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[2019] ZASCA 190
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National Credit Regulator v Lewis Stores (Pty) Ltd and Another (937/18) [2019] ZASCA 190; 2020 (2) SA 390 (SCA); [2020] 2 All SA 31 (SCA) (13 December 2019)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 937/18
In
the matter between:
THE
NATIONAL CREDIT
REGULATOR APPELLANT
and
LEWIS STORES (PTY)
LTD FIRST
RESPONDENT
NATIONAL
CONSUMER TRIBUNAL SECOND
RESPONDENT
Neutral
citation:
The National Credit
Regulator v Lewis Stores (Pty) Ltd
(937/18)
[2019] ZASCA 190
(13 December 2019)
Wallis,
Nicholls and Dlodlo JJA and Eksteen and Hughes AJJA
Heard:
11 November 2019
Delivered:
13 December 2019
Summary:
National Credit Act, 34 of 2005 (NCA) – interpretation –
sections 100, 101(1)(
a
) and 102(1) – cost of credit –
extended warranties in respect of goods sold not void by virtue of
incomplete or inaccurate
testimonial of agreement – charging
subscriptions to Lewis Family Club not cost of credit – nature
of proceedings before
National Consumer Tribunal – appeal to
high court in terms of s 148(2)
(b)
of NCA – high
court sitting as court of first instance – leave to appeal to
SCA in terms of s 16(1)
(a)
of
Superior Courts Act 10 of
2013
.
ORDER
On
appeal from:
Gauteng Division of High
Court, Pretoria (Janse van Nieuwenhuizen J, Mokose AJ concurring,
sitting on appeal from National Consumer
Tribunal):
The appeal is dismissed
with costs, including the costs of two counsel.
JUDGMENT
Eksteen AJA (Wallis,
Nicholls and Dlodlo JJA and Hughes AJA concurring):
[1]
The appellant (the regulator) applied to the second respondent (the
tribunal), pursuant to an investigation it had carried out,
for a
declarator that the first respondent, a national retailer of
furniture and electrical appliances (Lewis), had repeatedly
contravened
ss 90
,
91
,
100
,
101
(1)(
a
)
and 102(1) of the National Credit Act, 34 of 2005 (NCA) and for
certain ancillary relief. The tribunal dismissed the application
and
a subsequent appeal
[1]
to the
High Court, Gauteng, was unsuccessful. The current appeal is with
special leave of this court.
[2]
The
appeal
[2]
In the appeal the regulator contended that:
(a) The charge levied by
Lewis for certain ‘extended warranties’ in respect of
goods purchased from it constituted prohibited
conduct as envisaged
in ss 100, 101(1) and 102(1) of the NCA and that the extended
warranties also contravened ss 90 and 91 of
the NCA; and
(b) The charging of
subscriptions for membership of the Lewis Family Club (‘club
fees’) to customers who had entered
into credit agreements with
Lewis was prohibited conduct as envisaged in ss 100, 101 and 102(1)
of the NCA as these fees constituted
a prohibited ‘cost of
credit’.
I
will deal with each in turn, but before doing so need to deal with a
cocnern regarding the jurisdicion of the tribunal.
Jurisdiction
of the tribunal
[3]
In consequence of the findings of its investigation the regulator
referred the matter to the tribunal, ostensibly in terms of
s
140(2)(
b
) of the NCA in which it sought, inter alia, the
following relief:
‘
(a) A declaration
that [Lewis] has repeatedly contravened s 90, 91, 100, 101(1)(a) and
102(1) of the NCA;
(b) A declaration that
[Lewis’s] repeated contravention of s 90, 91, 100,101(1)(a) and
102(1), constitutes conduct prohibited
by the NCA.
(c) An order directing
[Lewis ] to refund all the customers who were, from 2007 to date,
unlawfully charged with costs and maintenance
agreements by Lewis
which ran concurrently with the supplier/manufacturer warranty or had
no term or period;
(d) An order directing
[Lewis] to refund all the consumers who were, from 2007 to date,
unlawfully charged club and membership fees
by Lewis.
(e) . . .
(f) An order declaring
all the clauses or provisions relating to unlawful maintenance costs
in the maintenance agreements with [Lewis]
referred to in the
investigation report unlawful provisions;
(g) An interdict
restraining [Lewis] from, in future, charging consumers with unlawful
maintenance costs;
. . .’
[4]
I have a concern regarding the jurisdiction of the tribunal to deal
with matters arising under the provisions of ss 90 and 91
and
accordingly with the power of the tribunal to have entertained the
application or to have made orders in the terms sought.
The concern
arises from the provisions of the NCA, specifically ss 164(1) and
90(4).
[5]
The tribunal is a statutory body established by s 26 of the NCA. Its
powers are defined by the NCA. The functions of the tribunal
are set
out in s 27 and include to:
‘
(
a
)
adjudicate in relation to any –
(i) application that may
be made to it in terms of this Act, and make any order provided for
in this Act in respect of such an application;
or
(ii) allegations of
prohibited conduct by determining whether prohibited conduct has
occurred and, if so, by imposing a remedy provided
for in this Act.’
[6]
Section 150 of the NCA empowers the tribunal to make orders:
‘
(
a
)
declaring conduct to be prohibited in terms of this act.
(
b
) interdicting
any prohibited conduct;
(
c
) to (
g
)
. . .
(
h
) requiring
payment from the consumer of any excess amount charged, together with
interest at the rate set out in the agreement;
or
(
i
) any other
appropriate order required to give effect to a right as contemplated
in this act or the
Consumer Protection Act, 2008
.’
‘
Prohibited
conduct’ is defined in the NCA as ‘an act or omission in
contravention of the Act’.
