THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 08/16

In the matters between:

PANTELIS KAKNIS

APPELLANT

and

ABSA BANK LIMITED

RESPONDENT

and

PANTELIS KAKNIS

APPELLANT

and

MAN FINANCIAL SERVICES SA (PTY) LTD
RESPONDENT

Neutral citation: Kaknis v Absa Bank Limited & another (08/16) [2016]
ZASCA 206 (15 December 2016)

Coram:
Shongwe, Willis, Mathopo and Van der Merwe JJA and Nicholls
AJA

Heard:
11 November 2016

Delivered: 15 December 2016

Summary: Interpretation of statute: National Credit Act 34 of 2005: section
12B(1)(b) inserted by National Credit Amendment Act 19 of 2014: section has
no retrospective application and did not invalidate the agreement relied upon by
the respondents: summary judgment correctly granted.

ORDER
________________________________________________________________

On appeal from:  Eastern Cape Local Division of the High Court, Port
Elizabeth (Msizi AJ) sitting as court of first instance.
The appeal is dismissed with costs.

JUDGMENT
________________________________________________________________

Shongwe JA (Willis JA concurring) (dissenting judgment)

[1] This appeal is against the judgment and two orders of the Eastern Cape
Local Division of the High Court (Msizi AJ) (the high court) granting summary
judgments against the appellant Mr Pontelis Kaknis. The respondents, Absa
Bank limited (Absa) and Man Financial Services SA (Pty) Ltd (MFS) are the
two judgments creditors in whose favour these two orders were granted and are
the respondents in this appeal. The high court dismissed the appellant‟s defence
that the respondents‟ claims against him had prescribed. For this assertion, the
appellant had relied on s 126B(1)(b)(ii) of the National Credit Act 34 of 2005
(the Act). The high court held that s 126B(1)(b)(ii) did not apply
retrospectively. The appeal against this narrow point of law, is with leave of the
high court.

[2] The crisp question in this appeal accordingly is the interpretation and
application of the provisions of s 126B of the Act which came into operation
with effect from 13 March 2015. Specifically it is whether or not s 126B(1)(b)
of the Act applies retrospectively.

Background
[3] I turn to deal briefly with the background before delving into the relevant
legal principles of interpretation. During the period March 2006 to March 2008
the appellant concluded ten instalment sale agreements with Absa, in terms of
which Absa sold and delivered to the appellant various movable assets
comprising, inter alia, motor vehicles and trailers. The appellant also concluded
an instalment sale agreement with MFS, in terms of which it sold and delivered
to the appellant a 2007 Man truck. The appellant honoured both transactions by
paying regularly. However, after a few years of compliance the appellant got
into financial difficulties, which resulted in his failure to pay.

[4] As a result of his financial woes, the appellant approached a debt
counsellor to apply for a debt review as contemplated in s 86 of the Act. On 12
June 2010, he obtained an order from the Magistrate‟s court for the District of
Port Elizabeth in terms of which his obligations to his various credit providers
were re-arranged in accordance with the provisions of s 86(7)(c)(ii) (aa) and
(bb) of the Act. The appellant faithfully complied with the court order, until 8
July 2011 when the last payment was made by the payment distribution agent. It
is common cause that the claims against the appellant became prescribed on 8
July 2014 in terms of s 11(d) of the Prescription Act 68 of 1969 (the
Prescription Act), due to the fact that more than three years had lapsed since the
last payment was made by the appellant in reduction of his indebtedness under
the sale agreements.

[5] In the meantime, the respondents continued attempts to recover the
amounts owed to them, by demanding payment. The appellant however
remained unable to repay the outstanding amounts. On 3 October 2014, after the
respondents‟ claims had become prescribed, the appellant concluded an

acknowledgement of debt in favour of the respondents. In terms of this
agreement, the appellant acknowledged his indebtness to Absa in an amount
over R2.7 million, plus interest, and an amount of R702 496, plus interest, in
respect of MFS. The appellant failed to pay in terms of the acknowledgement of
debt, and he also did not surrender any of the assets as was agreed in the
agreements. On 30 April 2015, the respondents issued summons against the
appellant claiming confirmation of the cancellation of the sale agreements,
return of the assets and leave to prove damages later. The appellant entered an
appearance to defend but did not deliver a plea. Subsequently, the respondents
brought separate applications for summary judgment, alleging that the appellant
lacked a bona fide defence. The appellant opposed both applications. He
averred that the claims had become prescribed. He also contended that by virtue
of the provisions of s 126B(1)(b) of the Act, the respondents were precluded
from continuing the collection of the debt by relying on the acknowledgement
of debt which the respondents alleged revived the prescribed debt. The appellant
further stated that he had not been aware that the respondents‟ claims against
him had become prescribed, and that if he had been aware of the defence of
prescription he would not have concluded the acknowledgment of debt. As
mentioned, the two applications for summary judgment were considered
together for purposes of judgment by the high court.

