# Regulatory Compliance Category > National Credit Act Forum >  Ethical debt collecting procedures for the small business

## Citizen X

Ethical debt collecting procedures for the small business       



*Primary learning outcome

*

Recover a debt successfully and ethically without the use of an attorney



*Secondary learning outcomes

*

1. Understand and apply the relevant legislation
2. Successfully prepare a clear and concise letter of demand
4. Understand and apply the section 57 procedure
5. Understand and apply the section 58 procedure
6. Understand the summons procedure and successfully sue out a summons in the capacity of Plaintiff
7. Understand what to do in practice depending on the debtor’s response and lack thereof
7. Successfully obtain judgment against a Defendant in your capacity as Plaintiff
8. Understand and apply procedures after Judgment
9. Understand and apply all procedures related or incidental




Introduction

The target audience for this thread is the small and medium business _that is not classified_ as a credit provider under the National Credit Act. The rationale is that this thread should benefit the many businesses who are members of TFSA. The added thought, is that credit providers under the ambit of the NCA, such as banks, already have in-house training programs, access to debt collecting agents and attorneys.
This work is intended for the business who acts in the direct capacity of plaintiff, that is, the business engages in the recovery of debts itself.
This work will not deal with the ‘combined summons,’ as this type of summons is unnecessary for a small business that is not a credit provider under the National Credit Act.



_Since this work requires explanations and attachments, it is my intention, to work on this thread, literally over a period of several months as free time permits._

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ACEsterhuizen (26-Jan-15), AndyD (18-Jan-15), Dave A (19-Jan-15), vieome (23-Jul-15), wynn (23-Jul-15)

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## IanF

Vanash this will be useful yah anks for this!

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## Citizen X

*Key terms*

Action, defendant, plaintiff, Liquidated amount, letter of demand, simple summons, Issue of summons, service of summons, _Dies indutia,_ declaration, application for default  judgment, application for summary judgment, section 65 enquiry, clerk of courts, sheriff, warrant of execution


The following example will be used for illustration purposes:

TZ (Pty) Ltd, is a small business, that specializes in manufacturing paint. It serves as a wholesaler of paint to other small businesses. TZ (Pty)Ltd also offers a painting service.

Action: There are many actions that can be brought. The focus is on the simple summons and a liquidated amount and no other action.Defendant: The individual or juristic person against who the action is broughtPlaintiff: Person bringing the actionClerk of court: The individual to whom court documents need to be filedLiquidated amount: This is an amount which can be easily determined by means of simple arithmetic (If the defendant owes you R10 000 and 15 % is added as interest, this can be easily calculated). The emphasis is that the demand is described in a clear manner. This clear manner must be established by simple mathematical calculation.Letter of demand: This is the first step of the action, ideally a good letter of demand should be clear and concise without any legalese, pointing to the simple fact that there will be consequences in practice should the defendant fail to comply with the demand.Simple summons:  This form of summons is used when the Plaintiff has a claim which can be classified as  a debt or liquidated amount.(This summons is actually directed ,in writing on the summons, to the sheriff to do a particular thing)_Dies indutia_: This means time allowed for both the plaintiff and defendant to do certain things in practice, failing which, there are potential consequences for both parties.[In particular for the benefit of the plaintiff the defendant is required to serve a notice of intention to defend within 10 working days after service of summons.Issue of summons: After the summons is prepared, it must be issued, this simply means that it must be endorsed by the clerk of courts by stamp, without which the summons has no authority whatsoever. So before the issue of the summons, the summons itself must be prepared,Declaration(This is necessary where the defendant has filed a notice of intention to defend) This is the particulars of claim of the plaintiff, where it is required, by means of several averments or paragraphs, to set out the claim against the defendantThe Sheriff: Only the sheriff can serve the summons, this does not apply to subsequent pleadings. After the summons has been issued, this original must be taken to the sheriff, copies are made and kept for the plaintiffLetter to the Sheriff: A letter addresses to the sheriff pertaining to the summons is requiredWarrant of execution: This is a procedure that the plaintiff takes after judgment has been grantedWhere no notice of intention is served: The option of default judgment is usually used;Where a notice of intention to defend has been served but the defendant has no defence, the application for summary judgment is usually used.

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## Citizen X

Mr X arrives at TZ PTY Ltd to purchase paint. He is given an invoice. The total cost of the paint is R25 000. Mr X pays a deposit of R2000 and agrees to pay the balance when the paint is delivered to him later that day. No instalment agreement whatsoever is entered into. The paint is delivered. Mr X informs the driver that he will pay the balance in cash, in person the next day. A week passes by and Mr X simply doesn’t pay. TZ PTY Ltd erroneously believes that this is a case of theft and subsequently goes to the local police station to file criminal charges. The police rightfully inform him, that this is not a case of theft according to the definitional elements of theft and that this is a civil matter and that TZ PTY ltd must approach the courts

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## Citizen X

Which Act applies to debt and its collection?

The Magistrates Court Act 32 of 1944(as amended), section 55 up to and including section 60

Which court rules applies to debt and its collection?

Rule 36 up to and including Rule 48

Can I as the Plaintiff charge any costs for a letter of demand?

No, only an attorney or debt collector can do so

What should a letter of demand consist of?

