THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 740/2023


In the matter between:
ABSA BANK LIMITED APPELLANT
and
JOHAN SERFONTEIN FIRST RESPONDENT
JACOBUS HENDRIK SERFONTEIN SECOND RESPONDENT

Neutral citation: Absa Bank Limited v Johan Serfontein and Another (740/2023)
[2024] ZASCA 11 (10 February 2025 )
Coram: MOLEMELA P, KGOELE and KEIGHTLEY JJA, and KOEN and
DOLAMO AJJA
Heard : 21 August 2024
Delivered : This judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the Supreme Court of Appeal website,
and released to SAFLII. The date for hand down is deemed to be 10 February 2025
at 11h00 .
Summary: National Credit Act 34 of 2005 (the NCA ) – acknowledge ment of debt and
power of attorney – whether a ‘supplemen tary agreement’ containing unlawful
provisio ns listed in s 90(2) – severance of unlawful provisions not reasonably possible
– entire acknowledgme nt of debt and power of attorn ey declared u nlawfu l from the
date it took effec t.

2

___________________________________________________________________

ORDER
___________________________________________________________________
On appeal from : The Free State Division of the High Court, Bloemfontein (Van Zyl J,
sitting as a court of first instance):
The appeal is dismissed with costs .
___________________________________________________________________

JUDGMENT
___________________________________________________________________
Keightley JA and Dolamo AJA (Molemela P and Kgoele J and Koen AJA
concurring):
Introduction
[1] The subject matter of this appeal is an acknowledgement of debt , incorporating
a power of attorney (AOD/POA), that was entered into between the appellant, ABSA
Bank Limited (ABSA), and the respondents, Messrs J H Serfontein (Mr Serfontein
senior) and J Serfontein (Mr Serfontein) , collectively, the ‘Serfonteins ’. The primary
question is whether it is valid, or whether, as the Free State Division of the High Court,
Bloemfontein (the high court) found, it contravenes the National Credit Act, 34 of 2005
(NCA) and is therefore invalid . The high court found that the AOD/POA was a
supplementary agreement containing unlawful provisions in contravention of ss 89,
90, and 91, read together with s 164(1) of the NCA. It declared the AOD/POA, as well
as a subsequent deed of sale concluded pursuant thereto, void ab initio (having no
legal effect from the outset ). If this Court uphold s the high court’s finding that the
AOD/POA was unlawful, the remaining question is whether the high court was correct
in declaring it void. ABSA contends that the high court ought to have severed the
offending provisions, leaving the remainder of the AOD/POA , and the deed of sale,
valid and enforceable . The appeal comes before this Court with leave of the high court .

[2] Central to the appeal are the meaning and effect of the impugned terms of the
AOD/POA . Their validity must be assessed within the framework of the relevant
provisions of the NCA , bearing in mind the statute’s underlying purpose s. The se
include the promotion and advance ment of the social and economic welf are of South
3

Africans; the promotion of a fair, transparent, competitive, sustainable , effective and
accessible credit market and industry ; and t he protect ion of consumers.1

[3] To achieve a balance between the interests of consumers and credit provid ers,
the NCA provid es measures to promote responsibility in the credit market. Of
releva nce to this appeal, t hey include: p romoting equity in the credit market by
balancing the respective rights and responsibilities of credit provi ders, on the one
hand, and consumers, on the other; and correct ing the imbalances in the negotiating
power between consumers and credit providers by, among others, protecting
consumers from deception, unfair and fraudulent conduct by credit providers and
credit bureau s.2

Facts
[4] In July 2003 ABSA granted Mr Serfontein an overdraft f acility. Over the years
the limit of the overdraft was increased . Security was provided by the registrat ion of
four covering mortgage bonds in favour of ABSA over Mr Serfo ntein’s property, being
Portion 3 of the Farm Welverdiend 92, District Kro onstad, Free State Province (the
immov able property). As additional securit y, his father, Mr Serfontein senior , signed a
deed of suretys hip in terms of which he bound himself as surety and co-princip al debtor
in solidum to be jointly and severally liable for the due fulfilment of his son’s obligations
to ABSA. Furthermore , ABSA registered two covering b onds over Mr Serfontein
senior’s immo vable property, being the Remaining Extent of the Farm Welverdi end 92,
District Kroonsta d, Free State Provin ce.

