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The Loan Company (Pty) Ltd v The National Credit Regulator and Another (1104/2023) [2025] ZASCA 40 (9 April 2025)

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Brief Summary

National Credit Act — Registration of credit providers — Loan Company (Pty) Ltd entered into credit agreements and advertised credit availability prior to registration as a credit provider — National Credit Regulator found multiple contraventions of the National Credit Act 34 of 2005 — Tribunal declared agreements unlawful and void, ordered refunds to consumers, and imposed an administrative fine — Appeal against tribunal's orders dismissed — Court upheld the tribunal's findings regarding the Loan Company's non-compliance with registration requirements and the legality of the agreements.

Comprehensive Summary

Summary of Judgment


Introduction


The proceedings were an appeal to the Supreme Court of Appeal of South Africa arising from regulatory enforcement under the National Credit Act 34 of 2005. The matter concerned the lawfulness of a pawn-broking credit provider’s conduct and the remedial and punitive powers of the National Consumer Tribunal under the Act.


The appellant was The Loan Company (Pty) Ltd, a business conducting pawn-broking transactions involving short-term loans secured by consumers’ movable property. The first respondent was the National Credit Regulator (NCR), the statutory regulator responsible for investigations and enforcement under the Act. The second respondent was the National Consumer Tribunal, which did not participate in the appeal and abided the decision.


The procedural history commenced with an investigation by the NCR following complaints about the appellant’s business practices. The NCR referred the matter to the Tribunal under section 140(1)(b) (read with section 140(2)(b)) on the basis that the appellant had engaged in “prohibited conduct” as defined in section 1 of the Act. The Tribunal granted orders against the appellant, including declarations of contraventions, orders of refund and return of pawned goods (or sale proceeds), and an administrative fine. The appellant appealed to the Gauteng Division of the High Court, Pretoria under section 148(2)(b), but the appeal was dismissed with costs. The present appeal proceeded with leave of the High Court, limited to specified contravention findings and related remedial orders.


The general subject-matter of the dispute was the interpretation and application of statutory obligations concerning registration as a credit provider, the lawfulness of advertising credit while unregistered, permissible interest charges, and the Tribunal’s powers to declare agreements unlawful and void, order refunds, and impose administrative fines, particularly in the context of pawn transactions.


Material Facts


The court proceeded on the basis that the appellant operated a typical pawn-broking model. It advanced small, short-term loans to consumers and retained possession of consumers’ movable property as security. If consumers did not repay the loan timeously, the appellant sold the pawned goods and retained the proceeds.


Following complaints, the NCR investigated the appellant’s activities. The NCR’s case before the Tribunal relied materially on an investigation report with attachments documenting approximately fifteen “sample transactions”. These sample transactions were treated as illustrative instances in which, according to the NCR, the appellant concluded credit agreements prior to being registered as a credit provider, advertised credit while unregistered, and levied charges (including interest) exceeding statutory limits.


On registration, the NCR’s version was that the appellant was first registered as a credit provider on 31 March 2017, that it was not registered at the time of the investigation (1 March 2017), and that its earlier application for registration had lapsed after it failed to provide requested information within a stipulated period. The NCR contended that the sample transactions occurred before registration, most during 2016.


The appellant opposed and disputed contraventions. Through its director, Mr De Rosnay, it asserted that it applied for registration on 9 June 2016 and commenced trading after that application, contending that its agreements were pawn transactions and suggesting that its activities were permissible while awaiting registration. The court treated key portions of this account—particularly as to what was submitted to the NCR and when—as unsupported by confirmatory evidence from the attorney said to have handled registration, and therefore not capable of displacing the NCR’s documented account of requests, warnings, and non-compliance leading to lapse of the first application.


On advertising, the appellant did not dispute that it advertised credit on its website, but disputed unlawfulness on the basis that it had applied for registration and later received a registration certificate.


On interest charging, the Tribunal found (and the appeal court accepted) that while the appellant charged the rate generally applicable to short-term credit agreements, it applied the rate in a manner that resulted in charging interest for longer than the actual duration of certain agreements. Illustratively, a consumer was charged interest calculated for 30 days where the agreement duration was 29 days, producing an excess charge.


A further factual illustration addressed the pawn broker’s entitlement upon default and sale. In one sample matter, the appellant advanced R35 000 to a consumer (Mr Tselapedi) against a vehicle with an estimated value substantially higher than the debt. When the consumer defaulted, the appellant sold the vehicle for R65 000 and retained the full proceeds.


Legal Issues


The central legal questions were interpretive and concerned the application of law to established facts. The Supreme Court of Appeal was required to determine whether, on the proved facts, the Tribunal (as confirmed by the High Court) correctly concluded that the appellant:


The first issue was whether the appellant contravened section 40(1) read with section 40(3) of the Act by concluding credit agreements and extending credit while required to be registered but not registered, and whether the appellant could rely on section 42(3)(a) to justify providing credit after applying for registration.


The second issue was whether the appellant contravened section 76(3) by advertising the availability of credit while unregistered, and whether any contextual or purposive reading (including reliance on section 42(3)(a)) could render such advertising permissible.


The third issue concerned whether the appellant charged interest in excess of what is permitted under sections 100(1)(c) and 101(1)(d)(ii), read with regulation 40, specifically whether regulation 40 allowed the appellant to charge interest calculated on a 30-day basis where the loan duration was shorter.


The fourth issue was remedial and jurisdictional: whether the Tribunal had the power to declare the sample transactions unlawful and void, given section 164(1) (which refers to a court declaring an agreement unlawful) and the interaction between section 40(4) and section 89, particularly because section 89(1) provides that section 89 does not apply to pawn transactions.


The fifth issue was whether the Tribunal had power to order refunds and related restitutionary relief, and whether it could impose an administrative fine of R250 000 under section 151, including whether the absence of detailed evidence of the appellant’s financial position rendered the fine improper.


Court’s Reasoning


The court emphasised that statutory interpretation under the National Credit Act is a unitary exercise requiring attention to text, purpose, and context, and referred to the Constitutional Court’s summary in AmaBhungane Centre for Investigative Journalism NPC v President of South Africa [2022] ZACC 31; 2023 (2) SA 1; 2023 (5) BCLR 499 (CC). It also stressed the Act’s purposive orientation under section 2(1) and section 3, including consumer protection and the balancing of rights and responsibilities in the credit market.


Registration and the ability to provide credit prior to registration


In relation to registration, the appellant’s argument before the Supreme Court of Appeal relied on section 42(3)(a), which can allow a person to continue providing credit after applying for registration when required to register for the first time due to a new threshold determination by the Minister. The court rejected this reliance on the basis that the appellant’s factual position did not fall within section 42. The court considered it material that, on the appellant’s own version, it applied for registration on 9 June 2016 when it claimed it was not obliged to register (because the threshold was then R500 000). On that account, registration would have been voluntary under section 40(5), which undermined the appellant’s attempt to reframe the issue as one involving section 42.


The court accepted that the NCR placed before the Tribunal documentary proof that the first application lapsed due to non-compliance with information requests and that the appellant was only registered on 31 March 2017. The appellant’s account that all required information had been submitted depended materially on what its attorney allegedly did, but no confirmatory affidavit was provided. The court treated this as leaving the NCR’s version, supported by documentation, as not meaningfully displaced.


Against that evidentiary background, the court concluded there was no basis to accept that section 42 applied, and therefore no basis to conclude that credit provision before registration was permissible. Accordingly, the High Court was correct in confirming the Tribunal’s finding that the appellant contravened section 40(1) read with section 40(3).


Advertising credit while unregistered


The court treated section 76(3) as “clear and unambiguous” in prohibiting advertising of the availability of credit by a person required to be registered but not registered. The appellant again sought to justify its position by importing section 42(3)(a) into the interpretation of section 76(3), arguing that if a credit provider may continue to conclude credit agreements after applying, it should also be able to advertise.


The court rejected this as untenable. It held that the appellant’s reliance on section 42(3)(a) failed factually because section 42 did not apply to the appellant. It further held that the appellant’s interpretive approach would go beyond interpretation into effectively “legislating,” which the court regarded as impermissible. The confirmation of the Tribunal’s finding of contravention of section 76(3) therefore stood.


