The Supreme Court of Appeal (“SCA”)
recently handed down a landmark judgment in Absa Bank
Limited v Serfontein, setting aside an acknowledgement
of debt agreement (“AOD”) that
incorporates a power of attorney
(“POA”) (the
“agreement”) in favour of Absa Bank
Limited (“Absa”). The ruling followed
an appeal by Absa against a decision from the Free State High
Court, which had found the agreement to violate the National Credit
Act 34 of 2005 (“NCA”) and, therefore,
void from the outset.
Background facts
Absa provided an overdraft facility to Mr. Johan Serfontein,
secured by mortgage bonds over his immovable property. His father,
Mr. Jacobus Hendrik Serfontein, signed a deed of suretyship to
provide additional security. When Johan Serfontein defaulted on his
obligations, Absa insisted on an AOD and POA, signed by both senior
and junior Serfontein after they obtained legal advice. The POA
granted Absa the irrevocable right to sell the property without
needing a court
