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[2012] ZASCA 30
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New Foodcorp Holdings (Pty) Ltd and Another v Minister of Agriculture, Forestry and Fisheries and Others (82/1) [2012] ZASCA 30; [2012] 2 All SA 518 (SCA); 2012 (7) BCLR 717 (SCA); 2013 (1) SA 406 (SCA) (28 March 2012)
Links to summary
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 82/11
Reportable
NEW
FOODCORP HOLDINGS (PTY) LTD
….......................................................
1
st
Appellant
FOODCORP
(PTY) LTD
…..................................................................................
2
nd
Appellant
and
MINISTER
OF AGRICULTURE, FORESTRY AND FISHERIES
…..................
1
st
Respondent
ACTING
DEPUTY DIRECTOR GENERAL OF THE FISHERIES
BRANCH OF
THE DEPARTMENT OF AGRICULTURE, FORESTRY
AND
FISHERIES
…..........................................................................................
2
nd
Respondent
MINISTER
OF WATER AND ENVIRONMENTAL AFFAIRS
….......................
3
rd
Respondent
DEPUTY
DIRECTOR-GENERAL OF THE OCEANS AND
COASTAL
MANAGEMENT BRANCH OF THE DEPARTMENT
OF
ENVIRONMENTAL AFFAIRS
…................................................................
4
th
Respondent
Neutral
citation:
New Foodcorp
Holdings (Pty )Ltd v Minister of Agriculture, Forestry and Fisheries
(82/11)
[2012] ZASCA
30
(28 March 2012)
Bench
NAVSA, VAN HEERDEN, MHLANTLA, LEACH and WALLIS JJA
Heard
: 1 MARCH 2012
Delivered
: 28 MARCH 2012
Corrected
:
Summary
:
Challenge to policy which requires ministerial approval when a sale
of shares results in change of control of a company –
policy
regarding transformation of the fishing industry consonant with
objectives of the
Marine Living Resources Act 18 of 1998
- provisions
of policy not ultra vires the Minister’s powers in terms of the
Act – re-emphasised that transformation
is a constitutional and
statutory imperative - policy not vague or irrational.
_______________________________________________________________________
ORDER
On
appeal from
:
Western Cape High Court, Cape
Town (Griesel J sitting as
court of first instance):
The appeal
is dismissed with costs including those attendant on the employment
of two counsel.
JUDGMENT
NAVSA JA (VAN HEERDEN, MHLANTLA, LEACH and WALLIS
JJA
concurring):
[1] This appeal concerns the legality of two paragraphs of a document
entitled ‘Policy for the Transfer of Commercial Fishing
Rights’
(the TP). The TP was first issued and published in July 2009 by the
Minister previously responsible for fisheries,
namely, the third
respondent, the Minister of Water and Environmental Affairs.
1
Following governmental reorganization the TP is now administered by
the first respondent, the Minister of Agriculture, Forestry
and
Fisheries (the Minister). The appeal is directed against a judgment
of the Western Cape High Court (Griesel J), in terms of
which an
application by the first and second appellants, New Foodcorp Holdings
(Pty) Ltd and Foodcorp (Pty) Ltd, to have paragraphs
6.2 and 6.3 of
the TP declared unconstitutional, unlawful and invalid, was dismissed
with costs, including the costs of two counsel.
I shall refer to the
first and second appellants as Holdings and F, respectively.
[2] In the application in the court below the appellants had also
sought an order declaring that F was not required to obtain
authorisation from either the Minister or the second respondent, the
Acting Deputy Director-General of the Fisheries Branch of his
department, ‘for a composite transaction of 10 March 2010 in
terms of which [F’s] shareholding and corporate structure
was
re-arranged’. For reasons that will become apparent, none of
the relief sought by the appellants was granted by the court
below. I
will in due course deal with the nature and effect of F’s
restructuring. The appeal is before us with the leave
of the court
below.
