About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2017
>>
[2017] ZAWCHC 141
|
|
Du Toit v Benay Sager (NCRD2484) t/a Debt Busters and Others (16226/17) [2017] ZAWCHC 141 (17 November 2017)
In
the High Court of South Africa
(Western
Cape Division, Cape Town)
Case
No: 16226/17
In
the matter between
REGARD
DU
TOIT Applicant
and
BENAY
SAGER (NCRD2484) T/A DEBT
BUSTERS First
Respondent
HTN
ATTORNEYS C/O BOODLE INSTANT
LOANS
Second
Respondent
CONSUMER
FRIEND C/O FOSCHINI RETAIL GROUP
Third
Respondent
GET
BUCKS (PTY)
LIMITED
Fourth
Respondent
HOPON
LOANS
Fifth
Respondent
WESBANK
LIMITED C/O TOYOTA FINS
SERVICES
Sixth
Respondent
LANDAU
ATTORNEYS C/O WONGA
FINANCE
Seventh
Respondent
JUDGMENT DELIVERED ON 17 NOVEMBER 2017
THULARE AJ
INTRODUCTION
[1] The applicant approached this
court to be declared no longer over-indebted and no longer under debt
review, that the credit
bureaux remove the debt review status from
his credit reports and that the debt counsellor provide the Form 17.W
in terms of the
National Credit Act 34 of 2005 (the NCA) confirming
that he has been declared no longer over-indebted. The application
was served
on the respondents, but it was unopposed.
THE FACTS
[2]
In November 2016 the applicant applied to the first respondent, a
debt counsellor, to be declared over-indebted in terms of
s 86(1) of
the NCA. The first respondent accepted the application and issued
notices to advise the credit providers, the second
to the seventh
respondent, of that acceptance, as well as all registered credit
bureaux. No court order was sought and none was
made in respect of
the debt review.
[3]
The applicant alleges that he has now settled all debts he had with
the respondents, except his instalment sale agreement with
the sixth
respondent. He alleges that his financial circumstances have
significantly improved. He advised the first respondent
of his wish
to terminate the debt review process and to pay his creditors
directly. The first respondent is unable to help, as
in terms of the
National Credit Regulator’s Guidelines, a debt counsellor does
not have the statutory powers to terminate
or withdraw the debt
review process. The applicant urges the court to intervene as his
credit status will continue to reflect that
he is still under debt
review even if he is no longer over-indebted and can afford to pay
his creditors directly. According to
him, no creditor will suffer any
prejudice.
[4]
The first respondent is unwilling to make an assessment of the
applicant’s position even though he is still listed as
the
applicant’s debt counsellor. According to the first respondent,
the applicant’s debt review process had been suspended
in March
2017 due to the applicant’s non-cooperation which involves
non-payment of the debt counseling aftercare fee. The
first
respondent does not have the resources to help the applicant as he is
no longer an active client.
[5]
The issue is whether the High Court should intervene where the
consumer has applied to be declared over-indebted; where the
application was accepted by the debt counsellor and the credit
bureaux and creditors accordingly advised; but the proposal never
made it to a Magistrate’s Court for an order for rearrangement
of the consumer’s obligations; and the consumer seeks
a removal
of his or her record of debt adjustment from the national register
and all registered credit bureau, but has not satisfied
all the
obligations under every credit agreement that was subject to that
debt re-arrangement; and the debt counsellor decided
not to issue or
failed to issue a clearance certificate in terms of section 71 of the
NCA.
[6]
Mr Rogowski who appeared as counsel for the applicant, argued that
the court must use its inherent jurisdiction to make the
order in the
terms sought in the notice of motion. He argued that there are
circumstances where a person has not paid off all their
debts and
therefore cannot get a clearance certificate but they are however no
longer over-indebted. It is his argument that the
NCA does not make
provision for such instances and as a result it is a lacuna in which
this court is asked to intervene to prevent
injustices. Relying on
the Withdrawal Guidelines 002/2015 issued by the National Credit
Regulator (NCR), it was further argued
that the circumstances are
such that the only option available to the applicant is a court order
to declare that he is no longer
over-indebted.
