Minister of Finance and Another v Paper Manufacturers Association of South Africa (567/07) [2008] ZASCA 86; 2008 (6) SA 540 (SCA) ; [2008] 4 All SA 509 (SCA) (2 September 2008)

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[2008] ZASCA 86
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Minister of Finance and Another v Paper Manufacturers Association of South Africa (567/07) [2008] ZASCA 86; 2008 (6) SA 540 (SCA); [2008] 4 All SA 509 (SCA); 70 SATC 267 (2 September 2008)

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THE SUPREME COURT OF
APPEAL
OF SOUTH AFRICA
Case No 567/07
THE MINISTER OF FINANCE
...
First
Appellant
THE PRINTING INDUSTRIES
FEDERATION OF
SOUTH
AFRICA ... Second Appellant
and
PAPER
MANUFACTURERS ASSOCIATION OF
SOUTH
AFRICA ... Respondent
Neutral
citation:
Minister
of Finance v Paper Manufacturers Association
(567/07)
[2008] ZASCA 86
(2 September 2008)
Coram:
HARMS
ADP, STREICHER, MTHIYANE, MAYA JJA, and MHLANTLA AJA
Heard:
18
August 2008
Delivered:
02
September 2008
Corrected:
Summary:
Interdict
preventing Minister from submitting Bill to parliament – legality
of – jurisdiction – Customs and Excise Act 91 of
1964 s 48
ORDER
On
appeal from:
High
Court, Pretoria (Southwood J sitting as court of first instance)
1. The
appeal is upheld with costs, including the costs of two counsel.
2. The
order of the court below is set aside and replaced with an order
dismissing the application with costs, such costs to include
the
costs of two counsel.
JUDGMENT
HARMS ADP (STREICHER,
MTHIYANE, MAYA JJA and MHLANTLA AJA concurring):
[1] The Minister of
Finance gave notice during February 2007 of his intention to submit a
Taxation Laws Amendment Bill, 2007 to Parliament.
The Bill contained
a clause 66(1), which read as follows:
‘
Continuation
of certain amendments of Schedule 1 to 6 and 10 to [the Customs and
Excise] Act 91 of 1964.
(1) Every
amendment or withdrawal of or insertion in Schedules 1 to 6 and 10 to
the Customs and Excise Act 1964, made under section
48 . . . or
75(15) of that Act during the calendar year ending on 31 December
2006 shall not lapse by virtue of section 48(6) . .
. or 75(16) of
that Act.’
[2] In terms of s
48(1)(b), the Minister of Finance may from time to time by notice in
the Gazette amend, i.a., Part 1 of Schedule
1 in so far as it relates
to imported goods in order to give effect to any request by the
Minister of Trade and Industry. Section
75(15) is similar, allowing
the Minister of Finance to amend, i.a., Schedule 4 in the same
manner. The reason for this kind of provision
is explained by R C
Williams in
Lawsa
vol 22(2) para 566:
‘
In
an economy which employs the tariff as a potent instrument to
manipulate economic activity there is a need for frequent adjustment
of the terms of and the rates applied in the tariff. The Customs and
Excise Act accordingly provides that the Minister may from time
to
time by notice in the Government Gazette amend the general notes to
Schedule 1 part 1 or replace the said part 1 and amend part
2 of the
Schedule in so far as it relates to imported goods.’
[3] These amendments have
a limited lifespan and their future is dependent on parliamentary
action. This appears from the provisions
of s 48(6) of the Customs
and Excise Act, which reads:
‘
Any
amendment, withdrawal or insertion made [by the Minister] under this
section in any calendar year shall, unless Parliament otherwise
provides, lapse on the last day of the next calendar year, but
without detracting from the validity of such amendment, withdrawal
or
insertion before it has so lapsed.’
This provision applies
mutatis
mutandis
in respect of any amendment made under the provisions of s 75(15),
hence the reference to s 75(16) in the proposed Bill.
[4] On 21 July 2006,
which is within the period covered by the Bill, the Minister of
Finance had abolished and/or lowered the rates
of duty and rebates on
paper and paperboard products by amending Schedules 1 and 4 by
notices GN R 691 and R 692.
This
means that the relevant changes to the schedules effected by the
ministerial notices would have lapsed by the end of 2007 unless
Parliament had provided otherwise. With this in mind the Minister
sought to introduce the mentioned Bill.
