- Supreme Court finds Standard Bank’s settlement agreements with the Wolmarans Kinder Trust unlawful.
- Judges say the bank bypassed debt protection laws under the National Credit Act.
- Earlier court orders allowing the sales of trust properties are rescinded.
Fairness and proper process prevailed when the Supreme Court of Appeal ruled that Standard Bank broke the rules when it tried to enforce debt against the Wolmarans Kinder Trust using private settlement agreements.
The bank had turned those agreements into court orders and was ready to sell off 14 properties without giving the trust a real chance to fight back.
The five-judge Bench, led by Judge PA Koen, found that the bank’s conduct went far beyond ordinary debt collection. It violated the National Credit Act, which outlines how credit providers must treat borrowers. Judge Koen said in the judgment that “permitting credit providers to circumvent statutory requirements through settlement would undermine the purpose of the Act.”
The case involved Christoffel and Emerentia Wolmarans, trustees of the Wolmarans Kinder Trust, who signed two settlement agreements in 2019 and 2020 after falling behind on repayments. Those agreements gave the bank broad powers to sell the trust’s farms and other properties at its discretion, without court oversight.
Settlement agreements declared unlawful
The Supreme Court of Appeal found that the so-called settlement agreements were not separate contracts but “supplementary agreements” to the original credit deals. This meant they were still governed by the National Credit Act and had to follow its rules.
“The settlement agreements dealt with the same subject matter as the underlying credit agreements,” the judgment said. “They modified the terms of repayment, changed the interest rates, and even allowed for the disposal of property, clearly affecting the credit relationship.”
The court said these agreements were designed to fast-track enforcement outside the law and therefore had no legal standing. Justice Koen wrote that “the unlawful provisions permeate the settlement agreements, making it impossible to sever the unlawful from the lawful. The settlement agreements are, in their entirety, unlawful and void.”
Among the unlawful clauses were provisions that allowed the bank to act as the trust’s agent and sell its properties without going to court first. The agreements also forced the trustees to pay inflated attorney and client legal costs and stripped them of their right to dispute calculation errors or ask for an account of what they owed.
In addition, the agreements let the bank sign documents on the trust’s behalf, recover costs beyond what the law allows, and proceed with judgment after only seven days’ notice. All these terms, the court said, “defeated the purposes of the Act” and took away protections guaranteed by law.
Court rescinds earlier orders
The Supreme Court also overturned two earlier orders from the Free State High Court, which had made the settlements legally binding. Those orders, issued in 2019 and 2020, had allowed Standard Bank to sell the trust’s properties to recover its money.
“The orders of court dated 21 February 2019 and 12 November 2020 are rescinded and set aside,” Judge Koen declared. He said that enforcing unlawful agreements as court orders was a serious mistake because “any term in conflict with the provisions of the Act is unlawful and void.”
Although the Wolmarans Kinder Trust still owes two smaller loan amounts totalling about R4 million, the Supreme Court dismissed the bank’s larger claim linked to a disputed overdraft facility. The bank was also ordered to pay the appeal costs.
A victory for fairness and accountability
Judge Koen emphasised that fairness and judicial oversight matter. “The bank required the appellants to sign settlement agreements which effectively gave it authority to sell the trust’s properties at its own discretion, without judicial oversight,” he said.
By setting aside the agreements and cancelling the previous court orders, the Supreme Court reinforced that lenders must respect the National Credit Act and give debtors a fair chance to respond before enforcing payment.
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