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[2021] ZANCT 35
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Winter v Kove Empire CC (NCT/176395/2021/75(1)(b)) [2021] ZANCT 35 (17 September 2021)
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IN THE NATIONAL CONSUMER TRIBUNAL
HELD IN CENTURION
Case number: NCT/176395/2021/75(1)(b)
In the matter between:
PAUL AUGUST WINTER APPLICANT
And
KOVE EMPIRE CC t/a PINETOWN VEHICLES RESPONDENT
Coram:
Dr MC Peenze – Presiding member
Mr T Bailey – Member
Prof K Moodaliyar – Member
Date of Hearing – 6 September 2021
Date of judgment – 17 September 2021
JUDGMENT AND REASONS
APPLICANT
1. The Applicant in this matter is Dr Paul Winter, a major male consumer residing in Umhlanga ("the Applicant"). The Applicant appeared on his own behalf.
RESPONDENT
2. The Respondent is Cove Empire CC t/a Pinetown Vehicles, a closed corporation duly registered in terms of the company laws of the Republic of South Africa ("the Respondent").
3. The Respondent's last known address is 165 Josiah Gumede Road, Pinetown, 3600.
4. Neither the Respondent nor its legal representative appeared at the hearing. On the morning of the hearing, the Tribunal panel was advised by officials from the Tribunal's Registrar ("the Registrar") that Brett Lewis of Brett Lewis & Company sent an email on 3 September 2021, the day before the hearing, advising that he would not be able to attend the hearing due to ill health. The email requested a postponement, but the Respondent did not file a formal postponement application as per the rules of the Tribunal. The matter remained unopposed on the papers.
5. The National Consumer Tribunal ("the Tribunal") conducted the hearing via a Teams technology link due to the physical distancing protocols imposed in response to the Covid-19 pandemic.
APPLICATION TYPE
6. This application is lodged in terms of Section 75(1)(b) of the Consumer Protection Act 68 of 2008 ("the Act" or "the CPA"). In this application, the Applicant, with leave granted by the Tribunal, seeks redress against the Respondent; and alleges breach of the Act on the basis that the Respondent allegedly failed to comply with the Applicant's request for a refund of the purchase price of a vehicle per Section 56(2)(b) read with Section 55 of the Act.
CONSIDERATION OF THE EVIDENCE ON A DEFAULT BASIS
7. The notice to refer his case against the Respondent to the Tribunal was served on the Respondent on 3 December 2020 by email, followed by the Respondent consenting to service by email on 7 December 2020. On 4 January 2021, the Applicant filed the application with the Tribunal, and on 15 January 2021, the Registrar issued a notice of filing to all the parties.
8. In terms of Rule 13 of the Tribunal Rules,[1] The Respondent had 15 business days to serve an answering affidavit and file with the Registrar. However, The Respondent failed to do so.
9. The Applicant did not file an application for a default order in terms of Rule 25(2).
10. On 15 February 2021, after the closure of pleadings, the Registrar issued a notice of set down for the application for leave to refer to be heard on 30 March 2021 on a default basis due to the pleadings being closed. The Registrar served the notice of set down on all the parties by email.
11. On 24 March 2021, the Applicant resent his section 75 application and his application for leave to refer to Brett Lewis. On 29 March 2021, the day before the hearing, the Registrar received correspondence by email from Brett Lewis, confirming to act for the Respondent. The correspondence further indicated that the Respondent does not intend to oppose the matter and would abide by the decision of the Tribunal.
12. On 30 March 2021, the Tribunal considered the leave to refer the application and issued its order, granting leave to refer on 7 April 2021. Forthwith, the Respondent did not file any answering or opposing papers in the matter.
13. On 20 May 2021, the Registrar issued a notice of set-down for the main matter to be heard on a default basis on 6 September 2021. The Registrar served the notice of set down on all the parties by email.
14. Rule 13(5) provides that:
"Any fact or allegation in the application or referral not specifically denied or admitted in the answering affidavit will be deemed to have been admitted."
15. Notwithstanding service of the application documents on the Respondent as contemplated under rule 30 of the Tribunal Rules, the Respondent did not file an answering affidavit as provided for under rule 13(1) and (2) of the Tribunal Rules. On the day of the main matter's hearing, the presiding member was satisfied that the Respondent's application documents and notice of set down were adequately served.
16. Since the Respondent did not file an answering affidavit and did not formally apply for a postponement, the hearing of the application proceeded on a default basis as envisaged in rule 25(3) of the Tribunal Rules.
JURISDICTION
17. Section 27(1)(a) of the National Credit Act, 2005 ("the NCA") empowers the Tribunal or a Tribunal member acting alone to adjudicate allegations of prohibited conduct by determining whether prohibited conduct has occurred and, if so, by imposing a remedy provided for in the NCA.
18. Section 150 of the NCA empowers the Tribunal to make an appropriate order concerning prohibited or required conduct under the NCA or the CPA. The Tribunal, therefore, has jurisdiction to hear this application.
ISSUES TO BE DECIDED
19. The Tribunal is required to consider and decide the following issues:
19.1 Whether the matter has prescribed;
19.2 Whether the Applicant has proved a contravention under the CPA; and
19.3 Whether the Applicant is entitled in law to the relief sought, namely the refund of the vehicle's selling price.
BACKGROUND
20. On 6 July 2016, the Applicant concluded a sales agreement with the Respondent. In terms of the agreement, the Applicant purchased a motor vehicle described as a 2006 BMW 330 D A/T, with engine number 32836110, for a total amount of R104,490.01. On or around 14 August 2016, the Respondent delivered the vehicle to the Applicant.
21. The Applicant also took out a warranty insurance policy with Debella Finance for two years in the amount of R9,000.20.
22. Upon taking delivery of the vehicle, the Applicant experienced technical and mechanical problems and reported the same to the Respondent. The day after the Applicant first took possession of the vehicle, it broke down in the middle of town at 21:00, and the Respondent towed the vehicle to its workshop. In the period up to 4 October 2016, the Respondent conducted various repairs on the vehicle, inter alia concerning the following:
(i) Problem of engine oil and water mixing;
(ii) Side mirror electronics not working;
(iii) Rearview mirror falling off;
(iv) Hand brake not working;
(v) Front bumper falling off;
(vi) Multiple dashboard warning lights continuously flashing;
(vii) Engine noise;
(viii) Passenger wing mirror replacement; and
(ix) Driver door rubber replacement.
