Consumer Law Review_April 2013
Published on: Apr 15, 2013
Dear Consumer Law Review recipient
It has been some time since our last issue, and a lot has happened. There have been some signs of activity at the National Consumer Commission and the country learned that it might not know what it is doing.
Afriforum won its case against the Department of Trade and Industry to set aside the exemption of low level municipalities from the scope of the CPA. We will discuss the implications of this decision.
The Protection of Personal Information Bill continues on its course through parliament although it seems to have come to a halt in the NCOP. This edition includes an update on the status of the bill. We will continue our introductory articles on the bill in the next edition.
Elizabeth de Stadler
Elizabeth de Stadler is the editor of the Consumer Law Review and a senior associate at Esselaar Attorneys in Cape Town (http://www.esselaar.co.za). Her practice consists of general regulatory compliance due diligences; training and workshops on regulatory compliance; opinion work on the CPA, the National Credit Act, banking law, gaming and lotteries, insurance, medical law, marketing law, contract law; and plain language drafting.
She conducts regular workshops and training sessions on the CPA and other consumer legislation for businesses and for Law@work, a unit situated within the Law Faculty at the University of Cape Town. She is the co-author of a consumer law textbook and a guide to plain language legal drafting, both of which are to be published by Juta Law.
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IN THIS EDITION OF THE CONSUMER LAW REVIEW
— What is going on at the NCC?
— Meat labelling scandal
— Consumer remedies for bad service delivery by municipalities
— Enactment of POPI delayed
— Plain language tip
What is going on in the NCC?
It has been some months since we wrote anything on the NCC — the September 2012 edition, in fact. At that point the beleaguered Commissioner Mohlala-Mulaudzi was replaced by her deputy, Mr Ebrahim Mohamed who has been the acting consumer commissioner ever since. He has received good reviews and after a period of relative silence, the NCC has started to become more active again.
According to Business Day Live, the NCC has withdrawn all compliance notices which are currently before the Consumer Tribunal. In light of the fact that the NCC has lost all of the challenges against the NCC thus far, this move was prudent. It is likely that most if not all of the notices suffer from the same procedural problems. These cases were discussed in the March/April, July and August 2012 editions of the CLR. It has also been reported that the NCC has been in talks with the suppliers in question, signalling a departure from the decidedly trigger-happy approach of the past.
The Minister of Trade and Industry has published a code of conduct for the automotive industry for comment (GN 113 in Government Gazette 36155 of 15 February 2013). A code of conduct, once finalised and published by the Minister of Trade and Industry, becomes ‘law’ for that particular industry. Section 82 of the CPA governs this process.
In a similar vein, a code for the advertising industry has been published for comment (GN 224 in Government Gazette 36253 of 22 March 2013). This includes an application for the accreditation of an ombudsman scheme. The application for an ombudsman scheme was made by the Advertising Standards Association of South Africa and the code which it wants to accredit is its own. If it is approved it means that a failure to comply with the code will be prohibited conduct and will carry the penalties contemplated in the CPA.
Section 24(4) of the CPA provides that the Minister of Trade and Industry may prescribe categories of goods which are required to have ‘trade descriptions’, which includes labelling, and the information which must be disclosed to the consumer. To date only certain categories of textiles, clothing, shoes and leather goods have been affected by this sub-section (see regulation 6 of the Consumer Protection Act Regulations). The Minister published a notice in March 2013 (GN 238 in Government Gazette 36285 of 22 March 2013) containing a proposed extension to processed and packaged meat products and dried and packaged meat products. Comments must be made by 25 May 2013. This notice and section 24 are discussed in some detail in the next article.
There have been reports in the media that a new retail ombudsman is about to become operational. It will be called the Consumer Goods and Services Ombud. The ombud scheme and the code of conduct which it will enforce have not yet been accredited by the NCC. Because the ombud does not represent a regulated industry, this means that the ombud will not be recognised for purposes of the CPA and the code which it will enforce is not yet binding on retailers. It is reported that the code will be published for comment soon.