[5]
These
changes to the Schedules had been sought by the Printing Industries
Federation of SA (a respondent in the court below and the
second
appellant on appeal and whom I shall call ‘the Printers’) who
sought a lower import levy on paper and paperboard. The
Paper
Manufacturers Association of SA (the applicant in the court below and
the respondent on appeal to whom I shall refer as ‘the
Manufacturers’), whose members manufacture paper and paperboard
locally, objected because the abolition or lowering of import levies
would have made their prices less competitive.
[6] The Manufacturers
applied to the High Court, Pretoria, for an interim interdict,
prohibiting the Minister from introducing the
Bill to the extent that
it related to these items to Parliament. The High Court obliged.
Subsequently it granted leave to appeal
to this Court realizing that
the interdict, although framed as an interim interdict, was final in
effect and, accordingly, appealable.
Metlika
Trading Ltd v Commissioner for SA Revenue Service
2005 (3) SA 1, [2004] 4 All SA 410
(SCA). What was though not taken into account in the main judgment
is
the rule that if an interdict is final in effect, the applicant has
to prove a clear right – a prima facie right is insufficient
–
and that the balance of convenience does accordingly not arise. We
conclude that the Manufacturers had no right to the relief
sought and
we uphold the appeal for the reasons that follow.
[7] The International
Trade Administration Act 71 of 2002 (the ITA Act) repealed the Board
on Tariffs and Trade Act 107 of 1986 and
replaced the Board on
Tariffs and Trade with the International Trade Administration
Commission (ITAC). The differences between the
two Acts are not of
any relevance to this case. On the contrary, the issues in this case
turn on similar provisions in the two Acts.
The earlier Act was the
subject of the judgment in
Chairman,
Board on Tariffs and Trade v Brenco Inc
2001 (4) SA 511
(SCA). One of the ITA Act’s objects is to provide
for the control of the import and export of goods on a continuous
basis, and
for the amendment of customs duties. For this, ITAC must
investigate and evaluate applications for the amendment of customs
duties
and issue recommendations regarding the rates of duty and
rebate provisions in the Customs and Excise Act. It is then required
to
take appropriate steps to give effect to its recommendations (s
22). A report is provided to the minister responsible for trade and
industry who, if the recommendations are adopted, requests the
Minister of Finance to amend schedules to the Customs and Excise Act
(which is the responsibility of this Ministry) by notice in the
Government Gazette.
[8] The ITAC report is
not only an important link in the administrative and legislative
chain; it is indeed a jurisdictional fact
for the ministerial actions
that follow. It is consequently not surprising that the ITA Act makes
special provision for the review
of any determination, recommendation
or decision of ITAC (s 46). A fatal flaw in the process at the ITAC
stage affects the whole
process (
Brenco
at para
10.)
[9] Prior to publication
of the intention to submit the Bill to Parliament, the Manufacturers
had lodged a review application in the
Pretoria High Court, citing
not only ITAC but also the two ministers and the Printers. This case
is still pending. The Manufacturers
sought the interdict, which is
the subject of this appeal, on the allegation that the adoption of
the Bill would have led to the
demise of its review application. The
whole thrust of the interdict application, consequently, was to
protect the reviewability of
ITAC’s report on which the two
ministers had acted.
[10] The case as
formulated in the founding affidavit was that if the Bill were to be
adopted the court’s review jurisdiction would
have been ousted and
this would have amounted to an infringement of the Manufacturers’
enshrined constitutional right to have a
pending dispute decided in a
fair public hearing and its right to administrative justice. The High
Court accepted this reasoning.
The essence of the argument is that if
the legislation were to be adopted the administrative process would
have been superseded by
a legislative one and since legislation
cannot be reviewed in terms of the definition of ‘administrative
action’ in
s 1
of the
Promotion of Administrative Justice Act 3 of
2000
, the Manufacturers’ right of review would have been lost.
[11] For this conclusion
the Manufacturers relied on the judgment of Spoelstra J in
Kennasystems
South Africa CC v Chairman, Board on Tariffs and Trade
1996 (1) SA 69
(T) at 74D-H where the learned judge dealt with a
similar case. He said:
‘
The
sole effect [of the legislation] is that the amendment [effected by
the Minister of Finance to the Schedule] does not lapse. Parliament
can achieve this in one of two ways: (i) by passing an Act amending
the Schedule and thereby imposing a tax independent of the Minister's
measure or (ii) by passing an Act preventing the lapsing of the
amendment, as it has done in this case. Although the practical effect
may be identical, the submission is that, from an administrative-law
perspective, the two methods attract different consequences.