23. After collecting the vehicle on 4 October 2020, various problems mentioned above persisted, and the Applicant was not satisfied with the vehicle's state. Specific persisting faults were the front bumper that still fell off, the handbrake that still did not work and the mixing of the engine oil and water that was still evident. The Applicant also felt unsafe due to the heavy vibration throughout the vehicle when driving on the highway, the loose rattle under the vehicle, the noise coming out of the engine, and the door handles on the outside that would not release, resulting in the doors not closing properly.
24. Due to the continued performance problems with the vehicle, the Applicant felt his safety was being compromised when using the vehicle. The Applicant subsequently had a safety assessment of the vehicle done at SMG BMW at his own cost. The results of this diagnostic test were shocking, according to the Applicant, as the Respondent did not disclose such defects to the Applicant before the sale. When the diagnostic report was presented to the Respondent, it refused to perform the necessary repairs as referred to in the diagnostic report to ensure the vehicle's safety.
25. Because of the continued performance problems with the vehicle and the Applicant's consequent concerns for his safety while using the vehicle, the Applicant filed a complaint with the Motor Industry Ombud of South Africa ("MIOSA"). In the complaint to MIOSA, the Applicant indicated that on 31 October 2016, he had sent the Respondent an email with the results of the safety diagnostic test.
26. On 9 February 2017, after investigating the complaint, MIOSA made recommendations that required compliance by the Respondent. The recommendations or directives by MIOSA were that the matter should be resolved in terms of the provisions of Section 56 of the CPA read together with Section 55 of the CPA. In terms of Section 56(2) of the CPA, a consumer may return goods to a supplier without penalty to the consumer and at the supplier's own risk and expense if the goods fail to satisfy the requirements and standard as contemplated in Section 55. It concluded that in terms of sections 55(2) and 56(2) of the CPA, the vehicle did not meet the statutory requirements. The MIOSA recommended that the Respondent collect the vehicle at their risk and expense and attend to the Applicant's concerns.
27. Although the Applicant supplied the Respondent with a list of his concerns, the Respondent did not act on MIOSA's findings and recommendations. The Respondent refused to collect the vehicle and failed to make any refunds or repairs to the Applicant, as ordered by MIOSA.
28. On or about 28 March 2017, the Applicant referred the matter to the National Consumer Commission ("the Commission" or "the NCC"). The Applicant expected the Commission to assist him within a reasonable time, in line with the statutory powers assigned to the Commission.
29. It is not clear to the Tribunal why the Commission took more than three years to respond to the Applicant's complaint. According to the evidence before the Tribunal, the Applicant persisted continuously and consistently in his follow-up and enquiries to the Commission throughout the period that his complaint was with the Commission. On more than one occasion, when he inquired about his matter's progress, he was told that the file could not be located or that the official dealing with his matter was no longer available.
30. In desperation, and due to the Commission's unresponsiveness, the Applicant approached the Public Protector of South Africa. It was only after the intervention of the Public Protector that the Commission issued the Notice of Non-Referral.
31. According to the Applicant, the length of the delay by the Commission had negatively affected his access to redress, more so that he is an unrepresented consumer. He had expected the Commission to fulfil the purpose of the CPA and enable the realisation of his consumer rights.
32. On 25 November 2020, the Commission issued a notice of non-referral, outlining that it did not find satisfactory evidence that the motor vehicle had any defects after being attended to by the supplier, and if so, what those defects were.
33. In its non-referral letter, the Commission did not state that section 116 of the CPA prevented it from doing so. The Commission also failed to clarify their delay of the matter for more than three years.
THE HEARING
34. The Applicant submitted that the matter was very important to him because his safety was at risk due to the persistent performance problems with the vehicle that the Respondent had sold him. Further, the Applicant explained that he attempted to do everything properly and procedurally correctly in referring his matter to the various statutory bodies, namely the MIOSA and the Commission.
35. He outlined how he went to great lengths to ensure proper compliance to the processes of the Tribunal and the Act. Irrespective, due to the alleged laxity and ignorance of both the Respondent and the Commission, his rights as a consumer are still being exploited.
36. The Applicant also alluded to the incorrect factual statements made by the Commission in its notice of non-referral. The Commission indicated that: "no satisfactory evidence stating with particularity whether the motor vehicle had any defects after being attended to by the supplier, and if so, what those defects were."
37. According to the Applicant, the Commission's statement is incorrect. The Applicant submitted the BMW diagnostic report various times to the Commission that explains the various defects after the Respondent made repairs to the vehicle,. Therefore, the documents presented to the Commission confirm that the Respondent did not make any repairs to the vehicle as recommended by the MIOSA in line with the diagnostic report issued by BMW. As it is common cause that the Respondent had not attended to these defined defects, the same defects persist.
38. The Applicant also confirmed that the Respondent never pursued its right to request reasonable compensation for the use of the vehicle but consistently failed to collect the vehicle. Irrespective, the Applicant outlined that he had in total not driven the vehicle for more than 5000 km since 2016 up to declaring the dispute. After that, he rarely used the vehicle due to the safety concerns raised. All attempts to return the vehicle to the Respondent were also met with resistance.
39. During the deliberations before the MIOSA, the Respondent was not prepared to address the faults diagnosed by SMG BMW and insisted that the Applicant utilises his personal insurance warranty. Forthwith, MIOSA found that the vehicle does not meet the requirements of Section 55(2).
40. More particularly, the Applicant submitted to the Tribunal that the vehicle is not reasonably suitable for the purposes for which the vehicle is generally intended, namely to safely take him from point A to B. Further, the vehicle is not of good quality, in good working order and free of defects.
