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[2013] ZAECGHC 31
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Troskie v Von Holdt and Others (2704/2012) [2013] ZAECGHC 31 (11 April 2013)
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IN THE HIGH COURT OF SOUTH AFRICA
EASTERN CAPE, GRAHAMSTOWN
CASE NO:2704/2012
Date heard: 28 March 2013
Date delivered: 11 April 2013
In the matter between
CHRISTIAAN TRUSHCKY TROSKIE .....................................................................Plaintiff
And
ROBERT ANTHONY VON HOLDT .............................................................First Defendant
ANDREA LOUISE VON HOLDT ..............................................................Second Defendant
ROBERT ANTHONY VON HOLDT N.O. ...................................................Third Defendant
ANDREA LOUISE VON HOLDT N.O. ......................................................Fourth Defendant
ELIZABETH FLORA ALICE VON HOLDT N.O. ........................................Fifth Defendant
NATIONAL CREDIT REGULATOR ..........................................Excipient /Sixth Defendant
THE MINISTER OF TRADE AND INDUSTRY OF
THE REPUBLIC OF SOUTH AFRICA ....................................................Seventh Defendant
JUDGMENT
GOOSEN, J.
This is an exception to the plaintiff’s particulars brought by the sixth defendant, the National Credit Regulator. The exception is based on the allegation that the plaintiff’s particulars of claim are vague and embarrassing. Although the notice of exception contends that the particulars do not disclose a cause of action, this basis for the exception was not pursued at the hearing of the matter.
The plaintiff instituted action against the first to fifth defendants for payment of money lent and advanced to the first defendant together with interest and costs. The plaintiff’s cause of action against the first defendant is founded upon loan agreements, both oral and in writing, concluded with the first defendant. His cause of action against the second to fifth defendants is founded upon suretyship obligations which the defendants undertook by way of security for the repayment of the loans made by plaintiff to the first defendant.
The plaintiff alleges that the provisions of the National Credit Act, 34 of 2005 (hereinafter the “NCA”) are not applicable to the agreements upon which the plaintiff claims. In the alternative hereto, and in the event that it is found that the NCA does apply then the plaintiff claims that certain sections, namely sections 1, 8, 40 and 89 of the NCA, are inconsistent with the Constitution in certain respects. In that event the plaintiff claims, by way of relief against all of the defendants, an order declaring the provisions of those sections of the NCA to be unconstitutional and seeks an order striking down such provisions. The sixth and seventh defendants are cited because of the interest they may have in the constitutional relief sought by the plaintiff. It is in these circumstances that the sixth defendant has filed its exception to the plaintiff’s particulars of claim.
Before dealing with the grounds of exception and the legal principles applicable to the adjudication of such an exception it is appropriate to set out in some detail the plaintiff’s case as pleaded.
The plaintiff is a businessman residing at Cookhouse in the Eastern Cape. In the period June 2011 to July 2011 the plaintiff and first defendant acting personally entered into three verbal loan agreements in terms of which the plaintiff loaned and advanced to the first defendant a total amount of R2 320 000.00. It was agreed that the amount loaned would be repaid within 14 days of the date of the loan and that no fee, charge or interest was payable. The first defendant failed to repay the amount due to plaintiff within the stipulated period and accordingly, it is alleged, the first defendant became liable to pay mora interest to the plaintiff at the legal rate.
On 11 July 2011 the plaintiff and first defendant entered into a written loan agreement in respect of the amounts already loaned to the first defendant. This written agreement was intended to constitute a novation of the existing verbal loan agreements. The written agreement made provision that the amount due would be payable within sixty days from the date of signature of the agreement. It further provided for payment of interest on the amount payable at the rate of 10% per annum from the date of advance to date of settlement. During July 2011 the second defendant executed a deed of suretyship in favour of the plaintiff binding herself as surety and co-principal debtor together with the first defendant for payment of the amount of R2 320 000.00 plus interest thereon at the rate set out above.
