an agreement between two brothers in terms of which a business relationship
was terminated. Ribeiro and Another v Slip Knot Investments 777 (Pty) Ltd 9 also
concerned the settlement of a claim for damages.
[39] Apart from bei ng bound by the ratio decidendi in Ratlou , I agree that it was never
the intention of the legislature in enacting the NCA to make the NCA applicable
to settlement agreements where the issue in dispute does not fall within the ambit
of the NCA. The contrary would indeed result in a bsurd results. One of the absurd
results is that settlement agreements would often be invalid, because the one
party (notionally being in the position of a credit provider) is not registered in
terms of the NCA as a credit provider .10
[40] The dictum quoted above must be read in context . The statement that the NCA
was not aimed at settlement agreements, must be understood as referring to
settlement agreements where the underlying causa was not subject to the NCA.
The court did not deal with the situation where the underlying causa fell within
the ambit of the NCA. The court qualified it s judgment by remarking that it found
(earlier in the judgment) that the legislature never had the intention t hat the NCA
be applicable to all settlement agreements .11
[41] Where the settlement agreement is concluded pursuant to an agreement
between the parties which is subject to the National Credit Act, and the terms of

7 Grainco (Pty) Ltd v Broodryk NO en Andere 2012 (4) SA 517 (FB )
8 Hattingh v Hattingh 2014 (3) SA 162 (FB)
9 Ribeiro and Another v Slip Knot Investments 777 (Pty) Ltd 2011 (1) SA 575 (SCA)
10 Section 40(4) of the NCA.
11 See par 27 of the judgment.
32
the settlement on a literal interpretation fall s within the definition of a credit
agreement in the Act, there is in my mind no reason why the court should deviate
from a literal interpretation , where the agreement is a novation of the original
cause of action . The contrary would lead to absurd consequ ences. The most
glaring consequence is that this would result in the provisions of the NCA being
circumvented with impunity.
[42] I have not been referred to any decided case where a court deal t with the issue
as to whether a settlement agreement is subject to the NCA, where the
underlying causa is a credit agreeme nt to which the Act applies .
[43] I take heed of the caution issued in Ratlou that the conclusion of settlement
agreements should not be stifled by a prospect that the NCA would be applicable
to such agreement. This is particularly apposite in cases where the underlying
cause does not fall within the ambit of the NCA.
[44] In matters where the NCA is applicable , different considera tions apply.
Consumers would be hesitant to conclu de settle ment agreement s where the
effect of the settlement would be that the protective measures contained in the
NCA will no longer be applicable . As a matter of policy, it would be highly
undesirable to allow a settlement agreement to thwart the clear purpose of the
NCA.
[45] Conversely, a credit provider will be reluctant to conclude a settlement
agreement if all the provisions of the NCA will be applicable to the agreement. In
this context, settlement agreem ents are more often than not concluded in
circumstances where the consumer has defaulted , and the credit provider was
constrained to issue a summons. At the point in time, the consumer is probably
hopelessly overindebted and will not qualify for credit. A full affordability
assessment will probably reveal this. If the NCA is fully applicable to these
settlement agreements, the overwhelming majority of the agreements would
constitute reckless credit. If that is the case, no prudent credit provider will
conclude a settlement agreement with a defaulting consumer , even if the effect
of the settlement agreement is to relieve the consumer’s burdens. The effect of
32
this would be that the credit provider will be forced to not extend compassion to
the consumer , and to enforce the original credit agreement strictly .
[46] The provisions of section 129 and 130 of the NCA is directed at affording the
consumer the opportunity to negotiate the restructuring of his or her obligations
prior to action being inst ituted . This may result in the conclusion of a settlement
agreement , in which the consumer’s obligations are restructured , invariably to
the benefit of the consumer. The same considerations as set out above apply to
these agreements.
[47] I am of the view that the cor rect approach is that the court should first decide
whether the NCA is applicable to the transaction in question and then decide
whether on a proper and purposive interpretation of the NCA certain specific
provisions of the NCA are applicable to such transaction. It may tra nspire th at
the NCA has limited ef fect on the particular trans action.