41. According to the diagnostic analysis done by SMG BMW, dated 28 October 2016, the faults identified can be summarised as follows:
(i) Faulty steering column switch;
(ii) Faulty pulse sensor;
(iii) Faulty brakes;
(iv) Centre console panel not fitted correctly;
(v) Worn parts, such as hex and torx bolts;
(vi) Warn lacing DSC rpm sensor and lacing coil spring unit;
(vii) Warn front silencer;
(viii) Faulty door handles;
(ix) Overdue service: engine oil, micro-filters, fuel filter, air filters, brake fluid, diesel filter (long), windscreen additive, diesel oil; and
(x) General: squeaking and bad vibration when testing; loud noise from engine bay on acceleration under load; loose front bumper; faulty auxiliary point.
42. According to the Applicant, he has the right to return the vehicle to the Respondent as the supplier within six months after the delivery of the vehicle, without penalty and at the Respondent's risk and expense, because the vehicle has failed to satisfy the requirements and standards as outlined in section 55 of the Act. The Respondent is persisting with this prohibited conduct.
PRESCRIPTION
43. The Tribunal finds it prudent to set out the law rating to prescription as it pertains to the Tribunal.
The Tribunal as a creature of statute
44. The Tribunal is a statutory body established in terms of section 26 of the NCA.
45. The Tribunal, like any other administrative or judicial body, derives its powers and authority from the empowering legislation.[2] Subsequently, the Tribunal only has those powers which are granted to it (expressly or impliedly) by its constitutive statutes and empowering legislation.[3] The High Court, on the other hand, has inherent jurisdiction. Therefore, it may hear whatever matter it wishes to hear, barring those matters that it is not permitted to entertain (certain constitutional matters are reserved for the Constitutional Court).[4] The Tribunal can only hear matters authorised to hear in terms of its founding or other legislation.
46. The Tribunal's processes are governed by the NCA, the CPA, applicable Regulations and Rules of Conduct. In particular, the NCA provides inquisitorial powers to the Tribunal. Section 142 of the NCA determines as follows:
142. (1) The Tribunal must conduct its hearings in public-
(a) in an inquisitorial manner;
(b) as expeditiously as possible;
(c) as informally as possible; and
(d) in accordance with the principles of natural justice.
47. The use of the Tribunal's inquisitorial powers is important when dealing with the issue of prescription. According to the Prescription Act 69 of 1969, prescription can only be raised by the parties in a matter[5]. However, the Tribunal may use its inquisitorial powers to take steps to ensure that all relevant facts are placed before it, including facts relating to prescription.
48. Both the NCA and the CPA outline when complaints to the Tribunal will prescribe. Therefore, it is unnecessary to invoke the Prescription Act's provisions when dealing with complaints before the Tribunal.
49. A further matter impacted by the status of the Tribunal as a creature of statute is the process that consumers must follow to enforce their rights. Section 69 of the CPA sets out the processes that a consumer must follow to enforce their rights.
Enforcement of rights by consumer
69. A person contemplated in section 4 (1) may seek to enforce any right in terms of
this Act or in terms of a transaction or agreement, or otherwise resolve any dispute with
a supplier, by—
(a) referring the matter directly to the Tribunal, if such a direct referral is
permitted by this Act in the case of the particular dispute;
(b) referring the matter to the applicable ombud with jurisdiction, if the supplier
is subject to the jurisdiction of any such ombud;
(c) if the matter does not concern a supplier contemplated in paragraph (b)—
(i) referring the matter to the applicable industry ombud, accredited in terms
of section 82(6), if the supplier is subject to any such ombud; or
(ii) 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;
(iii) referring the matter to another alternative dispute resolution agent
contemplated in section 70; or
(iv) filing a complaint with the Commission in accordance with section 71; or
(d) approaching a court with jurisdiction over the matter, if all other remedies
available to that person in terms of national legislation have been exhausted.
50. As required by section 69 of the CPA, a consumer cannot bring a matter directly to the Tribunal. The consumer is required to first refer the matter to the applicable industry ombud (such as the MIOSA).[6] The consumer protection legislative framework adopted in South Africa turns on compulsory alternative dispute resolution (ADR) procedures to be followed before approaching the Tribunal. After obtaining a recommendation by the applicable ombud (such as the MIOSA), the consumer may refer the matter to the Commission if the matter is still not resolved.[7] The Commission may decide to take on the consumer's case or issue a notice of non-referral (as in this matter). Once the Commission issues a notice of non-referral, the consumer may approach the Tribunal for leave to approach it directly (as in this matter).[8]
Prescription: Difference between S 116 of the CPA and S 166 of the NCA
51. Prescription is regulated in Section 116 of the CPA for consumer protection complaints lodged in terms of the CPA and in Section 166 of the NCA for credit-related consumer protection complaints lodged in terms of the NCA.
52. Section 116 of the CPA states the following –
Limitations of bringing action
116.
(1) A complaint in terms of this Act may not be referred or made to the Tribunal or to a consumer court more than three years after—
(a) the Act or omission that is the cause of the complaint; or
(b) in the case of a course of conduct or continuing practice, the date that the conduct or practice ceased.
53. Section 166 of the National Credit Act, 2005 ("the NCA") contains a similarly worded clause as section 116 of the Consumer Protection Act 2008 ("the CPA"). Section 166 of the NCA states as follows:
Limitations of bringing action
166.
(1) A complaint in terms of this Act may not be referred or made to the Tribunal or to a consumer court more than three years after—
(a) the Act or omission that is the cause of the complaint; or
(b) in the case of a course of conduct or continuing practice, the date that the conduct or practice ceased.
54. As the two clauses in the two different acts are similarly worded, the perception may be created that the two clauses must be applied the same. Such a deduction is misplaced. Although similarly worded, the application of the two sections may be different due to the nature of the prohibited conduct being regulated in the two pieces of legislation and the nature of the complaint being lodged.[9] However, both sections restrict the bringing of action before the Tribunal more than three years after a particular date.
Prescription Interruption: Innovative Order
55. Unlike the Prescription Act, neither the NCA nor the CPA provide explicitly for the interruption of prescription, nor do they explicitly provide for the Tribunal's authority to make an order on the interruption of prescription.
