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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

 

IN THE NATIONAL CONSUMER TRIBUNAL

SITUATED AT CENTURION

 

Case number: NCT/292194/2023/141(1)(b)

 

In the matter between:
MILLICENT GLORY MOKOME	APPLICANT
and
RUSHDIE TOFIE (NCRDC3698)	FIRST RESPONDENT
NATIONAL CREDIT REGULATOR	SECOND RESPONDENT

 

Coram:

Dr A Potwana            -         Presiding Tribunal Member

Ms Z Ntuli                 -         Tribunal Member

Mr C Ntsoane            -         Tribunal Member

Date of final hearing:           14 November 2024

 

JUDGMENT AND REASONS

 

THE PARTIES

 

1.               The applicant is Millicent Glory Mokome, a credit consumer who represented herself during the hearing.

 

2.               The first respondent is Rushdie Tofie, a registered male debt counsellor. During the hearing, Waleed Fortune appeared as an observer on behalf of the first respondent.

 

3.               The second respondent is the National Credit Regulator (NCR), a juristic person established by section 12(1) of the National Credit Act 34 of 2005 (NCA). Mr Anda Makrwede, an employee of the NCR, appeared on behalf of the NCR.

 

TYPE OF APPLICATION AND JURISDICTION

 

4.               The applicant seeks an order to remove the debt review status on her credit profile and have her credit status restored.

 

5.               Section 27(a) of the NCA confers jurisdiction on the Tribunal to hear the application.

 

ISSUE TO BE DECIDED

 

6.               The Tribunal must determine whether to order that the applicant’s debt review status be removed from her credit profile.

 

INTRODUCTION

 

7.               On 16 October 2023, the applicant filed an application in terms of section 141(1)(b) of the NCA for leave to refer a matter to the Tribunal with the Tribunal’s Registrar (Registrar) using the prescribed form, NCR Form 32. All the documents were served on the respondent by courier. The Tribunal granted the leave application.

 

CONSIDERATION OF EVIDENCE ON A DEFAULT BASIS

 

8.               Rule 13(1) and (2) of the Tribunal Rules[1] states –

 

“(1) Any person required by these Rules to be notified of an application or referral to the Tribunal may oppose the application or referral by serving an answering affidavit on:

 

(a)              the Applicant; and

 

(b)              every other person on whom the application was served.

 

(2)  An answering affidavit to an application or referral other than an application for interim relief must be served on the parties and filed with the Registrar within 15 business days of the date of the application.”

 

9.               The first respondent did not file an answering affidavit. On 22 March 2024, the Registrar issued a Notice of Set Down for the matter to be heard on a default basis on 9 May 2024 and served the same on all the parties. Rule 25(3) of the Tribunal Rules states –

 

“Tribunal may make a default order-

 

(a)              after it has considered or heard any necessary evidence; and

 

(b)              if it is satisfied that the application documents were adequately served.”

 

10.            The Tribunal was satisfied that the application documents were adequately served on the first respondent, and the matter proceeded on a default basis.

 

11.            Rule 13(5) of the Tribunal Rules stipulates that any fact or allegation not specifically admitted or denied within an answering affidavit is deemed admitted. Therefore, in the absence of an answering affidavit, the first respondent was deemed to have admitted the allegations made by the applicant.

 

BACKGROUND

 

12.            In “Part 2 – The Complaint” of NCR Form 32, the applicant stated that on 17 July 2023, she was contacted telephonically by a company called DebtLite. She was advised that the company was working under the NCR to assist consumers by reducing interest rates and monthly loan instalments. She was then asked to sign a new debit order for her three credit agreements on her smartphone. She was not given a document via email to read in order to understand what she was agreeing to and was never advised that she was going to be placed under debt review. She was informed that she would not be charged for this service. She only learned after everything was done and when she started experiencing problems in her bank account that she had been placed under debt review. She wants to be removed from the debt review.

 

13.            The applicant alleges that DebtLite was not honest with her about who they were and what they did. She submits that she can meet her financial obligations and commitments and has been doing so since she started working. Her credit score rating is above 600, as she does not miss payments and always pays on time. She states that she never signed Form 16 and did not understand what she was getting herself into. She was only asked for her monthly income. That is all. The amount listed as living expenses is not true at all. She was only informed by the banks that she had been placed under debt review and that DebtLite is a debt counsellor. Unfortunately, for her, the first debit order of R12,075.00 was already paid to the first respondent. When she requested a refund, she was furnished with Form 17W and informed that she would not get a refund as the R12,075.00 would cover the cancellation fee.

