Blue Chip 2 (Pty) Ltd t/a Blue Chip 49 v Ryneveldt and Others (499/2015) [2016] ZASCA 98; 2016 (6) SA 102 (SCA) (3 June 2016) (2024)

SUPREMECOURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Reportable

CaseNo: 499/2015

In the matter between:

BLUECHIP 2 (PTY) LTD t/a BLUE CHIP49APPELLANT

and

CEDRICKDEAN RYNEVELDT & 26 OTHERSRESPONDENTS

and

Neutralcitation: BlueChip 2 (Pty) Ltd v Ryneveldt (499/15) [2016] ZASCA 98 (03 June 2016)

Coram:Theron, Wallis, Pillay, Petse andWillis JJA

Heard:18 May 2016

Delivered:03 June 2016

Summary:Magistrates’Court Act 32 of 1944 - jurisdiction - s28(1)(d)- cause of action arising wholly within the district or regionaldivision - delivery of notice in terms of s 129(1)(a)of the National Credit Act 34 of 2005 - a material element of thecause of action - delivery thereof outside the area of jurisdictionof the magistrate’s courtis fatal to claim since cause ofaction did not wholly arise within the district or regional division.

ORDER

Onappeal from: FreeState Divisionof the High Court,Bloemfontein (Van Zyl J and Reinders AJ sitting as court of appeal):

The appeal is dismissed.

JUDGMENT

PillayJA (Theron, Wallis, Petse and Willis JJAconcurring)

[1]The appellant, Blue Chip 2 (Pty) Ltd trading as Blue Chip 49, is acredit provider in terms of the National Credit Act 34 of2005 (NCA).It entered into a number of small unsecured credit agreements withthe respondents. These were all entered into atBloemfontein and interms of the respective agreements, specific monthly instalments hadto be paid on specified dates into thebank account of the appellantheld at Bloemfontein. The documents in the record refer mostly toCedrick Dean Ryneveldt (to whomI will refer to as the respondent),presumably as a test case the result of which would be applicable toall others. In the circ*mstances,I will only deal with his case. Itis common cause that he entered into a credit agreement on 28 June2013 in an amount of approximatelyR20000, and defaulted on thepayments. The appellant then sought payment of the total amount dueand payable in terms ofthe agreement, namely R25134.

[2]Being a credit agreement, it fell squarely within the provisions ofthe NCA. Upon the default, the appellant caused a noticein terms ofs129(1)(a) of the NCA (the s129 notice) to bedelivered by registered post to the respondent’s electeddomicilium citandi et executandi,which was in Kimberley and outsidethe Bloemfontein Magistrates’ Court’s jurisdiction. Itwas common cause that thesaid notice reached the post office inKimberley, which duly gave the respondent notice to collect it.

[3]The respondent did not react to the notice within the prescribedperiod and the appellant then issued a letter of demand interms of s56 of the Magistrates’ Court Act 32 of 1944 (the Act). It seemsthat this letter of demand was hand deliveredto him in Kimberleyinforming him of the status of his account and pointing out that thefull amount was due and payable. In responsethereto, the respondentgave written consent in Bloemfontein to judgment in respect of thedebt, interest thereon and costs interms of s58of the Act. The consent document clearly showed that the appellantintended to seek judgmentin the magistrates’ court inBloemfontein.

[4]The appellant thereupon submitted a written request to the clerk ofthe Bloemfontein Magistrates’ Court for judgment tobe enteredin its favour. The clerk referred the request for judgment to themagistrate to be dealt with.

[5]The magistrate called for argument and on 31 July 2014 refused togrant the judgment in favour of the appellant, for lack ofjurisdiction. He reasoned that s28(1)(d) of the Act hadnot been complied with in that the delivery of the s129 notice,being an element of the cause of action, didnot occur within thearea of jurisdiction of the court and consequently he did not havejurisdiction to deal with the matter.