Method
(i) would probably establish sovereign parliamentary legislation.
Method (ii) is not equivalent to sovereign parliamentary
legislation
because it merely prevents the lapsing of a ministerial measure which
would have come to an end but for its extension
by Parliament. It
remains a ministerial amendment which could be scrutinised by this
Court. The distinction between these two methods
seems more apparent
than real. In both cases Parliament ratifies and adopts the
Minister's amendment. Parliament enacts that it shall
remain in
force. The manner in which Parliament elects to do this, cannot
change the nature of what it has done. A Court of law is
precluded
from excluding from the provisions of an Act of Parliament what the
Legislature has expressly included therein.’
[12] This extract should
be read in context. It was written on the assumption of the existence
of “sovereign parliamentary legislation”.
(The same applies to
the cases that followed this judgment such as
Lead
Laundry Equipment (Pty) Ltd v Minister of Finance
[1996] 3 All SA 516
(N).) I agree with the submission referred to by
Spoelstra J that by passing an Act preventing the lapsing of a
ministerial amendment,
the ‘sovereignty’ of parliament does not
arise ‘because it merely prevents the lapsing of a ministerial
measure which would
have come to an end but for its extension by
Parliament.’ I do, however, disagree that the distinction is more
apparent than real.
(The first postulate referred to by him did not
arise because the Bill was not intended to impose a tax independently
of the ministerial
measure.)
[13] All depends on an
interpretation of the Bill. The Manufacturers’ argument is premised
on the alleged retrospectivity of the
consequent Act: it would have
legalised the Minister’s notice
ex
tunc
,
i.e., from the date of its promulgation. I disagree. There was no
need for legislation to cover the period before end 2007. The
validity or invalidity of the notice until then was independent of
any legislation as appears from the concluding words of s 48(6),
namely that Parliament’s failure to prevent the lapse of the notice
does not detract from the validity of such amendment, withdrawal
or
insertion before it has so lapsed. The object of the Bill was to
extend the changes to the Schedules beyond 1 January 2008 and
preventing their automatic lapsing by virtue of s 48(6). In other
words, the intention of the Bill was to legislate for the future,
beginning on 1 January 2008.
[14] As mentioned, the
report is a jurisdictional fact for the validity of the Minister’s
notice and, consequently, the subsequent
legislation. In other words,
the legislative chain requires a ‘valid’ ITAC report. Therefore,
an ‘invalid report’ invalidates
subsequent legislation
pro tanto
.
The situation is comparable to the failure of Parliament to comply
with a precondition for legislation, which could affect the validity
of the resultant legislation.
King
v Attorneys Fidelity Fund Board of Control
2006
(1) SA 474
, [2006] 1 All SA 458 (SCA);
Doctors
for Life International v Speaker of the National Assembly
[2006] ZACC 11
;
2006
(6) SA 416
(CC).
On
this premise, too, the supposition that the adoption of the Bill
would have brought an end to the review application was misconceived.
[15] In
Regina
v Secretary of State for Health, ex parte US Tobacco International
Inc
[1992]
1 QB 353
the lower court had set aside regulations made under a
statute. They had been laid before Parliament and had come into force
because
Parliament did not by resolution set them aside. The Court of
Appeal, upholding the judge’s decision, said:
‘
Although
the Regulations were subject to annulment by negative resolution of
the House of Commons but were not so annulled, Parliament
would be
concerned only with the objects of the Regulations and would be
unaware of any procedural impropriety. It is therefore to
the courts,
by way of judicial review, that recourse must be had to seek a
remedy.’
(Quoted
in
Secretary
of State for the Foreign & Commonwealth Affairs v Bancoult
[2007] EWCA Civ 498.)
In the present case Parliament would have been
unaware of the alleged procedural defect attached to the Bill and by
parity of reasoning
the adoption of the Bill would not have cured the
defect.
[16] Underlying the
Manufacturers’ argument is the proposition that all legislation
with retrospective effect is unconstitutional
although counsel did
not put it in those terms. Instead he argued that this particular
Bill would have given rise to legislation
that was unconstitutional.
First, it was said, the Minister’s decision to submit the Bill to
Parliament with knowledge of a pending
review application was
irrational. There is no merit in the submission. An allegation of
irrationality was never made on the papers.