[6] As prefaced earlier, the court a quo granted the respondents‟ applications
and concluded that the claims had not prescribed. The court reasoned that the
legislature would have expressly stipulated that the provisions of s 126B of the
Act apply retrospectively, if it intended it to be applied retrospectively.
Unhappy with the court‟s findings, the appellant sought leave to appeal, which
leave was granted.

[7] Before us, the appellant persisted that the claims had become prescribed
and contended that 126B of the Act must be read in conjunction with Schedule
3 of the Act, in particular item 4(2), all falling under Chapter 6 of the Act which
deals with collection, repayments, surrender and debt enforcement (ss 124 –
133). In essence, Schedule 3 deals with transitional provisions which relate to
pre-existing credit agreements – meaning agreements that were made before the
effective date of the Act, and to which this Act applies. The appellant further
contended that in the absence of an amendment of Schedule 3 of the Act, the
entire Chapter 6 had retrospective effect, which includes s 126B of the Act. The
respondents‟ case on appeal was that the appellant, by concluding the
acknowledgement of debt, had renounced his right to rely on prescription. They
further contended that s 126B did not apply retrospectively, as its language and
context did not support such on interpretation. The respondents went on to
contend that because s 126B of the Act takes away rights which accrued to them
upon the conclusion of the acknowledgement of debt, the section cannot be
construed to apply retrospectively.

[8] As mentioned earlier, the nub of this appeal is whether the court a quo
was correct in interpreting the provisions of s 126B to apply retroactively as
opposed to retrospectively.

Interpretation of s 126B of the Act
[9] Section 126B came into operation on 13 March 2015 being introduced by
the National Credit Amendment Act 19 of 2014. It reads as follows:
„126B Application of prescription on debt
(1)(a) No person may sell a debt under a credit agreement to which this Act applies and that
has been extinguished by prescription under the Prescription Act, 1969 (Act 68 of 1969).
(b) No person may continue the collection of, or re-activate a debt under a credit agreement
to which this Act applies-

(i)   which debt has been extinguished by prescription under the Prescription Act, 1969
(Act 68 of 1969); and
(ii)   where the consumer raises the defence of prescription, or would reasonably have
raised the defence of prescription had the consumer been aware of such a defence, in
response to a demand, whether as part of legal proceedings or otherwise.’

[10] I must mention from the outset that I am alive to the existence of a strong
presumption that legislation is not intended to be retroactive, – nor retrospective
(see S v Mhlungu & others 1995 (3) SA 867 (CC) paras 65 – 67), where
Kentridge AJ observed that:
„[65] First, there is a strong presumption that new legislation is not intended to be
retroactive. By retroactive legislation is meant legislation which invalidates what was
previously valid, or vice versa, ie which affects transactions completed before the new statute
came into operation …. It is legislation which enacts that “as at a past date the law shall be
taken to have been that which it was not”. See Shewan Tomes & Co Ltd v Commissioner of
Customs and Excise 1955 (4) SA 305 (A) at 311H, per Schreiner ACJ. There is also a
presumption against reading legislation as being retrospective in the sense that, while it takes
effect only from its date of commencement, it impairs existing rights and obligations, eg by
invalidating current contracts or impairing existing property rights. See Cape Town
Municipality v F Robb & Co Ltd 1966 (4) SA 345 (C) at 351, per Corbett J. The general rule
therefore is that a statute is as far as possible to be construed as operating only on facts which
come into existence after its passing.
[66] There is a different presumption where a new law effects changes in procedure. It
is presumed that such a law will apply to every case subsequently tried “no matter when such
case began or when the cause of action arose” - Curtis v Johannesburg Municipality 1906 TS
308 at 312. It is, however, not always easy to decide whether a new statutory provision is
purely procedural or whether it also affects substantive rights. Rather than categorising new
provisions in this way, it has been suggested, one should simply ask whether or not they
would affect vested rights if applied retrospectively. See Yew Bon Tew v Kenderaan Bas
Mara (supra at 563 (AC)); Industrial Council for Furniture Manufacturing Industry, Natal v
Minister of Manpower and Another (supra at 242).
[67] There is still another well-established rule of construction namely, that even if a
new statute is intended to be retrospective insofar as it affects vested rights and obligations, it

is nonetheless presumed not to affect matters which are the subject of pending legal
proceedings. See Bell v Voorsitter van die Rasklassifikasieraad en Andere (supra); Bellairs v
Hodnett and Another (supra at 1148).‟

[11] It is clear from the above exposition in Mhlungu that the legal position
relating to the retrospective application of any statute is settled in our law and
also in most foreign jurisdictions. In the case of Yew Bon Tew v Kenderaan Bas
Mara [1982] 3 All ER 833 at 836 Lord Brightman said in this regard that:

'A statute is retrospective if it takes away or impairs a vested right acquired under
existing laws, or creates a new obligation, or imposes a new duty, or attaches a new
disability, in regard to events already past. There is however said to be an exception in the
case of a statute which is purely procedural, because no person has a vested right in any
particular course of procedure, but only a right to prosecute or defend a suit according to the
rules for the conduct of an action for the time being prescribed.