Background
[3] F is a broad-based manufacturer, marketer and distributor of
branded food products and is the country’s third largest
food
company. It has five divisions. The relevant one in respect of the
present appeal is known as ‘Marine Products’.
In 2005 F
and its subsidiaries applied for and were granted ‘long-term’
commercial fishing rights in terms of s 18
of the Marine Living
Resources Act 18 of 1998 (the MLRA). The relevant parts of s 18 read
as follows:
’
18 Granting of rights
No person shall undertake
commercial fishing or subsistence fishing, engage in mariculture or
operate a fish processing establishment
unless a right to undertake
or engage in such an activity or to operate such an establishment
has been granted to such a person
by the Minister.
An application for any right
referred to in subsection (1) shall be submitted to the Minister in
the manner that the Minister
may determine.
…
(5) In granting any right
referred to in subsection (1), the Minister shall, in order to
achieve the objectives contemplated in
section 2, have particular
regard to the need to permit new entrants, particularly those from
historically disadvantaged sectors
of society.’
[4] F and its subsidiaries also have annual permits granted in terms
of s 13 of the MLRA to exercise those rights.
2
Consequently F and its associated companies have the right to
undertake commercial fishing enterprises and operate fish processing
establishments. To properly appreciate the extent and scope of its
marine division, it is necessary to record that for insurance
purposes F’s investments in that sphere are valued at slightly
more than half a billion rand. To appreciate the full extent
of its
entire commercial worth, it should be mentioned that F’s
fishing interests account for only six per cent of its annual
turnover.
[5] The fishing rights allocation process referred to in the
preceding paragraphs was guided by a document entitled ‘General
Policy for the Allocation and Management of Long-Term Commercial
Fishing Rights: 2005’ (the GP), issued by the then Department
of Environmental Affairs and Tourism. The GP records that the MLRA
requires restructuring of the fishing industry in order to address
historical imbalances and to achieve equity within all the branches
of the fishing industry. It recognises that transformation
is a
constitutional imperative. It goes on to state that the GP has as an
objective, the improvement on the levels of transformation
achieved
during an earlier rights allocation process. The GP states
emphatically that ‘only quality transformation will be
recognised, that is, transformation which results in real benefits to
historically disadvantaged persons’. According to the
GP,
beneficial ownership by black people, in the form of unrestricted
voting rights and economic interest associated with equity
ownership,
will be assessed and taken into consideration. The management
structure of an applying entity will be taken into account
and, in
particular, senior executive management positions will be
scrutinised. Gender, employment equity, skills development,
affirmative procurement and corporate social investment are all
factors to be taken into account when commercial fishing rights
are
allocated.
[6] In applying for fishing rights in terms of s 18 of the MLRA and
meeting the requirements, particularly of s 18(5), F relied
on the
fact that its majority shareholder, Pamodzi Investment Holdings (Pty)
Ltd (Pamodzi), was a black-owned investment company,
which held some
58.33 per cent of F’s issued shares. It further relied on the
fact that a substantial shareholding in F (17.3
per cent) was held by
an employees’ share trust, of which 82.4 per cent of the
beneficiaries were historically disadvantaged
persons. (Management
held a further 12.98 per cent of the shares.)
[7] The genesis of the present litigation is the corporate
restructuring exercise referred to in para 2 above. On 10 March 2010,
F’s shareholding changed as a result of a composite series of
transactions in terms of which all its shares were transferred
to
Holdings. The transactions in question altered control of F and
affected the make-up of its shareholders. Essentially its
transformation
credentials were affected. Its black shareholding was
diluted. This occurred because Pamodzi had sold its entire
shareholding at
a price in excess of R500 000 000 and exited the
business. The employees’ trust had exchanged its shares in F
for shares
in Holdings. A new major shareholder Blue Bay Asset
Management plc, based in the United Kingdom, acquired 44.44 per cent
of the
shares in Holdings. F’s management and staff now
collectively hold 51 per cent of the shares in Holdings. According to
the
first and second respondents, the effect of the restructuring
exercise resulted in a reduction of black shareholding from 59.35
per
cent to 19.364 per cent. According to Holdings and F the reduction of
black shareholding, from the time of the allocation of
long term
fishing rights until after the restructuring exercise, is from 59.35
per cent to 21.59 per cent. On either basis the
effect on
transformation is stark.
