THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 560/2018

In the matter between:
NATIONAL CREDIT REGULATOR

APPELLANT
and
SOUTHERN AFRICAN FRAUD PREVENTION
SERVICES NPC

RESPONDENT

Neutral citation: National Credit Regulator v Southern African Fraud
Prevention Services NPC (560/2018) [2019] ZASCA
92 (03 June 2019)
Coram:
WALLIS, SALDULKER, ZONDI and SCHIPPERS JJA and
EKSTEEN AJA
Heard:
22 May 2019
Delivered: 03 June 2019
Summary: Credit bureau – collection of information pertaining to fraud –
whether consumer credit information in terms of s 70(1) of National Credit
Act 34 of 2005 (NCA) – whether information constituting an adverse
classification of consumer behaviour in terms of Regulation 17 of
Regulations under NCA in GN R489 of 31 May 2006 – whether credit
bureau required to expunge information within one year.

ORDER

On appeal from: Gauteng Division of High Court, Pretoria (Vuma AJ,
Baqwa J concurring, sitting as a court of appeal):
1 The appeal is dismissed with no order for costs.
2 The orders of the high court granting costs against the National Credit
Regulator in the appeal and the cross-appeal to that court are set aside.

JUDGMENT

Wallis and Schippers JJA (Saldulker and Zondi JJA and Eksteen AJA
concurring)

[1] On 12 March 2015 the appellant, the National Credit Regulator
(NCR), acting in terms of s 140(1) of the National Credit Act 34 of 2005
(the NCA), lodged a complaint with the National Consumer Tribunal (the
Tribunal), against the respondent, Southern African Fraud Prevention
Services NPC (SAFPS). The complaint charged SAFPS, a registered credit
bureau, with various contraventions of provisions of the NCA and the
regulations made thereunder. Prior to the hearing before the Tribunal the
parties concluded an agreement of settlement, which they embodied in a
draft order subsequently endorsed by the Tribunal. The agreement disposed
of all save one of the alleged contraventions. The Tribunal was left to
determine an alleged contravention of s 70(2)(f) of the NCA, read with
regulation 17, and, if there had been a contravention, whether an
administrative fine should be imposed upon SAFPS.

[2] The issue for determination by the Tribunal was whether SAFPS was
retaining information for longer than permitted by the NCA, read with
certain relevant regulations. The NCR contended that the information in
question was consumer credit information as defined in s 70(1) of the NCA
and that it could not be retained for longer than one year. SAFPS said that
it was what it described as ‘fraud information’, which was not regulated
and which it was entitled to keep for the period determined by it, namely
ten years.

[3] The Tribunal upheld the contentions of the NCR that SAFPS had
contravened s 70(2)(f) of the NCA, read with regulation 17, and made a
declaratory order to that effect. It declined to impose an administrative fine.
SAFPS appealed to the Gauteng Division of the High Court, Pretoria and
its appeal succeeded. This further appeal on both the issue of contravention
and the imposition of an administrative fine is with the special leave of this
court.

The facts
[4] SAFPS was incorporated in 2000 as a non-profit corporation by the
four major banks to combat fraud in commerce. Its members include most
major credit providers in South Africa, as well as the South African
Revenue Service and the Financial Services Board. It is funded by the
annual membership contributions of its members. SAFPS initially denied
that it was a credit bureau and obliged to register in terms of s 43 of the
NCA. The Tribunal upheld its contentions, but Legodi J in the North
Gauteng High Court, Pretoria, overruled that decision in a judgment
delivered on 26 May 2011. Subsequently SAFPS registered as a credit
bureau and it is accordingly obliged to comply with the statutory
obligations of a registered credit bureau. The issue is whether it has done

so in regard to expunging the information it collects on behalf of its
members.

