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[2019] ZAGPPHC 221
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South African Fruit and Vegetable Canners Association and Another v Impumelelo Agribusiness Solutions (Pty) Ltd and Others (82759/2018) [2019] ZAGPPHC 221 (3 June 2019)
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH
AFRICA
GAUTENG DIVISION, PRETORIA
(1)
REPORTABLE:
YES
/NO
(2)
OF
INTEREST TO OTHER JUDGES:
YES
/NO
(3)
REVISED.
CASE NO: 82759/2018
3/6/2019
In
the matter between -
SOUTH AFRICAN FRUIT AND VEGETABLE
CANNERS
ASSOCIATION
First
Applicant
SOUTH
AFRICA FRUIT JUICE ASSOCIATION
Second Applicant
and
IMPUMELELO
AGRIBUSINESS SOLUTIONS (PTY) LTD
First Respondent
EXECUTIVE OFFICER OF THE
AGRICULTURAL
PRODUCT
STANDARD ACT
Second Respondent
MINISTER
OF AGRICULTURE,FORESTRY AND
FISHERIES
Third Respondent
JUDGMENT
STRYDOM
AJ
Introduction
[1]
This
is an application in which the applicants seek interim relief to
restrain and prevent the respondents from conducting inspections
at
the members of the applicants and/or levying any inspection fees,
pending the final determination of the relief sought in terms
of Part
B of the notice of motion.
[2]
At
issue is the inspection fees determined and published by the first
respondent in non-Governmental Notice 509 of 31 August 2018
(Notice
509) in terms of the Agricultural Product Standards Act
[1]
(the Act). Pursuant to the published inspection fees it is the
intention of the first respondent to continue with inspections and
to
levy fees from the members of the applicants.
[3]
The
relief sought in Part B of the application (the review) is premised
on the following:
[3.1] On
a proper interpretation of section 3(1A)(b)(ii), read with sections
2(3), 3(1A) and 3A(4)
of the Act, and sections 25, 55 and 217(1) of
the Constitution
[2]
,
it is unconstitutional for the first respondent to unilaterally
determine, publish and impose inspection fees (the legality
challenge).
[3.2] The
process to determine the fees was procedurally unfair and was done
contrary to the provisions
of the Promotion of Administrative Justice
Act
[3]
(PAJA) (the PAJA challenge).
Points
in limine
[4]
On
behalf of the respondents, two points
in
limine
were raised in their heads of
argument. These points were not pursued with any vigour. A
non-joinder point was taken and also a
point that the applicants did
not exhaust the internal remedies available. It was further argued
that the applicants, on their
own version, still had an interim order
in place, interdicting and restraining the respondents from imposing
inspection fees. It
was argued on behalf of the respondents that if
this was the stance taken by the applicants then they would have had
an alternative
remedy to pursue, i.e. contempt of court proceedings,
and should not have re-applied for similar relief by way of this
interim
application.
[5]
It
became a contentious issue between the parties whether the existing
previous interim interdict, is still operative. I do not
intend to
make a finding in this regard in light of the conclusion I reached in
this matter. It should be noted, however, that
the existing previous
order contained suspensive terms which rendered the fulfilment
thereof a discretionary issue. The parties
are in dispute on whether
the conditions were fulfilled. Consequently, it remained contentious
whether the interim order was discharged.
[6]
Paragraph
4.2 of the order reads as follows:
"4.
That the aforesaid interim interdict shall endure until the earlier
of either:
…
4.2
the date on which the first respondent's final inspection fees
become known to the applicant,
whether the first respondent's final
inspection fees demonstrate that it has adhered to the principle of
just administrative
action and that it has sufficiently consulted
with the relevant stakeholders, being the first and second
applicants;"
[7]
Clearly,
this clause creates uncertainty as it leaves a discretion to be
exercised by the applicants and/or the respondents when
and to what
extent, adherence to the principle of just administrative action,
took place. As stated previously, the respondents
were of the view
that the interim interdict was discharged because they determined the
final inspection fees following proper procedure
whilst the view of
the applicants is to the contrary.
[8]
Considering
this uncertainty, I am of the view that this court should consider
the application for interim relief on the papers
currently before
this court.
