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[2015] ZAFSHC 70
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Blue Chip 2 (Pty) Ltd T/A Blue Chip 49 v Ryneveldt and Others (A233/2014) [2015] ZAFSHC 70 (19 March 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
(FREE STATE DIVISION,
BLOEMFONTEIN)
Appeal no. A233/2014
DATE: 19 MARCH 2015
In the matter between:
BLUE CHIP 2 (PTY) LTD t/a BLUE CHIP
49
.......................................................................
Appellant
And
CEDRIC DEAN RYNEVELDT & 26
OTHERS
...............................................................
Respondents
NATIONAL CREDIT
REGULATOR
............................................................................
Amicus
Curiae
CORAM: VAN ZYL, J et SJ REINDERS, AJ
HEARD ON: 2 MARCH 2015
JUDGMENT BY: S J REINDERS, AJ
DELIVERED ON: 19 MARCH 2015
[1] The Magistrate Bloemfontein was
approached in accordance with the provisions of Section 58 of the
Magistrate’s Court Act
no. 32 of 1994 (“the Act”)
for default judgment against various defendants.
[2] Having perused the applications for
default judgment, the Magistrate was uncertain as to whether the
whole cause of action arose
within his jurisdiction and raised the
said concern as he was compelled to do.
[3] It was common cause before the
Magistrate that the plaintiff (now appellant) is a registered credit
provider in terms of Section
40 of the National Credit Act (NCA) and,
as such has entered into a number of unsecured small and intermediate
credit agreements
with the relevant respondents herein. The
respondents however were not resident within the Court’s
jurisdiction but allegations
were made in affidavits in terms of
Rules 4(2) read with Rule 12(6)A of the rules regulating the conduct
of the proceedings in
the Magistrate’s Courts that the whole
cause of action arose within its jurisdiction. When the respondents’
respective
accounts fell in arrears, the appellant caused notices in
terms of Section 129 read with Section 130 of the NCA to be delivered
by registered post to addresses outside the Court’s
jurisdiction. The appellant attached the registered mail receipts as
well as the track-and-trace reports indicating that the notices at
least reached the respondents’ respective post offices
and were
accordingly notified of the awaiting registered mail. The
respondents failed to act upon these notices and appellant
issued
letters of demand to these same addresses in terms of Section 56 of
the act informing them that they are in default of the
obligations in
terms of the credit agreements and that these amounts are due and
immediately payable. These letters of demand
all appeared to have
been hand-delivered and the respondents resultantly consented to
judgment for the amount of the debt, interest
and costs claimed in
terms of Section 58 of the act.
[4] Having heard argument, the Learned
Magistrate on the 31st July 2014 in a comprehensive written judgment
came to the conclusion
that the delivery of the Section 129 notice is
a facta probanda and therefore forms part of the cause of action,
where the plaintiff
claims repayment of a loan governed by the NCA.
In coming to the said conclusion, the Magistrate considered himself
to be bound
by decisions like African Bank v Additional Magistrate
Mayambo N.O. and Others
2010 (6) SA 298
GNP at 311 A – B, where
it was inter alia stated that the credit provider’s cause of
action is not complete unless
the Section 129 notice or a Section
86(10) notice has been given and that the allegation (of compliance
with Section 129(1)(a)
or Section 86(10)) completes a cause of
action. The Magistrate was furthermore fortified by the decision in
Beets v Swanepoel
(2010) JOL 26422
(NC), where Majiedt J (as he then
was) held that the statutory pre-enforcement notice forms part of the
cause of action and that
the credit provider must aver compliance to
disclose a cause of action where the suit is based on a credit
agreement, the absence
of which could render the pleading excipiable.
Reliance was furthermore placed on Absa Technology Finance Solutions
Ltd v Pabi’s
Guest House CC and Others
2011 (6) SA 606
(FB)
where Kruger J held at par. [21] that Section 129(1)(b)(i)
unequivocally prohibits the credit provider from commencing legal
proceedings prior to notice being given to the consumer as
contemplated in the act and that proof of the notice forms part of
the facta probanda in an action for specific performance or
cancellation.