[6] The appellantappealed to the Free State Division of the High Court, Bloemfontein.The high court, although holding that a s129notice ‘doesnot however, form part of the cause of action’, concluded thatthe delivery of the s129 notice ‘completed’thecause of action. Consequently, because the notice was deliveredoutside the area of jurisdiction of the Bloemfontein Magistrates’Court, the claim did not wholly arise within its area of jurisdictionas required by s28(1)(d) of the Act. It reasoned thatthe delivery of the notice is a fact ‘giving rise tojurisdiction’ and since deliveryof the notice took placeoutside the area of jurisdiction of the Bloemfontein Magistrates’Court, that court did not havejurisdiction to deal with the matter.It consequently dismissed the appeal. This court then granted specialleave to appeal.

[7]In this court, it was argued on behalf of the appellant, that theconclusion of both the magistrate and the high court a quowas wrong.Simply, it was the case of the appellant that while delivery of thes129 notice had to be alleged and proved,it was a proceduralstep that did not form part of the cause of action and consequentlydid not have any bearing on s28(1)(d) of the Act. Thecause of action, it was argued, was manifested when the agreement,having been entered into in Bloemfontein, wasbreached inBloemfontein and this was sufficient to found the jurisdiction of theBloemfontein Magistrate’s Court.

[8]There was no appearance for the respondent but the National CreditRegulator was before the court as amicus curiae. Mr Grobler,counselfor the amicus curiae, argued that the delivery of the s129notice outside the area of jurisdiction of the BloemfonteinMagistrates’ Court prevented that court from having thenecessary jurisdiction to hear the matter since the cause of actiondid not arise ‘wholly within the district or regional division’as required by s28(1)(d) of the Act.

[9]The issue therefore to be determined in this appeal is whether thedelivery of the s129 notice constitutes partof the causeof action. There are a number of discordant judgments in themagistrate’s court on this issue. This judgmentwill clarifythe position.

[10]Being a creation of statute, the magistrate’s court derives itspowers from the Act. As was stated in Ndamasev Functions 4 All:[1]

‘Itis well-established that the magistrate’s court has nojurisdiction and powers beyond those granted by the Act.’

Sub-section 28(1)(d)of the Act reads:

’28Jurisdiction in respect of persons

(1)Saving any other jurisdiction assigned to a court by this Act or byany other law, the persons in respect of whom the courtshall,subject to subsection (1A), have jurisdiction shall be the followingand no other:

.. .

(d)any person,whether or not he or she resides, carries on business or is employedwithin the district or regional division, if thecause of actionarose wholly within the district or regional division;

.. . .’

[11]The magistrate examined whether he had the power to deal with thematter. He referred to the decision in Whytev Rathbone.[2]The facts were that the parties had entered into a loan agreement bysigning an acknowledgment of debt within the district of Durban.Nodate(s) for the repayment of the loan was agreed upon. It wastherefore necessary for the defendant to be placed in mora andaletter of demand was posted to him. This letter was not proved tohave been delivered to him within the jurisdiction of the DurbanMagistrates’ Court. The court held that it did not have thenecessary jurisdiction to hear the matter since the cause ofactiondid not wholly arise within the district (of Durban), as contemplatedin s28(1)(d).

[12]The meaning of the expression ‘cause of action’, when theidentically worded predecessor to s28(1)(d)was in operation, was authoritatively laid down in McKenziev Farmers’ Co-Operative Meat Industries Limited[3]where the definition of ’cause of action’, adopted fromCookv Gill (L.R., 8 C.P. 107), was held to be ‘. . . every fact which itwould be necessary for the plaintiff to prove, if traversed, in orderto supporthis right to the judgment of the Court. It does notcomprise every piece of evidence which is necessary to prove eachfact, butevery fact which is necessary to be proved.’

