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[2018] ZAWCHC 110
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Pioneer Foods (Pty) Ltd v Minister of Finance and Others (15797/2017) [2018] ZAWCHC 110; [2018] 4 All SA 428 (WCC) (5 September 2018)
Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
CASE
NO: 15797/2017
In
the matter between:
PIONEER
FOODS (PTY)
LTD
Applicant
and
MINISTER
OF
FINANCE
First
Respondent
NATIONAL
TREASURY
Second
Respondent
MINISTER
OF ECONOMIC DEVELOPMENT
Third
Respondent
MINISTER
OF TRADE AND
INDUSTRY
Fourth
Respondent
DEPARTMENT
OF TRADE AND INDUSTRY
Fifth
Respondent
INTERNATIONAL
TRADE ADMINISTRATION COMMISSION
Sixth
Respondent
Court:
Justice M I Samela
et
Justice J Cloete
Heard:
Friday 10 August 2018
Delivered:
Wednesday 5 September 2018
JUDGMENT
CLOETE
J
:
Introduction
[1]
On 1 September 2017 the applicant, a manufacturer and distributor of,
amongst others, wheat based products, approached this
court on an
urgent basis to compel the Minister of Finance as well as National
Treasury (unless otherwise indicated, “the
respondents”)
to publish a certain adjusted wheat import tariff in the Government
Gazette by not later than 8 September 2017.
This relief was contained
in Part A of the notice of motion, pending the determination of Part
B – being the relief at issue
in the present application.
[2]
In Part B the applicant seeks
orders declaring that: (a) the Minister of Finance (“the
Minister”) is under a duty,
to publish in the Government
Gazette, any adjustment to the variable tariff applicable to imported
wheat upon receipt thereof from
the Minister of Trade and Industry
[1]
within a reasonable period of such receipt; and (b) such a
period is 10 working days, alternatively such other period
determined by the court.
[3]
The respondents opposed the relief sought in Part A and persist with
their opposition in respect of Part B.
[4]
Part A was heard by Sher AJ (as he then was) who dismissed it, with
costs to stand over for determination with Part B. On 29
September 2017 he provided written reasons (“the Sher
judgment”) and subsequently granted the applicant leave to
appeal
to the Supreme Court of Appeal. As we understand it the latter
declined to hear the appeal on the basis that Sher AJ’s order
was not appealable until determination of Part B.
[5]
The relevant background facts are set out in the Sher judgment and
are thus not repeated, save to the extent necessary.
Issue
for determination
[6]
The central issue is the proper
characterisation of the Minister’s powers under s
48(1)(b) of the Customs and Excise
Act (“CEA”),
[2]
which authorises him to make amendments to the level of import duties
reflected in Parts 1 and 2 of Schedule 1 thereof
[3]
pursuant to a request to do so from the Minister of Trade and
Industry by publication in the Government Gazette.
[4]
[7]
If the amendments (or adjustments) are not published in the
Government Gazette they will not be applied by customs and excise
officials who oversee the off-loading and processing of imported
wheat through customs, since they can only apply tariffs which
are
published in this manner. Put differently, the adjusted tariff has no
force and effect until it is published.
[8]
Section 48(1)(b) of the CEA reads as follows:
‘
48.
Amendment of Schedule No. 1.
—(1)
The Minister may from time to time by notice in the
Gazette
amend the General
Notes to Schedule No. 1 and Part 1 of the said Schedule or substitute
the said Part 1 and amend Part 2 of the
said Schedule in so far as it
relates to imported goods--…
(b)
in order to give effect to any request by the Minister of Trade and
Industry…’
[9]
The applicant’s case is that in exercising this power the
Minister performs an ‘
administrative function’
subject only to compliance with the principle of legality. On the
other hand the respondents maintain that it is a wide and
discretionary
executive power which, when exercised, is in effect
legislative in nature.
[10]
In characterising the power as “administrative” the
applicant essentially means “mechanical function”
since
it is not suggested that, if administrative, the power is
discretionary and thus susceptible to review.
[11]
Given the particular circumstances of this matter there are, as I see
it, two interlinked elements to the enquiry. The first
is the nature
of the Minister’s powers in terms of s 48(1)(b) when
reacting to a request from the Minister of Trade
and Industry. The
second is whether, once the Minister has reacted favourably to such a
request, he is thereafter bound –
in mechanical fashion –
to follow the same formula for adjustment which underpinned the first
favourable reaction (subject
always to compliance with the principle
of legality) for further adjustments until such time as the
underlying formula is changed.
Factual
matrix
[12]
The sixth respondent, the
International Trade Administration Commission of South Africa
(“ITAC”), is a public statutory
body established in terms
of s 7 of the International Trade Administration Act
(“ITA”).
[5]
One of ITAC’s principal functions is to conduct tariff
investigations and make recommendations on customs duties.
[13]
It was on ITAC’s recommendation via the Minister of Trade and
Industry that a particular adjusted variable wheat import
duty tariff
was implemented by the Minister on 23 June 2017. The tariff is
described as ‘
variable’
given that it changes, in
general terms, as a result of adjustments to the global price of
wheat and the exchange rate.
