Planet Fitness Holdings (Pty) Ltd v National Consumer Commission (NCT/4719/2012/101(1)(P) CPA) [2013] ZANCT 30 (26 July 2013)

IN THE NATIONAL CONSUMER TRIBUNAL

HELD AT CENTURION

Case number: NCT/4719/2012/101(1)(P) CPA

DATE:26/07/2013

In the matter between:

PLANET FITNESS HOLDINGS (PTY) LIMITED......................................................APPLICANT

and

THE NATIONAL CONSUMER COMMISSION..........................................................RESPONDENT

Coram:

Prof Bonke Dumisa – Presiding member

Adv F Manamela – Member

Mr F Sibanda – Member

Date of Hearing – 26 March 2013

JUDGMENT AND REASONS

THE PARTIES

1. The Applicant in this matter is Planet Fitness Holdings (Pty) Limited, a private company duly registered and incorporated in terms of the Companies Act (the Applicant).

2. The Applicant is a health and fitness service provider with clubs operating countrywide in South Africa, with approximately 180 000 main members.

3. The Respondent is the National Consumer Commission (the Respondent), an organ of state within the public administration established in terms of Section 85 of the Consumer Protection Act, No. 68 of 2008 (the Act).

4. The Applicant’s Founding Affidavit was deposed to by Mark William Lambert, Head of Customer Services for the Applicant, duly authorised to do so by a resolution of the Board of Directors of the Applicant, dated 29 May 2012.

JURSIDICTION

5. The Applicant applied to the National Consumer Tribunal (the Tribunal) to review a compliance notice issued by the Respondent to the Applicant in terms of section 100 of the Act in respect of alleged contraventions of schedule 2 Item 8(1) and section 14(2)(a)(b) of the Act.

6. Section 101 of the Act empowers the Tribunal to confirm, modify or cancel all or part of a compliance notice.

7. Therefore the Tribunal has jurisdiction to hear this matter.

ISSUES TO BE DECIDED

8. The Application was brought on a default basis. The Tribunal has to decide whether it can hear the matter on a default basis.

9. The Tribunal must also determine whether the Respondent had the authority to issue a compliance notice with regards to alleged conduct that occurred prior to the general effective date of the Act and if so whether the Respondent is empowered to order cancellation of a contract.

BACKGROUND

10. According to the Compliance Notice, Ms J Cramer (the Complainant) entered into a 3-year contract with the Applicant in 2009. The Applicant submits that the contract was for a 2 year period.

11. In June 2009 the Complainant requested to cancel her contract because her father was retrenched and could no longer afford to pay her gym fees. The Applicant submits that the Complainant continued to pay her monthly fees and to use the gym facilities until December 2009 and that the request for cancellation was in effect only made on 9 July 2010.

12. At some point while attempting to cancel the contract, the Complainant was told by the Durbanville branch of the Applicant to send through a fax to the Head Office in order to effect the cancellation. Although the Respondent states in the Compliance Notice that the Complainant sent the fax, there is no evidence of such a fax before the Tribunal.

13. According to the Applicant, its stance throughout its engagement with the Respondent has been that it was prepared to accept cancellation of the agreement by the Complainant conditional upon her paying the arrear fees and cancellation fees.

14. The Complainant’s attempt to cancel the agreement was not accepted because she refused to pay either the arrear amounts that had accrued prior to her request to cancel the agreement or the cancellation fees in respect of the balance of the agreement.

15. The Respondent alleges in the Compliance Notice, that on 2 November 2010 the Complainant received a message from her bank indicating that a deduction had been made by the Applicant from her bank account. She queried this with the Applicant.

16. The Complainant tried unsuccessfully over a period of time to have her query resolved by the Applicant. Finally, the Complainant lodged a complaint with the Respondent on 4 November 2011. The Respondent forwarded the complaint to the Applicant on 25 January 2012 and gave the Applicant 7 days to respond. The Applicant responded, but its response was not satisfactory to the Complainant.

17. A compliance notice dated 30 March 2012 was issued to the Applicant on 16 May 2012. The Applicant brought its application for review of the compliance notice on 30 May 2012. The application was therefore brought within the prescribed period of 15 business days from receipt of the notice that is allowed by Table 2 of the Regulations to the Act.

18. The Respondent was served with the application on 30 May 2012 and was expected to file its answer to the application within 15 (fifteen) days1. The Respondent however did not file an answer to the Applicant’s application.

19. The matter is heard by the Tribunal on a default basis. The Tribunal considered the application on the basis of the founding affidavit and the oral submissions made by the Applicant at the hearing.

GROUNDS FOR CHALLENGING THE COMPLIANCE NOTICE

20. The Applicant raises a point in limine that first, the Respondent failed to refer to any of the repealed acts with reference to Schedule 2 Item 8(1) of the Act, upon which it relies in issuing the compliance notice.

21. Secondly, the Act, particularly section 14 thereof does not apply retrospectively to agreements entered into prior to 1 April 2011, except to the extent provided for in Schedule 2 Item 3.

