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/4845/2012/101(1)(P) CPA
In the matter between:
ACCORDIAN INVESTMENTS (PTY) LIMITED			 		        APPLICANT
and 
THE NATIONAL CONSUMER COMMISSION 				       	    RESPONDENT

Coram:
Adv FK Manamela	– Presiding member
Ms P Beck		– Member
Adv N Sephoti		– Member 

__________________________________________________________________________________	
REASONS FOR JUDGMENT
__________________________________________________________________________________

APPLICANT

1.	The Applicant in this matter is Accordian Investments (Pty) Limited, a company duly registered in terms of the Companies Act. (hereinafter referred to as “the Applicant”). 

2.	The Applicant’s Founding Affidavit is deposed to by Schalk Lubbe, a Customer Care Supervisor of the Applicant.

3.	The Applicant is the sole importer and distributer of TATA motor vehicles in South Africa. 

RESPONDENT

4.	The Respondent is the National Consumer Commission, an organ of state within the public administration established in terms of Section 85 of the Consumer Protection Act (“the CPA”) (hereinafter referred to as “the Respondent”).

COMPLAINANT

5.	The Complainant is Mike Powell (hereinafter referred to as “the Complainant”). 

APPLICATION TYPE
6.	This is an application in terms of section 101 of the Consumer Protection Act, 68 of 2008 (hereinafter referred to as “the Act”) for the review of a compliance notice issued by the Respondent to the Applicant in terms of section 100 of the Act. The Applicant objects to the Respondent’s allegation that it contravened Schedule 2 Item 8(1) and sections 20(1) and (2); 54(1) and (2), and 56(2) and (3) of the Act.

The compliance notice is dated 30 March 2012. The Applicant states in paragraph 35 of its founding affidavit that it received the compliance notice on 15 May 2012. The Applicant brought its application for review of the compliance notice on 05 June 2012. The application was therefore brought on the last day of the prescribed period of 15 business days from receipt of the notice that is allowed by Table 2 of the Regulations to the Act. 

BACKGROUND

7.	In terms of the founding affidavit, during March 2010 the Complainant purchased a TATA Telcoline motor vehicle bearing registration number X with chassis number X (“the vehicle”) from TATA East Rand (“the dealership”). On or about 6 May 2010 the Complainant sent an e-mail to the Applicant raising certain complaints about the vehicle. The Applicant alleges that it responded to such email on the same day informing the Complainant that the matter was being investigated. Copies of such correspondence is annexed to the founding affidavit and marked Annexures “FA3” and “FA4”. The Applicant attempted to make internal arrangements to have the complaint resolved and emails to that effect are also annexed to the founding affidavit and marked “FA6” and “FA7”. The dealership through an e-mail (Annexure “FA7”) requested the Complainant to take the vehicle to the closest Tata dealership in Nelspruit in order to resolve the issues. The Complainant did not comply with this request of the Applicant.  After numerous attempts to communicate with the Complainant as is evident from Annexure “FA9”, the Applicant could not make contact with the Complainant and the complaint file was closed. 

8.	In August 2010 the Complainant booked the vehicle with Tata Nelspruit and numerous repairs were undertaken. On 12 October 2010 the Complainant lodged another complaint with the Applicant, alleging that the vehicle is still pulling to one side and “metal noises” can be heard. A copy of such correspondence is annexed to the founding affidavit marked Annexure “FA16”. 

9.	On 25 January 2011 the Complainant sent an e-mail to Radio 702’s Consumer Forum in which the Applicant was being accused of importing worn-out and damaged vehicles and selling them as new (Annexure “FA19”), an allegation refuted by the Applicant. On the 16th  and 17th of February 2011 the 20 000km service was carried out at Tata Nelspruit as provided for in terms of the warranty (Annexure “FA20 and 21”). New locks were fitted on the doors as the Complainant complained that the doors did not open and this was covered by the vehicle warranty.

10.	Further repairs were effected to the vehicle at TATA Nelspruit on 10 March 2011 after other complaints were lodged by the Complainant with the Applicant.  There is no evidence before the Tribunal that any further repairs were effected on the vehicle after 10 March 2011.

11.	After a scheduled internal meeting between the Applicant’s employees, a proposal was made to the Complainant to effect full repairs according to manufacturer’s specification and that the Complainant would be provided with a replacement vehicle while a full assessment is being undertaken. The Complainant rejected the offer and stated that he wanted a “replacement deal” notwithstanding the fact that he had been utilising the vehicle for more than 12 months and in excess of 20 000 km. The Applicant alleges that after months of vehicle usage it could not accommodate the Complainant’s request for a new vehicle but that it was committed to resolving the issue by assessing and rectifying the issues.