[5] In terms of the agreement concluded between SAFPS and its
members, each member agrees that all fraud detected by it during the
normal course of its business will be filed to the SAFPS Shamwari database
within two business days of the fraud being detected. All members have
access to that database in order to access information applicable to their
business requirements and needs. Primarily members will seek information
before entering into a variety of commercial transactions or making
employment decisions.

[6] The SAFPS code of practice identifies 11 different categories of
fraudulent conduct. These are:
(a) False identity, which includes the use of a false name, address or ID
number or other false personal detail in an application of some type;
(b) Impersonation, where an applicant impersonates someone else, perhaps
by using a false ID book or number, or the particulars of a dead person, or
in some other way;
(c) Giving false employment details including an incorrect employer name,
address or telephone number or providing a forged or incorrect payslip;
(d) Use of other forged documents;
(e) A victim of impersonation, where it is doubtful whether the person is
in fact impersonating someone else or is himself or herself possibly the
victim of impersonation. In that event the person is shown under both
categories (b) and (e). The latter is said to require the member ‘to be extra
vigilant when deciding as to the granting of any facility’. After establishing
that they have been a victim of impersonation, for example, by someone

using their stolen identity card, a person listed under this category is able
to ask for a protective listing;
(f) Misuse of account through fraudulent conduct, which is described as
‘deliberately not paying their mortgage or credit card account, especially
by guile, trickery or illegitimate presentation of the individual’s financial
position’. It is said that the category is not to be used unless there was
clearly an intention to commit fraud;
(g) Employee fraud or fraud in an employment application. This is an
extensive category covering a vast number of possibilities;
(h) Insurance fraud, which relates to dishonest and inflated insurance
claims;
(i) Internet fraud;
(j) Business fraud/person unknown, which records information related to
fraudulent activities where no person can be identified as responsible;
(k) Suspected fraud (declined). This is a cautionary category where fraud
is strongly suspected, primarily in regard to the provision of false
information or impersonation of someone else. Accordingly it does not
involve a case of proven fraud.

[7] SAFPS referred compendiously to all the information in these
various categories as ‘fraud information’ and we shall do likewise. In each
case the primary item of information in its records was a factual statement
describing the particular fraud. It stressed the fact that fraud is widespread
and perpetrators of fraud are often repeat offenders. In other words, they
may repeat fraudulent conduct with several victims or, if unsuccessful in
one attempt they may try elsewhere. Perhaps along the lines that the
leopard does not change its spots, SAFPS maintained that such information
remained relevant for a lengthy period. It accordingly only deletes it from
the Shamwari data base after ten years, unless the alleged fraud is clarified

and resolved before that date and the listing removed at the instance of a
member.

The dispute
[8] The NCR contended that the information obtained by SAFPS from
its members constituted consumer credit information as defined in s 70(1)
of the NCA. That is information concerning:
‘(a) a person’s credit history, including applications for credit, credit agreements to
which the person is or has been a party, pattern of payment or default under any such
credit agreements, debt re-arrangement in terms of this Act, incidence of enforcement
actions with respect to any such credit agreement, the circumstances of termination of
any such credit agreement, and related matters;
(b) a person’s financial history, including the person’s past and current income, assets
and debts, and other matters within the scope of that person’s financial means, prospects
and obligations, as defined in section 78(3) and related matters;
(c) a person’s education, employment, career, professional or business history,
including the circumstances of termination of any employment, career, professional or
business relationship, and related matters; or
(d) a person’s identity, including the person’s name, date of birth, identity number,
marital status and family relationships, past and current addresses and other contact
details, and related matters.’

[9] The first issue between the parties was whether the NCR was correct
in contending that the fraud information held by SAFPS was consumer
credit information. If it was not, that was an end to the matter. If it was, the
second issue was whether and when SAFPS was obliged to expunge the
information from its Shamwari database. Section 70(2)(f) of the NCA
required it to:
‘promptly expunge from its records any prescribed consumer credit information that,
in terms of the regulations, is not permitted to be entered in its records or is required to
be removed from its records’.