[5] Having concluded that the delivery
of the Section 129 notice forms part of the cause of action, the
Magistrate investigated
whether the whole cause of action arose in
Bloemfontein, since these notices were delivered in districts outside
of the Court’s
jurisdiction. He relied on Whyte v Rathbone
1936 NPD 549
, wherein it was held that the whole cause of action
could not have arisen in the jurisdiction of the Court since a letter
of demand
which had to complete the cause of action was dispatched to
another district. Accordingly, the Magistrate refused to grant
judgment
as requested with the resulting effect that the appellant,
in order to obtain judgment, would have to follow the defendants to
his/her particular magisterial district.
[6] Not satisfied with the effect of
this ruling, the appellant now in essence contends that the
Magistrate erred in that a Section
129 notice is merely a peremptory
procedural requirement prior to the enforcement of litigation and
that it cannot be said that
such notice forms part of a cause of
action based on the breach of an agreement between the parties.
[7] The respondents decided not to
participate in the appeal. The National Credit Regulator (“NCR”)
was granted relief
to intervene in the appeal as amicus curiae by an
order of Moloi J on the 29th January 2015. The NCR believes that due
to the
contentious issue raised in the appeal, its intervention is
necessitated. Mr Grobler, appearing on behalf of the NCR (and to
whom
I am indebted for his comprehensive heads and argument) agrees
with the appellant that the Section 129 notice only serves as a
pre-litigation requirement. He however, submits that the true answer
in the appeal is to be found in the proper consideration of
the term
“cause of action arising”. His view is that the appeal
should fail in that a credit provider must allege
and prove
compliance with Section 129 and as such same is a fact “giving
rise to jurisdiction” which needs to be set
out and proved, for
jurisdictional purposes.
[8] Mr Botes SC (appearing with Mrs Le
Roux) and Mr Grobler as amicus curiae do not seek any cost orders
regardless of the result
of the appeal and agrees that no order as to
costs should be made.
[9] To my mind a clear distinction must
be made between the cause of action that a plaintiff must set out in
its summons and the
provisions of Section 28(1)(d) of the Act.
[10] African Bank v Mayambo supra at
311, par. (b) (with reference to what is to be stated in the summons)
concluded:
“It follows that where the action
against a consumer is commenced by way of summons, the summons must
contain an allegation
that either ss 129(1)(a) or 86(10) has been
complied with or an allegation that notice was not necessary, stating
the reason.”
And later –
“That is so because the
allegation completes a cause of action and also because the consumer
must be aware that the allegation
is made.”
At 311 C.
[11] Section 129(1)(a) requires a
credit provider to draw the default to the notice of the consumer in
writing before commencing
any legal proceedings to enforce a credit
agreement. This includes legal proceedings to cancel the agreement.
(Nedbank Limited
and Others v National Credit Regulator and Another
2011 (3) SA 581
(SCA) at 589 par. [12]). Whilst Section 129(1)(b)
seems to prohibit the commencement of legal proceedings, Section 130
has the
effect that such an action is not void.
“Thus, while Section 129(1)(b)
appears to prohibit the commencement of legal proceedings altogether
(may not commence), Section
130 makes it clear that where action is
instituted without prior notice, the action is not void. Far from
it. The proceedings
have life, but a Court ‘must’
adjourn the matter, and make an appropriate order requiring the
credit provider to complete
specified steps before resuming the
matter. The bar on proceedings is thus not absolute, but only
dilatory. The absence of notice
leads to a pause, not to nullity,
but to deduce this, it is necessary to read Section 129 in the light
of Section 130. Section
129 prescribes what a credit provider must
prove (notice as contemplated) before judgment can be obtained,
whilst Section 130 sets
out how this can be proved (by delivery).”
Sebola v Standard Bank
2012 (5) SA 142
CC at 160 par. B - D
[12] In Investec Bank Limited t/a
Investec Private Bank v Ramurunzi
2014 (4) SA 394
(SCA), the Supreme
Court of Appeal had to pronounce on the question whether a summons
served before the requisite notice in terms
of Section 129 of the
National Credit Act has been delivered to the consumer, interrupt the
running of prescription. Lewis JA,
writing on behalf of the Court
posed the question in the following terms:
“Is a summons of no effect until
the Section 129 notice has been served?” p. 395, par. G.
[13] Relying on the Sebola-matter
(supra) the Court found that Section 130 regulates debt procedures in
Court and it ensures that
any shortcomings in the pre-summons
enforcement procedure is made good which is for the benefit of the
consumer. (At p. 400, par.
C). The Court came to the conclusion
that the summons interrupted the running of prescription when it was
served on Mr Ramurunzi.
