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[2021] ZAGPPHC 227
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South African Fruit and Vegetable Canners Association and Another v Impumelelo Agri Business Solutions (Pty) Ltd and Others (82759/2018) [2021] ZAGPPHC 227; [2021] 3 All SA 242 (GP) (14 May 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
(1)
REPORTABLE: YES
(2)
OF INTEREST TO OTHERS
JUDGES: YES
(3)
REVISED
Case No: 82759/2018
In
the matter between:
SOUTH
AFRICAN FRUIT AND VEGETABLE
CANNERS
ASSOCIATION
FIRST
APPLICANT
SOUTH
AFRICAN FRUIT JUICE ASSOCIATION
SECOND APPLICANT
and
IMPUMELELO
AGRI BUSINESS SOLUTIONS (PTY) LTD
FIRST RESPONDENT
EXECUTIVE
OFFICER OF THE AGRICULTURAL
PRODUCT
STANDARD ACT
SECOND
RESPONDENT
MINISTER
OF AGRICULTURE, FORESTRY
AND
FISHERIES
THIRD RESPONDENT
PERISHABLE
PRODUCTS EXPORT CONTROL BOARD
AMICUS CURIAE
JUDGMENT
MOLEFE
J
INTRODUCTION
[1]
This is Part B of the application wherein the
applicants seek the following relief:
1.1
reviewing and setting aside the first
respondent’s determination,
publication and
imposition of the inspection fees;
1.2
directing the first respondent to consider the
determination afresh;
and
1.3
declaring that the first respondent cannot
unilaterally determine,
publish and impose
inspection fees.
[2]
At
issue in this matter is the inspection fees determined by the first
respondent in terms of the Agricultural Product Standards
Act
[1]
(the APS Act), in particular, the ultimate publication thereof in the
Non-Governmental Notice 509 on 31 August 2019 (Notice 509).
The
applicants contend that the determination of the inspection fees was
done in a manner that offends the prescript of the Promotion
of
Administrative Justice Act
[2]
(PAJA), and stands to be reviewed and set aside. The applicants
further argue that it should not be permissible for the first
respondent to be able to unilaterally determine, publish and impose
the inspection fees payable to it in terms of the APS Act.
BACKGROUND
[3]
On 9 January 2018, the applicants launched an
urgent application in terms of which they sought to interdict and
restrain the first
respondent from publishing its final inspection
fees in the Government Gazette, and/or imposing its final inspection
fees.
The application was not opposed and on 16 January 2018,
the applicants obtained an interdict restraining the respondents from
imposing
the final inspection fees until the earlier of either:
3.1
The final determination of the review proceedings
to be instituted
by the applicants
within 60 (sixty) days from the date on which the first respondent’s
final inspection fees became known
to the applicants; or
3.2
The date on which the first respondent’s
final inspection fees
became known to the
applicants, where the first respondent’s final inspection fees
demonstrate that it had adhered to the
principle of just
administrative action, and that it had sufficiently consulted with
the relevant stakeholders.
[4]
Subsequent to the first interdict being granted,
the first respondent published the inspection fees. The
applicants contend
that this publication was in violation of the
court order of 16 January 2018 and contrary to the provisions of just
administrative
action. The applicants then launched the present
proceedings. In Part A of this application, the applicants
sought
an interim interdict to restrain and prevent the first
respondent from,
inter alia
,
levying any inspection fees pending the determination of Part B of
the review application. On 3 June 2019, Part A of the
application was dismissed by Strydom AJ.
APPLICATION
FOR INTERVENTION
[5]
The
Perishable Product Export Control Board (PPECB) is a public statutory
body regulated by the Perishable Products Export Control
Act
[3]
(PPECB Act). It has been designated by the Minister as an
assignee under section 2(3)(a) of the APS Act, to monitor and manage
the quality standards of perishable products exported from South
Africa. The designation operates indefinitely. In
practice this means that as an assignee the PPECB delivers what are
described as ‘end-point’ inspection services to
producers
and exporters of perishable products destined for export. This
entails inspecting and certifying the perishable
products intended
for exports before they leave South Africa.
[6]
The
PPECB is funded from fees paid to it by parties who export perishable
products. They pay for inspections and certification
services
rendered by the PPECB. The PPECB performs its functions as an
assignee on a costs recovery basis. The power
conferred on the
PPECB under section 3(1A)(b)(ii) of the APS Act to determine its
actual fees is distinct from its duty to submit
an annual budget of
estimated revenue and expenditure for approval by the Department and
the Minister pursuant to section 53
of the Public Finance
Management Act
[4]
(PFMA). It is contended that the power conferred on the PPECB
to determine its fee structure is conferred on the PPECB by
the APS
Act, in its capacity as a designated assignee under the APS Act.
[7]
The PPECB made an application seeking leave to
intervene as
amicus curiae.
On 5 March 2019, in response to a letter from the PPECB’s
attorneys requesting the applicants’ consent to intervene,
the
applicants’ attorneys advised that they had no objections to
the PPECB joining as
amicus curiae
in respect of prayer 5 of Part B of the applicants’ notice of
motion. However, when the PPECB filed its application
for
admission as
amicus curiae,
the applicants changed their stance and opposed the PPECB’s
admission. The applicants filed an answering affidavit
to which
the PPECB filed a comprehensive reply. Thereafter, on 2 October
2019, the applicants withdrew the notice of opposition
to the PPECB’s
application with no tender for costs.
