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[2018] ZAKZPHC 30
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Ukhahlamba Poultry Farm (Pty) Ltd v South African Poultry Association (AR446/2017) [2018] ZAKZPHC 30 (3 August 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Reportable
Case
No: AR 446/2017
In
the matter between:
UKHAHLAMBA
POULTRY FARM (PTY) LTD
APPELLANT
and
THE
SOUTH AFRICAN POULTRY ASSOCIATION
RESPONDENT
JUDGMENT
Delivered on: 3 August 2018
Gorven
J (Balton and Bezuidenhout JJ concurring)
[1]
The appellant was the defendant in the court
a
quo
, where the respondent was the plaintiff.
In this judgment the parties shall be referred to as in that court.
The plaintiff is the
levy administrator. It is appointed to collect
levies under a notice (the notice)
[1]
promulgated under the Marketing of Agricultural Products Act (the
Act).
[2]
The notice was promulgated by the Minister of Agriculture, Forestry
and Fisheries pursuant to s 15 of the Act. The defendant
is a
producer as defined in the Act.
[3]
It produces eggs of the species
Gallus
domesticus
. This was proclaimed to be an
agricultural product to which a levy applied. The plaintiff sued the
defendant for payment of the
levy imposed in the notice. It relied
for its claim on two alternative grounds. One was that it had
invoiced the defendant monthly
for the levy, which the defendant was
obliged to pay directly to the plaintiff. The other was that
Huhtamaki South Africa (Pty)
Ltd (HSA) had supplied packaging
material to the defendant. The defendant was thus obliged to pay the
levy to HSA and the plaintiff
had taken cession of the claim of HSA
against the defendant.
[2]
Various defences were raised which need not be
dealt with here. The parties applied to court to separate the issues.
At the hearing,
one issue required determination. The order
concerning that issue was:
‘[O]n an interpretation of the Statutory Measure which is
Government Notice No. R954 dated 9 October 2009 and its various
amendments, in the context of the Act in terms of which was
published, being the
Marketing of Agricultural Products Act, No. 47
of 1996
, a determination be made whether the levy imposed by the Act
and the said notice is to be paid by the Defendant in terms of the
provisions of clause 8
(b)
of the notice, as read with
clause 4 and the definitions contained in the schedule to the
notice.’
Both
parties agreed before us that the separated issue was whether
clause 8
(b)
of
the notice required the defendant to pay the levy to the plaintiff.
It did not deal with whether the defendant was liable to
pay the levy
by virtue of the cession.
[3]
The matter came before D Pillay J. No evidence
was led. It was dealt with by way of argument alone. The court
a
quo
found for the plaintiff on the issue.
This appeal is with her leave.
[4]
The notice imposes a levy on two classes of
agricultural products. The first is day old female parent broiler
chickens sold by breeders
for commercial use. The second is for
packed eggs for commercial use.
[4]
Clause 8 reads as follows:
‘The levy imposed in terms of this notice shall be paid by-
(a)
the breeder of day old female parent broiler chickens at
the sale of such chickens and the breeder will then pay it over to
the
levy administrator; and
(b)
the supplier of packaging material for the packing of eggs
at the sale of such packaging material and the supplier will then pay
it over to the levy administrator on behalf of the egg producers.’
The
court
a quo
found that
clause 8
(b)
rendered
the defendant liable to pay the levy to the plaintiff.
[5]
The law concerning the approach to interpretation
of documents has been variously stated. Wallis JA held:
‘Interpretation is the process of attributing meaning to the
words used in a document, be it legislation, some other statutory
instrument, or contract, having regard to the context provided
by reading the particular provision or provisions in the light
of the
document as a whole and the circumstances attendant upon its coming
into existence. Whatever the nature of the document,
consideration
must be given to the language used in the light of the ordinary rules
of grammar and syntax; the context in which
the provision appears;
the apparent purpose to which it is directed and the material
known to those responsible for its production.
Where more than one
meaning is possible each possibility must be weighed in the light of
all these factors. The process is objective,
not subjective. A
sensible meaning is to be preferred to one that leads to insensible
or unbusinesslike results or undermines the
apparent purpose of the
document. Judges must be alert to, and guard against, the
temptation to substitute what they regard
as reasonable, sensible or
businesslike for the words actually used. To do so in regard to a
statute or statutory instrument is
to cross the divide between
interpretation and legislation; in a contractual context it is to
make a contract for the parties other
than the one they in fact made.
The “inevitable point of departure is the language of the
provision itself”, read in
context and having regard to the
purpose of the provision and the background to the preparation and
production of the document.’
[5]
The
Constitutional Court has held:
‘A fundamental tenet of statutory interpretation is that the
words in a statute must be given their ordinary grammatical
meaning,
unless to do so would result in an absurdity. There are three
important interrelated riders to this general
principle, namely:
(a)
that statutory provisions should always be interpreted
purposively;
(b)
the relevant statutory provision must be properly
contextualised; and
(c)
all statutes must be construed consistently with the
Constitution, that is, where reasonably possible, legislative
provisions
ought to be interpreted to preserve their constitutional
validity. This proviso to the general principle is closely related to
the purposive approach referred to in
(a)
.’
