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[2012] ZACAC 7
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Computicket (Pty) Ltd v Competition Commission of South Africa (118/CAC/APR12) [2012] ZACAC 7; [2013] 1 CPLR 26 (CAC) (29 October 2012)
IN
THE COMPETITION APPEAL COURT
OF
SOUTH AFRICA
CAC CASE NO.:
118/CAC/APR12
[CT CASE NO: 20/CR/APR10]
In the matter between:
COMPUTICKET (PTY)
LIMITED
...................................................
Appellant
and
THE COMPETITION
COMMISSION OF SOUTH AFRICA
.......
Respondent
JUDGMENT
29
October 2012
_________________________________________________________
SWAIN A J A
[1] The appellant
unsuccessfully sought an order before the Competition Tribunal (the
Tribunal) directing the respondent to make
discovery of and to
produce to the appellant copies of
“
[1.1] all
materials including the report(s) and the recommendation(s) to the
Competition Commissioner and/or the Executive Committee
of the
Competition Commission based on which the decision to refer the
complaints of alleged abuses of dominance against the applicant
under
Case No. 20/CR/APR/10 was taken and
[1.2] any further documentation
related to the decision itself”.
[2] The order sought was
interlocutory to an application brought by the applicant, referred to
by the applicant as
“the dismissal application”
,
in which the applicant sought an order,
inter
alia
, declaring the referral invalid,
alternatively, reviewing and setting aside the
“purported
referral”.
Is the decision
appealable?
[3] The first challenge
raised by the respondent was that the refusal by the Tribunal of the
“discovery application”
was not
appealable, primarily on the ground that an appeal against that order
should not be heard at this stage of the proceedings,
unless the
balance of convenience favoured a piecemeal consideration of the
case, and that would lead to a
“just and reasonably
prompt resolution of the real issue between the parties”.
Zweni v Minister of
Law and Order
1993 (1) SA 523
(A)
at 531 D – E
It was submitted that
this was so, even if the order was not subject to reconsideration by
the Tribunal.
[4] This Court has
jurisdiction to hear an appeal against a decision which is
interlocutory in nature, provided that the appeal
is made in terms of
the Rules of this Court.
Sections 37
(1) (b)
(ii) and
38
(2A) (a) of the
Competition Act
No. 89 of 1998
[5] The documentation,
which the appellant seeks to compel discovery and production by the
respondent, forms part of the basis for
the applicant’s
contention in the dismissal application, that the respondent did not
validly refer the complaint to the Tribunal
because the information
upon which the respondent relied, did not justify a determination by
the respondent, that a prohibitive
practice on the part of the
appellant had been established, in terms of Section 50 (2) (a) of the
Competition Act No. 89 of 1998
(the Act).
[6] The challenge raised
by the appellant is that the Tribunal, absent a valid referral of the
complaint to it by the respondent,
does not have jurisdiction to
entertain the referral. Consequently, a determination of whether the
referral is valid, involves
at the same time a determination of the
jurisdiction of the Tribunal. For the reasons and on the grounds set
out in this Judgment,
the discovery and production of certain of the
documents by the respondent, as sought by the appellant, is necessary
to enable
the appellant to properly evaluate and challenge the
validity of the determination made by the respondent, to refer the
complaints
to the Tribunal. If the refusal of the relief by the
Tribunal, sought by the appellant, was not capable of being remedied
by the
current appeal, the appellant may be irretrievably prejudiced
because such refusal will not be revisited by the Tribunal, when
hearing the dismissal application. In addition, I agree with the
appellant’s contention that, in any subsequent appeal by
the
appellant, in the event that the Tribunal refuses the dismissal
application, the appellant will not be able to challenge the
refusal
by the Tribunal to order discovery and production of the documents
sought.
Shepstone &
Wylie v Geyser N.O.
1998 (3) SA 1036
(SCA)
This conclusion does not
involve a piecemeal consideration of the issue of whether the
referral by the respondent was valid or not.
It simply seeks to
remedy irretrievable prejudice that may be suffered by the appellant,
if the refusal by the Tribunal of the
discovery application, is
permitted to stand.
[7] The order made by the
Tribunal, refusing the discovery application, is accordingly
susceptible to an appeal to this Court and
I therefore turn to
consider the merits of the appeal.
The legal basis upon
which the decision to refer the complaint by the respondent may be
reviewed.
[8] At the outset, it
seems to me that some of the opposing arguments advanced before this
Court by the parties, found their source
in the fact that the main
application was referred to as the
“dismissal
application”
, in respect of which further and
better discovery was sought by the appellant from the respondent.
Greater clarity is brought to
the dispute if the main application is
correctly classified as an application to review the determination of
the respondent, to
refer the complaint to the Tribunal, in which the
respondent is requested to produce
“the record of the
proceedings”,
namely the material that was before
the decision maker, when the decision was made.
[9] The distinction is
not one simply of form. It is one of substance and avoids the
unnecessary complications which arise in the
context of discovery
being sought in application proceedings and the entitlement of the
appellant to obtain further and better
discovery in this context. In
addition such a classification more clearly focuses the enquiry into
the nature of the discretion
exercised by the respondent, in
referring a complaint to the Tribunal, as well as the enquiry into
the grounds upon which the exercise
of this discretion is reviewable.
[10] On the facts of this
case, the distinction is not an artificial one, because, as pointed
out above, the appellant in the alternative,
seeks an order reviewing
and setting aside the
“purported referral”.
[11] The Tribunal has the
power in terms of Section 27 (1) (c) of the Act to review decisions
of the respondent. It is clear that
the decision of the respondent to
refer the complaint to the Tribunal, did not constitute
administrative action and was not reviewable
under the Promotion of
Administrative Justice Act No. 3 of 2000 (PAJA).
