About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2011
>>
[2011] ZAGPPHC 52
|
|
Taishan Fibreglass SA (Pty) Ltd v Minister of Trade and Industry, National Governement and Another (57084/09) [2011] ZAGPPHC 52 (1 April 2011)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
(REPUBLIC
OF SOUTH AFRICA)
Case
No: 57084/09
DATE:
01/04/2011
In
the matter between:
TAISHAN
FIBREGLASS SA (PTY)
LTD
........................................................................
Applicant
and
THE
MINISTER OF TRADE AND INDUSTRY,
NATIONAL
GOVERNEMENT
................................................................................
1st
Respondent
THE
MANUFACTURING DEVELOPMENT
BOARD
....................................................................................................................
2nd
Respondent
JUDGMENT
MNGQIBISA-THUSI,
J
[1]
The applicant is seeking the following relief:
1.1
that the decision of the second respondent taken on 18 February 2009
disapproving the applicant's application for the decrease
in the
investment, turnover and employment conditions set by the second
respondent on 26 September 2007 when approving the applicant's
incentives be reviewed and set aside;
1.2
that the application of the applicant for relaxation of conditions
relating to the applicant's application for financial assistance
and
incentives in respect of the Small and Medium Enterprise Development
Programme (SMEDP) be granted; alternatively, that the
applicant's
application for relaxation of conditions relating to applicant's
application for financial assistance and incentives
in respect of the
SMEDP be remitted to the second respondent for reconsideration;
1.3
that the respondents be ordered, jointly and severally to pay the
costs of this application.
[2]
The first respondent introduced an incentive scheme in terms of the
SMEDP consisting of certain investment grants. The purpose
of the
programme is to encourage small and medium size businesses to develop
and grow, and to promote investment in plant and machinery.
The
scheme is managed by the second respondent on behalf of the first
respondent.
[3]
Around July 2005 the applicant lodged an application with the second
respondent in terms of the SMEDP. However, this application
was not
approved on the basis that it had a low matrix score.
[4]
As appears from the second respondent's answering affidavit a matrix:
"...
comprises a system whereby all the financial statements and other
information submitted by an applicant in support of
its application
are put on a spreadsheet. The spreadsheet allows for scores to be
calculated in respect of different categories
such as "machinery
and equipment" and "wealth creation".
[5]
For an applicant's application to be approved, the applicant must
obtain a minimum matrix score of 50%. The matrix score is
used as a
basis for recommendations made by the second respondent to the first
respondent. Further, a deviation from the minimum
matrix score is
allowed only in exceptional circumstances.
[6]
In March 2007 the applicant applied again (the second application).
In this second application, the applicant had increased
its
investment in plant and machinery for the second year by at least R25
000 000.00. Furthermore, the applicant undertook to increase
its
employment figure from 55 to 118 persons. This application was
approved on 26 September 2007 subject to what is termed "a
special condition', namely, that an employment figure of at least 118
would be maintained throughout the incentive period even
though the
applicant's projected employment figure was 50.
[7]
The contract was signed on 28 January 2008.
[8]
On 9 April 2008, the applicant submitted another application to the
SMEDP in terms of which it sought an approval to decrease
its
projected investment in new machinery to R10 370 000.00, a lower
turn-over level from 118 for the entire period to 50 for the
first
year and 8 for the second year.
[9]
The applicant's motivation for seeking a revision in the conditions
under the original contract was that as a result of the
problems
ESKOM experienced in supplying electricity to its customers
throughout the country during that period, the applicant would
not be
in a position to use the full production of an additional Fibreglass
Roving production line.
[10]
Initially on receipt of this revised application, the second
respondent rejected it outright under the erroneous belief that
it
was out of time. The letter rejecting the application as being out of
time reads in part as follows:
"The
board does not approve the decrease in investment and turnover figure
as the request was received 27 days late and as
no additional
material motivation/information was received. The existing contract
remains valid."
[11]
However, when it was alerted by the applicant to the fact that it was
wrong in its initial decision, the second respondent
did consider the
revised application. The letter pointing out the second respondent's
mistake reads in part as follows:
"We
respectfully submit that no additional motivation apart from argument
contained in our covering letter was deemed necessary
as the
electricity shortage is regarded as common cause. No doubt, your
Board is aware of Eskom's plea to mining/industry to cut
down
electricity consumption by at least 10 per cent."