[7]
Mr Rogowski drew my attention to the unreported judgment of Savage J
dated 3 August 2017 in
Daniels
and Another v Sensational Debt Relief (Pty) Ltd and Others
under case number 10065/17. I agree with Savage J, as held in
paragraph 13, that the NCA “does not expressly empower the
Magistrate’s Court to declare a consumer no longer
over-indebted after a s 86(1) application has been filed and Form
17.2
has been issued, where the consumer has settled liabilities to
the point that he or she is no longer over-indebted, in circumstances
in which the court has not declared the consumer over-indebted or
placed the consumer under debt review.”
[8]
Counsel further drew my attention to the unreported judgment of
Neukircher AJ dated 25 October 2016 in the Gauteng Division,
sitting
in Pretoria in
Mgadze
v Adcap, Ndlovu v Koekemoer
(57186/2016) [2016] ZAGPPHC 115 (2 November 2016). In my view, the
consequence of a clearance certificate issued by a debt counsellor
is
the removal of the record of debt adjustment from the records of the
national credit register and the credit bureau. This is
clear from
section 71(5) of the NCA, which appears later in this judgment.
[9]
There are different paths of travel, in my view, that a person
aggrieved by a report to a credit bureau and its holding of
information in which he had applied and had been accepted by a debt
counsellor to be placed under review, may approach the Tribunal
or
the Magistrate’s Courts.
[10] In the first path, the
applicable provisions of section 71 read as follows:
“
71.
Removal
of record of debt adjustment or judgment
(1)
A
consumer whose debts have been re-arranged in terms of Part D of this
Chapter, must be issued with a clearance certificate by
a debt
counselor within seven days after the consumer has-
(a) satisfied all the
obligations under every credit agreement that was subject to that
debt re-arrangement order or agreement,
in accordance with that order
or agreement; or
(b) demonstrated-
(i)
financial
ability to satisfy the future obligations in terms of the
re-arrangement order or agreement under-
(aa) a
mortgage agreement which secures a credit agreement for the purchase
or improvement of immovable property; or
(bb) any
other long term agreement as may be prescribed;
(ii)
that
there are no arrears on the re-arranged agreements contemplated in
subparagraph (i); and
(iii)
that
all obligations under every credit agreement included in the
re-arrangement order or agreement, other than those contemplated
in
subparagraph (i), have been settled in full.
. . .
(3) If a
debt counsellor decides not to issue or fails to issue a clearance
certificate as contemplated in subsection (1), the consumer
may apply
to the Tribunal to review that decision, and if the Tribunal is
satisfied that the consumer is entitled to the certificate
in terms
of subsection (1), the Tribunal may order the debt counsellor to
issue a clearance certificate to the consumer.
. . .
(5) Upon receiving a copy of
a clearance certificate, a credit bureau, or the national credit
register, must expunge from its records
–
(a) the fact that the
consumer was subject to the relevant debt re-arrangement order or
agreement;
(b) any information relating
to any default by the consumer that may have –
(i) precipitated the debt
re-arrangement; or
(ii) been considered in
making the debt re-arrangement order or agreement; and
(c) any
record that a particular credit agreement was subject to the relevant
debt re-arrangement order or agreement.”
[11]
This is the path, the applicant started to walk. The applicant
approached the debt counsellor for a clearance certificate in
terms
of s 71(1)(b). The first respondent decided not to issue the
applicant with the clearance certificate. According to correspondence
from the first respondent, attached to an affidavit filed by
Amukelani Mabasa employed by Campbell Attorneys on behalf of the
applicant, the reason for the position adopted by the first
respondent to this application is because the first respondent has
suspended provision of service due to non-cooperation by the
applicant in that fees payable by the applicant to the first
respondent
remain unpaid. In my view, this is not a matter nor is it
circumstances in which the inherent jurisdiction of the High Court
should
be visited upon. The applicant should simply have followed
through on the path he has commenced. This is a matter where the
applicant
may apply to the Tribunal to review the decision of the
first respondent.
[12] There is, in my view, another
second path for the removal of the record of the debt adjustment
which was available to the applicant.
