Discrepancies Noted in the Discussion the Portfolio Committee on Trade and Industry Had

Discrepancies noted in the discussion the Portfolio Committee on Trade and Industry had with the National Consumer Commission on 10 August 2012

NCC presentation / Parliamentary Legal Adviser Comment
On the presentation titled “Rural Outreach”, slide 5 (bullet 4) the NCC commented that the “NCC took the City of Johannesburg Municipality to the NCT” / This is not correct – the City of Johannesburg was the Applicant in the referral. It was thus the City of Johannesburg that took the NCC to the NCT.
“We have recently identified a serious challenge to our work from a judgement of the National Consumer Tribunal that the NCT is of the view that the NCC is not empowered to issue compliance notice and further that the NCC is not competent to classify a conduct as prohibited”
-Presentation titled “Rural Outreach”, slide 10 (bullet 1)
-Repeated in the response to MPs questions. Explained during the response that the above is contrary to the Act. / None of the NCT judgments that I’ve perused indicates this. In fact, in City of Johannesburg v National Consumer Commission[1]the NCT found the Compliance Notice defective because it did not set out the prohibited conduct. No mention was made that the NCT must be approached first;
“We also have a serious interpretative and practical application and consequently enforcement problem with a ruling by the National Consumer Tribunal that the National Consumer Commission does not have the locus standi to apply for interim relief on behalf of Consumers where the Commission has already issued a compliance notice.”
-Presentation titled “Rural Outreach”, slide 10 (bullet 3) / The reasons for the finding have not yet been published. It is thus a bit early to comment.
However, interim relief is set out in section 114 of the CPA. Section 114(1) states “A person who has applied for relief to a court, or the complainant in a complaint that has been referred to the Tribunal, may apply to a court subject to its rules, or to the Tribunal, as the case may be, for an interim order in respect of that application or complaint...”
From this section I am of the opinion that it is clear that the correct applicant is the complainant in a complaint, not the NCC. Nothing however stops the NCC to cooperate with a complainant to bring such an application in the name of the complainant.
“We have also identified a serious flaw in the amended regulations of the National Consumer Tribunal Regulations in that they do not provide for specific application for a default judgment to the NCT in the event that a party is served with a compliance notice by the NCC and he ignores such process. This is serious because it allows anyone to ignore the Notice because there are no consequences for such conduct.”
-Presentation titled “Rural Outreach”, slide 11 (bullet 1) / This comment is actually quite serious – but not in relation to the NCT. It indicates a lack of understanding / appreciation of the CPA by the NCC.
Section 100 of the CPA deals with compliance notices. Sub-section 100 (6) states: “(6) If a person to whom a compliance notice has been issued fails to comply with the notice, the Commission may either –
(a)Apply to the Tribunal for the imposition of an administrative fine; or
(b)Refer the matter to the National prosecuting Authority for prosecution as an offence in terms of section 110(2),
But may not do both in respect of any particular compliance notice.”
There is no default judgment involved. The CPA is clear – if the NCC wants to act on a Compliance Notice it can approach the NPA or the NCT. If it approaches the NCT, it can do so in terms of NCT Rule 3(1)(a), which states that the NCT has jurisdiction to hear matters set out in Table 1A and 1B. Table 1B includes an application in terms of section 100(6) of the CPA for an administrative fine.
When the NCC applies for an administrative fine it must give notice of this application to the Company concerned. If the Company does not enter an appearance to defend the application for an administrative fine THEN default judgement comes into play. NCT Rule 25(2) provides that “An Applicant may make application By way of form TI.r25(2) for purposes of obtaining a default order, if no response to the application was filed within the time stated in the application.”
The rules of the NCT thus does provide for the NCC to act on Compliance Notices that are ignored, as well as for default judgement.
Presentation titled “Rural Outreach”, slide 11 (bullets 2-3) regarding the Auction Alliance case. / I have not yet seen the written Auction Alliance judgement and can thus not comment on this yet.
NCC response to MPs questions / Parliamentary Legal Adviser Comment
NC Commissioner: In NCT judgments the NCC is told that the NCC is not complying, but the NCC is not told why. / The NCT judgements set out reasons for its decision. In each judgement that I perused, the “why” was quite clear:
City of Johannesburg v National Consumer Commission:[2] The NCC’s investigation was insufficient as the NCC did not inform the City that it was being investigated under the CPA nor afforded the City an opportunity to make representations.
