Brief Summary

Summary Judgment — Master rental agreement — Plaintiff seeking summary judgment for specific performance and return of telephonic equipment — Defendant raising bona fide defences including cancellation of agreement under the Consumer Protection Act — Court finds that the Consumer Protection Act applies to the agreement and that the defendant validly cancelled the agreement, thus entitling her to resist summary judgment — Summary judgment refused.

Comprehensive Summary

Summary of Judgment

Introduction

This was an application for summary judgment brought in the Gauteng Division, Johannesburg, in an action founded on a written master rental agreement. The plaintiff, South African Securitisation Programme (RF) Ltd, sued the defendant, Dr Mirjana Lucic, for enforcement of contractual remedies arising from the defendant’s alleged breach of the agreement.

The plaintiff’s claim flowed from an agreement originally concluded between the defendant and Sasfin Bank Limited (the cedent), and later transferred to the plaintiff by way of a written sale and transfer agreement. The plaintiff sought (i) return of the office telephonic equipment, and (ii) payment of R106 290.82, together with interest at 2% per annum from 13 January 2022 to date of payment, and costs on the attorney-and-client scale. The plaintiff characterised its claim as one for specific performance in terms of the contract.

The defendant opposed summary judgment, contending that she had disclosed bona fide defences in her plea and opposing affidavit sufficient to satisfy Rule 32(3) of the Uniform Rules of Court. Although several defences were pleaded, the opposition ultimately turned on whether the agreement was validly cancelled under section 14 of the Consumer Protection Act 68 of 2008 (CPA), and whether this constituted a triable defence that should defeat summary judgment.

Material Facts

On 28 August 2018, Sasfin and the defendant (a medical practitioner) concluded a master rental agreement in terms of which Sasfin financed certain office telephonic equipment for the defendant’s use. The agreement contemplated rental for 60 months, with a monthly rental of R2 424.40, escalating at 15% per annum, payable on the 25th of each month. A material feature of the agreement, as relied upon by the court, was that the defendant would not acquire ownership of the equipment at the end of the term.

On or about 18 March 2019, Sasfin and the plaintiff concluded a written sale and transfer agreement in terms of which Sasfin sold and transferred the master rental agreement to the plaintiff. The agreement included a cession and delegation clause recording that, with effect from the effective date, Sasfin ceded its rights and delegated its obligations under each specified equipment lease to the plaintiff, which accepted the cession and delegation and became entitled to exercise all rights under the lease.

The plaintiff alleged that the defendant breached the agreement by failing to pay rentals due. It contended that as at 12 January 2022 the defendant was in arrears in the amount of R33 084.78, and that under the agreement it was entitled, following breach, to claim immediate payment of all amounts that would have become payable up to the expiry of the rental term, and to take possession of the equipment. The plaintiff relied on a certificate of balance computing arrears and future rentals as R106 290.82.

The defendant admitted the conclusion of the agreement, her possession of the equipment, and that she stopped making payments after her last payment on 25 February 2021. However, she denied being in breach on the basis that she had validly cancelled the agreement, with the consequence that further monthly rentals were not payable thereafter.

The court considered three purported cancellations advanced by the defendant. First, the defendant pleaded a written communication dated 30 November 2020, addressed to Sasfin (and copied to Telelink), stating that the contract was to be “terminated with immediate effect”. Secondly, the defendant alleged in her opposing affidavit that she cancelled on 16 December 2020, but without setting out whether that cancellation was in writing or whether it afforded 20 business days’ notice. Thirdly, the defendant relied on a letter dated 16 February 2021 from her attorneys addressed to Sunlyn and Telelink, stating that she wished to terminate the agreement, that payments would stop on 25 February 2021, and requesting upliftment of the equipment.

In addition, the defendant relied on circumstances suggesting uncertainty as to the roles of Telelink and Sunlyn: Telelink had responded with a settlement quotation, and the defendant alleged that she had signed agreements bearing both Sasfin’s name and Sunlyn’s name. The court treated the nature of these relationships as potentially relevant to whether communications to Telelink and Sunlyn could constitute communication to the supplier, but approached that aspect as raising factual issues potentially requiring evidence at trial.

Legal Issues

The central question for determination was whether the defendant had disclosed a bona fide defence that was good in law and carried a reasonable prospect of success at trial, as required by Rule 32(3), such that summary judgment should be refused.