Charging interest in excess of prescribed limits


On interest, the court accepted that the Tribunal found the appellant charged the permissible short-term interest rate in principle, but calculated interest in a way that did not reflect the actual duration of the agreement. The court analysed section 100(1)(c) (prohibiting interest charges exceeding what is consistent with the Act), section 101(1)(d) (requiring interest to be expressed annually and not exceed prescribed maxima), and regulation 40 (prescribing method of calculation).


The court rejected an interpretation of regulation 40(2)(c)(iv) that would allow interest to be charged for 30 days where an agreement lasted 29 days (or otherwise beyond the agreement duration). It reasoned that the election in regulation 40 concerns whether “days in the month” are interpreted as 30 or the actual number of days in the month, but does not permit charging for a period exceeding the agreement’s duration. The court considered that the regulations’ structure—especially the importance of the deferred amount and the limitation that interest may be added only at month end—reinforced that interest cannot be charged beyond the period to which it applies. On the sample transactions, where 5% was charged irrespective of whether the agreements endured for a full month, the court held that the Tribunal’s finding of contravention was correct.


Tribunal power to declare agreements unlawful and void (and the relevance of pawn transactions)


A significant legal issue concerned whether the Tribunal could declare the sample credit agreements unlawful and void. The appellant relied on section 164(1) (stating that nothing renders void a prohibited or unlawful credit agreement unless a court declares it unlawful), the dictum in Vesagie NO and Others v Erwee NO and Another [2014] ZASCA 121, and the fact that section 89(1) provides that section 89 does not apply to pawn transactions. It also relied on an uncommenced amendment in the National Credit Amendment Act 7 of 2019 that would insert “or the Tribunal” into section 164(1), arguing this implied a lack of existing Tribunal power.


The court approached the matter by distinguishing between unlawfulness arising ex lege (by operation of the Act) and unlawfulness requiring a declaration. It referred to the Constitutional Court’s treatment in Chevron SA (Pty) Limited v Wilson t/a Wilson’s Transport and Others [2015] ZACC 15; 2015 (10) BCLR 1158 (CC), which confirmed that where section 89 applies, the agreement is unlawful in terms of the Act itself.


The court recognised the interpretive difficulty created by the cross-reference in section 40(4) to section 89, alongside section 89(1)’s exclusion of pawn transactions. It held, however, that section 40(4) applies to all credit agreements, including pawn transactions, and that a sensible interpretation was required. It reasoned that the default statutory position is that credit agreements entered into by unregistered credit providers who are required to be registered are unlawful and void, and that there was no rational basis to treat pawn transactions differently in this respect. The court held that the reference to section 89 in section 40(4) was not intended to draw a substantive distinction between pawn and non-pawn agreements on unlawfulness, but to locate the consequence “to the extent provided for in section 89.”


The court further held that section 164 is directed to court proceedings under the heading “Civil actions and Jurisdiction” and does not undermine the Tribunal’s adjudicative role under section 27(a), which includes determining whether prohibited conduct occurred and making orders provided for in the Act. The court concluded that the Tribunal, in declaring the sample agreements unlawful and void, was stating the legal position arising from the Act and did not act beyond its powers. It added that section 150 is not exhaustive of the Tribunal’s powers, and that the Tribunal acted within its competence.


Refunds, return of pawned goods, and entitlement to proceeds on sale


Because the agreements were treated as unlawful and void, the Tribunal’s refund orders followed as remedial relief. The court held that ordering repayment of amounts charged over and above the capital advanced fell within section 150, including the power to require repayment of excess amounts charged and to make any other appropriate order to give effect to rights under the Act. The court regarded the order to return pawned goods (or, if already sold, to pay the gross sale proceeds less what was lawfully owing) as appropriate and justified.


In addressing the appellant’s contention that a pawn broker is entitled to retain all proceeds of sale, the court interpreted the statutory definition of “pawn transaction” in section 1, focusing on the qualifying words in paragraph (c) that the credit provider may “retain all the proceeds of the sale in settlement of the consumers’ obligations under the agreement.” The court held that this does not entitle retention of more than what the consumer owes under the agreement (capital plus lawful charges). It also held that, absent clear statutory language, the Act should not be read as altering the common law position that a pawn broker must account to the consumer for any surplus after the debt is settled. The court considered that the appellant’s interpretation resembled a prohibited pactum commissorium and would be inconsistent with the consumer-protective purposes of the Act.


Administrative fine


The court held that the Tribunal’s power to impose an administrative fine is explicit under section 151(1) and that the fine must be within the limits in section 151(2) and paid into the National Revenue Fund under section 151(5). It treated the decision to impose a fine as discretionary, interfering only if the discretion was not properly exercised.


The court rejected the argument that the fine was improper due to lack of evidence about the appellant’s financial position. It reasoned that the appellant’s financial position was peculiarly within its own knowledge and that the appellant, aware the NCR sought a penalty, had ample opportunity to place such evidence before the Tribunal. The court found no indication that the Tribunal ignored the statutory factors in section 151(3) or considered improper factors. It further held that the appellant did not show that the fine exceeded statutory limits. The High Court’s confirmation of the fine was upheld.


Outcome and Relief


The Supreme Court of Appeal dismissed the appeal with costs, including the costs of two counsel. The effect was that the Tribunal’s relevant contravention findings and remedial orders remained in force.


Because of the passage of time, the court adjusted the commencement of certain time periods contained in the Tribunal’s order. The periods of 30 days (in paragraphs 164.4 and 164.7 of the Tribunal’s order) and 120 days (in paragraph 164.6) were directed to run from the date of the Supreme Court of Appeal’s order, and the 30-day period for payment of the administrative fine was to run from that date unless the fine had already been paid.


Cases Cited


AmaBhungane Centre for Investigative Journalism NPC v President of South Africa [2022] ZACC 31; 2023 (2) SA 1; 2023 (5) BCLR 499 (CC).


Sebola and Another v Standard Bank of South Africa Ltd [2012] ZACC 11; 2012 (5) SA 142; 2012 (8) BCLR 785 (CC).


De Bruyn NO and Others v Karsten [2018] ZASCA 143; 2019 (1) SA 403 (SCA).


Vesagie NO and Others v Erwee NO and Another [2014] ZASCA 121.


Chevron SA (Pty) Limited v Wilson t/a Wilson’s Transport and Others [2015] ZACC 15; 2015 (10) BCLR 1158 (CC).


National Credit Regulator v Opperman and Others [2012] ZACC 29; 2013 (2) BCLR 170; 2013 (2) SA 1 (CC).


Micro Finance South Africa and Another v National Credit Regulator and Others [2020] ZAGPPHC 463; 2021 (1) SA 487 (GP).


Nedbank Ltd and Others v The National Credit Regulator and Another [2011] ZASCA 35; 2011 (3) SA 581 (SCA); [2011] 4 All SA 131 (SCA).


National Credit Regulator v Lewis Stores (Pty) Ltd and Another [2019] ZASCA 190; 2020 (2) SA 390 (SCA); [2020] 2 All SA 31 (SCA).


Blacher v Josephson [2023] ZAWCHC 27; 2023 (3) SA 555 (WCC).


Mayo NO v De Montlehu [2015] ZASCA 127; 2016 (1) SA 36 (SCA).


Ledla Structural Development (Pty) Ltd and Others v Special Investigating Unit [2023] ZACC 8; 2023 (6) BCLR 709; 2023 (2) SACR 1 (CC).


Bornman v National Credit Regulator [2013] ZASCA 130; 2014 (3) SA 384 (SCA).


Quick Cash (Pty) Ltd v Molome 2003 All Bots 20 (CA).


Grobler v Oosthuisen [2009] ZASCA 51; 2009 (5) SA 500 (SCA); [2009] 3 All SA 508 (SCA).


National Credit Regulator v Standard Bank of South Africa, Limited [2019] 3 All SA 846; 2019 (5) SA 512 (GJ).


Hesseling v Meyer 1991 (1) SA 276 (SWA).


Graf v Buechel [2023] 2 All SA 123; 2003 (4) SA 378 (SCA).


Molteno Brothers and Others v South African Railways and Others 1936 AD 321.


City of Cape Town v South African National Roads Agency Ltd and Others [2013] ZAWCHC 74.


Legislation Cited


National Credit Act 34 of 2005.


