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[2012] ZACC 29
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National Credit Regulator v Opperman and Others (CCT 34/12) [2012] ZACC 29; 2013 (2) BCLR 170 (CC); 2013 (2) SA 1 (CC) (10 December 2012)
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CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 34/12
[2012] ZACC 29
In the matter between:
NATIONAL CREDIT REGULATOR
............................................................
Applicant
and
FILLIPPUS ALBERTUS OPPERMAN
..............................................
First
Respondent
JACOBUS BOONZAAIER
.............................................................
Second
Respondent
MINISTER OF FINANCE
.................................................................
Third
Respondent
MINISTER OF TRADE AND INDUSTRY
.....................................
Fourth
Respondent
Heard on : 21 August 2012
Decided on : 10 December 2012
JUDGMENT
VAN DER WESTHUIZEN J (Mogoeng CJ, Moseneke DCJ, Khampepe J,
Nkabinde J and Skweyiya J concurring):
Introduction
The central issue is whether section 89(5)(c) of the National Credit
Act
1
(NCA) is consistent with the right not to be arbitrarily deprived of
property, recognised in section 25(1) of the Constitution.
2
The Western Cape High Court, Cape Town (High Court) found that it
was not, because it denies an unregistered credit provider
the right
to restitution of money lent out, without affording a court the
discretion to consider whether restitution would be
just and
equitable. The High Court declared the provision to be
constitutionally invalid. This Court has to determine whether
the
order of constitutional invalidity should be confirmed.
The
National Credit Regulator (NCR) appeals against the declaration of
constitutional invalidity. The first respondent, Mr Opperman,
opposes the appeal and asks this Court to confirm the order of the
High Court. The second respondent, Mr Boonzaaier, and
the third
respondent, the Minister of Finance, did not file opposing papers in
this Court. The fourth respondent, the Minister
of Trade and
Industry (Minister), opposes the confirmation of the order.
The
questions to be answered are:
(a) What is the correct interpretation of section 89(5)(c)?
(b) Does section 89(5)(c) deal with
property
for the purposes
of section 25(1)?
(c) Does the provision amount to
arbitrary deprivation
of
property?
(d) Does it contain a constitutionally permissible limitation of the
right protected in section 25(1)?
3
(e) Depending on the above, what is the appropriate remedy?
Background
Mr Opperman
is a Namibian farmer. In 2009 he lent his friend, Mr Boonzaaier,
a total sum of R7 million for property
development in Cape
Town. They concluded three written loan agreements. Mr Opperman
was not registered as a credit provider
at the time of providing the
loan as required by the NCA.
4
He was not in the business of providing credit, was unaware of the
requirement to register and had no intention of violating
the NCA.
5
When the dates for the repayment of the loans had passed,
Mr Boonzaaier informed his friend that he was unable to meet
his obligations.
Mr Opperman
applied for the sequestration of Mr Boonzaaier’s estate
in the High Court. This application was unopposed
and a provisional
order was granted. On the return date the Court – of its own
volition (
mero motu
) – raised concerns about the
provisions of the NCA, and refused to grant a final order. It
postponed the sequestration
proceedings and extended the rule
nisi
to enable the parties to prepare argument to address its
concerns.
Counsel
for the first respondent subsequently amended the notice of motion
to include a challenge to the constitutionality of
section 89(5) of
the NCA. This resulted in the joinder of the NCR, the Minister of
Finance and the Minister of Trade and Industry
as parties to the
proceedings. The Minister of Finance did not take an active part in
the proceedings before the High Court or
this Court.
High Court
The High Court found that the loans concerned were “credit
agreements” in terms of the NCA.
6
The first respondent, as the lender, was a “credit provider”
and the second respondent, as the borrower, was a “consumer”
under the NCA.
7
Section 40
of the NCA requires certain credit providers to register with the
NCR.
8
Because Mr Boonzaaier’s total principal debt exceeded the
R500 000 threshold, prescribed in terms of section 42(1)
of the NCA,
9
the High Court held that Mr Opperman was required to register.
Since he was not registered, the credit agreement was unlawful.
Section 89(5)
10
stipulates how unlawful credit agreements must be dealt with by
courts.
The High Court found section 89(5)(a) to mean that the credit
agreement is void and that it bars Mr Opperman from recovering
any of the money lent out, either under the agreement or on the
basis of unjustified enrichment of Mr Boonzaaier. According
to
the Court, the object
of
section 89
was
to discourage the provision of credit outside the regulatory
framework provided by the statute. That objective is legitimate,
particularly as applied to those who are in the business of
providing credit. The Court stated that the NCA’s most
important objectives are to protect vulnerable consumers and abate
the inequality between credit providers and consumers.
11
The
High Court found that there was insufficient reason to deprive the
first respondent of his right to restitution of the money
lent. Thus
section 89(5)(c) provides for an arbitrary deprivation of
property in breach of section 25(1)
12
of the Constitution. It further held that the provision could not be
saved under section 36(1)
13
of the Constitution as a reasonable and justifiable limitation of
the right not to be arbitrarily deprived of property. The High
Court
held that section 89(5)(c) is inconsistent with section 25(1)
and thus constitutionally invalid.
Positions of the parties before this Court
The
NCR submits that section 89(5)(c) can be interpreted in a
manner that is consistent with the Constitution. The provision
does
not allow for arbitrary deprivation. The interpretation of the High
Court was incorrect. Mr Opperman supports the High
Court’s reasoning and asks this Court to confirm the
declaration of invalidity. The Minister submits that
section 89(5)(c)
does not infringe section 25(1). Although
it results in deprivation, the deprivation is not arbitrary because
there are
sufficient reasons for it. In the alternative, the
Minister submits that section 89(5)(c) can be read to include a
residual
discretion and when read in that way, there is no arbitrary
deprivation. If, however, this Court finds that the section is
unconstitutional,
the Minister invites us to suspend any declaration
of invalidity, during which time an interim reading-in should apply.
Interpreting the provision: common law and context
Common law rules on unlawful agreements and enrichment originated
centuries ago and have been shaped by court decisions over
time and
set out by academic authors.
14
The introductory part of section 89(5) indicates an awareness
of the existence of common law rules in this area by stating
that
the rest of the provision follows “despite any provision of
common law.”
15
Mr Opperman
claims that his common law action for restitution is denied by
section 89(5)(c). The legislature may of
course codify, deviate
from, change, or abolish parts of the common law. The Constitution
is the supreme law of the land. The
common law and statute law must
be consistent with it. The crucial question in this case is not
whether or how far the provision
deviates from the common law, but
whether it is inconsistent with section 25 of the Constitution.
However, a basic understanding
of the common law position regarding
unlawful contracts and enrichment is necessary to grasp the purpose,
meaning and effect
of section 89(5)(c).
Lawfulness
is one of the requirements for a valid contract. Unlawful contracts
are void from the outset (
ab initio
) and cannot be enforced.
If one party fails to perform as agreed, the other cannot
successfully compel him or her to perform.
16
A
party who wants to claim the restitution of money paid or goods
delivered in pursuance of an unlawful agreement cannot do so
under
the agreement and must make use of an action based on the
unjustified enrichment of the receiver.
17
Professor Visser describes the basic function of the law of
unjustified enrichment as “to restore economic benefits
to the
plaintiff, at whose expense they were obtained, and for the
retention of which by the defendant there is no legal
justification.”
18
The enrichment action relevant to this matter is the
condictio ob
turpem vel iniustam causam.
Its requirements are generally
described as follows: ownership must have passed with the transfer;
the transfer must have taken
place in terms of an unlawful
agreement;
19
and the claimant must tender the return of what he or she received.
20
In
order to be successful, ordinarily the party who claims on the basis
of unjust enrichment must be free of turpitude and show
that he or
she has not acted dishonourably. This is the
par delictum
rule.
21
The underlying principle is that the law should discourage and deter
illegality; it should not render assistance to those who
defy it.
22
Even
under Roman law this rule was at times applied in a nuanced way by
evaluating and comparing the degree of turpitude of both
parties
involved in the transaction. In Roman Dutch law the rule was applied
more strictly. However, since
Jajbhay v Cassim
23
South African courts have been prepared to relax the
par delictum
rule, to prevent injustice or to satisfy the requirements of public
policy, by taking fairness considerations into account. The
rule is
thus not an absolute bar to a claim for restitution.
24
Definite requirements as to when the rule should be relaxed have not
been stated, but courts have emphasised their freedom to
reject or
grant an unjust enrichment claim on the facts before it by
exercising a discretion.
25
A
credit agreement entered into by an unregistered credit provider who
was unaware of the requirement to register appears to be
a good
example of an unlawful agreement where there is little or no
turpitude on the part of the credit provider. Section 89(5)(a)
states that the agreement must be declared void from its inception.
This corresponds with the common law position. But there
appears to
be little room for judicial discretion under section 89(5)(c). It
provides that the rights of the credit provider
under the agreement
to recover money paid or goods delivered to the consumer must either
be cancelled, or forfeited to the state
if the consumer would be
unjustly enriched, regardless of turpitude or other factors relevant
in a fairness or public policy
inquiry. If this interpretation is
the correct one, section 89(5)(c) would differ substantially from
the common law by taking
away a credit provider’s right to
restitution. Academic literature has labelled the provision as “far
reaching”
or “outrageous”, and unfair.
