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[2015] ZAGPPHC 243
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Brandhouse Beverages (Pty) Ltd v Advertising Standards Authority of South Africa and Others (2331/15) [2015] ZAGPPHC 243 (28 April 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
PROVINCIAL DIVISION, PRETORIA
Case no 2331/15
Date: 28 April
2015
Not reportable
Not of interest
to other judges
In the matter
between:
BRANDHOUSE
BEVERAGES (PTY)
LTD
.................................................................................
Applicant
and
THE ADVERTISING
STANDARDS AUTHORITY
OF SOUTH
AFRICA
..........................................................................................................
First
Respondent
MR JUSTICE
BERNARD
NGOEPE
............................................................................
Second
Respondent
(In his capacity as
Chairperson of the Final Appeal
Committee of the
Advertising Standards Authority of South Africa)
SOUTH AFRICCAN
BREWERIES (PTY)
LTD
............................................................
Third
Respondent
JUDGMENT
1. The applicant
approached this Court on the basis that urgent relief in the form of
an immediate review and correction of a decision
made by the second
respondent in his official capacity was required to avoid potentially
irreparable commercial harm being caused
to the applicant should the
order sought not be granted. The third respondent disputed that the
matter was urgent, particularly
on the ground that the applicant had
only itself to blame for its failure to seek appropriate relief at an
earlier stage. Third
respondent further suggested that alternative
remedies were available to the applicant that would obviate the
necessity of approaching
the urgent court.
2. For the reasons
set out below the Court ruled that the matter was indeed urgent.
3. The applicant is
Brandhouse Beverages (Pty) Ltd, a company incorporated in terms of
the South African company law with registration
number 2003/021753/07
and with registered address at 1
st
Floor, Block B, C and
D, Black River Business Park, C/o Nelson and Fir Streets,
Observatory, Western Cape.
4. The applicant,
like the third respondent, does business as distributor of alcoholic
beverages in South Africa.
5.
The first respondent is the Advertising Standards Authority of South
Africa (‘ASA”); a voluntary association created
by
members of the advertising industry to “...
ensure
that its system of self-regulation works in the public interest.. ASA
has a president independent from the industry...',
as
the preface to its Code of Advertising Practice reads. The ASA enjoys
national and international recognition as regulator of
the
advertising industry. National legislation such as the Electronic
Communications Act 36 of 2003 has made electronic advertising
subject
to the ASA Code. The ASA’s principal place of business is at
Willowview, Burnside Island Office Park, 410 Jan Smuts
Avenue,
Craighall Park, Johannesburg.
6. The second
respondent is Mr Justice Bernard Ngoepe, who was cited herein in his
capacity as chairperson of the ASA’s Final
Appeal Committee. No
costs order was sought against the second respondent.
7. The first and
second respondents abide the decision of the court.
8. The third
respondent is South African Breweries (Pty) Ltd (‘SAB’),
a company duly incorporated and registered in
terms of the South
African company law with registered office or principal place of
business at 65 Park Lane, Sandton, South Africa.
In addition to
marketing and distributing beers and other beverages the third
respondent is also a brewer of beers, marketed under
brands such as
Castle and Castle Lite.
9. The applicant and
third respondent are competitors.
10.The applicant
launched a lite beer into the South African market under the name
Amstel Lite. The launch commenced in August 2014.
Three months later
the third respondent lodged a complaint with ASA on the grounds that
Amstel Lite cans and so-called six - packs
were packaged in a way
that copied the distinctive colours, green and silver, in a similar
presentation as that of SAB’s
Castle Lite and thereby
unlawfully benefitted from Castle Lite’s advertising goodwill,
apart from intentionally confusing
consumers.
11. SAB claimed to
have conducted a consumer survey that substantiated its claims that
the purchasers of Castle Lite were indeed
confused when confronted
with the applicant’s product packaging. The validity of this
survey is vigorously disputed by the
applicant, as are the assertions
that SAB had acquired goodwill and a commercially significant
reputation in the packaging of its
product; or that applicant had
taken any advantage of the alleged advertising goodwill.
