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[2019] ZAKZPHC 20
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Bosfor CC and Another v NCT Forestry Co-operative Ltd (10870/17) [2019] ZAKZPHC 20 (8 April 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 10870/17
In the matter between:
BOSFOR
CC
FIRST
APPLICANT
FIBRETECH
CC
SECOND
APPLICANT
and
NCT
FORESTRY CO-OPERATIVE LTD
RESPONDENT
ORDER
Having read the papers
and after hearing counsel, the following order is made:
(a)
In
respect of the first point in limine regarding locus standi of the
second applicant, the respondent succeeds and the second applicant’s
application is dismissed with costs.
(b)
On
the second point in limine regarding
lis
alibi pendens
,
the respondent is partially successful and is awarded costs up to and
including the date of the withdrawal of the first application.
(c)
In
respect of the third point in limine relating to condonation, the
respondent succeeds and the first applicant is to pay the
respondent’s costs including costs of two counsel.
(d)
As
regards the fourth point in limine regarding the jurisdiction of this
court to review the matter, the respondent succeeds and
the first
applicant is to pay the respondent’s costs including costs of
two counsel.
JUDGMENT
Date
Delivered: 8 April
2019
MASIPA J
The
facts
[1]
This a review application brought by the applicants. Being a review
of an administrative
decision taken by the respondent, the relief
sought by the applicants is the following:
‘
1. That
the respondent’s decision taken on 1 February 2017 to suspend
the applicants from
trading with the respondent is hereby reviewed
and set side.
2. The
respondent’s decision taken on 26 July 2017 to expel the
applicants as members
of the respondent and to cancel the applicants’
shares, is hereby reviewed and set aside.
3. That
the lateness of the review application of the respondent’s
decision taken
on 1 February 2017 and referred to in prayer 1
supra,
be condoned as far as it may be necessary.
4. That
the costs of this application be paid by the respondent.
5. Further
and/or alternative relief.’
[2]
The applicants trade in timber which they procure from growers in the
Mpumalanga and
KwaZulu-Natal Provinces. The first applicant was a
member of and held shares in the respondent for a period of 16 years.
Ownership
in the first applicant is held by two shareholders who hold
equal shares, being Daniel Johannes Bosman (Bosman) and his wife Dina
Bosman. The second applicant belongs to the two shareholders of the
first applicant who each hold fifty per cent of the member’s
interest. The second applicant is not a member of the respondent. In
terms of the applicants’ procurement procedure, once
they
receive timber from their numerous suppliers, they supply it to the
respondent who will pay them for it, and in turn, the
applicants pay
their supplier/agents.
[3]
The respondent’s objective was to market pine, waste,
eucalyptus and other forestry
products and to render necessary
services to its members in relation to forestry and farming, and was
regulated by its own statute,
being the statute of an undertaking
formed as a primary agricultural co-operative with limited liability
in terms of the provisions
of the Co-Operatives Act 91 of 1981.
[4]
The respondent provided the applicants with a monthly quota of timber
to be delivered
for the next month. The applicants estimated that
together they supplied 66 000 tons of gum and 35 000 tons
of waste
to the respondent annually. In order to facilitate the
transactions, the applicants were provided with delivery notes. When
the
timber was ready for delivery, the grower would inform the
applicants who would go to where the timber was to inspect it in
order
to vet the origin, location and ownership of the timber, take
photographs of the timber and record their location on the GPS
co-ordinates.
The applicants thereafter arranged for the
transportation of the timber. As time went by the applicants used
sub-agents including
Lagalela which employed Bongani Boyzie Zondo
(Zondo) and Thokozani Cele (Cele) as its drivers. The applicants
implemented security
checks and verified their agents.
[5]
After inspecting the timber, the applicants’ supplier or
transporter was issued
with a delivery note(s) and regular checks
were conducted to verify the timber. According to the respondent, due
to the vast number
of members, there are continual challenges
regarding what it calls “a chain of custody”, with some
members and suppliers
being implicated in delivering stolen timber.
