IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE DIVISION, CAPE TOWN)

Case Number: 5244/2013

In the matter between:

Chevron SA (Pty) Ltd	Applicant

And
Dennis Edwin Wilson t/a Wilson’s	First Respondent Transport
The Minister of Finance	Second Respondent
The Minister of Trade and Industry	Third Respondent
The National Credit Regulator	Fourth Respondent
JUDGMENT DELIVERED ON 5 JUNE 2014
 BAARTMAN, J
[1]	This matter concerns the constitutionality of section 89(5) (b) of the National Credit Act 34 of 2005 (the Act).

BACKGROUND

[2]	The circumstances that gave rise to this application are the following:
(a)	The applicant conducts business throughout Southern Africa as a supplier of petroleum products such as diesel, petrol and lubricants.
(b)	At the time relevant to this application, the first respondent traded as a sole proprietor - Wilson’s Transport. From 1997, the applicant extended credit to the first respondent for the purchase of petroleum products.
(c)	In 2008, the first respondent alleged that the applicant’s billing was inaccurate. A period of negotiation followed but the parties were unable to resolve their differences. I do not deal with the merits of the first respondent’s objections to the applicant's invoicing. The applicant has since instituted proceedings in the magistrate’s court claiming amounts it alleges the first respondent owed for petroleum products it had supplied to the first respondent.
(d)	In the magistrate’s court pre-trial proceedings, the magistrate enquired whether the applicant was a credit provider as envisaged in the Act. Subsequently, the applicant acknowledged that it was required to be registered as a credit provider but that it had failed to do so.
(e)	In terms of section 89(5)(a), the agreement, in terms of which the applicant claimed against the first respondent, was void because of the applicant’s failure to have registered as a credit provider as prescribed by the Act. Therefore, in terms of section 89(5)(b) the court had to order a refund to the first respondent of all money he had paid to the applicant in terms of the agreement.
(f)	The applicant and the first respondent reached agreement as to the further conduct of the matter, which terms were embodied in an order by the magistrate, dated 17 January 2013. The order provided as follows:
“Having heard counsel for the parties and having read the documents filed of record and by agreement between the parties:
IT IS HEREBY ORDERED THAT:
1.	The agreements concluded between the Plaintiff and the Defendant from the inception of the National Credit Act 34 of 2005 (“NCA") (i.e. from 1 June 2006) under the provisions of the Starcard Agreement constitute credit agreements regulated in terms of the NCA.
2.	In accordance with the provisions ofs89(2)(d) of the NCA, and by virtue of the fact that Plaintiff was not at all material times thereto registered as a “credit provider" within the meaning of this term under the NCA, the credit agreements concluded by Plaintiff with the Defendant referred to in 1 above are, as from the date that these agreements were entered into, unlawful and void as provided for in s40(3) read with s40(4) of the NCA.
3	The trial in this section is postponed sine die and the
proceedings herein are stayed, subject thereto that the Plaintiff institutes an application to the Western Cape High Court or the Constitutional Court by no later than 1 March 2013 for an order declaring the provisions of sections 89(5)(a) and (b) of the NCA unconstitutional; failing which the Defendant or the Plaintiff as the case may be, shall be entitled to enrol this matter for final determination. In so far as such application proceedings are concerned, all Defendant’s rights in law are reserved.
4.	The Plaintiff shall pay the Defendant’s costs occasioned by the postponement on 17 January 2013, including costs for preparation, with such costs to be on the scale as between party and party, to be taxed and/or agreed and such costs shall include the costs of Counsel in accordance with the fee parameters (guidelines) of the Cape Bar. ’
(g)	In the High Court, the applicant sought relief as follows in the Notice of Motion:
1	That sections 40(4) and 89(2)(d) of the National Credit Act,
No. 34 (“the NCA') of 2005, are declared to be inconsistent with the provisions of Section 25(1) of the Constitution, and thus invalid.
2	Alternatively, that the wording “a court must order that” as contained in Section 89(5) of the NCA is declared to be inconsistent with the provisions of Section 25(1) of the Constitution and thus invalid, and that the said wording is deleted and replaced with the following:
(i)	'A court may order thatalternatively
(ii)	'A court must order and, in the case of a credit agreement as referred to in Section 89(2)(d), may order that'....
