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Qabaka v Solomon and Another (NCT/297314/2023/141(1)(b)) [2024] ZANCT 54 (20 November 2024)

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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

SITUATED AT CENTURION

 

Case number: NCT/297314/2023/141(1)(b)

 

In the matter between:

 

JOSEPH TUELO QABAKA                                                APPLICANT

 

and

 

RAATHIA SOLOMON (NCRDC3842)                                  FIRST RESPONDENT

 

NATIONAL CREDIT REGULATOR                                    SECOND RESPONDENT

 

Coram:

Dr A Potwana            -         Presiding Tribunal Member

Dr M Peenze             -         Tribunal Member

Adv C Sassman        -         Tribunal Member

 

Date of final hearing  -         13 November 2024

Date of judgment      -         20 November 2024

 

JUDGMENT AND REASONS

 

THE PARTIES

 

1.               The applicant is Joseph Tuelo Qabaka, a credit consumer. During the hearing, the applicant represented himself.

 

2.               The first respondent is Raathia Solomon, a registered debt counsellor.

 

3.               The second respondent is the National Credit Regulator (the NCR), a juristic person established by section 12(1) of the National Credit Act 34 of 2005 (the NCA). Mr Anda Makrwede, an NCR employee, appeared on behalf of the NCR.

 

TYPE OF APPLICATION AND JURISDICTION

 

4.               The applicant brought an application for leave to refer a complaint to the Tribunal in terms of section 141(1)(b) of the NCA after the NCR issued a notice of non-referral in response to the applicant’s complaint. The Tribunal granted the application.

 

5.               The Tribunal has jurisdiction to hear this matter in terms of section 27(a) of the NCA.

 

ISSUE TO BE DECIDED

 

6.               The Tribunal is required to determine whether it should order that the applicant be withdrawn from debt review.

 

INTRODUCTION

 

7.               On 14 November 2023, the applicant filed the application for leave to refer with the Tribunal’s Registrar (the Registrar). The application documents were served on the first respondent by a courier. On 23 November 2023, the Registrar issued the Notice of Complete Filing and served it on the parties. In terms of Rule 13 of the Rules of the Tribunal (the Rules)[1] , the first respondent was entitled to oppose the application by serving an answering affidavit on the applicant within 15 business days of receiving the application. However, the first respondent failed to do so. Notwithstanding the first respondent’s failure to file an answering affidavit, the applicant did not file an application for a default order in terms of Rule 25(2) of the Rules.

 

8.               In “Part 2 – The Complaint” of the prescribed form for seeking leave to refer a complaint to the Tribunal, NCR Form 32, the applicant stated that he was contacted telephonically and advised that his credit interest was very high and that he would be helped to reduce it. Subsequently, he received a Form 16 from the first respondent’s co-worker for his signature. After reading it, he realised that it was a debt review form. He advised the first respondent’s co-worker that he did not wish to apply for debt review and that they should cancel the application as they never discussed debt review over the phone. Notwithstanding the foregoing, the applicant’s profile held by the credit bureaus indicates that he applied for debt review. Thus, the essence of the applicant’s complaint is that he was placed under debt review without his consent. He denies that he signed Form 16 electronically on 30 May 2023 at Three Rivers, Vereeniging, as stated in the NCR’s Notice of Non-Referral. He submitted that the electronic signature he appended was for the bank and not for a debt review application.

 

9.               In “Part 3 – Reasons, Relief and Leave Required” of NCR Form 32, the applicant denies that he signed Form 16. He stated that he wants his “name to be removed from the debt review or to be withdrawn from that register” because he’s not over-indebted and is able to pay his debts. He submitted that his credit record speaks for itself and that his creditors can attest to the fact that he can pay his debts. He stated that his credit score is healthy.

 

10.            The first respondent did not oppose the applicant’s application for leave. On 19 December 2023, the Registrar issued a Notice of Set Down for the application for leave to refer to be heard on 24 January 2024. On 26 January 2024, the Registrar issued the Tribunal’s ruling granting the applicant leave to refer his complaint to the Tribunal and served it on the first and second respondents.

 

CONSIDERATION OF EVIDENCE ON A DEFAULT BASIS

 

11.            On 6 March 2024, the Registrar issued a Notice of Set Down for the matter to be heard on a default basis on 16 April 2024 and served the same on the applicant and the first respondent.