[5] The last overdraft agreement was signed on 28 July 2014 . At that date, the
princip al debt was R5.2 million. Mr Serfont ein underto ok to repay an amount of
R2 million on or before 25 July 2015. Howev er, he defaulted , with the consequence
that by August 2016 an amount of R6 202 787.42 was outstanding . This amount was
increasing by approximat ely R50 000.00 per mont h in respect of co mpound interest
charged monthly and capitalised. To curb the burgeoning debt and, according to ABSA ,
to avoid inevitable litigation for the recovery of the debt, ABSA initiated negotiations

1 Section 3 of the NCA.
2 Section 3(d) and ( f).
4

attempt ing to reach an amicable solution. ABSA’s legal repre sentative invited the
Serfonteins to a meeting on 25 January 2019.

[6] What followed was an exchange of draft agreements between the legal
representatives of both parties. In the first draft, signed by Mr Serfontein, he offered to
sell the immovab le property and, with t he proceeds there of, settle the debt owing to
ABSA, in the event of his default under a proposed payment plan. This version was
rejected by ABSA . Instead, ABSA p resented an AOD/POA that provi ded for the sale of
the immovable property, as well as that of Mr Serfontein senior . The Serfonteins
objected to the inclusion of the sale of the latter . Ultimately, ABSA agreed to excise the
clause relati ng to that property , which resulted in the parties’ agreement on the final
version of the AOD/POA on 17 March 2019. The Serfonteins conced ed that they had
signed the final versio n of the AOD/POA after they had obtaine d ‘practical le gal advice
with regard to the settlement of the debt’ from their legal repres entativ e.

[7] The AOD/POA was a comprehensive and detailed document . We focus only on
those terms directly relevant to this appeal. Clause 1 comprised the acknowledgment
of debt portion of the agreement. The Serfonteins acknowledg ed that, as of 20
November 2018, they were truly and lawfully indebted to ABSA in respect of monies
lent and advanced in the amount of R7 131 019.14, plus interest at 10% per annum,
capitalised monthly from 21 November 2018 to date of final payment . This amount
they confirmed unconditionally to be due and payable. They further acknowledged that
they had defaulted on their obligations and were unable to honour them.

[8] The power of attorney component of the AOD/ POA was in clause 2 , headed
‘Power of attorney regarding immovable property’ . It recorded Mr Serfontein ’s
ownership of the immov able property and ABSA’s four covering bonds register ed
against the title deed thereof as security . In clause 2.3 the Serfonteins g ranted an
irrevoc able power of attorney , in favour of ABSA, to sell the immovable property by way
of public auction, tender, or by private sale for the highest possible price . The proceeds
of the sale would be paid towards any outstan ding bala nce due and p ayable to AB SA
in terms of the agreement. Importantly, in terms of these provisions, ABSA acquired
the unconditional and irrevocable right to proceed immediately , and without an order
5

of court , to sell the immovable property.
[9] The power of attorney gave ABSA additional , ancillary powers. They included
the power, at ABSA’s sole discreti on, to appoint auctione ers of its choice to conduct a
public auction on su ch terms and conditions as ABSA deemed fit. ABSA also would
have the right to sign, on behalf of the Serfonteins , all documentation necessary to give
effect to the sale and transfer of the immovable property.

[10] Under c lause 3 of the AOD/POA the Serfonteins renounced the benefits
attached to the legal exceptions of revision of accounts, no value received , and the
beneficium de duobus vel pluribus reis d ebendi (a co-debtor’s right to avoid paying
more than their share of the joint debt) . They acknowledged that they were fully
acquainted with the full meaning and effect of these renunciations. A final, but by no
means insignificant , aspect of the AOD/POA was clause 13, headed ‘Disclosures in
terms of the NCA ’. In it the Serfonteins ‘ackno wledge[d] that this agreement is not
subject to [the] applicability of the National Credit Act .’

[11] Armed with the AOD /POA, ABSA proceeded to auction the immovable property
on the 17 July 2019. However , the offer made at the auction was unacceptable to
ABSA and was rej ected. Although ABSA continued to market the property, an
alternative buyer was not found for some time. On 24 February in 2021, ABSA served
Mr Serfontein with a notice in terms of s 129 of the NCA . The notice advised him that
he was in breach of the overdraft agreements and called upon him to re medy the
default by making payments directly to ABSA. In response, the Serfonteins exercised
their rights under s 129(1) (a) of the NCA3 and referred the matter to the Ombudsman
for the Banking Service s. One of their complaints was that the overdraft agreement
between ABSA and Mr Serfontein amounted to reckless credit. The referral was
unsuccessful.