12. The complaint
was considered by the ASA Directorate. Complaints concerning
advertising are categorized as either consumer complaints
or
competitor complaints depending upon the identity of the complainant.
The complaint against the applicant clearly fell into
the latter
category.
13.The
applicant disputed the third respondent’s allegations in its
response to the complaint, which response was filed with
the
Directorate of the ASA. In spite of the applicant’s
protestations the Directorate ruled on the 6
th
February 2015 that the complaint was well founded. The applicant was
found to have transgressed clause 8 of General Principles
of the ASA
Code. This clause prohibits the taking of advantage by an advertiser
of the ‘ ...
advertising
goodwill relating to the trade name or symbol of the product or
service of another, or advertising goodwill relating
to another
party’s advertising campaign or advertising property...
'
14.The Directorate
ruled that the applicant had to withdraw the Amstel Lite packaging
within three months from date of the ruling,
less one week deducted
from this period because the applicant’s response had been
delivered one week out of time. This period
will expire on the 29
th
April 2015.
15. The applicant
was dissatisfied with the Directorate’s ruling and lodged an
appeal to the Advertising Industry Tribunal.
The notice of appeal was
delivered on the 20
th
February 2015. The third respondent
filed a response to the appeal on the 5
th
March 2015. The
tribunal has not yet ruled on the appeal, but its decision is
expected in the near future.
16.The ASA’s
Procedural Guidelines provide i.a. the following in respect of an
appeal against a ruling given by the Directorate:
8.9
Any party who feels aggrieved by
a
ruling of the
Directorate may, within ten days of the date on which such party is
informed of the ruling, appeal to the Advertising
Standards
Committee, in respect of consumer complaints, or to the Advertising
Industry Tribunalin respect of competitor complaints,
against such
ruling...
8.13 Where an
aggrieved party has lodged an appeal to the Advertising Standards
Committee or the Advertising Industry Tribunal,
the ruling of the
Directorate must be adhered to, until such time as that ruling is
reversed.
8.14 The
Directorate may perform all such acts and do all such things as are
reasonably necessary for or ancillary, incidental,
or supplementary
to the performance of any of its functions but will not extend to the
suspension of rulings. Should circumstances
arise where good and
valid reasons justify a departure from usual procedure, these will be
taken into account, but always at the
discretion of the Directorate.
...
10.8 Any party
who feels aggrieved by a ruling of the Advertising Industry Tribunal
shall have the right to appeal to the Final
Appeal Committee against
such ruling, in accordance with the appeal procedure set out in this
Code. An appeal must be lodged by
the appellant within twenty days
from receipt of the ruling.
10.9 Where an
appeal is lodged, the ruling of the Tribunal must be adhered to,
until reversed by the Final Appeal Committee.
10.10 The
Chairman or Committee may perform all such acts and do all such
things as are reasonably necessary for or ancillary, incidental,
or
supplementary to the performance of any of its functions but will not
extend to the suspension of rulings. Should circumstances
arise where
good and valid reasons justify a departure from usual procedure,
these will be taken into account, but always at the
discretion of the
Chairman or Committee.
…
......
12.
Final appeals against rulings of the Advertising Standards Committee
or Advertising Industry Tribunal
12.1
An appeal lodged against
a
ruling of the
Advertising Standards Committee or Advertising Industry Tribunal
shall be considered by the Final Appeal Committee.
..
12.19 The
Chairman or Committee may perform all such acts and do all such
things as are reasonably necessary for or ancillary, incidental
or
supplementary to the performance of any of its functions. Should
circumstances arise where good and valid reasons justify a
departure
from usual procedure, these will be taken into account, but always at
the discretion of the Chairman or Committee...
17. All parties
shall exhaust the internal remedies provided by the Code before
resorting to any relief or order from any court.
17.lt
is apparent from these provisions that, although an aggrieved party
such as the applicant has the right to appeal to the Advertising
Industry Tribunal and from the Tribunal to the Final Appea Committee,
the Procedural Guidelines expressly decree that the lodging
of an
appeal will not suspend the ruling of the Directorate or the Tribunal
pending the finalisation of the appeal. It stands to
reason that the
absence of an automatic suspension of the Directorate’s ruling
may have a devastating commercial effect upon
the aggrieved party if
the latter is forced to comply with a sanction as severe as that
imposed in this case; only to find some
weeks later that the ruling
is overturned on appeal, when the harm may have been done.