Multichoice Africa (Pty) Ltd vs National Consumer Commission:[3] The NCC did not sufficiently consult with ICASA because ICASA was not provided with information about Multichoice’s alleged contraventions of the CPA, nor of the outcome of the investigation.
Vodacom Service Provider Company (Pty) Ltd and Another v National Consumer Commission:[4] The NCC did not have a reasonable belief that Vodacom engaged in prohibited conduct. The NCC simply identified the clauses in the contracts which it deemed to be contravening the CPA, without analysing why it was of this view. The NCC further did not consider amendments made to the contracts in question before issuing the Compliance Notice. The Compliance Notice was further issued to the incorrect party and issued for a reason not authorized in terms of the CPA, namely refusal to sign a consent.
Hyginique Toilet Hire & Sales v Chauke and Another:[5] HTH cooperated with NCC and yet a Compliance Notice was issued. The NCC also did not conduct an investigation on HTH. The compliance notice further contained contradictions and was issued in terms of the wrong section in the CPA. Compliance with the compliance notice was impossible as the date for compliance was on the same day HTH received it.
Murray NO and Others v National Consumer Commission and Others, Auction Alliance (Pty) Ltd v National Consumer Commission and Others:[6] No complaint was lodged against the liquidators and accordingly no investigation was conducted. The NCC could thus not have formed the reasonable belief that the liquidators were engaged in prohibited conduct.
NC Commissioner: The Commissioner stated that she takes offence to the allegation that the NCC is usurping the power of the Minister. The Commissioner indicated that these notices referred to were published for public comment only and accordingly is allowed.
Mr. Thupayatlase (Head of NCC Legal Services): The Head of legal indicated that these notices were issued in terms of section 82 of the CPA. Section 82 requires publication for public comment. All these documents are given to the Minister before publication, thus the Minister is aware of it. / I’ve perused the CPA to see what the NCC may publish:
- Section 22:Guidelines for methods of assessing whether a notice, document or visual representation is done in plain language. These guidelines may also be published for public comment. No mention is made as to where these guidelines must be published (for public comment or the final guidelines)
- Section 82 - Industry codes: The Commission may publish industry codes for public comment. No mention is made where to publish the industry codes. The final document is to be published by the Minister as a Regulation.
- Section 93: Codes of practice for use of plain language, standard communication practices, alternative dispute resolution and for anything else that could assist in achieving the objectives of the CPA – must be published for public comment before being implemented. No mention is made who must publish or where to publish the codes of practice and the final document is not required to be published.
- Section 96: The NCC must 1. Issue explanatory notices on its procedures, or an opinion on its interpretation of the CPA (although this isn’t binding and the NCC must ask a court for a declaratory order on such interpretation) and 2. Publish any orders or findings of the NCT.
Nothing prohibits the NCC from publishing anything in the Government Gazette per se. However, the NCC has to date published:
-“Draft enforcement guidelines” for public comments and “Final enforcement guidelines, relating to the internal enforcement functions of the Commission in order to give effect to the Act”
-Guidelines for advisory opinions and clarifications for public comment
The enforcement guidelines deal with the internal procedures of the NCC. The guidelines for advisory opinions deal with section 96 “issuing of an opinion on the NCC’s interpretation of the CPA”.
The CPA does not stipulate how the section 96 opinions must be issued, nor does it provide for guidelines on how to issue an opinion.
Section 120 of the CPA deals with regulations that the Minister may make. These include, matters related to the functioning of the NCC. This is exactly what the Enforcement guidelines referred to above deals with. The method to issue opinions is also part of the functioning of the NCC. It could thus be argued as usurping the role of the Minister.
-Guidelines for the Development of Industry Codes of Conduct for Accreditation under the Act;
-Guidelines for the Accreditation of Ombud-Schemes in terms of the Act
-Draft Consumer Product Safety Recall Guidelines for comments;
Section 82 only gives the NCC the authority to recommend an industry code to the Minister. This includes a recommendation that a scheme be accredited as an ‘‘accredited industry ombud’’. Section 60 provides that the product safety recall must be issued in terms of section 82. Nothing in the CPA authorises the NCC to develop guidelines for the development of Industry Codes. As the NCC only recommends to the Minister, it could be argued that publishing guidelines for the development of industry codes is usurping the role of the Minister.
-Request for Expression of Interest (EOI);
-Publication of the Report on Expression of Interest (EOI): For comments or objections
