M C Rijkheer Incorporated t/a Jordaans Rijkheer and Partners v National Credit Regulator and Others (CA157/2016) [2016] ZAECGHC 130 (8 November 2016)

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION, GRAHAMSTOWN

CASE NO. CA 157/2016

In the matter between:

M C RIJKHEER INCORPORATED

Appellant

t/a JORDAANS RIJKHEER & PARTNERS

and

THE NATIONAL CREDIT REGULATOR

First Respondent

THE DEPARTMENT OF JUSTICE AND CONSTITUTIONAL

Second Respondent

DEVELOPMENT

THE BANKING ASSOCIATION OF SOUTH AFRICA

Third Respondent

THE DEBT COUNSELLORS ASSOCIATION

Fourth Respondent

OF SOUTH AFRICA

JUDGMENT

Bloem J.

[1] During January 2016 the appellant instituted an application for declaratory relief set out in its notice of motion over 14 pages. On 21 April 2016 Lowe J dismissed the application. The appellant now appeals against the dismissal of its application, leave to appeal having been granted by the court a quo.

[2] The appellant is a private company duly registered and incorporated in terms of the relevant Companies Act. It describes itself as a “firm of attorneys specialising in inter alia, but specifically the National Credit Act, Act 34 of 2005 (as amended), and more particularly debt review matters in terms of section 86 of the National Credit Act ...”.

[3] The first respondent is the National Credit Regulator, a juristic person established in terms of section 12 of the National Credit Act. The second respondent is cited as the Department of Justice and Constitutional Development (instead of the Minister of Justice and Correctional Services). The third respondent is the Banking Association of South Africa, an industry body representing all the banks registered and operating in South Africa. The fourth respondent is the Debt Counsellors Association of South Africa, a professional body representing debt counsellors in South Africa. None of the respondents opposed the application in the court a quo and this appeal.

[4] The nature of the application is described in the appellant’s founding affidavit, deposed to by an attorney practising as such as a professional assistant at the appellant, as “an application, in terms of the rules regulating the conduct of proceedings of the Magistrate’s Court of South Africa, and the National Credit Act ... and the Regulations ... . The main subject matter of the application, as set out in the prayers and relief as sought and set out in the Notice of Motion, is that direction and clarity be given to the inferior courts within this court’s jurisdiction, based on the relevant Statutes and Rules of Court”.

[5] The appellant is not a debt counsellor. It assists debt counsellors to perform their duties which are set out in section 86 of the NCA which reads as follows:

“86 Application for debt review

(1) A consumer may apply to a debt counsellor in the prescribed manner and form to have the consumer declared over-indebted.

(2) An application in terms of this section may not be made in respect of, and does not apply to, a particular credit agreement if, at the time of that application, the credit provider under that credit agreement has proceeded to take the steps contemplated in section 130 to enforce that agreement.

(3) A debt counsellor-

(a) may require the consumer to pay an application fee, not exceeding the prescribed amount, before accepting an application in terms of subsection (1); and

(b) may not require or accept a fee from a credit provider in respect of an application in terms of this section.

(4) On receipt of an application in terms of subsection (1), a debt counsellor must-

(a) provide the consumer with proof of receipt of the application;

(b) notify, in the prescribed manner and form-

(i) all credit providers that are listed in the application; and

(ii) every registered credit bureau.

(5) A consumer who applies to a debt counsellor, and each credit provider contemplated in subsection (4) (b), must-

(a) comply with any reasonable requests by the debt counsellor to facilitate the evaluation of the consumer's state of indebtedness and the prospects for responsible debt re-arrangement; and

(b) participate in good faith in the review and in any negotiations designed to result in responsible debt re-arrangement.

(6) A debt counsellor who has accepted an application in terms of this section must determine, in the prescribed manner and within the prescribed time-

(a) whether the consumer appears to be over-indebted; and

(b) if the consumer seeks a declaration of reckless credit, whether any of the consumer's credit agreements appear to be reckless.

(7) If, as a result of an assessment conducted in terms of subsection (6), a debt counsellor reasonably concludes that-

(a) the consumer is not over-indebted, the debt counsellor must reject the application, even if the debt counsellor has concluded that a particular credit agreement was reckless at the time it was entered into;

(b) the consumer is not over-indebted, but is nevertheless experiencing, or likely to experience, difficulty satisfying all the consumer's obligations under credit agreements in a timely manner, the debt counsellor may recommend that the consumer and the respective credit providers voluntarily consider and agree on a plan of debt re-arrangement; or

(c) the consumer is over-indebted, the debt counsellor may issue a proposal recommending that the Magistrate's Court make either or both of the following orders-

(i) that one or more of the consumer's credit agreements be declared to be reckless credit, if the debt counsellor has concluded that those agreements appear to be reckless; and

(ii) that one or more of the consumer's obligations be re-arranged by-

(aa) extending the period of the agreement and reducing the amount of each payment due accordingly;

(bb) postponing during a specified period the dates on which payments are due under the agreement;

(cc) extending the period of the agreement and postponing during a specified period the dates on which payments are due under the agreement; or

(dd) recalculating the consumer's obligations because of contraventions of Part A or B of Chapter 5, or Part A of Chapter 6.