As one of the measures taken to prevent this, it issues delivery
notes to members
who are warned to safeguard them. It appears that
unbeknown to the applicants, two of the drivers from Lagalela, Zondo
and Cele,
were involved in the delivery of stolen timber which the
respondent attributes to poor verification procedures.
[6]
On 2 February 2017,
[1]
the
applicants were informed that they were suspended from trading with
the respondent with effect from 6 February 2017 until the
annual
general meeting scheduled for 26 July 2017, at which time the
respondent’s board would recommend that the applicants
be
permanently expelled. Despite there being no provision for
internal remedies in the respondent’s statute, the applicants
appealed against the decision on 3 February 2017. On 9 February 2017,
the applicants were informed that the appeal would be heard
during
March 2017. Consequently, a more detailed letter challenging the
suspension was forwarded to the respondent on 27 February
2017. On 3
March 2017, the applicants received a letter to the effect that the
respondent’s board had resolved to maintain
the suspension.
[7]
Attempts were made thereafter through the applicants’ attorneys
to request an
audience with the respondent’s board but to no
avail. The applicants subsequently sent an objection to the
suspension as
provided for in the respondent’s statute and the
respondent replied saying that the suspension would remain.
[8]
On 26 July 2017, a special resolution was passed by the members of
the respondent
to expel the first applicant and the second applicant
(a non-member) in terms of clause 34(1)(c) of the statute and for the
cancellation
of the first applicant’s member’s interest
in terms of clause 36(3). A letter was issued on 26 July 2017
informing
the applicants of their expulsion. Mention was made in the
letter of an intensive forensic investigation report which the
applicants
contend was never availed to them. The applicants were
only informed that their delivery notes were used to deliver stolen
timber.
[9]
Prior to the incident leading to the suspension and expulsion of the
first applicant
and during 2013, Bosman was advised of certain
security concerns regarding the applicants’ supply system.
Bosman was informed
that the primary agent was responsible for the
supply chain and behaviour of their sub-agents and he was requested
to propose a
sanction which was sufficient to deter agents against
complaisant control during timber sourcing. The sanctions which were
accepted
were for the agent to pay to the respondent three times the
timber value of the load for the first offence, five times the timber
value of the load for the second offence and automatic dissociation
of the agent from the respondent’s supply chain for the
third
offence.
[10]
The applicants contend in this review application that the
respondent’s decision to suspend
and subsequently expel them
was irrational and was not supported by the evidence. Further, that
no reasonable person could have
arrived at such a conclusion that the
applicants were involved in stealing and supplying stolen timber to
the respondent. According
to the respondent, the expulsion of the
first applicant was not because it was guilty of stealing or
supplying stolen timber but
rather that the first applicant through
poor verification procedures, allowed the supply of timber proven to
be stolen. Bosman
admitted in his supplementary founding affidavit
that the sub-agents of the first applicant used its delivery notes to
deliver
23 loads of stolen timber. Notably, the resolution to expel
the first applicant was in respect of 25 loads while the information
provided to the applicants was that it related to only 23 loads which
were treated as a single case.
[11]
According to the applicants, a similar incident took place with a
sub-agent of Khulanathi Forestry
(Pty) Ltd, also a member of the
respondent. However, the resolution to expel was only taken against
the applicants. The reason
provided for this was that the respondent
contends that the applicants were guilty of repeated incidents and
the sanction imposed
was as had been agreed with the applicants in
2013. Despite allegations of delivering stolen timber against other
members of the
respondent, no steps were taken against such other
members.
[12]
It is common cause that a hearing was held prior to the respondent’s
decision to expel
the applicants. What is in dispute is the substance
of that hearing. According to the applicants, the decision was based
on a formal
disciplinary hearing on 7 December 2016. It is undisputed
that the notice for the disciplinary hearing did not inform the
applicants
of their rights to call witnesses. On the day of the
disciplinary hearing the applicants’ representatives, Bosman
and his
wife, were advised that they had not been summoned to a
hearing but that the hearing was intended to hear their side and find
alternative
ways to resolve the issue and mitigate the delivery of
stolen timber. Further, Mr and Mrs Bosman noted upon perusal of
the
record for the hearing that despite the hearing sitting for two
days, the applicants were only invited to the second day of the
proceedings.