[8]
Counsel for the PPECB argued that any finding or
order which interprets the APS Act as restricting an assignee’s
powers to
determine and vary their fees as contended for by the
applicants, will adversely affect the way in which the PPECB
discharges its
statutory mandate. The PPECB is South Africa’s
official certification agency for perishable products bound for
export
and recognised by the European Commission as an approved
‘
third country’
,
meaning that the inspection services rendered by the PPECB as an
assignee under the APS Act are treated as equivalent to those
of the
relevant European authorities.
[9]
The PPECB’s application for admission as
amicus curiae
is
therefore unopposed. I am satisfied that the PPECB has a
legitimate interest in the matter and stands to be affected by
the
relief sought by the applicants and is therefore admitted as
amicus
curiae
to these proceedings.
POINTS
IN
LIMINE
[10]
The following points in
limine
were raised by the respondents:
10.1
That the applicants have failed to exhaust
internal
remedies prior to
proceeding with the review application; and
10.2
There is a material non-joinder of the interested
parties. At
the hearing of this
application, the respondents’ Counsel abandoned this point in
limine
.
Exhaustion
of the internal remedies
[11]
The respondents’ counsel submitted that in
terms of section 7(2)(a) of PAJA, no court shall review an
administrative action
unless internal remedies provided for in any
other law had first been exhausted. Counsel argued that the
applicants did not
exhaust the internal remedies available, and in
this regard relied on section 10(1) of the APS Act, which provides
that any person
whose interests are affected by any decision or
direction of the Executive Officer or an assignee under this Act, may
appeal against
such decision or direction to the Director-General.
An appeal contemplated in section 10(1) must, according to section
10(2),
be lodged in the prescribed manner, which the applicants
failed to do.
[12]
On the
other hand, Counsel for the applicants argued that at the time when
the present litigation was instituted, the only procedure
prescribed
was the APS Act
:
Regulations: Inspections and Appeals: Local
[5]
(the Inspection and Appeal Regulations). Counsel submitted that
the Inspection and Appeal Regulations make it apparent that
the
appeal contemplated in section 10(1) of the APS Act is concerned with
actual inspections, and not an appeal against the determination
of
fees by an assignee, such as the first respondent. It is argued
that it was only during September 2019, when the
present
proceedings had already been instituted, that the Minister
[6]
promulgated Regulations
[7]
that could possibly cater for an appeal relating to the determination
of inspection fees.
[13]
The
procedure for submission of an appeal in terms of section 10 of the
APS Act deals with actual inspections.
[8]
Since no procedure was prescribed at the time of the institution of
the present proceedings, the applicants argue that the
remedy was not
available to them.
[14]
In my
view, in order for the respondents to rely on section 7(2)(a) of
PAJA, the appeal in section 10(1) must in fact, be available,
effective and adequate in order to count as an existing internal
remedy.
[9]
.
The appeal
procedure prescribed at the time of launching the present proceedings
was tailored for appeals dealing with actual inspections,
and
therefore did not present an effective remedy to afford redress to
the applicants, and accordingly did not constitute an internal
remedy
that the applicants had to exhaust in terms of section 7(2)(a) of
PAJA. This point in
limine
is therefore dismissed.
LEGISLATIVE
FRAMEWORK
[15]
The APS Act provides for control over the sale,
export and import of certain agricultural and other related products,
and for matters
connected therewith. It principally deals with
the grading (for example choice or standard grade), the packaging
that the
product must comply with, how the product is packed, and the
labels (or markings) that need to be placed on these products.
[16]
The
applicants’ members produced canned fruits and vegetables,
fruit juice and drinks, jams, jellies and marmalades, canned
pasta,
canned mushrooms, mayonnaise and salad dressing.
[10]
[17]
Section 3 of the APS Act deals with the control
over the sale of products and section 4 deals with the control over
the export of
these products. These sections, amongst others,
authorises the Minister (the third respondent) to prohibit the sale
of products
which do not conform with the prescripts of the APS Act
and regulations published in terms thereof, i.e. grading, packaging,
labelling,
etc.
[18]
The
Minister can designate an officer in the service of the Department of
Agriculture, Fisheries and Forestry (the DAFF) as an executive
officer.
[11]
The executive officer shall, subject to the control and directions of
the Minister, exercise the powers and perform the duties
conferred
upon such executive officer under the APS Act.
[19]
The
Minister can also designate any person, undertaking, body,
institution, association or board having particular knowledge of
the
product concerned as an assignee in terms of that product.
[12]
The assignee, unless expressly provided otherwise, and subject to the
directions of the executive officer, performs the duties
and has the
powers of the executive officer with regard to the appointed products
in terms of the APS Act.
[13]
The Minister has the power to revoke the mandate assigned to the
assignee in terms of section 2 of the APS Act.
[20]
The
first respondent was appointed as an assignee with effect from 9
December 2016 for the purposes of sections 3(1)(a) and (b),
3A(1),
4A(1) (a), 7 and 8 with regard to regulated agricultural products
destined for sale in the local market.
[14]
These sections deal with the following:
20.1
Section 3(1)(a) and (b): Prohibit the sale of
locally
produced/manufactured
products not complying with the regulations.
20.2
Section 3A(1): Provides for the inspection,
grading and sampling
of products for
quality control. The executive and/or assignee have wide powers
and can enter any place, premises or conveyance,
and open any
container, inspect or test or cause to be tested any quantity of a
product.
20.3
Section 4A(1)(a): Prohibits the sale of imported
products not
complying with the
regulations.
20.4
Section 7 and 8: Extends powers to the executive
and the
assignee to enter
upon any place, premises or conveyance, and investigate and sample,
and seize when necessary, any regulated product.
