National Credit Regulator v Patmat General Trading CC (NCT/71775/201657(1)) [2017] ZANCT 59 (27 April 2017)

IN

THE NATIONAL CONSUMER TRIBUNAL

HELD

IN CENTURION

Case Number: NCT/71775/2016/57(1)

In the matter between:

THE

NATIONAL CREDIT REGULATOR

APPLICANT

and

PATMAT

GENERAL TRADING

CC RESPONDENT

Coram:

Prof J.M. Maseko – Presiding member

Prof B. Dumisa – Member & Acting Executive Chairperson

Mr X. May

– Member

Date of Hearing – 28 February 2017

JUDGEMENT

AND REASONS

APPLICANT

1. The Applicant in this matter is the National Credit Regulator (NCR), a body established in terms of Section 12 of the National Credit Act 34 of 2005 (the “NCA” or the “Act”) (hereinafter referred to as “the Applicant”). Two of the functions of the Applicant are

1.1 To register credit providers in terms of Section 14 of the Act; and

1.2 To regulate their conduct in terms of Section 15 and other provisions of the Act.

2. At the hearing the Applicant was represented by Ms Leanne Schwartz.

3. The Applicant’s Founding Affidavit is deposed to by Ms Jacqueline Peters: Manager for Investigations and Enforcement in the employ of the Applicant.

RESPONDENT

4. The Respondent (and the Registrant) is PATMAT GENERAL TRADING CC, a close corporation incorporated in terms of the South African laws under Registration Number CK/2007/179446/23, with its address at Office Number 28; Luvhengo Complex, Thohoyandou, in the Limpopo Province.

5. The Respondent is registered as a Credit Provider, with the Applicant, with Registration Number NCRCP7228.

6. The Respondent did not attend the hearing, nor were they represented, despite the necessary proof of service which was provided to the Tribunal.

HEARING

AND APPLICATION TYPE

7. This is an application to the National Consumer Tribunal for the cancellation of registration of the Respondent in terms of Section 57(1)(a) and (c) of the Act.

8. The Respondent did not file any answering affidavit and did not attend the Hearing. Having satisfied itself that the Respondent had been properly served, by examining proof of service which showed that service was effected via registered mail; the Tribunal considered this case as an unopposed matter, and proceeded with it on a default basis.

BACKGROUND

9. The Applicant observed some general contraventions of the Act within the Luvhengo Complex in Thohoyandou; and this prompted a decision by the Applicant to conduct raids on the entities associated with the credit industry within the Complex, especially with regards to credit providers who were retaining consumer instruments. The Respondent operates its business within the same Luvhengo Complex where the Applicant was conducting these raids.

10. On or about the 1st of February 2016, the Applicant initiated a complaint against the Respondent, in its own name, in terms of Section 136(2) of the Act, after its duly appointed Inspector overheard consumers complaining that they were going to collect their instruments from the Respondent. When the Inspector entered the premises to make an enquiry:

10.1 He established that the Respondent was a registered credit provider;

10.2 He saw the owner of the business, later identified as Ms Patricia Tshinavhe, openly holding a plastic bag containing SASSA cards.

10.3 The Applicant formally appointed Avhashoni Kenneth Ratshitali (herein after referred to as “Ratshitali”) as the Inspector, in terms of Section 25 of the Act, to conduct an investigation into the Respondent’s business.

10.4 The Inspector, accompanied by other members of the raiding team and South African Police (SAPS), and based on a search and seizure warrant, raided the Respondent’s business premises. This culminated in an investigation report dated the 10th of February 2016, which forms the basis of this case.

10.5 On the 13th of December 2016, the Applicant commenced proceedings before the Tribunal for an order for the cancellation of the registration of the Respondent in terms of Section 57 of the Act.

ISSUES

TO BE DECIDED BY THE TRIBUNAL

11. The Applicant further that the Respondent repeatedly contravened the Act, more particularly that:

11.1 The Respondent contravened Section 81(2) of the Act, by entering into credit agreements with consumers without conducting affordability agreements;

11.2 The Respondent contravened Section 81(3), read with Section 80(1) of the Act, by engaging in reckless lending.

11.3 The Respondent contravened Section 92(1) read with Regulation 28(1) of the Act, by entering into unlawful credit agreements;

11.4 The Respondent contravened Section 170 read with Regulation 55(1)(b)(iv) of the Act, by not keeping the consumer records in the prescribed manner and form.

11.5 The Respondent contravened Section 93(2) read with Regulation 30 of the Act, by entering into credit agreements with consumers using agreements which are not in the prescribed form;

11.6 The Respondent contravened Section 100(c ) read with Section 101 (d)(ii) and Regulation 42(1) of the Act, by charging interest in excess of the amount allowed by the Act;

11.7 The Respondent contravened Section 90(2)(l)(i) by employing prohibited collection and enforcement practices; and

11.8 The Respondent contravened Section 90(2)(l)(ii) by requiring consumers to reveal personal identification codes and numbers.

