Consumer Tribunal finds another three used car dealers guilty of prohibited conduct

The National Consumer Tribunal has found another three used car dealers guilty of engaging in prohibited conduct when they sold used cars to consumers.

Of these three, two were fined R100 000 each for making a consumer sign an agreement intended to avoid their obligations or duty in terms of the Consumer Protection Act (CPA).

One of them forced the consumer to sign a document that deprived her of her rights under the CPA, while the other two were found to have sold defective vehicles to consumers. All three consumers complained to the National Consumer Commission (NCC).

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Squad Cars fined for agreement intended to void obligations

In the first case, a consumer complained to the NCC that Squad Cars, a used car dealer from Pretoria, allegedly contravened several sections of the CPA when she bought a 2014 BMW 316i for R200 000. According to the purchase agreement, the supplier would not be liable for any vehicle damage after purchase.

Two months later, the car overheated with the coolant and fan running properly and a warning light on the cluster illuminated, indicating that the consumer must stop the car. She informed the dealer of the mechanical problem and enquired about their warranty but did not explicitly request the dealer to repair the car.

As the dealer outlined in the conditions of sale that the vehicle could have been in an accident and reconditioned, the consumer was led to believe that Squad Cars would not be liable for any repairs.

The consumer took the vehicle to a BMW dealership where it was confirmed that the top gasket had blown. The thermostat and coolant were also damaged. On opening the engine, the dealership suspected that the engine had been opened previously opened.

The cylinder head was warped and they suspected it had been removed previously, as the cylinder head gasket fitted in the vehicle was not a genuine BMW part.

Complaint investigated

The consumer then lodged a complaint with Motor Industry Ombudsman of South Africa (MIOSA), but MIOSA could not assist her because she had taken her vehicle to a third party for repairs.

MIOSA issued a recommendation indicating that the relief requested was impossible and advised the consumer to file a complaint with the NCC.

Based on this, the NCC formed a reasonable suspicion that Squad Cars had contravened the CPA and investigated the complaint. As Squad Cars is owned by a trust, the trustees, as well as the trust, were also part of the respondents with Squad Cars.

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Dispute about who caused damage to engine

According to Squad Cars, there is no evidence of a defect at the date of purchase and the engine failure could have resulted from driver error.

The dealer also took issue with a third party stripping the car, arguing that disassembling the car without their permission constituted an intervention by a third party, nullifying the inherent statutory warranty.

The respondents outlined that the consumer drove 2,979km within one month and continued to drive the car without water in the cooling system. In addition, the consumer did not cancel the sale agreement or return the car to the supplier for a refund or repairs, they said.

The respondents also argued that the contractual terms did not attempt to circumvent the supplier’s responsibilities in terms of the CPA but that they were lawful and standard clauses in the industry.

The consumer’s evidence about when she stopped the car was questioned and the Consumer Tribunal decided to disregard her evidence.

However, the NCC still wanted a declaratory order that the respondents contravened various sections of the CPA and that the contraventions be declared prohibited conduct.

During the hearing, the NCC abandoned some of the alleged transgressions and confirmed that it only sought a declaratory order for the alleged contravention of sections 48(1)(a)(ii) and (c) and section 55(2)(b).

The NCC also abandoned its plea for a refund of the purchase price and asked the Consumer Tribunal to directing the respondents to refund the consumer the costs incurred in an attempt to repair the vehicle in the sum of R73 977.78 and pay an administrative fine in the amount of R1 million.

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Making a consumer sign agreement to waive rights

According to section 48(1)(a)(ii), a supplier is not allowed to offer to supply, supply, or enter into an agreement to supply any goods or services on terms that are unfair, unreasonable or unjust.

A supplier is not allowed to require a consumer to waive any rights, assume any obligation or waive any liability of the supplier on unfair, unreasonable, or unjust terms or impose any such terms as a condition of entering into a transaction.

The NCC submitted that the supplier entered into an agreement with the consumer on terms and conditions that waived the consumer’s right to fair, reasonable and just terms.

The commission added that the exemption clause in the purchase agreement also constitutes prohibited conduct, as a supplier cannot contract out of its statutory obligations.