[9]
The
further issue that was raised relates to the internal remedies
inter
alia,
a right to appeal, against the
decision of the Executive Officer or an assignee. Section 10(1) of
the Act 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. The question arose during argument whether this
right to appeal also pertained
to the determination of inspection
fees by an assignee. On behalf of the applicants it was argued that
it does not, as section
10(2) of the Act refers to the lodging of an
appeal in the prescribed manner and if the prescribed form is
considered, it does
not cater for an appeal against the determination
of inspection fees. In my view this is an issue which the parties can
pursue
during the review application stage, if this issue remains
contentious.
The interdictory relief
[10] An
applicant in interdict proceedings
pendente lite
has to
satisfy the court that he has a reasonable prospect of success in the
main action although there is no definite preponderance
of
possibilities in his favour. Put differently, an applicant must show
that it has a
prima facie
case although this case may be open
to some doubt. The applicants had to show that they have a prospect
of success in the review
proceedings.
[11]
Should the applicants be able to show
such a
prima facie
right,
it will then have to meet the other requirements for interim relief.
This include that the applicants have to show that they
have a
well-founded apprehension of irreparable harm if the interim
interdict is not granted. The court, in considering whether
an
interim interdict should be granted, will look at the balance of
convenience and whether there are other suitable remedies available
to the applicants.
Legislative framework
[12]
The applicants' members produce canned
fruits and vegetables, fruit juice and drinks, jams, jellies and
marmalades, canned pasta,
canned mushrooms, mayonnaise and salad
dressing. These products are regulated by the Act. The preamble to
the Act sets out that
the purpose of the Act is to provide for
control over the sale and export of certain agricultural products and
control over the
sale of certain imported and related products.
According to the regulations promulgated in terms of the Act these
inspections would
further be conducted to determine microbiological
spoilage, quality, quantity and grading and also to ascertain what
exact ingredients
are contained in these products. This will be
established by conducting laboratory tests.
[13]
For purposes of the application of the
Act, the Minister may, with regard to a particular product, designate
any person, undertaking,
etc.
which
has particular knowledge ,
in
respect of the product concerned as an assignee in respect of that
product. The Act provides that an assignee must determine
the fees
payable to it by the parties to be inspected.
[14]
Ultimately, the purpose of the Act is to
protect consumers and to provide consumers with products of
consistent quality.
[15]
The first respondent was appointed to
conduct these inspections and to determine their own fees. At some
stage when it became known
to the applicants that the first
respondent is about to publish the inspection fees, the applicants,
being unhappy about the process
which was followed, approached the
court for interim relief preventing the first respondent, together
with the second and third
respondents, to continue with such
publication of the fees. An interim interdict was obtained on an
unopposed basis. A draft order
was made an Order of Court by Jordaan,
J on 16 January 2018.
[16]
Thereafter, correspondence followed
between the applicants and the first respondent which culminated in
the first respondent publishing
a final inspection fees on 30 August
2018. I do not intend to refer to all correspondence and
communications between the parties
but for purposes of this judgment,
I refer to the following engagements or events:
[16.1] On 26 January 2018,
the applicants were informed that the first respondent is in the
process of finalising a contract
with an independent expert
consultant to re-look at its business plan and determine inspection
fees based on sound research. The
applicants were informed that a
model of constructive workshops with the applicants' members will be
followed in the process of
developing a new business plan and
determining inspection fees. Thereafter a workshop would be held to
present a final business
plan and fees which would have been
considered after the stakeholders' input.
[16.2] It was further stated
as follows:
''After the stakeholder
engagement, we will then be publishing our final fees and commence
services thereafter."
[16.3] On 2 February 2018,
the industry was informed that the first respondent appointed OABS
Development Agricultural Consultants
(OABS) to assist the first
respondent to determine its business plan and its inspection fees.
[16.4] On 6 February 2018,
OABS held an introductory meeting with the applicants.
[16.5] On 15 February 2018,
OABS informed representatives of the applicants that the idea was
never to conduct a public participation
/ consultation process with
stakeholders but rather that the process was aimed to engage with
stakeholders to obtain their views,
identify challenges and gather
information in order to formulate a proposal / model.