[13]One of the issues in Evinsv Shield Insurance Co Ltd[4]was whether claims for bodily injuries and loss of supportconstituted two separate rights of action under the common law andthe Compulsory Motor Vehicle Insurance Act 56 of 1972 respectivelywhen flowing from the same set of facts. In dealing with thatquestion, the court found it necessary to refer to the term ‘causeof action’. At 838 D-F, Corbett JA, writing forthe majority ofthe court adopted the approach as set out in McKenzie,quoting the definition of ‘cause of action’ referred toin para 12 above. In the same matter, Trollip JA, writingfor theminority, stated at 825 E-H:

‘Istill remain somewhat uncertain whether appellant’s claims forher bodily injuries and her loss of support constitute twoseparaterights of action under the common law and the Compulsory MotorVehicle Insurance Act 56 of 1972 (“the CMVI Act”).Iprefer to use the term “right of action” to “causeof action” because, I think, the former is strictlyandtechnically more legally correct in the present context (cf Mazibukov. Singer 1979 (3) SA 258 (W) at 265 D-G). “Cause of action” isordinarily used to describe the factual basis, the set of materialfacts, thatbegets the plaintiff’s legal right of action and,complementarily, the dependant’s “debt”, the wordusedin the Prescription Act. The term, “cause of action”,iscommonly used in relation to pleadings or in statutes relating tojurisdiction or requiring prior written notification of a claimbefore action thereon is commenced.’(Emphasisadded)

Clearlyboth judgments are in line with McKenzie.Where it is essential to the successful pursuit of a contractualclaim that a letter of demand be sent, then the sending of thatletter of demand is part of the cause of action. In particular wherea statute provides that before an action can be commencedor a claimenforced against a debtor, a notice be given, then the giving of thatnotice is essential to the successful pursuitof the claim andproving that it was given, is part of the cause of action. Compliancewith a directive to serve a notice mustboth be alleged and proved ifa claimant is to succeed and obtain judgment.[5]

[14]The definition of ‘cause of action’ as set out inMcKenziehas stood the test of time and almost one hundred years on, has notbeen altered in any way.[6]There is no compelling argument why it should now be changed.

[15] The purposes of theNCA is broadly described in s3 thereof as being the following:

‘topromote and advance the social and economic welfare of SouthAfricans, promote a fair, transparent, competitive, sustainable,responsible, efficient, effective an accessible credit market andindustry, and to protect consumers’.

TheNCA represents a major overhaul of previous credit regulation and aclean break from the past.

[16] I now turn to theaspect of the s129 notice and whether there is any reason tohold that it does not form part of thecause of action as contendedby the appellant. Section 129(1) of the NCA reads:

‘(1)If the consumer is in default under a credit agreement, the creditprovider -

(a)may draw thedefault to the notice of the consumer in writing and propose that theconsumer refer the credit agreement to a debtcounsellor, alternativedispute resolution agent, consumer court or ombud with jurisdiction,with the intent that the parties resolveany dispute under theagreement or develop and agree on a plan to bring the payments underthe agreement up to date; and

(b)subject tosection 130(2), may not commence any legal proceedings to enforce theagreement before -

(i)first providing notice to the consumer as contemplated in paragraph(a), or section 86(10), as the case may be; and

(ii)meeting any further requirements set out in section 130.’

Thissection obviously accords with the broad purposes of the NCA as setout in s 3 thereof.

[17]It is clear from s129(1)(a)and (b)thatprior to commencing legal proceedings to enforce an agreement, thecredit provider must deliver a written notice to the consumerwhereinattention is drawn to the default in repayment, setting out variousoptions open to him or her whereby the pressure ofthe default couldbe alleviated. In other words, it is a mandatory requirement whichmust be satisfied before judgment can be grantedfor recovery of theoutstanding debt. [7] In Sebolav Standard Bank,[8]para 74 it was held that given the significance of the s129notice, ‘the credit provider must make averments that willsatisfy the court from which enforcement is sought that the notice,on balance of probabilities, reached the consumer’. InKubyanav Standard Bank of South Africa Ltd,[9]para 34, the purpose of a s129 notice was explained as aimingto ‘establish a framework within which the parties tothecredit agreement, in circ*mstances where the consumer has defaultedon her obligations, can come together and resolve theirdisputewithout expensive, acrimonious and time-consuming recourse to thecourts’.

