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[2016] ZASCA 206
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Kaknis v Absa Bank Limited; Kaknis v Man Financial Services SA (Pty) Ltd (08/16) [2016] ZASCA 206; [2017] 2 All SA 1 (SCA); 2017 (4) SA 17 (SCA) (15 December 2016)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 08/16
In
the matters between:
PANTELIS
KAKNIS
APPELLANT
and
ABSA
BANK
LIMITED
RESPONDENT
and
PANTELIS
KAKNIS
APPELLANT
and
MAN
FINANCIAL SERVICES SA (PTY)
LTD
RESPONDENT
Neutral
citation:
Kaknis v Absa Bank Limited & another
(08/16)
[2016] ZASCA 206
(15 December 2016)
Coram:
Shongwe, Willis, Mathopo and Van der Merwe JJA and Nicholls AJA
Heard:
11 November 2016
Delivered:
15 December 2016
Summary:
Interpretation of statute:
National Credit Act 34 of 2005
:
section 12B(1)
(b)
inserted by National Credit Amendment Act 19
of 2014: section has no retrospective application and did not
invalidate the agreement
relied upon by the respondents: summary
judgment correctly granted.
ORDER
On appeal from:
Eastern Cape Local Division of
the High Court, Port Elizabeth (Msizi AJ) sitting as court of first
instance.
The appeal is dismissed with costs.
JUDGMENT
Shongwe
JA (Willis JA concurring) (dissenting judgment)
[1]
This appeal is against the judgment and two orders of the Eastern
Cape Local Division of the High Court (Msizi AJ) (the high
court)
granting summary judgments against the appellant Mr Pontelis Kaknis.
The respondents, Absa Bank limited (Absa) and Man Financial
Services
SA (Pty) Ltd (MFS) are the two judgments creditors in whose favour
these two orders were granted and are the respondents
in this appeal.
The high court dismissed the appellant’s defence that the
respondents’ claims against him had prescribed.
For this
assertion, the appellant had relied on s 126B(1)
(b)
(ii) of the
National Credit Act 34 of 2005 (the Act). The high court held that s
126B(1)
(b)
(ii) did not apply retrospectively. The appeal
against this narrow point of law, is with leave of the high court.
[2] The crisp question in this appeal accordingly is the
interpretation and application of the provisions of s 126B of the Act
which
came into operation with effect from 13 March 2015.
Specifically it is whether or not s 126B(1)
(b)
of the Act
applies retrospectively.
Background
[3]
I turn to deal briefly with the background before delving into the
relevant legal principles of interpretation. During the period
March
2006 to March 2008 the appellant concluded ten instalment sale
agreements with Absa, in terms of which Absa sold and delivered
to
the appellant various movable assets comprising, inter alia, motor
vehicles and trailers. The appellant also concluded an instalment
sale agreement with MFS, in terms of which it sold and delivered to
the appellant a 2007 Man truck. The appellant honoured both
transactions by paying regularly. However, after a few years of
compliance the appellant got into financial difficulties, which
resulted in his failure to pay.
[4]
As a result of his financial woes, the appellant approached a debt
counsellor to apply for a debt review as contemplated in
s 86 of the
Act. On 12 June 2010, he obtained an order from the Magistrate’s
court for the District of Port Elizabeth in
terms of which his
obligations to his various credit providers were re-arranged in
accordance with the provisions of s 86(7)
(c)
(ii)
(aa)
and
(bb)
of the Act. The appellant faithfully complied with the
court order, until 8 July 2011 when the last payment was made by the
payment
distribution agent. It is common cause that the claims
against the appellant became prescribed on 8 July 2014 in terms of s
11
(d)
of the Prescription Act 68 of 1969 (the
Prescription
Act), due
to the fact that more than three years had lapsed since the
last payment was made by the appellant in reduction of his
indebtedness
under the sale agreements.
[5]
In the meantime, the respondents continued attempts to recover the
amounts owed to them, by demanding payment. The appellant
however
remained unable to repay the outstanding amounts. On 3 October 2014,
after the respondents’ claims had become prescribed,
the
appellant concluded an acknowledgement of debt in favour of the
respondents. In terms of this agreement, the appellant acknowledged
his indebtness to Absa in an amount over R2.7 million, plus interest,
and an amount of R702 496, plus interest, in respect
of MFS. The
appellant failed to pay in terms of the acknowledgement of debt, and
he also did not surrender any of the assets as
was agreed in the
agreements. On 30 April 2015, the respondents issued summons against
the appellant claiming confirmation of the
cancellation of the sale
agreements, return of the assets and leave to prove damages later.
The appellant entered an appearance
to defend but did not deliver a
plea. Subsequently, the respondents brought separate applications for
summary judgment, alleging
that the appellant lacked a bona fide
defence. The appellant opposed both applications. He averred that the
claims had become prescribed.