3	Granting to Applicant such further or alternative relief as this Honourable Court may deem fit.
4	Directing that any of the Respondents who oppose the relief sought herein shall pay the costs occasioned by their opposition."
(h)	The applicant, the third and the fourth respondents reached agreement and later the first respondent also accepted the proposal. The parties now seek relief in respect of only section 89(5)(b) of the Act. The applicant has abandoned its main relief
and is satisfied that the limited relief now sought by agreement will cure its complaint. This is relevant to the costs order that the applicant seeks against only the first respondent. I deal with the issue of costs below.
[3]	The impugned section provides as follows:
“(5) If a credit agreement is unlawful in terms of this section, despite any provision of common law, any other legislation or any provision of an agreement to the contrary, a court must order that-
(b) the credit provider must refund to the consumer any money paid by the consumer under that agreement to the credit provider, with interest calculated -
...(i) at the rate set out in that agreement; and
...(H) for the period from the date on which the consumer paid the money to the credit provider, until the date the money is refunded to the consumer."
The relief claimed
[4]	The parties now propose the following order:
“(1) That Section 89(5)(b) of the National Credit Act No. 34 of 2005 (uthe Act”) is declared invalid and unconstitutional.
(2)	That, to remedy the defect, section 89(5) of the Act be reformulated to read as follows:
5	If a credit agreement is unlawful in terms of this section, despite any other legislation or any provision of an agreement to the contrary, a court must make a just and equitable order including but not limited to an order that:
(a)	The credit agreement is void as from the date the agreement was entered into
(b)	...
(3)	That the orders in paragraphs 1 and 2 above shall have no impact on matters in which final judgment has been delivered and in which no application for leave to appeal is pending.
(4)	That the Applicant, Third and Fourth Respondents shall be liable for their own legal costs, including the costs of Counsel, for this Application.
(5)	That these Orders are referred to the Constitutional Court for confirmation in terms of section 172(2)(a) of the Constitution.”
DISCUSSION
[5]	The third respondent, the relevant minister, has not defended the constitutionality of section 89(5)(b) because the third respondent is persuaded that the Constitutional Court decision in the matter of National Credit Regulator v Opperman and Others 2013 (2) SA 1 (CC) is authority for the proposition that there is indeed tension between the consumer's claim for a refund of money paid to an unregistered credit provider (section 89(5)(b)) and the unregistered credit provider’s enrichment claim in terms of the common law. In para 86 of the Opperman matter the Constitutional Court held:
“[86] As observed by the high court, the continuing existence of s(b) may create tension between the consumer’s claim for a refund of money paid to the credit provider and the credit provider's enrichment claim. This is another reason - in addition to the inaccurate language used - for the legislature to consider a reformulation ofs 89(5) as a whole, within the context ofs89 and the rest of the NCA. ”
[6]	Section 89(5)(b) makes provision for the obligatory refund of any money with interest that the consumer has paid the credit provider under the agreement irrespective of circumstances of the matter.
[7]	I am persuaded that the obligatory nature of the refund constitutes an infringement of section 25(1) of the Constitution, which provides:
“25 Property
(1)	No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property."
[8]	Advocate Pillay, counsel for the third respondent, submitted that the deprivation is arbitrary both on a substantive and procedural level. I agree. The court is denied any discretion to decide on a just and equitable order. This is problematic and leads to procedural unfairness. Similarly, on a substantive level the obligatory nature compels a court to order the refund whether or not there is sufficient reason for a deprivation.
