About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2016
>>
[2016] ZASCA 98
|
|
Blue Chip 2 (Pty) Ltd t/a Blue Chip 49 v Ryneveldt and Others (499/2015) [2016] ZASCA 98; 2016 (6) SA 102 (SCA) (3 June 2016)
SUPREME
COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 499/2015
In the matter between:
BLUE
CHIP 2 (PTY) LTD t/a BLUE CHIP
49
APPELLANT
and
CEDRICK
DEAN RYNEVELDT & 26 OTHERS
RESPONDENTS
and
NATIONAL CREDIT
REGULATOR AMICUS
CURIAE
Neutral
citation:
Blue
Chip 2 (Pty) Ltd v Ryneveldt
(499/15)
[2016] ZASCA 98
(03 June 2016)
Coram:
Theron, Wallis, Pillay, Petse and
Willis JJA
Heard:
18 May 2016
Delivered:
03 June 2016
Summary:
Magistrates’
Court Act 32 of 1944 - jurisdiction - s
28(1)
(d)
- cause of action arising wholly within the district or regional
division - delivery of notice in terms of
s 129(1)
(a)
of the
National Credit Act 34 of 2005
- a material element of the
cause of action - delivery thereof outside the area of jurisdiction
of the magistrate’s court
is fatal to claim since cause of
action did not wholly arise within the district or regional division.
ORDER
On
appeal from:
Free
State
Division
of the High Court
,
Bloemfontein (Van Zyl J and Reinders AJ sitting as court of appeal):
The appeal is dismissed.
JUDGMENT
Pillay
JA (Theron, Wallis, Petse and Willis JJA
concurring)
[1]
The appellant, Blue Chip 2 (Pty) Ltd trading as Blue Chip 49, is a
credit provider in terms of the National Credit Act 34 of
2005 (NCA).
It entered into a number of small unsecured credit agreements with
the respondents. These were all entered into at
Bloemfontein and in
terms of the respective agreements, specific monthly instalments had
to be paid on specified dates into the
bank account of the appellant
held at Bloemfontein. The documents in the record refer mostly to
Cedrick Dean Ryneveldt (to whom
I will refer to as the respondent),
presumably as a test case the result of which would be applicable to
all others. In the circumstances,
I will only deal with his case. It
is common cause that he entered into a credit agreement on 28 June
2013 in an amount of approximately
R20 000, and defaulted on the
payments. The appellant then sought payment of the total amount due
and payable in terms of
the agreement, namely R25 134.
[2]
Being a credit agreement, it fell squarely within the provisions of
the NCA. Upon the default, the appellant caused a notice
in terms of
s 129(1)
(a)
of the NCA (the s 129 notice) to be
delivered by registered post to the respondent’s elected
domicilium citandi et executandi,
which was in Kimberley and outside
the Bloemfontein Magistrates’ Court’s jurisdiction. It
was common cause that the
said notice reached the post office in
Kimberley, which duly gave the respondent notice to collect it.
[3]
The respondent did not react to the notice within the prescribed
period and the appellant then issued a letter of demand in
terms of s
56 of the Magistrates’ Court Act 32 of 1944 (the Act). It seems
that this letter of demand was hand delivered
to him in Kimberley
informing him of the status of his account and pointing out that the
full amount was due and payable. In response
thereto, the respondent
gave written consent in Bloemfontein to judgment in respect of the
debt, interest thereon and costs in
terms of s 58
of the Act. The consent document clearly showed that the appellant
intended to seek judgment
in the magistrates’ court in
Bloemfontein.
[4]
The appellant thereupon submitted a written request to the clerk of
the Bloemfontein Magistrates’ Court for judgment to
be entered
in its favour. The clerk referred the request for judgment to the
magistrate to be dealt with.
[5]
The magistrate called for argument and on 31 July 2014 refused to
grant the judgment in favour of the appellant, for lack of
jurisdiction. He reasoned that s 28(1)
(d)
of the Act had
not been complied with in that the delivery of the s 129 notice,
being an element of the cause of action, did
not occur within the
area of jurisdiction of the court and consequently he did not have
jurisdiction to deal with the matter.
[6] The appellant
appealed to the Free State Division of the High Court, Bloemfontein.