National Credit Amendment Act 7 of 2019.


Consumer Protection Act, 2008.


Rules of Court Cited


No rules of court were cited in the judgment.


Held


The Supreme Court of Appeal held that the appellant repeatedly contravened the National Credit Act by concluding credit agreements while required to be registered but not registered, by advertising the availability of credit while unregistered, and by charging interest in excess of what is permitted because it calculated interest for periods longer than the agreement duration.


It held that the Tribunal acted within its powers in declaring the sample credit agreements unlawful and void, that it was empowered to order refunds and restitutionary relief in respect of unlawful agreements, and that it was entitled to impose an administrative fine under section 151 on the facts and within the statutory framework.


It further held that, properly construed, a pawn broker is not entitled to retain sale proceeds exceeding what is necessary to settle the consumer’s obligations under the agreement, and that surplus proceeds are not retained merely because the transaction falls within the statutory definition of a pawn transaction.


LEGAL PRINCIPLES


Statutory interpretation under the National Credit Act is a unitary exercise requiring attention to text, purpose, and context, with the Act to be interpreted to give effect to its purposes in section 3 through section 2(1), including consumer protection and a balanced, sustainable credit market.


A credit provider required to be registered under section 40 may not offer, make available, extend credit, or enter into credit agreements while unregistered, subject only to the exceptional circumstances contemplated in the Act. Reliance on section 42(3)(a) depends on satisfying its factual and contextual prerequisites, including the circumstance of first-time registration compelled by a new threshold determination.


Section 76(3) prohibits advertising the availability of credit by a person required to be registered but not registered, and this prohibition is not displaced by an interpretive importation of section 42(3)(a) where that section does not apply on the facts.


Interest must be calculated and charged consistently with sections 100 and 101 and the National Credit Regulations, and regulation 40 does not permit charging interest for a period exceeding the actual duration of the credit agreement; an interpretation that increases the cost of credit beyond the agreement period is inconsistent with the regulatory scheme.


Credit agreements concluded by an unregistered credit provider who is required to be registered are unlawful by operation of the Act, and the Tribunal may, in adjudicating prohibited conduct and granting remedies under the Act, declare the agreements unlawful and void as part of determining and recording the applicable legal consequence.


Under the statutory definition of “pawn transaction,” the entitlement to retain sale proceeds is limited to retaining proceeds in settlement of the consumer’s obligations under the agreement; this does not authorise retention of surplus proceeds beyond what is owed, and the Act is not interpreted as displacing the common law requirement to account for surplus in the absence of clear language.


The Tribunal has statutory power under section 151 to impose an administrative fine for prohibited conduct, the determination is discretionary and guided by section 151(3) factors, and a regulated entity cannot rely on its own failure to furnish financial information as a basis to challenge the propriety of a fine where it bore the ability to place such information before the Tribunal.






THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 1104 /2023

In the matter between:
THE LOAN COMPANY (PTY) LTD APPELLANT
and
THE NATIONAL CREDIT REGULATOR FIRST RESPONDENT
THE NATIONAL CONSUMER TRIBUNAL SECOND RESPONDENT

Neutral citation: The Loan Company (Pty) Ltd v The National Credit Regulator and
Another (1104 /2023 ) [2025 ] ZASCA 40 (8 April 2025 )
Coram: MOKGOHLOA ADP and KEIGHTLEY and COPPIN JJA and
PHATSHOANE and VALLY AJJA
Heard : 26 February 2025
Delivered : This judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the Supreme Court of Appeal website,
and release to SAFLII. The date for hand dow n is deemed to be 8 April 2024 at 11h00
Summary: National Credit Act, 34 of 2005 – interpretation – sections 40(1), 40(3),
76(3), 100(1) (c),100(1) (d)(ii) and 151 – obligation to register as credit provider –
permissibility of advertising the availability of credit and concluding credit agreements
prior to registration – permissible interest charges – power of National Credit Tribunal
in terms of the Act – to declare non-compliant credit agreements unlawful and void –

2

to order refunds to consumers – to determine and impose administrative fine s – nature
of appeal from the tribunal to the high court in terms of s 148(2) (b) of the Act .
___________________________________________________________________

ORDER
___________________________________________________________________
On appeal from : Gauteng Division of the High Court, Pretoria (Nyathi J and Molopa -
Sethosa J concurring, sitting on appeal from the National Consumer Tribuna l):
The appeal is dismissed with costs, including the costs of two counsel.
___________________________________________________________________

JUDGMENT
___________________________________________________________________
Coppin JA (Mokgohloa ADP, Keightley JA and Phatshoane and Vally AJJA
concurring) :
[1] Following an investigation by the first respondent, the National Credit Regulator
(NCR) , into the business activities of the appellant, the Loan Company (Pty) Ltd (the
Loan Company) , and in proceedings initiated by the NCR, the National Consumer
Tribunal (the tribunal) made various orders against the Loan Company . They included
a declar ation that it had contravened several sections of the National Credit Act 34 of
2005 (the Act) and the imposition of an administrative penalty.

[2] An appeal against those orders by the Loan Company to the Gauteng Division
of the High Court, Pretoria (the high court) , in terms of s 148(2) (b) of the Act , was
unsuccessful. The appeal before this Court is with the leave of the high court. The
tribunal did not participate in the proceedings and has given notice to abide by the
decision of this Court.

[3] The following will be dealt with sequentially: the background facts, the orders
of the tribunal appealed against and in respect of which leave to appeal was granted
by the high court , a discussion, which include s a brief overview of the high court’s
3

findings, the arguments of the parties, the nature of the appeal before the high court,
and lastly the conclusion and order.

Background facts
[4] The Loan Company is a typical ‘pawn ’ broking business . It gives small short -
term loans to consumers and in return retains possession of the ir movable property as
security. If the loan or credit is not repaid on time it sells the ‘pawn ed’ movable and
retains all the proceeds of the sale .

[5] Following complaints , the NCR investigated the business activities of the Loan
Company. It then brought an application in the tribunal against the Loan Company in
terms of s 140(1) (b) (read with s 140(2) (b)) of the Act (the application) . The sections,
in essence, provide that after completing an investigation , the NCR may refer the
matter to the tribunal if it believes that the person investigated has engaged in
‘prohibited conduct’. Section 1 of the Act defines ‘prohibited conduct’ as an act or
omission that is in contravention of the Act.

[6] The NCR alleged in its affidavits that the Loan Company had engaged in
multiple acts (or omissions) that were in contravention of the Act. These included: (a)
concluding credit agreements and extending credit to consumers without being
registered in terms of the Act and in contravention of sections 40(1) and 40(3) of the
Act; (b) advertising the availability of credit while not registered as a credit provider in
terms of the Act and in contravention of sections 76(3) and 76(4) (c)(iii) of the Act (read
with regulation 21(6) (b)) of the National Credit Regulations (regulations)1; and (c) over
charging interest and levying other fees and charges in contravention of sections
100(1) (c) and 100(1) (d) (read with s 101(1)) of the Act .

[7] The NCR also averred that the contraventions by the Loan Company were
repeated contraventions of the Act and regulations and consequently sought the
imposition of an administrative penalty on the Loan Company , as well as other
interdictory and further relief against it. In substantiation of its case against the Loan
Company , the NCR relied on an investigation report, which is attached to the founding

1 National Credit Regulations in GN R489 GG 28864 of 31 May 2006 I
4

papers in the application . It also relied on about f ifteen other attachments to that report,
which essentially document fifteen instances where the Loan Company either entered
into credit agreements (according to the NCR) before being registered as a credit
provider in terms of the Act, or contravened the Act (the sample transactions ).

[8] The NCR sought an order in respect of the sample transactions that all amounts
charged by the Loan Company over and above the capital amount it loaned in those
matters be refunded to the affected consumer s. It also sought orders that the Loan
Company return all vehicles it held as security to the consumers . Alternatively , in
instances where that was impossible because t he vehicle had already been sold, that
the Loan Company be directed to pay the affected consumer the difference between
the gross proceeds from the sale of the vehicle and the loan amount advanced (less
any amount the consumer had paid toward the loan). The NCR also sought other relief
which will be dealt with below at the appropriate junctur e.

