1IN THE NATIONAL CONSUMER TRIBUNAL
HELD IN CENTURION

CASE NUMBER:  NCT/4450//2012/114(1)(P)CPA  

In the matter between:

NAYYARA DISTRIBUTION ENTERPRISE CC 					         APPLICANT

and 

EARLYWORKS 266  (PTY) LTD t/a GLORIA JEANS COFFEES SA		    RESPONDENT

CORAM:  
TERBLANCHE D. (MS) (PRESIDING MEMBER)
WOKER T. (PROF) (MEMBER)
BECK P. (MS) (MEMBER)

________________________________________________________________________________

JUDGMENT AND REASONS

1.	The Applicant is Nayyara Distribution Services CC (Applicant), a close corporation duly registered with Registration Number CK2009/209598/23 and its principal place of business at No. 5 Leven Street, Kensington, Johannesburg. The Applicant is represented by its members, Ms R. Aboobacar and Mr K Dhawood.   

2.	The Respondent is Earlyworks 266 (Pty) Ltd t/a Gloria Jeans Coffees SA (Respondent), a company duly registered with Registration Number unknown and its registered address at No. 1 Rydall Vale Crescent, Rydall Vale Park, La Lucia Ridge. The Respondent is represented by Adv A Ellis of the Pretoria Bar duly instructed by Lombard, Muller & Vennote Inc., the attorney for the Respondent.

3.	Applicant and Respondent are in a franchisee – franchisor relationship. Applicant bought two Gloria Jean Coffees franchise outlets situated at Eastgate Shopping Centre and Bedford Shopping Centre respectively from Respondent in and during December 2010.

4.	This matter relates to an application for interim relief brought by the Applicant in terms of Section 114(1) of the Consumer Protection Act, Act 68 of 2008 (the CPA) with the National Consumer Tribunal (the Tribunal) on 25 April 2012.

5.	Applicant filed the application for interim relief, allegedly to - 
(i)	Prevent it from incurring irreparable damage; or
(ii)	Prevent the purposes of the Act from being frustrated,
due to Respondent’s refusal to cancel the franchise agreement and taking over the running of the outlets.

6.	Prior to launching this application in terms of section 114(1) with the Tribunal, the Applicant lodged a complaint with the National Consumer Commission (NCC) 

7.	The NCC issued a Compliance Notice against the Respondent on 20 April 2012. 

8.	The Applicant thereafter, on 25 April 2012, filed this application for interim relief with the Tribunal.

9.	This matter was heard on 25 May 2012. At the hearing Applicant provided a brief outline of its complaint against the Respondent reiterating its request for interim relief.

10.	Respondent submitted that Applicant’s founding affidavit was not served on it and it accordingly suffers prejudice as a result of not having been placed in a position to respond to the allegations and prepare responses and argument in relation thereto.

11.	Respondent further submitted that the Tribunal does not have jurisdiction to hear the matter as the contract(s) entered into between the parties predates the implementation date of the CPA. 

12.	The Tribunal, in arriving at a decision in this matter, considered the pleadings filed of record and oral submissions and arguments made at the hearing by the representatives of the parties.

13.	In setting out the reasons for the order issued by the Tribunal in this matter on 30 May 2012, refusing the interim relief sought by the Applicant, we find it unnecessary to delve into the details of the Applicant’s allegations and Respondents responses thereto.

14.	Section 114 of the CPA provides as follows - 
“114(1)	A person who has applied for relief to a court, or the complainant in a complaint that has been referred to the Tribunal (emphasis added), may apply to a court subject to its rules, or to the Tribunal, as the case may be, for an interim order in respect of that application or complaint, and the court or Tribunal may grant such an order if—
…
(c)	the Respondent has been given a reasonable opportunity to be heard, having regard to the urgency of the proceedings; and
…”

“114(2)	An interim order in terms of this section must not extend beyond the earlier of—  
(a)	the conclusion of a hearing into an application or a complaint; or
(b)	the date that is six months after the date of issue of the interim order.”

15.	Schedule 2, Item 3 (Application of Act to pre-existing agreements) of the CPA provides –
“3. (1) Except to the extent expressly set out in this item, this Act does not apply to—
(a)	the marketing of any goods or services before the general effective date;
(b) 	any transaction concluded, or agreement entered into, before the general effective date; or 
(c)	any goods supplied, or services provided, to a consumer before the general effective date.”

16.	The Tribunal considered two matters to determine whether the applicant is entitled to apply for the relief sought in terms of the CPA namely whether the Applicant is properly before the Tribunal in terms of section 114(1) and whether the CPA applies to the dispute between the parties. 