26
The
statutory context of section 89(5)(c) is important in the
interpretation of the provision. The NCA must be interpreted to
give
effect to its objects and purposes.
27
Before its advent, South African credit legislation consisted mainly
of the Usury Act
28
and the Credit Agreements Act.
29
The need for a review of our credit legislation became apparent in
1994 after the South African Law Reform Commission had recognised
shortfalls in our credit regulatory framework.
30
One of the many concerns that led to the review was “effectiveness
of consumer protection, particularly in relation to
the 85 per cent
of the population in low-income groups”.
31
According
to its preamble, the objects of the NCA include removing unfair
credit practices; regulating credit information; promoting
responsible credit granting and use; and prohibiting reckless credit
granting.
32
Section 3 sets out its purposes: “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”. This Court accepted in
Sebola
33
that the main objective of the NCA is to protect consumers, but
stated that the interests of credit providers should not be
minimized or disregarded in the process of interpretation.
34
Section
89(5) is aimed at protecting consumers by attaching significant
negative consequences to the failure to register by credit
providers
who are required to do so. A credit agreement entered into by an
unregistered credit provider is void from its inception.
The credit
provider may not enforce the agreement. And it must refund to the
consumer any money paid by the consumer to the credit
provider, with
interest.
35
The
question is what happens to money paid by the credit provider to the
consumer under the unlawful and void agreement. In terms
of section
89(5)(c) it stays with the consumer, because all the “purported
rights” of the credit provider to recover
money are
“cancelled”, unless cancellation would “unjustly
enrich” the consumer.
36
But what happens if the consumer would indeed be unjustly enriched?
Before
proceeding to the interpretations of section 89(5)(c) advanced in
this case, I need to point out that the term “unjustly
enrich”
is used in subsection (c)(i) and (ii), whereas the terms
“unjustified enrichment” and “unjustifiably
enriched” are mostly used in academic literature and in many
judgments by courts.
37
Linguistically there appears to be some difference between “unjust”
and “unjustified”. The first refers
to the concept of
justice, or fairness, whereas the second normally means the absence
of justification, in this case legal justification
for the
enrichment.
38
The
question could be asked whether the choice of terminology in the two
subsections is deliberate and significant. The more correct
term –
“unjustified enrichment” – does not seem to be
adhered to strictly by our courts and the two terms
appear to be
used synonymously in practice. It appears that the words “unjustly
enrich” were not consciously chosen
to refer to anything other
than unjustified enrichment, as recognised in common law.
Different interpretations
Different
interpretations of section 89(5)(c) have been proposed by the High
Court, the NCR and Mr Opperman, as well as during
oral argument in
this Court. I deal with each of these in turn. Then the question
whether section 89(5)(c) has a clear meaning,
or is perhaps so vague
that it may be constitutionally void, is addressed.
The High Court’s interpretation
The
High Court interpreted the provision to mean that the rights of the
credit provider to recover any money paid must be
either
(i)
cancelled, unless the court concludes that doing so would unjustly
enrich the consumer;
or
(ii) forfeited to the state, if the
court concludes that cancelling those rights in the circumstances
would unjustly enrich the
consumer. It held that the provision
allows for these two possibilities only. Therefore, it does not
afford a court a discretion.
The only decision required is whether
there is unjustified enrichment on the part of the consumer.
The
provision contemplates two possible orders. Under both, the credit
provider would lose his or her right to restitution; that
is not
only any possible right under the credit agreement, but also the
right based on the unjustified enrichment of the consumer.
The High
Court thus held that section 89(5)(c) results in the arbitrary
deprivation of property. The NCR acknowledges that this
interpretation would result in constitutional invalidity.
The
applicant’s
interpretation
The
NCR contends that the High Court’s interpretation is
incorrect. It submits that the provision can be construed in a
constitutionally acceptable manner, as allowed for by
Hyundai
.
39
According to the NCR, subsection (i) provides that the right to
restitution, consequent upon the declaration of voidness of the
contract, must be cancelled
unless
the court concludes that
doing so in the circumstances would unjustly enrich the consumer.
Section 89(5)(c)(i) thus enables the
court to either cancel the
right of the credit provider to restitution,
or
leave it
intact by not cancelling it. If the court follows the last-mentioned
route, it need not concern itself with subsection
(ii) and with
forfeiture to the state.
The
NCR contends that subsection (ii) makes a forfeiture order possible,
but a court may only grant it if cancellation of the
credit
provider’s restitution rights would result in unjust
enrichment. The effect of this interpretation is that subsection
(ii) does not automatically come into operation if cancellation
would unjustly enrich the consumer; the court has a discretion
to
leave the rights intact, or to forfeit them to the state. Thus a
court may, for example, consider the level of turpitude or
blameworthiness on the part of the credit provider.
In
sum, in the NCR’s interpretation a court has three options,
namely, to (a) cancel the credit provider’s right to
restitution; or (b) leave the credit provider’s right to
restitution intact for the credit provider to exercise, because
the
consumer would be unjustly enriched if the rights are cancelled; or
(c) forfeit the credit provider’s rights to the
state because
the consumer would otherwise be unjustly enriched if the court
exercises its discretion to apply subsection (ii).
According
to
Hyundai
, a constitutionally compliant interpretation must
be given if it can be reasonably ascribed to the words of the
provision.
40
The “
either
. . .
or
” wording in section
89(5)(c) does not reasonably allow for the interpretation proposed
by the NCR. These two words have
the effect that (i) and (ii) must
be read together, leaving only two alternatives to a court:
cancellation or forfeiture to the
state.
The
first respondent’s interpretation
Counsel for Mr Opperman initially suggested that in order to save
the provision from unconstitutionality, the words “must
order”
in the introductory sentence of section 89(5) can be read as
“may order”. This interpretation was
correctly rejected
by the High Court and then abandoned before this Court.
41
An alternative interpretation
The
interesting interpretation proposed in the judgment by my colleague
Cameron J was not raised before or mentioned by the High
Court in
its judgment. Counsel did not accept it as a viable possibility when
it was put to them during the presentation of oral
argument in this
Court.
This
interpretation focuses on the words “rights . . . under that
credit agreement” in section 89(5)(c). It holds
that as an
enrichment claim is not based on the credit agreement, it is not
included in the provision that deals with rights
“under that
credit agreement”. The claim for restitution on the basis of
enrichment that the credit provider has
under common law, is thus
not affected by the section. As the credit provider is not denied
the right to restitution based on
enrichment, there is no arbitrary
deprivation. The provision is thus not constitutionally offensive.
This
interpretation is attractive to the extent that it attempts to give
meaning to the words “under that credit agreement”
and
does not result in constitutional invalidity. However, it poses
problems.
Section
89(5)(c) would then mean that only the rights under the credit
agreement are cancelled or forfeited to the state. But
we know that
no rights flow from or exist under an unlawful and void agreement.
The provision would be “inoperative, a
patently regrettable
result”,
42
ineffectual and in fact meaningless. It would be a patent “drafting
error”.
43
According
to this interpretation, the legislature would simply be required to
remove the words “under that credit agreement”
to give
the provision meaning and thereby remedy the defect. Then the
cancellation and forfeiture would indeed apply to restitution
based
on enrichment. The unconstitutionality complained of by Mr Opperman
and found by the High Court would thus arise again
and would still
have to be determined by courts, including this Court.
In my
view the words “under that credit agreement” are no more
central and pivotal to the provision than the words
“to
recover any money paid or goods delivered”, together with the
repeated mentioning of “unjustly enrich”
in section
89(5)(c)(i) and (ii). Why would courts be told to decide whether the
consumer is unjustly enriched or not, which is
the very difference
between section 89(5)(c)(i) and (ii), if the intention is simply to
cancel the non-existing rights under
the void agreement and say
nothing at all about restitution based on enrichment?
The
provision has to be interpreted within the context of the stated
aims of the NCA as a whole, as well as the rest of the provision.
It
should be understood within the broader context of section 89(5) and
in the light of the unjust enrichment enquiry referred
to in (i) and
(ii). There is a link between the “purported rights” and
“that credit agreement” although
a claim based on
enrichment is not a contractual right; it arises as a result of an
agreement being void. Section 89(5) seems
to state the negative
consequences for an unregistered credit provider progressively, from
voidness in (a), through the refunding
of money paid by the consumer
to the credit provider under (b), to the denial of the right to
restitution under (c). This is
the scheme of the provision, which is
quite understandable within the context of the aims of the NCA.
There
might furthermore be practical implications if the restitution
claim is left intact by section 89(5)(c), as proposed by this
interpretation. The credit provider would have a claim for
restitution
against the consumer (under (c)). At the same time the
consumer would have a claim (under (b)) to a refund of all money
paid
by the consumer to the credit provider.
44
This would make little sense.
A
court must try to give a reasonable meaning to the text enacted by
the legislature. I am unable to endorse an interpretation
that
renders section 89(5)(c) inoperative and meaningless. And I cannot
find a provision to be constitutionally compliant, if
that finding
is based on a drafting error. This Court has previously rejected an
interpretation that would render a provision
ineffective and
nugatory, even if it results in constitutional compliance.
