THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable
Case no: 382/2021

In the matter between:

NATIONAL CREDIT REGULATOR

APPELLANT

and

DACQUP FINANCES CC trading as ABC
FINANCIAL SERVICES – PINETOWN
FIRST RESPONDENT

THE NATIONAL CONSUMER
TRIBUNAL

SECOND RESPONDENT

Neutral citation: National Credit Regulator v Dacqup Finances CC
trading as ABC Financial Services – Pinetown and
Another (382/21) [2022] ZASCA 104 (24 June 2022)
Coram:
MAKGOKA,
NICHOLLS
and
GORVEN
JJA
and
PHATSHOANE and SAVAGE AJJA
Heard:
25 May 2022
Delivered: 24 June 2022

Summary: National Credit Act 34 of 2005 (the NCA) – what constitutes
reasonable suspicion for National Credit Regulator to initiate a complaint in
terms of s 136 of the NCA – competence of National Consumer Tribunal
(the Tribunal) to order the appointment of an independent auditor to assess
extent of first respondent’s overcharging – appeal upheld – order of the
Tribunal reinstated.

_____________________________________________________________
ORDER
_____________________________________________________________

On appeal from: Gauteng Division of the High Court, Pretoria
(Neukircher and Teffo JJ, sitting as court of appeal):
The appeal is upheld with costs.
The order of the high court is set aside and substituted with the
following:
‘The appeal is dismissed with costs.’
_____________________________________________________________
JUDGMENT
_____________________________________________________________
Nicholls JA (Makgoka and Gorven JJA and Phatshoane and Savage
AJJA concurring):
[1] The central question in this appeal is what constitutes a sufficient
trigger for the appellant, the National Credit Regulator (the NCR) to initiate a
complaint into alleged contraventions of the National Credit Act 34 of 2005
(the NCA). The NCR has a statutory responsibility to ensure compliance with
the NCA. It initiated a complaint against the first respondent, Dacqup
Finances CC trading as ABC Financial Services – Pinetown (Dacqup), which
is a registered credit provider. It advances micro-loans of up to R8000.

[2] The complaint was considered by the second respondent, the National
Consumer Tribunal (the Tribunal), an independent adjudicative body. The
Tribunal found that Dacqup had contravened various sections of the NCA and
had engaged in repeated prohibited conduct. It ordered Dacqup to pay a fine

and that all Dacqup’s credit agreements for a certain period be assessed by an
independent auditor. Dacqup successfully appealed against those orders in the
Gauteng Division of the High Court, Pretoria (the high court). The high court
did not consider the merits of the appeal, as it found in favour of Dacqup on a
point in limine. The appeal is with the leave of the high court.1

[3] It is necessary to place the regulatory environment in context. The NCA
came into operation on 1 June 2006, replacing the Usury Act 73 of 1968 and
the Credit Agreements Act 75 of 1980. At that time, the credit market was
characterised by discrimination, lack of transparency, high costs of credit and
limited consumer protection. This was particularly prevalent in the micro-
financing industry, which capitalised on vulnerable markets characterised by
overpriced debt repayments. The major reason for the NCA’s enactment was
to protect consumers from unscrupulous lenders and to create an accessible
and affordable credit market with mechanisms to protect the consumers from
reckless credit and over-indebtedness.2

[4] It is against this backdrop that the relevant sections of the NCA should
be considered. Section 136 provides that any person may submit a complaint
of reckless credit, alternatively the NCR may submit a complaint in its own
name. Reckless credit is dealt with in ss 80 and 81 of the NCA. Section 81(3)
prohibits a credit provider from entering into a reckless credit agreement with
a prospective customer. In terms of s 81(2)(a)(i), a credit provider cannot enter

1 There was initially some uncertainty as to whether decisions of the high court under s 148(2)(b) of the NCA
come to this Court by way of leave granted by the high court or by special leave of this Court. This issue was
settled in National Credit Regulator v Lewis Stores (Pty) Ltd and Another [2019] ZASCA 190; 2020 (2) SA
390 (SCA); [2020] 2 All SA 31 (SCA) para 56.
2 See the preamble to the NCA and section 3 of the NCA, which provides for the purposes of the NCA in
great detail.