 

12.            Rule 24 of the Rules states that:

 

(1)  If a party to a matter fails to attend or be represented at any hearing or any proceedings, and that party –

 

(a)                 is the applicant, the presiding member may dismiss the matter by issuing a written ruling: or

 

(b)                  is not the applicant, the presiding member may –

 

(i)                  continue with the proceedings in the absence of that party; or

 

(ii)                 adjourn the hearing to a later date;

 

(2)             The Presiding member must be satisfied that the party had been properly notified of the date, time and venue of the proceedings before making any decision in terms of subrule (1);

 

(3)             If a matter is dismissed, the Registrar must send a copy of the ruling to the parties.”

 

13.            The Presiding member was satisfied that the first respondent was properly notified of the date, time and venue of the proceedings. The hearing proceeded on a default basis accordingly. Rule 13(5) of the Rules stipulates that any fact or allegation not specifically admitted or denied within an answering affidavit is deemed admitted. Therefore, in the absence of an answering affidavit, the first respondent was deemed to have admitted the allegations made by the applicant.

 

FACTS

 

14.            On the day of the hearing, the applicant argued that the first respondent’s agent called and advised him three times that the purpose of the call was not to offer debt counselling services. Responding to questions from the panel, the applicant submitted that he does not know whether the debt review application was confirmed by a Magistrates’ Court or the Tribunal but was advised by an NCR official that he had been placed under debt review. He reiterated that he had never signed Form 16 and had requested both the first respondent and the NCR to produce copies of the said Form 16. Neither furnished him with the same. He persisted that he signed bank documents only.

 

15.            Because the Tribunal was not presented with the respondent’s conditions of registration and the applicant’s debt review status was unclear, the Tribunal relied on its powers to conduct hearings in an inquisitorial manner. Acting in terms of section 144 of the NCA, the Presiding Tribunal member issued two summonses, one to the NCR’s Chief Executive Officer (the NCR’s CEO) and the other to the first respondent.

 

16.            The first respondent failed or neglected to respond to the Tribunal’s summons which requested her to produce, among others, Form 16. The summons issued to the NCR’s CEO required her to produce, among others, the respondent’s Conditions of Registration as a Debt Counsellor, a copy of the record of the applicant’s debt-review status on the NCR’s Debt Help System that could assist the Tribunal in determining whether a Magistrate’s Court or the Tribunal issued a debt review order against him, and copies of all documents, including a copy of Form 16, submitted to the NCR by the first respondent in relation to the complaint filed with the NCR by the applicant. Among others, the NCR’s CEO produced a page that shows that the applicant applied for debt review and that the assessment resulted in a decision that he was over-indebted and the respondent’s Conditions of Registration as a Debt Counsellor. Condition 2 of the respondent’s General Conditions states that:

 

The Debt Counsellor must perform debt counselling in a manner that is consistent with the purpose and requirements of the Act. The Debt Counsellor must in all instances act professionally and reasonably in providing debt counselling services to consumers and provide such services in a manner that is timely, fair and non-discriminatory and does not bring the NCR or debt counselling into disrepute.”

 

17.            Section 86(1) of the NCA states that “A consumer may apply to a debt counsellor in the prescribed manner and form to have the consumer declared over-indebted.” In view of the provisions of section 86(1) of the NCA and the applicant’s uncontroverted evidence that he advised the first respondent’s agent that he did not wish to apply for debt review and the summonsed documents from the NCR’s CEO, the Tribunal unanimously found that the first respondent placed the applicant under debt review even though he never applied for debt review. Subsequently, the first respondent wrongly updated the applicant’s debt review status on the NCR’s Debt Help System in breach of Condition 2 of her conditions of registration and thereby contravened section 52(5)(c) of the NCA which states, “A registrant must comply with its conditions of registration and the provisions of this Act.” By so doing, the respondent committed prohibited conduct.

 

18.            In addition to the above, the Tribunal unanimously found that the first respondent acted in a manner that was inimical to the purposes of the NCA as expressed in section 3(f) thereof and that her conduct in this regard could not be countenanced and ought to be deterred through the imposition of an administrative fine in terms of section 150(c) of the NCA, which states-

 

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, or the Consumer Protection Act, 2008, including imposing an administrative fine in terms of section 151, with or without the addition of any other order in terms of this section.”

 

We consider the appropriate administrative fine that should be imposed on the first respondent further below.