(8) If a debt counsellor makes a recommendation in terms of subsection (7) (b) and-

(a) the consumer and each credit provider concerned accept that proposal, the debt counsellor must record the proposal in the form of an order, and if it is consented to by the consumer and each credit provider concerned, file it as a consent order in terms of section 138; or

(b) if paragraph (a) does not apply, the debt counsellor must refer the matter to the Magistrate's Court with the recommendation.

(9) If a debt counsellor rejects an application as contemplated in subsection (7) (a), the consumer, with leave of the Magistrate's Court, may apply directly to the Magistrate's Court, in the prescribed manner and form, for an order contemplated in subsection (7) (c).

(10)

(a) If a consumer is in default under a credit agreement that is being reviewed in terms of this section, the credit provider in respect of that credit agreement may, at any time at least 60 business days after the date on which the consumer applied for the debt review, give notice to terminate the review in the prescribed manner to-

(i) the consumer

(ii) the debt counsellor; and

(iii) the National Credit Regulator; and

(b) No credit provider may terminate an application for debt review lodged in terms of this Act, if such application for review has already been filed in a court or in the Tribunal.

(11) If a credit provider who has given notice to terminate a review as contemplated in subsection (10) proceeds to enforce that agreement in terms of Part C of Chapter 6, the court hearing the matter may order that the debt review resume on any conditions the court considers to be just in the circumstances.”

[6] In the court a quo the appellant sought an order declaring that, in an application in terms of section 86 of the NCA:

6.1. the physical presence of neither the debt counsellor nor the consumer is required when the application is heard by the magistrate;

6.2. it is not a requirement to complete and attach the prescribed Form 16 “as it is not a pre-requisite for a consumer to apply to be declared indebted”;

6.3. service of process:

6.3.1. by way of registered post or by hand may be effected by the debt counsellor or his attorney and need not be effected by the sheriff;

6.3.2. by way of email, fax or registered mail may, in the event of an agreement between interested parties, be effected by the debt counsellor or his attorney and need not be effected by the sheriff;

6.4. the magistrate who hears the application shall:

6.4.1. consider the confirmation of the debt counsellor’s determination of over-indebtedness on the available information at the debt counsellor’s disposal at the time of the debt counsellor’s determination. Should the magistrate confirm the debt counsellor’s determination of over-indebtedness, the magistrate may require further and/or updated information;

6.4.2. consider such application even in circumstances where the consumer’s initial application to the debt counsellor to be declared over-indebted was made longer than one year before the application for debt review is heard.

6.5. the debt counsellor must annex the document(s) required in support of the relief sought where the original documents are unavailable, the debt counsellor must explain, under oath, why they are not attached, in which event copies of those documents should be admissible as evidence;

6.6. legal standing must appear from the description of the parties in the process commencing the application;

6.7. when a debt counsellor refers his recommendations to the Magistrate’s Court, he does not need to attach proof of registration as a debt counsellor, nor proof of payment of renewal fees, he attests to valid registration under oath;

6.8. where the parties reach agreement in terms whereof the credit provider consents to an interest rate other than the rate in the credit agreement, the magistrate may make an order rearranging the consumer’s payment obligations based on the agreed amended interest rate;

6.9. a debt counsellor has substantially complied with section 86 (4) (b) (ii) of the NCA, as read with regulation 24 (2), once he has successfully uploaded the consumer’s details onto the National Credit Regulator’s electronic debt help system;

6.10. it is only the debt counsellor, not the consumer, who can assess the consumer’s position and situation and consider whether the consumer is indeed over-indebted and if a recommendation of over-indebtedness should and can be made to the magistrate’s court hearing the application.

[7] The appellant claimed that debt counsellors experience severe difficulties in Magistrate’s Courts in debt review applications. To assist debt counsellors it launched the application in the court a quo to obtain direction and clarity regarding the requirements of an application for debt review in terms of section 86 of the NCA.

The appellant referred to an order granted by the North Gauteng Division of the High Court on 26 March 2015[1] in which an order in the same terms as the order sought in the court a quo was granted. Ms Collins, counsel for the appellant, advised us that no judgment was delivered in that matter, primarily because the same respondents in this appeal also did not oppose that application.