[8] When the fishing rights were granted to F, the condition imposed
by the Minister was that such rights may not be transferred
or
assigned to any other entity without prior approval. A condition of
F’s permit issued in terms of s 13 was that the Department
‘must’ be informed of changes of ownership and
shareholding within 30 days of such change.
[9] As recorded by the court below, in terms of the GP, which was in
force at the time when the commercial fishing rights were
allocated:
‘
[I]t
was recognised that a share sale transaction could not be equated
with a transfer in that “the fishing right remains
with the
same legal entity”. The General Policy only required approval
for share transactions which resulted in a change
of control “to
prevent the circumvention of s 21(2) of the [Act]”.’
The GP only required approval for share transactions which resulted
in a change of control of the entity to which fishing rights
were
allocated to prevent a circumvention of s 21(2) of the MLRA.
3
[10] At this stage the contents of paras 6.2 and 6.3 of the TP become
relevant. Paragraphs 6.2 and 6.3 appear under the heading
‘Sale
of Shares/members Interests in companies and close corporations’
and read as follows:
‘
6.2
Approval for transfer of a right is not required if the sale of
shares/member’s interest does not result in change [in]
control
of the company or close corporation and the company/close corporation
remains at least as transformed as at allocation
of the long-term
right. The Right Holder (except in the case of a public company) will
still be required to complete a form informing
the Department so that
the change in shareholding/member’s interest can be recorded.
6.3 If the sale of
shares/member’s interest results in change of control of the
company/close corporation or results in the
company/close corporation
not being as transformed as at date of allocation of the long-term
right an application for transfer
of the right is required and the
following will be considered:
The change in
shareholding/members interest relating to race and gender in the
right holding entity;
The number (percentage) of
shares/member’s interest to be sold;
Whether the entity or person
acquiring the shares/member’s interest is an existing Right
Holder in the fishing industry
and if so, in which sector;
The investment of the
transferee entity or person acquiring the shares/member’s
interest in the fishing industry;
The fishing performance of the
entity or person acquiring the shares/member’s interest;
Whether the proposed transfer
of shares/member’s interest will lead to a consolidation of
either Right Holders, or of effort;
There is evidence that the
transferee will be a “paper quota” and not become
directly involved in the catching or
processing of the fish caught.’
[11] F notified the Department of the change in the shareholding and,
on 4 May 2010, through its attorneys, applied for approval
of the
restructuring transaction. A decision on that application is pending.
Notwithstanding that application for approval, the
appellants,
because they considered that the application would not be looked upon
favourably and because they feared action by
the Department in terms
of s 28(1)
4
of the MLRA, which includes cancellation and suspension of fishing
rights and permits, adopted the view that the provisions of
the TP,
set out in the preceding paragraph, are invalid and unenforceable.
This caused them to approach the court below for the
orders set out
above. Their challenge was based on the following:
(a) Paras 6.2 and 6.3 are ultra vires the Minister’s powers in
terms of s 21(2) of the MLRA, in that, properly construed,
the
Minister’s powers are confined to approving the transfer of a
commercial fishing right from one person to another and
not to
approving the sale or purchase of shares in a company that holds a
commercial fishing right;
(b) the TP is not contained in regulations, either in terms of s
21(3)
(b),
or s 77(1) of the MLRA, and consequently the TP is
at best a non-legislative ‘guiding policy’, which cannot
lay down
requirements for Ministerial or departmental approval in
circumstances such as those of the present case;
(c) the factors to be taken into account by the department and the
Minister in assessing an application for approval in terms of
paragraph 6.3 are impermissibly vague; and
(d) the TP is irrational and unreasonable.
