Advertising Regulatory Board NPC and Others v Bliss Brands (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Petse DP, Schippers JA, Plasket JA, Hughes JA and Matojane AJA
• Judgment Date: 12 April 2022
• Court: Supreme Court of Appeal
• Hearing Date: 12 April 2022
• Citation: 2022 (4) SA 57 (SCA)
• Counsel: S Budlender SC (with N Ferreira, K Harding and K Mvumu) for the first appellant. G Marcus SC (with C McConnachie) for the second and third appellants. CDA Loxton SC (with F Southwood SC) for the respondent.
• Docket Number: 786/21 [2021] ZASCA 51

Schippers JA (Petse DP, Plasket JA, Hughes JA and Matojane AJA concurring):

[1] The first appellant, the Advertising Regulatory Board NPC (the ARB), is a non-profit company which carries on business as an independent, self-regulatory body in the advertising industry. Its members are required to adhere to the Code of Advertising Practice (the Code), which is based on international best practice for advertising self-regulation and is the guiding document of the ARB. The Code states that its two main purposes are to protect the consumer and to ensure professionalism among advertisers; and that advertising is a service to the public and thus 'should be informative, factual, honest and decent'. All advertising in the electronic broadcast media is subject to the Electronic Communications Act 36 of 2005 (ECA). Every electronic broadcaster must adhere to the Code as determined and administered by the ARB, [1] which has replaced and performs the same functions as the former Advertising Standards Authority of South Africa (ASA). [2] The second and third appellants, Colgate-Palmolive (Pty) Ltd and Colgate-Palmolive Company (Colgate), and the respondent, Bliss Brands (Pty) Ltd (Bliss Brands), are competitors in the toiletries business.

[2] In December 2019 Colgate lodged a complaint with the ARB that Bliss Brands, in the packaging of its Securex soap, had breached the Code by exploiting the advertising goodwill and imitating the packaging architecture of Colgate's Protex soap. Although Bliss Brands is not a member of the ARB, it raised no objection to the ARB's jurisdiction and participated fully in its hearings, taking the matter all the way to the ARB's final appeal committee (the FAC). After the FAC dismissed its appeal, Bliss Brands applied to the Gauteng Division of the High Court, Johannesburg (the High Court), to review and set aside the FAC's decision.

[3] The High Court (Fisher J) mero motu questioned the constitutionality of the ARB's powers. Bliss Brands then amended its notice of motion and supplemented its founding papers so that they bore little resemblance to its original application. It raised a number of constitutional points which found favour with the court. It made a series of orders which effectively dismantled the system of self-regulation of advertising in South Africa in its entirety. This included an order declaring part of the ARB's memorandum of incorporation (MOI) 'unconstitutional, void

Schippers JA (Petse DP, Plasket JA, Hughes JA and Matojane AJA concurring)

and unenforceable', together with further declaratory and interdictory relief. The issue in this appeal, which is before us with the leave of the High Court, is whether it was correct in making those orders.

The complaint and proceedings below

[4] The directorate of the ARB, responsible for adjudicating complaints at first instance, found that Bliss Brands had not breached the Code in the packaging of its Securex soap. Colgate appealed to the advertising appeals committee (the AAC), which overturned the directorate's decision. Bliss Brands then lodged an appeal to the FAC. It found in favour of Colgate in a split decision. Its chairperson, Judge Ngoepe, cast the deciding vote. The FAC's ruling required Bliss Brands to cease distribution of the offending Securex packaging. This was followed by a brief FAC decision clarifying the costs award in its earlier ruling.

[5] Subsequently, Bliss Brands brought an urgent application in the High Court to suspend the FAC's ruling, pending a review application. That application was dismissed. Undeterred, on 2 October 2020 Bliss Brands launched another urgent application for interim relief, coupled with an application to review the FAC's ruling based on a violation of the principle of legality and various grounds under the Promotion of Administrative Justice Act 3 of 2000 (PAJA). It did not challenge the ARB's jurisdiction, nor did it suggest that its participation in the ARB's proceedings was anything but voluntary.

[6] On 30 October 2020 Fisher J issued a directive that the parties submit argument on the constitutionality of those parts of the Code and the MOI which authorised the directorate and the committees of the ARB to determine whether the packaging of a product constituted passing-off or breach of copyright (the directive). The parties were also required to address the basis of the ARB's jurisdiction 'to usurp the function of the courts in relation to these issues'.