[21]
Inspections are not mandatory in terms of the APS
Act. Section 3 prohibits the sale of products not complying
with specified
criteria, but does not require that inspections must
be conducted. The APS Act simply requires adherence.
Furthermore,
according to the Inspection and Appeal Regulations
referred to above, inspections are requested. The provision
reads as follows:
“
2
Inspection fees
(1) If a person requires
inspection of a product, such an inspection shall be requested in
writing from the Executive Officer.
(2) The amounts specified
in column 2 of Table 1 shall, subject to subregulation (3), be
payable in respect of an inspection
referred to in subregulation (1).
(3) Where an Assignee
designated under section 2(3)(a) of the APS Act has determined fees,
such fees shall be payable”.
FEES
PAYABLE TO THE ASSIGNEE
[22]
The
assignee has no recourse against the State for any of the services it
renders or expenses it incurs in terms of the APS Act.
[15]
This is the responsibility of the owner of the regulated
product.
[16]
The fees that may be charged in respect of the powers exercised and
duties performed by the assignee, such as conducting
inspections, are
the fees determined by the assignee.
[17]
[23]
The
APS Act does not prescribe how these fees are to be determined save
to state that the fees which will be payable are those determined
by
the assignee. Even the provisions authorising the Minister to
make regulations provides that regulations can be made regarding
the
inspection fees that have been determined by the assignee.
[18]
According to section 15(4), a regulation prescribing fees shall be
made with the concurrence of the Minister of Finance.
However,
if one has regard to section 15(1)(g), the Minister makes regulations
regarding fees that have already been determined
by the assignee.
[24]
If the
owner refuses or fails to pay the fees determined by the assignee,
such failure shall, according to section 11(1)(b), constitute
an
offence. In the event of a first conviction, such owner can be
held liable to a fine or to imprisonment for a period not
exceeding
six (6) months, and in the case of a subsequent conviction, a period
not exceeding one (1) year.
[19]
PAJA
REVIEW
[25]
The applicants’ submission is that the
determination of the first respondent’s fees is to be reviewed
and set aside
as it was:
25.1
done in a manner that is procedurally unfair
(section 6(2)(c) of
PAJA);
25.2
taken because irrelevant considerations were
taken into account
or relevant
considerations were not considered (section 6(2)(e) (iii) of PAJA);
25.3
taken in bad faith (section 6(2)(e)(v) of PAJA);
and
25.4
not rationally connected to the information
before the first
respondent (section
6(2)(f)(ii)(cc) of PAJA).
[26]
It is
not disputed that the determination of fees constitutes
administrative action in terms of PAJA; that the first respondent
was
obliged to give effect to procedurally fair administrative actions as
prescribed in terms of section 3 and 4 of PAJA, and that
the first
respondent elected to follow the notice and comment procedure
prescribed in section 4(3) of PAJA when determining the
fees.
[20]
[27]
The first respondent however disputes that the
determination was made in a manner contrary to the provisions of
PAJA. The
respondents submit that a fair procedure was followed
in terms of section 3 of PAJA, and submit that should it be found
that there
was a departure, they rely on section 4(b)(i) to (v) which
deals with the provisions when an administrator may depart from the
requirements. Counsel for the respondents argued that:
27.1
The procedure followed by the first respondent
complied with the
minimum requirements
for fair administrative action in that due notice was given, comments
were received, meetings were held and
engagements with relevant
stakeholders took place;
27.2
The information which was given to the applicants
was never
enough for them, and
it was at their own peril that they merely criticised and posed
questions instead of providing comments on
the proposed inspection
fees; and
27.3
The applicants were attempting to prescribe to
the first
respondent as to how
it should run its business.
NOTICES
CALLING FOR COMMENTS
[28]
Prior to the publication of notice 509, the first
respondent published two (2) notices calling for comments on the
proposed inspection
fees. The first notice was notice 251 of
2017 (notice 251) published in the Government Gazette no 40733 on 31
March
2017, which notice culminated in the applicants obtaining
an interdict on 16 January 2018. The second notice was
notice
339 of 2018 published in the Government Gazette no 41704 on 15
June 2018 (notice 339).
[29]
The applicants contend that both notices 251 and
339 failed to comply with the following PAJA regulations:
29. 1
Regulation 18(2)(a), as the notice was only published in the
Government Gazette
and not in a newspaper;
29.2
Regulation 18(2)(b), as the notice failed to
contain a caution that
comments received
after the closing date may be disregarded;
29.3
Regulation 18(3)(a), as the notice failed to
contain sufficient
information about
the proposed administrative action in order that the applicants could
make meaningful comments. The notice
contained a list of
products together with the proposed inspection fees with no
indication given as to how these fees were calculated
or how same
will be implemented;
29.4
Regulation 18(3)(b), as the notice did not
specify a place where
and the hours within
which further information concerning the proposed administrative
action will be available for public scrutiny;
and
29.5
Regulation 19(1), as the notice was only
published in English,
when the regulation
in fact contains a peremptory provision that the notice must be
published in at least two official languages.
[30]
Counsel
for the respondents argued that the applicants, in contrast to their
allegations, fully participated in the decision-making
process and
were fully aware of the steps being undertaken. Counsel
submitted that a meeting was held on 22 February
2017, at the
premises of the applicants.
[21]
After notice 251 was published on 31 March 2017, headed “invitation
of comments on the proposed inspection fees”,
the second
applicant commented on the invitation on 25 April 2017 and the first
applicant commented on 5 May 2017. Meetings
were held with
stakeholders between 10-17 July 2017 and on 21 and 29 August 2017.