[7]
Sections 90 and 91 of the NCA, relied upon by the regulator and
referred to in the relief claimed from the tribunal, are contained
in
part A of chapter 5 of the NCA. Part A of chapter 5 is concerned with
‘unlawful’ agreements and provisions. Section
90(2) lists
a number of provisions which would be unlawful if they were contained
in a credit agreement and s 91 is directed at
preventing a credit
provider from circumventing the provisions of s 90 by recording
provisions which would be unlawful if included
in a credit agreement
in a separate supplementary agreement or unilateral document signed
by the consumer.
[3]
[8]
In s 90(3) the NCA declares a provision which is unlawful in
terms of s 90(2) void as from the date that the provision
purports to
take effect.
[4]
Notwithstanding
this provision, however, s 164(1) of the NCA 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.’
This,
it seems to me, refers back to the provisions of s 90(4), which
stipulates:
‘
In any matter
before it respecting a credit agreement that contains a provision
contemplated in ss (2), the court must –
(
a
) sever that
unlawful provision from the agreement, or alter it to the extent
required to render it lawful if it is reasonable to
do so having
regard to the agreement as whole; or
(
b
) declare the
entire agreement unlawful as from the date that the agreement, or
amended agreement, took effect,
and make any further
order that is just and reasonable in the circumstances to give effect
to the principles of s 89(5) with respect
to that unlawful provision
or entire agreement, as the case may be.’
[9]
These provisions of the NCA are not a model of clarity. However,
prima facie, it appears that no unlawful provision, as envisaged
in s
90(2), contained in a credit agreement would be void, as envisaged in
s 90(3), unless and until a court had declared it to
be unlawful.
[5]
If this is correct, the tribunal does not have the jurisdiction to
declare any such provision unlawful, because that jurisdiction
appears to vest in a court and the tribunal is not a court. Moreover
voidness is not automatic because s 90(4) requires a
court to
alter the offending provision so as to render it lawful if it is just
and reasonable to do so. In that event the provision
ceases to be
unlawful.
[10]
By virtue of the conclusion to which I have come on the issues
canvassed ina rgument it is not necessary to resolve this issue.
It
was not raised in the papers and we have not had the benefit of full
argument in that regard. Accordingly I refrain from making
a
conclusive finding in this regard.
The
extended warranties
[11]
The regulator’s investigation
[6]
into the extended warranties, leading to its complaint initiated in
its own name in terms of s 136(2) of the NCA, arose in consequence
of
an article published in the newspaper which asserted that Lewis might
be engaging in prohibited conduct relating to, amongst
other things,
extended warranties. The article recorded that information was
obtained by a ‘mystery shopper’ who went
to a Lewis
outlet to purchase a television set. It proceeded to explain that a
number of secret shopping expeditions that were
recorded, were
conducted at Lewis outlets. The investigator accordingly engaged with
Lewis in respect of its extended warranties.
One McLoughlin, an
accountant in the employ of Lewis, explained that all goods sold by
Lewis have a 12 month supplier’s warranty
which operates from
the date of purchase. An ‘extended warranty and maintenance
contract’ (extended warranty), which
endures for two years
after the expiry of the supplier’s warranty, was offered to
purchasers in respect of the goods sold.
The terms and conditions of
the extended warranty were explained to consumers prior to the
conclusion of the agreement and it was
entirely optional whether the
consumer accepted the warranty.
[12]
The explanation did not allay the concerns of the regulator. In the
conduct of its investigation the regulator inspected a
sample
consisting of 22 customer files from Lewis’s records. It is not
clear how many of the consumers were interviewed,
but only three
affidavits were obtained. The affidavits which were taken are so
brief as to be of little assistance. The investigation
found no
evidence of the conduct alleged in the news article. However, the
investigator reported that in five instances consumers
said that the
‘extended warranty’ was not explained to them and had
they understood they would not have taken it. Only
one affidavit was
obtained in support of this allegation. The deponent merely stated
that the extended warranty was ‘not
fully explained’.
What was in fact said and understood by the parties, in particular
with reference to the period of its
operation, was not explored in
the affidavit. No mystery shopper was sent to determine first-hand
how employees of Lewis conducted
themselves and the recordings of the
secret shopping expeditions do not appear to have attracted the
interest of the regulator.
[13]
Instead, the regulator called for copies of a number of credit
agreements and extended warranties which Lewis duly provided.
The
extended warranty was reflected on a pro forma document which
provided blank spaces for the insertion of the period of the
warranty
and the commencement and completion dates thereof. In the sample of
documents provided the regulator identified a number
of extended
warranties where the sales staff had either not completed the blank
spaces or where incorrect dates had been inserted
reflecting the
purchase date as the commencement date for the extended warranty. In
the latter cases,
ex facie
the document, the extended warranty
would run concurrently with the supplier’s warranty for the
first 12 months. The regulator
concluded that as a result the
incomplete documents were void, as the term of the extended warranty
had not been agreed. It said
that it would accordingly constitute a
contravention of ss 100, 101(1)(
a
) and 102(1) of the NCA to
require payment by the consumers in respect of the extended
warranties. In instances where the period
of the extended warranty
reflected on the document coincided with the period of the supplier’s
warranty the regulator concluded
that it constituted a duplication of
the supplier’s warranty which had no value. Its view was
therefore that it unlawfully
increased the cost of credit and that
the conclusion of the extended warranty agreement in that form
constituted a contravention
of ss 90 and 91 of NCA.
[14]
Lewis, on the other hand, said that this was mistaken on the facts as
well as the law. They explained that it was their policy
that
consumers were informed of the existence of the 12 month supplier’s
warranty at the time of purchase. They were simultaneously
advised of
the optional extended warranty which would provide them with an
additional two years’ cover for repairs or replacement
of
defective merchandise. The existence of this optional additional two
year warranty was advertised both on in-store advertising
boards and
other point of sale material and Lewis’s marketing brochures.