into a credit agreement without first taking reasonable steps to assess the
consumer’s general understanding and appreciation of the risks and costs of
the proposed credit. In terms of s 81(2)(a)(ii), the credit provider is obliged to
take into account the debt repayment history of the consumer, and in terms of
s 81(2)(a)(iii), the consumer’s existing financial means, prospects and
obligations. In terms of s 80(1)(a), a credit agreement is reckless if the credit
provider failed to conduct an assessment as required by s 81(2), irrespective
of the outcome had the proper assessment been made at the time. In terms of
s 80(1)(b), a credit agreement is reckless if, having conducted the assessment,
the information points to the probability that the consumer did not fully
understand and appreciate the risks, or that she would be over-indebted if she
entered into the credit agreement.

[5] Importantly, the NCA affords the NCR certain investigative and
referral powers. Once a complaint has been initiated by either the NCR or any
other person in terms of s 136, the NCR may direct an inspector to investigate
the complaint, and appoint others to assist. At any time during the
investigation, the NCR may summons a person to appear under oath before
the NCR, or subpoena any document, provided that no self-incriminating
evidence will be admissible in a criminal trial.3 As part of its mandatory
oversight and enforcement functions, the NCA mandates the NCR to attend
to ‘monitoring the consumer credit market and industry to ensure that
prohibited conduct is prevented or detected and prosecuted’.4 Pursuant thereto
and as part of its monitoring functions, the NCR sends personnel to different
parts of the country on so-called ‘scouting exercises’.

3 Sections 139(3) and (5) of the NCA.
4 Section 15(c) of the NCA.

[6] It was on one such ‘scouting exercise’ during 2018, that an NCR
inspector, Ms Muhanganei Mbedzi, noticed a signboard outside Dacqup’s
premises advertising ‘instant loans’. This aroused her suspicion for a variety
of reasons. If the loans were ‘instant’, it would be difficult to comply with the
onerous affordability assessments required by the NCA. Conversely, if they
were not ‘instant’, the advertisement breached the NCA’s prohibition on
misleading and deceptive advertising of credit. Posing as a potential customer,
the inspector entered the premises to inquire about a prospective loan. Upon
enquiry about the interest rate, she was informed that an interest rate of 30%
per month was levied on short-term loans, which amount far exceeded the
statutory maximum permissible.

[7] The scouting exercise led to the NCR initiating an investigation in its
own name into possible contraventions of the NCA by Dacqup. It conducted
an on-site investigation, during which ten credit agreements were assessed,
where loans of between R510 and R3000 were granted. Following the
assessment, a report was compiled, in which it was found that Dacqup had
failed to properly assess the financial means of the respective consumers and
their debt repayment history. The NCR concluded that the granting of credit
had been reckless as defined in s 80 of the NCA. In addition, the NCR found
that Dacqup had overcharged on interest and on initiation fees in some
instances, and had not provided customers with pre-agreement statements.

[8] On the strength of these findings, the NCR made an application to the
Tribunal that Dacqup be deregistered as a credit provider, as well as other
ancillary relief. The NCR’s founding affidavit was deposed to by

Ms Jacqueline Peters, the manageress in its Investigations and Enforcement
Department. She explained that Dacqup had contravened the NCA in the
following respects: (a) by using the phrase ‘instant loans’, Daqup may not be
conducting proper affordability assessments; (b) the phrase may be viewed as
misleading and deceptive, as it indicated to consumers that they potentially
need not provide the necessary documentation of proof of income; (c) the
inspector, on entering the premises, was told that the interest rate was charged
at 30% per month, which far exceeded the statutory maximum permissible.
The inspector, Ms Mbedzi, confirmed this in a confirmatory affidavit.

[9] The Tribunal found that Dacqup had engaged in repeated prohibited
conduct. It further found that Dacqup had merely engaged in a ‘tick box
exercise’ to create the impression of complying with the NCA when, in reality,
it did not comply with the stringent assessment requirements and did not
conduct proper affordability assessments. At the Tribunal Dacqup raised two
points in limine. Firstly, that the NCR did not have a reasonable basis for
initiating a complaint and an investigation. Secondly, that the NCR should
have afforded Dacqup an opportunity to respond to the charges before
referring the matter to the Tribunal. Both points in limine were dismissed by
the Tribunal, which declared that all ten sampled agreements amounted to the
granting of reckless credit. The Tribunal did not cancel Dacqup’s registration,
as requested by the NCR. Instead, it ordered Dacqup to pay an administrative
fine of R300 000. In addition, the Tribunal ordered Dacqup to appoint an
auditor, at its own cost, to assess all credit agreements for the three years prior
to the investigation, and to reimburse overpaid fees and charges to the relevant
consumers.