[13]
Dissatisfied with these decisions, the applicants lodged an
application for the decisions to
be reviewed and set aside. In
lodging their application, the applicants contended that the review
fell within the ambit of s 7
of the Promotion of Administrative
Justice Act 3 of 2000 (the PAJA) which required that reviews be filed
within 180 days failing
which, there must be an application for
condonation. The applicants contend that the respondent’s
failure to provide them
with the investigation report was a violation
of the preamble to the PAJA which calls for openness and transparency
in public administration
or in the exercise of public power or the
performance of public function.
Points in limine
[14]
The respondent raised four points in limine against the applicants’
case. The points will
be considered individually as they each raise
separate and distinct legal issues which necessitate that they be
dealt with in this
manner.
Locus standi
[15]
It is common cause that the second applicant is not a member of the
respondent. This being
so, the respondent raised a point in
limine that the second applicant lacked locus standi to bring this
case. Mr
Combrink
for the
respondent submitted that at no stage had the second applicant
submitted to the jurisdiction of the respondent. In support
thereof
he relied on
Herbex
(Pty) Ltd v Advertising Standards Authority
[2]
where the court found the decision taken by the respondent against a
non-member to be an infringement of the non-member’s
constitutional rights to freedom of association and expression. This
was despite the applicant (non-member) having for a number
of years,
subjected itself to the procedures and rulings of the respondent. The
facts in
Herbex
are
very similar to the current matter.
[16]
Mr
Snyman
for the applicants correctly conceded that the
second applicant is not a member of the respondent and that it
therefore lacked the
necessary locus standi. He conceded that
the second applicant’s case should be dismissed with costs.
Lis alibi pendens
[17]
The second point in limine of
lis alibi pendens
was raised on
the basis that there had been an earlier, similar application for
review between the same parties. However, after
the respondent took
the point in its court papers for the current application, the
applicants withdrew the earlier application
with the result that this
point fell away. Mr
Combrink
submitted that the point was
justifiably taken and was the reason for the withdrawal of the
initial application. Consequently,
the respondent was entitled to an
order for costs up to and including the date of the withdrawal of the
initial application.
Condonation
[18]
The third point in limine relates to whether there was a need for the
applicants to apply for
condonation for the late filing of the
review. The condonation issue is restricted to the challenge in
respect of the respondent’s
decision to suspend the applicants
on 2 February 2017
[3]
. It is
apparent from the relief sought by the applicants that condonation
was part of the prayer. However, this was sought with
the
understanding and belief held by the applicants at the time, that the
review was in terms of the PAJA which requires review
applications to
be launched within a period of 180 days. Mr
Snyman
conceded
in the replying affidavit that the PAJA was not applicable and that
the review was a common law review in accordance with
the provisions
of rule 53 of the Uniform rules of court. In so far as this was the
case, Mr
Combrink
submitted
that review applications in terms of rule 53 had to be brought within
a reasonable time.
[19]
Mr
Combrink
further submitted that the correct approach in considering whether
there was a delay is to calculate from the date of the decision
sought to be impeached being 2 February 2017 to 22 September 2017
when the application was launched. According to Mr
Combrink
this amounts to a delay of 233 days. He argued that a useful
guideline would be that set out in s 7(1) of the PAJA which sets out
180 days as being the reasonable time within which to launch a review
application (see
Thabo
Mogudi Security Services CC v Randfontein Local Municipality
)
.
[4]
[20]
It is the awareness of the administrative action that sets the clock
ticking (see
Camps
Bay Ratepayers’ and Residents’ Association & another
v Harrison & another
[5]
and
Aurecon
South Africa (Pty) Ltd v City of Cape Town
)
.
[6]
There was no explanation for the delay in bringing the application.
In the absence of such condonation application, the application
ought
to be dismissed with costs, such costs to include costs of two
counsel.
[21]
Mr
Snyman
submitted that since the respondent contends that
the PAJA is not applicable, then the computation of 180 days cannot
apply. This
is because the review is in terms of common law which
requires proceedings to be instituted within a reasonable period. It
was
argued that the review application was brought within a
reasonable time.
