The bank told Llewellyn and Ilana Reinecke that ‘it is not enough to ask for [bank] statements but rather there must be a basis alleged as to why such statements are necessary’. Picture: GroundUp
The banks are starting to find it heavy going in the courts when trying to recover arrears from customers.
Last week a full bench of the Pretoria High Court dismissed with costs an appeal by FirstRand Bank against a couple who allegedly fell into arrears on a loan facility they had taken out.
The couple had pledged several properties they owned as security for the R2.1 million loan.
Some time later they appear to have fallen into arrears and were presented with a “certificate of balance” or COB as proof of their alleged debt.
ALSO READ: Kudos to woman taking on SA Home Loans
Rather than taking the bank’s claims of indebtedness at face value, the couple, Llewellyn and Ilana Reinecke, asked the bank for a breakdown of how it arrived at the claimed arrears figure. They did not get a response.
The court earlier found in favour of the Reineckes, who denied they were in arrears for the amount claimed because they had not received statements since 2019.
They argued that the certificate of balance was not conclusive proof of indebtedness.
The bank’s legal team responded that the onus was on the couple to prove that the claimed amounts were incorrect.
The Pretoria High Court disagreed. “We agree that this conclusion [that the customers had to prove the COB was incorrect] is misguided and therefore not sustainable,” reads the unreported judgment.
FirstRand’s legal team doubled down, saying the onus was on the Reineckes to provide statements and proof of payment.
It went further, claiming there was no evidence before the court placing the COB in dispute, nor was there any evidence that the couple had not received their bank statements.
This seemed a puzzling argument, as the Reineckes had specifically denied receiving statements. How were they to prove the non-receipt of bank statements?
“This submission is incorrect [as] the respondents pertinently raised the issue of statements at paragraph 35 of the answering affidavit,” reads the judgment.
Because the Reineckes had not received bank statements for several years, they claimed they were not in a position to admit or deny that the amount being claimed was correct.
ALSO READ: Court rules in favour of clients in Standard Bank home loan dispute
“And due to them [the Reineckes] not admitting the amount, these allegations cannot de deemed to have been admitted,” reads the earlier judgment that was under appeal.
To simply say – as the bank did – that it had sent out monthly statements is insufficient, argued the full court in the appeal.
The bank told the Reineckes that “it is not enough to ask for statements but rather there must be a basis alleged as to why such statements are necessary”.
The court found this response by the bank’s counsel worrying, since it ignored the Reineckes’ argument that they did not accept the amount claimed by the bank and asked for a total breakdown of the arrears.
ALSO READ: Consumer debt: consumers still battling despite improved optimism
There was also a dispute as to the amount the bank was claiming.
The bank sent out a Section 129 notice, as required under the National Credit Act, demanding repayment of the full amount of R2.15 million.
Yet in its court papers, it claims the arrears amounted to R267 583.
“To add insult to injury, the [bank’s] letter of demand dated 5 October 2020 recorded that the arrears on the loan facility was R70 412”, reads the judgment.
The Reineckes said it was impossible that just 11 months later the amount owed had jumped to R2.1 million.
The judgment says Section 129 (1) of the National Credit Act obligates a credit provider to include the amount of the arrears and the nature of the default in the notice.
The purpose of this section of the act is to draw the attention of the consumer to the default and propose that the consumer refer the matter to a debt counsellor, alternative dispute resolution agent, consumer court or ombud to avoid having to go to court.
Unless the amount of the arrears is specified in the notice, consumers are unable to formulate a plan to repay the debt.
ALSO READ: Positive developments offer golden opportunity to repay debt
Legal advisor Leonard Benjamin says it is crucial for people receiving Section 129 notices in terms of the National Credit Act to ask for detailed breakdowns of the arrears claimed.
“Never ignore a Section 129 notice. But what customers should do is demand evidence from the bank as to how it came to the arrears figure. This has the benefit of keeping it out of the courts.
“The credit provider must respond to these requests for detailed statements and if they don’t, you have the option of taking the matter to the ombud and other channels rather than end up arguing these cases in court.”
One of the general principles of pleading is that that which is not denied is admitted.
If you don’t deny the arrears figure, it is deemed to be admitted, a point that worked in the Reineckes’ favour.
However, the courts are unlikely to entertain a bare denial of the arrears.
Benjamin says the denial must be based on some concrete evidence, such as the credit provider not reflecting payments made in their statements or not accurately reflecting changes in interest rates as required by the credit contract.
This article was republished from Moneyweb. Read the original here.
Download our app and read this and other great stories on the move. Available for Android and iOS.