According to the respondents, the purchase agreement’s terms and conditions are fair and standard industry terms and conditions. They argued that the exclusion was the result of an arms-length transaction and that the consumer agreed to the clause.

According to the evidence the purchase agreement contained clauses stating that Squad Cars does not issue any warranty/ies whatsoever to any buyer, buyers have an option to buy a warranty from Squad Cars and that the consumer indemnifies and holds Squad Cars harmless against any liability and in respect of any losses, damages and/or latent and patent defects which may arise or surface during, with or after the purchase of the vehicle.

In addition, there is a clause that says the consumer confirms that he will not be entitled to institute any claims of any nature about the car, either civil or criminal against Squad Cars.

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Consumer Tribunal’s judgment

The Consumer Tribunal said in its judgment that section 56 provides for a six-month implied warranty from the purchase date. The supplier was obliged to repair the car if the consumer chose to.

By including the exclusion clause in the purchase agreement, the supplier deprived the consumer of her rights in terms of section 56.

Despite the agreement that Squad Cars would not be responsible for future repairs, the Consumer Tribunal found that the respondents were statutorily prohibited from using the exclusion and this contravenes the CPA.

Similarly, to the extent that such a clause would have the general effect of defeating the purpose of the CPA, such an agreement contravenes the CPA.

Therefore, the Tribunal found that including these clauses in the purchase agreement was a blatant attempt to defeat the purposes of the CPA and clear evidence that the vehicle was sold to the consumer on unfair, unreasonable and unjust terms, all aimed at getting the consumer to waive her consumer rights and the respondents’ liability.

The Tribunal, therefore, found that the respondents contravened sections 48(1)(a)(ii) and 48(1)(c) of the CPA and although the Consumer Tribunal could not find that Squad Cars contravened section 56, it said that the consumer should consider applying for a certificate of prohibited conduct from the chairperson of the Tribunal and instituting a claim for the assessment and awarding of damages in a civil court.

In the end the Consumer Tribunal found that the respondent’s conduct displayed little or no regard for the spirit and purpose of the CPA and that a fine of R100 000 will be appropriate.

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Bryanston Executive Cars: R100k fine for prohibited conduct

The Consumer Tribunal also slapped Bryanston Executive Cars CC with an administrative fine of R100 000 for conduct that was deemed prohibited.

The NCC investigated after a consumer complained that the 2013 Audi 7 he bought from Bryanston Executive Cars CC broke down within two months after purchase. The supplier ignored the consumer’s request for redress.

The Tribunal ruled that the supplier distributed a defective vehicle, contravening sections 56(2) read with 55(2)(c) of the CPA.

In addition, the Tribunal found that Bryanston Executive Cars also contravened section 51(1)(b)(1) and (ii) by making the consumer sign an agreement that purported to avoid its obligations or duty in terms of the CPA.

This conduct was declared prohibited and the supplier was ordered to repair or replace the engine and pay an administrative fine of R100 000.

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Wynberg Used Cars refused to repair car

The Consumer Tribunal also declared the conduct of Wynberg Used Cars (PTY) Ltd. prohibited. The NCC received a complaint from a consumer alleging that the Honda Acord he bought from Wynberg Used Cars showed defects within two weeks of purchase.

The NCC’s investigation revealed that the consumer took the car back to the dealer for repairs, but Wynberg Used Cars refused to fix all the defects.

The Tribunal found that Wynberg Used Cars contravened section 56 (2)(a) read with section 55 (2)(a) to (c) of the CPA by selling a defective vehicle.

According to section 55(2)(a) to (c), every consumer has the right to receive goods that are reasonably suitable for the purpose for which they are generally intended, of good quality and usable and durable for a reasonable period of time.

Section 56(2)(a) states that a consumer can return goods to the supplier without penalty within six months after purchase and the supplier must, at the direction of the consumer, repair or replace the unsafe or defective goods.

“The conduct of these suppliers is a clear disregard of the CPA and the rights of consumers. We believe these judgments will deter other suppliers from engaging in the same conduct,” says Hardin Ratshisusu, the NCC’s acting commissioner.