Masindi v Ramco Motor Company CC (NCT/122119/2018/75(1)(b)) [2019] ZANCT 90 (26 May 2019)

IN THE NATIONAL CONSUMER TRIBUNAL

HELD IN CENTURION

Case number: NCT/122119/2018/75(1)(b)

In the matter between:

TSHAMUNWE HERRY MASINDI APPLICANT

and

RAMCO MOTOR COMPANY CC RESPONDENT

Coram:

Dr L. Best: Presiding Member

Ms P. Beck: Tribunal Member

Mr A. Potwana: Tribunal Member

Date of hearing: 17 May 2019

Date of judgment: 26 May 2019

JUDGMENT AND REASONS

THE PARTIES

1. The Applicant is Tshamunwe Herry Masindi, an adult male (“the Applicant”).

2. The Respondent is Ramco Motor Company CC, a Close Corporation that is duly registered in terms of the Close Corporations Act No. 69 of 1984 of the Republic of South Africa; with registration number 1997/040774/23 (“the Respondent”).

THE APPLICATION

3. The Applicant applied for leave to refer its complaint, which was non-referred by the National Consumer Commission (the “NCC” or “Commission”), directly to the National Consumer Tribunal (the “Tribunal”) in terms of section 75(1)(b) of the Consumer Protection Act, 2008 (the “CPA”); which provides that:

“If the Commission issues a notice of non-referral in response to a complaint, other than on the grounds contemplated in section 116, the complainant concerned may refer the matter directly to the consumer court or the Tribunal, with leave of the Tribunal.”

4. Following a Tribunal hearing held on 1 March 2019, the Applicant was granted leave on 12 March 2019 to refer his complaint directly to the Tribunal; following a Non-Referral Notice with Reference Number 12/1/1/08-17/02494 issued by the National Consumer Commission (“the Commission”) on 15 November 2018. The judgment was issued by the Tribunal Registrar on 14 March 2019.

5. Having been granted leave, hearing convened on 17 May 2019 was to consider the merits of the Application.

6. The Applicant seeks a refund of all monies paid to the Respondent [an amount of R7881.00 for repairs done on the vehicle and an additional amount of R1133.00 for a service]; re-imbursement for all other expenses incurred to date to release the vehicle from the storage arranged without the applicant’s permission by the Respondent and for repairs to get the vehicle in a working condition [R59 700.00]; and compensation for loss of earnings. Furthermore the Applicant seeks an appropriate order that the Tribunal may issue as a result of the Respondent failing to perform and fulfil its duties and legal responsibilities towards a consumer in terms of the CPA.

7. The Respondent did not oppose this matter; nor did it appear at the hearing. The Tribunal was satisfied that the service requirements in terms of Rule 30(1)(b) were met. The Applicant served the application on the Respondent via registered mail. On the date of the hearing the Tribunal panel hearing the matter was satisfied that the notice of set down was adequately served on the Respondent. The matter proceeded on a default basis.

BACKGROUND

8. The Applicant is a consumer, who had repairs done to his vehicle by the Respondent. The Applicant received various SMS’s from the Respondent offering a free diagnostic, engine, electronics and gearbox check; as well as a discount on spares. On 28 March 2017, the Applicant took his vehicle to the Respondent for a free 28 point diagnostic check. The Applicant received the diagnostic report; which indicated that he needed to have his brake pads and shocks replaced; and a few other items attended to. He paid an amount of R7881.00 for repairs to be done on his vehicle and an additional amount of R1133.00 for a service.

9. On 29 March 2017, the Applicant fetched his vehicle from the Respondent. While driving to Johannesburg, his vehicle broke down. When the Applicant opened the bonnet of his vehicle; he found that screws were missing from some parts; and that the water bottle was empty. The Applicant had to have his vehicle towed to a location close-by to the proximity of the Respondent. On 30 March 2017, the Respondent fetched the vehicle and took it to the Respondent’s workshop. The Respondent informed the Applicant that it had replaced the water bottle. The Applicant requested the Respondent’s manager to show him the repair work that had been conducted. Upon inspection, it was discovered that the Respondent had placed water and oil in the water bottle of the vehicle. The Respondent informed the Applicant; that he now had to buy a new or second hand engine.

10. The Applicant requested to address this matter with the Manager. After not receiving any satisfaction from the Respondent; the Applicant filed a complaint with the Motor Industry Ombudsman of South Africa (“MIOSA”).