In addition, at the time
the Minister took his decision he only knew of an allegation (albeit
under oath) that the ITAC report was
reviewable. There is nothing to
show that he knew that it was in fact bad, something that has not yet
been decided. Furthermore,
if a minister acts in this regard
irrationally, that does not make the legislation unconstitutional. If
anything, it is the content
of legislation that determines whether or
not it is irrational; nothing else.
[17] A related submission
was based on s 77(3) of the Constitution. It provides that all money
Bills must be considered by Parliament
in accordance with the
procedure laid down in s 75, which deals with the parliamentary
procedure applicable to the adoption of ordinary
bills that do not
affect provinces. It adds that ‘an Act of Parliament must provide
for a procedure to amend money Bills before
Parliament’. Because no
such Act has been adopted the argument is that the adoption of any
money Bill would be unconstitutional.
The failure of Parliament to
adopt legislation envisaged in the Constitution is notorious
especially in relation to legislation to
which no time frame was
added. That, it appears to me, cannot mean that if legislation is not
adopted within a reasonable time, and
there is an existing procedure,
everything done under the existing procedure is unconstitutional. See
the transitional provisions
of the Constitution in Schedule 6,
particularly s 21 and s 23. However, intriguing though the question
may be, the Manufacturers
were not entitled to rely on this failure
of Parliament before either the High Court or this Court because the
failure of Parliament
to fulfil a constitutional obligation falls
within the exclusive jurisdiction of the Constitutional Court
(Constitution s 167(4)(e)).
[18] This raises another
question, which was not considered by the High Court or dealt with in
the written submissions, namely the
jurisdiction of the High Court to
prevent the responsible Minister from submitting a Bill to
Parliament. In
Doctors
for Life International v Speaker of the National Assembly
[2006] ZACC 11
;
2006
(6) SA 416
(CC) the Constitutional Court said in paras 68 and 69
(footnotes omitted):
‘
Courts
in other jurisdictions, notably in the Commonwealth jurisdictions,
have confronted this question. Courts have traditionally
resisted
intrusions into the internal procedures of other branches of
government. They have done this out of comity and, in particular,
out
of respect for the principle of separation of powers. But at the same
time they have claimed the right as well as the duty to
intervene in
order to prevent the violation of the Constitution. To reconcile
their judicial role to uphold the Constitution, on
the one hand, and
the need to respect the other branches of government, on the other
hand, courts have developed a “settled practice”
or general rule
of jurisdiction that governs judicial intervention in the legislative
process.
The
basic position appears to be that, as a general matter, where the
flaw in the law-making process will result in the resulting
law being
invalid, courts take the view that the appropriate time to intervene
is after the completion of the legislative process.
The appropriate
remedy is to have the resulting law declared invalid. However, there
are exceptions to this judicially developed
rule or “settled
practice”.
Where
immediate intervention is called for in order to prevent the
violation of the Constitution and the rule of law, courts will
intervene and grant immediate relief. But intervention will occur in
exceptional cases, such as where an aggrieved person cannot
be
afforded substantial relief once the process is completed because the
underlying conduct would have achieved its object.
’
[Emphasis added.]
[19] The
Constitutional Court chose to leave the question open whether the
‘test’ set out in the emphasised sentences applies.
In effect,
the test represents the Constitutional Court’s summation of the
test formulated
by
the Privy Council in
Bahamas
District
of the
Methodist Church in the Caribbean and the Americas v The Hon Vernon J
Symonette MP (Bahamas)
[2000] UKPC 31.
The Privy Council, it should be noted, did not seek
to formulate a rule of universal application but sought to interpret
the constitution
of The Bahamas. The ‘rule’ must also be read in
the context of the allegations in that case. The applicant church,
which was
a body corporate, sought to prevent the introduction of a
Bill on the ground that the adoption of the Bill would have dissolved
the
church and that, accordingly, after adoption of the Bill the
church’s right to attack the constitutionality of the subsequent
Act
would have become nugatory because the church would not have been
able to litigate because it no longer existed. In that context
the
possibility was mooted of someone who
cannot
be afforded substantial relief once the process is completed because
the underlying unconstitutional conduct would have achieved
its
object. But even applying that test, there is nothing exceptional
about this case and, as set out earlier, it is not a case where
the
Manufacturers cannot be afforded substantial relief once the Bill is
enacted.