[8] Since a High Court derives its jurisdiction to grant a declaratory order from section 21 (1) (c) of the Superior Courts Act[2], it is not surprising that the relief sought by the appellant was based on that section which reads as follows:

“21 Persons over whom and matters in relation to which Divisions have jurisdiction

(1) A Division has jurisdiction over all persons residing or being in, and in relation to all causes arising and all offences triable within, its area of jurisdiction and all other matters of which it may according to law take cognisance, and has the power-

(a) ...;

(b) ...;

(c) in its discretion, and at the instance of any interested person, to enquire into and determine any existing, future or contingent right or obligation, notwithstanding that such person cannot claim any relief consequential upon the determination.”

[9] One of the jurisdictional requirements of section 21 (1) (c) is that the party which seeks a declaration of rights must be an “interested person”. It is only once the court has satisfied itself that the applicant has an interest in “any existing, future or contingent right or obligation” that the court can exercise its direction by deciding either to refuse or grant the declaratory order. A two-stage approach accordingly has to be followed to assess whether or not a declaratory order should be made. That two-stage approach was stated as follows by Jafta JA (as he then was) in Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd[3] at 213E-G:

“During the first leg of the enquiry the Court must be satisfied that the applicant has an interest in an 'existing, future or contingent right or obligation'. At this stage the focus is only upon establishing that the necessary conditions precedent for the exercise of the Court's discretion exist. If the Court is satisfied that the existence of such conditions has been proved, it has to exercise the discretion by deciding either to refuse or grant the order sought. The consideration of whether or not to grant the order constitutes the second leg of the enquiry.”

[10] An “interested person” entitled to apply for a declaration of rights has been described as “a person who has a direct and real interest in the question of law enquired into”[4].

[11] In terms of section 21 (1) (c) an interested person may apply to a High Court for a declaratory order in respect of any existing, future or contingent right or obligation. Those rights must attach to the person who seeks the declaratory order and not be a declaration of someone else’s rights.[5]

[12] Lowe J dismissed the application for two reasons. Firstly, he was not persuaded that the appellant is an interested person in the subject matter that he was called upon to adjudicate or that any right attaches to it personally. Secondly, the learned Judge found that the appellant did not demonstrate an interest in an existing, future or contingent right.

[13] In her heads of argument Ms Collins submitted that, despite the fact that the appellant is not a debt counsellor, it nevertheless is an interested person for purposes of section 21 (1) (c). For that submission counsel relied on inter alia an article by G E Devenish[6] wherein the author examined the historical evolution and present status of locus standi in terms of section 38 of the Constitution.[7] In particular, counsel referred to the following paragraphs in that article:

“As a result of the influence of several reported judgments a rule known as that in Patz v Greene[8] emerged. This determined the position in our law with regard to the right to enforce statutory provisions as follows:

(a) Where a statute was enacted in the interests of a particular class of persons, any member of that class could take action to enforce it, irrespective of whether he personally was adversely affected by non-compliance; and

(b) Where a statute was enacted in the public interest, any member of the public who could show that he was adversely affected by non-compliance with the statute would have locus standi to enforce it.

Obviously, if a person had a sufficient direct and pecuniary interest such person would have locus standi.”

[14] It is apparent from the heading of the article that its aim is to address the implications of section 38 of the Constitution on the common law concept of standing. In the article Devenish did not address whether or not section 38 of the Constitution amended the general requirement in the South African law prior to the inception of section 38 of a sufficient interest for purposes of locus standi. Neither in the court a quo nor before us did the appellant submit that a right in the Bill of Rights has been infringed or threatened. Absent proof of such infringement or threatened infringement the court cannot grant a declaration of rights in terms of section 38 of the Constitution.

The appellant did not place reliance on section 38 of the Constitution for purposes of standing. Its case is that it has

locus standi because it is an interested person as envisaged in section 21 (1) (c) of the Superior Courts Act.

[15] Patz v Greene & Co had nothing to do with the declaration of rights. It concerned the enforcement of statutory provisions. The applicant therein made an application to court for an interdict to restrain the respondents from continuing their illegal business on the ground that trading on claim property was expressly prohibited by statute, that the respondents were not licensed as required by law and that the applicant sustained great damage by reason of the respondents’ illegal competition. One of the issues raised was whether the applicant could bring an application for an interdict against the respondents who were carrying on business on claim property without the necessary licences. Solomon J found that every person has the right to protect himself by approaching a court of law against loss caused to him by the conduct of another, which is expressly prohibited by statute. Where the act is expressly prohibited in the public interest, then any member of the public is entitled to his remedy provided he can demonstrate that such act caused him damage. The learned Judge found that the respondents were indeed prohibited by the statute from carrying on business on claim property “and if the applicant can satisfy the Court that he is being injured by such business ..., he has in my opinion an action for damages and for an interdict.”