That takes one to the regulations promulgated under the Act (the
Regulations).1

[10] Regulation 17(1) contains a table of different categories of consumer
credit information, with a more detailed description and a maximum period
from the date of the relevant event for which it can be displayed and used
for purposes of credit scoring or credit assessment. No point was made of
that latter qualification and we assume that SAFPS accepted that its
members use the information in part at least for credit assessment. It was
common cause between the parties, and correctly so in our opinion, that
the only category of consumer credit information that might be relevant to
the information held by SAFPS was category 5 entitled ‘Adverse
classifications of consumer behaviour’. The appended description is
‘Subjective classifications of consumer behaviour’ and the period of
expungement one year. The second issue was whether the fraud
information held by SAFPS fell within this category. If it did, then its
retention on the database for ten years was a breach of s 70(2)(f) of the
NCA.

Is the SAFPS fraud information consumer credit information?
[11] The NCR’s case before the Tribunal was that a listing relating to
fraud or suspected fraud constituted ‘consumer credit information’ as
defined in s 70(1) of the NCA, because consumer behaviour was not
limited to payment under a credit agreement but also included the
behaviour of a consumer who intended to defraud a credit provider in a
prospective credit application. All of this fitted comfortably within the
general categories of a person’s credit history or their financial history. In

1 The Regulations were originally published in GN R489 of 31 May 2006 and amended by GN R1209
of 30 November 2006 and further amended by GN R202 of 13 March 2015.

a real sense nothing could be more relevant to a person’s credit history than
that they had previously committed fraud.

[12] Before us counsel for the NCR advanced essentially the same
argument. The data that the SAFPS kept in its database was consumer
credit information, because it included information relating to fraudulent,
financial or other transactions involving consumers and contained their
personal details such as identity numbers, addresses and places of work.
The data was inextricably linked to credit applications by consumers to
credit providers and used by members of SAFPS when assessing
applications for credit.

[13] In construing the relevant provisions of the NCA and regulation 17,
the starting point is the accepted approach to statutory construction that
when interpreting legislation, what must be considered is the language
used, the context in which the provision appears, the apparent purpose to
which it is directed, and the background to its production.2

[14] The definition of ‘consumer credit information’ in s 70(1) is
extremely broad. It includes all sorts of information of the type that
consumers ordinarily furnish in credit applications, about their credit,
financial and employment history. In order for it to be meaningful it reflects
personal information such as their name, address, identification number
and contact details. The breadth of the definition must however be
understood in the context in which it appears. That context emerges from
other provisions of the NCA. Thus, in s 3(f), one of the purposes of the

2 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593
(SCA) para 18; affirmed in Airports Company South Africa Big Five Duty Free (Pty) Limited & others
[2018] ZACC 33; [2019] 2 BCLR 165 (CC) para 29;

NCA is to improve consumer credit information and the reporting and
regulation of credit bureaux. That appears to serve two purposes consistent
with the balance that the NCA seeks to maintain between consumers who
need credit and those who provide it. The first is that the information
recorded by bureaux should be as accurate and meaningful as possible. The
second is that consumers seeking credit should not be burdened by
inaccurate or out of date information.

[15] In s 43(1), dealing with the registration of credit bureaux, one finds
that they are bodies that for payment engage in the business of receiving
reports of, or investigating, credit applications, credit agreements, payment
histories or patterns or consumer credit information as defined in s 70 (1).
When furnished with consumer credit information they are obliged to
verify its accuracy and also to maintain it in their records. In other words,
consumer credit information relates to information concerning a person’s
ordinary track record as a consumer. Its apparent purpose is credit
assessment, more specifically whether consumers would be able to comply
with their obligations under a credit agreement. SAFPS submitted that the
information in the section was confined to this type of information and did
not include information about criminal convictions or confirmed incidents
of fraud.

