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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

 

IN THE NATIONAL CONSUMER TRIBUNAL

HELD IN CENTURION

 

Case number: NCT/210256/2021/73(2)(b)

 

In the matter between:

 

THE NATIONAL CONSUMER COMMISSION                           APPLICANT

 

and

 

KEMPSTER SEDGWICK (PTY) LTD                                           RESPONDENT

t/a CHM USED CARS

 

 

Coram:

Prof T Woker            -         Presiding member

Prof K Moodaliyar    –        Member

Mr A Potwana          –        Member

 

Date of Hearing       –        21 February 2022

Date of Judgment    -         23 February 2022

 

 

JUDGMENT AND REASONS

 

 

APPLICANT

 

1.            The Applicant in this matter is the National Consumer Commission, a regulatory entity created by section 85 of the Consumer Protection Act 68 of 2008 ("the CPA") ("the Applicant" or "the NCC").

 

2.            At the hearing, the NCC was represented by one of its employees, Mr Eric Jabulani Mbeje.

 

RESPONDENT

 

3.            The Respondent is Kempster Sedgwick (Pty) Ltd t/a as CHM Used Cars with registration number [....]. The Respondent is a supplier and dealer in second-hand motor vehicles with its business premises at 1 William Crescent, Umhlanga Ridge KwaZulu-Natal 4319 ("the Respondent").

 

4.            There was no appearance by the Respondent or its representative at the hearing.

 

APPLICATION TYPE

 

5.            This is an application in terms of section 73(2)(b) of the CPA. The NCC alleges that it received a complaint from a consumer, did an investigation and is now referring the complaint to the Tribunal.

 

CONSIDERATION OF THE EVIDENCE ON A DEFAULT BASIS

 

6.            On 23 November 2021, the Applicant filed the application with the Tribunal. The application was served on the Respondent via email on 23 November 2021.[1]

 

7.            In terms of Rule 13 of the Rules of the Tribunal,[2] the Respondent had 15 business days to serve an answering affidavit and file the same with the Tribunal's Registrar. The Respondent did not file an answering affidavit.

 

8.            On 13 January 2022, the Tribunal's Registrar issued a notice of set down to all the parties setting the matter down for hearing on a default basis for 21 February 2022 due to the pleadings being closed.

 

9.            On the date of the hearing, the Tribunal was satisfied that the application was adequately served on the Respondent, and the matter proceeded on a default basis.

 

10.         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".

 

11.         In the absence of any answering affidavit filed by the Respondent, the Applicant's application and the allegations contained therein are deemed to be admitted.

 

12.         This judgment is based on the documents before the Tribunal and arguments by the Applicant at the hearing. Due to the Covid19 pandemic, the hearing took place via a Microsoft Teams video and audio link.

 

BACKGROUND FACTS

 

13.         On 24 June 2019, Mrs Debra Ann Bowers ("Mrs Bowers") purchased a 2015 Mercedes Benz C200 Bluetec Avante Grade A/T motor vehicle from the Respondent for the sum of R300 469,24. Following the signing of the sale documents, a dispute seems to have arisen between the parties (the exact details of which were not canvassed before the Tribunal). Be that as it may, it appears that Mrs Bowers only took possession of the vehicle sometime in July 2019.

 

14.         On 31 July 2019, Mrs Bowers took the vehicle to Tyger Wheel and Tyre for an assessment in compliance with her insurance requirements. [3]

 

15.         Upon inspection of the vehicle, she was informed that the vehicle was fitted with standard tyres and not with run-flat tyres, which are standard with this particular make of vehicle and required by the manufacturer.

 

16.         Mrs Bowers was advised that this might result in her insurance company repudiating any claim relating to the tyres.

 

17.         Mrs Bowers immediately informed Hansie Louw, the dealer principal of the Respondent, about this issue and, according to Mrs Bowers, he undertook to look into the matter. This he failed to do, so Mrs Bowers took it upon herself to contact NMI Durban South Motors (Pty) Ltd t/a Mercedes Benz, Durban ("Mercedes Benz").

 

18.         Mercedes Benz issued Mrs Bowers a letter dated 1 August 2019, confirming that her vehicle should be fitted with run-flat tyres.[4] Despite this letter, the Respondent refuses to replace the existing tyres. On 5 August 2019, Mr Louw sent an email to Mrs Bowers, which reads as follows:[5]

 

"The tyres is (sic) 100% according to specification and road legal as per roadworthy, the MO on the tyres means Mercedes Approved. If you would like to change the tyres for whatever reason it will unfortunately be for your account."

 

19.         On the advice of the bank representative who had assisted with her vehicle finance, Gary Orwin,[6] Mrs Bowers referred the matter to the Motor Industry Ombudsman of South Africa (MIOSA) on 7 August 2019. MIOSA attempted to investigate the matter, but the Respondent did not engage with MIOSA.

 

20.         On 14 February 2020, MIOSA informed Mrs Bower as follows:

 

"After a number of attempts to acquire a response from the supplier have failed, we conclude that there is no reasonable possibility of the parties resolving their dispute through the process of reconciliation and the MIOSA therefore terminates the process.

