Blue Chip 2 (Pty) Ltd T/A Blue Chip 49 v Ryneveldt and Others (A233/2014) [2015] ZAFSHC 70 (19 March 2015) (2024)

IN THE HIGH COURT OFSOUTH AFRICA

(FREE STATE DIVISION,BLOEMFONTEIN)

Appeal no. A233/2014

DATE: 19 MARCH 2015

In the matter between:

BLUE CHIP 2 (PTY) LTD t/a BLUE CHIP49.......................................................................Appellant

And

CEDRIC DEAN RYNEVELDT & 26OTHERS...............................................................Respondents

NATIONAL CREDITREGULATOR............................................................................AmicusCuriae

CORAM: VAN ZYL, J et SJ REINDERS, AJ

HEARD ON: 2 MARCH 2015

JUDGMENT BY: S J REINDERS, AJ

DELIVERED ON: 19 MARCH 2015

[1] The Magistrate Bloemfontein wasapproached in accordance with the provisions of Section 58 of theMagistrate’s Court Actno. 32 of 1994 (“the Act”)for default judgment against various defendants.

[2] Having perused the applications fordefault judgment, the Magistrate was uncertain as to whether thewhole cause of action arosewithin his jurisdiction and raised thesaid concern as he was compelled to do.

[3] It was common cause before theMagistrate that the plaintiff (now appellant) is a registered creditprovider in terms of Section40 of the National Credit Act (NCA) and,as such has entered into a number of unsecured small and intermediatecredit agreementswith the relevant respondents herein. Therespondents however were not resident within the Court’sjurisdiction but allegationswere made in affidavits in terms ofRules 4(2) read with Rule 12(6)A of the rules regulating the conductof the proceedings inthe Magistrate’s Courts that the wholecause of action arose within its jurisdiction. When the respondents’respectiveaccounts fell in arrears, the appellant caused notices interms of Section 129 read with Section 130 of the NCA to be deliveredby registered post to addresses outside the Court’sjurisdiction. The appellant attached the registered mail receipts aswell as the track-and-trace reports indicating that the notices atleast reached the respondents’ respective post officesand wereaccordingly notified of the awaiting registered mail. Therespondents failed to act upon these notices and appellantissuedletters of demand to these same addresses in terms of Section 56 ofthe act informing them that they are in default of theobligations interms of the credit agreements and that these amounts are due andimmediately payable. These letters of demandall appeared to havebeen hand-delivered and the respondents resultantly consented tojudgment for the amount of the debt, interestand costs claimed interms of Section 58 of the act.

[4] Having heard argument, the LearnedMagistrate on the 31st July 2014 in a comprehensive written judgmentcame to the conclusionthat the delivery of the Section 129 notice isa facta probanda and therefore forms part of the cause of action,where the plaintiffclaims repayment of a loan governed by the NCA. In coming to the said conclusion, the Magistrate considered himselfto be boundby decisions like African Bank v Additional MagistrateMayambo N.O. and Others 2010 (6) SA 298 GNP at 311 A – B, whereit was inter alia stated that the credit provider’s cause ofaction is not complete unlessthe Section 129 notice or a Section86(10) notice has been given and that the allegation (of compliancewith Section 129(1)(a)or Section 86(10)) completes a cause ofaction. The Magistrate was furthermore fortified by the decision inBeets v Swanepoel (2010) JOL 26422 (NC), where Majiedt J (as he thenwas) held that the statutory pre-enforcement notice forms part of thecause of action and thatthe credit provider must aver compliance todisclose a cause of action where the suit is based on a creditagreement, the absenceof which could render the pleading excipiable. Reliance was furthermore placed on Absa Technology Finance SolutionsLtd v Pabi’sGuest House CC and Others 2011 (6) SA 606 (FB)where Kruger J held at par. [21] that Section 129(1)(b)(i)unequivocally prohibits the credit provider from commencing legalproceedings prior to notice being given to the consumer ascontemplated in the act and that proof of the notice forms part ofthe facta probanda in an action for specific performance orcancellation.

[5] Having concluded that the deliveryof the Section 129 notice forms part of the cause of action, theMagistrate investigatedwhether the whole cause of action arose inBloemfontein, since these notices were delivered in districts outsideof the Court’sjurisdiction. He relied on Whyte v Rathbone 1936 NPD 549, wherein it was held that the whole cause of actioncould not have arisen in the jurisdiction of the Court since a letterof demandwhich had to complete the cause of action was dispatched toanother district. Accordingly, the Magistrate refused to grantjudgmentas requested with the resulting effect that the appellant,in order to obtain judgment, would have to follow the defendants tohis/her particular magisterial district.