12.	The Complainant then lodged a complaint with the Respondent and the Applicant was provided with a copy thereof on 27 May 2011. The Applicant responded to this. On 01 July 2011 the Applicant received a notice to attend a conciliation meeting set down for the 14th of July 2011. At this conciliation there was no settlement reached as the issues remained unresolved. On 19 July 2011 the Applicant addressed another email to the Respondent addressing issues relating to the matter as set out in Annexure “FA30”. The Applicant did not receive any response to this email and was issued with a compliance notice on the 15th of May 2012.  

APPLICABLE SECTIONS OF THE CPA

13.	The Respondent alleges, in the compliance notice, that the conduct of the Applicant amounts to contravention of Schedule 2 Item 8(1); Sections 40(1) and (2); 54(1) and (2) of the Act which state that;
Continued application of repealed laws
8(1) 	Despite the repeal of the repealed laws, for a period of three years after the general effective date the Commission may exercise any power in terms of any such repealed law to investigate any breach of that law that occurred during the period of three years immediately before the general effective date.
8(2) 	In exercising authority under sub item (1), the Commission must conduct the investigation as if it were proceeding with a complaint in terms of this Act.
 Consumer’s right to return goods
20(1) 	This section is in addition to and not in substitution for-
(a) the right to return unsafe or defective goods, contemplated in section 56; or
(b) any other right in law between a supplier and consumer to return goods and receive a refund.
(2) 	Subject to subsections (3) to (6), the consumer may return goods to the supplier, and receive a full refund of any consideration paid for those goods, if the supplier has delivered-
(a) goods to the consumer in terms of an agreement arising out of direct marketing, and the consumer has  rescinded that agreement during the cooling-off period, in accordance with section 16;
(b) goods that the consumer did not have an opportunity to examine before delivery, and the consumer has rejected delivery of those goods for any of the reasons contemplated in section 19 (5);
(c)  a mixture of goods, and the consumer has refused delivery of any of those goods, as contemplated in section 19 (8); or
(d)  goods intended to satisfy a particular purpose communicated to the supplier as contemplated in section 55 (3), and within 10 business days after delivery to the consumer, the goods have been found to be unsuitable for that particular purpose.

41 False, misleading or deceptive representations
(1) 	In relation to the marketing of any goods or services, the supplier must not, by words or conduct-
(a) directly or indirectly express or imply a false, misleading or deceptive representation concerning a material fact to a consumer;
(b) use exaggeration, innuendo or ambiguity as to a material fact, or fail to disclose a material fact if that failure amounts to a deception; or
(c)  fail to correct an apparent misapprehension on the part of a consumer, amounting to a false, misleading or deceptive representation, or permit or require any other person to do so on behalf of the supplier.

54 Consumer’s rights to demand quality service
(1) 	When a supplier undertakes to perform any services for or on behalf of a consumer, the consumer has a right to-
(a) the timely performance and completion of those services, and timely notice of any unavoidable delay in the performance of the services;
(b) the performance of the services in a manner and quality that persons are generally entitled to expect;
(c) the use, delivery or installation of goods that are free of defects and of a quality that persons are generally entitled to expect, if any such goods are required for performance of the services; and
(d) the return of any property or control over any property of the consumer in at least as good a condition as it was when the consumer made it available to the supplier for the purpose of performing such services, having regard to the circumstances of the supply, and any specific criteria or conditions agreed between the supplier and the consumer before or during the performance of the services.
(2) 		If a supplier fails to perform a service to the standards contemplated in subsection (1), the consumer may require the supplier to either-
(a)   remedy any defect in the quality of the services performed or goods supplied; or
(b)   refund to the consumer a reasonable portion of the price paid for the services performed  and goods supplied, having regard to the extent of the failure.

55 Consumer’s rights to safe, good quality goods
 (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 29 of 1993), or any other public regulation.
56 Implied warranty of quality
(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.

THE HEARING

14.	This matter was set down for hearing on 20 March 2013. The proceedings were conduct by a telephonic conference call. The Applicant was represented by Advocate Whittington. The Respondent elected not to be present at the hearing, nor did it file any documentation relevant to these proceedings.

Preliminary issues

15. 	The first issue to be decided is whether this matter can be heard on a default basis. The Tribunal would have to determine whether the requirements for a default judgment have been met.  
Factors to be taken into consideration in the default application
16. 	The Applicant served the Respondent with the application which was deemed complete on 7th of June 2012 and, in terms of the provisions of Rule 13 of the Tribunal Rules, the Respondent was supposed to file its response by 28 June 2012. The Respondent failed to do so. The Applicant proceeded to file a Rule 25(3) default application on the 6th of March 2013.  