[9] The Loan Company opposed the application and delivered an answering
affidavit deposed to by its sole director , Jacques Guillaume Fromet De Rosnay (Mr De
Rosnay). It essentially denied the NCR’s allegations of impropriety and illegality. It
averred, inter alia, that all the credit transactions it conclude d (includin g the sample
transactions ) were concluded after it had applied for registration as a credit provider
in terms of the Act. And it contended that it had advertised the availability of credit only
after its registration certificate as a credit provider had been issued. Ultimately , the
Loan Company denied contravening the Act . The NCR filed a replying affidavit in
which it basically joined issue with the Loan Company.

[10] After hearing the parties, the tribunal found in favour of the NCR , and against
the Loan Company . It made several orders, not all of which are relevant for purposes
of this appeal. Of those that are relevant, some dealt with contraventions of the Act by
the Loan Compan y (contravention orders). Others were remedial in nature (remedial
orders).

[11] The relevant orders included the following. First, the tribunal declared that the
Loan Company had repeatedly contravened several sections of the Act including
s 40(1) (read with s 40(3)), s 76(3), s 92(1) (read with regulation 28 and form 20.2),
5

ss 100(1) (c) and 101(1) (d)(ii) (read with regulation 40) and ss 100(1) (a) and 101(1) .
Second, i t declared that those repeated contraventions were ‘prohibited conduct’ in
terms of the Act . Third, i t declared that the sample transactions were all unlawful and
void. In respect of the contravention orders, the tribunal made the following (relevant )
remedial orders. It ordered the Loan Company to refund each of those customers all
amounts that they were charged in excess of the amount the Loan Company advanced
to them as a loan. It also ordered the Loan Company to return to the customers the
goods pawned as security for their loans , alternatively , to pay them the gross proceeds
of the sale of the goods , less the balance ou tstanding on the amount loaned . Finally,
the tribunal levied an administrative fine on the Loan Company of R250 000.00 , which
had to be paid within 30 days of its order into the account of the National Revenue
Fund. The tribunal made no order as to the costs.

[12] The Loan Company appealed to the high court in terms of s 148(2) of the Act
in respect of all the order s of the tribunal. Even though the Act and Regulations do not
make any specific provision in that regard, t he procedure the Loan Company adopted
and followed was essentially the same procedure employed when a civil matter is
appealed from the magistrate’s court to the high court. Th e matter was argued before
two judges of the high court , as would be the case generally in civil appeals from the
magistrate’s court. The record of the proceedings in the tribunal was the record in the
appeal. In addition, heads of arguments were filed by the parties.

[13] The high court dismissed the Loan Company’s appeal with costs. It found that
the ‘findings and orders’ of the tribunal ‘cannot be faulted’ and it confirmed them. The
high court then granted the Loan Company leave to appeal to this Court on a limited
basis. The extent of that grant is detailed in the high court’s order of 5 October 2023 ,
read with the Loan Company’s notice of appeal dated 31 October 2023, which is in
accordance with that order. It is limited to three of the ‘contravention ’ orders and three
of the ‘remedial ’ orders made by the tribunal and confirmed by the high court.

[14] The contravention orders appealed against are those relating to: the conclu sion
of credit agreements before the Loan Company was registered in terms of the Act;
advertising the availability of credit before being registered in terms of the Act; and
repeatedly charging interest rates in excess of the prescribed rate in terms of the Act .
6

The remedial orders appealed against are the following: the tribunal’s declaration that
the credit agreements concluded in contravention of the Act are unlawful and void; the
tribunal’s order that the Loan Company refund consumers; and, the tribunal’s
imposition of the administrative fine.

[15] Each of t hese orders raise diverse issues and they will be dealt with in turn. The
determination of th ose issues involves the interpretation of the relevant sections of the
Act. The principles of interpretation , which are now trite, were recently summarised by
the Constitutional Court in AmaBhungane Centre for Investigative Journalism NPC v
President of South Africa2 as follows:
‘As always, in interpreting any statutory provision, one must start with the words, affording
them their ordinary meaning, bearing in mind that statutory provisions should always be
interpreted purposively, be properly contextualised and must be construed consistently with
the Constitution. This is a unitary exercise. The context may be determined by consider ing
other subsections, sections or the chapter in which the keyword, provision or expression to be
interpreted is located. Context may also be determined from the statutory instrument as a
whole. A sensible interpretation should be preferred to one that is absurd or leads to an
unbusinesslike outcome. ’3 (Footnotes omitted).

[16] Section 2 of the Act contains general principles for its interpretation. In terms of
section 2(1) the Act must be interpreted in a manner that gives effect to the purposes
set out in s 3 of the Act. In terms of that section the purpose of the Act is to promote
and advan ce 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 customers by specific means identifi ed in
that section. The Act represents ‘a clean break from the past ’ and one of its main aims
is the protection of consumers , while securing a sustainable credit market by
‘balancing the respective rights and responsibilities of credit providers and
consumers’.4



2 AmaB hungane Centre for Investigative Journalism NPC v President of South Africa [2022] ZACC 31;
2023 (2) SA 1; 2023 (5) BCLR 499 (CC) para 36.
3 Ibid para 36 .
4 Sebola and Another v Standard Bank of South Africa Ltd [2012] ZACC 11; 2012 (5) SA 142; 2012 (8)
BCLR 785 (CC) paras 39 -40.
7

Orders appealed against
Entering into credit agreements before registration
[17] The NCR alleged, the tribunal found and declared, and the high court confirmed
that the Loan Company had entered into credit agreements before it was registered
on 31 March 2017 as a credit provider, and that it did so in contravention of s 40(1)
read with s 40(3) of the Act. Section 40 of the Act , insofar as is relevant to this matter,
reads as follows:
‘Registration of credit providers
(1) A person must apply to be registered as a credit provider if the total principal debt owed to
that credit provider under all outstanding credit agreements, other than incidental credit
agreements, exceeds the threshold prescribed in terms of section 42(1);
(2) In determining whether a person is required to registe r as a credit provider –
(a) the provisions of subsection (1) appl y to the total number and aggregate principal debt of
credit agreements in respect of which that person, or any associated person, i s the credit
provider . . .
(b) . . .
(c) . . .
(d). . .
(3) A person who is required in terms of subsection (1) to be registered as a credit provider,
but who is not so registered, must not offer, make available or extend credit, enter into a credit
agreement or agree to do any of those things.
(4) A credit agreement entered into by a credit provider who is required to be registered in
terms of subsection (1) but who is not so registered is an unlawful agreement and void to the
extent provided for in section 89.
(5) . . .
(6) . . .’

[18] In this Court the Loan Company’s argument in respect of this ground of appeal
was the following. The finding that it had contravened s 40(1) read with s 40(3) of the
Act is incorrect. At the time of entering into credit agreements it had already applied
for registration. In terms of s 42(3) (a) of the Act a credit provider which is obliged to
register for the first time because of a new threshold determination made by the
Minister, may , after it has applied for registration , continue to provide credit until the
NCR has decided on its application. The Loan Company, in essence, argued that it
registered for the first time on 9 June 2016. It denied that it was obliged to register
8

before the threshold was changed from R500 000.00 to nil by the Minister on 11
November 2016 . (It is common cause that until 11 November 2016 the threshold for
registration was R 500 000 and thereafter it was nil ).5 The Loan Company further
argued that there is no evidence that it had concluded credit agreements before 9
June 2016. Th ese argument s were also advanced in the high court and w ere rejected.
The high court found , essentially , that the Loan Company ’s registration did not fall
within the provisions of s 42 and it could therefore not rely on s 42(3) (a) of the Act.

[19] However, in its answering affidavit the Loan Company placed no reliance on
s 42(3)(a) in its defence. Its version in the affidavit, confirmed under oath by Mr De
Rosnay , is the following. It was only registered as company in October 2015. It applied
for registration as a credit provider to the NCR on 9 June 2016 and thereafter
commenced ‘trading’ by concluding credit agreements with consumers. According to
Mr De Rosnay , it was permissible for the Loan Company to do so because of the
provisions of s 89(2) (d) of the Act . According to Mr De Rosnay , the business the Loan
Company conducted until it decided to register as a credit provider on 9 June 2016 ,
‘did not involve any credit agreements as regulated by legislation’ .