Applicant’s standing:

17.	Section 114 provides that –
“A person who has applied for relief to a court, or the complainant in a complaint that has been referred to the Tribunal (emphasis added), may apply to a court subject to its rules, or to the Tribunal, as the case may be, for an interim order in respect of that application or complaint...” 

18.	The section requires that a complaint should have been referred to the Tribunal and the person entitled to file an interim relief application is envisaged as the “complainant in a complaint that has been referred to the Tribunal.

19.	Matters are referred to the Tribunal either through the NCC or the consumer directly. 

20.	The latter finds application where the NCC has issued a notice of non-referral and the complainant then applies for leave to refer the matter directly to the Tribunal. 

21.	The former finds application in the current scenario where the Applicant lodged a complaint with the NCC and the NCC exercised its discretion to refer the matter to the Tribunal. The CPA provides in section 73 that the NCC may, after concluding an investigation into a complaint, if the Commissioner believes that a person has engaged in prohibited conduct, refer the matter to the Equality court, propose a consent order, refer the matter to a Consumer Court or the Tribunal, or issue a compliance notice in terms of section 100.

22.	It is common cause that the NCC issued a compliance notice against the Respondent.

23.	Through its decision to issue a compliance notice, the NCC left the Applicant without recourse to apply for interim relief or to apply to the Tribunal for leave to refer the matter directly to the Tribunal, a pre-requisite of which is the issuance of a notice of non-referral by the NCC. In issuing the compliance notice, the NCC impliedly formed a reasonable belief that prohibited conduct took place. 

24.	In the circumstances, taking into consideration the NCC’s belief that prohibited conduct took place, the NCC would not have issued a notice of non-referral as Section 72(1)(a) prescribes that the NCC may issue a notice of non-referral to the complainant, in the following circumstances:

a.	If the complaint appears to be frivolous or vexatious;
b.	If the complaint does not allege any facts which , if true, would constitute grounds for a remedy under the CPA; or
c.	If the complaint is prevented, in terms of Section 116, from being referred to the Tribunal.

25.	The only way for the Applicant to be able to apply for interim relief in terms of Section 114 of the CPA in relation to its complaint would have been if the NCC elected to refer the prohibited conduct to the Tribunal instead of issuing a compliance notice.

Application of the CPA:

26.	The National Consumer Tribunal finds its jurisdiction through the application of the CPA. 

27.	Section 27 of the National Credit Act, Act 34 of 2005 as amended provides that the Tribunal may adjudicate on applications and referrals in terms of the National Credit Act and the CPA.

28.	For the Tribunal therefore to have jurisdiction to adjudicate on the dispute between the Applicant and the Respondent the CPA has to be applicable to their transaction.

29.	It is common cause between the parties that the transaction(s) was / were entered into in and during December 2010. The CPA came into operation on 1 April 2011. The transaction/s therefore pre-dates / date the implementation the CPA.

30.	Schedule 2, Item 3 provides that - 
“…. this Act does not apply to—
(a)  	the marketing of any goods or services before the general effective date;
(b) 	any transaction concluded, or agreement entered into, before the general effective date; or
…”     

31.	It must be noted however that the Applicant's complaint was based on a number of different issues – 

a.	The one related to misrepresentations that were allegedly made regarding the expected income of the outlets and then there were allegations relating to delivery of food and advertising fees.  These misrepresentations were made at a time when the relevant section of the CPA was not in operation - therefore the Tribunal has no jurisdiction over those complaints. 

b.	As far as other allegations are concerned, sections 53 to 58 of the CPA which deals with the right to receive good qualify service, etcetera do apply to pre-existing contracts, provided the contract extends to a fixed date beyond 1 April 2013.  (See schedule 3 2(b)).  There would therefore have been a need to establish when the contract comes to an end, and if it is after 1 April 2013 certain sections of the CPA are applicable.    

c.	In addition the Applicant alleged that it had tried to cancel their contracts shortly after entering into them but was informed that they could not do so without forfeiting their extensive deposit.  So they allegedly decided to go ahead with the deal.  Section 7 of the CPA came into operation on 24 April 2010 - so if the applicant was not informed of the cooling off period then there might have been prohibited conduct on the part of the Respondent.  

32.	By failing to refer / non-refer the matter opting for the compliance notice route, the NCC has effectively closed the Applicant off from accessing interim relief, a potential claim for damages and other remedies under the law.

33.	The Tribunal accordingly finds that –

a.	Applicant has not established standing to launch this application before the Tribunal; and 
b.	The transactions pre-date the implementation date of the CPA and the Tribunal has no jurisdiction in this matter.

THUS DONE AND SIGNED AT CENTURION ON THIS THE 3rd DAY OF JULY 2012.

[signed]
_________________________________
D. TERBLANCHE
PRESIDING MEMBER

Prof T Woker (Member) and Ms P Beck (Member) concurring.