3 Section 129(1)(a) of the NCA provides that the credit provid er ‘may draw the default to the notice of
the consumer in writing and propose that the consumer refer the credit agreement to a debt counsello r,
alternat ive disp ute resoluti on agent, consu mer co urt or ombud with jurisdiction, with the intent that the
parties res olve any d ispute under the agreem ent or develop and agree on a plan to bring the payments
under the agreem ent up to date. ’
6

[12] ABSA eventually concluded a deed of sale for the immovable propert y on 13
September 2021 (the deed of sale) for the sum of R6 000 000.00. This sum translated
to approximately R9 740.00 per hectare. ABSA maintained that the purchase price
was a market-related price, although the Serfonteins disputed this. ABSA advised Mr
Serfontein of the sale of the immovable property and demanded that, on registra tion
of tra nsfer, he should vacate the property to give vacant poss ession to the purchaser.
This prompted the Serfonteins to launch their high court application. They sought an
order: declaring the AOD/ POA to be contrary to the NCA and void ab initio; declaring
the deed of sale void; and directing the Registrar of Deeds (the Registrar) not to
register the transfer of the immovable property to the purchaser. ABSA, the two
trustees of the Trust that had purch ased the immovable property, and the Registrar
were cited as respondent s. Only ABSA opposed the application. It also counter-
claimed for a declaratory order to enforce the AOD/POA and f or related r elief.

The high court
[13] In the high court, the Serfonteins ’ main contention was that the AOD/POA was
a suppl ementary agreement prohibited by s 89 of the NCA and was thus, in its entirety,
unlawful and void. In the alternative, they argued that it was void in that it was a credit
agreement , several provisions of which were prohibited under s 90(2). Further, having
regard to the agreement as a whole, they contended that it would not be reasonable
to sever the unlawful provis ions from the remainder to render it lawful.

[14] ABSA’s argument , on the other hand, was that the AOD/POA was not a
suppleme ntary agreement in that it added nothing to the overdr aft agreements , which
had been concluded years before the AOD/POA . ABSA submitted that the AOD/POA
did not deal with the same subject matter as the original overdraft agreement , nor did
it regulate the circumstances under which credit was extended to Mr Serfontein.
Further, the AOD/POA was concluded after the credit agreeme nt had run its course
and the default had occurred. ABSA argued that our courts have ruled that it is lawful
for a debtor who is in default to consent to the sale of mortgaged property in settle ment
of the debt.

7

[15] Having conducted a detailed review of the AOD /POA the high court found in
favour of the Serfonteins . It granted an order in the following ter ms:
‘1. In terms of the provisions of sections 89, 90, and 91, read with section 164(1) of the Natio nal
Credit Act, 34 of 2005, the Acknowl edgeme nt of Debt, incorporati ng a Power of Attorney to
dispose of Portion 3 of the Farm Welverdiend 92, Extension 616, Distri ct Kroonstad, Free State
Provi nce, in extent 616,717 hectares (“the property”) of which the first applicant is the owner,
entered into between the applica nts and the first respondent on the 17 M arch 2019, is d eclared
void from the date it was ent ered into.
2. The agreemen t of sale of the property to the Francois Els trust IT no. 1298/98 , repres ented
by the second and third respondent s, signed on 7 September 2021 and 13 September 2021
respectiv ely, is declared void ab initio .
3. The fourth responde nt is prohibited from registering the property on the basis of the
agreement of sale referred to in paragraph 2 into the names of the second and third
respondent s.
4. The count er application is dismisse d.
5. The first respondent is ordered to pay the costs of the applicati on and the counter
application.’

Statutory framework
[16] At the core of chapter 5 of the NCA is the protection of the cons umer by
outlawing certain agreements between credit providers and consumers ; prohibiting the
inclus ion of cert ain unlawf ul clauses in those agreemen ts; and prohibiting certain
conduct by credit provi ders. Th ere are also provisions which set out the mechanisms
for dealing with contraventions , and the consequences of those contraventions. As
noted at the commencement of this judgment, the provisions central to this appeal are
ss 89, 90, and 91 .