56. Therefore, under certain circumstances, it might be possible for the Tribunal to deal with prescription through an innovative order, without definitively ruling on it. The authority to make an innovative order must similarly be provided to the Tribunal by way of statute.
57. A careful analysis of the NCA and the CPA convinces that only the CPA provides the Tribunal with authority to make an innovative order.[10] Although the Tribunal adjudicates complaints lodged in terms of both statutes, there is no basis for equating the provisions of the two respective statutes when interpreting the Tribunal's authority to make an innovative order. As a result, the Tribunal can only make innovative orders regarding a complaint lodged in terms of the CPA. Section 4(2) of the CPA determines that the Tribunal must develop the common law as necessary to improve the realisation of consumer rights[11] and that it must make any innovative order that better advances, protects, promotes and assures the realisation by consumers of their rights in terms of the CPA:[12]
(2) In any matter brought before the Tribunal or a court in terms of this Act—
(b) the Tribunal or court, as the case may be, must—
(i) promote the spirit and purposes of this Act; and
(ii) make appropriate orders to give practical effect to the consumer's right of
access to redress, including, but not limited to—
(aa) any order provided for in this Act; and
(bb) any innovative order that better advances protects, promotes and
assures the realisation by consumers of their rights in terms of this Act.
(3) If any provision of this Act, read in its context, can reasonably be construed to
have more than one meaning, the Tribunal or court must prefer the meaning that best
promotes the spirit and purposes of this Act, and will best improve the realisation and
enjoyment of consumer rights generally, and in particular by persons contemplated in
section 3(1)(b).
58. An example of an innovative order by the Tribunal is an order that prescription is interrupted while an Ombud or the Commission is dealing with a complaint.[13] This statutory authority of the Tribunal to make innovative orders only extends to matters brought before the Tribunal in terms of the CPA.[14] Accordingly, it can be safely stated that the Tribunal has the statutory authority to consider the interruption of prescription, depending on the particular circumstances of a specific matter referred to it in terms of the CPA.
59. This authority is justified if exercised to advance, protect, promote, and assure the realisation of consumers' rights in terms of the CPA. By applying such discretion and making such innovative orders, the Tribunal will not usurp any non-statutory authority. It will execute its responsibility to properly exert its assigned statutory responsibility as contained in section 4 of the CPA.
60. The Tribunal's view is supported by the aim of the CPA, which is to protect consumers such as the Applicant from exploitation and abuse in the marketplace. The CPA provides consumers with the Bill of Rights as set out in its preamble. Any other interpretation will render the CPA ineffective to assist consumers in their pursuit of enforcing their rights.
61. This view is further supported by the purposive theory, which requires the interpreter to move beyond the manifested intention of the legislation.[15] Similarly, in S v Mhlungu and Others[16] Sachs J, in quoting Lord Denning, stated that "... Judges… solve the problem by looking at the design and purpose of the legislature, at the effect, it was sought to achieve. They then interpret the legislation to produce the desired effect."[17]
62. This authority to consider and make innovative orders does not extend to matters being adjudicated on as referred to in terms of the NCA. The NCA does not contain a similar provision like section 4 of the CPA to empower the Tribunal to make an innovative order, such as a ruling on the interruption of prescription in credit complaints.
63. By implication, section 166 of the NCA is an absolute bar that does not allow for any discretion by the Tribunal. If a complaint in terms of the NCA prescribed in terms of section 166, the consumer could not bring the matter to the Tribunal for adjudication.[18] In such an instance, the consumer will first have to obtain an order from the high court, granting condonation to extend the prescription period.[19]
64. It follows that section 166 of the NCA restricts the bringing of an action before the Tribunal more than three years after the commission or omission that caused the complaint. Unlike the Prescription Act, 68 of 1969, the NCA does not provide for the interruption of prescription nor the discretion to issue innovative orders regarding complaints lodged in terms of the NCA.
65. Therefore, on the one hand, due to the absence of a statutory mandate, the Tribunal does not have the authority to find that the three-year period in section 166 of the NCA was interrupted. On the other hand, due to the statutory mandate in section 4 of the CPA, the Tribunal has the authority to consider the interruption of prescription under certain circumstances, in matters referred to it in terms of the CPA. Without ruling definitively on it, in such instances it might be possible for the Tribunal to deal with prescription through an innovative order..
Prescription: Two different scenarios
66. Both section 166 of the NCA and section 116 of the CPA define two different scenarios when a complaint will prescribe:
Scenario 1: The act or omission that occurred on a particular day
66.1 In line with section 116(1)(a) of the CPA and 166(1)(a) of the NCA, a complaint prescribes if a period of three years had lapsed after a particular act or omission occurred that is the cause of the complaint.
66.2 Examples of such an act would be the "sale of a defective vehicle" or the "concluding of a reckless agreement". This prescription scenario is particularly relevant where the NCC, NCR or consumer would approach the Tribunal for a penalty or a fine, following the prohibited action or omission.
66.3 Importantly, the date of the particular act or omission must be determined, and the complaint must be based on such act or omission.
Scenario 2: The course of conduct or continuing practise which existed for a particular period
66.4 In line with section 116(1)(b) of the CPA and section 166(1)(b) of the NCA, a complaint prescribes if a period of three years had lapsed after the date that a course of conduct or continuing practice had lapsed. This clause is applicable where there is a case of course of conduct or continuing practice.
66.5 Examples of such a course of conduct, can be the failure by a supplier to refund a consumer when required to do so in terms of the CPA or the discrimination by a credit provider against a consumer in response to a consumer exercising any right set out in the NCA.
66.6 Importantly, the date when such conduct or practise had ceased must be determined, and the complaint must be based on such conduct or practise. The prescription period does not start when the conduct or practise first occurs, but when the conduct or practise ceases.
Analysis: Facts of the matter
67. The Applicant brought the complaint in this matter in terms of the CPA. Accordingly, when determining whether the complaint had prescribed, section 116 of the CPA will be considered, as read with section 4 and other applicable clauses of the CPA.
68. According to the Applicant, the goods (namely the vehicle and accessories) were supplied on or around 14 August 2016. After receipt of the vehicle, the Applicant immediately started to notice defects and faults. The case before the Tribunal is that the vehicle was sold with such defects.