45
It is not the most plausible interpretation for the provision, if a
plausible one at all.
I
disagree with the view of Cameron J insofar as it is suggested that
this Court does not have a duty to give meaning to a provision
if
that meaning would result in unconstitutionality. Before
constitutional compliance can be evaluated, a court must attribute
a
meaning to a provision. If more than one meaning is reasonably
plausible, the one resulting in constitutional compliance must
be
chosen. But if the interpretation that emerges from the wording and
context results in constitutional invalidity a court has
to make a
finding of unconstitutionality. The fact that a constitutionally
compliant interpretation cannot reasonably be given
to it, does not
necessarily lead to vagueness. A finding of vagueness based on a
perceived inability to interpret the provision
would in any event
also result in constitutional invalidity. And an interpretation that
renders the provision meaningless would
lead nowhere. It would be
futile.
Vagueness
It
appears from the different interpretations advanced that aspects of
the wording of section 89(5)(c) are problematic and do
not fit
perfectly with any of these interpretations. The wording of the
provision also does not seem to properly recognise the
common law
position referred to in the introductory part of section 89(5).
The words “cancelled” and “forfeit”
in
relation to “all the purported rights . . . under that credit
agreement” are nebulous. The credit agreement is
after all
void from its inception because it is unlawful, under common law, as
well as in terms of section 89(5)(a). Given that
no contractual
rights exist “under that credit agreement”, one wonders
which “purported rights” stand
to be “cancelled”.
And what rights remain to be forfeited to the state? What are
“purported rights” in
any event?
This
Court previously found significant ambiguity in section 89(5)(c)
46
and stated that it was “difficult to fathom exactly what is
taken away from the applicant and exactly what is forfeited
to the
state.”
47
Similarly poor formulation of other provisions of the NCA has also
resulted in litigation.
48
But no provision of the NCA has been argued or found to be
unconstitutionally vague.
The
question arises whether the provision is indeed vague to the extent
of being constitutionally unacceptable. Vagueness was
not a ground
on which the High Court found section 89(5)(c) constitutionally
invalid. It was also not raised by any of the parties
before this
Court. After the hearing of oral argument, the parties were directed
to make additional written submissions
on whether
section 89(5)(c) is constitutionally invalid due to its vagueness.
In response, all the parties submitted that the
provision is not
unconstitutionally vague.
Laws must of course be written in a clear and accessible manner.
49
Impermissibly vague provisions violate the rule of law, a founding
value of our Constitution.
50
For the “law” to “rule”, it must be
reasonably clear and certain.
However,
courts have a duty to interpret and apply the law.
51
On the assumption of office, each judge must swear or affirm to
administer justice in accordance with the Constitution and the
law.
52
The doctrine of the separation of powers requires the legislature to
make law and the courts to interpret and apply it to the
best of
their ability. In
Affordable Medicines
53
Ngcobo J stated: “[t]he doctrine of vagueness must recognise
the role of government to further legitimate social and economic
objectives”.
The
need for clarity does not require absolute certainty. The law must
indicate with reasonable certainty to those bound by it
what is
required of them.
54
When considering vagueness, a court must construe the relevant
provision by applying the normal rules of construction, which
would
include looking at the statute as a whole.
55
Only
once has this Court found legislation to be impermissibly vague. In
South African Liquor Traders
the lack of a timeframe in a
definition rendered that definition completely unworkable and
impermissibly vague and thus unconstitutional.
Section 1 of the
Gauteng Liquor Act
56
defined a “shebeen” as “any unlicensed operation
whose main business is liquor and is selling less than ten
(10)
cases consisting of 12 x 750 ml of beer bottles”, without
stipulating the period within which these had to be
sold. O’Regan
J stated on behalf of a unanimous court:
“
The
difficulty arises from the fact that the definition does not
stipulate the period within which the prescribed quantity of beer
must be sold: it could be defined by reference to a day, a week, a
month or even a year. The absence of a stipulated period from
the
definition renders the definition vague. Furthermore, there is
nothing in the rest of the Act which assists in any way in providing
a meaning to the definition. Its meaning cannot therefore be
ascertained with any precision. It is simply not clear which
unlicensed
liquor traders will fall within the definition and which
without.”
57
The
preferred interpretation
In
view of the less than accurate language of the provision, a robust
conclusion that section 89(5)(c) is unconstitutionally vague
appears
tempting. A finding to this effect would result in a declaration of
invalidity without more, which would render it unnecessary
to
grapple with the questions concerning the arbitrary deprivation of
property that still have to be addressed. But it would
amount to
shirking one’s responsibility to give meaning to an important
piece of legislation.
The
provision is not well drafted. The inaccuracy is frustrating. But it
does not rise to a constitutionally fatal level of vagueness.
The
situation is very different from the one in
South
African Liquor Traders,
where the
provision was utterly meaningless and unworkable and where nothing
in the rest of that Act assisted in giving a meaning
to the
definition.
In
spite of words and phrases that may show incoherence and a lack of
understanding of common law, the stated objectives of the
NCA and
the context within which section 89(5)(c) appears assist in
interpreting the provision.
The
phrase “despite any provision of common law” may,
arguably, indicate the aim either to override the common law,
or to
regulate the relationship between the credit provider and the
consumer, whatever the common law position might be. In view
of the
stated objects of the NCA, it is fair to assume that the legislature
intervenes because of a perceived need to do so.
This need is
probably to deny the credit provider a remedy which he or she may
have under common law but which would not accord
with the purposes
of the NCA, namely the right to restitution.
The
use of the term “purported rights” is clumsy but
understandable. It can only refer to the rights a credit provider
might have had if the agreement were valid, or might mistakenly
think he or she still has, even under the unlawful agreement.
The
most plausible meaning of section 89(5)(c) is the one the High Court
gave it. The interpretation reflects what common sense
tells one the
aim of the provision is, in view of the NCA as a whole: consumers
have to be protected against uncontrolled credit
providers and
therefore credit providers are required to register; credit
providers who do not register in contravention of the
NCA face
severe consequences; courts must declare the agreement void and
order
either
that all rights perceived to follow from the
agreement (including the right to restitution) are cancelled
or
forfeited to the state. In practice it may well
always
be forfeited to the state.
Cherangani
58
recognised this, without deciding, as one possible meaning of
section 89(5)(c). This
is how authors appear to interpret the
provision.
59
This interpretation does not
unduly strain the wording of the provision.
It does not escape me that this interpretation may result in a
finding of constitutional invalidity even though it requires a
somewhat robust treatment of
aspects of the language of the provision. But it does not ignore
the
words in the provision, at least not substantially more than in
Abahlali
.
60
Rather than ignoring the phrase “under that credit agreement”,
it invokes context and recognises the references to
unjust
enrichment in the provision.
Does section 89(5)(c) deal with
“
property
”
under section 25?
In
order to engage section 25(1) the “purported rights” of
a credit provider under a credit agreement “to recover
any
money paid or goods delivered”, referred to in section
89(5)(c), must indeed be
property
within the meaning of
section 25.
The
High Court found that section 89(5)(c) has the effect that a credit
provider is deprived of his or her goods or money through
the denial
of their restitution rights. The Court mentioned that the claim has
monetary value and can be disposed of and transferred.
It can be
counted as an asset in one’s estate and is part of one’s
patrimony.
All
the parties, furthermore, accept that we are dealing with property
under section 25.
Section
25 does not define
property
, other than stating that it is
not limited to land.
61
This Court reasoned in
FNB v
CSARS
62
that assigning a comprehensive definition to the term
property
is not possible or wise and was not necessary in that case.
63
This
Court has not specifically found that personal rights emanating from
contract, delict, or enrichment are indeed
property
under
section 25.
Our constitutional jurisprudence
accepts that deprivation of ownership of corporeal property
constitutes deprivation for purposes
of section 25.
64
Without discussing the specific point, this Court has also accepted
a trade mark to be property, albeit incorporeal, deserving
protection under section 25.
65
Intellectual property, even though incorporeal, is of course
different from an enrichment claim.
The right to claim
restitution on the basis of enrichment is a personal right. It can
only be enforced against a specific party
or parties, in this case
the consumer who received the money. It is not a real right in
property like, for example, ownership
or a usufruct, enforceable
against all. Section 25 deals with
property
and not with
ownership
. But reliance has been placed on the link to
ownership in evaluating whether there is a deprivation or whether
section 25 comes
into play.
66
I
n
Law Society of South Africa and Others v Minister for Transport
and Another
67
this Court was faced with a right which is not universally
enforceable, but sourced in the law of obligations. The Court
assumed
without finding that a claim for loss of earning capacity or
support is property.
In
the circumstances of this case, the recognition of the right to
restitution of money paid, based on unjustified enrichment,
as
property under section 25(1) is logical and realistic.
68
It would be in accordance with developments in other jurisdictions
where personal rights have been recognised as constitutional
property.
