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[2010] ZANCT 44
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Motitsoe v Absa Bank and Others (NCT/255/2009/138(1)(P)) [2010] ZANCT 44 (21 April 2010)
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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy |
IN THE NATIONAL CONSUMER TRIBUNAL,
HELD IN PRETORIA
CASE No: NCT/255/2009/138(1)(P)
DATE:21/04/2010
In the matter between
BASETSANA ANGELINA MOTITSOE............................................Applicant/Consumer
(Represented by Martha Aletta Strydom a debt counsellor)
and
ABSA BANK...................................................................1st Respondent/Credit Provider
AFRICAN BANK............................................................2nd Respondent/Credit Provider
DIRECT AXIS (SA) PTY LTD..........................................3rd Respondent/Credit Provider
RANDBURG FINANCE.................................................4th Respondent/ Credit Provider
CONSUMER FRIEND..................................................5th Respondent / Credit Provider
JUDGMENT
1. INTRODUCTION
1.1 The Applicant is a consumer who applied for debt review in terms of the National Credit Act 34 of 2005 (the Act). The debt counsellor representing the debtor is Martha Aletta Strydom. The Applicant is applying for a consent order in terms of section 86(8) read together with section 138 of the Act.
1.2 The debt counsellor found that the Applicant was experiencing difficulty satisfying all obligations under her credit agreements in a timely manner.
1.3 The debt counsellor recommended a restructuring of the payment instalments to all credit providers, as per the agreement which is attached hereto marked "Annexure A".
1.4 All the respective credit providers (Respondents to this consent order) consented to this agreement.
2. APPLICATION FOR CONSENT ORDER
2.1 The Applicant applied for a consent order on 9 December 2009. The Tribunal expressed concern regarding the interest rate which Randburg Finance (a Respondent) was charging the Applicant in the consent order. The matter was adjourned in order for the Tribunal to subpoena the contract in order to establish the type of credit agreement entered into and the applicable formula for calculating interest.
2.2 The matter commenced again on 7 April 2010. The Tribunal had the relevant contract from Randburg Finance.
3. CONSIDERATION OF THE RANDBURG FINANCE CONTRACT
On 7 July 2009 the Applicant was granted a loan by Randburg Finance of R3000. In addition the Applicant had to pay R350 as an initiation fee and a monthly service fee of R50 was payable. The interest rate is recorded as 60 percent. The loan was repayable over a period of 6 months. Taking the loan, the fees and the interest into consideration, the Applicant was expected to make payments of R1030 for a period of 6 months. The Applicant was therefore expected to repay R6180 to Randburg Finance.
The agreement also states that "Additional interest will be charged on all amounts which are in arrears and will be calculated at 5 percent per month, from the due date until date of payment".
4. CONSIDERATION OF THE CONSENT AGREEMENT
The consent agreement attached to the application for a consent order indicates that the Applicant owes Randburg Finance R7 800. In addition, the Applicant has agreed to repay Randburg Finance R538.97 for a period of 30 months. The interest rate for this debt is recorded at 60 percent . This means that at the end of the repayment period the Applicant will have paid R16 169.10 for a loan of R3000.
5. CONSIDERATION
The agreement concluded between the Applicant and Randburg Finance constitutes a short term loan. This is a loan not exceeding R8000 which is repayable within 6 months (see regulation 38 (2) of the Act) When such a loan is granted, the credit grantor is entitled to charge 5 percent per month (Regulation 42 Table A). The maximum amount of interest which the credit grantor can therefore charge is 30 percent (i.e. 5 percent for 6 months). Section 101 (1) (d) (I) states that the interest charged must not exceed the maximum prescribed rate. Therefore, an agreement to pay 60 percent interest per annum constitutes an illegal agreement.
In addition such an agreement is contrary to the in duplum rule. The common law in duplum rule has been codified in section 103 (5). However, this section has expanded the common law rule in that the interest charged, can never exceed the principal debt. This section reads as follows:
Despite any provision of the common law or a credit agreement to the contrary, the amounts contemplated in section 101 (1) (b) to (g) that accrue during the time that the creditor is in default under the credit agreement may not, in aggregate, exceed the unpaid balance of the principal debt under that credit agreement at the time that the default occurs.
This section has been interpreted by Du Plessis J in NCR v Nedbank Limited and others 2009 (6) SA 295 GNP. The court interpreted the section to mean that:
(a) the amount contemplated in section 101 (1) (b) to (g) which accrues while the consumer is in default may not exceed, in aggregate the unpaid balance of the principal debt when the default occurred;
(b) once the total charges referred to in section 101 (1) (b) to (g) equal the amount of the unpaid balance, no further charges may be levied;
(c) once the total charges referred to in section 101 (1) (b) to (g) equal the amount of the unpaid balance, payments made by a consumer thereafter during a period of default do not have the effect of permitting the credit provider to charge further interest while such default persist.