[14]
The formula recommended by ITAC for calculating these adjustments is
as follows. On a weekly basis, a comparison is made between
the
three-week moving average of the United States ‘
Hard Red
Wheat No 2 Gulf settlement price’
(also known as the ‘
World
reference price’
) and the Dollar-based reference price over
the same period. If the three-week moving average varies by more than
$10 per ton, this
will constitute what is termed a ‘
trigger
event’
which triggers an adjustment to the tariff. The
adjusted tariff is then converted to Rands at the prevailing rate of
exchange on
the date of the trigger event and then further adjusted
based on the latest available effective real rate of exchange.
[15]
Thus, whenever a ‘
trigger event’
occurs, the
tariffs are required to be updated. According to the applicant, this
is achieved by ITAC and/or the officials within
the Department of
Trade and Industry (“DTI”) supplying the updated tariffs
to the Minister, via the Minister of Trade
and Industry, for
publication in the Government Gazette in accordance with s
48(1)(b) of the CEA. According to the respondents
however, amendments
to the tariffs are made only after the Minister has considered all
the relevant circumstances and has made
a decision to amend, and
therefore the applicant (and other affected parties) do not have a
right to demand publication before
the Minister has done so.
[16]
The practical consequence of any delay in publishing the adjusted or
updated tariff is that parties such as the applicant have
to continue
paying import duties in accordance with the existing tariff until any
adjustment is published in the Government Gazette,
notwithstanding
that the ‘
trigger event’
has already occurred. The
anticipated financial loss to the applicant in the instance which
gave rise to this application was R28
393 000, and it
would be irrecoverable (other than passing it on by way of price
increases to consumers) because the published
tariff adjustments do
not operate retrospectively and thus no “rebate” can be
claimed.
[17]
The applicant provided a table setting out the Duty Trigger and
Adjustment History for the period 23 June 2017 to 7 August
2018
which, for illustrative purposes, is set out below:
Trigger
Value
Trigger
Date
Implement
Date
Weeks of Delay
1.
R947.20
23 June 2017
23 June 2017
Implementation
2.
R379.30
11 July 2017
8 September 2017
8
3.
R752.40
8 August 2017
29 September 2017
7
4.
R910.00
5 September 2017
3 November 2017
8
5.
R716.30
3 October 2017
15 December 2017
10
6.
R394.90
13 February 2018
6 April 2018
7
7.
R293.70
20 March 2018
21 May 2018
8
8.
R437.30
10 April 2018
25 May 2018
6
9.
R281.74
12 June 2018
13 July 2018
4
10.
R640.54
10 July 2018
Pending
4
[18]
Whether or not the Minister’s powers are administrative or
legislative in nature, it appears that on each and every occasion
he
ultimately implemented the exact tariff adjustment requested by the
Minister of Trade and Industry.
Background
to ITAC’s recommendation
[19]
According to a media statement
issued by National Treasury on 8 April 2016, during 1999 the
Ministers of Finance and Trade
and Industry took a policy decision to
adopt a tariff-setting process for selected agricultural products,
including wheat. As part
of this policy decision it was agreed that a
variation (i.e. increase or decrease) in the customs duty on wheat,
sugar and maize
would be regulated and governed by formulae, also
known as variable import duty formulae, based on a reference price
system.
[6]
[20]
As the media statement reflects, the decision to adopt these formulae
was taken:
‘…
after
consideration of the unique circumstances surrounding the production
of these agricultural products and the nature of the
international
market to which SA producers are exposed, inter alia, to afford
protection
and
provide certainty for domestic producers against international price
volatility
.’
[my
emphasis]
[21]
The same media statement records that, after the Minister of Finance
received a recommendation from the Minister of Trade and
Industry in
December 2015 for an upward adjustment in the rate, calculated in
accordance with the applicable formula, National
Treasury ‘
consulted
with the relevant stakeholders with a view to assess the impact on
food prices on upstream and downstream industries of
the proposed
increase in the import duty on wheat and wheaten flour as well as the
appropriateness of the current formula’.
The Ministry of
Finance thereafter decided to approve the adjustment but:
‘…
subject
to a review of the current variable import duty formula
on wheat, the timelines and process of which will be announced
formally by ITAC.’
[my
emphasis]
[22]
The reason provided in the media statement for the review of the
formula was the Minister’s particular concern about
the impact
of imposition of higher import duty on the price of bread and other
staple food, while at the same time being mindful
of the need to
‘
ensure policy certainty’
, food security and the
financial health of the farming industry.
[23]
As was foreshadowed in the
media statement the Minister of Trade and Industry then directed ITAC
to investigate and evaluate the
appropriateness of the formula in
terms of s 16(1)(d)(i) of the ITA.
[7]
The ITAC report reflects that:
‘
The
directive was made in view of the fact that wheat, maize and sugar
are basic necessities used by South Africans, and that the
country is
still in the grip of a drought coupled with large exchange rate
fluctuations over the last couple of months. I
[i.e.
the Minister of Trade and Industry]
direct
ITAC to urgently review the current formulae, in particular taking
into account the impact on the price of bread, maize and
sugar.’
[24]
The intended review was published in the Government Gazette on 22
July 2016 for a period of four weeks to elicit comment
from
interested parties.
[25]
ITAC subsequently produced its report (Report No. 538) on 5
December 2016. In numbered paragraph 4 thereof the following
is
stated:
‘
4.
ESSENTIAL ISSUES PERTAINING TO THE REVIEW
The
essential issues
according
to the policy directive
include: the effects of drought; food inflation (bread prices);
exchange rate fluctuations; and the relationship between the cost
of
production and the level of protection.’
