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Bhekintsha Business Enterprise CC v Absa Bank Ltd (NCT/61/2009/141(1)(P)) [2010] ZANCT 34 (12 March 2010)

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IN THE NATIONAL CONSUMER TRIBUNAL

(HELD AT CENTUTION)


CASE No: NCT/61/2009/141(1)(P)

DATE:12/03/2010


in the matter between:

BHEKINTSHA BUSINESS ENTERPRISE CC......................................................Applicant

and

ABSA BANK LIMITED......................................................................................Respondent


JUDGMENT


[1] INTRODUCTION


[1.1] The Applicant is Bhekintsha Business Enterprise CC and the Respondent is ABSA Bank Limited, a registrant in terms of the National Credit Act, 34 of 2005 (the Act) with the National Credit Regulator, registration number NCRDC 27.


[1.2] On the 17™ of June 2009, Vukile Mlungwana the sole director of Bhekintsha Business Enterprise CC lodged an application before the National Consumer Tribunal (NCT) in terms of section 141(1)(b) of the Act on the grounds that the National Credit Regulator (NCR) had issued a notice of non referral in respect of a complaint that he had lodged against the respondent.


[2] PROCEDURE


[2.1] The applicant lodged an application on the 17th of June 2009 together with the notice of non referral from the NCR and attached proof of service. The Respondent was due to file his answering affidavit on 9 July 2009. The dies having expired without a response from the respondent, the applicant then applied for a default judgment in terms of Rule 25 of the National Consumer Tribunal. The applicant then lodged an application for default judgment on the 28th of July 2009 together with the affidavit and proof of service of the application to the respondent. There was no response from the respondent.The matter was then set down for hearing on the 1st of October 2009.


[2.2] At the hearing the Tribunal members raised a number of questions with the applicant in that, the effectiveness of service of the application upon the respondent was questionable, as proof of service upon the respondent was not satisfactory. The Tribunal then requested him to give an explanation of the service of the application upon the respondent.


[2.3] The explanation given by the applicant on the effectiveness of the mode of service utilized in the circumstances was still not satisfactory. This, coupled with the fact that in the application papers the applicant had not applied for leave to file his application with the Tribunal. Further that in his prayers the orders that were being sought, were beyond the powers of the Tribunal. Mr. Mlungwana in his response stated that he is a layman and was not fully aware of the processes to be followed.

[2.4] The Tribunal ordered that Mr. Mlungwana's non compliance with the rules of the Tribunal be condoned and gave him an opportunity to re-file his application by the 30th of October 2009 and requested him to do the following;


i. File a notice of motion.

ii. Attach an affidavit in which he must state whatever issues or facts he wanted to
present to the Tribunal.

iii. Annex documents supporting his case.

iv. Certify copies of the papers annexed to the application.

v. Serve the application upon the respondent and that proof of service must reflect
Respondent's bank stamp.


The Applicant was further advised to seek the services of a legal aid clinic to assist him to put his application together. Also, the Applicant was granted leave to refer his matter to the Tribunal.


[2.5] The Applicant refiled his application on the 28th of October 2009. The Respondent filed its answering affidavit on the 18th of November 2009. On the 26th of November 2009 the Applicant filed an answering affidavit to the Respondent's replying affidavit. The application became complete on the 26th of November 2009. The matter was then set down for hearing on the 23rd of December 2009 at the seat of the Tribunal at Centurion. At the hearing the applicant was represented by Mr. Vukile Mlungwana the sole director of Bhekintsha Business Enterprises CC and the Respondent was represented by Advocate G V Meijers instructed by the Attorney of record Mr Lance Dlamini.



[3] SUMMARY OF THE COMPLAINT


[3.1] The Applicant entered into a contract of lease with an option to purchase a motor vehicle from ABSA Bank (Bank) on 19 October 2005. The agreement provided for the payment of Value Added Tax (VAT) on the sale of the vehicle. The VAT amount was included in the purchase price of the vehicle paid by the bank to the dealer, and paid to South African Revenue Services (SARS).


[3.2] The Applicant and the bank agreed that the applicant will claim the VAT from SARS and thereafter pay it over to the bank. The Applicant after successfully claiming the VAT from SARS did not pay it over to the bank, as a result the bank repossessed the vehicle on 18 October 2006.