The High Court could not, however, grant a
judgment against him until, after adjourning the matter for this
purpose, a Section
129 notice was delivered to him, - at 401, par. B
– C.
[14] In my view, a plaintiff (where the
NCA is applicable) have to aver in his summons, compliance with
Section 129 thereof. The
purpose thereof is to take the barriers
away which prohibits such a plaintiff to proceed with the enforcement
procedure. It enlightens
the Court that the procedural requirement
of notice has been met (or not met). It does not however, form part
of the cause of
action that has to be alleged in the summons. It is
merely a peremptory procedural requirement and a plaintiff has to
allege compliance
therewith or why same is not applicable. In casu,
the cause of action remains the conclusion of the contract and the
breach thereof.
The Section 129 notice therefore does not become an
element of the contract or to the breach thereof. It however
completes the
cause of action. Sebola supra at p. 166, par. G.
[15] Section 28(d) of the Magistrate’s
Court Act determines:
“(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 sub-section
(1A), have jurisdiction shall be the following and no other:
(a) …
(b) …
(c) …
(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 Court.”
A Magistrate’s Court is a
creature of statute and it is well-established that a Magistrate’s
Court has no jurisdiction
or powers beyond those that were granted by
the act. Ndamase v Functions 4 All
2004 (5) SA 602
(SCA) at 605 G.
Mason Motors (Edms) Bpk v Van Niekerk
1983 (4) SA 406
(TPA) at 409 D
– F. In Veneta Mineraria Spa v Carolina Collieries’ (Pty)
Ltd
1987 (4) SA 883
AD at 886 D, “jurisdiction” was
described as “a lawful power to decide something in a case or
to adjudicate upon
a case, and to give effect to the judgment, that
is, to have the power to compel the person condemned to make
satisfaction.”
[16] For purposes of jurisdiction the
words used in Section 28(1)(d) is not to be understood to mean only
the cause of action (to
wit the contract in casu) as set out in the
summons. In Bisonboard Ltd v Braun Woodwork and Machinery (Pty) Ltd
[1990] ZASCA 86
;
1991 (1) SA 482
(A) at 486 D – E, the appellate division (as it
then was) interpreted “causes of action arising” to be
“legal
proceedings duly arising”.
[17] Jafta JA writing on behalf of the
full bench of the Supreme Court of Appeal referred with approval to
the Bisonboard-matter
and further stated:
“Plainly, what is meant in the
above interpretation is that ‘causes arising’ does not
refer to causes of action
but to all factors giving rise to
jurisdiction under the common law. Of course, such factors do not
exclude a cause of action.
It is by now well-established that, in
appropriate cases, a Court which has jurisdiction over the area
within which a cause of
action arose is competent to decide a matter
on that basis alone.”
Cordiant Trading CC v Daimler Chrysler
Financial Services
2005 (6) SA 205
(SCA) at 211 C – E
[18] The provisions of Section 28(1)(d)
is a departure from the common law rule actor sequitur forum rei,
which requires a defendant
to be sued in the district where he
resides or carries on business. The right of a plaintiff to make use
of this special jurisdiction
is therefore restricted, and he may sue
the defendant under this provision only if the cause of action arose
wholly within the
district. (Jones & Buckle, The Civil Practice
of the Magistrate’s Court in South Africa, 10th Ed, Vol.
1 Act
104).
Rule 5(6)(a) accordingly requires that if a defendant is cited
under the jurisdiction conferred upon the Magistrate’s Court
by
this section, the summons must contain an averment that the whole
cause of action arose within the district. Attached to the
compliance affidavit (on behalf of the appellant in the Magistrate’s
Court) was the relevant track-and-trace report (of the
Section 129
notice) which indicated that the item had been delivered to Mr Van
Ryneveldt on the 27th November 2013 in Kimberley.
It is common cause
that Kimberley does not fall within the magisterial district of the
Magistrate’s Court of Bloemfontein.
It was accordingly
incumbent upon the appellant for jurisdictional purposes to allege
and prove that the said notice was delivered
to the Respondents.
(Delivery on the basis as set out in Sebola supra at 166 G). The
appellant’s cause of action would
be completed therefore on
“receipt” of the Section 129 notice, which in this
instance is outside the territorial and
jurisdictional area of the
Magistrate.
[19] As alluded to above, a Section 129
notice has been described as a gateway provision or a new
pre-litigation layer to the enforcement
process. One of the means by
which the legislation expressly provides for its purposes to be
pursued is consensual resolution.
