Straight shot to the courts for consumers litigating under the CPA?
It is now possible for consumers to take their complaint directly to the High Court in instances where the adjudicative and dispute resolution mechanisms provided for in the Consumer Protection Act, 2008 (“CPA”) are not sufficient or adequate to deal with the infringements alleged.
In the case of Steynberg v Tammy Taylor Nails Franchising 2022, the High Court concluded that it has jurisdiction to deal with a complaint in terms of the CPA. It stated that there would be no purpose to require the applicant to approach the Consumer Goods and Services ombud or the National Consumer Tribunal or to require the applicant to file a complaint with the National Consumer Commission.
In this case, Christina Johanna Steynberg had signed a franchise agreement with Tammy Taylor; however, within a week, she alleged that Tammy Taylor had not been open and honest with her regarding the actual costs of purchasing and establishing a franchise. Steynberg cancelled the agreement and demanded a refund of the ZAR346 000 franchise fee. Tammy Taylor refused.
Steynberg argued that Tammy Taylor failed to comply with the CPA and the regulations thereto by failing to include, on the first page of the agreement, that the franchise may be cancelled within 10 business days without any costs or penalties. Steynberg further argued that the failure to comply with the CPA rendered the franchise agreement void and unenforceable, and the respondent should be directed to refund the franchise fee.
Steynberg instituted motion proceedings against Tammy Taylor to set aside a franchise agreement entered into between the parties. It was common cause that the Steynberg was a consumer and Tammy Taylor a supplier resulting in the CPA having application in the matter.
The main issue was the jurisdiction of the High Court to hear the matter. Tammy Taylor argued that in terms of the CPA, Steynberg was only entitled to relief from the High Court “ if all other remedies available to that person in terms of national legislation have been exhausted.”
The CPA provides several avenues to follow before approaching the courts: these include;
- the National Consumer Tribunal,
- the (Consumer Goods and Services) Ombud,
- applying to the consumer court (which has not been established), referring a matter to an alternative dispute resolution agent,
- or filing a complaint with the National Consumer Commission.
Only after these remedies have been exhausted is a party entitled to approach a court with jurisdiction over the matter.
However, in this case, the court held that the complaint fell within the ambit of:
- section 40 (Unconscionable conduct);
- section 41 (False, misleading, or deceptive representations); and
- section 48 (Unfair, unreasonable, or unjust contract terms)
of the CPA, which grants the court the power to make a suitable order in the circumstances.
The court held that an ombud would not be sufficient or appropriate to deal with the matter as it is doubtful whether the ombud has the power to grant the relief sought by Steynberg.
As far as recourse to the National Consumer Tribunal was concerned, its powers are restricted by its rules and do not include the power to grant declaratory relief or to deal with claims for the payment of money, which, on the other hand, has been specifically entrusted to the court in terms of the CPA.
Furthermore, the court cited the obiter remarks of the Supreme Court of Appeal in Motus Corporation (Pty) Ltd t/a Zambezi Multi Franchise and another v Wentzel, that the CPA should not be read to exclude the rights of consumers to approach the court in order to obtain redress, despite the provisions of the Act.
South African courts have always had jurisdiction to resolve such claims before, and there is no apparent reason why a consumer should be precluded from approaching the courts before having exercised the remedies afforded to the consumer.
It is also referred to in the unreported judgment of Takealot Online (RF) (Pty Limited and Drive consortium Hatfield (Pty) Limited, a Western Cape High Court decision, which found that the argument that the CPA requires a party to exhaust all other remedies is misplaced because, in terms of section 52 of the CPA, only a court of law can deal with issues relating to section 48 (Unfair, unreasonable, or unjust contract terms) of the CPA.
Tammy Taylor relied on two unreported cases decided in the Free State High Court, namely AFCA Trading and Supply (Pty) Ltd v City Square Trading and Supply 604 (Pty) Ltd and Joroy 4440 CC t/a Ubuntu Procurement v Potgieter N.O. and Another.
In both these cases, it was held that the court did not have jurisdiction to deal with the matters because the plaintiffs had not exhausted all remedies available to them in terms of the CPA. However, the court found otherwise, citing the obiter remarks of the Supreme Court of Appeal as the authority.
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