The farm was sold four months later to someone who did not mind that there was no dam and no croc, but this buyer was still not refunded.
The National Consumer Tribunal has fined an auctioneer R250 000 and ruled he must refund a couple from Lephalale in Limpopo after selling them a game farm. The brochure for the sale showed all the amenities, including a dam, as well as some of the animals, including a crocodile.
The only problem was that the farm did not have a crocodile, nor a dam. These were actually on the neighbour’s farm.
Juan and Freda Scholtz placed the winning bid for the game farm, Ba Batle, at an auction run by Root X Africa Auctioneers CC on the farm in June 2022. According to the auction advert, prospective buyers could view the farm for an hour before the auction starts.
No time to view whole farm before auction
The Scholz-couple arrived two hours before the auction would start to ensure they could still view the 370 hectare farm before bidding on it. However, they had limited opportunity as the gate was closed when they arrived.
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When the auctioneer, Dirk Pienaar, eventually provided access, he told them that there was a hunting party on the farm and therefore they could only view some of the farm buildings. This meant that the Scholtz couple had to rely on the marketing material provided in the bidder’s pack of Root X Africa Auctioneers, which included a photograph of a dam and a crocodile.
Juan Scholz placed the winning bid at the auction for R6.6 million and Freda Scholz paid the deposit of R660 000, as well as the auctioneer’s commission of R569 250.
However, the next day, they learnt that despite the photographs of a dam in the bidder’s pack, the dam was not on the farm they had bought but on an adjacent farm. The farm they bought had no dams at all, and obviously no crocodile either.
The couple then decided to cancel the sale because they did not get what they paid for: a dam and a crocodile. They demanded that Pienaar refund them the R1.2 million they paid and cancel the sale but fought in vain to retrieve their money from the auctioneer.
They consulted a local attorney who sent a number of letters to the auctioneer, but he refused to refund the payments despite having plenty of time and opportunity. Juan Scholz says it was tough to get a response out of Root X Africa or its attorneys.
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Couple still not refunded after a year
While still waiting for their money nearly a year later, they approached Trudie Broekmann, an attorney who specialises in consumer law, who sent the auctioneer a letter of demand. However, they were still not refunded.
Broekmann then referred the matter to the Consumer Tribunal that heard the case in July last year and gave its judgment in December.
According to the judgment, Root X Africa Auctioneers’ main defence was that the transaction was between the buyer and the seller and not between the buyer and the auctioneer. Root X Africa Auctioneers also claimed that including the photograph of the dam was an “innocent mistake”, as it was taken from the game farm’s Facebook page.
But the Consumer Tribunal dismissed Root X Africa Auctioneers’ defence and arguments in its judgment. “Root X Africa Auctioneers included a photograph depicting a dam in the bidders’ pack, which created the impression that the dam formed part of the game farm.
“The buyers were misled by this mistaken belief into buying the game farm. The auctioneer was aware of the dam’s ownership but failed to disclose it. The failure to do so rendered the representation false, deceptive and misleading,” the tribunal said in a scathing judgment.
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Photograph encouraged buyers to buy the farm
According to the Consumer Tribunal, including the photograph was material as it influenced the Scholtz couple’s decision to buy the farm. Freda Scholtz said that if she knew there was no dam, she would not have signed an agreement or if she did, it would have been on different terms.
The Consumer Tribunal also noted that Root X Africa Auctioneers failed to afford bidders a reasonable opportunity to inspect the game farm prior to the auction.
Broekmann points out that the key rulings in the judgment are that the Consumer Protection Act (CPA) regulates auctions and that auctions are regulated especially strictly because as an exception to the general rule in the CPA, goods can be sold voetstoots on auction.
The ruling makes it clear that auctioneers are required to be “highly transparent” for precisely that reason, she says.
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Sections of the CPA auctioneers failed to comply with
The Consumer Tribunal ruled that the auctioneers’ conduct showed a blatant disregard for the CPA and the purpose it was enacted for. According to the judgment, Root X Africa Auctioneers contravened sections 41(1)(a) read with 51(3), 48 (2), (d) and 49 (4).
Section 41 deals with false, misleading or deceptive representations and provides that suppliers are not allowed to directly or indirectly express or imply a false, misleading or deceptive representation about a material fact to a consumer when marketing goods, such as a dam on the farm.
Section 51, about prohibited transactions, agreements, terms or conditions, stipulates that such a transaction is void.
Section 48 deals with unfair, unreasonable or unjust contract terms and rules that a transaction or agreement, term or condition of a transaction or agreement, or a notice that a term or condition is purportedly subject to, is unfair, unreasonable or unjust if the transaction or agreement was subject to a term or condition, or a notice to a consumer contemplated in section 49 (1) or it was not drawn to the consumer’s attention.
Section 49 deals with the notice required for certain terms and conditions that limits the rights of the consumer. The supplier must draw the to the attention of the consumer before he signs the agreement or pays.
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Root X Africa Auctioneers disregarded consumer rights
The Consumer Tribunal ordered Root X Africa Auctioneers to refund R1.207 million plus interest to the Scholz couple within 30 business days of the judgment and pay an administrative fine of R250 000.
Broekmann says this judgment is good news for South African consumers, as it shows that the Consumer Tribunal will deal firmly with false, deceptive and misleading marketing and that auctioneers must observe the letter and spirit of the CPA.
“The Tribunal made it clear that even when an auctioneer does not know they are not stating the truth, it nevertheless qualifies as misrepresentation for purposes of consumer law. Any material misrepresentation entitles a consumer to cancel the contract.”
The Consumer Tribunal said in its judgement that Root X Africa Auctioneers committed numerous serious contraventions of the CPA and infringed consumer rights while benefitting financially.
“The company blatantly disregarded consumer rights and the legislation enacted to protect consumers. Notwithstanding that the farm was sold to another buyer four months later, the auctioneer continued to withhold the deposit the Scholz couple paid, which is contrary to the letter and the spirit of the CPA.”