[16] A further factor is that the NCA itself appears to recognise that a
credit bureau may receive and retain certain information that does not
constitute consumer credit information. Section 70(3)(a) provides that, in
addition to the consumer credit information contemplated in s 70(2), which
is the information described in s 70(1), a credit bureau ‘may receive,
compile and report only other prescribed information in respect of a
consumer’. This is something of a double-edged sword. It prohibits credit

bureaux from receiving, compiling and reporting on any information other
than information described in s 70(1), but contemplates that there may be
such additional information and that this may be kept, if that is prescribed
by regulation. So the NCA itself appears to contemplate that there may be
information that it is desirable that credit bureaux should keep, falling
outside that described in s 70(1).

[17] This rather tangled scheme is given effect by way of the regulations.
Regulation 18(3) defines six categories of consumer credit information that
may not be kept and must be expunged from a credit bureau’s records in
terms of s 70(2)(f) of the NCA. These categories include information about
a consumer’s race, political affiliation, medical status, religion, sexual
orientation or trade union membership. This is all described as consumer
credit information, albeit that it is unclear how some of it at least fits within
the definition in s 70(1). The additional information that a credit bureau
may keep in terms of s 70(3)(a) is then described in regulation 18(6). There
are four categories of such information viz:
‘(a)
status and history of outstanding obligations and payments in respect of goods,
services, or utilities supplied to consumers;
(b)
information that is relevant for the purposes of credit fraud detection and
prevention;
(c)
payments made by a consumer in respect of a debt, where the debt has been
ceded or sold by the credit provider to another party;
(d)
information that is not related to and not intended to for the purpose of providing
consumer credit, provided that the consumer’s consent has been obtained to use the
information for such purpose and to submit, compile and report such information’.

[18]  Section 70(3)(a) describes this as ‘other information’ in
contradistinction to consumer credit information. The difficulty lies in
distinguishing the two. Sub-paragraph (a), for example, undoubtedly refers

to information that constitutes part of a consumer’s credit history. A
consumer’s payment history in respect of a debt is a ‘pattern of payment or
default’ under a credit agreement and therefore part of their credit history
as defined. Some at least of the information held by SAFPS, such as the
identity of consumers and the fact that they had applied for credit and been
refused, would constitute part of their credit history and therefore
consumer credit information. On the face of it therefore there is an overlap
between the information prescribed in regulation 18(6) and consumer
credit information in terms of s 70(1).

[19] One way of dealing with this would be, as contended by SAFPS, to
ask first whether the information is information that is relevant for the
purpose of credit fraud detection and prevention. If the answer to that
question is affirmative then, because s 70(3)(a) treats information of that
type as distinct from consumer credit information as defined, it is
automatically excluded from the latter category. On that basis all the
information it describes as fraud information would fall outside the scope
of consumer credit information and also outside the scope of s 70(2)(f) of
the NCA, which only applies to the expungement of consumer credit
information and not information that does not constitute consumer credit
information. The same approach could be taken to the other information
referred to in regulation 18(6).

[20] This is an apparently simple way of dealing with the overlap
between the fraud information held by SAFPS and consumer credit
information defined in s 70(1), such as information relating to personal
details, for example, the surname and identity number of a subject;
employment, professional or business history; and credit history which
includes applications for credit. But it poses problems. In the first place

s 70(1) is the primary provision, contained as it is in the NCA itself, while
regulation 18(6) is a regulation made under the NCA that serves a
subordinate purpose. It inverts the enquiry to say that the regulation
operates to limit the scope of the statutory definition.  Secondly, it means
that the regulation serves to define the statutory provision, but that is not
the purpose of a regulation. In our view therefore the contention that
regulation 18(6)(b) serves to exclude from the ambit of consumer credit
information any information that is relevant for fraud detection and
prevention purposes cannot succeed.

