The respondent furniture retailer in The National Credit Regulator v Lewis Stores (Pty) Ltd offered club membership to its customers including its credit agreement customers which afforded certain benefits to the club members including the chance to win attractive prizes.
Club membership is open to any person whether a credit customer or not, and the person elects to join under a separate contract from the credit agreement. Membership is not dependent on the conclusion of a credit agreement and is open to members of the public. The duration of club membership is not related to the period of the credit agreement and can be terminated on 30 days’ notice. A subscription fee payable in advance is levied in the amount of R25 per month to club members. Arrears are not recovered and membership is terminated if there is non-payment.
Where there is a credit agreement, the monthly statement sent to credit consumers reflects the club fee payable separately from the outstanding amounts under the credit agreement. The club fee is not part of the deferred amount under section 101(1) of the NCA.
The court rejected the argument of the NCR that the club fees were a prohibited supplementary agreement as envisaged in section 91(2) of the NCA.
There was no reference to the club fees in any pre-agreement statement or quotation or in the documents forming part of the credit agreement. A ‘supplementary agreement’ is not defined in the NCA. Having regard to the meaning of ‘supplementary’ an agreement can only be supplementary if it deals with the same subject matter as the main agreement, namely the regulation of credit and the repayment of the amounts due. That is not the nature of the club membership agreement.
The election to join the club is not in any manner related to the terms of the credit granted and it is not prohibited by section 90 and section 91 of the NCA. The club membership fee is not a prohibited charge in conflict with section 101(1). The club fees are not contemplated in section 102 and the consumer was not ‘required’ to pay the club fee nor did it increase the cost of credit nor was the club fee paid under the credit agreement.
The mere fact that some consumers are introduced to the notion of club membership during the credit application process has no bearing on the interpretation of the NCA.