The much anticipated Declaratory Order took nearly two years before it was eventually finalized, however the order has created more havoc in the courts since 21st August 2009. The reason for this is that most Magistrate's stated that the Declaratory order was indeed an obiter dicum (a remark or observation made by a judge that, although included in the body of the court's opinion, does not form a necessary part of the court's decision)

However, despite the various interpretations of the Magistrate's the following can be understood of the judgement:

The Debt Review application is a referral which the Debt Counsellor must make to the Magistrate' Court. The reason is to bring a matter before the Magistrate. The Magistrate therefore has the right to conduct a hearing whether the Credit Provider has consented to the recommendation to the Debt Cousellor or not.

In terms of what Section must the Debt Review be drafted?

The referal is done by means of Rule 55 of the Magistrate's Court Act. There is therefore affidavits that should be attached together with the supporting docments which would be your proposal and your FORM 16, however Magistrate's differ and therefore it is always wise to set up an appointment with the Magistrate to hear which supporting documents he/she will require.

How is the Debt Cousellor and the Consumer cited?

The Debt Counsellor is now the applicant as the Debt Counsellor fulfills a statutory obligation and the Consumer is now one of the respodents together with the Credit Providers.

Where must the application be brought - in which court?

Judge Du Plessis clearly states the following in the Declaratory Order: "the Magistrate's Court having jurisdiction in respect of the consumer". This means that the application will be brought where the Consumer resides and not where the Debt Counsellor carries on his/her Debt Counselling business.

Service of the court documents:

The service of the court documents is to be done in terms of Rule 9 of the Magistrate's Courts' Rules which describe the means of service. However Judge Du Plessis did continue to state that "Service of any such documents may, with the agreement of the affected parties, be by way of fax or email."

Even though there is no mention of whether the agreement must be a specific consent or a general consent, there are magistrate's that currently require specific consents for each matter.

There is also a current debate of whether service in terms of Rule 9 is by way of Sherrif or by way of Registered Post. One could argue that Rule 9(11) states the following:

9(ii) a: Service of any notice, request, statement or other document which is not process of the court may be effected by delivery of hand at the address for service given in the summons or appearance to defend (as the case may be) or sending it by registered post to the postal address given.

There are currently Magisrate's that agree fully with the abovementioned rule and that service by means of Sherrif is not required.

Cost orders against Debt Counsellors

The Declaratory Order is very clear in that no cost orders are to be granted against the Debt Cousellors as the Debt Counsellor fulfills a statutory obligation in the process, however the court may grant a cost order against the Debt Counsellor in extreme cases whereby the Debt Counsellor has acted mala fide.

The Induplum Rule

The Induplum rule has been granted in favour of the Consumer, hence the opposing of this section by Nedbank and Standard Bank. How the order reads. that the amounts cannot exceed the capital outstanding balance on date of default. These amounts which Judge Du Plessis is speaking about is in accordance with Section 101(1)(b)-(g) which includes the initiation fee, service fee, interest, cost of any credit insurance, default administration charges and collection costs.

Therefore most Debt Counselling matters will now resolve as the interest and costs will not accumulate to a ridiculous amount that the Consumer will never be abble to settle his/her account.

Will Debt Counsellors have to be present at the court hearings?

In terms of the Declaratory Order it is hereby required thaththe Debt Counsellors be present at the hearings of the Debt Review Applications. The reason is because the Court has the right to request evidence which the Debt Counsellor needs to produce in order for the Debt Review order to be granted.

Reckless Credit Agreements  

The High Court has confirmed that should the Credit Provider not have made an assessment or alternatively the Consumer did not understand the risks, costs or obligations then the court can set aide the agreement or suspend the force of the agreement.

If the credit agreement entered into by the Consumer had caused the Consumer to be over-indebted then the court has the right to suspend the force of that agreement until the date which the court has determined or alternatively to restructure the payment of that credit agreement in the manner which the court deems fit and proper.

Monetary Jurisdiction

There is no monetary jusrisdiction for the Debt Review application and therefore all matters are to be heard in front of the Magistrate's Court irrespective if the outstanding balances of the credit agreements exceed R100 000, which is currently the monetary value of the Magistrate's Court.