[10] In its appeal to the high court, Dacqup did not appeal the merits. It
raised four points in limine, two of which were abandoned, including whether
the NCR should have afforded Dacqup the right to be heard in its initial
investigation. Accordingly, the only issues that the high court was called upon
to determine were whether the NCR had a reasonable suspicion to initiate an
investigation and whether the order of the Tribunal to appoint an auditor was
ultra vires. Because the high court found in Dacqup’s favour in respect of the
first point in limine, it did not consider the question of the appointment of an
auditor.

[11] Dacqup’s argument, which found favour with the high court, was that
the words ‘instant loans’ could not objectively trigger a reasonable suspicion,
as the phrase could reasonably be understood to mean that Dacqup acts
‘promptly, swiftly or speedily’, yet lawfully. Although the high court noted
that the words literally meant ‘happening or coming immediately’, this, it
held, reasonably meant nothing more than acting swiftly. The high court
further reasoned that if the NCR wanted to establish whether Dacqup’s
conduct was unlawful, Ms Mbedzi should have requested a loan, posing as a
customer. This would have established precisely what was meant by the words
‘instant loans’, and thus whether an investigation should have been conducted.

[12] The high court accepted Dacqup’s argument that the complaint was
initiated only on the memorandum of Ms Mbedzi, who conducted the scouting
exercise and that the contents of the founding affidavit were not relevant in
this regard. Ms Mbedzi’s memorandum, dated 23 October 2018, only made
mention of two grounds of suspicion: the words ‘instant loans’ and that she
had been told on enquiry that the interest rate was 30%.

[13] Regarding the allegation that Dacqup was charging 30% per month in
interest, the high court was of the view that this complaint was not the basis
on which the investigation was initiated. However, this is not borne out by the
facts. The 30% interest rate was set out both in Ms Mbdezi’s memorandum
and in another internal memorandum by a junior inspector, dated 18
December 2018, requesting an investigation. This was in addition to the
founding affidavit of Ms Peters before the Tribunal. Nonetheless, according
to the high court, the complaint was not initiated on the basis of prohibited
advertising, nor the 30% interest rate charged on short-term loans, but merely
on the advertising board.

[14] On the basis of the above, the high court concluded:
‘To allow the NCRA to initiate an investigation, such as the one in this matter, on a mere
signage, sets the bar so low that it offends the sensibility of what should be good practice.
It also offends the notion of what should constitute a reasonable suspicion. If indeed, a
reasonable suspicion is formed objectively then there must be objective facts which support
it – such as the inspector attempted to ascertain the procedure by which the loan application
would take place and, indeed, how quickly a loan would be advanced. If [Dacqup’s]
procedures are streamlined, and on the face of it, comply with the provisions of the Act,
and the loan is advanced “promptly”, “swiftly” or “speedily” then (objectively speaking)
there cannot be a “reasonable suspicion” that the Act is being contravened.’

[15] Accordingly, without considering the merits as to whether Dacqup had
contravened the NCA in material respects, the high court upheld Dacqup’s
appeal with costs.

[16]  In this Court, the parties agreed that the appeal hinged exclusively on
whether the high court was correct in upholding Dacqup’s point in limine that

there was no reasonable suspicion to initiate an investigation. If that is
answered in the affirmative, the secondary issue is whether the Tribunal had
the power to make the audit order.

[17] Before dealing with the main issue, a related submission advanced by
Dacqup should be disposed of. This concerned the admissibility of
Ms Mbedzi’s memorandum. It was contended that the memorandum was
inadmissible hearsay evidence which could not be cured by a confirmatory
affidavit attached to the founding affidavit of the NCR. This Court in
Competition Commission v Yara,5 observed that the initiation of a complaint
was an ‘awkward concept’ which started a process by directing an
investigation which may, or may not, lead to a referral of the complaint to the
Tribunal. It does so on the basis of information received from an informant;
or what it gathers from media reports; or what it discovers in the process of
investigating a different complaint. The decision to open a case can be
informal or tacit.