[18]The delivery of a s129 notice is a peremptory step which is apre-requisite for any judgment sought on a claim arisingout of adefault of a credit agreement. The failure to take the necessarysteps prior to judgment, will result in a court refusingto grantjudgment in favour of the claimant. It is a step which is recognisedin the NCA as essential to granting judgment in favourof a claimant.Hence in para 87 of Sebola, it is pointed out that if indeed alitigant has failed to comply with any provision of the NCA,including s129, s130(4)(b) provides for stepswhich may be taken in order to remedy the situation in terms of anorder of the court. A failure to allege andprove compliance withs129(1) (even after s130 procedures) wouldrender a summons excipiable and the matterwould end without judgmentin favour of the claimant being granted.

[19]As was said by Majiedt AJP in Beetsv Swanepoel[10](para 19):

‘.. . a plaintiff must in my view aver compliance with these sections[s 129 and s 130] in the summons or particulars of claim todisclosea cause of action where the suit is based on a credit agreement towhich the Act applies. It is a material averment, theabsence whereofwould render the pleading excipiable. Without the requisite notice, aclaim cannot be enforced.’

Thereason for this is that the pleadings would lack a proper cause ofaction.

[20]In order to disclose a cause of action to enforce a claim emanatingfrom a default of a credit agreement, an averment of compliancewiths129 must be contained in the summons and proved. Delivery of as129 notice forms part of the cause of action.It is anessential component of a plaintiff’s cause of action.[11]It must occur before a cause of action can be said to have arisen.Absent compliance therewith, there would be no cause of action.

[21]The giving of the notice is therefore critical to the question ofjurisdiction in relation to s28(1)(d) of the Act. Sinceit is common cause that delivery of the s129 notice took placeoutside the area of jurisdiction of theBloemfontein Magistrates’Court, the cause of action did not arise ‘wholly within thedistrict or regional division’of that court. It followstherefore that the magistrate was correct in finding that he couldnot deal with the matter for lackof jurisdiction. The high court wasalso correct to dismiss the appeal.

[22]It was also argued on behalf of the appellant that the respondent hadconsented to the jurisdiction of the Bloemfontein Magistrates’Court when he signed the consent to judgment. Mr Botes SC howeverconceded that if that court lacked jurisdiction, the consenttojudgment cannot be relied upon. This is in accordance with s45of the Act. In my view, though not necessary to deal withit herein,s90 and s91 of the NCA would in all probability alsoprohibit consent to jurisdiction in these circ*mstances.

[23]Neither of the parties sought any cost order.

[24] In the result, theappeal is dismissed.

__________________

RPillay

Judgeof Appeal

Appearances:

ForAppellant:FW Botes SC (and L Collins)

Instructedby:

Jordaan Rijkheer Inc,Bloemfontein

For amicuscuriae:SGrobler

Instructedby:

HoneyAttorneys, Bloemfontein

[2]Whyte vRathbone1936 NPD 549.

[3]McKenziev Farmers’ Co-Operative Meat Industries Ltd 1922AD 16 at 23.

[7]Although the word ‘may’ is used in s 129(1)(a),the notice is a mandatory requirement. See NedbankLtd &others v National Credit Regulator & another [2011] ZASCA 35; 2011 (3) SA 581 (SCA) para 8.

[8]Sebola &another v Standard Bank of South Africa Ltd & another[2012] ZACC 11; 2012 (5) SA 142 (CC).

[9]Kubyanav Standard Bank of South Africa Ltd[2014] ZACC 1; 2014 (3) SA 56 (CC).

[10]Beets vSwanepoel[2010] ZANCHC 55.