In the period August 2011 to October 2011 the plaintiff and first defendant entered into further oral agreements in terms of which the plaintiff advanced to the first defendant a further total amount of R1 787 000.00. These oral agreements were in similar terms to the initial oral agreements, requiring repayment within a period of 14 days and there being no charge, fee or interest payable. On 23 November 2011, the first defendant having defaulted on this oral agreement, the plaintiff and first defendant concluded a written agreement which was intended to consolidate the first defendant’s overall liability to the plaintiff in the amount of R4 107 000.00. I may mention here that the plaintiff seeks, in his particulars of claim, rectification of this latter written agreement since it erroneously does not incorporate reference to certain amounts loaned and advanced to the first defendant. This rectification issue is of no relevance to the present proceedings.
During November 2011 the trustees of the Gablesway Trust, being the first and second defendants (cited in this respect in their capacities as trustees as the third and fourth defendants) and the fifth defendant, executed a deed of suretyship in favour of the plaintiff in terms of which the Gablesway Trust bound itself as surety and co-principal debtor with the first defendant in the amount of R4 107 000.00 together with interest on said amount.
Arising from the first to fifth defendant’s failure to satisfy the plaintiff’s demand for payment of amounts due to him the plaintiff instituted action. In addition to the allegations set out in the particulars relating to the various loan agreements and their respective terms, the plaintiff makes the following allegations which are germane to the exception now taken by the sixth defendant.
33. The Plaintiff pleads that:
33.1 The aforesaid oral agreements of loan were not credit agreements as defined in the NCA;
33.2 At all times material to these proceedings, and more particularly at the time of the conclusion of the various agreements referred to above, the Plaintiff was not required to be registered as a credit provider in accordance with the provisions of section 40 of the NCA;
33.3 The aforesaid agreements are accordingly not unlawful credit agreements as defined in section 89 of the NCA and the Plaintiff is not precluded from claiming in terms thereof.
34. Alternatively to the aforegoing and in the event of it being held that one or more of the agreements constitute credit agreements as defined in the NCA and that the Plaintiff was indeed a credit provider required to be registered as such in accordance with the provisions of section 40 of the NCA, the Plaintiff pleads that:
34.1 the Plaintiff is a private individual who does not provide credit in the course of a business, profession or occupation.
34.2 the aforesaid transactions were not commercial transactions and constituted personal loans in circumstances where the parties were not at arm’s length, notwithstanding the provision in the written agreements for the charging of interest on monies due.
34.3 the provisions of the NCA, to the extent that these purport to render the agreements unlawful and to preclude the Plaintiff from claiming monies otherwise legitimately due to him in terms of the agreements are in conflict with the provisions of the Constitution in that such provisions:
34.3.1 are in conflict with the fundamental right of equality;
34.3.2 arbitrarily deprive the Plaintiff of his property;
constitute an unreasonable and unjustifiable limitation of the Plaintiff’s constitutional rights having regard to the nature of aforesaid rights, the importance of the purpose of the limitation, the nature and extent of the limitation, the relation between the limitation and its purpose and less restrictive means available to achieve the relevant purpose of the NCA.
34.4 Having regard to the purpose of the NCA, which the legislature sought legitimately to achieve, the wide definitions provided in Section 1 relevant to “a credit provider” and “credit agreement” read together with the provisions of Section 8, Section 40 and Section 89, to the extent that these Sections seek to incorporate transactions concluded by individuals who do not provide credit in the course of a business, profession or occupation, or incorporate loans of a personal nature which are not arms-length commercial transactions, are unreasonable, unfair and unjustifiable and fall to be struck down.
(emphasis added)
Prayer 6 of particulars of claim seeks an order declaring the provisions of Sections 1, 8, 40 and 89 of the NCA to be unconstitutional and striking down such provisions.
The sixth defendant excepts to the particulars of claim on four grounds. The first ground relates to the allegations contained in paragraph 34.3.1 of plaintiff’s particulars of claim. The complaint is that the reference to “the fundamental right to equality” is insufficient and that it is not possible for the sixth defendant to ascertain whether the plaintiff seeks to rely upon the right to equality before the law, as enshrined in section 9(1) of the Constitution or the right not to be subjected to unfair state discrimination, enshrined in section 9(3) of the Constitution or both of these provisions. It is alleged that the plaintiff has failed to set out the respects in which the NCA breaches the right to equality and has not set out facts giving rise to the pleaded conclusion. On this basis the sixth defendant alleges that it is unable to formulate a proper view as to whether the NCA does so breach the right to equality and is accordingly unable to discern what case it is required to meet.