[16.6] In a letter dated 16
February 2018, it was again made clear to stakeholders that OABS will
not engage in a broad stakeholder
engagement. This will be done by
the first respondent itself.
[16.7] On 15 June 2018,
non-Governmental Notice 339 of 2018 was published in the Government
Gazette. In this notice proposed
inspection fees were published and
comments were invited. Such comments should have reached the first
respondent by not later than
30 (thirty) days from the date of
publication of the notice.
[16.8] On 6 July 2018, a
draft report containing a business plan to determine inspection fees
for production standards was
made available to the applicants and
other stakeholders. That was approximately nine days before the
deadline for comments pursuant
to the notice 339, communicating the
proposed inspection fees.
[16.9] On 10 July 2018, the
applicants wrote to the first respondent enquiring what the relevance
of the draft report was
and whether it should be considered by the
applicants. It was specifically asked whether the applicants need to
consider and comment
on this report. Further, it was pointed out that
if the draft report needs consideration and comments it should be
noted that it
was only received on 6 July 2018, and that it would be
impossible to comment thereon before the 15 July 2018 deadline. It
was stated
that it would take at least 30 days to submit comments
thereon from the date that the applicant became aware of it.
[16.10] On 11 July 2018, the
first respondent responded to the enquiry from the applicants by
stating that the draft report
is not to be commented upon since it
merely provides a background and context to the published proposed
inspection fees. It was
reiterated that the deadline for comments on
the proposed inspection fees still remains the date which was
contained in the notice
being 15 July 2018.
[16.11] On 12 July 2018, the
applicants wrote to the first respondent. In this letter it was
stated that the first respondent
needs to provide additional
information such as, but not limited to, the business and
implementation plan which informs the inspection
fees (as it must be
charged on a cost recovery basis), the scope of the mandate of the
first respondent, technical capabilities,
method and standard
operating procedures to be followed in the inspections. It was stated
that the applicants could only meaningfully
comment on the proposed
inspection fees if they know the extent of the inspections, the cost
involved and standard procedures to
be followed. It was stated that
the first respondent has not consulted the applicants on the newly
proposed inspection fees. It
was noted that only a draft report was
received from OABS and that the first respondent refused to provide
an extension for the
applicants to consider same. Various issues were
raised on how the first respondent was able to determine the proposed
inspection
fees. The applicants reiterated that they did not receive
sufficient information to provide meaningful comments on the proposed
fees. A further request was then made to obtain the requested
information.
[16.12] On 25 July 2018, a
date after the expiry of the deadline for comments, the first
respondent replied to the applicants'
letter dated 12 July 2018,
wherein it was stated that the applicants should have commented on
the proposed fees. It was stated
that the first respondent had
consulted the applicants before entering into the contract with OABS
and that comments should not
be made on the draft business report but
on the notice itself. In paragraph 10 of this letter it was
inter
alia
stated as follows:
"In that context, it is worth
noting that, SAFJA and SAFVCA did not request additional information
to be provided to them nor
did they deem it necessary to request an
extension of the published notice. However, lmpumelelo undertakes to
have additional consultative
meeting (sic) the industry prior to the
publication of the final fees."
[16.13] On 27 July 2018, a
stakeholders meeting was held between the first respondent, industry
and the Department of Agriculture,
Forestry and Fisheries. In the
minutes of this meeting the purpose thereof was described as follows:
"The main purpose of the meeting was
intended for an lmpumelelo Agribusiness Solutions to present its
business plan and the
model used to determine the proposed inspection
fees for local processed products."
[16.14] On 6 August 2018,
the applicants responded to the first respondent's letter dated 24
July 2018. It was pointed out
that the first defendant incorrectly
alleged that the applicants did not request additional information
and an extension of the
deadline. It was further pointed out that
during the stakeholders meeting the applicants were informed that
further stakeholder
engagement would take place before the final fees
would be published. The applicants requested for more detail in this
regard.
[16.15] On 13 August 2018, a
stakeholders meeting was in fact held but the applicants were not
invited. At the beginning of
the meeting this was realised and the
applicants were informed about the meeting after which their
representatives did arrive.
