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[2011] ZASCA 102
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Saidex (Pty) Ltd and Others v Minister of Minerals and Energy NO and Others (49/10) [2011] ZASCA 102 (1 June 2011)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
No: 49/10
In
the matter between:
Saidex
(Pty) Ltd
…...........................................................................................
First
Appellant
Frits
Stephanus Visser
…...........................................................................
Second
Appellant
Este
Minerals CC
…........................................................................................
Third
Appellant
D
& R Diamonds CC
…................................................................................
Fourth
Appellant
CS
Diamonds CC
…........................................................................................
Fifth
Appellant
Platinum
Shadow Trade 101 (Pty) Ltd
…........................................................
Sixth
Appellant
and
The
Minister of Minerals and Energy NO
…................................................
First
Respondent
The
Department of Minerals and Energy
…...........................................
Second
Respondent
SA
Diamond & Precious Metal Regulator
…..............................................
Third
Respondent
Martinus
Mamphenyane Mononela NO
…...............................................
Fourth
Respondent
Neutral
citation:
Saidex v The Minister of Minerals and Energy
(49/10)
[2011] ZASCA 102
(1 June 2011)
Coram:
LEWIS,
SNYDERS, SHONGWE, THERON AND MAJIEDT JJA
Heard:
19 May 2011
Delivered:
1 June 2011
Summary:
Interim interdict – requirements – nature of business
permitted by Diamonds Act 56 of 1986.
ORDER
On appeal from: North
Gauteng High Court (Pretoria) (Sapire AJ sitting as court of first
instance).
The appeal is dismissed
with costs, including the costs of two counsel.
JUDGMENT
SNYDERS JA (Lewis,
Shongwe, Theron, Majiedt JJA concurring)
[1] The appellants were
refused an interim interdict in the North Gauteng High Court,
Pretoria (Sapire AJ) and are before this court
with the leave of the
court below.
[2] The appellants
conduct business in the diamond industry subject to and in terms of
the provisions of the Diamonds Act 56 of
1986 (the Act). During 2005
the Act was amended twice and the amendments came into effect on 1
July 2008 (the amended Act).
1
The appellants allege
that, save in so far as the transitional provisions protect their
rights, the amended Act has deprived them
of the business which they
have been conducting in terms of the Act. They seek to preserve their
rights under the Act pending an
application by the South African
Diamond Producers Organisation (‘SADPO’), of whom they
are all members, aimed at obtaining
an order declaring certain
provisions of the amended Act to be unconstitutional.
[3] The respondents are,
respectively, the Minister, the department, the SA Diamond &
Precious Metal Regulator established in
terms of the Act and the
official in the employ of the third respondent, tasked with the
implementation of the Act and the amended
Act. Only the second and
third respondents opposed both the application and this appeal and I
will refer to them, for the sake
of convenience, as the respondents.
[4] At the outset the
respondents contested the appealability of the order of the court
below. The refusal of an interim interdict
is, in principle,
appealable.
2
The question of
appealability is, however, by no means a simplistic one.
3
The facts of this case
suggest that the relief sought in the court below was aimed at
preserving the status quo of the vested business
interests of the
appellants, pending the determination of the main application that
would definitively decide the rights of the
parties. The effect of
the refusal of the interim interdict is, therefore, final in
declining to preserve the status quo. A consideration
of this issue
on appeal does not constitute an undesirable piecemeal approach to
the matter. Without delving too deeply into the
issue I accept in
favour of the appellants that the order by the court below is
appealable.
[5] The respondents also
submitted that the appellants’ notice of appeal is defective
because it does not ‘state in
what manner the variation of the
order of the Court a quo is sought’.
4
The appellants’
notice of appeal may strictly fall short of the rule, but as the
relief sought in the court below was refused
and the appeal is noted
against ‘the whole of the judgment and costs order’, it
is obvious that the appellants seek
the reversal of the refusal and
the granting of the relief contained in the notice of motion.
Although sloppiness and a lack of
discipline is by no means
encouraged, the notice of appeal has not caused prejudice and the
matter should be decided on its merits.
[6] To have achieved
success the appellants would have had to persuade the court below
that if their factual allegations were accepted,
together with the
respondents’ allegations that could not be disputed by the
appellants, and if regard was had to the inherent
probabilities, they
could have obtained final relief in the main application. Once that
exercise produced an answer in the appellants’
favour, only
serious doubt cast on the appellants’ case by the respondents’
allegations could have prevented the granting
of interim relief.
5
In addition the
appellants had to have persuaded the court below that they had a well
grounded apprehension of irreparable harm
if interim protection was
not afforded, that the balance of convenience favoured them and that
they had no other adequate remedy.
6
[7] Integral to an
interim interdict is the need to show that proceedings which address
the principal dispute between the parties
are intended or pending. In
the founding affidavit this aspect is addressed as follows:
‘
On 20 December 2007 SADPO
issued an application out of the above Honourable Court under case
number 98085/07 against the first and
second respondents herein (“the
main application”) to –
24.1 set aside the coming into
operation by proclamation published on 12 July 2007 in Government
Gazette No. 30071, Volume 505,
No. R17 of 2007 of the First and
Second Amendment Acts respectively;
24.2 declare as unconstitutional
24.2.1 certain sections of the Acts;
24.2.2 the arbitrary deprivation of
the rights accrued to tender houses in consequence of certain
sections of the Second Amendment
Act; and
24.2.3 set aside the Regulations made
under that Act.’
The appellants do not
refer to the specific provisions of the amended Act that are being
attacked in the main application. That
failing is repeated in the
present proceedings.
[8] The first appellant
is the holder of a valid certificate issued by the South African
Diamond Board (SADB) in terms of s 26 of
the Act which entitles it to
operate a diamond exchange at designated premises. The second
appellant is a shareholder and director
of the first appellant and
the holder of a licence as a diamond dealer in respect of the same
premises. The third to fifth appellants
are all diamond dealers on
the strength of similarly issued diamond dealers’ licences. The
sixth appellant is a newly formed
company and has applied for a
licence as a diamond dealer in terms of the amended Act, which has
not yet been issued. The sixth
appellant therefore has no rights that
require protection and can, for that reason, be ignored for purposes
of this judgment.
[9] The appellants place
much reliance in their founding affidavit on a judgment granting an
interim interdict in the same division
of the high court, by the same
judge and, seemingly, on the same issue and against the same
respondents in favour of one
Meyer
Diamonds CC
which
held a diamond exchange certificate. The only value of the judgment
in the
Meyer
matter is that it may
have constituted a precedent for the court below. However, it was
distinguished by the court below and not
followed. (Whether the
distinction was justified is not something I need decide.) In fact
the only significance of
Meyer
for this court is that a
large portion of the founding affidavit incorporates allegations made
in the
Meyer
papers. The incorporated
allegations describe the details of what is called ‘the tender
business’ and in the present
application all the applicants
align themselves with the
Meyer
matter in this regard.
[10] The appellants
allege that they have established, in terms of the Act prior to the
amendments, a business described by them
as a ‘tender business’
which is made unlawful by the amendments. The explanation in the
founding affidavit of the tender
business is given by quoting several
paragraphs from the
Meyer
matter. In summary, local
licensed diamond dealers are assisted by unlicensed foreigners in the
purchase of unpolished diamonds
from other local licensed dealers
like themselves. This practice, so they allege, ensures that they
come into contact with international
traders and obtain the best
possible price commensurate with international, as opposed to local,
markets. It also ensures a commission
for the local licensed dealers
involved that are not the sellers in the transaction. Significantly,
the appellants refer to this
as a ‘de facto’ practice and
distinguish it from the ‘de jure’ position. This
distinction illustrates the
fundamental flaw in the appellants’
case.
[11] The appellants do
not refer to a single provision in the Act that suggests that a
practice such as their tender business is
or ever has been
legitimate. On the contrary the Act is aimed at the prevention of all
dealing in, possession of and the purchase
and sale of unpolished
diamonds at premises not licensed and by persons not licensed to do
so.
7
The tender business
described involves the dealing in unpolished diamonds by unlicensed
foreigners. To refer to assistance by unlicensed
foreigners distorts
the truth in that it identifies the unlicensed foreigner as the one
who ‘assists’ the licensed
dealers whereas it is the
licensed dealers who assist the unlicensed foreigner and earn
commission by doing so.
[12] The appellants rely
solely on a letter from the SADB for the legitimacy of the tender
business. They do not attach the letter
to their papers, but allege
that it is dated 21 March 1993, was written by the SADB, and was
addressed and sent to every licensed
rough diamond dealer and cutter
in South Africa. Reliance on the letter is explained as follows in
the founding affidavit:
‘
7.2 According to this letter,
licensees were no longer permitted to be assisted, when viewing and
purchasing diamonds, by anyone
who was not a licensee or the
Authorised Representative of a licensee.
7.3 The letter made it very clear that
this condition applied to
selling
offices
(section 48(1)(d))
and
buying offices
(section 48(2)(d)) exclusively.
7.4 The letter went on to state
categorically and unequivocally that (and I quote for convenience of
the court from the letter as
follows):
“
Please note, however, that the
Board’s decision
does
not apply
to the viewing or
purchasing of diamonds on any of the following premises:
7.4.1 the premises of the Diamond
Bourse of S A;
7.4.2
the business premises of a
licensed cutter or dealer (the particulars of such a premises are
reflected on a cutter or dealer’s
license)
; and
7.4.3 the premises of Trans Hex in
Parow.”’
(Their
emphasis)
[13] These allegations
contain an apparent conflict between para 7.4.2 of the quoted letter
and para 7.2 of the excerpt from the
founding affidavit that purports
to contain a summary of part of the letter. It is extraordinary that
the appellants seek to establish
a prima facie right on the contents
of a letter which is not placed before the court. The court is not
put in a position to interpret
the letter for itself and assess the
cogency of the allegation that it gave rise to a legitimate practice.
The respondents also
do not deal conclusively with this letter. They
do not deny the letter or the rendition of its contents by the
appellants but allege
that the letter has been superseded by the
licence conditions of each of the appellants. I will return to this
aspect.
[14] The exclusion in
para 7.4.2 of the letter relied upon by the appellants is contrary to
the provisions of the Act even before
the amendments were passed.
Although the applicants do not allege that the letter had been
written in terms of the provisions of
s 30 of the Act, which gives
the SADB the power to determine, cancel, vary or impose conditions in
respect of licenses issued,
this is the only provision that they
could possibly rely on for the legitimacy of the exclusion.
8
However, it goes without
saying that the SADB could not possibly allow exemptions contrary to
the Act. But even if that is ignored,
s 30(3), in peremptory terms,
obliges the executive officer of the SADB to endorse ‘on the
licence any cancellation, variation
or condition referred to’
in s 30(2). Section 30(4) gives the executive officer the necessary
powers to require that a licensee
submits a licence to be endorsed.
The appellants are silent as to whether this was done or had to be
done in consequence of the
letter. Their case does not contain the
necessary averments required to establish the alleged exclusion in
the letter that legally
entitled them to develop the ‘de facto’
tender business that they rely on. A fortiori, they have not
established even
a prima facie right.
[15] I return to the
respondents’ answer to the letter. All the dealers’
licences, except that of the fourth appellant,
attached to the
founding affidavit are dated after 21 March 1993. It is inconceivable
that the licences would not have been endorsed
with the exemption
relied on by the appellants, if it legitimately existed. Section 29
of the Act compels the endorsement of any
licence with the conditions
determined by the SADB.
9
When the licences were
issued without this all important exemption the appellants were
within their rights to seek endorsement in
terms of s 30. They make
no allegations to this effect nor do they make out a case that their
licences were issued reflecting the
incorrect conditions. The
conditions reflected on all licences attached to the papers are in
direct conflict with the exemption
relied upon by the applicants.
Each one includes the following condition:
‘
The licensee’s authorised
representative(s) may when viewing or purchasing unpolished diamonds
on a premises approved in terms
of Section 48(1)(d) (selling office)
or a premises approved in terms of section 48(2)(d) (buying office),
only be assisted by another
licensee or a natural person registered
as an authorised representative in terms of section 54 of the
Diamonds Act, 1986’.
[16] The fourth appellant
is affected in precisely the same manner as all the others despite
the fact that its licence was issued
in 1988, because there is no
endorsement on the licence consistent with the alleged exemption and
no attempt to explain why the
provisions of s 30(3) and (4) were not
employed to have it endorsed to reflect the alleged true conditions
of its licence.
[17] The respondents’
answer to the appellants’ allegations is a persistent and
unequivocal denial that the tender business
described and relied upon
by the appellants is legal in terms of the Act. They contend that the
amended Act does not bring about
anything new in this regard. This
view accords with the provisions of the Act. The allegations by the
appellants provide a context
to the amended Act which reveals that
the amended Act seeks to root out, in express terms, an illegal
practice that has developed
contrary to the provisions of the Act.
[18] The second to fifth
appellants have not established a case in respect of the first
requirement of an interim interdict and
rightly failed to obtain
relief in the court below.
[19] The second
appellant, as the shareholder and director of the first appellant,
deposed to the founding affidavit. As already
mentioned the founding
affidavit contains an extensive quotation from the founding affidavit
in the
Meyer
matter. The applicant in
Meyer
was the holder of a
diamond exchange certificate, like the first appellant. At first
blush it seems strange that the holder of a
diamond exchange
certificate would place so much emphasis in its founding affidavit on
the case for the holder of a diamond dealer’s
licence. A closer
look reveals that the first appellant has an interest that is closely
linked to and dependent upon the second
appellant’s diamond
dealer’s licence. It is that close link which puts another
perspective on the first appellant’s
case as a diamond
exchange: it is not a mere complaint that the amended Act does not
provide for a certificate to operate as a
diamond exchange. If the
first appellant’s case was as simple as that, there was no need
for it to pay any attention to the
tender business of the diamond
dealers in its founding affidavit and likewise in the
Meyer
matter. The identity of
interest is, however, clear if the case of the diamond dealers and
the diamond exchange is read together,
as it is presented in this
matter. It is the access to and contact with unlicensed persons,
primarily foreigners, that creates
the first appellant’s export
market.
[20] The explanation in
the founding affidavit as to how a diamond exchange operates confirms
this conclusion:
‘
Anyone wishing to export a
rough diamond (eg the South African Licensee in consortium with the
foreigner who had won a parcel on
a “tender”) may place
it on a Diamond Exchange duly registered as such in terms of section
47 of the Act.’
The export business of
the first appellant stems from dealing with unlicensed foreigners, an
illegal practice in terms of the Act
that the amended Act seeks
expressly to forbid.
[21] Although it is
technically correct that there no longer exists a diamond exchange
certificate in terms of the amended Act,
the implication argued for
by the first appellant – that it would no longer be able to
export diamonds - is not correct.
The certification of premises as a
diamond exchange in terms of the Act has been replaced by the
certification of premises as a
diamond trading house. The first
appellant has already applied in terms of the amended Act for its
premises to be certified as
a diamond trading house and that
application is pending. The procedures for the export of diamonds in
terms of the Act as amended
are similar to those in place previously,
with two important differences. First, diamond trading houses would
not be entitled to
make contact and enter into transactions with
unlicensed foreigners that would lead to the export of unpolished
diamonds to them;
and second, export duty exemption has been
abolished by s 115 of the Taxation Amendment Laws Act 8 of 2007. The
abolition of the
export duty exemption is not attacked by the
appellants. In so far as the first difference is concerned, contact
with unlicensed
foreigners in terms of the express terms of the
amended Act has to take place at prescribed premises and export of
unpolished diamonds
to them occurs in terms of the same procedure as
operated in terms of the Act and as described in the founding
affidavit.
10
[22] In the appellants’
eagerness to align themselves with
Meyer
as a consequence of the
success obtained in that matter, they have not made allegations
pertinent to any imminent threat which they
are facing or the extent
of the harm they may suffer if an interim interdict was not granted.
The extensive quote from
Meyer
in the founding affidavit
contains allegations of threats leveled by the respondents to close
down
Meyer
Diamonds’
business.
It also contains details of the income that could be earned as a
tender business and a diamond exchange. In this matter
the appellants
have made only vague allegations of threats resulting from a refusal
by the respondents to agree to extend to them
the same protection
obtained in
Meyer
.
No allegations are made of the extent of income that would be lost,
relative to their total income, as a result of the implementation
of
the amended Act.
[23] The second amendment
to the Act introduced transitional provisions to the effect that if
application is made for a licence
or certificate in terms of the
amended Act within one year of the coming into operation of the
amended Act, the licence or certificate
in existence in terms of the
Act remains operative until the applications in terms of the amended
Act are decided.
11
It is common cause that
all the appellants had applied within the required one year period
for the comparable licences and certificates
in terms of the amended
Act and that no decision has yet been made on those applications.
They can therefore continue their legitimate
trade in terms of the
provisions of the Act.
[24] Assuming, however,
in favour of the appellants, that the appropriate official could at
any stage, without notice, take a decision
on the new applications
and that a threat is constituted in that way, the appellants face the
difficulty that they have not disclosed
what harm such a decision
would cause them, if any.
[25] The appellants
submitted in their founding affidavit, and persisted with that stance
during the hearing, that s 31(9) is ‘void
for uncertainty’
because it refers to a date before ‘section 4 of this Act takes
effect’ and that this reference
is incomprehensible as s 4
deals with the ‘objects of the Regulator’. The date
referred to is 1 July 2008, the date
the amended Act came into
operation, because the reference to s 4 in s 31(9) seeks to inform
licensees that licences in terms of
the Act would continue in
operation for a limited period, namely, one year after the coming
into operation of the amended Act.
This is clearly how s 31(9) has
been understood by all parties in this matter and reflects the
obvious intention of the legislator.
[26] For the reasons
stated the appeal is dismissed with costs, including the costs of two
counsel.
_________________
S SNYDERS
JUDGE OF APPEAL
APPEARANCES:
For
appellants: J J Gauntlett SC (with him N Jagga)
Instructed by David
Kotzen Attorneys, Edenvale
Lovius- Block,
Bloemfontein.
For
respondents: I Semenya SC (with him T Machaba)
Instructed by The State
Attorney, Pretoria,
The
State Attorney, Bloemfontein.
(On
behalf of the 1
st
& 2
nd
Respondents)
1
The
amendments were introduced by the
Diamonds Amendment Act 29 of 2005
and the
Diamonds Second Amendment Act 30 of 2005
.
2
African
Wanderers Football Club (Pty) Ltd v Wanderers Football Club
1977 (2) SA 38
(A) at 47C-48H;
Cronshaw
& another v Coin Security Group (Pty) Ltd
[1996] ZASCA 38
;
1996
(3) SA 686
(A) at 690B-691G;
Knox
D’Arcy Ltd & others v Jamieson & others
[1996] ZASCA 58
;
1996 (4) SA 348
(A) at 356H-360D.
3
Health
Professions Council of South Africa v Emergency Medical Supplies and
Training CC t/a EMS
2010 (6) SA 469
(SCA) paras 14-19.
4
SCA
rule 7(3)(b)
requires an appellant to ‘state the particular
respect in which the variation of the judgment or order is sought’.
5
Webster
v Mitchell
1948 (1) SA 1186
(A) at 1189;
Gool v Minister of
Justice
1955 (2) SA 682
(C) at 688E. This case having originated
as an urgent application, I will accept in favour of the appellants,
the lesser test
stated in
Webster
on the strength of
Sing
& Co (Pty) Ltd v Pietermaritzburg Local Road Transportation
Board
1959 (3) SA 822
(N) at 824C.
6
Setlogelo
v Setlogelo
1914 AD 221.
7
Sections
18, 19, 20, 21, 31 and 48 of the Act.
8
Section
30 reads: ‘(1) A licence shall be subject to such conditions
as the Board may determine at the time of the granting
of the
application in question.
(2) The Board may at any
time-(a) cancel or vary any condition to which a licence is subject;
or (b) impose any condition or any
further condition in respect of a
licence.
(3) The executive
officer shall endorse on the licence any cancellation, variation or
condition referred to in subsection (2).
(4) In order to give
effect to subsection (3), the executive officer may request a
licensee in writing to submit his licence to
the executive officer
within the period specified in the request.’
9
Section
29 reads: ‘(1) If the Board grants an application for a
licence, the executive officer shall against payment of
the
prescribed fee issue to the applicant the licence on the prescribed
form.
(2) The executive
officer shall endorse on such licence – (a) any condition
determined by the Board under section 30(1);
and (b) particulars of
the location of the premises approved by the Board under section
31(1).’
10
Sections
60-69
11
Sections
31(9)
, (10) and (11) of the
Diamonds Amendment Act 29 of 2005
.