IN THE NATIONAL CONSUMER TRIBUNAL
HELD IN CENTURION  
Case number:  NCT 2679/2011(1)(P)

In the matter between: 

BMW SOUTH AFRICA (PTY) LTD						            APPLICANT

and

M ROGERS								          FIRST RESPONDENT
NATIONAL CONSUMER COMMISSION					     SECOND RESPONDENT

Coram:
		Ms P Beck		-	Presiding Member
		Adv N Sephoti		-	Member
		Adv F Manamela	-	Member

Date of Hearing:		24 August 2012

REASONS FOR JUDGEMENT:
APPLICATION FOR REVIEW OF A COMPLIANCE NOTICE

INTRODUCTION

1.	This is an application for review of a compliance notice issued in terms of section 100 of the Consumer Protection Act 68 of 2008 (“the CPA”). The Applicant, BMW South Africa (Pty) Ltd (“BMW”) has brought this application in terms of section 101(1) of the CPA and objects to the compliance notice issued by the National Consumer Commission (“the Commission”) on 23 August 2011.

2.	This matter was initially heard by the Tribunal during the consolidation application, but had since been separated from the two other matters by an order of the Tribunal dated 12 July 2012.

THE PARTIES

3.	The Applicant is BMW South Africa (Pty)Ltd conducting business at 1 Bavaria Avenue, Randjiespark, Extention 17, Midrand, Gauteng, South Africa  (“BMW”)

4.	The 1st Respondent is Mr M Rogers, an adult male residing at 20 Downing street, Magaliesig Ext 32, Pretoria, Gauteng Province. Mr Rogers is referred to herein as the Complainant (“ Mr Rogers”)

5.	The 2nd Respondent is the National Consumer Commission, an organ of state within the public administration established in terms of Section 85 of the Consumer Protection Act (“the CPA”) with physical address at Berkley Office Park, 08 Bauhinia Street, Highveld, Techno Park, Centurion (“the Commission”)

BACKGROUND

6.	In August 2008 Mr Rogers purchased a BMW Z4 M Coupe motor vehicle with a 5 year/100 000 km motor plan for R550 000 from Club Motors in Randburg. 

7.	 In March 2011, Mr Rogers noticed that cracks were appearing on the armrest on the driver’s side, where his elbow rests. 

8.	Mr Rogers took the vehicle to Club Motors where the problem was rectified. Less than two weeks later, similar cracks appeared. The vehicle was repaired for a second time. The cracks thereafter reappeared and Mr Rogers was advised to replace the armrest. It would cost in total, the amount of R20 000.00 to replace the armrest. The replacement of the arm rest was not covered by the motor plan. However, BMW offered to share the cost of replacing the armrest with Mr Rogers, so that each would pay R10 000.00.

9.	It is not clear from the complaint whether Mr Rogers is currently in possession of the vehicle and whether he is currently using it. 

10.	The Commission seeks the following relief in the compliance notice:

10.1.	BMW to replace the armrest of Mr Rogers’ vehicle;
10.2.	Alternatively to 10.1, BMW to pay the full amount of R20 000.00 to replace the armrest;
10.3.	If this was not done by 15 September 2011, BMW to pay an administrative fine of R500 000.00

CONDONATION
11.	The Commission applies for condonation for the late filing of its answering affidavit, which was delivered nine business days late. It  submits that it was not able to file the affidavit within the prescribed time period due to circumstances beyond its control which includes:

11.1.	The Commission’s legal team had to conduct extensive research and had to evaluate the prospects of  BMW’s success in the matter 
11.2.	The Commission, due to the complexity of this matter, had to engage the services of an external law firm to conduct extensive research
11.3.	This is the first matter of this nature and the factor of diligence on both research and consultation had to be allowed to take its course;
11.4.	The Commission’s legal team had to consult with external parties ;
11.5.	The Commission submits that BMW did not suffer any prejudice as a result of the late filing of the Answering Affidavit and that the Commission will suffer severe prejudice if the affidavit is not accepted by the Tribunal.
11.6.	The Commission submits that the acceptance of the request for condonation would find favour with fairness, equality and public interest.