Similar allegations are advanced in the second ground of exception relating to paragraph 34.3.2 of the particulars of claim where reference is made to the arbitrary deprivation of property. In this regard the sixth defendant contends that the “property” is not identified and that no allegations are contained in the particulars upon which the impugned provisions can be said to “deprive” the plaintiff of his property. For this reason the sixth defendant states that it is unable to discern the nature and basis of the plaintiff’s constitutional challenge.
The third ground of complaint concerns the formulation of the prayer for relief, the complaint being that the plaintiff seeks the striking down of the various sections in their entirety whereas it appears from the particulars of claim that the plaintiff’s claim is limited to contending that the impugned provisions are unconstitutional only insofar as they apply to persons who are not commercial credit providers.
The fourth ground relates to paragraph 34.3 of the particulars of claim. The sixth defendant contends that of the impugned provisions of the NCA only section 89(5)(c) of the NCA precludes the plaintiff from claiming monies otherwise legitimately due to him. In the light of the recent decision of the Constitutional Court in National Credit Regulator v Opperman 2013 (2) SA 1 (CC) in which section 89(5)(c) was declared inconsistent with the Constitution and invalid, there is no issue as between the parties in respect of that section. However, since the plaintiff persists in contending that the remaining provisions of the NCA preclude him from claiming monies due to him his particulars are vague and embarrassing in that the sixth defendant is unable to discern the nature of the constitutional challenge.
At the commencement of the proceedings Mr Ford, for the plaintiff, referred me to a notice of intention to amend the particulars of claim by substituting prayer 6 of the prayers. He pointed out that the amendment brings the prayers into line with concluding portion of the particulars at paragraph 34. The amended prayer seeks an order in the following terms:
An order declaring the definition of “credit provider” and “credit agreement” contained in Section 1, read together with the provisions of Section 8, Section 40 and Section 89 of the National Credit Act, to the extent that these sections seek to incorporate transactions concluded by individuals who do not provide credit in the course of a business, profession or occupation or incorporate loans of a personal nature which are not arm’s length commercial transactions to be unconstitutional and striking down such provisions.
Mr Govender¸ for the excipient stated that the excipient has no objection to the proposed amendment. It was agreed that the particulars should be dealt with on the basis of the proposed amendment as formally moved. He nevertheless argued that the amendment was a direct consequence of the exception and that since it was dispositive of the third ground of exception that the plaintiff was liable for costs associated therewith. Mr Ford argued that the amendment was not dispositive of the exception in any manner but that, insofar as there may be identifiable costs associated with the amendment in the context of the exception the plaintiff was prepared to pay such costs.
A further aspect which was clarified at the outset of the hearing was the basis of the exception. The notice of exception was framed in terms which suggested that the plaintiff had failed to make averments sufficient to set out a cause of action. In the alternative it was contended that the particulars of claim are vague and embarrassing. Mr Govender pointed out that the excipient does not suggest that a cause of action is not made out in the particulars. It confined its complaint to the allegation that the particulars are vague and embarrassing and the exception was argued on that basis.
The applicable legal principles
An exception based on the allegation that the pleading is vague and embarrassing is one that is directed to some defect in the manner in which a cause of action is formulated which is of such a nature as to cause the party excepting thereto embarrassment (Trope v South African Reserve Bank [1993] ZASCA 54; 1993 (3) SA 264 (A) at 269I; Venter and Others NNO v Barritt; Venter and Others NNO v Wolfsberg Arch Investments 2 (Pty) Ltd 2008 (4) SA 639 (C) at 643I – 644A).
In deciding an exception on the basis that the pleading is vague and embarrassing, the first question involves deciding whether the pleading is indeed vague inasmuch as it is not possible to distil from it a clear single meaning (see Venter (supra) at 644A-B). If this question is answered positively the court is then required to determine whether embarrassment is occasioned by such vagueness (see International Tobacco Co. of SA Ltd v Wollheim 1953(2) SA 603 (A) at 613B) and whether such embarrassment is prejudicial to the party excepting to the pleading (Venter (supra) at 645C-D; Francis v Sharp 2004 (3) SA 230 (C) at 240F-G).