[3.3] The matter was referred to the Ombudsman for Banking Services who found that the bank was legally correct in terminating the agreement, repossessing, auctioning the vehicle and holding the applicant liable for the shortfall. The Applicant was then afforded further opportunity to rectify the breach and bring the repayments up to date but did not utilise the opportunity.


[3.4] On the 5th of November 2008, the Applicant lodged a complaint with the NCR against ABSA Bank Limited. On the 3rd of June 2009 approximately 7 months later the NCR issued a notice of non- referral in terms of section 139(1 )(A) of the Act, 34 of 2005 in respect of the complaint against the bank. The NCR in its reasons for non-referral stated that;


"The complaint has no merit, nor does it allege any facts which if true would constitute grounds for a remedy under the National Credit Acf1.


[3.5] The applicant thereafter approached the National Consumer Tribunal as provided for in terms of section 141(1)(b) of the Act that;


If the national Credit Regulator issues a notice of non-referral in response to a complaint concerning section 61 or an offence in terms of this Act, the complainant concerned may refer the matter directly to-

(a) The consumer court of the province within which the complainant resides, or in which the
respondent has its principal place of business in the Republic, subject to the provincial legislation
governing the operation of that consumer court; or

(b) The Tribunal, with leave of the Tribunal.
[4] COMPLAINT OF THE APPLICANT


[4.1] The complaints of the Applicant as quoted on NCR form 32 are;


"i The manner in which the Applicant was treated by the bank was unfair when he purchased the motor vehicle on behalf of the business;

ii. The unlawful provision advanced in the lease agreement;

iii. The attitude of ABSA when the vehicle was repossessed;

iv. Improper assistance received from ABSA after the dispute was referred to it;

v. The poor service meted out by the Banking Ombudsman characterized by non
transparency, delays; and

vi. The unprofessional service of NCR characterized by poor filing system and failure to
investigate the complaint."



[5] RELIEF SOUGHT IN TERMS OF NCR FORM 32



[5.1] The Applicant sought the following relief in terms of NCR form 32;


i. That ABSA's conduct be declared to be a prohibited conduct;

ii. Interdict the prohibited conduct by imposing an administrative fine;

iii. Give any other appropriate order required to give effect to a right, as
contemplated in the National Credit Act, 34 of 2005;

iv. Declaration that, the conduct of the Ombud for Banking Services be held as
prohibited conduct; and

v. Declaration that, the conduct of the NCR to be held as prohibited conduct.

The conducts complained o2 are in terms of the Credit Agreement Act3 and the relief sought is in terms of the National Credit Act, 34 of 2005. If one were to treat these conducts complained of by the applicant as if they fall under the NCA they would be tabulated in the following table;


No

Conduct complained off

Charge

Relevant NCA provision

1

The unfair manner in which the Applicant was treated by the bank when he bought the vehicle on behalf of the business

Prohibited conduct Administrative fine.

Section 92, 101,106

2

Unlawful provision advanced in the lease agreement

Prohibited conduct

NCA not applicable, contractual matter.

3

Repossession of the vehicle

Prohibited conduct

Section 129, 130, 131

4

Improper assistance when the dispute was raised with ABSA

Prohibited conduct Administrative fine

Section 128(1)

5

Conduct of the Banking Ombud

Prohibited conduct


6

Conduct of the NCR in failing to investigate the complaint.

Prohibited conduct



These complaints relate to a vehicle lease agreement entered into on the 19th of October 2005 prior to the coming into force of all the relevant provisions of the NCA. The contract was entered into during the era of predecessor legislation4.



[6] VALIDITY OF THE AGREEMENT


[6.1] One of the complaints raised by the applicant relates to the manner in which the contract was entered into and the validity thereof5. The Tribunal has jurisdiction throughout the Republic, in respect of credit agreements under the National Credit Act. There are certain powers which can only be exercised by the courts in terms of the Act.6 As a general rule the Tribunal cannot exercise powers which are not expressly stated in the Act or the Rules because the Tribunal is a creature of statute. In terms of section 89(5) of the Act, only the court can declare a credit agreement to be void. Therefore the Tribunal has no jurisdiction to pronounce on the legality of a contract. The Act is very clear on this aspect. The Tribunal cannot usurp the authority of a court.



[7] COMPLAINTS AGAINST THE NATIONAL CREDIT REGULATOR AND OMBUD FOR BANKING SERVICES


[7.1] The complaints levelled against the Banking ombudsman and the National Credit Regulator are far reaching and it would seem absurd to charge or declare their conduct to be of a prohibited nature on the basis that they gave an adverse or unfavourable ruling against a complainant. The NCR and Ombud for Banking Services are institutions created in terms of the enabling respective legislations7 to investigate complaints and apply the appropriate remedy.


