SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
in compliance with the law and SAFLII Policy
IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
CASE NO:2026-045648
In the matter between:
SAM DALE TRADING (PTY) LTD Applicant
t/a CONSUMER FRIEND
and
MBD LEGAL COLLECTIONS (PTY) LTD First Respondent
RCS CARDS (PTY) LTD Second Respondent
Delivered: This 28th day of July 2026 by email to the parties
_________________________________________________________
REASONS FOR ORDER
_________________________________________________________
NDITA, J
[1] This application was brough on urgent basis for final relief arising
from an attempt by the First Respondent, to unilaterally instruct payment
distribution agents and debt counsellors to reroute payments of “ Paying
Matters” portfolio away from the Applicant. The portfolio was historically
administered by Applicant under a written service agreement concluded
between the Applicant and the Third Respondent. The relief that was
sought was couched in the following terms:
1. The Applicant’s failure to abide by the rules pertaining to time periods, filing
service and compliance with the rules of this Court is condoned and this
application is dealt with as one of urgency in accordance with Uniform Rule 6
(12).
2. It is declared that, in relation to the portfolio acquired by the first respondent
from the second respondent (‘the portfolio’), the first respondent is bound by
the service agreement concluded between the applicant and the second
respondent on 26 October 2022 (effective from 1 October 2020) (‘the
Consumer Friend Agreement’) as the second respondent’s “permitted assign”
and/or “other legal successor”) for purposes of clause 1.4 thereof.
3. The first respondent is directed to comply with the Consumer Friend
agreement in relation to the portfolio, including (without limitation) clause 13.1
thereof, by recognising and giving effect to the applicant’s entitlement to retain
and administer Paying Matters (as defined therein) until they are paid in full.
4. Directing the first respondent, within 24 hours of service of this order, to take
all steps within its power (including issuing written instructions to all relevant
payment distribution agents (‘PDA’s) and any third party administrators and/or
service providers utilised by the first respondent in relation to the portfolio) to
ensure that payments in respect of the portfolio (and, in particular, Paying
Matters) are routed for onward transmission to the applicant in accordance
with existing administration and payment-flow arrangements contemplated by
the Consumer Friend agreement within 24 hours of service of this order.
5. The first respondent is interdicted and restrained, pending full compliance with
paragraphs 3 and 4 above, from:
5.1 instructing any PDA, debtor, debt counsellor, or third party administrator or
service provider to route payments away from the applicant in respect of
the the portfolio;
5.2 receiving, retaining applying appropriate or dealing with payments in respect
of the portfolio otherwise than as contemplated by the Consumer Friend
agreement; and
5.3 interfering. directly or indirectly, with the applicant’s administration of the
portfolio.
6. The first respondent is further directed, within 5 court days of service of this
order, to furnish the applicant with a schedule certified by a duly authorised
representative of the first respondent reflecting, in respect of the portfolio:
6.1 the account identifiers;
6.2 the relevant PDAs and/or payment channels; and
6.3 All receipts collected from 1 February 2026 to date.
7. The first respondent is ordered to pay costs of two counsel on scale C.
[2] On 23 March 2026, I issued an order granting the Applicant the
above relief as prayed for in the notice of motion. These are the reasons
for the order.
The Parties
[3] The Applicant, Consumer Friend (PTY) Ltd (“Consumer Friend”) a
private company duly incorporated in accordance with the laws of the
Republic of South Africa with its registered address at […], The C […]
E[…], Westway Office Park, Westville, KwaZulu -Natal. It conducts its
business as a “credit agent” performing outsourced debt review
administration services on behalf of various credit providers.
[4] The First Respondent, MBD Legal Collections (Pty) Ltd (“MBD”) is
a private company duly incorporated with the Laws of the Republic of
South Africa with its registered address at 1 […] W[…] Street, Sandown,
Sandton, Gauteng.
[5] The Third Respondent RCS CARDS (PTY) Ltd (“RCS”) is also a
private company duly incorporated in accordance with the laws of the
Republic of South Africa with its registered address at M […] P[…], J[…]
S[…] Drive, Pinelands, Western Cape.
Factual background
[6] On 26 October 2022, Consumer Friend and RCS concluded a
written service agreement for debt collection services. During 2024, RCS
conducted a procurement process a Request for Information) (“ RFI”)
followed by a request for proposals (‘RFP’) relating to the sale of certain
debt review portfolios, including the portfolio which is the subject matter
of this application (‘the portfolio’). The RFI and RFP documentation
recorded that the acquisition of the portfolio would “come with Consumer
Friend as the managing agent” and that Consumer Friend would retain
the right to collect on debt review “Paying matters”.
[7] MBD participated in the RFI/RFP process and thereafter, with the
full knowledge of the Consumer Friend agreement, acquired the portfolio
from RCS in terms of a “ Sale of Book Debts Agreement ” dated 25
September 2025. In the founding affidavit deposed to by the Applicant
Chief Executive Officer, Mr Laszlo Istvan Toth (“Mr Toth”), the Applicant
alleges that by acquiring the portfolio (and the associated administration
or payment -flow arrangements) MBD stepped into RCS’s position in
relation to the portfolio as RCS’ s “permitted assign” and/or other “legal
successor”.
