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[2013] ZANCT 11
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Wingfield Motors (Pty) Ltd v National Consumer Commission (NCT/3882/2012/101(1)(P) CPA) [2013] ZANCT 11 (22 April 2013)
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IN THE NATIONAL CONSUMER TRIBUNAL
HELD AT CENTURION
Case No: NCT/3882/2012/101(1)(P) CPA
Date:22/04/2013
In the matter between:
WINGFIELD MOTORS (PTY) LTD............................................................................... APPLICANT
and
THE NATIONAL CONSUMER COMMISSION................................................................RESPONDENT
Coram:
Adv F Manamela – Presiding Member
Adv N Sephoti – Member
Ms P Beck – Member
Date of Hearing: 6 December 2012
REASONS FOR JUDGEMENT: APPLICATION FOR THE REVIEW OF A COMPLIANCE NOTICE
INTRODUCTION
The Applicant in this matter is Wingfield Motors (Pty) (Ltd) a trading company registered in terms of the Company Laws of the Republic of South Africa, conducting its business in the Province of the Western Cape (“the Applicant”).
The Respondent is the National Consumer Commission (NCC), a public entity established in terms of section 85 of the Consumer Protection Act No. 68 of 2008 (“CPA” or “the Act”) (“the Respondent”).
The Applicant brought an application in terms of section 101(1) of the CPA to the National Consumer Tribunal (“the Tribunal”) for the review and cancellation of a compliance notice issued against it by the Respondent. The Applicant has set out in detail grounds for the review and /or cancellation of the notice, in Form TI.60 (3) & 101 CPA and the accompanying documents filed by the Applicant.
0n 31 October 2012, this Tribunal dismissed an application by the Respondent for condonation for the late filing of an Answering Affidavit. The current application before the Tribunal is for the review of such compliance notice
The review application has not been opposed by the Respondent, as the latter’s condonation application failed and no answering affidavit had been filed. This stands to reason that the facts alleged by the Applicant are uncontroverted.
BACKGROUND
On 4 April 2011 Mr. D Ramaloo (“the Complainant”) purchased a used motor vehicle Mazda RX8 high power, 2005 model, from the Applicant. The vehicle was purchased for the amount of R146 000.00. The Complainant tendered an amount of R12 000.00 as a deposit and continues to pay the balance by way of monthly instalments in the amount of R3 200.00.
The Complainant agreed with the Applicant that the vehicle would be returned to the Applicant for service and replacement of the air conditioner. The vehicle was subsequently returned to the Applicant on 11 April 2011 and was returned to the Complainant on 15 April 2011 without all the problems resolved.
The Complainant alleges that he experienced certain problems with the vehicle such as that the owner’s manual and service book; spare key and the spare wheel were not provided.
The matter was then referred to conciliation on 8 December 2011 (date appearing on the conciliation notice dated 30 November 2011) where the parties failed to resolve the dispute.
The Respondent, in the compliance notice, made the following demands to the Applicant:
10.1 to cancel the contract and settle the balance the Complainant is owing to the bank
10.2 to refund the Complainant all the money he paid towards the vehicle, being R12 000.00 deposit and the amount of R3 200.00 in respect of the monthly instalments paid towards the vehicle;
10.3 to refund the amount of R6 503.00 for towing the vehicle from Bloemfontein to Cape Town and the pre-delivery service fees incurred by the Complainant.
The Respondent stated in the compliance notice that it would, upon failure by the Applicant to comply with the notice, approach the Tribunal for an order imposing an administrative fine of R300 000.00.
The Applicant, in response to the Respondent’s claims in the Compliance Notice, contends that during the Conciliation Hearing held on 8 December 2011, it was noted that the vehicle was received in good order and that the Complainant received specific written instructions from the repairer on how to handle the engine for the first 2000km.
The Applicant alleges that the Complainant drove the vehicle until it lost coolant water, causing the damage to the engine, contrary to the written instructions received.