69
Intangible property has become important in modern-day society and
property
should not be so narrowly interpreted as to diminish
the worth of the protection given by section 25. In
Law
Society of South Africa v Minister for
Transport
this Court stated that “
the
definition of property for purposes of constitutional protection
should not be too wide to make legislative regulation impracticable
and not too narrow to render the protection of property of little
worth.”
70
Mr
Opperman’s enrichment claim falls within the scope of section
25 of the Constitution. The question is whether he is arbitrarily
deprived of it.
71
Arbitrary
deprivation?
Section
25(1) of the Constitution protects against the arbitrary deprivation
of property. Its primary function has been described
as “striking
a proportionate balance” between the right of property holders
and the interests of the public.
72
Whether
there has been a
deprivation
depends on the extent of interference
with the use, enjoyment
or exploitation of the constitutionally protected property.
73
Interference significant enough to have a legally relevant impact
on
the rights
of the affected party amounts to deprivation.
74
Forfeiture
involves state conduct by which property is lost to the state,
without the consent of the owner and without just compensation.
75
It is well established that forfeiture results in the deprivation of
property and therefore must be consistent with the Constitution.
76
Is
the deprivation
arbitrary
? Dealing with a provision of the
Customs and Excise Act,
77
this Court held in
FNB v CSARS
that a deprivation of property is arbitrary when the law does
not provide sufficient reason for the particular
regulatory
deprivation in question, or when it is procedurally unfair.
78
A
complexity of relations must be
considered in testing whether there is sufficient reason for the
regulatory deprivation. These
include the relationship between the
means employed and the ends sought by the legislative scheme; the
relationship between the
purpose of the deprivation and the nature
of the property; as well as the extent of the deprivation in respect
of that property.
79
The more extensive the deprivation and the stronger the
property interest, the more compelling the state’s purpose has
to
be for having the regulatory deprivation at question in place.
80
The
Minister argues that the deprivation is not arbitrary
.
Counsel for the Minister submitted that the procedural leg of the
inquiry is satisfied, because a court adjudicates the matter
and
makes an order. The problem is of course that the court is denied
any discretion to decide on a just and equitable order.
This Court
indicated in
Mohunram
81
that a lack of discretion on the part of a court to forfeit property
would result in an arbitrary deprivation of property.
82
The
deprivation at issue here is not of a partial nature; it effectively
removes an unregistered credit provider’s right
to
restitution. For this, there must be persuasive reasons.
83
The Minister submits that the purpose of the limitation is
important, namely to protect the public against unscrupulous money
lenders. The punitive nature of the provision must deter
unregistered credit providers from advancing credit to consumers,
outside of the regulatory framework.
Though
one can be sympathetic to the objects of the provision, I am not
persuaded that the importance and purpose of the limitation,
including deterrence and protection of the public, provide
sufficient reason for the deprivation embodied in this provision.
84
Whereas regulated deprivation may be permissible to further
compelling interests, the state still has to be constrained in how
it may pursue those ends. Given that the extent of deprivation here
is far reaching, the purpose should be stated clearly, and
the means
chosen to accomplish it must be narrowly framed. In this case the
means chosen are disproportionate to the purpose,
as is further
demonstrated by the less restrictive means analysed below under the
justification enquiry.
Thus
section 89(5)(c) results in arbitrary deprivation of property in
breach of section 25(1) of the Constitution.
A reasonable and justifiable limitation?
In
the alternative to the Minister’s main submission that there
is no arbitrary deprivation, it was argued on behalf of
the Minister
that section 89(5)(c) contains a constitutionally permissible
limitation of the right not to be arbitrarily deprived
of property
in section 25(1). The immediate question is: can the deprivation of
property which is indeed arbitrary, ever be a
reasonable and
justifiable limitation in an open and democratic society, in terms
of section 36(1)?
85
The conceptual difficulties are obvious.
86
When considering the concept of arbitrariness, Ackermann J
opined in
S v Makwanyane and Another
87
that “[n]either arbitrary action nor laws or rules which are
inherently arbitrary or must lead to arbitrary application
can, in
any real sense, be tested against the precepts or principles of the
Constitution.”
88
Counsel for the Minister conceded in the High Court that the section
36(1) argument is a difficult one to advance, once arbitrary
deprivation is established.
In
FNB v CSARS
this Court assumed, without deciding, that it
must be determined whether or not the deprivation was justified
under section 36,
89
even though it was arbitrary. The Court was of the view that the
text of section 36 does not suggest that any right is excluded
from
limitation under its provisions. Section 25(8) of the Constitution
also expressly states that any departure from the provisions
of
section 25 has to be “in accordance with the provisions of
section 36(1).”
90
Many
of the factors employed under the arbitrariness test to determine
sufficiency of reasons yield the same conclusion when considering
whether a limitation is reasonable and justifiable under section 36.
Section
36(1)(d) specifically requires that attention be given to the
relation between the limitation and its purpose. Laws impacting
on
constitutional rights may not use disproportionate means to achieve
their purpose.
91
Furthermore, the availability of less restrictive means has to be
considered in terms of section 36(1)(e). The common law position
is
less restrictive: unlawful contracts are void and not enforceable
and turpitude is taken into account when restitution is
claimed on
the ground of unjustified enrichment. It does discourage unlawful
agreements by unregistered credit providers. Section
89(5)(b)
furthermore states that the credit provider must refund all money
paid by the consumer, with interest. The failure to
allow a court a
discretion to distinguish between credit providers who intentionally
exploit consumers and those who fail to
register because of
ignorance and lend money to a friend on an ad hoc basis, for
example, is disproportional.
Further,
under the NCA a consumer may bring a complaint about an unlawful
agreement to the NCR.
92
The NCR can bring the complaint to the National Consumer Tribunal.
The Tribunal is empowered to declare the conduct prohibited.
93
The Tribunal may impose an administrative fine the amount of which
must be determined by considering the factors enumerated in
section
151(3) and which may not exceed certain limits.
94
This helps to achieve the stated purposes of the NCA.
95
As
the High Court pointed out, a credit provider’s object is to
make money by way of interest. A credit provider who enters
into an
unlawful agreement is not legally entitled to the interest. Forgoing
the interest is another means to achieve the aims
of the NCA that is
less restrictive than the means employed by section 89(5)(c).
The
nature of the right, the importance of the limitation, the nature
and extent of the limitation, the relation between the limitation
and its purpose and less restrictive means to achieve the purpose
have all, in effect, been considered in determining whether
the
deprivation is arbitrary. And I take note of the High Court’s
recognition of the situation in other open and democratic
societies,
in so far as these are comparable in the area relevant here.
I am
not persuaded that section 89(5)(c) can be saved as a reasonable and
justifiable limitation of the right not to be deprived
of property
arbitrarily.
Remedy
The
High Court declared section 89(5)(c) inconsistent with the
provisions of section 25(1) of the Constitution and thus invalid.
No
reading-in or suspension of the order of invalidity was ordered.
The
NCR submits that since the only difficulty with the provision would
be the lack of a discretion, the appropriate remedy in
the
circumstances would be to read-in that discretion into the section.
It proposes that the following words be read into the
provision
immediately after section 89(5)(c)(ii):
“
Provided
that where the Court concludes that it would not be just and
reasonable in the circumstances to make either of the orders
set out
in sub-paragraphs (i) and (ii) above, the Court must make such order
as it deems fit in order to give effect to the objects
of the Act.”
This
remedy makes provision for the objects of the NCA to be taken into
account by a court, but giving a court such a wide discretion,
albeit guided by the aims of the NCA, seems to be a broader
construction than what is necessary.
It is
preferable for the legislature to address the problematic content of
the provision comprehensively, because it is part of
an important
piece of legislation with laudable objectives, rather than for a
court to venture into patch-work legislating. In
the circumstances I
would simply declare it invalid without any reading-in.
The
Minister asked this Court to suspend any order of constitutional
invalidity for a period of two years to afford the legislature
an
opportunity to amend the NCA. But no significant gap would be
created by an order which does not provide for a period of
suspension, as made by the High Court. If section 89(5)(c) is
declared invalid, the common law position regarding unlawful
contracts
would prevail until the legislature replaces it. The
unlawful agreement would be void and the credit provider would be
able to
claim successfully from the consumer on the basis of
unjustified enrichment, if the requirements of the action are met.
This
could include the consideration of the circumstances of each
case and especially the degree of blameworthiness of the
unregistered
credit provider, in order to reach a just outcome.
As
observed by the High Court, the continuing existence of subsection
(b) may create tension between the consumer’s claim
for a
refund of money paid to the credit provider and the credit
provider’s enrichment claim. This is another reason (in
addition to the inaccurate language used) for the legislature to
consider a reformulation of section 89(5) as a whole, within
the
context of section 89 and the rest of the NCA.
Retrospectivity
The NCR raised concern that the High Court did not limit the
retrospective effect of its order. An order of invalidity of this
Court will, however, have no effect on cases that have already been
finalised.
96
Conclusion
It
follows that the High Court’s judgment and order cannot be
faulted. Its interpretation of section 89(5)(c) is the most
plausible of the interpretations advanced. The interpretation of the
NCR cannot reasonably be applied to the provision. The alternative
interpretation proposed is futile. The provision is also capable of
interpretation and is thus not unconstitutionally vague.
