National Credit Regulator v Getbucks (Pty) Ltd and Another

The National Credit Regulator (NCR) alleged that Getbucks (Pty) Ltd overcharged monthly service fees in contravention of Regulation 44 promulgated under the National Credit Act 34 of 2005. The NCR approached the National Credit Tribunal to deregister Getbucks. Getbucks responded by launching an application in the Gauteng Division of the High Court, Pretoria, seeking a declaration that Regulation 44 was ultra vires and void, and that the NCR could not prosecute it for alleged contraventions of the regulation. Regulation 44 prescribed maximum monthly service fees of R50. The draft regulation was published on 20 February 2006 with a closing date for submissions of 25 March 2006 - only 27 business days, not the 30 business days required. The Act was assented to on 10 March 2006, and the regulation was promulgated on 31 May 2006, coming into effect on 1 June 2006. Getbucks was registered as a credit provider on 22 February 2012 and was referred to the Tribunal for deregistration on 26 November 2014. The High Court found in favor of Getbucks, and the NCR appealed with leave.

• Whether Regulation 44 was promulgated under section 171 or section 11 of Schedule 3 of the National Credit Act
• Whether the procedural requirements for promulgating regulations under the National Credit Act were met
• Whether consultation with the National Credit Regulator occurred before promulgation as required by section 105(1) of the Act
• Whether the 27 business days allowed for comment satisfied the minimum 30 business day requirement in section 11 of Schedule 3
• Whether Getbucks' challenge to the regulation was a valid defensive/reactive challenge despite time having elapsed since promulgation
• Whether the regulation was validly promulgated and could be used as a basis for deregistration proceedings

The appeal was dismissed with costs. The order of the High Court was upheld, declaring that the NCR was barred from prosecuting Getbucks or seeking relief against it before the National Consumer Tribunal in respect of any alleged contravention of Regulation 44 prior to its subsequent review and amendment.

The binding legal principles established are: (1) Where a statute requires consultation with a specific body before regulations are made, that requirement cannot be satisfied by consulting with a different body, even if that body was absorbed into the required consultee. (2) Section 11 of Schedule 3 to the National Credit Act allows regulations to be made without meeting procedural requirements in the Act, but only if the published notice allows at least 30 business days for comment. It is the Gazette notice itself that must allow the minimum period, not merely the Minister's subjective intention to consider late submissions. (3) Where regulations are not validly promulgated due to failure to comply with statutory procedural requirements, they are ultra vires and cannot be relied upon by state organs to take coercive action. (4) A defensive or reactive challenge to the validity of regulations or administrative acts may be raised when a person is subjected to coercive action based on those provisions. Such challenges are not subject to time limitations applicable to review applications under PAJA or common law. (5) The principle of legality requires that public power may only be exercised where lawful authority exists. This is a fundamental principle of constitutional law applying to all exercises of public power, not only administrative action.

The Court observed that it was not necessary to determine whether the promulgation of the regulations was administrative or legislative in character, as the issue was one of legality applicable to any invalid act. The Court also noted that the regulation had been subsequently reviewed and amended after the application was launched, such that any defects no longer attended on the current version, but the validity of the original regulation remained relevant to whether Getbucks could be subjected to deregistration for past non-compliance. The Court made observations about the purpose of section 14 of the Interpretation Act 33 of 1957, explaining that it allows for a smooth transition and prevents a vacuum where repealed legislation is no longer operative and new legislation lacks regulations to administer it. This ensures that necessary administrative machinery is in place when new legislation comes into effect.

This case is significant in South African administrative and constitutional law for several reasons: (1) It clarifies the distinction between different bases for promulgating regulations under the National Credit Act and the procedural requirements for each. (2) It reinforces the principle that public bodies can only act within their lawful powers - the rule of law principle of legality. (3) It confirms that defensive or reactive challenges to invalid regulations are available when coercive action is taken based on those regulations, and such challenges are not time-barred like administrative review applications. (4) It demonstrates that strict compliance with consultation and notice requirements is necessary for valid subordinate legislation. (5) The case illustrates the application of section 14 of the Interpretation Act allowing preparatory steps before legislation comes into effect. (6) It emphasizes that consultation with a predecessor body that is absorbed into a new entity does not constitute consultation with the new entity itself. The judgment upholds constitutional principles of legality and procedural fairness in the exercise of public power.