[7.2] One can rule that they were acting within their mandate as creatures of statute established in terms of their enabling legislations. What the Applicant should have done was to challenge the outcome of their rulings based on either substantive or procedural grounds. The applicant did not make averments in his pleadings relating to any substantive or procedural irregularities in the manner in which his complaint was handled.


[7.3] The applicant merely states in form NCR 32 that, there was poor service on the part of the Banking Ombud characterized by non-transparency and delays. The applicant alleges that the National Credit Regulator (NCR) was unprofessional in rendering their service and as such, the conducts of both the ombud and NCR should be declared prohibited conducts. The applicant did not make any submission as to how his treatment or how his matter was handled before these forums to confirm prohibited conduct or highlight serious flaws, such that there was procedural irregularity or substantive misguidance to render the outcome of both forums unfair. This allegation should be disregarded as it is without merit.



[8] JURISDICTION


[8.1] In terms of Proclamation 22 of the Government Gazette 28824 of 11 May 2006. The erstwhile President of the Republic and the Minister of Trade and Industry fixed the 1st of June 2007 as the commencement dates of the following sections 92, 101, 106, 128, 129, 130 and 131of the Act. The applicant's case is based on these provisions. The complaints predate the coming into force of provisions of the Act.


[8.2] At the hearing it was common cause that the agreement was concluded and that the incidents took place before the commencement date of the NCA. The agreement was concluded prior to the coming into force of certain provisions of the NCA and it is necessary to consider the provisions set out in Schedule 3 of the Act dealing with the Transitional Provisions.


[8.3] The only relevant provision is item 4(2) to Part C of chapter 5 of the Act. In terms of the schedule the provisions of the Act do not apply to pre-existing credit agreements. Section 106 of chapter 5, Part C relating to the credit insurance would appear to be the only section that would have been applicable in this respect, however the Credit Agreement Act did not have a similar provision. It would appear that, when one considers the conducts complained of when viewed through the lens of the Credit

Agreement Act, the conduct of the Bank in repossessing the vehicle did not constitute a prohibited conduct. However the Tribunal cannot at this stage pronounce on the legality of the repossession.


[8.4] The Tribunal is a creature of statute and its powers are circumscribed in terms of the Act. The function of the Tribunal is adjudicative in nature and its powers are expressly provided for by the Act8. The Tribunal unlike the High Court does not enjoy inherent jurisdiction. A guiding central principle when the Tribunal is asked to grant a particular order is that it must first look to see whether it enjoys such powers expresssely or by necessary implication in the four corners of the constituent Act9.


([8.5] The Tribunal derives its jurisdiction from the legislative measures which accord it its existence. It possesses no jurisdiction beyond that granted by the statute creating it. It has no inherent jurisdiction such as is possessed by the Supreme Court and may claim no authority which cannot be deduced from the four corners of the statute under which it is constituted10. In the matter of National Party vs. Jamie NO and another11 where the jurisdiction of the Electoral Tribunal was questioned, Ackermann J remarked in the following terms;



"A statutory tribunal may, of course, have implied as well as expressed authority and, where an Act gives jurisdiction to a tribunal on the main subject in dispute, its purpose is not to be defeated because the ancillary powers which are necessary to enforce that jurisdiction have not been specifically mentioned. This is not, however, to be equated with inherent jurisdiction. The matter was well expressed as follows, by Maisels J in the

Hatfield Town Management Board vs. Mynfred Poultry Farm (Pvt) Ltd 1963 (1) SA 737 (SR) at 739F-G:



'. . . (W)hen the Act gives jurisdiction to the court on the main subject in dispute, its purpose is not to be defeated because the ancillary powers which are necessary to enforce that jurisdiction have not been specificaliy mentioned . . . But this doctrine of implied jurisdiction can only arise where the Act is silent, and in regard to matters which are specifically provided for in the Act the magistrate is obliged to keep within the terms of the statute. See Wilson vs. Gandy 1907 TS 249.'



It is also salutary to bear in mind that the upholding of the rule of law, that supreme principle of civilised constitutionality, entails that courts and tribunals are also subject to the law. However praiseworthy it may be for a tribunal, particularly in our present context, to pursue justice and fairness, it is bound to do so in terms of the law and, in the case of a tribunal, subject to its statutory authority."