He also contended that by virtue of the
provisions of s 126B(1)
(b)
of the Act, the respondents were
precluded from continuing the collection of the debt by relying on
the acknowledgement of debt
which the respondents alleged revived the
prescribed debt. The appellant further stated that he had not been
aware that the respondents’
claims against him had become
prescribed, and that if he had been aware of the defence of
prescription he would not have concluded
the acknowledgment of debt.
As mentioned, the two applications for summary judgment were
considered together for purposes of judgment
by the high court.
[6]
As prefaced earlier, the court a quo granted the respondents’
applications and concluded that the claims had not prescribed.
The
court reasoned that the legislature would have expressly stipulated
that the provisions of s 126B of the Act apply retrospectively,
if it
intended it to be applied retrospectively. Unhappy with the court’s
findings, the appellant sought leave to appeal,
which leave was
granted.
[7]
Before us, the appellant persisted that the claims had become
prescribed and contended that 126B of the Act must be read in
conjunction
with Schedule 3 of the Act, in particular item 4(2), all
falling under Chapter 6 of the Act which deals with collection,
repayments,
surrender and debt enforcement (ss 124 – 133). In
essence, Schedule 3 deals with transitional provisions which relate
to
pre-existing credit agreements – meaning agreements that
were made before the effective date of the Act, and to which this
Act
applies. The appellant further contended that in the absence of an
amendment of Schedule 3 of the Act, the entire Chapter 6
had
retrospective effect, which includes s 126B of the Act. The
respondents’ case on appeal was that the appellant, by
concluding
the acknowledgement of debt, had renounced his right to
rely on prescription. They further contended that s 126B did not
apply
retrospectively, as its language and context did not support
such on interpretation. The respondents went on to contend that
because
s 126B of the Act takes away rights which accrued to them
upon the conclusion of the acknowledgement of debt, the section
cannot
be construed to apply retrospectively.
[8]
As mentioned earlier, the nub of this appeal is whether the
court a quo was correct in interpreting the provisions of s 126B to
apply retroactively as opposed to retrospectively.
Interpretation
of s 126B of the Act
[9]
Section 126B came into operation on 13 March 2015
being introduced by the National Credit Amendment Act 19 of 2014. It
reads as
follows:
‘
126B
Application of prescription on debt
(1)
(a)
No person may sell a debt under a credit agreement to which this
Act applies and that has been extinguished by prescription under
the
Prescription Act, 1969 (Act 68 of 1969).
(b)
No person may continue the collection of, or re-activate a debt under
a credit agreement to which this Act applies-
(i) which debt has
been extinguished by prescription under the Prescription Act, 1969
(Act 68 of 1969);
and
(ii) where the
consumer raises the defence of prescription, or would reasonably have
raised the defence of prescription
had the consumer been aware of
such a defence, in response to a demand, whether as part of legal
proceedings or otherwise.’
[10]
I must mention from the outset that I am alive to the existence of a
strong presumption that legislation is not
intended to be
retroactive, – nor retrospective (see
S v Mhlungu &
others
[1995] ZACC 4
;
1995 (3) SA 867
(CC) paras 65 – 67), where Kentridge
AJ observed that:
‘
[65]
First, there is a strong presumption that new legislation is not
intended to be retroactive. By retroactive legislation is
meant
legislation which invalidates what was previously valid, or
vice
versa
,
ie which affects transactions completed before the new statute came
into operation …. It is legislation which enacts that
“as
at a past date the law shall be taken to have been that which it
was not”. See
Shewan
Tomes & Co Ltd v Commissioner of Customs and Excise
1955
(4) SA 305
(A)
at 311H,
per
Schreiner ACJ. There is also a presumption against reading
legislation as being retrospective in the sense that, while it takes
effect only from its date of commencement, it impairs existing rights
and obligations, eg by invalidating current contracts or
impairing
existing property rights. See
Cape
Town Municipality v F Robb & Co Ltd
1966
(4) SA 345 (C
)
at 351,
per
Corbett J. The general rule therefore is that a statute is as far as
possible to be construed as operating only on facts which
come into
existence after its passing.
[66]
There is a different presumption where a new law effects changes in
procedure. It is presumed that such a law will apply to
every case
subsequently tried “no matter when such case began or when the
cause of action arose” -
Curtis v Johannesburg Municipality
1906 TS 308
at 312. It is, however, not always easy to decide whether
a new statutory provision is purely procedural or whether it also
affects
substantive rights. Rather than categorising new provisions
in this way, it has been suggested, one should simply ask whether or
not they would affect vested rights if applied retrospectively. See
Yew Bon Tew v Kenderaan Bas Mara (supra
at 563 (AC));
Industrial Council for Furniture Manufacturing Industry, Natal v
Minister of Manpower and Another (supra
at 242).