ANALYSIS OF LEGAL PROVISIONS AND FACTS

22. The Respondent alleges, in the compliance notice, that the conduct of the Applicant amounts to a contravention of Schedule 2 Item 8(1) and Section 14(2)(a) and (b) of the Act .

23. Schedule 2 Item 8(1) of the Act states that:

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.

24. Schedule 2 Item 8 of the Act empowers the Respondent to investigate and refer to the Tribunal conduct that took place before the general effective date of the Act, that is, 1 April 2011. Such conduct should have been prohibited under certain laws that have now been repealed by the Act.

25. In City of Johannesburg v National Consumer Commission2 the Tribunal held that where it was necessary to rely on the transitional provisions because the conduct arose before the Act came into operation, the Respondent is required, in the Compliance Notice, to identify a specific section of a specific repealed Act it was relying upon. Then in the section headed, nature and extent of the non-compliance, it should set out the details regarding how the Applicant had contravened the section.

26. In this particular matter the Respondent did not refer to any specific section of any specific repealed legislation listed under section 121 of the Act that the Applicant has allegedly contravened. Instead, all that the Respondent has done under item 1.4 of the compliance notice is to restate Schedule 2 Item 8 of the Act without in any way referring to a specific repealed Act that is alleged to have been contravened.

27. Section 14 (2)(a) and (b) of the Act on the other hand states that:

If a consumer agreement is for a fixed term—

that term must not exceed the maximum period, if any, prescribed in terms of subsection (4) with respect to that category of consumer agreement;

despite any provision of the consumer agreement to the contrary—

the consumer may cancel that agreement—

(aa) upon the expiry of its fixed term, without penalty or charge, but subject to subsection (3)(a); or

(bb) at any other time, by giving the supplier 20 business days’ notice in writing or other recorded manner and form, subject to subsection (3) (a) and (b);or

the supplier may cancel the agreement 20 business days after giving written notice to the consumer of a material failure by the consumer to comply with the agreement, unless the consumer has rectified the failure within that time;

28. As alluded to above, the conduct complained of in this matter took place before the general effective date of the Act. Section 14 of the Act does not apply retrospectively to contracts entered into before this date, except to the extent provided for in Schedule 2 Item 3 of the Act which provides that:

Except to the extent expressly set out in this item, this Act does not apply to-

the marketing of any goods or services before the general effective date;

any transaction concluded, or agreement entered into, before the general effective date; or

any goods supplied, or services provided, to a consumer before the general effective date.

(2) The sections of this Act listed in the first column of the following table apply, to the extent indicated in the second column, to a pre-existing agreement between a supplier and a consumer, if the pre-existing agreement –

(a) would have been subject to this Act if this Act had been in effect at the time the agreement was made; and

(b) Contemplates that the parties to it will be bound for a fixed term until a date that is on or after the second anniversary of the general effective date:

29. The table under Schedule 2 Item 3 of the Act lists various sections of the Act that would apply to pre-existing agreements. With respect to section 14 the table referred to in subsection (2) states that:

“only subsections (1)(b) to (d) and (2) apply with respect to the expiry and possible renewal of the agreement, on or after the general effective date”

30. However, the Act as it currently stands does not have subsections (1) (a) to (d) and this could have been the result of a drafting error.

31. Nonetheless, Schedule 2 Item 3(2) governs the extent to which provisions of the Act apply to pre-existing agreements. In that regard, the Act would apply to a pre-existing agreement if it is contemplated that the parties to the agreement would be bound for a fixed term until a date that is on or after the second anniversary of the general affective date, that is, 1 April 2013 or beyond.

32. It is common cause that the contract in question was entered into between the Complainant and the Applicant in 2009. However, according to the Compliance Notice the contract was for a 3 year period whist the Applicant maintains that it was for a 2 year period.

33. Either way, the contract would have expired before the second anniversary of the general effective date and therefore the provisions of section 14 of the Act would not apply retrospectively to the agreement in question.

CONCLUSION

34. The Respondent did not identify a provision of any of the repealed Acts that is alleged to have been contravened.

35. Section 14 (2)(a) and (b) of the Act do not apply to the agreement in question because it expired before the second anniversary of the Act.

ORDER

36. Under the circumstances and for the reasons stated above, the Tribunal orders as follows:

a. the compliance notice is hereby cancelled in its entirety.

b. There is no order as to costs.

DATED THIS 26th DAY OF JULY 2013

[signed]

___________________________

FK Sibanda

Member

Adv F Manamela (Member) and Prof B Dumisa (Presiding member) concurring.

1 In terms of Rule 13(2) of the Regulation for Matters relating to the Functions of the Tribunal and Rules for the Conduct of Matters before the National Consumer Tribunal, 2007, published under GN 789 in GG30225 of 28 August 2007, as amended by GenN 428 in GG 34405 of 29 June 2011.

2 City of Johannesburg v National Consumer Commission NCT/2667/2011/101(1)(P) and NCT/2081/2011/101(1)(P) (30 March 2012)