[
20] I
would with some diffidence like to revisit the foreign cases referred
to by the Constitutional Court in this regard. The Canadian
cases
are of no assistance to the Manufacturers because they were brought
under Canadian legislation permitting, for instance,
the
Lieutenant Governor in Council to refer ‘any matter’ to the
court:
Reference
Re Canada Assistance Plan (BC)
[1991] 2 SCR 525
,
(1991) 83 DLR (4th) 297. The
Canadian provinces have similar legislation, which explains the
judgment in
In re Amendment
of the Constitution of Canada
(1981) 125 DLR (3d) 1 (SCC).
The High Court of
Australia’s judgment in
Cormack
v. Cope
[1974] HCA 28
;
(1974)
131
CLR 432
concerned an alleged constitutional irregularity in the law-making
process and likewise is no authority for the proposition relied
on by
the Manufacturers.
Rediffusion
(Hong Kong) Ltd v. Attorney-General of Hong Kong
[1970] AC 1136
(PC) dealt with the position of a colony, which had no
elected legislative council and had limited legislative authority.
These distinguishing
features, and many others, were stressed by the
Privy Council (at 1153F-1154D). The question it had to judge was
whether a court
could
a
priori
decide whether a
particular Bill fell within the legislative competence of the colony,
and it held in the affirmative. That does
not justify the broad rule
and is also hardly comparable to the present case.
[
21] I
would venture to suggest that the answer is to be sought in the
Constitution itself and not on an interpretation or application
of
foreign constitutions or judgments. The Constitutional Court, as
highest court in constitutional matters, has a circumscribed
jurisdiction. Importantly, only it may pronounce on the
constitutionality of a Bill. Even then its powers are limited: it may
do
so (in the case of parliamentary bills) but only in the
circumstances anticipated in s 79 of the Constitution (s 167(4)(b)).
Section
79 envisages the case where the President has reservations
about the constitutionality of a Bill twice considered by Parliament
and
refers the question to that Court for a decision. Conscious of
the limitations of the
expressio
unius est exclusio alterius
rule, I would nevertheless consider it strange if the Constitutional
Court were to have a greater jurisdiction and otherwise be able
to
prevent the introduction of Bills.
[22] That
leaves the question whether a high court may issue an interdict in
these circumstances. Once again, I believe that the answer
must be
sought in the Constitution, more particularly s 172, which deals with
the powers of other courts in constitutional matters.
Sub-section (2)
states that this Court, a high court or a court of similar status may
make an order concerning the constitutional
validity of ‘an Act of
Parliament, but an order of constitutional invalidity has no force
unless it is confirmed by the Constitutional
Court.’ It furthermore
states that if an order of constitutional invalidity issues, the
court may grant a temporary interdict,
pending a decision of the
Constitutional Court on the validity ‘of that Act’. This language
is quite specific. It does not include
a decision on the
constitutional invalidity of a Bill. The reason appears to me to be
obvious. If a high court could decide on the
constitutionality of a
bill, and issue an interdict, which is final in effect (compare
National
Gambling Board of SA v Premier of KwaZulu-Natal
2002 (1) SA 715
(CC) at para 50), preventing its submission to
Parliament, it short-circuits the constitutional process and
emasculates the requirement
that the Constitutional Court has to
confirm any order of invalidity before it takes effect.
[23] The
appeal has accordingly to succeed and the following order is made:
1. The
appeal is upheld with costs, including the costs of two counsel.
2. The order of the court
below is set aside and replaced with an order dismissing the
application with costs, such costs to include
the costs of two
counsel
_______________________
L T C HARMS
ACTING DEPUTY PRESIDENT
APPEARANCES:
FOR APPELLANT 1) C E
PUCKRIN SC
M B MATLEJOANE
2) A P JOUBERT SC
C J McASLIN
FOR RESPONDENT: E W DUNN
SC
V BRONSTEIN
ATTORNEYS:
FOR
APPELLANT 1) THE STATE ATTORNEY
PRETORIA
THE
STATE ATTORNEY
BLOEMFONTEIN
2) JAN
S DE VILLIERS ATTORNEYS
c/o
COUZYN HERTZOG & HORAK PRETORIA
NAUDES
ATTORNEYS
BLOEMFONTEIN
FOR
RESPONDENT: H MILLER ACKERMANN & BRONSTEIN
c/o
JACOBSEN & LEVY
PRETORIA
ISRAEL
& SACKSTEIN
BLOEMFONTEIN