Within that overarching summary judgment enquiry, the court was required to determine legal questions concerning the applicability and interpretation of the CPA, and the legal sufficiency of the defendant’s cancellation defence. The dispute primarily concerned the application of law to fact, namely whether the defendant’s communications amounted to a valid CPA cancellation and, if so, whether that cancellation negated the plaintiff’s contractual enforcement claim.

A key interpretive issue was whether section 14(2)(b)(bb) of the CPA requires a consumer, in a cancellation notice, to expressly state that (i) the consumer is exercising rights under section 14(2)(b)(bb), and (ii) the consumer affords the supplier 20 business days’ notice. A related factual-and-legal issue was whether the cancellation was properly communicated to the supplier, including whether communications to Telelink and/or Sunlyn could suffice, and whether that question should be resolved on summary judgment or left for trial.

Although other defences were raised (including reliance on the National Credit Act and the Conventional Penalties Act), the court’s decision on summary judgment was driven by the CPA cancellation defence.

Court’s Reasoning

The court commenced by restating the accepted approach to summary judgment as an extraordinary remedy that should not be used to shut out a defendant who raises a triable issue. It relied on the principle that summary judgment is aimed at defendants with no defence, and that where triable issues of fact exist, or it is unclear whether they exist, summary judgment must be refused.

On the CPA’s applicability, the plaintiff contended that the CPA did not apply because Sasfin was not a supplier but merely a financier, and (initially) because Sasfin as a bank was exempt from the CPA. During argument, the plaintiff abandoned the exemption point. The court then considered the statutory definitions in section 1 of the CPA and reasoned that the term “supplier” is broad and includes a person who markets goods or services, and that “services” includes banking services or related financial services. On this basis, the court concluded that Sasfin, as financier in the transaction, fell within the CPA’s definition of a supplier and that the CPA applied to the agreement. The court noted that this conclusion aligned with an earlier decision regarded as “on all fours” with the present matter.

The court then addressed section 14(2)(b)(bb) of the CPA, which permits a consumer to cancel a fixed-term consumer agreement “at any other time” by giving the supplier 20 business days’ notice in writing (or other recorded manner), subject to subsection (3). The plaintiff argued for a formalistic approach: that a cancellation notice must expressly refer to section 14(2)(b)(bb) and explicitly state that 20 business days’ notice is being given, failing which the cancellation is ineffective.

The court rejected that construction. It approached the interpretation purposively and contextually, drawing on established interpretive principles (including the preference for sensible meanings and the CPA’s consumer-protection purpose). It relied on authority emphasising that the CPA must be interpreted to advance consumer protection, particularly for vulnerable consumers. The court also considered authority dealing with section 14 and held that it is not a requirement, express or implied, that a notice must explicitly spell out the statutory period, provided the statutory period is in fact afforded.

Applying these principles, the court reasoned that section 14(2)(b)(bb) requires written notice to the supplier that affords 20 business days’ notice, but does not require the consumer to state in the notice that 20 business days are being afforded, nor to expressly cite section 14(2)(b)(bb). The court held that where a consumer gives written notice of cancellation and only acts on the cancellation after the 20-business-day period has elapsed, the cancellation would be effective under the CPA.

On the facts, the court found that the 30 November 2020 written communication addressed to Sasfin constituted clear and unequivocal notice of an intention to cancel. Although it purported to terminate with “immediate effect”, the court accepted that the defendant did not act immediately in a manner consistent with an immediate termination, because she continued using the equipment and continued paying for some time thereafter, and only stopped payments after a period exceeding 20 business days from the date of notice. The court further held that the defendant was not required, in that notice, to tender return of the equipment.

The court acknowledged that the defendant did not deal with this 30 November 2020 cancellation in her opposing affidavit and that it appeared primarily from the plea. However, in the context of summary judgment, the court held it could not ignore a cancellation notice annexed to the plea, particularly where it was potentially dispositive of the plaintiff’s claim to enforce ongoing payment obligations.

The court agreed, as a matter of principle, that cancellation must be communicated to the supplier to be effective, as section 14(2)(b)(bb) indicates. It then considered the defendant’s difficulties in explaining the precise roles of Telelink and Sunlyn and held that the relevant information might be peculiarly within the plaintiff’s knowledge. The involvement of Telelink in issuing a settlement quote and the appearance of Sunlyn’s name on documentation were treated as creating a triable issue concerning whether these entities acted as agents for Sasfin and/or the plaintiff, and therefore whether notices directed to them could amount to notice to the supplier. The court held that this issue could only properly be determined through evidence at trial.

