The National Consumer Tribunal (NCT) dismissed a condonation application in a case involving an insurer’s alleged liability for the actions of a service provider. It said insurers do not fall under the definition of suppliers in the Consumer Protection Act (CPA).
Norton Rose Fullbright recently highlighted the implications of Mokgoke v Momentum Insure Company Limited in an article published on the law firm’s websiteSantam%20graphs.
As set out in the Tribunal’s ruling of 20 September 2023, Mojela Mokgoke, the owner of a Mercedes Benz CLA 200, applied for leave to refer the matter involving Momentum Insure and the repercussions linked to an unsuccessful insurance claim to the Tribunal on 28 June last year.
Mokgoke’s troubles started three years prior when he submitted a claim to Momentum Insure (the respondent) for water leakage in his vehicle. Two days after submitting the claim in June 2020, the insurer collected the vehicle and referred it to various service providers. In August, the insurer informed Mokgoke that his claim had been rejected because it was not covered by the policy.
When Mokgoke went to collect his vehicle, he found it in a terrible state. The front lights were missing, the bumper was damaged, and the tracker had been removed. A sign on the windshield read “engine dead”, and he discovered engine parts strewn about inside. Mokgoke claimed that none of this had been done with his permission. He refused to take possession because of the vehicle’s condition.
He contended that Momentum was liable for the actions of the appointed service providers, “who failed to exercise the required care”. While he did not dispute the rejection of the insurance claim, he claimed damages for the loss.
In March 2022, the National Consumer Commission (NCC) advised Mokgoke to refer his complaint to the FSCA, which referred him to the Motor Industry Ombudsman. In June last year, Mokgoke applied for leave to refer the matter directly to the NCT.
In his application, he asked the Tribunal to instruct Momentum to pay him R500 000 for pain, emotional distress, and inconvenience, along with several other requests. These included returning the vehicle and covering all expenses for tests by an independent body of his choice, purchasing a new vehicle or compensating him to buy one, covering private storage costs, refunding arrears on the vehicle’s licence, refunding insurance premiums with interest set by the Tribunal, and settling the outstanding balance with the tracking company.
Prospects of success
The issue before the Tribunal was whether the late filing of Mokgoke’s application for leave to refer a matter directly to the Tribunal should be condoned.
Although it was noted that the delay of 12 months to submit the matter to the Tribunal, following the response by the FSCA, was “excessive”, the Tribunal said that, in determining the issue of condonation, it had to consider the applicant’s prospects of success.
After considering the facts, the Tribunal said Mokgoke did not have a reasonable prospect of success: the Tribunal does not have the jurisdiction to consider the complaint because the insurer is not a supplier as defined in the CPA.
“It was also common cause that third parties had provided the services which led to the damage, and the applicant did not claim against those suppliers as respondents in the matter,” said Donald Dinnie, director at Norton Rose Fullbright Africa.
What the CPA says
Section 5(1)(c) of the CPA states that the Act applies to “goods or services that are supplied or performed in terms of a transaction to which this Act applies, irrespective of whether any of those goods or services are offered or supplied in conjunction with any other goods or services or separate from any other goods or services”.
Section 1(c) of the CPA defines “service” as including “any banking services, or related or similar financial services, or the undertaking, underwriting or assumption of any risk by one person on behalf of another, except to the extent that any such service” –
- constitutes advice or intermediary services that are subject to regulation in terms of the Financial Advisory and Intermediary Services Act; or
- is regulated in terms of the Long-term Insurance Act or the Short-term Insurance Act.
The Tribunal held that Momentum’s services are governed by the Short-term Insurance Act; therefore, the CPA does not apply to the services provided by the respondent.
Dinnie added that section 10(1)(a) of the Financial Sector Regulation Act states that the CPA does not apply to or in relation to a function, act, transaction, financial product, or financial service that is subject to a financial sector law regulated by the FSCA.
Consumers’ right to enforcement
The Tribunal stated that section 69 (Enforcement of rights by consumer) of the CPA regulates as follows:
A person contemplated in section 4(1) may seek to enforce any right in terms of this Act or in terms of a transaction or agreement or otherwise resolve any dispute with a supplier by –
(a) Referring the matter directly to the Tribunal, if such a direct referral is permitted by this Act in the case of the particular dispute;”
Dinnie explained that, as stated by the Tribunal, the dispute revolved around the contractual obligation of an insurer in terms of its insurance contract.
“The services of insurers are governed by the Insurance Acts, and not by the CPA,” he said.
The Tribunal advised Mokgoke to approach a court for relief as required by the insurance contract.
“As the particular dispute resolves around the contractual obligations of an insurer in terms of its insurance contract, the applicant is obliged to approach a court for relief as agreed to in terms of the contract of insurance,” the NCT said.
The Tribunal further found that the alleged conduct by Momentum included allegations of breach of contract and delict. The NCT said it did not have the statutory authority to adjudicate such complaints.
“More particularly, the relief requested includes a request for general damages, which can only be considered by a court with jurisdiction.”
For these reasons, the Tribunal dismissed the condonation application.