 

14.            She wants to be removed from debt review and have her dignity restored. Then, the humiliation she is currently experiencing will be a thing of the past. She has been investing in properties, but with her current credit rating status, she cannot do so as she appears to be over-indebted.

 

15.            During the hearing on 9 May 2024, the applicant submitted that she never signed a Form 16, but she has been flagged as over-indebted, and everywhere she went, she was blacklisted. She submitted that she wants the respondent to refund her the R12,075.00 that she paid to the first respondent via a debit order.

 

THE LAW APPLICABLE TO THIS APPLICATION

 

16.            Section 141(1)(b) of the NCA states, “If the National Credit Regulator issues a notice of non-referral in response to a complaint other than a complaint concerning section 61 or an offence in terms of this Act, the complainant concerned may refer the matter directly to the Tribunal, with the leave of the Tribunal.”

 

17.            Section 52(5) of the NCA states, “A registrant must comply with its conditions of registration and the provisions of this Act.”

 

18.            Rules 13(5) of the Tribunal Rules states, “Any fact or allegation in the application or referral not specifically denied or admitted in an answering affidavit, will be deemed to have been admitted.”

 

FACTS

 

19.            The application is not defended. In terms of Rule 13(5) of the Tribunal Rules, all the facts or allegations stated by the applicant in its application or referral documents are deemed to be admitted. Based on the evidence presented to the Tribunal, the panel was satisfied that, notwithstanding that the applicant never applied for debt review, the first respondent placed her under debt review and updated the NCR’s Debt Help System with the information that the applicant applied for debt review. Subsequently, the applicant’s credit profile with credit bureaus reflected that the applicant was under debt review.

 

20.            Since the Tribunal was not presented with the respondent’s conditions of registration and the applicant’s debt review status was unclear, the Tribunal relied on its powers to conduct hearings in an inquisitorial manner.[2] Acting in terms of section 144 of the NCA, the Presiding Tribunal member issued two summonses against the NCR’s Chief Executive Officer (NCR’s CEO) and the first respondent. The summons issued to the first respondent required him to produce copies of all documents in his possession or under his control, including a copy of Form 16, relating to the applicant. The first respondent failed or neglected to respond to the Tribunal’s summons.

 

21.            The summons issued to the NCR’s CEO required her to produce a copy of the first respondent’s Conditions of Registration as a Debt Counsellor, a copy of the record of the applicant’s debt review status on the NCR’s Debt Help System, and copies of all documents, including a copy of Form 16, submitted to the NCR by the first respondent in relation to the complaint the applicant filed with the NCR. Among others, the NCR’s CEO produced a page showing that the applicant applied for debt counselling on 25 July 2023 and that the assessment resulted in a decision that she was over- indebted. The NCR’s CEO also produced the first respondent’s Conditions of Registration as a Debt Counsellor. Condition 2 of the first respondent’s General Conditions of Registration states that:

 

“The Debt Counsellor must perform debt counselling in a manner that is consistent with the purpose and requirements of the Act. The Debt Counsellor must in all instances act professionally and reasonably in providing debt counselling services to consumers and provide such services in a manner that is timely, fair and non-discriminatory and does not bring the NCR or debt counselling into disrepute.”

 

22.            Based on the applicant’s uncontroverted evidence, the Tribunal concluded that the applicant never applied for debt review envisaged under section 86(1) of the NCA and found that by placing the applicant under debt review and wrongly updating the NCR’s Debt Help system with information that the applicant applied for debt counselling, the first respondent breached condition 2 of his conditions of registration and contravened section 52(5)(c) of the NCA, which states, “A registrant must comply with its conditions of registration and the provisions of this Act.” By so doing, the respondent committed prohibited conduct.

 

23.            In view of the order sought by the applicant, the Tribunal considered the provisions of section 150(i) of the NCA, which state that -

 

“In addition to its other powers in terms of this Act, the Tribunal may make an appropriate order in relation to prohibited conduct or required conduct in terms of this Act, or the Consumer Protection Act, 2008, including any other appropriate order required to give effect to a right, as contemplated in this Act or the Consumer Protection Act, 2008.”

