SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 499/2015

In the matter between:

BLUE CHIP 2 (PTY) LTD t/a BLUE CHIP 49                                             APPELLANT

and

CEDRICK DEAN RYNEVELDT & 26 OTHERS                                    RESPONDENTS

and

NATIONAL CREDIT REGULATOR                                                        AMICUS CURIAE

Neutral citation:   Blue Chip 2 (Pty) Ltd v Ryneveldt (499/15) [2016] ZASCA 98
(03 June 2016)

Coram:
Theron, Wallis, Pillay, Petse and Willis JJA

Heard:
18 May 2016
Delivered:
03 June 2016

Summary:
Magistrates‟ Court Act 32 of 1944 - jurisdiction - s 28(1)(d) - cause of action
arising wholly within the district or regional division - delivery of notice in terms of
s 129(1)(a) of the National Credit Act 34 of 2005 - a material element of the cause of
action - delivery thereof outside the area of jurisdiction of the magistrate‟s court is fatal to
claim since cause of action did not wholly arise within the district or regional division.

ORDER

On appeal from:
Free State Division of the High Court, Bloemfontein (Van Zyl J and
Reinders AJ sitting as court of appeal):

The appeal is dismissed.

JUDGMENT

Pillay JA (Theron, Wallis, Petse and Willis JJA concurring)

[1] The appellant, Blue Chip 2 (Pty) Ltd trading as Blue Chip 49, is a credit provider in
terms of the National Credit Act 34 of 2005 (NCA). It entered into a number of small
unsecured credit agreements with the respondents. These were all entered into at
Bloemfontein and in terms of the respective agreements, specific monthly instalments
had to be paid on specified dates into the bank account of the appellant held at
Bloemfontein. The documents in the record refer mostly to Cedrick Dean Ryneveldt (to
whom I will refer to as the respondent), presumably as a test case the result of which
would be applicable to all others. In the circumstances, I will only deal with his case. It is
common cause that he entered into a credit agreement on 28 June 2013 in an amount of
approximately R20 000, and defaulted on the payments. The appellant then sought
payment of the total amount due and payable in terms of the agreement, namely
R25 134.

[2] Being a credit agreement, it fell squarely within the provisions of the NCA. Upon
the default, the appellant caused a notice in terms of s 129(1)(a) of the NCA (the s 129
notice) to be delivered by registered post to the respondent‟s elected domicilium citandi
et executandi, which was in Kimberley and outside the Bloemfontein Magistrates‟ Court‟s

jurisdiction. It was common cause that the said notice reached the post office in
Kimberley, which duly gave the respondent notice to collect it.

[3] The respondent did not react to the notice within the prescribed period and the
appellant then issued a letter of demand in terms of s 56 of the Magistrates‟ Court Act 32
of 1944 (the Act). It seems that this letter of demand was hand delivered to him in
Kimberley informing him of the status of his account and pointing out that the full amount
was due and payable. In response thereto, the respondent gave written consent in
Bloemfontein to judgment in respect of the debt, interest thereon and costs in terms of
s 58 of the Act. The consent document clearly showed that the appellant intended to
seek judgment in the magistrates‟ court in Bloemfontein.

[4] The appellant thereupon submitted a written request to the clerk of the
Bloemfontein Magistrates‟ Court for judgment to be entered in its favour. The clerk
referred the request for judgment to the magistrate to be dealt with.

[5] The magistrate called for argument and on 31 July 2014 refused to grant the
judgment in favour of the appellant, for lack of jurisdiction. He reasoned that s 28(1)(d) of
the Act had not been complied with in that the delivery of the s 129 notice, being an
element of the cause of action, did not occur within the area of jurisdiction of the court
and consequently he did not have jurisdiction to deal with the matter.

[6] The appellant appealed to the Free State Division of the High Court, Bloemfontein.
The high court, although holding that a s 129 notice „does not however, form part of the
cause of action‟, concluded that the delivery of the s 129 notice „completed‟ the cause of
action. Consequently, because the notice was delivered outside the area of jurisdiction of
the Bloemfontein Magistrates‟ Court, the claim did not wholly arise within its area of
jurisdiction as required by s 28(1)(d) of the Act. It reasoned that the delivery of the notice
is a fact „giving rise to jurisdiction‟ and since delivery of the notice took place outside the
area of jurisdiction of the Bloemfontein Magistrates‟ Court, that court did not have
jurisdiction to deal with the matter. It consequently dismissed the appeal. This court then
granted special leave to appeal.