11. On 13 July 2017; MIOSA issued a finding in favour of the Applicant. MIOSA concluded that the Respondent must repair the Applicant’s vehicle at its own cost as well as pay the Applicant any further consequential damages that may have been caused as a result of the repairs it had performed on the vehicle. The Respondent did not adhere to the MIOSA recommendations. The Applicant thereafter; referred his complaint to the Commission. The Commission issued a notice of non-referral.

12. The Applicant approached the Tribunal after receiving the notice of non-referral from the Commission.

THE HEARING

13. Having been granted leave to refer the matter directly to the Tribunal, a hearing was held on 17 May 2019 in Centurion for the Applicant to present the matter; and for the Tribunal to consider the merits of the application.

14. The Applicant represented himself and explained that as a layperson he may not always be as articulate as a legally qualified person would be when setting out the merits.

15. The Applicant explained his case and detailed his reasons for the allegations of poor quality service and dissatisfaction with the manner in which the Respondent performed work on his vehicle. Notably that when the Applicant left his vehicle with the Respondent it was in working condition; yet after the work performed by the Respondent, the vehicle broke down and could not be driven. The Applicant regards this as contraventions of the CPA; specifically section 54.

16. The Applicant submitted that initially he required the Respondent to repair his vehicle to the required standard. However, in light of the redress process taking so long, he had no choice but to start repairing his vehicle at his own cost. He therefore wishes to be refunded for the cost he had to incur to repair his vehicle as well as the additional costs he incurred for the towing of his vehicle and the storage costs. The Applicant detailed these as follows:

a) Towing costs when the vehicle broke down after the Applicant collected if from the Respondent after the repairs: R1500.00;

b) Storage costs when the Respondent had the Applicant’s vehicle placed in storage without permission: R7000.00;

c) Towing the vehicle to new service provider for repairs to get the vehicle drive-able again: R3000.00;

d) Labour costs of the new service provider: R10 000.00;

e) Second-hand engine to replace the engine damaged by the Respondent: R35 000.00, and

f) Parts required by the new service provider: R3200.00.

17. The Applicant also wished to be compensated for loss of earnings as the vehicle was due to be used for business purposes; however the Applicant was unable to quantify this or provide sufficient detail in this regard.

18. The Applicant indicated in layperson’s terms that his submission is that the Respondent failed to perform its responsibilities in terms of the CPA; and failed to conduct business as expected of a service provider or business in terms of the CPA. The Applicant requested that the Tribunal should consider this inappropriate conduct of the Respondent; and that this should be sanctioned accordingly.

ISSUES TO BE DECIDED

19. The issues the Tribunal is required to decide are; firstly whether the Respondent contravened the CPA by failing to provide the Applicant with quality service, as contemplated in Section 54(1); secondly the applicability of Section 55(2) in this matter; and thirdly whether by these acts, the Respondent’s actions constitute prohibited conduct.

LEGAL PRINCIPLES

20. The Applicant relies on Section 54(1) of the Act, which deals with the consumer’s right to demand quality service and provides that: -

“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) ….; 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.”

21. Subsection (2) covers the failure to perform a service; 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; and provides that: -

“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”.

22. The Applicant alleged that throughout his dealings with the Respondent he had been treated poorly and therefore the Respondent had acted in contravention of section 54(1)(b). In terms of section 54(2), when a supplier fails to perform a service to the standards contemplated in the section, the consumer may require the supplier to remedy any defect in the quality of the services performed or goods supplied; or refund the consumer a reasonable portion of the price paid for the services performed and goods supplied, having regard to the extent of the failure.

23. The Applicant further indicated reliance on Section 55(2) of the Act, which deals with the consumer’s rights to safe, good quality goods, as follows:

“…..every consumer has a right to receive goods that:…

(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; …”

24. The Applicant alleged that his vehicle was in a good working condition, until such time the Respondent carried out repairs to the vehicle. The Applicant alleged that after oil and water was mixed in the water bottle of the vehicle, the engine failed to function; and he was then informed by the Respondent that the engine needed to be replaced.

25. The Applicant’s vehicle is not in good working order since he returned it to the Respondent after it broke down subsequent to the Respondent having worked on the vehicle. In fact the vehicle is unusable, requiring the engine to be replaced in order to be functional again.

26. Although the Applicant placed reliance on Section 55(2) in his opening argument, he did not pursue same with detail or evidence during his submissions.