[7] The directive resulted in a fundamental change to the relief sought by Bliss Brands. It asked for an order that the entire MOI of the ARB be declared 'unconstitutional and void'. In the alternative it sought declaratory orders that clause 3.3 of the MOI is unconstitutional; that the ARB has no jurisdiction over any person who is not a member of the ARB; that the ARB may not issue rulings in relation to any non-member or that non-member's advertising; and that the rulings of the FAC in August 2020 are unlawful.

[8] The High Court made the following declaratory orders. Clause 3.3 of the MOI is unconstitutional and invalid because it permits the ARB to decide complaints concerning advertisements of non-members; the ARB has no jurisdiction over non-members in any circumstances and may not issue any rulings in relation to non-members or their advertising; the FAC's ruling (upholding Colgate's complaints against Bliss Brands' soap packaging with costs) is unlawful and it was set aside.

Schippers JA (Petse DP, Plasket JA, Hughes JA and Matojane AJA concurring)

[9] Before addressing the correctness of these orders, it must again be emphasised that a court should decide only the issues before it, as pleaded by the parties. In Fischer v Ramahlele [3] this court said:

'(I)t it is for the parties, either in the pleadings or affidavits (which serve the function of both pleadings and evidence), to set out and define the nature of the dispute, and it is for the court to adjudicate upon those issues. That is so even where the dispute involves an issue pertaining to the basic human rights guaranteed by our Constitution, for (i)t is impermissible for a party to rely on a constitutional complaint that was not pleaded. There are cases where the parties may expand those issues by the way in which they conduct the proceedings. There may also be instances where the court may mero motu raise a question of law that emerges fully from the evidence and is necessary for the decision of the case. That is subject to the proviso that no prejudice will be caused to any party by its being decided. Beyond that it is for the parties to identify the dispute and for the court to determine that dispute and that dispute alone.'

[10] This admonition, regrettably, was disregarded by the High Court. Bliss Brands' submission to the jurisdiction of the ARB should have put paid to any challenge to jurisdiction, or to the constitutionality of the Code or MOI. Instead, the issuance of the directive resulted in virtually an entirely new case for decision. Most recently, the Constitutional Court has affirmed the rule that constitutional issues should only be raised by courts mero motu in exceptional circumstances. [4] This is not such a case.

[11] The High Court found that the submission to the ARB's jurisdiction by Bliss Brands 'cannot be said to constitute actual consent'. This finding is unsustainable on the evidence. The letter advising Bliss Brands of the complaint requested it to 'inform us if you do not consider yourself to be bound by the ARB', and advised that Bliss Brands was not obliged to respond or furnish a defence.

[12] Bliss Brands responded in full, contesting the merits of the complaint without raising any objection to the ARB's jurisdiction, its legitimacy or its procedures. It participated fully in the hearing of the complaint at all stages of the proceedings, without a hint of protest. It accepted the directorate's ruling on the complaint in its favour. When Colgate's appeal to the AAC was upheld, Bliss Brands lodged an appeal to the FAC. It even sought an alternative order of remittal to the FAC for a rehearing, if the main relief for substitution of the FAC's ruling was refused.

[13] This court has repeatedly held that a failure to raise any objection to jurisdiction and subsequent participation in proceedings is sufficient to

Schippers JA (Petse DP, Plasket JA, Hughes JA and Matojane AJA concurring)

demonstrate submission to jurisdiction. [5] Bliss Brands unquestionably submitted to the jurisdiction of the ARB. Although the appeal could be disposed of solely on this basis, we were urged by counsel for the ARB not to do so, because the High Court's pronouncements on the constitutionality of clause 3.3 of the MOI and its finding that the ARB may not issue rulings in relation to non-members or their advertising, will create legal uncertainty. This, in turn, will impede the ARB in carrying out its functions as a self-regulating body in the advertising industry.

[14] More fundamentally, however, the High Court's analysis included statements of principle which the appellants have criticised. For example, the High Court stated that the ARB is not empowered to determine breaches of the Code under the ECA; that the powers it exercises in relation to the regulation of advertising by non-members is not sourced in law and thus unconstitutional; that a non-member is 'denied the right to defend itself in a court of law on the merits of a complaint'; and that the AAC and FAC may reasonably be perceived to lack independence. We must proceed to address these criticisms and insofar as they are valid, so declare, since otherwise the High Court's statements of principle would remain authoritative.

The ARB's powers are sourced in law

[15] The High Court accepted that private bodies are capable of exercising public powers in the absence of statutory authorisation...