69. Due to the Respondent's continuous disregard for the Applicant's right to return the defective vehicle and receive a refund, the Applicant's rights as protected by the CPA are still being infringed. More particularly, it is the Applicant's case that the Respondent's course of conduct, namely its refusal to collect the vehicle as recommended by the MIOSA and to refund the Applicant, is continuing and in need of relief to be granted by the Tribunal. Therefore, the Respondent's prohibited course of conduct is not a once-off incident or event but a continuous practice or sequence of events, seriously impacting the Respondent's rights as a consumer. This practice and prohibited conduct by the Respondent have not yet ceased and is continuing at the time of the hearing.
70. Therefore, it follows that the Applicant is not pursuing a complaint as referred to in section 116(1)(a) of the CPA. He is pursuing a complaint as referred to in section 116(1)(b) of the CPA. In particular, the Applicant is not requesting a fine against the Respondent or any declaratory order to be issued. The Applicant is only pursuing his complaint regarding the continuous course of conduct of the Respondent, namely its conduct of not refunding the Applicant with the purchase price. This complaint is the type of complaint referred to in section 116(1)(b), and the Tribunal needs to determine whether the continuous conduct as alleged by the Respondent has ceased or not. If it has not yet ceased, then the complaint has by default not prescribed. If the continuous conduct has ceased, the Tribunal needs to determine whether three years have lapsed since the date the conduct had ceased. If three or more years have lapsed since such date, then the complaint has prescribed.
71. The Tribunal is persuaded that in terms of Section 116(1)(b) of the CPA, the Applicant's complaint in this matter had not prescribed. The Respondent's failure to refund the Applicant constitutes a course of action that has not yet ceased. As a result, the prescription period to determine possible prescription has not yet started. The fact that the sale of the vehicle occurred more than three years ago is irrelevant in the interpretation of section 116(1)(b). Section 116(1)(b) makes it possible to ensure that consumer's rights are protected in instances where continuing exploitation of a consumer is evident. In this matter, the Applicant is still suffering due to the Respondent's continued refusal to refund the purchase price.
72. By acknowledging that the Applicant's complaint falls within the ambit of section 116(1)(b), the Tribunal sensibly deals with this situation to give effect to the presumed purpose of the CPA.
73. As the Applicant's complaint does not fall within the prescripts of section 116(1)(a), the issue of interruption of prescription and the making of an innovative order do not need to be adjudicated in this particular matter. Therefore, the Tribunal does not make a ruling in that respect and bases its finding purely on section 116(1)(b).
Conclusion
74. The Tribunal finds that the Respondent's conduct of not refunding the consumer in line with section 56(2) and (3) of the CPA is continuing as a course of action referred to in section 116(1)(b). Subsequently, the Applicant's complaint will only prescribe three years after the date that this course of action or continuing practice by the Respondent ceases.[20] As this date has not yet come and since the Respondent's conduct is continuing, the consumer may lodge his complaint with the Tribunal with the leave of the Tribunal.[21]
75. The Tribunal, therefore, finds that the Applicant's claim has not prescribed. The Tribunal continues to consider the merits of the matter.
THE PROVISIONS OF THE CPA
76. Part H of the CPA sets out a consumer's right to fair value, good quality and safety. Section 53 of the CPA sets out the following -
53. (1) In this Part, when used concerning any goods, component of any goods, or
services—
(a) "defect" means—
(i) any material imperfection in the manufacture of the goods or components,
or in performance of the services, that renders the goods or results
of the service less acceptable than persons generally would be reasonably
entitled to expect in the circumstances; or
(ii) any characteristic of the goods or components that renders the goods or
components less useful, practicable or safe than persons generally would
be reasonably entitled to expect in the circumstances;
(b) "failure" means the inability of the goods to perform in the intended manner
or to the intended effect;
77. Section 55 of the CPA sets out the consumer's rights to goods that are reasonably suitable for the purpose intended and are free of any defects –
Consumer's rights to safe, good quality goods
55.
(1) This section does not apply to goods bought at an auction, as contemplated in
(2) Except to the extent contemplated in subsection (6), every consumer has a right to
receive goods that—
(a) are reasonably suitable for the purposes for which they are generally intended;
(b) are of good quality, in good working order and free of any defects;
(c) will be useable and durable for a reasonable period of time, having regard to
the use to which they would normally be put and to all the surrounding
circumstances of their supply; and
(d) comply with any applicable standards set under the Standards Act, 1993 (Act
No. 29 of 1993), or any other public regulation.
78. Section 56 of the CPA provides a six-month period within which the goods can be repaired, replaced or returned for a refund.
Implied warranty of quality
56.
(1) In any transaction or agreement pertaining to the supply of goods to a
consumer there is an implied provision that the producer or importer, the distributor and
the retailer each warrant that the goods comply with the requirements and standards
contemplated in section 55, except to the extent that those goods have been altered
contrary to the instructions, or after leaving the control, of the producer or importer, a
distributor or the retailer, as the case may be.
(2) Within six months after the delivery of any goods to a consumer, the consumer
may return the goods to the supplier, without penalty and at the supplier's risk and
expense, if the goods fail to satisfy the requirements and standards contemplated in
section 55, and the supplier must, at the direction of the consumer, either—
(a) repair or replace the failed, unsafe or defective goods; or
(b) refund to the consumer the price paid by the consumer for the goods.
(3) If a supplier repairs any particular goods or any component of any such goods, and
within three months after that repair, the failure, defect or unsafe feature has not been
remedied, or a further failure, defect or unsafe feature is discovered, the supplier must—
(a) replace the goods; or
(b) refund to the consumer the price paid by the consumer for the goods.
(4) The implied warranty imposed by subsection (1), and the right to return goods set
out in subsection (2), are each in addition to—
(a) any other implied warranty or condition imposed by the common law, this Act
or any other public regulation; and
(b) any express warranty or condition stipulated by the producer or importer,
distributor or retailer, as the case may be.