Having found that the cancellation defence disclosed a bona fide defence with reasonable prospects of success, the court concluded that summary judgment had to be refused. It therefore dealt only briefly with the other defences. It rejected the defendant’s reliance on the Conventional Penalties Act on the basis that the plaintiff’s claim was framed as specific performance, and stated that even if the Act were applicable, the defendant’s allegations were insufficiently particularised to establish disproportionality or to justify a quantified reduction. The court also rejected the defence that the agreement was subject to the National Credit Act, relying on authority holding that the NCA was not applicable to this type of transaction. The defendant’s locus standi defence was not persisted with and did not feature in the final determination.

On costs, the court applied the general rule that where summary judgment is refused, costs ordinarily stand over as costs in the cause of the main action, and found no reason to depart from that approach.

Outcome and Relief

The court dismissed the plaintiff’s application for summary judgment. The costs of the summary judgment application were ordered to be costs in the cause of the main action.

Cases Cited

Joob Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture 2009 (5) SA 1 (SCA)

South African Securitisation Programme (RF) Limited and Prelene Jaglal - Govindpershad (5835/2022) [2023] ZAGPJHC 728 (26 June 2023)

Absa Technology Finance Solutions (Pty) Ltd v Michael’s Bid a House CC and Another 2013 (3) SA 426 (SCA)

Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA)

Cool Ideas 1186 CC v Hubbard and Another 2014 (4) SA 474 (CC)

Novartis SA (Pty) Ltd v Maphil Trading (Pty) Ltd 2016 (1) SA 518 (SCA) ([2015] ZASCA 111)

Eskom Holdings Ltd v Halstead-Cleak 2017 (1) SA 333 (SCA)

Transcend Residential Property Fund (Pty) Ltd v Mati and Others 2018 (4) SA 515 (WCC)

Extel Industrial (Pty) Ltd v Crown Mills (Pty) Ltd 1999 (2) SA 719 (SCA)

Citibank NA V South African Branch V Paul N.O and Another 2003 (4) SA 180 (T)

Company Unique Finance V Johannesburg Northern Metropolitan Local Council 2011 (1) SA 440 (GSJ)

Absa Technology Finance Solutions (Pty) Ltd V Leon Hattingh t/a Corner Savings Supermarket 2009 JDR 0382 (GNP)

Legislation Cited

Consumer Protection Act 68 of 2008

National Credit Act 34 of 2005

Conventional Penalties Act 15 of 1962

Rules of Court Cited

Uniform Rules of Court, Rule 32(3)

Held

The court held that the Consumer Protection Act 68 of 2008 applied to the master rental agreement, including on the basis that the statutory definition of supplier is sufficiently broad to include the financier in the transaction.

The court held that section 14(2)(b)(bb) does not require a consumer’s cancellation notice to explicitly cite the section or to expressly state that 20 business days’ notice is being given, provided that written notice is given and the supplier is in fact afforded the statutory notice period before the cancellation is acted upon.

On the facts, the court held that the defendant’s pleaded written notice of 30 November 2020, addressed to Sasfin, disclosed a bona fide cancellation defence that was good in law and carried reasonable prospects of success at trial, with the consequence that summary judgment could not be granted. The court further held that the role of entities such as Telelink and Sunlyn raised factual issues requiring evidence, reinforcing the existence of triable issues.

LEGAL PRINCIPLES

Summary judgment is a stringent procedure intended to provide swift relief only where the plaintiff’s case is unanswerable and the defendant has no bona fide defence; where triable issues of fact exist or may exist, summary judgment should be refused.

The CPA must be interpreted purposively and contextually, in a manner that gives effect to its consumer-protection purpose, and courts should prefer interpretations that yield sensible and businesslike results consistent with the statute’s objectives.

For cancellation under section 14(2)(b)(bb) of the CPA, the operative requirements are that the consumer gives notice in writing (or other recorded manner) to the supplier and that the supplier is afforded 20 business days’ notice; the statute does not require the consumer to use formalistic wording by citing the section or explicitly stating the notice period, provided the substantive statutory requirements are met.

Where the factual question arises whether notice to an entity constitutes notice to the supplier (including potential issues of agency or the role of intermediaries), and the relationships are unclear on the papers, that uncertainty may constitute a triable issue that is inappropriate to resolve on summary judgment.

South African Securitisation Programme (RF) Ltd v Lucic (2022/6034) [2023] ZAGPJHC 768 (6 July 2023)