[7] In this court, it was argued on behalf of the appellant, that the conclusion of both
the magistrate and the high court a quo was wrong. Simply, it was the case of the
appellant that while delivery of the s 129 notice had to be alleged and proved, it was a
procedural step that did not form part of the cause of action and consequently did not
have any bearing on s 28(1)(d) of the Act. The cause of action, it was argued, was
manifested when the agreement, having been entered into in Bloemfontein, was
breached in Bloemfontein and this was sufficient to found the jurisdiction of the
Bloemfontein Magistrate‟s Court.

[8] There was no appearance for the respondent but the National Credit Regulator
was before the court as amicus curiae. Mr Grobler, counsel for the amicus curiae, argued
that the delivery of the s 129 notice outside the area of jurisdiction of the Bloemfontein
Magistrates‟ Court prevented that court from having the necessary jurisdiction to hear the
matter since the cause of action did not arise „wholly within the district or regional
division‟ as required by s 28(1)(d) of the Act.

[9] The issue therefore to be determined in this appeal is whether the delivery of the
s 129 notice constitutes part of the cause of action. There are a number of discordant
judgments in the magistrate‟s court on this issue. This judgment will clarify the position.

[10] Being a creation of statute, the magistrate‟s court derives its powers from the Act.
As was stated in Ndamase v Functions 4 All:1
„It is well-established that the magistrate‟s court has no jurisdiction and powers beyond those
granted by the Act.‟
Sub-section 28(1)(d) of the Act reads:
‟28 Jurisdiction in respect of persons
(1) Saving any other jurisdiction assigned to a court by this Act or by any other law, the persons in
respect of whom the court shall, subject to subsection (1A), have jurisdiction shall be the
following and no other:
. . .

1 Ndamase v Functions 4 All [2004] ZASCA 32; 2004 (5) SA 602 (SCA) para 5.

(d) any person, whether or not he or she resides, carries on business or is employed within the
district or regional division, if the cause of action arose wholly within the district or regional
division;
. . . .‟

[11] The magistrate examined whether he had the power to deal with the matter. He
referred to the decision in Whyte v Rathbone.2 The facts were that the parties had
entered into a loan agreement by signing an acknowledgment of debt within the district of
Durban. No date(s) for the repayment of the loan was agreed upon. It was therefore
necessary for the defendant to be placed in mora and a letter of demand was posted to
him. This letter was not proved to have been delivered to him within the jurisdiction of the
Durban Magistrates‟ Court. The court held that it did not have the necessary jurisdiction
to hear the matter since the cause of action did not wholly arise within the district (of
Durban), as contemplated in s 28(1)(d).

[12] The meaning of the expression „cause of action‟, when the identically worded
predecessor to s 28(1)(d) was in operation, was authoritatively laid down in McKenzie v
Farmers’ Co-Operative Meat Industries Limited3 where the definition of ‟cause of action‟,
adopted from Cook v Gill (L.R., 8 C.P. 107), was held to be „. . . every fact which it would
be necessary for the plaintiff to prove, if traversed, in order to support his right to the
judgment of the Court. It does not comprise every piece of evidence which is necessary
to prove each fact, but every fact which is necessary to be proved.‟

[13] One of the issues in Evins v Shield Insurance Co Ltd4 was whether claims for
bodily injuries and loss of support constituted two separate rights of action under the
common law and the Compulsory Motor Vehicle Insurance Act 56 of 1972 respectively
when flowing from the same set of facts. In dealing with that question, the court found it
necessary to refer to the term „cause of action‟. At 838 D-F, Corbett JA, writing for the
majority of the court adopted the approach as set out in McKenzie, quoting the definition
of „cause of action‟ referred to in para 12 above. In the same matter, Trollip JA, writing for

2 Whyte v Rathbone 1936 NPD 549.
3 McKenzie v Farmers’ Co-Operative Meat Industries Ltd 1922 AD 16 at 23.
4 Evins v Shield Insurance Co Ltd 1980 (2) SA 814 (A).

the minority, stated at 825 E-H:
„I still remain somewhat uncertain whether appellant‟s claims for her bodily injuries and her loss of
support constitute two separate rights of action under the common law and the Compulsory Motor
Vehicle Insurance Act 56 of 1972 (“the CMVI Act”). I prefer to use the term “right of action” to
“cause of action” because, I think, the former is strictly and technically more legally correct in the
present context (cf Mazibuko v. Singer 1979 (3) SA 258 (W) at 265 D-G). “Cause of action” is
ordinarily used to describe the factual basis, the set of material facts, that begets the plaintiff‟s
legal right of action and, complementarily, the dependant‟s “debt”, the word used in the
Prescription Act. The term, “cause of action”, is commonly used in relation to pleadings or in
statutes relating to jurisdiction or requiring prior written notification of a claim before action
thereon is commenced.‟(Emphasis added)
Clearly both judgments are in line with McKenzie. Where it is essential to the successful
pursuit of a contractual claim that a letter of demand be sent, then the sending of that
letter of demand is part of the cause of action. In particular where a statute provides that
before an action can be commenced or a claim enforced against a debtor, a notice be
given, then the giving of that notice is essential to the successful pursuit of the claim and
proving that it was given, is part of the cause of action. Compliance with a directive to
serve a notice must both be alleged and proved if a claimant is to succeed and obtain
judgment.5

[14] The definition of „cause of action‟ as set out in McKenzie has stood the test of time
and almost one hundred years on, has not been altered in any way.6 There is no
compelling argument why it should now be changed.