Meat labelling scandal
I considered not writing about the meat labelling scandal as so much has been written about it already. But, given the NCC’s involvement and the recent notice which it published in terms of section 26 it is worthwhile to take a closer look at a supplier’s obligations in terms of the CPA. For purposes of this article I am going to assume, perhaps incorrectly, that this is not a food safety issue, but rather simply a case of misinformation.
As a start the CPA provides that all consumers have a right to information. This right is given life by section 22 to 28 which deals with topics like the right to plain and understandable language (a regular topic in the CLR), the disclosure of the price, the provision of sales records and importantly, product labelling and ‘trade descriptions’. The concept of a ‘trade description’ is rather wide (see the definition in section 1). It includes ‘any description, statement or other direct or indirect indication, other than a trade mark, as to —
- the number, quantity, measure, weight or gauge of any goods;
- the name of the producer or producer [presumably this is a drafting error] of any goods;
- the ingredients of which any goods consist, or material of which any goods are made;
- the place or country of origin of any goods;
- the mode of manufacturing or producing any goods;
- any goods being the subject of any patent, privilege or copyright’.
Clearly labelling is a ‘trade description’ and the ingredients of a particular product are relevant.
An important question in the saga around the labelling of meat, centres around who the accountable party is. Retailers were quick to assure the public that they do testing to ensure that their products are what they say they are. This makes business sense, but do they have a legal obligation to check that the labelling on their products is accurate? Section 24 distinguishes between the person who applies the label and the retailer who sells the goods. In terms of section 24(2) a person must not knowingly use labelling which is misleading. Strangely enough, the duty on a retailer (according to section 1, the person who supplies to the consumer) is more onerous. In terms of section 24(3) a retailer must not supply goods if the retailer ‘knows, reasonably could determine or has reason to suspect that’ the labelling is likely to mislead a consumer.
Clearly, the CPA applies and consequently it is not surprising that the NCC got involved. The Department of Trade and Industry promised that the regulation of meat products would be strengthened. It proposes to achieve this through section 24(4)(c) which enables the Minister to prescribe categories of goods that are required to disclose certain information on their labelling. The Minister has published a notice for comment which provides that ‘processed and packaged meat products’ and ‘dried and packaged meat products’ must in future include the following information in the trade description:
- the number, quality, measure, weight or gauge of the goods,
- the name of the producer of the goods,
- the ingredients of which the goods consist, or material of which the goods are made, and
- the mode of manufacturing or producing the goods.
This notice does very little to change the law as it stands or to address the issue. The issue is not that we did not know what the products contained, but that the packaging misrepresented what the ingredients were. It has always been the case that labelling could not be misleading or lie about the ingredients which the product contains.
The question as always will be whether these regulations will be enforced. Strengthening the regulations relating to labelling will have little or no effect, if the agencies tasked with ensuring compliance are not strengthened too. The NCC has had a less than stellar performance in enforcing the CPA and probably does not have the capacity to do the DNA testing required to establish whether products contain any ingredients which they do not. It may be that it will not be the NCC, but rather the Advertising Standards Authority of South Africa who will be enforcing labelling regulations in the future. That is, if their bid to be accredited in terms of the Act is successful (see the article above). They will only adjudicate complaints relating to labelling and will probably not have the capacity to police compliance in the industry. Next month’s edition will include an article on the ASASA code.
Consumer remedies for bad service delivery by municipalities
Poor service delivery by municipalities has become a reality for many consumers in South Africa. Ratepayers, such as the Moqhaka Rate Payers and Residents Association, have resorted to refusing to pay rates. Their case is currently awaiting judgment in the Constitutional Court (Rademan v Moqhaka Municipality and Others). The Consumer Protection Act applies to service delivery by the State and includes the provision of water, electricity, waste removal etc. Why then could consumers not bring claims against their municipality up until now?
