RUNNING OUT OF ROAD

After ignoring several attempts to resolve a dispute around the sale of a used vehicle, a car dealership has been held to account for ‘prohibited conduct’

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’s 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 dealer must pay a fine of R100,000 for its unlawful contract and “prohibited conduct”, and there’s a warning of “significantly higher penalties” for future infringements.

At first the outlook seemed poor for buyer H van Lill. After the vehicle broke down, she had it taken back to the seller, Western Car Sales in Kraaifontein, and asked for her money back.

The dealer 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 dealer simply ignored these, even the motor industry ombudsman’s ruling in favour of Van Lill.

Eventually, she turned to the national consumer commission, which on her behalf brought an action against the dealership before the national consumer tribunal. Belligerent in response to Van Lill’s earlier efforts, the dealer neither filed an answer to the commission’s application, nor appeared at the hearing.

The 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 the tribunal find against the dealership and impose a significant fine, one that would make consumer sharks pay attention?

The tribunal ruled that the contract was filled with unlawfulness. One section 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 “nonrunning” condition: “As is”/“voetstoots”/“scrap”.

But consumers have the right to goods “reasonably suitable for the purpose intended” and useable 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.

There is also a six-month period within which goods may be returned for a refund, repair or replacement.

Sounding a warning

The dealer’s “contract” used phrases that seemed to indicate Van Lill had “expressly agreed” to accept the car in a nonworking 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 included 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, while at the same time the dealer tried to evade liability for any defects by inserting its standard escape clause with reference to “scrap”.

Here’s the crucial take-away: the tribunal found that the consumer protection laws do 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 noncompliance with the law will not be tolerated.

Since the tribunal may impose fines of up to R1m, this is tough talking.

The consumer protection laws do not contemplate a seller supplying goods ‘voetstoots’, without any liability whatsoever for defects