[67]
There is still another well-established rule of construction namely,
that even if a new statute is intended to be retrospective
insofar as
it affects vested rights and obligations, it is nonetheless presumed
not to affect matters which are the subject of
pending legal
proceedings. See
Bell v Voorsitter van die Rasklassifikasieraad en
Andere (supra
);
Bellairs v Hodnett and Another (supra
at
1148).’
[11] It is clear from
the above exposition in
Mhlungu
that the legal position
relating to the retrospective application of any statute is settled
in our law and also in most foreign
jurisdictions. In the case of
Yew
Bon Tew v Kenderaan Bas Mara
[1982] 3 All ER 833
at 836 Lord
Brightman said in this regard that:
'A
statute is retrospective if it takes away or impairs a vested right
acquired under existing laws, or creates a new obligation,
or imposes
a new duty, or attaches a new disability, in regard to events already
past. There is however said to be an exception
in the case of a
statute which is purely procedural, because no person has a vested
right in any particular course of procedure,
but only a right to
prosecute or defend a suit according to the rules for the conduct of
an action for the time being prescribed.
But
these expressions ‘retrospective’ and ‘procedural’,
though useful in a particular context, are equivocal
and therefore
can be misleading. A statute is retrospective if it takes away or
impairs a vested right acquired under existing
laws, or creates a new
obligation, or imposes a new duty, or attaches a new disability, in
regard to events already passed. There
is, however, said to be an
exception in the case of a statute which is purely procedural,
because no person has a vested right
in any particular course of
procedure, but only a right to prosecute or defend a suit according
to the rules for the conduct of
an action for the time being
prescribed.
But
these expressions “retrospective” and “procedural”,
though useful in a particular context, are equivocal
and therefore
can be misleading. A statute which is retrospective in relation to
one aspect of a case (eg because it applies to
a pre-statute cause of
action) may at the same time be prospective in relation to another
aspect of the same case (eg because it
applies only to the
post-statute commencement of proceedings to enforce that cause of
action); and an Act which is procedural in
one sense may in
particular circumstances do far more than regulate the course of
proceedings, because it may, on one interpretation,
revive or destroy
the cause of action itself.’
The learned judge accordingly
further stated that:
‘
Whether
a statute is to be construed in a retrospective sense, and if so to
what extent, depends on the intention of the legislature
as expressed
in the wording of the statute, having regard to the normal canons of
construction and to the relevant provisions of
any interpretation
statute.’
And (at 839):
‘
Their
Lordships consider that the proper approach to the construction of
the 1974 Act is not to decide what label to apply to it,
procedural
or otherwise, but to see whether the statute, if applied
retrospectively to a particular type of case, would impair
existing
rights and obligations
.'
(
Yew
Bon Tew v Kenderaan Bas Mara
, as approved in our courts by Marais JA in
Minister
of Public Works v Haffejee NO
1996
(3) SA 745 (A)
at
752C-G;
Euromarine
International of Mauren v The Ship Berg & o
thers
1986
(2) SA 700 (A)
at
710E-I, and
Transnet
Ltd v Ngcezula
1995
(3) SA 538 (A)
at
549G-
I.)
[12] The reasoning behind
the presumption against the retrospective application of legislation
is premised upon the unwillingness
of the courts to inhibit vested
rights
.
In the pivotal authority in this respect Innes CJ
stated in the case of
Curtis v Johannesburg Municipality
1906
TS 308:
'The
general rule is that, in the absence of express provision to the
contrary, statutes should be considered as affecting future
matters
only; and more especially that they should if possible be so
interpreted so as not to take away rights actually vested
at the time
of their promulgation.'
A
further reason for its existence is that the creation of new
obligation or an imposition of new duties by the Legislature is not
lightly assumed. (See Lourens du Plessis
Re-interpretation of
statutes
eds (2002) at 182, and the cases cited therein.)
[13]
Thus a statute is presumed not to apply retrospectively, unless it is
expressly or by necessary implication provided
otherwise in the
relevant legislation. It is for that reason presumed that the
legislature only intends to regulate future matters.
See
Mhlungu
above
para
64. U
nless a contrary
intention appears from new legislation which repeals previous
legislation, it is presumed that no repeal of an
existing statute has
been enacted in relation to transactions completed prior to such
existing statute being repealed.
Transnet
Ltd v Ngcezula
above. See also G E
Devenish
Interpretation of Statutes
eds (1992) at 189.
[14]
It has been held that the crux of the matter is not the prospectivity
or retrospecitivity of legislation as such,
but the fair treatment
befalling those subject to the legislation should the legislation be
held to apply in that manner. Nevertheless,
where the statutory
provision confirms the existing law, it is not a case of true
retrospectivity, since true retrospectivity means
that at a past
date, the law shall be taken to have been that which it is not. Thus,
if the legal position is A, and enactment
X is designed merely to
confirm A, then it cannot be said that, subsequent to the
promulgation of X, the legal position has
become A.