[8] In terms of the Consumer Friend agreement, RCS appointed
Consumer Friend to administer its debt review portfolio “on its behalf”
with commission of 13% payable by RCS. Mr Toth avers that the
Consumer Friend agreement is binding to on an enforceable against by
the trustees, permitted assigns, liquidators or other legal successors of
the parties as fully and effectually as if they had signed the agreement.
[9] Clause 13.1 of the Consumer agreement provides that in the event
of withdrawal of debts by RCS under clauses 3.4 or 3.5, or termination
on 3o days written notice under clause 11.1, “ all Paying Matters shall be
retained by [Consumer Friend] until such time as these Debts have been
paid in full ” and that the necessary provisions survive termination in
respect of Paying Matters. “ Paying Matters ” are defined (in clause
1.1.14) as debts under debt review where either the debtor or its PDA
has made payment to RCS or Consumer Friend as at the date of
withdrawal of debts by RCS or termination of the Consumer Friend
agreement.
[10] The parties undertook to observe the utmost good faith and
warranted that in their dealings with each other they would refrain from
doing anything which might prejudice or detract from the rights, assets or
interest of either party. In addition, in the event that RCS sells its
business or any part thereof to which or in respect of which Consumer
Friend renders services, RCS is entitled to cede, assign and/or transfer
its rights and obligations under the Consumer Friend agreement to the
purchaser of such business without notice to Consumer Friend.
[11] Against this backdrop, on 16 July 2024, RCS invited selected
industry participants to participate in a RFI relating to the potential sale
of portions of its debts review portfolio. The RFI included the following:
11.1 Under the “ General Requirements ” in paragraph 3, it was
recorded that the bidder had to “showcase previous transactions
and demonstrate how they ensure that that customers will continue
to enjoy the benefits and regulated treatment of Debt Review after
the acquisition from RCS. The respondent will also demonstrate
any previous relationship with Consumer Friend if applicable and
how operationally there is no confusion to customer or debt
counsellor who owns the account in question. … A solution should
also highlight any market related insights that has been learned
from similar transactions with other credit providers”.
11.2 Under the “ Commercial and contractual requirements ” in
paragraph 4 it was recorded that “Consumer friend [sic] will retain
as per agreement the right to collect on debt review paying
matters. If an accounts exits DR[debt review] the exclusivity falls
away.”
11.3 Under evaluation in paragraph 5, it was recorded that the
evaluation would be based on a balanced scorecard, which
included the “[v]endors current relationship with Consumer Friend”,
which carried a weighting of 30%.
[12] As part of the RFI process, RCS conducted bidder question -and-
answer sessions and circulated a consolidated question -and-answer
document to participants via email on 25 July 2024. Several questions
were directed concerning Consumer Friend agreement and/or
Consumer Friend’s involvement. It is necessary to set out the relevant
questions; ,they are as follows:
12.1 Question 4: “Details of Consumer Friend process/agreement
and their anticipated involvement in the ‘Monthly Inflow’ process?”
Answer: We provide shortlisted candidates the redacted
agreement on confirmation from CF”.
12.2 Question 8 :”Pleased [sic] confirm the commission rate that
Consumer Friend will earn on paying accounts. This is a critical
input into our cost assumptions.” Answer: “At he shortlisted round
this will be discussed, RCS will not share details of contract and
commercials at this stage”.
12.3 Question 9: “Please also confirm if Terminated Debt Review
accounts are also contractually obligated to be manages by
Consumer Friend, and if so, what is the commission rate?” Answer:
“No non-paying matters are requited (sic) to be worked by CF.”
[13] In addition, the RFP included the following:
13.1 Under current stock “( once off sale )”- a subheading under
Debt Review – in paragraph 2 it was recorded that the acquisition
of this book comes “ with Consumer Friend as the managing
agent”.
13.2 Under “General Requirements” in paragraph 3 it was
recorded that the “respondent will also demonstrate any previous
relationship with Consumer Friend if applicable and how
operationally there is no confusion to customer or debt counsellor
with who owns the account in question.
[14] Mr Toth avers that shortly after the acquisition by MBD and in 21
November 2025, he had a Microsoft Teams call with Messrs John Garde
and Graeme Fourie of MBD. He states that he was informed that there
may not be a binding agreement between Consumer Friend and MBD, a
suggestion he claims he rejected.
[15] During a follow up meeting of the parties on 21 November 2025,
the parties had discussions around operational requirements, going
forward. It was recorded that MBD was “ not amiable to the continuance
of the status quo” regarding pricing. MBD also reaffirmed its initial stance
to the effect that there may not be an agreement between it and
Consumer Friend post the acquisition of the portfolio. In an email dated
29 January 2026 MBD unequivocally stated inter alia, that:
15.1 There was no formal agreement in place between MBD and
Consumer Friend in relation to the portfolio Consumer Friend
historically managed for RCS, which had been acquired by MBD.
15.2 MBD intended to conclude a formal written agreement with
Consumer Friend that would include defined service levels and a
market related commission structure.