[my
emphasis]
[26]
The report reflects that both the National Chamber of Milling (NCM)
and Grain SA gave significant input; that the Bureau for
Food and
Agricultural Policy (BFAP) conducted an impact analysis on the price
effect of the formula on wheat production and the
bread price; and
that there was engagement with producers and downstream users of
wheat (who are listed at numbered paragraph
6 of the report).
[27]
It is evident from the ITAC report that in arriving at a
recommendation a wide range of considerations were taken into
account,
many of which are of a technical and expert nature. The
report itself is lengthy, detailed and comprehensive. ITAC noted in
the
report that ‘
rapid response’
to tariff
adjustments is ‘
required due to the frequency of the sharp
peaks and troughs evident in the price cycles of wheat’.
[28]
According to the applicant the adoption by the Minister of the ITAC
recommendation was delayed from December 2016 to March
2017, and
thereafter further delayed until June 2017. On 23 June 2017 he
formally implemented it by publishing updated tariffs
–
calculated in accordance with the new formula recommended by ITAC –
in terms of s 48 of the CEA. Save for the
reference to s
48 these allegations are denied by the respondents.
Process
followed by respondents after request by Minister of Trade and
Industry
[29]
The respondents state that, before the Minister approves an amendment
under s 48(1)(b), the amendment itself is subject
to an
intensive internal review process. This, it is said, is because s
85(2)(a) and (b) of the Constitution confer executive
authority on
the Minister, both as the head of National Treasury and as the member
of Cabinet responsible for amending tariff duties
in the CEA, ‘
to
implement national legislation, develop national policy and to
perform any other function provided in national legislation’
.
In the formulation and implementation of national policy and in the
performance of specified functions relating to the imposition
of
tariffs that have an economic impact, the Minister must consider all
relevant information.
[30]
To this end, when the recommendation of ITAC and the request by the
Minister of Trade and Industry are received, extensive
internal
evaluation is undertaken by the various units within National
Treasury because customs duty on wheat can affect inflation.
Only
when the Minister is satisfied that the competing interests of
economic policies, the fiscus and farmers (agriculture) are
balanced,
will he make a decision.
[31]
As I understand the argument, the respondents therefore contend that
the decision by the Minister of Trade and Industry to
adopt the ITAC
recommendation of December 2016 did not render the executive
decision-making process complete. It is only complete
when the
Minister has undertaken the exercise referred to above and decides to
approve any tariff adjustment, whenever a request
is made by the
Minister of Trade and Industry, and irrespective of the formula that
underpins it.
[32]
The internal review process, according to the respondents, entails
the following. The Minister directs the request for a tariff
amendment to the Strategy, Legal and Policy Unit in SARS, whereupon
statistical information is obtained in order to ascertain the
possible effect of the amendment on the fiscus. SARS then drafts a
submission to the Minister ‘
outlining the reasons for the
request for the legislative amendment and any possible impact the
Minister may need to consider’.
The whole SARS process
takes at least 10 to 15 working days, whereafter the product of its
labours is delivered to National Treasury.
[33]
National Treasury sends it to the Deputy Director-General (DDG) of
Economic Policy ‘
for assessment and a decision’
.
The office of the DDG forwards it to the Microeconomic Policy Unit
which conducts an economic analysis and assessment of the main
issues
pertaining to the submission. According to National Treasury this is
because ‘
ITAC submissions are made on a unique product and
the specific circumstances of each submission will vary and must be
assessed on
a case-by-case basis’.
[34]
The key considerations are said to include the impact of trade
support for the product on trade and industrial policy priorities,
the competitiveness of the industry in question, the impact of
movements in that industry on related industries (including upstream
and downstream industries) and the structure of the industry and
related industries ‘
to assess the creation or entrenchment
of monopolies or barrier to entry for new entrants’.
[35]
Thereafter the submission is returned to the DDG Economic Policy for
decision. Once he has made a decision it is despatched
to the Tax and
Financial Sector Policy Division. The role of the Tax Policy Unit of
that division is to advise the Minister on
tax policy issues arising
from all three levels of government (National, Provincial and Local).
[36]
The Tax Policy Unit considers ‘
issues relating to tax
policy, the impact of the request regarding increase or decrease of
the tariff on current or proposed tax
policy, the financial impact of
the request submitted by SARS, the legal issues and other
administrative issues such as draft Notice
issued by SARS and
commodity codes used by SARS in the draft Notice’.
(These
were not explained). After the Unit has considered the submission, it
is forwarded to the Deputy Director-General: Tax and
Financial Sector
Policy, from there to the Minister via the Director-General’s
office, and ‘
after considering all the financial
implications, the Minister will make a decision whether or not to
amend the customs duty on
wheat’.
[37]
According to the respondents this process is designed to enable the
Minister to comply with ‘
the statutory duty imposed upon
[him]
that before
[he]
amends the tariffs or performs
his statutory duty, he must satisfy himself that amending the tariff
will not have detrimental consequences
for the country’.
Discussion
[38]
The preamble to the ITA reflects that one of its purposes is to
provide for the continued control of import and export of goods
and
amendment of customs duties. The object of the ITA is set out in s
2 thereof as follows:
‘…
to
foster economic growth and development in order to raise incomes and
promote investment and employment in the Republic and within
the
Common Customs Area
[8]
by
establishing an efficient and effective system for the administration
of international trade subject to this Act and the SACU
agreement.’