[48] It is contended that the reckless credit provisions of the NCA are applicable to
the settlement agreement in casu . I am of the view that on a proper interpretation
of the NCA, such provisions are not applicable to the settlement agreement in
casu . This will be fully dealt with hereunder.
[49] Other provisions of the NCA should on a proper interpretation be applicable,
notably provisions that limit th e recovery of exorbitant interest and costs.
[50] In my view the application of over-indebtedness and debt review provisions, as
well as the debt -enforcement provisions , to the settlement agreement are
eminently within the purpose of the NCA. Although this court only needs to decide
the latter aspect of the Act, there is interplay between the debt -enforcement
provisions, and the over -indebtedness provisions in the Act.
[51] Consequently, I am of the view that if the various provisions of the NCA i s
purposively interpreted, the should be no reason wh y credit providers or
consumers should be discouraged from concluding settlement agreements.
[52] Furthermore, to the extent that the NCA will be applicable to a settlement
agreement, such agreement is no dif ferent from the credit agreement originally
32
concluded between the parties; if the agreement falls within the purpose and
express purview of the Act, the parties have no choice but to accept the
obligations imposed upon them by law. If they do not wish to b e bound by such
obligations, they are free to desist from concluding the agreement.
[53] Consequently, I hold that the settlement agreement in casu is a credit agreemen t
in terms of the NCA.
Reckless credit contention in relation to settlement agreement
[54] One o f the main objects of the NCA is to promote responsible credit granting and
to that end, the prevent ion of reckless credit granting.
[55] Section 80 of the NCA provides that a credit agreement is reckless if, at the time
that the agreement was made, or at the time when the amount approved in terms
of the agreement is increased :
a. the credit provider failed to conduct an assessment as required by section
81(2), irrespective of wha t the outcome of such an assessment might have
concluded at the time; or
b. the credit provider, having conducted an assessment as required by section
81(2), entered into the credit agreement with the consumer despite the fact
that the preponderance of inform ation available to the credit provider
indicated that (i) the consumer did not generally understand or appreciate
the consumer's risks, costs or obligations under the proposed credit
agreement; or (ii) entering into that credit agreement would make the
consumer over -indebted.
[56] Section 8 1(1) provides that w hen applying for a credit agreement, and while that
application is being considered by the credit provider, the prospective consumer
must fully and truthfully answer any requests for information made by the credit
provider as part of the assessment required by this sect ion.
[57] Section 81(2) provides that a credit provider may not enter into a credit
agreement without first taking reasonable steps to assess the prospective
consumer’s understanding of the risks associated with the proposed credit and
32
the rights and obligations thereunder , the consumer’s credit history, and current
financial position.
[58] Section 81(3) prohibits a credit provider from granting credit to a prospective
consume r recklessly.
[59] Section 83(1) makes provision for a declaration by the court or tribunal that an
agreement constitutes reckless credit, while section 83(3) makes provision for
the following remedies consequent upon such declaration:
a. the setting aside all or part of the consumer's rights and obligations under
that agreement, as the court determines just and reasonable in the
circumstances; or
b. suspending the force and effect of that credit agreement in accordance with
subsection (3)(b)(i).
[60] In accordance with th e purpose of the Act, as set out in section 3, these
provisions apply at the stage when a credit grantor has to decide whether to grant
credit to the consumer, i.e. before the conclusion of an initial credit agreement. It
refers to the “proposed credit” an d the “prospective consumer”.
[61] One of the purposes of the Act is “providing for a consistent and accessible
system of consensual resolution of disputes arising from credit agreements ”.
Accordingly, the Act provides in section 129 for a mechanism whereby parties
may resolve any dispute under the agreement or develop and agree on a plan to
bring the payments under the agreement up to date , before the debt is enforced
by legal action .
[62] In my view, “ a plan to bring the payments under the agreement up to date ” is
nothing but a form of settlement.
