About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2012
>>
[2012] ZASCA 176
|
|
National Credit Regulator v Standard Bank of SA Ltd (231/12) [2012] ZASCA 176; 2013 (1) SA 628 (SCA); [2013] 1 All SA 335 (SCA) (29 November 2012)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 231/12
Reportable
In the matter between:
THE NATIONAL CREDIT REGULATOR
..................................
Appellant
and
STANDARD BANK OF SOUTH
AFRICA LIMITED
.......................................................................
Respondent
Neutral citation:
The
National Credit Regulator v Standard Bank of SA Ltd
(231/12)
[2012] ZASCA 176
(29 November 2012)
Coram:
NUGENT, PONNAN,
MALAN and PILLAY JJA and SALDULKER AJA
Heard:
15 NOVEMBER 2012
Delivered: 29 NOVEMBER 2012
Summary:
National Credit Act 34 of 2005
– administration fees restricted
under former Usury Act 73 of 1968 – whether survived the
transition.
___________________________________________________________
ORDER
___________________________________________________________
On appeal from South Gauteng High
Court, Johannesburg (J M A Cane AJ sitting as court of first
instance).
The appeal is upheld with costs
that include the costs of two counsel. The order of the court below
is set aside and replaced with
the following:
‘
1. It
is declared that the respondent is not entitled to charge an
administration fee on housing loans that existed at the time
the
National Credit Act 34 of 2005
came into operation in excess of the
fee provided for in paragraph 3(b)(i) of the Schedule to the Usury
Act 73 of 1968 unless and
until that fee is amended under the powers
conferred by
s 105(1)
of the
National Credit Act.
2. The respondent is to pay the
costs of the application including the costs of two counsel.’
___________________________________________________________
JUDGMENT
___________________________________________________________
NUGENT JA (PONNAN, MALAN and
PILLAY JJA and SALDULKER AJA CONCURRING)
[1] The business of the Standard
Bank of South Africa Limited, the respondent in this appeal, includes
making loans to purchasers
of homes. The terms of those loans were at
one time regulated by the Usury Act 73 of 1968, which set a limit on,
amongst others,
the fees that might be charged for administering the
loans. The Usury Act was repealed by and replaced with the
National
Credit Act 34 of 2005
. That Act similarly set an upper limit on
‘service fees’ that might be charged on home loans, which
are comparable
to administration fees under the Usury Act.
[2] The Bank contends that the
limit imposed on administration fees under the Usury Act did not
survive the transition to the
National Credit Act so
far as extant
home loans were concerned, with the result that administration fees
on those loans ceased to be regulated. Disputing
that contention the
National Credit Regulator, which is the appellant, applied to the
South Gauteng High Court for an order restraining
the bank from
charging administration fees on those loans in excess of the maximum
amount set under the Usury Act, alternatively
declaring the bank to
be entitled to no more than that amount. The application was
dismissed by Cane AJ and the Regulator appeals
with the leave of that
court.
[3] Administration fees were
regulated under the Usury Act by s 5(1)(
k
), which
provided that
‘
no
moneylender … shall in connection with a money lending
transaction … obtain judgment for or recover from a borrower
…
an amount exceeding the sum of –
–
(
j
)
(
k
) in the
case of a housing loan, administration fees to the extent and on the
conditions mentioned in the Schedule’.
[4] 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 beyond the amount mentioned
in paragraph 3(b)(i)’
.
[5] Paragraph 2 allowed for the
recovery of administration fees subject to the conditions mentioned
in paragraph 3. At the time
the Usury Act was repealed, paragraph
3(b)(i) of the Schedule set the maximum administration fee at R5.00
per month.
[6] Under the
National Credit Act
a
‘credit agreement’ – which includes a home loan –
must not require payment by the borrower of any money
or other
consideration except, amongst others, a ‘service fee’,
which ‘must not exceed the prescribed amount
relative to the
principal debt’.
1
A ‘service fee’ is
defined to mean
‘
a
fee that may be charged periodically by a credit provider in
connection with the routine administration cost of maintaining a
credit agreement’.
