IN THE NATIONAL CONSUMER TRIBUNAL
HELD IN CENTURION

Case number: NCT/4718/2012/101(1)(P) CPA
In the matter between:

INKS MEDIA AND DIGITAL MACHINE SUPPLIES CC t/a IMDM		             	             APPLICANT
and 
NATIONAL CONSUMER COMMISSION	 				                     RESPONDENT

Coram:
Prof. J.M. Maseko	– 	Presiding Member
Adv. N. Sephoti 		– 	Tribunal Member
Adv. J Simpson	 	– 	Tribunal Member 

Date of Hearing 		– 	19 February 2014  
__________________________________________________________________________________

JUDGMENT AND REASONS
__________________________________________________________________________________

APPLICANT

1.	The Applicant in this matter is Inks Media & Digital Machine Supplies CC t/a IMDM; Incorporated in South Africa as a Close Corporation with Registration Number 2009/122740/23 (“the Applicant”) and with its principal place of business situated in Durban.

2.	The Applicant’s Founding Affidavit is deposed to by Mr Iqbal Mohamed Essop Bam who was a director in the Applicant’s business.  Mr Bam submitted as such in paragraph 1.1 on page 1 of his founding affidavit – page 54 of case File (“Bam”).
  
3.	At the hearing of 19 February 2014, the Applicant was represented by Adv. H. van der Vyver of Group 21 Advocates.

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, 68 of 2008 (“the CPA”). (“The Respondent”).

5.	At the hearing of 19 February 2014, the Respondent did not attend and nor was it represented.

THE COMPLAINANT

6.	The Complainant is mentioned in the Compliance Notice challenged in this case, as Mr A. Kaas an adult male residing in Old Mill Park in the KwaZulu Natal Province (“the Complainant”). 

JURISDICTION OF THE TRIBUNAL

7.	This Tribunal derives jurisdiction to adjudicate this matter from section 101(1) of the CPA. The Applicant has applied for the review and setting aside, of a compliance notice issued by the Respondent to the Applicant in terms of Section 100 (1) of the CPA.

BACKGROUND

8.	The unopposed evidence of the Applicant is as follows:

8.1	On 26 October 2010, the Complainant purchased and took possession of a Solaris 3.2 Metre 4 Colour 4 head printing machine from the Applicant. The purchase price was R330 000.00. According the Applicant, the said machine was in good working order at the time of purchase and delivery as well as installation by employees of the Applicant.

8.2	The said machine came with a warranty which covered the machine itself for a period of 2 years. The print heads and software dongles were each covered for a period of three months from the date of installation.

8.3	The warranty term of the machine in the agreed terms and conditions also provided that the warranty would not apply to any damage caused by or resulting from:

8.3.1	The storage or operation of the printer in an improper environment;

8.3.2	The placement of the printer in an inappropriate environmental setting such as:

8.3.2.1	High temperatures;

8.3.2.2	Humidity;

8.3.2.3	Dust; and 

8.3.2.4	Installation of the machine by someone other than an IMDM certified operator.

8.4	The Applicant also states that it installed the said machine, using its own employees, on 29 October 2010. This was at the original location before the machine was subsequently moved to another location just under a year later. We amplify on this point below.

9.	In August 2011, and whilst the said machine was still in good working condition, the Complainant moved it to another location, without the knowledge and assistance of the Applicant. The Applicant avers that this was in direct violation of the terms of the two year warranty between the parties. 

10.	During August 2011 the Complainant experienced problems with the machine and reported it to the Applicant. The Applicant repaired the machine but warned the Complainant that the machine had been moved contrary to the warranty conditions and had sustained damage due to the conditions it had been operated under. 

11.	The Complainant then lodged a complaint with the Respondent. After receiving a complaint, the Respondent sent a Conciliation Notice inviting the Applicant to a conciliation hearing which was to be held on 15 February 2012, at the Respondent’s Offices in Centurion. The Applicant attended and refused at that conciliation hearing to refund the Complainant the sum of R330 000.00 claimed and instead offered to repair the machine.

12.	The main grounds for the refusal by the Applicant had been that the problems with the machine had occurred as a direct result of the Complaint violating the terms and conditions of the warranty concluded at the time of purchase. The details of these terms are covered under the grounds of the application below.

13.	During May 2012 the Respondent issued a compliance notice to the Applicant. Based on the contents of the Applicant’s application, the compliance notice was dated 30 March 2012 but only sent to the Applicant on 11 May 2012.

14.	On 30 May 2012 the Applicant submitted the present application in terms of Section 101(1) of the CPA for an order setting the Compliance Notice aside.