[63] Whilst the legislature made provision for a settlement between the parties , it
expressly provided that such settlement must be the result of the parties
resolving the dispute by agreement. There is no requirement that the credit
provider must conduct a credit assessment before entering into a settlement
agreement.
32
[64] One of the purposes of the Act is “ providing for a consistent and harmonised
system of debt restructuring, enforcement and judgment, which places priority on
the eventual satisfaction of all responsible consumer obligations under credit
agreements ”.
[65] To echo the sentiments in Ratlou , if the reckless credit provisions of section 80
to 83 of the Act are to be made applicable to settlement agreements , it would
stifle the resolution of disputes and / or agreements to bring arrears up to date
as provided in section 129 . It would also frustrate the object of the Act mentioned
in the previous paragraph.
[66] In the present matter, the settlement agreement reli eved the obligation s resting
on the consumer for a period of time, suspended the possible execution against
the hypothecated property , and provided for a payment plan directed at the
consumer fulfilling her obligations . The application of the reckless cred it
provisions to this kind of agreement would be senseless , and I hold that it was
not intended that the reckless credit provisions would be applicable where the
settlement agreement was to the benefit of the consumer .
[67] It must be emphasised that this court is not called upon to decide whether the
reckless credit provisions would on a proper interpretation be applicable to
settlement agreements where the consumer’s obligations are made more
onerous , for instance, where the interest rate is increased , and / o r the
instalments are increased and / or punitive costs and / or collection costs not
previously agreed are imposed.
[68] In the premises, although the NCA is generally applicable to the settlement
agreement in ca su, I hold that the reckless credit provisions are not applicable to
the settlement agreement herein .
[69] Therefore, t he respondent’s contention that the settlement agreement constitutes
reckless credit in terms of the NCA, with the resultant consequences, must fail .
[70] The thi rd question set out above, therefore falls by the wayside.
32
Was the applicant obliged to comply with the provisions of section 129 and 130
before launching the application ?
[71] Section 129 (1)(a) requires the credit provider to propose by notice that the
consume r refer the credit agreement to a debt counsellor, alternative dispute
resolution agent, consumer court or ombud with jurisdiction, with the intent that
the parties resolve any dispute under the agreement or develop and agree on a
plan to bring the payment s under the agreement up to date .
[72] Section 130(1) provides that a credit provider may only approach a court for the
enforcement of a credit agreement if the consumer was at least 20 busin ess days
in arrears, and at least 10 days have elapsed since the delivery of a section 129
notice.
[73] In terms of s ection 129(5) the notice has to be delivered by either registered mail
or by delivery to an adult person at the address designated by the consumer. In
terms of section 129(7) delivery by registered mail is sufficiently proven by written
confirmation by the postal service or its authorised agent, of delivery to the
relevant post office or postal agency , while in the case of physical delivery by the
signature or identifying mark of the recipient .
[74] For a variety of reasons , I am of the view that the protection afforded by section
129 of the NCA to consumers is illusory . However, the present matter does not
present an opportunity to discuss this issue.
[75] Turning to the present matter, the settlement agreement was a novation of the
original cause of action and brought the original action to an end. The settlement
agreement constituted a new cause of action, which had to be enforced by new
legal proceedings.
[76] The agreement provided that the respondent consented to judgment in the event
of non -compliance, and that the agreement would be made an order of court.
During the hearing the applicant ’s counsel was requested to address the
question whether the order incorporating the agreement did not already amount
to an executable judgment. The applicant ’s approach was , correctly, that the
32
order did not amount to an executable judgment and that the present application
was necessary.
[77] This application for judgment was b rought several years after the conclusion of
the settlement agreement.
[78] The debt -enforcement provisions contained in the Act, in particular Section 129
and 130 are prima facie applicable to the application in casu .
[79] Having regard to the purpose of the Act, t here is no reason why a consumer
should not be afforded the express opportunity created by section 129 and 130
to negotiate a further restructuring of his or her obligations, to set the debt review
provisions of the NCA in motion or resolve disputes by way of the mechanisms
mentioned in section 129 .