Accordingly, true retrospectivity can only become an issue once X
replaces, amends of supplements A. (See du Plessis
above at 183. See
also
Unitrans Passengers (Pty) Ltd t/a
Greyhound Coach Lines v Chairman, National Transport Commission &
others: Transnet Ltd (Autonet
Division) v Chairman, National
Transport Commission & others
1999
(4) SA 1
(SCA) para 13 and
Manyeka v
Marine and Trade Insurance Co Ltd
1979
(1) SA 844
(SE) 847H-848A. See also
Nkabinde
& another v Judicial Service Commission & others
[2016]
ZASCA 12
;
2016 (4) SA 1
(SCA paras 59-84.)
[15] However, one must not
lose sight of the fact that presumptions, however strong, are merely
an aid to interpretation
and must therefore yield to the intention of
the legislature as it emerges from any particular statute. Thus, the
answer to the
question whether a particular statute has retrospective
operation cannot be found by simply determining whether the statute
deals
with substantive law or matters of procedure. One has always to
ascertain the intention of the legislature. (See
Kruger v
President Insurance Co Ltd
1994 (2) SA 495
(D) at 503E-G.)
[16]
It is common cause that s126B does not expressly provide that it is
intended to apply with retrospective effect.
Thus, the question that
requires analysis is whether it provides for retrospective
application by necessary implication. In
Lek v Estate Agents Board
1978 (3) SA 160
(C) at 169F-G, Friedman J observed that ‘such
an inference can be drawn when the consequences of holding an Act to
be non-retrospective
would lead to an absurdity or practical
injustice. In the case of
Bartman v Dempers
1952 (2) SA 577
(A) at 582A-B, Centlivres CJ concurred with the view of Evershed MR
in
Hutchinson v Jauncel
1950 (1) K.B. 574
at 579, who observed
that ‘it seems to me that, if the necessary intendment of the
Act is to affect pending causes of action,
then this Court will give
effect to the intention of the Legislature even though there is no
express reference to pending actions.'
[17]
Returning to s 126B(1)
(b)
of the Act,
it is trite that in the process of
interpreting a statute the inquiry includes a consideration of the
language of the enactment
and the purpose and intent of the
legislature which emerges therefrom. No obvious absurdity, repugnance
or inconsistency should
be produced. (See
Euromarine International
of Mauren v The Ship Berg & others
1986 (2) SA 700
(A) at
709I – 710E).
[18]
In my view s 126B of the Act intended to cure a situation where a
debt which had become prescribed, the credit
provider should not
benefit from a debt which had become prescribed because the ‘poor’
consumer is unaware of the defence
of prescription. If the consumer
would reasonably have raised the defence of prescription had he or
she been aware of such a defence,
s 126B would come to the consumer’s
rescue in order to prevent unfairness or injustice, which would have
befell the ‘poor’
consumer. Although it was said in
Landgraf v USI Film Products et al
[1994] USSC 10
;
511 US 244
(1994) 244 at
265 that ‘elementary considerations of fairness dictates that
individuals should have an opportunity to know
what the law is and to
conform their conduct accordingly’, in support of the basis of
the presumption against retrospectivity,
the corollary thereof is
that the presumption is not inflexible, it should operate only if
there is no contrary intention. (See
S v Mhlungu
supra para
38). The intention of the legislature in introducing s 126B of the
Act is clear in that it sought to protect consumers
in general, but
more particularly the naive and vulnerable ones. It must be accepted
that it was included in the Act with good
reason, presumably because
consumers, unaware of the law regarding prescription, were held
liable for old debts enforced by buyers
and cessionaries. (See
J
M Otto ‘
National
Credit Act. Vanwaar
Gehási? Quo
vadit lex? And some reflections on the National Credit Amendment Act
2014 (part 2)’
(2015)
TSAR
756
at 769.) In doing so, s
126B gives effect to the purposes set out in s 3 of the Act which
includes the protection of consumers
through inter alia, the
advancement of a fair and transparent credit industry. And one of the
ways to protect consumers is by balancing
the respective rights and
responsibilities of credit providers on one hand, and the consumer on
the other. Section 126B of the
Act, is clearly a means of achieving
the objective and demonstrates the intention of the legislature to
eradicate the injustice
inherent in credit providers being able to
benefit from transactions which had become prescribed.
[19]
It is well known that the Act has brought about implementation
challenges. In turn these challenges have created
uncertainty in the
credit market place. In order to ensure proper and better
implementation and interpretation of the Act, the
National Credit Act
Amendment
became necessary to address implementation challenges that
have materialised and also to ameliorate the implementation. For us
to understand the import of the provisions of s 126B of the Act, it
is of paramount importance to unpack the jurisdictional factors
of
the section. This process of unpacking will enable us to determine
whether or not the jurisdictional factors have been complied
with
before applying the principles of interpretation. The prohibition of
collection or re-activation of debt is not absolute,
certain
requirements have to be present for instance.