15.3 MBD wanted all payments received by PDAs and Consumer
Friend to be redirected to MBD’s “rights under all credit
agreements assigned to MBD and which “ are managed by
Consumer Friend”.
15.4 In a meeting held on 14 November 2025, and in an email of
27 November 2025, it had been indicated that the commission
structure was under consideration by Consumer Friend, but MBD
had not received any meaningful feedback and the “ status quo
cannot continue”.
15.5 Since MBD acquired the portfolio there had been a tacit,
month-to-month agreement to continue to pay Consumer Friend
commission for services rendered on the RCS portfolio at the rate
equal to what RCS paid Consumer Friend.
15.6 The letter served as 30 days written notice of termination of
the alleged tacit agreement, which constituted reasonable notice.
The tacit agreement would therefore terminate on 28 February
2026.
15.7 MBD’s operational team would be in contact with Consumer
Friend’s operational team to facilitate the orderly handover of all
“the relevant data, documents, and information applicable to the
RCS Portfolio, and manage communication with the PDAs, debt
Counsellors and consumers”.
15.8 Following termination, no collection services would be
rendered by Consumer Friend in relation to the portfolio and no
further commission is to be payable to Consumer Friend,
15.9 Contemporaneously with this letter, notice was given to all
PDAs and debt counsellors that, with effect from 16 February
2026, all payments received in relation to the affected MBD debts
were to be paid directly to MBD, with PDAs and debt counsellors
instructed to inform debtors accordingly. Consumer Friend was
requested to do the same.
[16] In response to this letter, Consumer Friend disputed the absence
of a formal agreement. Consumer Friend sought to be furnished with the
MBD agreement with RCS, a request which was refused by the former.
Consumer Friend requested a copy of the agreement from RCS. RCS
too was unable to supply it but confirmed that the “ condition of the RFP
i.e. the obligations to continue using Consumer Friend, was a term
of the agreement, per the RFT ”. On 11 February 2026, Ms Marine van
Brakel of RCS sent an email to both MBD and Consumer Friend wherein
she recorded inter alia that:
16.1 It was RCS’s ‘ intention during RFP process and
communicated agreed by all as much throughout the process, …
Consumer Friend would continue to service the debt review
accounts (‘the “paying matters”) that was sold to MBD”.
16.2 It was crucial that an agreement and necessary
arrangements were agreed to between MBD and Consumer Friend
to ensure the continued servicing of the accounts and it was her
understanding that this was not yet in place.
16.3 RCS would facilitate the process as both parties are
“valuable partnerships” in RCS’s business.
[17] On 12 February 2026, Consumer Friend became aware of an RCS
notice dated 10 February 2026 distributed by MBD to the following
effect:
“NOTICE OF ASSIGNMENT (CESSION) OF CERTAIN DEBT
REVIEW ACCOUNTS: RCS CARDS (PTY) LTD.
The notice recorded that the relevant debt review accounts would be
“administered by MBD”, provided Capital data contact details for future
correspondence and directed that “all future payments” be made into a
nominated Capital Data bank account, with queries directed to Capital
Data. The matter was brought to the attention of RCS . RCS distributed
a “corrected letter (V2) ” wherein the latter recorded that the accounts
“will be owned by MBD and will continue to be administered by
Consumer Friend” and that all queries relating to those accounts “should
be directed to Consumer Friend ”. Pursuant to RCS’s corrective letter,
MBD ON 10 February 2026 issued and urgent circular addressed to
“ALL PAYMENT DISTRIBUTIONB AGENTS AND DEBT
COLLECTORS” wherein MBD inter alia:
17.1 asserted that any payment to Consumer Friend after 16
February 2026 would not discharge the debtor’s obligations.
17.2 warned that payment to Consumer Friend may result in
“liability” (financial and regulatory) for the recipients; and
17.3 called for written confirmation by 13 February 2026 that
payments would be made to MBD in accordance with its directions
with effect from 16 February 2026.
[18] In light of the impasse, a virtual meeting with a view to resolve the
issue, was held between MBD, RCS and Consumer Friend on 16
February 2026. According to the Applicant, MBD highlighted that the
MBD agreement with RCS contains a clause to the effect that Consumer
Friend would not be ceded and/or assigned to MBD and that MBD and
Consumer Friend would agree to new terms and conditions between
them. In addition, MBD also confirmed that it had not transmitted the
revised RCS letter to the industry, despite having been instructed to do
so by RCS. The Applicant further avers that in view of the confirmation
by MBD that it had not transmitted the revised or corrected RCS to the
industry as instructed by RCS, and the ongoing reputational harm
caused by the letter disseminated by MBD, it approached this court for
urgent relief.
[19] Justifying its entitlement to the relief sought, Mr Toth states that the
relief sought by the Consumer Friend is premised on the express terms
of the Consumer Friend agreement read with the procurement process
by which MBD acquired the portfolio in question. More specifically, the
Applicant relies on clause 1.4 of the agreement which it claims extends
the binding effect of the agreement to the “permitted assigns” and other
“legal successors ” of the parties. According to the Applicant, the
aforesaid permitted assigns fully and effectually bound themselves to the
terms of the Consumer agreement as if they had signed it. Therefore,
MBD’s attempts to reroute payments and remove Consumer from
administration constituted ongoing unlawful interference with Consumer
Friend’s entitlement to retain and administer Paying Matters until they
are paid in full. This is particularly so because the Consumer Friend
agreement is binding on , and enforceable on MBD as a “permitted
assign” or “ legal successor”. Second, RCS’s disposal of the portfolio to
MBD, coupled with MBD’s insistence on a unilateral switch -over and
rerouting, constitutes, in substance a withdrawal of the relevant debts or
portfolio for purposes of clauses 3.4 or 3.5, which triggers clause 13.1.