[6]
The
Consitutional Court recently approved what was said in
Sassoon
Confirming and Acceptance Co (Pty) Ltd v Barclays National Bank
Ltd
:
[7]
‘The first step in construing a contract is to determine the
ordinary grammatical meaning of the words used by the parties
(
Jonnes
v AngloAfrican Shipping Co. (1936) Ltd.,
1972
(2) SA 827 (AD)
at p. 834E). Very few words, however,
bear a single meaning, and the “ordinary” meaning of
words appearing in
a contract will necessarily depend upon
the context in which they are used, their interrelation, and the
nature of the transaction
as it appears from the entire contract.’
[8]
[6]
The law reports are replete with formulations of
the approach to interpretation. These, however, do not provide a
mathematical formula
which, when applied, results in an
interpretation akin to a mathematical proof. In essence,
interpretation proceeds in a series
on concentric circles, much like
the ripples produced by dropping a pebble into a still pond of water.
The larger ripples are found
near the centre. The ripples diminish in
size and effect as they spread. In interpreting legislation, a court
is enjoined to promote
the spirit, purport and objects of the Bill of
Rights in our Constitution.
[9]
That is the overarching consideration. Within that framework, the
centre is the words used, followed by the purpose of the provision,
the immediate context within the document, the wider context which
gave rise to the generation of the document and, finally, whether
the
interpretation arrived at results in absurdities and
impracticalities.
[7]
The words of clause 8
(b)
are grammatically clear. The entity which must pay the levy to the
levy administrator is the ‘supplier of packaging material
for
the packing of eggs’. This is reinforced by the clause
providing that ‘the supplier will then pay it over to the
levy
administrator’. There is no provision in the Act or the notice
that egg producers should pay any levy to the levy administrator.
The
only mention in the entire notice of egg producers is at the
conclusion of the clause. This states that ‘the supplier
will
then pay it over to the levy administrator
on
behalf of the egg producers
.’
[10]
It is thus clear that, leaving aside questions of any cession, the
levy administrator may look only to the supplier of packaging
material for payment of the levy. In the present matter, therefore,
the plaintiff cannot look to the defendant for payment. Clause 8
(b)
does not render the defendant liable to make that payment to the
plaintiff.
[8]
Before us, the plaintiff made much of the phrase
highlighted above. It pointed to the distinction between this
provision and that
in clause 8
(a)
concerning broiler chickens. In that clause, the breeder is made
liable to pay to the levy administrator and no mention is made
that
the payment is to be made on behalf of another entity. It submitted
that this means that the entity liable to pay the levy
to the levy
administrator in clause 8
(b)
is the egg producer. The submission was to the effect that the notice
creates a form of statutory agency. The liability to pay
is that of
the egg producer. In making payment, the supplier of packaging
material simply discharges the obligation of the egg
producer. On
this premise, it was submitted that the plaintiff is entitled to look
to the principal rather than to the agent. It
is not necessary to
express myself as to whether a form of agency is created. Nor is it
necessary to find whether the primary liability
lies with the egg
producer. Even if I accept, without finding, that a form of agency is
created, this submission ignores the clear
wording of the clause.
What is clear is that clause 8
(b)
does not require the egg producer to pay the levy to the levy
administrator.
[9]
The interpretation that the supplier of packaging
material is required to pay the levy does no injury to the stated
purpose of the
notice. The notice itself sets out the purpose and
aims.
[11]
Clause 3 of the notice provides that the levies are to be employed in
consumer education, consumer assurance, research and development,
industry liaison, transformation and administration. These are
aligned to the purpose. This purpose is in no way affected by which
party is required to pay the levy. The purpose is aligned to the Bill
of Rights. If payment of the levy is made by either party,
it
promotes the spirit, purport and objects of the Bill of Rights.
[10]
Consideration must now be given to the immediate
context of the words requiring payment by the supplier of packaging
material. This
entity is defined in the notice as:
‘a supplier of packaging material for the packing of commercial
eggs of the species
Gallus domesticus
; excluding those
entities that have been exempted by the levy administrator after
application to the levy administrator as provided
for in the
registration notice . . . ’.
[12]
Apart
from this definition, clause 8
(b)
is the only provision which mentions a supplier of packaging
material. I can conceive of no reason why a supplier of packaging
material can apply for exemption unless such an entity is liable for
payment. Nor could the plaintiff suggest one in argument.
In
contrast, there is no definition in the notice of egg producers. The
Act contains a definition which applies to egg producers
but makes no
provision for any exemption to be obtained. Clause 8
(b)
contains the only mention of egg producers. No clause in the Act or
notice makes egg producers liable to pay the levy to the levy
administrator. The immediate context thus supports the interpretation
that only the supplier of packaging material is liable to
pay the
levy to the levy administrator.