[12] It is common cause that, in order to address historical
imbalances and achieve equality within the fishing industry,
transformation
is an important factor, rightly taken into
consideration when an application for commercial fishing rights is
considered by the
department. When long-term rights were allocated
the Minister assessed transformation by adopting a model in which
applicants for
rights were pitted competitively against each other by
considering factors such as race, gender, employment equity, skills
development,
alternative procurement and corporate social investment.
The applicants complain that the department appears to be considering
the restructuring transaction solely from the vantage point of black
ownership and that a ‘richer concept’ of transformation,
taking into account all the factors mentioned in the GP and in codes
issued under the Broad-Based Black Economic Empowerment Act
53 of
2003 (the BBBEE Act), should be adopted. They complain that the
department’s approach now places special emphasis on
management
and the beneficial ownership by black people ‘in the form of
unrestricted voting rights and economic interest
associated with
equity partnership’. These complaints are misplaced on the
evidence, both because when F and its subsidiaries
successfully
applied for their long-term commercial fishing rights in various
fisheries there was a similar emphasis on management
and the
beneficial ownership by black people and because both then and now,
in accordance with the provisions of the MLRA and the
GP, a wide
range of factors such as those provided under the BBBEE Act was and
will be taken into account. The letter of award
stated that the right
granted to the rights holder may not be transferred or assigned to
any other entity without prior written
approval. This provision
restates the requirements of s 21 of the MLRA.
[13] The permit issued to F states, inter alia, that the permit is
issued subject to the provisions of the MLRA and the GP. It
records
that the permit holder may only transfer its long term commercial
fishing rights in terms of s 21 of the MLRA and the TP.
In this
regard it is important to note that, in para 7.3 of the GP, it is
recorded that the MLRA requires the department to have
regard to the
need to restructure the fishing industry in order to address
historical imbalances and to achieve equity within all
the branches
of the fishing industry. The GP records that transformation is a
constitutional imperative and that the BBBEE Act
is one of a number
of statutory instruments giving effect to that imperative. The GP
states that one of its aims is to further
transformation and to
improve on the levels achieved during the medium-term rights
allocations process, which preceded the long-term
rights allocations
process. Furthermore, the GP states that it is necessary to promote
the participation of historically disadvantaged
persons within all
branches of the fishing industry. There can be no doubt from this of
the importance attaching to transformation,
not only at the time of
the long-term rights allocation, but also going forward from that
time, so that maintaining the levels
of transformation already
achieved would have been of ongoing concern to the Department.
The judgment in the High Court
[14] The Western Cape High Court had regard to the submission on
behalf of Holdings and F that governmental policy could not override
or be in conflict with statutory provisions and that s 21 could not
be construed so as to regulate the bona fide sale of shares.
The
following appears in the judgment of the high court:
‘
On a
narrow company law approach, the applicants’ argument appears
to be unassailable. However, for the reasons that follow,
I am of the
view that this would be an incorrect approach in the present
scenario. First, there are indications in the wording
of s 21 itself
that a wider, more extended meaning of “transfer” was
intended by the legislature. Thus, reference is
made in subsec (1) to
a commercial fishing right which “may be leased, divided or
otherwise transferred”. The words
“otherwise transferred”
are significant, because they extend the ordinary meaning of
“transfer” so as to
include within its ambit the lease or
division of fishing rights. It would therefore be wrong, in my view,
to attach a narrow literal
interpretation to the concept of “transfer
of fishing rights”.’
[15] Reasoning that the applicants themselves conceded that a
transfer of shares may, in certain circumstances, require ministerial
approval, as for example, where companies holding commercial fishing
rights attempt to circumvent s 21 by disguising a transfer
of fishing
rights as a share sale transaction, the high court held that it was
important to have regard to the scope and purpose
of s 21 and ‘within
limits’, to its background. On this aspect the high court
referred to
Bato Star Fishing (Pty) Ltd v Minister of
Environmental Affairs and Tourism & others
[2004] ZACC 15
;
2004 (4) SA 490
(CC), in which the Constitutional Court made it clear that the
‘process of interpreting the Act must recognise that its policy
is founded on the need both to preserve marine resources and to
transform the fishing industry’.