[9]	The third respondent has not advanced any basis for a limitation of rights in terms of section 36 of the Constitution. In the circumstances of this matter, the factors that indicate that the deprivation is arbitrary also indicate that the deprivation cannot be reasonably justified in terms of section 36 of the Constitution. There are less restrictive means that can be employed to achieve the object - registration of credit providers that fall within the ambit of the Act. (See Teddy Bear Clinic for Abused Children and Another v Minister of Justice and Constitutional Development and Another 2014 (2) SA 169 (CC) at 195 para 95)
[10]	I am persuaded that section 89(5)(b) is inconsistent with the Constitution and invalid. It follows that the provisions of section 172(1) are applicable - the section provides:
“(1) When deciding a constitutional matter within its power, a court -
(a)	must declare that any law or conduct that is inconsistent with the Constitution is invalid to the extent of its inconsistency; and
(b)	may make any order that is just and equitable, including -
(i)	an order limiting the retrospective effect of the declaration or invalidity; and
(ii)	an order suspending the declaration of invalidity for any period and on any conditions, to allow the competent authority to correct the defect. ”
[11]	When considering the appropriate remedy, I considered the following:
(a)	The third respondent, the relevant minister, has not defended the constitutionality of section 89(5)(b); instead, he has suggested a reformulation.
(b)	In the course of these proceedings, Amendment Bill [B47- B3013] to the Act was passed. The Amendment Bill awaits signature by the president. It is uncertain when this will happen. However, in terms of section 27 of the Amendment Bill section 89(5) will be amended to read as follows:
“(5) If a credit agreement is unlawful in terms of this section, despite any other legislation or any provision of an agreement to the contrary, a court must make a just and equitable order including but not limited to an order that:
(a)	The credit agreement is void as from the date the agreement was entered into. ”
(c)	The proposed order follows the wording of the Amendment Bill soon to be signed by the president.
(d)	It follows that the legislature has considered the issue, agreed that section 89(5) is inconsistent with the Constitution and therefore needing to be amended, and has acted in line therewith.
(e)	The applicant agrees that the Amendment Bill, once signed by the president, will address its complaint against the section. The first respondent, the consumer who did not rely on the provisions of 89(5)(b) in the magistrate’s court, supports the proposed order.
[12]	It was in issue whether the proposed order would amount to a reading-in or a reading-down of the provisions of section 89(5)(b). Regrettably, the issue received too much attention and contributed to the clouding of issues between the applicant and the first respondent. In the matter of Mkhize v Umvoti Municipality and Others 2010 (4) SA 509(KZN) at 522 para 27 Wallis J said:
' [27] Reading-in was accepted as a constitutional remedy in the judgment of Ackermann J for the Constitutional Court in National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others. The following principles emerge from that judgment. Where it is decided that a particular provision is unconstitutional the court is obliged to grant an order declaring the provision invalid ‘to the extent of its invalidity’, and may make any order that is just and equitable in all the circumstances. It may simply declare the entire provision invalid. However, this potentially involves throwing the constitutional baby out with the unconstitutional bathwater. In appropriate circumstances the court can remedy the problem, without the drastic consequence of invalidating the provision in its entirety, by excising from the provision and striking down only those words that render it unconstitutional. Where the constitutional defect lies in an omission, severance is inappropriate, because one cannot logically sever an omission. Merely to make a declaration of partial invalidity may be ambiguous or ineffectual, leaving the offending provision in place in its entirety, as occurred in the court below in the National Coalition case. In these circumstances the remedy of reading-in may be appropriate. In principle there is no difference between a court rendering a statutory provision constitutional by severing part of it or by reading words into it. The only enquiry - and the risk of this is greater in the case of reading-in than in the case of severance - is whether the remedy chosen by the court constitutes an unconstitutional intrusion into the domain of the legislature. Ultimately the question is whether the reading-in is just and equitable and an appropriate remedy."
[13]	In the circumstances of this matter, the order sought does not amount to an “intrusion into the domain of the legislature" because the Amendment Bill will soon be signed and the order sought is identical to its wording.
[14]	Therefore, I am persuaded that the order sought is the appropriate remedy and I intend to grant the order sought by agreement between all the parties to this litigation.
COSTS
[15]	In terms of the agreement between the applicant, and the third and the fourth respondents, no order as to costs is sought against the other. The applicant, however, has sought a costs order against the first respondent who in turn sought an order against the applicant.