Telematrix
(Pty) Ltd v Advertising Standards Authority of South Africa
[2006]
All SA 6
(SCA) provides a practical example of the damage that can be
caused to an advertiser by this process. (The applicant estimates the
cost of the withdrawal of the allegedly offending packaging at R 100
million. This figure is in dispute, but it is clear that considerable
financial loss will be caused if the packaging has to be changed, not
least by the loss of advertising undertaken to promote the
present
get-up of applicant’s product.)
18. The applicant
therefore approached the second respondent with the request to
exercise the powers conferred upon him by section
12.19 of the
Procedural Guide and in the exercise of his discretion suspend the
Directorate’s ruling and order to withdraw
the packaging
pending the finalisation of the appeal. The second respondent, on the
19
th
March 2015, declined the application to suspend the
ruling and its effect on the grounds that he did not have the
authority to
do so, unless and until the appeal process had reached
the Final Appeal Committee. Apart from a lack of the power to do so
the
second respondent cited the fact that he was unable to consider
the appeal’s prospects of success. The second respondent
further referred to an earlier decision he gave in the same vein in
November 2014.
19.The applicant
seeks an order having this decision reviewed and set aside in terms
of section 6 read with section 8 of the Promotion
of Administrative
Justice Act 3 of 2000 (‘PAJA’), and a substitution of the
decision with an order by this court preventing
the first respondent
from enforcing the terms of the ruling until the finalisation of all
appeal proceedings under the ASA Procedural
Guide, and until the
finalisation
20.The application
is opposed. The following issues arise for determination, apart from
urgency, which the court held was dictated
by the facts of the
matter:
Does the second
respondent have the power in terms of clause 12.19 of the ASA
Procedural Guide to order a suspension of the Directorate’s
ruling?
21.The
second respondent’s decision appears to, with respect, run
counter to an earlier decision penned by a predecessor,
Justice
O’Reagan, dealing with a similar request in
Herbex
Appetite Control Tablets v Dr Harris Steinman
on
12 July 2013. She noted that the Chairman of the Final Appeals
Committee’s powers did not exclude the power to suspend
rulings, as do the provisions of the Procedural Guide relating to
appeals against decisions of the Directorate or of the Advertising
Industry Tribunal. She then continued:
'It
might be argued that Rule 12.19 should be interpreted as having a
narrow purview permitting the suspension of rulings only in
cases of
appeals pending before the FAC and not those pending before the ASC
or the Advertising Industry Tribunal....there are
three reasons why a
narrow approach to the wording of the rule would not be appropriate.
First
,
the wording of the
Rule does not expressly suggest that it should be interpreted in this
narrow fashion. Secondly, a narrow interpretation
would have the
irrational effect that a ruling by the Directorate could not be
suspended at all for the period when the appeal
is pending before the
ASC or the AIT. Yet once a decision has been made by the ASC or the
AIT, that ruling could be suspended pending
an appeal to the FAC.
There can be no
principled reason why a ruling that is being appealed may be
suspended for some time during the appellate process,
but not at
other times. Thirdly, in our legal system the ordinary rule is that
an appeal suspends the operation of a decision so
that an appellant
is not compelled to comply with an order before the legal issues are
finally determined upon appeal'
22.
The learned Justice 0’Regan refers to previous instances in
which the Chairperson of the Final Appeal Committee exercised
the
power to suspend rulings of the Directorate pending appeals;
suggesting that a practice of this nature had been followed by
the
second respondent’s predecessors. I respectfully adopt and
follow the interpretation given to the Rule by Justice O’Reagan.
Any other interpretation could, with respect, lead to absurd and
indisputably unfair results by demanding compliance with a ruling
to
the significant detriment of an aggrieved party, who would be doubly
aggrieved by finding that the ruling appealed against,
but enforced
pending an appeal, was eventually overturned by the Final Appeal
Committee at a stage when compliance therewith has
rendered the
success thus achieved nugatory because the harm caused by the ruling
cannot be undone. (See
Telematrix,
supra.)