It results
in the deprivation of Mr Opperman’s property because it
extinguishes his right to claim restitution based on
unjustified
enrichment, without leaving any discretion to a court to consider a
just and equitable order under the circumstances.
This deprivation
is arbitrary because sufficient reasons have not been given for it.
The infringement of the right not to be
arbitrarily deprived of
property is disproportionate to the purpose of the provision. There
are less restrictive means available
to achieve the purpose.
Therefore it is not a constitutionally acceptable limitation of the
right.
Costs
Mr Opperman
did not initially apply for costs of the application before this
Court as he would have received costs in the
main sequestration
proceedings. He has belatedly requested a costs order due to changed
circumstances in the High Court proceedings.
Standard Bank, a
secured creditor, brought an urgent application in the High Court to
intervene as a party to the proceedings.
Standard Bank discharged
Mr Opperman’s
rule nisi
and obtained a
rule
nisi
in its favour, thus Mr Opperman is no longer a party
to the sequestration proceedings.
The
NCR opposes the request for costs on the basis that it is belated.
The delay is understandable because when the papers were
filed in
this Court, Standard Bank had not intervened. As the successful
party, Mr Opperman is entitled to his costs before this
Court.
Order
The
following order is made:
The
appeal is dismissed.
The
order of the High Court is confirmed.
Section
89(5)(c)
of the
National Credit Act 34 of 2005
is inconsistent with
section 25(1) of the Constitution and thus invalid.
The
applicant must pay the costs of the first respondent.
CAMERON J
(Froneman J and Jafta J concurring):
At
issue is the constitutional validity of a provision of the National
Credit Act
97
(NCA) that requires cancellation or forfeiture of the rights of
recovery of a lender who advances money under an unlawful credit
agreement. The High Court concluded that the provision arbitrarily
deprives the lender of property and hence is constitutionally
bad.
The main judgment, by my colleague Van der Westhuizen J, which I
have had the pleasure of reading, reaches the same conclusion,
for
broadly the same reasons. I cannot endorse this approach.
The
route the main judgment takes lies along a path that requires the
Court to ignore plain words in the provision that are
central to
it. In my view, it is simpler, and truer to our task of
interpretation, not to ignore the words, but to take them
to mean
what they say. Doing so renders the provision inoperative, a
patently regrettable result. But the words the legislator
enacted
render that unavoidable. And the consequence is that it is not
necessary to strike the provision down. That is better,
I suggest,
than to struggle to find a meaning, in the face of the words
ignored, only then to declare the provision invalid.
On
either approach the effect is to blunt the provision’s bite.
It cannot deprive unauthorised lenders of their rights
of recovery.
In both cases, if the legislature wishes to give the provision
teeth, it must re-draft and re-enact it in better
form. But behind
the management of the practical outcome lies the difficult question
how far we can stretch or squeeze language
to arrive at meaning.
Ignoring words pivotal to the provision, in my view, goes further
than a court should, even if it means
acknowledging that the
legislature, in enacting it, misfired.
The
provision causing the pain requires a court in the case of an
unlawful credit agreement (including one concluded with an
unregistered credit provider, as here) to order that “all the
purported rights of the credit provider under that credit
agreement
to recover any money paid or goods delivered to, or on behalf of,
the consumer in terms of that agreement”
are either cancelled
or forfeited to the state.
98
The provision taxed this Court in
Cherangani
,
99
which found that “it will not be easy to give a
comprehensible meaning”
100
to it:
“
Neither
counsel could tell us what the provision meant and their submissions
tended to go sometimes in one direction and sometimes
in another.”
101
The
phrase “purported rights” in particular caused
puzzlement:
“
It is
difficult to fathom exactly what is taken away from the
[unregistered credit provider] and exactly what is forfeited to
the
state. Are they ‘purported rights’ which do not exist
anymore or is the right to sue for unjust enrichment also
forfeited?”
102
The
Court in
Cherangani
declined to determine the provision’s
meaning because of late presentation of the question and
non-joinder of a state
entity.
103
In addition, the prejudice to the party concerned had not been
spelt out.
104
Those factors are absent here and we must now decide what the
provision means. In doing so, we must be guided by the precepts
of
statutory interpretation this Court has embraced in its task of
constitutional adjudication. The words must be given their
ordinary
meaning, in context.
105
If the words are reasonably capable of a meaning that avoids
conflict with the Constitution, that meaning must prevail.
106
If two meanings promote the spirit, purport and objects
107
of the Bill of Rights, that which better does so should be
adopted.
108
The
High Court found, and the main judgment concludes,
109
that the provision deals with the credit provider’s
restitutionary rights. The provision, so the main judgment finds,
requires that courts – in the case of agreements entered into
by credit providers who in contravention of the statute
do not
register – must declare the agreement void, and must order
either that the credit provider’s right to restitution
is
cancelled, or that it is forfeited to the state. In ascribing this
meaning to the provision, Van der Westhuizen J notes
that the use
of the term “purported rights” is “clumsy”
110
and that the interpretation that rights under an unlawful and void
agreement must be cancelled or forfeited “may result
in a
finding of constitutional invalidity even though it requires a
somewhat robust treatment of aspects of the language of
the
provision.”
111
These
very considerations drive me to conclude that it is better to avoid
embracing this interpretation. Pivotal to my colleague’s
conclusion that the provision requires cancellation or forfeiture
of the credit provider’s right to restitution is ignoring
the
words “under that credit agreement”.
A
longstanding precept of interpretation is that every word must be
given a meaning. Words in an enactment should not be treated
as
tautologous or superfluous.
112
This is for good reason. Interpretation is a cooperative venture
between legislator and judge, bounded by mutually understood
rules,
in which the latter seeks to give meaning to the text enacted by
the former.
113
The mutual suppositions, and the constraints of principle and
constitutional precept on the judge’s role, enable the
joint
process to reach a coherent and practical outcome. For this, it has
to be assumed that the legislator’s enacted
text includes
only words that matter.
114
For to enact words that do not would violate the most basic
supposition of the shared enterprise. Hence none can be ignored.
The
shared enterprise is imperilled if this precept is too readily
ignored. It could seem to license judges to pick and choose
among
words and phrases, and to omit those considered inconvenient. That
cannot be. Everything the legislator has enacted must
be included
in the meaning assigned to the whole. The rule performs a
boundary-setting function. Its observance shows that
judges are
staying within their assigned role of interpretation, and not
straying outside it into amendment, enactment or innovation.
As
this Court pointed out in its very first judgment, if the language
used by the lawgiver is ignored in favour of other pursuits,
“the
result is not interpretation but divination.”
115
Though said in a different context, the point is that
constitutionalism has not upended the basic rules of
interpretation.
The
phrase “rights . . . under that credit agreement” is
central to the phraseology of the provision. It cannot
in my view
be ignored. At the same time, its inclusion renders the provision
incoherent and ineffectual. It is incoherent because
a right to
restitution does not derive from contract. It arises from the very
fact that a contract is invalid.
116
Restitution as a remedy lies outside the parties’ agreement,
precisely because their agreement has failed.
The
provision is ineffectual since it lacks retributive bite. If one
takes the language the legislator has enacted seriously,
as we
must, the plain meaning of the provision is that the unregistered
credit provider’s purported rights under the
credit agreement
to recover what has been transferred to the borrower must either be
cancelled or forfeited. On its own terms,
this is not incoherent.
Many contractual agreements provide for recovery by the lender when
the agreement is cancelled because
of malperformance by the
borrower. So the wording can quite plausibly be taken as directed
at those contractual rights of recovery.
The difficulty, of course,
is that the statute itself ordains that the credit agreement is
void from the moment it was concluded.
117
So, by the legislator’s own logic, there cannot be any rights
of recovery under the agreement. So the contractual right
could not
vest in the state, thus sapping the provision of any effective
punitive force.
Recognising
this, the main judgment takes the provision as meaning to reach
restitutionary rights. But the conception of restitutionary
rights
“under that credit agreement” is even more radically
misplaced, both legally and linguistically. Rights
of recovery in
the case of a void contract are derived from the common law of
restitution, not from the agreement. So to hold
in defiance of what
the language states that the provision effectively reaches the
unregistered credit provider’s restitutionary
rights is to
squeeze it into a meaning its words, taken together, cannot
sustain.
Other
decisions of this Court and of the Supreme Court of Appeal have
lamented the dismal drafting of the NCA.
118
Duty-bound, in fidelity to our task of protecting constitutional
rights, we have strained to give meaning to provisions that
have
seemed to defy it. We have done so to give coherence to what we
justifiably assume is a well-directed even if poorly-crafted
statutory enterprise. But sometimes we have to acknowledge that
fidelity to language, and to what we can fairly hope for in
coherent drafting, require us to leave well alone. Elementary
meaning demands that we stop short of the extreme expedient of
interpreting a provision against its own language.
This
case, in my respectful view, signals the limits of cooperative
effort in giving meaning to ill-chosen words. To virtually
ignore
the wording of the provision, and then find it constitutionally
bad, seems to me an unnecessary dissonance. Put differently,
once
the words, taken as a whole, preclude a constitutionally compliant
interpretation, the conclusion beckons that no constitutionally
rational meaning can be given to the provision. The result may be
that the provision is constitutionally void for vagueness.