[18] It would therefore be wholly incorrect to confine reasonable suspicion
to what is set out in the memorandum of Ms Mbedzi. In any event, hearsay
evidence is sufficient to ground a reasonable suspicion. Whether the evidence
is later found to be inadmissible in a court of law is irrelevant for determining
whether an arresting officer had a reasonable suspicion.6

[19] The concept of ‘reasonable suspicion’ is commonplace in our law.
Whether the suspicion is reasonable is objectively determined. This Court has

5 Competition Commission v Yara (South Africa) (Pty) Ltd and Others [2013] ZASCA 107; [2013] 4 All SA
302 (SCA); 2013 (6) SA 404 (SCA) para 21.
6 Biyela v Minister of Police [2022] ZASCA 36 (SCA) paras 31-35.

on a number of occasions7 endorsed Lord Devlin’s test of reasonable
suspicion as:
‘Suspicion in its ordinary meaning is a state of conjecture or surmise where proof is
lacking; “I suspect but I cannot prove”. Suspicion arises at or near the starting point of an
investigation of which the obtaining of prima facie proof is the end.’8

[20] While suspicion falls short of actual proof, there must be some factual
basis on which the suspicion is grounded.9 It must be emphasised that the
standard of reasonable suspicion is very low – it must be more than a hunch
and an unparticularised suspicion.10

[21] The initiation of a complaint is an earlier point than the start of the
investigation. It merely triggers the investigation, which may or may not result
in a referral to the Tribunal. This Court in Yara,11 dealt extensively with what
initiating a complaint meant in competition law, and observed:
‘. . . [T]he purpose of the initiating complaint is to trigger an investigation which might
eventually lead to a referral. It is merely the preliminary step of a process that does not
affect the respondent’s rights. Conversely stated, the purpose of an initiating complaint,
and the investigation that follows upon it, is not to offer the suspect firm an opportunity to
put [forward] its case. The Commission is not even required to give notice of the complaint
and of its investigation to the suspect. Least of all is the Commission required to engage

7 South African Reserve Bank v Leathern N O and Others [2021] ZASCA 102; 2021 (5) SA 543 (SCA);
[2021] 4 All SA 368 (SCA) para 15; Duncan v Minister of Law and Order [1986] 2 All SA 241 (A); 1986
(2) SA 805 (A) at 819I; Minister of Law and Order v Kader [1991] 1 All SA 256 (A); 1991 (1) SA 41 (A) at
50H-I; BTR Industries South Africa (Pty) Ltd and Others v Metal and Allied Workers’ Union and Another
[1992] ZASCA 85; [1992] 4 All SA 701 (A); 1992 (3) SA 673 (A) at 690G-H; Powell N O and Others v Van
der Merwe N O and Others [2005] 1 All SA 149 (SCA); 2005 (5) SA 62 (SCA) para 36.
8 Shaaban bin Hussien and others v Chong Fook Kam and another [1969] UKPC 26, [1969] 3 All ER 1626,
[1970] 2 WLR 441, [1970] AC 942 at 948B.
9 George v Rockett [1990] HCA 26; 170 CLR 104; 64 ALJR 384; 93 ALR 483.
10 Biyela fn 6 above.
11 Competition Commission v Yara (South Africa) (Pty) Ltd and Others [2013] ZASCA 107; [2013] 4 All SA
302 (SCA); 2013 (6) SA 404 (SCA).

with the suspect on the question whether its suspicions are justified. The principles of
administrative justice are observed in the referral and the hearing before the Tribunal.’ 12

[22] From the above, it is apparent that the bar has been set relatively low
for the initiation of a complaint in a regulatory environment, such as the area
of competition law.13 Even in the context of search and seizure operations in
competition matters, it has been found that there is a low bar required for
obtaining a warrant, which is ‘merely one of the starting points of the
investigative process’.14

[23] The present case deals with the initiation of a complaint in the
regulatory environment of the credit provision industry. Moreover, the NCA
is social legislation designed to protect the poor and vulnerable against
predatory lending practices. There is an argument to be made that in such
matters the bar should be set even lower.

