Court rules that a bank cannot sue a deceased client for unpaid car instalments after death

The North West Province's High Court has rebuffed  bank's attempt to repossess a vehicle from a client who had tragically passed away, highlighting the evolving relationship between financial institutions and ethical considerations in repayment matters.

Lilian Botsane honoured her monthly instalments with FirstRand Bank to finance her Ford Figo from the moment she bought it in October 2023.

Her account remained up to date until her death in January last year. Falling into arrears with the payment, the bank issued a summons against her to repossess the vehicle.

When the matter was called, the court was told by Botsane’s elderly parents that she had passed away on January 23, 2024, which was several months before the summons was issued on August 22, the previous year.

Her parents, both of ill health, appeared not as parties to the proceedings but simply to assist the court by clarifying the circumstances of their daughter’s death.

Counsel for the bank told the court that he had no prior knowledge of Botsane’s death. Service had consistently been served at the domicilium address chosen by the late Botsane, and the bank had no reason to believe that she was dead, the court was told.

The bank’s statement of account reflects that the first missed instalment occurred at the end of February 2024, approximately one month after her death. It subsequently issued a summons in August 2024, evidently unaware of her passing.

The court had to determine whether proceedings instituted against a deceased person are competent in law, and whether the bank acted with the necessary diligence in issuing summons without establishing Botsane’s status, particularly where no default occurred during her lifetime.

This includes whether the bank took reasonable steps to contact Botsane, her employer, or her next of kin before issuing a summons.

The court commented that a person’s legal personality terminates upon death. Once death occurs, the individual ceases to have juristic existence, and legal proceedings may not be initiated or continued against them.

Any cause of action thereafter must be directed against the deceased estate, properly represented by a duly appointed executor in terms of the Administration of Estates Act.

The court pointed to a previous judgment where it was held that the place of residence indicated by a person is a personal election that lapses upon death, as a deceased person cannot reside at or occupy an address.

“The purpose of a domicilium is to facilitate valid service upon a living litigant. Proceedings cannot lawfully be instituted against a person who has died, as such a litigant cannot receive service or defend the action. Such proceedings are a nullity and cannot stand,” the court remarked.

It added that the bank’s lack of knowledge about the defendant’s death does not cure the defect, as the law does not recognise proceedings against one who has no juristic existence.

The court noted that the bank’s claim is premised on an alleged default commencing in March 2024. By that time, the defendant had already passed away and could not have defaulted on any obligation.

The cessation of payments does not constitute a breach of contract but is a direct consequence of death. Any recovery of the asset or the outstanding balance must be sought through the procedures applicable to deceased estates, the court said.

“A person’s legal personality terminates upon death. Once death occurs, the individual ceases to have juristic existence, and legal proceedings may not be initiated or continued against them,” the court concluded in striking the matter from the roll.

The bank can now institute the claim against the estate.

BUSINESS REPORT