14. The Applicant denies the allegations made in the compliance notice that it ignored the Respondent’s effort to resolve the issue, and in turn alleges that the Respondent itself was not responding to its correspondence and that the next correspondence it received from the Respondent, was a Compliance Notice, despite, all the Applicant’s efforts to get the Respondent’s response to its correspondence.
The Applicant avers further that this matter would have appropriately been attended to by the Motor Industry Ombud and that the Respondent lacks jurisdiction to handle this matter.
SECTIONS OF THE ACT
The following sections of the Act are relevant to this matter:
Section 100 of the Act details the requirements for a Compliance Notice. It states the following:
“100 Compliance notices
Subject to subsection (2), the commission may issue a compliance notice in the prescribed form to a person or association of persons whom the Commission on reasonable grounds believes has engaged in prohibited conduct.
Before issuing a notice in terms of subsection (1) to a regulated entity, the Commission must consult with the regulatory authority that issued the licence to that regulated entity.
A compliance notice contemplated in subsection (1) must set out-
The person or association to whom the notice applies ;
The provision of this Act that has not been complied with ;
Details of the nature and extent of non-compliance ;
Any steps that are required to be taken and the period within which those steps are required to be taken ; and
Any penalty that may be imposed in terms of this Act if those steps are not taken.
…”
Section 101 of the Act details the process to be followed by a party who wishes to object to a Compliance notice received in terms of Section 100, quoted above. It reads as follows:
“101 Objection to notices
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 within –
15 business days after receiving that notice ; or
Such longer period as may be allowed by the Tribunal on good cause shown.
After considering any representations by the applicant and any other relevant information, the Tribunal may confirm, modify or cancel all or part of a notice.
…”
Alternative dispute resolution is dealt with in Section 70 of the CPA.
“Alternative dispute resolution
A consumer may seek to resolve any dispute in respect of a transaction or agreement with a supplier by referring the matter to an alternative dispute resolution agent who may be –
An ombud with jurisdiction, if the supplier is subject to the jurisdiction of any such ombud ;
An industry ombud accredited in terms of section 82(6), if the supplier is subject to the jurisdiction of any such ombud ;
A person or entity providing conciliation, mediation or arbitration services to assist in the resolution of consumer disputes, other than an ombud with jurisdiction, or an accredited industry ombud ; or
Applying to the consumer court of the province with jurisdiction over the matter, if there is such a consumer court, subject to the law establishing or governing that consumer court.
If an alternative dispute resolution agent concludes that there is no reasonable probability of the parties resolving their dispute through the process provided for, the agent may terminate the process by notice to the parties, whereafter the party who referred the matter to the agent may file a complaint with the Commission in accordance with section 71.
If an alternative dispute resolution agent has resolved, or assisted the parties in resolving their dispute, the agent may –
Record the resolution of that dispute in the form of an order; and
If the parties to the dispute consent to that order, submit it to the Tribunal or the High Court to be made a consent order, in terms of its rules.
With the consent of a complainant, a consent order confirmed in terms of subsection (3)(b) may include an award of damages to that complaint.”
Section 72 sets out the steps which the Respondent may take upon initiating or receiving a complaint in terms of the CPA. This section provides as follows:
“Investigation by Commission
Upon initiating or receiving a complaint in terms of this act, the Commission may –
Issue a notice of non-referral to the complainant in the prescribed form, if the complaint
Appears to be frivolous or vexatious ;
Does not allege any facts which, if true, would constitute grounds for a remedy under this Act; or
Is prevented, in terms of section 116, from being referred to the Tribunal;
Refer the complaint to an alternative dispute resolution agent, a provincial consumer protection authority or a consumer court for the purposes of assisting the parties to attempt to resolve the dispute in terms of section 70, unless the parties have previously and unsuccessfully attempted to resolve the dispute in that manner ;
Refer the complaint to another regulatory authority with jurisdiction over the matter for investigation; or
Direct an inspector to investigate the complaint as quickly as practicable, in any other case.
