National Consumer Commission v Hanmon International CC (NCT/308359/2024/100(6)(a)) [2024] ZANCT 8 (19 April 2024)

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/308359/2024/100(6)(a)

In the matter between:

NATIONAL

CONSUMER COMMISSION

APPLICANT And

HANMON

INTERNATIONAL CC

RESPONDENT

Coram:

Adv C Sassman - Presiding Tribunal member

Dr MC Peenze - Tribunal member

Dr A Potwana - Tribunal member

Date of the hearing: - 16 April 2024

Date of judgment: - 19 April 2024

JUDGMENT AND REASONS

THE

PARTIES

1. The applicant is the National Consumer Commission (the applicant), a juristic person established in terms of section 85(1) of the Consumer Protection Act 68 of 2008 (CPA). The applicant is responsible for enforcing the CPA by monitoring the consumer market to ensure prohibited conduct and offences are prevented or detected and prosecuted.

2. At the hearing, the applicant was represented by Imrhan Magoro, the applicant’s legal advisor.

3. The respondent is Hanmon International CC (the respondent). The respondent is a close corporation registered in terms of the laws of South Africa, with registration number 1959/010419/23, and is defined as a supplier in section 1 of the CPA.

4. The respondent’s owner, Yunhan Xiao, attended the hearing merely to observe the proceedings.

TERMINOLOGY

5. Unless indicated otherwise, a reference to a section in this judgment refers to a section in the CPA.

6. A reference to a rule in this judgment refers to the Rules of the Tribunal[1].

APPLICATION TYPE AND

JURISDICTION

7. This is an unopposed application made in terms of section 100(6)(a) for the issuing of an administrative fine on the respondent for failure to comply with a compliance notice issued in terms of section 100(1) by the applicant on 27 June 2023.

8. The Tribunal has jurisdiction to hear this matter in terms of section 27(a)(i) of the National Credit Act 34 of 2005.

BACKGROUND

9. On 4 November 2022, the South African Revenue Service notified the applicant that it had issued a detention notice in terms of section

113(8)(a) of the Customs and Excise Act[2]. The detention notice alerted the applicant that the respondent had imported certain goods, which were detained. The goods were detained on suspicion that the importation thereof contravened certain provisions of the CPA. As a result, the applicant formed a reasonable suspicion that the respondent had contravened certain provisions of the CPA and investigated the matter.

10. The applicant’s investigation concluded that the respondent had imported 17 880 scarves into South Africa and, in doing so, had contravened section 24(5) by failing to apply a trade description to the goods, which discloses its country of origin and any other prescribed information. The respondent further contravened section 22(1) by failing to display a notice, document or visual representation in plain language as required for the imported goods. In addition, the respondent also contravened regulation 6(1)(a)(i) and (b) by failing to comply with the product labelling and trade description requirements prescribed in the CPA.

11. On 27 June 2023, the applicant issued a compliance notice and emailed a copy to the respondent, its owner, and its appointed representative, Riyaad Jonkers. The notice detailed the respondent's contraventions and provided a timeframe for certain steps to be taken regarding the imported goods. It also advised the respondent of the steps it could take to have the notice reviewed and the consequences of failing to comply with it. On 15 September 2023, the respondent’s representative acknowledged receipt of the notice, but no action had been taken to comply with it. On 18 September 2023, the applicant resent the notice to the importer using the email address provided on 15 September 2023. However, the respondent failed to respond or comply.

THE APPLICANT’S

SUBMISSIONS

12. The applicant submitted that it acted in accordance with the prescribed legal requirements when it issued the compliance notice. The respondent has failed to comply with the notice since the imported goods have not been destroyed or exported off the continent of Africa as required. The respondent has not provided any reasons for not complying with the notice.

13. The applicant initially listed four prayers in its application but abandoned three at the hearing, leaving only a request that an administrative fine of R1 000 000.00 (one million rand) or 10% of its annual turnover be imposed on the respondent in terms of section 100(6)(a).

CONSIDERATION OF

SUBMISSIONS

14. The Tribunal considered the applicant's submissions and is satisfied that the respondent elected not to comply with the notice and provided no valid reason for failing to do so. The respondent’s disregard for the legislation and the applicant as a regulatory authority justifies the Tribunal imposing an administrative fine on the respondent.

CONSIDERATION OF AN

ADMINISTRATIVE FINE

15. The applicant requested the Tribunal to impose an administrative fine on the respondent. Section 112(3) of the CPA outlines the factors the Tribunal must consider when determining an appropriate fine. These are listed and discussed under separate sub-headings below.

The nature, duration, gravity, and extent of the contravention

There is no evidence that the respondent has continuously engaged in this type of conduct, but the respondent’s conduct, in this instance, could harm consumers by exposing them to various allergies.

Any loss or damage suffered as a result of the contravention

There is no direct evidence of any particular consumer suffering a loss in this matter, but the applicant incurred costs in travelling to inspect the respondent’s consignment and investigating the matter.

The behaviour of the respondent

The respondent appears to have acted with a disregard for consumer rights, the legislation enacted to protect consumers and the instructions from the regulatory authority mandated to enforce compliance in the industry.

The market circumstances in which the contravention took place

It is unclear who the intended market was for the imported goods, and no submissions were made in this regard.

The level of profit derived from the contravention

There is no evidence that the respondent derived any profit from the contravention.

The degree to which the respondent has cooperated with the National Consumer Commission and the Tribunal

The applicant submitted that the respondent initially cooperated with their investigation but stopped doing so at some point.

Whether the respondent has previously been found in contravention of the CPA The applicant did not submit any evidence of prior investigations or enforcement instituted against the respondent.

CONCLUSION

16. The applicant plays a pivotal role in enforcing compliance with the CPA and protecting consumer rights. Failure to comply with a notice issued in terms of section 100(1) is viewed in a serious light and cannot be condoned. The Tribunal must ensure that consumers’ rights are protected and that suppliers comply with the legislation and instructions of regulatory authorities. Imposing an administrative fine on the respondent is, in this instance, warranted as a punitive measure.

17. Regarding the quantum of the administrative fine, section 112(2) provides that an administrative fine imposed may not exceed the greater of 10% of the respondent’s annual turnover during the preceding financial year or R1 000 000.00 (one million rand). The applicant did not submit any evidence of the respondent's turnover. The Tribunal can, however, still impose a fine limited to a maximum of R1 000 000.00 (one million rand).

18. The Tribunal finds a fine of R50 000.00 (fifty thousand rand) appropriate in this instance.

ORDER

19. Accordingly, the Tribunal makes the following order:

19.1 The respondent must, within 30 (thirty) business days of issuing this judgment, pay an administrative fine of R50 000.00 (fifty thousand rand) into the National Revenue Fund referred to in section 213 of the Constitution[3] using the following bank account details:

Bank: The Standard Bank of South Africa

Account holder: Department of Trade and Industry Branch name: Sunnyside

Branch code: 010645

Account number: 3[…]

Reference: NCT/308359/2024/100(6)(a) and the name of person or business making the payment; and

19.2 There is no cost order.

Adv C Sassman

Presiding Tribunal member

Tribunal members Dr MC Peenze and Dr A Potwana concur.

[1] Published under GN 789 in GG 30225 on 28 August 2007 as amended by GN 428 in GG 34405 on 29 June 2011, GN R203 in GG 38557 on 13 March 2015 and GN 157 in GG 39663 on 4 February 2016.

[2] 91 of 1964.

[3] Constitution of the Republic of South Africa, Act 108 of 1996.