Granting default judgments: The registrar’s powers under the National Credit Act

August 1st, 2024
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Section 23 of the Superior Courts Act 10 of 2013, read with r 31(5) of the Uniform Rules of Court, empowers the Registrar of the High Court, save in circumstances involving residential property, to grant default judgments. The purpose of this rule is to prevent the overburdening of the court roll and judicial workload by allowing registrars the discretion to grant default judgments in uncomplicated, undefended matters. Recently, there has been much uncertainty as to the powers of the registrar – in particular whether or not a registrar is empowered to grant default judgments in matters relating to the National Credit Act 34 of 2005 (NCA). Unfortunately, due to its less-than-desirable drafting, the NCA has been the subject of a great deal of conflicting judicial interpretation. There are numerous examples of lack of clarity within the NCA, the most recent being the lack of clarity on the powers of the registrar. Section 130 of the NCA provides:

‘Despite any provision of law or contract to the contrary, in any proceedings commenced in a court in respect of a credit agreement to which this Act applies, the court may determine the matter only if the court is satisfied that –

(a) in the case of proceedings to which sections 127, 129 or 131 apply, the procedures required by those sections have been complied with.’

No reference is made to the registrar in s 130 and it is debateable whether or not the registrar is empowered to grant default judgment in NCA related matters. As a result of this lacuna, different approaches have been adopted by the different provincial divisions, and huge judicial conflict has arisen. This article will consider the history of uncertainty on this topic.

History of conflicting judgments

In the well-known Constitutional Court (CC) judgment of Nkata v FirstRand Bank Ltd 2016 (4) SA 257 (CC) (which clarified whether debtors can reinstate a credit agreement under s 129(3) of the NCA), Jafta J found that default judgment granted by the registrar was incompatible with s 130, as such matters were required to be determined by a court. At para 169, Jafta J held that:

‘Parliament has considered compliance with s 129(1) to be so important that it deemed it necessary to preclude a court from adjudicating the dispute until the court itself is satisfied that there was compliance. Notably, it is the court that must be satisfied and nobody else. This signifies that legal proceedings to which the Act applies must be determined by the court only.’

Jaftha J further held that ss 129 and 130 of the NCA obliges a ‘court’ to adjudicate a dispute arising from a credit agreement, and the general theme of the Act requires that in all proceedings to which the NCA applies, the ‘court’ is required first at the commencement of the hearing to consider compliance with the Act’s requirements (see also University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice and Correctional Services and Others 2016 (6) SA 596 (CC)).

A few years after Nkata, in the case of Du Plessis v FirstRand Bank Limited t/a Wesbank (GP) (unreported case no 62570/2015, 2-5-2018) (Tlhapi J), the Gauteng Division of the High Court held that the registrar did possess the powers to grant default judgment in NCA related matters. This court found that the functions of the Registrar are administrative and, when exercising this function, the registrar was obliged to ensure compliance with the NCA.

After that, the decisions of Xulu v Standard Bank of South Africa Limited and Others (KZP) (unreported case no 1570/21; 2909/14, 23-8-2021) (Nkosi J), Seleka v Fast Issuer SPV (RF) Limited and Another (GP) (unreported case no 46620/20, 10-3-2021) (Mabuse J) and Ramakuela v FirstRand Auto Receivables (RF) Ltd (LP) (unreported case no 4304/2019, 31-1-2022) (Mangena AJ), followed Jaftha J’s finding in Nkata, and found that the registrar was not empowered to grant default judgment in NCA related matters.

In light of the uncertainty and conflicting judgments, the Mpumalanga Division of the High Court constituted a full Bench in the case of Nedbank Ltd v Mollentze 2022 (4) SA 597 (ML) to consider the question. The full Court at para 22 found that ‘a default judgment granted and entered by the registrar is deemed to be a judgment of a court of the division concerned.’ The court found that: ‘A registrar of a court fulfils a quasi-judicial function. Rule 31(5)(b) sets out the process that needs to be followed in respect of default judgments and safeguards are provided to ensure that all relevant information is gathered before a decision is made’ (Shenaaz Munga ‘Can Registrars grant default judgments in terms of the National Credit Act?’ (www.ensafrica.com, accessed 30-6-2024)). The court noted that ‘if the Registrar was not empowered to do so, the costs of bringing a substantive application for default judgment in NCA-related matters would burden financially distressed consumers and it would defeat the purposes of the NCA’ (Munga (op cit)).