 

24.            The Tribunal concluded that the right in question is the applicant’s right to challenge the accuracy of the information concerning her and to have information that is not supported by credible evidence removed from credit bureau reports and the national credit register as envisaged in section 72 of the NCA. The NCR’s Debt Help System holds incorrect information. Since the order sought by the applicant would directly affect the NCR’s rights or interests as the custodian and administrator of the NCR’s Debt Help System and the first respondent is registered with the NCR, the panel concluded that the NCR had to be joined to these proceedings before an order could be made against it. In Snyders and Others v de Jager,[3] writing the majority judgment of the Constitution Court, Zondo J stated that:

 

“A person has a direct and substantial interest in an order that is sought in proceedings if the order would directly affect such a person’s rights or interest. In that case the person should be joined in the proceedings. If the person is not joined in circumstances in which his or her rights or interests will be prejudicially affected by the ultimate judgment that may result from the proceedings, then that will mean that a judgment affecting that person’s rights or interests has been given without affording that person an opportunity to be heard. That goes against one of the most fundamental principles of our legal system. That is that, as a general rule, no court may make an order against anyone without giving that person the opportunity to be heard.”

 

25.            Rule 16(1) of the Tribunal Rules states that:

 

“The Tribunal may of its own accord or on application by a party combine any number of persons, either jointly, jointly and severally, separately, or in the alternative, as parties in the same proceedings, if their rights to relief depend on the determination of substantially the same questions of law or fact.”

 

26.            After the hearing on 9 May 2024, the Tribunal made the following orders:

 

26.1.    “The National Credit Regulator is joined as the second respondent.

 

26.2.    The Registrar must serve a copy of the entire contents of the Tribunal’s file, including a copy of this judgment and order, to the Chief Executive Officer of the National Credit Regulator.

 

26.3.    The National Credit Regulator may serve and file an answering affidavit within 15 business days of receipt of the contents of the Tribunal’s file.

 

26.4.    If the National Credit Regulator serves and files an answering affidavit, the applicant must serve and file a replying affidavit within 10 business days of being served with an answering affidavit.

 

26.5.    The hearing of this matter is adjourned sine die.

 

26.6.    No order is made as to costs.”

 

27.            On 19 July 2024, the Registrar issued the Tribunal’s judgement. The NCR failed or neglected to file its answering affidavit in accordance with the issued order. The contents of the Tribunal’s file show that on 2 September 2024, the Registrar sent an email to the NCR informing it that 15 days had lapsed since the judgment and order were served on it and enquiring whether it would be filing any papers. On 3 September 2024, Mr Makrwede sent an email to the applicant, the first respondent, and the Registrar stating that “We will not be filing answering papers nor are we opposing the application by the consumer.”

 

28.            Notwithstanding the above, on 28 September 2024, the NCR delivered written submissions. On 29 October 2024, the Registrar issued a Notice of Set Down for the hearing to continue on 14 November 2024. Mr Makrwede appeared on behalf of the NCR. He advised the panel that the NCR had sent written submissions that the NCR believed would assist the Tribunal and he wanted to present them orally to the Tribunal. Since the NCR was given an opportunity to file an answering affidavit but opted not to do so, the Presiding Tribunal member asked Mr Makrwede for a legal authority which supports the proposition that a party that has chosen not to file an answering affidavit can be allowed to make written or oral submissions. He stated that the NCR only sought to bring to the Tribunal’s attention the recent developments in law and interpretation to assist the Tribunal regarding the appropriate remedy. Accordingly, he believed the best way to do so was through a submission, given that the NCR did not intend to oppose the application. He said the NCR did so purely because it was joined in the proceedings and believed it was expected to assist. However, he did not furnish the Tribunal with the requested legal authority.

 

29.            In our view, the NCR’s attempt to influence the decision of the Tribunal without following proper legal procedure and outside the Rules of the Tribunal constitutes a procedural irregularity. This procedural irregularity is not only an abuse of process but possibly amounts to criminal conduct. Section 160(2)(a) of the NCA states that “A person commits an offence who does anything calculated to improperly influence the Tribunal…” By trying to make submissions that could influence the decision of the Tribunal in a manner that is not prescribed in the Rules of the Tribunal, the NCR acted improperly. Such conduct undermines the applicant’s right to reply to its submissions and to prepare and present counter-submissions or arguments. In The Minister of Land Affairs and Agriculture v D& F Wevell Trust,[4] the Supreme Court of Appeal said:

 

“It is not proper for a party in motion proceedings to base an argument on passages in documents which have been annexed to the papers when the conclusions sought to be drawn from such passages have not been canvassed in the affidavits. The reason is manifest ─ the other party may well be prejudiced because evidence may have been available to it to refute the new case on the facts. The position is worse where the arguments are advanced for the first time on appeal. In motion proceedings, the affidavits constitute both the pleadings and the evidence: Transnet Ltd v Rubenstein,[5] and the issues and averments in support of the parties’ cases should appear clearly therefrom. A party cannot be expected to trawl through lengthy annexures to the opponent’s affidavit and to speculate on the possible relevance of facts therein contained. Trial by ambush cannot be permitted.”[6]

 

30.            It is apt to mention that although section 142(1)(a) of the NCA obliges the Tribunal to conduct hearings in an inquisitorial manner, a litigant cannot flout the procedures prescribed in the Rules of the Tribunal in the hope that the Tribunal will utilise its powers to conduct hearings in an inquisitorial manner that undermines and circumvents the Rules of the Tribunal. This conduct is unbecoming of a regulator who is supposed to act as a model litigant in all matters before the Tribunal. It is condemned in the strongest possible terms. Accordingly, the NCR’s written submissions are regarded as pro non scripto (not written).