5
[16] On the question whether the TP was in conflict with the Act, the
high court concluded as follows:
‘
In the
context of the applicants’ challenge herein, it is clear to me
that the considerations contained in the Transfer Policy
do not
override or amend the policy as embodied in the Act nor are they in
conflict therewith. As already pointed out, the question
of
transformation played a pivotal role in the allocation of fishing
rights. In that process, the corporate veil has been rendered
completely transparent, thus enabling the Minister and the Department
to look behind the façade of the legal entity in question
to
see the identities and profiles of those holding interests and
positions in the entity. It stands to reason that similar
considerations
should apply when it comes to the transfer of those
rights. In fact, the Transfer Policy says so expressly. This is to
avoid the
possible “regression in relation to transformation”
of the industry. It follows from what has been said above regarding
the statutory framework that this is a perfectly legitimate policy
consideration.’
[17] The high court was concerned about the consequences of upholding
the contentions of Holdings and F. It expressed its reservations
as
follows:
‘
If the
applicants’ argument were to be upheld, then it would mean that
there is a loophole in the law which permits shareholders
or members
in corporate rights holders freely to dispose of their shares or
members’ interests without the approval of the
Minister –
even where such transfer would have a drastic effect on the control
and/or racial profile of the particular corporate
entity. It would
also mean that the constitutional and statutory objectives regarding
transformation could be easily circumvented
or undermined, with the
result that the Minister and the Department would have no control
over the transfer of shares or members’
interests in the
periods between the allocation of rights. In my view, these
assertions only have to be stated for them to be rejected.’
[18] Griesel J dealt with the submission on behalf of Holdings and F,
that paras 6.2 and 6.3 were impermissibly vague and the specific
complaint that there was no certainty about how an application for
Ministerial approval will be assessed. Put differently, Holdings
and
F claimed that they required certainty about the circumstances under
which permission would be granted so that they could know
in advance
whether approval would be forthcoming. In this regard the high court
referred to the following dictum in
Dawood, Shalabi and Thomas v
Minister of Home Affairs & others
[2000] ZACC 8
;
2000 (3) SA 936
(CC):
6
‘
Discretion
plays a crucial role in any legal system. It permits abstract and
general rules to be applied to specific and particular
circumstances
in a fair manner. The scope of discretionary powers may vary. At
times they will be broad, particularly where the
factors relevant to
a decision are so numerous and varied that it is inappropriate or
impossible for the Legislature to identify
them in advance.
Discretionary powers may also be broadly formulated where the factors
relevant to the exercise of the discretionary
power are indisputably
clear. A further situation may arise where the decision-maker is
possessed of expertise relevant to the
decisions to be made.’
[19] Griesel J went on to conclude that the factors relevant to the
exercise of the Minister’s discretionary power are
‘indisputably
clear’. He held that the TP as a whole
provided sufficient guidance as to the manner in which the discretion
would be exercised
and thus rejected the complaints concerning
vagueness.
[20] Lastly, the high court dealt with the submission that TP did not
meet the requirement of rationality. In this regard the court
considered that the enquiry was whether the means selected are
rationally related to the objective sought to be achieved. On this
aspect Griesel J relied on the decision in
Albutt v Centre for the
Study of Violence and Reconciliation & others
2010 (3) SA 293
(CC).
7
Conclusions
[21] It is clear that in dealing with the MLRA and interpreting its
provisions, the following dictum in
Bato Star
8
must be borne in mind:
‘
That
context is the constitutional commitment to achieving equality, the
foundational policy of the Act to transform the industry
consistent
with the Constitution and the Act read as a whole. The process of
interpreting the Act must recognise that its policy
is founded on the
need both to preserve marine resources and to transform the fishing
industry, and the Constitution’s goal
of creating a society
based on equality in which all people have equal access to economic
opportunities.’