Ideally a letter of demand should be clear and concise and avoid unnecessary legalese. A letter of demand will either work or it wont work in the recovery of your debt. Should the letter of demand not work, then you, in your capacity as Plaintiff must be serious about the next step, namely sue out summons, or the letter of demand will just be pointless!

See attached

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Dave A (29-Jul-15)

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## Citizen X

TZ(Pty) Ltd, has decided to sue out summons. 

ps If there's one thing that I have learned about the law, it's this: It changes constantly!!! To this end, I'm looking into the civil jurisdiction of the detached courts, as such, if cited court is incorrect, I will change it in due course

Important information to obtain* first
*
Which court has jurisdiction?

1.   Monetary Jurisdiction, The Magistrates Courts monetary jurisdiction is R100 000; the Regional Magistrates Courts monetary jurisdiction is R300 000, and the High Court’s monetary jurisdiction is unlimited;

2.   Since the amount due and payable to TZ(Pty) ltd is below R100 000, it’s R23 000 a Magistrates Court has jurisdiction


Which specific Magistrates court has jurisdiction?

*1.  * Use the following links in conjunction with the attached document(http://www.theforumsa.co.za/document...on121-magc.pdf) to establish which Magistrates Court has jurisdiction *in your own matter*

http://www.justice.gov.za/maps/areas-gp.html
http://www.justice.gov.za/maps/areas-gp.html


2.   In the case of TZ(Pty) Ltd, The Magistrates Court for the Magisterial district of Johannesburg has jurisdiction
3.   Ensure that you cite the name of the court properly on the summons, or the clerk of courts will turn you away and tell you to cite the courts name properly before you bring back the summons to be issued

*In this particular case the correct citation is as follows:
*
IN THE MAGISTRATES COURT FOR THE MAGISTERIAL DISTRICT OF JOHANNNESBURG CENTRAL, HELD AT JOHANNESBURG

Which specific sheriff must serve the summons (The summons is a process *and can only* be served by the sheriff), the sheriff will charge about R300 for this (to provide you with a return of service)

4.   How do I know which sheriff to contact?

Use the following link:

http://www.sheriffs.org.za/locate-a-sheriff.htm

In the ‘search sheriff by service area,’ box, type your area, in this instance Lenasia

The following comes up:
Gauteng
SHERIFF NAME:Mr BO Khumalo

MAGISTERIAL DISTRICT:Lenasia HL

HIDE SERVICE AREAS

Buschkoppies, Derland, Freedom Park, Greyville, Klipspruit Wes, Kliptown, *Lenasia* Ext./Uit. 1-11, Lenz, Old Eldorado Park, Olifantsvlei, Rainbowvalley

ADDRESS:P.O. Box 3471, Southgate 2082

PHONE:011-680-9744

FAX:086-636-5752

CELL:083-278-9111

E-mail:bokhumalo@telkomsa.net

5.   Which sections of the Magistrates Court Act apply to jurisdiction?
Sections 26 to 29

6.    In this particular example, what basis of jurisdiction will I use?
section 26(1)a) which provides:

28.     Jurisdiction in respect of persons

(1)     Saving any other jurisdiction assigned to a court by this Act or by any other law, the persons in respect of whom the court shall, subject to subsection (1A), have jurisdiction shall be the following and no other:

(a)     Any person who resides, carries on business or is employed within the district or regional division;

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## Citizen X

TZ (Pty) Ltd(in its capacity as the plaintiff itself) has now decided to sue out summons. To this end, the actual summons has been drawn up (Please see attached)

What court rules apply to a summons?

Rules 5, 6 and 7 of the Magistrates Court Rules

Why does the attached summons not include a declaration?

The Declaration is only filed and served after a notice of intention to defend  has been received from the defendant

Are there any rules of thumb when drawing up a summons?

Use Arial 11 as a font, paragraph 1.5 spacing

Note the following clear and concise averment in the simple summons

To the sheriff or his/her deputy:

INFORM MR TOM BROWN, an adult male, whose full and further particulars are unknown to the Plaintiff and whose *domicilium citandi et executandi* is 6 Kuber Street, Lenasia, 1827 (hereinafter called the defendant), that-
TZ (PTY) Ltd, a company located at 1 Mirage Street, Lenasia,1827 (Hereinafter the Plaintiff) hereby institutes action against the defendant in which action the plaintiff claims payment of the sum of R23 000, being the balance of the plaintiffs fee in respect of goods delivered to the defendant on a cash on delivery basis on 23 July 2015, which the defendant failed, alternatively refused, alternatively neglected to pay on that day. This sum is now due and owing, which despite demand, the defendant has failed, alternatively neglected, alternatively refused to pay despite demand, together with interest thereon at 15,5% per annum _a tempore morae_, plus costs.

What must take place next in practice?

The summons must be issued(will explain in subsequent post)

Issue means that the clerk of courts must stamp the summons and allocate a case number to it

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Dave A (29-Aug-15)

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## Jane123

This is very useful!!! Thanks Vanash for posting!

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## Citizen X

It's a pleasure Madam :Smile:

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## dellatjie

@vanash, what happens after this?

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## Citizen X

Hi Dellatjie,

It all depends on whether the defendant served and filed a notice of intention to defend. If so, the plaintiff needs to serve and file a declaration. The defendant has to serve and file a plea on merits. Both parties must serve and file a discovery affidavit. The matter needs to be set down. The court file needs to be indexed and paginated.

If no notice of intention to defend was served and filed, then you go the application for default judgment route.

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