 

31.            In the absence of the NCR’s answering affidavit, and in view of the provisions of Rule 13(5) of the Tribunal Rules that stipulates that any fact or allegation not specifically admitted or denied within an answering affidavit is deemed admitted, the NCR is deemed to have admitted the applicant’s allegations.

 

32.            We now turn to consider the administrative fine that should be imposed on the first respondent.

 

DETERMINATION OF THE APPROPRIATE ADMINISTRATIVE FINE

 

33.            Section 3(f) of the NCA states -

 

“The purposes of this Act are to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers, by improving consumer credit information and reporting and regulation of credit bureaux.”

 

34.            Section 151(1) of the NCA states that “The Tribunal may impose an administrative fine in respect of prohibited or required conduct in terms of this Act, or the Consumer Protection Act, 2008.” It is important to note that the provisions of section 151(1) of the NCA empower the Tribunal to impose an administrative fine in respect of prohibited or required conduct, irrespective of whether an applicant has sought the imposition of an administrative fine or not. Having analysed the conduct of the first respondent, the Tribunal considers it appropriate to impose an administrative fine to deter him and other debt counsellors from engaging in the type of prohibited conduct that he engaged in when dealing with the applicant.

 

35.            Section 151(2) of the NCA states that “An administrative fine imposed in terms of this Act, or the Consumer Protection Act, 2008, may not exceed the greater of—

 

(a)              10 per cent of the respondent’s annual turnover during the preceding financial year; or

 

(b)              R1 000 000.”

 

36.            Section 151(3) of the NCA lists various factors the Tribunal must consider when determining an appropriate administrative fine. We will consider each factor under the sub-headings below.

 

The nature, duration, gravity, and extent of the contravention

 

37.            The first respondent acted deceitfully towards the applicant, resulting in her unlawfully acquiring an adverse credit listing. She was advised that the first respondent worked under the NCR to assist consumers by reducing interest rates and monthly loan instalments. This was misleading. The provisions of the NCA do not authorise debt counsellors to assist a consumer by reducing interest rates and monthly loan instalments, but only those who are over-indebted and those who are not over-indebted, but are nevertheless experiencing, or likely to experience, difficulty satisfying all their obligations under credit agreements in a timely manner. The applicant was then asked to sign a new debit order for her three credit agreements on her smartphone. She was not given a document via email to read in order to understand what she was agreeing to and was never advised that she was going to be placed under debt review. She was informed that she would not be charged for this service. She only learned after everything was done and when she started experiencing problems in her bank account that she had been placed under debt review.

 

38.            The first respondent or his agent was not honest with the applicant about who they were and what they did. The applicant submits that she can meet her financial obligations and commitments and has been doing so since she started working. Her credit score rating is above 600, as she does not miss payments and always pays on time. She states that she never signed Form 16 and did not understand what she was getting herself into. She was only asked for her monthly income. The amount listed as living expenses is not true at all. She was only informed by the banks that she had been placed under debt review and that DebtLite is a debt counsellor. Unfortunately, for her, the first debit order of R12,075.00 was already paid to the first respondent. When she requested a refund, she was furnished with Form 17W and informed that she would not get a refund as the R12,075.00 that was debited would cover the cancellation fee. She stated that she wants to be removed from debt review and have her dignity restored. Then, the humiliation she is currently experiencing will be a thing of the past. She has been investing in properties, but with her current credit rating status, she cannot do so as she appears to be over-indebted. During the hearing on 9 May 2024, the applicant submitted that she never signed Form 16, but she had been flagged as over-indebted, and everywhere she went, she was blacklisted.

 

39.            The first respondent’s actions towards the applicant undermine the provisions of the NCA that seek to relieve consumers who are over-indebted and those who are not over-indebted but are nevertheless experiencing, or likely to experience, difficulty satisfying all their consumer’s obligations under credit agreements in a timely manner. He misled the applicant into believing that he would help her reduce the interest rates applicable to her credit agreements. He exploited the applicant’s ignorance and abused the applicant’s personal information for personal gain. His actions adversely affected the applicant’s credit rating. Abusing the provisions of the NCA by misleading a credit consumer on the pretext of helping her to reduce interest rates for personal gain undermines the debt counselling provisions of the NCA and is unconscionable.

