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[2018] ZASCA 44
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National Consumer Commission v Univision Services Association NPC and Others (618/2017) [2018] ZASCA 44 (28 March 2018)
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THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 618/2017
In
the matter between:
THE
NATIONAL CONSUMER COMMISSION
APPELLANT
and
UNIVISION
SERVICES ASSOCIATION NPC
FIRST RESPONDENT
VACATION
RECREATIONAL SERVICES
SECOND
RESPONDENT
QUALITY
TIME MARKETING (PTY) LTD
THIRD RESPONDENT
QUALITY
VACATION CLUB
FOURTH RESPONDENT
AFRICAN
CLUB INNOVATIONS
FIFTH RESPONDENT
MULTI
DESTINATION CLUB
SIXTH
RESPONDENT
LIFESTYLE
VACATION CLUB
SEVENTH RESPONDENT
AFRICAN
VACATION CLUB
EIGHTH RESPONDENT
VIP
EXPRESS
NINTH RESPONDENT
MILCAR
DEVELOPMENT CC
TENTH RESPONDENT
INVESTAGE
192 (PTY) LTD
ELEVENTH RESPONDENT
THE
NATIONAL CONSUMER TRIBUNAL
TWELFTH RESPONDENT
Neutral
citation:
The
National Consumer Commission v Univision Services Association NPC
(618/2017)
[2018] ZASCA 44
(28 March 2018)
Coram:
Navsa,
Leach, Seriti and Mocumie JJA and Hughes AJA
Heard:
12
March 2018
Delivered:
28
March 2018
Summary:
Complaint
to the National Consumer Commission under the
Consumer Protection Act
68 of 2008
– complaint referred to the National consumer
Tribunal under
s 73(2)
(b)
of that Act –
s 147
of the
National Credit Act 34 of 2005
precluded the Tribunal from granting a costs order against the
Commission on it withdrawing the referral.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Thobane AJ sitting as court of
first instance):
1
The appeal succeeds, with costs.
2
The order of the court a quo is set aside and substituted with the
following:
‘
The
application to review and set aside the order of the Tribunal of 16
November 2015 is dismissed, with costs.’
JUDGMENT
Leach
JA (Navsa, Seriti and Mocumie JJA and Hughes AJA concurring)
[1]
A finding in regard to costs lies at the heart of this appeal. As a
general rule this court declines to hear appeals solely
against
costs. But that is due to costs of legal proceedings being a matter
which lies within the discretion of the court of first
instance, a
discretion which if exercised judicially brooks no interference. The
relief sought in this appeal, however, is not
whether a discretion to
award costs was properly exercised. It is whether the twelfth
respondent, the National Consumer Tribunal
(the Tribunal) established
under
s 26
(1) of the National Credit Act 34 of 2005 (the NCA),
had the power to make a costs award in the circumstances of this
case.
[1]
That is a matter of
law, which is appealable. The Gauteng Division of the High Court,
Pretoria held that the Tribunal indeed had
the power in the
circumstances of this case to make such an award, but granted leave
to appeal to this Court.
[2]
The appellant, the National Consumer Commission (the Commission), was
established by s 85(1) of the Consumer Protection Act
68 of 2008 (the
CPA) ‘as an organ of state within the public administration,
but an institution outside the public service’.
As appears from
what is set out below, at the heart of this appeal is a complaint
against the first to eleventh respondents which
the Commission had
referred to the Tribunal, but subsequently withdrew.
[3]
The first to eleventh respondents are all entities conducting
business in a particular sector of what is commonly referred to
as
‘the timeshare industry’ in which the holders of
so-called ‘points’ use them to access accommodation
at
holiday resorts. Those who purchase these points become obliged
to pay levies which, in turn, are used to administer and
maintain the
various resorts. The first to eleventh respondents have made common
cause and, for convenience, I intend to refer
to them collectively as
‘Univision’, as did counsel in the appeal.
[4]
The Commission received hundreds of complaints from consumers
relating to matters such as Univision’s advertising, marketing
and sale of points and collection of levies. These complaints brought
into play the provisions of Chapter 3 (ss 68-78) of the CPA.