[24] Insofar as it may be argued that there is any constitutional impediment
to initiating the complaint, the Constitutional Court has recognised that the
right to privacy exists on a continuum. On one side is the sanctum of the
personal home life, where privacy should be afforded the maximum
protection. On the other is the right to privacy in commercial contexts, where
the right is considerably attenuated. In this regard, it is trite that ‘[t]he more
public the undertaking and the more closely regulated, the more attenuated

12 Ibid para 24.
13 See also Competition Commission of South Africa v Standard Bank of South Africa Limited; Competition
Commission of South Africa v Standard Bank of South Africa Limited; Competition Commission of South
Africa v Waco Africa (Pty) Limited and Others [2020] ZACC 2; 2020 (4) BCLR 429 (CC) para 19.
14 Farmers Trust v Competition Commission of South Africa [2017] ZAGPPHC 488; 2020 (4) SA 541 (GP)
para 30.

would the right to privacy be and the less intense any possible invasion. . . In
the case of any regulated enterprise, the proprietor’s expectation of privacy . .
. must be attenuated by the obligation to comply with reasonable regulations
and to tolerate the administrative inspections that are an inseparable part of an
effective regime of regulation. The greater the potential hazards to the public,
the less invasive the inspection. People involved in such undertakings must be
taken to know from the outset that their activities will be monitored’.15 In fact,
participants in closely controlled and regulated industries should expect
regular inspections.16 Consequently, the right to privacy in respect of business
activities in the context of a highly regulated environment, such as the credit
provision industry, is greatly attenuated.

[25] Turning to consider the facts of this case. Ms Mbedzi saw the sign
advertising ‘instant loans’ and, upon enquiry, was informed by an employee
of Dacqup that the interest rate charged was 30% per month. Whether or not
this was later found to be factually incorrect does not detract from the fact that
she had a suspicion that these practices by Dacqup were contraventions of the
NCA. Ms Mbedzi stated this in her report to initiate an investigation, and in
the confirmatory affidavit attached to the founding papers. There is nothing to
gainsay Ms Mbedzi’s suspicion on the basis of the two contraventions that she
recorded: the 30% interest rate and the advertisement for ‘instant loans’.

15 Mistry v Interim National Medical and Dental Council of South Africa and Others 1998 (7) BCLR 880
(CC); 1998 (4) SA 1127 (CC) para 27 quoted with approval in Magajane v Chairperson, North West
Gambling Board and Others [2006] ZACC 8; 2006 (10) BCLR 1133 (CC); 2006 (5) SA 250 (CC); 2006 (2)
SACR 447 (CC) para 46.
16 Gaertner and Others v Minister of Finance and Others [2013] ZACC 38; 2014 (1) SA 442 (CC); 2014 (1)
BCLR 38 (CC) para 63.

[26] While the phrase ‘instant loans’ may merely mean ‘swiftly’, it could
reasonably be suggestive of a curtailed or less onerous loan application
process, as was held by the Tribunal. The meaning of ‘instant’ is defined as
‘happening immediately, without any delay’.17 Even if one accepts the
meaning attributed to the phrase by the high court, it is sufficient that the
meaning could have other reasonable connotations. If the meaning ascribed to
‘instant loans’ by Ms Mbedzi was a reasonable one, then it cannot be said that
she did not have a reasonable suspicion. In my view, not only was
Ms Mbedzi’s interpretation a reasonable one, but a more probable one in the
context of the micro-lending industry.

[27] In addition, the approach taken by the high court conflated the notion
of a reasonable suspicion with prima facie evidence. As our courts have
repeatedly stated, a reasonable suspicion contemplates a lesser burden than
that of prima facie evidence.18 To require an inspector to actually obtain a loan
in order to establish a reasonable suspicion would be tantamount to requiring
prima facie proof.

[28] In all the circumstances, I am satisfied that the NCR has shown that it
had a reasonable suspicion to initiate an investigation into the activities of
Dacqup. These suspicions are set out in the memorandum of Ms Mbedzi and
amplified in the NCR’s founding affidavit.

17 Cambridge English Dictionary online.
Available at https://dictionary.cambridge.org/dictionary/english/instant Accessed on 10 June 2022.
18 Bruwil Konstruksie (Edms) Bpk v Whitson N O and Another [1980] 2 All SA 478 (T); 1980 (4) SA 703 (T)
at 711A-E.