[80] Consequently , the applicant should have complied with section 129 and 130 of
the NCA before this application was launched and failed to do so.
[81] In the event of non -compliance with the provisions of sections 129 and 130,
section 130 (4)(b) obliges the court to adjourn the matter and make an appropriate
order setting out the steps the credit provider must complete before the matter
may be resumed .
[82] In her supplementary affidavit in which this issue is ra ised, the respondent simply
raised non -compliance of section 129 as a defence , describing the application
as premature. It is now trite that non -compliance with section 129 is at best a
dilatory defence, having regard to the provisions of section 130(4)(b) .
[83] The purpose of section 129 is to resolve dispute s between the parties, though
an alternative dispute resolution agent , consumer court or ombud. The purpose
of the section is also to enable the consumer to use the mechanisms , including
referral to a debt counsellor, to develop and agree upon a plan to bring the
payments under the agreement up to date. In the absence of any dispute which
the consumer intends resolving through these mechanisms, or in the absence of
an intention to put the agreement through a mechanism to restructure the
obligations with the intention that the agreement will ultimately be fully complied
32
with, demanding that section 129 should be complied with , is nothing but fruitless
formalism. It was never the purpose of the NCA to facilita te formalism which
would not benefit the consumer in any way.
[84] In the present matter, the respondent raises non -compliance purely as a dilatory
defence. She failed to indicate any intention to implement any of the remedies
referred to in section 129. Moreover, she stated that she was unemployed and
impecunious . As such, she is clearly unable to co-operate with the development
of a plan to restructure payments with a view on eventually paying the full debt.
[85] It is clear that suspension of the action or application, coupled with an order
regulating future proceedings, would serve no purpose but to delay the matter ,
increase the legal costs and waste valuable court resources .
[86] Be that as it may, section 130(4)(b) compels this cou rt to suspend proceedings
and to make an appropriate order.
[87] No purpose will be served to order the delivery of a section 129 notice. The
respondent is already aware of her rights. I t will suffice to afford the respondent
the opportunity to exercise the rem edies referred to in section 129 and make
orders regulating future proceedings.
The applicant’s application in terms of Rule 46A
[88] In the absence of a judgment, the applicant’s application in terms of Rule 46A
can obviously not proceed.
[89] In any event, the ap plicant’s application did not comply with the provisions of rule
46A. There is no indication that the application was served on the local
municipality who has an interest in the application . The a pplicant also failed to
support its application by a n affidavit incorporating a valuation of the property by
a registered professional valuer as required by the rule, read with binding case
law applicable in this Division.12

12 SB Guarantee Co (Pty) Ltd v De Sousa and Two Similar Cases 2024 (6) SA 625 (GJ)
32
[90] This matter was allocated for hearing at 11h30 on 28 November 2024. Literally
one mi nute before the hearing of the matter the applicant unilaterally uploaded
onto Cas eLines a valuation report which was ostensibly commissioned by a
commissioned of oaths , as well as a document reflecting the current balance
owing to the municipality. Apart from the fact that the court was not asked for
permission to submit further evidence, the respondent was not afforded the
opportunity to respond to it. This was contrary to the provisions of Rule 6 , and
the basic tenets of our law . No notice of these docum ents could be taken in
favour of the applicant.
[91] An aspect to which no reference has yet been made, is that the applicant also
sought an order that if the reserve price set by the court is not met, that the
property may be sold to the highest bidder. This i s entirely in conflict with Rule
46A, which provide for a procedure whereby the court may be approached for a
reconsideration if the reserve price was not met at the sale in execution.
[92] To the extent that the applicant has not complied with Rule 46A, the ru le
authorise s the court to postpone the matter and call for further evidence.
Prima facie contravention of section 103(5) of the NCA
[93] The applicant also uploaded a certificate of balance on 28 November 2024 , which
reflected that the respondent was allegedly indebted to the applicant in the
amount of R3 118 935.22 plus further interest at the rate of 9.5% per annum.