The
statutory matrix relevant to dealing with complaints of this nature,
are as follows:
(a)
Section
4(1) of the CPA provides for various persons who allege that a
consumer’s rights in terms of that Act have been infringed,
impaired or threatened, or that ‘
prohibited
conduct
’
[2]
has occurred or is occurring, to approach a court, the Tribunal or
the Commission.
(b)
Section
69 goes on to provide that a person contemplated in s 4(1) may seek
to enforce any right in terms of the CPA or in terms
of a transaction
or agreement, or otherwise resolve any dispute with a supplier by,
inter alia, filing a complaint with the Commission
[3]
in accordance with s 71 (which provides for a complaint to be filed
in a prescribed manner and form.)
(c)
Upon
receiving such a complaint, the Commission has various options open
to it under s 72. First, depending on the facts, it may
issue a
notice of non-referral which, subject to the provisions of s 75(1)
(b)
set out below, would be the end of its involvement in the matter. In
the event of it not issuing such a notice, the Commission
may either
refer the complaint to alternative dispute resolution – s
72(1)
(b)
– or to another regulatory authority having jurisdiction –
s 72(1)
(c)
– or it may direct an inspector to investigate the complaint as
quickly as practicable – s 72(1)
(d)
.
(d)
If an
investigation is held, s 73 provides that when it is concluded the
Commission, once again, may issue a notice of non-referral
to the
complainant – s 73(1). But if it does not do so, and is of the
view that a person may have engaged in prohibited conduct,
s
73(1)(
c
)(iii)
provides that
the Commission may,
inter alia, refer the complaint to the Tribunal under s 73(2)
(b).
(e)
In the
event of the Commission issuing a notice of non-referral in the above
circumstances, all is not lost for a complainant as
s 75(1)
(b)
provides
that as long as such notice is not issued on grounds contemplated by
s 116
,
the
complainant may refer the matter directly to the Tribunal with its
leave
.
[5]
As is apparent from this, there are two paths by way of which a
complaint may be referred to the Tribunal: first, after investigating
the complaint, the Commission refers it under s 73(2)
(b)
;
second, with leave of the Tribunal despite the Commission having
issued a notice of non-referral, the complainant refers it under
s
75(1)
(b)
.
[6]
In November 2014, the Commission used the first of these paths to
refer the complaints it had received against Univision to
the
Tribunal under s 73(2)
(b)
of the CPA. Section 75(3) required it to do so in the prescribed
form, which is set out in the regulations for matters before the
Tribunal, promulgated by the Minister of Trade and Industry under s
171 of the NCA
[4]
(all
references hereinafter to regulations are to these regulations).
Somewhat unusually for a referral of this nature, the regulations
require this to be done by way of a notice of motion in which an
order is claimed.
[5]
In its
notice of motion, the Commission sought an order that, inter alia,
provided:
‘
1.
That the Marketing; Offering and or Sale of “Points” as
“Timeshare/s”
in terms of the Property Time-sharing
Control Act and or Share Blocks Control Act is declared an
unconscionable conduct in violation
of Section 40 of the (CPA) and
are interdicted.
2.
That the agreement; demand and collection of levies from “Points
Purchasers”
on the basis of an obligation established in terms
of the Property Time-sharing Control Act and; Share Blocks Control
Act and or
Sectional Titles Act amount to false misrepresentation;
misleading and deceptive marketing or conduct and therefore a
violation
of section 41 of the (CPA).
3.
That the business; act and or conduct of the Respondents in terms of
which the
“Points” are sold as Timeshare is declared a
“fraudulent Scheme” and therefore in violation of section
42 of the (CPA).
ALTERNATIVELY
:
and in the event the National Consumer Tribunal finds that it does
not have the jurisdiction and or authority to give Orders as
prayed
for above . . . the Tribunal (makes) . . a finding that the
“agreement” in terms of which Points are sold; is
a fixed
term agreement in terms of section 14 of the (CPA)… and can
therefore be terminated in terms of the provisions of
section 14 of
the CPA.’
