Abstract
The right to reinstatement has been a central component of South African credit legislation for as long as one can remember. The Hire Purchase Act 36 of 1942 and (after it was repealed) the Credit Agreements Act 75 of 1980 provided for reinstatement – although the latter did not apply to immovable goods and hence not to mortgage agreements.
The legislature saw fit to introduce the concept of reinstatement in the National Credit Act 34 of 2005. It is apparent that the legislature ventured in introducing an improved proviso which broadens the scope of the right to reinstatement of a credit agreement to “property” - therefore, movable and immovable property. This proviso is seemingly predicated to a certain degree on section 12 of the Credit Agreements Act.
Section 129(3) and (4) of the National Credit Act embodies a unique process aimed at consumer protection, which is predominantly referred to as the right to “reinstate” a credit agreement. In principle, a debtor who has defaulted on a payment obligation has the right to reinstate the agreement by settling the arrears and paying certain costs. A creditor is prevented from enforcing or cancelling the agreement once successful reinstatement occurs. Conversely, this entitlement to reinstate is not unqualified and for that reason subsection (4) sets out numerous events after which reinstatement is no longer possible.
The wording of section 129(3) and (4) in its original form, resulted in great uncertainty with litigation spiralling to the constitutional court. The subsections were amended by the National Credit Amendment Act 19 of 2014, in what appears to be aimed at providing clarity. Regretfully it is yet to be determined whether or not these amendments actually resulted in the much-needed legal certainty. What was set out to be a clarification of the legal issues somehow got extremely muddled along the way.
Academics alike agree that the authority regarding reinstatement in respect of immovable property is clear. However, in regards to movable property, the position is mired in uncertainty, especially where a creditor has enforced and cancelled an agreement and executed upon a judgment obtained. Consequently, the purpose of this dissertation is detailed research of the reinstatement process, it being corroborated by various case law in addition to academic articles central to the issue.
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From the outset Chapter 1 will state the research problem in addition to an overview of the chapters to follow. In Chapter 2 the background and context of reinstatement will be discussed, with specific focus on the common law, the Hire Purchase Act, the Credit Agreements Act, National Credit Act and National Credit Amendment Act. Chapter 3 will focus on reinstatement under the original provisions pertaining to section 129(3) and (4). Chapter 4 will consider the position post the promulgation of the National Credit Amendment Act, in order to ascertain the current interpretation of these provisions, to assess whether the discrepancies contained in the original subsections were adequately addressed and whether any inadequacies still remain with the amended version of the subsections. In closing in Chapter 5, the future of reinstatement will be discussed.