As
was said by Harms, JA (as he then was), writing for a unanimous
court, in a somewhat different context:
'
[3
0]
Although the Constitution does not guarantee a right of appeal in
civil proceedings explicitly
,
a general right to
a 'fair' hearing is entrenched in s 34. Applied to the provisions of
the Supreme Court Act, this means that the
proceedings there
described must, procedurally, be
1
fair'.
In Boodhoo & Ors v. Attorney General of Trinidad and Tobago
(Trinidad and Tobago)
f20041 UKPC 17
(PC) the Privy Council had to
consider the effect of a basic right to
’
the
protection of the law' contained in the constitution of Trinidad and
Tobago on a delay in appeal proceedings, and it quoted
with approval
the following statement of de la Bastide CJ in the Court of Appeal of
Trinidad and Tobago (at para 9):
’
It
seems to me that this is the right that can most appropriately be
invoked by persons who complain of delay by a court in delivering
judgment or for that matter failure to deliver judgment
.
Surely; if the
protection of the law means anything, it must mean that persons are
entitled to have recourse to the appropriate
court or tribunal
prescribed by law for the purpose of enforcing or defending their
rights against others or resolving disputes
of one kind or another.
It is axiomatic that such a right is meaningless without a decision
by the court or tribunal to which the
claim or dispute is referred
for adjudication.' The Privy Council concluded by holding that 'delay
in producing a judgment would
be capable of depriving an individual
of his right to the protection of the law, as provided for in section
4(b) of the Constitution
of Trinidad and Tobago,
but
only in circumstances where by reason thereof the judge could no
longer produce a proper judgment or the parties were unable
to obtain
from the decision the benefit which they should
.'
(Para 12, emphasis
added.) The same must apply to the right to a
’
fair
hearing' in respect of an application for leave to appeal.'
(Pharmaceutical
Society of South Africa and Others v Minister of Health and Another;
New Clicks South Africa (Pty) Limited v Tshabalala-Msimang
NO and
Another
(542/2004,
543/2004)
[2004] ZASCA 122
(20 December 2004)).
23.By the same token
it must be said, however, that an appeal tribunal or court of appeal
must on occasion be given sufficient time
to consider the issues
arising from an appeal and should not be subjected to undue pressure
to finalise its deliberations merely
because the aggrieved party is
anxiously awaiting the result. This consideration adds further weight
to the conclusion that Justice
O’Reagan’s ruling is, with
respect, clearly correct.
24.lt must be
concluded that the second respondent does have the power to suspend a
ruling by the Directorate and that he, with
respect, committed an
error of law in coming to the conclusion that is challenged in these
proceedings.
25.This finding
leads to the next question.
Does the court
have the power to review and set aside the second respondent’s
ruling? Or, put differently, does the second
respondent’s
decision amount to administrative action as defined by the
Promotion
of Administrative Justice Act 3 of 2000
?
26. The starting
point of this enquiry must be the definition of ‘administrative
action’ in section 1 of the Promotion
of Administrative Justice
Act, 3 of 2000 (‘PAJA’). The relevant part of the
definition in section 1 of PAJA reads:
'..any decision
taken, or any failure to take a decision, by
…
.
(b) a natural or
juristic person other than an organ of state, when exercising a
public power or performing a public function in
terms of an
empowering provision, which adversely affects the rights of any
person and which has a direct, external legal effect,..”
This
text was examined in
Chirwa
v Transnet Ltd and Others
[2007] ZACC 23
;
2008
(4) SA 367
(CC) by Skweyiya J in the following passage:
'[72]
Only acts of an administrative nature are subject to the
administrative justice right in section 33(1) of the Constitution.
The focus of the enquiry as to whether conduct constitutes
administrative action is not on the position which the functionary
occupies but rather on the nature of the power being exercised
.
This Court has
held in a number of cases that in this enquiry what matters is not so
much the functionary as the function; that
the question is whether
the task itself is administrative or not and that the focus of the
enquiry is not on the arm of government
to which the relevant
functionary belongs but on the nature of the power such functionary
is exercising. ’
(footnotes
omitted).