 

REASONS FOR JOINING THE NCR

 

19.        Section 150(i) of the NCA states that “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, or the Consumer Protection Act, 2008, including any other appropriate order required to give effect to a right, as contemplated in this Act or the Consumer Protection Act, 2008.” The right in question in these proceedings is the applicant’s right to challenge the accuracy of the information concerning him and to have information that is not supported by credible evidence removed from credit bureau reports and the national credit register as envisaged in section 72(1)(c)(ii) of the NCA. That section states that “Every person has a right to challenge the accuracy of any information concerning that person that is held by the credit bureau or national credit register, as the case may be, and require the credit bureau or National Credit Regulator, as the case may be, to investigate the accuracy of any challenged information, without charge to the consumer.”

 

20.            Since the incorrect information is primarily held by the NCR, the Tribunal considered it imperative that the NCR be joined to these proceedings before an order could be made against it. Rule 16(1) of the Rules states that “The Tribunal may of its own accord or on application by a party combine any number of persons, either jointly, jointly and severally, separately, or in the alternative, as parties in the same proceedings, if their rights to relief depend on the determination of substantially the same questions of law or fact.”

 

21.            After the hearing on 16 April 2024, the Tribunal made the following order:

 

21.1.           The National Credit Regulator is joined as the second respondent to these proceedings.

 

21.2.           The Registrar must serve a copy of the entire contents of the Tribunal’s file, including a copy of this judgment and order, to the Chief Executive Officer of the National Credit Regulator.

 

21.3.           The National Credit Regulator may serve and file an answering affidavit within 15 business days of receipt of the contents of the Tribunal’s file.

 

21.4.           If the National Credit Regulator serves and files an answering affidavit, the applicant must serve and file a replying affidavit within 10 business days of being served with an answering affidavit.

 

21.5.           No order is made as to costs.”

 

22.            On 20 June 2024, the Registrar served the Tribunal’s judgement and order to the NCR. The NCR failed or neglected to file its answering affidavit in accordance with the issued order. The Tribunal’s file, however, shows that the NCR sent a letter dated 5 July 2024 to the Registrar requesting an extension to file its answering affidavit. This was an irregular step by the NCR, as the Rules of the Tribunal do not provide for extensions to be requested informally via a letter and without any notification to other litigants in the same application. Rule 34(1) of the Rules states-

 

A party may apply to the Tribunal in Form TI.r34 for an order to:

 

(a)                condone late filing of a document or application;

(b)                extend or reduce the time allowed for filing or serving;

(c)                 condone the non-payment of a fee; or

(d)                condone any other departure from the rules or procedures.”

 

23.            In view of the provisions of Rule 34(1), the NCR’s conduct shows a disregard for the Rules. The Tribunal cannot be silent when a regulator such as the NCR undermines the Rules, and the procedures prescribed therein. The Tribunal accordingly records its displeasure at this procedural irregularity and condemns it in the strongest possible terms.

 

24.            The Tribunal’s file shows that on 8 August 2024, in an apparent response to the applicant’s enquiry, the NCR’s Acting Senior Legal Advisor, Anda Makrwede (Mr Makrwede), sent an email to the applicant stating that “I concur and the matter may proceed in our absence as per the email to you this morning.” On 2 September 2024, the Registrar asked the NCR to confirm that it would not file an answering affidavit. On 3 September 2024, Mr Makrwede sent an email to the Registrar stating that “We will not be filing papers in this matter to – same was confirmed to consumer.” (sic-in-toto)

 

25.            On 9 September 2024, the Registrar issued a Notice of Set Down for the hearing to continue on 2 October 2024 and served it on all the parties. On 1 October 2024, the Registrar issued a Notice of Removal from Hearing Roll and served it on the parties. On 28 October 2024, the Registrar issued another Notice of Set Down for the hearing to continue on 13 November 2024.

 

26.            On 13 November 2024, Mr Makrwede appeared on behalf of the NCR and advised the panel that the NCR had sent written submissions that the NCR wanted to make to the Tribunal and that he wanted to present those submissions orally to the Tribunal. Since the NCR was given an opportunity to file an answering affidavit but failed or neglected to do so, the Presiding Tribunal member asked Mr Makrwede for a legal authority which supports the proposition that a party that has failed or neglected to file an answering affidavit can be allowed to make written or oral submissions. In his responses, he submitted that the NCR wanted to make legal submissions and was acting in a manner that was akin to being a friend of the Tribunal. This stance raises a plethora of serious procedural questions, such as the following:

 

26.1.        How can a cited party purport to act as a friend of the Tribunal?

 

26.2.        Upon whose invitation or based on which legal procedure could the NCR become a friend of the Tribunal?

 

26.3.        What is the legal authority for allowing a party that has neglected or failed to present its version on an affidavit to present written and oral submissions?