17. 	Rule 3(2)(v)(vi) of the Tribunal Rules provides that the Tribunal may consider applications for default judgment in terms of Rule 25.The said Rule 25(3) provides as follows:
“(3) The Tribunal may make a default order – 
(a)	After it has considered or heard any necessary evidence; and
(b)	If it is satisfied that the application documents were adequately served.

18.	This forms the test for application for default judgment before the Tribunal.

19.	 As far as the above requirements are concerned, the amendment of the Rules by Government Notice 428 of 29 June 2011 clearly provides that the Tribunal needs only be satisfied that the application documents were adequately served on the Respondent. This requirement relates to the main application. In this matter the Tribunal was provided with proper proof of service of the main application on the Respondent and it is therefore satisfied that this requirement has also been met

20.	The Respondent failed to oppose the application and the application will therefore have to be dealt with on the basis of an application for default judgment as provided for in Rule 25(3) of the Rules.

Jurisdictional Issues: Retrospective application of the Act

21.	The Tribunal would have to determine whether the Respondent had jurisdiction to issue a compliance notice with regards to an incident that occurred prior to the commencement of the Act as this would amount to a retrospective application of the legislation. The Tribunal has to decide whether the specific sections of the Act that are alleged to have been contravened by the Applicant (as set out in the compliance notice) can be applied retrospectively to the transaction. 

22.	The Tribunal would have to also determine whether there was an investigation as envisaged by section 72 of the Act.

The main application

23.	The Tribunal would have to determine whether the Respondent relied on the correct and applicable sections of the Act in issuing the compliance notice.

24.	The Tribunal would have to determine whether the Respondent is mandated to order a refund to the Complainant in the amount of R110 000.00 or a replacement of the vehicle with a new one.

APPLICANT’S SUBMISSIONS

25.	The Applicant denies the allegations raised in the compliance notice and alleges that the Respondent acted unlawfully and beyond its jurisdiction by issuing the notice on the following grounds:

Retrospective application of the CPA

25.1	The Applicant raises the issue of retrospective application of the Act as a ground for review and submits that:
25.1.1	The Act commenced on 31 March 2011 ;
25.1.2	The Act does not have general retrospective effect. Schedule 2 Item 3 of the Act provides for instances where the Act may be applied retrospectively but the specific provisions dealing with Section 20, 41, 54, 55 and 56 is not applicable for the reasons discussed under the subheading for each of these sections as set out below ;
Interpretation of Schedule 2, Item 8(1) and Item 8(2) of the CPA
25.2	The Applicant makes the following submissions relating to the Respondent’s alleged reliance on Schedule 2, Item 8:
25.2.1	That it is evident that the Respondent attempts to bring the transaction within the ambit of the Act by relying on Schedule 2, Item 8(1), but that the Respondent’s actions are not based on any repealed law as provided for in that Item.
25.2.2	The Respondent does not indicate in the compliance notice what the repealed law is that it relies on to grant it jurisdiction in this matter;
25.2.3	The Respondent’s reliance on Schedule 2, Item 8(1) is unfounded and bad in law.
Reliance on Section 20(1) and (2)
25.3	The Applicant submits that neither the Respondent nor the Complainant can rely on 	Section 20(1) and (2) for the following reasons:
25.3.1	Section 20 affords a consumer the right to return goods in certain defined circumstances;
25.3.2	The Respondent did not consider the provisions of Section 20(4) which requires goods to be returned to the supplier within 10 business days after delivery to the consumer;
25.3.3	The Complainant did not return the vehicle to the Applicant within 10 business days. Instead, the Complainant utilised the vehicle extensively and travelled more than 20,000km in a period of 12 months;
25.3.4	The Respondent seeks to now direct the return of the vehicle while the Complainant already had the benefit and usage of the vehicle for an extended period;
25.3.5	This could not have been the intention of the legislature and is in direct breach of the Act;
25.3.6	The Respondent’s reliance on this section must therefore fail.

Reliance on Section 41
25.4	The Applicant submits that the Respondent cannot rely on Section 41 for the following reasons:
25.4.1	Section 41 has no retrospective applicability to agreements entered into prior to the general effective date of the Act;
25.4.2	There is in any event no evidence of false, misleading or deceptive representations on the part of the Applicant, and any such allegations are denied;
Reliance on Section 55 and 56 of the Act
25.5.	The Applicant submits that Section 56(2) provides that, in order to rely on this section, the consumer has to return the goods to a supplier within 6 months after delivery. The Complainant failed to adhere to this and utilised the vehicle for 12 months. The Respondent therefore cannot rely on this section.