On 20 November 2017, a further consultative
meeting was held between
the first respondent and the industry, and the applicants were in
attendance. The stakeholders were
invited to comment on the
sampling size relating to inspection. The applicants responded
to this invitation on 20 November
2017.
[22]
On 28 November 2017, the first respondent provided a draft operating
procedure.
[23]
[31]
Counsel for the respondents contends that the
allegations by the applicants in the replying affidavit that they
have no knowledge
of these engagements is misleading and it is the
very antithesis of what transpired.
[32]
The first respondent obtained data from a
well-known company, Nielsen, regarding volumes, number of
manufacturers, brands and products
per product group, and further
appointed a company known as OABS Development (Pty) Ltd (OABS) to
assist the first respondent to
compile a business plan.
[33]
On 15
June 2018, the first respondent again in the non-governmental
organisation Government Gazette, published notice 339, an invitation
for comments on proposed inspection fees. The applicants once
again commented on the proposed inspection fees to which the
first
respondent replied.
[24]
A further meeting was held on 27 July 2018 with the relevant
stakeholders and the DAFF, during which a revised business plan
was
presented. During August 2018, several meetings were held with
the relevant stakeholders, and as a consequence of the
meetings held,
OABS brought out an addendum.
[25]
On 31 August 2018, the first respondent published its final
inspection fees.
[34]
The
first respondent contends that it is clear that it followed a
protracted, comprehensive, reasonable and fair process as envisaged
in terms of the provisions of PAJA, and did not unilaterally
determine its fees. It was further argued that the first
respondent
followed a hybrid system of notice and comment, together
with public participation in accordance with the principles as
enunciated
in
Minister
of Health and Another v New Clicks South Africa (Pty) Ltd and
Others
,
[26]
wherein it was held that the legislation in question – the APS
Act in this instance – did not prescribe a particular
procedure
for the determination of the inspection fees, and that the relevant
requirements were therefore those prescribed in section
4(1) of
PAJA.
[27]
[35]
The first respondent further argued that it is
immaterial that caution was not contained in the notice that comments
received after
the closing date may be disregarded as it still
considered comments received even after the expiry of the 30-day
period.
In my view, this is inconsequential although the notice
ought to have contained the warning as prescribed in regulation
18(2)(b)
of PAJA.
FAILURE
TO SUPPLY INFORMATION AND CONSIDER COMMENTS
[36]
The following are central to the determination as
to whether the first respondent’s determination was lawful:
36.1
whether the applicants received sufficient
information in order to
enable
them to submit meaningful comments; and
36.2
whether the first respondent in fact considered
the comments
received.
[37]
The applicants raised the following issues to the
first notice 251:
37.1
they indicated that they were unable to
meaningful comment on
the proposed
inspection fees without sufficient information as to how the fees
were calculated;
37.2
they required a business plan to understand the
scope,
methodology and
costs involved; and
37.3
in addition they raised a number of questions
which they required
clarification on in
order to enable them to meaningfully comment.
[38]
It is
a substantive requirement of proper notification that the notice of
proposed decisions must contain sufficient information
in terms of
depth and detail to enable the public to make meaningful
representations.
[28]
If a person is supplied with insufficient information and is
prevented from dealing with material issues, there will be a
failure
of procedural fairness to the public.
[29]
[39]
The first respondent developed a business plan
with the assistance of an independent consultant after the applicants
had obtained
the interdict. In this regard the following dates
are material:
39.1
On 16 January 2018, the first interdict was
granted;
39.2
On 26 January 2018, the first respondent advised
that it had
appointed an
independent consultant to “re-look at their business plan and
determine inspection fees based on sound research”.
[30]
39.3
On 15 June 2018, notice 339 was published,
calling for comments
on the revised fees
to be imposed.
39.4
On 6 July 2018, the independent consultant
transmitted a draft
report on the
proposed business plan to the stakeholders. At this stage the
closing comments in terms of notice 339 was before
15 July
2018.
39.5
On 10 July 2018, the applicants addressed an
email to the first
respondent requiring
clarity as to the status of the draft report and the proposed
business plan, and requiring an extension of
the period prescribed in
notice 339 for comments.
39.6
On 11 July 2018, the first respondent replied to
the applicants’
email that the draft
report is not to be commented upon as it merely provides a background
and context to the proposed inspection
fees and further that the
deadline for the comments on the proposed inspection fees is set out
in the gazetted notice itself.
39.7
On 12 July 2018, the applicants submitted their
comments to
notice 339 and
stated in their submissions that the first respondent needs to
provide additional information (but not limited to
the business and
implementation plan) which informs the inspection fees and standard
operating procedures to be followed in the
inspections. The
applicants reiterated that they did not receive sufficient
information to provide meaningful comments on
the proposed fees and a
further request was made to obtain the requested information.
39.8
On 27 July 2018, a stakeholders meeting was
convened at which
an independent
consultant presented its draft report on the proposed business plan.
The presentation covered the independent
consultant’s
methodology and assumptions as well as the proposed business plan and
cost model on which the proposed inspection
fees were based
[31]
.
At the meeting, attendees were informed that further consultations
would be held to gather information in order to finalize
their
business plan and proposed final inspection fees
[32]
.
39.9
On 13 August 2018, the applicants were
telephonically contacted
by the consultant to
attend the stakeholders meeting where it was agreed that a further
meeting would be convened during September
2018 and where,
inter
alia
, the draft report would be discussed. This was
confirmed in the report of the meeting sent to the applicants by the
first
respondent on 30 August 2018.