The same approach has to be adopted when a court is called upon to
examine ministerial or departmental policy.
[22] Furthermore, the long title of the MLRA reads as follows:
‘
To
provide for the conservation of the marine ecosystem, the long-term
sustainable utilisation of marine living resources and the
orderly
access to exploitation, utilisation and protection of certain marine
living resources; and for these purposes to provide
for the exercise
of control over marine living resources in a fair and equitable
manner to the benefit of all the citizens of South
Africa; and to
provide for matters connected therewith.’
[23] Section 2 sets out the objectives of the MLRA and the principles
that should be applied. The relevant parts read as follows:
‘
The
Minister and any organ of state shall in exercising any power under
this Act, have regard to the following objectives and principles:
…
the need to achieve to the
extent practicable a broad and accountable participation in the
decision-making processes provided
for in this Act;
…
the need to restructure the
fishing industry to address historical imbalances and to achieve
equity within all branches of the
fishing industry.’
[24] In addition, s 18(5) of the MLRA set out in para 3 above obliges
the Minister, in granting commercial fishing rights, to have
‘particular regard‘ to the need to permit new entrants,
particularly those from historically disadvantaged sectors
of
society.
[25] Importantly, as pointed out in para 4 above, no person may
exercise a fishing right unless an annual permit has been issued
by
the Minister subject to such conditions as determined by him or her.
[26] In
Bato Star
the Constitutional Court stated the
following:
‘
There
can be no doubt that the development objectives of the national
government include transformation of the economy. On an overall
reading of the provisions of the Act, decision-makers, in allocating
fishing rights, must seek to give effect to the objectives
of the Act
and, in particular, must ensure that a process of transformation
takes place. To meet the obligations imposed in this
regard by ss
2
(d)
,
(j)
and
18(5), there must, in the first place, be a recognition of the fact
that Parliament required these needs to be fulfilled and
that steps
must be taken to ensure their fulfilment in time. At the very least,
some practical steps must be taken in the process
of the fulfilment
of these needs each time allocations are made if possible.’
9
[27] The Constitutional Court went on to say the following about the
GP:
‘
The
policy guidelines published at the same time as the invitation for
applications on 27 July 2001 indicate that the transformation
of the
industry was a consideration central to the allocation process. So
does the evaluation process of applicants for quotas.
The actual
allocation as well as the general reasons issued after the allocation
process indicate that some steps were taken in
relation to the s 2
(j)
objective
but that no new entrants were admitted into the hake deep-sea trawl
sector. The evidence shows, however, that new entrants,
including the
applicant, had been admitted in previous years. It is also clear that
in relation to the deep-sea hake sector of
the fishery and its own
particular context, particularly its capital- and labour-intensive
character, transformation was to be
sought, not so much in admitting
new entrants to the industry, as in concentrating on the
transformation of those companies already
in the industry.’
10
[28] That, then, is the background against which this appeal has to
be decided.
[29] Counsel representing the first and second respondents was
constrained to concede that there are difficulties in attempting
to
justify the provisions of paras 6.2 and 6.3 as being authorised in
terms of s 21 and to construe it in the manner resorted to
by the
Cape High Court, referred to in paras 14 and 15 above. However, it
does not necessarily follow that paras 6.2 and 6.3 are
without legal
underpinning. There is accordingly no need to explore the
difficulties of construction.
[30] First, although the TP is headed ‘Policy for the Transfer
of Commercial Fishing Rights’, it does deal with matters
beyond
that narrow description, as is evidenced by paras 6.2 and 6.3.
Paragraph 6.2 records that approval for a transfer of a right
is not
required if the sale of shares does not result in a change in control
of the company or close corporation when the company
or close
corporation remains as transformed as at the time of the allocation
of the right. Paragraph 6.3 requires consideration
by the Minister
when a sale of the shares or members’ interest results in the
company not being as transformed as it was
at the time of the
allocation of fishing rights.
