By Nomfundo Jele
On 4 November 2021, the Supreme Court of Appeal (SCA) handed down judgment in Bayport Securitisation Limited and Another v University of Stellenbosch Law Clinic and Others (SCA) (unreported case no 507/2020, 4-11-2021) (Phatshoane AJA (Ponnan, Makgoka and Gorven JJA and Molefe AJA concurring)), which provides indispensable certainty on the issue of legal fees chargeable to enforce credit agreements. This required an analysis of the relevant provisions of the National Credit Act 34 of 2005 (the NCA), which according to the SCA ushered in a host of new forms of protection for consumers.
The SCA essentially had to place a construction on ‘collection costs’ as defined in s 1 of the NCA and to decide whether ‘collection costs’ referred to in s 101(1)(g), read with s 103(5) of the NCA, includes all legal costs pre and post judgment.
If so, the legal fees would be subject to the requirement contained under s 103(5) of the NCA, which provides that the aggregate interest, fees, and charges, including collection costs, as covered in the NCA, cannot exceed the unpaid balance of the consumer’s principal debt at the time of the default.
The LSSA has always held the view that legal fees do not form part of the collection cost. The Western Cape Division of the High Court (WCC), however, rejected this view. The court found that ‘collection costs’ include all legal fees and are subject to s 103(5) of the NCA. The Law Society of South Africa (LSSA) resolved to take the judgment of the WCC on appeal to the SCA. As a professional interest organisation, the LSSA is pursuant to its constitution obligated to ‘at all times, also have regard to broader interests of the public whom the profession serves, and to endeavour to reconcile, where they may conflict, the interests of the profession and the public’. The SCA upheld the LSSA’s appeal.
The SCA reiterated that South African courts have recognised the distinction between collection costs and litigation costs. To this extent, the courts have recognised that a legal practitioner (attorney) who executes the recovery mandate through a legal process, is remunerated through costs awarded by the court, which costs are subject to maximum tariffs prescribed under law. The costs are awarded to successful litigants, and it provides them some indemnification for having incurred the legal costs in pursuing legal action.
The SCA illustrated that if the legal fees cannot exceed the unpaid balance of the consumer’s principal debt, it would severely limit a court’s discretion to make appropriate cost orders, including punitive cost orders in the event of frivolous litigation that may deserve reprimand. The SCA also confirmed that the statutory limit under s 103(5) of the NCA does not apply post-judgment. This means that litigation costs are not considered collection costs, as defined in the NCA, whether pre or post litigation.
The SCA engaged in a delicate judicial balancing exercise, which confirmed the well-established distinction between collection and litigation costs. This in turn recognises the need for credit providers to approach the courts for appropriate relief, including, when successful, cost orders that are subject to maximum tariffs prescribed by law.
The LSSA would like to thank its legal team, André Bloem from RW Africa Group, advocate André Badenhorst SC and Pieter Skein Attorneys of Bloemfontein.
Click here to read the SCA judgment.
The LSSA would like to remind attorneys that the 2022 Fidelity Fund Certificate (FFC) application portal is open for applications. The Legal Practice Council (LPC) has requested legal practitioners to immediately access the portal to apply for their FFC online and check the progress of their application. In terms of s 85(7) of the Legal Practice Act 28 of 2014, an FFC is valid until 31 December of the year in which it was issued.
Click here to create a profile and apply for your 2022 FFC.
Click here to read the LPC notice.
Click here for the FFC application LPC provincial contact details.
The LSSA has made several submissions on proposed amendments to legislation and policy documents:
The Board of the Road Accident Fund (the Board) published for comment notice BN 66 GG44747/22-6-2021 prescribing ‘terms and conditions upon which claims for compensation shall be administered’.
The LSSA is of the view that the entire notice is ultra vires and unenforceable for various reasons.
In terms of the Road Accident Fund Act 56 of 1996, the Board does not have the power to amend the Act or the Regulations. By imposing additional requirements for a valid lodgement of a claim, the Board effectively seeks to amend the Act.
As regards the schedule of additional documents required, the LSSA noted that many of the ‘official documents’ are not readily available. Furthermore, these documents cannot be elevated to peremptory requirements for substantial compliance.
The proposed new requirements will also prejudice direct claimants, many of whom will not only be unable to decipher and understand the provisions of the peremptory claim requirements but will also find the additional requirements costly. The proposed new requirements could inadvertently cause claims to become prescribed.
Click here to read the submissions.
The LSSA has considered the proposed eThekwini Metropolitan Municipality: Credit Control and Debt Collection Amendment By-law, 2021 and submitted that the proposed amendment be withdrawn, as it will not pass constitutional muster.
Click here to read the submissions.
Having considered the Deeds Registries Amendment Bill, 2020, the LSSA submitted comments, including as regard the proposal to extend the duties of the Registrar to record land tenure rights and the proposed sanction for the unauthorised execution or signature of a preparation clause. Apart from some issues, the proposed amendments generally appear to be sensible, practical, and intended to bring the Deeds Registries Act 47 of 1937 in line with formal requirements.
Click here to read the submissions.
The LSSA also considered the Companies Amendment Bill, 2021 and made substantial comments. One of the proposals made by the LSSA was that, in order to enable South Africa to comply with its international obligations as far as money laundering and terrorism is concerned, a deeming provision dealing with the ‘true owner’ of the company be inserted.
Click here to read the submissions.
Deputy Judge President of the Gauteng Division of the High Court, Aubrey Ledwaba, has issued a directive pertaining to the management of crowded-out matters in the Pretoria High Court. The objective of the directive is to ensure that only matters that are verified trial ready and comply with the directive be allocated dates on the trial roll.
In the directive, Ledwaba DJP explains that space has been reserved for the allocation of matters that were on the trial roll and were crowded out or not allocated by the court between March 2020 to June 2021 because of the non-availability of judges. The statements for these matters need to be uploaded by 19 November 2021, failing which, the crowded-out matters will not be allocated trail dates.
Click here to read the directive.
The LSSA would like to remind practitioners that due to renovations, the services offered at the High Court, Durban will be accommodated at the Durban Magistrate’s Court during the December 2021/January 2022 recess period.
Click here to read the notice.
Although some progress has been made since the Department of Justice’s systems were compromised on 6 September 2021, causing loss of access to all electronic systems and networks, including e-mails, there are still various issues that need to be sorted. The Department is currently in the testing phase to ensure all systems are functional. Please note that all departmental offices (Masters, Magistrate’s courts etcetera) were affected. A statement will be issued by the department, which the LSSA will share when all systems are totally functional again.
The Southern African Democratic Community Lawyers Association (SADC LA) has advised that its annual conference and general meeting (ACGM), which was scheduled to take place from 24 – 26 November 2021, has been postponed to a date to be announced soon. The SADC LA sincerely apologise for any inconvenience caused.
With effect from 1 December 2021, Sars will levy a late submission of return penalty where one or more personal income tax returns are outstanding. As a transitional measure for the first year, the one tax return or more rules will only apply to the 2021 tax return. Prior to 1 December 2021, Sars could only levy a late submission of return penalty where two or more tax returns were outstanding. This older rule will remain in place for one more year for 2020 and earlier returns.
The deadline for individual non-provisional taxpayers is 23 November 2021. In a notice, Sars has stated that taxpayers in the auto-assessment population, who neither accepted nor edited and submitted their simulated assessments by this date, will receive an original assessment based on an estimate in accordance with s 95 of the Tax Administration Act 28 of 2011.
Click here to read the SARS notice.
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Nomfundo Jele, Acting Communications Manager, Law Society of South Africa, nomfundom@lssa.org.za