Clause 13.1, according to the Applicant, affords protection to Paying
Matters which cannot be defeated by a change in ownership and the
conduct of MBD erodes that very protection.
[20] The Applicant avers that the ha rm that Consumer Friend is
suffering is continuous and the only effective remedy is the stopping of
MPD’s conduct and the restoration of its right to administer the portfolio
until Paying matters are paid in full.
The First Respondent’s Answering Affidavit
[21] The First Respondent, in an affidavit deposed to by its manager
director, Mr Jon Garde, avers that the Applicant’s application must fail on
the basis that the Consumer Friend Agreement was never assigned to
MBD and MBD never became the legal successor to RCS. Furthermore,
Consumer Friend has no legal duty to insist on receiving payment from
any debtors. Additionally, Consumer Friend is not the creditor under the
various payment plans and as such has no contractual rights against
debtors in the RCS portfolio , nor is there a legal nexus between
Consumer Friend and the debt counsellors and PDA’s as far as the RCS
portfolio is concerned. According to the First Respondent, for the
Applicant to succeed in the application, it must prove that the rights
and/or obligations established by the Consumer Friend Agreement was
assigned or otherwise transferred to MBD. In other words, MBD cannot
become the legal successor to RCS other than through a valid
assignment or transfer of such rights, something that did not happen.
[22] The First Respondent further avers that in terms of Clause 1.4 of
the Consumer Friend Agreement, it is only binding on and enforceable
by the trustees, permitted assigns, liquidators and other permitted
assigns whilst Clause 25.4 provides that in the event that RCS sells its
business, or in respect of which Consumer Friend renders services,
RCS would be entitled to cede, assign and/or transfer its rights and
delegate its to the purchase of such business without notice to
Consumer Friend. The First Respondent reiterates that whilst in terms of
the already mentioned provision, the Consumer Frie nd c ould become
binding upon permitted assigns , RCS must actually cede, assign or
transfer its obligations under the Consumer Friend Agreement to the
purchaser to give effect thereto.
[23] Mr Garde further explained that the negotiations between RCS
and MBD concerning the acquisition of the RCS portfolio culminated in
the conclusion of a written Sale of Books Agreement on 25 September
2025 in terms of which:
23.1 RCS, with effect from the determination date, ceded to MBD
all Claims, including without limitation all right of recourse, against
the Debtors; and
23.2 RCS cedes to MBD all RCS rights, title and interest and the
Key Information (as defined in clauses 1.2.15 and 4.2);
23.3 MBD acknowledged that Claims as set out would in the
Computer File were at the time serviced in the form of debt
collection by Consumer Friend, and with regard to Paying Matters:
23.2.1 MBD would be liable for all commissions and/or fees
applicable as agreed by MBD and Consumer Friend from the
Effective date; and
23.2.2 RCS would not incur any liability in respect of the
agreement and/or agreement between MBD and Consumer
Friend following the Effective date;
[24] The First Respondent further states that in terms of Clause 16.10
of the Agreement, the parties waived right to rely on any alleged express
provision not contained in the Agreement and no party may rely on any
representation which allegedly induced that that party to enter into the
agreement unless the representation is recorded in the Agreement. In
the same vein, the parties agree d that no contract varying, or adding to,
or cancelling the agreement, and no suspension of any right under the
agreement would be effective unless reduced to writing and signed by
or or on behalf of the parties.
[25] Flowing from the aforegoing, so further aver s the First Respondent
through Mr Garde, it is clear that the RCS did not assign any rights to
and obligations derived from the Consumer Friend Agreement. Instead,
the parties envisaged that MBD would conclude a new agreement with
Consumer Friend concerning its services and the commission to be
charged in respect thereof. This is particularly so because even the Sale
of Book Debts Agreement record ed the factual possession concerning
Consumer Friend’s role pending conclusion of a possible agreement
between MBD and Consumer Friend as confirmed by Mr Robert James
Amolis who signed the Sale of Book of Debts Agreement on behalf of
MBD.
[26] Mr Garde averred that following the acquisition of the RCS
portfolio, he and Mr Graeme Fourie met with Mr Toth (the Chief
Executive Officer of Consumer Friend) on 13 November 2025 via
Microsoft Teams. During that meeting, they initiated a negotiations
towards an agreement with Consumer Friend and proposed an
appropriate and market related commission structure for the services
which would be rendered by Consumer Friend. However, Mr Toth
refused to accept the proposal stating that according to him, MBD had
stepped into the shoes of MBD. Mr Garde states that they (he and Mr
Fourie) informed Mr Toth that no such contract existed between
Consumer Friend and RCS.