In this path, available to the
applicant under the statute, s 72(1)(c) of the NCA provides as
follows:
“
72
Right
of access and challenge credit records and information
(1) Every person has a right
to-
(c) challenge the accuracy
of any information concerning that person –
(i)
that
is the subject of a proposed report contemplated in paragraph (a); or
(ii)
that
is held by the credit bureau or national credit register, as the case
may be,
and
require the credit bureau or National Credit Regulator, as the case
may be, to investigate the accuracy of any challenged information,
without charge to the consumer; …”
[13]
The
Concise Oxford English Dictionary
,
revised tenth edition, Oxford University Press defines “held”
as “past and past participle of hold”. It
defines “hold”
as amongst others “keep in a specified position”,
“continue to follow (a course)”
and “stay or cause
to stay at a certain value or level”. In my view, in s 72(1)(c)
the Legislature recognised that
there would be instances where
information in an adverse report contemplated to be made against a
person, would not warrant a challenge.
The Legislature acknowledged
that there could be reasons, some time after the report was made but
whilst being held by the credit
bureau, that call for a challenge to
the information to continue to stay or be kept in the original
position. It is this acknowledgement,
in my view, that informed the
provision for the alternative, in respect of time, from the
contemplation of a proposed report to
the time during which that
report is held. This is how, in my view, s 72(1)(c)(ii) is to
be purposively interpreted and understood,
following section
72(1)(c)(i). There is nothing in the terms of this section, in my
view, which suggests that 72(1)(c(ii) only
refers to instances where
the adverse report came to the knowledge of the complainant for the
first time after the information
was already listed.
[14]
In my view, the notification by a debt counsellor to all credit
providers listed in the application and every registered credit
bureau in terms of section 86(4), of his or her receipt of an
application by a consumer to have the consumer declared
over-indebted,
is not the equivalent of a judgment of a court. The
Legislature has provided that such notification may be removed by the
credit
bureau upon receipt of a clearance certificate issued by a
debt counsellor [s 71(5)]. The issue of a clearance certificate by a
debt counsellor, is not a withdrawal of the debt review in the sense
discussed in the judgment of Nobanda AJ in the South Gauteng
Division
sitting in Johannesburg in
Rougier
v Nedbank Ltd
(27333/2010) [2013] ZAGPJHC 119 (28 May 2013).
[15]
In my view, entries of adverse reports by the credit bureau are not
final and unalterable by such credit bureau at the moment
of their
enrolment. They can be varied and rescinded at any time on the
presentation of credible information. At any point in time
where the
financial position of a person demonstrates a substantial change,
good reason exists for a just and equitable adjustment
of his or her
credit profile by the credit bureau and a commensurate report should
be attributed to such person as soon as the
credit bureau receives
such information.
[16]
There is a duty on the credit bureau, once the information it held is
challenged, to take reasonable steps to seek evidence
in support of
the challenged information and then to do either of two things: to
provide a copy of the evidence upon which its
report relies to the
aggrieved person, or to remove the information and all record of it
from its files if it is unable to find
credible evidence in support
of its information [s 72(3)]. Where the credit bureau does not remove
the information, the person
who challenged the information may apply
to the NCR to investigate the disputed information as a complaint
under s 136, [s 72(4)].
The credit bureau may not report information
that is challenged until the challenge has been resolved in terms of
s 72(3), [s 72(5)].
[17] There is a third path that the
applicant could have followed. S 13(a) and s 15(a) and (i) lists the
responsibility and the
enforcement functions of the NCR. S 13(a)
provides:
“
Development
of accessible credit market
13. The National Credit
Regulator is responsible to-
(a)
promote
and support the development, where the need exists, of a fair,
transparent, competitive, sustainable, responsible, efficient,
effective and accessible credit market and industry to serve the
needs of-
(i)
historically
disadvantaged persons;
(ii)
low
income persons and communities; and
(iii)
remote,
isolated or low density populations and communities,
in a manner consistent with
the purposes of this Act;
[18] Whilst, s 15(a) and (i) sets out
the enforcement functions as:
“
Enforcement
functions of National Credit Regulator
15. The National Credit
Regulator must enforce this Act by –
(a)
promoting
informal resolution of disputes arising in terms of this Act between
consumers on the one hand and a credit provider or
credit bureau on
the other, without intervening in or adjudicating any such dispute;
. . .