But even
if constitutionally impermissible vagueness is not the result, then
it seems there is little constitutional purpose
in examining
alternative meanings that will result in unconstitutionality or
depriving the provision of the purpose for which
it seems to have
been enacted. There is then no particular constitutional imperative
to squeeze a meaning from the provision.
Rather, we must accept the
words of the provision for what they say, even at the cost of
accepting that the provision is ineffectual.
It is better, in my
view, to acknowledge the drafting error, and to leave Parliament to
correct it.
I
would therefore decline to confirm the High Court’s order of
invalidity.
For the
Applicant: Advocate S Budlender instructed by Norton Rose South
Africa.
For the
First Respondent: Advocate M McChesney instructed by Gerhard Gous
Attorneys.
For the
Fourth Respondent: Advocate K Pillay instructed by the State
Attorney.
1
34
of 2005. Section 89(5) states:
“
If a credit agreement is
unlawful in terms of this section, despite any provision of common
law, any other legislation or any
provision of an agreement to the
contrary, a court must order that—
(a) the credit agreement is void as from the date the
agreement was entered into;
(b) the credit provider must refund to the consumer any
money paid by the consumer under that agreement to the credit
provider,
with interest calculated—
(i) at the rate set out in that agreement; and
(ii) for the period from the date on which the consumer
paid the money to the credit provider, until the date the money
is
refunded to the consumer; and
(c) all the purported rights of the credit provider
under that credit agreement to recover any money paid or goods
delivered to,
or on behalf of, the consumer in terms of that
agreement are either—
(i) cancelled, unless the court concludes that doing so
in the circumstances would unjustly enrich the consumer; or
(ii) forfeit to the State, if the court concludes that
cancelling those rights in the circumstances would unjustly enrich
the
consumer.”
2
Section
25(1) states: “No one may be deprived of property except in
terms of law of general application, and no law may
permit arbitrary
deprivation of property.”
3
Section
36(1) of the Constitution states:
“
The rights in the Bill of
Rights may be limited only in terms of law of general application to
the extent that the limitation
is reasonable and justifiable in an
open and democratic society based on human dignity, equality and
freedom, taking into account
all relevant factors, including—
(a) the nature of the right;
(b) the importance of the purpose of the limitation;
(c) the nature and extent of the limitation;
(d) the relation between the limitation and its
purpose; and
(e) less restrictive means to achieve the purpose.”
4
Sections
40 and 42 of the NCA.
5
This
is according to an affidavit filed by Mr Opperman’s
attorney in the High Court. Mr Opperman’s lack
of
intention to violate the NCA was not contradicted.
6
See
the definition of “credit agreements” in section 1 of
the NCA read with section 8 of the NCA. Section 8 of the
NCA
provides:
“
(1) Subject to subsection
(2), an agreement constitutes a credit agreement for the purposes of
this Act if it is—
. . .
(b) a credit transaction, as described in subsection
(4);
. . .
(4) An agreement, irrespective of its form but not
including an agreement contemplated in subsection (2), constitutes a
credit
transaction if it is—
. . .
(f) any other agreement, other than a credit facility
or credit guarantee, in terms of which payment of an amount owed by
one
person to another is deferred, and any charge, fee or interest
is payable to the credit provider in respect of—
(i) the agreement; or
(ii) the amount that has been deferred.”
7
Section
1(h) of the NCA defines “credit provider” as “the
party who advances money or credit to another under
any other credit
agreement”. It defines “consumer” to mean “the
party to whom or at whose direction money
is advanced or credit
granted under any other credit agreement.”
8
The
relevant subsection of section 40 of the NCA reads:
“
(1) A person must apply to be
registered as a credit provider if—
(a) that person, alone or in conjunction with any
associated person, is the credit provider under at least 100 credit
agreements,
other than incidental credit agreements; or
(b) the total principal debt owed to that credit
provider under all outstanding credit agreements, other than
incidental credit
agreements, exceeds the threshold prescribed in
terms of section 42(1).”
9
The
amount was set at R500 000 by the Minister in
Government
Gazette
No 28893 1 June 2006 (see item
5 of the schedule to Government Notice 713).
10
Above
n 1.
11
The
High Court relied on an affidavit of the Director-General of the
Department of Trade and Industry
and
listed the following as the purposes of the NCA
:
“
(i) to introduce controls in
the credit industry directed at addressing the exploitation of poor
persons - primarily by micro-lenders;
(ii) promoting the
non-discriminatory availability of credit, thereby breaking down the
rich-poor divide in access to credit
- a divide that manifested in
large measure along racial lines; (iii) providing for the improved
collection of credit-related
data, and, in close connection with
this object, creating a framework for the registration of credit
bureaux, credit providers
and debt counselling services; (iv)
discouraging the reckless extension of credit; and (v) putting in
place mechanisms to facilitate
the redemption of credit-agreement
related indebtedness and the adjudication of disputes or complaints
concerning credit agreement
transactions.”
12
Above
n 2.
13
Above
n 3.
14
See
Christie
The Law of Contracts in South Africa
5 ed
(LexisNexis Butterworths, Durban 2006) at 392; Visser
Unjustified
Enrichment
(Juta & Co, Cape Town
2008)
in general; Lotz “Enrichment” 9
LAWSA
2005 at paras 214 – 6; Otto “Die par delictum-reël
en die
National Credit Act” (2009
) 3
TSAR
417 at 417-8;
and Otto “
National Credit Act, ongeoorloofde
ooreenkomste en
meevallertjies vir die fiscus”
(2010) 1
TSAR
161
at 162
- 3
. Regarding the English law position, see
Burrows
The Law of Restitution
3
ed (Oxford
University Press, Oxford 2002).
15
Above
n 1.
16
This
rule is expressed in the maxim
ex turpi
causa non oritur actio.
See the
reasoning of Innes CJ in
Schierhout v
Minister of Justice
1926 AD 99
at 109.
17
Visser
above n 14
at 442.
18
Id
at
4.
19
Lotz
above n 14 at para 215. On this action, see Visser id at 414 and
onwards.
20
See
the principles governing the reversal of payment or transfer as set
out by Visser id at 441 and onwards.
21
The
full Latin term is:
In pari delicto potior conditio possidentis
vel defendentis
, meaning that where the parties are equally in
the wrong the party in possession or the defendant is in a stronger
position.
22
Afrisure
CC and Another v Watson NO and Another
[2008] ZASCA 89
;
2009 (2) SA 127
(SCA) at
para 39.
23
1939
AD 537
at 544 and 558.
24
See
Visser en 'n Ander v Rousseau en Andere NNO
1990 (1) SA 139
(A) at 148;
Henry v Branfield
1996 (1) SA 244
(D) at 251;
Mamoojee v Akoo
1947 (4) SA 733
(N) at 738; and Visser above
n 14 at 447 – 53.
25
Visser
above n 14 at 448 – 51 gives examples of instances where the
par delictum
rule was relaxed and where it was not.
26
See
Otto “
Die par delictum-reël en die
National Credit Act”
above
n 14 at 431 and 434, who
calls it “verregaande” and unfair.
27
Nedbank
Ltd and Others v The National Credit Regulator and Another
2011
(3) SA 581
(SCA) at para 2.
Section 2(1)
of the NCA states that it
must be interpreted “in a manner that gives effect to the
purposes set out in
section 3.
”
28
">
28
73
of 1968.
29
75
of 1980.
30
On
the background and purposes of the NCA see Otto JM and Otto R-L
The
National Credit Act Explained
2 ed (LexisNexis, Durban
2007) Chapter 1 and Kelly-Louw “Introduction to the National
Credit Act”
2007
JBL
147.
31
Kelly-Louw
id.
32
The
preamble to the NCA provides:
“
To promote a fair and
non-discriminatory marketplace for access to consumer credit and for
that purpose to provide for the general
regulation of consumer
credit and improved standards of consumer information; to promote
black economic empowerment and ownership
within the consumer credit
industry; to prohibit certain unfair credit and credit-marketing
practices; to promote responsible
credit granting and use and for
that purpose to prohibit reckless credit granting; to provide for
debt re-organisation in cases
of over-indebtedness; to regulate
credit information; to provide for registration of credit bureaux,
credit providers and debt
counselling services; to establish
national norms and standards relating to consumer credit; to promote
a consistent enforcement
framework relating to consumer credit; to
establish the National Credit Regulator and the National Consumer
Tribunal; to repeal
the Usury Act, 1968, and the Credit Agreements
Act, 1980; and to provide for related incidental matters.”
33
Sebola
and Another v Standard Bank of South Africa Ltd and Another
[2012] ZACC 11
;
2012 (5) SA 142
(CC);
2012 (8) BCLR 785
(CC)
(
Sebola
).
34
In
Sebola
id at para 40 Cameron J stated:
“
The statute sets out the
means by which these purposes must be achieved, and it must be
interpreted so as to give effect to them.