But these expressions „retrospective‟ and „procedural‟, though useful in a particular
context, are equivocal and therefore can be misleading. A statute is retrospective if it takes
away or impairs a vested right acquired under existing laws, or creates a new obligation, or
imposes a new duty, or attaches a new disability, in regard to events already passed. There is,
however, said to be an exception in the case of a statute which is purely procedural, because
no person has a vested right in any particular course of procedure, but only a right to
prosecute or defend a suit according to the rules for the conduct of an action for the time
being prescribed.

But these expressions “retrospective” and “procedural”, though useful in a particular
context, are equivocal and therefore can be misleading. A statute which is retrospective in
relation to one aspect of a case (eg because it applies to a pre-statute cause of action) may at
the same time be prospective in relation to another aspect of the same case (eg because it
applies only to the post-statute commencement of proceedings to enforce that cause of
action); and an Act which is procedural in one sense may in particular circumstances do far
more than regulate the course of proceedings, because it may, on one interpretation, revive or
destroy the cause of action itself.‟
The learned judge accordingly further stated that:

„Whether a statute is to be construed in a retrospective sense, and if so to what extent,
depends on the intention of the legislature as expressed in the wording of the statute, having

regard to the normal canons of construction and to the relevant provisions of any
interpretation statute.‟
And (at 839):
„Their Lordships consider that the proper approach to the construction of the 1974 Act
is not to decide what label to apply to it, procedural or otherwise, but to see whether
the statute, if applied retrospectively to a particular type of case, would impair
existing rights and obligations.'
(Yew Bon Tew v Kenderaan Bas Mara , as approved in our courts by Marais JA
in Minister of Public Works v Haffejee NO 1996 (3) SA 745 (A) at 752C-G;
Euromarine International of Mauren v The Ship Berg & others 1986 (2) SA 700
(A) at 710E-I, and Transnet Ltd v Ngcezula 1995 (3) SA 538 (A) at 549G- I.)

[12]  The reasoning behind the presumption against the retrospective
application of legislation is premised upon the unwillingness of the courts to
inhibit vested rights. In the pivotal authority in this respect Innes CJ stated in
the case of Curtis v Johannesburg Municipality 1906 TS 308:
'The general rule is that, in the absence of express provision to the contrary, statutes
should be considered as affecting future matters only; and more especially that they should if
possible be so interpreted so as not to take away rights actually vested at the time of their
promulgation.'
A further reason for its existence is that the creation of new obligation or an
imposition of new duties by the Legislature is not lightly assumed. (See Lourens
du Plessis Re-interpretation of statutes eds (2002) at 182, and the cases cited
therein.)

[13] Thus a statute is presumed not to apply retrospectively, unless it is
expressly or by necessary implication provided otherwise in the relevant
legislation. It is for that reason presumed that the legislature only intends to
regulate future matters. See Mhlungu above para 64. Unless a contrary intention
appears from new legislation which repeals previous legislation, it is presumed

that no repeal of an existing statute has been enacted in relation to transactions
completed prior to such existing statute being repealed. Transnet Ltd v Ngcezula
above. See also G E Devenish Interpretation of Statutes eds (1992) at 189.

[14] It has been held that the crux of the matter is not the prospectivity or
retrospecitivity of legislation as such, but the fair treatment befalling those
subject to the legislation should the legislation be held to apply in that manner.
Nevertheless, where the statutory provision confirms the existing law, it is not a
case of true retrospectivity, since true retrospectivity means that at a past date,
the law shall be taken to have been that which it is not. Thus, if the legal
position is A, and enactment X is designed merely to confirm A, then it cannot
be said that, subsequent to the promulgation of  X, the legal position has
become A. Accordingly, true retrospectivity can only become an issue once X
replaces, amends of supplements A. (See du Plessis above at 183. See also
Unitrans Passengers (Pty) Ltd t/a Greyhound Coach Lines v Chairman,
National Transport Commission & others: Transnet Ltd (Autonet Division) v
Chairman, National Transport Commission & others 1999 (4) SA 1 (SCA) para
13 and Manyeka v Marine and Trade Insurance Co Ltd 1979 (1) SA 844 (SE)
847H-848A. See also Nkabinde & another v Judicial Service Commission &
others [2016] ZASCA 12; 2016 (4) SA 1 (SCA paras 59-84.)

[15]  However, one must not lose sight of the fact that presumptions, however
strong, are merely an aid to interpretation and must therefore yield to the
intention of the legislature as it emerges from any particular statute. Thus, the
answer to the question whether a particular statute has retrospective operation
cannot be found by simply determining whether the statute deals with
substantive law or matters of procedure. One has always to ascertain the
intention of the legislature. (See Kruger v President Insurance Co Ltd 1994 (2)
SA 495 (D) at 503E-G.)

[16] It is common cause that s126B does not expressly provide that it is
intended to apply with retrospective effect. Thus, the question that requires
analysis is whether it provides for retrospective application by necessary
implication. In Lek v Estate Agents Board 1978 (3) SA 160 (C) at 169F-G,
Friedman J observed that „such an inference can be drawn when the
consequences of holding an Act to be non-retrospective would lead to an
absurdity or practical injustice. In the case of Bartman v Dempers 1952 (2) SA
577 (A) at 582A-B, Centlivres CJ concurred with the view of Evershed MR in
Hutchinson v Jauncel 1950 (1) K.B. 574 at 579, who observed that „it seems to
me that, if the necessary intendment of the Act is to affect pending causes of
action, then this Court will give effect to the intention of the Legislature even
though there is no express reference to pending actions.'

