Auction Alliance will have their day in court

Whether National Consumer Commissioner Mamodupi Mohlala-Mulaudzi has overstepped her powers in summonsing three Auction Alliance executives to appear before her, appears to be a very fine legal point.

After a day in court on Monday during which senior counsel for the National Consumer Commission and Auction Alliance presented their arguments and replies, legal observers commented that the legal arguments of both sides had merit.

This is a continuation of a case that began in January when consumer, Wendy Applebaum, laid a complaint with the National Consumer Commission (NCC). Applebaum disputed the legality of an auction that saw her purchase the Quoin Rock Wine Estate for R55m in December. She had discovered that she was the only genuine bidder.

Rael Levitt, the former CEO of Auction Alliance which conducted the auction, needs the law to fall on his side as he battles to save what remains of SA’s biggest auction house and avoid the NCC fine of up to R1m or 12 months in jail. He is relying on a twin-pronged legal strategy which saw his lawyers lodge appeal papers with the National Consumer Tribunal to have him cleared on charges of breaching the Consumer Protection Act.

Mohlala-Mulaudzi needs the law to fall on her side to protect her reputation as well as that of the NCC. This is as she battles the department of trade and industry’s decision not to renew her contract which expires in August.

Counsel for Rael Levitt and Auction Alliance has argued that the three summonses issued by the NCC (summonsing Levitt, acting CEO Bruce Sneddon and chairman Sango Ntsaluba to appear before it) are unlawful and should be set aside. This, says Auction Alliance senior counsel Peter Hodes, is because the NCC had already completed its investigation. “There was unpalatable haste to nail Mr Levitt...We cannot expect an unbiased hearing from [the Commissioner].”

However counsel for the NCC, Gerhard Strydom SC, argued that the investigation contained a number of components and while one part of the investigation was closed it was by no means over.

The first part of the investigation was complete. The NCC found that the Consumer Protection Act had been contravened – a mock auction had been held – and a compliance notice was issued. But the second part of the complaint, which suggested that the matter should be handed over to the National Prosecuting Authority – needed further investigation.

While Auction Alliance argues that an investigation of ‘fraud’ falls outside of the provisions of the Consumer Protection Act, Strydom argued that, “it has become emphatically clear that the respondents do not intend to appear before the commission.”

However, he adds, “they fail to understand that they cannot avoid the inevitable, which is that they will have to appear before the commission – whether the investigation has been concluded and is reopened or whether new complaints calling for further investigation are lodged with the commission.”

Judgement is expected to be handed down before June 18.

(Moneyweb)

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