27. Had the Applicant made detailed submissions regarding his reliance on Section 55(2); the Tribunal would contend that this Section was not intended to regulate repairs but to lay a foundation for protecting consumers, as buyers of goods (not of services), through a statutory warranty that is codified in section 56(1) which applies only to “producer or importer, the distributor and the retailer”. The omission of suppliers of services such as repairers reveals that section 55 was not meant to protect consumers from suppliers of services such as repairs. Section 54 does that. It is also telling that section 55(1) refers to “goods bought”.

28. Based on the evidence presented to the Tribunal, the Respondent failed to provide quality service to the Applicant. The Respondent did not perform the services of repairs to the Applicant’s vehicle in a manner and quality that the Applicant could have been generally entitled to expect. This is a violation of a consumer’s rights to demand quality services and constitutes a contravention of section 54 of the CPA.

29. Prohibited conduct is defined in the CPA as follows:

“Prohibited conduct means as act or omission in contravention of this Act.”

The Respondent’s failure to comply with Section 54 of the Act clearly constitutes prohibited conduct.

RELIEF SOUGHT

30. The Applicant’s prayer for a refund of all monies paid to the Respondent [an amount of R7881.00 for repairs to the vehicle and an additional amount of R1133.00 for a service] is able to be remedied by section 54(2)(b) of the CPA which states as follows:

“If a supplier fails to perform a service to the standards contemplated in subsection (1), the consumer may require the supplier to……

(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 failure.”

31. With regard to the Applicant’s prayer to be re-imbursed for costs incurred to get the vehicle back to a functional state, it bears noting that the Tribunal has no powers to award damages or award costs to compensate for loss of income and/or reimbursement of said costs. These are indirect costs that are not provided for in the CPA.

32. Section 115(2) of the CPA provides: –

“(2) A person who has suffered loss or damage as a result of prohibited conduct or dereliction of required conduct –

(a) may not institute a claim in a civil court for the assessment of the amount or awarding of damages if that person has consented to an award of damages in the consent order; or

(b) if entitled to commence an action referred to in paragraph (a), when instituting proceedings, must file with the registrar or clerk of the court a notice from the Chairperson of the Tribunal in the prescribed form –

(i) certifying whether the conduct constituting the basis for the action has been found to be a prohibited or required conduct in terms of this Act;

(ii) stating the date of the Tribunal’s finding, if any; and

(iii) setting out the section of this Act in terms of which the Tribunal made its finding, if any”.

33. Clearly, section 115 of the CPA does not extend the Tribunal’s powers to order parties to provide redress or award damages to complainants. This power is reserved for the courts. In the matter of Audi SA (Pty) Ltd v The National Consumer Commission, the Tribunal stated that:[1]

“The powers of the Tribunal are similarly circumscribed and do not extend to the Tribunal awarding damages to parties. At its high water mark, the CPA empowers the Tribunal to impose an administrative penalty, order refunds……..and issue a certificate of prohibited conduct from the Chairperson of the Tribunal as provided for in Rule 29 after a finding that prohibited conduct took place, to enable a consumer to approach the high court for damages.”

34. If the Applicant wishes to pursue damages or compensation for financial harm, the Applicant is at liberty to follow the process set out in section 115(2) of the CPA.

CONCLUSION

35. For the above reasons, the Tribunal is persuaded that the Respondent was legally liable for providing quality service within the rights of the consumer as laid out in Section 54(1). It is the Tribunal’s view that the Respondent failed to do so. The Respondent has thus committed prohibited conduct.

36. The Respondent failed to respond to the Applicant’s application to the Tribunal, despite being properly served. Further, the Respondent did not co-operate with MIOSA, the industry ombud set up to provide an avenue for consumers and suppliers to resolve disputes. This behaviour is inexcusable and exploitative to unrepresented consumers such as the Applicant. The Applicant still does not a vehicle in driving condition; and is incurring costs to restore the vehicle to its state of functionality which existed before the Respondent undertook to work on and service the vehicle.

ADMINISTRATIVE FINE

37. The Applicant, as an unrepresented consumer, did not make submissions to the Tribunal regarding the imposition of an administrative fine. The Applicant did, however, request that the Tribunal should consider the inappropriate conduct of the Respondent; and that this should be sanctioned accordingly.

38. Section 3 of the CPA: Purpose and Policy of the Act, states as follows:

“(1) The purposes of this Act are to promote and advance the social and economic welfare of consumers in South Africa by…..