The extended warranty, Lewis contended, was incorporated
as an
integral part of the computer data capturing process of all credit
agreements. The start and end dates of every extended
warranty was
captured on the computer system by reference to the date of the
conclusion of the credit transaction and the date
of the anniversary
following such conclusion at which time the supplier’s warranty
expired. The commencement and completion
dates of the extended
warranties were reflected on the consumer’s monthly statements
and Lewis sent SMS communications to
all of its customers who
concluded extended warranties advising them of the commencement and
end dates. All its customers who opted
to take out an extended
warranty accordingly enjoyed the benefit of a warranty for a period
of two years after the expiry of the
supplier’s warranty.
[15]
Lewis contended further that there was no requirement in the NCA for
an extended warranty to be recorded in writing as a mandatory
formality. The true agreement between the parties, irrespective of
the errors which may have occurred in certain of the documents,
was
that every consumer who had elected to purchase an extended warranty
would receive the benefit of such warranty for the full
two year
period. The regulator, in its investigation, did not locate any
consumer who contended that they had understood it differently
or who
complained that they did not receive the benefits bargained for. The
high water mark of the evidence which the regulator
presented was a
single affidavit which said that the warranty was not ‘fully
explained’. The alleged shortcomings in
the explanation were
not identified. There was accordingly no real dispute of fact in
respect of these issues.
[16]
I turn to the provisions of the NCA relied upon by the regulator.
Sections 100, 101 and 102 are contained in part C of chapter
5 of the
NCA. Part C thereof deals with the ‘consumer’s liability,
interest, charges and fees’. The material
portion of section
100 provides:
‘
Prohibited
Charges
(1) A credit provider
must not charge an amount to, or impose a mandatory liability on, the
consumer in respect of –
(a) A credit fee or
charge prohibited by this Act;
(b) . . . ‘
Section
101 is directed at the ‘cost of credit’ and the material
portion provides:
‘
(1) A credit
agreement must not require payment by the consumer of any money or
other consideration, except –
(a) The principal debt,
being the amount deferred in terms of the agreement, plus the value
of any item contemplated in s 102;
(b) . . .’
[17]
Section 102, in turn, prescribes the fees and charges which may be
levied in respect of a credit agreement. The material portion
of s
102 provides:
‘
Fees and
charges
(1) If a credit agreement
is an instalment agreement . . . . the credit provider may include in
the principal debt deferred under
the agreement any of the following
items to the extent that they are applicable in respect of any goods
that are the subject of
the agreement—
(a) . . .
(b) the cost of an
extended warranty agreement;
(c) . . .
(2) A credit provider
must not—
(a) . . .
(b) . . .
(c) charge the consumer
an amount under ss (1) in excess of—
(i) the actual amount
payable by the credit provider for the service, as determined after
taking into account any discount or other
rebate or other applicable
allowance received or receivable by the credit provider; or
(ii) the fair market
value of a service contemplated in subsection (1), if the credit
provider delivers that service directly without
paying a charge to a
third party.
(iii) . . .’
Section
102(1) expressly authorises a credit provider to include in the
deferred debt the cost of an extended warranty agreement.
There is
therefore no dispute between the parties in respect of the extended
warranties which reflected the correct dates and duration
in
accordance with Lewis’s policy. This raised the question
whether the shortcomings contained in the documents embodying
the
disputed extended warranties, rendered the charges levied in respect
thereof prohibited charges. Only in that event would the
credit
agreements contain unlawful terms.
[18]
On behalf of the regulator it was argued that in fact and in law the
relationship between the affected consumers and Lewis
in respect of
the extended warranties was regulated solely by the written
agreements, which could not be overridden by extrinsic
evidence such
as the recordals in the computer system or records of Lewis or even
what actually transpired. Resort was had to the
parol evidence rule
to sustain the argument.
[19]
Section 93 of the NCA requires a credit provider to deliver to a
consumer a copy of the document that records their credit
agreement
and it prescribes the form in which various categories of credit
agreements are to be concluded. The written document,
however,
constitutes evidence of the agreement concluded and is not a
constitutive requirement for the validity of the contract.
[7]
Like any other agreement, were a dispute to arise
inter
partes
relating to the terms of the written document, either party would be
entitled to raise rectification of the document. Rectification
corrects the document, not the juristic act expressed by the
document, and it does not amount to a variation of the contract.
[8]
The document purporting to reflect the contract must be rectified
before the question of compliance with formal requirements can
be
considered.
[9]
[20]
By parity of reasoning, where there is no dispute as to the content
of the extended warranty agreement (the legal act) in fact
concluded
between Lewis and the consumers (as opposed to the document
evidencing the agreement), logic dictates that regard must
be had to
the extrinsic evidence in order to determine whether a contravention
of the NCA has occurred. In fact, on the papers,
there is no evidence
of any consumer who was not advised at the time of making the
election to purchase an extended warranty that
they would enjoy
protection in terms of the warranty for two years after the lapse of
the supplier’s warranty. Lewis has
consistently honoured the
extended warranty accordingly. In the circumstances I consider that
the court a quo correctly concluded
that the evidence presented on
behalf of Lewis established, that notwithstanding the incorrect dates
in some of the extended warranty
agreements, the terms of the actual
agreements were honoured. Every consumer that entered into a two year
extended warranty agreement,
received the additional two years upon
the expiry of the initial one year manufacturer’s warranty.
[21]
The disputed documents, notwithstanding the errors, are indeed
warranties as envisaged in s 102(1)(
b
). The warranties have
consistently been honoured for a period of two years after the lapse
of the supplier’s warranties and
there is no evidence that the
amount charged in respect thereof exceeded their fair market value.
Had a dispute arisne between
a customer and Lewis both parties would
have been entitled to claim rectification of the extended warranty
document. Even
if that were not the case, section 90(4) of the
NCA, which is set out earlier, provides for a court considering an
agreement which
is alleged to contain a clause which is unlawful in
terms of s 90(2), to alter the offending provision so as to render it
lawful,
provided it is reasonable to do so. In order to do so the
court would be obliged to consider the interaction between the
parties
when concluding the agreement. All the evidence which would
be admissible in a claim for rectification and any prejudice which
any party may suffer if the order is granted would have to be
considered. I can conceive of no circumstances in which it would not
be more appropriate to alter the term in regard to the duration of
the extended warranty than those which prevail in this case.