[16] With respect, neither the article by Devenish nor Patz v Greene & Co is of assistance to the appellant.

[17] At the hearing Ms Collins conceded that, on the papers, the appellant did not demonstrate a direct interest in the subject matter of the appeal. In my view that concession was correctly made. Counsel made that concession when she could not point to an authority, other than the order issued in van der Hoven Attorneys and The National Credit Regulator and three others,[9] in support of the submission that she made in her heads of argument, namely, that despite the fact that the appellant is not an interested person, it is nevertheless entitled to a declarator.

[18] In the court a quo the appellant sought a declaration of rights relating to debt counsellors and consumers. It is the appellant’s case that it acts for debt counsellors in applications for debt review in terms of section 86 of the NCA. It is when the appellant acts in that capacity that it is exposed to the problems allegedly experienced by debt counsellors. It therefore brought the application in the court a quo to obtain a declaration of rights in respect of a subject matter in which it does not have a legal interest. It brought the application to obtain a declaration of debt counsellors’ rights. The fact that the appellant may be affected by the provisions of section 86 of the NCA when it assists debt counsellors does not convert its interests in its clients’ affairs or well-being into the legal interests required for purposes of section 21 (1) (c) of the Superior Court Act.

[19] The finding by the court a quo, that the appellant failed to demonstrate that it is an interested person, as required by the first jurisdictional factor or that any right attaches to the appellant personally, cannot be faulted. That finding is upheld. That being the case, the necessary conditions are not present for the court to exercise its discretion by deciding whether to refuse or grant the declaratory order. In the circumstances, the appellant failed to establish that it has locus standi to obtain a declaration of rights. Its appeal must therefore be dismissed.

[20] In the result, the appeal is dismissed.

_______________________

G H BLOEM

Judge of the High Court

Griffiths J,

I agree

_________________________

R E GRIFFITHS

Naidu AJ,

V NAIDU

Acting Judge of the High Court

For the appellant:

Adv L Collins, instructed by M C Rijkheer Inc, Bloemfontein and Netteltons Attorneys, Grahamstown.

For the respondents:

No appearance

Date of hearing:

31October 2016

Date of delivery of the judgment:

8 November 2016

[1] In the matter between van der Hoven Attorneys and The National Credit Regulator and three others, case number 10918/2015.

[2] Superior Courts Act, 2013 (Act No. 10 of 2013).

[3] Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd 2005 (6) SA 205 (SCA).

[4] Transvaal Agricultural Union v Minister of Agriculture and Land Affairs and others (National Land Committee, as amicus curiae)(No1) 2003 (4) SA 397 (LCC) at 403E-F.

[5] Asmal v Asmal and others 1991 (4) SA 262 (N) at 265H referred to with approval in Unicorn Lines (Pty) Ltd v Commissioners of Customs and Excise and another 1997 (1) SA 369 (D) at 375C-D.

[6] Locus standi revisited: Its historical evolution and present status in terms of section 38 of the South African Constitution, published in De Jure, 2005 page 28.

[7] Section 38 of the Constitution of the Republic of South Africa, 1996 reads as follows: “38 Enforcement of rights Anyone listed in this section has the right to approach a competent court, alleging that a right in the Bill of Rights has been infringed or threatened, and the court may grant appropriate relief, including a declaration of rights. The persons who may approach a court are- (a) anyone acting in their own interest; (b) anyone acting on behalf of another person who cannot act in their own name; (c) anyone acting as a member of, or in the interest of, a group or class of persons; (d) anyone acting in the public interest; and (e) an association acting in the interest of its members.”

[7] Section 38 of the Constitution of the Republic of South Africa, 1996 reads as follows:

“38 Enforcement of rights

Anyone listed in this section has the right to approach a competent court, alleging that a right in the Bill of Rights has been infringed or threatened, and the court may grant appropriate relief, including a declaration of rights. The persons who may approach a court are-

(a) anyone acting in their own interest;

(b) anyone acting on behalf of another person who cannot act in their own name;

(c) anyone acting as a member of, or in the interest of, a group or class of persons;

(d) anyone acting in the public interest; and

(e) an association acting in the interest of its members.”

[8] Patz v Greene & Co 1907 TS 427 at 31.

[9] Counsel informed us that a similar order was also granted on an unopposed basis in the Free State Division of the High Court.