[21]  There is an alternative argument that may have a similar result. It is
that the purpose of s 70(2)(f) of the NCA is to empower the Minister to
make regulations that remove from the ambit of consumer credit
information certain specified information that would otherwise fall within
it, given the wide terms of the definition in s 70(1). Accordingly regulation
18(6) serves to excise from consumer credit information in terms of s 70(1)
the information specified in the regulation. That construction would
overcome the problem that the regulation and the section overlap. It was
not, however, developed in argument before us and, as the appeal can be
resolved without deciding the point, it is best not to make a firm ruling on
it. We turn then to the second issue, which we will approach on the footing
that at least some of SAFPS’ fraud information is consumer credit
information.

Is SAFPS obliged to expunge its fraud information?
[22] The obligation to expunge consumer credit information arises under
s 70(2)(f) of the NCA. A credit bureau must promptly expunge from its
records any prescribed consumer credit information that in terms of
regulations is required to be removed from its records. The obligation to

expunge information arises in relation to any consumer credit information
that is so prescribed. Any information not so prescribed is not subject to
compulsory expungement. The issue then is whether the fraud information
is so prescribed. In order to determine that it is necessary to have regard to
regulation 17(1).

[23] The regulation is headed ‘Retention periods for credit bureau
information’. It provides that the consumer credit information as per the
table to the regulation ‘must be displayed and used for purposes of credit
scoring or credit assessment for a maximum period from the date of the
event, as indicated’. That period is ‘1 year or within the period prescribed
in section 71A’, in the case of category 5 – adverse classifications of
consumer behaviour. This was the only provision in the table on which the
NCR relied in contending that there was an obligation on SAFPS to delete
its fraud information.

[24] The term ‘adverse classifications of consumer behaviour’ is not
defined in the Regulations. It has however been defined in s 71A(4)(a) of
the NCA, in the context of the removal of adverse consumer credit
information, as follows:
‘ “adverse classification of consumer behaviour” means classification relating to
consumer behaviour and includes a classification such as “delinquent”, “default”, “slow
paying”, “absconded”, or “not contactable” …’
That definition was introduced into the NCA with effect from 13 March
2015 in terms of Act 19 of 2014. In view of the fact that the events leading
to the NCR’s original complaint arose prior to the effective date of the
amendment and the regulations had also been amended in that time, the
parties were asked whether we were to approach the issues in accordance
with the historical provisions of the statute and regulations or on the basis

of the amendments. They confirmed that the case had been argued on the
latter basis and, as that was the live dispute between them, that the case
should be determined under the current statute and regulations.

[25] In our view, the meaning that must be given to the term ‘adverse
classification of consumer behaviour’ throughout category 5 of regulation
17(1) is the meaning that it is given in s 71A(4)(a) of the NCA. Various
features support that construction. The first is that its central feature is the
failure by consumers to perform their legal and contractual obligations
under a credit agreement. It encompasses subjective classifications of that
failure and says nothing about fraud. The latter is more usually an objective
assessment of the consumer’s conduct in the light of the definition of fraud.
The expression ‘adverse classification of consumer behaviour’ appears to
be directed at the behaviour of the consumer once credit has been advanced
rather than behaviour aimed at defrauding a credit provider in a prospective
credit application.

[26] Different meanings cannot be assigned to the expression ‘adverse
classification of consumer behaviour’ in category 5 of regulation 17(1),
depending on whether one is concerned with the one year period or the
seven day period for expungement. Both periods require information of
that class to be expunged. In general it must be expunged after one year.
Where the obligation has been discharged it is seven days. In relation to
the latter class of cases the statutory meaning of ‘adverse classification of
consumer behaviour’ in s 71A(4)(a) is applicable. Regulation 1 makes it
clear that any word or expression defined in the NCA bears the same
meaning in the Regulations. There is no basis upon which the expression
can be given a different meaning when dealing with a situation where the
obligation has not been settled, so that the expungement period is one year.