[20]
The defence of prescription ought to be raised in response to a
demand by the credit provider; it can be raised
during the
proceedings, as in the present case, when it was raised in opposition
to a summary judgment application. If the consumer
was aware of the
defence of prescription, he should raise it, but if he or she was not
aware the consumer must show that he or
she would reasonably have
raised it. The prescription period must have lapsed and the consumer
must not have been responsible for
preventing the credit provider
from knowing of the debt. And also that the consumer has not
acknowledged liability for the debt
during the running of the
prescription period as contemplated in
s 14
of the
Prescription Act,
thereby
interrupting the running of prescription and that
s 13(2)
of
the
Prescription Act is
not applicable (dealing with a reciprocal
non-prescribed contractual debt). Lastly, that the consumer did not
waive the defence
of prescription.
Section 126B(1)(b)(ii)
in essence
extends the protection of the defence of prescription to consumers
who are not aware of the existence of the defence.
If the consumer
was made aware, for instance by the credit provider, this protection
falls away, as they would have waived the
defence.
[21]
I concede, though that, somewhere somehow, in promoting protection
and equity in the credit market, the rights
and responsibilities of
credit providers and consumers must be balanced to achieve
sustainability. (See
Kubyana v Standard Bank
of SA Ltd
[2014]
ZACC 1
;
2014 (3) SA 56
(CC) para 20.)
[22]
In
Nkata v Firstrand Bank Limited
[2016] ZACC 12
;
2016 (4) SA
257
, Moseneke DCJ, had this to say:
‘
[95]
This court has before expressed itself on the purposes of the Act.
In Sebola, in the context of section 129(1)
(a)
of the Act,
Cameron J observed that at the core of the Act is the objective to
protect consumers. This protection, however, must
be balanced against
the interests of credit providers and should not stifle a
“competitive, sustainable, responsible, efficient
[and]
effective . . . credit market and industry”. The Act, the court
noted, replaces the apartheid-era legislation that
regulated the
credit market, and infuses constitutional considerations into the
culture of borrowing and lending between consumers
and credit
providers.
[96]
The purposes of the Act are directly attributable to the
constitutional values of fairness and equality.
Sebola
recognised that the Act is at pains to create a credit marketplace
that agrees with our constitutional democracy, both through
its
purpose – to promote “a fair . . . marketplace for access
to consumer credit” – as well as through
the means that
ought to be adopted to achieve these goals. The tools for
achieving the Act’s purposes include the promotion
of “equity
in the credit market by balancing the respective rights and
responsibilities of credit providers and consumers”,
and the
development of “a consistent and accessible system of
consensual resolution of disputes arising from credit agreements”.
In sum, the Act is “a clean break from the past” and
encourages dialogue between consumers and credit providers.’
(Footnotes omitted.)
[23]
The court a quo in my view over-emphasised the protection and undue
compromise of certainty in commercial transactions
as opposed to the
protection of the consumer which is clearly demonstrated in the
wording of s 126B of the Act. Therefore by concluding
the
acknowledgement of debt the appellant did not renounce his defence of
prescription as he would reasonably have raised it had
he been aware
of this defence. It was the intention of the legislature and the
purpose of amending the law by introducing the safety
valve in s 126B
of the Act. To construe s 126B of the Act as not applying
retrospectively would be at odds with the trend set by
the
Constitutional Court where it emphasised the protection of the
consumer. For instance it interpreted s 129 of the Act to require
a
notice to be dispatched to the consumer, prior to taking legal
action. (See
Sebola & another v Standard Bank of South Africa
& another
[2012] ZACC 11
;
2012 (5) SA 142
(CC) and
Kubyana
v Standard Bank
(supra).) It would also create an odd situation
where certain consumers whose agreements were entered into before the
amendment
Act was effected are afforded less protection than those
who did so after, thus creating a differentiation between classes of
consumers.
Schedule
3 of the Act
[24]
The appellant has also relied on the transitioning provisions in
Schedule 3 of the Act, in support of his proposition
that s 126B
applies retrospectively. Item 4 of Schedule 3 regulates the
applicability of the Act to pre-existing agreements. These
are
agreements which are made before the effective date, ie 1 June 2007.
The respondents rebuffed this submission, stating that
Schedule 3 of
the Act has run its course in that it relates to pre-existing credit
agreements which were concluded prior to the
effective date. They
contended that Schedule 3 was enacted to apply the provisions of the
Act to credit agreements complying with
the definition in the Act,
but which were concluded before it came into effect. Accordingly, as
soon as the whole Act came into
effect, Schedule 3 ceased to be
relevant. Therefore it has no application in this case, and even
though it has not been repealed,
it must be ignored, so the argument
went. Their view was that the mere fact that Schedule 3 was enacted
to apply the provisions
of the Act to credit with respect to certain
categories of credit agreements at the time that the Act came into
effect did not
justify the conclusion that it would continue to have
such effect with respect to future amendments of the Act.