An exception is always decided with reference only to the pleadings. In determining the question of vagueness, a court is called upon with reference to the pleadings read as a whole, to interpret the impugned averment(s) within the context of the pleading and is required to adopt a common-sense approach to the matter of interpretation mindful of the purpose that the pleading serves. In Jowel v Bramwell-Jones and Others 1998 (1) SA 836 (W) Heher J (as he then was) set out the principles applicable to determining an exception on the ground that a pleading is vague and embarrassing in detail. The learned judge stated (at 899G) that an exception that a pleading is vague and embarrassing cannot be directed at a particular paragraph with a pleaded cause of action. The exception must go to the whole of the cause of action, which must be demonstrated to be vague and embarrassing. The learned judge then undertook a careful analysis of the rules relating to what is required to the particularity to be pleaded by a party and the range of remedies available for non-compliance with the rules. In dealing with exceptions based on alleged vagueness and embarrassment, the court stated (at 902H-903E) that:
It is therefore incumbent upon a plaintiff only to plead a complete cause of action which identifies the issues upon which the plaintiff seeks to rely, and on which evidence will be led, in intelligible and lucid form and which allows the defendant to plead to it. The attacks mounted by the defendants that their particulars of claim are vague and embarrassing cannot found on the mere averment that they are lacking in particularity. This might, depending on the circumstances, allow an application in terms of Rule 30. An allegation that a pleading is vague and embarrassing is a far more serious one than a complaint about particulars.
Furthermore, in approaching these exceptions, I shall bear in mind the following general principles:
minor blemishes are irrelevant;
pleadings must be read as a whole; no paragraph can be read in isolation;
a distinction must be drawn between the facta probanda, or the primary factual allegations which every plaintiff must make, and the facta probantia, which are the secondary allegations upon which the plaintiff will rely in support of his primary allegations. Generally speaking, the latter are matters for particulars for trial and even these are limited. For the rest, they are matters for evidence;
only facts need be pleaded; conclusions of law need not be pleaded;
bound up with the last-mention consideration is that certain allegations expressly made may carry with them implied allegations and the pleading must be so read: cf Coronation Brick (Pty) Ltd v Strachan Construction Co (Pty) Ltd 1982(4) SA 371 (D) at 377, 379B, 379G-H.
In the light of the fact that the central issue in the exception concerns the formulation of the plaintiff’s challenge to the constitutionality of sections of the NCA, it is necessary to briefly examine the NCA, and in particular the impugned provisions, in order to facilitate determination of whether the allegations made in the particulars may be said to be vague.
The relevant legislative framework of the NCA
The purpose of the NCA is captured in its preamble1 and in section 3.2
The primary purpose is the protection of consumers, although this does not mean that the rights of credit providers are ignored.3
A reading of the NCA indicates that the scheme of protection of consumers takes the form of statutory regulation of the credit market on the one hand, and on the other, the provision of a procedurally fair enforcement regime which applies in circumstances where credit providers seek to enforce agreements. This latter aspect need not concern us presently. The former involves the description and definition of credit agreements available in the credit market; the registration of credit providers and credit bureaux, and statutory sanctions for non-compliance with the regulatory framework which applies to the provision of credit. In this regard Section 89 of the NCA is an important provision in the scheme of protection for consumers.4
The section provides that a credit agreement is unlawful in certain circumstances defined by the section. Of particular relevance in this matter is section 89(2)(d) which is to the effect that a credit agreement concluded by an unregistered credit provider who was required in terms of the NCA to be registered, is unlawful. Subsection (5) provides in turn that:
(5) 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 –
the credit agreement is void as from the date the agreement was entered into;
the credit provider must refund to the consumer any money paid by the consumer under that agreement to the credit provider, with interest calculated –
at the rate set out in that agreement; and
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;
(emphasis added)
Section 89(5)(c), which “cancelled” or “forfeited to the state” the credit provider’s rights under the unlawful agreement unless a court concluded that doing so would unjustly enrich the consumer, was declared to be inconsistent with the Constitution in Opperman (supra). The confirmation of the declaration of invalidity however relates only that portion of section 89.
