Telematrix (Pty) Ltd didn’t like a “complaint upheld” verdict by the South African Advertising Standards Authority. So it took the SA ASA to court and pressed for damages for negligence. J. Michael Judin of Johannesburg attorneys Goldman Judin, acting for the SA ASA, gives a ringside report
TELEMATRIX (PTY) LIMITED t/a MATRIX VEHICLE TRACKING v ADVERTISING STANDARDS AUTHORITY SA 2006 (1) SA 461 (SCA)
Prepared by J Michael Judin at Goldman Judin Inc attorneys, Johannesburg. Michael may be contacted by telephone (+27 11 268 0287), by mobile (+27 83 300 5000), by facsimile (+27 11 268 0282) or by e-mail ( email@example.com). Michael represents the Advertising Standards Authority in South Africa.
Law stated as at: 25 June 2007
Every day throughout South Africa and the world many thousands of administrative bodies, both in the public and the private sector, make countless decisions affecting peoples' lives.
We would hope that most of the time they get their decisions right. But we know that some of the time they get them wrong. What recourse, if any, do those affected by these decisions have against the administrative bodies which have made errors? Seen from the other side, what responsibility do these bodies owe to the public to get their decisions right?
Generally, those affected by administrative decisions with which they are dissatisfied seek to have those decisions set aside by the courts, on review. The available grounds of review are, however, limited, and one cannot simply go to court to complain that an administrative decision was wrong. There has to be an irregularity in the taking of the decision before a review will succeed.
The Plaintiff in Telematrix (Pty) Limited v the ASA was on the receiving end of a decision that it considered to be wrong. The decision had been taken by the ASA's Directorate, upholding the complaint against Telematrix brought by a competitor, Netstar (Pty) Limited. The Directorate ruling had the result that Telematrix was obliged to withdraw certain advertisements and it suffered economic loss as a result thereof. Telematrix appealed the Directorate's decision to the next tier of decision-making in the ASA, the Advertising Industry Tribunal. Its appeal succeeded and the Directorate ruling was overturned.
Telematrix believed that the Directorate decision was not only wrong, but had been taken negligently. It sued the ASA in the High Court in a delictual action for damages for the amount that it claimed that it lost as a result of having to implement the Directorate's decision. Before the merits of the matter could be considered, however, the ASA raised an exception to Telematrix's claim. The exception questioned whether an administrative body, such as the ASA, is responsible for loss caused by decisions taken by it, even if those decisions are shown to have been taken negligently. In other words, the ASA contended that even if it was found to have acted negligently, which it denied, Telematrix would not be entitled to its damages.
The exception was upheld by Snyders J. in the Witwatersrand Local Division, and was taken on appeal by Telematrix to the Supreme Court of Appeal.
In order to succeed in a delictual claim a plaintiff must show that the defendant acted wrongfully and negligently.
The test for wrongfulness according to the Supreme Court of Appeal, asks whether public policy considerations demand that in the circumstances the plaintiff has to be compensated for the loss caused by the negligent act or omission of the defendant.
In its decision the SCA went on to stress that this was not simply a question of whether there was a duty of care on the defendant. The question went further and asked whether the breach of the duty of care, if such duty existed, gave rise, as a matter of policy, to an obligation to compensate.
After reviewing decisions concerning a variety of adjudicative forums, both judicial and administrative, the Court found that public policy generally requires adjudicators of disputes to be immune to damages claims in respect of their incorrect and negligent decisions. The Court stated that this policy recognizes that it is in the nature of the adjudication process that rights will be affected, but that in order for adjudicative processes to function effectively, decisions must be made without fear of damages claims, particularly if the adjudicator is to retain his or her independence.
The Court recognised, however, that decisions made in bad faith (through bias or malice) would not be protected, and would give rise to damages claims.
Having reached this conclusion the SCA then considered the position of the ASA. It rejected the argument that Telematrix, which was not a member of the ASA, should not be bound by its decisions and nor should the ASA be protected in its actions against Telematrix. The Court rejected this argument, stating that the Telematrix could have ignored the ASA Directorate's decision, but it chose to abide by it and it was that decision that caused its loss.
The Court ultimately accepted that the ASA takes decisions in the public interest and for the public good, and it is thus protected by the public policy considerations that recognise that there should be immunity from the consequences of a wrong decision, even if made negligently. The appeal was therefore dismissed and the ASA's exception was upheld.