Chevron SA (Pty) Limited v Dennis Edwin Wilson t/a Wilson's Transport and Others

Chevron SA (Pty) Limited extended credit to Mr Dennis Edwin Wilson t/a Wilson's Transport from 1997 for the purchase of petroleum products. Mr Wilson paid monthly for purchases until a billing dispute arose in 2008. In 2010, Chevron sued in the Magistrate's Court for payment of R3,330,977.03. During pre-trial proceedings, Chevron accepted it was required to be registered as a credit provider under section 40(1) of the National Credit Act 34 of 2005 (NCA) but was not registered. Section 40(4) provides that a credit agreement by an unregistered credit provider is unlawful and void under section 89. From 1997 to 2009, Mr Wilson had paid approximately R33 million to Chevron. Section 89(5)(b) mandates that courts order credit providers to refund all money paid by consumers under unlawful agreements, with interest. The parties agreed the agreements were unlawful credit agreements under the NCA. Chevron challenged the constitutional validity of section 89(5)(b).

• Whether monies paid by a consumer to a credit provider constitute property protected by section 25(1) of the Constitution
• Whether mandatory repayment under section 89(5)(b) of the NCA amounts to deprivation of property
• Whether deprivation under section 89(5)(b) is arbitrary due to lack of judicial discretion
• Whether availability of an unjustified enrichment claim negates arbitrariness of the deprivation
• Whether the limitation of the property right is justified under section 36(1) of the Constitution
• Whether section 89(5)(b) of the NCA is constitutionally invalid
• What remedy is just and equitable

The Constitutional Court confirmed the High Court's order of constitutional invalidity with modifications: (1) Section 89(5)(b) of the National Credit Act 34 of 2005 was declared inconsistent with the Constitution and invalid. (2) From 5 June 2014 to 13 March 2015, section 89(5) was deemed to read: "If a credit agreement is unlawful in terms of this section, despite any other legislation or any provision of an agreement to the contrary, a court must make a just and equitable order including but not limited to an order that: (a) The credit agreement is void as from the date the agreement was entered into." (3) The orders have no effect on matters in which final judgment has been delivered and in which no appeal or application for leave to appeal is pending. (4) Each party bears its own costs. Condonation was granted for late filing of documents.

A law that mandates courts to order deprivation of property without granting any judicial discretion to consider relevant circumstances and make just and equitable orders is procedurally unfair and constitutes arbitrary deprivation of property in violation of section 25(1) of the Constitution. Specifically, section 89(5)(b) of the National Credit Act 34 of 2005, which compels courts in all circumstances to order credit providers to refund all monies paid by consumers under unlawful credit agreements, is arbitrary because it denies courts discretion to take into account factors such as the conduct of parties, their financial positions, apportionment of blameworthiness, and the extent to which consumers benefited from the transaction. The availability of a common law unjustified enrichment claim does not negate this arbitrariness. Such arbitrary deprivation cannot be justified under section 36(1) where less restrictive means exist, such as granting courts discretion to make just and equitable orders that achieve consumer protection while allowing for individualized justice.

The Court reiterated without deciding that it is difficult to conceive of situations where arbitrary law or conduct can be reasonable and justifiable under section 36(1), though previous judgments have assumed without deciding that section 25(1) rights may be subject to limitation. The Court noted with concern the disturbing frequency of condonation applications and warned litigants that the Court will be firm and stern with tardiness, putting parties on notice that its process must not be treated with laxity. The Court also observed that sections 150, 151 and 160 of the NCA, which give the National Consumer Tribunal wide-ranging powers including imposing administrative fines, demonstrate less restrictive means already present within the Act itself. The Court emphasized that saying section 89(5)(b) cannot compel refunds "in all circumstances" does not suggest that such refunds may not be acceptable in some circumstances; the problem is the lack of exceptions allowing courts to exercise discretion.

This judgment is significant in South African consumer credit law and constitutional property jurisprudence. It establishes that mandatory refund provisions without judicial discretion constitute arbitrary deprivation of property in violation of section 25(1) of the Constitution. The case emphasizes procedural fairness as a component of non-arbitrariness in property deprivation cases. It builds on the Constitutional Court's earlier decision in National Credit Regulator v Opperman regarding section 89(5)(c) and demonstrates consistency in protecting property rights while balancing consumer protection objectives. The judgment affirms that even laws serving important consumer protection purposes must employ the least restrictive means and cannot eliminate judicial discretion to achieve just and equitable outcomes. It demonstrates judicial deference to the Legislature by adopting the remedy Parliament had already enacted in the Amendment Act. The case also clarifies that availability of common law enrichment remedies does not cure constitutional defects in statutes that mandate arbitrary deprivations.