[17] Section 89(2) provides, in relevant part:
‘(2) Subject to subsections (3) and (4), a credit agreement is unlawful if -
…
(c) it is a supplementary agreement or document prohibited by section 91(a):
. . .’
8

Further, i n terms of s 89(5) (a):
‘If a credit agreement is unlawful in terms of this section, despite any other legislation or any
provision of an agreement to the contrary, a court must make a just and equitable order
including but not limited to an order that -
(a) the credit agreement is void as from the date the agreement was entered into .’

[18] The cross -refere nce in s 89(2) to s 91(a) is misleading, as the latter subsection
no longer exists.4 Instead, s 91 reads:
‘Prohibition of unlawful provisions in credit agreements and supplementary agreements
(1) A credit provider must not directly or indirectly, by false pretences or with the intent to
defraud, offer, require or induce a consumer to enter into or sign a credit agreement
that contains an unlawful provision as contemplated in section 90.
(2) A credit provider must not directly or indirectly require or induce a consumer to enter
into a supplementary agreement or sign any document, that contains a provision that
would be unlawful if it were included in a credit agreement.’

[19] While subsec tion (1) deals specifically with unlawful provisions in the main
credit agreement, s ubsec tion (2) has broader reach . It extends the prohibition to
agreements that supplement the main credit agreement , thus ensuring that they, too,
do not contain unlawful provisions. The parties were agreed that s 91(2) finds
application in this appeal . This brings s 90(2) into play, which is the section that list s
the types of provisions that would be unlawful if included in a supplementary
agreement .

[20] The list of prohibited provisions in s 90(2) is extensive . It is not necessary to set
them out in full. The following subparagraphs have particular relevance in this case:
‘(2) A provision of a credit agreement is unlawful if -
(a) its general purpose or effect is to-
(i) defeat the purpose o r policies of this Act;
. . .

4 As originally promulgated, the NCA did include a s 91(a). It provided that ‘[a] credit provider must not
. . .directly or indirectly require or induce a customer to enter into a supplementary agreement, or sign
any document that contains a provision that would be unlawful if it were included in a credit
agreement’ .
Section 91 was substituted by s 28 of the National Credit Amendment Act 19 of 2014 (the Amendment
Act) with the effect that it now comprises subsections (1) and (2). Unfortunately, the drafters of the
Amendment Act overlooked the need simult aneously to amend the cross -reference in s 89( 2).
9

(c) it purports to waive any common law rights that -
(i) may be applicable to the credit agreement ; and
(ii) have been prescribed in terms of subsection (5);
. . .
(j) it purports to appoint the credit provider, or any employee or agent of the credit provider,
as an agent of the c onsumer for any p urpose other than those contemplated in section
102 or deems such an appointment to have been made ;
(k) it expresses, on behalf of the consumer -
. . .
(ii) a grant of a power of attorney in advance to the credit provider in respect of any matter
related to the granting of credit in terms of this Act;
. . .’

[21] Two further subsections of s 90 are relevant , being subsec tion (3) and (4). They
read:
‘(3) In any credit agreement , a provision that is unlawful in terms of this section is void as
from the date that the provision purported to take effect.
(4) In any matter before it respecting a credit agreement that contains a provision
contemplated in subsection (2) , the court must -
(a) sever that unlawful provision from the agreement , or alter it to the extent required to
render it lawful, if it is reasonable to do so having regard to the agreement as a whole;
or
(b) declare the entire agreement unlawful as from the date that the agreement, or
amended agreement, took effect ,
and make any further order that is just and reasonable in the circumstances to give effect to
the principles of section 89(5) with respect to that unlawful provision, or entire agreement,
as the case may be. ’

Issues for determination
[22] In terms of this statutory scheme , the following issues arise for determination :
(a) Is the AOD/POA a supplementary agreement ?
(b) If it is a supplementary agreement, does it con tain provisions that would be
unlawful if included in a credit agreement? In other words, do any of the AOD/POA
provisions fall foul of the prohibitions listed in s 90(2)?
(c) In addition, were the Serfonteins induced or required to sign the AOD/POA ?
10

(d) If the first three questions are answered in the affirmative, th e impugned
provisions of the AOD/POA are unlawful . The issue then is whet her the high court
exercised its discretion , accorded under ss 89(5) , 90(3) and 90(4) , properly in
declaring the entire AOD/POA void ab initio .

