THE old VW Passat had done 280 000 km and cost R61 450 but it suited the new buyer just fine. Then, after just three days, it broke down. Her disappointment has been the public gain, however, as the dispute has led to a major new consumer protection decision.
And there’s more: she gets her money back, the car dealers must pay a fine of R100 000 for their unlawful contract with its “prohibited conduct”, plus there’s a warning of “significantly higher penalties” for future infringements by these or other motor dealers.
At first the outlook seemed poor for buyer, Ms H van Lill. When the car broke down she had it taken back to the sellers, Western Car Sales in Kraaifontein, and she asked for her money back. The dealers refused a refund and threatened to charge her storage costs if she did not remove the car.
Several attempts at resolving the dispute followed, but the dealers simply ignored it all, even the ruling in favour of Van Lill made by the motor industry ombudsman. Eventually she turned to the national consumer commission which brought an action on her behalf against the dealership, before the national consumer tribunal. Belligerent in response to Van Lill’s earlier efforts, the dealers neither filed an answer to the commission’s application, nor appeared at the hearing.
That commission had found the dealership’s standard agreements amounted to “prohibited conduct”, with clauses intended to “defeat the purposes” of the law and mislead the consumer. Would the tribunal agree?
It was a crucial test case, the first time the tribunal had to consider alleged prohibited provisions in a contract. Would there be blood on the floor? – A finding against the dealership with a significant fine, one that would make consumer sharks pay attention?
The tribunal delivered a most satisfactory critique of the dealership’s behaviour and its contract – a document that was filled with unlawfulness, the tribunal ruled.
One section of the contract appeared to indicate that a check had been made of the vehicle and its components and that everything was working. But another section, via a small font stamp, told a different story, declaring that the vehicle was sold with no certificate of roadworthiness, and no warranty. It was stamped as being in a “non-running” condition: “As is”/“Voetstoots”/“Scrap”.
But the tribunal pointed out that under the law, consumers have the right to goods “reasonably suitable for the purpose intended” and usable for a “reasonable period” of time, unless the consumer has been expressly informed otherwise beforehand and has expressly agreed to accept them in that condition. It also provides a six month period within which goods may be returned for a refund, repair or replacement.
The dealer’s “contract” used phrases that seemed to indicate the buyer “expressly agreed” to accept the car in a non-working condition. Yet there was no evidence she was warned the car was “scrap” – quite the reverse. She clearly bought the car on the understanding that she would have several years of use from it, and the contract includes confirmation by the seller that it was in good working condition.
The tribunal concluded that the car was sold to Van Lill as a usable vehicle in good working order, but at the same time the dealers tried to evade liability for any defects by inserting their standard escape clause with reference to “scrap”.
Here’s the crucial take-away: watch out for anyone who claims, after sale, that the goods were bought “voetstoots”. The tribunal found that the consumer protection laws did not contemplate a seller supplying goods “voetstoots”, without any liability whatsoever for defects. Refusing to take back the car was “prohibited conduct” and a fine was justified to indicate to the motor industry that non-compliance with the law would not be tolerated.
Since the tribunal may impose fines of up to R1m, this is tough talking.
- Carmel Rickard (First published in the Financial Mail, 28 September 2017)