[20] In its founding papers the NCR allege s that during February 2017 it became
aware of advertisements put up by the Loan Company on its website , advertising the
availability of credit and claiming that it was a registered credit provider, whereas it
was not registered. On 16 February 2017 the NCR appointed an inspector to
investigate the Loan Company’s business. As part of the investigation, it obtained
copies of the sample transactions, which were eventually attached to the investigation
report. An analysis of those transact ions lead to the formulation of the greater part of
the NCR’s case against the Loan Company in the tribunal.

[21] The NCR deal s specifically, inter alia, with the Loan Company’s registration
status. It alleges the following : The first time the Loan Company was registered as a
credit provider with the NCR was on 31 March 2017. At the time of the investigation
(1 March 2017) the Loan Company was not registered. It had previously applied for

5 De Bruyn NO and Others v Karsten [2018] ZASCA 143; 2019 (1) SA 403 (SCA) ( De Bruyn ) para 26;
National Credit Act Regulations in GN 713 GG. 28893 of 1 June 2006 Item 5 ; National Credit Act
Regulations in GN 513 GG 39981 of 11 May 2016 item 2 .
9

registration, but that application lapsed after it failed to provide the NCR with certain
requested information within the stipulated time. The Loan Company re -applied for
registration after its initial application had lapsed, and it is only then that it was
registered on 31 March 2017. All the sample transactions were entered into prior to
that date, most having been concluded in 2016.

[22] In the Loan Company’s answering affidavit Mr De Rosnay does not engage
directly with each averment made by the NCR in its founding affidavit, but gives a
uniform, vague response to all those averments in a few paragraphs under the heading
‘Registration status of the respondent’. He does not expressly admit or deny that the
Loan Company’s first application lapsed and that it reapplied resulting in its registration
on 31 March 2017 . Instead, he aver s the following:
’10.1 The Respondent’s application for registration with the Applicant was submitted on the
9th of June 2016. The Respondent started trading, after it was surmised that the registration
of the Respondent would be successful and given the provisions of section 89(2)(d) and as I
was advised at the time.
10.2 I employed the services of an attorney one Richard Nortje at the time to assist me with
the registration. He handled all the paperwork including the drafting of the loan agreements
and preparing the documents for Respondent ’s registration with the Applicant. He has since
emigrated, and I do not have a copy of what was submitted when. What I can say is that
Annexure C to the Applicants papers surmises that the Respondent started trading in 2015.
This is not correct as the Resp ondent was only registered as a company in October 2015. The
business that the Respondent conducted until it decided to register as a credit provider did not
involve any credit agreements as regulated by legislation.
10.3 All of the information required by the Applicant, to be submitted to the Applicant to
finalise the registration of the Respondent was provided to the Applicant. Respondent ’s
application was never refused and since the Applicant ’s letter of 13 June 2016 and having
provided the relevant information to Applicant without delay, nothing was heard from the
Applicant until they issued the registration certificate on 31 March 2017.
10.4 The Applicant, as a result, only issued the Respondent’s certificate on the 31st of March
2017.
10.5 In looking at section 89 of the Act, it states in (1) that this Section does not apply to a
pawn transaction. It does not deserve any debate that the Act has been formulated in a clumsy
matter and accordingly all of the Court cases over many years, as I am advised.
10.6 Nevertheless, Section 89(2)(d) states that subject to (3) and (4) a credit agreement is
unlawful if – (d) at the time the agreement was made, the Credit Provider was unregistered
10

and this Act requires the Credit Provider to be registered. So it follows that if Respondent
concluded pawn transactions he would be exempted from having conducted an unlawful
activity and would rather be subject to a compliance notice a contemplated in th e Act.
10.7 Irrespective of the fact that section 89 does not apply to a pawn transaction, Section
89(4) states that: (2)(d) does not apply to a Credit Provider if – (a) at the time the credit
agreement was made, or within 30 (thirty) days after that time, the Credit Provider had applied
for registration in terms of Section 40, and was awaiting a determination of that application. I
am advised that legal argument will be presented if required regarding the interpretation of
legislation and it s application to the A ct.
10.8 The Applicant states that: Respondent has accordingly repeatedly contravened
Section 40(1), Section 40(3) and Section 89(2)(d) of the Act. This is denied as the agreements
concluded constitutes pawn transactions.
10.9 This submission by the Applicant is premised on the basis that the Respondent’s
agreements are not defined as pawn transactions.
10.10 I submit that all of the transactions drawn as a sample concluded by the Respondent
took place subsequent to the Respondents application for registration, and the sample
agreements were concluded before the certificate of registration was issued. Whe n the
Applicant conducted its investigation it was inclined to issue a compliance notice in terms of
section 55 of the Act read together with section 54 and regulation 13.’

[23] No confirmatory affidavit by Mr Richard Nortje (Mr Nortje) is attached to the
answering papers. Accordingly, what Mr De Rosnay states in the paragraphs quoted
and what was in the personal, first -hand knowledge of Mr Nort je, is inadmiss ible
hearsay evidence , in the absence of confirmation by Mr Nortje. Mr De Rosnay could
not have know n what was submitted , or when , and he could not seriously contend that
all the information requested by the NCR was given to it . Only Mr Nortje and the NCR
could testify to that. In its replying affidavit the NCR provides proof of the r equest that
it had sent to the Loan Company , its notification to the Loan Company that the
application would be refused if it fail ed to submit the information within a stipulated
period , and Loan Company’s failure to comply with that request .

[24] At the time the Loan Company applied for the first time on 9 June 2016 , the
threshold was R500 000 but, on its version, it was not then obliged to register.
However, t he fact that it had to re -register indicates that something compelled it to do
so. In its answering affidavit it f ound support in s 89(4) of the Act and in particular s
11

89(2) (d). That section provide s that the provision , that a credit agreement entered into
by an unregistered credit provider who is required to be registered , is unlawful, does
not apply if the agreement was concluded after an application for registration was
made, and the credit provider was awaiting the outcome of that application. But th at
support was misplaced, because s 89(1) explicitly provides that the section does not
apply to a pawn transaction. The Loan Company’s transactions , on its own admission ,
are pawn transactions.

[25] This explains the Loan Company’s change in approach by the time the matter
went on appeal to the high court. Even though n o mention at all was made of s 42(3) (a)
in the proceedings before the tribunal , reliance on that section became the Loan
Company’s main defence (in argument) in the high cou rt. In this Court it place s no
reliance at all on s 89 and b ases its defence on s 42(3) (a). Unfortunately, t his once
again proves to be ‘a building of straw’ because that section applies to specific
instances, namely, where a credit provider who was never registered or previously
required to be registered, is required to register , because the threshold determined by
the Minister now obliges it to register. On the facts before the tribunal and the high
court, t his was not the position of the Loan Company.

[26] On the Loan Company’s own version it applied for registration on 9 June 2016 ,
when it was not obliged to register. It could only have done so voluntarily (assuming
in its favour that it was not required to register under the R 500 000 threshold). In which
event, it was very easy for it to say so and to have relied on s 40(5) of the Act, which
provides that the person t o whom s 40 of the Act does not apply may nevertheless
‘voluntarily apply to the [NCR] at any time to be registered as a credit provider ’. In that
event, it would not have been necessary for it to rely on s 89 or even on s 42 of the
Act, which are not applicable in that instance. And in the alternative, it should not have
applied to be registered , if it was not obliged to do so . But its persistence to register
and its reliance on those sections belies its denial that it was obliged to register as a
credit provider at the time when it applied to be registered. The Loan Company even
found it necessary to employ an attorney to attend to that process. All of t hat implies
something other than voluntari ness on its part. The evidence of the attorney , who
would have first -hand knowledge of those facts , is conspicuously lacking.

12

[27] In the circumstances there is no basis for accepting Mr De Rosnay’s
inadmissible hearsay version and rejecting that of the NCR , which is supported with
documentation. Section 42 does not apply to the Loan Company and its reliance on s
42(3) (a) is misplaced. The high court did not err in finding that the tribunal correctly
declared that the Loan Company contravened s 40(1) read with s 40(3) of the Act.

Advertising the availability of credit
[28] Section 76(3) is clear and unambiguous; it reads as follows:
‘A person who is required to be registered as a credit provider, but who is not so registered,
must not advertise the availability of credit, or of goods or services to be purchased on credit.’