(i)
referring
matters to the Tribunal and appearing before the Tribunal, as
permitted or required by this Act;”
[19]
Once a person applies to the NCR to investigate the disputed
information as a complaint in terms of section 136, as provided
for
in terms of s 72(4), there is a duty on the NCR to investigate the
complaint [s 137 read with s 139 and s 140]. In my view,
where it is
found that the circumstances of the complainant have changed to such
an extent that the adverse entry on his credit
profile that he is
over-indebted and under debt review can no longer be sustained by the
true facts, the NCR and the credit bureau,
and any other party
involved, may resolve the matter and have the terms of their
agreement made an order. Such order by consent
may be presented to
the Tribunal (s 140 read with s 138) or the Magistrate’s Courts
[s 138]. Where the NCR issues a
notice of non-referral in
response to a complaint other than a complaint in respect of
protection against discrimination in respect
of credit, the
complainant may refer the matter to the Tribunal or the consumer
court [s 141]. Where the complaint was heard by
a single member of
the Tribunal, relief may be sought from the full panel. It is a
decision of the full panel that is reviewable
or appealable to the
High Court in terms of section 148.
[20]
The applicant seems to hold the view that the issuing of a clearance
certificate involves nothing more than the mere formality
of the
filling in of a one page NCR Form 19 containing eight questions. What
appears to escape the applicant is that he has amongst
others to
demonstrate financial ability to satisfy future obligations in terms
of the re-arrangement order under outstanding agreements,
as but one
example. This demonstration, includes an in-depth study of his last
three documented proof of income as well as his
last three months
bank statements, wherein his expense patterns and tendencies are
assessed, as part of the prescribed criteria
to conduct the
affordability assessment on the existing financial means and
prospects as set out in Regulation (R) 23A(3) and (4)
of the
Regulations made in terms of the NCA. Part of the assessment of the
financial obligations include a consideration of the
statutory
deductions and minimum living expenses in order to arrive at a net
income, which must be allocated for payment of debt
instalments [R
23(8) and (9)]. This duty of the debt counsellor who has to issue a
clearance certificate is set out in s 71(2)
as part of the assessment
by the debt counsellor that the consumer has demonstrated what the
NCA expects of him in section 71(1)(b).
The information that a debt
counsellor must receive, in pursuance of this assessment, is also set
out in R 24.
[21]
The application before me has no information in the vein sought by R
23A and R 24, to enable me to venture into a full investigation
of
the applicant’s financial position. What is worse, is that R
24(3) requires of a debt counsellor who does an assessment
to verify
the information provided to him or her by requesting documentary
proof from the consumer, contacting the relevant credit
providers or
employer or any method of verification of the information considered.
The investigation of the affordability assessment
on the existing
means and prospects has been deliberately placed outside the High
Court as a first instance forum by the Legislature.
It has been left
to the debt counsellor, the NCR, the Tribunal and the Magistrate’s
Courts.
[22]
It follows that I am not in agreement with Mr Rogowski that the
silence of the NCA on any process to have a person declared
no longer
over-indebted by a Magistrate’s Court is a lacuna in the NCA.
In my view, it is a deliberate decision by the Legislature,
against
the background of the nature of the work that a debt counsellor has
to do as introduced by the amendments brought about
by the National
Credit Amendment Act 19 of 2014. Where circumstances like the present
emerge, where the debt counsellor is unable
or unwilling to do the
research envisaged for him or her to assess whether the financial
position of the consumer warrants him
or her to issue a clearance
certificate, the Legislature decided that such research be left to
the Tribunal. The Tribunal has the
power to make any other
appropriate order required to give effect to a right, as contemplated
in the NCA or the
Consumer Protection Act, 68 of 2008
[s 150(i)].
This, in my view includes the power to refer the matter to the NCR
for a full investigation. On the other hand, the
NCR has the right to
apply to the Tribunal in the prescribed manner and form for an order
resolving a dispute over information
held by a credit bureau, in
terms of Part B of Chapter 4 [s 137(1)].
[23] There is a further worrying
aspect in this matter which remains unexplained by the applicant. In
my view, it is an aspect that
relates to the fourth path that was
available to him. His application to the first respondent for his
obligations to be re-arranged
was only made in November 2016. This is
long after the Supreme Court of Appeal in
Nedbank Ltd and Others v
The National Credit Regulator and Another
2011 (3) SA 581
(SCA)
at paragraph 29 had already said:
“
[29]
… A court is empowered to modify the wording of a statute
where it is necessary to give effect to what was the true
intention
of the legislature. This power will readily be exercised where there
are other indications in the legislation supporting
the correction.
