Optional extended warranty and club fees of Lewis not in breach of National Credit Act 34 of 2005
NATIONAL CREDIT REGULATOR V LEWIS STORES (PTY) LTD AND ANOTHER  2 All SA 31 (SCA)
In this case the National Credit Regulator (the “NCR”) wanted a declaratory order confirming that Lewis Stores (Pty) Ltd (“Lewis”) had repeatedly contravened certain provisions of the National Credit Act 34 of 2005 (the “Act”). The NCR contended that the charge levied by Lewis for an extended warranty relating to goods sold was prohibited by the Act. The NCR further contended that the charging of subscriptions fees for a membership to a specific club created by Lewis for their customers was prohibited by the Act.
The NCR firstly sought relief from the National Consumer Tribunal, who dismissed their application. The NCR then also failed in their subsequent appeal to the High Court, whereafter special leave to appeal was granted to them in order to bring the matter to the Supreme Court of Appeal.
The Supreme Court of Appeal found that neither the charges for the extended warranty, nor the subscriptions for the club membership were in contravention of the Act and the NCR’s appeal was dismissed with costs.
In the case of the extended warranties, the dispute between the parties boiled down to certain instances where the written extended warranty agreement between Lewis and its customers reflected incorrect dates for the currency of the warranties and the NCR contended that in these circumstances the charges levied by Lewis for the warranties constituted prohibited charges. The Court found that despite of certain erroneous dates being reflected on the extended warranty agreements, Lewis had consistently honoured the correct periods for the extended warranties and therefore no contravention of the Act had occurred.
In the case of the club membership fees, the NCR contended that because of the fact that the subscription fees were also reflected on the monthly credit statements of customers, it formed part of the cost of credit in terms of the credit agreement and was therefore prohibited by the act. Upon investigating the evidence, the Court found that the subscription to the club and Lewis’s credit agreements were completely separate and distinct from each other, and therefore no contravention of the Act was committed.
Written by: Lucas Theron (B. Com Law, L.L.B, Dipl. Fin. Plan.); source: https://www.lexisnexis.co.za/