By Paul Esselaar
Many attorneys will be aware that the delivery of letters in terms of s 129 of the National Credit Act 34 of 2005 has been an issue of great debate. In essence, a letter sent in terms of s 129 of the National Credit Act is required before further legal action (such as a summons) can be taken against a defaulting debtor. Following the Constitutional Court decision in Sebola and Another v Standard Bank 2012 (5) SA 142 (CC) it is now a requirement that –
Unfortunately, the Constitutional Court in the Sebola case did not consider or pronounce on the rather obvious possibility that while the track and trace printout from the South African Post Office would indicate that the letter was correctly delivered to the post office closest to the debtor, the letter was returned unclaimed.
Conflicting case law
This possibility has caused procedural difficulties, which in turn has resulted in two conflicting judgments in the form of the Western Cape High Court judgment in Nedbank Ltd v Binneman and Thirteen Similar Cases 2012 (5) SA 569 and the KwaZulu-Natal judgment in ABSA Bank Ltd v Mkhize and Another and Two Similar Cases 2012 (5) SA 574. In the former it was held that proof of delivery of the letter to the appropriate post office was sufficient (whether or not it was picked up by the debtor), while in the latter it was held that further steps should be taken by the credit provider if it knew from the track and trace report that the letter had not been picked up by the debtor.
Most reliable communication?
While there can be no doubt that this is an important procedural question (bearing in mind the volume of s 129 letters being sent out), there is a more fundamental (and frankly alarming) assumption that continues to be asserted by parliament and the highest courts – that registered mail is the more ‘reliable’ method of communication in South Africa (as stated in Rossouw and Another v FirstRand Bank Ltd 2010 (6) 439 (SCA) at para 29 and approved of in the Sebola case). Astonishingly, the courts have stated that there is ‘a high degree of probability that most [registered mail letters] are delivered’ (Maharaj v Tongaat Development Corporation (Pty) Ltd 1976 (4) SA 994 (A) at 1001B, quoted by Cloete JA in the Rossouw case at para 56). Tellingly, Cloete JA in the Rossouw case relies on a 1976 judgment (before the introduction of cellphones and the internet in South Africa) to put forward the apparently settled position that registered mail is the most reliable method of communication.
Fortunately, this issue was picked up for the first time in the Mkhize case, in which Olsen AJ was provided with statistics on unclaimed registered mail by ABSA Bank, which he described as, ‘to say the least, startling’ (at para 25). Essentially, ABSA Bank asserted that approximately 70% of registered mail sent by the bank countrywide was returned unopened.
If one considers the time and expense (both in court and to the country) taken to resolve what should have been an elementary issue, it is rather surprising that the entire issue could have been avoided by adopting the correct approach to legislative drafting when dealing with technology issues.
It is a settled principle worldwide that, due to the rapid change of technology, it is advisable to draft legislation in such a way as to be technology neutral. That South Africa endorses this principle is borne out in the Electronic Communications and Transactions Act 25 of 2002, which was at pains to provide wider definitions in order to cater for just this problem (and which ironically precedes the National Credit Act).
A mobile phone solution
In contrast, the drafters of the National Credit Act, apart from drafting ambiguous legislation, have essentially mandated the use of a particular communication medium – registered mail – even though this communication medium was firmly based on the untested assumption that this is the best and most reliable method to communicate with consumers. Unfortunately, this assumption is clearly false. As anecdotal evidence from large-volume debt collection firms indicates, even normal mail has a far higher success rate than registered mail. However, even normal mail pales into insignificance when considering the penetration of mobile phones in South Africa, where there are an estimated 59 million cellular phones for a population of approximately 50 million (T Phillips, P Lyons, M Page, L Viviez & Dr Molina ‘African Mobile Observatory: Driving Economic and social development through mobile services 2011’, http://www.mobileactive.org, accessed 27-9-2012). If the number of registered postal addresses is compared to the number of cellphones, there is no doubt that far more South Africans have access to mobile phones. Moreover, there is a larger likelihood of reaching a particular person via a mobile phone in comparison to a postal address, which often services several people. Added to this is the fact that the use of sms codes is ubiquitous in internet banking in South Africa and frequent updating of information relating to SIM cards by the cellular network operators in terms of the Regulation of Interception of Communications and Provision of Communication-related Information Act 70 of 2002 is necessary. It therefore seems clear that the drafters of the National Credit Act erred in mandating a particular communication method in the Act. The decision as to which communication medium(s) must/could be used should have been left to the regulations in terms of the Act. This would allow the Department of Trade and Industry to have sufficient flexibility – based on statistics that could be provided by the credit providers and the National Credit Regulator – to update the communication medium that must be used to ensure that a s 129 communication comes to the attention of a debtor. For example, it could well be that the most successful method of bringing a s 129 letter to the attention of a debtor is in the form of an sms that provides a unique hyperlink to that consumer’s s 129 letter, which letter is able to be read on the cellphone itself. Moreover, proof of delivery of the sms (or the fact that the consumer clicked on a particular unique hyperlink) could be provided by the network operators.
Conclusion
Similar to the failure to properly consider providing electronic textbooks to South African learners, the failure of both the courts and legislation to fully grasp the possibilities and efficiencies that technology can provide is disappointing. This is even more disappointing in light of the fact that the Electronic Communications and Transactions Act recognised the need to develop an e-strategy that would permeate all of government’s communications to leapfrog South Africa into becoming a global competitor.
Paul Esselaar LLB (Rhodes) LLM (UCT) is an attorney at Esselaar Attorneys in Cape Town.
This article was first published in De Rebus in 2012 (Nov) DR 38.