[16]	Mr Moller who appeared with Ms Bizony, as counsel for the first respondent, submitted that the applicant broadened the scope of its constitutional challenge contrary to the magistrate's order. In addition, so the argument went, the applicant abandoned its main relief and the order sought by agreement is substantially less than applicant’s alternative relief. Therefore, so the argument went, the applicant has not obtained substantial relief. Counsel submitted that the first respondent was obliged to defend the relief sought because it was broader than initially intended and without merit. Mr Moller further submitted that the first respondent had been left out of the negotiation process between the applicant, and the third and fourth respondents.
[17]	In November 2013, I accepted that after negotiations between the applicant, and the third and fourth respondents, the applicant corresponded with all the respondents by e-mail correspondence as follows:
a
2.	With regard to the proposed reformulation of Section 89 of the NCA, referred to in the Third Respondent’s Answering Affidavit, it appears that the proposed reformulation is also the subject of a bill which has been tabled for public comment (Government Gazette 36916 dated 9 October 2013).
3.	We have been instructed by our client that the proposed amendment to Section 89 of the Act as proposed in the affidavit of the Third Respondent and in the aforesaid bill would, for all intents and purposes, cure the various objections to the currently worded Section 89 raised in the Applicant’s founding papers.
4	That being so, it does not appear as if there is any need to pursue the application instituted under Case Number 5244/2013, and we accordingly propose the following:
4.1	That such application be postponed. pending the adoption of the aforesaid bill;
4.2	If the aforesaid bill is for any reason not in due course promulgated that the parties in the proceedings instituted in
Case Number 5244/2013 consent to the court making an order for the reading-down of Section 89, in the terms suggested in the Third Respondent’s Affidavit.
4.3	That Applicant will thereafter, at its cost, approach the Constitutional Court fora confirmation of such order;
4.4	That the parties bear their own costs related to the proceedings instituted under Case Number 5244/2013. Our client contends that, given the stance adopted in the Third Respondent's Answering Affidavit, the Applicant has achieved substantial success in obtaining the relief for which it approached the court but that, notwithstanding such success, it would be prepared to bear its own costs provided the other parties consent to an order directing that each party pay its own costs. ”
[18]	It is in issue whether the first respondent’s attorney received the November correspondence when it was sent to all the respondents. I accept that she did not; instead she only received it on 15 January 2014. Mr Oosthuizen SC, who appeared together with Mr Torrington on behalf of the applicant, submitted that the first respondent’s failure thereafter to have engaged with the applicant caused the unnecessary opposition to the order and therefore, at least from that date, the first respondent should bear the costs of opposition. Mr Moller in turn submitted that the applicant had not abandoned its main relief or at least the first respondent was not informed thereof as he was left out of the negotiation process.
[19]	Subsequent to the hearing, the first respondent has placed further correspondence before me and made further submissions in respect of costs in a supplementary note, in which counsel, with reference to Franks v Muller and Schonken 1929 TPD 464 and Brink v Stadler 1963 (2) SA 427 (C), submitted that although the applicant achieved less than initially claimed, it should be awarded the costs of opposition. The applicant had, so the argument went, in the alternative sought "a reading-in granting the court discretion as to whether it should order the credit provider to refund money paid under the void agreement.” I also received a supplementary note from the first respondent’s counsel vigorously making contrary submissions as follows: it
17. The Applicant originally founded its primary claim on section 89(2)(d) and 40(4); and in the alternative on sections 89(5)(a) and
(b)	. The Applicant no longer persists in three of the four provisions it originally challenged. This shift in approach was only communicated at the end of March 2014...
22. Furthermore, where a party knew or ought to have known that its claim was excessive; it should be deprived of costs.
23...the Applicant’s challenge to sections 89(2)(d)r 40(4) and 89(5)(a) was wholly without merit, the Applicant persisted with its challenge to these sections until March 2014...'
[20]	As indicated above, the first respondent did not rely on section 89(5) for any relief in the magistrate’s court. The first respondent merely challenged the applicant’s accounting method. Once the magistrate raised the issue of the applicant’s compliance with the Act, the applicant sought to challenge the constitutionality of section 89(5). As indicated above, the challenge was also broader than envisaged in the magistrate’s court order. In my view, it is unwarranted to burden the consumer with costs of a constitutional challenge brought against legislative protection the consumer did not rely on. Mr Oosthuizen submitted that the first respondent, a sole proprietor in a very successful enterprise, is not the consumer the legislature aimed to protect. On behalf of the first respondent, counsel submitted that the first respondent was an elderly, historically-disadvantaged person, who fared very well in business.
