Medical Nutritional Institute (Pty) Limited v Advertising Standards Authority

• Jurisdiction: South Africa
• Judge: EF Dippenaar AJ
• Judgment Date: 18 September 2015
• Docket Number: 15/30142
• Court: Gauteng Local Division, Johannesburg
• Hearing Date: 09 September 2015
• Citation: 2016 JDR 0900 (GJ)

EF Dippenaar AJ:

[1]

This is an urgent application claiming interim interdictory relief pending the finalisation of an action to be instituted by the applicant against the respondent. The application was launched by way of urgency on 25 August 2015.

[2]

The applicant, Medical Nutritional Institute (Pty) Ltd ("MNI"), manufactures and sells complementary medicines, including a product styled AntaGolin, which the applicant contends combats insulin resistance and assists in weight loss. It is undisputed on the papers that the sale of AntaGolin represents 70% of the applicant's income.

[3]

The respondent, the Advertising Standards Authority ("the ASA") is an industry established voluntary association in terms of the Companies Act 71 of 1973. No proof has been provided that the respondent has complied with the necessary requirements of the Companies Act 71 of 2008. The respondent styles itself as an independent industry funded body established to promote and enforce standards in the advertising industry. It is common cause that the applicant is not a member of the respondent.

[4]

The background to this application relates to the steps taken by the respondent pursuant to complaints which were laid with it by two individuals, Goldstein and Steinmann ("the complainants") that the advertising assertions made about AntaGolin, viz that it combats insulin resistance and assists with weight loss, are unsubstantiated. The respondent upheld the complaints and issued a series of rulings, effectively directing that the advertisements in their current form be withdrawn and ultimately on 29 June 2015 directing that sanctions would imminently

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be imposed on the applicant in terms of the respondent's advertising code ("the code") for breaching its rulings.

[5]

Pursuant to the applicant obtaining legal advice from its present attorneys of record, substantial correspondence ensued between the parties in an attempt to avoid urgent litigation.

[6]

When these attempts failed, the applicant launched the present proceedings for interim relief on an urgent basis.

[7]

The applicant contends that this application is aimed at preserving and/or restoring the applicant's reputation and commercial viability. It contends that it has been prejudiced and detrimentally affected by the respondent's rulings, the publication thereof and the consequences of the sanctions which may be imposed on the applicant in relation to this product, pending the determination of the disputes between the parties in the proposed trial action.

[8]

At the centre of the disputes between the parties lies an attack on the legitimacy of the respondent's adjudication of complaints in respect of the advertising of non-members; whether the applicant has any lawful basis to exercise jurisdiction over such entities and the extent to which the respondent (in exercising jurisdiction over its members) is entitled to interfere in the contractual arrangements of non-members.

[9]

In its notice of motion, the applicant seeks the following relief:

[9.1]

Pending the final determination of a trial action to be instituted by the applicant against the respondent within 30 days of the order (''the trial action") seeking an interim order:

[9.1.1]

interdicting the ASA from imposing any form of sanctions including an ad-alert on MNI in respect of advertisements of the product AntaGolin (or any other);

[9.1.2]

interdicting the ASA from taking any steps to preclude MNI from asserting in its advertisements in all media that AntaGolin combats insulin resistance and assists with weight loss;

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[9.1.3]

directing the ASA to remove from its website all rulings, and any other publication by or on behalf of ASA, in respect of (or referring to) MNI, to the effect that the assertion by MNI that AntaGolin combats insulin resistance and assists with weight loss are unsubstantiated;

[9.2]

That the costs of this application are reserved for determination in the trial action;

[9.3]

The notice of motion further states that in the trial action MNI will seek, inter alia, the following relief:

[9.3.1]

declaring that all the rulings purportedly made by the ASA in respect of MNI's product AntaGolin ("the contested rulings") are unlawful, and of no force and effect;

[9.3.2]

declaring that any sanctions purportedly imposed by the ASA in respect of the alleged breach of the said ASA rulings are unlawful, and of no force and effect;