[11]
Consideration must be given to the context which
gave rise to the promulgation of the notice. The immediate context is
provided
by s 15 of the Act. This empowers the Minister to
introduce a levy on an agricultural product and requires the notice
to contain,
inter alia, particulars set out in subsection 4
(c)
which reads:
‘
(c)
the different levies introduced on different
classes of agricultural products and at different points in the
marketing chain between
the producer and consumer for each such class
. . .’.
In
its judgment, the court
a quo
said that ‘[i]t would be of no interest and probably unfair if
not
ultra vires
the
Minister’s powers to impose an obligation to pay on the
packaging industry for the benefit of the poultry industry.’
The statement was said to be made ‘in passing’. Here I
differ. The Act pertinently allows a levy to be imposed ‘at
different points in the marketing chain between the producer and
consumer’.
[13]
This section was not dealt with by the court
a
quo
. During argument, it was agreed by both
parties that a supplier of packaging material forms part of the
marketing chain of packed
eggs. This context is therefore also
consistent with the requirement that a supplier of packaging material
is liable to pay the
levy.
[12]
No reason was suggested why this interpretation
would lead to impracticalities or an unbusinesslike outcome. Nor can
I think of
any. The matter was argued on the pleadings. No evidence
was led which might have highlighted any impracticalities. The
plaintiff’s
own approach militates against any. This is
because, even if one accepts that the supplier of packaging material
makes payment
as agent for the egg producers, it remains a payment
which is made by the supplier. If the supplier can make payment as
agent,
I can think of no practical reason why this cannot be done
without invoking agency.
[13]
In my respectful view, accordingly, the court
a
quo
erred in reaching its conclusion that
clause 8
(b)
of
the notice makes the defendant liable to pay the levy to the
plaintiff. Taking into account the principles of interpretation
mentioned above, the only entity liable to pay the levy to the
plaintiff is a supplier of packaging material as defined in the
notice. Whether the defendant is liable to pay the levy to HSA and,
accordingly, whether the plaintiff can succeed in its claim
based on
the cession in this matter does not arise in this appeal. No
determination is made on that issue.
[14]
In the result, the appeal is upheld with costs
and the order of the court
a quo
is set aside and replaced with the following order:
‘
1. Clause 8
(b)
of Government Notice No. R954 dated 9 October 2009 makes a
supplier of packaging material, and not the defendant, liable to
pay
to the plaintiff the levy relating to packed eggs.
2. The plaintiff is directed to pay the costs of suit
relating to the separated issue.’
_________________
Gorven
J
Date
of Hearing: 30 July 2018
Date of Judgment: 3 August 2018
Appearances
For the Appellant: AJ Troskie SC,
instructed by Cox Yeats Attorneys,
locally
represented by Stowell & Company
For the Respondent: RM Van Rooyen,
instructed by Ramsurjoo & Du Plessis Inc., locally
represented by Venns Attorneys
[1]
‘Establishment of statutory measure and determination of
guideline pricing: Levies relating to broiler chickens and packed
eggs’ GN R954,
GG
32616, 9 October 2009.
[2]
Marketing of Agricultural Products Act 47 of 1996
.
[3]
Section 1
defines ‘producer’ as ‘a person who
produces an agricultural product’.
[4]
Section 4
of the Notice.
[5]
Natal Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) ([2012]
2 All SA 262
;
[2012] ZASCA 13)
para 18
(references omitted). Cited with approval in
Trinity Asset
Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd
2018
(1) SA 94
(CC) para 52.
[6]
Cool Ideas 1186 CC v Hubbard & another
2014 (4) SA 474
(CC)
(2014 (8) BCLR 869
;
[2014] ZACC 16)
para 28 (references
omitted).
[7]
Sassoon Confirming and Acceptance Co (Pty) Ltd v Barclays
National Bank Ltd
1974 (1) SA 641
(A) at 646B.
[8]
Trinity Asset Management (Pty) Ltd v Grindstone Investments 132
(Pty) Ltd
para 53.
[9]
Section 39 of the Constitution of the Republic of South Africa,
1996.
[10]
My emphasis.
[11]
Clause 2 is to the following effect:
‘2 Purpose and aims of the statutory measure and the relation
thereof to objectives of the Act
The statutory levy is required by the poultry industry to fund:
(a)
Empowerment and development of black emerging poultry
producers;
(b)
Consumer education;
(c)
Consumer assurance;
(d)
Research and development; and
(e)
Industry liaison, information and training.
The levy is not detrimental to any of the objectives of the Act and,
in particular, shall not be detrimental to the number of
employment
opportunities or fair labour practice in the poultry industry.
The levy is necessary to finance the above-mentioned functions and
the levy shall be utilised in accordance with the levy application.
The Auditor-General shall also be responsible for auditing the
statutory levies collected.’
[12]
Section 1 of the Notice.
[13]
Section 15(4)
(c)
of the Act.