[17] Returning to s 126B(1)(b) of the Act, it is trite that in the process of
interpreting a statute the inquiry includes a consideration of the language of the
enactment and the purpose and intent of the legislature which emerges
therefrom. No obvious absurdity, repugnance or inconsistency should be
produced. (See Euromarine International of Mauren v The Ship Berg & others
1986 (2) SA 700 (A) at 709I – 710E).

[18] In my view s 126B of the Act intended to cure a situation where a debt
which had become prescribed, the credit provider should not benefit from a debt
which had become prescribed because the „poor‟ consumer is unaware of the
defence of prescription. If the consumer would reasonably have raised the
defence of prescription had he or she been aware of such a defence, s 126B
would come to the consumer‟s rescue in order to prevent unfairness or injustice,
which would have befell the „poor‟ consumer. Although it was said in Landgraf
v USI Film Products et al 511 US 244 (1994) 244 at 265 that „elementary
considerations of fairness dictates that individuals should have an opportunity to

know what the law is and to conform their conduct accordingly‟, in support of
the basis of the presumption against retrospectivity, the corollary thereof is that
the presumption is not inflexible, it should operate only if there is no contrary
intention. (See S v Mhlungu supra para 38). The intention of the legislature in
introducing s 126B of the Act is clear in that it sought to protect consumers in
general, but more particularly the naive and vulnerable ones. It must be
accepted that it was included in the Act with good reason, presumably because
consumers, unaware of the law regarding prescription, were held liable for old
debts enforced by buyers and cessionaries. (See J M Otto „National Credit Act.
Vanwaar Gehási? Quo vadit lex? And some reflections on the National Credit
Amendment Act 2014 (part 2)‟ (2015) TSAR 756 at 769.) In doing so, s 126B
gives effect to the purposes set out in s 3 of the Act which includes the
protection of consumers through inter alia, the advancement of a fair and
transparent credit industry. And one of the ways to protect consumers is by
balancing the respective rights and responsibilities of credit providers on one
hand, and the consumer on the other. Section 126B of the Act, is clearly a
means of achieving the objective and demonstrates the intention of the
legislature to eradicate the injustice inherent in credit providers being able to
benefit from transactions which had become prescribed.

[19] It is well known that the Act has brought about implementation
challenges. In turn these challenges have created uncertainty in the credit
market place. In order to ensure proper and better implementation and
interpretation of the Act, the National Credit Act Amendment became necessary
to address implementation challenges that have materialised and also to
ameliorate the implementation. For us to understand the import of the
provisions of s 126B of the Act, it is of paramount importance to unpack the
jurisdictional factors of the section. This process of unpacking will enable us to
determine whether or not the jurisdictional factors have been complied with

before applying the principles of interpretation. The prohibition of collection or
re-activation of debt is not absolute, certain requirements have to be present for
instance.

[20] The defence of prescription ought to be raised in response to a demand by
the credit provider; it can be raised during the proceedings, as in the present
case, when it was raised in opposition to a summary judgment application. If the
consumer was aware of the defence of prescription, he should raise it, but if he
or she was not aware the consumer must show that he or she would reasonably
have raised it. The prescription period must have lapsed and the consumer must
not have been responsible for preventing the credit provider from knowing of
the debt. And also that the consumer has not acknowledged liability for the debt
during the running of the prescription period as contemplated in s 14 of the
Prescription Act, thereby interrupting the running of prescription and that s
13(2) of the Prescription Act is not applicable (dealing with a reciprocal non-
prescribed contractual debt). Lastly, that the consumer did not waive the
defence of prescription. Section 126B(1)(b)(ii) in essence extends the protection
of the defence of prescription to consumers who are not aware of the existence
of the defence. If the consumer was made aware, for instance by the credit
provider, this protection falls away, as they would have waived the defence.

[21] I concede, though that, somewhere somehow, in promoting protection
and equity in the credit market, the rights and responsibilities of credit providers
and consumers must be balanced to achieve sustainability. (See Kubyana v
Standard Bank of SA Ltd [2014] ZACC 1; 2014 (3) SA 56 (CC) para 20.)

