The National Credit Regulator (NCR) should never have gone after retailer Lewis in the first place, the high court in Pretoria has found – and it has promised a cost order that will "discourage" such behaviour in the first place.
The NCR late last week lost an appeal against a previous finding that Lewis, the largest furniture retailer in SA, had done no wrong.
But the written judgment does not simply dismiss the NCR's efforts, it is scathing of the "disconcerting" way the regulator conducted itself – and suggests the NCR should be prevented from such action in future.
“… one would expect the [NCR] only to persist in litigation that has strong prospects of success. The present matter is not such an instance," said judge Nicolene Janse van Nieuwenhuizen.
The NCR should have realised it did not have a case against Lewis early on, she said, almost as soon as Lewis first responded to its allegations, she said. And if not then, the NCR should have realised the error of its ways when it was first ruled against, instead of running up "huge costs".
In order to discourage such actions in future she will make an "appropriate" cost order against the NCR, Janse van Nieuwenhuizen said.
The NCR had argued that "club fees" of R25 per month charged by Lewis were an undeclared extra fee necessary to secure credit. It also said that two-year "extended warranties" sold by Lewis, for around R1,000 each in the cases the NCR examined, were quite simply worthless.
But the club had nothing to do with getting credit, Lewis countered – as evidenced by the fact that well under a third of the people who hold loans with it are part of its club.
The court also accepted Lewis' argument that although some of its stores make mistakes on forms about the start and end date of the extended warranties, they were honoured nonetheless. That made the warranties "a far cry" from the kind of “unscrupulous, unfair and unconscientious conduct” the law seeks to protect consumers against.