[27] This interpretation is underscored by the fact that in the amending
regulations made under GN R1209 of 30 November 2006 the term ‘adverse
classifications of consumer behaviour’ was included in the definition of
‘adverse consumer credit information’, which provided:
‘“adverse consumer credit information” includes:
(a) adverse classifications of consumer behaviour, which are subjective
classifications of consumer behaviour and include classifications such as
“delinquent”, “default”, “slow paying”, “absconded” or “not contactable” …
(b) adverse classifications of enforcement actions, which are classifications related
to enforcement action taken by the credit provider, including classifications
such as “handed over for collection or recovery”, “legal action”, or “write off”.’
These then formed two of the categories in the table in regulation 17(1).
When s 71A was introduced in 2015, these definitions were removed from
the regulations and transposed to the statute in s 71A(4), but the categories
specified in regulation 17(1) were unchanged. That is a clear indication that
the statutory meaning that had always until then governed these categories
would continue to do so.

[28] The fraud information held by SAFPS does not fit comfortably in an
‘adverse classification of consumer behaviour’ as defined in the NCA. That
behaviour, which includes ‘delinquent’, ‘default’, slow-paying’,
‘absconded’ and ‘not contactable’, is behaviour in relation to the
performance of obligations under a credit agreement, and will not
ordinarily include fraud. Where fraud is committed, as in many cases it
appears to be, when a consumer is seeking to obtain credit or a job, it
stretches the language to describe that as consumer behaviour of the type
referred to in the definition.

[29] The fraud information does not involve a ‘subjective’ classification
of consumer behaviour. The reason for expungement of subjective
classifications of consumer behaviour in category 5 of regulation 17 is a
matter of common sense. It is precisely because the classification by the
credit provider as ‘delinquent’, ‘default’, ‘non-paying’, ‘absconded’ or ‘not
contactable’ is entirely subjective and based on the classifier’s own
observations or preferences, that the information may not be retained for
more than one year. Where the reason for the default is that the consumer
has lost their job as a result of illness, one credit provider may treat that as
a misfortune, while another may categorise them as in default or
delinquent. Such subjective classifications warrant being retained for a
shorter period.

[30] By contrast, the types of fraud on the SAFPS database are generally
classified on the basis of facts and objective criteria. For example, in the
filing category ‘false identity’, applicants in fact supply false documents
about themselves in order to deceive, which is entered in the Shamwari
database. Likewise, before a filing is made under the category ‘insurance
fraud’, members of the SAFPS are required to objectively establish that the
claimant has completed a claim form containing materially false and
misleading information in order to obtain a benefit which would have
resulted in a loss to the member. Fraud in relation to credit applications
may involve forgery of bank records or pay slips and similar documents.

[31] All of this points to the fraud information held by SAFPS not being
subject to the time limit, even if it constitutes consumer credit information,
because it is not consumer credit information within any of the prescribed
categories in regulation 17. The Tribunal’s finding that fraud information
‘is the subset of [consumer] credit information that equally impacts the

credit provider’s decision whether or not to grant credit to the affected
consumer’, does not properly address the question whether it falls within
one of the categories in regulation 17(1) and is thus incorrect.

[32] Additionally, the NCA and the regulations made under it expressly
recognise certain categories of information that credit bureaux are allowed
to keep under s 70(3)(a) that are not included in the various categories in
regulation 17(1). Regulation 18(6) prescribes that ‘other’ information, ie
the information other than consumer credit information that a credit bureau
may keep on record. It lists various categories of information of this kind.
The relevant provision is s 18(6)(b). It provides:
‘(6) In addition to the consumer credit information contemplated in section 70(1) of the
Act, a registered credit bureau may receive, compile and report only the following
information in respect of a consumer:
(a)…
(b) information that is relevant for the purpose of credit fraud detection and
prevention…’

[33] Section 70(2)(g) of the NCA provides that a registered credit bureau
must issue a report to any person who requires it for a prescribed purpose
or a purpose contemplated in the Act. Regulation 18(4) provides in relevant
part:
‘The prescribed purposes, other than for purposes contemplated in the Act, for which a
report may be issued in terms of section 70(2)(g) are:
(a) an investigation into fraud, corruption or theft, provided that the South African
police service or any other statutory enforcement agency conducts such
investigation;
(b) fraud detection and fraud prevention services …’