39.10
Notwithstanding the confirmation, the very next
day on 31 August
2018, notice was
published containing the final inspection fees. The applicants
contend that this is evidence that the determination
was made in bad
faith and illustrates a clear and utter disregard for the process of
fair administrative action. The applicants
were prevented from
giving their inputs as they were instructed not to comment on the
draft business plan.
[40]
Counsel for the applicants argued that as far
back as April 2017, the applicants have been requesting to be
provided with a business
plan and clarification on the basis on which
the first respondent’s fees are calculated. Then at the
eleventh hour,
they were provided with a draft report on a business
plan and instructed not to comment thereon. They are then
hoodwinked
to believe that a further consultation will be held, but
the very next day the fees are published. The applicants
further
submit that where private entities such as the first
respondent are permitted to determine fees which the public by law is
required
to pay, such determination must be subject to the highest
standard of compliance with the prescripts of administrative justice.
[41]
In my view, it is only rational that the proposed
fees must be considered having regard to the frequency of
inspections, the quantity
of products to be inspected, the amounts of
samples to be taken, what equipment is required, and the costs
involved in conducting
each inspection. All this information
would typically be contained in the Standard Operating Procedure
(SOP) and/or business
plan.
[42]
The
first respondent however, does not share this view. According
to the first respondent, the requirement of a “business
plan”
had been wholly imported by the applicants and has never been a
requirement for the determination of inspection fees.
[33]
It is also argued that the business plan was presented to the
applicants as a matter of courtesy and not for the applicants
to
provide input. This is, however, wholly in conflict with what
had been stated by the second respondent in a letter addressed
to,
inter
alia
,
the applicants.
[34]
The letter stated amongst other things:
“
The assignee is expected
to determine their fees guided strictly by their business plan”.
[43]
The
judgment of Cameron J in
Rustenburg
Platinum Mines Ltd (Rustenburg Section) v Commission for
Conciliation, Mediation and Arbitration and Others
[35]
is insightful in this respect:
“
In a review the question
is not whether the decision is capable of being justified (or, as the
LAC thought, whether it is not so
incorrect as to make intervention
doubtful), but whether the decision-maker properly exercised the
powers entrusted to him or her.
The focus is on the process and
on the way in which the decision-maker came to the challenged
conclusion”.
[44]
If
there is no proper consideration of the issues, then the entire
exercise is a smokescreen which is devoid of any benefit and
is
simply a waste of funds.
[36]
No matter how broadly represented or how well-facilitated the process
of public participation is, it will not constitute
a fair process if
the relevant authority does not intend to incorporate input into
policy decisions or development plans.
[37]
[45]
The
first respondent’s attitude is that if the incorrect fees are
recovered, it will simply “
revise
its fees when it appears that there is an under or over recovery of
fees.”
[38]
In the meantime the owners of the products must pay fees based
on a flawed calculation. This is clearly an irrational
response. Accordingly, the first respondent did not comply with
the minimum requirements for fair administrative action.
[46]
In my opinion, the applicants have made out a
case to review and set aside the first respondent’s
determination of its final
inspection fees.
DECLARATORY
RELIEF
[47]
The applicants submit that an assignee appointed
in terms of the APS Act should not have the power to unilaterally
determine its
own fees and that should such conduct be permitted,
those sections stand to be declared invalid and unconstitutional for
the following
reasons:
47.1
It will permit the deprivation of property in
accordance with a
system that is
procedurally unfair and thereby contravening section 25 of the
Constitution;
47.2
The fact that an assignee, being a private
person, is authorised
to determine fees
that the applicants are by law required to pay offends against the
prescripts contained in section 55 of the Constitution;
and
47.3
An assignee determining its own fees is in
contravention of
section 217 of the
Constitution as the Minister would effectively be contracting for
services which are not fair, cost-effective
and transparent.
[48]
The
applicants are in effect challenging the constitutionality of the
provisions of section 3(1A)(b)(ii) of the APS Act. In
essence,
they contend that section 3(1A)(b)(ii) should be interpreted as
meaning that assignees such as the first respondent and
the PPECB may
not unilaterally determine their inspection fee in advance of their
appointment as assignees. The applicants
have complied with
Rule 16A
[39]
and have delivered the notice of their intention to raise the
constitutional issues.
SECTION
25 OF THE CONSTITUTION
[49]
Section 25(1) of the Constitution provides as
follows:
“
No one may be deprived of
property except in terms of law of general application, and no law
may permit arbitrary deprivation of
property.”
[50]
The applicants’ contention is that the
property which is subject to arbitrary deprivation is:
50.1
the products which are “destroyed”
during sampling and
inspections; and
50.2
the money the applicants are liable to pay for
the inspection or
face conviction.
[51]
The
mere fact that the provisions give rise to a deprivation of property
does not render them unconstitutional. Deprivation
of property
is arbitrary if the law does not provide sufficient reason for the
particular deprivation or is procedurally unfair.
[40]
[52]
Counsel
for the applicants argued that the APS Act on several occasions
refers to the “
fees
determined by the assignee
”,
[41]
but no mechanism is created in the APS Act to vet these fees.
The assignee, in this case the first respondent, is left to
his own
devices to determine the fees, without any oversight from the second
and third respondents, and the first respondent stands
to personally
benefit by the determination of fees payable by law. It is
therefore submitted by the applicants that insofar
as the APS Act
provides for the first respondent to determine its own fees, it is
procedurally unfair and constitutes an arbitrary
deprivation of
property in conflict with section 25 of the Constitution.