…’
[7]
The regulations, which refer to proceedings before the Tribunal as
‘an application’, require the notice of motion
to be
supported by affidavits and other documentary proof,
[6]
and provide for the filing of answering
[7]
and replying affidavits.
[8]
The
founding affidavit in this application, deposed to by a senior
investigator of the Commission, Mr Mabuza, was a lengthy affair
of
some 150 pages and was supported by hundreds of pages of annexures.
To this the Univision respondents filed a reply which included
a
number of points
in
limine
.
In their final form, the papers in the referral totalled almost 900
pages.
[8]
On 1 October 2015, a so-called ‘pre-hearing’ was held in
terms of reg 17. Presided over by a member of the
Tribunal, its
minutes record that the parties were informed that the Tribunal
wished to be addressed on a number of issues at the
commencement of
the hearing. These included the provisions of the CPA relied
upon in support of the relief claimed; the powers
of the Tribunal to
issue a declaratory order of the nature sought; the powers of the
Tribunal to hear an application based on contracts
entered into prior
to the CPA coming into operation; and the possible application of
prescription. It was also agreed that a number
of preliminary points
would be dealt with at the commencement of the hearing. These
included whether Mr Mabuza had the necessary
authority to bring the
application on the Commission’s behalf; the failure to join
various parties having a direct and substantial
interest in the
outcome; and whether the Commission was only entitled to make a
referral after concluding an investigation in accordance
with s 73(2)
of the CPA.
[9]
The matter was set down for hearing by the Tribunal on 9 November
2015. That morning, before the hearing commenced, the Commission
served a notice of withdrawal under reg 19(1) which provides that an
application may be withdrawn before it has been decided. Regulation
19(2) goes on to provide that a notice of withdrawal ‘may
include a consent to pay costs, or the other party may apply to
the
Tribunal for an order for costs’. Not only did the notice of
withdrawal not contain a tender of costs, but it specifically
recorded that the Commission ‘does not consent to pay costs,
pending the award of costs by the Tribunal’.
[10]
Univision was aggrieved at this turn of events. It felt it had been
dragged before the Tribunal at great expense; that the
Commission had
pursued the matter in a frivolous and vexatious manner; and that, in
the circumstances, and in the light of the
provisions of reg 25(7),
to which I shall refer in due course, the Commission ought to pay its
costs on a punitive scale. It immediately
applied to the Tribunal for
such an order.
[11]
There was a substantial obstacle to such an order. The referral had
come before the Tribunal under s 73(2)
(b)
rather than s
75(1)
(b)
. Section 147 of the NCA, which applies to hearings
before the Tribunal, provides:
‘
147(1)
Subject to subsection (2), each party participating in a hearing must
bear its own costs.
(2)
If the Tribunal-
(a)
has
not made a finding against a respondent, the member of the Tribunal
presiding at a hearing may award costs to the respondent
and against
a complainant who referred the complaint in terms of section 141(1)
or section 75(1)
(b)
of the (CPA) as the case may be; or
(b)
has
made a finding against a respondent, the member of the Tribunal
presiding at a hearing may award costs against the respondent
and to
a complainant who referred the complaint in terms of section 141(1)
or section 75(1)
(b)
of the (CPA) as the case may be.’
[12]
Relying on this section, the
Commission
argued that the Tribunal could only make a costs award against a
party if the matter had been referred to it under s
73(5): that, as
the referral had been under s 73(2), and there had in any event not
been a finding made against it, the Tribunal
was precluded from
making a costs award when the referral was withdrawn; and that each
party thus had to bear its own costs. In
its judgment delivered on 16
November 2015, the Tribunal upheld this argument and ordered
accordingly.
[13]
Smarting at this, Univision applied to the court a quo for an order
reviewing and setting aside the Tribunal’s order,
and remitting
the matter to the Tribunal for it to take a decision on the issue of
costs. The Tribunal and the Commission were
cited, respectively, as
first and second respondents. The Tribunal filed a notice
,
indicating its intention to abide the decision of the court, but the
Commission opposed the review.