[6] Not satisfied with the effect ofthis ruling, the appellant now in essence contends that theMagistrate erred in that a Section129 notice is merely a peremptoryprocedural requirement prior to the enforcement of litigation andthat it cannot be said thatsuch notice forms part of a cause ofaction based on the breach of an agreement between the parties.

[7] The respondents decided not toparticipate in the appeal. The National Credit Regulator (“NCR”)was granted reliefto intervene in the appeal as amicus curiae by anorder of Moloi J on the 29th January 2015. The NCR believes that dueto thecontentious issue raised in the appeal, its intervention isnecessitated. Mr Grobler, appearing on behalf of the NCR (and towhomI am indebted for his comprehensive heads and argument) agreeswith the appellant that the Section 129 notice only serves as apre-litigation requirement. He however, submits that the true answerin the appeal is to be found in the proper consideration ofthe term“cause of action arising”. His view is that the appealshould fail in that a credit provider must allegeand provecompliance with Section 129 and as such same is a fact “givingrise to jurisdiction” which needs to be setout and proved, forjurisdictional purposes.

[8] Mr Botes SC (appearing with Mrs LeRoux) and Mr Grobler as amicus curiae do not seek any cost ordersregardless of the resultof the appeal and agrees that no order as tocosts should be made.

[9] To my mind a clear distinction mustbe made between the cause of action that a plaintiff must set out inits summons and theprovisions of Section 28(1)(d) of the Act.

[10] African Bank v Mayambo supra at311, par. (b) (with reference to what is to be stated in the summons)concluded:

“It follows that where the actionagainst a consumer is commenced by way of summons, the summons mustcontain an allegationthat either ss 129(1)(a) or 86(10) has beencomplied with or an allegation that notice was not necessary, statingthe reason.”

And later –

“That is so because theallegation completes a cause of action and also because the consumermust be aware that the allegationis made.”

At 311 C.

[11] Section 129(1)(a) requires acredit provider to draw the default to the notice of the consumer inwriting before commencingany legal proceedings to enforce a creditagreement. This includes legal proceedings to cancel the agreement. (Nedbank Limitedand Others v National Credit Regulator and Another 2011 (3) SA 581 (SCA) at 589 par. [12]). Whilst Section 129(1)(b)seems to prohibit the commencement of legal proceedings, Section 130has theeffect that such an action is not void.

“Thus, while Section 129(1)(b)appears to prohibit the commencement of legal proceedings altogether(may not commence), Section130 makes it clear that where action isinstituted without prior notice, the action is not void. Far fromit. The proceedingshave life, but a Court ‘must’adjourn the matter, and make an appropriate order requiring thecredit provider to completespecified steps before resuming thematter. The bar on proceedings is thus not absolute, but onlydilatory. The absence of noticeleads to a pause, not to nullity,but to deduce this, it is necessary to read Section 129 in the lightof Section 130. Section129 prescribes what a credit provider mustprove (notice as contemplated) before judgment can be obtained,whilst Section 130 setsout how this can be proved (by delivery).”

Sebola v Standard Bank 2012 (5) SA 142CC at 160 par. B - D

[12] In Investec Bank Limited t/aInvestec Private Bank v Ramurunzi 2014 (4) SA 394 (SCA), the SupremeCourt of Appeal had to pronounce on the question whether a summonsserved before the requisite notice in termsof Section 129 of theNational Credit Act has been delivered to the consumer, interrupt therunning of prescription. Lewis JA,writing on behalf of the Courtposed the question in the following terms:

“Is a summons of no effect untilthe Section 129 notice has been served?” p. 395, par. G.

[13] Relying on the Sebola-matter(supra) the Court found that Section 130 regulates debt procedures inCourt and it ensures thatany shortcomings in the pre-summonsenforcement procedure is made good which is for the benefit of theconsumer. (At p. 400, par.C). The Court came to the conclusionthat the summons interrupted the running of prescription when it wasserved on Mr Ramurunzi. The High Court could not, however, grant ajudgment against him until, after adjourning the matter for thispurpose, a Section129 notice was delivered to him, - at 401, par. B– C.