[34] These provisions thus expressly recognise that recording and
making available fraud information is a proper function of a credit bureau.
There is nothing in the various categories in regulation 17(1) to suggest
that any of them include fraud information or that it is required to be
retained only for a limited period. The endeavour in argument to squeeze
fraud information into category 5 without regard to the definition
applicable to that category supports the interpretation that it is information
of a type that should not be subject to expungement by way of regulation.

[35] The above interpretation is sensible. In Exxon Corporation,3 Oliver
LJ said: ‘It is not necessary, in construing a statutory expression, to take
leave of one’s common sense’. A statutory provision must be interpreted
in a way that leads to sensible and businesslike results, provided the
interpretation does not do violence to the clear meaning of the provision or
undermines its apparent purpose.4

[36] Section 3 of the NCA states that its purposes are ‘to promote and
advance the social and economic welfare of South Africans, promote a fair,
transparent, competitive, sustainable, responsible, efficient, effective and
accessible credit market and industry, and to protect consumers’ in the
respects listed in subsections (a)-(i). None of these subsections suggests
that the Act does not purport to regulate the type of fraud combating
activities that SAFPS undertakes. Nor do any of them support a
construction that would undermine genuine endeavours to combat fraud.

3 Exxon Corporation v Exxon Insurance Consultants International Ltd [1982] Ch 119 at 144.
4 Endumeni fn 2, para 18.

[37] The Tribunal’s interpretation of the NCA however was that all
information kept by a credit bureau constituted ‘consumer credit
information’ and is subject to expungement under regulation 17(1). That
was inconsistent with the fact that when the regulation was amended in
2015 it removed from the table the general catch-all category ‘Other’. The
construction leads to patently insensible and unbusinesslike results and
cuts across the purposes of the NCA – it would undermine the ability of
the financial industry to protect itself against fraud and in doing so, protect
fraudsters and not the victims of fraud; it would not promote a responsible
credit market and industry; and it would not protect consumers. It would
require credit bureaux to expunge highly relevant information about fraud
on the part of consumers after one year, but oblige them to retain
information about maintenance judgments potentially indefinitely
(Category 8). Information about sequestration orders could be retained for
five years and, once the consumer had been rehabilitated, that fact could
be retained for another five years (Categories 9 and 10). No reason was
advanced for affording this benevolence to fraud and fraudsters, but
withholding it from maintenance defaulters and insolvents, including after
their rehabilitation.

[38] The NCR however contended that the behaviour of a consumer
intending to defraud a credit provider under a prospective credit application
fell within the definition of ‘adverse classification of consumer behaviour’,
as contemplated in the NCA; that this was ‘the correct interpretation’; and
that otherwise construed, it ‘would defeat the purpose of the NCA’.

[39] The contention is both startling and wrong. It is directly at odds with
s 81 of the NCA which provides in relevant part:

‘Prevention of reckless credit
81(1) When applying for a credit agreement, and while that application is being
considered by the credit provider, the prospective consumer must fully and truthfully
answer any requests for information made by the credit provider as part of the
assessment required by this section.
…
(4) For all purposes of this Act, it is a complete defence to an allegation that the credit
agreement is reckless if–
(a) the credit provider establishes that the consumer failed to fully and truthfully
answer any requests for information made by the credit provider as part of the
assessment required by this section; and
(b) a court or the Tribunal determines that the consumer’s failure to do so materially
affected the ability of the credit provider to make a proper assessment.’

The NCR’s contention that the NCA must be read to protect fraudsters is
untenable in the light of s 81 and leads to a patently insensible and
unbusinesslike result.