[14]
In doing so, the Commission contended that the Tribunal had been
correct in concluding that s 147 of the NCA precluded a costs
award
other than each party pay its own costs. In addition, and in response
to an allegation that the referral to the Tribunal
had been frivolous
and vexatious, and an associated allegation that punitive costs were
justified, the Commission stated that a
fundamental question in the
referral had been whether the points system fitted comfortably into a
property time-sharing scheme
and a time-sharing interest within the
meaning of the Property Time Sharing Control Act 75 of 1983. It
described this as a ‘controversial
question which lay at the
heart of the referral’ that had been preceded by no less than
281 complaints to the Commission.
It went on to state that the
referral had ‘suffered from a number of technical defects,
which was the predominant reason
for the withdrawal’ and that
in these circumstances, even if the Tribunal could award costs, which
it denied, there was no
basis for it to be ordered to do so.
[15]
In reaching its decision on the issue in dispute, the court a quo
placed considerable emphasis on regs 19(2), 25(4) and 25(7)
which
provide:
‘
19(2)
A notice of withdrawal may include a consent to pay costs, or the
other party may apply to the Tribunal for an order
for costs.
.
. .
25(4)
The Tribunal may award costs in the circumstances contemplated in
section 147 of the Act, in the following
terms-
(a)
The fees of a single representative may be allowed between party and
party;
(b)
the costs between party and party must be taxed by the Registrar
according to the
tariff agreed between the parties or otherwise
according to the tariff applicable in the High Court;
(c)
the Registrar may tax a bill of costs for services actually rendered
in connection
with proceedings, and call for any book, document paper
or account that in the opinion of the Registrar is necessary to
properly
determine any matter relating to the taxation.
. . .
25(7)
The Tribunal may award punitive costs against any party who is found
to have made a frivolous or vexatious
application to the Tribunal.’
[16]
Reading these regulations together with the provisions of the CPA,
the court a quo concluded that s 147 did not preclude a
costs order
being issued against the Commissioner. In doing so, it said:
‘
I
see no reason why the Tribunal should not, when dealing with an
application for an award of costs brought after the matter is
withdrawn, adjudicate over the application and determine whether or
not an award of costs is warranted in the given circumstances.
The
same bar, would again in my view, not exist where a party seeks such
an award of costs on the basis of vexatiousness and frivolity,
in
which event such costs may be punitive in nature. . . . I do not
agree with the submission that (the Tribunal) is not empowered
to
consider an award of costs.I find that in terms of the regulations
the (Tribunal) is empowered to consider an award of costs
. . . .’
It
therefore set aside the Tribunal’s decision of 16 November
2015, and remitted the matter back to the Tribunal for it to
reach a
decision on Univision’s application that the Commission pay its
costs.
[17]
In considering the correctness of this decision, it is necessary to
state at the outset that the court a quo overlooked the
essential
difference between a referral to the Tribunal under s 73 of the CPA,
on the one hand, and civil litigation in which costs,
as a general
rule, follow the event, on the other. The Commission is not an
ordinary civil litigant. It is, as I have stated, an
organ of state.
It serves to protect the economic welfare of consumers, who of course
play a vital role in the economy and thereby
contribute to the fiscus
and development of the country. The Commission functions, inter alia,
to prohibit unfair marketing and
business practices and to promote a
consistent legislative and enforcement framework for consumer
transactions. Section 99 of the
CPA spells out the various
enforcement functions the Commission has to protect consumer
rights.
[9]
In referring a matter
to the Tribunal under s 73(2), it does not merely seek redress for a
personal infringement of a civil right,
but acts in the public
interest in pursuance of its statutory obligation to do so in order
to enforce consumer rights, not only
on behalf of those who have
complained to it, but also of the public at large. Consequently,
there is no reason for the general
rule in regard to costs in civil
litigation to apply to referrals made by the Commission to the
Tribunal.