The
parol evidence rule cannot apply.
[22]
The reliance placed by the regulator on the provisions of ss 90 and
91 flowed from its contentions in respect of ss 100, 101
and 102.
Once it is accepted, as I have found, that the errors in completing
the document were resolved by the evidence of the
actual warranty
agreements concluded, the regulator’s objections fall away.
Club
fees
[23]
The investigation embarked upon by the regulator revealed the
existence of the ‘Lewis Family Club’ (the club) and
that
certain consumers were charged ‘club fees’ as reflected
on their monthly statements. It accordingly initiated
a further
complaint and extended the mandate of the investigation of extended
warranties to include the question of club fees as
it postulated that
they increased the cost of credit.
[24]
In scrutinising the sample of customer files obtained from
Lewis the regulator identified positive evidence of two consumers
who
were being charged club fees reflecting on their monthly statements,
but not on the copies of the consumer credit agreements.
The
investigation by the regulator revealed nothing more. The regulator
contended that charging a club fee was part of the cost
of credit as
the fees were included in the statements of account. It therefore
asserted that the mere charging of a club fee to
consumers was not
permitted by ss 100, 101 and 102(1) of the NCA, whether or not
membership of the club was optional.
[25]
The club is an association which affords certain benefits to its
members including the opportunity to participate in regular
draws to
win attractive prizes. There may be some scepticism about the real
benefits of belonging to the club, however, that is
not an issue in
the present matter.
[26]
The evidence on behalf of Lewis relating to the nature of the club
membership and the charging of fees was uncontradicted.
Club
membership is open to any person, whether or not they be a credit
customer of Lewis. Whilst membership of the club is offered
to
consumers seeking credit, in the same manner as it is to any other
customers, the consumer has the exclusive entitlement to
determine
whether or not they wish to take up the offer. When a person elects
to join the club a completely separate contract is
concluded between
the parties. Membership is not in any way dependent upon the
conclusion of a credit agreement and is open to
members of the
public, whether or not they are customers of Lewis. The duration of
the club membership has no bearing on the duration
of any credit
agreement concluded and any member is entitled to terminate their
membership on 30 days’ notice. A subscription
fee (club fee),
payable in advance, is levied in the amount of R25 per month to all
members of the club. Where a member of the
club defaults on the
payment of the monthly club fees, no interest is charged on arrears
and, if they fall into arrears in respect
of three months’ club
fees, their membership is automatically terminated. In such instances
the unpaid club fees are written
off and are not recovered from the
former member.
[27]
The monthly statements of account sent to credit consumers reflect
the club fee payable separately from the outstanding amounts
on any
credit agreements and reveal that no interest is levied on arrear
club fees. It is accordingly not included in the deferred
amount as
envisaged in s 101(1).
[28]
On behalf of the regulator it was argued that the agreement between
consumers and Lewis in respect of club fees was a prohibited
supplementary agreement, as envisaged in s 91(2) of the NCA. This was
so, so the argument went, as one of the terms contained in
the small
credit agreement which Lewis concluded with consumers provided
consumers with the option to agree to join the club and
to pay the
club fee.
[29] There are a number
of difficulties with this argument. Firstly, in its founding papers
the regulator placed no reliance on
the provisions of ss 90 or 91 in
respect of club fees. Lewis has accordingly not addressed the issue
in its answering papers. In
Swissborough Diamond Mines (Pty) Ltd
and others v Government of the RSA
1999 (2) SA 279
(T) Joffe J
correctly summarised the requirements for founding papers thus:
‘
It
is trite law that in motion proceedings the affidavits serve not only
to place evidence before the Court but also to define the
issue
between the parties. In so doing the issues between the parties are
identified. This is not only for the benefit of the Court
but also,
and primarily, for the parties. The parties must know the case that
must be met and in respect of which they must adduce
evidence in the
affidavits. In
Hart v Pinetown Drive-Inn
Cinema (Pty) Ltd
1972 (1) SA 464
(D) it
was stated at 469C-E that
“
where
proceedings are brought by way of application, the petition is not
the equivalent of the declaration in proceedings by way
of action.
What might be sufficient in a declaration to foil an exception, would
not necessarily in a petition, be sufficient to
resist an objection
that a case has not been adequately made out. The petition takes the
place not only of the declaration but
also of the essential evidence
which would be led at a trial and if there are absent from the
petition such facts as would be necessary
for determination of the
issue in the petitioner’s favour, an objection that it does not
support the relief claimed is sound.”
An
applicant must accordingly raise the issue upon which it would seek
to rely in the founding affidavit. It must do so by defining
the
relevant issues and by setting out the evidence upon which it relies
to discharge the
onus
of
proof resting on it in respect thereof.’
[10]
The
unlawfulness in terms of ss 90 and 91 accordingly did not arise.
[30] Secondly, the
argument was factually incorrect. The small credit agreement provided
that the terms and conditions that applied
in respect of the credit
agreement were contained in the contract folder, which terms and
conditions had to be read as forming
part of the agreement. The
contract folder consisted of: The terms and conditions – small
credit agreement, customer protection
insurance terms, the
certificate of insurance, the notice of disclosure to short term
policyholders and the maintenance agreement,
if selected. It
proceeded to record that:
‘
The
terms and conditions relating to the amount of the principal debt,
the number and frequency of instalment payments, the date
of the
first and last payments and all such other additional charges that
the seller may charge to the purchaser are contained
in the
pre-agreement statement and quotation attached thereto, which terms
and conditions must be read as forming part of this
credit
agreement’
.