[12]
The second respondent rejected the revised application on the ground
that the motivation in support of the application was
"meagre,
scant and vague in the extreme and without any substance."
[13]
The applicant and the respondents have applied for condonation for
the out of time bringing of this application and the late
filing of
the answering affidavit, respectively. In consideration of the
motivation supplied by each party, condonation is granted
to both
parties.
[14]
It is the contention of the applicant that the decision of the second
respondent should be reviewed and set aside on the following
grounds:
14.1
the second respondent has not paid due consideration to the
circumstances which stopped the applicant's proposed expansion;
14.2
the second respondent's remedies were exhausted and if the matter is
remitted back to the second respondent for reconsideration,
this will
probably not be done properly;
14.3
that the administrative action taken by the second respondent was not
procedurally fair in terms of section 6(2) of Promotion
of
Administrative Justice Act 3 of 2000 (PAJA), in particular 6(2)(c);
6(2)(e)(vi) and (vii); 6(2)(f)(ii) and 6(2)(h);
14.4
that the second respondent ignored the applicant's submissions and
did not bother to provide reasons for its decision;
14.5
that the decision made was biased and taken in bad faith,
arbitrarily or capriciously. The basis for this ground stems from
the
second respondent's response to the applicant's revised application
that it was 'meagre, scant and vague in the extreme and
without any
substance'.
[15]
It was argued on behalf of the applicant's that the second respondent
as a regulator should be more sensitive to the challenges
faced by
actors in the manufacturing industry particularly the impact that the
electricity outages would have on the output. Further
that it does
not seem as though the second respondent had applied its mind to the
applicant's revised application since it appears
that it used a
general criterion to evaluate the application.
[16]
The pertinent subsections of section 6(2) of PAJA read as follows:
"6.
(2) A court or tribunal has the power to judicially review an
administrative action if -
(c)
the action was procedurally unfair;
(e)
the action was taken-
(vi)
arbitrarily or capriciously;
(f)
the action itseif-
(ii)
is not rationally connected to-
(aa)
the purpose for which it was taken; (bb) the purpose of the
empowering provision; (cc) the information before the administrator;
or
(dd)
the reasons given for it by the administrator;
(h)
the exercise of the power or the performance of the function
authorised by the empowering provision, in pursuance of which the
administrative action was purportedly taken, is so unreasonable that
no reasonable person could have so exercised the power or
performed
the function."
[17]
It was submitted on behalf of the respondents, firstly, that the
applicant's second application was approved on the basis of
its
proposed increase in its employment quota. The respondents contend
that special conditions as contained in the applicant's
contract are
imposed in instances where the applicant's matrix score does not meet
the minimum requirements. Secondly, it was argued
on behalf of the
respondents that even after it was indicated to the applicant that
additional motivation was necessary, the applicant
did not deem it
necessary to supply same beyond claiming that the problems with
electricity supply were well known. Further it
was contended that the
electricity outages were not an occurrence unique to the applicant.
It needed to motivate why within a short
period of two months after
the contract is signed it deems it necessary to revise its matrix, in
particular, its employment component.
[18]
In order to determine whether a decision-maker has failed to apply
his mind in reaching a decision it was held in Johannesburg
Stock
Exchange and Another v Witwatersrand Nigel Ltd and Another
1988 (3)
SA 132
(A) at 152B-D that:
"Such
failure may be shown by proof, inter alia, that the decision was
arrived at arbitrarily or capriciously or mala fide
or as a result of
unwarranted adherence to a fixed principle or in order to further an
ulterior or improper purpose; or that the
president misconceived the
nature of the discretion conferred upon him and took into account
irrelevant considerations or ignored
relevant ones; or that the
decision of the president was so grossly unreasonable as to warrant
the interference that he had failed
to apply his mind to the matter
in the matter aforestated .... Some of these grounds tend to
overlap."
[19]
Further, in Pharmaceutical Manufacturers Association of South Africa
and Another: In re Ex parte President of the Republic
of South Africa
and Others
[2000] ZACC 1
;
2000 (2) SA 674
(CC);
2000 (3) BCLR 241
at paras [85] and
[86] at 708D - F the court held that:
"[85]
It is a requirement of the rule of law that the exercise of public
power by the Executive and other functionaries should
not be
arbitrary. Decisions must be rationally related to the purpose for
which the power was given, otherwise they are in effect
arbitrary and
inconsistent with this requirement. It follows that in order to pass
constitutional scrutiny the exercise of public
power by the Executive
and other functionaries must, at least comply with this requirement.