 

21.         MIOSA informed Mrs Bowers to approach the NCC to exercise her rights in terms of section 71 of the CPA.[7]

 

22.         On 18 March 2020, Mrs Bowers referred her complaint to the NCC.

 

23.         Inspectors were appointed to investigate the matter, and an investigation report was compiled by Shumani Mudua.[8] The report concluded that the Respondent had contravened certain sections of the CPA and recommended that the matter be referred to the NCC Prosecutions Unit to consider further enforcement action against the Respondent.

 

APPLICANT'S SUBMISSIONS

 

24.         The NCC is alleging that the Respondent contravened the following sections of the CPA and requests the Tribunal to make a finding of prohibited conduct in this regard: –

 

(1)       Section 55 (2 (a) and (b)

The right to safe, good quality goods

Section 55 (2) provides that except to the extent contemplated in subsection (6), every consumer has the right to receive goods that are (a) are reasonably suitable for the purpose for which they are generally intended and (b) are of good quality, in good working condition and free of any defects.

 

The Applicant alleges that the Respondent has contravened section 56 (2) (a) and (b) because it supplied a vehicle with tyres that do not comply with the manufacturer's standard. Because the vehicle should have run-flat tyres, the vehicle is not supplied with a spare wheel, and there is no compartment within the vehicle for an extra tyre to be stored. This means that the consumer would not be able to replace a damaged tyre, which means that the vehicle is not suitable for its purpose and is defective.

 

(2)       Section 56 (2)

Implied warranty of quality

Section 56 (2) provides that 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.

 

The Applicant alleges that the Respondent has contravened the provisions of section 56 (2) (a) of the CPA in that it failed to replace the tyres with run-flat tyres, despite the consumer having elected that the tyres be replaced within six months of delivery of the vehicle.

 

25.         The NCC is asking the Tribunal for the following orders –

 

(1)       That the Respondent's contraventions of the abovementioned sections be declared prohibited conduct;

(2)       That the Respondent be interdicted from engaging in the prohibited conduct as set out above;

(3)       Directing the Respondent to replace the ordinary standard tyres on Mrs Bower's vehicle with run-flat tyres within 15 days of the judgment;

(4)       Directing the Respondent to pay an administrative fine of R100 000.00; and

(5)       Any other appropriate order contemplated in section 4(2) (b) (ii).

 

26.         The NCC further provides an affidavit on oath submitting the factors and reasons why an administrative fine should be imposed.

 

ASSESSMENT OF THE EVIDENCE

 

27.         The evidence establishes that when the vehicle was sold to Mrs Bowers, it should have been supplied with run-flat tyres. This is according to the manufacturer's (Mercedes Benz) specifications and the credit application signed by Mrs Bowers on 24 June 2019, when she purchased the vehicle. This credit application contains a document headed "Vehicle Information."[9] Included in this list is "run-flat" tyres. When Mrs Bowers raised certain complaints about the vehicle on 9 July 2019, including that there were no tools in the boot, [10] Mr Louw responded and informed her that the "car comes with run flat tyres so no tools".[11]

 

28.         It is common cause, that the vehicle does not have run-flat tyres. Although Mr Louw initially stated that the vehicle did have run-flat tyres, he later changed his tune and argued that it did not have "run flats because it was fitted with a repair kit."[12] This statement contradicts his previous statement where he informed Mrs Bowers that she did not have tools in her vehicle because the vehicle was fitted with run-flat tyres.

 

29.         We must decide whether the failure to provide run-flat tyres constitutes a defect under the CPA.

 

30.         Section 53(1) defines 'defect'. In subsection. (1)(a) it states that  "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;

 

31.         We are satisfied that the failure to supply this vehicle with run-flat tyres renders the vehicle less useful, practicable or safe than persons generally would be reasonably entitled to expect in these circumstances. The evidence establishes that the vehicle cannot carry a spare wheel, and therefore, the safety of the consumer would be compromised if she had a flat tyre.

 

32.         We turn now to the issue of Mrs Bowers' remedy.

 

Mrs Bowers' remedy

 

33.         The provisions of section 56 (2) (a) of the CPA provide a six-month period within which the goods can be repaired, replaced or returned for a refund.

 

34.         The evidence before the Tribunal indicates that Mrs Bowers wanted the tyres to be replaced with run-flat tyres. She brought the problem to the attention of Mr Louw, the dealer principal of the Respondent, within a few days of having taken delivery of the vehicle. Although Mr Louw undertook to look into this matter, it appears that he did not do so. Mrs Bowers herself obtained a letter that clearly stated that the tyres needed to be run-flat tyres. This letter is dated 1 August 2019, less than two months after Mrs Bowers purchased the vehicle. When she referred this letter to Mr Louw, he responded unequivocally that if she wanted to replace the tyres, she had to do so at her own cost.

 

35.         Therefore, we are satisfied that the Applicant has established that Mrs Bowers is entitled to have the tyres on her vehicle replaced. The Respondent engaged in prohibited conduct by failing to replace Mrs Bowers tyres when requested to do so.