THE CONTENTS OF THE COMPLIANCE NOTICE

15.	The compliance Notice on the main finds the Applicant to have contravened certain sections of the CPA.  It states, in part, that:

15.1	After the failed conciliation, the refusal of the Complainant to have the Applicant repair the machine and the refusal of the Applicant to refund the Complainant, the Respondent concluded at paragraph 1.4 of the Compliance Notice, that the Applicant had contravened:

15.1.1	Schedule 2 Item 8(1); 
15.1.2	Section 20(1) and (2); 
15.1.3	Section 41(1); 
15.1.4	Section 54(1);
15.1.5	Section 55(2); and 
15.1.6	Section 56(2) (all) of the CPA.

15.2	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 law that occurred during the period of three years immediately before the general effective date of the CPA – Schedule 2 Item 8(1).

15.3	Section 20(1) and (2) are in addition to and not a substitution for:

15.3.1	The right to return unsafe or defective goods, contemplated in section 56; or

15.3.2	Any other rights in law between a supplier and consumer to return goods and receive a refund.

15.4	The Applicant is directed (by that Compliance Notice), to refund the Complainant the sum of R300 000.00 and to do so within 15 days from the date of the issue of that Compliance Notice – which would have lapsed on the 18th April 2012.

THE GROUNDS OF THE APPLICATION

16.	The grounds of the objection to the Compliance Notice, according to the application are, in summary, that:

16.1	The Respondent failed to consider that the sale had been concluded subject to the standard terms and conditions and with the benefit of a warranty which covered the printer for two years from the date of installation;

16.2	The print heads and software dongles had been each covered for a period of three months from the date of installation; 

16.3	The warranty had specifically stated that it would not operate to any damage caused by or resulting from:

16.3.1	The storage or operation of the printer in an improper environment; and/or

16.3.2	The placement of the printer in an inappropriate environmental setting such as high temperatures or humidity; and/or

16.3.3	The installation of the printer by someone other than an operator certified by the Applicant.

16.4	The Respondent did not take into account that upon the Applicant’s receiving notice of a lodged complaint against it, the Applicant investigated and established that the Complainant had materially violated the terms of the two year warranty by:

16.4.1	Transporting or moving the machine without informing the Applicant and/or not utilising the services of an installer accredited by the Applicant to facilitate the transporting or moving;

16.4.2	Utilising the services of people who were under the influence of alcohol in relocating the machine to another place;

16.4.3	Placing the machine in an inappropriate operating environment -  in an outdoor area sheltered by a thatched roof;

16.4.4	Causing the problems later reported with the machine by the incorrect removal of the machine to an environment that was detrimental to its proper functioning.

16.5	When the Applicant attempted to assist the Complainant on the 27th of August 2011, by sending out a technician to restore the machine to its proper working condition, at the Applicant’s own cost, the Complainant was advised that such assistance would not provide a long term solution and that operating conditions had to be changed for the machine to work properly.

16.6	Despite the advice to move the machine to a more suitable location, the Complainant had failed to do so. This refusal to abide by this advice led to the termination of the warranty. This point was also not challenged or opposed.

17.	At paragraph 2.4 of the application, the Applicant catalogues six issues that were detected by its technician when attending to the problems of the machine after its unilateral relocation by the Complainant. In paragraph 2.6 of the application, the Applicant lists five interventions that its technician carried out on site to remedy the problems as diagnosed. All this time, the Applicant had not admitted any form of responsibility or obligation to make these interventions. The Applicant continually contended that the problems had resulted from the conduct of the Complainant – violating the terms of the warranty.

CONSIDERATION OF THE ISSUES IN DISPUTE

18.	The Registrar of the NCT issued a notice of complete filing to both parties on 14 June 2012. The notice states that the Respondent has 15 business days from the date of the notice to file an answering affidavit. The Respondent has, to date, never filed an answering affidavit. The Applicant did not file an application for default judgment.

19.	In accordance with Rule 13(5) of the Rules of the Tribunal any fact or allegation in the application not specifically denied in an answering affidavit will be deemed to have been admitted.

20.	The Applicant’s allegations are not contested by the Respondent in any way and are therefore deemed to be admitted. There are no issues in dispute.

THE APPLICABLE LAW

21.	In accordance with section 100 of the CPA, a compliance notice must set out-

(a)	details of the nature and extent of the non-compliance; and

(b)	Any steps that are required to be taken and the period within which those steps must be taken; and any penalty that may be imposed in terms of this Act if those steps are not taken.