[22] In Nkata v Firstrand Bank Limited [2016] ZACC 12; 2016 (4) SA 257,
Moseneke DCJ, had this to say:

„[95] This court has before expressed itself on the purposes of the Act.  In Sebola, in
the context of section 129(1)(a) of the Act, Cameron J observed that at the core of the Act is
the objective to protect consumers. This protection, however, must be balanced against the
interests of credit providers and should not stifle a “competitive, sustainable, responsible,
efficient [and] effective . . . credit market and industry”. The Act, the court noted, replaces
the apartheid-era legislation that regulated the credit market, and infuses constitutional
considerations into the culture of borrowing and lending between consumers and credit
providers.
[96] The purposes of the Act are directly attributable to the constitutional values of
fairness and equality. Sebola recognised that the Act is at pains to create a credit marketplace
that agrees with our constitutional democracy, both through its purpose – to promote “a fair .
. . marketplace for access to consumer credit” – as well as through the means that ought to be
adopted to achieve these goals.  The tools for achieving the Act‟s purposes include the
promotion of “equity in the credit market by balancing the respective rights and
responsibilities of credit providers and consumers”, and the development of “a consistent and
accessible system of consensual resolution of disputes arising from credit agreements”. In
sum, the Act is “a clean break from the past” and encourages dialogue between consumers
and credit providers.‟ (Footnotes omitted.)

[23] The court a quo in my view over-emphasised the protection and undue
compromise of certainty in commercial transactions as opposed to the
protection of the consumer which is clearly demonstrated in the wording of s
126B of the Act. Therefore by concluding the acknowledgement of debt the
appellant did not renounce his defence of prescription as he would reasonably
have raised it had he been aware of this defence. It was the intention of the
legislature and the purpose of amending the law by introducing the safety valve
in s 126B of the Act. To construe s 126B of the Act as not applying
retrospectively would be at odds with the trend set by the Constitutional Court
where it emphasised the protection of the consumer. For instance it interpreted s
129 of the Act to require a notice to be dispatched to the consumer, prior to
taking legal action. (See Sebola & another v Standard Bank of South Africa &

another [2012] ZACC 11; 2012 (5) SA 142 (CC) and Kubyana v Standard Bank
(supra).) It would also create an odd situation where certain consumers whose
agreements were entered into before the amendment Act was effected are
afforded less protection than those who did so after, thus creating a
differentiation between classes of consumers.

Schedule 3 of the Act
[24] The appellant has also relied on the transitioning provisions in Schedule 3
of the Act, in support of his proposition that s 126B applies retrospectively.
Item 4 of Schedule 3 regulates the applicability of the Act to pre-existing
agreements. These are agreements which are made before the effective date, ie 1
June 2007. The respondents rebuffed this submission, stating that Schedule 3 of
the Act has run its course in that it relates to pre-existing credit agreements
which were concluded prior to the effective date. They contended that Schedule
3 was enacted to apply the provisions of the Act to credit agreements complying
with the definition in the Act, but which were concluded before it came into
effect. Accordingly, as soon as the whole Act came into effect, Schedule 3
ceased to be relevant. Therefore it has no application in this case, and even
though it has not been repealed, it must be ignored, so the argument went. Their
view was that the mere fact that Schedule 3 was enacted to apply the provisions
of the Act to credit with respect to certain categories of credit agreements at the
time that the Act came into effect did not justify the conclusion that it would
continue to have such effect with respect to future amendments of the Act.

[25] It has correctly been pointed out that the transitional provisions are not
easy to apply and that they often lead to confusion. (See J M Otto The National
Credit Act Explained eds (2006) at 106.) It is indeed accepted that schedules
may in certain instances be used as an aid to construction, and I accept that not
all schedules carry equal value in the construction of provisions of a statute. The

weight to be attached to its interpretive value depends on a range of factors such
as the content of the schedule, its relationship to the rest of the statute and the
weight indicated in the statute itself to be attached to the schedule. (See G E
Devenish Interpretation of Statutes eds (1992) at 112.)

[26] The extent to which the provisions apply to pre-existing agreements has
been indicated through a column, under item 4(2) of Schedule 3. On one hand,
it provides the relevant provisions of the Act. On the other, it sets out the extent
to which the provisions apply to pre-existing agreement, and Chapter 6, under
which s126B falls is indicated as „applying fully‟ to pre-existing agreements.
Certain provisions, such as sections 60 to 66 and 91, apply to existing
agreements only with respect to acts or omissions occurring after the coming
into operation of the Act. These sections regulate inter alia, the right to apply for
credit and contain the non-discrimination provisions in respect of credit. There
are further examples where the legislature sought to determine the extent to
which the Act would apply to pre-existing agreements, and how far back or into
the past the act would apply. The point I make is that it is clear that where the
legislature saw fit to restrict the content of the Act‟s ambit to pre-existing
agreements, it did so in express terms. However, I agree with the appellants that
Schedule 3 had retrospective effect in certain respects till the time when the Act
came into effect but I do not agree that it is no longer applicable, and that it does
not apply to future amendments in the Act. Firstly, it continues to regulate the
position of pre-existing agreements. Second, the amendment made in the Act
pertain, at its highest, to „all agreements‟, which may include pre-existing
contracts (and according to my interpretation, does). Further, the legislature,
which is presumed to know the law, chose not to amend item 4(3) of the
Schedule, nor to repeal the schedule in its entirety. (See Road Accident Fund v
Monjane [2007] ZASCA 57; 2010 (3) SA 641 (SCA) para 12). It is a well-
established principle of statutory interpretation that the legislature must be taken

to be aware of the nature and state of the law existing at the time when
legislation is passed. (See Boost Sports Africa (Pty) Ltd v South African
Breweries (Pty) Ltd [2015] ZASCA 93; 2015 (5) SA 38 (SCA) para 13.