[9]
[39]
As set out in s 3, the ITA applies to all economic activity
within, or having an effect within, the Republic (subject
to certain
limited exceptions not relevant for present purposes). The Minister
of Trade and Industry, as the responsible member
of Cabinet, is
empowered under s 5 to issue Trade Policy Statements or
Directives for this purpose.
[40]
The object of the CEA is to provide for the levying of customs and
excise duties and certain other duties. Control of the CEA
vests in
the Minister of Finance (subject to certain Parliamentary oversight –
for purposes of s 48, the applicable
sub-section is s
48(6)). Put differently, it is the Minister of Finance who determines
appropriate customs duties.
[41]
In terms of s 2 of the CEA the Commissioner for SARS is,
subject only to the control of the Minister of Finance, charged
with
the administration of the CEA including the interpretation of the
Schedules thereto.
[42]
In
Executive
Council, Western Cape Legislature and Others v President of the
Republic of South Africa and Others
[10]
the Constitutional Court confirmed that a Schedule to an Act ‘
is
as much a part of the statute, and is as much an enactment, as any
other part’.
[11]
[43]
Section 48(5)(a) of the CEA reads as follows:
‘
(5)
(a) Whenever any amendment made under this section has an effect
which was not foreseen or intended, the Minister
[of
Finance]
may, whether
or not such amendment has ceased to have effect as such or has lapsed
under subsection (6), after consultation with
the Minister of Trade
and Industry, by further notice in the
Gazette
,
adjust such amendment,
to
the extent he deems fit
,
with effect from the date of such amendment or any later date, and
any adjustment effected under this subsection shall be deemed
to be
an amendment under this section.’
[my
emphasis]
[44]
Section 48(6) of the CEA provides that:
‘
(6)
Any amendment, withdrawal or insertion made under this section in any
calendar year shall, unless Parliament otherwise provides,
lapse on
the last day of the next calendar year, but without detracting from
the validity of such amendment, withdrawal or insertion
before it has
so lapsed.’
[45]
Also of importance is the
Public Finance Management Act
[12]
(PFMA) which in Chapter 2 established National Treasury with
the Minister of Finance as its head. The applicable sections
of the
PFMA read as follows:
‘
NATIONAL
TREASURY AND NATIONAL REVENUE FUND
Part
1: National Treasury
5.
Establishment.
---(1)
A National Treasury is hereby established, consisting of---
(a)
the Minister, who is the head of the Treasury; and
(b)
the national department or departments responsible for financial and
fiscal matters.
(2)
The Minister, as the head of the National Treasury, takes the policy
and other decisions of the Treasury, except those decisions
taken as
a result of a delegation or instruction in terms of section 10.
6.
Functions and powers.
---(1)
The National Treasury must---
(a)
promote the national government’s fiscal policy framework and
the co-ordination of macro-economic policy;…’
[46]
Section 41 of the Constitution sets out the principles of
co-operative government and intergovernmental relations and in
relevant
part provides that:
‘
41.
(1) All spheres of government and all organs of state within each
sphere must-
…
(g)
exercise their powers and perform their functions in a manner that
does not encroach on the geographical, functional or institutional
integrity of government in another sphere; and
(h)
co-operate with one another in mutual trust and good faith by-
(i)
fostering friendly relations;
(ii)
assisting and supporting one another;
(iii)
informing one another of, and consulting one another on, matters of
common interest;
(iv)
co-ordinating their actions and legislation with one another;
(v)
adhering to agreed procedures; and…’
[47]
The above quoted sections of the ITA and the CEA reflect the
constitutional obligations imposed by s 41 on the Ministers
of
Finance and Trade and Industry, and accord with its spirit and
purpose. What is envisaged is a high degree of co-operation in
exercising their respective powers and performing their respective
functions in a manner that does not encroach on the functional
integrity of the other.
[48]
In
Minister
of Finance v Paper Manufacturers Association of South Africa
[13]
the Supreme Court of Appeal explained the interface between the ITA
and the CEA as follows:
‘
[7]
… One of the ITA Act’s objects is to provide for the
control of the import and export of goods on a continuous
basis, and
for the amendment of customs duties. For this, ITAC must investigate
and evaluate applications for the amendment of
customs duties and
issue recommendations regarding the rates of duty and rebate
provisions in the Customs and Excise Act. It is
then required to take
appropriate steps to give effect to its recommendations (s 22).
A report is provided to the minister
responsible for trade and
industry who, if the recommendations are adopted, requests the
Minister of Finance to amend schedules
to the Customs and Excise Act
(which is the responsibility of this Ministry) by notice in the
Government Gazette
.
[8]
The ITAC report is not only an important link in the administrative
and legislative chain; it is indeed a jurisdictional fact
for the
ministerial actions that follow. It is consequently not surprising
that the ITA Act makes special provision for the review
of any
determination, recommendation or decision of ITAC (s 46).’
[49]
In
President
of the Republic of South Africa v South African Rugby Football
Union
[14]
it was held that:
‘
[141]
…the test for determining whether conduct constitutes
“administrative action” is not the question whether
the
action concerned is performed by a member of the executive arm of
government. What matters is not so much the functionary as
the
function… The focus of the enquiry as to whether conduct is
“administrative action” is not on the arm of
government
to which the relevant actor belongs, but on the nature of the power
he or she is exercising.