“Section 129(1) is pivotal
to this. It precludes legal enforcement of a debt before the credit
provider has suggested to
the consumer that he or she explore
non-litigious ways to purge the default. Specifically, the notice
must propose that the default
in consumer refer the credit agreement
to a debt counsellor, alternative dispute resolution agent, consumer
court or Ombud, with
the intent that the parties resolve their
dispute, or agree on a plan to remedy the default.” Sebola
supra at 158, par.
F.
In order to obtain judgment, the
plaintiff will therefore have to prove delivery of the Section 129
notice in terms of Section 130.
Where default judgment is sought,
the consumer’s lack of opposition will entitle the Court from
which enforcement is sought,
to conclude that the credit provider’s
averment that the notice reached the consumer is not contested. If
it is contested
and the consumer asserts that the notice went astray
after reaching the post office, or was not collected, or not attended
to,
the Court will have to make a finding whether, despite the credit
provider’s proven efforts, the consumer’s allegations
are
true and if so, act in accordance with Section 130(4)(b). Sebola
supra at 166, par. [77] to [167], par. A
[20] In Nedbank v National Credit
Regulator
2011 (3) SA 581
(SCA) at 590 (O), par. 14, the Supreme
Court of Appeal stated the following:
“One of the objects of the NCA is
the provision of a consistent and accessible system of consensual
dispute resolution. A
notice in terms of Section 129(1)(a), however,
does not exclude the resolution of a dispute relating to a specific
credit agreement
in this manner. The purpose of a Section 129(1)(a)
notice is a resolution of a dispute and the bringing up to date of
payments
under a specific credit agreement. While it is a step prior
to the commencement of legal proceedings, it is also the first step
the credit provider has proceeded to take to enforce that agreement.”
[21] So seen, the giving and receiving
of the notice is a fact “giving rise to jurisdiction”
which needs to be set out
and proved to vest jurisdiction in terms of
Section 28(1)(d).
[22] One of the factors so giving rise
to jurisdiction, was not within the jurisdiction of the Magistrate’s
Court of Bloemfontein,
but in fact Kimberley and other Magisterial
areas where the cause of action on “receipt” of the
Section 129 notice
was completed.
[23] The appellant submitted that the
finding that the Magistrate’s Court don’t have
jurisdiction in casu have far-reaching
effects in that it directly
impacts both on the common law as well as the very purpose of the
NCA, with specific reference to the
pre-amble thereof. The
respondent submitted that the appellant may still enforce its
perceived rights in the proper forum. There
is no reason why Mr
Ryneveldt and the other consumers cannot be sued where they reside.
Bertelsmann J in Absa Bank Limited v Myburgh
2009 (3) SA 340
TPD,
authoritively deals with the avowed aims of the NCA to lighten the
financial burden which the conclusion of a credit agreement
may
impose on a consumer. Although it dealt with the question whether a
High Court should deal with the matter where a Magistrate’s
Court has concurrent jurisdiction the Court’s remarks regarding
the purpose of the act to protect consumers and the way the
act
should be interpreted is apposite:
“In instances of this nature,
purposive interpretation is therefore called for. The Act is
indubitably aimed at protecting
the consumer’s fundamental
rights to dignity, equality, non-discrimination and fair
administrative and trial procedures and
must be purposively
interpreted for that reason alone …” At 346, par. G and
347 par. B
[24] In casu, the appellant realized at
the time of the conclusion of the agreement that the respondents did
not reside within the
Magistrate’s Court jurisdiction in
Bloemfontein. He can hardly be heard to complain at this stage that
it is inconvenient
or expensive to follow the Respondents to the
jurisdictional area where they reside. It is likewise inconvenient
and expensive
for the consumer to litigate in an area where he/she
does not reside.
[25] In the circumstances, and for the
reasons set out herein, I am not convinced that the Magistrate can be
faulted for finding
that he has no jurisdiction to entertain the
matters. Accordingly the following orders are made:
25.1 The appeal is dismissed.
25.2 No order as to costs.
S. J. REINDERS, AJ
I agree.
C. VAN ZYL, J
On behalf of the appellants: Adv. F.
W. Botes SC with Adv. L. le Roux
Instructed by: Jordaans Rijkheer
Inc.
BLOEMFONTEIN
On behalf of the amicus curiae: Adv.
S. Grobler
Instructed by: Honey Attorneys
BLOEMFONTEIN