[21]	The circumstances of this matter are indicative of the imbalance between a consumer, from any walk of life, and a multinational company, and the general need for consumer protection. In my view, both parties’ intransigence added to the unnecessary delay in finalising the matter. The costs order agreed to between the applicant and the third and fourth respondents - each to pay their own costs - is sensible and appropriate in the circumstances. In my view, it is also an appropriate order in respect of the applicant and the first respondent. (See Biowatch Trust v Registrar Genetic Resources and Others 2009(6)SA 232 (CC))
CONCLUSION
[22]	I, for the reasons stated above, declare section 89(5)(b) inconsistent with the Constitution and invalid, as per the order annexed.
Baartman J
IN THE HIGH COURT OF SOUTH AFRICA (WESTERN CAPE DIVISION, CAPE TOWN)
Case Number: 5244/2013
ON THURSDAY 5 JUNE 2014
BEFORE THE HONOURABLE JUSTICE E BAARTMAN
In the matter between:
CHEVRON SOUTH AFRICA (PTY) LTD	Applicant
And
DENNIS EDWIN WILSON t/a WILSON’S	First Respondent
TRANSPORT
THE MINISTER OF FINANCE	Second Respondent
THE MINISTER OF TRADE AND INDUSTRY Third Respondent THE NATIONAL CREDIT REGULATOR	Fourth Respondent
Having heard counsel for the parties and by agreement between the
parties in respect of the constitutional relief:
IT IS ORDERED:
1.	That Section 89(5)(b) of the National Credit Act 34 of 2005 (the Act) is declared invalid and unconstitutional.
2.	That, to remedy the defect, section 89(5) of the Act be reformulated to read as follows:
(5)	If a credit agreement is unlawful in terms of this section, despite any other legislation or any provision of an agreement to the contrary, a court must make a just and equitable order including but not limited to an order that:
(a)	The credit agreement is void as from the date the agreement was entered into
(b)		
3.	That the orders in paragraphs 1 and 2 above shall have no impact on matters in which final judgment has been delivered and in which no application for leave to appeal is pending.
4.	That each party shall be liable for its own legal costs, including the costs of counsel, for this application.
5.	That these orders are referred to the Constitutional Court for confirmation in terms of section 172(2)(a) of the Constitution.
IN THE HIGH COURT OF SOUTH AFRICA (WESTERN CAPE DIVISION, CAPE TOWN)
Case Number: 5244/2013
ON THURSDAY 5 JUNE 2014
BEFORE THE HONOURABLE JUSTICE E BAARTMAN
In the matter between:
CHEVRON SOUTH AFRICA (PTY) LTD	Applicant
And
DENNIS EDWIN WILSON t/a WILSON’S	First Respondent
TRANSPORT
THE MINISTER OF FINANCE	Second Respondent
THE MINISTER OF TRADE AND INDUSTRY Third Respondent THE NATIONAL CREDIT REGULATOR	Fourth Respondent
Having heard counsel for the parties and by agreement between the
parties in respect of the constitutional relief:
IT IS ORDERED:
1.	That Section 89(5)(b) of the National Credit Act 34 of 2005 (the Act) is declared invalid and unconstitutional.
2.	That, to remedy the defect, section 89(5) of the Act be reformulated to read as follows:
(5)	If a credit agreement is unlawful in terms of this section, despite any other legislation or any provision of an agreement to the contrary, a court must make a just and equitable order including but not limited to an order that:
(a)	The credit agreement is void as from the date the agreement was entered into
(b)		
3.	That the orders in paragraphs 1 and 2 above shall have no impact on matters in which final judgment has been delivered and in which no application for leave to appeal is pending.
4.	That each party shall be liable for its own legal costs, including the costs of counsel, for this application.
5.	That these orders are referred to the Constitutional Court for confirmation in terms of section 172(2)(a) of the Constitution.