Supplementary agreement
[23] What is meant by a supplement ary agreemen t is not defined in the NCA . In
National Credit Regula tor v Lewis Stores (Pty) Ltd and Another5 this Court, applying
the set tled rules of interpretation, held that:
‘The starting point in interpreting the legislation, of necessity, is to give consideration to ‘the
language used in the light of the ordinary rules of grammar and syntax; the context in which
the provision appears, the apparent purpose to which it is direc ted and the material known to
those responsible for its production. The Shorter Oxford English Dictionary defines
‘supplementary’ as ‘of the nature of, forming, or serving as, a supplement’. ‘Supplement’, in
turn, is defined as ‘something added to supply a deficiency; an auxiliary means, an aid;’ or ‘a
part added to complete a literary work or any written acco unt or document.’ Giving the term its
ordinary English meaning in the context of ch 5 of the NCA, an agreement can only, in my
view, be ‘supplementary’ if it deals with the same subject matter as the main agreement, ie the
regulation of the credit and repayment thereof. Examples of supplementary agreements that
spring to mind would be docum ents acknowledging that no representations had been made
to the consumer, a waiver of statutory rights or an acknowledgment of receipt of goods in good
order and condition. ’6

[24] Counsel for the Serfonteins accepted in oral argument that not all
acknowledgements of debt fall foul of the NCA. This concession was correctly made
because the question of unlawfulness will always depend on the pa rticular provisions
of the agreement under consideration. However, the antecedent inquiry is whether the
NCA applies at all. The jurisprudence of th is Court clear ly establishes that not all
settlement agreements or acknowledgments of debt fall within the ambit of the Act. In
Ratlou v Man Financial Services (Pty) Ltd7 this Court endorsed a purposive approach

5 National Credit Regulator v Lewis Stores (Pty ) Ltd and Another [2019] ZASCA 190; 2020 (2) SA
390(SCA) ; [2020] 2 All SA 31 (SCA) (Lewis Stores ).
6 Lewis Stores fn 4, para 32.
7 Ratlou v Man Financial Services (Pty) Ltd [2019] ZASCA 49 (SCA); 2019 (5) SA 117 (SCA) (Ratlou ).
See also Ribeiro & Another v Slip Knot Investments 777 (Pty) Ltd [2010] ZASCA 174; 2011 (1) SA 575
(SCA).
11

to determining whether the NCA applies to agreements of compromise. This involves
examining the relationship between the underlying causa (cause) and the settlement
agreement . This Court concluded that ‘the NCA was not designed to regulate
settlement agreements where the underlying agreements or cause would not have
been considered by the Act.’ In that case , the underlying agreement – a rental
agreement for trucks – did not fall within the ambit of the NCA because it was a large
agreement concluded with a juristic person. For this reason, the subsequent
acknowledgment of debt also fell outside the NCA’s scope.

[25] This approach to agreements of compromise informs the inquiry into whether
the AOD/POA was a supplementary agreement and thus f ell within the regulatory
ambit of chapter 5 of the NCA. The interconnectedness between the underlying
agreement and the AOD/POA is a determining factor . This involves a consideration of
the subject -matter of each agreement, and their respective nature s: do they share the
same subject -matter, and does that subject -matter involve the extension and
repayment of credit ? Following from Ratlou , one might a dd to the inquiry the question
whether the underlying agreement falls within the ambit of the NCA . If these features
are present, it will follow that the AOD /POA supplements the overdraft agreements
and accordingly fell within the scope of s 91(2).

[26] It is evident that the AOD/POA dealt with the same subject matter as the main
agreement . By its very nature, an overdraft agreement regulates the extension and
repayment of credit between the credit provider and the consumer. There was no
suggestion that the overdraft and surety agreement s between ABSA and the
Serfonteins were not governed by the NCA. One purpose of the AOD/POA was to
record the Serfonteins’ concession that they were indebted to ABSA under the
overdraft and surety agreements , that they had defaulted on th e debt, and that the
amount outstanding was due and payable. A further purpose was to regulate the
recovery of the debt by giving ABSA the irrevocable right to sell the immovable
propert y. There can thus be no question th at the underlying agreements and the
AOD/POA were intrinsically intertwined, and that the latter supplemented the former.
Plainly, both the underlying agreements and the AOP/POA involved a credit provide r-
consumer relationship , the regulation of which lies at the heart of the NCA.

12

[27] For these reasons we conclude that the AOD/POA was a supplementary
agreement within the meaning of the phrase in s 91(2). The next stage of the inquiry
is to determine whether any of its provisions fell foul of the prohibitions listed in s 90(2).