The terms “credit agreement” and “credit provider” are defined in section 1 of the NCA. These definitions encompass a broad range of transactions and parties and their reach is extensive. A “credit provider” in relation to a credit agreement to which the NCA applies is defined to mean –
the party who supplies goods or services under a discount transaction, incidental credit agreement or instalment agreement;
the party who advances money or credit under a pawn transaction;
the party who extends credit under a credit facility;
the mortgagee under a mortgage agreement;
the lender under a secured loan;
the lessor under a lease;
the party to whom an assurance or promise is made under a credit guarantee;
the party who advances money or credit under any other credit agreement; or
any other person who acquires the rights of a credit provider under a credit agreement after it has been entered into.
A “credit agreement” is defined with reference to section 8 5of the NCA. The definition encompasses credit facilities, credit transactions and credit guarantees, each of which is described in the section. It is clear from a reading of the section that its reach includes personal loans made by a private individual to another in which the agreement makes provision for the payment of interest.
Section 40 of the NCA requires that credit providers be registered as credit providers. It is necessary only to record the terms of subsections (1) and (4) for present purposes. These read as follows:
A person must apply to be registered as a credit provider if –
(i) that person, alone or in conjunction with any associated person, is the credit provider under at least 100 credit agreement, other than incidental credit agreements; or
(ii) 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).
(4) A credit agreement entered into by a credit provider who is required to be registered in terms of subsection (1) but who is not so registered is an unlawful agreement and void to the extent provided for in section 89.
In terms of section 42 (1) the prescribed threshold is R500 000.00. The effect of this is that where the total principal debt exceeds R500 000.00 the credit provider is obliged to be registered and failure to do so renders the agreement void from its inception and unenforceable.
So much for the relevant statutory scheme of the NCA. I turn now to deal with each of the grounds of exception in turn.
The first ground of exception: reliance on right to equality
The first ground is based on the alleged lack of particularity relating to the plaintiff’s reliance on the right to equality. It was argued on behalf of the excipient that the plaintiff’s reliance upon the right to equality, without specifying which sub-section of section 9 of the Constitution upon which he relies and by failing to identify the respects in which the impugned sections of the NCA infringe the right to equality is per se vague. Section 9 of the Constitution contains a number of sub-sections which relate to different aspect of the equality right and which posit particular tests to be applied in determining whether or there has been an infringement of the section. In the absence of identifying the particular provision relied upon the sixth defendant does not know what case it is required to meet.
Mr Ford argued that upon a reading of the particulars as a whole and by the application of a common sense approach to the particulars it is manifestly clear that the plaintiff relies on the right to equality before the law, as enshrined in section 9(1) of the Constitution. The plaintiff’s cause of action relates to the repayment of monies loaned and advanced to the first respondent. He seeks no payment of monies from the state or any organ of state. It is apparent too that the complaint in respect of the provisions of the NCA relates to the broad definition of a “credit provider” and what constitutes a “credit agreement”. There can be no basis, it was argued, for considering that the plaintiff contends any form of discrimination on any one of the listed grounds provided for in section 9(3). It was argued that the scheme of the NCA applies to all credit providers and credit agreements irrespective whether the credit was provided by a private individual in circumstances which do not amount to a commercial credit agreement. On this basis, having regard to the legislative scheme, the plaintiff’s right to equal treatment by the law is impugned.
I need of course not decide whether there is merit in the case as pleaded, nor do I need to consider in what respects the impugned provisions of the NCA impact upon the plaintiff’s right to equality. That is a matter for the trial court in due course. All that I am required to consider is whether the particulars of claim are vague in this regard. In my view they are not. The substance of the sixth defendant’s objection relates to the degree of particularity pleaded by the plaintiff. That is not, as the authorities indicate, a basis for exception. The fact that the particulars of claim may have been drawn in more precise terms does not, per se, render them vague. There is in any event no particular prejudice claimed by the sixth defendant other than a general statement that it does not know what case it is to meet at trial. That is a matter which can more than adequately be remedied by appropriate trial particulars in due course. An excipient is required to show that he will be seriously prejudiced in the event that the exception is not upheld (see Levitan v Newhaven Holiday Enterprises CC 1991 (2) SA 2987 (C) at 298A). It follows that the first ground of exception cannot succeed.