These publications deals with the establishment of the registry in which any person may register a pre-emptive block against any communication that is intended for the purposes of direct marketing of goods or services. Section 11 does not require or authorise any publication. However, it also does not prohibit such publication.
This could be seen/argued as usurping the Minister role iro the Regulations.
NC Commissioner: In response to encouragement to speak to the NCT about the apparent conflict between the two bodies, the Commissioner indicated that in trying to communicate with the NCT, NCC was opposed in its attempts. The NCC indicated that it has a thick file filled with correspondence from the NCC to the NCT. But the NCT's response got to the stage that the NCT indicated if the NCC persists to contact the NCT, the NCC will be referred to the Law Society. The NCC thus feels that they cannot speak to the NCT anymore. / I was quite concerned by this statement. Involving the Law Society indicates to me that there could have been a breach of legal ethical conduct on the side of the NCC. There would be no other reason to involve the Law Society. If it was simple “harassment” (a flood of correspondence of an administrative nature), the correct avenue of complaint would have been to threaten with referral to the Minister, the dti. I enquired from the NCT what the situation was i.r.o the letter that threatened referral to the Law Society. I am now in receipt of the said letter, as well as the letter to which it responds.
The specific letter that threatened referral to the Law Society dealt with the Auction Alliance matter, and not with general correspondence between the NCC and the NCT or to correspondence trying to better the relationship. The incident starts with a letter from the NCT to both parties, dated 25 June 2012. In this letter the NCT refers to a telephone call received by the Chairperson of the Tribunal from Botha, Massyn and Thobejane Associated Attorneys – the Attorneys of the NCC in the Auction Alliance High Court matter. The caller wanted to discuss the content of a letter from the NCT with the Chairperson. The Chairperson indicated that this is improper and ended the conversation. The letter of 25 June then sets out what the correct manner is to contact the NCT. The letter that threatens with referral to the Law Society (and the NPA in fact), is dated 3 July 2012. This letter is directed to Botha, Massyn and Thobejane Associated Attorneys and not to the NCC. It is written in response to a letter dated 2 July 2012 from Botha, Massyn and Thobejane Associated Attorneys.
The letter dated 2 July 2012 from the NCC’s Attorneys sets out an argument for the NCT to consider. This is serious and improper conduct for an attorneys firm, as the opposing party is not aware of this argument and can thus not respond. Furthermore, unless leave is granted to make written arguments, any argument in writing to an adjudicating body must be done in terms of the rules of that body, failing which it is not allowed. I am thus not surprised by the threat of the NCT to refer the matter to the Law Society.
NC Commissioner: In responding to the confidential report created by the NCT and submitted to the Minister, the dti the Commissioner asked the Members to check whether the report correctly reflects the judgements of the NCT. This implied that the report does not. Further, the Commissioner indicated that whereas the NCT judgments do not set out reasons for its judgements, the report did contain such information. / Having read the judgements and the report, these were the only instances that were not specifically included in the judgements:
Page 20: The NCC is submitting poorly drafted pleadings to the NCT and displays a contemptuous attitude during hearings;
Pages 20-21: The Commissioner usurps the powers of the Minister by publishing notices in the Government Gazette; and
Page 21: The NCC impugns the dignity of other state institutions and is undermining the NCT.
These issues were not included in judgements as they are not relevant to a judgement . These are “behind the scenes” issues.
All the other issues were however first addressed in judgements, with clear reasons as to the failure that occurred.
Mr. Thupayatlase (Head of NCC Legal Services): The head of Legal Services NCC complained that the statement that the NCC exceeded its mandate is a very broad statement and that not one NCT judgement indicated that the NCC exceeded its mandate. / This is incorrect. In Vodacom Service Provider Company (Pty) Ltd and Another v National Consumer Commission[7] one of the reasons for cancelling the Compliance Notice is that the NCC exceeded it mandate by issuing a Compliance Notice for a reason not authorized in terms of the CPA (the NCC issued the compliance notice because Vodacom refused to sign the consent order, and not because Vodacom was engaged in prohibited conduct) .

[1][2012] ZANCT 6 (30 March 2012)NCT/2667/2011/101(1)(P), NCT/2081/2011/101(1)(P).

[2][2012] ZANCT 6 (30 March 2012)NCT/2667/2011/101(1)(P), NCT/2081/2011/101(1)(P).

[3][2012] ZANCT 4 (28 March 2012)NCT/3220/2011/101(1)(a)(P)

[4][2012] ZANCT 9 (8 June 2012) NCT/2793/2011/101(1)(P)

[5][2012] ZANCT 10 (29 June 2012) NCT/3592/2011/101(1)(P)CPA

[6] [2012] ZANCT 17 (30 July 2012)NCT/4454/2012/101(1)(P)CPA, NCT/4570/2012/101(1)(P)CPA

[7][2012] ZANCT 9 (8 June 2012) NCT/2793/2011/101(1)(P)