Unlawful provisions
[28] Did the AOD/POA contain provisions that would be unlawful if included in a
credit agreement ? ABSA argued that even if it were to be found to be a supplementary
agreement, it s provisions were not unlawful under s 90(2). Although the high court
considered and pronounced on the unlawfulness of several of the provisions of the
AOD/POA , it is sufficient for purposes of this appeal to refer only to those most relevant
to the outcome .

[29] The first fundamental contravention is to be found in clause 1 3 of the AOD/POA ,
which purports to exclude the application of the NCA to its terms. The general purpose
or effect of an express ouster clause of this nature is to defeat the purposes or polices
of the NCA . Accordingly, it offends against s 90(2)( a)(i) and is unlawful. It is worth
pointing out that th e clause is in any event unenforceable, as it is for the court, and not
the parties, to determine whether the NCA applies to an agreement of compromise.

[30] A key feature of the AOD/POA is that it combine d, in one agreement, not only
an acknowledgement of debt, but also a power of attorney , giving ABSA a full
complement of rights to sell the immovable property . As we noted earlier, the effect of
clause 2, which was irrevocable, was that it entitled ABSA immediately, and without
resort to court processes , to execute against the immovable property (the right of
parate executie ). The high court found that these provisions fell within the prohibition s
contained in s 90(2)( k) and 90(2)(j).

[31] In Bock and Others v Du buroro Investment (Pty) Ltd8 this Court reaffirmed the trite
principles of parate executie. The fundamental principle, being that:
‘A clause in a mortgage bond permitting the bondholder to execute without recourse to the
mortgagor or the court by taking possession of the property and selling it is void. ’
The Court went on to explain that there is an important proviso to this principle :

8 Bock and Others v Duburoro Investment (Pty) Ltd 2004 (2) SA 242 (SCA) (Bock ) para 7 .
13

‘Nevertheless, after default the mortgagor may grant the bondholder the necessary authority
to realise the bonded property . It does not matter whether the goods are immovable or
movable: in the latter instance, to perfect the security, the court’s imprimatur is required .’
(Emphasis added.)

[32] ABSA relied on this proviso in support of its submission that the high court had
erred in finding that clause 2 of the AOD/POA contravened the NCA. It relied, too, on
the following dictum in Iscor Housing Utility and Another v Chief Registrar of Deeds
and Another , 9 which was cited with approval in Bock :10
‘. . . where a parate executie power is granted, whether in respect of movables or immovable s,
and the parties were to agree after the debtor be in default that the creditor may proceed to
realise that bonded property , he no longer does so by virtue of the original power, but by virtue
of the fresh agreement after the debtor’s default .’

[33] In sum, ABSA’s contention was that AOD/POA fell within the scope of the
proviso to the parate executie prohibition. It pointed out that the impugned provisions
were not included in advance in the mortgage bond agreement between ABSA and
the Serfonteins. Instead, t hey formed part of an agreement reached between the
parties after the Serfonteins had fallen into default . As such, ABSA submitted, on the
recognised principles of our common law, as confirmed in the judgments referred to
above, the grant of an irrevocable power of attorney to ABSA to execute immediately
against the immovable property was lawful .

[34] The fundamental difficulty with ABSA ’s reliance on Bock and Iscor is that both
cases were decided before the promulgation of the NCA , with the result that they
considered only the pre -statutory , common -law position . The legal landscape of the
creditor -consumer relationship has undergone fundamental changes since then. This
is not to say that existing common -law principles no longer have any application. That
is an issue that does not require further consideration in this case. However, what it
does mean is that once an agreement falls within the ambit of the NCA, the lawfulness
of its provisions must be determined under th e legislation . We have found that the

9 Iscor Housing Utility and Another v Chief Registrar of Deeds and Another 1971 (1) SA 613 (T) ( Iscor )
at 616E.
10 Bock fn 8 para 7.
14

AOD/POA was a supplementary agreement within the meaning of that term in the
NCA. The simple question , then, is whether the grant in clause 2 of an irrevocable
power to execute against the immovable property without resort to court process es
was prohibited under s 90(2 ).

[35] A provision of this nature does not pass muster under the NCA. In our
constitutional dispensation , procedural constraints are placed on the powers of
mortgagors to execute against immovable property . This is necessary to promote the
constitutional protection s against the arbitrary deprivation of property , in s 25(1), and
eviction , in s 26(3) , of the Constitution. Under the latter provision, eviction in the
absence of a court order is expressly prohibited.11 Deprivation of ownership of
immovable property by a creditor without the sanction of a court order is plainly
arbitrary. This position is confirmed by the introduction of rules 46 and 46A into the
Uniform Rules of Court . These amended rules require judicial supervision in all matters
involving execution against a debtor’s immovable property , and only when judgment
has been granted by a court.