Most recent judgments

Last year, in the cases of Gcasamba v Mercedes-Benz Financial Services SA (Pty) Ltd and Another 2023 (1) SA 141 (FB), and Ngandela v Absa Bank Limited and Another (ECEL) (unreported case 1637/2021, 31-1-2023) (Dreyer AJ), the Free State Division of the High Court, Bloemfontein and the East London Local Division held that the meaning of ‘court’ in s 130 cannot be interpreted impliedly to include anybody else, and found that the registrar was not empowered to grant default judgment in NCA related matters. In Gcasamba, Snellenburg AJ found that the ‘court’ in s 130 clearly refers to a judge in open court. Had the legislature intended this function to be performed by anyone else, as opposed to the court, the section would have provided for that in express terms. There is no indication or justification for the suggestion that the legislature intended ‘court’ to have a different meaning or to be read so that another person, such as the registrar, may exercise the functions. Regarding s 23 of the Superior Courts Act, the Free State Division of the High Court found that the section does not purport to empower the registrar to grant default judgments in matters that are reserved for the court, such as matters resorting under the NCA (paras 62-67). Section 130 of the NCA specifically refers to the court, and not the registrar, and accordingly only endows the court with the powers to grant judgments in NCA related matters. Likewise, in Ngandela, the court held that s 130 specifically limits the powers of the registrar in NCA related matters. Section 130 specifically requires judicial oversight of a court, not the registrar, when deciding by default about enforcing a credit agreement.

In January this year, the Gauteng Local Division of the High Court in Nedbank Ltd v Mashaba and Other Similar Matters 2024 (3) SA 155 (GJ), was required to consider this question again. Gilbert AJ noted the conflicting judgments that preceded this case, in particular the finding by Jaftha J in Nkata and the full bench’s decision in Mollentze. After considering the history of cases and the arguments before it, the court agreed with the full bench in Mollentze and held that the findings by Jaftha J in Nkata was not binding and was obiter (paras 37-43). The court found that the purposes of the NCA will not be undermined by the registrar fulfilling the role of the court as required in s 130. When interpreting s 130, the section is to be read in a manner that is consistent with and does not give rise to a conflict with s 23 of the Superior Courts Act. This can be done by interpreting the reference to the ‘court’ in s 130 as including the registrar (paras 51-55). It is also accepted that the kind of oversight required by s 130 is not the kind of ‘judicial supervision’ such as is required over the granting of execution orders and that the purposes of the NCA can be advanced without requiring every application for default judgment in an NCA matter to be heard in open court, there is no need to read s 130 of the NCA as being in conflict with s 23 of the Superior Courts Act, rather than consonant with it. Accordingly, the court found that the registrar does possess the powers to grant default judgment in NCA related matters.

Conclusion

The NCA has undoubtedly created more protection for consumers – unfortunately, the application and interpretation of the Act has left much to be desired. In practice and academically, there is still confusion and debate about whether the registrar can grant default judgments in NCA matters.

The implications of the abovementioned judgments, on the powers of the registrar under the NCA, are far-reaching. If s 130 is interpreted in accordance with Jaftha J’s findings in Nkata, then it would appear that the NCA has lessened the powers of the registrar. This interpretation would also have the effect of increasing the administrative workload of judges and potentially delaying the enforcement process of credit agreements subject to the NCA.

The recent decision by Gilbert AJ in Mashaba seems more pragmatic. Gilbert AJ noted that the arguments holding that the registrar does not possess powers under the NCA seems to be in line with the CC’s attitude that judicial oversight is essential during the execution process against residential property used as a primary residence. It was questionable whether such judicial oversight was required in general NCA related debt enforcement matters, not implicating constitutional rights. Accordingly, there is a desperate need for clarity, and it is recommended that certainty can be established by an amendment to the NCA and Uniform Rules of Court confirming whether or not that debt enforcement proceedings under a credit agreement must be heard before open court or before the registrar. These amendments would create clarity and consistency across all divisions and are urgently needed to ensure uniformity in the debt-enforcement process.

Professor Ciresh Singh LLB LLM PhD (Law) (UKZN) is a Law Professor at the University of South Africa.
This article was first published in De Rebus in 2024 (Aug) DR 36.

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