[29] What remains is the question of whether it was competent for the
Tribunal to make an order that Dacqup appoint an auditor to assess the amount
that consumers had been overcharged. The high court, having found that there
was no reasonable suspicion to initiate a complaint, did not deem it necessary
to address this question. Ordinarily, this Court would remit the matter to the
high court to consider the issue. However, the issue before this Court has
narrowed considerably. As emerged during the hearing, Dacqup now accepts
that an auditor should be appointed to assess the extent of overcharging and
the amount to be reimbursed to consumers. Dacqup only objects to that part
of the order requiring it to bear the cost of the auditor, and contends that the
NCR should bear that cost. No purpose would therefore be served by remitting
the matter to the high court. The Constitutional Court has found that remittal
in certain circumstances would be a waste of judicial resources and
inconsistent with the principle that there must be finality in litigation.19
Because of its narrow ambit, this is such a case.

[30] There are several cases where an order has been made that an entity
appoint an independent auditor to ascertain the extent of unlawfully obtained
profit.20 Implicit in these orders is that the relevant entity is to pay the costs of
the auditor. There is no reason why cases involving the NCR should be any

19 Spilhaus Property Holdings (Pty) Ltd and Others v MTN (Pty) Ltd and Another [2019] ZACC 16; 2019
(6) BCLR 772 (CC); 2019 (4) SA 406 (CC) paras 44-46.
20 Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South
African Social Security Agency and Others (No 2) [2014] ZACC 12; 2014 (6) BCLR 641 (CC); 2014 (4) SA
179 (CC); South African Social Security Agency and Another v Minister of Social Development and Others
[2018] ZACC 26; 2018 (10) BCLR 1291 (CC); Cash Paymaster Services (Pty) Ltd and Others v Freedom
Under Law NPC and Others [2022] ZACC 2; 2022 (6) BCLR 661 (CC); IGS Consulting Engineers CC and
Another v Transnet Soc Limited [2022] ZASCA 63 (SCA); Mining Qualifications Authority v IFU Training
Institute (Pty) Ltd [2018] ZAGPJHC 455 (GJ) para 41.

different, especially bearing in mind the wide-ranging powers afforded to the
Tribunal in making any appropriate order in relation to prohibited conduct.21

[31] Accordingly, the appeal must succeed. Costs should follow the result.
Nevertheless, it is necessary to briefly comment on how the high court dealt
with the issue of costs. As mentioned already, it ordered the NCR to pay
Dacqup’s costs. It is a long-established principle in our law that where a
statutory body is fulfilling its statutory duties, costs should not be awarded
against it, even if it acted incorrectly, as long as its conduct was not
mala fide.22 The high court failed to observe this salutary principle, as there
was no suggestion that the NCR’s conduct had been actuated by malice. Even
on the view it took to dismiss the appeal, it should not have ordered the NCR
to pay costs.

[32] In the result, the following order is made:
The appeal is upheld with costs.
The order of the high court is set aside and substituted with the
following:
‘The appeal is dismissed with costs.’

______________________
C HEATON NICHOLLS
JUDGE OF APPEAL

21 See, in particular, s 150(i) of the NCA.
22 National Credit Regulator v Southern African Fraud Prevention Services NPC [2019] ZASCA 92; [2019]
3 All SA 378 (SCA); 2019 (5) SA 103 (SCA) paras 42-45; Coetzeestroom Estate and Gold Mining Co v
Registrar of Deeds 1902 TS 216 at 223-224; Deneysville Estates Ltd v Surveyor-General [1951] 2 All SA
202 (C); 1951 (2) SA 68 (C) at 81D-H; Competition Commission of South Africa v Pioneer Hi-Bred
International Inc and Others [2013] ZACC 50; 2014 (3) BCLR 251 (CC); 2014 (2) SA 480 (CC) para 24.

Appearances

For appellant:

M Mbikiwa
Instructed by:

M Incorporated Attorneys, Sandton
Matsepes Incorporated, Bloemfontein

For first respondent:
R Michau SC
Instructed by:

LLR Incorporated Attorneys, Pretoria
Webbers 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:

24 June 2022
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
National Credit Regulator v Dacqup Finances trading as ABC Financial Services Pinetown and Another
(382/21) [2022] ZASCA 104 (24 June 2022)
Today the Supreme Court of Appeal (SCA) handed down a judgment upholding, with costs, an appeal
against the decision of the Gauteng Division of the High Court, Pretoria (the high court).