[36] As we noted earlier, t he purpos es of the NCA include the protection of
consumers and the promotion of equity in the credit market by balancing the respective
rights and responsibilities of credit providers and consumers. Section 90(2) (a)(i)
prohibits provision s that have the effect of defeating the NCA’s purposes. In permitting
ABSA to execute against the immovable property immediately and without a court
order the AOD/POA fundamentally defeated these central purposes of the NCA and
was unlawful.

[37] We conclude that two key provisions of the AOD/POA, namely clauses 2 and
13, were prohibited under s 90(2). In light of this conclusion, it is unnecessary to
consider the high court’s finding that other provisions in the AOD/POA were also
unlawful under that section.


11 Section 26(3) provides:
‘No one may be evicted from their home, or have their home demolished, without an order of court
made after consideration of al l the relevant circumstances. No legislation may permit arbitrary
evictions.’
15

Induced or required to sign
[38] The third issue is whether the Serfonteins were required or induced to sign the
AOD/PO A. The words ‘require’ and ‘induce’ are not defined in the NCA. They are
therefore to bear their ordinary gram matical mean ing. ‘Require ’, according to the
Shorter Oxford English Dictio nary means to instruct or expect someone to do
something. As to the meaning of ‘induce’ in the NCA, i n Barko Financi al Services (Pty)
Ltd v National Credit Regulator12 this C ourt found :
‘To “induce ”, according to the Shorter Oxford English Dictionary 6 ed, is to succeed in
persuading or leading someone to do something . In presenting the suite of documents to the
consumer, it is Bako’s employees who explain the advantages to the consumer of Annexure
D5. That exercise, no doubt, is intended to persuade the consumer that it is in their best
interests to sign that agreement. The stress laid in the affidavits on the advantages of the
ADEO system from the perspective of the consumer would undoubtedly have been at the
forefront of the presentation to prospective customers and informing them that ADEOs were
less expensive than other forms of payment would clearly be directed at inducing them to
agree to use this system. In view of the benefits to Barko of that system it is inconceivable that
it would adopt a neutral stance in regard to the use of an ADEO in preference to some other
means of payment. The fact that a consumer may have been free to decline to conclude the
agreement is, in my view, thus irrelevant to the question whether or not they were induced to
do so .’ (Emphasis added .)

[39] Counsel for ABSA was at pains to emphasise that the AOD/POA was a product
of a negotiation process, where both sides enjoyed legal representation, culminat ing
in a settlement agreement acceptable to both parties. Counsel also submitted that,
had it not been for the signing of the AOD/POA , expensive litigation to enforce ABSA’s
claim and execute thereon would have ensued . This , in a matter where the Serfonteins
had no defence, and the immovable property was bonded to provide security for the
debt. In defending the validity o f the subsequent sale agreement counsel submitted
that the selling price was market related. ABSA submitted that there was a distinction
between the fact s of this case and those in University of Stellenbosch Legal Aid Clinic
and Others v Minister of Justice and Correctional Services and Others .13 It highlighted

12 Barko Financial Services (Pty) Ltd v National Credit Regulator [2014] ZASCA 114 (SCA) ; [2014] 4
All SA 411 (SCA) para 16 .
13 University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice and Correctional
Services and Others [2016] ZACC 32; 2016 (6) SA 596 (CC); (2016) 37 ILJ 2730 (CC); 2016 (12)
BCLR 1535. (CC) (University of Stellenbosch LAC ).
16

that in that case , the credit provider had engaged in reprehensible conduct , demanding
that consumers sign documents and in some instances, forging signatures when they
refused. According to ABSA, this was a far cry from the facts of the case on appeal.

[40] Closer scrutiny of the circums tances leading to the signing of the AOD/ POA,
however, paint a different picture to the one portrayed by ABSA . In January 2019 ,
ABSA rejected the first offer by the Serfontein’s of a negotiated settlement. In the
exchange of letters that followed , ABSA’s le gal representative adopted a stern tone,
and it must hav e been clear to the Serfonteins , that unless they came to an agreement
acceptable to ABSA, they would face litigation and possible sequestration. In other
words, the Serfonteins were made aware that they were involved in a last-ditch effort
to settle the matter by agreeing to the unconditional acknowledgement of debt and
power of attorney to enable ABSA to sell the immovable property.