There
is no reference to the club fees in the pre-agreement statement and
quotation, nor in any of the documents that form part
of the
agreement. During the credit application procedure, however, a
manager’s interview sheet is utilised as a checklist
to obtain
information from the consumer. In the course thereof, as reflected on
the sheet, a credit consumer is afforded the option
to join the club
and, in the event of them electing to do so they are required to
confirm that they can afford the monthly fee
of R25. This form,
reflecting the information obtained from customers, is signed by both
the manager and the consumer. It is not,
however, the membership
contract with the club and no obligation arises from the completion
of the document.
[31]
Thirdly, a ‘supplementary agreement’ is not defined in
the NCA. The ordinary principles applicable to the interpretation
of
legislation find application in respect of the NCA.
[11]
Moreover s 2 of the NCA enjoins a court in interpreting the
provisions of the Act to do so in a manner that gives effect to the
purposes of the Act set out in s 3 thereof. The overriding purpose of
the Act set out in s 3 is ‘to promote and advance the
social
and economic welfare of South Africans, promote a fair, transparent,
competitive, sustainable, responsible, efficient, effective
and
accessible credit market and industry and to protect consumers’.
[32]
The starting point in interpreting the legislation, of necessity, is
to give consideration 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.’
[12]
The Shorter Oxford English Dictionary
[13]
defines ‘supplementary’ as ‘of the nature of,
forming, or serving as, a supplement’. ‘Supplement’,
in turn, is defined as ‘something added to supply a deficiency;
an auxiliary means, an aid;’ or ‘a part added
to complete
a literary work or any written account or document.’ Giving the
term its ordinary English meaning in the context
of chapter 5 of the
NCA, an agreement can only, in my view, be ‘supplementary’
if it deals with the same subject matter
as the main agreement, ie
the regulation of the credit and repayment thereof. Examples of
supplementary agreements that spring
to mind would be documents
acknowledging that no representations had been made to the consumer,
a waiver of statutory rights or
an acknowledgment of receipt of goods
in good order and condition.
[33]
I have referred earlier to the provisions of ss 89, 90 and 91 of the
NCA. Section 91(2) provides that the credit provider must
not
directly or indirectly require or induce a consumer to enter into a
supplementary agreement or sign any document that contains
a
provision that will be unlawful if it were included in the credit
agreement.
[34]
Counsel for the regulator was constrained to acknowledge that the
signing of the manager’s interview sheet (or the club
membership agreement) did not constitute a supplementary agreement.
He contended nevertheless that Lewis, directly or indirectly,
induced
consumers to sign the document which contained the election to join
the club, which he contended would be unlawful if it
were included in
the credit agreement. The document envisaged in s 91(2) is, however,
in the context of NCA, prohibited if it includes
a term which is
declared unlawful by the provisions of s 90(2). Section 91 is
found in part A of chapter 5 of the NCA to
ss 89 and 90. It seeks to
prevent the circumvention of the provisions of ss 89 and 90 by means
of the expedient of separating certain
undertakings from the
agreement itself. It must nevertheless relate to the same subject
matter, being the terms of the credit.
The election to join the club
is not in any manner related to the terms of the credit facility
granted. In these circumstances
the argument cannot succeed.
[35]
Reverting to the material provisions of ss 100, 101 and 102(1), set
out earlier, these provisions are contained in part C of
chapter 5
and are concerned with the consumer’s liability, interest,
charges and fees in respect of the credit facility.
These sections
relate to payments and charges made in respect of the credit
facility. Section 101 places a limitation on what may
be contained in
the credit agreement. It does not purport to prohibit a credit
provider from engaging in other business, unrelated
to the credit
facility, with a consumer.
[36]
The prohibited charge (envisaged in s 100(1)(a)) contended for by the
regulator is a charge made in conflict with s 101(1).
The material
portion of s 101(1) prohibits a credit provider from ‘requiring
payment’ by a consumer under a credit
agreement of any money or
other consideration except the principal debt, being the amount
deferred in terms of the agreement, plus
the value of any item
contemplated in s 102. It is common cause that club fees are not an
item contemplated in s 102. On the undisputed
facts set out on behalf
of Lewis, however, the membership agreement between consumers and the
club is an agreement unrelated to
the credit facility. It deals with
a different subject matter. The club fees are payable in advance and
do not constitute credit.
No interest is raised on the arrears and in
the event of them not being paid they are not recovered. In these
circumstances it
cannot be said that a consumer is ‘required’
to pay the club fee; nor that it increases the cost of credit; nor
can
it be said that the club fee, if it is paid, is paid under the
credit agreement. The mere fact that some consumers are introduced
to
the notion of club membership during the credit application process
can have no bearing on the interpretation of the provisions
of the
NCA.
[37]
In the result the appeal is dismissed with costs, including the costs
of two counsel.
________________________
J
Eksteen
Acting
Judge of Appeal
Wallis
JA (Nicholls and Dlodlo JJA and Eksteen and Hughes AJJA concurring):
[38]
I have read the judgment prepared by my colleague Eksteen AJA on the
merits of this appeal and concur in the judgment and the
outcome.
This judgment deals with the question whether the procedure followed
to bring this case before this court was correct.
It came before us
by way of special leave to appeal granted by this court in terms of
s 16(1)
(b)
of
the Superior Courts Act 10 of 2013 (the SC Act). In the course of
preparation for the appeal it transpired that in previous cases
involving appeals to this court against decisions of the high court
under s 148(2)
(b)
of the NCA inconsistent approaches to obtaining leave to appeal had
been followed. In
Barko
[14]
the appeal was brought on the basis of leave granted by the high
court under s 16(1)
(a)
of the SC Act, but in
NCR
v SAFPS
[15]
special leave to appeal under s 16(1)
(b)
of
the SC Act was sought and granted. It is desirable to resolve this
issue and determine whether it affects the appeal.