[142]
As we have seen, one of the constitutional responsibilities of the
President and Cabinet Members in the national sphere…
is to
ensure the implementation of legislation. This responsibility is an
administrative one, which is justiciable, and will ordinarily
constitute “administrative action” within the meaning of
s 33
[of the
Constitution]
.
Cabinet
Members have other constitutional responsibilities as well. In
particular, they have constitutional responsibilities to
develop
policy and to initiate legislation. Action taken in carrying out
these responsibilities cannot be construed as being administrative
action for the purposes of s 33
.
It follows that some acts of members of the executive… will
constitute “administrative action” as contemplated
by s
33, but not all acts by such members will do so.
[143]
Determining whether an action should be characterised as the
implementation of legislation or the formulation of policy may
be
difficult. It will, as we have said above, depend primarily upon the
nature of the power. A series of considerations may be
relevant to
deciding on which side of the line a particular action falls. The
source of the power, although not necessarily decisive,
is a relevant
factor. So too, is the nature of the power, its subject-matter,
whether it involves the exercise of a public duty
and how closely it
is related on the one hand to policy matters, which are not
administrative, and on the other to the implementation
of
legislation, which is. While the subject-matter of a power is not
relevant to determine whether constitutional review is appropriate,
it is relevant to determine whether the exercise of the power
constitutes administrative action for the purposes of s 33. Difficult
boundaries may have to be drawn in deciding what should or should not
be characterised as administrative action for the purposes
of s 33.
These will need to be drawn carefully in the light of the provisions
of the Constitution and the overall constitutional
purpose of an
efficient, equitable and ethical public administration. This can best
be done on a case by case basis.’
[my
emphasis]
[50]
In
Grey’s
Marine Hout Bay (Pty) Ltd v Minister of Public Works
[15]
the Supreme Court of Appeal characterised administrative action as
follows:
‘
[24]…Administrative
action is rather, in general terms, the conduct of the bureaucracy
(whoever the bureaucratic functionary
might be) in carrying out the
daily functions of the State which necessarily involves the
application of policy, usually after
its translation into law, with
direct and immediate consequences for individuals or groups of
individuals.’
[51]
This interpretation was
reinforced in
Minister of
Defence and Military Veterans Association v Motau
[16]
where the Constitutional Court held that:
‘…
administrative
powers usually entail the application of formulated policy to
particular factual circumstances. Put differently,
the exercise of
administrative powers is policy brought into effect, rather than its
creation.’
[52]
There are conflicting decisions
on the characterisation of the Minister’s powers under s
48(1)(b) of the CEA. On the
one hand there is the decision in
Kennasystems South Africa CC
v Chairman, Board on Tariffs and Trade, and Others.
[17]
On the other are the Sher judgment as well as the decision in
SA
Sugar Association v Minister of Trade and Industry.
[18]
[53]
In
Kennasystems
Spoelstra J considered the nature of the
Minister’s powers within the context of an application in terms
of uniform rule 53
for the review and setting aside of a ministerial
decision to amend a Schedule to the CEA. The respondents contended
inter alia
that the decision was not reviewable since, in
amending the Schedule, the Minister exercised legislative functions,
because the
Schedule formed part of the CEA and he thus in effect
acted as Parliament. At 73G-J the learned Judge held as follows:
‘
I
do not believe that there is any real substance in this argument. In
my view s 48 of the Act is simply an empowering section authorising
the Minister to effect, in certain circumstances and in a prescribed
manner, amendments to the Schedules to the Act. The Minister
clearly
derives his powers from the Act and his powers are limited and
defined by the relevant provisions of the Act. His powers
seem even
more limited than those granted to a person or body to make
regulations, by-laws or similar subordinate legislation.
This appears
from the direct control exercised by Parliament over the Minister’s
measures and their limited lifetime unless
extended by Parliament.
The fact that the Minister may in the prescribed manner amend a
Schedule to an Act of Parliament does not
indicate that Parliament
has transferred its powers to the Minister. He can do this simply
because Parliament has authorised him
to do so within the prescribed
parameters. Accordingly I am of the view that the Supreme Court has
jurisdiction to review the exercise
of such powers.’
[54]
This line of thinking was
followed – albeit in a different context – in
Lead
Laundry Equipment (Pty) Ltd v Minister of Finance and Another
[19]
where the issue was whether, if an amendment made by the Minister in
terms of s 48 of the CEA was
ultra
vires
his powers or
otherwise invalid, it was subsequently validated by Parliament acting
under s 48(6).
[55]
McCall J concluded that a court has no power to enquire into a
ministerial amendment extended by Parliament in terms of s
48(6) of the CEA. Relevant for present purposes are the following
findings made by the court at 527c-d and h-i:
‘
In
my opinion it is undoubtedly the case that, as was held by Spoelstra
J in the
Kennasystems
case (
supra
),
any amendment made by the Minister in terms of Section 48 of the Act
must be
intra vires
his powers in terms of
the Act. At least until such time as Parliament has extended its life
as contemplated by Section 48(6), it
is merely a form of subordinate
legislation which may prove to be of a temporary nature. …
It
must be assumed that the Legislature’s purpose in enacting
Section 48(6) of the Act was to ensure that an amendment made
by the
Minister in terms of Section 48 would not become a permanent and
integral part of the Act unless it received the approval
of
Parliament.’