[40] For those reasons there was no obligation on SAFPS to expunge the
fraud information in its possession and the decision by the high court
upholding its appeal was correct. The appeal must therefore be dismissed.
That renders the appeal in respect of the imposition of an administrative
fine academic, as there was no contravention of the NCA.

Costs
[41] Counsel for the NCR submitted that it should not be mulcted in costs
because it is no ordinary litigant but a statutory body. It did not institute
this litigation and opposed the appeal in the court a quo because it
concerned the exercise of the NCR’s statutory and regulatory powers.

[42] The principle that a statutory body should not be ordered to pay costs
in a case where it has acted impartially and reasonably in exercising its
statutory duties, even if it has been shown to have acted incorrectly though
bona fide, is well-established.5 More than a century ago in Coetzeestroom,6
affirmed by the Constitutional Court in Pioneer Hi-Bred,7 Innes CJ said
that it was inequitable to mulct an official (the Registrar of Deeds in that
case) with costs where his actions, though mistaken, were bona fide, as that
was detrimental to the vigilance required of that office in the public
interest.

[43] In Pioneer Hi-bred,8 Skweyiya ADCJ stated the principle thus:
‘The principle that should inform the CAC’s exercise of discretion is that, when the
Commission is litigating in the course of fulfilling its statutory duties, it is undesirable
for it to be inhibited in the bona fide fulfilment of its mandate by the threat of an adverse
costs award. This flows from the need to encourage organs of state to make and to stand
by honest and reasonable decisions, made in the public interest, without the threat of
undue financial prejudice if the decision is challenged successfully.’

[44] There is no suggestion that the NCR’s decision to refer the matter to
the Tribunal in terms of s 140 of the NCA on the basis that SAFPS had
allegedly contravened s 70(2)(f) read with regulation 17, was neither
honest nor reasonable. That decision was taken in the exercise of its
statutory and regulatory duties. The Tribunal ruled in favour of the NCR.
Its opposition to SAFPS’s appeal against that decision in the court a quo
was likewise bona fide and reasonable: the proper interpretation of
provisions of the NCA which the NCR was statutorily obliged to enforce,

5 See LAWSA, 2 ed, Vol 3 Part 2 p 257 para 367 and the authorities there collected.
6 Coetzeestroom Estate and GM Co v Registrar of Deeds 1902 TS 216 at 223-224.
7 Competition Commission of South Africa v Pioneer Hi-bred International Inc and Others [2013] ZACC
50; 2014 (2) SA 480 (CC) para 24.
8 Ibid, footnotes omitted.

and which directly impacted upon its powers and functions, were at issue.
Fairness, in the light of the particular circumstances of this case and the
NCR’s statutory duties in regulating the consumer credit industry and
enforcing the NCA,9 dictated that the costs orders issued by the high court
against it were not justified, despite its finding that the NCR’s actions were
mistaken.10

[45] Similarly, the NCR’s decision to lodge an appeal in this court was
bona fide, reasonable and taken in the course of fulfilling its statutory
duties. It is a public functionary and required clarity and certainty in
relation to the interpretation of the relevant provisions of the NCA. In our
opinion, an adverse costs order against the NCR is not justified in the
circumstances.

[46] The following order is made:
1 The appeal is dismissed with no order for costs.
2 The orders of the high court granting costs against the National Credit
Regulator in the appeal and the cross-appeal to that court are set aside.

_______________________

MJD WALLIS

JUDGE OF APPEAL

_______________________

A SCHIPPERS

JUDGE OF APPEAL

9 Sections 14 and 15 of the NCA.
10 Pioneer Hi-Bred fn 27 para 27.

Appearances
For appellant:
T V Norman SC (with her R J Mbuli)
Instructed by:
Mothle Jooma Sabdie Attorneys, Pretoria
Matsepe Inc, Bloemfontein

For respondent:
W Trengove SC (with him C Steinberg)

Instructed by:
Bieldermans Inc, Pretoria
Honey Attorneys, Bloemfontein.