[18]
On the other hand, the same cannot be said in regard to complainants
who refer matters to the Tribunal under s 73(5). Such
a referral
would have been made in the face of the Commission, the regulatory
body with the necessary expertise, having decided
that the complaint
lacks merit – either on receiving the complaint for the reasons
set out in s 72(1)
(a)
,
or after investigating the matter. In these circumstances, where a
complainant persists in advancing its complaint without the
Commission’s support, a referral is far more akin to a civil
trial. And if the complaint is upheld by the Tribunal, there
is every
good reason to award costs to the successful complainant. On the
other hand, where the complaint is unsuccessful and the
outcome
vindicates the Commission’s issue of a notice of non-joinder,
policy considerations justify the Tribunal ordering
the complainant
to pay the costs.
[19]
There is thus every reason for the legislature to have limited the
Tribunal’s power to award costs as it did in s 147.
But more
importantly, there is another fundamental flaw in the reasoning of
the court a quo. It appears to have lost sight of the
regulations
being subordinate to the empowering statute under which they were
promulgated, and that it is impermissible to treat
them as a single
piece of legislation. It is trite that regulations can neither be
used as an aid to interpret the statute under
which they were made
nor be read so as to broaden the scope of the power extended by the
statute. As was stated in
Shanahan v Scott
[1957] HCA 4
;
(1956) 96 CLR 245
at 250, a dictum cited with approval by this court in
Bezuidenhout
v Road Accident Fund
2003 (6) SA 61
(SCA) at 65G-I, the power
delegated by an enactment:
‘
(D)oes
not enable the authority by regulations to extend the scope or
general operation of the enactment but is strictly ancillary.
It will
authorise the provision of subsidiary means of carrying into effect
what is enacted in the Statute itself and will cover
what is
incidental to the execution of its specific provisions. But such a
power
will
not support attempts to widen the purposes of the Act, to add new and
different means of carrying them out or to depart from
or vary the
plan which the Legislature has adopted to obtain its ends
.’
(My emphasis)
[20]
Consequently, a regulation which does not give effect to a provision
in the enabling Act, or seeks to provide powers beyond
those
envisaged by the Act, would be
ultra
vires
and unenforceable. But that is not here the case. Regulations 19(2),
25(4) and 25(7) are compatible with the power extended to
the
Tribunal under s 147(2) to make a costs award in the circumstances
envisaged in that sub-section – ie in cases in which
the
referral was made by a complainant (not the Commission) under s
75(1)
(b)
.
That is no reason to hold that those regulations are of force and
applicable in any other circumstances beyond those spelled out
in s
147. To do so would be to impermissibly extend to the regulations the
force of a statute: indeed in the present case, it would
afford them
statutory force overriding the specific limitation the legislature
imposed upon the Tribunal in respect of its power
to award costs.
[21]
The court a quo therefore made the basic error in regarding the
regulations not as ancillary to s 147(2), but to operate separately
and in addition to that section to broaden the powers extended
thereunder. This was impermissible. It ought to have held that the
cost provisions in regs 19(2), 25(4) and 25(7) were only of
application in cases in which an award of costs was authorised under
the CPA, and that unless the present was a matter referred to in s
147(2) – ie one referred to the Tribunal under s 75(1)
(b)
–
then by reason of s 147(1) the parties were obliged to bear
their own costs.
[22]
Counsel for Univision correctly conceded that if regs 19(2), 25(4)
and 25(7) had to be read solely with the terms of s 147
of the NCA,
the Tribunal was not authorised to make a costs award against the
Commission. However, he tentatively suggested that
as the withdrawal
had been filed before the actual hearing started, and as s 147
envisages parties ‘participating in a hearing’
bearing
their own costs, it was of no application. His lack of enthusiasm for
the point was well-founded. It would be absurd to
interpret the
section in such a way that it only applied to costs incurred once an
actual hearing has commenced, denying a party
from a costs order from
that stage onwards but not before. Clearly the section was intended
to apply to all costs associated with
a matter once a referral is
made to the Tribunal.