[9.3.3]

declaring that the ASA has no entitlement to:

[9.3.3.1]

style itself as an "Authority of South Africa";

[9.3.3.2]

investigate complaints lodged against non-members and in particular MNI, issue rulings in respect of the acceptability of advertising assertions made in respect of MNI's AntaGolin product and/or ingredients nor to impose any sanctions in respect of an alleged breach of any such purported ruling;

[9.4]

Directing the ASA to record in any correspondence conducted with any non-member of the ASA (including MNI) that it is a voluntary association and not an organ of state, and has no legitimate remit to regulate the advertising industry or issue any rulings restricting the content of advertisements or assertions made therein other than by consent;

[9.5]

Costs on the attorney and client scale.

[10]

The papers filed of record are extensive and run to some 960 pages. The application was launched on 25 August 2015. The applicant filed a founding and a

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supplementary founding affidavit on 4 September 2015, in which it is, inter alia, contended that the respondent had failed to adhere to the time limits stipulated in the notice of motion. The respondent filed an answering affidavit on 4 September 2015 in which it, inter alia, reserved the right to file a supplementary affidavit and sought condonation for the late filing of its answering papers. A supplementary answering affidavit was filed on 7 September 2015. An extensive replying affidavit was filed on 8 September 2015, necessitating the matter to stand down on the urgent roll until 9 September 2015, when argument was presented on all issues.

[11]

In its answering affidavit, the respondent reserved the right to supplement its papers as it contended it had insufficient time to deal with the extensive founding papers and specifically the factual matter and expert evidence presented in relation to qualities of the applicant's product, AntaGolin, which supports the applicant's contentions that it combats insulin resistance and assists with weight loss. The founding papers comprised of a 159 page founding affidavit and annexes, amounting to some 500 pages.

[12]

The answering affidavit raised mainly legal issues and did not deal with the various factual issues raised by the applicant in relation to certain rulings and directives made by the respondent regarding AntaGolin. Despite filing a supplementary affidavit, these factual issues were not addressed. Ultimately, the respondent simply contended that the adverse rulings made against AntaGolin by it [1] were reasoned and considered. It did not dispute that no medical expertise was invoked by the respondent in considering the complaints made against the product, nor did it attack the substantial volume of expert evidence presented by the applicant. At the hearing, the respondent did not seek any postponement or leave to supplement its answering papers and the matter was argued on the papers as filed of record.

[13]

The respondent sought condonation for the late filing of its answering affidavits. This application was not opposed. I am satisfied that good cause has been shown

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and accordingly condonation for the late filing of respondent's answering affidavit is granted.

[14]

At the hearing of the application, the applicant sought an amendment to its notice of motion by including a reference to a claim for damages in an amount of R25 million in prayer 3. There was no opposition to this relief which is consequently granted.

[15]

At the hearing of the application the respondent indicated that it did not intend filing any further affidavits relating to the various factual issues which were not addressed in its answering papers. It contended that those issues were not required for the determination of the application.

[16]

The issues raised in the application papers are wide ranging and complicated and encompass issues of private, public and constitutional law. It is not for purposes of this judgment necessary or appropriate to deal with all the issues raised. These will be dealt with and determined in the proposed trial proceedings in due course.

[17]

The applicant's case in summary is that the respondent has no lawful basis to exercise jurisdiction over it, as it is not a member of the respondent and is not obliged to adhere to the code. It contends that the respondent is acting unlawfully in purporting to be the regulator of the advertising industry and that it has no enabling legislation to execute a public function as regulator and is acting in a manner which is inconsistent with its self-proclaimed limitations.

[18]

The applicant contends that the advertising of its products is regulated under the Medicines and Related Substances Control Act [2] and by the Medicines Control Council ("MCC"), an organ of the National Department of Health; which in terms of the Medicines Act and its regulatory framework is the body duly empowered by Statute to regulate medicines, together with the Minister of Health, the Director General of the Department of Health and the Registrar of Medicines [3] . This is not disputed on the papers. As such, applicant contends that the respondent's

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contention that absent regulation by it...