[27] Mr Garde however, acknowledged that following the acquisition of
the RCS portfolio, Consumer Friend continued to render administration
services for that portfolio and MBD continued to pay it commission
purely as an interim measure while it sought to negotiate a formal
agreement. According to Mr Garde, on 27 November 2025, Mr Toth
advised that he would refer the disagreement concerning the existence
of an agreement to Consumer Friend’s legal advisors and would revert.
He however did not revert, and it became clear to MBD that Consumer
Friend was not prepared to negotiate an agreement, as envisaged by
the Book of Debt Agreement.
[28] Consequently, on 29 January 2026, MBD addressed a letter to
Consumer Friend wherein it recorded what is already set out in Mr Toth’s
founding affidavit.
[29] According to Mr Garde, MBD never became a permitted assign or
legal successor to RCS under the Consumer Friend Agreement and
after the termination of the tacit agreement, MBD became entitled to
receive payment from its debtors and to direct the PDAs to pay directly
to it. Neither does Consumer Friend ha ve any right to receive payments
from the PDA. Furthermore, without any agreement between Consumer
Friend and MBD, the former is unlawfully processing the debtor’s
personal information.
[30] As to the procurement process conducted by RCS during 2024
and 2025 relating to the sale of certain debt review portfolios, the First
Respondent asserts and reiterates that it is non -binding. Whilst it so that
the RFI/RFP culminated in the in the conclusion of the Sale of the Book
of Debts Agreement, MBD is not bound to any terms or conditions,
representations or the like not recorded therein. In addition, so continues
the averment, MBD never had “full knowledge” of the Consumer Friend
Agreement with RCS as Consumer Friend have declined to provide
MBD with annexures “B” and “C” which are integral to the Consumer
Friend’s obligations. MBD did not take, and would not have taken,
assignment of, or agreed to be bound by, an agreement containing terms
which were not disclosed to it.
The Third Respondent’s Affidavit
[31] Despite no relief being sought against it , and notwithstanding its
non-opposition to the application, the Third Respondent, filed an affidavit
depose to by its Chief Executive Officer Marine van Brake l. Ms Brakel
states and affirms RCS’s position, which is that the obligations and
liabilities arising out of the Consumer Friend Agreement were in fact
assigned to MBD in terms of the MBD agreement. According to her,
MBD was well aware of and accepted the continued role that Consumer
Friend would play as the managing agent and the commercial terms of
Consumer Friend’s involvement, when acquiring these portfolios under
the MBD agreement. Accordingly, it RCS’s position that Consumer
Friend is entitled to remain as the managing agent in respect of the
claims sold by RCS to MBD, all of which are the subject of debt review.
[32] Proving the contextual facts which led to the conclusion of the
MBD agreement, Ms Brakel confirms that the MBD agreement was
preceded by RFI ( Request for Information) and RFP (Request for
Proposal). According to RCS, during this process, it (RCS) , repeatedly
conveyed to prospective purchasers that Consumer Friend would have
an ongoing role as managing agent of the Paying matters. She further
explained that the Paying Matters which were sold by RCS to MBD
comprised in excess of 44,000 debt review accounts, all of which had
been under debt review for nine months or longer, and a significant
number of which had reached an advanced stage in the debt review
process and which were Paying Matters. Consumer Friend, as the
management agent of these debt review accounts played a key role in
progressing the aforesaid accounts in the debt review process, and
ultimately collecting funds to be distributed as part of that process. Ms
Brakel states that this has been achieved as part of a strategic
commercial partnership between RCS and Consumer Friend.
[33] The Second Respondent further states that in formulating the MBD
proposal it is clear that the latter dated 7 August 2025 references the
following:
33.1 its existing relationship with Consumer Friend as a means to
mitigate risk and provide a seamless transition;
33.2 In motivating for its acquisition of the debt review accounts,
MBD lays the following basis;
33.2.1 it has built an excellent commercial partnership with
Consumer Friend over the past three years;
33.2.2 it has acquired six portfolios with over 18,000 similar
accounts which continue to be managed by Consumer
Friend post sale; and
24.2.3 these were seamlessly integrated to the acclaim of
the industry.
[34] Ms Brakel states that RCS’s understanding of the MBD agreement
is that the relevant obligations from the Consumer Friend agreement
insofar as they relate to Paying Matters, have been assigned to MBD
and that the portfolio was acquired by MBD subject to Consumer
Friend’s ongoing role as managing agent . To this end, so continues
RCS, the following facts appearing from the MBD agreement
demonstrate this assertion:
34.1 Clause 7.2 provides that all obligations and liabilities of the
Seller in relation to the Debtors and the Claims on or after the
Determination date (being 29 June 2025) would pass to MBD on
determination date;
34.2 The Externa l Debt Collector (“EDC”) is defined in clause
1.2.12 to be Consumer Friend.
The Replying Affidavit
[35] In the replying affidavit, Mr Toth re-emphasises that on the facts of
this matter MBD falls within clause 1.4 in relation to the portfolio (as
“other legal successor”), alternatively, as “permitted assign” and is
accordingly bound by the Consumer Friend agreement in relation to the
portfolio.
