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[2016] ZANCT 16
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Mosaic Connections CC v First National Bank Limited (NCT/3294/2015/137(3)) [2016] ZANCT 16 (10 May 2016)
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IN THE NATIONAL CONSUMER TRIBUNAL
HELD IN CENTURION
Case No: NCT/32949/2015/137(3)
In the matter between:
MOSAIC CONNECTIONS CC APPLICANT
AND
FIRST NATIONAL BANK LIMITED RESPONDENT
Coram:
Adv J Simpson - Presiding Member
Prof B Dumisa - Member
Mr F Sibanda - Member
Date of Hearing: 17 March 2016
Date of Judgment: 10 May 2016
JUDGMENT AND REASONS
PARTIES
1 The Applicant is Mosaic Connections CC, a company duly registered in terms of the company laws of the Republic (hereinafter referred to as “the Applicant”). At the hearing the Applicant was represented by its sole member, Mr Mario Compagnoni.
2 The Respondent is First National Bank (FNB), a company duly registered in terms of the company laws of the Republic (hereinafter referred to as “the Respondent”) and a registered credit provider with the National Credit Regulator (hereinafter referred to as “the Regulator”), with registration No. NCRCP20.
3 At the hearing the Respondent was represented by L Kannieappan of Glover Kannieappan Inc. Attorneys.
INTRODUCTION
4 The Applicant applied to the National Consumer Tribunal (“the Tribunal”) in terms of section 137(3) of the National Credit Act, No 34 of 2005 (“the Act”), upon failure of alternative dispute resolution between the Applicant and the Respondent.
5 Section 137(3) of the Act provides that –
“A consumer or credit provider who has unsuccessfully attempted to resolve a dispute directly with the other party and through alternative dispute resolution in terms of section 134(4) may file an application contemplated in this Act at any time…”
6 The Tribunal can hear this matter in terms of section 27(a)(i) of the Act, which provides that the Tribunal may adjudicate in relation to any application made to it in terms of the Act, and make any order provided for in the Act in respect of such application.
7 The matter was heard on 17 March 2016.
BACKGROUND
8 It bears mentioning at the outset that the Applicant in this matter is a layperson and had some difficulty in presenting his application to the Tribunal, especially as it relates to the Act and the Consumer Protection Act No 68 of 2008 (“the CPA”). The Tribunal therefore also guided him to a certain extent when he addressed the Tribunal on the points in limine and the merits of the matter. The judgment that follows attempts to identify the most relevant aspects of the matter.
9 In early 2011 the Respondent ran an advertising campaign to introduce a bank account targeted at small businesses. A key feature of this new account was the fact that customers would not be charged a fixed monthly account fee. Instead consumers would be charged a fee per transaction.
10 On 9 March 2011 the Applicant, influenced by these advertising campaigns, opened the FNB Business Essential Account (“the account”).
11 Between March 2011 and 7 June 2014 the Applicant was not charged monthly service fees on the account.
12 On 12 June 2014 the Applicant received an account statement dated 9 June 2014 reflecting a monthly account fee of R55.50 which had never been charged before. The Applicant immediately contacted Mr James Owen Fowle, the Chief Executive Officer of Premium and Business Core Banking, a business unit of the Respondent, requesting the reversal of the monthly account fee and a return to the agreed ‘per-transaction’ fee.
13 The Respondent replied, through Mr Fowle, on 13 June 2014, indicating that there was no subterfuge on its part in introducing the fixed monthly account fee and apologising that the communication sent out was not clearer so as to have prevented this misunderstanding.
14 Further communication continued between the parties until 8 July 2014 when the Applicant received correspondence from the Respondent declaring a deadlock and further advising that the Applicant can approach the Ombudsman for Banking Services for resolution of the dispute.
15 On 15 August 2014 the Applicant lodged a complaint with the National Consumer Commission (“the NCC”), alleging, among other things, misleading advertising and unfair dealing by the Respondent, in contravention of the Consumer Protection Act No 68 of 2008 (“the CPA”).
16 On 11 September 2014 the NCC referred the Applicant’s complaint to the Ombudsman for Banking Services.
17 On 8 June 2015 the Ombudsman for Banking Services advised the Applicant that the complaint falls outside its jurisdiction and as such is unable to deal with it. It completed a certificate for the Applicant which constitutes a failed attempt at alternative dispute resolution in terms of section 134(5) of the Act.