[16.16] On 22 August 2018,
OABS filed an addendum to the first respondent's business plan. In
this report reference is made
to the various workshops held with
certain sections of industry.
[16.17] On 30 August 2018,
the first respondent wrote to the applicants, indicating that Mr
Billy Makhafola of the Department
of Agriculture, Forestry and
Fisheries (DAFF) was willing to meet the applicants to discuss the
principles and concerns around
the regulations. He indicated he will
make himself available to meet industry stakeholders on any chosen
date, time and venue.
[16.18] On 31 August 2018,
the inspection fees were published by way of Notice 519 of 2018.
[17]
Considering
what transpired as set out above, it was the applicants' case that
there was never proper consultation with them. The
applicants were
never placed in a position to meaningfully comment on the proposed
fees. With only approximately nine days left
to comment, the
applicants received a draft business model and they were informed not
to comment on this model but rather on the
published fees. When an
extension was sought to consider the draft report and refer it back
to the members of the applicants, such
extension was not granted.
[18]
The
question may arise to what extent the principle of just
administrative action would require consultation with stakeholders
before comments are made. Each case must be considered on its own
facts. In
casu,
I
am of the view that a mere request for comment on the proposed fees
would not suffice. The fees to be charged must be determined
by the
first respondent to cover its costs. Unless the applicants knew what
the cost structure of the first respondent would be
and how it is
arrived at it would be very difficult, if not impossible, for the
applicants to comment on the proposed fees. To
this extend it differs
from a situation where a fee is proposed by a government agency that
merely should be reasonable.
[19]
In
Minister of Health and Another NO v
New Clicks South Africa (Pty) Ltd and Others (Treatment Action
Campaign and Another as amici
curiae)
[4]
Sachs J wrote:
"[630]... The forms of
facilitating an appropriate degree of participation in the law-making
process are indeed capable of
infinite variation. What matters is
that at the end of the day
a
reasonable
opportunity is offered to members of the public and all interested
parties to know about the issues and to have an
adequate
say. What amounts to a reasonable opportunity will depend on the
circumstances of each case. Prudence allied to principle
indicates
that this is
an
area where the law should develop in a fact-sensitive and incremental
way."
[20]
In
South
African Veterinary Association v Speaker of the National Assembly and
Others
[5]
Goliath, AJ stated:
"[32]...From the above it is obvious that
the standard by which public participation must be measured is
reasonableness. The
content of this standard will vary from case to
case. However, a complete failure to take any steps to involve the
public in a
material amendment to a Bill cannot be reasonable by any
measure."
[21]
Accordingly,
I am of the view that the applicants have established a
prima
facie
right on the basis that the
publication of the final inspection fees was preceded by an unfair
administrative process. After the
publication of the concept business
plan drafted by OABS, the applicants would have required more time to
engage with the first
respondent enabling them to meaningfully
comment on the proposed inspection fees.
[22]
This
prima facie
right
in my view is open to some doubt considering that at least a
reasonable time was afforded to comment on the inspection fees.
This
is also not a matter where the applicants did not know about the
imminent determination of the inspection fees. A long process
of
engagement was followed since 2017, and the applicants were not left
totally in the dark and could, to some extent, have done
their own
investigations. Some comments were received from the applicants after
a previous non-governmental notice 251 of 1917.
This interaction came
to naught as every time the first respondent requested comments the
applicants replied by asking for a business
plan and for standard
operating procedures and documents which the first respondent did not
have in place, as it was a start-up
situation as far as the
determination of inspection fees were concerned on the conducting of
such inspections.
The legality challenge
[23]
In
light of this court finding that the applicants have established a
prima facie
right
for purposes of an interim interdict I do not intend to make a
finding relating to the constitutional challenge. I will, however,
touch on these issues as it may have some bearing on the strength of
the applicants'
prima facie
right
which in turn may have a bearing on the balance of convenience.