[22]
As set out in
Erasmus
Superior Court
Practice
,
[7]
there is no statutory period prescribed for review proceedings in
terms of rule 53. Such a review must however be brought within
a
reasonable time.
[8]
As is the
case in this matter, the issue of a delay in launching a review
application is pre-eminently a point raised by the respondent.
The
applicant will then deal with this in its replying affidavit. The
applicants in their replying affidavit contend that the review
application was launched within a reasonable time and therefore the
point in limine on condonation is irrelevant.
[23]
In
Khumalo
& another v Member of the Executive Council for Education:
KwaZulu-Natal
[9]
the court had opportunity to consider a similar issue which was
before the Labour Court on review in terms of the PAJA. The issues
related to the promotion of two employees under different
circumstances but related to the same position. Despite the existence
of the alternative compulsory dispute resolution mechanisms, the
trade union NUPSAW approached the MEC to investigate these
promotions.
After a report that these were unlawful or irregular, the
MEC filed a review 21 months after receiving the report. The Labour
Court
entertained the matter and found the two promotions to have
been unlawful and ordered amongst other things that they be set
aside.
[24]
In an appeal to the Labour Appeal Court, the order of the Labour
Court was confirmed. Having
failed in a petition to the Supreme Court
of Appeal for special leave, the applicants approached the
Constitutional Court. There
Skweyiya J found firstly that the nature
of the review application by the MEC was not a review of
administrative action under the
PAJA. Further that the MEC was
correct in investigating the matter but had delayed unreasonably in
bringing her application and
there was no explanation for the
unreasonable delay. The court also found that in the absence of a
proper explanation for the delay,
the Labour Court should have dealt
with and determined this issue.
[25]
The court noted that the review fell under s 158(1)
(h)
of the
Labour Relations Act 66 of 1995 (the LRA), which has no prescribed
time limits for bringing reviews under the section, but
that the
review has to be launched within a reasonable time. It held that
courts have the power to refuse a review application
in the face of
an undue delay in initiating the proceedings and that the Labour
Court had misdirected itself in overlooking the
delay. The court held
that the delay was of such a nature that it should non-suit the MEC.
[26]
The condonation issue turns on what a reasonable period is as
envisaged by rule 53(1) of the
Uniform rules of court. This issue was
considered in the Labour Court in respect of reviews in terms of s
158(1)
(g)
of the LRA which provides for reviews in terms of the LRA without
setting any prescribed period as against a review in terms of
s 145
of the LRA which requires a review be brought within six weeks. It
has been accepted that in the context of reviews in terms
of s
158(1)
(g)
and s 158(1)
(h)
,
that these must be launched within a reasonable period and that a
reasonable period is that which is set out in s 145, being the
six
week period (see
Chetty
v Rafee N.O. & others
[10]
and
Qandana
v National Bargaining Council for the Road Freight Industry &
others
)
.
[11]
[27]
In
Lutchman
v Pep Stores & another
[12]
a review application in terms of s 158(1)
(g)
of the
LRA was brought eight months after conciliation on the basis that
there were no time frames set. There the court found that
the
application had to be brought within a reasonable time and where it
was not, an application for condonation had to be filed.
In the
absence of this the application could not stand and had to be
dismissed. In
Associated
Institutions Pension Fund & others v Van Zyl & others
[13]
the court stated that the reasonableness or unreasonableness of a
delay depends on the facts or circumstances of a particular case.
[28]
In
Thabo
Mogudi
[14]
the court referred to s 7(1) of the PAJA as ‘having attempted
to curb the uncertainty of the common law position by placing
a time
limit on the period within which judicial review proceedings must be
instituted’. The court found an application for
review launched
two months after the 180 days had expired to have been unreasonable.
It is common cause that there are no prescribed
time frames within
which review proceedings not covered by the PAJA must be brought. It
has been accepted they must be brought
within a reasonable
period.
