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[2011] ZAGPJHC 153
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National Credit Regulator v Standard Bank of South Africa Ltd (40475/2010) [2011] ZAGPJHC 153; 2012 (4) SA 47 (GSJ) (25 October 2011)
REPORTABLE
IN THE SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE No: 4
0475/2010
DATE:25/10/2011
In the matter between:
THE NATIONAL CREDIT REGULATOR
…..............................................
Applicant
and
THE STANDARD BANK OF SOUTH AFRICA
LIMITED
........................
Respondent
JUDGMENT
CANE AJ
The applicant is the National Credit Regulator and the respondent is
The Standard Bank of South Africa Limited. The applicant
seeks an
interdict (alternatively a declarator) restraining the respondent
from charging an administration fee in relation to
housing loan
agreements concluded in terms of the Usury Act, 1968 (“
the
Usury Act
”) prior to its repeal (“
the
pre-existing agreements housing loan agreements
”) by
the National Credit Act, 2005 (“
the NCA
”)
in excess of the maximum amount stipulated in paragraph 3(b)(i) of
the schedule to the Usury Act (“
the cap
”).
At the outset I should state that I raised with counsel whether
their clients had any difficulty with me adjudicating this matter,
as I had acted for the respondent against the applicant in a
previous matter. Counsel assured me that their clients had no
difficulty.
The NCA does not contain a definition of an administration fee, nor
does it expressly provide for the payment of an administration
fee
in respect of the pre-existing housing loan agreements. It provides
for a ‘service fee’, which is currently set
at a maximum
of R50,00 per month. It is common cause that sections 100 to 106 of
the NCA, which make provision for the imposition
and collection of
interest, charges and fees (including service fees), do not apply to
the pre-existing housing loan agreements.
The repeal of the Usury Act was made subject to certain transitional
arrangements contained in schedule 3 to the NCA, relating
inter
alia
to credit agreements that were concluded before the NCA
came into operation. (Item 4(1) of schedule 3.) Schedule 3 of the
NCA
contains no express provision relating to the payment of
administration fees in respect of the pre-existing housing loan
agreements.
During 2010 it appears that the respondent charged an administration
fee of R37,50 per month (including VAT) and that it increased
this
fee to R40,00 per month (including VAT) with effect from 1 January
2011. It has undertaken not to increase the administration
fees
beyond the maximum permitted for service fees under the NCA. The
respondent contends that since the Usury Act has been repealed,
there can be no change to the cap of R5,00 per month in respect of
the pre-existing housing loan agreements, which was imposed
in 1990
and has not been amended since. Thus if the relief sought by the
applicant were to be granted, the cap of R5.00 would
apply
indefinitely and this, submitted the respondent, could not have been
intended. The applicant sought to persuade me that
the Minister
could simply appoint the Regulator as the ‘Registrar’
for the purposes of increasing the cap under the
Usury Act. I doubt
whether this is correct, but in view of my findings below, it is
unnecessary to decide this point.
Paragraph 5(1)(k) of the Usury Act provides as follows:
“
No moneylender or
credit grantor shall in connection with a money lending transaction
or a credit transaction or a leasing transaction
obtain judgment for
or recover from a borrower or credit receiver or lessee an amount
exceeding the sum of –
(k) in the case of a housing
loan, administration fees to the extent and on the conditions
mentioned in the Schedule.”
An administration fee was defined in the Schedule to mean:
“
an amount payable by
the borrower to the moneylender –
Where such amount is in
terms of an agreement in writing between the moneylender and the
borrower recoverable from the borrower;
As valuable consideration
for the moneylender’s administering the borrower’s
account; and
Where the total amount
payable per month does not extend the amount mentioned in paragraph
3(b)(i);”
Paragraphs 2 and 3(b)(i) of the Schedule to the Usury Act provide as
follows:
“
2.
Subject to the conditions mentioned in paragraph 3, the following
amounts may in respect of a housing loan be recovered, by
obtaining
judgment or otherwise, from a borrower:
(a)
An
initiation fee;
(b)
administration
fees;
(c)
security
variation fees; and
(d)
loan
guarantee premiums.
3.
The
provisions of paragraph 2 shall apply on condition that-
(a)
….;
(b)
the
amount of-
administration
fees shall not exceed R5,00 per month;”
In regard to the contention that the aforesaid provisions continued
to be operative, notwithstanding the repeal of the Usury
Act by the
NCA on 1 June 2006, the applicant relies on two statutory
provisions, namely item 7(2) of schedule 3 to the NCA and
section
12(2)(c) of the Interpretation Act, 1957 (“
the
Interpretation Act
”).
Schedule 3 of the NCA deals with transitional provisions. Item 7(2)
thereof provides as follows:
“
Any other right or
entitlement enjoyed by, or obligation imposed on, any person in terms
of any provision of the previous Act
,
which had not been spent or fulfilled immediately before the
effective date, must be considered to be a valid right or entitlement
of, or obligation imposed on, that person in terms of any comparable
provision of this Act, as from the date that the right, entitlement
or obligation first arose, subject to the provisions of this Act.”
(Underlining added)
Section 12(2)(c) of the Interpretation Act provides as follows:
“
(2) Where a law repeals
any other law, then unless the contrary intention appears, the repeal
shall not –
(c) affect any right, privilege,
obligation or liability acquired, accrued or incurred under any law
so repealed.”
Both sections require as a precondition to their operation that the
relevant right, entitlement or obligation be acquired or
incurred
under or in terms of the repealed Usury Act. The terms ‘accrue’,
‘acquire’ and the entitlement
envisaged have already
been authoritatively defined.
