TRANSUNION CREDIT BUREAU JUDGMENT. [1] This appeal, with leave of the Supreme Court of Appeal, is

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1 IN THE HIGH COURT OF SOUTH AFRICA EASTERN CAPE DIVISION GRAHAMSTOWN In the matter between: Case No.: CA272/2015 TRANSUNION CREDIT BUREAU Appellant and NONKQUBELA NYOKA Respondent JUDGMENT REVELAS J: [1] This appeal, with leave of the Supreme Court of Appeal, is against a judgment delivered by Pakade ADJP on 12 February 2015 in terms whereof the appellant, a credit bureau as envisaged in the National Credit Act, 34 of 2005 ( the Act ), was ordered to deliver to the respondent: 1. all files, reports or information concerning the applicant which constitute adverse credit reports to Nedbank Ltd and delivered by the respondent [appellant] to the said bank. 2. The respondent [appellant] is ordered to pay the costs of the application.

2 Page 2 of 18 [2] I will refer to the parties herein as they were before Pakade ADJP. [3] The relief granted by the learned judge, cited above, was not the relief sought by the applicant in her notice of motion in which the following order was sought: That the respondent be and is hereby ordered to forthwith provide the applicant with the full contact particulars of the sources of adverse/default information especially postal and physical addresses appearing at Section B, part 4 of the applicant s credit report (Marais IT Credit and ITC Business). (emphasis added) Background [4] The matter has the following short history: The applicant unsuccessfully applied for a loan to Nedbank Limited ( the bank ), which was turned down on the basis of her alleged poor credit record as reflected in an adverse credit report furnished to the bank by the respondent. She subsequently instructed her attorney of record, Mr AS Zono, to challenge the report and her credit records held by the respondent. [5] Consequently, on 9 September 2013, Mr Zono wrote to the respondent and requested the applicant s credit records, files and

3 Page 3 of 18 information as well as the originating sources of the adverse credit record, and the identity of the person or institution responsible for the applicant s adverse credit listing. In his letter of demand, Mr Zono also warned the respondent that a failure to furnish these records and information as requested, within five days, would result in the applicant approaching the High Court for relief. [6] The respondent promptly responded to the request the following day, by furnishing Mr Zono with the applicant s credit records, comprising several pages and containing all the information relevant to her credit status. According to these records, three different creditors against the applicant in the East London Magistrates Court had obtained three judgments for payments of R785.00, R4, and R1, respectively. (One of the judgments had been rescinded and the respondent, at the behest of the applicant, through Mr Zono, expunged the adverse information in connection with the rescinded judgment from her credit record). More importantly, for purposes of the present matter, the identity and contact details of the originating sources of the adverse credit reports in respect of the applicant, were also furnished. They were Maris IT Credit ( Maris ) and ITC Business Administration ( ITC.)

4 Page 4 of 18 [7] Mr Zono was not satisfied with the information received. Further correspondence between Mr Zono and the respondent ensued. Mr Zono adopted the stance that the applicant was of right, and in terms of the Act, entitled to the physical address, fax numbers etc of the sources of the adverse credit listing ( adverse sources ) regarding the applicant (Maris and ITC). He maintained that these details were required by the applicant for purposes of challenging the adverse credit information in litigation. [8] On 26 November 2013, Ms Anne Greeff of the respondent wrote to Mr Zono and requested him not to pursue the applicant s quest for the aforesaid information matter any further, and advised him that the correct procedure to follow, if the applicant intended challenging her credit information, was set out in section 72 of the Act, and proposed how she should go about challenging the information in terms of a tailor-made procedure provide for in the Act, which she set out in clear terms. Mr Zono was also informed in the same letter, that if an application in the High Court was launched to obtain the information he insisted upon, it will be met with an application for a costs order, de bonis propriis, against him. The relevant part of Ms Greeff s letter to Mr Zono reads as follows:

5 Page 5 of In response, TransUnion provided you with the credit report, which contained the names, contact persons and contact numbers for the sources of the adverse listings appearing on the credit report. 3. You are now demanding, through the use of the courts, that TransUnion provide you with further contact information which it is not ordinarily obliged to provide. In this regard, the National Credit Act, No. 34 of 2005 ( National Credit Act ) places no legal obligation on the credit bureaux to provide and/or display the physical address and postal address of the sources of information appearing on a consumer credit report. 4. As you are aware, the National Credit Act provides for a convenient, practical and cost-effective procedure in terms of which your client would be able to challenge the information appearing on her credit report. Section 72 affords every person the right to access and challenge their credit record and information held by the bureaux. In terms of this section, a consumer (or any authorized third party acting on his/her behalf, including attorneys) is able to contact any bureau directly and dispute or challenge the information held by that bureau in respect of the consumer. The bureau is then afforded the opportunity to investigate the consumer s challenge and obtain credible evidence in support of the challenge. The legislature specifically intended these processes to allow for the resolution of inaccurate or erroneous consumer credit information submitted to the bureaux by the credit providers and data sources. 5. From the allegations contained in your claim, it is apparent that you have not advised your client on the above dispute

6 Page 6 of 18 procedure available to her in terms of the NCA. Instead, you have chosen to attempt to address the dispute through your own efforts, in the process demanding that TransUnion provide you with information which it is not obliged to provide you with, and which, in any event, TransUnion would not ordinarily utilize when attempting to resolve an information challenge submitted by a consumer. 6. As things currently stand, TransUnion believes that it has met all of its obligations in terms of the National Credit Act. Accordingly, your claim against TransUnion is without legal basis. [9] It must be pointed out at this juncture, that Mr Zono and the respondent were no strangers to each other in the context of applications of the kind under consideration, in which Mr Zono acted for different clients. I will deal with the relevance of this history when an appropriate costs order is considered below. [10] Despite the sensible advice given to Mr Zono in Ms Greeff s letter, which correctly reflects the procedure to follow when challenging adverse credit information in terms of the Act, the applicant proceeded to the High Court. [11] Since the credit records contained the contact details of the adverse sources, the purpose of the application to the High Court

7 Page 7 of 18 amounted to no more than the rather pointless exercise of obtaining two addresses. As shown above, the relief obtained by the applicant was much broader than what she had requested in her notice of motion. The relief granted was also inconsistent therewith, in as much as Mr Zono had already been furnished with the applicant s full credit records containing contact details for Maris and ITC, save for their physical and postal addresses. [12] The relief granted by the court a quo also did not accord with the case made out in the founding affidavit, wherein the sole focus of the application was on the need for the physical and postal addresses of the sources, Maris and ITC, to challenge them. It was clear from the founding affidavit that the applicant s credit records were delivered to her attorney. An order to deliver such credit records was therefore superfluous. [13] The primary question to be determined in this appeal, is whether the respondent was under any legal obligation to furnish the applicant with the particular details sought (the physical and postal addresses of Maris and ITC) and, whether it was in the circumstances necessary for the applicant to approach the High Court for such relief.

8 Page 8 of 18 [14] During argument, the applicant s counsel relied on the provisions of section 70(1)(d) of the Act in support of his contention that the applicant was entitled to demand the adverse sources physical and postal addresses and other contact details, over and above what had already been furnished, such as the adverse sources identities, telephone numbers, fax numbers and contact persons. [15] The reliance on section 70(1)(d) of the Act is for present purposes misplaced, as the section deals with the gathering of information pertaining to a consumer. Section 70(1)(d) regulates the kind of information concerning a consumer (like the applicant) which a credit bureau is obliged to keep in its records. Such information includes the consumer s identity, addresses (past and present), marital status, etc. The section does not apply to information concerning a credit bureau or adverse sources such as Maris and ITC. [16] Section 72 of the Act is applicable to persons who intend to challenge their credit records. This section deals specifically with the right of a person to access and challenge credit records and information, which is what the applicant intended. It is necessary to cite the section in full:

9 Page 9 of Right to access and challenge credit records and information. (1) Every person has a right to (a) (b) be advised by a credit provider within the prescribed time before any prescribed adverse information concerning the person is reported by it to a credit bureau, and to receive a copy of that information upon request; inspect any credit bureau, or national credit register, file or information concerning that person (i) without charge (aa) (bb) (cc) as of right once within any period of twelve months; if so ordered by a court or the Tribunal; and once within a reasonable period after successfully challenging any information in terms of this section, for the purpose of verifying whether that information has been corrected; and (ii) at any other time, upon payment of the inspection fee of the credit bureau or national credit register, if any; (c) challenge the accuracy of any information concerning that person (i) (ii) that is the subject of a proposed report contemplated in paragraph (a); or that is held by the credit bureau or national credit register, as the case may be, and require the credit bureau or National Credit Regulator, as the case may be, to investigate the accuracy of any challenged information, without charge to the consumer; and

10 Page 10 of 18 (d) be compensated by any person who reported incorrect information to a registered credit bureau or to the National Credit Register for the cost of correcting that information. (2) A credit provider must not require or induce a prospective consumer to obtain or request a report from a credit bureau in connection with an application for credit or an assessment under section 81. (3) If a person has challenged the accuracy of information proposed to be reported to a credit bureau or to the national credit register, or held by a credit bureau or the national credit register, the credit provider, credit bureau or national credit register, as the case may be, must take reasonable steps to seek evidence in support of the challenged information, and within the prescribed time after the filing of the challenge must (a) (b) provide a copy of any such credible evidence to the person who filed the challenge, or remove the information, and all record of it, from its files, if it is unable to find credible evidence in support of the information, subject to subsection (6). (4) Within 20 business days after receiving a copy of evidence in terms of subsection (3) (a), the person who challenged the information held by a credit provider, credit bureau or national credit register may apply in the prescribed manner and form to the National Credit Regulator to investigate the disputed information as a complaint under section 136. (5) A credit bureau or the National Credit Register may not report information that is challenged until the challenge has been resolved in terms of subsection (3) (a) or (b). (6) On application by a credit provider, credit bureau or the National Credit Regulator, as the case may be, the Tribunal may make an order

11 Page 11 of 18 limiting the applicant s obligations to a consumer in terms of this section if the Tribunal is satisfied that the consumer s (a) (b) particular request or requirement is frivolous, unfounded or wholly unreasonable; or history and pattern of such requests or requirements are frivolous or vexatious. (7) Failure by a credit bureau to comply with a notice issued in terms of section 55, in relation to this section, is an offence. [17] It is noteworthy that this section makes no mention of an obligation on the part of the credit bureau to furnish the physical addresses for purposes of challenging the accuracy of the information held by a credit bureau under this section. Neither does section 62 of the Act, which requires the credit provider to provide a consumer of the dominant reasons for not entering into a credit agreement with that particular consumer. If the reason is an adverse credit report, then the credit provider (in this case, the bank) is obliged to furnish the contact details of the credit bureau (in this case the respondent) who had furnished the adverse credit information, to the consumer, which it did. [18] Neither the Act, nor its regulations, confers any right to the kind of information sought in the notice of motion. A person seeking to

12 Page 12 of 18 invoke the provisions of section 72 of the Act would not need the postal or physical addresses of the respective credit bureaux and adverse sources as the credit bureaux will take up the matter with the adverse source. Quite plainly, the applicant had no entitlement to the relief sought by her. [19] Given the practical, efficient and cost-effective procedure to challenge inaccurate credit information provided for in section 72 of the Act, it was entirely unnecessary for the applicant to approach the High Court to obtain two addresses for the entities mentioned and which information would in any event be readily available on the internet, or by other means. There was simply no benefit to be derived from bringing the application in question. [20] When the matter was argued before him, the learned judge a quo, mero motu raised the question of jurisdiction and that aspect was dealt with first. The matter stood down for judgment to be handed down on that aspect. Thereafter, the merits would have been considered. What followed, however, was that the judgment under consideration in the present appeal was handed down, dealing with both questions of the jurisdiction and the merits, even though the merits had not been argued. Had the merits been argued, the learned