12.	The Commission makes the following observations regarding BMW’s papers, and raises in limine points as follows:

12.1.	That BMW’s application was filed out of time ;
12.2.	That BMW failed to comply with Rule 4(1) and the requirements in Table 2 ;
12.3.	That BMW failed to file Form TI 60(3) and 101 CPA together with an affidavit setting out its grounds of objection

13.	 Upon close scrutiny of the papers it appears that the points raised by the Commission fall short of any justification to warrant condonation. During the hearing the Commission admitted that it had no basis to launch any opposition to the issues raised by BMW.

14.	 In terms of Rule 13, the Commission was required to file its answering affidavit within 15 business days of the date of the application. 

15.	The Commission filed its answering affidavit nine business days later after the required time period, accompanied by an application to the Tribunal to condone its non-compliance with Rule 13.

16.	Rule 34(1) of the Rules provides that a party may apply to the Tribunal for condonation for non-compliance with the Rules of the Tribunal and the Tribunal may grant such an order on “good cause shown”.

17.	The Rules provide the Tribunal with the discretion to grant condonation on “good cause shown”.

18.	The discretion to condone non-compliance with rules on the basis of “good cause” has been dealt with in numerous court decisions.  In Mofokeng v Attorney General, for example, the court had to consider the meaning of “good cause” in Rule 94(1) of the Rules of Court and held that this meant substantially the same as “sufficient cause” in Rule 12 of the Appellate Division, (now the Supreme Court of Appeal)

19.	The Tribunal must consider the facts of the condonation application; act fairly to both parties and take a number of factors into consideration including inter alia the degree of lateness, the explanation therefore and the prospects of success regarding the merits of the matter.

20.	These factors are interrelated and should not be considered separately. The Rules do not circumscribe the Tribunal’s discretion and therefore the Tribunal has a wide discretion in these matters. The onus however, rests with the applicant for condonation, in this case, the Commission, to show that it is entitled to condonation.

21.	In Cairns’ Executors v Gaarn the court stated that the applicant for condonation must show something which entitles him to ask for the indulgence of the court and what that something is, depends on the circumstances of each particular application.

22.	The  Tribunal has considered the following factors: the degree of lateness; the explanation therefor; and the prospects of success

23.	In Independent Municipal & Allied Trade Union obo Zungu v SA Local Government Bargaining Council & Other, the court held that in explaining the reason for delay it is necessary for the party seeking condonation to fully explain the reason for the delay in order for the court to be in a proper position to assess whether or not the explanation is a good one. 

24.	The court in General Accident Insurance Co SA Ltd v Zampelli held that the “circumstances or ‘cause’ must be such that a valid and justifiable reason exists why compliance did not occur and why non-compliance can be condoned” and in Standard General Insurance Co Ltd v Eversafe (Pty) Ltd the court stated that:

“It is well established that an applicant for any relief in terms of Rule 27 has the burden of actually proving, as opposed to merely alleging, the good cause that is stated in Rule 27(1) as a jurisdictional prerequisite to the exercise of the court’s discretion. Silber v Ozen Wholesalers (Pty) Ltd 1954 (2) SA 345 (A) at 352G. 

25.	In the Melane case the court stated that even if a good explanation for the delay is provided, an application for condonation should be refused in circumstances where there are no prospects of success.

26.	It is also important to note that when dealing with prospects of success it is necessary for the Tribunal to consider the merits of the matter.

27.	In Penrice v Dickinson, for example, the Appellate Division held that in an application for condonation the merits of the appeal may in some cases be an important factor and that if there is sufficient information before the court to enable it to decide whether the appeal has or has not a reasonable prospect of success, it had to decide the question because if the appeal is hopeless, the “great expense of prosecuting it would be a mere waste of money”.  This view was reiterated in Melane v Santam Insurance Co Ltd where the court stated that “if there are no prospects of success there would be no point in granting condonation”
 
28.	Although this matter is about an application to review and cancel a compliance notice, the Tribunal is of the view that the same principles relating to prospects of success can be applied.

29.	In this particular matter, it is common cause that the conduct which forms the subject matter of the compliance notice took place prior to the commencement of the CPA, the general effective date of which was 31 March 2011.

30.	Item 8 of schedule II provides as follows:

Despite the repeal of repealed laws, for a period of three years after the general effective date the Commission may exercise any power in terms of such repealed law to investigate any breach of that law that occurred during the period of three years immediately before the general effective date …

31.	The repealed law which the Commission referred to in order to found jurisdiction over this matter is the Unfair Business Practices Act, 71 of 1988.  This Act makes provision for the control of unfair business practices.