The second ground of exception: reliance on arbitrary deprivation of property
The second ground relates to the complaint regarding the alleged vagueness of the plaintiff’s claim based on an alleged deprivation of property. This ground of exception, in my view, suffers from the same defect as the first inasmuch as it as complaint based upon an alleged lack of particularity. The notice of exception raises two complaints, the first being that the “property” to which the plaintiff refers is not specified and, secondly that it is not specified in what respects the provisions of the NCA “deprive” the plaintiff of this property.
The latter point is easily disposed of by referring to the several provisions of the NCA, namely section 40(4) and section 89(2)(d), (5)(a) and (b), which clearly render an agreement concluded by an unregistered credit provider to be void and unenforceable and which require that a court concerned with such an agreement declare such agreement to be void, with the attendant consequences of such declaration. A plain reading of the particulars and the relevant statutory provisions makes it clear that it is this legal consequence which flows from a finding that the credit agreement is unlawful which it is claimed constitutes arbitrary deprivation of property. Whether it is indeed a deprivation which is arbitrary will no doubt involve extensive analysis of the provisions of the NCA in relation to purpose of the legislation to be undertaken by the trial court. For present purposes the claim is set out in terms which are lucid and logical enough to enable the sixth defendant to discern what issues are at stake and to plead thereto.
As to the “property” concerned it hardly need be said that the money advanced in terms of the agreements constitutes property. That is of course not the only property at issue on the pleadings. It is clear from the particulars of claim is that the plaintiff contends that the statutory consequence of a finding that the credit agreement is unlawful will have the effect of depriving him of his right to claim repayment of the money lent and advanced to the first defendant in terms of the agreement and that it will deprive him of the rights to the security he holds as against the second to fifth defendants. It is plain therefore that the plaintiff contends that the rights that flow from the agreements constitute property. Whether indeed the personal rights that emanate from the contracts constitutes property within the meaning of section 25 of the Constitution is a matter which, no doubt, the trial court will be required to decide.6 That decision may well bear upon the merits of the plaintiff’s claim. There is however nothing vague about what it is that the plaintiff contends in this regard and accordingly the second ground of the exception too cannot succeed.
The third ground of exception: the extent of the striking down sought
The third ground of complaint relates to the formulation of the relief claimed by the plaintiff, it being contended that the relief is, having regard to the case made out in the particulars of claim, too broad and too far reaching. To the extent that this is a valid complaint the amendment of the particulars of claim, to which the sixth defendant agreed, cures the apparent defect in the formulation of the relief. It is now clear that the plaintiff seeks only to strike down the relevant sections ‘to the extent that [they] seek to incorporate transactions concluded by individuals who do not provide credit in the course of a business, profession or occupation or incorporate loans of a personal nature’. That this was the ambit of the relief sought by the plaintiff even before the amendment is clear from paragraphs 33 and 34 of the particulars of claim.
Inasmuch as the sixth defendant sought to argue that the relief is overbroad or that it is not warranted having regard to the case as pleaded such arguments are concerned with the merits of the plaintiff’s claim and do not concern the formulation of the grounds upon which the claim is based. It is entirely unclear to me what about the plaintiff’s claim in this regard can be said to be “vague” as would entitle the sixth defendant to except thereto. To the contrary, the sixth defendant’s argument on this point is premised on the fact that the claim is not vague, it being clear that the plaintiff apparently seeks a general striking down when it is not entitled to such relief based on the case it has pleaded.
Mr Ford argued that in any event the plaintiff is entitled to make the case that the impugned sections out to be struck out by reason of inconsistency with the Constitution. If the sixth defendant wishes to contend for a far more constrained order of invalidity or for other relief which the trial court may grant pursuant to the exercise of its constitutional jurisdiction then it is for the sixth defendant to make out such a case. This it must do by pleading to the claim as formulated by the plaintiff. I agree with these submissions. It follows that on this ground too the exception must fail.