[29] The Loan Company does not deny advertising on its website, but it once again,
belatedly seeks support in s 42(3) (a), which , as found above, does not apply to it. The
Loan Company argues that s 76(3) must be purposefully interpreted in the context of
the Act ‘in its totality, including section 42(3) (a)’. The argument then proceeds as
follows : Because s 42(3) (a) allows a credit provider to conclude credit agreements
after it has submitted its application for registration – ‘[a] business -like interpretation
of s 76(3) requires that advertising is allowed to credit providers who are entitled to
enter into credit agreements’. The Loan Company contends that on such an
interpretation its advertisements were lawful.

[30] This is a far -fetched and untenable argument. Firstly, the Loan Company’s
reliance on s42(3) (a) is misplaced , because on its own version it did not apply for
registration as envisaged in s 42 of the Act. Secondly, the interpretation contended for
would require more than a mere ‘reading -in’ to s 76(3) of what is permitted in terms of
s 42(3) (a). This would be more like legislating, which is not within the sphere of
competence of the courts , let alone the tribunal . The high court did not err in its
conclusion regarding the tribunal’s order on advertis ing.

Charging interest in excess of the prescribed rates
[31] The tribunal found that the Loan Company permissibly charged the rate
applicable to short -term agreements as allowed for in terms of item 5 of regulation 4.2.
However , it found that in calculating the interest the Loan Company impermissibly
charged the same rate of interest, irrespective of the duration of the agreement. For
13

example, it would charge 5 percent of the loan amount as interest in an agreement of
29-days duration and charge that same rate in respect of an agreement with a duration
of 30 -days or more. The tribunal held that since the sample transactions had a
specified date range the Loan Company was obliged to take into account the actual
number of days in th e range of each agreement and to calculate the interest incurred
for the specified number of days .

[32] Section 100 (1)(c) of the Act provides:
‘A credit provider must not charge an amount to, or impose a monetary liability on , the
consumer in respect of –
(a) . . .
(b) . . .
(c) an interest charge under a credit agreement exceeding the amount that may be charged
consistent with this Act ; or
(d) . . . ’

[33] Section 101 of the Act deals with the cost of credit. Section 101 (1)(d), which
deals with interest, provides:
‘a credit agreement must not require payment by the consumer of any money or other
consideration, except – . . . interest , which (i) must be expressed in percentage terms as an
annual rate calculated in the prescribed manner; and (ii) must not exceed the applicable
maximum prescribed rate dete rmined in terms of section 105.’

[34] In terms of s 105 the Minister , after consulting the NCR , may prescribe a
method for calculating the maximum r ate applicable to each subsector of the
consumer credit market. Regulation 40 provides the method . Even though regulation
40(2)(c)(iv) 6 provide s, in respect of short -term loa ns, that ‘the number of days in the
month may be interpreted either as 30, or as the actual number o f days in the particular
month’ , that does not mean that in months consisting of 28 days , it is permissible to
charge a consumer interest for 30 days, and vice versa. Permitting that would be
unreasonable as it would i ncrease the already high cost of credit. As an example, in
the case of one of the Loan Company’s debtors, Ms Katsande, she was charged

6 National Credit Regulations in GN R489 GG 28864 of 31 May 2006 .
14

interest for 30 days, whereas the agreement only had a 29 -day duration. This resulted
in her paying an extra R20 in interest.

[35] Properly construed , regulation 40 (2)(c)(iv) means no more than that credit
providers have an election whether to charge interest for the actual number of days of
the month or for 30 days . But t hey may only cha rge interest for 30 days if the
agreement ’s duration is for 30 days or more . In other words, the p eriod charge d for
must not be for more than the duration of the credit agreement . The Loan Compan y’s
interpretation that the regulation permitted it to do so , was therefore rightfully found by
the tribunal to have been incorrect and unreasonable , and in contravention of the Act .

[36] In terms of the regulations , the daily value of the amount outstanding (the
deferred amount ) is of crucial importance in the calculation of the interest. On any
particular day , several entries may be made in respect of an account. The regulations
are therefore very specific about the date s on which fees and charges are to be debited
to an account . The deferred amount for the day must be calculated as the average
deferred amount for the day , or if the credit agreement provides otherwise, as the
deferred amount at the particular time of the day. Interest may be added to the deferred
amount only once , at the end of the month. A credit provider may thus not require
payment of , or debit , an interest charge before the end of the day to which the interest
charge applies . This also means that a consumer cannot be charged interest for a
period beyond the actual duration of the credit agreement .

[37] In this Court the Loan Company also argued that there was no evidence that it
did not calculate interest as contemplated in regulation 40(1), or that it added and
compounded interest daily as the tribunal found. The main complaint in the tribunal
was not in that regard , but because the Loan Company charged consumers an interest
rate of 5% irrespective of whether the agreement endured for a period of an entire
month. The NCR gave examples from the sample transactions, such as that between
the Loan Company and Ms Fala tsi, the loan agreement with Mr Tselapedi and the
agreement with Ms Katsande. Those loans were all payable in 29 and not 30 or more
days. The Loan Company charged 5 percent as interest in those agreements as well
as 5 percent in the other agreements that endured for more than 30 days. As pointed
15

out above , that is not permissible . For all of the above reasons, the tribunal’s finding
was correct. There is no merit in this ground of appeal.

First remedial order - declaring credit agreements null and void
[38] The Loan Company argues that the tribunal did not have the power to declare
the sample credit agreements unlawful and void, and that only a court of law may do
so. In support of its argument, it relies on s 164(1) of the Act which provides:
‘Nothing in this Act renders void a credit agreement or a provision of a credit agreement that,
in terms of this Act is prohibited or may be declared unlawful unless a court declares that
agreement or provision to be unlawful.’

[39] The Loan Company also relies on a dictum of this Court in Vesagie NO and
Others v Erwee NO and Another (Vesagie )7 where it was stated: ‘ . . . unless the party
extending the credit is registered as a credit provider in terms of s 40 of the Act, the
agreement is unlawful. The consequence of such a finding is that a court is required
to declare the agreement null and void ab initio ’. It further argues that the stipulation
in s 164 (1) of the Act that only a court , and not the tribunal, may declare an agreement
unlawful or void, is also borne out by s 89(5) (a) of the Act .

[40] The Loan Company th en argues that s 40(4) of the Act, which is quoted earlier
in this judgment, does not empower the tribunal to declare credit agreements unlawful
and void. The section provides, in essence, that a credit agreement concluded by a
credit provider, who is required to be registered, and is not registered ‘is an unlawful
agree ment and void to the extent provided for in section 89’. According to the Loan
Company , the section does not empower the tribunal to declare agreements unlawful
and void because : (a) section 89 of the Act does not apply to pawn transactions; (b)
section 40(4) is subject to the stipulation in section 164(1); (c) sections 27 and 17 of
the National Credit Amendment Act 7 of 2019 , which have not commenced yet,
respectively, insert the words ‘or the Tribunal’ after the words ‘a court’ in s 164(1) of
the Act, so that the section should read ‘. . . unless a court or the Tribunal declares the
agreement or provision to be unlawful . . .’. The effect of the amendment is that the
tribunal will also be empowered to declare a prohibited agreement, or an agreement

7 Vesagie NO and Others v Erwee NO and Another [2014] ZASCA 121 para 1.
16

that may be declared unlawful, to be unlawful. According to the Loan Company , this
is an indication that the legislature recognised that the tribunal did not have the
necessary power to do so, hence the amendment; and (d) section 90(4) (b) of the Act
also allows for a court and not the tribunal to declare an entire agreement unlawful.

[41] In Vesagie this Court accepted that an agreement of purchase and sale that
provide d that interest was payable on deferred payments , was a credit transaction
under section 8(4) (f) of the Act and unless the party extending the credit was registered
as a credit provider in terms of section 40 of the Act, the agreement was unlawful.
More relevant for present purposes , it found that ‘[t]he consequence of such a finding
is that a court is required to declare the agreement null and void ab initio ’. But in
reaching that conclusion i t did not refer to either s 40(4) or to s 164(1) of the Act .