18 Subsequently, the Applicant approached the Regulator who after investigating the complaint issued a notice of non-referral, on 8 September 2015, in terms of section 140(1)(a) of the Act.
19 The Applicant then approached the Tribunal directly in accordance with section 137(3) of the Act, for an order that the Respondent must remedy the violations of the CPA.
20 The basis of the relief sought by the Applicant is that there is prima facie evidence that the Respondent appears to be contravening various provisions of the CPA, including but not limited to sections 22, 30, 40, 41 and 52; as well as having reneged on an Agreement between the Applicant and the Respondent.
21 In its answering affidavit the Respondent raised a point in limine concerning the Tribunal’s jurisdiction to hear this matter.
ISSUES TO BE DECIDED
22 The Tribunal must decide whether:
1.1 it has jurisdiction to hear the matter;
1.2 the Respondent has committed prohibited conduct;
1.3 it can order the prayers asked by the Applicant.
APPLICANT’S CASE
23 The Applicant alleges that the pricing structure contained in the agreement with the Respondent when the account was opened in March 2011, was that there would be a ‘transaction/pay as you use’ fee only and no fixed monthly account fee.
24 The Respondent unilaterally introduced an additional pricing structure, that is, the monthly account fee, in violation of the agreement’s substantive condition, agreed upfront with the Respondent, that there would be no fixed monthly fee.
25 By giving one month or one year notice before introducing the monthly account fee does not alter the fact that the Respondent reneged on the agreement with the Applicant by unilaterally imposing a monthly account fee from June 2014.
26 The justification by the Respondent that it was obliged to do away with the ‘per transaction’ fee because it was finding it to be costly, is not a sufficient basis for reneging on the agreement. The Respondent ought to have considered the viability of the product before heavily promoting and launching it.
27 In the event therefore, the only conclusion to reach is that the high profile advertising of this product, with the specific central feature of ‘no monthly account fee’, constitutes bait marketing, as per section 30 of the CPA.
RESPONDENT’S CASE
28 The Respondent raised a point in limine with regards to the Tribunal’s jurisdiction on the grounds that:
28.1 First, the account that is the subject of the dispute is a cheque account and does not have a credit facility linked to it. Therefore the Act does not apply to the account. The account is a financial product and falls within the ambit of financial services as defined in section 1 of the Financial Advisory and Intermediary Services Act, No 37 of 2002. In light of this, the provisions of the Act are not applicable and this matter cannot be referred to the Tribunal in terms of section 137(3) of the Act.
28.2 Second, the Applicant alleges that the Respondent appears to be contravening various provisions of the CPA, specifically sections 22, 30, 40, 41 and 52 of the CPA. However, Rule 3(1) of the Rules for the Conduct of Matters Before the National Consumer Tribunal (Tribunal Rules) lists the matters that may be dealt with by the Tribunal. Table 1B of the Tribunal Rules excludes the sections that the Applicant is alleged to have contravened.
29 Consequently, the Tribunal does not have jurisdiction to hear this application pertaining to the Respondent’s alleged contraventions of the Act and the CPA and as such the application should be dismissed.
ANALYSIS OF THE LAW AND THE FACTS
Point in limine: Tribunal’s jurisdiction
30
The Respondent argues that the account that is the subject of the dispute with the Applicant is not a credit agreement as defined in terms of section 8 of the Act which states that –“(1) Subject to subsection (2), an agreement constitutes a credit agreement for the purposes of this Act if it is –
(a) a credit facility, as described in subsection (3);
(b) a credit transaction, as described in subsection (4);
(c) a credit guarantee, as described in subsection (5); or
(d) any combination of the above.
(2) ….
(3) An agreement, irrespective of its form but not including an agreement contemplated in subsection (2) or section 4(6)(b), constitutes a credit facility if, in terms of that agreement –
(a) a credit provider undertakes –
(i) to supply goods or services or to pay an amount or amounts, as determined by the consumer from time to time, to the consumer or on behalf of, or at the direction of, the consumer; and
(ii) either to –
(aa) defer the consumer’s obligation to pay any part of the cost of goods or services, or to repay to the credit provider any part of 45 an amount contemplated in subparagraph (i); or
(bb) bill the consumer periodically for any part of the cost of goods or services, or any part of an amount, contemplated in subparagraph (i); and
(b) any charge, fee or interest is payable to the credit provider in respect of –
(i) any amount deferred as contemplated in paragraph (a)(ii)(aa); or
(ii) any amount billed as contemplated in paragraph (a)(ii)(bb) and not paid within the time provided in the agreement.”