 

27.            In our view, this is yet another procedural irregularity on the NCR’s part. This procedural irregularity is not only an abuse of process but possibly amounts to criminal conduct. Section 160(2)(a) of the NCA states that “A person commits an offence who does anything calculated to improperly influence the Tribunal…” By trying to make submissions in a manner that is not prescribed in the Rules, the NCR acted improperly. Such conduct undermines the applicant’s right to reply to its submissions and to prepare and present counter-submissions or arguments. In The Minister of Land Affairs and Agriculture v D& F Wevell Trust[2], the Supreme Court of Appeal said:

 

It is not proper for a party in motion proceedings to base an argument on passages in documents which have been annexed to the papers when the conclusions sought to be drawn from such passages have not been canvassed in the affidavits. The reason is manifest ─ the other party may well be prejudiced because evidence may have been available to it to refute the new case on the facts. The position is worse where the arguments are advanced for the first time on appeal. In motion proceedings, the affidavits constitute both the pleadings and the evidence: Transnet Ltd v Rubenstein[3], and the issues and averments in support of the parties’ cases should appear clearly therefrom. A party cannot be expected to trawl through lengthy annexures to the opponent’s affidavit and to speculate on the possible relevance of facts therein contained. Trial by ambush cannot be permitted.”

 

28.            Mr Makrwede’s argument that the Tribunal is empowered to consider the NCR’s written submissions because it is obligated to conduct hearings in an inquisitorial manner is misplaced. A litigant cannot hide its ineptness by dictating to the Tribunal to invoke the provisions of section 142(1)(a) and utilise the powers prescribed therein in a manner that undermines and circumvents the Rules. This conduct is unbecoming of a regulator who is supposed to act as a model litigant in all matters before the Tribunal. It is condemned in the strongest possible terms. Accordingly, the NCR’s written submissions are deemed to be pro non scripto (meaning as though they had not been written).

 

29.            We now turn to consider the administrative fine that should be imposed on the first respondent.

 

DETERMINATION OF THE APPROPRIATE ADMINISTRATIVE FINE

 

30.            Section 3(f) of the NCA states -

 

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 improving consumer credit information and reporting and regulation of credit bureaux.”

 

31.            Section 151(1) of the NCA states that “The Tribunal may impose an administrative fine in respect of prohibited or required conduct in terms of this Act, or the Consumer Protection Act, 2008.” It is apt to state that the provisions of section 151(1) of the NCA empower the Tribunal to impose an administrative fine in respect of prohibited or required conduct, irrespective of whether an applicant has sought the imposition of an administrative fine. Having analysed the first respondent’s conduct, the Tribunal considers it appropriate to impose an administrative fine on her to deter her and other debt counsellors from engaging in the type of prohibited conduct that she engaged in when dealing with the applicant.

 

32.            Section 151(2) of the NCA states that “An administrative fine imposed in terms of this Act, or the Consumer Protection Act, 2008, may not exceed the greater of—

 

(a)         10 per cent of the respondent’s annual turnover during the preceding financial year; or

 

(b)         R1 000 000.”

 

33.            Section 151(3) of the NCA lists various factors the Tribunal must consider when determining an appropriate administrative fine. We will consider each factor under the sub-headings below.

 

The nature, duration, gravity, and extent of the contravention

34.            The first respondent acted deceitfully toward the applicant, resulting in him unlawfully acquiring an adverse credit listing. The applicant was contacted telephonically and advised that his credit interest was very high and that he would be helped to reduce it. He specifically advised the first respondent’s agent that he did not wish to apply for debt review and that they should cancel the application as they never discussed debt review over the phone. Moreover, he denies that he signed Form 16 electronically on 30 May 2023. He submitted that the electronic signature he appended was for the bank and not for a debt review application. He stated that his credit record speaks for itself and that his creditors can attest to the fact that he can pay his debts. Notwithstanding the foregoing, the first respondent placed the applicant under debt review and uploaded this information of the NCR’s Debt Help System which resulted in his credit profile indicating that he applied for debt review. Thus, the applicant was placed under debt review without his consent.