27. In the same
decision Langa CJ added these observations:
[188] Secondly,
the applicants dismissal will have a very small impact, if any on the
public. While Transnet conducts work that
has a constant and
significant public impact, it is important to recognise the
applicant’s role in that venture. Her job
was to ensure the
smooth running of the Transnet Pension Fund. While that is important
to Transnet employees, its impact on the
public at large is further
removed. She affects the proper functioning of the body that ensures
the future of Transnet employees
after retirement. She does not take
decisions regarding transport policy or practice, and while her work
may in some way affect
the morale of the people who do take those
decisions, the ultimate effect of her dismissal on the public service
provided by Transnet
is negligible.
[189] The next
relevant factor is the source of the power As noted above, in this
case, the power is contractual. I must again stress
that this factor
is not always decisive, but is one that can have relevance. In this
instance, it seems to me simply to point strongly
in the direction
that the power is not a public one.
[190]
Finally, certain powers must be exercised for public, rather than
private benefit. In Police and Prisons Civil Rights Union
and Others
v Minister of Correctional Services and Others (POPCRU) the question
arose whether the dismissal of a number of correctional
officers for
refusing to work amounted to the exercise of a public power. The
Court held that where there
was
limited or no
impact on the public at large,
“
what
makes the power involved a public power is the fact that it has been
vested in a public functionary who is required to exercise
it in the
public interest, and not in his or her own private interest or at his
or her whim”.
(footnotes
omitted)
28.lt must thus be
determined whether the function performed by the second respondent in
taking the impugned decision was a public
function or an act in the
performance of a private or contractual nature. To get to the correct
conclusion the function of the
first respondent must be considered.
There can be no doubt whatever that the rendering of a service in the
public interest lies
at the heart of the Authority’s genesis
and existence. It is the official regulator of the advertising
industry. It prides
itself upon its close association with organs of
state and consumer organisations. The introductory paragraph of the
preface to
the ASA Code has been referred to above. The Code is
replete with other statements that underline the public function of
the ASA.
Two further extracts from the preface will have to suffice
in the light of the urgency with which this judgments has to be
prepared:
‘
9.
The ASA maintains close contact with government departments, consumer
organisations, relevant NGO’s and trade associations’
'11.Advertising is a service to the public and, as such, should be
informative, factual, honest, decent and its content should
not
violate any of the laws of the country. All entities bound by the
Code shall neither prepare nor accept any advertising which
conflicts
with the Code and shall withdraw any advertising which has
subsequently been deemed to be unacceptable by the ASA Directorate,
Advertising Standards Committee, Advertising Industry Tribunal or
Appeal Committee.’
29.The public nature
of the ASA’s functions is further evident from the fact that
members of the public, ordinary consumers,
are invited to interact
with the Authority and to file complaints relating to unethical,
unlawful or misleading advertising against
errant advertisers. Any
complaint is investigated with the interests of the public at large
and that of consumers and children
in particular in mind. The results
of investigations of hearings and appeals following upon complaints
are published and are readily
accessible to the man in the street.
30. The manner in
which complaints are dealt with is therefore part and parcel of the
ASA’s service to and interaction with
the public. It follows
that it cannot be argued that the appeal procedures are not part of
the public service the ASA renders,
and this must of necessity
include the role and function, and therefore also the decisions of
the second respondent.
31.
To this argument must be added the fact that the ASA has officially
confirmed that PAJA applies to its functions in the Appeal
Committee’s rulings of 10 November 2005 in
Glaxosmithkline
v Pfizer
and
International
Society of Krishna Consciousness v Nando’s
of
the 1
st
April 2004.
32.
Reference was made in argument to the Full Bench decision in
National
Horse Racing Authority of Southern Africa v Naidoo and Another
2010
(3) SA 182
(N).