Respondent’s failure to comply with Section 72 of the Act
25.6.	The Applicant submits that the compliance notice does not contain the result of an investigation by an inspector on behalf of the Respondent and bases this submission on the following:
25.6.1	That it is evident from the compliance notice that the legitimacy and truthfulness of the claims made by the Complainant have not been investigated by the Respondent;
25.6.2	That the Respondent has not engaged the Applicant and has not conducted an investigation as required in terms of Section 72(1) of the Act;
25.6.3	Since the Respondent did not conduct and complete an investigation as required by Section 72, the Respondent could not have issued the compliance notice as the completion of such an investigation is a jurisdictional prerequisite for the issuing of such a notice.

Allegations of non-cooperation
25.7	The Applicant denies the allegation made by the Respondent in the compliance notice that the Applicant did not display an effort to address the issues and submits the following: 

25.7.1	The content of the emails attached to the founding affidavit illustrates that this 	allegation is false;
25.7.2	The Applicant made it clear that it is committed to transparency and would always endeavour to assist any regulatory entity in resolving customer issues;
25.7.3	The Applicant made it clear that it would cooperate in any legal and reasonable manner;
25.7.4	This allegation was only inserted into the compliance notice to put the Applicant in a bad light;
25.7.5	The Applicant attached confirmatory affidavits from employees to confirm. 

ANALYSIS OF LAW AND FACTS

Retrospective applications of the Consumer Protection Act

26.	The Applicant has raised a point in limine in that the Respondent did not have jurisdiction and that the compliance notice was unlawful in that; 

27.	The transaction and events that occurred and the sections relied upon are not retrospective as set out in Item 3(2) that provides for the instances where the Act may have a retrospective effect;

27.1	Section 20 “Apply only with respect to goods that are deliverable or delivered to the consumer in terms of the agreement, on or after the general effective date”. The services rendered in respect of the vehicle are not covered by this provision. The vehicle which is “the goods” was delivered prior to the general effective date of the Act.
27.2	Section 41 is not listed in Schedule 3, Item 2 and is therefore not applicable retrospectively.
27.3	Section 54, 55 and 56 “Apply only with respect to any goods or services supplied to the consumer in terms of the agreement, on or after the general effective date”. The vehicle was delivered to the Complainant and the repairs were effected prior to the general effective date of the Act.

27.4	Schedule 2, Item 8(1) relates to an investigation in terms of a repealed law whereas the Respondent’s actions are not based in terms of any repealed law and also that there is no indication of which repealed law vesting the Respondent with jurisdiction to deal with the transaction. This is therefore unfounded.

27.5	The sections that have been relied upon by the Respondent, section 54(1) and (2), provides for the Consumers right to demand quality service. When considering the applicability of these specific sections of the Act to the present matter, especially in light of the Applicants submissions relating to the retrospective applicability of the Act, it is important to take note of the Tribunal’s decision in the case of City of Johannesburg vs. National Consumer Commission where it was held that;

“Schedule 2 Item (8) is an empowering provision which gives the Respondent the power to investigate breaches of certain laws, notwithstanding the fact that those laws have been repealed. As such, it is not possible for the Applicant to contravene this section and the fact that the manner in which schedule 2 item (8) was referred to in the compliance notices was incorrect…….
In the compliance notice, where it was necessary to rely on the transitional provision because the conduct arose before the Act came into operation, the Respondent should have identified which section of which repealed Act it was relying upon. Then in the section headed, nature and extent of the non-compliance, it should have set out the details regarding how the Applicant had contravened the section. 

In its heads of argument, the Respondent attempted to rectify the problem which it had conceded (as set out in 115 above) by referring to the Consumer Affairs (Unfair Business practice Act). This was one of the Acts which was repealed by the introduction of this Act (the CPA).  However, it must be noted that the Consumer Affairs (Unfair Business Practices Act) was an enabling Act and did not on its own prohibit anything.  Unfair business practices per se were not prohibited – it was only after a particular practice was identified, investigated and the Minister of Trade and Industry promulgated regulations relating to that particular practice that it became an unfair business practice.  The Consumer Affairs Act empowered the Consumer Affairs Committee (Cafcom) to investigate unfair business practices and to make recommendations to the Minister. Therefore before the Respondent can rely on the now-repealed Consumer Affairs (Unfair Business Practices) Act, it would have to identify the particular regulations under which a particular business practice had been declared unfair.  The Tribunal is not aware of any regulations which govern the conduct which the Respondent was concerned about”

27.6	The principle that was established in the Johannesburg-matter requiring the Respondent to point out which provision of the repealed Acts and transactions that it alleges were contravened by Johannesburg Municipality is equally binding and applicable in the present case. 