This indicates that the maximum amount allowed by section 103(5) of the NCA
will be reached soon, if not already reached. It shows that the applicant will
contravene section 103(5) by continuing to charge interest without limitation. I t
will be apposite to require the applicant to demonstrate to the court when the
matter is re -enrolled that section 103(5) is not contravened and to indicate what
the appropriate limitation to the applicant’s claim should be (both in terms of
amount and further interest) , having regard to the date of default and the costs
and interest debited after such date. An appropriate limitation should be
incorporated in any future order for judgment.
32
The question of costs
[94] It is trite that costs are in the discretion of the court , which discretion should be
exercised judicially. Whilst the costs normally follow the result, the court has the
discretion to deviate fro m this general principle. The court may in appropriate
circumstances deprive a successful party of its costs or even order a successful
party to pay the costs.
[95] The respondent initially raised defences to the main application which not only
had no merit but was clearly based on false evidence . She falsely denied having
concluded the loan agreements and / or passing the mortgage bonds over her
property. Her counter -application was based on the same false evidence and
had no merit. To the credit of her counsel, Mr Laher, who argued the matter
competently , the respondent did not persist with her ill -founded defences and
counter -application . The issues were confined to those dealt with above .
[96] The respondent should be ordered to pay th e costs of the counter - application.
[97] The respondent was successful in contending that the settlement agreement is
subject to the NCA, and that the applicant should have complied with section 129
and 130 before launching the application. She was unsuccessfu l in persuading
the court that the reckless credit provisions of the NCA was applicable to the
agreement and to set aside her obligations in terms of section 83.
[98] I have already alluded to a perturbing aspect of the respondent’s conduct and
approach in the present matter . The respondent raise d the section 129 and 130
defence and is evidently fully aware her rights in terms of section 129 and 130.
The matter took years to finalise . Meanwhile, while the respondent was fully
aware of her right to make use of the over -indebtedness and debt review
provisions of the Act , she failed to make use of these rights and simply await ed
the hearing of the matter . The fact that the applicant failed to comply with section
129 and 130 entitled her to apply to be declared ove r-indebted and for debt
review in terms of section 86(1) .13 In terms of section 86(2) she would only have
been prohibited from applying for debt review if the applicant had complied with

13 See the discussion above.
32
section 130, and by implication, section 129. While raising the dilato ry defence
that section 129 has to be complied with, she d id not indicate what she would
have done, had the credit provider complied with section 129. Nor d id she
indicate what she intend ed to do in future. At the same time, the respondent also
failed to comply with her obligations.
[99] The conclusion is inescapable that the consumer i s abusing the process of court
and is abusing her rights in terms of the NCA , contrary to the purpose of the
NCA, to execute a stratagem to delay the matter and to totally avoid complying
with her obligations .
[100] In my view the respondent was only nominally successful due to the express
provisions of section 130 of the NCA.
[101] Accordingly, in the exercise of my discretion I am of the view that costs should
not be granted in favour of the respondent , despite to some extent being
successful in opposing the applicant’s application .
Order
[102] In the circumstances the following order is granted :
(1) The respondent’s counterapplication is dismissed with costs on Scale B;
(2) The applicant’s application for judgment is hereby suspended in terms of Section
130(4)(b) of the National Credit Act and postponed sine die ;
(3) The applicant’s application in terms of Rule 46A is postponed sine die ;
(4) The respondent is hereby granted leave to refer the settlement agreement to a
debt counsellor, alternative dispute resolution agent, consumer court or ombud
with jurisdiction, with the intent that the parties hereto resolve any dispute under
the agreement or develop and agree on a plan to bring the payments under the
agreement up to date, within 15 days from the date this order is granted.
(5) If, the respondent fails to comply with the order in paragraph (4) above, or the
proceedings referred to in paragra ph (4) are term inated, the applicant is granted
leave to deliver a supplementary affidavit within 20 days after such non -
32
Date of hearing:
28 November 2024
Date of judgment: 30 January 2025
32