[31] Second, the permits issued to F are subject to the provisions of
the GP and the MLRA. As discussed earlier, the GP emphasises
the need
to restructure the fishing industry in order to address historical
imbalances and to achieve equity within all branches
of the fishing
industry. The GP states that one of its objectives is to improve on
transformation levels achieved during the preceding
medium-term
fishing rights allocation process.
[32] It follows that, purely on the basis that the permit condition
appears to have been contravened by the composite restructuring
exercise referred to at the beginning of this judgment, because of
the resultant dramatic reduction in black share-holding, the
Minister
is entitled to require scrutiny of that exercise in terms of paras
6.2 and 6.3 of the TP. Moreover, the Minister has an
obligation to
ensure that the objectives and principles set out in s 2 of the MLRA,
referred to in para 24 above, are met and complied
with.
Additionally, fishing rights were granted in terms of s 18 which
obliges the Minister to have regard to transformational
imperatives.
Far from being ultra vires, paras 6.2 and 6.3 appear to me to be
admirably consonant and in line with the provisions
of the MLRA.
There is no substance to the submission on behalf of Holdings and F
that, since the adjudication of applications for
permits involves a
process different from the process relating to changes in control of
entities and the transfer of permits, the
court below erred in
concluding that paras 6.2 and 6.3 were not ultra vires. Throughout
the various processes transformation of
the fishing industry to
address historical imbalances and to achieve equity is a constant
imperative.
[33] The somewhat emotionally-laden submission that, if the impugned
paragraphs of the TP were to remain extant, they would have
the
effect of prohibiting bona fide share transactions which could never
have been the intention of the Legislature, with concomitant
negative
results for the free market system, is in my view unfounded.
Particularly in the modern world, with environmental and
human rights
concerns, most, if not all, industries are regulated. Holdings and F
took advantage of the regulation of the fishing
industry in relation
to transformation when they ensured that they had adequate
transformation credentials when they applied for
fishing rights. The
corollary to obtaining benefits because of one’s transformation
profile may well be an obligation to
ensure that the cause of
transformation is not harmed by the pursuit of private advantage.
[34] In regulated industries participants know up-front the extent of
the regulation and the strictures under which they operate.
In the
present case, a letter of award of fishing rights and the permit
conditions made it abundantly clear that the provisions
of the MLRA
and the GP applied and that the permit holder might only transfer its
long term commercial fishing rights in terms
of s 21 of the MLRA and
the TP. The TP, the provisions of which were known, made it clear
that the granting of the rights with
attendant conditions would be
policed. I agree with the submissions on behalf of the Minister and
the Department that the Minister
is unjustifiably criticised for
stating in advance the criteria and principles to be applied when
dealing both with the transfer
of fishing rights or share sale
transactions which impinge on important provisions of the MLRA. This
criticism is all the more
unfounded when these are in line with
constitutional imperatives and consonant with the MLRA. Furthermore
the TP enables engagement
between the Minister and holders of fishing
rights well before the process envisaged by s 28 of the MLRA, which
might involve the
more drastic result of suspension or cancellation
of rights, licences and permits.
[35] I disagree with the submissions on behalf of Holdings and F that
the impugned paragraphs are impermissibly vague in that they
do not
enable one to identify cases in which the need for ministerial
approval is triggered or to identify with any certainty how
approval
might be obtained. Paragraph 6.3 comes into operation when the sale
of shares results in the company not being as transformed
as at the
date of allocation of fishing rights. In my view, there is nothing
mystifying or unclear about this. The factors being
taken into
account by the Minister in dealing with this change are listed and
the Minister is on record as stating that she will
be flexible in
their application when she exercises her discretion in terms of para
6.3. In this regard the court below was correct
in its conclusion.
[36] In seeking to scrutinise the share sale transaction by reference
to the conditions under which the fishing rights were granted
based
on the provisions of the GP, the Minister and the Department are not
following a narrow approach as suggested on behalf of
Holdings and F.