[39]
Section 16(1) of the SC Act reads as follows:
‘
(1)
Subject to section 15 (1), the Constitution and
any other law—
(
a
)
an appeal against any decision of a Division as a court of first
instance lies, upon leave having been granted—
(i)
if the court consisted of a single judge, either to the Supreme Court
of Appeal or to a full court of that Division, depending
on the
direction issued in terms of section 17 (6); or
(ii) if the court
consisted of more than one judge, to the Supreme Court of Appeal;
(
b
)
an appeal against any decision of a Division on appeal to it, lies to
the Supreme Court of Appeal upon special leave having been
granted by
the Supreme Court of Appeal’.
[40]
Under ss 17(1) and (2) of the SC Act, the judge or judges who
heard the case at first instance may grant leave to appeal,
if they
are of the opinion that the appeal would have reasonable prospects of
success, or that there is some other compelling reason
why the appeal
should be heard. If the first instance court refuses leave to appeal
it may be sought from the SCA, where two judges
appointed by the
President of the SCA consider the application. If special leave is
required in terms of s 16(1)
(b)
,
an application must be made to the SCA in terms of s 17(3) of
the SC Act for the grant of such leave. Special leave
imposes a
more stringent test for the grant of leave to appeal. There must be
both reasonable prospects of success and compelling
circumstances
justifying the grant of special leave.
[16]
[41]
The NCA provides, in s 148(2) that a participant in a hearing
before a full panel of the National Consumer Tribunal may:
‘
(a)
apply to the High Court to review the
decision of the Tribunal in that matter;
(b)
appeal
to the High Court against the decision of the Tribunal in that
matter, other than a decision in terms of section 138
[17]
or
section 69(2)
or
73
of the
Consumer Protection Act, 2008
, as the
case may be.’
The
decision of the Tribunal in issue in this case is not one that is
excluded from the right of appeal.
[42]
The Tribunal is not a court or part of the judicial system set out in
s 166 of the Constitution. It does not exercise
judicial
authority in terms of s 165 of the Constitution. Instead it is
an independent and impartial tribunal of the kind
contemplated in
s 34 of the Constitution. While its role generally is one of
adjudication,
[18]
it is
nonetheless a body of an administrative nature in the same way as the
CCMA is an administrative body.
[19]
As such its proceedings are subject to judicial review and this is
recognised in s 148(1)
(a)
.
[43]
Within the framework of the judicial system, a decision by a court on
appeal to it within the meaning of s 16(1)
(b)
of the SC Act is either an appeal from a magistrates’ court or
an appeal from a high court sitting at first instance. The
question
raised by this case is whether such appeals are the only appeals with
which s 16(1)
(b)
is
concerned, or whether it applies equally to statutory appeals from
persons, bodies or tribunals falling outside the judicial
system.
[44]
Statutes other than the NCA provide for appeals to the high court
from decisions of administrative bodies or officials. There
is a
diverse range of such provisions. One instance is the appeal against
decisions made by the registrar under s 33 of the
Registration
of Copyright in Cinematographic Films Act 62 of 1977. The statute
provides that an appeal to the high court lies against
a decision by
the registrar.
[20]
Other
statutes have similar provisions. Under s 20 of the Health
Professions Council Act 56 of 1974 an appeal lies to
the high
court against the decision of the Health Professions Council, a
professional board or a disciplinary appeal committee.
Under
s 24(1)
of the
Pharmacy Act 53 of 1974
there is a similar right of appeal to
the high court against any decision by the South African Pharmacy
Council. The decisions
thus rendered subject to appeal range from
registration issues to disciplinary matters. By no means all are
issues of law.
[45]
When magistrates conduct enquiries in terms of
s 9
, read with
ss10 or 12, of the Extradition Act 67 of 1962, they are acting in an
administrative capacity. Their decision is confined
to whether the
person concerned is liable to extradition, after which the decision
on extradition itself is that of the Minister.
In terms of s 13
of the Act the decision of the magistrate is appealable to the high
court having jurisdiction. As the magistrate
was not sitting as a
court this is not the same as an appeal, whether civil or criminal,
from a magistrates’ court to the
high court.
[46]
A further example, in what cannot purport to be a comprehensive
survey, is provided by
s 21(1)
of the
Films and Publications Act
65 of 1996
, which provides that if the Review Board classifies a film
as XX or X18, the publisher or distributor, or person who applied for
its classification, may appeal to the high court against the
decision. The court’s decision on the issue of classification
is then deemed to be a decision by the Film and Publication Board.
This is a decision of a purely administrative nature. So is
the
decision of the Air Services Licensing Council to grant or refuse a
licence to a prospective air services provider in terms
of s 16
of the Air Services Licensing Act 115 of 1990. However, it too is the
subject of an appeal to the High Court in terms
of s 25 of that
Act.
[47]
Some statutes are alive to problems that may arise from granting an
appeal directly to the high court and address this specifically.
Thus
under the
Patents Act 57 of 1978
decisions by the registrar are
appealable to a Commissioner of Patents
[21]
and, under
s 76
, decisions of the Commissioner are appealable to
the court. Under
s 29
of the
Copyright Act 98 of 1978
, the
Commissioner of Patents is also the Copyright Tribunal and decisions
by the Commissioner are likewise appealable to the court.
However,
both statutes provide that the appeal is to be noted and prosecuted
‘in the manner prescribed by law for appeals
against a civil
order or decision of a single judge’. The appeal accordingly
starts on the footing that it is dealt with
from a procedural
perspective as if the Commissioner were a court. That is not
surprising given that the Commissioner is a judge
or acting judge of
the high court. By way of contrast under
s 42
of the
Designs Act
195 of 1993
a decision by the registrar is appealable to the court
and the registrar’s decision is deemed to be an order or
judgment
of a magistrate.