[27] For the reasons above, I would have allowed the appeal.

_____________________

J B Z Shongwe

Judge of Appeal

WILLIS JA:

[28]  I have had the benefit of reading the judgments prepared by Shongwe and
Van der Merwe JJA. I agree with Shongwe JA but consider that it may be
helpful if I add a few additional remarks in support thereof. It is indeed correct
as Van der Merwe JA has emphasised that, generally speaking, there is a
presumption against the retrospective operation of law. The principle is an
ancient one alluded to by J Voet in Commentarius Ad Pandedas (1723) 1.3.17).
It is intrinsic to the rule of law. I understand the principle to derive from the fact
that in freedom-loving and enlightened societies that human beings are free to
do as they please, except as is either proscribed or prescribed by law.

[29] The principle against the retrospective operation of the law is not,
however, an absolute one. For example, another principle that in favour of
freedom has the consequence that new penal provisions that operate in favour of
the persons thereby affected do indeed have a retrospective effect but those that
work against them do not. It was made clear in R v Mazibuko 1958 (4) SA 353
(A) at 357E, that  it is indeed also an ancient, well-established principle of our

common law that an increase in penalty will ordinarily not operate
retrospectively in circumstances where that additional burden did not apply at
the time when the offence was committed. This principle was reaffirmed in R v
Sillas 1959 (4) SA 305 (A) at 311E-G and S v Mpetha 1985 (3) SA 702 (A) at
707H-708A and 717I-718B. Care must obviously be taken not to stretch the
analogy too far or inappropriately.

[30]   Sight must not, however, be lost of the fact that among the reasons we
have the law of prescription is to set persons free from the burden of debt. The
question we have to ask ourselves is whether, under our constitutional
dispensation, it is better, in the transitional period, to set consumers forever free
from debt that has prescribed or to allow credit providers the freedom to revive
debt that has prescribed through the mechanism of „acknowledgement‟. The
question is a hard one, especially in the circumstances of this case.

[31] Nevertheless, if the National Credit Act 34 of 2005 (NCA) is read ex
visceribus actus (see, for example, City Deep Limited V Silicosis Board 1950
(1) SA 696 (A) at 702) (comprehensively, as a whole), I am persuaded that this
court must come down in favour of the consumer, rather than the credit
provider. I am fortified in this view by reference to a number of cases in which
the Constitutional Court has expressed itself on the purposes of the NCA. I
refer, in particular, to Sebola & another v Standard Bank of South Africa Ltd &
another [2012] ZACC 11; 2012 (5) SA 142 (CC) para 40;  Ferris & another v
Firstrand Bank Ltd [2013] ZACC 46;2014 (3) SA 39 (CC) paras 17-18;
Kubyana v Standard Bank of South Africa Ltd [2014] ZACC 1; 2014 (3) SA 56

(CC) paras 36-37 and Nkata v Firstrand Bank Ltd   [2016] ZACC 12; 2016 (4)
SA 257 (CC) paras 92-100.

____________________
NP Willis
Judge of Appeal

Van der Merwe JA (Mathopo JA and Nicholls AJA concurring):

[32] I have had the benefit of reading the judgment prepared by my colleague
Shongwe JA. I gratefully adopt his exposition of the facts of the matter and will
only refer to those facts that I consider necessary for a proper understanding of
this judgment. I regret, however, that I am unable to agree with the conclusion
that he reached. For the reasons that follow, I am of the view that s 126B(1)(b)
of the National Credit Act 34 of 2005 (the NCA) has no retrospective effect.

[33] The written agreement entered into between the parties on 3 October
2014 (the agreement), was a comprehensive agreement. In terms thereof the
appellant inter alia acknowledged indebtedness towards Absa Bank Limited
(Absa) in respect of ten existing accounts. These accounts related to instalment
sale agreements entered into between the appellant and Absa in respect of two
Mercedes Benz motor vehicles, an Actros motor vehicle, three trailers, a jetski,
four „quad bikes‟, an Isuzu motor vehicle and a Scania truck. The total
indebtedness acknowledged to Absa amounted to more than R2,7 million. The
appellant also acknowledged indebtedness to MAN Financial Services (Pty) Ltd
(MFS) in the amount of R707 496, in respect of an instalment sale agreement
entered into in respect of a MAN truck. The appellant undertook to reduce its

indebtedness by making monthly payments to Absa in the amount of R42 000
and monthly payments to MFS in the amount of R15 000.
[34] In his opposing affidavits to the applications for summary judgment, the
appellant stated that all of these debts had become prescribed before the
agreement was entered into. He said that he was unaware at the time that he
could rely on prescription and that had he been aware thereof, he would not
have entered into the agreement. These averments had to be accepted for
purposes of summary judgment and counsel for the respondents argued the
matter on this basis.

