---

NATIONAL CONSUMER TRIBUNAL

HELD AT NATIONAL CONSUMER TRIBUNAL – CENTURION

CASE NO:NCT/40/2009/149(1)(P)

NCT/41/2009/149(1)(P)

NCT/42/2009/149(1)(P)

NCT/43/2009/149(1)(P)

NCT/44/2009/149(1)(P)

NCT/49/2009/149(1)(P)

NCT/60/2009/149(1)(P)

DATE:20/04/2010

In the matter between

GLOBAL PACT 417(PTY) LTD................................................................................... Applicants

BAZISE TOURS CC,

ALTIOUS TRADING 232 (PTY) LTD,

DOVACS INVESTMENT 860 (PTY) LTD,

SIZISA UKHANYO TRADING 398 CC,

COALITION TRADING 917 CC,

DULSIE TRANSPORT CC

AND

MERCEDES BENZ FINANCIAL SERVICES (PTY) LTD......................................... Respondent

ORDER AND REASONS FOR ORDER

(1) These are applications for Interim Relief, as catered for in Section 149 of the National Credit Act (NCA), Act 34 of 2005.These seven cases involving Mercedes Benz Financial Services (MBFS) are all based on common grounds. Even though this was not a class action matter, the seven cases were all heard in one setting, with each of the seven applicants given adequate time to present their individual circumstances.

Background

(2.1) This was effectively a BEE Initiative by Mercedes Benz Financial Services, whereby the latter wanted to promote the "Owner-Driver Concept" when selling the Mercedes Benz trucks valued at over One million Rands (R1m) each and trailers costing less than R1 million.

(2.2) The Principal Debt for each of these businesses was valued at least Over One Million Four Hundred Rands (R1.4m).

(2.3) At one stage or the other, each one of these truck owners found themselves being in arrears in their monthly payments towards the MBFS.

(2.4) MBFS started with legal processes against the truck owners.

(2.4.1) Putting these debtors on terms;

(2.4.2) Going to court and even for debt agreement enforcement purposes

(2.4.3) Started repossessions

(2.5) It is at this time that the affected truck owners came to the National
Consumer Tribunal (NCT) for redress.

The Tribunal heard the applications on 3 November 2009 and on the same day dismissed these on the basis that it (the NCT) lacked the necessary jurisdiction under the NCA. The full reasons for our decisions are discussed below.

3.The Applicants' Case

(3.1) The applicants wanted to have their arrears written off.

(3.2) They wanted their monthly instalments to be significantly reduced.

(3.3) They argued that the duration of their credit agreements must be increased by a year, in order to enable them to pay lower monthly installments.

(3.4) The applicants further argued that this case must not just be argued and decided on purely legalistic basis, based on the papers.

(3.4.1) They argued that they were used as "guinea pigs" by MBFS, in the latter's endeavour to increase its truck sales.

(3.4.2) They argued that there were promises made by MBFS to provide some leads (work) for them. Applicants argue that the promises on providing them with work never materialised.

4. The Respondents' (MBFS) Case

The respondent, (MBFS), argued that

4.1 The National Consumer Tribunal does not have the jurisdiction and/or authority to deal with this matter, as according to them, Section 4(1 )(a) and (b) of the NCA show that the transactions under consideration here do not fall within the jurisdiction of the National Credit Act.

4.2 They further argued that the NCT does not have the authority to amend, or suspend the interest rates, legally agreed to by parties at the time of finalisation of transactions.

4.3 They further argued that the NCT does not have the authority to extend the period of debt repayment.

4.4 They finally argued that the NCT does not have the authority to order the writing-off of balances due and payable to the credit providers.

5. The Principal Debts of the Various Applicants

5.1 Global Pact 417 (Ptv) Ltd: NCT/40/2009/149(1)fP)

They purchased a Mercedes Benz 2650LS/33 Actras MP2 truck. The principal debt was R1 614 376.42

5.2 Bazse Tours cc: NCT/41/2Q09/149(1)(P)

5.2.1 They purchased one Freightliner Argosy 90 DDC truck. The principal debt was R1 537 954.25

5.2.2 They purchased a second Freightliner Argosy 90 DDC truck. The principal debt of this second truck was R1 531 924.57

5.2.3 They purchased two Semi-Trailers, one at R1 061 700.70 and the second one at R1 060 337.55

5.3 Altious Trading 232 (Ptv) Ltd: NCT/42/2009/149f1)(P)

They purchased a Mercedes Benz 2644LS/33 Actros MP2 truck. The principal debt was R1 578 961.33

5.4 Kovacs Investments 860 (Ptv) Ltd: NCT/43/2009/149(1)(P)

They purchased a Freightliner Argosy Truck and a refrigerated Tridem Trailer. The principal debts were as follows:

Truck R1 067 619.50 Trailer R 739 913.96

5.5 Sizisa Ukhanvo Trading 398 cc: NCT/44.2009/149(1KP)

They purchased two Mercedes Benz 2650LS/33 Actros MP2 trucks. The principal debt for each of these trucks was R1 579 321.34 They also purchased four CTS Tandem Semitipper Frontline Trailers. The principal debt for each of these trailers was R448 857.74

5.6 Coalition Trading 917 cc: NCT/49/2009/149/(1HP)

They purchased a Mercedes Benz 2650LS/33 Actros MP2 trucks. The principal debt for this truck was R1 614 376.42 They also purchased two CTS Tandem Semitipper Frontlin Trailers. The principal debt for each of these trailers was R448 857.74

5.7 Dulcie Transport cc: NCT/60/2009/149/(1)(P)

The applicant entered into six (6) finance agreements with Mercedes Benz Financial Services.

