The recent judgment delivered by Gauteng High Court, Johannesburg's Judge J Wilson in the matter between Standard Bank of South Africa Limited and the Koorbanallys elucidates significant legal principles under the National Credit Act (NCA).
This ruling not only reshapes the future interactions between credit providers and consumers but also lays bare the implications of failing to act in good faith when handling overdue accounts.
At the heart of the case are Martin Chris Koorbanally and Leeann Reinolda Koorbanally, who secured a home loan with Standard Bank.
Following their failure to keep up with payments, the bank initiated proceedings to reclaim the outstanding amount secured against the Koorbanallys’ home in Meyersdaal, situated south of Johannesburg. While the Koorbanallys aimed to halt the proceedings to allow time to remedy their default, their journey through the trial process turned contentious.
On 7 February 2020, Standard Bank sought to declare the Koorbanallys' home specially executable, prompting the couple to defend themselves in court. By July or early August 2024, after an arduous legal battle, they managed to settle their arrears. However, they fell short of settling the enforcement costs demanded by the bank. It is noteworthy that the bank had the responsibility to substantiate these costs but opted instead to prolong litigation, insistent on obtaining a costs order after the default had been remedied.
Judge Wilson’s ruling made it clear that the approach taken by Standard Bank was misguided. He pointed out that the bank’s insistence on pursuing attorney-client costs after the Koorbanallys had already addressed their arrears was inconsistent with the legal provisions set out in the NCA. The judgment highlighted that it was indeed the duty of Standard Bank to quantify and communicate its enforcement costs to the Koorbanallys in a timely manner, something that the bank failed to do during the case.
“Standard Bank's actions were high-handed and represented a waste of the court’s time,” declared Judge Wilson. He concluded that the bank should not only have remedied their approach but must also bear the wasted costs of the hearing, a measure that underscores the responsibilities of credit providers towards their clients.
