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[2021] ZAGPPHC 251
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Janks Office Imports (Pty) Ltd v Minister of Trade and Industry and Another (26720/2019) [2021] ZAGPPHC 251 (30 April 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION PRETORIA
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED
30/4/2021...
Case
Number
: 26720/2019
JANKS OFFICE IMPORTS (PTY)
LTD
Applicant
and
THE MINISTER OF TRADE AND
INDUSTRY
And
another
First
Respondent
JUDGMENT
SC
VIVIAN AJ
1.
This application arises from the Department of Trade and Industry’s
Manufacturing
Competitiveness Enhancement Programme (“MCEP”).
2.
At its heart, this is an application in which the applicant seeks to
review and
set aside the cancellation of what it perceives to be the
purported cancellation of an approval to pay an incentive to the
applicant
and for substitutionary relief in the form of an order for
the payment of money.
3.
The respondents are the Minister of Trade and Industry and the
Director General
of Trade and Industry. The application concerns to
conduct of officials employed at the Department of Trade and
Industry, which
I refer to as “the DTI”.
4.
In their answering affidavit, the respondents explain that the MCEP
is an incentive
programme that is aimed at promoting enterprise
competitiveness and job retention by supporting manufacturing
enterprises with
competitiveness improvement interventions. A further
objective is to support capital investment in equipment upgrading and
expansions
that will lead to the creation of new jobs and retention
of existing ones. The applying entities themselves are required to
make
minimum investments in the enterprise according to its size. By
way of an example an entity with total assets with a historical
cost
below R5 million should have a minimum investment in machinery and
equipment of R500 000. The incentive is a cost sharing
incentive in
terms of which the scheme contributes a percentage of the investment
made by the entity. The incentive is paid directly
to approved
applicants based on actual qualifying costs incurred and subject to
employment levels being retained.
5.
The programme is aimed at compensating the applying entity for actual
costs incurred
as an investment by the entity itself in expanding its
operation and creating and retaining jobs. The respondents explained
that
in the absence of proof of actual costs incurred, the programme
cannot pay the incentive.
6.
The applicant’s founding affidavit is terse. The deponent to
the founding
affidavit simply asserts that on 31 January 2014, the
applicant submitted an MCEP Application. There is no explanation of
the programme.
It is not clear to whom the application was submitted.
7.
On 10 September 2014, Mr Sitembile Tantsi, who is described as
“Director:
MCEP” sent a letter to the applicant. The
letter recorded: “
We are pleased to inform you that your
application for assistance under the dti's Manufacturing
Competitiveness Enhancement Programme
has been approved by the
Adjudication Committee/ Technical Committee on 22 August 2014. The
approval is conditional on the applicant
meeting the requirements of
the MCEP
.” The letter recorded that the total amount of
assistance that was approved was R5 million.
8.
The letter further recorded: “
In terms of MCEP guidelines
the claim must be submitted within six (6) months. If a first claim
is not submitted six (6) months
after the start of commercial
production, the incentive approval will be cancelled.
”
9.
In the founding affidavit, the applicant also referred to “
the
Guidelines
”. But it did not annex a copy to the founding
affidavit. The respondents also did not annex a copy to the answering
affidavit.
10.
I caused a note to be placed on Caselines in respect of this
omission. In response, the applicant
simply uploaded an unsigned
version of the Guidelines. During argument, I indicated to the
applicant’s counsel, Mr Nowitz,
that as this document is not
annexed to an affidavit, its evidentiary status is problematic and it
could not be used unless the
respondents agreed to its use. Mr
Jozana, who appeared for the respondents, took a pragmatic approach.
He indicated that he had
a different version of the Guidelines.
However, the differences were not material to this application.
Accordingly, the respondents
were prepared to accept that the
Guidelines be placed before me despite the evidentiary difficulties.
On this basis, the matter
was able to proceed.
11.
It is a requirement of the Guidelines that the first claim must be
submitted within 6 months of
approval. Importantly, the Guidelines
provide:
“
12.1.4 It
is the responsibility of the entity to provide complete and accurate
information to the dti to enable speedy
and correct processing of the
incentive. The entity must submit the following documents to the
Programme Manager at the dti:
12.1.4.1
An originally completed Claim Form duly signed
by the entity and an
independent external auditor or accredited person …
“
12.
The applicant submitted two claims – dated 1 September 2015
(the applicant says this was
submitted on 31 August 2015, but nothing
turns on the distinction) and 11 September 2015. These were
accompanied by an independent
auditor’s report prepared by
Corax Inc. The DTI received the claims and conducted a site visit on
14 October 2015.
13.
On 16 November 2015, the DTI sent two letters to the applicant. In
the first letter, it rejected
the 1 September 2015 claim on the basis
that it was a duplication of the 11 September 2015 claim. It appears
that the DTI later
accepted that this was incorrect. There were two
separate claims. In the second letter, the DTI rejected the 11
September 2015
claim on the basis that “
We were unable to
verify the existence of the supplier on the invoices supplied with
the claim.
”
14.
In the terse chronology of events in the founding affidavit, the next
event recorded is a request
from the DTI in an email dated 31 May
2016 to “…
furnish the team with verifiable proof of
investment to bring the assets into production and of payments made
ito the related financing
agreement.
” This was followed by
a response from the applicant on 3 June 2016, to which it attached
proofs of payment by it to a beneficiary
described on the statements
as “Northgate”.
15.
The narrative then jumps to 26 September 2016, when the applicant’s
former attorneys, Werksmans,
sent a letter of demand to the DTI. In
the letter, it was asserted that the applicant had complied with the
Guidelines. It demanded
payment of R5 million, failing which it would
“
launch appropriate legal proceedings.
”
16.
The DTI responded on 3 October 2016. It pointed out that no
beneficiary of any incentive scheme
has a right to a incentive in
that the approved amount is subject, amongst other things, to
compliance with “
the Incentive Guidelines and Schedule to
all incentives
”. It is also subject to economic policy and
availability of funds. In the letter, reference is made to paragraph
12.1 of
the Schedule, which is said to state: "
The approval
of an incentive application does not give the Beneficiary any right
to payment.
"
17.
Neither party has referred me to a document that could be “the
Schedule”. The quoted
paragraph does not appear in the
Guidelines.
18.
Importantly, in the 3 October 2016 letter, the DTI referred to a
letter from the DTI which it
said was dated June 2016 (“the
June 2016 letter”). It recorded that the June 2016 letter said
that the approval letter
was cancelled as the documents submitted to
substantiate the claim is insufficient evidence and the claims do not
justify payment
due to non-compliance with the Guidelines and
relevant statutes. Reference was made to specific paragraphs in the
Guidelines.
19.
The applicant says that it did not receive the June 2016 letter at
the time that it received the
3 October 2016 letter. In a letter
dated 31 October 2016, Werksmans requested a copy of the June 2016
letter. The letter must have
been provided to the applicant at some
point in time as it is annexed to the founding affidavit, but the
applicant does not disclose
when that point in time was.
20.
The applicant points out that the June 2016 letter to which the DTI
referred is in fact unsigned
and undated. Nonetheless, the thrust of
this application is an attempt to set aside the administrative
decision communicated in
the June 2016 letter.
21.
I accept that the applicant did not receive the June letter in June
2016. However, the fact of
the purported cancellation was
communicated to the applicant in the 3 October 2016 letter. If there
was an cancellation, it was
communicated on 3 October 2016.
22.
Mr Jozana described the use of the word “
cancelled
”
in the correspondence as unfortunate. He submitted that the initial
approval of the applicant did not create a contractual
relationship
where the applicant became entitled to payment of the incentive.
Instead, the applicant only acquired rights when
it submitted a
compliant request for payment. This would include the necessary
evidence to substantiate the request.
23.
Mr Jozana submitted that the administrative decision that was made
was not in effect to “cancel”
the approval of the
applicant as a person who qualified for the incentive. He submitted
that the administrative decision was the
decision not to pay. Insofar
as there was a purported cancellation of the approval of the
applicant, he submitted that it should
be set aside.
24.
The June 2016 letter commences with the words: “
We regret to
inform you that the your claim for the MCEP incentive incentive was
cancelled, due to failure to provide substantiated
evidence …
”
It concludes with the words: “
Based on the above factors the
approval amount to the value of R5 000 000 has been
terminated with immediate effect.
”
25.
Read as a whole, this communicates a rejection of the submitted
claims, not a cancellation of
the approval of the applicant as a
person who qualified for the incentive. It was a decision not to pay.
This was misstated by
the DTI in its later letter of 3 October 2016,
in which it said that the June letter informed the applicant that the
approval was
cancelled. But it is the decision communicated in the
June letter that the applicant seeks to have reviewed and set aside.
26.
The applicant has accordingly misconstrued the administrative
decision that it seeks to impugn.
27.
The applicant says that it subsequently launched a PAIA application.
It also provided the DTI
with a lever arch file of documents.
Although these documents are annexed to the founding affidavit, the
content is not dealt with
in the founding affidavit.
28.
The applicant refers to an exchanged of correspondence between 2016
and 22 June 2018. Again, although
the letters are annexed to the
founding affidavit, the content is not dealt with in the founding
affidavit.
29.
Eventually, on 4 December 2018, the applicant purported to lodge a
notice of internal appeal in
terms of Clause 12.3 of the Guidelines.
THE
INTERNAL APPEAL
30.
In the founding affidavit, the applicant referred to clause 12.3 of
the Guidelines. That clause
reads: “
Any dispute relating to
a decision (including the rejection of an application) taken by the
dti is limited to one internal appeal
per application lodged within
such time as set out in the letter of notification
.”
31.
The applicant says that although the DTI acknowledged receipt of the
notice of internal appeal,
it did not respond to it at all.
Eventually, on 15 April 2019, it launched this application.
32.
During argument, I asked both counsel to point me to the empowering
legislation in terms of which
an internal appeal could be considered.
I asked which body was empowered to consider the appeal. Neither
counsel was able to point
me to the appropriate empowering statute or
regulation. Neither party could identify the body empowered to
determine the internal
appeal. As Mr Nowitz put it, although the
Guidelines provide for an internal appeal, to all intents and
purposes there is no mechanism
for an internal appeal.
33.
The first prayer in the notice of motion is for an order: “
Upholding
the Applicant’s Internal Appeal in terms of Clause 12.3 of the
dti Guidelines
…” However, Mr Nowitz submitted that
what was really being sought was a judicial review in terms of
Section 6 (2)
(g) of the Promotion of Administrative Justice Act (Act
3 of 2000; “PAJA”). He suggested that the first prayer
could
be amended to reflect what was really being sought.
34.
In my view, however, the applicant failed to make out a case for this
relief. The Court cannot
judicially review a failure to make a
decision when the applicant has not demonstrate who was required to
make the decision or
why that person or body was required to make the
decision.
The
delay in instituting proceedings to review the decision communicated
in the June 2016 letter
35.
The second prayer in the notice of motion is for the Court to review
and set aside the purported
cancellation in the June 2016 letter. The
third prayer is for payment of the incentive. Mr Nowitz argued that
this is a substitutionary
remedy in terms Section 8 (1) (c) (ii) (aa)
of PAJA. The second and third prayers are accordingly remedies in
terms of PAJA and
relate to the decision communicated in the June
2016 letter.
36.
In terms of Section 7 (2) of PAJA, the Court may not review an
administrative action unless any
internal remedy provided in any
other law has first been exhausted. As neither party can refer me to
an internal remedy provided
in any law, I must infer that there is no
such internal remedy. Accordingly, Section 7 (2) is not a bar to me
considering the remainder
of the relief sought.
37.
However, in terms of Section (7) (1) of PAJA, proceedings for
judicial review had to be instituted
within 180 days. As there was no
internal remedy, that 180 day period commenced when the applicant
received notice of the decision
communicated in the June 2016 letter.
That notice is contained in the 3 October 2016 letter. These
proceedings were only instituted
on 15 April 2019, some 2 ½
years after the administrative decision was communicated to the
applicant. This is an inordinate
amount of time. In the absence of an
application in terms of Section 9 of PAJA, this Court does not have
the power to review the
decision communicated on 3 October 2016.
38.
The respondents did not rely on Section 7 (1) – presumably
because the first prayer related
to the internal remedy. It only
became apparent that there was no internal remedy during argument.
39.
In
Camps Bay Ratepayers' and Residents' Association and Another v
Harrison and Another
2011 (4) SA 42
(CC) at para’s 53 to 54
,
Brand AJ held that the Court can raise Section 7 (1)
mero motu
.
However, the Court will only do so when the delay is manifestly
inordinate and only after it had given the applicant an opportunity
to explain the delay.
40.
I did not give the applicant an opportunity to explain its delay.
Accordingly, I would not have
dismissed this application solely on
the basis of non-compliance with Section 7 (1).
The
merits of the decision communicated in the June 2016 letter
41.
The applicant says in the founding affidavit that after 3 October
2016, and for a period of some
20 months, the DTI continued to call
for stamped bank statements, invoices, and affidavit and the like,
all of which it supplied
to the DTI.
42.
The applicant does not, however, explain in any detail in the
founding affidavit exactly the basis
on which it sought to justify
its claims for a incentive. It was required to submit substantiating
documents. It is clear that
the DTI did not accept these documents.
There is nothing in the founding affidavit that even explains what
money was invested and
how it was expended.
43.
In argument, Mr Nowitz spent time working through the documents
provided to the DTI. I noted above
that although this bundle was
annexed to the founding affidavit, the content is not canvassed save
in the broadest terms.
44.
In
Minister of Land Affairs and Agriculture and Others v D & F
Wevell Trust and Others
2008 (2) SA 184
(SCA) at para 43
Cloete
JA held:
“
It
is not proper for a party in motion proceedings to base an argument
on passages in documents which have been annexed to the papers
when
the conclusions sought to be drawn from such passages have not been
canvassed in the affidavits. The reason is manifest -
the other party
may well be prejudiced because evidence may have been available to it
to refute the new case on the facts.
”
45.
The applicant accordingly failed in its founding affidavit to show
that it complied with the requirements
set out in the Guidelines. It
simply asserted the conclusion that it had complied without
prejudicing evidence of compliance.
46.
Even if I were to trawl through the annexures, they raise more
questions than answers. It was
explained that a bundle of
substantiating documents was submitted to the DTI. These formed a
single annexure to the founding affidavit,
spanning some 72 pages.
The documents include a series of bank statements. Some are addressed
to the applicant. But others are
addressed to “Harjean
Properties (Pty) Ltd”, “Knock or Wood Furniture (Pty)
Ltd” and “Northgate Trading
(Pty) Ltd”
(“Northgate”).
47.
The bundle also included reconciliations. There is no evidence as to
who prepared the reconciliations.
The reconciliations include a
column for “beneficiary” and a column for “payer”.
Other than each reconciliation
having a heading such as “building”
or “shelving” there is no identification of what was
being purchased.
The “payer” column for the building
reconciliation includes a number of payers. Save for Northgate, there
is no explanation
as to why payments made by other persons
constitutes evidence that the applicant had made the minimum
investment needed to trigger
payment of the incentive.
48.
The applicant produced a loan agreement between the applicant and
Northgate. In terms of the loan
agreement, Northgate made the sum of
R12 500 000 available to the applicant to be drawn by the
applicant as and when
required. This explains the fact that some
payments were made by Northgate. However, the other entities are not
identified.
49.
Mr Jozana pointed out these and other anomalies. He said that this
justified the DTI’s stance
that the applicant had not supplied
sufficient substantiation for its claim. Mr Nowitz’s reply was
that the identity of the
payers was irrelevant. The applicant
provided reconciliations and backed this up with bank statements.
Irrespective of where the
funds came from, this was proof that money
was expended.
50.
I agree with Mr Jozana. The fact that the applicant supplied a bundle
of documents, and indeed
that it supplied documents in various
tranches and at various times, does not assist it. The documents are
inconsistent and do
not constitute complete and accurate information.
51.
The nature of the incentive is that, before it can receive payment of
the incentive, the applicant
must itself have made a minimum
investment in the enterprise in order to trigger an incentive
payment. This is so because the incentive
is a cost sharing
incentive. It is paid to applicants based on actual qualifying costs
incurred. The applicant could not receive
payment until it
demonstrated that it had made this minimum investment. I have already
said that there is no evidence in the founding
affidavit that
demonstrates compliance. Trawling through the annexures does not
solve this inherent problem in the application.
There is no evidence
to link a payment by Harjean Properties (Pty) Ltd to the applicant.
On what basis should the DTI have accepted
that a payment by Harjean
Properties (Pty) Ltd constituted the applicant making an investment
in the enterprise?
52.
Accordingly, the applicant has failed to make out a case under any of
the grounds set out in Section
6 (2) of PAJA.
53.
Mr Jozana informed me that the respondents do not seek an order for
costs and I will accordingly
not make a costs order.
54.
The application is accordingly dismissed.
Vivian,
AJ
Acting
Judge of the Gauteng Division of the High Court of South Africa
APPEARANCES:
FOR
THE APPLICANT:
Adv M Nowitz
FOR
THE RESPONDENTS:
Adv A
Jozana