DO SEQUESTRATION PROCEEDINGS FALL WITHIN THE OVERALL AMBIT OF “ANY PROCEEDINGS” AS STIPULATED IN SECTION 130(3) OF THE NATIONAL CREDIT ACT 34 OF 2005?* Naidoo v Absa Bank Limited [2010] 4 All SA 496 (SCA)

Abstract

Naidoo v Absa Bank Limited is one of the few cases by a court in which the interface between the insolvency law and the National Credit Act 34 of 2005 arose since the commencement of the latter in 2006. Other cases highlighting this interface include Investec Bank Ltd v Mutemeri (2010 (1) SA 265 (GSJ)) and Ex Parte Ford (2009 (3) SA 376 (WCC). The enactment of the National Credit Act has had significant
consequences for the scope of remedies available to both debtors and creditors in terms of the insolvency law. The National Credit Act did not change the Insolvency Act 24 of 1936 dramatically. Section 84 of the Insolvency Act, which deals with goods delivered in terms of an instalment agreement to a debtor whose estate became subsequently sequestrated, was one section which was changed by the National Credit Act. However, the National Credit Act is now dealing exclusively with certain debts and the enforcement of those debts. These are debts arising out of credit agreements and therefore excluding the application of insolvency law when dealing with such debts. Section 4 of the National Credit Act determines when the Act is applicable. The National Credit Act provides sophisticated measures during a situation when consumers who are parties to credit agreements, which are not exempted from the application of the National Credit Act, are unable to pay their debts. These measures include debt reviewing, the declaration of a credit agreement as reckless credit and debt restructuring (see s 86(7) of the National Credit Act for the recommendations which a debt counsellor may
make after reviewing a consumer’s debts). In all other instances, normal civil remedies such as a garnishee order, sale in execution, an order for payment in instalments and the measures of the insolvency law are still means of redress available to a creditor. It is
submitted that this will not be the only time in South Africa where a possible overlap of remedies available under both insolvency law and under the National Credit Act will be adjudicated. Future motions will either try to enforce the application of the insolvency law or question its application, arguing for the application of the more specialized National Credit Act as seen in Naidoo v Absa Bank Limited.