Cancellation of orders for product not in writing: Supplier should accept cancellation (20131021759, 201310281082, 201310281117, 20131119991) [2014] ZACGSO 4 (21 May 2014)
- Citation
- [2014] ZACGSO 4
- Status
- Order
- Jurisdiction
- South Africa
- Court
- Consumer Goods and Services Ombud
- Panel
- N Melville
- Case number
- 20131021759, 201310281082, 201310281117, 20131119991
More details
- Court
- Consumer Goods and Services Ombud
- Panel
- N Melville
- Case number
- 20131021759, 201310281082, 201310281117, 20131119991
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Ombud determined that the CPA provides greater protection to consumers in cancellation scenarios, and that the supplier should accept cancellations made by the complainants, even if not strictly in writing, provided they were recorded. The supplier's refusal to accept cancellation and subsequent recovery actions were not justified under the CPA. The supplier is required to backdate acceptance of cancellation to the date of first notice and calculate refunds in accordance with the relevant statutory provisions. The supplier must also undertake remedial action to prevent recurrence of such practices.
Court disposition
The supplier is ordered to accept the cancellations as valid, backdate acceptance to the date of first notice, calculate and pay refunds as required by law, and undertake remedial action to prevent recurrence.
Orders
- The supplier must accept the cancellation of all four agreements as valid.
- The supplier must backdate acceptance of cancellation to the date on which each complainant first gave notice.
- Refunds must be calculated and paid in terms of the relevant sections of the CPA or NCA, depending on the timing of notice.
- The supplier must provide an undertaking to take remedial action to prevent recurrence of the problem.
02
Material facts
Parties
Complainants (20131021759, 201310281082, 201310281117, 20131119991)
ApplicantSupplier (Diversion Distributors)
RespondentCl (Financier)
RespondentG (Warranty Provider)
Respondent03
Procedural history
Posture
Consumer Complaint / Ombud Determination
04
Questions and positions
Legal issues
- 01
Whether the supplier is obliged to accept cancellation of orders not made in writing under the Consumer Protection Act (CPA).
- 02
Whether the cooling off period under section 16 of the CPA or section 121 of the National Credit Act (NCA) applies to these agreements.
- 03
Whether the supplier followed correct procedures in responding to cancellation attempts and subsequent recovery actions.
- 04
Whether the supplier must backdate acceptance of cancellation to the date of first notice by the complainants.
Party arguments
- Applicant
- The complainants argue that they attempted to cancel their agreements but faced obstacles from the supplier, who refused to accept cancellation and initiated recovery actions. They contend that the CPA provides greater protection and allows cancellation by written or recorded notice, and that the supplier should have accepted their cancellation attempts and refunded them accordingly.
- Respondent
- The supplier maintains that the cancellations were not valid as they were not made in the prescribed manner or within the cooling off period. The supplier asserts that recovery actions were justified and that the complainants did not comply with the contractual or statutory requirements for cancellation.
05
Court’s reasoning
Legal principles
- 01
Section 2(9)(b) Consumer Protection Act
Where there is a variance between the CPA and NCA, the provision that extends the greatest protection to the consumer prevails.
- 02
Section 14 Consumer Protection Act
A consumer may terminate a fixed term agreement at any time, subject to payment of a cancellation fee.
- 03
Section 122 National Credit Act
A consumer may terminate a credit agreement at any time, subject to payment of the settlement amount.
- 04
Section 16 Consumer Protection Act
The cooling off period under the CPA permits notice of termination in writing or other recorded form.
- 05
Section 121 National Credit Act
The cooling off period under the NCA requires delivery of notice in the prescribed manner.
06
Ratio, limits and disposition
Ratio decidendi
The Ombud determined that the CPA provides greater protection to consumers in cancellation scenarios, and that the supplier should accept cancellations made by the complainants, even if not strictly in writing, provided they were recorded. The supplier's refusal to accept cancellation and subsequent recovery actions were not justified under the CPA. The supplier is required to backdate acceptance of cancellation to the date of first notice and calculate refunds in accordance with the relevant statutory provisions. The supplier must also undertake remedial action to prevent recurrence of such practices.
Obiter and limits
- The complaints collectively indicate an undesirable business practice by the supplier in handling cancellations.
- The issue of reckless credit extension falls within the jurisdiction of the National Credit Regulator and was not determined in this order.
Court disposition
The supplier is ordered to accept the cancellations as valid, backdate acceptance to the date of first notice, calculate and pay refunds as required by law, and undertake remedial action to prevent recurrence.
- The supplier must accept the cancellation of all four agreements as valid.
- The supplier must backdate acceptance of cancellation to the date on which each complainant first gave notice.
- Refunds must be calculated and paid in terms of the relevant sections of the CPA or NCA, depending on the timing of notice.
- The supplier must provide an undertaking to take remedial action to prevent recurrence of the problem.
Source and reliance status
Consumer Goods and Services Ombud
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Consumer Goods and Services Ombud
Order
Cancellation of orders for product not in writing: Supplier should accept cancellation
Complaint ref:20131021759; 201310281082; 201310281117 and 20131119991
Complaint ref
20131021759; 201310281082; 201310281117 and 20131119991
Adjudicator:N Melville
Adjudicator
N Melville
Date:21 May 2014
21 May 2014
1.Introduction
Introduction
The Consumer Goods and Services Ombud (CGSO) received the above list of complaints regarding A products that were sold by a diversion
distributors but have in common that the purchases were financed by Cl. A further business, G, is involved as it provides the warranty
and after sales service on the products.
2.Consideration of complaints
Consideration of complaints
Taken together, the complaints raise a number of concerns that may collectively be indicative of an undesirable business practice.
The first area of concern is that in cases one and four, the complainant soon realized that they could not afford the machines:
Thus gives rise to the question regarding whether the credit was not extended recklessly. This aspect falls within the domain of the National Credit Regulator (NCR).
The second concern is that in all four cases, the complainants experience varying degrees of difficulty in the cancellation of the agreements
There is a matter of clarity as to whether the section 16 CPA cooling off period or the section 121 NCA cooling off period would apply. The former permits notice of termination in writing orby other recorded form, while the latter requires the delivery of a notice in the prescribed manner. Section 2(9((b) of CPA provides that the provision that extends the greatest protection to the consumer will prevail if there is variance between two acts. In this case, the CPA offers the greater protection.
by other recorded form
Beyond the cooling off period, in terms of section 122 of NCA, a consumer may terminate an agreement at any time, subject to payment of the settlement amount, and under section 14 of CPA, a consumer may cancel a fixed term agreement subject to the payment of a cancellation fee. In all four complaints, it appears that the consumers’ attempts to cancel the agreements were thwarted and then recovery action resorted to. It is not clear whether the correct processes were followed in this regard.
3.Recommendation
Recommendation
The supplier is given the opportunity to resolve all four cases by backdating the acceptance of the respective cancellations to the dates on which the complainants say they first gave notice of intention to cancel the agreements and calculated refunds in terms of the relevant sections of the CPA or in NCA, depending upon when the notice was given. Further, the supplier is requested to give an undertaking that it will take appropriate remedial action to prevent the recurrence of the problem.
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