The high court, although holding that a s 129
notice ‘does
not however, form part of the cause of action’, concluded that
the delivery of the s 129 notice ‘completed’
the
cause of action. Consequently, because the notice was delivered
outside the area of jurisdiction of the Bloemfontein Magistrates’
Court, the claim did not wholly arise within its area of jurisdiction
as required by s 28(1)
(d)
of the Act. It reasoned that
the delivery of the notice is a fact ‘giving rise to
jurisdiction’ and since delivery
of the notice took place
outside the area of jurisdiction of the Bloemfontein Magistrates’
Court, that court did not have
jurisdiction to deal with the matter.
It consequently dismissed the appeal. This court then granted special
leave to appeal.
[7]
In this court, it was argued on behalf of the appellant, that the
conclusion of both the magistrate and the high court a quo
was wrong.
Simply, it was the case of the appellant that while delivery of the
s 129 notice had to be alleged and proved,
it was a procedural
step that did not form part of the cause of action and consequently
did not have any bearing on s 28(1)
(d)
of the Act. The
cause of action, it was argued, was manifested when the agreement,
having been entered into in Bloemfontein, was
breached in
Bloemfontein and this was sufficient to found the jurisdiction of the
Bloemfontein Magistrate’s Court.
[8]
There was no appearance for the respondent but the National Credit
Regulator was before the court as amicus curiae. Mr Grobler,
counsel
for the amicus curiae, argued that the delivery of the s 129
notice outside the area of jurisdiction of the Bloemfontein
Magistrates’ Court prevented that court from having the
necessary jurisdiction to hear the matter since the cause of action
did not arise ‘wholly within the district or regional division’
as required by s 28(1)
(d)
of the Act.
[9]
The issue therefore to be determined in this appeal is whether the
delivery of the s 129 notice constitutes part
of the cause
of action. There are a number of discordant judgments in the
magistrate’s court on this issue. This judgment
will clarify
the position.
[10]
Being a creation of statute, the magistrate’s court derives its
powers from the Act. As was stated in
Ndamase
v Functions 4 All
:
[1]
‘
It
is well-established that the magistrate’s court has no
jurisdiction and powers beyond those granted by the Act.’
Sub-section 28(1)
(d)
of the Act reads:
’
28
Jurisdiction in respect of persons
(1)
Saving any other jurisdiction assigned to a court by this Act or by
any other law, the persons in respect of whom the court
shall,
subject to subsection (1A), have jurisdiction shall be the following
and no other:
.
. .
(d)
any person,
whether or not he or she resides, carries on business or is employed
within the district or regional division, if the
cause of action
arose wholly within the district or regional division;
.
. . .’
[11]
The magistrate examined whether he had the power to deal with the
matter. He referred to the decision in
Whyte
v Rathbone.
[2]
The facts were that the parties had entered into a loan agreement by
signing an acknowledgment of debt within the district of Durban.
No
date(s) for the repayment of the loan was agreed upon. It was
therefore necessary for the defendant to be placed in mora and
a
letter of demand was posted to him. This letter was not proved to
have been delivered to him within the jurisdiction of the Durban
Magistrates’ Court. The court held that it did not have the
necessary jurisdiction to hear the matter since the cause of
action
did not wholly arise within the district (of Durban), as contemplated
in s 28(1)
(d)
.
[12]
The meaning of the expression ‘cause of action’, when the
identically worded predecessor to s 28(1)
(d)
was in operation, was authoritatively laid down in
McKenzie
v Farmers’ Co-Operative Meat Industries Limited
[3]
where the definition of ’cause of action’, adopted from
Cook
v Gill
(L.R., 8 C.P. 107)
, was held to be ‘. . . every fact which it
would be necessary for the plaintiff to prove, if traversed, in order
to support
his right to the judgment of the Court. It does not
comprise every piece of evidence which is necessary to prove each
fact, but
every fact which is necessary to be proved.’
[13]
One of the issues in
Evins
v Shield Insurance Co Ltd
[4]
was whether claims for bodily injuries and loss of support
constituted two separate rights of action under the common law and
the Compulsory Motor Vehicle Insurance Act 56 of 1972 respectively
when flowing from the same set of facts. In dealing with that
question, the court found it necessary to refer to the term ‘cause
of action’. At 838 D-F, Corbett JA, writing for
the majority of
the court adopted the approach as set out in
McKenzie
,
quoting the definition of ‘cause of action’ referred to
in para 12 above. In the same matter, Trollip JA, writing
for the
minority, stated at 825 E-H:
‘
I
still remain somewhat uncertain whether appellant’s claims for
her bodily injuries and her loss of support constitute two
separate
rights of action under the common law and the Compulsory Motor
Vehicle Insurance Act 56 of 1972 (“the CMVI Act”).