[25]
It has correctly been pointed out that the transitional provisions
are not easy to apply and that they often lead
to confusion. (See J M
Otto
The
National Credit Act Explained
eds (2006) at 106.)
It
is indeed accepted that schedules may in certain instances be used as
an aid to construction, and I accept that not all schedules
carry
equal value in the construction of provisions of a statute. The
weight to be attached to its interpretive value depends on
a range of
factors such as the content of the schedule, its relationship to the
rest of the statute and the weight indicated in
the statute itself to
be attached to the schedule. (See G E Devenish
Interpretation
of Statutes
eds (1992) at 112.)
[26]
The extent to which the provisions apply to pre-existing agreements
has been indicated through a column, under
item 4(2) of Schedule 3.
On one hand, it provides the relevant provisions of the Act. On the
other, it sets out the extent to which
the provisions apply to
pre-existing agreement, and Chapter 6, under which s126B falls is
indicated as ‘applying fully’
to pre-existing agreements.
Certain provisions, such as sections 60 to 66 and 91, apply to
existing agreements only with respect
to acts or omissions occurring
after the coming into operation of the Act. These sections regulate
inter alia, the right to apply
for credit and contain the
non-discrimination provisions in respect of credit. There are further
examples where the legislature
sought to determine the extent to
which the Act would apply to pre-existing agreements, and how far
back or into the past the act
would apply. The point I make is that
it is clear that where the legislature saw fit to restrict the
content of the Act’s
ambit to pre-existing agreements, it did
so in express terms. However, I agree with the appellants that
Schedule 3 had retrospective
effect in certain respects till the time
when the Act came into effect but I do not agree that it is no longer
applicable, and
that it does not apply to future amendments in the
Act. Firstly, it continues to regulate the position of pre-existing
agreements.
Second, the amendment made in the Act pertain, at its
highest, to ‘all agreements’, which may include
pre-existing
contracts (and according to my interpretation, does).
Further, the legislature, which is presumed to know the law, chose
not to
amend item 4(3) of the Schedule, nor to repeal the schedule in
its entirety. (See
Road Accident Fund v
Monjane
[2007] ZASCA 57
;
2010 (3) SA
641
(SCA) para 12). It is a well-established principle of statutory
interpretation that the legislature must be taken to be aware of
the
nature and state of the law existing at the time when legislation is
passed. (See
Boost Sports Africa (Pty)
Ltd v South African Breweries (Pty) Ltd
[2015] ZASCA 93
;
2015 (5) SA 38
(SCA) para 13.
[27]
For the reasons above, I would have allowed the appeal.
_____________________
J
B Z Shongwe
Judge
of Appeal
WILLIS
JA:
[28]
I have had the benefit of reading the judgments prepared by
Shongwe and Van der Merwe JJA. I agree with Shongwe JA but
consider
that it may be helpful if I add a few additional remarks in support
thereof. It is indeed correct as Van der Merwe JA
has emphasised
that, generally speaking, there is a presumption against the
retrospective operation of law. The principle is an
ancient one
alluded to by J Voet in
Commentarius Ad Pandedas
(1723)
1.3.17). It is intrinsic to the rule of law. I understand the
principle to derive from the fact that in freedom-loving and
enlightened societies that human beings are free to do as they
please, except as is either proscribed or prescribed by law.
[29]
The principle against the retrospective operation of the law is not,
however, an absolute one. For example, another
principle that in
favour of freedom has the consequence that new penal provisions that
operate in favour of the persons thereby
affected do indeed have a
retrospective effect but those that work against them do not. It was
made clear in
R v Mazibuko
1958 (4) SA 353
(A) at 357E, that
it is
indeed also an ancient, well-established principle of our common law
that an increase in penalty will ordinarily not operate
retrospectively in circumstances where that additional burden did not
apply at the time when the offence was committed. This principle
was
reaffirmed in
R v Sillas
1959
(4) SA 305
(A) at 311E-G
and
S
v Mpetha
1985 (3) SA 702
(A) at 707H-708A and 717I-718B.
Care must obviously be taken not to stretch the analogy too far or
inappropriately.
[30]
Sight must not, however, be lost of the fact that among
the
reasons we have the law of prescription is to set persons free from
the burden of debt. The question we have to ask ourselves
is whether,
under our constitutional dispensation, it is better, in the
transitional period, to set consumers forever free from
debt that has
prescribed or to allow credit providers the freedom to revive debt
that has prescribed through the mechanism of ‘acknowledgement’.
The question is a hard one, especially in the circumstances of this
case.