Issues for determination
[36] The core issue for determination in this application is whether the
relevant obligations and liabilities arising from the Consumer Friend
Agreement and RCS have been assigned to MBD upon the acquisition
by MBD of certain debt review portfolios from RCS in terms of the MBD
agreement on 25 September 2025 and whether MBD is obliged to
continue using Consumer Friend as a managing agent thereof. Put in
another way, the question is to be answered is whether MBD became a
permitted assign or legal successor . More specifically, the issue is
whether MBD is bound by the Consumer Friend agreement by operation
of clause 1.4 and must give effect to clause 13.1 in relation to the Paying
Matters portfolio.
Analysis
[37] The matter at hand turns primarily on the interpretation of the
Consumer Friend Agreement and whether it is binding on MBD.
[38] In Natal Joint Municipality Pension Fund v Endumeni Municipality
2012(4) 593 SCA Wallis JA restated the present state of the law
regarding interpretation thus:
“Interpretation is the process of attributing meaning to words used in a
document, be it legislation, some other statutory instrument, or contract,
having regard to the context provided by reading the particular provisions in
the light of the document as a whole and the circumstances attendant upon its
coming into existence. Whatever the nature of the document, consideration
must be given to the language used in the light of the ordinary rules of
grammar and syntax; the context in which the provision appears; the apparent
purpose to which it is directed and the material known to those responsible for
its production. Where more than one meaning is to be preferred to one that
leads to insensible or unbusinesslike results or undermines the apparent
purpose of the document. Judges must be alert to and guard against the
temptation to substitute what they regard as reasonable, sensible and
businesslike for the words actually used. To do so in regard to a statute or
statutory instrument is to cross the divide between interpretation and
legislation; in a contractual context it is to make a contract for the parties other
than the one they in fact made . The inevitable point of departure is the
language of the provision itself, read in context and having regard to the
purpose of the provision and the background to the preparation and
production of the document.”
[39] In Comwezi Security Services (Pty) Ltd v Cape Empowerment
Trust Ltd [2012] ZASCA 126 (SCA) where the Court held thus:
“In the past, where there was perceived ambiguity in a contract, the courts
held that subsequent conduct of the parties in implementing their agreement
was a factor that could be taken into account in preferring one interpretation to
another. Now that regard is had to all relevant context irrespective of whether
there is a perceived ambiguity, there is no reason not to look at the conduct of
the parties in implementing the agreement. Where it is clear that they have
both taken the same approach to its implementation, and hence the meaning
of the provision in dispute, their conduct provides clear evidence of how
reasonable businesspeople situated as they were and knowing what they
knew, would construe the disputed provision.”
[40] Counsel for the Applicant contended that the Consumer Friend
agreement, in particular clause 1.4 read with clause 25.4, contains
express provisions extending its binding effect beyond the original
signatories and expressly contemplates the transfer of RCS’s
contractual position upon sale of the relevant business or part thereof.
According to this contention, Clause 1.4 is applicable in circumstances
where (i) RCS sold the portfolio; (ii) the RFI/RFP process recorded that
the portfolio came with Consumer Friend as managing agent and
Consumer Friend retains Paying Matters; and (iii) MBD acquired the
portfolio with knowledge of this.
[41] Furthermore , so continued argument for the Applicant, Clause 1.4
operates to treat references to RCS in the Consumer Friend agreement
as including that successor, with the consequence that MBD is bound
“as fully and effectually as if [it] had signed this Agreement in the first
instance”, including being bound to give effect to the clause 13.1 Paying
Matters regime . Even if MBD is not characterised as RCS’s “ permitted
assign” for purposes of clause 1.4, MBD falls within the further category
of “ other legal successors ” contemplated in that clause. On this
approach, so goes the argument, the question is not whether there was
a formal assignment of the Consumer Friend agreement to MBD, but
whether, by acquiring the portfolio in the manner and on the terms
recorded in the RFI/RFP process, and thereafter acting consistently with
Consumer Friend’s continued administration, MBD became RCS’s legal
successor in respect of the portfolio for purposes of clause 1.4, with the
consequence that it is bound to the Consumer Friend agreement in
relation to the portfolio.
[42] Counsel for the Respondent argued that there are no facts to
support the contention that MBD was the assignee of the Consumer
Friend obligations. Furthermore, there too is no contractual nexus
between MBD and Consumer Friend. It was further contended that the
Applicant brought this application without recourse to the MBD Sale
agreement and was unaware of its terms as it was not in possession of a
copy thereof. Those short-comings notwithstanding, the applicant seeks
a final declaratory order that RCS had assigned its obligations in terms
of the Consumer Friend Agreement to MBD and that, in relation to all of
the assets forming the subject matter of the MBD sale agreement (which
the applicant describes as “ the portfolio”), MBD must comply with the
Consumer Friend Agreement in RCS’s stead. According to the
Respondent t he ultimate purpose, of this application is an attempt to
retain the applicant’s claims to substantial commission on each
instalment paid by a debtor under debt review.