Compliance with the requirements of section 100(3) of the CPA

22.	The Respondent in its compliance notice states that the Applicant’s conduct amounts to a contravention of the following provisions of the Act:

22.1.1	Schedule 2 Item 8(1); 

22.1.2	Section 20(1) and (2); 

22.1.3	Section 41(1); 

22.1.4	Section 54(1);

22.1.5	Section 55(2); and 

22.1.6	Section 56(2) (all) of the CPA.

23.	In this regard it must firstly be noted that the CPA came into operation on 31 March 2011. The sale and delivery of the machine took place during October 2010.
 
24	The application of the CPA to pre-existing transactions and agreements is limited to the extent provided for in Schedule 2, Item 3. This provision states, in brief, that the CPA does not find application to pre-existing transactions and agreements, with certain exceptions. 

25	Schedule 2, Item 3 of the CPA provides that certain sections of the CPA, as listed in the first column of the provided table, apply to a pre-existing agreement between a supplier and a consumer, to the extent indicated in the second column, as if that pre-existing agreement would have been subject to the CPA if the CPA had been in effect at the time the agreement was concluded. 

26	The extent of the CPA’s application to pre-existing agreements is inter alia the following:

•	Goods that are deliverable or delivered to the consumer in terms of the agreement, on or after the general effective date;

•	A notice, document or visual representation that is required to be produced, provided or displayed to the consumer, on or after the general effective date;

•	Goods supplied to the consumer in terms of the agreement, on or after the general effective date; 

•	Any transactions occurring in terms of the agreement, on or after the general effective date; 

•	Any purported amendment to the agreement made, on or after the general effective date;

•	Goods or services supplied to the consumer in terms of the agreement, on or after the general effective date; or

•	An amount paid or payable by the consumer in terms of the agreement, on or after the general effective date.

27	The Complainant purchased the machine from the Applicant during 2010 and it was delivered at the same time, evidently before the effective date of the CPA, being 31 March 2011. The CPA is therefore not applicable to the purchase and delivery of this machine.

28.	It must be noted that the Respondent in its compliance notice also did not rely on any specific repealed law. The Respondent merely alleged that the Applicant contravened Schedule 2, Item 8(1) of the CPA.  The compliance notice, in terms of this requirement, has to set out the details of the nature and extent of the non-compliance relating to the repealed law.

29.	Without reference to the repealed law that has allegedly been contravened by the Applicant, the Tribunal would not be able to determine whether and which repealed law, if any, has been contravened and the Compliance Notice would thus not comply with the provisions of Section 100(3).  

30.	In the Volkswagen case it was held that in order for the Respondent to rely on the continued application of repealed laws, it must show which law it is relying on. It also had to demonstrate exactly the applicability to the situation and proof of the alleged contraventions to the extent required in terms of that law. Schedule 2, Item 8 in itself cannot be contravened as it is an enabling provision.

CONSIDERATION OF THE CPA

31.	Although it has been found that the CPA is not applicable to the sale and delivery of the machine, the Tribunal in any event briefly considered the application of the CPA to the facts placed before it.

32.	The citation of the provisions of section 20(1) and (2) in paragraph 1.4 of the Compliance notice, does not appear to have any relevance to the facts of the complaint. The section refers for instance to direct marketing and refunds after cooling off periods of 10 business days. But the complaint arose after a period of almost a year of the installation of the printing machine. Further, there is no evidence before the Tribunal of the machine having been purchased as a result of direct marketing. 

33.	The provisions of section 41(1) and (2) of the CPA deal with issues of false, misleading or deceptive representation to a consumer. This section does not appear to have any direct application to the facts of the matter at hand. There is no evidence before the Tribunal or indication of any representations having been made by the Applicant to the Complainant in the matter. 

34.	Section 56 of the CPA cited in the Compliance Notice relates to the period within which a consumer may claim for a refund, repair or replacement of goods. The evidence clearly shows that the Complainant only raised concerns regarding the machine approximately 8 months after the purchase, which is in any event outside the period of 6 months provided for in the section. 

ORDER

35.	The Compliance Notice issued by the Respondent against the Applicant, dated 30 March 2012, is hereby cancelled in its entirety in terms of section 101(2) of the Consumer Protection Act, 68 of 2008.

36.	No order is made as to costs.

Thus done and handed down at Centurion this 20th day of February 2014.

{signed}
Prof. J. M. Maseko
Presiding Member

Adv. Neo Sephoti (Tribunal Member) and Adv. John Simpson (Tribunal Member) concurring.