CONSIDERATION

OF THE ORDERS APPLIED FOR

12. The Applicant wants the Tribunal to find in their favour that the Respondent contravened Section 81(2) of the Act, by entering into credit agreements with consumers without conducting affordability assessments. The Inspection Report by Ratshitali, attached to the founding affidavit lists several entries that form part of this evidence. Listing them one by one here will serve no additional purpose.

13. The failure by the Respondent to submit most of the required documents gave credence to the Applicant’s contentions that the Respondent contravened most if not all of the many provisions as listed above under “Issues to be decided by the Tribunal”.

Dealing with each one of them here will equally serve no additional purpose.

14. The issue whether the Respondent contravened section 100( c) read with Section 101(d)(ii) and Regulation 42(1) of the Act, by charging interest in excess of the amount allowed by the Act had to be decided based on circumstantial evidence. The Applicant relied more on circumstantial evidence in that the Respondent seemed to be adding excessive amounts in arriving at the repayment amounts, which were all above 20 percent, without necessarily breaking down how the total interest amount was arrived at.

15. The Applicant was able to prove that the Respondent contravened Sections 90, 91, and 133 by employing prohibited collection and enforcement practices. Many South African Social Security (SASSA) debit cards belonging to consumers, and some of their PIN codes were found in the possession of Respondent when the latter’s premises were raided.

16. Based on all the above, the Applicant prayed that the Respondent be declared to have been in repeated contravention of the Act, and hence constituted prohibited conduct in terms of Section 150(a); and

17. That the registration of the Respondent as a credit provider be cancelled with immediate effect, in terms of Section 57(1)(a) of the Act.

18. The Applicant prayed for an Order that the Respondent be ordered to pay an administrative fine in terms of Section 150(1) of the Act. The Applicant has not provided the Tribunal with the necessary financial data that is necessary for the determination of an appropriate administrative fine. The Tribunal was previously faced with such a dilemma in NCR v Werlan Cash Loans t/a Lebathu Finance (NCT/3887/2012/57(1)(P)) where the Applicant did not put any evidence before the Tribunal on the Respondent’s annual turn-over it being unknown to the Applicant. In that case, the Tribunal made an assertion that where there is no basis for calculating the “10 per cent of the respondent’s annual turnover during the preceding financial year” in line with Section 151(2)(a), the Tribunal has the option to simply follow Section 151(2)(b) by imposing an administrative fine not greater than or equal to R1 000 000 (one million rand). Section 151(3) will thus be important to consider when determining an appropriate fine, if any, these factors will be considered: (a) The nature, duration, gravity and extent of the contravention; (b) Any loss or damage suffered as a result of the contravention; (c) The behaviour of the respondent; (d) The market circumstances in which the contraventions took place; (e) The level of profit derived from the contravention; (f) The degree to which the respondent

has co-operated with the National Credit Regulator, or the National Consumer Commission, in the case of a matter arising in terms of the Consumer Protection Act, and the Tribunal; and (g) whether the respondent has previously been found in contravention of the Act, or the CPA, as the case may be. Section 2 of the NCA requires the Tribunal to interpret the NCA in a manner that “gives effect to the purposes of the Act”. The major factors the Tribunal may have to take into consideration when deciding whether or not to impose any administrative fine in this particular case will be that the Respondent does not seem to have adequate financial resources, judging from the fact that they could not even afford attending their own hearing; and that there is no evidence of the Respondent’s previous contraventions of the Act.

19. Granting the Applicant such further and / or alternative relief as the Tribunal may consider appropriate to give effect to the

Consumer’s rights in terms of the Act. The Applicant in its written and oral submissions has covered almost the possible orders that the Tribunal can make in this case.

ANALYSIS

OF THE FACTS AND THE LAW

20. From the above fact and the applicable law, the Applicant has fully satisfied the Tribunal that there were repeated contraventions of the Act, as alleged under different provisions of the Act.

21.The Respondent chose not to defend herself, by not lodging an answering affidavit and also by not attending the hearing, and hence this matter has to be decided on a default basis with all the consequences thereof.

ORDER

Accordingly, the Tribunal makes the following order:

22. The Respondent is declared to have engaged in prohibited conduct in terms of the Act.

23. The Respondent’s registration as a credit provider is hereby cancelled with immediate effect.

24. An administrative fine of R10 000 (ten thousand Rand) is imposed, payable within three months of the date of this judgement.

25. No order as to costs.

DATED ON THIS 27th DAY OF APRIL 2017

_____

Prof B. Dumisa

Member & Acting Executive Chairperson

Prof J Maseko (Presiding Member) and Mr X May (Member) concurring