[43] In this matter, the legal conclusion sought to be drawn is that MBD
became bound to the Applicant, either as a “ permitted assign ” or as
some “ other legal successor ”. In considering the issue of assignment
and/or delegation, I first record the undisputed facts. They are:
43.1 RCS sold the portfolio to MBD (that is common cause);
43.2 the RCS procurement process which preceded any
agreement between MBD and RCS notified potential
purchasers that the portfolio “ came with the applicant as the
managing agent ” (that recordal is not disputed, but its
contractual relevance is);
43.3 Consumer Friend retains Paying Matters (that recordal does
not appear in the June 2025 RFP);
43.4 MBD acquired the portfolio with knowledge of these
preceding facts.
-
[44] Ordinarily contractual rights and obligations are enforceable only
between the contracting parties. Christie 1 explains this principle as
follows:
“The basic idea of contract being that people must be bound by the
contracts they make with each other it would obviously be ridiculous if
total strangers could sue or be sued on contracts with which they were in
no way connected. The doctrine that prevents this ridiculous situation
arising is usually known as the doctrine of privity of contract: parties who
are not privy to a contract cannot sue or be sued on it.”
However, privity of contract is, subject to the parties’ express agreement
as to successors or assigns for a contract could be delegated, ceded or
assigned to a party that was not initially privy to it. Christie explains that
(i) delegation occurs when the debtor is replaced by a third party but the
creditor remains the same, (ii) cession occurs when the creditor is
replaced by a third party but the debtor remains the same and (iii) a
combination of delegation and cession – also referred to as assignment
– occurs when a third party entirely replaces one of the parties to the
contract.2
[45] In assessing whether a successor may be bound, the starting point
is that succession alone is not necessarily sufficient. Some further
1 R H Christie: The Law of Contract in South Africa, 7th Edition, p 302.
2 R H Christie: The Law of Contract in South Africa, 7th Edition, p 521-522.
agreement, conduct, or other legal basis must link the successor to the
obligation in a manner that requires it to comply with the original party’s
rights.3 In the present matter, that additional legal basis is present as the
portfolio was sold through an RFI/RFP process recording Consumer
Friend’s ongoing role as managing agent, MBD acquired the portfolio
with knowledge of this and of the terms of the Consumer Friend
agreement and acted consistently with that position by receiving
performance and paying commission post-acquisition.
[46] I now turn to examine the clauses of the Consumer Friend
Agreement relied upon by the Applicant.
[47] Clause 13 regulates termination of the Consumer Friend
Agreement and provides thus:
“13.1 In the event of withdrawal of Debts by RCS in terms of clauses 3.4 or
3.5 or termination in terms of clause 11.1 then and in such an event:
13.1.1 all Paying Matters shall be retained by the Debt Collector until
such time as these Debts have been paid in full;
13.2 all necessary and relevant provisions are intended by clause 1,12,
shall survive the termination of this Agreement with regard to Paying
Matters.”
3 This is consistent with the approach in Dyayanundh v Narain [1983] 1 All SA 68 (N) at 73.
[48] It cannot be disputed that the Consumer Friend agreement is
performance-based and not a once -off claim for money. Properly
construed, the retention in clause 13.1 is not limited to internal
accounting between Consumer Friend and RCS. Its commercial purpose
is to secure Consumer Friend’s continued administration of, and
remuneration stream arising from, “ Paying Matters” until they are paid in
full. Where a third party becomes RCS’s successor or assign in relation
to the portfolio, clause 1.4 operates to prevent the Paying Matters
protection from being defeated by the change in ownership of the
portfolio.
[49] MBD contended that the Consumer Friend agreement could only
become binding upon permitted assigns if RCS ceded, assign ed or
transferred its obligations under the Consumer Friend Agreement to the
purchaser to give effect thereto as envisaged in Clause 25 of the
Consumer Friend Agreement which reads as follows:
“25 NO ASSIGNMENT
25.3 RCS shall be entitled to sell, ceded assign delegate or in any other way
alienate or dispose of any or all of rights and obligations under the terms of
this Agreement to any other company in the RCS Group without prior consent
of the Debt Collector.
25.4 in the event that RCS sells its business or any part thereof (“the
business”) to which or in respect of which the Debt Collector renders the
Services, RCS shall be entitled to cede, assign and/or transfer its rights and
delegate its obligations under this Agreement to the purchaser of such
business without notice to the Debt Collector.
[50] In Simon NO v Air Operations of Europe and Others 1999 (1) SA
217, the Court held that the word ‘assignment’ in our law was generally
used to denote a transfer of both rights and obligations, but its precise
meaning in a given case might depend on the context in which it was
used. I do not agree that RCS must cede, assign or transfer obligations
under the Consumer Friend agreement for the purchaser to give effect
thereto. ‘Assignment’ may be established from the facts. Besides, MTK
Saagmeule (Pty) Ltd v Killyman Estates (Pty) Ltd 1980 (3) SA 1 (A).
demonstrates how, “ even in the absence of the necessary consent, the
contract between the party stepping out of the original contract and the
party stepping in may be enforceable.”
[51] The RFP unequivocally records that the acquisition of the Book of
Debts comes “with Consumer Friend as a managing agent”. To my mind,
this declaration, read with all the facts relating to procurement,
establishes without a doubt the requisite “assignment” of MBD. It in my
opinion, the facts establish that MBD falls into the category of a “ legal
successor”.