[23]
The reasoning and conclusion that I set out above is in all material
respects precisely the same as that adopted by the Constitutional
Court in
Competition Commission of South Africa v Pioneer Hi-Bred
International Inc & others
2014 (2) SA 480
(CC) paras 29 –
40. In that matter, the court was called upon to deal with the effect
of
s 57
of the
Competition Act 89 of 1998
and the regulations
thereunder dealing with the Competition Tribunal, all of which are in
terms similar to
s 147
of the NCA and the regulations in issue in
this case. On a parity of reasoning to that in this judgment, the
Constitutional Court
held that the Competition Tribunal was precluded
from making a costs order against the Competition Commission.
[24]
For some inexplicable reason neither the Tribunal, nor the court a
quo, nor this Court was referred to that judgment which
is decisive
of the issue between the parties. Be that as it may, it is clear in
this case that
s 147
of the NCA precluded the Tribunal from granting
Univision’s application for the Commission to pay its costs
when the referral
was withdrawn. That being so, the Tribunal
correctly refused to make an award of costs against the Commission
and the court quo,
in turn, erred in setting aside the Tribunal’s
order. The appeal against the order of the court a quo must therefore
succeed.
There is no reason for costs not to follow the event.
[25]
The following order is made:
1
The appeal succeeds, with costs.
2
The order of the court a quo is set aside and substituted with the
following:
‘
The
application to review and set aside the order of the Tribunal of 16
November 2015 is dismissed, with costs.’
______________
L
E Leach
Judge
of Appeal
Appearances
For
the Appellants:
A Govender
Instructed
by:
Gildenhuys Malatji Attorneys, Pretoria
Honey Attorneys,
Bloemfontein
For
the First Respondents: H
Epstein SC (with him S Cohen)
Instructed
by:
David Feldman Attorneys, Pretoria
Lovius Block
Attorneys, Bloemfontein
[1]
Section 27
of the NCA extends
the following functions to the Tribunal:
‘
The
Tribunal or a member of the Tribunal acting alone in accordance with
this Act or the
Consumer Protection Act, 2008
may─
(a)
adjudicate in relation to any─
(i)
application that may be made to it in terms of this Act, and make
any order provided for in this Act in respect of such
an
application; or
(ii)
allegations of prohibited conduct by determining whether prohibited
conduct has occurred and, if so, by imposing a
remedy provided for
in this Act;
(b)
grant an order for costs in
terms of section 147; and
(c)
exercise any other power
conferred on it by law.’
[2]
Defined in s 1 of the CPA as an
act or omission in contravention of the CPA.
[3]
Section 69
(c)
(iv)
of the CPA.
[4]
Published under GN 789, GG
30225, 28 August 2007 and amended by GN 428, GG 34405, 29 June 2011.
[5]
See the definition of
‘Applicant’ in reg 1 as read with reg 4 and form TI.r4
appended to the Regulations.
[6]
Regulation
4(2) read with reg
7.
[7]
Regulation 13.
[8]
Regulation 14.
[9]
Section
99 reads:
‘
The
Commission is responsible to enforce this Act by─
(a)
promoting informal resolution of any dispute arising in terms of
this Act between
a consumer and a supplier, but is not responsible
to intervene in or directly adjudicate any such dispute;
(b)
receiving complaints concerning alleged prohibited conduct or
offences, and dealing
with those complaints in accordance with Part
B of Chapter 3;
(c)
monitoring─
(i)
the consumer market to ensure that prohibited conduct and offences
are prevented,
or detected and prosecuted; and
(ii)
the effectiveness of accredited consumer groups, industry codes and
alternative
dispute resolution schemes, service delivery to
consumers by organs of state, and any regulatory authority
exercising jurisdiction
over consumer matters within a particular
industry or sector;
(d)
investigating and evaluating alleged prohibited conduct and
offences;
(e)
issuing and enforcing compliance notices;
(f)
negotiating and concluding undertakings and consent orders
contemplated in section 74;
(g)
referring to the Competition Commission any concerns regarding
market share, anti-competitive
behaviour or conduct that may be
prohibited in terms of the Competition Act, 1998 (Act 89 of 1998);
(h)
referring matters to the Tribunal, and appearing before the
Tribunal, as permitted or
required by this Act; and
(i)
referring alleged offences in terms of this Act to the National
Prosecuting
Authority.’