The main objective is to
protect consumers. But in doing so, the Act aims to secure a credit
market that is ‘competitive,
sustainable, responsible [and]
efficient’. And the means by which it seeks to do this embrace
‘balancing the respective
rights and responsibilities of
credit providers and consumers’. These provisions signal
strongly that the legislation must
be interpreted without
disregarding or minimising the interests of credit providers. . . .
I . . . agree that ‘whilst the
main object of the Act is to
protect consumers, the interests of creditors must also be
safeguarded and should not be overlooked’.”
(Footnotes
omitted.)
See also
Nedbank Ltd
above n 27:
“
[t]he interpretation of the
NCA calls for a careful balancing of the competing interests sought
to be protected, and not for a
consideration of only the interests
of either the consumer or the credit provider.” (Footnote
omitted.)
35
Section
89(5)(a) and (b) quoted in full in n 1 above.
36
Id.
37
See
Visser and Lotz above n 14.
38
See
Giglio “A Systematic Approach to ‘Unjust’ and
‘Unjustified’ Enrichment” (2003) 23
Oxford
Journal of Legal Studies
455 at 456.
39
Investigating
Directorate: Serious Economic Offences v Hyundai Motor Distributors
(Pty) Ltd: In re Hyundai Distributors (Pty)
Ltd v Smit NO and Others
[2000] ZACC 12
;
2001 (1) SA 545
(CC);
2000 (10) BCLR 1079
(CC)
(
Hyundai
) at para 23: “[J]udicial officers must prefer
interpretations of legislation that fall within constitutional
bounds over
those that do not, provided that such an interpretation
can be reasonably ascribed to the section.”
40
Id.
41
This
Court has read down words in order to save a statute from
unconstitutionality. For instance, the word “shall”
in
section 50(1)(a)
of the
Prevention of Organised Crime Act 121 of
1998
has been interpreted as “may”. See
Mohunram and
Another v National Director of Public Prosecutions and Another (Law
Review Project as Amicus Curiae)
[2007] ZACC 4
;
2007 (4) SA 222
(CC);
2007 (6) BCLR 575
(CC) at para 121. This is not possible here.
The words “must order” in the introductory phrase of
section 89(5)
apply to the entire provision, including subsection
(a), which declares that the unlawful credit agreement must be
ordered to
be void. It is well-established in our law that unlawful
contracts are void. It is unlikely that
section 89(5)
seeks to give
courts a discretion not to declare them void. Further, this reading
would be at odds with
section 89(2)(d)
and
section 40(4)
where the
unlawful credit agreement has been expressly declared to be void.
This interpretation would not be in line with the
scheme and purpose
of the Act.
42
[93]
below.
43
[105]
below.
44
See
the wording of section 89(5)(b) and (c) above n 1.
45
In
Abahlali baseMjondolo Movement SA and Another v Premier of the
Province of Kwazulu-Natal and Others
[2009] ZACC 31
;
2010 (2)
BCLR 99
(CC) (
Abahlali
) at paras 110 – 11 this Court
rejected an interpretation that “pulls the coercive teeth [of
a provision at stake
and] renders the provision nugatory.”
46
Cherangani
Trade and Invest 107 (Pty) Ltd v Mason NO and Others
[2011] ZACC
12
;
2011 (11) BCLR 1123
(CC) (
Cherangani
) at paras 13 and 18,
per Yacoob J.
47
Id
at para 14. Yacoob J further mentioned at para 19 that even the
parties’ counsel could not provide a clear meaning of
the
provision.
48
See
for example,
Sebola
above n 33 at para 66 (“[t]he lack
of clarity in the drafting of the Act has justly been bemoaned”)
and
Nedbank Ltd
above n 27 at para 2 (“[n]umerous
drafting errors, untidy expressions and inconsistencies” make
interpreting the NCA
“a particularly trying exercise”).
49
Affordable
Medicines Trust and Others v Minister of Health and Others
[2005]
ZACC 3
;
2006 (3) SA 247
(CC);
2005 (6) BCLR 529
(CC) (
Affordable
Medicines
) at para 108. See also
Bertie
Van Zyl (Pty) Ltd and Another v Minister for Safety and Security and
Others
[2009]
ZACC 11
;
2010 (2) SA 181
(CC);
2009 (10) BCLR 978
(CC) at para 100
and
South African Liquor Traders’ Association
and Others v Chairperson, Gauteng Liquor Board, and Others
[2006] ZACC 7
;
2009 (1) SA 565
(CC);
2006 (8) BCLR 901
(CC) (
South
African Liquor Traders
)
at para 27.
50
See
section 1(c) of the Constitution.
51
See
section 165(2) of the Constitution.
52
See
item 6 of Schedule 2 of the Constitution.
53
Affordable
Medicines
above n 49.
54
Id
at paras 108 – 9 and
Hyundai
above n 39 at paras 22 and
24.
55
Affordable
Medicines
above n 49 at para 109. See also generally
South
African Liquor Traders
above n 49
.
56
2
of 2003. See also
South African Liquor Traders
above n 49 at
para 2.
57
South
African Liquor Traders
above n 49 at para 26.
58
See
above n 46 at para 14.
59
See
Otto “
Die par delictum-reël en die
National Credit Act”
above n 14 at 431 and 434.
60
See
above n 45.
61
Section
25(4)(b).
62
First
National Bank of SA Ltd t/a Wesbank v Commissioner, South African
Revenue Service and Another; First National Bank of SA
Ltd t/a
Wesbank v Minister of Finance
[2002] ZACC 5
;
2002 (4) SA 768
;
2002 (7) BCLR 702
(CC) (
FNB v CSARS
) at para 51.
63
Id.
64
Id.
See also
Reflect-All 1025 CC and Others v MEC
for Public Transport, Roads and Works, Gauteng Provincial
Government, and Another
[2009] ZACC
24
;
2009 (6) SA 391
(CC);
2010 (1) BCLR 61
(CC);
Du
Toit v Minister of Transport
[2005]
ZACC 9
;
2006 (1) SA 297
(CC);
2005 (11) BCLR 1053
(CC)
;
Phoebus Apollo Aviation CC v Minister of Safety and Security
[2002] ZACC 26
;
2003 (2) SA 34
(CC);
2003 (1) BCLR 14
(CC); and
Harksen v Lane NO and Others
[1997] ZACC 12
;
1998 (1) SA 300
(CC);
1997 (11) BCLR 1489
(CC).
65
See
Laugh It Off Promotions CC v SAB
International (Finance) BV t/a Sabmark International (Freedom of
Expression Institute as
Amicus Curiae
)
[2005] ZACC 7
;
2006 (1) SA 144
(CC);
2005 (8) BCLR 743
(CC) and
Phumelela Gaming and Leisure Ltd v
Gründlingh and Others
[2006] ZACC 6
;
2006 (8) BCLR 883
(CC) (
Phumelela
).
66
This
is reflected by the reasoning of this Court in the following
judgements:
Phumelela
id;
Mkontwana v Nelson Mandela
Metropolitan Municipality and Another; Bissett and Others v Buffalo
City Municipality and Others; Transfer
Rights Action Campaign and
Others v MEC, Local Government and Housing, Gauteng, and Others
(KwaZulu-Natal Law Society and Msunduzi
Municipality as
Amici
Curiae
)
[2004]
ZACC 9
;
2005 (1) SA 530
(CC);
2005 (2) BCLR 150
(CC) at para 34; and
FNB v CSARS
above n
62 at para 51.
67
[2010]
ZACC 25
;
2011 (1) SA 400
(CC);
2011 (2) BCLR 150
(CC) (
Law
Society of South Africa v Minister for
Transport
)
at para 84.
68
For
support for the view that intangible property like rights, that are
themselves seen as the objects of property rights, must
qualify as
property, see
V
an der Walt
Constitutional
Property Law
3 ed (Juta & Co, Cape Town 2011) at pages 115 –
6 and 141 – 2.
69
Other
jurisdictions have accepted personal rights emanating from contract
and delict as constitutional property. Debts and claims
that sound
in money have been recognised as constitutional property in, for
example, Germany, Australia and Ireland. See in this
regard id at
150 – 68. See also the Irish case of
In the matter of
Article 26 of the Constitution and in the matter of the Health
(Amendment) (No.2) Bill 2004
[2005] IESC 7.
See also
Hewlett
v Minister of Finance & Another
1982 (1) SA 490
(ZS) where
the Zimbabwean Supreme Court found that debts owed by the state,
arising from the actual awards of compensation, are
property
within the meaning of
the
Constitution of
Zimbabwe
(1979)
.
70
Above
n 67 at para 83.
71
Roux
“Property” in Woolman et al (eds)
Constitutional
Law of South Africa
2 ed at 46-2 –
5.
72
FNB
v CSARS
above n 62
para
50.
73
Id
at
paras 57 – 8 and 60.
74
Offit
Enterprises (Pty) Ltd and Another v Coega Development Corporation
(Pty) Ltd and Others
[2010] ZACC 20
;
2011 (1) SA 293
(CC);
2011
(2) BCLR 189
(CC) paras 39 and 41. See also
FNB v CSARS
above
n 62.