[15] The purposes of the NCA is broadly described in s 3 thereof as being the
following:
„to promote and advance the social and economic welfare of South Africans, promote a fair,
transparent, competitive, sustainable, responsible, efficient, effective an accessible credit market
and industry, and to protect consumers‟.

5 Masuka and Another v Mdlalose and Others 1998 (1) SA 1 (SCA) at 7C-E; Avex Air (Pty) Ltd v Borough
of Vryheid (2) 1972 (4) SA 676 (N) at 678 C_E; Minister of Safety and Security v De Witt 2009 (1) SA 457
(SCA) para 10; Merry Hill (Pty) Ltd v Engelbrecht 2008 (2) SA 544 (SCA) para 23.
6 Ndlovu v Santam Ltd [2005] ZASCA 41; 2006 (2) SA 239 (SCA) para 17; Road Accident Fund & another
v Mdeyide [2010] ZACC 18; 2011 (2) SA 26 (CC) para 19; Van Deventer v Ivory Sun Trading 77 (Pty) Ltd
[2014] ZASCA 169; 2015 (3) SA 532 (SCA) para 23.

The NCA represents a major overhaul of previous credit regulation and a clean break
from the past.

[16] I now turn to the aspect of the s 129 notice and whether there is any reason to
hold that it does not form part of the cause of action as contended by the appellant.
Section 129(1) of the NCA reads:
„(1) If the consumer is in default under a credit agreement, the credit provider -
(a) may draw the default to the notice of the consumer in writing and propose that the consumer
refer the credit agreement to a debt counsellor, alternative dispute resolution agent, consumer
court or ombud with jurisdiction, with the intent that the parties resolve any dispute under the
agreement or develop and agree on a plan to bring the payments under the agreement up to
date; and
(b) subject to section 130(2), may not commence any legal proceedings to enforce the agreement
before -
(i) first providing notice to the consumer as contemplated in paragraph (a), or section 86(10), as
the case may be; and
(ii) meeting any further requirements set out in section 130.‟
This section obviously accords with the broad purposes of the NCA as set out in s 3
thereof.

[17] It is clear from s 129(1)(a) and (b) that prior to commencing legal proceedings to
enforce an agreement, the credit provider must deliver a written notice to the consumer
wherein attention is drawn to the default in repayment, setting out various options open to
him or her whereby the pressure of the default could be alleviated. In other words, it is a
mandatory requirement which must be satisfied before judgment can be granted for
recovery of the outstanding debt. 7 In Sebola v Standard Bank,8 para 74 it was held that
given the significance of the s 129 notice, „the credit provider must make averments that
will satisfy the court from which enforcement is sought that the notice, on balance of
probabilities, reached the consumer‟. In Kubyana v Standard Bank of South Africa Ltd,9
para 34, the purpose of a s 129 notice was explained as aiming to „establish a framework

7 Although the word „may‟ is used in s 129(1)(a), the notice is a mandatory requirement. See Nedbank Ltd
& others v National Credit Regulator & another [2011] ZASCA 35; 2011 (3) SA 581 (SCA) para 8.
8 Sebola & another v Standard Bank of South Africa Ltd & another [2012] ZACC 11; 2012 (5) SA 142 (CC).
9 Kubyana v Standard Bank of South Africa Ltd [2014] ZACC 1; 2014 (3) SA 56 (CC).

within which the parties to the credit agreement, in circumstances where the consumer
has defaulted on her obligations, can come together and resolve their dispute without
expensive, acrimonious and time-consuming recourse to the courts‟.

[18] The delivery of a s 129 notice is a peremptory step which is a pre-requisite for any
judgment sought on a claim arising out of a default of a credit agreement. The failure to
take the necessary steps prior to judgment, will result in a court refusing to grant
judgment in favour of the claimant. It is a step which is recognised in the NCA as
essential to granting judgment in favour of a claimant. Hence in para 87 of Sebola, it is
pointed out that if indeed a litigant has failed to comply with any provision of the NCA,
including s 129, s 130(4)(b) provides for steps which may be taken in order to remedy the
situation in terms of an order of the court. A failure to allege and prove compliance with
s 129(1) (even after s 130 procedures) would render a summons excipiable and the
matter would end without judgment in favour of the claimant being granted.