[14] In my view, a plaintiff (where theNCA is applicable) have to aver in his summons, compliance withSection 129 thereof. Thepurpose thereof is to take the barriersaway which prohibits such a plaintiff to proceed with the enforcementprocedure. It enlightensthe Court that the procedural requirementof notice has been met (or not met). It does not however, form partof the cause ofaction that has to be alleged in the summons. It ismerely a peremptory procedural requirement and a plaintiff has toallege compliancetherewith or why same is not applicable. In casu,the cause of action remains the conclusion of the contract and thebreach thereof. The Section 129 notice therefore does not become anelement of the contract or to the breach thereof. It howevercompletes thecause of action. Sebola supra at p. 166, par. G.

[15] Section 28(d) of the Magistrate’sCourt Act determines:

“(1) saving any otherjurisdiction assigned to a Court by this act or by any other law, thepersons in respect of whom theCourt shall, subject to sub-section(1A), have jurisdiction shall be the following and no other:

(a) …

(b) …

(c) …

(d) Any person, whether or not he orshe resides, carries on business or is employed within the districtor regional division, ifthe cause of action arose wholly within thedistrict or regional Court.”

A Magistrate’s Court is acreature of statute and it is well-established that a Magistrate’sCourt has no jurisdictionor powers beyond those that were granted bythe act. Ndamase v Functions 4 All 2004 (5) SA 602 (SCA) at 605 G. Mason Motors (Edms) Bpk v Van Niekerk 1983 (4) SA 406 (TPA) at 409 D– F. In Veneta Mineraria Spa v Carolina Collieries’ (Pty)Ltd 1987 (4) SA 883 AD at 886 D, “jurisdiction” wasdescribed as “a lawful power to decide something in a case orto adjudicate upona case, and to give effect to the judgment, thatis, to have the power to compel the person condemned to makesatisfaction.”

[16] For purposes of jurisdiction thewords used in Section 28(1)(d) is not to be understood to mean onlythe cause of action (towit the contract in casu) as set out in thesummons. In Bisonboard Ltd v Braun Woodwork and Machinery (Pty) Ltd[1990] ZASCA 86; 1991 (1) SA 482 (A) at 486 D – E, the appellate division (as itthen was) interpreted “causes of action arising” to be“legalproceedings duly arising”.

[17] Jafta JA writing on behalf of thefull bench of the Supreme Court of Appeal referred with approval tothe Bisonboard-matterand further stated:

“Plainly, what is meant in theabove interpretation is that ‘causes arising’ does notrefer to causes of actionbut to all factors giving rise tojurisdiction under the common law. Of course, such factors do notexclude a cause of action. It is by now well-established that, inappropriate cases, a Court which has jurisdiction over the areawithin which a cause ofaction arose is competent to decide a matteron that basis alone.”

Cordiant Trading CC v Daimler ChryslerFinancial Services 2005 (6) SA 205 (SCA) at 211 C – E

[18] The provisions of Section 28(1)(d)is a departure from the common law rule actor sequitur forum rei,which requires a defendantto be sued in the district where heresides or carries on business. The right of a plaintiff to make useof this special jurisdictionis therefore restricted, and he may suethe defendant under this provision only if the cause of action arosewholly within thedistrict. (Jones & Buckle, The Civil Practiceof the Magistrate’s Court in South Africa, 10th Ed, Vol. 1 Act104). Rule 5(6)(a) accordingly requires that if a defendant is citedunder the jurisdiction conferred upon the Magistrate’s Courtbythis section, the summons must contain an averment that the wholecause of action arose within the district. Attached to thecompliance affidavit (on behalf of the appellant in the Magistrate’sCourt) was the relevant track-and-trace report (of theSection 129notice) which indicated that the item had been delivered to Mr VanRyneveldt on the 27th November 2013 in Kimberley. It is common causethat Kimberley does not fall within the magisterial district of theMagistrate’s Court of Bloemfontein. It was accordinglyincumbent upon the appellant for jurisdictional purposes to allegeand prove that the said notice was deliveredto the Respondents. (Delivery on the basis as set out in Sebola supra at 166 G). Theappellant’s cause of action wouldbe completed therefore on“receipt” of the Section 129 notice, which in thisinstance is outside the territorial andjurisdictional area of theMagistrate.