[8.6] When parties in the above mentioned case cited lack of prejudice, with having to entertain issues that appeared to border on the aspect of the lack of jurisdiction Ackermann J ruled that;



"The power of the tribunal is to be gathered from the enabling legislation. Absence of prejudice can never confer jurisdiction if such jurisdiction is not accorded by the enabling statute".


[8.7] The Tribunal does not have the all-embracing jurisdiction over all the credit agreements entered into even prior to the commencement of the relevant provisions of the Act. To assume jurisdiction without valid legal grounds or sufficient reason, would ensure a review with some possibly not too pleasant remarks. It must be emphasised that a Tribunal cannot do things for which it is not authorised by the statute. In presiding on matters before it, the Tribunal cannot vest itself with powers which the statute did not confer; otherwise doing so would be ultra vires and irregular.


[8.8] The Tribunal decides cases through interpreting and applying the provisions of the Act from their effective date. Certain provisions of the Act are applicable in certain circumstances to credit agreements that came into existence before the effective date of the relevant provisions. These provisions and circumstances are set out in section 172 read with schedule 3 of the Act. Item 10(b) of schedule 3 which provides that;


Despite the repeal of previous Act, for a period of three years after the effective date and in respect of a matter that occurred during the period of three years immediately before the effective date -


(b) the Tribunal may make any order that is authorised to make in terms of this Act that could have been made in the circumstances by a court under any previous Act as if it were proceeding with a complaint in terms of this Act.


[8.9] The preliminary question raised by the Tribunal of its own accord was whether or not it has jurisdiction and power to hear a matter that arose during the predecessor legislation. In the event of the answer being affirmative then it would have the power to grant the orders sought, where appropriate. The panel members decided that it would be proper first to dispense with the issue of jurisdiction as a point of law before proceeding with a full hearing on the merits of the case.


[8.10] Sir William Wade who in his work Administrative Law12, observed that, "Where a jurisdictional question is disputed before a tribunal, the tribunal must necessarily decide it". The Tribunal has to determine whether the matter lies within the competence of the Tribunal.


[8.11] The presiding member raised points in limine13 on the allegations or conducts of the bank complained of. The presiding member then requested the parties to address the Tribunal on the constraints they had with respect to the applicability of the National Credit Act and the Credit Agreement Act14. The parties were then given an opportunity to address the Tribunal on the aspect of jurisdiction of the Tribunal to hear the matter. The parties made submission from pages 2 to 13 of the Transcript.


[8.12] Both parties in their submission are in agreement that the Tribunal has to hear the matter though doubtful as to whether the Tribunal has jurisdiction. Their submission is not enough to persuade the Tribunal to accede or afford itself jurisdiction to determine the matter. The reasons submitted by the Respondent are somewhat remote and not compelling to find the Tribunal to be a competent forum to determine the matter. It would not be justifiable to sneak in jurisdiction because the parties are in agreement that the matter can be heard before the Tribunal.



[9] POWERS OF THE TRIBUNAL


[9.1] Section 150 of the NCA provides as follows:

"In addition to its other powers in terms of this Act, the Tribunal may make an appropriate order in relation to prohibited conduct or required conduct in terms of this Act, including-

  1. Declaring conduct to be prohibited in terms of this Act;

  2. Interdicting any prohibited conduct;

  3. Imposing an administrative fine in terms of section 151, with or without the addition of any other order in terms of this section;

  4. Confirming a consent agreement in terms of this Act as an order of the Tribunal;

  5. Condoning any non-compliance of its rules and procedures on good cause shown;

  6. Confirming an order against an unregistered person to cease engaging in any activity that is required to be registered in terms of this Act;

  7. Suspending or cancelling the registrant's registration, subject to section 57 (2) and (3);

(h) Requiring repayment to the consumer of any consumer of any excess amount charged, together
with interest at the rate set out in the agreement; or

(i) Any other appropriate order required to give effect to a right, as contemplated in this Act."



Advocate Meijers argued that15 the Tribunal based on the provisions of section 150 of the Act can derive jurisdiction when looking at its adjudicative role in respect of prohibited conduct. He stated that the transaction of the conduct complained of started and was complete before the commencement of the NCA. He then proposes that the Tribunal can retrospectively enquire into whether there was compliance in terms of the predecessor legislation16.


