The consumers would have to settle the rental and loan amounts at the end of the contract period, to have the vehicle transferred back into their names.
The Supreme Court of Appeal has struck off its roll a “pawn your car and still drive it” matter.
It cited a lack of jurisdiction over an investigation while the former credit provider was currently before the National Consumer Tribunal.
The National Credit Regulator (NCR) initiated an investigation into the business practices of the CMR Group in 2017, which looked into agreements relating to CMR’s core business, known as the ‘pawn your car and still drive it’ scheme.
The investigation showed that CMR advanced funds to consumers against their fully paid motor vehicles, subject to a pawn agreement.
The scheme allowed the consumers to borrow between 30% and 50% of their motor vehicle’s market value, and consumers then transferred their vehicles into CMR’s name.
The consumers remained in possession of the motor vehicle while renting it from CMR for up to 12 months.
The monthly rental was calculated at 25% to 30% of the loan amount.
The consumers would have to settle the rental and loan amounts at the end of the contract period, to have the vehicle transferred back into their names.
If they failed to comply, the consumers would have to forfeit their vehicles to CMR. After its investigation, the National Credit Regulator found that CMR was in contravention of the National Credit Act, and subsequently cancelled CMR’s registration as a credit provider due to it charging an excessive amount of interest; failing to conduct affordability assessments; and imposing a prohibited charge.
The tribunal then also interdicted CMR from entering into any further credit transactions with consumers or operating as a credit provider, and its credit agreements were declared reckless.
During 2019, a special resolution was passed to voluntarily wind up CMR in terms of the Companies Act, however, the National Credit Regulator only became aware of the winding up after CMR’s attorneys of record had withdrawn.
The application lodged by the regulator before the tribunal had to then be postponed to a later date, upon which neither the National Credit Regulator nor the provisional liquidators appeared.
The orders were therefore set in both parties’ absence.
Aggrieved by that decision, the liquidators appealed to the Gauteng High Court, and the appeal was dismissed.
Instead of applying to the tribunal to rescind its order, the liquidators approached the SCA.
The Supreme Court of Appeal found that although the liquidators made extensive submissions on the merits of the case, the jurisdictional Rubicon first had to be crossed, a hurdle which they failed to overcome.
Justice Yvonne Mbatha said: “It was never envisaged that every creditor who had commenced proceedings would bear a further onerous burden of joining the liquidators of the company in liquidation. This would also not be in the best interest of the creditors that the liquidators are forced to come to court, even when they do not have a defence to the action.
“As alluded to earlier in the judgment, notwithstanding their non-attendance at the hearing before the tribunal, they contended that they participated in the proceedings before the tribunal through associating themselves with the answering affidavit which was filed by CMR.”
Enquiries to NCR had not been answered by deadline on Wednesday.
Cape Times