Repossession of Goods in the Context of the National Credit Act

The current economic climate has resulted in a proliferation of "cash strapped" consumers. Accordingly the purchase of a vehicle is very rarely a cash transaction. The obvious alternative is an installment sale agreement, whereby the vehicle is paid off over a period of time.As a credit agreement, an installment sale agreement is subject to regulation by the National Credit Act 34 of 2005 (NCA). The terms of the agreement are generally standard, providing for repayment of the capital plus interest, provided that upon the consumer's default, the credit provider is entitled to cancel the agreement and repossess and sell the vehicle in order to defray the outstanding balance owed by the consumer. With credit agreements such as installment sale agreements now being regulated by the NCA, the consumer is protected from abusive credit providers by a number legislative provisions providing for a plethora of consumer rights. But what happens when these protective provisions have the effect of unilaterally altering the terms of a credit agreement to the consumer's detriment? This was the very issue before the court in the matter of ABSA Bank Limited vs Pieter de Villiers and the Magistrate for the District of Simonstown (Case No 15692/07). The matter involved an application by a credit provider to repossess a vehicle purchased on installment sale. The court was charged with determining whether the provisions of the NCA entitled the credit provider (applicant) upon default by the consumer to apply for a final order authorizing attachment of the vehicle, without requiring the credit provider to first issue summons for cancellation of the agreement. In terms of the common law principles of law of contract, restitution, which in the context of the aforementioned matter constituted repossession of the vehicle, is the normal result flowing from the cancellation of a contract, and accordingly a credit provider seeking to repossess a vehicle upon default would be required to claim and successfully obtain cancellation of the agreement prior to attachment of the vehicle.