[42] In Chevron SA (Pty) Limited v Wilson t/a Wilson’s Transport and Others 8 the
Constitutional Court dealt with the constitutionality of section 89(2)( c). It confirmed
that, in terms of s 89, if it was applicable , the credit agreement concluded by an
unregistered credit provider who was supposed to be registered, would be unlawful in
terms of the Act itself.9 In other words, the illegality follows ex lege , and it is not
established by any order of court or the tribunal . If this is so, then the appeal on this
ground must fail. However, t he difficulty in this matter is that it involves pawn
transactions, in respect of which s 89 is not applicable. The question is whether this
means that as far as pawn transactions are concerned, illegality does not arise ex
lege?

[43] In De Bruyn10, where this Court confirmed what had been held in Vesagie , but
accepted that the mere fact that the credit provider was not registered at the time of
concluding the agreement would render such agreement null and void. None of th ose
decisions dealt with pawn transactions , or with the power s of the tribunal .


8 Chevron SA (Pty) Limited v Wilson t/a Wilson’s Transport and Others [2015] ZACC 15; 2015 (10)
BCLR 1158 (CC) para 7.
9 See also National Credit Regulator v Opperman and Others [2012] ZACC 29; 2013 (2) BCLR 170;
2013 (2) SA 1 (CC) (Opperman ) where the Constitutional Court dealt with s 89(5)( c).
10 Op Cit fn 5 para 13.
17

[44] That the Act is not a model of clarity is an accepted fact , as has been pointed
out by other courts,11 including this Court.12 It is an understatement to say that its
interpretation is a daunting exercise . Section 40( 4) of the Act, which applies to all credit
agreements , including pawn transactions , does not refer at all to s 164 of the Act , but
it refers to s 89. However, s ection 89(1) stipulates that section 89 it is not applicable
to pawn agreements. On the other hand, Section 164 deals with ‘Civil actions and
Jurisdiction ’. It is directed at court proceedings and is not directed at proceedings in
the tribunal. The fact that the new Amendment Act intends to add ‘tribunal’ to ‘court’ in
s 164(1) is hardly consoling. If the aim was to provide clarity, this could easily have
been achieved by an amendment to the powers of the tribunal as provided in s 150 of
the Act.

[45] Section 164 correctly does not require an agreement that is unlawful in terms
of the Act to be declared unlawful by a court. And it confirms that an unlawful
agreement does not require a declaration by a court that it is null and void . The section
is therefore not applicable , because s 40(4) provides that the agreements envisaged
there are unlawful.13 If s 164(1) was to be applied , as contended for by the Loan
Company, the clear wording of both, s 164(1) and s 40(4) would have to be ignored .
And the clear stipulation of unlawfulness in s 40 (4) w ould be rendered nugatory . This
is because, having obtained an order in the tribunal , the NCR would still be obliged to
approach a court for an order declaring the prohibited , unlawful agreement to be
unlawful .

[46] In terms of s 40 (3) of the Act in general, the conclusion of a credit agreement
by an unregistered credit provider who is supposed to be registered , is prohibited. This
is of course subject to the exceptional circumstances contemplated in s 42(3) and
89(4) of the Act. In terms of s 40(4) an agreement contemplated in s 40(3) is an
unlawful agreement and void to the extent provided for in s 89. At common law an

11 Micro Finance South Africa and Another v National Credit Regulator and Others [2020] ZAGPPHC
463; 2021 (1) SA 487 (GP) para 3. 12.
12 Nedbank Ltd and Others v The National Credit Regulator and Another [2011] ZASCA 35; 2011 (3)
SA 581 (SCA); [2011] 4 All SA 131 (SCA) (Nedbank ) para 2; National Credit Regulator v Lewis Stores
(Pty) Ltd and Another [2019] ZASCA 190; 2020 (2) SA 390 (SCA); [2020] 2 All SA 31 (SCA) para 9.
13 Op cit fn 10 para 8.
18

unlawful contract is generally considered as void ab initio and to be of no effect, since
it is a nullity, and it cannot be enforced .14

[47] A sensible interpretation of s 40(4) is called for in this instance . The general
principle is that agreements in contravention of the Act are unlawful and have no effect.
There is no rationale for distinguishing between pawn transactions and other credit
agreements in this respect. The cross -reference to s 89 in s 40(4) is not intended to
draw that distinction. It merely states the position insofar as it applies to that section.
What is clear is that the intended default position is that credit agreements entered
into by unregistered credit providers who are required to be registered will be null and
void. That consequence is justified in that such agreements breach one of the most
fundamental protections provided to consumers under the Act.15 They are all unlawful
in terms of the Act by operation of law .

[48] Even though s 89(5) (a) requires that unlawful agreements in terms of that
section must be declared void ab initio , that follows as a matter of law because these
agreements did not start off as lawful and then become unlawfu l, but were unlawful
from the outset. This is borne out by the wording of s s 164(1) and 90(3) of the Act .
Section 90 deals with unlawful provisions in a credit agreement. Section 90(3)
provides: ‘In any credit agreement , a provision that is unlawful in terms of this section is void
from the date that the provision purported to take effect .’

[49] In conclusion on this point, the tribunal did not act outside the scope of its
powers when it declared that the sample agreements were unlawful and null and void.
One of the functions of the tribunal in terms of s 27 (a) of the Act is to adjudicate in
relation to any application made to it in terms of the Act and to make any order provided
for in terms of the Act in respect of such an application. It may also determine whether
prohibited conduct has occurred and if so, im pose a remedy provided in the Act.16In
this instance the tribunal merely stated what the l egal position in terms of the Act

14 Blacher v Josephson [2023] ZAWCHC 27; 2023 (3) SA 555 (WCC) para 23.
15 Compare Mayo NO v De Montlehu [2015] ZASCA 127; 2016 (1) SA 36 (SCA) paras 14 -18.
16 Compare Ledla Structural Development (Pty) Ltd and Others v Special Investigating Unit [2023]
ZACC 8; 2023 (6) BCLR 709; 2023 (2) SACR 1 (CC) par as 65-66.
19

was,17 namely, that the impugned agreements of the Loan Company were unlawful
and null and void. Section 150 of the Act is not exhaustive of the tribunal’s powers and
the high court did not err in finding that the tribunal acted within its powers.

Second remedial order - that consumers be refunded
[50] The order that the Loan Company refund consumers was the consequence of
the finding and confirmation that the sample agreements which the Loan Company
concluded before it was registered as a credit provider , were prohibited and were
unlawful and void. This is apparent from paragraph 164.3 of the tribunal’s order. The
issue of the entitlement to the excess after the sale of the asset retained as security ,
is dealt with later under that rubric. As for the power of the tribunal to order refunds ,
the exercise of that power is entirely appropriate and falls within the parameters of
s 150 of the Act.18 The section empowers the tribunal to make orders requiring
repayment to the consumer of any excess amount charged, together with interest, at
the rate set out in the agreement, or any other appropriate order required to give effect
to a right as contempla ted in the Act.

[51] The order was to the effect that the Loan Company repay the consumers in the
sample agreements all amounts, over and above the amount the Loan Company
loaned to those consumers, and to return to them the assets that they had pawned , or
the proceeds of the sale of the assets less the amount loaned to them (after deducting
the amount the consumer repaid in that respect). That order was not only appropriate
but was the only order that was justifiable in respect of those instances.19

Pawn brokers’ entitlement to proceeds of sale of asset
[52] The Loan Company interprets the definition of ‘pawn transaction’ as one
entitling it to retain all the proceeds of the sale of the pawned asset, irrespective of
whether it is more than what the consumer was liable to repay in terms of the credit
agreement. The phrase ‘pawn transaction’ is defined in s 1 of the Act as:
‘… an agreement, irrespective of its form, in terms of which –

17 Golela O ‘The Constitutionalisation of the Text for Statutory Illegality in South African Contract Law :
Cool Ideas v Hubbard 2014 (4) SA 474 (CC) ’ (2018 ) 21 Potchefstroom Electronic Law Journal para 3.
18 Bornman v National Credit Regulator 2013 ZASCA 130; 2014 (3) SA 384 (SCA) ( Bornman ) para 27.
19 Compare Bornman para 27.
20

(a) one party advances money or grants credit to another, and at the time of doing so, takes
possession of goods as security for the money advanced or credit granted; and
(b) either –
(i) the estimated resale value of the goods exceeds the value of the money provided or the
credit granted;
(ii) a charge, fee or interest is imposed in respect of the agreement, or in respect of the amount
loaned or the credit granted; and
(c) the party that advanced the money or granted the credit is entitled on expiry of a defined
period to sell the goods and retain all the proceeds of the sale in settlement of the consumers’
obligations under the agreement .’ (Emphasis added .)