Analysis
79. The Applicant's version, which stands unopposed, is accepted by the Tribunal as true and correct. When applying the provisions of the CPA to the facts accepted by the Tribunal, it becomes clear that the vehicle, as supplied by the Respondent, was defective. Based on the evidence presented, the Respondent undertook to supply a safe vehicle, free from any defects. As the Respondent supplied the vehicle to the Applicant within the context of a transaction under the CPA, it can be held responsible for any defects in the goods.
80. The following analysis motivates the Tribunal's conclusion: Section 55 stipulates that goods have to be reasonably suitable for the purposes for which they are generally intended, of good quality, in good working order and free of any defects and should be useable and durable for a reasonable period of time (having regard to the use to which they would normally be put and to all the surrounding circumstances of their supply). The directive from the MIOSA recommendations was that the Respondent should collect the vehicle in question at their risk and expense and attend to the Applicant's concerns. MIOSA further advised that if the Respondent would wish to utilise the Applicant's warranty, it must first obtain authorisation from him in a written format.
81. MIOSA's recommendations give effect to clause 23.11 of the South African Automotive Industry Code of Conduct promulgated in terms of Section 82 of the Act by way of Government Notice 817 of 17 October 2014. The recommendations are in line with Section 70(3)(a) of the Act. The Respondent is bound by the recommendations and ought to have implemented them. The non-compliance with the recommendations amounts to prohibited conduct as envisaged in the Act. It is clear from the papers that there was non-compliance by the Respondent with the recommendations.
82. Neither the email communication from the MIOSA and other attempts by the Applicant to elicit a response from the Respondent were successful. To date, the Respondent has simply failed to comply with MIOSA's recommendations or directives. Upon the realisation that the recommendations won't be complied with, the Applicant filed a request for compliance to be issued by the Commission in terms of section 100 of the Act. As alluded to earlier in the judgment, this process ended in the Commission issuing a notice of non-referral, three years and eight months after the Applicant referred its matter to the Commission.
83. The CPA aims to protect consumers such as the Applicant from exploitation and abuse in the marketplace. As outlined above, the CPA will be ineffective unless there is a proper enforcement mechanism, affordable to consumers.
84. It is important to note the preamble of the Act states that the people of South Africa recognise that apartheid and discriminatory laws of the past have burdened the nation with unacceptably high levels of poverty, illiteracy and other forms of social and economic inequality and that it is necessary to develop and employ innovative means to:
(i) fulfil the rights of historically disadvantaged persons and promote their participation as consumers;
(ii) protects the interests of all consumers, ensure accessible, transparent and efficient redress for consumers who are subjected to abuse or exploitation in the marketplace;
(iii) to give effect to internationally recognised customers' rights; and
(iv) that recent and emerging technological changes, trading methods, patterns and agreements have brought new benefits, opportunities and challenges to the market for consumer goods and services within South Africa.
85. It is desirable to promote an economic environment that supports and strengthens a culture of consumer rights and responsibilities, business innovation and enhanced performance.
86. For the reasons set out above, the Tribunal is committed to giving effect to the international law obligations to:
(i) promote and protect the economic interest of consumers;
(ii) improve access to, and the quality of, information that is necessary so that consumers can make informed choices according to their wishes and needs;
(iii) protect consumers from hazards to their well-being and safety;
(iv) develop effective means of redress for consumers;
(v) promote and provide for consumer education, including education concerning the social and economic effects of consumer choices;
(vi) facilitate the freedom of consumers to associate and form groups to advocate and promote common interest; and
(vii) promote consumer participation in decision-making processes concerning the marketplace and the interest of consumers.
87. As outlined above, section 55(2) of the Act provides that all goods must be reasonably suitable for the purposes for which they are generally intended, of good quality, in good working order and free of any (not only material) defects. The goods must be useable and durable for a reasonable period of time. When a latent defect is present, the product lacks the quality promised in the sale agreement. The consumer then has the choice of a refund, replacement or repair of the goods in terms of section 56. This responsibility of the supplier can, in turn, also be regarded as an implied warranty.[22]
Implied warranty
88. The attempts to solve the mechanical problems were unsuccessful on the Applicant's version. Accordingly, in terms of section 56(1) of the Act, the transaction is subject to an implied warranty by the Respondent as the supplier. By implication, the goods supplied or distributed should comply with the statutory quality requirements and standards.
89. This implied warranty is not applicable in instances where the consumer was informed of the specific condition of the products, and the consumer expressly accepted the product on that basis or knowingly acted in a way compatible with accepting the product in that condition.
90. However, in the matter before the Tribunal, the Applicant did not expressly accept the vehicle on the basis that there were certain quality defects in the vehicle that were present and therefore expressly accepted by the Applicant. The Applicant submitted that the opposite was true, namely that the Respondent sold him a supposedly safe and good quality vehicle with no defects. The Respondent withheld critical information relating to the condition of the vehicle from the Applicant, which information should have been communicated to the Applicant before the sale.
91. Also, the Respondent's response, as contained in the email trail with the Applicant, that the Applicant should have accepted the vehicle's status, being that of a second-hand vehicle, is unacceptable. The mere fact that a vehicle is sold second-hand is not a proper excuse for any supplier not to convey the truth about the actual state of the vehicle being sold.
92. The Tribunal places a strong responsibility on the supplier to ensure that all defects of a particular vehicle are determined and explained to the consumer before selling a second-hand vehicle. Where such defects would render the vehicle non-compliant to the standard as set by the Act, it is subsequently expected from the supplier to ensure the consumer expressly agrees in writing to such defects before completing the sale and delivering the vehicle.
Right to return vehicle and receive refund
93. In his application before the Tribunal, the Applicant relied on the provisions of the CPA, in that the supply of the vehicle to him contravened the implied warranty of quality contained in section 55(2)(b) and (c) of the Act. The Applicant was a credible witness who made a favourable impression upon the Tribunal. Based on the evidence before it, the Tribunal finds that the only inference to be drawn was that the vehicle's mechanical problems and other damages must have been present at the time of its purchase from the Respondent.