[15]
Following from the
Labour Court judgments where a reasonable period was accepted to be
that which was prescribed by its statute
and after considering
Thabo
Mogudi
,
I am satisfied that the period of 180 days set out in s 7(1) of the
PAJA, which is a period in excess of six months, is a reasonable
period for purposes of a review in terms of rule 53(1).
[29]
Where it is alleged that the review was not brought within a
reasonable time, as is the case
in this matter, it is for the court
to decide this and to determine whether the unreasonable delay, if
any, should be condoned.
[16]
Where an objection is raised regarding the delay the applicant can
deal with this in reply. Despite the respondent raising this
issue in
the matter before me, the applicants elected not to address this
issue. As stated above, Mr
Snyman
submitted that since there were no time frames set, it was
unnecessary for the applicants to apply for condonation. I disagree
with him in this regard. Even if I agreed with him, it is clear from
the authorities that it was incumbent on the applicants to
place
relevant facts before the court to show that the review was launched
within a reasonable period. In the absence of this the
court is left
only with the respondent’s version on the issue. On the facts
presented, I find that the applicants’
delay in launching the
review was out of time and that an application for condonation was
necessary. In the absence of such an
application, the application
falls to be dismissed.
Jurisdiction to
review
[30]
The fourth point in limine was that the administrative action sought
to be reviewed was not open
for review. This point relates mainly to
the respondent’s decision to expel the first applicant, since
the issue of the lateness
in filing the review application does not
arise as the impugned decision was taken on 26 July 2017 and the
review launched on 22
September 2017. It was submitted by Mr
Combrink
that the applicants admitted that the respondent is not an organ
of State and that therefore the PAJA did not apply. As regards a
common law review, the application in terms of rule 53(1) is limited
to decisions of an inferior court, or any tribunal, board
or officer
performing judicial, quasi-judicial or administrative functions. The
performance of administrative function relates
to conduct of public
or private entities exercising public powers, performing public
functions or exercising authority in the public
interest.
[31]
Mr
Combrink
submitted
that common law review now applies in a narrow field in relation to
private entities that are required in their domestic
arrangements to
observe common law principles of administrative law. This relates to
voluntary associations and religious organisations.
[17]
He submitted that according to the respondent’s constitution,
it is a private body, wholly owned and whose members share
in the
profits. It was argued that the respondent’s decision sought to
be impeached is not an administrative action or a
decision
susceptible to review.
[32]
In
Pennington
v Friedgood & others
[18]
it was held that the rulings of the chairperson of a general meeting
of a medical scheme registered in terms of the
Medical Schemes Act
131 of 1998
did not constitute administrative action and were
therefore not susceptible to review.
[19]
Relying on
Pennington,
Mr
Combrink
argued that by analogy, the decision of the shareholders of the
respondent did not constitute an administrative action and was
not
susceptible to review. He submitted therefore that the application
stood to be dismissed.
[33]
As stated by Devenish,
Govender
and Hulme in
Administrative
Law and Justice in South Africa
,
[20]
administrative action is defined in
s 1
of the PAJA as relating to a
decision taken or the failure to take a decision by an organ of State
when exercising power in terms
of the Constitution or a provincial
constitution or exercising public power or performing public function
in terms of any legislation.
It also includes natural or juristic
persons exercising public power or performing public function in
terms of an empowering provision.
[21]
[34]
In
Pennington
,
the court relying on
Dawnlaan
Beleggings
(Edms)
Bpk v Johannesburg Stock Exchange & others
[22]
where it was found that just as a meeting of shareholders of a
company was not subject to review of the high court, found that
proceedings of an annual general meeting of a medical scheme was not
subject to review and such did not constitute administrative
action.
[35]
Mr
Combrink
argued that since there was an agreed sanction
between the first applicant and the respondent, which is set out
earlier in this
judgment, and the first applicant acknowledged
impropriety when it signed the acknowledgment of debt in favour of
the respondent,
which acknowledgment was signed freely and
voluntarily and co-signed by witnesses, the respondent applied the
sanction as agreed.
Consequently, the submission that the respondent
did not comply with its statute was flawed since the agreement which
was contractual,
provided severance for a third offence. The
respondent was clearly not exercising any judicial, quasi-judicial or
administrative
action when it imposed the sanction to the applicants.