32.	The interpretation of Item 8 schedule II was dealt with by the Tribunal in the case of City of Johannesburg v NCC., a judgment handed down by this Tribunal in March 2012.  

33.	 This judgment is binding on the Commission.

34.	Considering the reason for the delay alleged by the Commission that: “the issues arising in the matter had to be properly investigated” This reason cannot find favour with the Tribunal’s assessment of good enough a reason for condonation. In any case the law requires that any matter before the Commission needs proper investigation before the issuing of a compliance notice. The Commission has to make out a proper case for it to be forgiven. The Commission’s explanation is unsatisfactory and unsubstantiated.
 
35.	Accordingly the Commission’s application for condonation is refused.

 THE TRANSACTION DOES NOT FALL WITHIN THE AMBIT OF THE CPA

36.	BMW submits that as the general affective date of the Act was 1 April 2011 and seeing that the Transaction took place prior to the general effective date of the CPA, the Transaction is excluded from the application of the CPA by Item 3(1) of Schedule 2 which provides as follows:
“Except to the extent expressly set out in this Item, this Act does not apply to-
(a)	The marketing of 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.”

37. 	With regards to the retrospective applicability of the CPA, BMW submits that the Transaction is not a fixed term agreement in terms whereof Mr Rogers and BMW at the time of concluding same, contemplated that they would be bound to it for a period of two years after the effective date of the CPA.

38.	BMW refers to Item 3(2) of Schedule 2 which provides that the CPA only applies retrospectively to a pre-existing agreement in circumstances where such pre-existing agreement:
(1)	Would have been subject to the CPA if it had been in effect at the time the agreement was concluded ; and
(2)	Contemplates that the parties to it will be bound for a fixed terms until a date that is on or after the second anniversary of the General Effective Date.

39.	BMW submits that, even if the transaction did fall within the ambit of Item 3(2) of Schedule II of the CPA, the relevant provisions of the CPA in terms of which the Compliance Notice was issued, being Sections 54(1)(b) and 55(2)(b) and Sections 56(2)(a) and (b), only apply retrospectively to the extent that goods and services were supplied to a consumer on or after the general effective date. 

40.	BMW concludes that the CPA does not apply retrospectively to the transaction and the Commission does not have jurisdiction to investigate and adjudicate the complaint in terms of the CPA. On this ground alone the compliance notice fall to be set aside. The rest of the argument by BMW becomes an academic exercise as the Commission did not succeed in its application for condonation for the late filing of the answering affidavit. It means therefore that BMW’s version has to be admitted.

APPLICATION OF THE LAW TO THE FACTS 

41.	This review application is brought in terms of section 101(1) of the CPA. The review was occasioned by the Commission issuing a compliance notice in terms of section 100 of the CPA. Section 101 (1) provides as follows:
“any person issued with a notice in terms of section 100 may apply to the     Tribunal in the prescribed manner and form to review that notice…”
It is common cause that the conduct of the Respondent in issuing a compliance notice in terms of section 100 of the CPA constitutes administrative action as defined in the Promotion of Administrative Justice Act 3 of 2000 ( PAJA). See Vodacom v NCC and City of Johannesburg v NCC
42.	Section 101(2) read with section 100(4)(a) empowers the Tribunal to “confirm, modify or cancel all or part of a notice” pursuant to an objection lodged in terms of section 101(1). The Tribunal therefore is empowered under section 101(1) to exercise its powers to review a compliance notice after considering an application presented before it.  

CONCLUSION

43.	The Tribunal is faced with the consideration and determination of the retrospective applicability of the Act to the transaction and specifically the sections relied on by BMW and the Commission’s non-opposition thereto.

44.	The Tribunal would then have to decide whether or not the issuing of the Compliance Notice by the Commission satisfies the requirements of Section 100(3) of the CPA and PAJA

45.	The Tribunal also has to determine if the Commission has made out a case against BMW and whether it has further successfully articulated its case to meet the requirements of sections 54, 55 and 56 of the CPA. At the hearing the Commission elected to not oppose the matter.	

46.	Accordingly, the Tribunal, having heard counsels’ argument and submissions on the papers, makes the following ruling:

46.1 	The compliance notice is hereby cancelled
46.2 	No order is made as to costs

Signed and handed down on this 6th day of December 2012

[signed]
_______________________________
ADV FK MANAMELA
 MEMBER 
Ms P Beck (Presiding Member) and Adv N Sephoti (Member) concurring.