[19] As was said by Majiedt AJP in Beets v Swanepoel10 (para 19):
„. . . a plaintiff must in my view aver compliance with these sections [s 129 and s 130] in the
summons or particulars of claim to disclose a cause of action where the suit is based on a credit
agreement to which the Act applies. It is a material averment, the absence whereof would render
the pleading excipiable. Without the requisite notice, a claim cannot be enforced.‟
The reason for this is that the pleadings would lack a proper cause of action.

[20] In order to disclose a cause of action to enforce a claim emanating from a default
of a credit agreement, an averment of compliance with s 129 must be contained in the
summons and proved. Delivery of a s 129 notice forms part of the cause of action. It is an
essential component of a plaintiff‟s cause of action.11 It must occur before a cause of
action can be said to have arisen. Absent compliance therewith, there would be no cause
of action.

[21] The giving of the notice is therefore critical to the question of jurisdiction in relation

10 Beets v Swanepoel [2010] ZANCHC 55.
11 Rossouw & another v First Rand Bank Ltd [2010] ZASCA 130; 2010 (6) SA 439 (SCA) para 38.

to s 28(1)(d) of the Act. Since it is common cause that delivery of the s 129 notice took
place outside the area of jurisdiction of the Bloemfontein Magistrates‟ Court, the cause of
action did not arise „wholly within the district or regional division‟ of that court. It follows
therefore that the magistrate was correct in finding that he could not deal with the matter
for lack of jurisdiction. The high court was also correct to dismiss the appeal.

[22] It was also argued on behalf of the appellant that the respondent had consented to
the jurisdiction of the Bloemfontein Magistrates‟ Court when he signed the consent to
judgment. Mr Botes SC however conceded that if that court lacked jurisdiction, the
consent to judgment cannot be relied upon. This is in accordance with s 45 of the Act. In
my view, though not necessary to deal with it herein, s 90 and s 91 of the NCA would in
all probability also prohibit consent to jurisdiction in these circumstances.

[23] Neither of the parties sought any cost order.

[24] In the result, the appeal is dismissed.

R Pillay

Judge of Appeal

Appearances:

For Appellant:

F W Botes SC (and L Collins)

Instructed by:
Jordaan Rijkheer Inc, Bloemfontein

For amicus curiae:

S Grobler

Instructed by:

Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

03 June 2016

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form part of
the judgment.

Blue Chip 2 (Pty) Ltd t/a Blue Chip 49 and Cedrick Dean Ryneveldt & 26 Others [2016]
ZASCA 98 (03 June 2016)

MEDIA STATEMENT

The Supreme Court of Appeal today dismissed an appeal in respect of a claim for the recovery of
loans made to a number of people. It dealt with the Reyneveldt case as a test.

The appellant, a credit provider in terms of the National Credit Act 34 of 2005 granted a loan to
Ryneveldt. The loan contract was signed by the parties within the magisterial district of Bloemfontein.
In terms of that contract specified monthly payments had to be made into the appellant’s account held
in Bloemfontein. The respondent defaulted thereon.

In terms of s 129 of the National Credit Act, a notice in which the default as well as certain options
available to the debtor had to be delivered to the latter before the institution of any claim in regard to
the contract. In this case the said notice was delivered to Ryneveldt by post intended to be delivered
at his chosen address which was situated in Kimberley. Upon the signing of a consent to judgment by
Ryneveldt, judgment in favour of the appellant was sought from the Magistrate in Bloemfontein. The
magistrate refused to grant judgment in favour of the appellant for lack of jurisdiction since the
required notice had been delivered to an address outside the court’s area of jurisdiction and since the
cause of action did not wholly arise within the district of Bloemfontein as required by s 28(1)(d) of the
Magistrates’ Court Act 32 of 1944. An appeal to the Free State Division of the High Court,
Bloemfontein was unsuccessful.

It was argued in this court that the delivery of a s 129 notice was merely a procedural step and that
the cause of action had been manifested in Bloemfontein when the breach of the contract had
occurred. It was held that where a statute provides that before an action can be commenced or a
claim enforced against a debtor a notice be given, then the giving of that notice is essential to the
successful pursuit of that claim and proving that it was given, is part of the cause of action. In other
words, the delivery of such a notice is a mandatory requirement which must be satisfied before
judgment can be granted for recovery of an outstanding debt. The failure to prove compliance with
peremptory steps prior to judgment will result in the court refusing to grant judgment in favour of a
claimant as happened in this case.

Furthermore, consenting to judgment did not cure the problem because the cause of action did not
wholly arise within the district of the Bloemfontein Magistrate’s Court.

---ends---