Chairman of the Board on Tariffs
and Trade v Volkswagen of South Africa (Pty) Ltd and another
[2000] ZASCA 84
;
2001 (2) SA 372
(SCA) at
[13]
. A prior entitlement which is specific
and not general, actual and not abstract, live and not hypothetical,
is envisaged.
In
Mahomed NO v Union Government (Minister of Interior)
1911
AD 1
the Appellate Division, when considering the effect of the
repeal of a statutory provision, held as follows (at p9):
“
A thing acquired under an
Act must necessarily be conferred by the Act; it must be something
which, but for the passing of the measure,
the beneficiary would not
have been entitled to ....The right or privileges which the Indians
in this case claim is the right,
by virtue of their South African
domicile, to enter the Cape Province at pleasure, in spite of the
fact that they are prohibited
immigrants under the existing law. They
say that they enjoyed that privilege prior to the repeal of the Act
of 1902. No doubt they
did; but did they acquire it under the
Statute? Because if they did not, then it was not kept alive by the
repealing clause. ...
it is clear that the privilege in the present
case sprang not from Statute, but from the Common Law.”
In
Garydale Investment Co v Jo’burg Western Rent Board
1958 (1) SA 466
(T) the full bench, in considering this type of
statutory provision, held that an exemption from the Rents Act
conferred no additional
or further rights than those acquired by
virtue of the common and other laws of the land. Similarly, in my
view the limitation
in issue in this matter conferred no additional
or further rights than those that were acquired by virtue of the
common and other
laws of the land.
In amplification of the aforesaid, neither the entitlement to charge
an administration fee, nor the corresponding obligation
to pay it,
was acquired, nor incurred, under or in terms of paragraph 3(b)(i)
of the schedule to the Usury Act. Such rights and
obligations were
acquired and incurred by way of contract under the common law. That
paragraph in no way enabled the acquisition
of rights or incurring
of obligations which otherwise could not have been acquired or
incurred. It merely imposed an overriding
statutory limitation on
the contractual rights and obligations which the mortgagor and
mortgagee acquired and incurred by way
of contract. The effect of
the repeal of that statutory limitation was that the agreement
between the parties continued to govern
their relationship. The
accrued rights and obligations of the parties had their origin in
contract and no right or privilege
was acquired by or accrued to any
borrower by virtue of the provisions of paragraph 3(b)(i) of the
schedule to the Usury Act.
Hence, the limitation imposed by
paragraph 3(b)(i) of the schedule to the Usury Act did not give rise
to any right, privilege,
obligation or liability, nor was any right,
privilege, obligation or liability acquired, accrued or incurred
“under”
paragraph 3(b)(i).
It is apparent from a consideration of the schedules to the NCA that
where the legislature thought fit to preserve particular
provisions
of any statute after the coming into force of the NCA, it did so
expressly. I refer to schedule 2 to the NCA. The
legislature also
made provision, in schedule 1 to the NCA, for conflicts between
other legislation and the NCA. Where the legislature
intended that
provisions of the Usury Act were to continue in force
notwithstanding its repeal, it did so in express terms in
item 10 of
schedule 3 to the NCA, which preserved certain provisions of the
Usury Act for a limited period. Thus one would have
expected that if
the legislature intended that paragraph 3(b)(i) of the schedule to
the Usury Act were to continue in force for
any period subsequent to
the repeal of that Act, the legislature would have included it in
this list. For the reason set out
above, I do not consider that the
paragraph’s continued operation was ensured through the more
general provisions of item
7(2) of schedule 3 to the NCA or section
12(2)(c) of the Interpretation Act.
The applicant submitted that if paragraph 3(b)(i) of the schedule to
the Usury Act were held not to be applicable to the pre-existing
housing loan agreements, it would mean that the determination of the
applicable administration fees would be in the unilateral
discretion
of a financial institution. It was submitted further that the
respondent and all other financial institutions would
have an
‘unbridled discretion’, which would result in exorbitant
administration fees being charged, and that this
would be
inconsistent with the purposes of the NCA and thus could not have
been intended.
In my view this argument is not persuasive. To the extent that the
terms of the pre-existing agreements permit the financial
institution to vary the administration fees from time to time, the
financial institution would be constrained to do so
arbitrio bono
viri
(as a good man would). The right to fix administration fees
conferred on mortgagees by the pre-existing housing loan agreements
are subject to this limitation imposed by the common law.
NBS
Boland Bank v One Berg River Drive and Others; Deeb and Another v
ABSA Bank Ltd; Friedman v Standard Bank of South Africa
Ltd
1999
(4) SA 928
(SCA)
My conclusion is that neither item 7(2) of Schedule 3 to the NCA,
nor section 12(2)(c) of the Interpretation Act, render paragraph
3(b)(i) of the schedule to the Usury Act applicable to the
pre-existing agreements. In the result it is unnecessary for me to
consider a further issue raised by the respondent, namely whether
the applicant had
locus standi
to seek the relief it did.
The following Order is made:
The application is dismissed with costs, such costs to include those
consequent upon the employment of two counsel.
JMA CANE
ACTING JUDGE OF THE SOUTH GAUTENG HIGH COURT, JOHANNESBURG
DATE OF JUDGMENT
: 2011-10-25
ON BEHALF OF APPLICANT
: MD KUPER SC
MA CHOHAN
ON BEHALF OF RESPONDENT
: CDA LOXTON SC
JA BABAMIA
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