13 Page 13 of 18 judge may have found, as he ought to have, that the applicant was not entitled to the relief sought by her or to the relief granted to her, for the reasons I have outlined above. In the circumstances, it must be concluded that the application ought to have been dismissed. The appeal must therefore succeed. Costs [21] During argument, counsel for the applicant submitted that Mr Zono merely acted in accordance with the instructions received from his client, the applicant. I am not at all persuaded that this was the case. The applicant is a layperson who found herself in financial difficulty. That was her main reason for instructing Mr Zono to act on her behalf. A reasonable attorney in his position ought to have advised her, as his client, to pursue the more cost-effective route provided for in section 72 of the Act. It is highly unlikely that the applicant was advised of this remedy, but had nonetheless instructed her attorney to bring a more expensive and unnecessary application. [22] The respondent demonstrated, referring to several examples, that Mr Zono has brought similar applications before, and in some instances the question of costs was settled out of court. In the

14 Page 14 of 18 present application Mr Zono was made aware, in no uncertain terms, motivated by cogent reasons as evidenced in the letter written by Ms Greeff, giving him proper legal advice, that the respondent would not settle the matter, and would go as far as applying for a punitive costs order against him, should he persist. Mr Zono shunned this advice and proceeded with the application in the High Court regardless of the consequences, describing the respondent as arrogant for not providing the physical addresses in question. Mr Zono did not bring to the attention of the court a quo, that the respondent had advised him of the proper procedure to challenge credit records as set out in section 72 of the Act, and also failed to give reasons for not following the prescripts of section 72 of the Act and his motivations for not attempting to use alternative methods (such as, but not limited to, a Google search) to establish the addresses sought after. Mr Zono simply set out to portray the respondent as having an implacable approach to the matter. [23] The history between Mr Zono and the respondent in several similar matters referred to by the respondent, suggests that Mr Zono was running a veritable cottage industry, as put by counsel for the respondent, around these types of frivolous applications, The

15 Page 15 of 18 application in question was to his client s detriment and it militated against the spirit and objectives of the Act. [24] When considering whether or not to grant costs de bonis propriis against the representative or agent of a litigant, (t)he general rule is that a person in a fiduciary position, is not liable for costs of litigation de bonis propriis unless he has acted mala fide, or negligently, or unreasonably and this applies to him whether the costs are those incurred on behalf of the trust [the client] or to opponents. 1 [25] Mr Zono undoubtedly caused unnecessary costs to his client and opponent in this matter. His client was clearly not behind this litigation that was very costly to her and served no discernable purpose. [26] The circumstances set out above, all constitute grounds for the costs order sought by the respondent 2 and thus a proper case was made before the court a quo to grant a punitive costs order de bonis propriis, against the applicant s attorney of record. 1 Caldwell s Trustee v Western Assurance Co 1918 WLD 146 at 158 et seq, citied with approval in Venter NO v Scott 1980 (3) SA 988 (O) at See: Road Accident Fund v Le Roux 2002 (1) SA 751 (W) and Naidoo and Another v Matlala NO and Others 2012 (1) SA 143 (GNP)

16 Page 16 of 18 [27] In the circumstances the following order is made: 1. The appeal succeeds with costs. 2. The orders granted by Pakade ADJP on 12 February 2015 are hereby set aside and substituted with the following: (a) The application is dismissed. (b) The applicant s attorney, Mr A S Zono, is to pay the respondent s costs, of the application, on a scale as between attorney and client, de bonis propriis. E REVELAS Judge of the High Court SMITH J: I agree. J E SMITH Judge of the High Court

17 Page 17 of 18 BLOEM J: I agree. G H BLOEM Judge of the High Court

18 Page 18 of 18 Appearances: For the appellant: Adv B D Hitchings instructed Breytenbach Mostert Skosana Incorporated, Johannesburg c/o Wheeldon Rushmere & Cole, Grahamstown For the respondent: Adv M N Hinana instructed by Messrs A S Zono & Associates, Mthatha Date heard: 06 June 2016 Date delivered: 14 June 2016