Schwartz v African Bank (NCT/510/2010/138(1 )(P)) [2011] ZANCT 1 (16 January 2011)

Schwartz v African Bank (NCT/510/2010/138(1 )(P)) [2011] ZANCT 1 (16 January 2011)

The Tribunal found that the interest rates agreed upon in the consent order (36.60% and 39.80% per annum) exceeded the maximum prescribed rates at the time the application was lodged, rendering the agreements illegal under section 101(1)(d)(i) of the National Credit Act. Furthermore, the consent agreements contravened the statutory in duplum rule, as the total amount African Bank would receive exceeded the principal debt, including permissible charges. The Tribunal concluded that granting the consent order would sanction an illegal agreement and violate statutory protections for consumers. Accordingly, the application for a consent order was refused.

Citation
[2011] ZANCT 1
Parties
Applicant: Gerald Clive Schwartz; Respondent: African Bank
Court
National Consumer Tribunal
Jurisdiction
South Africa
Judgment Date
16 January 2011
Case Number
NCT/510/2010/138(1 )(P)
Procedural Posture
Consent Order Application / Application for Consent Order Under Section 86(8) and Section 138 of the National Credit Act
Outcome
Application for consent order refused; matter referred to the National Credit Regulator for investigation.
Judges
P A Beck
Legal Topics
National Credit Act, Interest Rate Limitation, In Duplum Rule, Illegal Agreement, Debt Restructuring
Banking and Finance Civil Procedure National Credit Act Interest Rate Limitation In Duplum Rule Illegal Agreement Debt Restructuring

Case Brief

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Parties

Gerald Clive Schwartz

Applicant

African Bank

Respondent

Procedural Posture

Consent Order Application / Application for Consent Order Under Section 86(8) and Section 138 of the National Credit Act

Legal Issues

  1. 1 Whether the interest rates charged by African Bank under the consent agreement exceed the maximum prescribed by law.
  2. 2 Whether the consent agreement contravenes the statutory in duplum rule as codified in section 103(5) of the National Credit Act.
  3. 3 Whether the consent order should be granted given the alleged illegality of the agreement.

Ratio Decidendi

The Tribunal found that the interest rates agreed upon in the consent order (36.60% and 39.80% per annum) exceeded the maximum prescribed rates at the time the application was lodged, rendering the agreements illegal under section 101(1)(d)(i) of the National Credit Act. Furthermore, the consent agreements contravened the statutory in duplum rule, as the total amount African Bank would receive exceeded the principal debt, including permissible charges. The Tribunal concluded that granting the consent order would sanction an illegal agreement and violate statutory protections for consumers. Accordingly, the application for a consent order was refused.

Court Disposition

Application for consent order refused; matter referred to the National Credit Regulator for investigation.

Orders

  • The application for a consent order is refused.
  • The matter is referred to the National Credit Regulator to investigate whether there was prohibited conduct by African Bank.