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[2013] ZAGPPHC 538
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Barko Financial Services (Pty) Limited v National Credit Regulator and Another (A499/2011) [2013] ZAGPPHC 538 (28 March 2013)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT)
Case number:
A499/2011
Date: 28 March 2013
In the matter
between:
BARKO
FINANCIAL SERVICES (PTY)
LIMITED
......................................................................
Appellant
and
NATIONAL
CREDIT
REGULATOR
...................................................................................
First
Respondent
THE
NATIONAL CONSUMER
TRIBUNAL
..................................................................
Second
Respondent
JUDGMENT
PRETORIUS J.
[1] This is an
appeal against the decision of the National Consumer Tribunal, the
second respondent. The appellant is appealing
against the decision to
set aside the compliance notice issued by the respondent’s
regulation dated 24 June 2010. The appeal
concerns the legality of
fees paid to Altech NuPay in regards to services rendered by NuPay to
consumers who have credit agreements
with the appellant.
[2] The tribunal
erred, according to the appellant, by finding that the NuPay
Financiat Services fees paid by consumers fall within
the category of
the National Credit Act and further that the service fees paid to
NuPay by the consumers should be repaid by the
appellant.
[3] The appellant is
the credit provider and conducts short-term credit transactions with
consumers. The provisions of the National
Credit Act, 34 of 2005
(“the Act”) apply to these transactions. As the appellant
is a registered credit provider under
the Act, the business
activities are regulated by the National Credit Regulator (NCR).
[4] On 24 June 2010,
after conducting an inspection of the applicant’s business
practices, compliance notice 359 was issued
to the appellant in terms
of section 55 of the Act by the first respondent. The complaint
against the appellant was that the fees
the consumer had to pay to
NuPay are not recoverable by the appellant in terms of the Act. The
appellant was instructed to reimburse
the consumers by the amount
that the consumers had paid fees to NuPay. The only fees the consumer
can pay is stipulated in section
101(1) (b) to (g) of the Act.
[5] Section 101 (1))
of the Act provides:
“
(1)
A credit agreement must not require payment by the consumer of any
money or other consideration, except-
(a) the principal
debt, being the amount deferred in terms of the agreement, plus the
value of any item contemplated in section
102;
(b) an initiation
fee, which-
may not exceed
the prescribed amount relative to the principal debt; and
must not be
applied unless the application results in the establishment of a
credit agreement with that consumer;
(c) a sen/ice
fee, which-
in
the case of
a
credit facility,
may be payable monthly, annually, on a per transaction basis or on a
combination of periodic and transaction basis;
or in any other case,
may be payable monthly or annually; and
must not exceed
the prescribed amount relative to the principal debt;
”
[6] The prescribed
amount in the present case is R50 per month per transaction.
[7]
The modified compliance notice provides
inter
alia:
"............
Cease
requiring consumers to pay the NuPay service provider fee where such
fee
,
if added to the
service fee charged by Barko, would increase the sen/ice fee payable
under credit agreements to an amount above
the prescribed maximum
sen/ice fee of R50.00"
[8] A service fee is
defined in section 1 of the Act as:
“
A
fee that may be charged periodically by a credit provider in
connection with the routine administration cost of maintaining a
credit agreement. ”
[9]The appellant had
a separate agreement with NuPay to participate in the payment system,
which is the "Service Level Agreement"
(“SLA”).
The SLA between the appellant and NuPay provides:
“
MANAGEMENT
SERVICES
The
parties agree that NuPay shall provide the Management Services
associated with the NuPay System to the Merchant, for
which
the latter shall pay NuPay the relevant fees as set out in clause 6
and Schedule A annexed hereto.’
(Courts
emphasis)
[10]
In clause 2.3.7.6 “Management Services”
inter
alia
is
defined as:
“’’
Management
Services” means and incorporates
inter
alia
the following
services,
2.3.7.1
2.3.7.2
2.3.7.3
2.3.7.4
2.3.7.5
2.3.7.6
processing and management of transactions”
[11] This is exactly
the same action that the consumer authorizes NuPay to do. NuPay must
process and manage the transactions paid
into the appellant’s
account by the consumer and the consumer has to pay the service fees
to NuPay.
[12] Clause 7.2 of
the SLA set out:
“
The
merchant will be required to sign the attached debit order form
authorising NuPay to debit ail the fees payable, on a monthly
basis,
as well as any other outstanding amounts owing to NuPay”
[13] There is no
specific provision in the SLA to indicate which portion of the fee
payable to NuPay must be paid by the consumer.