[31]
Nevertheless, if the National Credit Act 34 of 2005 (NCA) is read
ex
visceribus actus
(see, for example,
City Deep Limited V Silicosis Board
1950 (1) SA 696
(A) at 702) (comprehensively, as a whole), I am
persuaded that this court must come down in favour of the consumer,
rather than
the credit provider. I am fortified in this view by
reference to a number of cases in which the Constitutional Court has
expressed
itself on the purposes of the NCA. I refer, in particular,
to
Sebola & another v Standard Bank
of South Africa Ltd & anothe
r
[2012] ZACC 11
;
2012 (5) SA 142
(CC) para 40;
Ferris
& another v Firstrand Bank Ltd
[2013]
ZACC 46
;
2014 (3) SA 39
(CC) paras 17-18;
Kubyana
v Standard Bank of South Africa Ltd
[2014] ZACC 1
;
2014 (3) SA 56
(CC)
paras 36-37 and
Nkata v Firstrand Bank
Ltd
[2016] ZACC 12
;
2016
(4) SA 257
(CC) paras 92-100.
____________________
NP Willis
Judge of Appeal
Van
der Merwe JA (Mathopo JA and Nicholls AJA concurring):
[32]
I have had the benefit of reading the judgment prepared by my
colleague Shongwe JA. I gratefully adopt his exposition
of the facts
of the matter and will only refer to those facts that I consider
necessary for a proper understanding of this judgment.
I regret,
however, that I am unable to agree with the conclusion that he
reached. For the reasons that follow, I am of the view
that
s 126B(1)
(b)
of the National Credit Act 34 of 2005 (the
NCA) has no retrospective effect.
[33] The written agreement entered into
between the parties on 3 October 2014 (the agreement), was a
comprehensive agreement.
In terms thereof the appellant inter alia
acknowledged indebtedness towards Absa Bank Limited (Absa) in respect
of ten existing
accounts. These accounts related to instalment sale
agreements entered into between the appellant and Absa in respect of
two Mercedes
Benz motor vehicles, an Actros motor vehicle, three
trailers, a jetski, four ‘quad bikes’, an Isuzu motor
vehicle and
a Scania truck. The total indebtedness acknowledged to
Absa amounted to more than R2,7 million. The appellant also
acknowledged
indebtedness to MAN Financial Services (Pty) Ltd (MFS)
in the amount of R707 496, in respect of an instalment sale
agreement
entered into in respect of a MAN truck. The appellant
undertook to reduce its indebtedness by making monthly payments to
Absa in
the amount of R42 000 and monthly payments to MFS in the
amount of R15 000.
[34]
In his opposing affidavits to the applications for summary judgment,
the appellant stated that all of these debts
had become prescribed
before the agreement was entered into. He said that he was unaware at
the time that he could rely on prescription
and that had he been
aware thereof, he would not have entered into the agreement. These
averments had to be accepted for purposes
of summary judgment and
counsel for the respondents argued the matter on this basis.
[35]
Thus, the appellant’s case was that the agreement constituted
the re-activation of debts under credit agreements
to which the NCA
applied, which debts had been extinguished by prescription and that
he would reasonably have raised the defence
of prescription at the
time of the agreement had he been aware of that defence. It follows
that the appellant’s case was
fully dependent on the
proposition that s 126B(1)
(b)
of the NCA retrospectively
invalidated the agreement and destroyed the rights of Absa and MFS in
terms thereof.
[36]
Absa and MFS essentially claimed delivery of the assets over which
they had retained ownership. It is not at all
clear to me that
prescription of the debts and the invalidity of the agreement would
constitute a defence to the claims for delivery
of the assets. It
does not follow from the prescription of the debts that the appellant
was in law entitled to retain possession
of the assets. However, the
matter was not argued on this basis and I will confine myself to the
issue of retrospectivity of s 126B(1)
(b)
.
[37] There are formidable obstacles in the
way of the contention of the appellant that s 126B(1)
(b)
reached back to nullify the agreement. In
Unitrans Passenger (Pty)
Ltd t/a Greyhound Couch Lines v Chairman, National Transport
Commission, & others; Transnet Ltd (Autonet
Division) v Chairman,
National Transport Commission, & others
1999 (4) SA 1
(SCA)
para 12, Olivier JA said:
‘
One
may start the
conspectus
by stating the time-honoured principle formulated in
Peterson
v Cuthbert & Co Ltd
1945 AD 420
at
430, based upon the Roman-Dutch law, that no statute is to be
construed as having retrospective operation (in the sense of taking
away or impairing a vested right acquired under existing laws),
unless the Legislature clearly intended the statute to have that
effect (see also,
inter alia Bartman v
Dempers
1952 (2) SA 577
(A) at 580C).’