 

Loss or damage suffered as a result of the contravention

 

40.            Given that the applicant could not access credit with a debt review status under her name, the harm caused by the first respondent to the applicant’s credit profile and her ability to access credit is far- reaching.

 

The behaviour of the respondent

 

41.            There is no plausible reason for the first respondent or his agents to be unaware of his conditions of registration and the statutory obligations applicable to him as a registered debt counsellor under NCA. The fact that he elected to become a registered debt counsellor indicates that he is aware of his registration conditions and the NCA's prescripts. Despite this, the first respondent failed to comply with his conditions of registration. Furthermore, he failed to comply with the summons issued by the Tribunal requesting him to produce, among others, Form 16. Evidently, the first respondent behaved unprofessionally towards the applicant. He violated his conditions of registration and the debt counselling provisions of the NCA and acted disrespectfully towards the Tribunal.

 

Market circumstances under which the contraventions occurred

 

42.            The first respondent operates in a market that should help consumers who are over-indebted and those who are not over-indebted but are nevertheless experiencing, or likely to experience, difficulty satisfying all their obligations under credit agreements in a timely manner. Instead, the first respondent’s marketing practices mislead consumers, such as the applicant who did not know that the respondent is a debt counsellor and that she would acquire an adverse credit profile and not be able to access credit if she enlisted the first respondent’s services.

 

Level of profit derived from the contraventions

 

43.            The Tribunal does not know the full extent of the profit the first respondent derived from the prohibited conduct. According to the applicant, the first debit order of R12,075.00 was paid to the first respondent, and he refused to refund it to her. Therefore, it is evident that the first respondent derived a profit from his unlawful conduct.

 

The degree to which the first respondent has co-operated with the NCR

 

44.            There is no evidence of the degree to which the first respondent has co-operated with the NCR. Prior contraventions committed by the first respondent

 

45.            We are not aware of prior enforcement actions that might have been instituted against the first respondent.

 

CONCLUSION

46.            The first respondent acted contemptuously towards the applicant. He demonstrated a total disregard for his conditions of registration and undermined the NCA’s debt-counselling provisions. These provisions are aimed at helping credit consumers who are over-indebted and those who are not over- indebted but are nevertheless experiencing, or likely to experience, difficulty satisfying all their obligations under credit agreements in a timely manner. Abusing the provisions of the NCA by misleading consumers who are not over-indebted and can meet their financial obligations has serious consequences for consumers and the credit market. In addition, this conduct abuses the resources of government institutions such as the NCR, which has the responsibility to investigate complaints filed with it by consumers who claim to have been placed under debt-review under false pretences, and those of the Tribunal, which must adjudicate debt-review applications and later adjudicate applications to be removed from debt-review. The abuse of unsuspecting credit consumers and the resources of government institutions cannot be countenanced. Such conduct deserves to be visited with a substantial administrative fine to deter the first respondent and other debt counsellors from engaging in such deceitful and exploitative practices.

 

47.            An administrative fine of R250 000.00 (Two Hundred and Fifty Thousand Rands) is appropriate.

 

ORDER

 

48.            It is hereby ordered that:

 

48.1.        The first respondent contravened section 52(5)(c) of the NCA.

 

48.2.        The first respondent’s contravention of section 52(5)(c) of the NCA is declared prohibited conduct in terms of section 150(a) of the NCA.

 

48.3.        The first respondent must pay R250 000.00 (Two Hundred and Fifty Thousand Rands) within 90 days of the issuing of this judgment into the bank account of the National Revenue Fund, the details of which are as follows:

 

Bank:                           Nedbank

Account Holder:              Department of Trade, Industry and Competition

Account type:               Current Account

Branch Name:                 Telcoms and Fiscal

Branch code:               198765

Account number:          1[…]

Reference:                      NCT/292194/2023/141(1)(b)

 

48.4.        The first respondent must immediately refund the applicant R12,075.00 by paying the said sum into the applicant’s chosen bank account.

 

48.5.        The National Credit Regulator must delete the applicant’s debt review status from its Debt Help System and inform all registered credit bureaus accordingly.

 

48.6.        There is no order as to costs.

 

Thus, done and dated 25 November 2024.

 

Dr A Potwana

Presiding Tribunal Member

 

Tribunal members Ms N Ntuli and Mr C Ntsoane concur.

 

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