If it does not, it falls short of the
standards demanded by our
Constitution for such action.
[86]
The question whether a decision is rationally related to the purpose
for which the power was given calls for an objective enquiry.
Otherwise a decision that, viewed objectively, is in fact irrational,
might pass muster simply because the person who took it mistakenly
and in good faith believed it to be rational. Such a conclusion would
place form above substance and undermine an important constitutional
principle."
[20]
The applicant has not given sufficient evidence in support of its
contention that the decision taken by the second was not
proceduraily
fair. Once the second respondent became aware of its mistake in
dismissing the applicant's revised application, it
had considered the
application and responded to the applicant indicating its rejection
of the application due to lack of sufficient
motivation. The
applicant was aware on receipt of the letter of the erroneous letter
of rejection that besides the applicant considering
the application
to be out of time, the applicant also considered the application as
not being sufficiently motivated. In response
the applicant had
indicated that in its opinion it did not deem it necessary to
motivate for the revision in view of what it referred
to as common
knowledge, namely, the electricity outages.
[21]
Furthermore I am not convinced that the second respondent was
capricious, mala fide or irrational in deciding to reject the
applicant's revised application. The second respondent made the
decision based on the information supplied by the applicant being
that it had to reduce its proposed plans as a result of the power
outages and nothing else. The second respondent has correctly
pointed
out that it couid not base its decision on an event of general
application as the applicant was not the only one affected
by the
electricity outages. The applicant did not supply the second
respondent with grounds applying specifically to it as an entity
which would necessitate the agreed upon components. Furthermore
bearing in mind that according to the second respondent the
applicant's
application was only approved, even though it did not
meet the basic matrix score, on its employment component which was
regarded
as exceptional circumstances in terms of the respondents'
criteria.
[22]
In Minister of Environmental Affairs and Tourism and Others v
Phambili Fisheries (Pty) Ltd; Minister of Environmental Affairs
and
Tourism and Others v Bato Star Fishing (Pty) Ltd
2003 (6) SA 407
(SCA) at para 48 the court stated that:
"In
treating the decisions of administrative agencies with the
appropriate respect, a Court is recognising the proper role
of the
Executive within the Constitution. In doing so a Court should be
careful not to attribute to itself superior wisdom in relation
to
matters entrusted to other branches of government. A Court should
thus give due weight to findings of fact and policy decisions
made by
those with special expertise and experience in the field. The extent
to which a Court should give weight to these considerations
will
depend upon the character of the decision itself, as well as on the
identity of the decision-maker. A decision that requires
an
equilibrium to be struck between a range of competing interests or
considerations and which is to be taken by a person or institution
with specific expertise in that area must be shown respect by the
Courts."
[23]
Furthermore, in Logbro Properties CC v Bedderson NO and Others
2003
(2) SA 560
(SCA) Cameron JA quoted from an article by Cora Hoexter
entitled The Future of Judicial Review in South African
Administrative
Law' (2000) 117 SAU 484 at 501-2 which reads as
follows:
"...
the sort of deference we should be aspiring to consists of a judicial
willingness to appreciate the legitimate and
constitutionally-ordained
province of administrative agencies; to
admit the expertise of these agencies in policy-laden or polycentric
issues; to accord
their interpretation of fact and law due respect;
and to be sensitive in general to the interests legitimately pursued
by administrative
bodies and the practical and financial constraints
under which they operate. This type of deference is perfectly
consistent with
a concern for individual rights and a refusal to
tolerate maladministration."
[24]
In this matter I am guided by the sentiments expressed in the above
mentioned cases. I do not find anything evidencing that
the second
respondent did not apply its mind when considering the application
made by the applicant. Accordingly I do not think
that this court can
substitute the second respondent's decision with its own. What is
clear is that the second respondent followed
the proper procedure in
these applications and gave reasons for rejecting the application.
[25]
Accordingly the following order is made: The application is dismissed
with costs."
NP
MNGQIBISA-THUSI J
Judge
of the North Gauteng High Court