[53]
Where there is sufficient reason to warrant the
deprivation is a matter to be decided on all the relevant facts of
each particular
case, always bearing in mind that the enquiry is
concerned with ‘arbitrary’ in relation to the deprivation
of property
under section 25.
[54]
Whether
there has been a ‘deprivation’ depends on the extent of
the interference with or limitation of use, enjoyment
or
exploitation.
[42]
The extent of the purported deprivation of the taking of a sample
prescribed by the regulations, is in my view so inconsequential
that
it cannot be seen as a deprivation of property. Only a
representative sample is taken and the entire remaining consignment
remains untouched. The applicants have not made out a case that
the consignment (the applicants’ property) is the subject
of
deprivation or destroyed when sampling is done, and the use and
enjoyment of the applicants’ ‘property’ is
not in
any manner affected.
[55]
In
First
National Bank of South Africa,
[43]
the Constitutional Court held that a deprivation of property is
‘arbitrary’ as contemplated in section 25 of the
Constitution
where the law in question ‘
does
not provide sufficient reason for the particular deprivation in
question or is procedurally unfair.’
[56]
The objective of the APS Act is to provide
consumers with quality standards and concomitantly with products of
consistent quality
not containing prohibited substances for food
safety and to ensure that producers are not offering for sale
products falling within
the prohibitions. The purported
deprivation is so miniscule that it cannot, formalistically or
substantively, be regarded
as deprivation. In my view, the
taking of samples for inspection does not constitute a deprivation of
property.
[57]
As afore-mentioned, a deprivation of property
arbitrarily within the meaning of section 25 of the Constitution
arises if the law
either fails to provide ‘
sufficient
reason’
for the deprivation or is
procedurally unfair. Although I found that the taking of
samples does not constitute a deprivation
of property, I still
consider whether the deprivation is arbitrary.
[58]
The question as to arbitrariness requires a three
interrelated step inquiry, which must determine in turn:
58.1
the nature of the property concerned and the
extent of the
deprivation;
58.2
the nature of the means-ends relationship that is
required in
light of the nature
and extent of the deprivation; and
58.3
whether the relationship between means and ends
accords with
what is appropriate
in the circumstances and whether it
constitutes
sufficient reason for the section 25(1) deprivation.
[44]
[59]
The only way in which a consignment can be tested
to ensure that it complies with the APS Act and the regulations
thereto, is by
taking of a sample and there are no other means of
testing whether a product or consignment falls within the
prohibitions listed
in the relevant regulations. The taking of
samples therefore constitutes sufficient reason for the section 25(1)
‘deprivation’
for the above-mentioned reasons.
[60]
Counsel for the PPECB submitted that in the
present case there is no basis for concluding that the scheme
established under the
APS Act or the fixing and charging of fees by
assignees within that scheme is arbitrary. On the contrary, the
purpose of
the scheme is to provide for necessary functions to be
performed by assignees such as the PPECB. This is done in
exchange
for the payment of fees which cover the costs of rendering
these services. These functions would otherwise have to be
performed
by the State at a cost.
[61]
Therefore, in the present case, insofar as the
APS Act provides for the first respondent to determine its own fees,
it does not
in my view constitute an arbitrary deprivation of
property in conflict with section 25 of the Constitution.
SECTION
55 OF THE CONSTITUTION
[62]
Section 55 of the Constitution provides for the
powers of the National Assembly when exercising its legislative
power, that it must
provide for mechanisms to ensure that all
executive organs of the state are accountable, and the National
Assembly is to maintain
oversight of the exercise of National
Executive Authority including implementation of legislation and any
organ of state.
[63]
The
applicants without actually challenging the constitutional validity
of the APS Act contend in their heads of argument
that “it
is unconstitutional for the Legislature to have delegated to the
first respondent, a private entity, an authority
to determine its own
fees without providing any oversight…”. The
applicants in this regard rely on
Executive
Council of the Western Cape Legislature and Others v President of the
Republic of South Africa and Others,
[45]
whereby a pre-constitutional Act conferred the power on the President
to amend the Act by himself by proclamation and the Act constituted
the delegation of legislative power that went beyond Constitutional
acceptable limits. In my view, this case is distinguishable
in
that the APS Act is not amended and does not constitute an unfettered
discretion merely to determine inspection fees without
any oversight.
[64]
The
legislature in the APS Act has conferred powers on the assignee,
inter
alia
,
the power to determine its own inspection fees.
[46]
In
New
Clicks
,
[47]
the Medicines and Related Substances Act did not require the Minister
and the pricing committee to follow any particular procedure
in
making the regulations and the court held that the relevant
requirements were therefore those prescribed by section 4(1) of
PAJA.
[65]
The
courts do not review provisions of Acts of Parliament on the ground
that they are unreasonable. They will only do so if
they are
satisfied that the legislation is not rationally connected to a
legitimate government purpose.
[48]
The purpose of the APS Act is to manifestly achieve a legitimate
government purpose, i.e. food safety and quality assurance.
The
powers and duties performed by an assignee, i.e. inspections, are
part and parcel of the legitimate government purpose.
The
applicants’ challenge that an assignee cannot unilaterally
determine its inspection fees is not founded on a solid legal
principle. What is required from an assignee is that a proper
procedure prescribed by section 4(1) of PAJA is followed.
[66]
On the PPECB’s interpretation of section
3(1A)(b)(ii) of the APS Act, it is submitted that it does not
infringe section 55
of the Constitution and does not constitute an
unlawful delegation of legislative power.