[9.2] The powers of the National Consumer Tribunal may be divided into substantive and procedural powers. It will also appear from the reading of sections 3 and 10 of the Rules17 that the approach to the question of incidental powers must be handled differently between the substantive powers and procedural powers. Section 3 of the Rules provides a comprehensive list of all powers the Tribunal can exercise in relation to substantive matters.


[9.3] It would appear that the Tribunal does not have any powers beyond those expressly provided for in the Act or in the Rules as far as powers relating substantive matters are concerned. This viewpoint is supported by section 10 of the Rules.


Section 10 (1) of the Rules provides:


"A person wishing to bring before the Tribunal a matter which is not listed in rule 3, or otherwise provided for in these rules, must first apply to the High Court for a declaratory order confirming the Tribunal's jurisdiction-fa) To deal with the matter;

In the application before the Tribunal, there was no such declaratory order from the High Court vesting the Tribunal with jurisdiction and section 89(5) expressly states that in respect of declaring a conduct to be prohibited a party must approach the courts. This aspect adds to the fact that the Tribunal has no jurisdiction to pronounce or determine this matter.


[10] In the matter of MC Van De Heuvel vs. First National Bank a division of First Rand Limited18 before the National Consumer Tribunal, with similar facts though slightly different in that it related to the transitional provisions dealing with interest, the members were unanimous in their decision that the Tribunal does not have jurisdiction as the NCA did not apply at the time the conduct complained of took place. The approach adopted by Judge Ackermann19in the National Party matter, where he stated that lack of prejudice is not sufficient to confer jurisdiction if such jurisdiction is not accorded by the enabling statute, holds. The fact that the parties are in agreement does not accord the Tribunal with jurisdiction.


[11] The Act can only be applied retrospectively in instances that have been outlined in terms of schedule 3 of the Transitional provisions. The provisions of Item 10 of schedule 3 can be applied retrospectively in a situation where the predecessor legislation had a somewhat similar provision to the current Act. The provisions of the NCA are not a reproduction of the Credit Agreements Act. Therefore the Tribunal would not look into the aspect of the bank when dealing with Value added Tax and repossession. The question of administrative fine would therefore also fall away.


[12] In the circumstances the Tribunal makes the following order:


[12.1] The Tribunal has no jurisdiction to pronounce on the legality of a contract, in terms of section 89(5) of the Act. The complaint on the legality of the contract can be referred to the court for a determination.


[12.2] The Tribunal does not have jurisdiction to adjudicate complaints in respect of this application relating to the conduct of ABSA Bank during the era of the Credit Agreements Act, 75 of 1980.


[12.3] The complaints or charges against the National Credit Regulator and Ombudsman for Banking Services do not have merit and therefore cannot stand.


Dated at Centurion on this 12th day of March 2010


FK Manamela

Presiding Member


Concurring,


N Sephoti X May

Member Member

1Page 2 of the Notice of non-referral by the NCR.

2NCR form 32

375 of 1980.

4Credit Agreement Act, 75 of 1980

5NCR form 32, prayer number 1 of the Notice of motion, Annexure Q of the outcome of the Ombudsman for Banking Services

6In terms of section 89{5) of Act 34 of 2005 only a court can declare a credit agreement void.

7Section 12 of the National Credit Act, 34 of 2005 and Section 21 of the Companies Act,61 of 1973.

8Section 27 of the Act.

9 Jones & Buckle; Civil Procedure in the Magistrate's Court. (Durban: Butterworths 1997) L C Harms; Devenish interpretation of Statutes Juta 1992 Cape Town: Juta & Co. 1992. Vii + 298 pp. ISBN 0-7021-2754-X]; Minister of Education and Culture, House of Delegates 1989(3) SA 221(A).

10Connolly v Ferguson 1909 TS 195 at 198; Hatfield Town Management Board v Mynfred Poultry Farm (Pvt) Ltd 1963 (1) SA 737 (SR) at 739 and Van der Schyffv Taylor 1984 (2) SA 688 (C).

11[1994]4AIISA212(EWC).

12Sixth Ed:2S3

13Para 4-5, Page 1-2 of the Transcript.

14 75 of 1980.

15Page 3 of the Transcript.

16 Credit Agreement Act 75 of 1980.

17Rules of the National Consumer Tribunal.

18NCT/01/2007/141(P)

19National Party vs. Jamie No and another Supra.