27.7	Schedule 2 provides for the specific retrospective applicability of certain sections of the Act and also states the exact extent to which such sections may be applied retrospectively. The sections relied on by the Respondent in the compliance notice being Schedule 2 Item 8(1); Sections 40(1) and (2); 54(1) and (2) cannot be applied retrospectively to the specific transaction for the following reasons:

27.7.1	Section 20 is only applicable “to goods delivered or deliverable to the consumer in terms of the agreement, on or after the general effective date”.

27.7.2	No provision is made in the said Schedule 2, Item 3 for the retrospective applicability of sections 40 and 41;

27.7.3	Section 54 can, in terms of Schedule 2, Item 3, only be applied retrospectively “with respect to goods or services supplied to the consumer in terms of the agreement, on or after the general effective date”. The Applicant’s argument in this regard is therefore correct.

28.	In light of the aforesaid, it is submitted that the Act, and more specifically the provisions relied on by the Respondent in the compliance notice is not applicable to this specific transaction. 

Investigation

29.	The Applicant alleges that the legitimacy and truthfulness of the claims made by the Respondent have not been investigated as envisaged in terms of 72 of the CPA by failing to;

29.1	Engage the Applicant as required in terms of Section 72(1) and therefore it was premature for the Respondent to issue a compliance notice without having complied with a pre-requisite provision of the Act which mandates the Respondent to conduct an investigation before electing to issue a compliance notice.

29.2	The principle established in the matter of City of Johannesburg vs. National Consumer Commission on the concept of investigation where the Tribunal stated that;

“an investigation is not only important in order to establish that the facts as averred by consumers are correct, an investigation is also important in order to measure those facts against the Act.  It is only when the facts are measured against relevant sections of the Act that it can be ascertained that the Applicant was engaged in prohibited conduct”, 
finds application in this matter.

29.3	It is difficult to ascertain what process was followed by the Respondent in ascertaining and establishing its facts. It would appear that it merely accepted facts that were given to it by the Complainant and did not take any further steps to investigate save for reconciliation. Investigation, as was held in the case of Johannesburg municipality, is a prerequisite and mandatory step before issuing a compliance notice. The principle that was followed is therefore equally applicable in the matter in casu.

Order to cancel a contract and refund the complainant

30.	The Respondent in the compliance notice ordered the Applicant to cancel a contract and refund the Complainant all monies paid by the Complainant (Paragraph 2.1 of the compliance notice). 

31.	In the case of Volkswagen v The National Consumer Commission the Tribunal held as follows:
“The enforcement functions of the Commission are set out in section 99 of the CPA. From a plain reading of the word and expansion that the enforcement function entails, it is clear to us that the enforcement function does not include a function to order parties to provide redress to complainants. This power has been reserved to the courts and the Tribunal, albeit in the latter instance to a limited extent.”
And
“ It is accordingly an untenable interpretation of the CPA to read into the powers and functions of the Respondent the power to impose a requirement in the compliance notice which in effect amounts to the imposition of an order for damages, refunds or return of goods. The route to achieve redress for consumer through a prosecution either for prohibited conduct or by agreement with the transgressor to pay compensation, either through the Tribunal or the Courts.

Furthermore, Section 150 of the National Credit Act, Act 34 of 2005 (“the NCA”) provides the Tribunal with a mandate to “requiring repayment to the consumer of any excess amount charged, together with interest at the rate set out in the agreement. No similar provision exists that gives the NCC the right to order repayment. It is evident that such a right should be specifically provided in terms of the Act (as it is awarded to the Tribunal) and therefore, that the Respondent, not being specifically mandated to do so, may not be allowed to order repayment.

It would therefore be beyond the powers of the Respondent to include a step in a Compliance Notice that in fact amounts to the award of damages to a Complainant. ”

32.	When the aforesaid decision is taken into account it is clear that the Commission does not have the mandate to order a refund or a replacement of the vehicle as was done in this matter. The provisions of the Act are clear in this regard and it is submitted that the position set out in the Volkswagen-matter should be applied in this matter as well.

CONCLUSION

33.	The Tribunal, after considering the papers filed of record and the oral representations canvassed by the Applicant during the hearing, makes the following ruling:
33.1	The compliance notice is hereby cancelled;
33.2	There is no order as to costs.

DATED ON THIS 11 DAY OF NOVEMBER 2013

[SIGNED]
FK MANAMELA
(Presiding Member)

Ms P Beck-Paxton (Member) and Adv N Sephoti (Member) concurring