National Credit Regulator (NCR) v Opperman, The Constitutional court

images ncr

In the Constitutional court, the court invalidated section 89(5)(c) of the National Credit Act1 (NCA) on the basis that a person should not be arbitrarily deprived of property (section 25 (1) of the Constitution) and that sec 89(5)(C) of the NCA does so even after applying the sec 36 of the constitution (the limitation clause).

I found this judgement interesting and somewhat confusing at times. However as a student who am i to decide the merits or any other angle, i am entitled to my opinion though. That opinion being that the correct decision was made and should have been made sooner. Having just completed Law of Contracts we dealt with the NCA and the CPA (Consumer Protection Act) and both struck me as somewhat lopsided in favour of the consumer, which to be fair is done to protect naive consumers from loan sharks (of the illegal variety) and other unsavoury characters/lenders.

However, that protection should surely only extend to a certain point. Simply allowing consumers to escape liability on the basis of ignorance was wrong in law when you consider that the lender had no recourse to reclaim his property (provided the transaction was above R500 000, in which case a lender was required to register with the NCR), this clearly infringes on the lenders right to claim property lent under what is assumed to be a valid contract notwithstanding the fact that certain provisions have not been complied with.

The act will return to the legislature for correction and hopefully will be less vague and confusing, the court had this to say on vagueness, “Given that no contractual rights exist “under that credit agreement”, one wonders which “purported rights” stand to be “cancelled”. And what rights remain to be forfeited to the state? What are “purported rights” in any event?”

In my mind though this may not be the end of the argument since the facts of this case were based on the fact that first respondent (Opperman) was from Namibia and therefore was completely unaware of the NCA stipulations, to be fair he was not a “credit provider” in any event and it seems he was helping his friend. That said it there were contractual agreement entered into. The crux of the matter is whether money can be included within the ambit of sec 25 of the constitution and if so was the agreement valid in the circumstances and can the offending provision be saved by sec 36?

The CPA was not touched upon in this judgement, it would have been an interesting inclusion into the mix of the NCA and CPA and the constitution being read together. The respondent to be fair never did anything to warrant the inclusion of the CPA. However, under sec 5(2)(d) of the CPA “This Act does not apply to any transaction—(d) that constitutes a credit agreement under the National Credit Act, but the
goods or services that are the subject of the credit agreement are not excluded
from the ambit of this Act;” Thus the agreement itself would not fall under the CPA which confuses me since the CPA was designed to protect consumers against illegal contracts, the money itself would.

The judgement can be read here

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2 comments

  1. couple of points – firstly, what i don’t understand is why the National Credit Act was applied to this transaction in the first place. The judgement does not seem to consider whether the loan was concluded on the basis of the friendship between the 2 parties or whether the lender was in the business of providing credit. It seems to imply though that the transaction was based on their friendship. If that is the case then the NCA is not applicable to the transaction at all. In terms of section 4 of the NCA, only transactions at ARMS LENGTH are subject to the NCA. Therefore no further section of the Act would be applicable.
    You also incorrectly state that the R500k limit applies to any credit transaction. The Act requires registration as a credit provider where the lenders total book exceeds R500k or 100 loans.
    And, finally, as a debt counsellor, i see the extent to which the mainstream lending institutions wilfully manipulate consumers and the law. The NCA may be biased towards consumers but i believe this is necessary considering how credit providers have been abusing their positions and the law with no balance whatsoever. to follow contract law in the context you are looking for, we would need to have attorneys review each contract before a consumer signs it.

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  2. with all due respect to you sir im not sure that you read the judgement, in the judgement it states quite clearly that there was a written contract between the two men. Further, that i did not incorrectly state the 500k limit was applicable to any credit transaction, in any event you state that that situation could only be the case if the lenders book, “lenders total book exceeds R500k or 100 loans.” therefore if you lend 500k then as a lender your book has reached that threshold has it not? and again i did not state this in any case, this was the reasoning of the court.

    your last paragraph makes no sense, i at no point endorsed the use of illegal or “institutions wilfully manipulate consumers and the law” i in fact found the judgement fair and at least allows recourse to those that lend based on good faith.

    I am not sure if you have an llb or any other type of law degree but one thing that should be noted is that laws are not used or interpreted in isolation. There may be a myriad of different factors that come into play, and those include draft bills, public policy and so on.

    Thanks for the response and thanks for commenting

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