[41] The corresponden ce discloses that on 27 February 2019 ABSA ’s legal
representatives informed the Serfonteins that the AOD/POA must be signed by the
Serfonteins and two witnesses and returned to ABSA’s legal representative on or
before the close of business on 1 March 2019. The Serfonteins were warned that a
failure to sign the AOD/POA would lead to formal steps being taken to recover the
outstanding balance owed. It is clear from the terms of this letter that the alternative,
in case of failure to sign the AOD/POA, would be the institution of legal proceedings.

[42] To avoid the express threat of the institution of legal proceedings, which could
have included sequestration , the Serfonteins signed the AOD/POA. They effectively
had no option but to accede . In this respect, the facts of this case are a stark er example
of inducement than those in Barko .

[43] ABSA contended in its s ubmissions that a broad interpretation of the terms
‘require’ and ‘induce’ in s 91 would have a chilling effect on the banking industry and
would effectively preclude commercial banks from settling disputes with defaulting
clients out of court. This is because of the reality that , when faced with the option of
settling with a credit lender, or facing litigation, a defaulting debtor does not have any
real option but to settle by acknowledging his or her debt. The fear expressed by ABSA
17

was that this would have the effect of outlawing most acknowledgments of debt under
the NCA .

[44] The fear contained in this submission is more apparent than real. Firstly, every
case must be decided on its own facts. Secondly , it is important to bear in mind that an
‘inducement’ – in this broad sense – on its own will not invalidate an acknowledgment
of debt. Under s 91, it is only if the debtor is induce d to agree to terms that are
prohibited under s 90(2) that the acknowledgment of debt will be unlawful and invalid.
If an acknowledgement of debt does not include prohibited provisions, it will not be
unlawfu l under s 89(2), read with s 91.

[45] For these reasons we are satisfied that the Serfonteins were directly or indirectly
required or induced to sign the AOD/POA. Consequently, we conclude that the high
court was correct in finding that the AOD/ POA contravened the provisions of the NCA
and was unlawful. The remaining issue is whether the high court erred in declaring the
AOD/POA, and the consequent agreement of sale , void ab initio .

Validity of the AOD/POA
[46] In terms of s 90(4) read with s 89(5) if a court finds any provisions in a credit
agreement to be unlawful, it has the option of either severing the unlawful provisions
from the rest of the agreement, if it is reasonable to do so, or declaring the entire
agreement unlawful. The effect of an order of severance is that the credit agreement,
with the unlawful provisions severed from it, will remain in force. On the other hand, if
it is not reasonable to sever the offending provisions, the court is required to declare it
unlawful ab initio . In that case, the unlawful credit agreement is void and cannot be
enforced. The court may also make any further order that is just and reasonable in the
circumstances to give effect to the principles of s 89(5).

[47] ABSA submitted that in the peculiar circumstances of this case, a finding of
unlawfulness should not necessarily lead to a striking down of the AOD/POA and
reversing its consequences. It submitted that a just and equitable order would be to
sever from the AOD/POA any provision that may be found to be offensive. ABSA,
however, did not venture to mention which offending clauses of the AOD/POA could
18

be severed so that the remaining provisions c ould be implemented. Severance will
only be reasonable, and thus permissible, if thereafter a valid agreement, capable of
implementation , remains. The unlawful provisions, in our view, permeate d the entire
AOD/POA , thus making it impossible to render it lawful through severance of the
offending clauses.

[48] In the circumstances, the AOD/POA could not be saved through sever ance.
The high court was correct in so finding, and in declaring it unlawful as from the date
it was concluded . As the AOD/POA was the bas is on which ABSA entered into the
deed of sale in respect of the immovable property, the high court correctly ordered that
that agreement , too, was rendered void ab initio .

Conclusion and order
[49] For all the above reasons, we conclude that the high court cannot be faulted in
granting the relief sought by the Serfonteins. We make an order in the following terms:

The appeal is dismissed with costs .





___________________
R M KEIGHTLEY
JUDGE OF APPEAL






___________________
M J DOLAMO
ACTING JUDGE APPEAL
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Appearances

For the appellants: MP van der Merwe SC and HJ Benade
Instructed by Symington De Kok Attorneys, Bloemfontein

For the respondents: N Snellenburg SC
Instructed by: Blair Attorneys, Bloemfontein .