[35] Thus, the appellant‟s case was that the agreement constituted the re-
activation of debts under credit agreements to which the NCA applied, which
debts had been extinguished by prescription and that he would reasonably have
raised the defence of prescription at the time of the agreement had he been
aware of that defence. It follows that the appellant‟s case was fully dependent
on the proposition that s 126B(1)(b) of the NCA retrospectively invalidated the
agreement and destroyed the rights of Absa and MFS in terms thereof.

[36] Absa and MFS essentially claimed delivery of the assets over which they
had retained ownership. It is not at all clear to me that prescription of the debts
and the invalidity of the agreement would constitute a defence to the claims for
delivery of the assets. It does not follow from the prescription of the debts that
the appellant was in law entitled to retain possession of the assets. However, the
matter was not argued on this basis and I will confine myself to the issue of
retrospectivity of s 126B(1)(b).

[37] There are formidable obstacles in the way of the contention of the
appellant that s 126B(1)(b) reached back to nullify the agreement. In Unitrans
Passenger (Pty) Ltd t/a Greyhound Couch Lines v Chairman, National

Transport Commission, & others; Transnet Ltd (Autonet Division) v Chairman,
National Transport Commission, & others 1999 (4) SA 1 (SCA) para 12,
Olivier JA said:
„One may start the conspectus by stating the time-honoured principle formulated in Peterson
v Cuthbert & Co Ltd 1945 AD 420 at 430, based upon the Roman-Dutch law, that no statute
is to be construed as having retrospective operation (in the sense of taking away or impairing
a vested right acquired under existing laws), unless the Legislature clearly intended the
statute to have that effect (see also, inter alia Bartman v Dempers 1952 (2) SA 577 (A) at
580C).‟
This principle is not only time-honoured but also one of global application. See
National Director of Public Prosecutions v Carolus & others 2000 (1) SA 1127
(SCA) para 32 and National Director of Public Prosecutions v Basson 2002 (1)
SA 419 (SCA) para 11. It bears repeating what Kentridge AJ said in S v
Mhlungu & others 1995 (3) SA 867 (CC) para 65:
„First, there is a strong presumption that new legislation is not intended to be retroactive. By
retroactive legislation is meant legislation which invalidates what was previously valid, or
vice versa ie which affects transactions completed before the new statute came into operation.
See Van Lear v Van Lear [1979 (3) SA 1162 (W)]. It is legislation which enacts that “as at a
past date the law shall be taken to have been that which it was not”. See Shewan Tomes & Co
Ltd v Commissioner of Customs and Excise 1955 (4) SA 305 (A) at 311H, per Schreiner ACJ.
There is also a presumption against reading legislation as being retrospective in the sense
that, while it takes effect only from its date of commencement, it impairs existing rights and
obligations, eg by invalidating current contracts or impairing existing property rights. See
Cape Town Municipality v F Robb & Co Ltd 1966 (4) SA 345 (C) at 351, per Corbett J. The
general rule therefore is that a statute is as far as possible to be construed as operating only on
facts which come into existence after  its passing.‟
And as Mokgoro J pointed out in Veldman v Director of Public Prosecutions,
Witwatersrand Local Division 2007 (3) SA 210 (CC) para 26, the principle that
legislation will affect only future matters and not take away existing rights, is
founded on the rule of law. It also follows that if the court is left in doubt as to

the retrospective effect of a provision, the presumption against the
retrospectivity would not be rebutted.
[38] It is trite that the legislature is presumed to know the law. Before the
commencement of s 126B(1)(b) an agreement that revived a prescribed debt of
this kind was perfectly valid. See De Jager & others v Absa Bank Bpk 2001 (3)
SA 537 (SCA) para 12-15.  The legislature must no doubt be taken to have been
aware that retrospective application of s 126B(1)(b) would nullify agreements
that had validly been entered into and would take away existing rights. There is
no indication in s 126B(1)(b) of any intention to do so. I accept that the
provision was intended to benefit consumers. But that is the reason why the
provision was introduced. That in itself says nothing about retrospectivity. As
the court a quo and Shongwe JA demonstrated, our courts have repeatedly said
that although the main objective of the NCA is to protect consumers, this
protection must be balanced against the rights of credit providers.

[39] In Rossouw & another v Firstrand Bank Ltd [2010] ZASCA 130; 2010
(6) SA 439 Maya JA referred to various provisions of the NCA and in para 19
continued to say:
„These provisions make it abundantly clear that the legislature recognised the need to express
its intention where it sought to interfere with vested rights. Interestingly, s 90(2)(c)
acknowledges the parties‟ common-law rights, and declares unlawful any provisions in a
credit agreement which purport to waive such rights as may be applicable to the agreement. I
find it inconceivable, therefore, that the legislature would, in the same act, indirectly do away
with vested rights such as the mortgagee‟s right to claim the balance of the debt after
execution against the mortgaged property.‟
In accordance herewith the submission was that the retrospective application of
s 126B(1)(b) was expressly stipulated for in Schedule 3 of the NCA. I am
unable to agree. Schedule 3 is entitled „TRANSITIONAL PROVISIONS‟. Its
provisions deal with precisely that. In this context the meaning of item 4 of
Schedule 3 is plain. It simply makes specified provisions of the NCA applicable

to certain credit agreements that had been entered into before the
commencement of the provisions. There is no basis for the startling proposition
that flows from the appellant‟s argument, namely that unless Schedule 3 was
amended, all amendments of the provisions of the NCA that applied to pre-
existing agreements, would operate retrospectively. This demonstrates a further
difficulty with the argument. On any interpretation of Schedule 3, it has no
effect on credit agreements entered into after the commencement of the NCA. It
follows that if Schedule 3 was to provide for retrospective operation, it would
do so only in respect of pre-existing credit agreements and not in respect of
credit agreements entered into after the commencement of the NCA. This is an
absurd result that could not have been intended.

