We are pleased to share a significant judicial development that carries important implications for debt counsellors, credit providers, and other stakeholders in the consumer credit industry.
Our firm had the privilege of representing a debt counsellor in opposing a High Court appeal initiated by a consumer attempting to rescind a consent order issued by the National Consumer Tribunal (NCT) under Section 165 of the National Credit Act (NCA).
- Initial Debt Review: The consumer, identified as over-indebted at the time of applying for debt review, secured agreements from all his credit providers to a proposed repayment plan by his debt counsellor.
- NCT Consent Order: This consensual plan was referred to the NCT, which duly granted a consent order under Section 138 of the National Credit Act (NCA).
- Rescission Application: The consumer subsequently applied to rescind the order, contending it had been erroneously granted. Our firm opposed the rescission, and the NCT ultimately refused the application.
- High Court Appeal: The consumer then appealed the NCT’s refusal to the High Court, seeking to overturn the decision.
- Appeal Dismissed with Costs The High Court upheld the NCT’s refusal to rescind the consent order and dismissed the appeal with costs. Significantly, the Court found that the order was neither erroneously sought nor granted, noting that the consumer was represented by the debt counsellor under a valid written mandate.
- Jurisdiction & Over-Indebtedness The Court reaffirmed that a debt counsellor may refer an over-indebted consumer to the NCT for a consent order where all credit providers accept a proposed repayment plan. This mechanism aligns with the NCA’s objective of providing cost-effective and consensual solutions to over-indebtedness.
- Finality & Certainty Emphasizing the importance of preserving the finality of legal proceedings, the Court considered the consumer’s two-year delay in seeking rescission and the limited financial information provided, both of which weighed against granting the appeal.
- Undesirable Consequences Allowing the consent order to be rescinded in these circumstances could invite a wave of similar applications from debtors seeking to exit debt review prematurely—a development contrary to the legislative aims of the NCA.
- Broad Discretion of the NCT The Court recognized the wide discretion afforded to both the NCT and itself under Section 165 of the NCA to grant or refuse rescission applications, concluding that the NCT had exercised its powers appropriately and in accordance with the Act’s objectives.
This ruling underscores the principle that once a repayment arrangement has been agreed upon by all credit providers and crystallized into a consent order, courts will be disinclined to set it aside absent compelling grounds. The decision reinforces the broader intent of the NCA to promote certainty and efficiency in debt restructuring processes.
Our team at VHT Attorneys is proud to have successfully represented the debt counsellor in this matter. Should you have any questions about the judgment or wish to discuss its implications for your operations, please do not hesitate to contact us.
We remain committed to providing strategic advice and robust representation to all participants in the consumer credit landscape.
For further details, the High Court’s judgment is available on our website.