This principle is not only time-honoured but also one of
global application. See
National Director of Public Prosecutions v
Carolus & others
2000 (1) SA 1127
(SCA) para 32 and
National
Director of Public Prosecutions v Basson
2002 (1) SA 419
(SCA)
para 11. It bears repeating what Kentridge AJ said in
S v Mhlungu
& others
[1995] ZACC 4
;
1995 (3) SA 867
(CC) para 65:
‘
First,
there is a strong presumption that new legislation is not intended to
be retroactive. By retroactive legislation is meant
legislation which
invalidates what was previously valid, or vice versa ie which affects
transactions completed before the new statute
came into operation.
See
Van Lear v Van Lear
[1979 (3) SA 1162
(W)]. It is legislation which enacts that “as
at a past date the law shall be taken to have been that which it was
not”.
See
Shewan Tomes & Co
Ltd v Commissioner of Customs and Excise
1955 (4) SA 305
(A) at 311H, per Schreiner ACJ. There is also a
presumption against reading legislation as being retrospective in the
sense that,
while it takes effect only from its date of commencement,
it impairs existing rights and obligations, eg by invalidating
current
contracts or impairing existing property rights. See
Cape
Town Municipality v F Robb & Co Ltd
1966
(4) SA 345
(C) at 351, per Corbett J. The general rule therefore is
that a statute is as far as possible to be construed as operating
only
on facts which come into existence after its passing.’
And as Mokgoro J pointed out in
Veldman v Director of
Public Prosecutions, Witwatersrand Local Division
2007 (3) SA 210
(CC) para 26, the principle that legislation will affect only future
matters and not take away existing rights, is founded on the
rule of
law. It also follows that if the court is left in doubt as to the
retrospective effect of a provision, the presumption
against the
retrospectivity would not be rebutted.
[38]
It is trite that the legislature is presumed to know the law. Before
the commencement of s 126B(1)
(b)
an agreement that
revived a prescribed debt of this kind was perfectly valid. See
De
Jager & others v Absa Bank Bpk
2001 (3) SA 537
(SCA) para
12-15. The legislature must no doubt be taken to have been
aware that retrospective application of s 126B(1)
(b)
would nullify agreements that had validly been entered into and would
take away existing rights. There is no indication in s 126B(1)
(b)
of any intention to do so. I accept that the provision was intended
to benefit consumers. But that is the reason why the provision
was
introduced. That in itself says nothing about retrospectivity. As the
court a quo and Shongwe JA demonstrated, our courts have
repeatedly
said that although the main objective of the NCA is to protect
consumers, this protection must be balanced against the
rights of
credit providers.
[39] In
Rossouw & another v Firstrand
Bank Ltd
[2010] ZASCA 130
;
2010 (6) SA 439
Maya JA referred to
various provisions of the NCA and in para 19 continued to say:
‘
These
provisions make it abundantly clear that the legislature recognised
the need to express its intention where it sought to interfere
with
vested rights. Interestingly, s 90(2)
(c)
acknowledges the parties’ common-law rights, and declares
unlawful any provisions in a credit agreement which purport to
waive
such rights as may be applicable to the agreement. I find it
inconceivable, therefore, that the legislature would, in the
same
act, indirectly do away with vested rights such as the mortgagee’s
right to claim the balance of the debt after execution
against the
mortgaged property.’
In
accordance herewith the submission was that the retrospective
application of s 126B(1)
(b)
was expressly stipulated for
in Schedule 3 of the NCA. I am unable to agree. Schedule 3 is
entitled ‘TRANSITIONAL PROVISIONS’.
Its provisions deal
with precisely that. In this context the meaning of item 4 of
Schedule 3 is plain. It simply makes specified
provisions of the NCA
applicable to certain credit agreements that had been entered into
before the commencement of the provisions.
There is no basis for the
startling proposition that flows from the appellant’s argument,
namely that unless Schedule 3 was
amended, all amendments of the
provisions of the NCA that applied to pre-existing agreements, would
operate retrospectively. This
demonstrates a further difficulty with
the argument. On any interpretation of Schedule 3, it has no effect
on credit agreements
entered into after the commencement of the NCA.
It follows that if Schedule 3 was to provide for retrospective
operation, it would
do so only in respect of pre-existing credit
agreements and not in respect of credit agreements entered into after
the commencement
of the NCA. This is an absurd result that could not
have been intended.
[40]
I therefore agree with the conclusion of the court a quo that
s 126B(1)
(b)
has no retrospective operation and provided
no defence to the appellant. As no further defence had been put
forward, the court
a quo correctly granted summary judgment.
[41] In the result the appeal is dismissed
with costs.
__________________
C H G van der Merwe
Judge of Appeal
Appearances
For
the Appellant: P W A Scott
SC with him K D Williams
Instructed by:
Marston Attorneys, Port Elizabeth;
Claude Reid Incorporated, Bloemfontein.
For
the Respondent: J G Richards
Instructed by:
McWilliams & Elliott Incorporated, Johannesburg;
Phatshoane Henney Attorneys, Bloemfontein.