I
prefer to use the term “right of action” to “cause
of action” because, I think, the former is strictly
and
technically more legally correct in the present context (cf
Mazibuko
v. Singer
1979 (3) SA 258
(W) at 265 D-G). “Cause of action” is
ordinarily used to describe the factual basis, the set of material
facts, that
begets the plaintiff’s legal right of action and,
complementarily, the dependant’s “debt”, the word
used
in the Prescription Act. The term, “cause of action”,
is
commonly used in relation to pleadings or in statutes relating to
jurisdiction or requiring prior written notification of a claim
before action thereon is commenced
.’(Emphasis
added)
Clearly
both judgments are in line with
McKenzie
.
Where it is essential to the successful pursuit of a contractual
claim that a letter of demand be sent, then the sending of that
letter of demand is part of the cause of action. In particular where
a statute provides that before an action can be commenced
or a claim
enforced against a debtor, a notice be given, then the giving of that
notice is essential to the successful pursuit
of the claim and
proving that it was given, is part of the cause of action. Compliance
with a directive to serve a notice must
both be alleged and proved if
a claimant is to succeed and obtain judgment.
[5]
[14]
The definition of ‘cause of action’ as set out in
McKenzie
has stood the test of time and almost one hundred years on, has not
been altered in any way.
[6]
There is no compelling argument why it should now be changed.
[15] The purposes of the
NCA is broadly described in s 3 thereof as being the following:
‘
to
promote and advance the social and economic welfare of South
Africans, promote a fair, transparent, competitive, sustainable,
responsible, efficient, effective an accessible credit market and
industry, and to protect consumers’.
The
NCA represents a major overhaul of previous credit regulation and a
clean break from the past.
[16] I now turn to the
aspect of the s 129 notice and whether there is any reason to
hold that it does not form part of the
cause of action as contended
by the appellant. Section 129(1) of the NCA reads:
‘
(1)
If the consumer is in default under a credit agreement, the credit
provider -
(a)
may draw the
default to the notice of the consumer in writing and propose that the
consumer refer the credit agreement to a debt
counsellor, alternative
dispute resolution agent, consumer court or ombud with jurisdiction,
with the intent that the parties resolve
any dispute under the
agreement or develop and agree on a plan to bring the payments under
the agreement up to date; and
(b)
subject to
section 130(2), may not commence any legal proceedings to enforce the
agreement before -
(i)
first providing notice to the consumer as contemplated in paragraph
(a)
, or section 86(10), as the case may be; and
(ii)
meeting any further requirements set out in section 130.’
This
section obviously accords with the broad purposes of the NCA as set
out in s 3 thereof.
[17]
It is clear from s 129(1)
(a)
and
(b)
that
prior to commencing legal proceedings to enforce an agreement, the
credit provider must deliver a written notice to the consumer
wherein
attention is drawn to the default in repayment, setting out various
options open to him or her whereby the pressure of
the default could
be alleviated. In other words, it is a mandatory requirement which
must be satisfied before judgment can be granted
for recovery of the
outstanding debt.
[7]
In
Sebola
v Standard Bank,
[8]
para 74 it was held that given the significance of the s 129
notice, ‘the credit provider must make averments that will
satisfy the court from which enforcement is sought that the notice,
on balance of probabilities, reached the consumer’. In
Kubyana
v Standard Bank of South Africa Ltd
,
[9]
para 34, the purpose of a s 129 notice was explained as aiming
to ‘establish a framework within which the parties to
the
credit agreement, in circumstances where the consumer has defaulted
on her obligations, can come together and resolve their
dispute
without expensive, acrimonious and time-consuming recourse to the
courts’.
[18]
The delivery of a s 129 notice is a peremptory step which is a
pre-requisite for any judgment sought on a claim arising
out of a
default of a credit agreement. The failure to take the necessary
steps prior to judgment, will result in a court refusing
to grant
judgment in favour of the claimant. It is a step which is recognised
in the NCA as essential to granting judgment in favour
of a claimant.
Hence in para 87 of
Sebola
, it is pointed out that if indeed a
litigant has failed to comply with any provision of the NCA,
including s 129, s 130(4)
(b)
provides for steps
which may be taken in order to remedy the situation in terms of an
order of the court. A failure to allege and
prove compliance with
s 129(1) (even after s 130 procedures) would
render a summons excipiable and the matter
would end without judgment
in favour of the claimant being granted.