[52] I now turn to consider clause 1.4. It provides as follows:
“The Agreement shall be binding on and enforceable by the trustees,
permitted assigns, liquidators or other legal successors of the Parties as fully
and effectually as if they signed the Agreement in the first instance and
reference to any Party shall be deemed to include such Party’s trustees,
permitted assigns, liquidators or other legal successors, as the case may be.”
[53] In my view, clause 1.4 operates independently and is framed in
broad terms. It emphasises that the Consumer Friend Agreement is
“binding on and enforceable by ” the “ permitted assigns ” and/or “other
legal successor” of the parties “as fully and effectually as if they had
signed” it and that reference to a “party” are deemed to include such
successors or assigns. Besides, this provision must be considered, in
line with the light of the procurement process. It will be recalled that the
Respondent in its bid capitalised on its relationship with Consumer
Friend and acclaim and achievements flowing therefrom. More
specifically MBD stated that:
53.1 it has built an excellent commercial partnership with
Consumer Friend over the past three years;
53.2 it has acquired six portfolios with over 18,000 similar
accounts which continue to be managed by Consumer Friend post
sale; and
55.3 those were seamlessly integrated to the acclaim of the
industry.
[54] Additionally, Ms Brakel in her affidavit (also referred to by the
Respondent) states that:
“[18] Consumer Friend’s continued role in managing the debt review
accounts is clear from the documentation attached to the founding
affidavit in the RFI and RFP process and was expressly disclosed to
potential bidders. MBD clearly appreciated the significance of
Consumer Friend’s anticipated ongoing role in managing the debt revie
accounts. It was for this reason that it requested and was supplied with
the Consumer Friend Agreement by RCS during September 2024in the
context of formulating a bid/offer and arriving at the proposed sale
price. It thus had full knowledge of all the terms of the Consumer
Friend agreement and what obligations would be taken over.
[19] MBD clearly considered this role and the Consumer Friend
agreement when formulating the MBD proposal. This is evident from
inter alia, the following references in the MBD proposal (which is dated
7 August 2025, a month before the MBD agreement was signed).”
[55] Based on the aforegoing facts, i t is my judgment that MBD is
bound by the Consumer Friend agreement as RCS’s assign or legal
successor as contemplated in Clause 1.4 . It follows that MBD is bound
to the Consumer Friend agreement in relation to the portfolio, including
the Paying Matters regime in clause 13.1 and cannot remove Consumer
Friend from the administration and payment -flow arrangements by
unilateral rerouting.
[56] I am fortified in so holding by the fact that MBD has recognised
Consumer Friend’s continued management (i) before MBD ‘s acquisition
of the portfolio during the RFI/RFP process and (ii) post -acquisition
through the im plementation and operation of the payment -flow
arrangement (See Comwezi Security Services , supra). Even if I may
wrong finding that in finding that MBD is bound by the Consumer
agreement as a “legal successor”, Consumer Friend’s case is not
founded on succession alone. The link is (i ) MBD’s acquisition of the
portfolio through an RFI/RFP process that recorded the continued
operational arrangement (Consumer Friend retains Paying Matters); (ii)
MBD’s knowledge of and reliance upon this when it submitted its bid and
pricing; and (iii) MBD’s post -acquisition conduct in receiving the benefit
of Consumer Friend’s administration and paying commission. That
conduct provides the basis on which MBD is obliged to comply with
Consumer Friend’s rights under the Consumer Friend agreement.
[57] It remains to be said that the Respondent relied primarily on the
fact that Consumer Friend was not a party to the MBD agreement.
Reference was made to certain clauses of that agreement. I do not
deem it necessary in this judgment to make any reference to the MBD
and RCS agreement because the Applicant, sensibly made it clear from
the outset that it places no reliance on an agreement it was not part of.
Consequently, nothing turns on the fact that the Applicant moved this
application without having had recourse to the MBD Agreement. This is
so because the MBD agreement cannot deprive Consumer Friend of its
rights in terms of the Consumer Friend agreement, including clause 1.4
and Paying Matters regime in clause 13.1. I have already found that
those provisions bind M BD in relation to the portfolio because MBD falls
within clause 1.4 as RCS’s “permitted assign” and/or “legal successor”.
Conclusion
[58] I have in this judgment held that MBD is bound, in relation to the
portfolio, by the Consumer Friend agreement by operation of clause 1.4
of the Consumer Friend agreement , properly construed in the factual
circumstances of (i) the RFI/RFP process and the terms on which the
portfolio was marketed and sold, (ii) MBD’s knowledge of Consumer
Friend’s continuing role and the commission and “ evergreen” contract
reflected in MBD’s own bid materials and (iii) MBD’s post -acquisition
conduct in permitting Consumer Friend to continue servicing and in
paying commission. In consequence, MBD is obliged to give effect to the
clause 13.1 “Paying Matters” regime and may not resort to self -help by
rerouting payments and removing Consumer Friend as the
administrator. I am also satisfied that the hearing of the matter on an
urgent basis was justified.
[59] For all these reasons, I issued the order in paragraph 2 of this
judgment.
________________
NDITA, J