75
Van
Der Walt “Civil Forfeiture of Instrumentalities and Proceeds
of Crime and the Constitutional Property Clause”
(2000) 16(1)
SAJHR
1.
See also Van Jaarsveld “The history of
in
rem
forteiture: a penal legacy of the past” (2006) 12
Fundamina
137 at 138 – 47 quoting Justice Blackstone:
“The natural justice of forfeiture . . . is founded on this
consideration:
that he who hath thus violated the fundamental
principles of government, and broken his part of the original
contract between
king and people, hath abandoned his connections
with society, and hath no longer any right to those advantages which
before belonged
to him as a member of the community; among which
social advantages the right of transferring . . . property to others
is one
of chief.”
76
Van
der Burg and Another v National Director of Public Prosecutions
[2012] ZACC 12
;
2012 (2) SACR 331
(CC);
2012 (8) BCLR 881
(CC) at
para 1. See also
S v Shaik and Others
[2007] ZACC 19
;
2008
(2) SA 208
(CC);
2007 (12) BCLR 1360
(CC) and
Mohunram
above
n 41 at para 9.
77
91
of 1964.
78
FNB
v CSARS
above n 62
at
para 100.
79
Id.
According to Roux above n 71 at 46 – 22
the level of
scrutiny in an arbitrariness test is higher than rationality review
but lower and less stringent than proportionality
evaluation.
80
FNB
v CSARS
above n 62
at
para 100.
81
Above
n 41.
82
Id
at para 121: “[Courts] have correctly held all requests by
state prosecutors for civil forfeiture to the standard of
proportionality which amounts to no more than that the forfeiture
should not constitute arbitrary deprivation of property or
the kind
of punishment not permitted by section 12(1)(e) of the
Constitution.”
83
S
v Bhulwana, S v Gwadiso
[1995] ZACC 11
;
1996 (1) SA 388
(CC);
1995 (12) BCLR 1579
(CC) (
Bhulwana
) at para 18:
“
The more substantial the
inroad into fundamental rights, the more persuasive the grounds of
justification must be.”
84
See
above n 11 for a list of purposes of the NCA.
85
See
above n 3 for the wording of section 36.
86
See
Roux above n 71 above at 46-26.
87
[1995]
ZACC 3
;
1995 (3) SA 391
(CC);
1995 (6) BCLR 665
(CC).
88
Id
at para 156.
89
FNB
v CSARS
above n 62
at para
110
state
s:
“
It might be contended that,
once the deprivation has been adjudged to be arbitrary, no scope
remains for justification under section
36. By its terms, section 36
of the Constitution draws no distinction between any rights in the
Bill of Rights when it provides
that ‘[t]he rights in the Bill
of Rights may be limited’. Neither the text nor purpose of
section 36 suggests that
any right in the Bill of Rights is excluded
from limitation under its provisions.
In
view of the conclusion ultimately reached on this part of the case,
it is not necessary to decide this question finally here.
It will be
assumed, without deciding, that an infringement of section 25(1)
of the Constitution is subject to the provisions
of section 36
.”
(Emphasis added and footnote omitted.)
90
Section
25(8) provides:
“
No provision of this section
may impede the state from taking legislative and other measures to
achieve land, water and related
reform, in order to redress the
results of past racial discrimination, provided that any departure
from the provisions of this
section is in accordance with the
provisions of section 36(1).”
91
S
v Manamela and Another (Director-General of Justice Intervening)
[2000] ZACC 5
;
2000 (3) SA 1
(CC);
2000 (5) BCLR 491
(CC) at para 34
states: “Section 36, however, does not permit a sledgehammer
to be used to crack a nut.”
92
See
section 136 of the NCA.
93
Prohibited
conduct is defined in section 1 of the NCA as meaning:
“
an act or omission in
contravention of this Act, other than an act or omission that
constitutes an offence under this Act, by—
(a) an unregistered person who is required to be
registered to engage in such an act; or
(b) a credit provider, credit bureau or debt
counsellor”.
94
Section
151(3) of the NCA provides:
“
When determining an
appropriate fine, the Tribunal must consider the following factors:
(a) The nature, duration, gravity and extent of the
contravention;
(b) any loss or damage suffered as a result of the
contravention;
(c) the behaviour of the respondent;
(d) the market circumstances in which the contravention
took place;
(e) the level of profit derived from the contravention;
(f) the degree to which the respondent has co-operated
with the National Credit Regulator, or the National Consumer
Commission,
in the case of a matter arising in terms of the
Consumer
Protection Act, 2008
, and the Tribunal; and
(g) whether the respondent has previously been found in
contravention of this Act, or the
Consumer Protection Act, 2008
, as
the case may be.”
95
As
s
et out in the Preamble, quoted in full above n
32.
96
See
Bhulwana
above n 83 at para 32.
97
34
of 2005.
98
Section
89(5)(c)
of the NCA.
99
Cherangani
Trade and Invest 107 (Pty) Ltd v Mason NO and Others
[2011] ZACC
12
;
2011 (11) BCLR 1123
(CC) (
Cherangani
).
100
Id
at para 13.
101
Id
at para 19.
102
Id
at para 14.
103
Id
at para 22.
104
Id
at paras 22-5.
105
S
v Makwanyane and Another
[1995] ZACC 3
;
1995 (3) SA 391
(CC);
1995 (6) BCLR 665
(CC) at para 13 (Chaskalson P). For a recent
comprehensive treatment of the rules of interpretation, see
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA
593
(SCA) (Wallis JA).
106
Investigating
Directorate: Serious Economic Offences and Others v Hyundai Motor
Distributors (Pty) Ltd and Others: In re Hyundai
Motor Distributors
(Pty) Ltd and Others v Smit NO and Others
[2000] ZACC 12; 2001
(1) SA 545 (CC); 2000 (10) BCLR 1079 (CC).
107
Section
39(2)
reads:
“
When interpreting any
legislation, and when developing the common law or customary law,
every court, tribunal or forum must promote
the spirit, purport and
objects of the Bill of Rights.”
108
Wary
Holdings (Pty) Ltd v Stalwo (Pty) Ltd and Another
[2008] ZACC
12
;
2009 (1) SA 337
(CC);
2008 (11) BCLR 1123
(CC) at paras 46-7.
109
[53]
and [55] above.
110
[54]
above.
111
[56]
above.
112
Wellworths
Bazaars Ltd v Chandler’s Ltd and Another
1947 (2) SA 37
(A) at 43 (“a Court should be slow to come to the conclusion
that words [in a statute] are tautologous or superfluous”).
113
Judges
are expected to deal with the text by engaging in judicial
interpretation, not “judicial vandalism”, as observed
by
Lord Bingham in
R (Anderson) v Secretary of State for the Home
Department
[2002] UKHL 46
,
[2003] 1 AC 837
(HL) at para 30.
114
De
Ville
Constitutional and Statutory Interpretation
(Interdoc
Consultants (Pty) Ltd, Cape Town 2000) at 114 explains that the
precept “can either be expressed as a rule of
grammatical
interpretation or as a presumption: that the legislature does not
intend to enact invalid or purposeless provisions.”
Du Plessis
Re-interpretation of Statutes
(Butterworths, Durban 2002) at
213 submits in response that the presumption and rule can remain
distinct:
“
The presumption expresses the
inherent validity and purposefulness of statute law, that is, its
effect-directedness, while the
rule verbalises the expectations as
to the language in which effect-directed enactments will be couched.
The literalist formulation
of the rule is unduly narrow and
encourages an excessive peering at the words of legislative
instruments. Words are not the only
signifiers that generate
statutory meaning. Phrases, sentences, paragraphs, sections and,
finally, the instrument of the text
as a whole all generate meaning.
The linguistic expression of the purposefulness of a statutory text
should therefore be broader:
all language used, that is, every
linguistic signifier and the syntax must be taken seriously.”
115
S
v Zuma and Others
[1995] ZACC 1
;
1995 (2) SA 642
(CC);
1995 (4)
BCLR 401
(CC) at para 18. Kentridge AJ was talking about
constitutional interpretation, but what he says applies all the more
to statutory
interpretation generally. He stated at paras 17-8:
“
I am well aware of the
fallacy of supposing that general language must have a single
‘objective’ meaning. Nor is it
easy to avoid the
influence of one’s personal intellectual and moral
preconceptions. But it cannot be too strongly stressed
that the
Constitution does not mean whatever we might wish it to mean.
We must heed Lord Wilberforce's reminder that even a
constitution is a legal instrument, the language of which must be
respected.
If the language used by the lawgiver is ignored in favour
of a general resort to ‘values’ the result is not
interpretation
but divination.”
116
See
Visser
Unjustified Enrichment
(Juta & Co, Cape Town 2008)
at 90 and Lotz “Enrichment” 9
LAWSA
2005 at para
209.
117
Section
89(5)(a) of the NCA.
118
Sebola
and Another v Standard Bank of South Africa Ltd and Another
[2012]
ZACC 11
;
2012 (5) SA 142
(CC);
2012 (8) BCLR 785
(CC) at para 66 and
Nedbank Ltd and Others v National Credit Regulator and Another
2011 (3) SA 581
(SCA) at para 2. The main judgment also refers to
these decisions above n 48.