The issue before the SCA concerned the question of what constituted a sufficient trigger for the
appellant, the National Credit Regulator (NCR) to initiate a complaint into alleged contraventions of the
National Credit Act 34 of 2005 (the NCA).

In 2018, during a ‘scouting exercise’, an NCR inspector noticed a signboard outside Dacqup’s premises
advertising ‘instant loans’. This aroused the inspector’s suspicion for a variety of reasons. If the loans
were ‘instant’, it would be difficult to comply with the onerous affordability assessments required by the
NCA. Conversely, if they were not ‘instant’, the advertisement breached the NCA’s prohibition on
misleading and deceptive advertising of credit. Posing as a potential customer, the inspector entered
the premises to inquire about a prospective loan. Upon enquiry about the interest rate, the inspector
was informed that an interest rate of 30% per month was levied on short-term loans, which amount far
exceeded the statutory maximum permissible.

Following this, the NCR initiated a complaint against the first respondent (Dacqup), which is a registered
credit provider. The complaint was considered by the second respondent, the National Consumer
Tribunal (the Tribunal). The Tribunal found that Dacqup had contravened various sections of the NCA
and had engaged in repeated prohibited conduct. It ordered Dacqup to pay a fine and that all Dacqup’s
credit agreements for a certain period be assessed by an independent auditor. Dacqup successfully
appealed against those orders in the high court. However, the high court did not consider the merits of
the appeal, as it found in favour of Dacqup on a point in limine.

The SCA held that the NCA afforded the NCR certain investigative and referral powers. Once a
complaint had been initiated by either the NCR or any other person in terms of s 136 of the NCA, the
NCR may direct an inspector to investigate the complaint, and appoint others to assist. Relying on the
provisions of the NCA, the SCA held that at any time during the investigation the NCR may summon a
person to appear under oath before the NCR, or subpoena any document, provided that no self-
incriminating evidence would be admissible in a criminal trial. Moreover, the SCA held that as part of
its mandatory enforcement functions, the NCA mandated the NCR to attend to monitoring the consumer
credit market to ensure that prohibited conduct was prevented or detected and prosecuted.

Furthermore, the SCA found that the initiation of a complaint was an earlier point than the start of the
investigation. According to the SCA, it merely triggered the investigation, which may or may not result
in a referral to the Tribunal. The SCA further held that the approach taken by the high court conflated
the notion of a reasonable suspicion with prima facie evidence. As our courts had repeatedly stated, a
reasonable suspicion contemplated a lesser burden than that of prima facie evidence. Hence, the SCA

held that to require an inspector to actually obtain a loan in order to establish unlawful conduct would
be tantamount to requiring prima facie proof.

The SCA held that the concept of ‘reasonable suspicion’ was commonplace in our law. Whether the
suspicion was reasonable was objectively determined. In addition, the SCA held that it would be wholly
incorrect to confine reasonable suspicion to what was set out in the memorandum of the inspector.
According to the SCA, hearsay evidence was sufficient to ground a reasonable suspicion. These
suspicions were set out in the memorandum of the inspector and amplified in the NCR’s founding
affidavit. As a result, the SCA held that in all the circumstances, it was satisfied that the NCR had shown
that it had a reasonable suspicion to initiate an investigation into the activities of Dacqup.

Regarding the issue of appointing an auditor, the SCA held that Dacqup had now accepted that an
auditor should be appointed to assess the extent of overcharging and the amount to be reimbursed to
consumers. As Dacqup only objected to that part of the order requiring it to bear the cost of the auditor,
contending that the NCR should bear the cost, this aspect need not be remitted to the high court for
determination.

Relying on case law, the SCA held that there were several cases where an order had been made that
an entity appoint an independent auditor to ascertain the extent of an unlawfully obtained profit. The
SCA held that implicit in these orders was that the relevant entity was to pay the costs of the auditor.
Hence, the SCA found that there was no reason why cases involving the NCR should be any different,
especially bearing in mind the wide-ranging powers afforded to the Tribunal in making any appropriate
order in relation to prohibited conduct. Finally, the SCA held that the appeal must succeed
~~~~ends~~~~