94. According to the evidence before the Tribunal, the defects in the vehicle are very serious, evidenced by the fact that it requires various replacements of parts, brakes are not working properly, vibrations throughout the vehicle occur, the centre console panel is not fitted correctly, the auxiliary point is not working, the doors cannot properly close, a loud noise is resonating from the engine bay on acceleration, and the front bumper is not affixed. The vehicle suffers from serious mechanical faults.[23] The Tribunal is not convinced that the Respondent will repair the damages, as various attempts before 4 October 2016 failed. The Tribunal is particularly concerned about mixing oil and water in the engine, which can indicate a blown gasket.
95. Accordingly, the Tribunal finds that the various defects outlined in the diagnostic report constitute defects within the meaning of Section 53 (1) (a) on several grounds, rendering the goods less acceptable, less practical or useful. Most of these defects became apparent within one day after the consumer received the vehicle. All defects were identified within three months after purchase of the vehicle; therefore, within the statutory warranty period of six months. The Applicant, therefore, has recourse under Section 56 of the CPA.
96. More particularly, in line with section 56(3) of the CPA, the evidence before the Tribunal supports the conclusion that the Respondent unsuccessfully attempted to repair the vehicle or some components of the vehicle. Within three months after such repair, the failure, defect or unsafe features as outlined above were not remedied.
97. By failing to respect the consumer's rights to return the vehicle and be refunded the purchase price, the Respondent is not only exerting prohibited conduct as defined in the CPA.[24] The Respondent is also infringing on the Applicant's right to fair consumer practices and his right to safe and good quality goods. This continuous conduct is alarming as the MIOSA finding gave direction to the parties, and the Respondent chose to ignore the finding and recommendations.
98. Accordingly, the Applicant was well within his rights to insist on returning the vehicle to the Respondent within six months, without penalty, at the Respondent's risk and expense. Also, the Applicant is acting within his rights to expect the Respondent to refund him the purchase price, as the Respondent failed to repair the vehicle successfully within three months after purchase.
99. The Tribunal would like to express its disappointment in the disrespect shown in this matter for the finding of the MIOSA. The MIOSA is an impartial ombud and focuses on the resolution of disputes. It makes recommendations in cases referred to it where all parties cannot reach mutually acceptable agreements when a dispute arises. Therefore, as part of the alternative dispute resolution structure designed to assist consumers in the motor vehicle industry, the recommendations of MIOSA must be taken seriously.
100. The role and purpose of the Commission also deserve scrutiny in this matter. The Commission is responsible for carrying out the functions and exercising the powers assigned to it by or in terms of the Act, any other national legislation, section 92 (1) or by the Minister as envisaged at section 72 (2) (a) of the Act and must do so in accordance with the values and principles mentioned in section 195 of the Constitution (the basic values and principles governing public administration). As an organ of state, it is responsible to the Minister.[25]
101. On the enforcement function of the NCC, any of the persons listed in section 4(1) (a) – (e) of the Act may, in the manner provided for in the CPA, approach a court, the National Consumer Tribunal (NCT) or the NCC alleging that a consumer’s rights in terms of the Act have been infringed, impaired or threatened, or that prohibited conduct has occurred or is occurring. The NCC’s enforcement functions are listed in section 99(b) and (d)–(i). The enumeration of functions in section 99 essentially comprises a summary of the NCC’s functions. As an administrative agency, the NCC is primarily an investigative and enforcement body, responsible for:
(i) Initiating[26] or receiving[27] complaints concerning alleged prohibited conduct or offences, and dealing with those complaints in accordance with Part B of Chapter 3 (sections 72–75);
(ii) referring complaints for dispute resolution section 72(1) (b);
(iii) referring complaints to another regulatory authority section 72 (1) (c);
(iv) investigating and evaluating alleged prohibited conduct and offences section 99 (d) and complaints section 72 (1)(d);
(v) conducting interrogations section 102 and searches section 103-105 of the Act;
(vi) issuing and enforcing compliance notices section 99(e); 73 (1) (c) 9(iv);
(vii) negotiating and concluding undertakings and consent orders contemplated in sections 73(1)(c)(ii) and 74(1);
(viii) appearing before the NCT as permitted or required in terms of the provisions of section 99(h);
(ix) referring alleged offences in terms of the Act to the National Prosecuting Authority;
(x) proposing draft consent orders in terms of section 74 section 73 (1) (c)(ii) or
(xi) making referrals to the NCT section 73(2) (b) or to the consumer court of the province in which the supplier has its principal place of business in the Republic section 73(2) (a) . The NCC may only refer a matter to the consumer court if there is a consumer court in that province and it believes that the issues raised by the complaint can be dealt with expeditiously and fully by such referral section 73(2) (a) (i)-(ii) of the Act.
102. In the light of the responsibilities of the Commission, as outlined above, the Tribunal is shocked by the Commission's dilatory conduct over three years. By issuing a non-referral in the face of the MIOSA recommendation in this matter, the Commission denuded rather than enhanced consumer rights. Consequently, it defeated the purpose the Act is meant to achieve. In this matter, probable cause existed to apply for an administrative fine against the Respondent in terms of section 110(2) of the CPA.
CONCLUSION
103. In the Tribunal's view, the vehicle did not satisfy the requirements of section 55(2) because the vehicle was not suitable for its intended purpose; was neither of good quality nor in good working order and free of defects; and 'plainly' not safe and usable for a reasonable time. Therefore, the Applicant was entitled in terms of section 56(2) to return the vehicle to the Respondent within six months of delivering the vehicle without incurring a penalty. Further, the Respondent is obliged to refund the Applicant the amount paid for the vehicle.
104. After considering all the evidence, the Tribunal is satisfied that the Respondent seriously infringed upon the Applicant's right to a refund. The intention of section 56(4) is to provide an additional statutory protection in the form of an implied warranty to the consumer. This statutory implied warranty will apply in instances like this, where the consumer's right to return faulty goods must be respected irrespective of any other warranty that may also exist, such as maintenance insurance or any other implied condition.
105. The Respondent displays continuous prohibited conduct by insisting that the Applicant exhausts its vehicle insurance warranty as procured outside of the sales agreement for repairs on the faulty vehicle. Suppliers should understand that they remain responsible for delivering goods that are safe and of good quality. It is the suppliers' responsibility to repair goods that do not comply with the expected standard, and the consumer should not be required to use any of its own means to ensure such repair. The responsibility remains that of the Respondent to honour the inherent statutory warranty, accept the return of the vehicle, and refund or replace the vehicle as requested by the consumer.