The fourth ground of exception: the effect of the Opperman judgment
The final ground of complaint concerns the effect of the Opperman judgment. The sixth defendant alleges that the Opperman judgment has definitively disposed of the issue raised by the plaintiff. In this regard it was submitted that upon a reading of the NCA it is only section 89(5)(c) that purported to deprive the plaintiff from claiming monies otherwise legitimately due to him in terms of the agreements concluded with the first respondent. Since the Constitutional Court has declared this section to be inconsistent with the Constitution there is no dispute between the parties. The plaintiff’s continued assertion of constitutional invalidity is therefore, so the argument went, vague and embarrassing.
In my view the sixth defendant’s complaint is not sustainable. I have already referred to the fact that section 40(4) and section 89(5)(a) both render an unlawful agreement void ab initio. Neither of these two provisions were considered in Opperman. It is therefore not correct that the decision in Opperman deals with the issues which arise in this matter. The sixth defendant’s argument loses sight of the fact that the plaintiff’s claim is also premised upon deeds of suretyship entered into by the second to fifth defendants as security for the payment of the principal debt. If it is held that the suretyship agreements constitute credit agreements which fall within the ambit of the NCA (which prima facie they must be) then the plaintiff’s rights in respect of those agreements may very well also be extinguished by a mandatory declaration of voidness as required by section 89(5)(a). This is plainly not an issue that the judgment in Opperman deals with and accordingly it is a matter which is triable and open to be decided by the trial court. That the plaintiff pleads this issue as one to be determined by the trial court is clear from a reading of the particulars of claim and the relevant sections of the NCA the plaintiff challenges. The particulars of claim are accordingly not vague in this regard. In any event the sixth defendant does not contend for embarrassment such as would occasion it serious prejudice. It follows therefore that the exception on this ground too cannot succeed.
Costs
Finally there is the question of costs. Mr Ford, on behalf of the plaintiff argued that this is a matter which warrants the costs of two counsel. The action involves issues of considerable complexity and importance, and the determination of constitutional issues will potentially have far reaching consequences. In addition the value of the plaintiff’s claim is substantial. In these circumstances, it was submitted, it was entirely appropriate that the plaintiff should take the precaution of appointing both senior and junior counsel and that he should require them to be engaged in the matter from the outset. For these reasons, it was submitted, it would be appropriate to allow the costs of two counsel also in relation to the exception.
It hardly need be said that the constitutional issues raised in this matter are issues of considerable importance. The NCA is an important and far reaching piece of legislation which has brought about very significant changes to the regulation of the consumer credit market. Numerous judgments have remarked that the legislation embodies very important objectives and that what it seeks to achieve is both legitimate and necessary. Yet it is true that courts have remarked on the poor draftsmanship; on the opaque language used and on the difficulty encountered in seeking to discern the intention and even ambit of certain provisions. One need only consider the basis of the minority judgment of Cameron J in the Opperman matter to understand that matters of the proper interpretation of the NCA are by no means uncomplicated. In my view the employment of two counsel in this matter was certainly a wise and prudent precaution.
In the result I make the following order:
The exception is dismissed with costs, such costs to include the costs of two counsel.
G. GOOSEN
JUDGE OF THE HIGH COURT
Appearances: For the Excipient: Mr A. Govender
Instructed by Wheeldon, Rushmere & Cole
For the Plaintiff: Mr E.A.S. Ford SC
Assisted by Ms. M. L. Beard
Instructed by Nettletons
1The preamble provides:
“ To promote a fair an 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 with the consumer credit industry; top 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”
2Section 3 of the NCA provides:
“The purposes of this Act are to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers, by –
promoting the development of a credit market that is accessible to all South Africans, and in particular those who have historically been unable to access credit under sustainable market conditions;
ensuring consistent treatment of different credit products and credit providers;
promoting responsibility in the credit market by –
encouraging responsible borrowing, avoidance of over-indebtedness and fulfilment of financial obligations by consumers; and
discouraging reckless credit granting by credit providers and contractual default by consumers;
promoting equity in the credit market by balancing the respective rights and responsibilities of credit providers and consumers;
addressing and correcting imbalances in negotiating power between consumers and credit providers by –
providing consumers with education about credit and consumer rights;
providing consumers with adequate disclosure of standardised information in order to make informed choices; and
providing consumers with protection from deception, and from unfair or fraudulent conduct by credit providers and credit bureaux;
improving consumer credit information and reporting and regulation of credit bureaux;
addressing and preventing over-indebtedness of consumers, and providing mechanisms for resolving over-indebtedness based on the principle of satisfaction by the consumer of all responsible financial obligations;
providing for a consistent and accessible system of consensual resolution of disputes arising from credit agreements; and
providing for a consistent and harmonised system of debt restructuring, enforcement and judgment, which places priority on the eventual satisfaction of all responsible consumer obligations under credit agreements.”