[24]
The
applicants submitted that an assignee appointed in terms of the Act
should not have the power to unilaterally determine its
own fees and
that as far as such conduct is permitted those sections authorizing
the first respondent to do so, stand to be declared
invalid and
unconstitutional for the following reasons:
[24.1] it will permit the
deprivation of property in accordance with a system that is
procedurally unfair thereby contravening
section 25 of the
Constitution;
[24.2] 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
[24.3] should an assignee be
able to determine its own fees it would sidestep the provisions of
section 217 of the Constitution
as the third respondent would
effectively be contracting for services not in a fair, cost-effective
and transparent manner.
[25]
As far as the section 25(1) of the
Constitution
[6]
is concerned I am not convinced that the applicants have established
a strong case. Without deciding any specific issue, I am of
the view
that it cannot be said that the levying of inspection fees amounts to
an arbitrary deprivation of property. Moreover,
even if it is to be
found that the levying of inspection fees would amount to a
deprivation of property this is the kind of situation
which would be
covered by the limitation of rights clause in the Constitution on the
basis that the limitation is reasonable and
justifiable in an open
and democratic society.
[26]
The section 55 of the Constitution
challenge which is based on a separation of powers argument is also
not convincing. The applicants'
case is that the power to determine
inspection fees should not have been delegated to the first
respondent. Delegated subordinate
regulatory authority was not only
constitutionally permissible, but was necessary for effective
governance. Although this authority
was delegated to a private person
it was on the basis that the first respondent may only recover costs.
This would mean that it
may not profit from the exercising of its
delegated functions. In terms of section 15(1)(g) of the Act the
Minister may make regulations
regarding inspection fees that have
been determined by an assignee. Moreover, the third respondent can
appoint an assignee and
can then by implication also revoke such an
appointment. Accordingly, some form of oversite remains in place.
[27]
The question remains to what extent the
oversight remains in place. The act provides for an appeal procedure
but the availability
of such procedure has been questioned by the
applicants. There will always be oversight in a situation where a
delegated power
can be revoked which is the case in
casu.
Accordingly, I am of the view that
as far as this challenge is concerned, the applicants did not make
out a strong case.
[28]
As far as the section 217 challenge is
concerned, the applicants argued that the third respondent, is in
terms of the Act, able
to contract for services contrary to section
217 as the fees of the first respondent is not determined prior to
its appointment
but only determined once the first respondent is
appointed, the second and third respondent exercise no oversight over
the determination
of the fees. According to the applicants' argument,
the provisions that allow for the first respondent to determine its'
fees essentially
enables the second and third respondents to abdicate
their duties set out in section 217.
[29]
Section 217 of the Constitution deals
with a procurement which should take place in accordance with a
system which is fair, equitable,
transparent, competitive and cost
effective. The reference to "cost-effective" would mean
that it should be cost
effective for the organ of state
appointing the service provider. In this instance the inspection fees
are not to be paid by government.
These fees are to be paid by the
producers and the issue of cost-effectiveness cannot be applicable to
the designation of an assignee.
I am of the view that it cannot be
found that the appointment of the first respondent was not fair,
equitable, transparent and
competitive. First respondent can only
recover its own expenses through the levying of fees.
[30]
As already stated, it is not the court's
intention to finally decide these issues but I had to consider the
veracity of these challenges
as it may have an effect on a
consideration where the balance of convenience lies when I decide
whether an interim interdict should
be granted. In conclusion, I am
of the view that a strong case has not been established pertaining to
this legality challenge.
Irreparable
harm and balance of convenience
[31]
On behalf of the applicants, it was
argued that the applicants will suffer irreparable harm should the
interim interdict not be
granted. It was stated that the first
respondent can inspect any quantity of products. This would destroy
the products and this
would occasion losses. Further, the applicants
will have to pay the inspection fees. It was stated that the
applicants' members
stand to suffer "severe economic losses"
as a result of the payment of the inspection fees as well as in
respect of the
destroyed products due to inspections. According to
the applicants, this will have a knock-on effect to the members'
employees,
the farmers producing the products and ultimately the
consumer, who for some of these products are the most vulnerable in
our society.
[32]
From the papers, it is evident that the
quantities of products produced by the members of the applicants are
enormous. If samples
are to be taken for inspection purposes this can
never lead to "severe economic losses". The same would
apply to the
inspection fees to be paid. The applicants have not set
out in their papers the turnover and profit of its members and what
the
exact impact the inspection fees will have on their profit
margins. Moreover, on the basis of confidentiality, the members of
the
applicants have elected not to place any evidence before the
court pertaining to their turnover and profit margins of the
different
members and/or the individual products.
