The Appellate Division has spoken – Sequestration Proceedings do not Qualify as Proceedings to Enforce a Credit Agreement under The National Credit Act 34 of 2005: Naidoo v ABSA Bank 2010 4 SA 597 (SCA)

  • Ngwaru Maghembe University of Pretoria
Keywords: Credit agreement, credit provider, consumer, National Credit Act, sequestration


This case note aims to analyse the decision of the Supreme Court of Appeal in Naidoo v ABSA Bank 2010 4 SA 597 (SCA) and to spark some debate as to whether being under debt review in terms of the National Credit Act (NCA) should bar sequestration proceedings in the form of an application for the compulsory sequestration of a consumer’s estate. This decision held that a credit provider does not need to comply with the procedure provided for in section 129(1) of the NCA before instituting sequestration proceedings against a debtor, as such proceedings are not proceedings to enforce a credit agreement. The main issues discussed in this article are whether the court was correct in its interpretation of the relevant provisions of the NCA and whether this decision that allows a creditor to sequestrate a debtor who is attempting to meet his/her obligations under debt review, without informing him/her, is consistent with the principle urging consumers to satisfy all of their financial obligations under the NCA.


It is submitted by the author that the court was correct in its interpretation of the relevant provisions of the NCA, but may have overlooked how this decision may impact the principle of satisfaction by the consumer of all of his/her financial obligations. It is suggested by the author that amendments be made to force the creditor to give a section 129 notice to the debtor before seeking sequestration of his/her estate. The author also suggests that once debt restructuring has been granted, credit providers should not be allowed to proceed with sequestration proceedings against the debtor.




Otto National Credit Act Explained
Otto JM The National Credit Act Explained (LexisNexis Butterworths Durban 2010)

Roestoff et al 2009 PER
Roestoff M et al "The debt counselling process - closing the loopholes in the National Credit Act 34 of 2005" 2009 PER 246-305

Scholtz et al National Credit Act
Scholtz JW et al Guide to the National Credit Act (LexisNexis Butterworths Durban 2006)

Van Heerden and Coetzee 2009 PER
Van Heerden CM and Coetzee H "Marimuthu Munien v BMW Financial Ser-vices (SA) (Pty) Ltd Unreported case no. 16103/08 (KZD)" 2009 PER 332-360

Van Heerden and Boraine 2009 PER
Van Heerden CM and Boraine A "The interaction between debt relief measures in the National Credit Act 34 of 2005 and Aspects of Insolvency Law" 2009 PER 22-161

Register of legislation

Insolvency Act 24 of 1936
National Credit Act 34 of 2005

Register of court cases

Collett v Priest 1931 AD 290
Ex parte Ford 2009 3 SA 376 (WCC)
Investec Bank v Mutemeri 2010 1 SA 265 (GSJ)
Naidoo v ABSA Bank 2010 4 SA 597 (SCA)
  • Abstract 79
  • PDF 67
  • XML 2
Views and downloads are with effect from 11 January 2018