The factors taken into account in terms of the GP described above are
similar to the objectives set out in s 2
of the BBBEE Act. Those
factors are taken into account in addition to matters relevant to the
fishing industry.
[37] The submission in respect of the irrationality of the impugned
paragraphs can be dealt with succinctly. As set out above,
the
impugned paragraphs are in line with constitutional and statutory
objectives. The court below referred to
Albutt
11
where the following appears:
‘
But,
where the decision is challenged on the grounds of rationality,
courts are obliged to examine the means selected to determine
whether
they are rationally related to the objective sought to be achieved.
What must be stressed is that the purpose of the enquiry
is to
determine not whether there are other means that could have been
used, but whether the means selected are rationally related
to the
objective sought to be achieved. And if, objectively speaking, they
are not, they fall short of the standard demanded by
the
Constitution.’
I agree with the conclusion of the court below that the submissions
on behalf of Holdings and F in respect of irrationality fall
to be
rejected.
[38] In our constitutional order courts have fulfilled their
constitutional duty when the legislature or members of the executive
have transgressed the bounds of the power vested in them and have
made the necessary orders. In instances such as the present,
when
members of the executive fulfil their constitutional duties and meet
the constitutional transformation imperative in impressive
fashion
courts should say so. Finally, it needs to be stated that the
professed litigation objective of F and Holdings, namely,
that they
were intent on ensuring responsible and progressive transformation is
belied by their actions in completing the composite
transactions in
question.
[39] For all the reasons set out above the appeal must fail. The
following order is made. The appeal is dismissed with costs including
those attendant on the employment of two counsel.
_________________
M S NAVSA
JUDGE OF APPEAL
APPEARANCES:
For
Appellants: S Burger SC
D
Borgström
Instructed
by:
Cliffe
Dekker Hofmeyr Inc
Cape
Town
Claude
Reid Inc
Bloemfontein
For
Respondents: G Budlender SC
K
Pillay
J
de Waal
Instructed
by:
The
State Attorney
Cape
Town
The
State Attorney
Bloemfontein
1
The
policy document was published in Government Notice 789 in
Government
Gazette
32449 of 31 July 2009.
2
Section
13(1), (2) and (4) of the MLRA provide:
‘
(1) No person shall exercise
any right granted in terms of section 18 or perform any other
activity in terms of this Act unless
a permit has been issued by the
Minister to such person to exercise that right or perform that
activity.
(2) Any permit contemplated in subsection (1) shall –
(
a
) be issued for a specified period not
exceeding one year;
(
b
) be issued subject to the conditions
determined by the Minister in the permit; and
(
c
) be issued against the payment of any fees
determined by the Minister in terms of section 25(1).
…
(4) A permit to exercise an existing right in terms of
this Act may be refused if the conditions of a previously issued
permit
had not been adhered to.’
3
Section
21(2) provides:
‘
An application to transfer a
commercial fishing right or a part thereof shall be submitted to the
Minister in the manner that
the Minister may determine, and subject
to the provisions of this Act and any applicable regulation, the
Minister may, in writing,
approve the transfer of the right or a
part thereof.’
4
Section
28(1) reads as follows:
If a holder of any right, licence or permit in terms
of this Act –
has furnished information in the application for that
right, licence or permit, or has submitted any other information
required
in terms of this Act, which is not true or complete;
contravenes or fails to comply with a condition
imposed in the right, licence or permit;
contravenes or fails to comply with a provision of
this Act;
is convicted of an offence in terms of this Act; or
fails to effectively utilise that right, licence or
permit,
the Director-General may by written notice delivered to
such holder, or sent by registered post to the said holder’s
last
known address, request the holder to show cause in writing,
within a period of 21 days from the date of the notice, why the
right,
licence or permit should not be revoked, suspended,
cancelled, altered or reduced, as the case may be.’
5
Para
92.
6
Para
53.
7
Para
51.
8
Para
92.
9
Para
40.
10
Para
41.
11
Para
51.