At any time during an investigation, the Commission may designate one or more persons to assist the inspector conducting the investigation contemplated in subsection (1)”
THE HEARING
The hearing took place on 6 December 2012 at the Tribunal offices via teleconference. The Respondent elected not to attend the hearing. The Applicant was represented by its manager, a Mr White (“White”) who made oral representations to the Tribunal, and relied on a written statement he made on 15 February 2012, after he had received a Compliance Notice.
ISSUES TO BE DECIDED
The Tribunal had to decide whether the compliance notice issued to the Applicant was lawful and of not, whether it should be cancelled as requested by the Applicant.
APPLICANT’S SUBMISSIONS AND GROUNDS FOR OBJECTION
The Applicant submitted the following:
23.1. The Respondent demanded a refund on behalf of the Complainant of the full purchase price of the vehicle, including the deposit and all the instalments paid.
23.2. This demand did not sit well with White as he claimed that the Applicant rendered a “superb and excellent customer service” to the Complainant as required by law.
23.3. The Applicant did not sell a vehicle of inferior quality to its client, which it will never do. The Complainant complained about the non-starting of his vehicle. The vehicle was taken to an expert repairer for a rotary engine, which is a very specialised engine. Due to the fact that the vehicle had difficulty starting, a problem which is regularly experienced with these types of engines, the engine was opened for a technical opinion. The expert suggested that for the long-term, and for best results, it would be the best option to have the engine completely overhauled.
23.4. The Applicant agreed with the advice of the expert and the engine was overhauled at a cost of approximately R53 000.00.
23.5. The Applicant handed the repaired vehicle back to the Complainant. The Complainant was very excited and very happy to get his car back and he still told the Applicant, happily, that he was on his way to Durban to his parents. The expert repairer and the Applicant reiterated the written instructions to the Complainant indicating the necessary precautions which the Complainant should take for the first 2000 kilometres, once again reminding the Complainant that the engine in question is a rotary engine and not a traditional piston engine.
23.6. These instructions were handed to and fully explained to the Complainant.
23.7. The Applicant received a telephone call from the Complainant after approximately a month and a half, advising that the vehicle had suffered a breakdown in Bloemfontein. The Complainant was returning from Durban and on his way through Bloemfontein the vehicle overheated.
The Applicant submits that the Compliance Notice should be reviewed on the following grounds:
The Applicant objected to the Compliance Notice because it was of the view that it is not liable for any further repairs on the vehicle. The damage occurred through negligence of the Complainant.
The damage to the vehicle had no relation to any repairs done or service delivered by the Applicant. Any vehicle can become involved in an accident or suffer wear and tear, and/or breakdown. A customer can be negligent and damage his vehicle without any control from a dealer selling such a vehicle.
The Applicant submits that it is not correct to expect that the Applicant should carry any further costs as a result of the Complainant's negligence.
It was clearly proved by an independent Mazda dealer in Cape Town, an expert in this field, that the engine overheated as a result of the vehicle being deliberately driven until the engine nearly melted. The written results of the test (technical inspection) conducted on the vehicle after the engine had seized were communicated to the Complainant and fully explained to him. He made contact with the dealer in Cape Town and everything was further explained to him to assist him in understanding the reason for the vehicle’s breakdown.
All the warning signs were in working order, it was tested and proven on the computer system of the vehicle. All the information still gets stored on the computer of the said vehicle and that is how they managed to make such a technical report.
The allegation that the Respondent makes, namely that Applicant tried to smear up information and try to hide the truth is denied.
INVESTIGATION BY THE COMMISSION
The Tribunal asked the Applicant if there was any investigation conducted by the Respondent. The Applicant submitted the following:
25.1 A mediation meeting was held a year ago via a telephone conference between Applicant (represented by Mr White), the Respondent and the Complainant. There was no final outcome. The Commissioner stated at such meeting that she would have to hand the matter over to the legal department of the Respondent and that they would revert back to the Applicant.
25.2. The Applicant did not receive any further correspondence until a compliance notice was served on it. The Applicant submitted that no investigation was conducted.