 

35.            The first respondent’s actions towards the applicant undermine the provisions of the NCA that seek to relieve consumers who are over-indebted and those who are experiencing, or likely to experience, difficulty satisfying all their consumer’s obligations under credit agreements in a timely manner. She misled the applicant into believing that she would help him reduce the interest rates applicable to his credit agreements. In reality, she exploited the applicant’s ignorance and abused the applicant’s personal information for personal gain. Her actions adversely affected the applicant’s credit rating. Abusing the provisions of the NCA to mislead a credit consumer on the pretext of helping him to reduce interest rates for personal gain undermines the debt counselling provisions of the NCA and is unconscionable.

 

Loss or damage suffered as a result of the contravention

 

36.            Given that the applicant could not access credit with a debt review status under his name, the harm caused by the first respondent to the applicant’s credit profile and his ability to access credit is far- reaching.

 

The behaviour of the respondent

 

37.            There is no plausible reason for the first respondent to be unaware of her conditions of registration and her statutory obligations under NCA. The very fact that she elected to become a registered debt counsellor indicates that she is aware of her conditions of registration and the prescripts of the NCA. Notwithstanding, the first respondent failed to comply with her conditions of registration. She did not file an answering affidavit and failed or neglected to comply with the summons issued by the Tribunal.

 

Evidently, the first respondent’s behaviour portrays a total disdain for the applicant, her conditions of registration, the debt counselling provisions of the NCA, and the Tribunal.

 

Market circumstances under which the contraventions occurred

 

38.            It is evident that the first respondent lures unwitting consumers like the applicant by misleading them into thinking that she would help them. Instead, the first respondent’s actions resulted in the applicant acquiring an adverse credit profile listing and not being able to access credit. The first respondent’s misleading marketing indicates that she does not appreciate the effect of her actions on the applicant and other consumers in need of financial assistance.

 

Level of profit derived from the contraventions

 

39.            The Tribunal does not know the level of profit the first respondent derived from the prohibited conduct. It is reasonable, however, to surmise that the first respondent derived a profit from this nefarious conduct.

 

Degree to which the first respondent has co-operated with the NCR

 

40.            The first respondent failed to assist the applicant.

 

Prior contraventions committed by the respondent

 

41.            We are not aware of prior enforcement actions that might have been instituted against the first respondent.

 

The Tribunal’s determination of the appropriate administrative fine

 

42.            The first respondent’s conduct towards the applicant was disrespectful and condescending. She demonstrated a total disregard for her conditions of registration. Such conduct deserves to be visited with an administrative fine that can deter the first respondent and other debt counsellors from engaging in such deceitful and exploitative practices.

 

43.            On a conspectus of the evidence before the Tribunal, an administrative fine of R250 000.00 (Two Hundred and Fifty Thousand Rands) is appropriate.

 

ORDER

 

44.            It is hereby ordered that:

 

44.1.                   The first respondent contravened section 52(5)(c) of the NCA.

 

44.2.                    The first respondent’s contravention of section 52(5)(c) of the NCA is declared prohibited conduct in terms of section 150(a) of the NCA.

 

44.3.                    The first respondent must pay the amount of R250 000.00 (Two Hundred and Fifty Thousand Rands) within 90 days of the issuing of this judgment into the bank account of the National Revenue Fund, the details of which are as follows:

 

Bank:                        Nedbank

Account Holder:        Department of Trade, Industry and Competition

Account type:            Current Account

Branch Name:           Telcoms and Fiscal

Branch code:            198765

Account number:       1[…]

Reference:                 NCT/297314/2023/141(1)(b) and the name of the person or entity making the payment

 

44.4.                    The National Credit Regulator must delete the applicant’s debt review status from its Debt Help System and inform all registered credit bureaus accordingly.

 

44.5.                   There is no order as to costs.

 

Dr A Potwana

Presiding Tribunal Member

 

With Dr M Peenze and Adv C Sassman (Tribunal Members) concurring.



[1] Regulations for matters relating to the functions of the Tribunal and Rules for the conduct of matters before the National Consumer Tribunal, 2007 (as amended) published on 28 August 2007 under GN 789 in Government Gazette No. 30225.

[2] 2008 (2) SA 184 (SCA) at paragraph 43.

[3] 2006 (1) SA 591 (SCA) para 28.