Faculty of Law
Department of Mercantile Law
Selected Highlights from Research Findings
The National Credit Act, which came into effect on 1 June 2007, governs the granting and management of credit by all credit providers, including micro lenders, banks and retailers. The Act was introduced to reduce reckless credit behaviour (by credit providers and consumers) and over-indebtedness in South Africa. There are certain requirements that credit providers, need to meet. This includes greater disclosure on the cost of credit; regulation of advertising and marketing at home or the workplace; prohibition of unlawful terms, conditions or clauses; and prohibition of negative option marketing and automatic credit increases. In terms of the Act, there is much greater focus on the affordability assessment in respect of the proposed loan, as there are serious sanctions in the event of reckless lending. It is therefore critical that you fully disclose your financial obligations and income (the onus is on the client to give full disclosure). Researchers in the Department of Mercantile Law studied the Act and found that it not only introduces extensive changes to the South African consumer credit law, but that participants in the South African consumer credit market will have to review their credit practices and documentation to ensure compliance with the Act. Moreover, the Act sets out new parameters for the granting of credit as credit providers will in future have to assess a consumer’s credit worthiness before granting credit. It is pointed out that the Act applies to a far greater number of contracts than its predecessors and consequently a large group of consumers, including low income consumers, will enjoy the protection afforded by the Act. They also submit that the Act will result in improved consumer protection, especially in certain areas where protection of the consumer was lacking. However, they suggest that the success of the Act in practice will depend on effective enforcement thereof and on consumer education. On the negative side they are of the opinion that the Act perhaps strives to over-regulate the consumer industry.
Contact person: Prof M Roestoff.
Researchers in the Department of Mercantile Law also investigated the application of the National Credit Act by contrasting the provisions of the Act regarding the cancellation of instalment agreements with the corresponding provisions of the Act’s predecessor, the Credit Agreements Act 75 of 1980. Although the new Act is silent with regard to interim interdicts and attachments, they submit that such relief can be applied for under certain circumstances. They further submit that the conditions prescribed by the Act under which a court may not determine a debt enforcement procedure may cause difficulty in practice. They concluded that it will become the duty of the parties to provide the required information to the court but the Act is silent on the procedure to be followed in this regard. Their final submission that the Act affords equal protection to consumers regarding the exercise of his or her contractual rights by a credit provider to cancel a credit agreement in the event of breach of contract by the consumer than did its predecessor, the Credit Agreements Act. However, the provisions in the Act that deal with this aspect are to some extent less clear than the repealed provisions and judicial interpretation thereof will have to be awaited.
Contact person: Mr S Renke.
In South African Broadcasting Corporation Ltd v National Director of Public Prosecutions and Others 2007 (2) BCLR 167 the following constitutional issues were raised before the Constitutional Court: (1) The nature of the right to a fair trial in the context of a criminal appeal. (2) The ambit of the right to freedom of expression of the press and to receive information in section 16 of the Constitution, 1996, with specific regard to the media’s role to inform the public about the legal system. (3) The existence and role of the ‘principle of open justice’ . (4) The power of the Supreme Court of Appeal to regulate its own proceedings under section 173 of the Constitution, 1996. Prof de Villiers expressed many concerns, inter alia the fact that the Constitutional Court relied on section 35(3) of the Constitution to hold that it was the constitutional responsibility of the court of appeal to ensure that the applicants in the appeal were treated fairly. Section 35(3) bestows on an accused person the right to a fair trial which includes specific enumerated rights. A person convicted of an offence is no longer an accused person and an appeal hearing is not a trial. He submits that these rights were clearly meant only to apply to a person that has not been convicted and to a criminal trial. Another concern is the assumption by the Constitutional Court that section 16 which entrenches the right to freedom of expression of the press and the right of the public to be informed, included the right to televise and broadcast criminal court proceedings. The Constitutional Court has in a line of decisions where it specifically dealt with the interaction between the criminal procedure rights in the Bill of Rights and other rights in the Bill erected a conceptual wall between the criminal procedure rights and the other rights. Prof de Villiers also voiced his concern that the Constitutional Court applied section 34 of the Constitution to a criminal appeal. In S v Pennington 1997 (10) BCLR (CC) paragraph 46 the unanimous Court remarked obiter that section 34 of the Constitution did not apply to criminal proceedings. He furthermore expressed his concern with the finding by the Constitutional Court that the Supreme Court of Appeal had to ensure that the appeal proceedings before it were fair because of its powers in terms of section 173 of the Constitution, 1996. The court even found that the exercise of this power will inevitably affect rights in the Bill of Rights including the right to a fair trial and cautioned that in the exercise of this power these rights must not be unjustifiably interfered with. De Villiers submits that the Supreme Court of Appeal cannot use this power to interfere with a procedural right that has been provided for in the Constitution. The power in section 173 must be used in a manner consistent with the Constitution. The power must furthermore be used sparingly He inter alia concluded that there must be and is a constitutional duty on the Supreme Court of Appeal to ensure that a convicted person is treated fairly on appeal. Section 12 of the Constitution bestows this duty. He argues that the confusion concerning the basic structure of the fundamental protection of the individual’s right to freedom and security and the interaction thereof with the criminal procedure rights in the Constitution under South African law must be corrected. More specifically, the operation of section 12 of the Constitution as a general and residual due process right must be substantiated. He argued that as far as the protection of the liberty of someone confronted by the criminal justice system goes section 34 appears to be redundant.
Contact person: Prof WP de Villiers.
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