The processes it followed were purely contractual in nature and can
therefore
not be reviewed in terms of rule 53(1). This court
therefore lacks the required jurisdiction to adjudicate on the
matter.
Order
[36]
In the premises, the following order is made:
(a)
In respect of the first point in limine regarding locus standi of the
second applicant,
the respondent succeeds and the second applicant’s
application is dismissed with costs.
(b)
On
the second point in limine regarding
lis
alibi pendens
,
the respondent is partially successful and is awarded costs up to and
including the date of the withdrawal of the first application.
(c)
In
respect of the third point in limine relating to condonation, the
respondent succeeds and the first applicant is to pay the
respondent’s costs including costs of two counsel.
(d)
As
regards the fourth point in limine regarding the jurisdiction of this
court to review the matter, the respondent succeeds and
the first
applicant is to pay the respondent’s costs including costs of
two counsel.
MASIPA J
APPEARANCES
:
For the Applicants:
Mr C J
Snyman
SC
Instructed by:
Van der Westhuizen Attorneys
For the Respondent:
Mr L E
Combrink
SC
Instructed by:
SKYE Forsyth Attorneys
Matter
heard on:
7 December 2018
Judgment
delivered on:
8 April 2019
[1]
Despite the prayer referring to the
suspension date as 1 February 2017, the letter of suspension is
dated 2 February 2017. The
correct suspension date is therefore 2
February 2017.
[2]
Herbex (Pty) Ltd v Advertising
Standards Authority
2016
(5) SA 557 (GJ).
[3]
The suspension letter referred to both applicants being suspended
despite the second applicant being a non-member of the respondent.
[4]
Thabo Mogudi Security Services CC
v Randfontein Local Municipality
2010
JDR 0525 (GSJ) paras 59-60.
[5]
Camps Bay Ratepayers’ and
Residents’ Association & another v Harrison & another
2011 (4) SA 42
(CC) para 49.
[6]
Aurecon South Africa (Pty) Ltd v
City of Cape Town
2016 (2)
SA 199
(SCA) para 16.
[7]
Erasmus Superior Court Practice
2 ed Vol 2 D1-701.
[8]
Lion Match Co
Ltd v Paper Printing Wood & Allied Workers Union & others
2001 (4) SA 149
(SCA) paras 25-26;
Madikizela-Mandela
v Executors, Estate Late Mandela & others
2018
(4) SA 86
(SCA) paras 9-10.
[9]
Khumalo & another v Member of
the Executive Council for Education: KwaZulu-Natal
2014
(3) BCLR 333
(CC).
[10]
Chetty v Rafee
N.O. & others
(JS755/13) [2016] ZALCJHB 400 (14 October 2016)
para
11.
[11]
Qandana v National Bargaining
Council for the Road Freight Industry & others
(P331/11) [2012] ZALCPE 11 (19
November 2012) para 5.
[12]
Lutchman v Pep
Stores & another
(2004) 25 ILJ 1455
(LC).
[13]
Associated Institutions Pension
Fund & others v Van Zyl & others
2005
(2) SA 302
(SCA) paras 47-48.
[14]
Thabo Mogudi Security Services CC
v Randfontein Local Municipality
2010
JDR 0525 (GSJ) para 57.
[15]
Erasmus above
at
D1-701
and
Chairperson,
Standing Tender Committee & others v JFE Sapela Electronics
(Pty) Ltd
2008 (2) SA 638
(SCA) para 28.
[16]
Erasmus
above
at D1-701.
[17]
GE
Devenish,
K Govender and D Hulme
Administrative
Law and Justice in South Africa
(2001) at 25.
[18]
Pennington v Friedgood &
others
2002 (1) SA 251
(C).
[19]
Pennington
para
38.
[20]
Devenish above
at
24.
[21]
Pennington
para
19.
[22]
Dawnlaan Beleggings
(Edms) Bpk v Johannesburg
Stock Exchange & others
1983
(3) SA 344
(W). See
Pennington
para
38
.