This was the result of item 2(3)(b) of Schedule 2 (Transitional Provisions) of the CPA which provides that the Minister can defer the application of the Act to local municipalities. The Minister did this in GN 221 in Government Gazette 34116 of 14 March 2011, but partially revoked it in GN 898 in Government Gazette 34724 of 31 October 2011. The operation of sections 8 to 10 and sections 53 to 61 (which relates to the consumer’s right to equality and the right to goods and services which are of a good quality) remain deferred until 31 December 2012 for medium capacity municipalities and 30 June 2014 in the case of low capacity municipalities. This exemption does not apply to high capacity municipalities as defined in the Local Government: Municipal Finance Management Act 56 of 2003. This is why many of the initial complaints lodged with the NCC were against the City of Johannesburg (see City of Johannesburg v National Consumer Commission NCT/2667/2011/101(1)(P) & NCT/2081/2011/101(1)(P)).
The purpose of this exemption is explained in item 2(3)(b) itself in that the grounds on which the exemption can be granted is ‘that additional time is required for adequate preparation of the administrative systems necessary to ensure that the municipality or organ of state can meet its obligations in terms of this Act efficiently and effectively.’
This exception has been set aside by the North Gauteng High Court as of the end of March 2013 (Afriforum v Minister of Trade and Industry and Others (52545/2011 ZAGPPHC 36 (28 February 2013)). The court took issue with the fact that all low level municipalities were exempted while information regarding ‘what each municipality is capable of’ was available to the Minister (see para ). It was held that the Minister ‘cannot defer without accuracy, rights as fundamental as consumer rights to the citizenry living within a particular municipality’ (see para ). As a result the exemption of the lower level municipalities has been set aside (this order has already take effect) and the Minister was ordered to publish a new notice by 31 July 2013 listing each individual municipality which should be exempted.
This means that at least until 31 July 2013 consumers can lodge complaints against any municipality, should it fail to deliver good quality service in terms of section 54.
Enactment of PoPI delayed
The latest news on the Bill’s journey through the parliamentary committees is that on 13 February 2013 the NCOP’s Select Committee on Security and Constitutional Development heard more detailed submissions from its content advisor, the drafters from the Department of Justice and Constitutional Development, the SA Law Reform Commisson and the Financial Services Board.
The minute of that meeting reflects that there is a way to go still for this bill. In addition, the workshop which was planned for early March 2013 was postponed until further notice (see cyber law expert Francis Cronje’s blog).
We will continue with our introductory articles on POPI in the next CLR.
Plain language tips
Have you ever wondered how to increase the effectiveness of the definition section of your contracts?
Definitions are often the first part of the contract that confront both the drafter and the reader. Several techniques can be used when dealing with definitions, to enhance their effectiveness, with the further benefit of increasing the comprehensibility of a contract.
A few of the do’s and don’ts to keep in mind when working with definitions in your contract are:
- Avoid definitions as far as possible or keep them to a minimum.
- Inform readers how defined terms will be distinguished from the rest of the text.
- Include your list of definitions at the beginning of your contract so that readers can familiarise themselves with the terms they will be confronted with further on in the contract.
- Place the definitions in alphabetical order to enable readers to find the definitions as easily as possible.
- Assign the most common definition to a term; ie do not depart too much from the common meaning of a term.
- Remember that the sentence in which the definition is used must still make sense when the term is substituted with the definition. If it does not, the definition should be reformulated.
- Do not include definitions of terms that are not used in the contract; rather compile the list of definitions once the contract has been drafted.
- Do not include definitions of terms that are used only once or twice in the contract. Explain the terms at the relevant sections in the contract.
- Do not include the term being defined in the definition as that could leave the reader still not understanding the term.
- Do not use the defined terms in a definition; it makes it hard for readers to reach a full understanding of the definition. Rather repeat the information contained in the other definition.
- Do not include contractual terms in a definition. Readers might miss this important information if they choose to skip the definition section.
- Do not define commonly known terms.
© Elizabeth de Stadler and the Unit for Document Design at the Stellenbosch University Language Centre.
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