106. The Tribunal is also satisfied that the Applicant attempted to return the vehicle to the Respondent. The Respondent refuses the return of the vehicle. Due to the Respondent's refusal, the Applicant does not have to account for the vehicle's use, depletion or deterioration over time. By failing to take possession of the vehicle and refund the Applicant the purchase price, the vehicle's risk shifted to the Respondent.
107. The Tribunal wishes to express its utter disappointment in how the Respondent treated the Applicant as a consumer. The Tribunal noted with concern the Respondent's total disregard for the rights of consumers to receive honest and transparent dealings, proper service and good quality goods. The Respondent's insistence that the Applicant must use its insurance cover to pay for the defects in the unsafe goods provided by the Respondent, shows ignorance of its responsibility to refund a consumer for unsafe goods returned within the first six months of purchase. Second-hand vehicles are not excluded from the protection of the CPA, and such vehicles are sold with the supplier's accountability and responsibility for repairs. Therefore, by refusing the refund in terms of sections 56(2) and (3), the Respondent's conduct is a clear example of prohibited conduct in terms of the Act.
FINDING
108. The Tribunal is persuaded that the Applicant has proved a contravention under the CPA. The Respondent displays continuous prohibited conduct by refusing to refund the Applicant the vehicle's purchase price, irrespective of the inherent statutory warranty that the consumer may return unsafe goods within the first six months of purchase and request a refund.
109. The Tribunal finds that the Respondent retains the risk for any damages to the goods following its refusal to collect or accept the return of the defective goods. Regarding any claims for reasonable use that the Respondent may have, the Respondent is allowed to pursue its rights in law.
110. Consequently, the Tribunal finds that the Respondent contravenes sections 55(2) and 56(2), constituting prohibited conduct.
111. The Tribunal further finds that the Applicant is entitled in law to the relief requested in its application, namely the refund of the vehicle's selling price. The Respondent, in turn, is entitled at its cost to recover the vehicle from the Applicant.
ORDER
112. Accordingly, the Tribunal makes the following order:
112.1 The Respondent is ordered to refund the Applicant an amount of R104,490.01 (one hundred and four thousand, four hundred and ninety rands and one cent), being the purchase price of the vehicle, within 15 business days after issuing of this judgment; and
112.2 There is no order as to costs.
DATED ON THIS 17th DAY OF SEPTEMBER 2021
[Signed]
Dr MC Peenze
Presiding member
Mr T Bailey (member) and Prof K Moodaliyar (member) concurring.
[1] GN 789 of 28 August 2007: Regulations for matters relating to the functions of the Tribunal and Rules for the conduct of matters before the National Consumer Tribunal, 2007 (Government Gazette No. 30225), as amended.
[2] See De Ville JR, Judicial Review of Administrative Action in South Africa, 2015, LexisNexis. p 91.
[3] FirstRand Bank Ltd v A Ludick A277/2019 High Court of South Africa, Gauteng, Pretoria division, 18 June 2020 (unreported), par 14.
[4] Also see Tshisa v Premier of the Free State and Another (A6/2009) [2009] ZAFSHC 119; 2010 (2) SA 153 (FB) (19 November 2009), par 16.
[5] s 17(1) of the Prescription Act 68 of 1969 provides: "A court shall not of its own motion take notice of prescription ." However, a court may allow a litigant to raise the defence of prescription at any stage of the proceedings.
[9] Also see the leave to refer ruling in Paul Winter v Kove Empire NCT/176395/2021/75(1)(b) dated 2 April 2021, par 32-33.
[10] Naude T and De Stadler E "'Innovative Orders' under the South African Consumer Protection Act 68 of 2008" PER / PELJ 2019(22) - DOI http://dx.doi.org/10.17159/1727-3781/2019/v22i0a5108. p 10
[11] Section 4(2)(a) of the CPA
[12] Section 4(2)(b)(ii)(bb) of the CPA
[13] See Littlewood Building and Garden Services Projects CC v Hyundai Automotive South Africa (Pty) Ltd t/a Hyundai Springfield (NCT/87578/2017/75(1)(b)) [2018] ZANCT 91 (26 June 2018). Also see Lazarus v RDB Project Management CC t/a Solid 2016 ZANCT 15 (9 June 2016); National Consumer Commission v Western Car Sales CC t/a Western Car Sales 2017 ZANCT 102 (14 September 2017); Ngoza v Roque Quality Cars 2017 ZANCT 104 (28 September 2017); Auto Glen Motors (Pty) Ltd t/a Auto Glen v Barnes In Re: Barnes v Auto Glen Motors (Pty) Ltd t/a Auto Glen 2018 ZANCT 51 (23 July 2018) para 21.
[14] Section 4(1) and 4(2) of the CPA
[15] Devenish Interpretation of Statutes at 36
[16] [1995] ZACC 4; 1995 (3) SA 867 (CC) at 916
[17] Barnado v National Consumer Commission and Others (47933/17) [2021] ZAGPPHC 531 (26 August 2021)
[18] First Rand Bank Limited v Annet Ludick A 277/2019, handed down 9 June 2020.
[19] Tshisa v Premier of the Free State and Another (A6/2009) [2009] ZAFSHC 119; 2010 (2) SA 153 (FB) (19 Nov 2009)
[20] Section 116(1)(b) of the CPA.
[21] This approach was also supported in the leave to refer ruling of this matter, dated 2 April 2021.
[22] Barnado v National Consumer Commission and Others (47933/17) [2021] ZAGPPHC 531 (26 August 2021), par 46.
[23] Also, see Vousvoukis v Queen Ace CC trading as Ace Motors 2016 JOL 35677 (ECG).
[24] Section 1 of the CPA defines prohibited conduct as “an act or omission in contravention of this Act”.
[25] Also see the Memorandum on the objects of the Consumer Protection Bill, 2008.
[26] See section 71(2)
[27] See section 71(1)