The Minister charged with the
responsibility for consumer credit matters is authorised by
s 10
5(1),
after consultation with the Regulator, to prescribe ‘a method
for calculating’, amongst others, the service fee.
At the time
the application was brought, the service fee had been set at a
maximum of R50 per month.
[7] Given the tight regulation
under both statutes of the fees that may be charged on the
administration of home loans it would
be extraordinary if the drafter
of the
National Credit Act had
chosen to terminate the regulation of
such fees on existing loans. Counsel for the bank readily accepted
that he or she could not
have done so intentionally but submitted
instead that the absence of continuing regulation of administration
fees on existing loans
was inadvertent.
[8] The transitional provisions
in schedule 3 to the
National Credit Act make
it perfectly clear that
the drafter was well aware that the regulation of existing agreements
required to be provided for. In paragraph
2 existing agreements were
subjected to the regime of the
National Credit Act in
certain
respects. Those provisions need not concern us. Paragraph 7 then
provides for the ‘general preservation of regulations,
rights,
duties, notices and other instruments’ We need concern
ourselves only with subsection (2), which provides that
‘
[any]
other right or entitlement enjoyed by, or obligation imposed on, any
person in terms of any provision of the previous Act
[which includes
the Usury 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’.
[9] Counsel for the bank
submitted that paragraph 3(b)(i) of the Schedule to the Usury Act,
properly construed, did no more than
impose a prohibition on
exceeding the maximum amount, which cannot be considered to create a
‘right’ or entitlement’
of a borrower, nor, by the
same token, an ‘obligation’ upon the moneylender.
[10] The learned judge in the
court below was attracted by that submission. She opined that the
entitlement to charge an administration
fee, and the corresponding
obligation to pay it, were not acquired or incurred by virtue of the
provisions of paragraph 3(b)(i),
but were acquired and incurred by
way of the contract of loan. The effect of that paragraph, she went
on to say:
‘
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’
.
[11] No doubt the right of the
bank to charge an administration fee, and the obligation of the
borrower to pay it, has its source
in the agreement between the
parties, but that is not a full answer to the Regulator’s
claim. Quite apart from the contractual
right and obligation to
charge and pay respectively, the Usury Act entitled a borrower not to
pay more than the prescribed amount
and obliged the bank not to
charge it. Call that a prohibition if you like, but it still gives
rise to an entitlement and an obligation
respectively, falling within
the terms of paragraph (7)(2) of the transitional provisions. That
section is clearly intended to
sweep up all rights and obligations
not specifically provided for elsewhere in the transitional
provisions and to preserve their
existence through the transition. It
would be a parsimonious construction of that section that leaves some
regulatory provisions
behind.
[12] The restriction that was
imposed on the administration fee under the Usury Act must be taken,
under Paragraph 7(2), to be imposed
on the comparable service fee
under
s 101(1)(c)
of the
National Credit Act. It
remains,
however, the administration fee formerly imposed by the Usury Act,
though now subject to variation by the Minister, acting
in
consultation with the Regulator, as provided for by s 105(1).
[13] It does not seem to me to be
necessary to impose a restraint on a reputable bank, as was sought in
the main prayer, against
acting unlawfully. It will suffice to
declare the legal position.
[14] The appeal is upheld with
costs that include the costs of two counsel. The order of the court
below is set aside and replaced
with the following:
‘
1. It
is declared that the respondent is not entitled to charge an
administration fee on housing loans that existed at the time
the
National Credit Act 34 of 2005
came into operation in excess of the
fee provided for in paragraph 3(b)(i) of the Schedule to the Usury
Act 73 of 1968 unless and
until that fee is amended under the powers
conferred by
s 105(1)
of the
National Credit Act.
2. The
respondent is to pay the
costs of the application including the costs of two counsel.’
__________________
R W NUGENT
JUDGE OF APPEAL
APPEARANCES:
For appellants: M D Kuper SC
M A Chohan
Instructed by:
Webber Wentzel, Illovo
Symington & De Kok,
Bloemfontein
For respondents: C D A Loxton SC
J A Babamia
Instructed by:
Eversheds, Sandton
Honey Attorneys, Bloemfontein
1
Section
101(1)(
c
).