Although it is not possible, from the consent agreement, to establish exactly what the outstanding amount was on the principal debt (that is without the added interest and charges) when the consumer fell into arrears, the amount which Randburg Finance will ultimately receive through this consent agreement, is clearly in excess of what Randburg Finance is entitled to receive, taking into account the statutory in duplum rule.
5. CONCLUSION
The application for a consent order is refused and the Tribunal makes the following order:
The matter is referred to the National Credit Regulator in order to investigate whether there was prohibited conduct on the part of Randburg Finance. The Regulator is requested to report back to the Tribunal within a period of one month from the date of this judgment regarding its findings.
Handed down on this 21 day of April 2010
PROFESSOR T WOKER
Presiding Member
IN
THE NATIONAL CONSUMER TRIBUNAL
HELD AT CENTURION
CASE NO.
In the matter between:
Basetsana Angeline Motitsoe...........................................................Applicant/Consumer
Identity number:
and
Absa Bank Limited.........................................................1st Respondent/Credit Provider
African Bank Limited.....................................................2nd Respondent/Credit Provider
Direct Axis (SA) (Pty) Ltd................................................3rd Respondent/Credit Provider
(Call Direct)
Randburg Finance..........................................................4th Respondent/Credit Provider
Consumer Friend...........................................................5th Respondent/Credit Provider
(RCS Account)
DRAFT
CONSENT ORDER IN TERMS OF SECTION 86(8) READ TOGETHER
WITH
SECTION 138 OF THE NATIONAL CREDIT ACT 34 OF 2005
WHEREAS:
a. The consumer applied for debt review in terms of the National Credit Act 34 of 2005;
b. The debt counsellor found that the consumer is experiencing difficulty satisfying all obligations under the credit agreements in a timely manner;
c. The debt counsellor recommended a restructuring of the payment installments to all the credit providers, as per the agreement which is attached hereto marked: "Annexure B";
d. All the respective credit providers and the consumer/applicant consented to this agreement, which consents are hereto attached marked "Annexure C"
NOW THEREFORE:
The Tribunal, being satisfied that the Applicant and Respondent are parties to a debt rearrangement facilitated by a debt counsellor under section 86(7) of the National Credit Act, hereby orders, by consent of the parties:
That the payment structures of the agreement between the Applicant and the respondents as set out in Annexure "B", be made an order of the National Consumer Tribunal;
Which agreement restructures the payment installment by extending the payment period as indicated in Annexure "B"
Creditor |
Reference |
Annual Interest |
New Monthly Installment |
Balance |
Estimated Period in Months |
Absa Bank Ltd |
3019233625 |
11.00% |
R238.57 |
R11 855.31 |
38 months |
African Bank Ltd |
6711925003 |
15.50% |
R400.45 |
R13 561.97 |
35 months |
|
74003026256 |
15.50% |
R209.31 |
R8 860.91 |
37 months |
|
6711925001 . |
15.50% |
R400.01 |
R10 947.93 |
32 months |
|
6711925002 |
15.50% |
R394.22 |
R7 898.90 |
25 months |
DirectAxis (SA) (Pty) Ltd |
CDH31561B |
14.00% |
R305.34 |
R4 411.62 |
19 months |
Randburg Finance |
16149 |
60.00% |
R538.97 |
R7 800.00 |
30 months |
Consumer Friend |
RCS Account 81592221 |
16.00% |
R53.37 |
R1 359.23 |
32 months |
DATED at Centurion this the day of 2009
REGISTRAR OF THE NATIONAL CONSUMER TRIBUNAL
Applicant/Consumer
Debt Counsellor on behalf of the Consumer
Dated at Johannesburg on this 19 day of October 2009
Applicant/Consumer TO:
THE REGISTRAR OF THE TRIBUNAL CENTURION
1. African Bank Limited 2. Absa Bank Limited
59 16th Road 3 The Crescent, Westway Office Park,
Midrand Wesrville
1685 4000
3. DirectAxis (SA) (Pty) Ltd 4. Randburg Finance .
DA Campus De Waalweg 108 3rd Floor, Nedbank Building
Dieprivier 310 Oak Avenue, Randburg
7800 2146
5. Consumer Friend
3 The Crescent, Westway OfFice Park,
Westvilie:-
4000