[19] As alluded to above, a Section 129notice has been described as a gateway provision or a newpre-litigation layer to the enforcementprocess. One of the means bywhich the legislation expressly provides for its purposes to bepursued is consensual resolution. “Section 129(1) is pivotalto this. It precludes legal enforcement of a debt before the creditprovider has suggested tothe consumer that he or she explorenon-litigious ways to purge the default. Specifically, the noticemust propose that the defaultin consumer refer the credit agreementto a debt counsellor, alternative dispute resolution agent, consumercourt or Ombud, withthe intent that the parties resolve theirdispute, or agree on a plan to remedy the default.” Sebolasupra at 158, par.F.

In order to obtain judgment, theplaintiff will therefore have to prove delivery of the Section 129notice in terms of Section 130. Where default judgment is sought,the consumer’s lack of opposition will entitle the Court fromwhich enforcement is sought,to conclude that the credit provider’saverment that the notice reached the consumer is not contested. Ifit is contestedand the consumer asserts that the notice went astrayafter reaching the post office, or was not collected, or not attendedto,the Court will have to make a finding whether, despite the creditprovider’s proven efforts, the consumer’s allegationsaretrue and if so, act in accordance with Section 130(4)(b). Sebolasupra at 166, par. [77] to [167], par. A

[20] In Nedbank v National CreditRegulator 2011 (3) SA 581 (SCA) at 590 (O), par. 14, the SupremeCourt of Appeal stated the following:

“One of the objects of the NCA isthe provision of a consistent and accessible system of consensualdispute resolution. Anotice in terms of Section 129(1)(a), however,does not exclude the resolution of a dispute relating to a specificcredit agreementin this manner. The purpose of a Section 129(1)(a)notice is a resolution of a dispute and the bringing up to date ofpaymentsunder a specific credit agreement. While it is a step priorto the commencement of legal proceedings, it is also the first stepthe credit provider has proceeded to take to enforce that agreement.”

[21] So seen, the giving and receivingof the notice is a fact “giving rise to jurisdiction”which needs to be set outand proved to vest jurisdiction in terms ofSection 28(1)(d).

[22] One of the factors so giving riseto jurisdiction, was not within the jurisdiction of the Magistrate’sCourt of Bloemfontein,but in fact Kimberley and other Magisterialareas where the cause of action on “receipt” of theSection 129 noticewas completed.

[23] The appellant submitted that thefinding that the Magistrate’s Court don’t havejurisdiction in casu have far-reachingeffects in that it directlyimpacts both on the common law as well as the very purpose of theNCA, with specific reference to thepre-amble thereof. Therespondent submitted that the appellant may still enforce itsperceived rights in the proper forum. Thereis no reason why MrRyneveldt and the other consumers cannot be sued where they reside. Bertelsmann J in Absa Bank Limited v Myburgh 2009 (3) SA 340 TPD,authoritively deals with the avowed aims of the NCA to lighten thefinancial burden which the conclusion of a credit agreementmayimpose on a consumer. Although it dealt with the question whether aHigh Court should deal with the matter where a Magistrate’sCourt has concurrent jurisdiction the Court’s remarks regardingthe purpose of the act to protect consumers and the way theactshould be interpreted is apposite:

“In instances of this nature,purposive interpretation is therefore called for. The Act isindubitably aimed at protectingthe consumer’s fundamentalrights to dignity, equality, non-discrimination and fairadministrative and trial procedures andmust be purposivelyinterpreted for that reason alone …” At 346, par. G and347 par. B

[24] In casu, the appellant realized atthe time of the conclusion of the agreement that the respondents didnot reside within theMagistrate’s Court jurisdiction inBloemfontein. He can hardly be heard to complain at this stage thatit is inconvenientor expensive to follow the Respondents to thejurisdictional area where they reside. It is likewise inconvenientand expensivefor the consumer to litigate in an area where he/shedoes not reside.

[25] In the circ*mstances, and for thereasons set out herein, I am not convinced that the Magistrate can befaulted for findingthat he has no jurisdiction to entertain thematters. Accordingly the following orders are made:

25.1 The appeal is dismissed.

25.2 No order as to costs.

S. J. REINDERS, AJ

I agree.

C. VAN ZYL, J

On behalf of the appellants: Adv. F.W. Botes SC with Adv. L. le Roux

Instructed by: Jordaans RijkheerInc.

BLOEMFONTEIN

On behalf of the amicus curiae: Adv.S. Grobler

Instructed by: Honey Attorneys

BLOEMFONTEIN