[40] I therefore agree with the conclusion of the court a quo that s 126B(1)(b)
has no retrospective operation and provided no defence to the appellant. As no
further defence had been put forward, the court a quo correctly granted
summary judgment.

[41] In the result the appeal is dismissed with costs.

__________________
C H G van der Merwe
Judge of Appeal

Appearances

For the Appellant:
P W A Scott SC with him K D Williams

Instructed by:

Marston Attorneys, Port Elizabeth;

Claude Reid Incorporated, Bloemfontein.

For the Respondent:
J G Richards

Instructed by:

McWilliams & Elliott Incorporated, Johannesburg;

Phatshoane Henney 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

15 December 2016

STATUS

Immediate

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

Kaknis v Absa Bank Limited & another (08/16) [2016] ZASCA 206
(15 December 2016)

MEDIA STATEMENT

Today the Supreme Court of Appeal handed down a judgment concerning the interpretation and
application of the provisions of s 126B of the National Credit Act 34 of 2005 (the Act), which came
into operation with effect from 13 March 2015. The issue was whether or not s 126B(1)(b) of the Act
applies retrospectively. This section seeks to prohibit the collection of or re-activation of a debt under
a credit agreement to which the Act applies, which has been extinguished by prescription under the
Prescription Act 68 of 1969. It applies where the consumer raises the defence of prescription, or
would reasonably have raised the defence of prescription had he or she been aware of such a
defence, in response to a demand, whether as part of legal proceedings or otherwise.

The issue arose from the grant of two summary judgments against the appellant, Mr Kaknis, by the
Eastern Cape Local Division of the High Court, Port Elizabeth in favour of Absa Bank Ltd (Absa) and
Man Financial Services SA (Pty) Ltd (MFS). It was common cause in the court a quo that the parties
had concluded installment sale agreements during 2006 and 2008, in terms of which the appellant
bought vehicles and trailers from Absa and MFS. And that on 3 October 2014, after the respondents’
claims had become prescribed, the appellant concluded an acknowledgement of debt in favour of the
respondents. In terms of this agreement, the appellant acknowledged his indebtedness to Absa in an
amount over R2,7 million, plus interest, and an amount of R702 496, plus interest, in respect of MFS.
The appellant failed to pay in terms of the acknowledgement of debt, and he also did not surrender
any of the assets as was agreed in the agreement. Arising from this failure, the respondents
proceeded to issue summons and to apply for summary judgment. The appellant raised the defence

that the claim had prescribed, and relied on the provisions of s 126B(1)(b)(ii) of the Act. The high
court dismissed the appellant’s defence that the respondents’ claims against him had prescribed and
held that s 126B did not apply retrospectively.

In dismissing the appeal, the majority court of the SCA held that s 126B(1)(b) of the Act has no
retrospective operation and provided no defence to the appellant. The majority in its reasoning
invoked the presumption against the retrospective operation of statutes, and found that the section
was not intended to take away or impair vested rights acquired under existing laws. According to the
majority court, the existing law before s 126B(1)(b) of the Act was introduced, was to the effect that
an agreement that revived a prescribed debt of this kind was perfectly valid, and because the
legislature is presumed to know the law, the legislature must be taken to have been aware that
retrospective application of s 126B(1)(b) would nullify agreements that had validly been entered into
and would take away existing rights. The court concluded that there was no indication in s 126B(1)(b)
of any intention to do so.  The court also found that the appellant’s reliance on schedule 3 of the Act
was misplaced.

In a dissenting judgment, Shongwe JA held that s 126B was intended to prohibit credit providers from
benefiting from debts which had become prescribed and was aimed at protecting ‘poor’ consumers
from enforcement of such debts, in order to prevent unfairness or injustice.  Shongwe JA reasoned
that to construe s 126B of the Act as not applying retrospectively would be at odds with Constitutional
Court jurisprudence in interpreting the Act, which has emphasised the protection to consumers, and
would also create a peculiar situation where certain consumers whose agreements were entered into
before s 126B came into effect, were afforded less protection than those who did so after, thus
creating a differentiation between classes of consumers.

Also dissenting, and in agreement with Shongwe JA, Willis JA held that the principle against the
retrospective operation of the law was not an absolute one. And further, that a reading of the Act
comprehensively, as a whole, and also with reference to the string of cases of the Constitutional
Court in interpreting the Act and its purpose, the SCA should have found in favour of the consumer,
the appellant, rather than the respondent credit providers.

--- ends ---