[33] I am
of the view that the applicants failed to prove that their members
will suffer irreparable harm
should the interim interdict not be
granted. I am not finding that there will not be financial losses,
but in my view the extent
of such losses is minuscule in relation to
the total turnover and unknown profit margins of the members of the
applicants.
[34] The
third requisite for an interim interdict is the balance of
convenience in favour of granting the
interim relief or not. The
court must weigh the prejudice to the applicants if the interim
interdict is refused against the prejudice
to the respondents if it
is granted. The stronger the prospects of success, the less the need
for the balance of convenience to
favour the applicants; the weaker
the prospects of success, the greater the need for balance of
convenience to favour the applicants.
[35] This
court has found that the applicants have established a
prima
facie
case
although it may be open to some doubt. The Act is aimed at serving a
public interest for the control over the sale and export
of certain
agricultural products. If the regulations promulgated in terms of the
Act is considered, the inspectors will look for
quality standards
which should be maintained, micro biological spoilage, quantity and
many other aspects to ensure that the consumer
gets what he or she
pays for. To, at this stage, prohibit further inspections (which I
was informed from the bar has now to a limited
degree been
implemented) will undermine the legitimate legislative purpose. This
public interest purpose should be weighed against
the applicants
paying inspection fees as was determined, at least until the review
application is finalised. This will be for a
limited duration.
Considering that it was always the stance on behalf of the applicants
that they were not against the conducting
of inspections and the
levying of fees but rather only against the determination thereof, it
is my view that the balance of convenience
does not favour the
granting of interim relief. The true dispute between the parties
relates to the amount of the inspection fees
which may very well have
been correctly calculated by the first respondent.
[36]
Accordingly, I am of the view that the application for interim relief
should be dismissed.
Declaratory relief
[37]
On behalf of the applicants, Mr van der
Merwe asked the court to, under the rubric of alternative relief
declare that the respondents
are in contempt of the previous court
interdict prohibiting them from publishing and imposing inspection
fees. Such a declaration
can only be ordered if a court is satisfied
that the factual basis upon which it is premised has been fully
canvassed in the papers
before court. The focus of the respondent was
not to place facts before the court to oppose such an order. It has
always been the
case of the respondents that they have complied with
the order in that they adhered to the principles of just
administrative action
and that the first respondent has sufficiently
consulted with the relevant stakeholders. This is denied by the
applicants. Although
the court found that the applicants made out a
prima facie
case
that the requirements of a fair administrative process was not met,
this does not mean that such a finding can be made on a
balance of
probabilities. Accordingly, the court is of the view that the
applicants would not be entitled to a declaratory order
as requested.
Costs
[38]
There were appearances on behalf of the
three respondents. Mr Puckrin acted as senior counsel for the
respondents. On behalf of
the first respondent, he appeared with a
junior counsel and on behalf of the second and third respondents, he
appeared with another
counsel. I am of the view that the costs order
should follow the result. Accordingly I make the following order:
[38.1] The
application for interim relief is dismissed with costs, including the
costs of one senior counsel and
two juniors.
R.
STRYDOM
ACTING JUDGE OF THE HIGH COURT
GAUTENG DIVISION, PRETORIA
Counsel
for applicants:
Adv M. P. Van der Merwe SC
Counsel
for the 1
st
respondent:
Adv C. Puckrin SC
Adv H. C. Janse van Rensburg
Counsel
for the 2
nd
& 3
rd
respondents:
Adv C. Puckrin SC
Adv E. Langa
Date
heard:
16 MAY 2019
Date
delivered:
3 JUNE 2019
[1]
Act 119 of 1990.
[2]
The Constitution of South Africa, 1996.
[3]
Act 3 of 2000.
[4]
2006 (2) SA 311
(CC) at para [630].
[5]
2019 (3) SA 62
(CC) at para [32].
[6]
" No-one may be deprived of property except in terms of law
of general application, and no law may permit arbitrary deprivation
of property.
"