[56]
In support of its argument the
applicant also relies on
Hoexter
:
Administrative Law in
South Africa
[20]
where Professor Hoexter identifies a category of administrative acts
of a legislative kind. She explains that these refer to ‘
law
made by administrators by virtue of power granted from a lawful
source, usually a statute. Legislative administrative activity
thus
results in “delegated” legislation… The provenance
or pedigree of delegated legislation is readily ascertainable
as it
invariably refers to the original legislation under which it has been
made.’
[21]
[57]
That amendments to Schedule 1
made under s 48(1)(b) of the CEA have a limited lifespan –
as found in
Kennasystems
– was confirmed by the Supreme Court of Appeal in
Paper
Manufacturers
.
[22]
However in my view this does not mean that they necessarily equate to
‘
subordinate
legislation which may prove to be of a temporary nature’
and do not become an integral part of the CEA unless and until
extended by Parliament.
[58]
In
Association
of Meat Importers v ITAC
[23]
Nugent JA, writing for the majority, held at para [44] that:
‘
[44]
Counsel for the authorities submitted that because the anti-dumping
duties remain reflected in Schedule 2 they still purport
to exist but
that is not correct. It is not the writing in the Schedule that
brought the anti-dumping duties into existence –
they
were brought into existence by the act of the Minister of Finance in
publishing the amendment to the schedule
.
The writing then inserted in the Schedule merely recorded that
amendment. Once the anti-dumping duties recorded in the Schedule
cease to exist, the writing remains only as an historical record that
they once existed. The authorities need no assistance from
a court if
they wish to expunge that historical record. They need only ask the
government printer to do so when next the Schedule
is printed.’
[my
emphasis]
[59]
The passage quoted above appears to favour an interpretation that it
is the act of publication in the Government Gazette that
amends the
CEA which is national legislation. This is supported by the wording
of s 48(6) that the lapsing of any amendment
(unless extended
by Parliament) shall not detract from the (legislative) validity of
that amendment prior to the occurrence of
either event. This is also
consistent with what was said by the Constitutional Court in
Executive Council, Western Cape Legislature
(
supra
).
[60]
Section 55(2)(a) of the CEA is
concerned with the imposition of anti-dumping (and similar) duties
and stipulates that they ‘
shall
be in accordance with any request by the Minister of Trade and
Industry under the provisions of’
the ITA. This notwithstanding, the Minister of Finance still retains
a discretion whether or not to impose such a duty since s
56(1)
provides that he ‘
may
from time to time by notice in the Gazette amend Schedule No. 2 to
impose an anti-dumping duty in accordance with the provisions
of
section 55(2)’,
and
section 56(3) provides that ‘
section
48(6) shall
mutatis
mutandis
apply in respect of
any amendment made under section 56(1)’.
[24]
[61]
In
International
Trade Administration Commission v SCAW SA
[25]
the Constitutional Court dealt with the powers conferred upon the
Minister of Trade and Industry by the ITA as follows:
‘
The
Act clothes the minister with far-reaching authority in relation to
trade policy. It includes the power to issue, subject to
the
Constitution and the law, trade policy statements or directives and
the power to regulate imports and exports. ITAC exercises
its
functions subject to these powers of the minister. The minister also
wields the power to prescribe regulations in order to
give effect to
the object of the Act.’
[62]
The High Court had granted an interim interdict – pending the
final determination of a review application – restraining
ITAC
from forwarding its recommendation to the Minister of Trade and
Industry, and furthermore restraining the Minister of Finance
from
implementing ITAC’s recommendation. The intended effect of the
interdict was to maintain the existing anti-dumping duty
until the
review was finalised.
[63]
In confirming that the appeal involved constitutional issues, the
Constitutional Court held that:
‘
[43]
Second, the impugned recommendation of ITAC too has been made in
terms of national legislation that regulates the administration
of
international trade and also seeks to give effect to the
international obligations of the Republic…
[44]
…The setting, changing or removal of an anti-dumping duty
is
a policy-laden executive decision
that flows from the power to formulate and implement domestic and
international trade policy. That power resides in the heartland
of
national executive authority…’
(my
emphasis)
[64]
Referring to the Minister of Trade and Industry, the Constitutional
Court stated:
‘
[96]
In the high court the minister joined issue with ITAC and opposed the
granting of the interdict. In a deposition filed on his
behalf, he
contended that the interdict would prevent him from exercising his
power and discretion to act in terms of the statutes
and frustrate
the exercise of his duties related to the determination of
anti-dumping duties. He contended that if the interdict
were to be
granted it would be an unjustified limitation of his functions under
the Act and the BTT Act. He added that an applicant
similarly
situated to SCAW, which has asked that duties be imposed on the
products of a competitor in order to protect its financial
interest,
would through the courts be able to frustrate the exercise of the
ministerial discretion.
[97]
The affidavit explains that no decision has been made in relation to
the existing anti-dumping duty. Once the recommendation
of ITAC has
been received, there would be extensive internal evaluation and only
then would the minister make a decision in terms
of the statutes.
Lastly, the minister draws attention to the fact that in the past he
has referred recommendations back to ITAC
for further evaluation and
consideration. He makes the final point that an interdict would
hinder the proper administration of
economic policy, a matter which
the Constitution entrusts to the national executive.
[98]
The statutory discretion the minister commands is indeed wide.
