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DEBT COLLECTION - A Brief Overview of the Steps to be Followed in Order to Obtain Judgment By Tracy-Erin Watson (Posted on 25/01/2012)
ORDINARY PROCEDURE LETTER OF DEMAND A letter of demand gets sent to the debtor whereby we request payment of the overdue amount. The debtor is given a reasonable time period in which to make the payment usually (7) seven to (10) ten days, failing which legal action will be instituted. The letter of demand is usually sent via registered mail. SUMMONS A Summons will be issued out of the Magistrates Court, the Regional Court or the High Court dependant on the amount claimed or as agreed in your agreement. The summons will contain all the relevant details of the plaintiff and defendant as well the cause of action. It will also set out the time period available to the defendant in order to defend the action. The court will provide us with a case number and the summons will be sent to the Sheriff for service. The sheriff will attempt to serve the summons on the defendant personally however if same is not possible he can serve on a person over the age of 16 years who appears to be control of the premises or even affix the summons to the principal door of a domicilium address if no other means of service is possible. The sheriff will provide the attorney with a ‘return of service’ which will contain the date and manner of service. If service was not possible the sheriff will furnish the attorney with a ‘return of non-service’. DEFAULT JUDGMENT If the Summons was successfully served and the time period (as mentioned in the summons in which the defendant has in order to defend the action) has lapsed, the Plaintiff can apply to court for Default Judgment. SUMMARY JUDGMENT If the Summons was successfully served and the defendant has served a Notice of Intention to defend the action within the time period as mentioned in the Summons, the Plaintiff can apply to court for Summary Judgment on each of such claims in the summons as is only –
together with any claim for interest and costs. One cannot proceed with an application for Summary Judgment if one is claiming Damages. The attorney will require an affidavit from the plaintiff or by any other person who can swear positively to the facts verifying the cause of action and the amount (if any) and stating that in his/her opinion there is no bona fide defence to the action and that the notice of intention to defend has been delivered solely for the purpose of delay. The defendant can then file an opposing affidavit stating that he does have a Bone fide defence and such affidavit or evidence shall disclose more fully the nature and grounds of the defence and the material facts relied upon. The plaintiff is not allowed to respond to the defendant’s affidavit and if same is accepted by the court at the Summary Judgment application then the application will be refused and the matter will proceed to trial. PLEADINGS, NOTICES AND TRIAL The defendant will then file his plea accepting or denying all allegations mentioned by the Plaintiff in the particulars of claim and will set out his defence. Both parties will exchange discovery affidavits setting out what documents they have or do not have in their possession in an attempt to prepare for trial. A pre-trial conference will be held in order to ascertain which facts are common cause and which facts are still in dispute. On the date of the trial the parties who made allegations will have to prove same. Both parties will lead evidence and the court will made the final decision. Judgment will be granted or refused. The parties will then argue for an order as to costs. ENFORCEMENT Once Judgment is granted in your favour there are various enforcement options available to you. A WARRANT OF EXECUTION can be issued by the court. This warrant will authorise the sheriff to attach movable or immovable property of the Judgment debtor (to the value of the judgment granted against him/her plus interest and costs if same has been awarded). The sheriff will make an inventory of the movable goods. Once the attorney gives instructions to the sheriff, the goods attached can be removed and will be sold at a public auction. If there are no movable goods then he will furnish the attorney with a ‘Nulla Bona Return’. SECTION 65 PROCEEDINGS (in the Magistrates Court only) A financial enquiry can be conducted against the Judgment debtor. The sheriff will serve a notice on the Judgment debtor calling him/her to appear at the section 65 proceedings in order for the attorney to enquire into the Judgments debtors financial affairs. He/she must supply the court with an income and expenditure statement and furnish the court with all financial documentation requested by the attorney for example salary slips and bank statements. The magistrate can make an order instructing a Judgment debtor to pay monthly instalments to the judgment creditor. If there was proper service of the section 65 notice and the Judgment debtor does not appear in court on the date as mentioned in the notice then a Warrant for the Judgment debtors arrest can be authorized.
Section 129 letter of the NCA A section 129 letter must be sent to the debtor notifying him /her of his /her rights in terms of section 129 of the National Credit Act. The letter must notify and invite the debtor to refer the agreement either to a debt counselor, to an alternative dispute resolution agent, to the consumer court or to an ombudsman with jurisdiction, with the intention to resolve any dispute under the agreement or to develop or agree on a plan to bring the payments under the agreement up to date. Nothing stops an attorney from requesting payment of the overdue amount from the debtor in the section 129 notice. Giving him /her a reasonable time period usually (7) seven to (10) ten days in which to make payment of the arrears. A credit provider will be entitled to institute legal action if the debtor is in default of the agreement for a period of at least 20 business days and 10 business days have elapsed since delivery of the section 129 notice and no response has been received. The courts prefer the notice in terms of section 129 of the NCA to be sent via registered mail in order to prove that the letter actually came to the attention of the debtor. SUMMONS Same as above with additional information annexed. A copy of the credit agreement, certificate of balance, national credit act compliance certificate and a national credit regulator certificate for the year the agreement was entered into is attached to the particulars of claim together with the notice in terms of Section 129. The particulars of claim should set out clearly the cause of action. If damages are claimed the particulars of claim and/or supporting documentation should set out exactly how said damages are calculated. DEFAULT JUDGMENT, SUMMARY JUDGMENT, PLEADINGS, NOTICES , TRIAL AND ENFORCEMENT As per the procedure set out above. CONCLUSION No matter what situation you find yourself in, Proper legal advice should be sought in order to proceed with the fastest and most cost effective method of collection.
ADDITIONAL PROTECTION FOR LANDLORDS By virtue of common law, a landlord derives a right known as a Landlord’s Hypothec which affords him extra security in the event that he has to institute legal action against a tenant for arrear rental. The Hypothec affords the landlord the ability to attach and sell the movable goods of a tenant held on the leased premises to the value of the arrear rental. This right extends to movable goods held on the leased premises that are owned by a third party and/or subtenant if certain criteria are met namely:
This right comes into effect upon occupation by the tenant however it is only enforceable by Court Order. A Tenant is therefore free to remove his goods from the premises until such time as the landlord hypothec has been confirmed by the courts. A Summons can be issued which includes a notice prohibiting any person from removing any of the furniture or other effects on the premises which are subject to the landlords hypothec for arrear rent until an order relative thereto has been made by court. The Sheriff, if requested, will make an inventory of such furniture or effects and such notice upon the summons shall operate to interdict any person having knowledge thereof from removing any such furniture or effects from the leased premises. Once an order is granted the landlord is entitled to remove and sell the goods, he cannot however do so himself he must make use of a sheriff who will remove the goods and sell them at a public auction. The landlord only enjoys the landlord’s hypothec when the tenant is in arrears with his rental. It therefore lapses when the rental has been paid and the tenant is then free to remove the goods from the premises. Always be sure to seek sound legal advice before attempting to collect arrear rental, this will ensure that the correct steps are taken which will expedite the collection process. |
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