The Constitutional Court case involving Standard Bank and the Sebola family has stirred up a hornet’s nest for South African companies who now legally have to prove their corporate communication delivery, as the onus is no longer on the recipient.

The Constitutional Court ruled in favour of the Sebola family saying that debtors must receive notice before action can be taken against them. Sebola maintained that despite Standard Bank having issued a notice for debt recovery after defaulting on a debt, the communication had mistakenly been delivered to the wrong PO Box address by the postal service. Under the provisions of the National Credit Act, the Sebolas argued they needed to receive notice directly and won their case.

In essence, the ruling now means proof of despatch is no longer deemed sufficient to issue communications to debtors, and other stakeholders including shareholders. Companies must now be able to prove the delivery was received and not only sent.

The ruling will have an enormous financial impact on credit providers as well as the consumer, if registered or courier posting now has to be used. However, this also has its downside given that a person who has signed for receipt is not necessarily the person who the communication is addressed to. What’s more apart from its unreliability, it is also costly.

Eugene Joubert, Chairman of Corporate Rebels says:
“The new ruling has caught everyone off guard and will bring yet more delays to debt recovery.

“It’s going to cost businesses a hell of a lot more money to show proof of delivery and many people are taking the view notifications will need to be treated like the delivery of a summons by sending communication via registered post and then hand delivering notices with field agents,” he added.

Joubert also argues that with 9 million people at risk of default and 2 trillion rand of debt at stake in South Africa, it makes common sense to communicate with the debtor and restructure that debt with a repayment plan, rather than seek redress in the courts.

Using more up to date electronic and digital communication methods, providing of course the recipient has agreed to receive communication this way, can track delivery information using computer to computer techniques like email, FTP and EDI to log and prove each send and receive activity.
As Tim Marshall, CEO, Trifecta Capital Services points out, “The ruling has far reaching implications for the way we communicate and ensuring recipients receive notification.

“It is undoubtedly more relevant in that all important and time sensitive communications sent to debtors and other stakeholders of companies, including shareholders, are not just sent to them at their last known address but companies need to put greater emphasis on the need for up to date and relevant information on all those being communicated with,” he added.

Data integrity, multi point delivery and a single point of contact for data exchange are critical to companies who wish to remain within the confines of the law. One such mechanism that addresses this is Trifecta’s eConnect product, which was launched earlier this year and has been designed to provide comprehensive electronic communications to all stakeholders of a company, by obtaining electronic consent and then enabling them to download corporate communications by internet/email.

eConnect service not only manages the legislative requirement of a South African company to communicate with its shareholders and stakeholders, but also substantially provides cost savings resulting from reduced printing and delivery costs; increase the speed of communications rather than wait for unreliable post; ensures communications are delivered direct to the addressee and will benefit the environment by potentially reducing the use of paper used for stakeholder communication.

“Electronic communication is more relevant and reliable than ever before as the number of people using the internet and email as their preferred communication method grows, not forgetting of course the rapid growth in mobile communication via SMS.

“eConnect addresses the hurdles many companies are now having to legally address in their communication channels,” said Trifecta’s Tim Marshall.

The legal precedent has clearly been set within the Constitutional Court ruling earlier this month with the test case of Standard Bank Vs the Sebolas, and companies choosing to ignore that judgment do so now at their own peril.