[67]
In
AAA
Investments (Pty) Ltd v Micro Finance Regulatory Council and
Another
,
[49]
the Constitutional Court held that the Minister of Trade and Industry
had acted lawfully when he delegated legislative powers to
a
regulatory body to regulate micro-lending through the imposition of
extensive rules applicable to micro-lenders. O’Regan
J
held that the delegation of power is important in a modern State, and
that courts should —
“
therefore
be cautious to avoid adopting unduly restrictive rules in this area
which will limit the possibility of effective ordering
of our society
by organisations which may not form part of government”.
[50]
[68]
The PPECB submits that section 3(1A)(b)(ii) goes
no further than providing that an assignee may determine fees for
their services
which must be paid by the persons subject to their
regulatory authority.
[69]
While the fixing of compulsory fees is the
exercise of a (subordinate) legislative power or function, it is one
that is incidental
to the conferral of regulatory authority on the
assignee and it must be done within the framework of the APS Act.
[70]
It is
common cause that the fees determined by the first respondent are not
contained in the regulations to the APS Act, but have
been published
in a General Notice. The Minister has been delegated the power
to make regulations regarding the inspection
fees that have been
determined by the assignee and this has to be done with the
concurrence of the Minister of Finance. The
power given to an
assignee is therefore not an unqualified or an unfettered discretion
and is subject to the control and directions
of the Minister.
The assignee has been delegated powers in terms of the APS Act and
delegation postulates revocable transmission
of subsidiary
authority.
[51]
SECTION
217 OF THE CONSTITUTION
[71]
In terms of section 217(1) of the Constitution,
an organ of state, when it contracts for goods and services, must do
so in accordance
with a system that is fair, transparent, competitive
and cost effective. The applicants contend that section 217 is
infringed
if it is held that assignees are empowered to determine and
vary their inspection fees after they are designated by the Minister.
[72]
The applicants submit that the Minister is, in
terms of the APS Act, able to contract for services contrary to
section 217, because
the fees of the first respondent and the PPECB
are not determined prior to its appointment. Once the first
respondent is
appointed, the second and third respondents exercise no
oversight over the determination of the fees. It is argued that
the
provisions that allow for the first respondent to determine its
fees essentially enable the second and third respondents to abdicate
their duties set out in section 217. The applicants contend
that the second respondent is not concerned with the determination
of
fees because the owners of the products are to foot the bill for
these fees. Accordingly, it is argued that there was
no
compliance with section 217 when the first respondent was appointed
and the APS Act permits the services of the first respondent
to be
procured in violation of section 217 of the Constitution.
[73]
I need to emphasise that the State does not
procure services from assignees. What the State does is assign
regulatory authority
to them, which otherwise the State itself would
exercise. Moreover, the State does not normally pay the
assignee for their
performance of those regulatory functions.
Section 2(3)(b)(iii) of the APS Act provides that unless the Minister
in a particular
case directs otherwise, an assignee shall “
have
no recourse against the State in respect of any expenses incurred in
connection with the exercising of such powers or the performance
of
such duties”.
[74]
In my
view, if inspection fees are to be determined prior to the
appointment of the assignee, the whole process of public
participation
and fair procedure as contemplated in section 4 of PAJA
will be circumvented. What the applicants are arguing under
this
heading is completely contradictory to what it has been
advancing since the first publication of the proposed inspection fees
by
the first respondent. They even obtained an order
restraining the first respondent from publishing its final inspection
fees.
[52]
[75]
It should be remembered that the first step is to
designate or appoint an assignee in terms of the APS Act, which
brings such an
assignee within the definition of section 239 of the
Constitution. The applicants are on the one hand complaining
that the
process is procedurally unfair, but on the other hand are
advancing an argument that the inspection fees should be determined
before
the appointment.
[76]
All
organs of state are entities exercising powers on behalf of the
State, and due to the fact that an assignee first has to be
designated as such, it becomes part and parcel of Government and
furthermore, due to the fact that no specific procedure is prescribed
for the determination of inspection fees, the default provision for
an assignee to determine its inspection fees after its appointment
is
in terms of PAJA.
[53]
[77]
The applicants’ argument that the APS Act
permits the services of an assignee to be procured in violation of
section 217 of
the Constitution is without merit and should fail.
Therefore, the applicants’ declaratory relief is not
appropriate
and must be dismissed.
[78]
As regards costs, the PPECB submits that the
applicants’ opposition to the PPECB’s intervention was
unfounded and unreasonable
and for that reason it should bear the
PPECB’s costs, including costs of two counsel where employed.
At the hearing
of this matter Counsel for the applicants
confirmed that on the 20 March 2020 the applicants tendered the PPECB
costs.
ORDER
[79]
I therefore make the following order:
1.
The first respondent’s determination,
publication and imposition of the inspection fees as set out in the
Non-Governmental
Organization Notice 509 of 2018 published in
Government Gazette No 41870 of 31 August 2018 is reviewed and set
aside;
2.
The second respondent’s decision to accept
or impose or otherwise give effect to the first respondent’s
determination
is reviewed and set aside;
3.
The third respondent’s decision to accept
or impose or otherwise give effect to either or both the first and
second respondents
determination is reviewed and set aside;
4.
The first respondent is directed to consider the
determination of fees afresh;
5.
The applicants’ declaratory relief is
dismissed; and
6.
The first respondent is ordered to pay the costs
of the application, such costs to include the employment of two
counsel.