Barring the predictable requirement that he must wield the power
subject to the Constitution and the law, he or she may accept, or
reject the recommendation, or remit it to ITAC. Nothing obliges
the
minister to follow slavishly the reasoning and findings of ITAC. It
is open to the minister, in making a decision, to weigh
in
polycentric considerations such as diplomatic relations, the
country
’
s
balance of payments, the regional or global trading conditions, goods
needed to foster economic growth and so forth. Thus, the
recommendation of ITAC may be important but it is not the sole
predictor of what the minister is likely to decide.
’
[65]
To my mind, and having regard to the legislative framework of the
ITA, CEA and PFMA set out above, as well as s 41 of
the
Constitution, there is no reason why the same considerations should
not apply to the Minister of Finance when exercising his
powers under
s 48(1)(b).
[66]
First, he derives them from the CEA, a separate legislative
instrument to the ITA. Second, just as the Minister of Trade and
Industry is not obliged to follow the ITAC recommendation, there is
nothing in the CEA which indicates that the Minister is obliged
to
follow the recommendation of the Minister of Trade and Industry.
[67]
The use of the word ‘
may’
in s 48(1) of the CEA – while not of its own decisive of
the issue – should, following the approach in
Endumeni,
[26]
also be read together with s 48(5)(a), which makes it clear
that, even after publishing a tariff adjustment, the Minister
of
Finance may amend it in his own discretion and ‘
to
the extent he deems fit’
should it have an effect that was not foreseen or intended. The only
proviso is that he must first consult with the Minister of
Trade and
Industry. Section 48(5)(a) is also not subject to any limitation in
relation to an underlying formula previously adopted
for purposes of
implementing an earlier recommendation. The jurisdictional fact of an
ITAC recommendation would no doubt still
be necessary in light of
Paper Manufacturers
but it seems that this would only be part of the consultative process
with the Minister of Trade and Industry.
[68]
Third, the Minister has the final decision (subject to extension by
Parliament after a fixed period under s 48(6)) to
determine
whether a tariff adjustment recommended by ITAC and thereafter by the
Minister of Trade and Industry should be implemented.
If he makes
such a decision then publication in the Government Gazette is not
merely the implementation of legislation because
it is
the
Minister
who amends the Schedule to the CEA and thus amends
national legislation.
[69]
Fourth, when regard is had to the factors set out in the
SARFU
judgment (
supra
), in reaching his decision the Minister
exercises a public duty closely related to policy matters. This was
summarised in
SA Sugar
(
supra
) as follows:
‘
[33]
…The provisions of the CEA vest the Minister of Finance with
the final decision (subject ultimately to Parliament) to
determine
appropriate customs duties. In this regard, I have made the point
that the Minister is performing a legislative function.
A legislator
acts in a fiduciary capacity; he must so carry out the duties imposed
on him in the interests of the Republic. This
is reflected in the
oaths of office of legislators as well as members of the executive
and judicial officers in Schedule 2 to the
Constitution which require
the office bearer to swear or affirm to be faithful to the Republic.
Such a fiduciary is obliged to
carry out all such investigations as
rationality require to qualify him to carry out the legislative task
reposed in him. A legislator
is self-evidently entitled to carry out
such research as he may consider will best equip him to carry out his
legislative task.
[34]
The National Treasury, with the Minister of Finance as its head, was
established by section 5 of the Public Finance and Management
Act 1
of 1999. Under section 6(1) of that Act, the Treasury must, amongst
other things, promote the national government’s
fiscal policy
and the co-ordination of macro-economic policy. The Treasury has
rightly been described as the guardian of the nation’s
economy.’
[70]
Tuchten J also held in
SA Sugar
that:
‘
[35]
I find nothing in the language of the CEA which reduces the role of
the Minister in this regard to that akin to a registrar.
I am
prepared to assume, without deciding the point, that the wide power
conferred on the Minister of Finance under section 48(1)(e)
may only
be exercised in instances which do not fall under sections
48(1)(a)-(d). But I think the use of the word "otherwise"
in section 48(1)(e) supports the interpretation which I favour. I
think that this word is a pointer to the conclusion that the
power
conferred on the Minister of Finance is one which he may generally
exercise when he has come to the conclusion that it is
in the public
interest that he do so. The CEA is replete with powers conferred on
the Minister of Finance in relation to duties
which he may exercise
when he deems it expedient in the public interest to do so.
[36]
That there is an overlap in the decision making powers in the
situation which culminates with a request to the Minister of
Finance
under section 48(1)(b) and that investigations are conducted by other
organs of State do not detract in my view from this
conclusion. There
is nothing strange or anomalous in the situation that arises when the
Legislature prescribes, in effect, that
approvals by more than one
decision maker are required for the ultimate effectiveness of the
action contemplated.
[37]
This point is to my mind demonstrated by the provisions of Chapter VI
of the CEA which deals with anti-dumping, countervailing
and
safeguard duties and safeguard measures. In terms, the Minister of
Finance is vested with powers to impose or vary anti-dumping
and
countervailing duties and impose or vary safeguard measures. But the
Minister of Finance can only act in relation to these
duties and
measures in accordance with a request by the Minister of Trade and
lndustry. In the Chapter VI instances, the empowering
provisions
clearly restrict the Minister, in the exercise of his power to impose
or vary duties or measures, to instances where
the Minister of
Finance has been requested by the Minister of Trade and Industry to
impose such duties or measures. In such a case
the Minister of
Finance has an election: the Minister of Finance may either impose or
vary the duty or measure in accordance with
the view expressed by the
Minister of Trade and Industry through his request or the Minister of
Finance may decline to act at all
in accordance with the powers
conferred by Chapter VI of the CEA. In such cases the Minister of
Finance may not act unilaterally.