In terms of
s 86(7)(c)
the debt counsellor may “issue a
proposal” that the Magistrate’s Court make certain
orders. It is not said that
he ‘must’ do so but, given
his duty in terms of subsec (6) and his position as statutory
functionary, he ‘must’
issue the proposal. If the
contentions of Juselius were to be accepted it would remain
uncertain, in cases falling under
s 86(7)(c)
, from where the
Magistrate’s Court, to which the matter has been referred,
would derive its power to make any of the orders
set out in
s 87(1).
”
The
applicant, in my view, should have taken this court into his
confidence and disclosed the true reasons as to why the first
respondent did not issue a proposal recommending that the
Magistrate’s Court re-arrange his obligations, as the law
required.
This omission is material as it excluded, according to the
applicant, the magistrate’s powers to rescind the
re-arrangement
order in terms of
s 36(d)
of the
Magistrates’
Courts Act 32 of 1944
. The Magistrate’s Court’s power to
rescind its own order was thereby thwarted.
[24] Whether the exclusion of the
Magistrate’s Court through an omission to issue a proposal for
the Magistrate’s Court
to make an order was by design or
oversight, in my view, did not totally oust the power of the
Magistrate’s Court to consider
the applicant’s case. In
Ndamase v Functions 4 All
2004 (5) SA 602
(SCA) at para 5 it
is said:
“
[5]
It is well-established that the magistrate’s court has no
jurisdiction and powers beyond those granted by the Act (compare
Riversdale
Divisional Council v Pienaar
(1885)
3 SC 252
at 256;
Stork
v Stork
(1903)
20 SC 138
at 139;
Gqalana
and Others v Knoesen and Another
1980
(4) SA 119
(E) at 120;
Mason
Motors (Edms) Bpk v Van Niekerk
1983
(4) SA 406
(T) at 409E-F;
Venter
v Standard Bank of South Africa
[1999]
3 All SA 278
(W) at 280i-j) and that in this context, jurisdiction
means ‘the power vested in a court by law to adjudicate upon,
determine
and dispose of a matter’ (see
Ewing
McDonald & Co Ltd v M & M Products Co
[1990] ZASCA 115
;
1991
(1) SA 252
(A) at 256G-H;
Graaff-Reinet
Municipality v Van Ryneveld’s Pass Irrigation Board
1950
(2) SA 420
(A) at 424;
Spendiff
NO v Kolektor (Pty) Ltd
[1992] ZASCA 18
;
1992
(2) SA 537
(A) at 551C). It is also well-established that powers may
be conferred expressly or by implication. Where the Act is silent on
a matter the general rule is that by expressly conferring on the
magistrates’ courts jurisdiction in respect of a particular
matter, the Act confers by implication the ancillary powers necessary
to give effect to that jurisdiction.”
The
preamble to the NCA provides its object as being “to promote a
fair and non-discriminatory marketplace for access to consumer
credit
and for that purpose to provide for the general regulation of
consumer credit and improved standards of consumer information.;
…
to regulate credit information; …”.
[25]
In my view, where fresh facts have arisen since a debt counsellor’s
notification to all credit providers and every registered
credit
bureau of the consumer’s application for debt re-arrangement,
or, after an assessment and conclusion that a consumer
appears to be
over-indebted, and the new facts demonstrate a material change in the
circumstances of a consumer, the Magistrate
Court’s power to
find that the consumer is not over-indebted is by implication,
conferred when the Magistrate’s Court
is given the jurisdiction
to entertain proposals from the debt counsellor to re-arrange a
consumer’s obligations or, with
leave of the Magistrate’s
Court, a consumer applied directly to the Magistrate’s Court.
There is no provision in the
NCA, in my view, which expressly
provides that the Magistrate’s Court shall have no jurisdiction
to consider such proposal
or application.
[26] Such an interpretation of the
powers of a Magistrate’s Court is in line with the preamble,
and the purpose of the NCA
as set out in s 3 which provides that:
“
3.