D
S MOLEFE
JUDGE OF THE HIGH
COURT
GAUTENG DIVISION
OF THE HIGH COURT, PRETORIA
Delivered:
This judgment 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 14 May 2021.
APPEARANCES
Counsel
for the Applicants:
ADV.
MP VAN DER MERWE SC
ADV.
N KOMAR
Instructed
by:
GELDENHUYS
JOURBERT
ATTORNEYS
Counsel
for the Respondents
ADV.
CE PUCKRIN SC
ADV.
HC VAN RENSBURG
Instructed
by:
THE STATE
ATTORNEY,
PRETORIA
J VAN RENSBURG
ATTORNEYS
Counsel
for the
Amicus Curiae
ADV.
L KELLY
Instructed
by:
MOTHLE JOOMA
SABDIA
ATTORNEYS
Date
of Judgment:
14
May 2021
[1]
119 of 1990.
[2]
3 of 2000.
[3]
9 of 1983.
[4]
1 of
1999.
[5]
Published in GN R1979 of Government Gazette 13473 of 23 August 1991
as amended.
[6]
Minister of Agriculture, Forestry and Fisheries.
[7]
Regulations regarding Appeal Procedures – published in GN 1260
of 2019 – GG 4272 of 27 September 2019.
[8]
Regulation 3(1) of the Inspection and Appeal Regulations provides
that ‘(1) An appeal in terms of section 10 of the APS
Act with
regard to a consignment, production lot or carcass as the case may
be of a production of a kind specified in column
1 of Table 2 shall
. . . ’
[9]
See
Koyabe v Minister
of Home Affairs and Others
2010
(4) SA 327
(CC) at paras 41 to 45.
[10]
Founding affidavit, para 7.12.
[11]
Section 1 of the APS Act.
[12]
Section 3(a) of the APS Act.
[13]
Section 2(3)(b)(i) of the APS Act.
[14]
Annexure “JA1”; Vol 1: page 71.
[15]
Section 2(3)(b)(iii) of the APS Act.
[16]
Section 3A(4) of the APS Act.
[17]
Section 3A(4) of the APS Act.
[18]
Section 15(1)(g) of the APS Act.
[19]
Section 11(2)(c) and (d) of the APS Act.
[20]
Answering affidavit, page 529, para 327.
[21]
Answering affidavit, ‘JCM 03-32’; page 452, para 75.
[22]
Annexure ‘JA21’ pages 135-136.
[23]
Answering affidavit, page 465.
[24]
Annexure ‘MN19”, pages 962-965.
[25]
Annexure “MN29”, pages 1114-1157.
[26]
2006 (2) SA 311
(CC) at para 150.
[27]
The requirements of section 4(1) of PAJA call in the first instance,
for a decision to be taken as to whether to hold a public
enquiry,
to follow a notice and comment procedure, to do both or to follow
another appropriate procedure which gives effect to
section 3 of
PAJA.
[28]
D J Brynard “Procedural fairness to the public as an
instrument to enhance public participation in Public Administration”
Administratio Publica Vol 19 No 4 (2011) at 102.
[29]
Du Preez and Another v
Truth and Reconciliation Commission
1997
(3) SA 204 (A).
[30]
Annexure “JA 34”, Vol 2, page 221.
[31]
Answering affidavit, pp 518-519, paras 279-283.
[32]
Answering affidavit, p 59, para 284.
[33]
Answering affidavit p 483, para 143.
[34]
Annexure “JA 10”, p 109-110.
[35]
2007 (1) SA 576
(SCA) at para 31.
[36]
Govender, K 2003 “An assessment of
section 4
of the
Promotion
of Administrative Justice Act 2000
as a means of advancing
participatory democracy in South Africa” SA Public Law Vol 18
No 2: pages 409-435 at para 423.
[37]
E. Raubenheimer
Section 4
of PAJA – “The Constitutional
standard or participation provisions in land use management”
SA Public Law 22,
pages 491-506/2007.
[38]
Answering affidavit, page 483, para 142.
[39]
Uniform Rules of Court.
[40]
First National Bank of
SA Limited t/a Wesbank v Commissioner for the South African Revenue
Services and Another; First National
Bank of SA Limited t/a Wesbank
v Minister of Finance Services
[2002] ZACC 5
;
2002
(4) SA 768
(CC) at para 100.
[41]
Section 3(1A) (b)(ii); 3A(4); 4(2)(a).
[42]
Mkontwana v Nelson
Mandela Metropolitan Municipality and Another; Bissett and Others v
Buffalo City Municipality and Others; Transfer
Rights Action
Campaign and Others v MEC Local Government and Housing, Gauteng and
Others (Kwa-Zulu Natal Law Society & Msunduzi
Municipality as
amici curiae)
2005
(1) SA 530
(CC) at para 32.
[43]
Supra
n
40 at para 100.
[44]
Mkhontwana supra
n 42 at para 44.
[45]
[1995] ZACC 8
;
1995 (4) SA 877
(CC).
[46]
Section 3 (1A)(b)(ii) of the APS Act.
[47]
Supra
n
26 at para 150.
[48]
Merafong Demarcation
Forum and Others v President of the Republic of South Africa and
Others
[2008] ZACC 10
;
2008 (5) SA
171
(CC) at para 260.
[49]
[2006] ZACC 9
;
2007 (1) SA 343
(CC).
[50]
Ibid
at
para 123.
[51]
Executive Council of
the Western Cape Legislature
supra
n 45 at para 173.
[52]
Court order dated 16 January 2008, case no 453/2018.
[53]
New Clicks
supra
n 26.