This is because the language (in
accordance with ...) makes it clear that he may not. But there is
nothing in the language of section
55 which indicates that the
Minister of Finance is obliged to concur with or defer to the
Minister of Trade and Industry and that
the former Minister is not
precluded by law from conducting his own independent investigation
and analysis of the subject matter
of the request received from the
latter.’
[71]
I agree. In my respectful view
Kennasystems
(and the passage
quoted from
Lead Laundry
) appear to overlook the independent
policy considerations to which the Minister of Finance must have
regard before acceding to
a request from the Minister of Trade and
Industry. While in the instant case the variable tariff formula
relates exclusively to
the industry in which the applicant operates,
it is incumbent on the Minister of Finance, under s 6(1) of the
PFMA, to co-ordinate
macro-economic policy and promote national
government’s fiscal policy in relation to South Africa as a
whole. I therefore
also agree with much of the reasoning as well as
the conclusion reached in the Sher judgment which need not be
repeated herein.
[72]
Although the request from the Minister of Trade and Industry in any
given instance is effectively one to implement his policy
decision, I
am compelled to conclude that it must, for purposes of s
48(1)(b), be subject to the Minister of Finance’s
own policy
decision to implement it. I thus cannot agree with the applicant’s
submission that the Minister of Trade and Industry
‘
has
overall responsibility for policy formation around the amendment of
customs duties’
. It follows that the application must fail.
Costs
[73]
It cannot be said that the applicant pursued this matter frivolously,
particularly when regard is had to National Treasury’s
own
media statement of April 2016, which purports to convey to the South
African wheat industry that the purpose of the past and
intended
exercises was to ‘
ensure policy certainty’
and
‘
provide certainty for domestic producers against
international price volatility’.
Moreover the
Constitutional Court itself emphasised in
SARFU
how difficult
it can be to determine whether an action should be characterised as a
policy decision or merely the implementation
of legislation. To my
mind the appropriate costs order is the one that follows.
[74]
In the result the following order is made:
1.
The application for the relief
sought in Part B of the Notice of Motion is dismissed.
2.
There shall be no order as to
costs, including the costs in relation to Part A of the Notice of
Motion.
__________________
J
I CLOETE
SAMELA
J
I
agree and it is so ordered.
__________________
M
I SAMELA
[1]
At the commencement of the hearing the reference to ‘
fifth
and/or sixth respondents
’
in prayer 1.1 of Part B was amended to ‘
fourth
respondent via the fifth and/or sixth respondents
’.
[2]
No 91 of
1964.
[3]
It is common cause that Part 1 of Schedule 1 is at issue in the
present matter.
[4]
Section 48(1)(b) refers to the ‘
Minister
of Trade and Industry and for Economic Co-ordination
’.
There are currently two ministerial positions: Minister of Trade and
Industry and Minister of Economic Development.
[5]
No 71 of 2002.
[6]
The ITAC report at p8 states that following the introduction of the
variable tariff formula in 1999, it was used until 2005 when
ITAC
recommended an
ad valorem
tariff. This was reviewed
in 2008 when ITAC recommended a reversion to the variable tariff
formula.
[7]
In the ITAC report reference is made to the Commission having been
directed to conduct the investigation and evaluation by the
Minister
of Economic Development, which reference the parties accept to be to
the Minister of Trade and Industry.
[8]
Defined as ‘
the
combined areas of the Member States of SACU
’.
[9]
‘
SACU
’
means the Southern African Customs Union.
[10]
[1995] ZACC 8
;
1995 (4) SA 877
(CC) at para
[33]
quoting Craies
Statute
Law
7th ed.
[11]
Subject to the proviso that if there is a conflict between a
provision in the body of the Act and Schedule, the Act prevails.
[12]
No 1 of 1999.
[13]
2008 (6) SA 540 (SCA).
[14]
2000 (1) SA 1
(CC).
[15]
2005 (6) SA 313 (SCA).
[16]
2014 (5) SA 69
(CC) at para [37].
[17]
1996 (1) SA 69
(T).
T
he
ITA repealed the Board on Tariffs and Trade Act 107 of 1986 and
replaced the Board on Tariffs and Trade
with
ITAC
–
see
Paper
Manufacturers
(
supra
)
at para [7]
[18]
[2017] 4 All SA 555 (GP)
[19]
[1996] 3 All SA 516 (N).
[20]
2nd Edition pp51 – 52.
[21]
That ‘
the jury is
still out
’ on the
question whether subordinate law-making is “administrative
action” is pointed out in
Mostert
v Registrar of Pensions Funds
2018
(2) SA 53
(SCA) at paras [8] – [10].
[22]
At para [2].
[23]
[2013] 4 All SA 253
(SCA), also reported at 2014 (4) BCLR 439 (SCA).
[24]
Only the relevant part is quoted for present purposes. See however
Association of Meat
Importers v ITAC
at para
[9].
[25]
2012 (4) SA 618 (CC).
[26]
Natal Joint Municipal
Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA).