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[2021] ZAGPPHC 109
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Woodlands Dairy Proprietary Limited and Another v Minister of Agriculture, Forestry and Fisheries in the Government of the Republic of South Africa and Others (82044/2018) [2021] ZAGPPHC 109; [2021] 3 All SA 619 (GP) (22 February 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
(1)
REPORTABLE: YES/
NO
(2)
OF INTEREST TO OTHERS
JUDGES: YES/
NO
(3)
REVISED
Case
number: 82044/2018
Heard on:
26 January 2021
Date
of judgment: 22 February 2021
In
the application between:
WOODLANDS
DAIRY PROPRIETARY LIMITED
First Applicant
MILK
SOUTH AFRICA
NPC
Second Applicant
and
THE
MINISTER OF AGRICULTURE, FORESTRY
AND
FISHERIES IN THE GOVERNMENT
OF
THE REPUBLIC OF SOUTH AFRICA
First
Respondent
BILLY
MALOSE MAKHAFOLA N.O.
Second
Respondent
NEJAHMOGUL
TECHNOLOGIES AND
AGRIC
SERVICES PROPRIETARY LIMITED
Third Respondent
JUDGMENT
SWANEPOEL AJ:
INTRODUCTION
[1]
First Applicant (“Woodlands”) is the third largest
producer of milk and long-life
dairy products in South Africa. Second
applicant (“Milk SA”) is a non-profit company which was
established by the dairy
industry to deal with issues of common
interest to role players within the industry.
[2]
First respondent is the Minister of Agriculture, Forestry and
Fisheries (“the
Minister”). One of the Department of
Agriculture Forestry and Fisheries’ functions is to monitor and
exercise control
over various agricultural sectors, of which the
dairy industry is one. Second respondent (“the Executive
Officer”)
is the Executive Officer appointed by the Minister in
terms of section 2 (1) of the Agricultural Product Standards Act, Act
119
of 1990 (“the APS Act”).
[3]
Third respondent (“Nejahmogul”) is a for profit company
designated by
the Minister on 9 December 2016 as assignee in terms of
section 2 (3) (a) of the APS Act. It was so designated for the
application
of sections 3 (1) and 4 A of the APS Act, and
specifically for the inspection of dairy and related products.
[4]
Applicants seek the following relief:
[4.1]
That section 3 (1A) (b) (ii) of the APS Act be declared to be
unconstitutional in terms of section
172 (1) of the Constitution;
[4.2]
That the Minister be directed to submit an amendment to the APS Act
to Parliament whereby any fees
determined by an assignee in terms of
section 3 (1A) (b) (ii) of the APS Act be made subject to regulatory
control over, and approval
by the Minister and/or the Executive
Officer, prior to the imposition of such fees upon the owner of any
agricultural products;
[4.3]
That the decision of the Minister on 13 February 2015, to invite
potential service providers to apply
for designation as assignees in
respect of dairy and related products, under section 2 (3) of the APS
Act, be set aside;
[4.4]
That the notice published by the Minister in the Government Gazette
No 40140 dated 15 July 2016, which
invited prospective assignees to
express their interest to be designated as an assignee be declared
unlawful and of no force and
effect;
[4.5]
That the decision by the Minister on 13 January 2017 to designate
Nejahmogul as assignee for the purposes
of sections 3 (1) (a) and
(b), 3A (1), 4 A 1 (1) (a), 7 and 8 of the APS Act be set aside;
[4.6]
That Nejahmogul’s decision to determine its fees, and the
publication of the fees in Notice
267 of 2018, Government Gazette No.
41650 dated 25 May 2018 be set aside;
[4.7]
That, pending any order in respect of the decision of the Minister to
invite assignees, Nejahmogul
be prohibited from charging or
recovering any fees for performing any functions or duties assigned
to it by the Minister;
[4.8]
That the decision of the Executive Officer on 15 June 2018 not to
stay the commencement by Nejahmogul
of the execution of its powers
and duties pending the:
[4.8.1]
conclusion of the consultative process with the dairy industry;
[4.8.2]
conclusion of a service level agreement between Nejahmogul and the
Department of Agriculture, Forestry and Fisheries (“the
Department”); and
[4.8.3]
the approval by the Executive Officer of the standing operating
procedure with regard to the execution of Nejahmogul’s
powers
and responsibilities,
be set aside;
[4.9]
That the decision of the Executive Officer on 15 June 2018 not to
issue directions in terms of section
2 (3) (b) (i) of the APS Act, to
the effect that only one routine inspection per annum per producer is
required, and thereafter
on a risk-based approach after assessing the
compliance or non-compliance (as the case may be) by owners of dairy
products with
the enforcement/compliance provisions of the APS Act
and its regulations, be set aside;
[4.10] Costs.
THE
AGRICULTURAL PRODUCTS STANDARDS ACT, ACT 119 OF 1990
[5]
The aims of the APS Act are set out in its preamble:
“
To
provide for control over the sale and export of certain agricultural
products, control over the sale of certain imported agricultural
products, and control over other related products, and for matters
connected therewith.”
[6]
The APS Act empowers the Minister to designate any person,
undertaking, association
or board as an assignee. Section 2 of the
APS Act reads as follows:
“
2
.
Designation of Executive Officer
and assignees
(1)
The Minister shall designate
an officer in the service of the department as Executive Officer, who
shall, subject to the control
and directions of the Minister,
exercise the powers and perform the duties conferred upon or assigned
to the Executive Officer
by or under this Act.
(2)
(a)
The Executive Officer may, unless
expressly provided otherwise, in writing delegate or transfer to any
officer under his or her
control any such power or duty, or in
writing authorize or direct any such officer to exercise such power
or perform such duty.
(b)
A power exercised or duty performed
by an officer other than the Executive Officer shall be deemed to
have been exercised
or performed by the Executive Officer:
Provided that the Executive Officer may at any time amend or withdraw
any decision made
or order given by such other officer.
(3)
(a)
The Minister may, for purposes of
the application of this Act or certain provisions thereof, with
regard to a particular product,
designate any person, undertaking,
body, institution, association or board having particular knowledge
in respect of the product
concerned, as an assignee in respect of
that product.
(b)
An assignee thus designated
shall-
(i)
unless expressly provided otherwise and
subject to the directions of the Executive Officer, exercise the
powers and perform the
duties that are conferred upon or assigned to
the Executive Officer by or under this Act, with regard to the
product referred to
in paragraph (a);
(ii)
in the case of a juristic person,
notwithstanding anything to the contrary contained in any other law
or in the absence of any express
provision to that effect, be
competent to exercise the powers and perform the duties referred to
in subparagraph (i); and
(iii)
unless the Minister in a particular
case otherwise directs, have no recourse against the State in respect
of any expenses incurred
in connection with the exercising of such
powers or performance of such duties.
(c)
The chief executive official, chairman or other person in charge of
such assignee who is
not a natural person-
(i)
shall act on behalf of that assignee in the exercise of the powers
concerned
and the performance of the duties concerned; and
(ii)
may in writing delegate or transfer to an employee of that assignee
any such power
or duty which the assignee concerned shall or may
exercise or perform by or under this Act, or in writing authorize or
direct such
employee to exercise such power or perform such duty.
(d) A power
exercised or duty performed by an employee referred to in paragraph
(c) (ii), shall be deemed to have
been exercised or performed by the
chief executive official, chairman or other person in charge, as the
case may be: Provided that
the chief executive official, chairman or
other person in charge, as the case may be, may at any time amend or
withdraw any decision
made or given by such employee.”
[7]
The section at the heart of this matter is section 3 (1A) of the APS
Act. Applicants
contend that section 3 (1A) (b) (ii) is inconsistent
with the Constitution. Section 3 (1A) reads as follows:
“
(1A)
(a)
Fees may be charged in respect of
the powers exercised and duties performed by the Executive Officer or
the assignee, as the case
may be, to ensure compliance with this
section.
(b)
In the case of powers exercised and
duties performed by-
(i)
the Executive Officer, the
prescribed fee shall be payable; and
(ii)
the assignee, the fee determined by
the assignee shall be payable”.
THE BACKGROUND
[8]
The department has, for some years, been unable to properly fulfil
its regulatory
functions due to a lack of capacity. The
Director-General of the Department was aware of this deficiency and
consequently, on 12
December 2014 he recommended to the Minister that
potential service providers should be invited to apply to be
designated as assignees
in a number of sectors, the dairy sector
being one of them.
[9]
The Minister agreed, and after the first invitation was issued and
withdrawn, a second
invitation was published in the Government
Gazette on 15 July 2016. Specifically relevant to this matter,
applications were sought
for the dairy and related products sector. A
summary of the requirements that prospective assignees had to meet
was also subsequently
published. They were the following:
[9.1]
The assignee was required to have an organizational structure that
would enable it to maintain the
capability of exercising its mandate;
[9.2]
It required a sufficient number of competent, designated permanent
personnel with the necessary expertise
to carry out the assigned
functions;
[9.3]
The assignee was required to have adequate and suitable facilities
and equipment for rendering the
service;
[9.4]
The assignee had to use prescribed methods and procedures in
exercising its functions;
[9.5]
The assignee was required to have and maintain sound financial
administration and have an annual business
plan and budget setting
out the powers and duties to be exercised and performed and the
expected costs thereof.
[9.6]
The assignee had to comply with the requirements of the AgriBEE
Sector Code;
[9.7]
The assignee had to maintain a record keeping system to suit its
particular circumstances and ensure
the confidentiality of the
clients.
[10]
On 18 July 2016 an information session was held to acquaint
prospective applicants with the minimum
requirements determined by
the Minister for appointment as assignee. Nejahmogul was incorporated
on 20 July 2016, five days after
the second invitation was issued,
and two days after the information session was held. During August
2016 Nejahmogul replied to
the invitation by delivering a lengthy
application to the Department.
[11]
One of the other applicants for designation was the Dairy Standard
Agency (“DSA”),
a non-profit company which had been
established by the organized diary industry to balance the interests
of the industry and the
consumer. It is funded by the producers of
dairy products and it assists the department and its inspectors to
identify compliant
and non-compliant processors and manufacturers.
[12]
On 22 September 2016 all of the applicants were shortlisted for
interviews. After interviews
had been conducted with the applicants,
the Department held a meeting on 8 November 2016 where the applicants
were assessed.
On 9 December 2016, after consideration of the
applications and the assessments, the Minister designated Nejahmogul
as assignee
for dairy and related products. The designation was
published in Government Notice No. 40545 dated 13 January 2017.
[13]
What followed was a months-long attempt by Nejahmogul and the dairy
industry to find common ground
on the manner in which Nejahmogul
would fulfil its obligations and exercise its powers, more
specifically regarding the cost of
inspections and the testing of
products. On 27 February 2017 the Executive Officer published a
notice to affected stakeholders
which provided a guideline to the
inspection of regulated agricultural products, and which set out the
assignee and the stakeholders’
respective responsibilities and
obligations. Of importance is that the Executive Officer made it
clear that the fees attached to
the inspections would be determined
by the assignee, and that it would amount to a criminal offence under
section 11 of the APS
Act for a stakeholder not to comply with its
obligation to pay the fees.
[14]
On 13 April 2017 Nejahmogul published a notice in the Government
Gazette in which it listed its
proposed fees, and it sought comment
thereon from the industry. The industry was overwhelmingly of the
view that the fees were
exorbitant, and would result in serious
financial harm to producers. On 3 May 2017 Milk SA proposed the
establishment of a workgroup
consisting of representatives of the
industry, the Department and Nejahmogul, with the purpose of putting
together an appropriate
standard operating procedure (“SOP”)
according to which the assignee would fulfil its functions. Milk SA
pointed out,
in support of its proposal, that inspection and sampling
fees should not be determined before the standard operating procedure
had been finalized.
[15]
The Department welcomed the proposal, and the process of appointing
members of the workgroup
commenced. On 9 June 2017 the Minister
invited comment on draft regulations which would regulate the
inspections and fees. The
draft regulations included proposals which
would require the assignee to submit a business plan and a budget on
an annual basis.
The plan and the budget would be published and,
after having received comment, the assignee would be obliged to
determine its fees
having had regard to the comments. The draft
regulations specifically required the assignee to have regard to the
input of the
industry in determining its fees. Unfortunately, the
draft regulations did not deal with the Executive Officer’s
obligation,
arising from section 2 (3) (b) (i) of the APS Act, to
direct the assignee in the manner in which it exercised its powers or
performed
its duties. The draft regulations never came into
operation.
[16]
Milk SA, the Consumer Goods Council of SA and Nejahmogul met on 22
June 2017. At this meeting
it was decided to establish a dairy task
team. Two specific decisions were taken that are of importance to
this matter. Firstly,
it was resolved to draft a guideline document
outlining the frequency of inspections. Secondly, Nejahmogul
undertook to reconsider
the published inspection fees, and to publish
the revised fees for comment. These two issues, the frequency of
inspection, and
the inspection fee structure would emerge as the main
points of dispute between Nejahmogul and the dairy industry.
Nejahmogul wanted
to conduct 12 inspections per producer per annum.
The industry proposed one inspection per annum (under normal
circumstances).
[17]
On 25 August 2017 the task team presented the Executive Officer with
a fourth version of a draft
protocol on the assessment and compliance
management of dairy and imitation dairy products. At this meeting the
Executive Officer
undertook that the inspection fees would not be
published until they had been approved by the Executive Officer, and
an SOP was
in place. This undertaking accorded with the department’s
statement on 28 March 2017 in which it had said:
“
Section
3 (1A) of the APS Act allows for an assignee to charge fees in
respect of the powers exercised and duties performed. However,
assignees must charge their fees on a cost-recovery basis and not a
profit basis. Although not currently required by the APS Act,
assignees will on a yearly basis publish their proposed inspection
fees for public comment in the Government Gazette to ensure
transparency and buy in from affected stakeholders. Once the
consultation process has been concluded, the finalized fees will be
submitted to the Executive Officer for approval and again published
in the Government Gazette by the assignee concerned.”
[18]
On 8 September 2017 the Dairy Standard Agency circulated a draft of
the protocol to its members. The task team
continued to work on an
SOP. Its efforts were mainly hamstrung by disagreement on the
frequency of inspections, and the dearth
of information in respect of
the cost structure proposed by Nejahmogul. One of the stumbling
blocks was that, whereas the department
had assured the industry that
the assignee’s cost structure would be based on a cost-recovery
model, Nejahmogul was a company
for profit, and it had premised its
cost estimation on the principle that it was entitled to make a
profit. On 19 October 2017
the task team met again. At this meeting
the industry reiterated that the costs should be premised on a
cost-recovery basis. Nejahmogul
undertook to review its cost model,
and to provide clarity on specific identified issues.
[19]
On 17 November 2017 Milk SA wrote to the Executive Officer. It
requested a meeting with him,
and it also attached comments from
various industry role-players regarding the proposed SOP. Although
the draft SOP was generally
acceptable to the industry, there was
strong disagreement with the proposed frequency of inspections and
the proposed inspection
fees. More specifically, there was concern
around the financial impact of the fees on smaller producers.
[20]
On 22 November 2017 the Executive Officer advised Milk SA that he
would not convene a meeting,
and that the department would not become
involved in formulating an SOP. He said that Nejahmogul could
determine the frequency
of inspections as it saw fit. The Executive
Officer also reneged on his undertaking that the proposed fees would
not be published
until the department had approved an SOP. The
Executive Officer’s email signified the department’s
complete withdrawal
from the process of establishing an SOP, and from
the process of determining inspection fees. The Executive
Officer’s
view was that the consultations had gone on for long
enough, and that it was up to Nejahmogul to carry on as it pleased.
[21]
The task team made a further effort to come up with an agreed SOP.
Nejahmogul was by then clearly
frustrated at consultations that had,
in its words, gone on “
ad nauseam”
. Nevertheless,
on 14 December 2017 the task team (including Nejahmogul) met once
again, and although common ground could not be
reached on the
inspection fees, a revised draft SOP was agreed upon. DSA presented
the draft SOP to the Executive Officer on 15
December 2017. On 18
December 2017 the Executive Officer replied to the draft SOP by
stating that Nejahmogul could not be prevented
from implementing the
provisions of the APS Act any longer. The inspections would start on
1 February 2018, regardless of whether
the SOP was agreed upon or
not.
[22]
The Executive Officer offered to meet with DSA if necessary, and also
undertook to advise DSA
in advance of any possible decision to
approve the SOP. The Executive Officer’s response was
accompanied by his comments
on the draft SOP. He expressed the view
that it was unnecessary to implement an SOP before the inspections
could commence. His
view was that Nejahmogul could implement the APS
Act without being “encumbered” by an SOP or a service
level agreement.
He made it clear that the industry was the
“regulated”, Nejahmogul was the “regulator”,
and he warned against
what he regarded as overreach by the industry.
The Executive Officer would furthermore not commit to publishing
regulations regarding
the implementation of Nejahmogul’s
mandate.
[23]
Following further input from the industry, the Executive Officer
clarified his stance in an email
of 18 January 2018. He said that
section 15 (1) (g) of the APS Act allowed the Minister a discretion
whether to make regulations
in respect of the Executive Officer’s
fees. His view was, however, that Nejahmogul was solely responsible
for the determination
of its own fees. Neither the Minister, nor the
Executive Officer were, in the latter’s view, entitled to
interfere in that
process.
[24]
By January 2018 Nejahmogul had agreed to reduce the inspections to
six per annum. The industry,
however, persisted in its demand for
only one inspection per annum. Nejahmogul had also undertaken to
reconsider its business plan,
budget, fees and management structure,
in order to reduce the cost of inspections to the industry. The
revised budget was never
forthcoming. However, in an unsigned letter
dated 20 February 2018 Nejahmogul recorded that it required four
inspections in a 12
month cycle, in order to fulfil its mandate.
Applicants contend that it was clear at that stage that Nejahmogul
did not have sufficient
knowledge of the dairy industry, and that its
approach to the determination of inspection frequency was irrational.
The discussions
and correspondence between the parties continued. At
issue were the same bugbears, the number of inspections to be
conducted annually
(the industry insisted on one inspection per
annum), and the cost thereof.
[25]
By May 2018 the Executive Officer had accepted that six inspections
per annum were unnecessary.
The Executive Officer concedes in these
papers that six inspections per annum were not required, but, he
says, the number of inspections
is a random number, and only has to
be statistically valid. I am not told why six inspections per annum
were then suddenly considered
to be excessive to achieve the purposes
of the APS Act, when all along Nejahmogul had been proposing twelve
inspections per annum
with, it seems, the Executive Officer’s
concurrence.
[26]
The parties could still not reach consensus on the outstanding
issues. Nevertheless, despite
the industry’s objections,
Nejahmogul published its fee structure in Notice 267 of 2018, in
Government Gazette 41650 dated
25 May 2018. The starting date for
inspections was 28 May 2018. There was no SOP in place, no service
level agreement, and no agreement
on the frequency of inspections.
[27]
Milk SA continued to try and reach agreement with Nejahmogul and the
department on the outstanding
issues, and it continued with its
efforts to engage with them. The Executive Officer’s attitude
was, however, firm. He expressed
his willingness to engage with Milk
SA on other issues, but in respect of the execution of Nejahmogul’s
powers, he was intransigent.
In an email dated 15 June 2018 he said
the following:
“
1.
You remain the subject of the Agricultural Products Standards Act 119
of 1990 and its
attendant regulations in terms of enforcement and
application, and therefore, as the regulated community you are in no
position
to dictate as to how you should be regulated except to
influence the regulatory course.
2.
With respect to the letter that you addressed to Nejahmogul, there is
no way
that DAFF can vary the frequency of inspection except to be
led by the inspecting agency, Assignee, lest we are accused of
conflict
of interest. At any rate, except the Executive Officer:
Agricultural products Standards Act and the honourable Minister,
there
is no official who can articulate a position authoritatively on
behalf of DAFF in so far as the regulatory matters that fall within
the remit of the Agricultural Product Standards Act are concerned.
3.
As far as I am concerned, there is no “SOP” be it in a
draft or whatever
form. At any rate, an SOP is subordinate to the
existing legislation rather than being an authoritative document.”
[28]
It is clear from the Executive Officer’s various communications
that he understood the
protocol by which inspections were to be
conducted, the frequency of inspections, and the fees charged
inspections to fall completely
within the remit of the assignee, and
that he had no authority to exercise control over those matters. The
parties were at an impasse.
The industry took the view that the
publication of the fees was of no force and effect, and that
Nejahmogul was not entitled to
commence with inspections. On the
other hand, Nejahmogul took the stance that it was going to continue
with inspections, whether
the industry liked it or not. The impasse
resulted in this application being launched on 13 November 2018.
CONSTITUTIONALITY OF
SECTION 3 (1A) (b) (ii) OF THE APS ACT
[29]
I have quoted section 3 (1A) (b) (ii) of the APS Act above. It
provides that an assignee may
charge fees for the powers exercised
and the duties performed by it. Section 3 A (4) renders the payment
of the fee or amount determined
by the assignee mandatory. Section 15
(1) (g) of the APS Act allows the Minister to make regulations
regarding the fees that have
been determined by the assignee.
[30]
Applicants argue that the aforesaid provisions give the assignee the
unfettered right to determine
its own fees. In contrast, they say,
the fees payable to the Executive Officer is subject to the
Minister’s approval. Therefore,
there is no rational reason why
the fees determined by the assignee should not be subject to some
form of control. Applicants say
that the Minister was aware of the
shortcomings of the APS Act, and that he attempted to remedy the
deficiencies by publishing
the Agricultural Product Standards Act
Amendment Bill for comment on 18 August 2017. The Bill provided for
three key changes to
the statutory position:
[30.1] An
assignee would be obliged to determine its fees on a cost-recovery
basis;
[30.2]
The assignee would be required to produce a business plan and a
budget, setting out the powers and
duties to be exercised and
performed, and the expected cost thereof.
[30.3]
The Executive Officer would be required to invite written comment
from interested parties on the
business plan and the budget,
whereafter he could grant his approval for a specified period.
[31]
Unfortunately the Bill has been withdrawn and has not been passed
into law. In the meantime,
applicants say, Nejahmogul is at liberty
to charge whatever it wants, without control by either the Minister
or the Executive Officer.
Applicants contend that other legislation,
such as the Perishable Products Export Control Act, 1983 provides for
a mechanism to
control the determination of fees. In terms of the
said Act, fees must be expenditure related, must be budgeted, and
must be approved
by the Board on an annual basis. On that basis,
applicants say, there is no rational reason why an assignee should be
able to set
its own fees without regulatory control.
[32]
Applicants argue that the
lacuna
in the APS Act infringes on
sections 22 and 33 of the Constitution. In terms of section 22:
“
Every
citizen has the right to choose their trade, occupation or profession
freely. The practice of a trade, occupation or profession
may be
regulated by law.”
[33]
Section 33 provides that:
“
Everyone
has the right to administrative action that is lawful, reasonable and
procedurally fair.”
[34]
Applicants say that as a result of the provisions of section 3 (1A)
(b) (ii):
[34.1]
An assignee is permitted to determine its own fees, and the producer
is obliged to pay the fee;
[34.2]
No due process is followed in determining the fee, and there is no
statutory control over the determination;
[35]
Therefore, applicants argue, the provision is not rational nor
reasonable given the purpose of
the APS Act. The differentiation
between the prescribed fees payable when the Executive Officer
performs his duties, (which are
subject to Ministerial approval), and
the self-determined fees of the assignee is not legitimate, is
arbitrary, irrational and
serves no legitimate public end, applicants
say.
[36]
The crux of the applicants’ argument is that the provision does
not allow for control by
the Minister or by the Executive Officer,
when the fees are determined by the assignee. If the applicant’s
contention on
this point is incorrect, then the entire argument on
constitutionality falls away.
[37]
I was referred to the judgment in
Bertie
van Zyl (Edms) Bpk and others v The Minister of Agriculture Forestry
and Fisheries and others
[1]
.
This
is a judgment by Baqwa J in this Division, and it deals with a
virtually identical set of facts. The applicants had also sought
a
declaration of unconstitutionality of section 3 (1A) (b) (ii) of the
APS Act, albeit on a slightly different Constitutional ground.
In
Van
Zyl
applicants
contended that the fees payable to an assignee amounted to unlawful
deprivation of property which is prohibited by section
25 of the
Constitution.
[38]
In
Van Zyl
applicants
argued, as the applicants have in this matter, that the assignee has
an unfettered discretion with regard to the determination
of its
fees. Therefore, the applicants contended, the determination of fees
by an assignee without regulatory control amounted
to deprivation of
property contrary to the provisions of section 25. On this point
Baqwa J held as follows:
“
35.
In terms of section 2 (3) (b) (i) of the APS
Act an assignee exercises its powers and duties subject to the
directions of the Executive
Officer unless expressly provided
otherwise. This section also expressly provides that an assignee
exercises powers and performs
duties conferred upon or assigned to
the Executive Officer who acts under the control of the Minister. The
Minister also has power
to revoke the mandate upon the assignee in
terms of section 2 of the APS Act.
36. The APS Act is thus
quite explicit regarding the ambit of an assignee’s powers. It
can therefore not be correct
as suggested by the applicants that the
power exercised by assignees is unfettered or unqualified.”
[39]
Applicants argued that the
Van Zyl
judgment was, in this regard, clearly incorrect. I
do not agree. Section 2 (3) (b) (i) of the APS Act specifically
provides that
the powers and duties of the assignee shall be
exercised and performed subject to the direction of the Executive
Officer. The assignee’s
powers include the implementation of
inspection procedures, and the determination of fees. The assignee
must subject its work to
the direction of the Executive Officer, who
is entitled (and obliged) to give direction to the assignee. It is
therefore not correct
to say that the assignee has unfettered
discretion to do as it pleases. It may be so that the Amendment Bill
would have had the
salutary effect of codifying exactly how the
Executive Officer has to exercise his duties. That does not mean that
the APS Act,
as it stands, does not allow for proper monitoring and
direction by the Executive Officer. Furthermore, the fact that the
Executive
Officer may be remiss in fulfilling his obligation to
direct the assignee in the execution of its powers and performance of
its
duties does not result in the provision itself being
unconstitutional.
[40]
Ironically, applicants undermine their own case when they point out
in paragraph 129 of the founding
affidavit:
“
On
the same day the Executive Officer replied, a copy of which is
annexed as FA 48. He again exhibited a lack of rationality and
a
clear bias by saying that the industry was in no position to dictate
how is should be regulated and that DAFF could not vary
the frequency
of inspections for fear it would be accused of a conflict of
interest. He was clearly wrong in this regard –
section 2 (3)
(b) (ii) of the APS Act expressly provides that an assignee shall
exercise its powers and perform its duties
subject
to the directions of the Executive Officer.
”
[41]
I am consequently respectfully in agreement with the judgment of
Baqwa J. The relief sought,
that the provision be declared
unconstitutional must therefore fail. The APS Act already provides
for regulatory control over,
and approval of the decisions of the
assignee by the Executive Officer. It would therefore be
inappropriate to order the Minister
to submit to Parliament the
amendment to the APS Act proposed by applicants.
RELIEF UNDER THE PROMOTION
OF ADMINISTRATIVE JUSTICE ACT, 2000 (“PAJA”)
[42]
Applicants furthermore seek to review and set aside a number of
administrative actions taken
by both the Minister and the Executive
Officer. The first group of actions relate to the issuing of the
invitation by the Minister,
the process by which the applications
were considered, and Nejahmogul’s eventual designation by the
Minister as assignee
for the dairy industry. These actions occurred
more than 180 days before the application was launched. Applicants
have argued that
the Minister did not depose to an answering
affidavit, and that the allegations relating to the Minister’s
conduct, and that
he was mislead, have therefore not been answered.
In light of the view that I take in respect of the application to
extend the
period for review below, nothing more needs to be said
regarding this argument.
[43]
The second group of actions relate to the determination by Nejahmogul
of its fees and the publication
of the fees on 25 May 2018. Finally,
applicants attack the alleged refusal of the Executive Officer on 15
June 2018 to stay the
commencement of the execution of Nejahmogul’s
powers and duties and to direct that Nejahmogul’s inspections
would be
limited to only one standard inspection per annum.
[44]
Administrative action is reviewable under PAJA. Sections 6 (1) and
(2) of PAJA read as follows:
“
Judicial
review of administrative action
6. (1)
Any person may institute proceedings in a court or a tribunal for the
judicial review
of an administrative action.
(2)
A court or tribunal has the power to judicially review an
administrative action
if-
(a)
the administrator who took it-
(i) was not
authorized to do so by the empowering provision;
(ii) acted under a
delegation of power which was not authorized by the empowering
provision; or
(iii) was biased or reasonably
suspected of bias;
(b)
a mandatory and material procedure or condition prescribed by an
empowering provision was
not complied with;
(c)
the action was procedurally unfair;
(d)
the action was materially influenced by an error of law;
(e)
the action was taken-
(i) for a
reason not authorized by the empowering provision;
(ii) for an
ulterior purpose or motive;
(iii) because irrelevant
considerations were taken into account or relevant considerations
were not considered;
(iv) because of
unauthorized or unwarranted dictates of another person or body;
(v) in bad faith;
or
(vi) arbitrarily or
capriciously;
(f)
the action itself-
(i)
contravenes a law or is not
authorized by the empowering provision; or
(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;
(g)
the action concerned consists of a
failure to take a decision;
(h)
the exercise of the power or the
performance of the function authorized 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;
or
(i)
the action is otherwise
unconstitutional or unlawful.”
[45]
Section 7 (1) of PAJA requires the review proceedings to be
instituted without unreasonable delay:
“
7
(1) Any proceedings for judicial review in terms of
section 6 (1) must be instituted without unreasonable delay and
not
later than 180 days after the date-
(a)
subject to subsection (2) (c), on
which any proceedings instituted in terms of internal remedies as
contemplated in subsection (2)
(a) have been concluded; or
(b)
where no such remedies exist, on
which the person concerned was informed of the administrative action,
became aware of the action
and the reasons for it or might reasonably
have been expected to have become aware of the action and the
reasons.”
[46]
In terms of section 9, the period of 180 days referred to in section
7 (1) may be extended by
agreement, or by a court or tribunal on
application by the person concerned, where the interests of justice
so require.
[47]
This application was launched in November 2018. In respect of the
first group of administrative
actions to which I referred above,
applicants have applied for an extension of the 180 day period, as
those actions were taken
in 2016 and 2017, far beyond the 180 day
period. The second group of actions, which concern the implementation
of the fee structure,
and the refusal by the Executive Officer to
limit the frequency of inspections to one per annum, all occurred
less than 180 days
before the institution of this application, and do
not require an extension of time.
EXTENSION OF TIME PERIOD IN
TERMS OF SECTION 9
[48]
The ‘delay rule’ at common law, and section 7 of PAJA
both have the purpose of ensuring
that judicial challenges to the
validity of decisions are brought without undue delay, or as it was
framed in
Louw
v The Mining Commissioner Johannesburg
[2]
,
to non-suit a litigant who “wishes to drag a cow which has long
been dead out of the ditch”.
[49]
In
Gqwetha
v Transkei Development Corporation Ltd and others
[3]
,
writing
for the majority, Nugent J said as follows:
It is
important for the efficient functioning of public bodies (I include
the first respondent) that a challenge to the validity
of their
decisions by proceedings for judicial review should be initiated
without undue delay. The rationale for that longstanding
rule –
reiterated most recently by Brand JA in Associated Institutions
Pension Fund v Van Zyl 2005 (2) SA 302 (SCA)
at 321 – is twofold: First, the failure to bring a review
within a reasonable time may cause prejudice to the respondent.
Secondly, and in my view more important, there is a public interest
element in the finality of administrative decisions and the
exercise
of administrative functions. As pointed out by Miller JA
in Wolgroeiers Afslaers (Edms) Bpk v Munisipaliteit van
Kaapstad 1978 (1) SA 13 (A) at 41E–F
(my translation):
“
It
is desirable and important that finality should be arrived at within
a reasonable time in relation to judicial and administrative
decisions or acts. It can be contrary to the administration of
justice and the public interest to allow such decisions or acts
to be
set aside after an unreasonably long period of time has elapsed
– interest reipublicae ut sit finis litium . . .
Considerations of this kind undoubtedly constitute part of the
underlying reasons for the existence of this rule.” (footnote
omitted)
Underlying
that latter aspect of the rationale is the inherent potential for
prejudice, both to the efficient functioning of the
public body, and
to those who rely upon its decisions, if the validity of its
decisions remains uncertain. It is for that reason
in particular that
proof of actual prejudice to the respondent is not a precondition for
refusing to entertain review proceedings
by reason of undue delay,
although the extent to which prejudice has been shown is a relevant
consideration that might even be
decisive where the delay has
been relatively slight (Wolgroeiers Afslaers, above, at 42C).”
[50]
Plaskett AJA held in
Beweging
vir Christelik-Volkseie Onderwys and others v Minister of Education
and others
[4]
that
a two-stage approach should be followed. The first question to be
answered is whether the delay in launching the application
was
unreasonable, or whether it was launched more than 180 days after
internal remedies had been exhausted or the applicant had
been
informed of, had knowledge of or ought to have had knowledge of the
administrative action under challenge. The second question,
if the
first is answered in the affirmative, is whether it is in the
interests of justice to condone the delay.
[51]
In considering whether condonation should be granted, the Court is
obliged to disregard the merits
of the review, unless the decision
complained about was egregious. In
Asla
Construction (Pty) Ltd v Buffalo City Metropolitan Municipality
(South African Civics Organisation as amicus curiae
[5]
)
the manner in which the granting of condonation should be considered
was dealt with as follows:
“
The
manner in which the discretion to extend the statutory time period
should be exercised, was described in Camps Bay Ratepayers’
and Residents’ Association and another v Harrison and
another
[2010] ZASCA 3
;
[2010] 2 All SA 519
(SCA)
paragraph 54, in the following terms:
“
[11]
And the question whether the interests of justice require the grant
of such extension depends on the facts
and circumstances of each
case: the party seeking it must furnish a full and reasonable
explanation for the delay which covers
the entire duration thereof
and relevant factors include the nature of the relief sought, the
extent and cause of the delay, its
effect on the administration of
justice and other litigants, the importance of the issue to be raised
in the intended proceedings and
the prospects of success.”
[My emphasis.]
[12]
Although a consideration of the prospects of success of the
application
for review requires an examination of its merits, this
does not encompass their determination. In Beweging vir
Christelik-Volkseie
Onderwys v Minister of Education
[2012]
ZASCA 45
;
[2012] 2 All SA 462
(SCA) paragraphs 42–44,
the proposition that a court is required to decide the merits
before considering whether
the application for review was
brought out of time or after undue delay and, if so, whether or not
to condone the defect, was rejected.
Thereafter, in Opposition
to Urban Tolling Alliance v South African National Roads Agency
Ltd
[2013] ZASCA 148
;
[2013] 4 All SA 639(SCA)
paragraphs
22, 26 and 43, it was decided that a court was compelled to deal with
the delay rule before examining the merits of
the review application,
because in the absence of an extension the court had no authority to
entertain the review application.
The court there concluded that
because an extension of the
180-
day
period was not justified, it followed that it was not authorised to
enter into the merits of the review application. However,
in South
African National Roads Agency Limited v Cape Town City
[2016]
ZASCA 122
;
[2016] 4 All SA 332
(SCA); 2017 (1) SA 468 (SCA)
paragraph 81, a submission based upon this decision, namely that the
question of delay had to be dealt with before the merits of the
review could be entertained, was answered as follows:
“
It
is true that . . . this court considered it important to settle the
court’s jurisdiction to entertain the merits of the
matter by
first having regard to the question of delay. However, it cannot be
read to signal a clinical excision of the merits
of the impugned
decision, which must be a critical factor when a court embarks on a
consideration of all the circumstances of a
case in order to
determine whether the interests of justice dictates that the delay
should be condoned. It would have to include
a consideration of
whether the non-compliance with statutory prescripts was egregious.”
[13]
A full and proper determination of the merits of the review
application was accordingly dependent
upon a finding that the
respondent’s failure had to be condoned. As stated
in Opposition to Urban Tolling Alliance (supra),
paragraph
26:
“
Absent
such extension the court has no authority to entertain the review
application at all. Whether or not the decision was unlawful
no
longer matters. The decision has been ‘validated’ by the
delay . . . ”
It was
thus impermissible for the court a quo to have entered into
and decided the merits of the review application without
having first
decided the merits of the condonation application
.”
[52]
In
Opposition
to Urban Tolling Alliance and others v South African National Road
Agency Ltd and others
[6]
it
was explained that after expiry of the 180 day period, a court may
only review an action if the interests of justice require
an
extension of time. Once the 180 day period has expired, in the
absence of an extension, a court is not authorized to consider
the
review. Whether the decision was in fact unlawful is then of no
consequence. The decision would be “validated”
by the
delay.
[7]
[53]
A final point I would make is that the Supreme Court of Appeal in
Tasima
(
supra
),
and the Constitutional Court (in
Van
Wyk v Unitas Hospital and
another
(Open
Democratic Advice Centre as amicus curiae)
)
[8]
have held that an extension of time in terms of section 7 may have
important consequences, and is not merely for the asking:
“
An
applicant for condonation must give a full explanation for the delay.
In addition, the explanation must cover the entire period
of the
delay. And, what is more, the explanation given must be reasonable”
[54]
Applicants say that when they first became aware of Nejahmogul’s
designation as assignee
the organized dairy industry, working through
Milk SA, engaged with both the Executive Officer and with Nejahmogul.
They did so
in order to try and reach common ground with Nejahmogul
on an SOP, a service level agreement, and on fair inspection fees and
laboratory
costs. They say that they acted with diligence in
attempting this outcome, and when the initiatives failed, they
launched this
application.
[55]
The first decision under attack is that of the Minister, when he
decided to invite potential
service providers to apply for
designation as assignees. This decision was made on 13 February 2015,
some 3 ½ years before
the application was launched. Applicants
knew about the invitation when it became public, but there is no
evidence that they took
issue with the decision at any time before
November 2018.
[56]
The second action sought to be reviewed is the publication of an
invitation to prospective assignees
to apply for the appointment. The
invitation was published on 15 July 2016, more than two years before
the application was launched.
Applicants now say that the invitation
did not comply with the Treasury Regulations and should be set aside
for that reason. Applicants
knew that the invitation had been issued.
Not only did they not object to the invitation at the time, the DSA
responded to the
invitation and also applied to be appointed as
assignee. Applicants, and other role players in the industry were
instrumental in
creating the DSA in the first place, and the question
is now why applicants did not take issue with the invitation at the
time.
Instead, they participated in the process that followed the
invitation, albeit through DSA.
[57]
The third decision that applicants attack is that of the Minister on
13 January 2017 to designate
Nejahmogul as the assignee. The same
criticism is applicable to applicant’s conduct in regard to
this decision. Applicants
make out a case that Nejahmogul should
never have been appointed as assignee in the first place. It had been
incorporated five
days after the second invitation had been issued.
It had no employees, no offices, no business plan of note, no track
record, and
it was not BEE compliant, having not traded at all. In
fact, when its application was filed, Nejahmogul’s director was
still
a municipal employee. Applicants argue that Nejahmogul’s
application was unresponsive and should never even have been
considered.
[58]
Applicants would likely have been aware of Nejahmogul’s
circumstances when the applications
were being considered. Even if
that were not so, applicants say that in a letter dated 20 February
2018 Nejahmogul made certain
proposals that made it clear that it had
little or no knowledge of the industry. At that stage at least, the
alarm bells should
have rung, and applicants should have taken
action. However, they continued to engage with Nejahmogul for months
thereafter, trying
to reach common ground. Even if I find that
Nejahmogul’s alleged unsuitability for appointment came to
light only in February
2018, which is unlikely, applicants still
allowed the 180 day period to expire. None of the aforementioned
delays are explained
save to say that applicants tried to engage and
reach common cause with Nejahmogul. This explanation is, in my view,
not a proper
explanation at all.
[59]
The only reasonable conclusion is that applicants made a conscious
decision not to attack the
assignment at the time. Nevertheless, I
must still determine whether it is in the interests of justice that
the period be extended.
In this regard, the nature of the
administrative decision must be taken into account, as well as its
purpose and the effect that
a setting aside thereof would have on the
parties affected by the decision. The prejudice to the applicant
should the decision
not be set aside must be weighed against the
prejudice to the respondent if it were set aside. The longer the
decision is
allowed to stand, the more profound the effects of it
being set aside would likely be.
[60]
Following its designation as assignee Nejahmogul has opened four
offices countrywide. It has
appointed board members, senior staff, 5
inspectors and support staff. Should any of the aforementioned
decisions be set aside,
it would follow that Nejahmogul’s
designation as assignee is of no force and effect. All of the
aforesaid persons would be
affected thereby. Also of importance is
the fact that Nejahmogul has been exercising powers and performing
duties in terms of the
APS Act. It has levied fees and has been paid.
It has conducted inspections and has reported to the Department. All
of those actions
would be affected should any of these decisions be
set aside. Therefore, not only will Nejahmogul be severely prejudiced
if its
designation as assignee is set aside, but also its regulatory
functions over the last three years would be impugned.
[61] I can
therefore not find that it would be in the interests of justice to
grant an extension of time in terms
of section 9 of PAJA. The prayer
for an extension of time in terms of section 9 of PAJA cannot
succeed.
THE DETERMINATION AND
PUBLICATION OF FEES
[62]
Applicants attack both the determination of its fees by Nejahmogul,
and the publication of the
fee structure on 25 May 201. They argue as
follows:
[62.1]
The process by which the fees were determined was procedurally
unfair, and stands to be set aside under section 6 (2)
(b) of PAJA;
[62.2]
The determination was arbitrary, and stands to be set aside in terms
of section 6 (2) (e) (iv) as being the result
of the unauthorized or
unwarranted dictates of another person or body;
[62.3]
The decision was not rationally connected to the information before
Nejahmogul or to the reasons given for the determination
by
Nejahmogul, and is therefore an action referred to in section 6 (2)
(f) (ii) (cc) and (dd) of PAJA;
[62.4]
The decision was so unreasonable that no reasonable person could so
have exercised the power or performed the function,
and consequently
it stands to be set aside in terms of section 6 (2) (h) of PAJA.
[63]
Applicants also contend that the decision was unconstitutional.
However, given my finding on
the constitutionality of section 3 (1A)
(b) (ii), this argument is moot.
[64]
In
Van Zyl
(
supra)
the fees payable to the assignee had
been determined after a process of notice and comment, and after oral
representations had been
made to the assignee. The Executive Officer
was involved in the process by receiving comments and emails from
industry representatives.
Baqwa J found that the process of fixing
the fees had taken place under the supervision of the Executive
Officer. In that case
the Executive Officer had exercised his powers
to direct the assignee in the determination of its fees.
[65]
The question in this matter is, however, whether the determination of
the fees was the result
of a clear and transparent process, whether
it was rationally connected to the purpose for which the decision was
taken and to
the purpose of the APS Act, and whether the decision had
been taken subject to the Executive Officer’s direction. The
decision
should also have been rationally connected to the
information available to Nejahmogul and to the Executive Officer when
the decision
was made.
[66]
In order to determine this question, it is necessary to delve into
the events preceding the determination
of the fees. On 27 February
2017 the Executive Officer issued a notice to affected parties in
which he set out the “
administrative regulatory functions
”
that assignees were to perform. The essence of the notice was that
the assignee:
“…
.shall
for purposes of the application of the APS Act, inter alia, inspect,
grade and sample for quality control in order to establish
compliance
of the regulated agricultural products with the regulations
concerned.”
[67]
The notice did not provide any guidance as to how the inspections
were to be conducted, and at
what frequency. The protocol to be
applied was evidently left up to the assignee. The notice furthermore
reiterated that fees would
be determined by the assignee, and that
sellers were to fully comply with the provisions of the APS Act, to
cooperate with the
assignee, and to pay the accounts presented to
them.
[68]
It seems to be common cause that the fees cannot be determined
in
vacuo
. There first has to be a decision as to the manner in which
the assignee is to fulfil its obligations. A number of questions have
to be answered before the assignee can sensibly consider what fees
are to be levied:
[68.1]
How are the inspections to be conducted?
[68.2]
What frequency of inspection is necessary for the assignee to be able
to fulfil its obligation to “
grade
and sample for quality control
”.
[68.3]
How are the costs to be recovered, by way of payment for each
inspection, or by levies per unit produced?
[68.4]
How many samples, and of which products, are to be taken at each
inspection?
[68.5]
Are large producers to be dealt with on the same basis as smaller
producers, or are different tariffs to be imposed?
[68.6]
What infrastructure is necessary for Nejahmogul to be able to fulfil
its mandate?
[68.7]
Is Nejahmogul to charge on a cost-recovery basis, as the Department
suggested at one point, or is it entitled to make
a profit?
[68.8]
What would the impact of the fees be on the producers’
financial affairs?
[68.9]
How does the fact that the industry is already heavily self-regulated
impact on the protocol to be applied to inspections,
more especially
with regard to the frequency of inspections?
[69]
There had clearly been no thought given to these practical questions
before the assignees were
appointed, and it was left to the assignee
to find common ground with the industry concerned. More importantly,
until a number
of these key questions had been answered, the assignee
would not be in a position to determine its fees.
[70]
On 28 March 2017 the Department published a list of frequently asked
questions together with
answers to those questions. It was then the
Department’s position that the method of inspection would be
left up to each
individual inspector’s discretion. The
frequency of inspections would be agreed with each individual
industry. Each assignee
would be required to have an inspection model
in place as agreed with the industry concerned. Assignees would be
required to sign
a service level agreement to ensure that the
assignee keeps to the set performance agreements.
[71]
On 13 April 2017 Nejahmogul published its proposed fee structure and
requested comment thereon.
The proposal contemplated 12 inspections
annually per producer. It estimated that the cost to the industry
would amount to some
R 90 million per annum. Nejahmogul later revised
its estimate to R
38.7 million per annum
,
although it is not clear how any of
these figures were arrived at.
[72]
On 18 April 2017 Milk SA replied to the request for comment. Its view
was that it was difficult
to comment on the proposal in the absence
of information regarding the protocols and procedures to be followed,
the “
how, when, how frequent and where”
as they
termed it. Milk SA requested an urgent meeting with the Department.
[73]
As I have said above, a task team was then appointed to attempt to
find common ground on the
outstanding issues. Various protocols and
SOP’s were drafted, but none was ever agreed upon. At the task
team meeting on
10 and 16 October 2017 it was pointed out that
Nejahmogul had not given any meaningful information on the
calculation of its fees.
It was therefore impossible to assess the
frequency of inspections, as it had to be weighed against the
economic impact on the
dairy industry. There were no proper budgets
available, and given the uncertainty as to how Nejahmogul intended to
fulfil its duties,
the fee structure could not be properly assessed.
[74]
The proposed fees were especially burdensome to smaller producers.
The Small Stock Dairy Association
commented that the method of
inspection proposed was cumbersome, the frequency of inspections was
unrealistic, and the costs exorbitant.
The largest dairy processor in
the country estimated that the costs would reduce its profit after
tax by 21%. Woodlands estimated
that its annual costs would amount to
R 372 360.00.
[75]
The industry sought a meeting with the Executive Officer in order to
address these concerns.
He refused to meet with them. He said that
the Department would not participate in the drafting of an SOP, and
that the assignee
could determine the frequency of inspections and
its fees as it pleased.
[76]
Nejahmogul, probably because of pressure from the industry, proposed
to reduce the inspections
to six per annum. Later, Nejahmogul
conceded that less inspections per annum may be acceptable. Whilst
the cost of the inspections
to the industry is a key element in
deciding on the frequency of inspections, the main question remains:
How often would Nejahmogul
have to inspect a producer in order to
ensure that it has complied with the provisions of the APS Act and
the regulations? Is one
inspection per annum enough to fulfil the
purpose of the APS Act, especially given the level of self-regulation
by the industry
itself, or should producers be inspected biannually,
every quarter, or every month?
[77]
That question is not answered in these papers. On the one hand the
industry insists that one
inspection per annum is sufficient, whilst
Nejahmogul has veered from 12, to six, and then to something less
than six inspections
per annum. There is simply no explanation,
scientific or otherwise, for Nejahmogul’s proposal. All I have
been told is that
Nejahmogul considered the regulations, the comments
from the industry, various meetings with the industry, data provided
by Nielsen,
the proposed SOP, email exchanges, the testing capacity
of accredited laboratories and the costs of testing, and the effects
of
the fees on the consumer. What specific factors were considered,
and how the fees were in fact arrived at, is still unclear.
[78]
Nejahmogul published its fees in the Government Gazette on 25 May
2018. Fees for the inspection
of large processing facilities (more
than 1 million units per annum) were set at R 5 052.00. The cost
of inspection of importers
was R 2 190.00 per inspection, and
for small processing facilities (less than 1 million units per
annum), a charge of R 0.02
per unit was set. The laboratory costs
were also set out, the costs varying according to the nature of the
test.
[79]
Applicants argue that the notice only refers to “processors”
and “importers”.
A processor is understood in the
industry to mean the processing of a product without changing its
essential characteristics. Therefore,
they say, the notice excludes
manufacturers of cheese and butter products from inspection.
Nejahmogul says that a processor and
a manufacturer are one and the
same thing.
[80]
Applicants also say that the term “unit” is not defined
in the notice, and therefore
the distinction between large and small
processors is unclear. The notice does not define whether a “unit”
is one individual
product, a unit of volume, or a unit of mass.
Nejahmogul’s answer, which I frankly do not understand, is that
“
A unit is an individual thing regarded as single and
complete but which can also form an individual component of a larger
or more
complex whole.”
This definition has, in my view, no
rational meaning within the context of the current case.
[81]
Section 33 of the Constitution provides that “
Everyone
has the right to administrative action that is lawful, reasonable,
and procedurally fair.”
In
Pharmaceutical
Manufacturers Association of SA; In re: ex parte application of
President of the RSA
[9]
the
Constitutional Court held that the exercise of public power should
not be arbitrary, but must be rationally related to the purpose
for
which the power was given. The enquiry is objective, and rationality
is the minimum requirement. In
Trinity
Broadcasting, Ciskei v Independent Communications Authority of South
Africa
[10]
the
difference between ‘reasonable’ and ‘rational’
was explored:
“
In
requiring reasonable administrative action the Constitution does not,
in my view, intend that such action must in review proceedings
be
tested against the reasonableness of the merits of the action in the
same way as in an appeal. In other words it is not required
that the
action must be substantively reasonable, in that sense, in order to
withstand review. Apart from that being too high a
threshold, it
would mean that all administrative action would be liable to
correction on review if
objectively
assessed as substantively unreasonable: cf Bel Porto School
Governing Body and others v Premier, Western Cape and
another. As
made clear in Bel Porto, the review threshold is rationality.
Again, the test is an objective one, it being immaterial
if the
functionary acted in the belief, in good faith, that the action was
rational. Rationality is, as has been shown above, one
of the
criteria now laid down in section 6(2)(f )(ii) of the
Promotion
of Administrative Justice Act. Reasonableness
can, of course, be a
relevant factor but only where the question is whether the action is
so unreasonable that no reasonable person
would have resorted to it
(see
section 6(2)(h)).
[81]
In
Calibre
Clinical Consultants (Pty) ltd v National Bargaining Council for the
Road Freight Industry
[11]
Nugent
J said that “
a
decision is rationally connected to the purpose for which it was
taken if it is connected by reason as opposed to being arbitrary
or
capricious.”
[82]
In my view the determination of the fees was not rationally connected
to the purpose of the APS
Act, and that which Nejahmogul was trying
to achieve, which is the proper inspection and sampling of dairy
products in order to
determine whether the APS Act and the
Regulations had been complied with. If Nejahmogul had not determined
what frequency of inspection
was required to achieve that purpose, it
would be unable to determine what infrastructure and personnel it
required, and it follows
that it could also not compile a budget.
Furthermore, not only was the determination of the fees not
rationally connected to the
purpose sought to be achieved, the fee
structure was irrational. It does not define what a “unit”
is. It leaves one
in the dark as to the difference between a large
and small processor, and how small processors are to be charged. The
fees were
arbitrarily determined in my view, and did not take into
consideration all of the information that Nejahmogul had available to
it.
[83]
The decision to determine the fees by Nejahmogul, and their
subsequent publication, should be
set aside for the above reasons.
However, that is not the end of the matter. Section 33 of the
Constitution provides that everyone
has the right to administrative
action that is lawful, reasonable and procedurally fair. Section 2
(3) (b) (i) of the APS Act provides
that an assignee
shall
exercise
its powers and perform its duties subject to the direction of the
Executive Officer. Having regard to the purpose of the
APS Act
[12]
,
and the fact that the Executive Officer is clearly intended to have a
role in directing the manner in which the assignee fulfils
its tasks,
the word “shall” appears to me to be peremptory.
[84]
In this case, as opposed to the the
Van
Zyl
matter, the Executive Officer
expressed the view that he was unable to give any direction to the
manner in which the assignee fulfilled
its mandate. He cited a
nebulous “conflict of interest” for his decision not to
give direction to the process of developing
an SOP, and to the
determination of fees. This approach is patently incorrect, and by
refusing to act, the Executive Officer has
abdicated his
responsibilities. Applicants were entitled to expect of the Executive
Officer to fulfil his duties, and to exercise
the powers that the APS
Act has given him. In my view, the executive Officer’s failure
to act was unlawful. For that reason
also, the decision to determine
the fees is reviewable under section 6 (2) (g) of PAJA.
SHOULD THE APPLICANTS HAVE
FIRST EXHAUSTED THEIR INTERNAL REMEDIES?
[85]
In its heads of argument Nejahmogul contended that applicants had
failed to exhaust all of the
internal remedies available to them in
terms of the APS Act, and that they should therefore not have
approached the Court to review
the assignee’s decision to
determine its fees. Section 10 (1) and (2) of the APS Act provides as
follows:
“
10.
Appeals –
(1)
Any person whose interests are
affected by any decision or
direction of the executive officer
as an assignee under this Act, may
appeal against such decision or direction to the Director-General.
(2)
An appeal referred to in subsection
(1) shall be lodged in the prescribed manner within the prescribed
period, and the prescribed
fee shall be payable in respect of such
appeal.”
[86]
Section 7 (2) (a) of PAJA prohibits any court from reviewing an
administrative action unless
any internal remedy has first been
exhausted. A court may, in exceptional circumstances and on
application by the person concerned,
exempt the person from the
obligation to first exhaust its internal remedies.
[13]
The duty to exhaust internal remedies is not absolute, nor is it
automatic.
[14]
It was held in
DPP
Valuers
(supra)
that a
court will condone a failure to pursue an available remedy where the
remedy is illusory or inadequate.
[87]
On 23 August 1991 regulations were published
[15]
in respect of section 10 appeals only in appeals dealing with a
consignment, production group, production lot, lot or carcass.
These
regulations were repealed in September 2019. Consequently, when the
fees were determined in May 2018 there was no prescribed
manner in
which an appeal of this kind had to be brought, nor a prescribed time
within which it should be brought, and no fees
were prescribed.
[88]
Therefore, although the APS Act nominally provided for an appeal, in
reality there was no appeal
procedure available to the applicants.
This, I believe, is exactly what Mhlantla JA was referring to in
DPP
Valuers
in referring to an illusory
or inadequate remedy. There is in my view no merit to this point.
THE EXECUTIVE OFFICER’S
FAILURE TO STAY THE EXECUTION OF NEJAHMOGUL’S POWERS
[89]
Applicants contend that the Executive Officer took an administrative
action on 15 June 2018 by
deciding not to stay the commencement of
Nejahmogul’s functions pending the outcome of the consultative
process. They say
that this action was procedurally unfair,
arbitrary, not rationally connected to the information before him, so
unreasonable that
no reasonable person could have so exercised the
power or performed the function, and was biased, alternatively gave
rise to a
perception of bias.
[90]
In
President
of the RSA v South African Rugby Football Union
[16]
the
Constitutional Court admitted that what is, and what is not
administrative action is sometimes difficult to determine, and would
have to be considered on a case-by-case basis.
[91]
The alleged “administrative action” complained of by
applicants was preceded by a
letter addressed to the Acting Deputy
Director: Food Safety and Quality Assurance by Milk SA. In the letter
Milk SA made three
points:
[91.1]
It said that it regarded the publication of the fees on 25 May 2018
to be
ultra vires;
[91.2]
It amounted a breach of trust that the fees were published whilst the
consultative process was still ongoing;
[91.3]
The industry wished to continue with the consultative process.
[92]
On the same day the Executive Officer replied to the letter. He held
the same unmoving views
as before, saying that the industry could not
dictate the manner in which it was regulated. He also reiterated his
view that the
Department could not interfere in Nejahmogul’s
decision on the frequency of inspections. He said there was no SOP in
place,
whether in draft or otherwise, and that he viewed an SOP to be
superfluous in any event.
[93] Does this
amount to administrative action? The term is defined in PAJA as
follows:
“
(i)
‘administrative action’ means any decision taken, or any
failure to take
a decision, by-
(a)
an organ of state, when-
(i)
exercising a power in terms of the
Constitution or a provincial constitution; or
(ii)
exercising a power or performing a
public function in terms of any legislation; or
(b)
a natural or juristic person, other
than an organ of state, when exercising a public power or performing
a public function in terms
of an empowering provision,
which
adversely affects the rights of any person and which has a direct,
external effect…..”
[17]
[94]
The following definition was given to administrative action in
Grey’s
Marine Hout Bay (Pty) Ltd and others v Minister of Public Works and
others
[18]
“
Administrative
action means any decision of an administrative nature made...under an
empowering provision [and] taken...by an organ
of state, when
exercising a power in terms of the Constitution or a provincial
constitution, or exercising a public power or performing
a public
function in terms of any legislation, or [taken by] a natural or
juristic person, other than an organ of state, when exercising
a
public power or performing a public function in terms of an
empowering provision, which adversely affects the rights of any
person and which has a direct, external legal effect...’.”
[95]
The question is, what decision did the Executive Officer take on 15
June 2018? The letter of
Milk SA had not been addressed to the
Executive Officer, and it made no request to him (or to the Deputy
Director) to do anything.
It simply expressed Milk SA’s desire
to continue to consult, and restated its view that Nejahmogul should
not commence with
enforcement until that process was complete.
[96]
In replying to Milk SA, the Executive Officer did not purport to make
any decision. All he did
was to restate his (incorrect) view that he
was not empowered to interfere with Nejahmogul’s determination
of fees, and the
consultation process had been finalized, and
that there was no further impediment to Nejahmogul commencing with
the performance
of its functions. In my view the Executive Officer
did not take administrative action when he restated his belief that
the consultative
process was final.
[97]
Exactly the same criticism applies to the contention that the
Executive Officer took administrative
action on 15 June 2018 to the
effect that he did not direct that normal inspections should be
limited to one
per annum
. There is no indication on the papers
that the Executive Officer was asked to apply his mind to that issue
on that date, nor that
he failed to take a decision. Again, the
Executive Officer was merely restating what he had previously
decided, that the assignee
was free to do what it pleased, without
direction from the Executive Officer. In my view, therefore, the
Executive Officer did
not take an administrative action on 15 June
2018 as alleged by the applicants
CONCLUSION
[98]
For the reasons set out above, the attack on the constitutionality of
section 3 (1A) (b) (ii)
of the APS Act must fail, as must the relief
sought that the Minister must present an amendment to the APS Act to
Parliament. All
the relief sought under PAJA must also fail, save for
the relief sought in respect of the determination of inspection fees,
and
the publication thereof on 25 May 2018.
[99]
Even though applicants have not succeeded on the majority of the
relief sought, they have been
successful in respect of the setting
aside of the fee structure, which was essentially at the core of this
dispute. Consequently,
the normal rule must apply that the successful
party is awarded costs.
[
100]
Consequently, I make the following order:
[100.1]
The decision by the third respondent to determine its fees,
and
thereafter to publish those fees in Notice 267 of 2018, Government
Gazette No. 41650 of 25 May 2018 is set aside.
[100.2]
Respondents shall pay the costs of the application jointly
and
severally, including the cost of senior and junior counsel where so
employed.
JJC Swanepoel
ACTING JUDGE OF THE HIGH COURT
GAUTENG DIVISION OF THE HIGH
COURT, PRETORIA
Electronically submitted
therefore unsigned
Delivered:
This judgement was prepared and authored by the Judge whose name is
reflected and is handed down electronically
by circulation to the
Parties/their legal representatives by email and by uploading it to
the electronic file of this matter on
CaseLines. The date for
hand-down is deemed to be 22 February 2021.
APPLICANTS’
COUNSEL:
Adv. EAS Ford SC
Adv. G
Wickins
APPLICANTS’
ATTORNEYS:
Rushmere Noach Inc.
(Mr. S Gough)
RESPONDENTS’
COUNSEL:
Adv. HC Janse van Rensburg
FIRST
AND SECOND
RESPONDENTS’
ATTORNEYS:
The State Attorney
(Mr. G.P
Seleka)
THIRD
RESPONDENT’S
ATTORNEY:
Soutie Van Rensburg Attorneys
(Mr. AJ Van
Rensburg)
HEARD
ON:
26 January 2021
JUDGMENT
ON:
22 February 2021
[1]
Gauteng
Division case no. 45144/2017 dated 28 February 2020 (unreported)
[2]
(1896)
3 OR 190
[3]
2006
(2) SA 603 (SCA)
[4]
[2012]
2 ALL SA 462
(SCA) at par. 46
[5]
[2017]
1 ALL SA 677
(SCA) at paras. 11 to 13
[6]
[2013]
4 ALL SA 639 (SCA)
[7]
Tasima
(Pty) Ltd v Department of Transport and others [2016] 1 ALL SA 465
(SCA)
[8]
2008
(4) BCLR 442
[9]
[2000] ZACC 1
;
2000
(2) SA 674
(CC)
[10]
2004
(3) SA 346 (SCA)
[11]
2010
(5) SA 457 (SCA)
[12]
See:
Messenger of the Magistrate’s Court, Durban v Pillay[1952]
3
ALL SA 449
(A) at 451:
“
The
cardinal rule is still as stated in Standard Bank v Estate Van Rhyn,
1925 A.D. 266
at 274: ‘After all, what we have to get at is
the intention of the Legislature’….”
[13]
Section
7 (2) (c) of PAJA
[14]
DDP
Valuers (Pty) Ltd v Madibeng Local Municipality
[2015] ZASCA 146
;
par. 15; See also:
Koyabe
v Minister of Home Affairs (Lawyers for Human Rights as Amicus
Curiae)
2010 (4) SA 327
(CC) para 38
[15]
GNR
1979 of 23 August 1991
[16]
2000
(1) SA 1 (CC)
[17]
See:
City of Tshwane Metropolitan Municipality and others v Nambiti
Technologies (Pty) Ltd
[2016] 1 ALL SA 332
(SCA) at par. 22
[18]
2005
(3) SA 313
(SCA) par. 21; See also Minister of Defence and Military
Veterans v Motau
2014 (5) SA 69
(CC)