 

CONSIDERATION OF AN ADMINISTRATIVE FINE

 

36.         The NCC has requested the Tribunal to impose a fine on the Respondent. The NCC has submitted argument on the factors listed in section 112(3) of the CPA that the Tribunal must consider.

 

37.         Considering the nature of the contraventions and the importance of this issue for consumers the Tribunal regards a fine as appropriate and justified. As pointed out in previous decisions of the Tribunal, the buying and selling of vehicles is an enormous industry in South Africa.[13] This industry affects consumers daily. A clear message must be sent that non-compliance with the CPA will not be condoned or tolerated.

 

(1)          The nature, duration, gravity and extent of the contravention;

The Respondent was approached on several occasions by both the MIOSA and the NCC to resolve this matter. From the evidence before the Tribunal, the Respondent largely ignored communications and had to be approached several times by each entity and Mrs Bowers before a response was forthcoming. This attitude is particularly alarming in its attitude towards MIOSA, the industry body set up especially by the legislature to deal with consumer complaints about motor vehicles. The court in Barnado v National Consumer Commission and Others[14] explained the importance of MIOSA and its determinations, holding that motor dealerships are bound by MIOSA determinations and ought to implement them.[15] In this case, the court held that non-compliance with MIOSA determinations amounts to prohibited conduct as envisaged in the CPA.[16] From this, it can be seen that the Respondent cannot simply ignore MIOSA. It should have engaged with MIOSA and made a meaningful attempt to resolve this dispute.

 

(2)          Any loss or damage suffered as a result of the contravention;

No specific evidence was provided in this regard, but from the lengths to which Mrs Bowers has had to go to enforce her rights, it is clear that she has been hugely inconvenienced.

 

(3)          The behaviour of the Respondent;

The Respondent refused to engage with MIOSA. It then did not defend the application before the Tribunal. This behaviour is indicative of a dismissive attitude towards the rights of consumers and the dispute resolving process in general. The Respondent was granted an ideal opportunity to co-operate and resolve the matter through MIOSA. The fact that it chose to ignore MIOSA and not engage further in any way to resolve the dispute is an aggravating factor.

 

(4)          The market circumstances in which the contravention took place;

No specific evidence was provided to the Tribunal but based on the types of matters referred to the Tribunal, it would appear that vehicle-related complaints against dealerships are widespread. For the average consumer, the purchase of a vehicle constitutes an extremely costly and essential transaction, second only to purchasing a house.

 

(5)          The level of profit derived from the contravention;

No specific evidence was provided, but Mrs Bowers paid the Respondent a significant sum of money for this vehicle.

 

(6)          The degree to which the Respondent has co-operated with the Commission and the Tribunal;

Based on the NCC's submissions, the Respondent did not co-operate with the NCC's investigators, who had to send several reminders to the Respondent for information. The Respondent has also ignored all communications from the Tribunal.

 

(6)          Whether the Respondent has previously been found in contravention of this Act.

The NCC submitted that there was no record of a previous investigation or finding against the Respondent.

 

(7)          The NCC did not submit any evidence of the turnover of the Respondent. The Tribunal can still impose a fine but is limited to a maximum fine of R1 000 000.00.

 

38.         As stated above, a strong message must be sent that dealers in motor vehicles cannot escape the peremptory provisions of the CPA. Their conduct must be aligned to the CPA, and consumers must be protected against dealers that ignore consumer rights. Dealers and suppliers must further use the opportunity to settle disputes through MIOSA when provided with the opportunity to do so, as set out in section 69 of the CPA.

 

CONCLUSION

 

39.         The Tribunal finds that Mrs Bowers is entitled to have her vehicle's tyres replaced with suitable run-flat tyres for this make of vehicle in terms of section 56 of the CPA.

 

40.         The Respondent is found to have contravened sections 55 (2)(a) and (b) and section 56 (2) (a) of the CPA and this constitutes prohibited conduct.

 

41.         An administrative penalty of R50 000.00 is appropriate under the circumstances.

 

ORDER

42.         Accordingly, the Tribunal makes the following order:

 

(1)       The Respondent is to replace Mrs Bowers' tyres with run-flat tyres within 15 business days of the date of this judgment.

 

(2)       The Respondent is to pay an administrative fine of R50 000.00 (Fifty Thousand Rand) into the National Revenue Fund referred to in section 213 of the Constitution within 30 business days of the date of this judgment.

 

The National Revenue fund account details are as follows:

Bank:                         Standard Bank of South Africa

Account name:         Department of Trade and Industry

Account number:     [....]

Account type:           Business current account

Branch code:            010645 (Sunnyside)

Branch code -           electronic payments:051001

Reference:                NCT-210256/2021/73(2)(b) (Name of depositor.)

 

(3)       No order is made as to costs.

 

 

 

DATED ON THIS 23^rd DAY OF FEBRUARY 2022

 

 

[Signed]

Prof T Woker

Presiding Tribunal Member

Mr A Potwana (Tribunal Member) and Prof K Moodaliyar (Tribunal Member) concur.

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