The majority
judgment held that the proceedings of a domestic disciplinary
tribunal did not constitute administrative action for
the purposes of
PAJA. Wallis J, as he then was, argued in a minority judgment that
they performed a public function that was by
no means necessarily
excluded from the purview of PAJA:
I
also find unpersuasive the contention that monopolistic sporting
bodies holding a position of major public importance and exercising
“near monopolistic powers in an area in which the public
generally have an interest and many persons earn their livelihoods”
are not performing public functions or exercising public powers,
merely because they derive their standing from a constitution
and
rules adopted by their members,
(footnotes
omitted)
The description of
the sporting bodies the learned judge referred to could be applied in
equal measure to the first respondent.
33.
Counsel referred the court to two judgments of the Western Cape High
Court,
Tirfu
Raiders Rugby Club v South African Rugby Union
[2006]
2 AH SA 549 (C) and
Dominique
Daniels and Others
v
WP Rugby and
Another
Case
No 15468/11 (WCHC), 4 November 2011, which held that the public
interest in the administration of rugby clubs and rugby unions
dictated that the proceedings of their disciplinary committees
constituted administrative action reviewable in terms of PAJA. I
respectfully adopt the reasoning of the minority judgment in
National
Horse Racing Authority
and
the two judgments in the Western Cape High Court.
34.lt follows that
the court is entitled to review and set aside the second respondent’s
decision because it was informed
by a material error of law, as
intended in section 6(2)(d) of PAJA. The applicant is therefore
entitled to such an order.
35. This finding
leads to the question
Are the
circumstances of this matter sufficiently exceptional or
extraordinary to justify an order substituting the court’s
finding for that of the second respondent?
36. It is trite that
courts are reluctant to substitute their own decisions for those of
the decision makers whose rulings have
been set aside on review.
Usually the matter is referred back to the administrative tribunal or
decision maker to enable the latter
to reconsider and correct the
error that led to the review of the original incorrect ruling or
finding. PAJA authorises a judicial
intervention of such an invasive
nature only in exceptional circumstances as decreed in section
8(1)(c)(ii)(aa). Exceptional circumstances
are generally held to
exist in matters of this nature if the tribunal or decision maker was
biased, incompetent or conflicted to
such an extent that the purpose
of the review would be negated by referring the matter back to such
person or body.
37.There is nothing
on record to suggest that the second respondent would not, in the
normal course of events, be fully competent
and able to reconsider
his decision if the matter were to be referred back to him, as the
court would do were it not for the peculiar
facts of this case. This
judgment will be delivered literally the day before the deadline to
comply with the Directorate’s
ruling expires by which the
applicant must comply with the order to change the packaging. It
would be impossible for the second
respondent to deal with the matter
before the applicant will find itself in default of the Directorate’s
order, which would
negate the purpose of this application. Justice
would literally be denied by being delayed, even if for one day only.
It is for
this reason, and this reason only, that the court is
prepared to substitute its own order for that of the second
respondent.
38.The relief sought
by the applicant, as recorded earlier in this judgment, is clearly
overbroad, as Mr Ginsburg SC for the third
respondent has correctly
pointed out. The court can only substitute an order that could have
been given by the second respondent
upon reconsideration of the
matter.
39.Time does not
permit to deal with the other grounds advanced by the third
respondent in opposition to the application in any
detail. Suffice to
say that any undertaking the applicant may have given regarding
compliance with the Directorate’s ruling
certainly did not
include an undertaking not to appeal an unfavourable finding. The
applicant can therefore not be said to have
approached the court with
unclean hands.
40. Having been
substantially successful the applicant is entitled to its costs,
including those consequent upon the employment
of two counsel.
41. The following
order is made:
1. The second
respondent’s decision delivered on the 19
th
March
2015, dismissing the applicant’s application for the suspension
of the ruling of the Directorate of the first respondent
handed down
on the 6
th
February 2015, is hereby reviewed and set
aside;
2. The second
respondent’s decision is substituted with the following
decision:
The Directorate’s
ruling in the matter of Amstel Lite / Castle Lite /2014-1685F, dated
6
th
February 2015, is suspended until the Advertising
Industry Tribunal has determined the applicant’s appeal.’
3. The third
respondent is ordered to pay the applicant’s costs, such costs
to include the costs of two counsel
Signed at Pretoria
on this 27
th
day of April 2015.
E BERTELSMANN
Judge of the High
Court