They purchased two Mercedes Benz 2650LS/33 Actros 2 trucks with a principal debt of each at R1 259 631.00

They also purchased four CTS Trailer Superlinks. The principal debt of each of these trailers was R252 769.00

6. Specific Submissions By The Parties on Jurisdiction

6.1 The applicants made various references to Subsection 4(1 )(a) and 4(1 )(b), Subsection 7(1), and Subsection 9(4)(b) of the National Credit Act. It was their assertion that we consider all these NCA provisions in arriving at our final decisions. They argued that Subsection 9(4)(b) does make their businesses, which operate as juristic persons, subject to the protections under the NCA; and hence eligible to apply for Interim Relief at the NCT.

6.2 In their detailed Opposing Affidavits, in terms of Rule 13(3), the respondents, MBFS, through their legal Administrator, Kavitha Kaylaser, referred us to the provisions of subsections 4(1 )(a) and 4(1 )(b) of the NCA.

They proceeded to write:

"Resulting from the aforesaid I am therefore of the opinion that the National Consumer Tribunal does not have the jurisdiction and/or authority to deal with the aforesaid matter and the consumer and/or Applicant in this instance is specifically excluded from the Act in that the agreements concluded with the defendant the principal debt exceeds that of R250 000.00, alternatively the assets value is above R1 000 000.00, alternatively the assets value or annual turnover is less than R1 000 000.00. I refer to the recent matter before The consumer court between Hunky Dory (Pty) and the Standard Bank of South Africa¹ in which the Constitutional Court confirmed that companies as provided in the National Credit Act and that such an exclusion is in no manner whatsoever unconstitutional."

7. Ruling

Having considered all the issues brought in front of us, on paper and through oral submissions today, it is clear that the whole process involved in the manner in which these trucks and trailers were sold, to the applicants, through the Mercedes Benz Financial Services, was not just a straight-forward commercial process that we normally find between normal commercial enterprises and commercial car retailers. This was an initiative by MBFS to promote small BEE entrepreneurs in the transport sector. There are a number of complaints that the Applicants had about alleged non-fulfilment of promises made. The NCT cannot, however, pronounce itself on such contractual disputes because resolution of contractual disputes is not within the legal mandate of the National Consumer Tribunal. We thus, while empathising with the applicants on their plight about these disputes, cannot use such contractual matters as grounds for granting any interim relief for the applicants.

This now takes us to the provisions of Sections 4, 7 and 9 of the National Credit Act, as highlighted by both the Applicants and the Respondents.

7.1 Application of the Act

All the Applicants concluded these agreements as juristic persons. It is common practice that transactions of this magnitude for commercial purposes are entered into by juristic persons; even though small business owners usually find that they are forced to stand personal surety to such transactions.

Section 4(1 )(a) of the NCA specifically excludes a credit agreement in terms of which the consumer is "a juristic person whose asset value or annual turnover, together with the combined asset value or annual turnover of all related juristic persons, at the time the agreement is made, equals or exceeds the threshold value determined by the Minister in terms of section 7(1)".

The current threshold for monetary asset value or annual turnover for purposes of section 4(1) is R1 000 000.00 (one million rand)². It has been shown that the net asset value for each one of all the Applicants is over R1 m. It is therefore clear from this that the submissions made by the respondents, MBFS, on this issue of jurisdiction are valid: The transactions entered into by the Applicants with MBFS exclude the former (Applicants) from being considered as consumers under Section 4(1 )(a).

7.2 Categories of Credit Agreements

The Applicants argued that Section 9(4)(b) opens the door for them to fall within the NCA provisions. They argued their credit agreements can be categorised as "large agreements", under Section 9(4)(b).

This provisions states that "A credit agreement is a large agreement if it is ...any other credit transaction except a pawn transaction or a credit guarantee, and the principal debt under that transaction or guarantee falls at or above the higher thresholds established in terms of Section 7(1 )(b)."

We submit that Section 9(4) does not in anyway create any ambiguity about the application of sections 4 and 7 of the Act. It is not important for us to dwell on the examples where Section 9(4) can be appropriately applied; suffice to reiterate that the legislature has at this current stage set R1m (one million rand), in asset value or annual turnover, as the higher threshold for any juristic person to remain within the provisions of the NCA.

7.3 Conclusion

Having considered all these NCA provisions, we do find that in terms of Section 4 read together with Section 9 and Section 7 the Applicants cannot be regarded as consumers as contemplated by the National Credit Act. Their transactions were not subject to the NCA.

This does not mean that the Respondent as a credit provider does not have any obligations under the NCA; but those obligations are not in relation to the transactions with the Applicants.

We find that we have no jurisdiction to grant any relief, interim or permanent, to the Applicants and accordingly dismiss the applications.

Handed down on the 20th of April 2010

Ms Y Carrim Prof B Dumisa

Presiding Member Member

Mr X May

Member

---