The Western Cape High Court has thrown out an application by a George homeowner to stop Standard Bank transferring his property to a new owner after it was sold at a public auction in February.

The case was dismissed on the grounds of urgency, but the matter is far from over as the homeowner’s legal team weighs its options.

At issue is whether a bank can refuse to allow a customer to go under debt review so that it can proceed to sell a property on auction.

Moneyweb reports that debt review, in theory, freezes the legal enforcement process.

Standard Bank argued in its papers that it should not be joined to the case because it exited the picture in 2019 when the borrower’s debt to it was settled by an associate company called SB Guarantee. 

On this basis, it argued the homeowner was not entitled to enter debt review. The National Credit Act allows over-indebted consumers to go under debt review through a registered debt counsellor, which immediately places a moratorium on legal enforcement actions by creditors.

However, the right to apply for debt review falls away as soon as the bank serves a summons on the consumer.

The homeowner admits he was in default on his home loan but says his primary asset – his home – should be protected from legal action because he opted to go under debt review in November 2024.

In this case, the original judgment issued by the George Magistrate's Court was in favour of SB Guarantee (which is not a credit provider), not the bank. 

Moneyweb reports that the debt counsellor argued that this meant there was nothing to stop the homeowner from going under debt review.

The bank argued differently, and SB Guarantee proceeded to sell the property.

The case raises some interesting questions for tens of thousands of other homeowners who have agreements with guarantee companies. The bank’s claim against the consumer is based on the home loan agreement.

The guarantee company’s claim against the consumer is based on the indemnity and indemnity bond.

Curiously, when this case was argued in the Gauteng High Court (Pretoria) in May, with the homeowner representing himself, the judge accepted the bank’s argument and dismissed the application, saying the homeowner could not go under debt review as he had been served with a section 129 notice (a compulsory notice to pay up or go to court).

Moneyweb notes that the NCA was changed in 2015 to make it clear that up to the issue of summons – rather than a section 129 notice – a credit agreement could be placed under debt review.

On that reading, the judge and the bank got it wrong, says the homeowner, who is appealing the ruling.

Full Moneyweb report