The addendum of 29
April 2009 is between the appellant and NuPay and mentions a “service
provider fee” which is processed
with the consumer’s
obligation to the appellant as a single payment.
[14] The appellant
relies on a separate agreement allegedly entered into between the
consumer and NuPay which has no relationship
to the agreement between
the appellant and the consumer. This agreement allows NuPay access to
the consumers’ bank account
from which it deducts each
instalment and pays the appellant.
[15] The argument by
the appellant is that the NuPay Financial Service fee is a fee which
may be recovered in terms of section 101
of the Act as the agreement
between the consumer and NuPay was not part of the credit agreement
between the appellant and the consumer.
The fee is thus payable to
NuPay. According to the appellant both amounts, that paid by the
consumer to the appellant and the amount
due to NuPay, are deposited
by the consumer into the appellant’s bank account. These
financial service fees are due by the
consumers to NuPay, according
to the appellant. For purely practical reasons the consumer pays one
amount into the appellant’s
account and does not have to pay
the bank for two transactions, as NuPay sweeps the account for
payment of their fees. The appellant’s
contention is that the
NCR and the Tribunal erred in finding that the so-called NuPay
financial services’ fees paid by the
consumers to NuPay fall
within the category of capped
National Credit Act fees
. This amount
may thus exceed the R50 cap as it was not a service fee, according to
the appellant.
[16] The grounds of
appeal is that the Tribunal erred in finding that the appellant
induced consumers to enter into the NuPay service
agreement; finding
that the NuPay service agreement contained unlawful provisions by
providing for the levying of a service provider
fee over the limit of
R50 cap, which is unlawful under the Act; and finding that the
provisions of section 124 of the Act do not
assist the appellant.
[17] The appellant
was according to the first respondent contravening the provisions of
section 100 (1) (a) read with section 101
(1) of the Act and/or,
contravening the provisions of section 100 (1) (b) read with section
101 (1) (c) and 105 (1) (b) and Regulation
44 of the Act; and/or
charging an impermissible fee as contemplated in section 100 (1) (d)
of the Act.
[18] Furthermore it
is alleged that the appellant contravened section 90(1) read with
section 90(2)(a) and (b) of the Act as, as
well section 91(a) or (c)
read with section 90(1), (2)(a) and (b) of the Act.
[19] The appellant
argues that a consumer has a choice whether to enter into the NuPay
agreement when entering into a credit agreement
with the appellant.
According to the appellant not all the consumers choose the NuPay
option. Once a consumer has chosen the NuPay
option it is beyond the
control of the appellant, as it is a separate agreement between the
consumer and NuPay. It is common cause
that the NuPay agreement is
concluded at the same time as the credit agreement with the
appellant. The amount owed to NuPay is
paid to the appellant and
NuPay debits the appellant’s account for this fee. The
concession by the appellant that:
"Without
prejudice to the rights of the applicant, it is accordingly submitted
that although the loan documentation of the
applicant may on the face
of it create the impression that there has been non-compliance by the
applicant with the cited provisions
of the NCA, in reality these
provisions have not been contravened
[20]
The
question must be posed as to why the appellant alleges it is
reviewing its loan documentation and has requested NuPay to do
the
same; if the appellant is convinced that the agreements in both
instances are presently in order.
[21] The appellant’s
counsel argues that if a consumer chooses not to enter into the NuPay
agreement, it may go to the appellant’s
office and pay in cash.
It is clear that the inference can be drawn that it was pointed out
to the consumer that if they do not
choose the NuPay option they will
have to spend time and money to attend the appellant’s office
to make cash payment. This
will be in contravention of section 71(a)
of the NCA as it directly or indirectly induces the consumer to enter
into the NuPay
agreement.
[22] There is no
mention or provision at all in the SLA that the consumers have to pay
the appellant. It is patently clear that
the appellant had
relinquished its duty to collect the money to NuPay and that the
consumer is not a party to the SLA.
[23] Section 101(1)
of the Act does not make provision for the consumer to pay an
additional service fee which would exceed the
prescribed amount of
R50. The appellant benefits from the services of NuPay in terms of
the SLA and it is not the consumers that
benefit from this
arrangement, although the appellant argued that it was solely to
benefit the consumer.