3National Credit Regulator v Opperman and Others 2013 (2) SA 1 (CC) at para. [20]; Sebola and Another v Standard Bank of South Africa Ltd and Another 2012 (5) SA 142 (CC) at para. [40]
4See Opperman (supra) at para. [91] and Absa Bank Ltd v Myburgh 2009 (3) Sa 340 (T) at para. [33]
5Section 8 provides as follows:
Subject to subsection (2), an agreement constitutes a credit agreement for the purposes of the Act if it is –
a credit facility, as described in subsection (3);
a credit transaction, as described in subsection (4);
a credit guarantee, as described in subsection (5); or
any combination of the above.
An agreement, irrespective of its form, is not a credit agreement if it is -
A policy of insurance or credit extended by an insurer solely to maintain payment of premiums on a policy of insurance;
A lease of immovable property; or
A transaction between a stokvel and a member of that stokvel in acoordance with the rules of that stokvel,
An agreement, irrespective of its form but not including an agreement contemplated in subsection (2) or section 4 (6) (b), constitutes a credit facility if, in terms of that agreement –
a credit provider undertakes –
(i) to supply goods or services or to pay an amount or amounts, as determined by the consumer from time to time, to the consumer or on behalf of, or at the direction of, the consumer; and
(ii) either to-
defer the consumer’s obligation to pay any part of the cost of goods or services, or to repay to the credit provider any part of an amount contemplated in subparagraph (i); or
bill the consumer periodically for any part of the cost of goods or services, or any part of an amount, contemplated in subparagraph (i); and
any charge, fee, or interest is payable to the credit provider in respect of -
any amount deferred as contemplated in paragraph (a) (ii) (aa); or
any amount billed as contemplated in paragraph 9a) (ii) (bb) and not paid within the time provided in the agreement.
An agreement, irrespective of its form but not including an agreement contemplated in subsection (2), constitutes a credit transaction if it is –
(a) a pawn transaction or discount transaction;
(b) an incidental credit agreement, subject to section 5(2);
(c) an instalment agreement;
(d) a mortgage agreement;
(e) a lease; or
(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.
An agreement, irrespective of its form but not including an agreement contemplated in subsection (20 constitutes a credit guarantee if, in terms of that agreement, a person undertakes or promises to satisfy upon demand any obligation of another consumer in terms of a credit facility or a credit transaction to which this Act applies.
If, as contemplated in subsection (1)(d), a particular credit agreement constitutes both a credit facility as described in subsection (3) and a credit transaction in terms of subsection (4)(d) –
(a) subject to paragraph (b), that agreement is equally subject to any provision of the Act that applies specifically or exclusively to either –
(i) credit facilities; or
(ii) mortgage agreements or secured loans, as the case may be, and
(b) for the purpose of applying –
(i) section 108, that agreement must be regarded as a credit facility;
(ii) section 4(1)(b) read with section 9(4), that agreement must be regarded as a large agreement if it is a mortgage agreement.”
6It is perhaps apposite to note here the remarks in Opperman (supra) relating to the concept of constitutional property in the context of considering the effect of section 89(5)(c) of the NCA, at para. [61] and [63]:
[61] This court has not specifically found that personal rights emanating from contract, delict, or enrichment are indeed property under s 25. Our constitutional jurisprudence accepts that deprivation of ownership of corporeal property constitutes deprivation for purposes of s 25. Without discussing the specific point, this court has also accepted a trademark to be property, albeit incorporeal, deserving protection under s 25. 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 to 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 s 25 comes into play.
[63] In the circumstances of this case, the recognition of the right to restitution of money paid, based on unjustified enrichment, as property under 2 25(1) is logical and realistic. It would be in accordance with developments in other jurisdictions where personal rights have been recognised as constitutional property. 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 s 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.’