[53] The Loan Company’s interpretation of the definition fails to consider the
emphasised portion of ss (c). In a pawn transaction the credit provider is only allowed
‘to retain all the proceeds of the sale in settlement of the consumer ’s obligations under
the credit agreement’. This does not mean that the credit provider is entitled to retain
any more than what the consumer was obliged to pay the credit provider in terms of
the credit agreement. In the definition, the words ‘all proceeds of the sale’ are qualified
by the words ‘in settlement of a consumers ’ obligations under the agreement’. A
consumers’ obligations ‘under the agreement’ consists only of repaying the amount of
the loan advanced to him or her and the lawful charges , including interest , that had
been added in terms of the agreemen t.

[54] One must assume, in the absence of any indication to the contrary , that in
enacting the Act and defining ‘pawn transaction’ , the legislature did not intend to alter
the common law. Under the common law the pawn broker is not entitled to retain the
excess , but must account to the consumer concerning any surplus after settling the
debt.20 After all , one of the aims or purposes of the Act is to ensure consistency and
to promote and advance the social and economic welfare of South Africans , and
advance all the other laudable objectives referred to in s 3 of the Act.21 In terms of s
2(1) the Act must be interpreted in a manner that give s effect to those objectives.


20 See for example the position in Botswana which would be the same as in South Africa: Quick Cash
(Pty) Ltd v Molome 2003 All Bots 20 (CA) pages 4 -5; see also Grobler v Oosthuisen [2009] ZASCA 51;
2009 (5) SA 500 (SCA) ; [2009] 3 All SA 508 (SCA)
21 Op cit fn 13 ( Nedbank ) para 2; National Credit Regulator v Standard Bank of South Africa, Limited
[2019] 3 All SA 846; 2019 (5) SA 512 (GJ) .
21

[55] On the Loan Company’s interpretation of the definition it is really contending for
something like the prohibited pactum commissorium in the context of pledges. That is
an agreement where, if the pledg or defaults , the pledgee may keep the security as his
or her own property , irrespective of its value and the paucity of the debt .22 The only
difference in this instance, is that the Loan Company argues that it is entitled to sell
the goods given as security, and to retain all of the proceeds of the sale irrespective
of the paucity of the outstanding debt and the value of the pawned asset.

[56] Commissary agreements were prohibited in Roman times because they were
harsh, unjust and unfair . That prohibition has endured for centuries and still applies in
South African law.23 The same considerations which motivated the prohibition of the
commissary agreements are also present in this instance. This may be illustrated with
reference to the facts of the sample cases. In one instance, the Loan Company
advanced Mr Tselapedi a loan of R35 000.00. He was to pay back R42 000.00 by 3
August 2016. He gave his motor vehicle , a 2002 BMW X5 3 litre with an estimated
value of R100 000.00 (which he had bought for R 70 000.00) , as security. When he
defaulted , the Loan Company sold his vehicle for R 65 000.00, which was almost
double the amount it had loaned him initially and retained all the proceeds of the sale.

[57] The language of s 1(c) accords with the common law position. To interpret it
any other way would be to promote harshness and unfairness , and to undermine all
the laudable objectives that the Act seeks to promote. If the interpretation of the Loan
Company is to prevail it will not only defeat those objects, but undermine and render
meaningless the Act’s regulation of, for example , the charges that may or may not be
levied by a credit provider. Even though it is quintessential to a pawn transaction for
goods to be given as security for the loan the pawn broker advances to the consumer
and for the pawn brok er to sell the goods upon the consumer’s default, it would be
harsh and unfair for the pawn broker to retain any amount from the sale in excess of
what the consumer was owing to it . And therefore , it should not be permissible.24



22 Hesseling v Meyer 1991 (1) SA 276 (SWA) at 280F -281F.
23 Graf v Bue chel [2023] 2 All SA 123 ; 2003 (4) SA 378 (SCA) (Graf) paras 9 -12.
24 Compare Graf para 29.
22

Third remedial order - the power to impose an administrative fine
[58] This power is explicitly given to the tribunal in terms of s 151(1) of the Act. The
section provides: ‘ The Tribunal may impose an administrative fine in respect of
prohibited or required conduct in terms of this Act or the Consumer Protection Act,
2008’. In terms of s 151(5) of the Act the fine must be paid into the National Revenue
Fund. Section 151(2) stipulates the limits of the fine. It may not exceed the greater of
10 percent of the transgressor’s annual turnover during the preceding financial year ,
or R1 million.

[59] The Loan Company’s argument in respect of the fine imposed on it is the
following. Section 151(2) implies that the financial position of the credit provider must
be considered when the tribunal considers imposing a fine. In this instance the tribunal
erred in imposing a fine because it did not consider the Loan Company’s financial
position since no such evidence was put before it. Secondly, because the findings of
the tribunal on the merits were wrong, the imposition of the penalty was not proper.
Thirdly, the penalty was imposed purely to punish the Loan Company and not to
encourage it ‘to refrain from future contravention’. Fourthly, the tribunal made the Loan
Company a scapeg oat when imposing the fine.

[60] Section 151 gives the tribunal a discretion. Unless it is shown that the tribunal
erred in the exercise of that discretion, the interference with its imposition of the penalty
would not be justified.25 Section 151(3) insofar as is relevant to this matter, provides
the following. When determining an appropriate fine the tribunal must consider the
following factors: (a) the nature, duration, gravity and the extent of the contravention;
(b) any loss or damage suffered as a result of the contravention; (c) the behaviour of
the transgresso r; (d) the market circumstances in which the contravention took place ;
(e) the level of profit derived from the contravention; (f) the degree to which the
transgressor cooperated with the NCR; and (g) whether the transgressor had
previously been found to h ave been in contravention of the Act or the Consumer
Protection Act, as the case might be.


25 See inter alia Molteno Brothers and Others v South African Railways and Others 1936 AD 321 at
326-327; City of Cape Town v South African National Roads Agency Ltd and Others [2013] ZAWCHC
74 para 72.
23

[61] The Loan Company has not shown that the tribun al did not consider the factors
that it was obliged to take into account in terms of s 151(3) when it imposed the fine ,
or that it took into account factors that it was not supposed to have taken into account.
The Loan Company’s financial position is a matter that is peculiarly and exclusively
within its knowledge. It cannot seek to benefit from deliberately withholding th at
information to make the task of the tribunal difficult or even impossible. The Loan
Company was acutely aware that the NCR wanted (as part of its relief) the tribunal to
impose an administrative penalty. It had ample opportunity to disclose its financial
position in its own interest. The lack of candour on the part of the Loan Company in
that regard persisted in the high court and in this Court. Despite its arguments, it s till
did not provide any insight into its financial position. And more significantly, it has not
shown that the penalty imposed on it exceeded the limits prescribed in s 151(1). The
high court correctly dismissed its appeal in respect of t he administrative penalty.

Conclusion
[62] For all the above reasons the entire appeal of the Loan Company must fail. The
tribunal’s orders stand. Because of the passage of time, the time limit stipulated in the
tribunal’s order , in particular in paragraphs 164.4 and 164.6 , are to be adjusted . The
30 days referred to in paragraph 164.4, and the 120 days referred to in paragraph
164.6 of the tribunal’s order are to commence from the date of this Court’s order.
Unless the Loan Company has already paid the administrative fine , the 30 days
referred to in paragraph 164.7 are to commence from the date of this Court’s order.

[63] In the result :
The appeal is dismissed with costs, including the costs of two counsel.


________________
P COPPIN
JUDGE OF APPEAL

24

Appearances

For the appellant: J G Bergenthuin SC
Instructed by: Cilliers and Reynders Attorneys, Pretoria
c/o Honey and Partners Inc. , Bloemfontein

For the first respondent: L Kutumela SC with N A Moyo
Instruct ed by: VDT Attorney s, Pretoria
c/o Phats hoane Henny Attorneys, Bloemfontein.

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