[24] The suit of
documents provided to the consumer contains the NuPay agreement. The
court has studied these documents and can
come to no other
conclusion, but that the credit agreement, the loan application
agreements, and the copy of the quotation of the
loan agreement and
the NuPay Service Agreement all have the same style and font. The
conclusion can only be that these documents
emanate from the
appellant. It must further be mentioned that the quotation and
pre-loan agreement between the consumer and the
appellant and the
NuPay Service Agreement are both signed by the same person on behalf
of the lender. There is no space on the
so-called agreement between
the consumer and NuPay for a representative of NuPay to sign the
agreement.
[25]
Clause 4 of the so-called NuPay agreement reads
inter
alia:
“
The
Consumer hereby authorise NuPay to process the Service Provider Fee
due to NuPay and the Payment Obligation due to the Credit
Provider as
a single payment instruction and to deliver the payment instruction
for collection at the Consumer’s bank.
The
Consumer hereby authorises the Consumer’s bank to debit the
Consumer's nominated account with the amount of the payment
instruction
“
(Court s emphasis)
[26] There is no
distinct separate agreement between the consumer and NuPay. The
parties set out in the purported agreement are
the consumer and the
credit provider. There is no indication that a representative of
NuPay is involved in the agreement at all.
The appellant admits that
there is no interaction between NuPay and the consumer when the
agreement is concluded, it is clear that
there is never any
interaction between consumers and representatives of NuPay at all at
any stage. The appellant conceded that
90% of the consumers use the
NuPay system. There is no direct payment by the consumer to NuPay.
The appellant pays NuPay after
the appellant had collected the fee
from the consumer which is paid into the appellant’s bank
account where NuPay collects
it.
[27] The court must
agree that, without the appellant’s conclusion of the credit
agreement with the consumer, the consumer
would not have known about
NuPay and would not have utilized the services of NuPay. The consumer
would merely pay the amount into
the account of the appellant without
the intervention of NuPay and would not have to pay a service fee in
addition to the amount
according to the credit agreement.
[28] There is no
reason offered as to why the consumer could not pay the appellant
directly. The court has to come to the conclusion
that an additional
monetary liability is imposed on the consumer by the so-called
agreement with NuPay and that section 100 (1)
(d) is contravened in
this regard by the appellant. The capped service fee of the appellant
is R50, but in addition the consumer
has to pay a monthly service fee
to NuPay. The appellant contravenes section 90(2) of the Act by
providing for an additional service
fee and evading the provisions of
section 101.
[29] Although the
NuPay agreement does not form part of the loan agreement and would be
unlawful if it had formed part of the agreement,
it is still the
appellant who introduces the consumers to the NuPay agreement and 90%
of them choose to utilize the agreement.
It is clear that it is the
appellant’s representative who discuss the advantages of the
NuPay system with the consumers and
not the representatives of NuPay.
Therefore the appellant is guilty of contravention of section 91 read
with section 91 (a), 101
(1) (d), 90(2)(e) and (f).
[30]
It is quite clear that the consumer pays his money into the
appellant’s bank account that has control over the money.
The
fact that NuPay has a SLA with the appellant entitles NuPay to
payment by the appellant. There is no
nexus
between
the appellant and the consumer.
[31] The appellant,
in the founding affidavit by Mr de Wet, in the objection to the
Tribunal conceded:
'‘Notwithstanding
the unfortunate wording of the credit agreement...'’
[32] It is quite
clear that no representative of NuPay enters into a contract with a
consumer. According to Mr De Wet:
“
NuPay
provides the applicant with electronic integration information that
is sent to the applicant’s computer programmer and
then
registered into way of
a
administrative
computer programmes automatically calculates the value of the
transaction and determines the service provider fee
value as per
agreement.
This information is then printed out on
the NuPay Service Agreement which the consumer signs and in terms of
the mandate contained
therein the transaction is created on the AEDO
system.’’
(Court’s
emphasis)
[33] It is clear
from the sample credit agreement and NuPay Service agreement,
attached to Mr De Wet’s affidavit, that both
agreements were
signed on 23 March 2010 by the same lender who had signed on behalf
of NuPay, but only as a lender. There is no
signature on the NuPay
Service agreement by a representative of NuPay, although it is set
out in clause 4 that the consumer is
liable to NuPay.