Purpose of the Act – The purposes of this Act are to promote
and advance the social and economic welfare of South Africans,
promote a fair, transparent, competitive, sustainable, responsible,
efficient, effective and accessible credit market and industry,
and
to protect consumers, …”
Magistrates’
Courts are generally local and inexpensive in comparison to the High
Courts across the towns and cities of the
Republic. In my view, the
Legislature has provided in section 86 for a consumer to apply for
leave where he or she is not satisfied
with the response of a debt
counsellor, in order for the consumer to show cause why it is
desirable for the Magistrate’s
Court, and not the NCR or the
Tribunal, to intervene. The consumer must demonstrate circumstances
and reasons that show that it
is necessary, in the interests of
justice and equity that the investigation should shift from the
statutory body to the judicial
authority, in its discretion.
[27]
In my view, the general thrust of the NCA, and in particular the
consumer credit policy under Chapter 4, places the primary
jurisdiction of consumer rights, consumer credit records and
over-indebtedness and reckless credit, in the debt counsellor,
National
Credit Regulator, the Tribunal and the Magistrate’s
Courts, the latter two being subject to the supervision and inherent
jurisdiction of the High Courts. The nature of the work set out for a
debt counsellor, the NCR or the Tribunal in such circumstances,
in my
view, is necessary for a credible market place. Such an investigation
cannot be avoided by simply crying lacuna and running
to the High
Courts, and thereby avoiding a proper investigation by the debt
counsellor, the NCR or the Tribunal into the credibility
of the
information that sustains the alleged change in the financial
position of a consumer. Under the circumstances, in my view,
there is
no good cause for the quantum leap out of the domestic remedies
available to the applicant by statute, into the recourse
to the
courts, until the final stage and until the applicant had exhausted
his statutory remedies. The application to the High
Court is
premature.
[28]
It follows, in my view, that the High Court is not the forum of first
instance on matters which both the Tribunal and the Magistrate’s
Courts should deal with. Under circumstances where there are various
tribunals which under the NCA are open to an applicant, it
is
preferable that the intervention of the High Court be deferred until
the domestic remedies provided for in the NCA have been
exhausted,
unless the very complaint is the illegality or fundamental
irregularity of the decision sought to be challenged (
Welkom
Village Management Board v Leteno
1958 (1) SA 490
(A) at 501C-503H).
[29]
Where the Legislature has spared the High Courts from such primary
tasks as a forum of first instance in such elementary investigations,
in my view, that ordination should not be departed from at the
slightest invocation and for light and flimsy reasons. The applicant
had an option to simply challenge the information held by the credit
bureau, and if the credit bureau did not remove the information,
it
would have led to an investigation of his true financial position by
the NCR leading up to, if needs be, the full panel of the
Tribunal
deciding the matter. There is no explicable reason given by the
applicant as to why this path was not followed. Secondly,
the refusal
of the first respondent to issue the applicant with a clearance
certificate is a decision that is reviewable by the
Tribunal. There
is no reason advanced as to why the applicant did not approach the
Tribunal for intervention.
[30] I am not persuaded that the
applicant is entitled to the intervention of the High Court at this
stage and an order in the terms
prayed for. For these reasons, I make
the following order:
1. The application
is dismissed.
2. The applicant is
granted leave to:
2.1
Challenge
the accuracy of the information held by the credit bureau in terms of
section 72(1)(c)(ii) of the NCA;
2.2
File
a complaint against the first respondent with the National Credit
Regulator for the decision of the first respondent not to
issue the
applicant with a clearance certificate in terms of section 136 of the
NCA;
2.3
File
an application for review of the decision of the first respondent not
to issue the applicant with a clearance certificate as
contemplated
in section 71(1), to the Tribunal established in terms of
section 26
of the
National Credit Act 34 of 2005
; or
2.4
File
an application to the Magistrate’s Court for leave to apply
for, and if granted such leave, to apply for the granting
of an order
that the applicant is not over-indebted.
3. No cost order is
made.
………………………………………
DM
THULARE
ACTING
JUDGE OF THE HIGH COURT
APPEARANCES
For
the Applicant:
Adv Adrian Rogowski
Date(s)
of Hearing:
30 October 2017 (3
rd
Division)
Judgment
delivered on:
17 November 2017