Rental agreements and utility services charges are not subject to the provisions of the National Credit Act and people cannot claim protection under this Act according to a ruling from the South Gauteng High Court.
The ruling, from Judge RS Mathopo, found that the magistrate had erred in refusing to grant a default judgment to Pareto Limited and Absa Bank against Kalnishna Sigaban trading as KS Flowers n More for outstanding rentals of utility service charges of R59 946,18.
He ordered that the judgment against Sigaban be granted and awarded costs to Pareto as well.
The case arises from the refusal by an unnamed magistrate to grant default judgment for rental and other related charges including electricity, water, sewerage charges and municipal rates. Pareto had issued summons for the outstanding money and applied for a default judgment after Sigaban had failed to enter an appearance to defend the action.
The magistrate refused to grant the default judgment on the basis that the default judgment for rental and utility charges was premature in terms of Section 129 of the National Credit Act.
“The crisp point of the appeal is whether section 129 of the Act (which obliges a creditor in certain circumstances to deliver a specific form of notice of demand to a debtor prior to the institution of court proceedings) applies to amounts other than rental payable by the lessee in terms of a lease, notwithstanding that section 129 does not apply to the rental component of the landlord’s claim,” Judge Mathopo said in delivering his judgment.
He said it appeared as though the magistrate lumped the two claims together and concluded that since there had not been compliance with section 129 in regard to one part of the claim (utility charges) the entire action of the appellants was premature and he denied the judgment.
He said that this approach was fallacious because it is in conflict with the provisions of the Act, which stipulates that a credit agreement is a credit facility, transaction, guarantee or any combination to these.
“A lease agreement is specifically excluded in the Act and does not fall within the definition of a credit agreement,” he said in his judgment.
With regard to the utilities component of the claim Judge Mathopo said that it is clear that the landlord is entitled to recover charges it has incurred from the tenant. The landlord disburses the money to the utility provider on behalf of the tenant and is entitled to recover it.
“I conclude that the Magistrate misconstrued his position by refusing the default judgment on the basis of non-compliance with section 129 of the Act, which is clearly not applicable in this matter,” he found.
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