25.3. The Applicant had preferred to have the matter investigated by an alternative dispute resolution agent (ADR) in the form of the Motor Industry Ombudsman and only then when it could not be resolved, could the Tribunal adjudicate it.
APPLICATION OF THE LAW TO THE FACTS
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 NCC1 and City of Johannesburg v NCC2.
It is also common cause that for a compliance notice to be valid, the Respondent has to comply with the procedural provisions of the statute conferring authority upon it, in order to exercise such power. If such procedural aspects are ignored, the compliance notice falls to be reviewed or cancelled.
Likewise, PAJA governs all administrative actions in general and all decision makers who are entrusted with the authority to make administrative decisions by any statute are therefore required to do so in a manner that is and should be consistent with PAJA.
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.
30. In the matter of City of Johannesburg v The NCC the Tribunal held as follows:
“An evaluation of the sections of the Act which deal with investigations by the Commission and compliance notices leads to the conclusion that a compliance notice is issued once an investigation is completed.23
An investigation is necessary in order to
a. Establish the facts of the complaint;
b. Measure those facts against the Act in order to reach the belief on reasonable grounds that the person against whom the compliance notice is to be issued was engaged in prohibited conduct;
c. Ensure that the compliance notice complies with the prescribed requirements as set out in section 100 (3). The notice must provide details of the nature and extent of the non-compliance.”3
31. Considering the above, it is clear that the legislature intended that a compliance notice should be issued after an investigation was completed, and not before. Only after having conducted an investigation, can an investigator (appointed by the Respondent) have reasonable grounds for believing that a prohibited conduct is involved. If an investigation is not conducted, then a compliance notice will be based on unsubstantiated allegations and assumptions. In that regard, it will be procedurally unfair and irrational in that the provisions of the CPA would not have been complied with.
32. The provisions of section 100(3) of the CPA as set out above prescribe the requirements for a valid compliance notice to be issued. These requirements must be adhered to in order for a compliance notice to be lawful. The Tribunal notes, even though this aspect was not argued at the hearing, that the compliance notice fails to comply with such requirements in that it does not stipulate the sections that are alleged to have been contravened by the Applicant. The compliance notice therefore fails to meet the requirements of specifically section 100(3)(b).
CONCLUSION
33. The Tribunal is faced with the consideration and determination of whether or not the issuing of the compliance notice by the Commission is valid and consistent with the provisions of the CPA and PAJA.
34. The Tribunal finds that he compliance notice was issued in a manner that was procedurally unfair and inconsistent with section 33(1) of the Constitution and sections 3 and 4 of PAJA and specifically that the Respondent failed to conduct a proper investigation into the alleged complaint and in terms of the CPA read with PAJA. From the evidence before the Tribunal, the Applicant indicated to the Respondent that in its view it is not liable, as the damages was caused by the conduct of the Complainant. There is no evidence that this was investigated by the Respondent, but it appears from the compliance notice that the Respondent accepted the Complainant’s version without taking into consideration the version of the Applicant.
35. A person (Wingfield in casu) under investigation is entitled to be informed of the nature of the investigation and to make representations (in casu, to the Commission) before the Respondent can take action or issue a Compliance Notice
36. The administrative action taken by the Respondent is inconsistent with PAJA and the CPA in that the Respondent failed to give the Applicant a reasonable opportunity to make representations. The Respondent instead, proceeded to issue a compliance notice without consideration any representations from the Applicant.
37. Accordingly, the Tribunal, having heard the Applicant’s submissions makes the following ruling:
37.1 the compliance notice is hereby cancelled
37.2 no order is made as to costs
Dated and signed on 22 April 2013
FK MANAMELA
PRESIDING MEMBER
Ms P Beck and Adv N Sephoti concurring.
1 NCT/2793/2011/101 (1)(P)
2 NCT/2667/2011/101(1)(P) and NCT/2081/2011/101(1)(P)
3 At 2 supra par 47 and 48