Section 126B which prohibits dealing in a debt under a credit agreement extinguished by prescription, and allows the consumer to raise the defence of prescription (even though the consumer agreed to revive a prescribed debt without being aware of the prescription defence) came into force on 13 March 2015.
Before section 126B was enacted an agreement that revived a prescribed debt was perfectly valid.
The Supreme Court of Appeal in Kaknis v Absa Bank Limited & another applied the time-honoured principle that legislation does not operate retrospectively unless the law shows a clear intention to do so and refused to apply this section to an agreement entered into between the bank and the consumer in October 2014. The consumer was ordered to pay the bank the R2.7 million plus interest he owed to the bank.