(c) promoting fair business practices;

(d)protecting consumers from -

(i) unconscionable, unfair, unreasonable, unjust otherwise improper trade practices; ….”

These provisions of the CPA place a responsibility squarely on the Tribunal as a creature of statute enjoined to ensure the implementation of the CPA; and to ensure that consumers receive the protection of their rights as envisaged in section 3 of the CPA.

39. In the light of this, the Tribunal is of the view that the conduct of the Respondent warrants an imposition of a fine in order to send a strong message to unscrupulous suppliers who take advantage of consumers.

40. In terms of section 112 of the Act, the Tribunal: -

(1) “may impose an administrative fine in respect of a prohibited or required conduct.

(2) An administrative fine imposed in terms of this Act may not exceed the greater of

(a) 10 per cent of the Respondent’s annual turnover in the preceding financial year; or

(b) R1 000 000.”

41. When imposing the fine, the Tribunal must consider certain factors such as the nature, duration, gravity and extent of the contravention; the level of co-operation of the Respondent with the Commission and the Tribunal; the behaviour of the Respondent; any loss or damage suffered as a result of the contravention; the level of profit derived and whether the Respondent has previously been found in contravention of this Act.

42. In the case at hand, the Applicant continues to suffer the inconvenience of not having his car in a driveable condition more than two years after taking his car to the Respondent. He has to pay huge sums of money in an attempt to restore his vehicle into a drivable condition. However, in view of the fact that the Applicant can request a certificate of prohibited conduct from the Chairperson of the Tribunal and institute a civil claim, the Tribunal will not take these factors into account when determining an appropriate administrative fine. But, the Tribunal takes a very dim view of the Respondent’s behaviour which was discourteous; unfair; and possibly deceptive. The Respondent lured the Applicant through cell phone messages, and most probably numerous other motorists, by offering him discounts on services and repairs. It then made undertakings about and was paid for services which it failed to

deliver. To make things worse, instead of rendering a quality service to the Applicant, the Respondent damaged the Applicant’s

vehicle. The Respondent’s destructive conduct is only exceeded by its callousness in dealing with the Applicant and failure to comply with the recommendation made by the MIOSA, an ombud recognised in terms of section 70 of the CPA. The Tribunal notes that the market circumstances within which the Respondent operates involves expensive and very important goods which consumers need to accomplish various daily tasks. For most consumers, motor vehicles are the most treasured possessions after their homes. Without the convenience of a driveable vehicle, the lives of vehicle owners can be nightmarish. In the present matter, the Applicant’s nightmare is evidenced by his expensive endeavours to have his vehicle repaired. The Tribunal would be failing in its duty if it cannot express its disdain for the Respondent’s behaviour by imposing an appropriate administrative penalty.

43. The Tribunal considers it a mitigating factor that the Respondent has not previously been found to have contravened the CPA.

44. In view of the fact that the Respondent’s annual turnover is unknown to the Tribunal, the Respondent having not to defended the application, and the above-mentioned the Tribunal is of the opinion that an administrative fine of at least 10% of the prescribed maximum of R1000 000.00 is appropriate This penalty is proportional in severity to the Respondent’s blameworthiness and the nature of the offence. Hopefully, such a penalty will also send a strong message to repairers of motor vehicles and other service providers that treating consumers with the kind of disrespect that the Respondent showed to the Applicant will not be tolerated.

ORDER

45. Accordingly, the Tribunal makes the following order:

1) The Respondent is ordered to refund the Applicant an amount of R9014.00 [comprising R7881.00 for repairs to the vehicle and of R1133.00 for a service] within 30 ordinary days of the issuing of this order;

2) An administrative fine of R100 000.00 [one hundred thousand rands] is imposed on the Respondent;

3) The Respondent is to pay the administrative fine [R100 000.00] into the National Revenue Fund referred to in section 213 of the Constitution within 90 days from the date of issue of this judgment;

4) The Applicant’s request to be reimbursed the costs detailed in point 16 of this judgment and any loss of income is refused; and

5) There is no order as to costs.

Dated at Centurion on this 30th day of May 2019.

[Signed]

DR L BEST

PRESIDING MEMBER

Ms. P. Beck and Mr. A. Potwana concurring.

[1] NCT/4058/2012/101(1)(p) CPA [2013] ZANCT 4 at para 30.