[48] There does not
appear to be any authority on the meaning to be accorded the words
‘given on appeal to it’ in terms
of
s 16(1)
(b)
or
to whether any of these various kinds of appeals fall within those
words or are treated when they come before the high court
as being
heard by a court of first instance. The same words appeared in
s 20(4) of the Supreme Court Act 59 of 1959, the predecessor
of
the SC Act. It read:
‘
No
appeal shall lie against a judgment or order of the court of a
provincial or local division in any civil proceedings or against
any
judgment or order of that court given on appeal to it except—
(a)
in the case of a judgment or order
given in any civil proceedings by the full court of such division on
appeal to it in terms of
subsection (3), with the special leave of
the appellate division;
(b)
in any other case, with the leave of
the court against whose judgment or order the appeal is to
be made or, where such
leave has been refused, with the leave of the
appellate division.
’
[49]
This provision confined the need to obtain special leave to appeal
under sub-sec
(a)
to
cases of an appeal to the full court against a decision by the high
court. Statutory appeals did not fall under this section
and
accordingly, even if they were heard by the full court, that court
was entitled to grant leave to appeal to this court under
sub-sec
(b)
.
[22]
For that reason the appeal to this court in
De
Beer
[23]
proceeded with the leave of the high court that had determined the
appeal from the Medical and Dental Council under s 20 of
Act 56
of 1974.
[50]
In principle there are a number of reasons why s 16(1)
(b)
of
the SC Act should be confined to applications for leave to appeal
against decisions by the high court given on appeal to it from
other
courts within the judicial system, that is, the magistrates’
courts and full bench appeals from the high court sitting
at first
instance. The first is that there is a fundamental difference between
an appeal from a court and an appeal from a body
outside the judicial
system. The latter may be an administrative tribunal, or a board or
official dealing with purely administrative
matters, where the
decision in question may have little or no legal content, but may be
a matter of administrative discretion.
The ‘appeal’
brings it before the court for the first time. By contrast, once a
matter has been heard by a court of
first instance and the
dissatisfied party has exercised a right of appeal, the right to a
further appeal should depend not only
on the question whether there
are reasonable prospects of success, but also on the existence of
some compelling circumstances warranting
a further appeal. The reason
for such a limitation lies in the principle that there should be
finality in litigation.
[24]
Accordingly the law places a limit on the number of appeals that may
be pursued within the court system and empowers appellate
courts to
regulate the cases that come to them by way of provisions requiring
leave to appeal from those courts.
[51]
The second point of principle lies in the fact that an appeal within
the justice system is a clearly defined process, whereby
the
correctness of the decision of the court appealed from is assessed
within defined boundaries. The appeal proceeds on the record
of the
proceedings in the lower court and the factual findings of that court
and its exercise of discretion in reaching its decision
are given
respect and only departed from on limited grounds. That is by no
means true of statutory appeals from tribunals and officials.
[52]
The first issue in a statutory appeal is to ascertain the nature of
the right of appeal conferred by the statute. In determining
that
question courts follow the taxonomy laid down by Trollip J in
Tikly
v Johannes
.
[25]
Broadly speaking there are three possibilities. The appeal may be a
complete rehearing and fresh determination of the subject of
the
appeal. It may be an appeal in the conventional sense of a rehearing
on the merits, but on the same evidence and information
as was before
the original decision-maker, subject to the limitation inherent in
the decision-maker not necessarily being in the
same situation as a
court of record. Thirdly the appeal may be a review, involving a
limited rehearing, with or without additional
information and
evidence, to examine not the merits of the decision, but the manner
in which it was arrived at. Unlike appeals
within the judicial system
therefore statutory appeals may have a widely varying nature and
involve different types of hearing.
[53]
The third point concerns the nature of a statutory appeal and the
terms in which the right of appeal is granted. These may,
when
properly construed, mean that the appeal to the high court is final
and not subject to any further appeal at all. That may
especially be
the case when the statute provides that the decision by the court
will stand in the place of or be deemed to be the
decision of the
original decision-maker.
[26]
If the appeal to the high court is taken to result in a decision by
that court given on appeal to it there will be conflict between
the
statute conferring the right of appeal and the SC Act. That is
manifestly undesirable.
[54]
The fourth point is that it is almost inevitable, as recognised
expressly in s 148(2)
(a)
of
the NCA, that the decisions of statutory bodies and officials in
these matters will constitute administrative action and be subject
to
judicial review under the provisions of PAJA.
[27]
Such proceedings are conventionally pursued in the high court before
a single judge sitting at first instance. That judge will
deal with
the question of leave to appeal against the judgment and may direct
that it be heard before either a full court or this
court, depending
on the nature and complexity of the issues raised. It seems anomalous
that, if the dissatisfied party was content
to proceed by way of an
appeal on the record of the administrative decision-maker, any appeal
flowing from the judgment would require
special leave to appeal from
this court, when common experience teaches that there may be
considerable overlap between appeal and
review grounds.
[55]
Finally, I revert to the point made earlier that the test for
granting special leave to appeal is more stringent than the test
for
leave to appeal, Given the fact that restrictions on the right of
appeal have been held by the Constitutional Court to constitute
a
limitation on the right of access to courts under s 34 of the
Constitution, it seems to me that we should prefer an interpretation
of s 16(1)
(b)
that
least restricts the ability of a disappointed litigant to seek relief
by way of an appeal within the justice system.
[56]
For those reasons I conclude that an appeal from the decision of a
high court under s 148(2)
(b)
,
whether constituted of a single judge, or two judges, or as a full
court, lies with leave of that court sitting as a court of
first
instance. Such leave should be sought in terms of s 16(1)
(a)
of the SC Act and not by way of an
application for special leave to appeal from this court.