31 The Respondent insists that the account does not have a credit facility linked to it, and specifically it is not linked to an overdraft facility. However, according to the Applicant the account has an overdraft facility on which interest is charged when used. In the replying affidavit[1] the Applicant specifically states that he used the overdraft facility minimally and says he has phone recordings of an unsolicited call received from the Respondent’s representative seeking to increase the overdraft limit.
32 It is common cause that the Applicant opened the FNB Essential Account, which is a cheque account, whose primary purpose is to conduct general banking transactions, including making deposits, withdrawals, payments and purchases.
33 While this account may be linked to an overdraft facility, the latter is in any event not the subject of the dispute. What is at issue is the monthly account fee charged on the transactional account.
34 Therefore, when regard is had to the definition of a credit agreement and credit facility above, a cheque account does not qualify as either of the two. That being the case, the fees charged on the account are not regulated in terms of the Act.
35
>Despite having brought the application in terms of the Act, the Applicant also alleges that the Respondent has contravened sections 22, 30, 40, 41 and 52 of the CPA. In its replying affidavit the Applicant added section 51 to the above list of contraventions. This is a new issue not raised in the founding affidavit.36 As far as the Respondent’s submission is concerned, Rule 3(1) does not prohibit the Tribunal from hearing an application relating to the sections in question. The list of applications referred to in Table 1B relate to the specific types of applications that can be brought and do not seek to exclude the Tribunal’s powers in any way. The Tribunal’s powers are conferred by Section 27 of the Act and there is nothing in the Act which bars the Tribunal from dealing with any allegations of prohibited conduct in relation to the sections mentioned by the Applicant.
37 It must however be noted that the Application before the Tribunal has been brought under Section 137(3) of the Act. This section only refers to consumers or credit providers being able to bring applications to the Tribunal after a failed dispute resolution process. It makes no reference to the CPA or any applications in terms of the CPA. Section 137(3) of the Act does not appear to permit an applicant to bring an application in terms of the CPA. As such, the Applicant’s application insofar as the CPA allegations are concerned is not properly before the Tribunal as envisaged in Rule 3(1) of the Tribunal Rules.
38 The Tribunal however acknowledges the Applicant’s significant and determined efforts to bring this application before the Tribunal. The Tribunal will therefore very briefly refer to the aspects raised by the Applicant as it would have, had the application had been brought under section 75(1)(b) of the CPA.
CONSIDERATION OF THE MERITS
39 In the hearing the Tribunal permitted the Applicant to address it on the merits of the matter, as part of his submissions on the points in limine. The Respondent confirmed that he did not have any objection in this regard but did not make any substantial submissions in relation to the merits as the Tribunal indicated that it was not necessary at that stage. The evidence as contained in the Application was sufficient. The Respondent’s answering affidavit dealt with the points in limine but reserved a right to file a supplementary affidavit in relation to the merits, should it be required.
40 It is not necessary to deal with each aspect of the application in detail. Sections 40, 41 and 52 of the CPA, as alleged by the Applicant, relate to the court’s power to deal with unconscionable conduct and false, misleading and deceptive representations. The Tribunal is not a court as referred to in section 52 and therefore does not have any jurisdiction to exercise the powers mentioned therein.
41 Sections 22 and 30 of the CPA relate to a consumer’s rights to information in plain and understandable language and bait marketing. The Applicant did not set out any clear basis for the Tribunal to make a finding on either of these sections. Section 22 has very specific requirements; the Applicant did not provide any evidence relating to the ordinary consumer with average literacy skills. Section 30 also has specific requirements; the Applicant did not provide any evidence that shows this section is in any way applicable to the allegations made.
CONCLUSION
42 The Tribunal finds that the Applicant has been unable to prove that the fee in question is in any way regulated by the Act.
43 The Applicant was unable to prove that the Tribunal can consider the alleged contraventions of the CPA where the application was brought under section 137(3) of the Act.
44 Even if the Tribunal could consider the alleged contraventions of the CPA, the Applicant was unable to provide evidence that the particular sections applied to the dispute in question.
ORDER
45 Accordingly, the Tribunal makes the following order:
45.1 The Applicant’s application is dismissed;
45.2 No order is made as to costs.
DATED THIS 10th DAY OF MAY 2016
[signed]
__________________
Mr FK Sibanda
(Member)
Adv J Simpson (Presiding Member) and Prof B Dumisa (Member) concurring.
[1] Page 52 of the bundle, para 4.2.1.1