[19]
As was said by Majiedt AJP in
Beets
v Swanepoel
[10]
(para 19):
‘
.
. . a plaintiff must in my view aver compliance with these sections
[s 129 and s 130] in the summons or particulars of claim to
disclose
a cause of action where the suit is based on a credit agreement to
which the Act applies. It is a material averment, the
absence whereof
would render the pleading excipiable. Without the requisite notice, a
claim cannot be enforced.’
The
reason for this is that the pleadings would lack a proper cause of
action.
[20]
In order to disclose a cause of action to enforce a claim emanating
from a default of a credit agreement, an averment of compliance
with
s 129 must be contained in the summons and proved. Delivery of a
s 129 notice forms part of the cause of action.
It is an
essential component of a plaintiff’s cause of action.
[11]
It must occur before a cause of action can be said to have arisen.
Absent compliance therewith, there would be no cause of action.
[21]
The giving of the notice is therefore critical to the question of
jurisdiction in relation to s 28(1)
(d)
of the Act. Since
it is common cause that delivery of the s 129 notice took place
outside the area of jurisdiction of the
Bloemfontein Magistrates’
Court, the cause of action did not arise ‘wholly within the
district or regional division’
of that court. It follows
therefore that the magistrate was correct in finding that he could
not deal with the matter for lack
of jurisdiction. The high court was
also correct to dismiss the appeal.
[22]
It was also argued on behalf of the appellant that the respondent had
consented to the jurisdiction of the Bloemfontein Magistrates’
Court when he signed the consent to judgment. Mr Botes SC however
conceded that if that court lacked jurisdiction, the consent
to
judgment cannot be relied upon. This is in accordance with s 45
of the Act. In my view, though not necessary to deal with
it herein,
s 90 and s 91 of the NCA would in all probability also
prohibit consent to jurisdiction in these circumstances.
[23]
Neither of the parties sought any cost order.
[24] In the result, the
appeal is dismissed.
__________________
R
Pillay
Judge
of Appeal
Appearances
:
For
Appellant: F
W Botes SC (and L Collins)
Instructed
by:
Jordaan Rijkheer Inc,
Bloemfontein
For amicus
curiae: S
Grobler
Instructed
by:
Honey
Attorneys, Bloemfontein
[1]
Ndamase
v Functions 4 All
[2004] ZASCA 32
;
2004 (5) SA 602
(SCA) para 5.
[2]
Whyte v
Rathbone
1936 NPD 549.
[3]
McKenzie
v Farmers’ Co-Operative Meat Industries Ltd
1922
AD 16
at 23.
[4]
Evins v
Shield Insurance Co Ltd
1980
(2) SA 814
(A).
[5]
Masuka and Another v
Mdlalose and Others
1998
(1) SA 1
(SCA) at 7C-E;
Avex
Air (Pty) Ltd v Borough
of
Vryheid (2)
1972 (4) SA
676
(N) at 678 C-E;
Minister
of Safety and Security v De Witt
[2008] ZASCA 103
;
2009
(1) SA 457
(SCA) para 10;
Merry
Hill (Pty) Ltd v Engelbrecht
2008 (2) SA
544
(SCA) para 23.
[6]
Ndlovu v
Santam Ltd
[2005] ZASCA 41
;
2006 (2) SA 239
(SCA) para 17;
Road
Accident Fund & another
v
Mdeyide
[2010]
ZACC 18
;
2011 (2) SA 26
(CC) para 19;
Van
Deventer v Ivory Sun Trading 77 (Pty) Ltd
[2014] ZASCA 169
;
2015 (3) SA 532
(SCA) para 23.
[7]
Although the word ‘may’ is used in s 129(1)
(a)
,
the notice is a mandatory requirement. See
Nedbank
Ltd
&
others v National Credit Regulator & another
[2011] ZASCA 35
;
2011 (3) SA 581
(SCA) para 8.
[8]
Sebola &
another v Standard Bank of South Africa Ltd & another
[2012] ZACC 11; 2012 (5) SA 142 (CC).
[9]
Kubyana
v Standard Bank of South Africa Ltd
[2014] ZACC 1; 2014 (3) SA 56 (CC).
[10]
Beets v
Swanepoel
[2010] ZANCHC 55.
[11]
Rossouw
& another v First Rand Bank Ltd
[2010] ZASCA 130
;
2010 (6) SA 439
(SCA) para 38.