[57]
That leaves the disposal of this appeal. The parties were
understandably anxious that having come this far they should receive
a judgment on the merits. They came in good faith having received
special leave to appeal from this court, without any query being
raised as to the correctness of that approach until shortly before
the hearing. To strike the appeal from the roll only for them
to
retrace their steps through the high court and, if refused leave,
back to this court, but against a lesser standard for the
grant of
leave to appeal, would be a gross technicality and waste of
resources. Even more so would be a repeat hearing of an issue
that
has been fully argued.
[58]
It seems to me that this constitutes special circumstances in which
the court can in the exercise of its inherent jurisdiction
to
regulate its own procedure condone the irregular manner in which this
appeal reached us. There are clear indications in the
high court’s
judgment that, had leave to appeal been sought from it, the
application for leave would have been dismissed.
Inevitably that
would have led to an application for leave to appeal to this court
and, given that an application for special leave
was granted, the
conclusion must be that ordinary leave would have been granted.
Accordingly in the special circumstances of this
case, which will not
be repeated, because the issue of the proper approach to the
application of s 16(1)
(b)
will be resolved by this judgment, the appeal should be dealt with on
its merits in accordance with the judgment of Eksteen AJA.
________________________
M J D WALLIS
JUDGE
OF APPEAL
APPEARANCES:
For
Appellant:
P L Carstensen SC
Instructed
by:
Mothle, Jooma, Sabdia, Pretoria
Matsepes
Inc, Bloemfontein
For
Respondent:
A P H Cockrell
SC with P B J Farlam SC
Instructed
by:
Edward Nathan Sonnenbergs Inc, Pretoria
Lovius Block,
Bloemfontein
[1]
In
terms of s 148(2)
(b)
of the NCA.
[2]
See
the judgment by Wallis JA below in respect of the procedure for
leave to appeal.
[3]
Section
91(2) provides: ‘A credit provider must not directly or
indirectly require or induce a consumer to enter into a
supplementary agreement or sign any document, that contains a
provision that would be unlawful if it were included in a credit
agreement’.
[4]
Section
90(3) provides that: ‘In any credit agreement, a provision
that is unlawful in terms of this section is void as
from the date
that the provision purported to take effect’.
[5]
Michelle
Kelly-Louw
Consumer
Credit Regulation in South Africa
at 205.
[6]
In
terms of s 15(
f
)
of the NCA.
[7]
Compare
s
164(1)
of the NCA which provides:
‘
Civil
actions and jurisdiction
(1) Nothing in this Act
renders void a credit agreement . . . that, in terms of this Act, is
prohibited or may be declared unlawful
unless the court declares the
agreement . . . to be unlawful’.
[8]
See
Spiller
v Lawrence
1976 (1) SA 307
(N) at 310 in respect of the need to distinguish
between ‘contract’ in the sense of a contractual
document and ‘the
contract’ in the sense of the
agreement constituting the legal act.
[9]
See
Van der Merwe, Van Huysteen, Reinecke, Lubbe
Contract:
General Principles
4ed (2011) at 157.
[10]
Swissborough
at
323G–324A.
[11]
The
principles are summarised in
Natal
Joint Municipal Pention Fund v Endomeni Municipality
[2012] ZASCA 13
;
2012 (4) SA 593
(SCA) para 18 and
Bothma-Batho
Transport (Edms) Bpk v S Bothma en Seun Transport
(Edms) Bpk
[2013] ZASCA 176
,
2014 (2) SA 494
(SCA) para 10.
[12]
Natal
Joint Municipal Pension Fund
603
– 604 at para 18.
[13]
Shorter
Oxford English Dictionary
3
rd
ed, reprinted with revised etymologies and addenda, A73;
[14]
Barko
Financial Services (Pty) Ltd v National Credit Regulator
[2014]
ZASCA 114; [2014] 4 All SA 411 (SCA).
[15]
National
Credit Regulator v Southern Africa Fraud Prevention Services NPC
[2019]
ZASCA 92, 2019 (5) SA 103 (SCA).
[16]
Westinghouse
Brake and Equipment (Pty) Ltd and Another v Bilger Engineering (Pty)
Ltd
1986
(2) SA 555
(A) at 560E-H;
Van
Wyk v S; Galea v S
[2014]
ZASCA 152
;
[2014] All SA 708
(SCA);
2015 (1) SACR 584
(SCA) para 21.
[17]
Section
138 deals with consent orders.
[18]
Section
27 of the NCA.
[19]
Sidumo
and Others v Rustenburg Platinum Mines Ltd and Others
[2007] ZACC 22
;
2008 (2) SA 24
(CC) paras 81-88 and 122-141.
[20]
The
registrar is the Commissioner appointed under
s 189
of the
Companies Act 71 of 2008
as the head of the Companies and
Intellectual Property Commission (the CIPC).
[21]
The
Commissioner of Patents is a judge or acting judge designated by the
Judge President of the Gauteng Division of the High Court
to perform
the functions of the Commissioner. See
s 8
of the
Patents Act.
[22
]
New
Balance Athletic Shoe Inc v Dajee NO and Others
2011
BIP 139 (NG).
[23]
De
Beer v Die Raad vir Gesondheidsberoepe
[2006]
ZASCA 115
;
2007 (2) SA 502
(SCA) para 1.
[24]
Nestle
(South Africa) (Pty) Ltd v Mars Inc
2001
(4) SA 542
(SCA) para 16.
[25]
Tikly
and Others v Johannes NO and Others
1963
(2) SA 588
(W) at 590H-591A.
[26]
See
for example
The
Minister of Labour v Building Workers’ Industrial Union
1939
AD 328
and
Rohrs
v Newmarch
1915
AD 108.
Statutory appeals against decisions by officials or boards
in licencing cases were held not to raise a
lis
or
dispute between the applicant for a licence and the licencing
authority. Accordingly decisions by the court given on appeal
from
the licencing authority were not appealable. See
Maske
v The Aberdeen Licensing Court
1930
AD 30
at 36 and the authorities there referred to.
[27]
The
Promotion of Administrative Justice Act 3 of 2000
.