[34] Section 3 of
the NCA provides:
"3. Purpose
of Act
The
purposes of this Act are to promote and advance the social and
economic welfare of South Africans, promote a fair, transparent,
competitive, sustainable, responsible, efficient, effective and
accessible credit market and industry, and to protect consumers,
by-
(a)
promoting the development of a credit market that is accessible to
all South Africans, and in particular to those who have historically
been unable to access credit under sustainable market conditions
”
[35] The actions by
the appellant to induce the consumer to enter into a supplementary
agreement with NuPay are inconsistent with
a transparent credit
market. It does not protect the consumers and is in violation of
section 91 (a) of the Act.
[36] The appellant
relies in the alternative on the provisions of section 124 of the
Act. The court has studied the provisions of
section 124(1)(a) of the
Act and cannot find that the NuPay service fee constitutes a charge
made against:
“
(a)
the charge or series of charges may be made only against an asset,
account, or amount that has been-deposited by or for the
benefit of
the consumer and held by that credit provider or that third party;
and specifically named by the consumer in the authorisation:’''
[37] Section 124(4)
requires that the appellant must give the consumer notice:
“
notice
in the prescribed manner and form, setting out the particulars as
required by this subsection, of the charge or charges to
be made
under that authorisation
.
”
[38] There is no
evidence that the appellant ever complied with this provision. This
argument by the appeliant is thus rejected
as there is no basis on
the papers for such an argument.
[39] The appellant’s
counsel argued that the appellant cannot be expected to repay the
amounts which had been paid by the
consumer in respect of NuPay, as
it was never paid as a result of an agreement between the appellant
and the consumer. The consumer
will have to claim it from NuPay as it
was paid to NuPay. It is, however, common cause that the consumer
made one payment in respect
of NuPay and the appeliant. Once the
money is in the appellant’s bank account it becomes the
appellant’s money and
not NuPay's.
[40] It is quite
clear that the consumers have signed an agreement with the appellant
and not with NuPay. Therefore the appeliant
should be liable for the
repayment of the amount paid over and above R50 per month by the
consumer into the appellant’s bank
account. The appellant had
to pay NuPay’s service fee according to the SLA.
[41]
In
Roestof
v
CliffeDekkerHofmeyer
2013 (1)
SA
12
(GNP)
at paragraph 45 Du Plessis J held at paragraph 45:
“
Geld
(munte en note) is ‘n roerende saak dus vatbaar vir
eiendomsreg. Die eienaar van geld kan dit dus in beginsel met die
rei
vindication
opeis
van iemand wat in besit daarvan is. Omdat geld egter ‘n
vervangbare saak
(res
funibilesj
is, is
daar ‘n kompiikasie: Sodra 'n bepaalde eienaar se geld met
iemand anders s’n vermeng word, kan dit prakties nie
meer
geïdentifiseer word nie en gaan die aanvanklike eienaar se
eiendomsreg verlore. Geld, insluitende gesteelde geld, wat
in ‘n
bankrekening inbetaal word, is geen uitsondering nie. Dit word deur
regswerking die bank se eiendom. Gesteelde geld,
munte en note, wat
in ‘n bankrekening inbetaal word kan dus nie deur die slagoffer
met die
rei
vindicatio
van die
bank geeis word nie want hy is nie meer die eienaar daarvan nie. Vir
dieselfde rede kan gesteelde geld wat a an ‘n
onskuldige derde
betaal en met sy geld vermeng is, nie met die
rei
vindicatio
van
daardie derde opgeeis word nie.”
[42] The court finds
that the Tribunal correctly found that the recovery of the NuPay
service fees from the consumer is unlawful
as this action contravenes
the provisions of the Act. The appellant should then be held liable
to repay the consumers.
[43] Therefore the
appeal cannot succeed on any of the grounds set out by the appellant.
It is ordered that:
1. The appeal is
dismissed;
2. The appeliant to
pay the costs including the cost occasioned by the use of two
counsel.
C Pretorius
Judge of the High
Court
I agree,
LI Voster
Acting Judge of
the High Court
I agree,
W Hughes
Acting Judge of
the High Court
Case number:
A499/2011
Heard on: 13
February 2013
For the Appellant:
Adv PF Louw SC
Instructed by:
Routledge Modise Incorporated
For the Respondent:
Adv C Loxton SC
Adv PL Carstensen
Instructed by:
Edward Nathan Sonnenberg INC
Date of Judgment