The Competition
Commission of SA v Telkom SA Ltd & another
[2010] 2 All SA 433
(SCA) at para 12
The decision may however
be reviewed and set aside, under the constitutional principle of
legality.
[12] A complaint referral
by the respondent to the Tribunal is a jurisdictional fact, for the
exercise of the Tribunal’s powers,
in respect of prohibitive
practices.
Woodlands Dairy v
Competition Commission
2010 (6) SA 108
(SCA) pg 112 para 12
[13] The constitutional
principle of legality demands that the exercise of public power, even
if it does not constitute administrative
action, must comply with the
Constitution
DA v Acting NDPP
2012 (3) SA 486
(SCA) at 496 A
The grounds of review
articulated in
Shidiack v Union
Government (Minister of the Interior)
1912 AD 642
at 651
– 652
are
“consistent
with the foundational principle of the rule of law enshrined in our
Constitution”.
Pharmaceutical
Manufacturers Association of South Africa & another:
in re ex parte
President of the Republic of South Africa & others
[2000] ZACC 1
;
2000 (2) SA 674
(CC) para 83
These grounds are whether
the official concerned acted
mala fide
,
or with an ulterior motive, or failed to consider the question in the
sense that he failed to apply his mind to the matter. As
Galgut J (as
he then was) said in
Mitchell v Attorney
General Natal
1992 (2) SACR 68
(N) at 71 b
“He
could only be considered to have applied his mind properly, if,
inter
alia
, he took into account all relevant matter and disregarded
irrelevant matter”.
[14] The exercise of
discretion must be objectively rational, in that it must be
rationally related to the purpose for which the
power was given.
Pharmaceutical
Manufacturers paras 85 – 86
[15] In addition,
“
as long as
the functionary’s decision, viewed objectively, is rational, a
Court cannot interfere with the decision simply
because it disagrees
with it or considers that the power was exercised inappropriately”.
Pharmaceutical
Manufacturers para 90
However, if the decision
maker’s opinion is challenged on the basis that it was
irrational, the decision maker must show
“that the
subjective opinion it relied on for exercising power was based on
reasonable grounds”
Walele v City of
Cape Town and others
[2008] ZACC 11
;
2008 (6) SA 129
(CC) at 160 A – C
The nature of the
discretion exercised by the respondent in referring the complaint to
the Tribunal
[16] Section 50 (1) (a)
of the Act, provides that the respondent must
“
refer the
complaint to the Competition Tribunal, if it determines that a
prohibited practice has been established”.
[17] Mr. Gauntlett S C,
who together with Mr. Kuschke S C and Ms Engelbrecht appeared for the
appellant, relying upon the decision
of the Supreme Court of Appeal
in
Woodlands at para 13
submitted
that three sets of jurisdictional facts are necessary for a valid
referral of a complaint by the respondent to the Tribunal
in terms of
Section 50 (1) (a) of the Act. These are that the decision maker must
at the very least, have been in possession of
information concerning
an alleged practice, which objectively speaking enabled it to
determine that the existence of a
prohibited
practice, has been established
.
The decision
maker has to, as a minimum, form a reasonable suspicion of the
existence of a prohibited practice on what was before
the decision maker.
Mr. Gauntlett submitted that,
although
Woodlands
dealt
with the step anterior to referral, namely the initiation of an
investigation, referral is an
a fortiori
case compared to investigation-initiation. He submitted
that referral exposes the subject to immediate reputational harm and
constitutes
the inception of the trial.
[18] Mr. Wilson, who
together with Mr. Ncongo appeared for the respondent, submitted
however, in reliance upon the decision in
Telkom
, that the
respondent, in subjectively determining that a prohibited practice
had been established simply had to act
bona fide
, without
ulterior or improper motives and apply its mind properly to the
issue. The latter exercise would require that the respondent
take
into account relevant matter and disregard irrelevant matter. The
decision would also have to be objectively rational in that
the
respondent would have to show that its subjective determination that
it made, that a prohibited practice had been established,
which
formed the basis for the referral, was based on reasonable grounds.
Walele at 160 B - C
[19] The distinction
between the jurisdictional facts which have to exist based upon these
opposing submissions are, in my view,
more apparent than real.
Corbett J (as he then was) in
South African
Defence Force and Aid Fund & Another v Minister of Justice
1967
(1) SA 31
(C) at 34 H – 35 D
had the
following to say with regard to jurisdictional facts in general.
“
Upon a
proper construction of the legislation concerned, a jurisdictional
fact may fall into one or other of two broad categories.
It may
consist of a fact, or state of affairs, which, objectively speaking,
must have existed before the statutory power could
validly be
exercised. In such a case, the objective existence of the
jurisdictional fact as a prelude to the exercise of that power
in a
particular case is justiciable in a court of law. If the Court finds
that objectively the fact did not exist, it may then
declare invalid
the purported exercise of the power (see
Kellermann
v Minister of the Interior
1945
TPD 179
;
Tefu
v
Minister
of Justice and Another
1953 (2) SA 61
(T)). On the other hand, it may fall into the category
comprised by instance where the statute itself has entrusted to the
repository
of the power the sole and exclusive function of
determining whether in its opinion the prerequisite fact, or state of
affairs,
existed prior to the exercise of the power. In that event,
the jurisdictional fact is, in truth, not whether the prescribed
fact,
or state of affairs, existed in an objective sense but whether,
subjectively speaking, the repository of the power had decided that
it did. In cases falling into this category the objective existence
of the fact, or state of affairs, is not justiciable in a court
of
law. The Court can interfere and declare the exercise of the power
invalid on the ground of a non-observance of the jurisdictional
fact
only where it is shown that the repository of the power, in deciding
that the pre-requisite fact or state of affairs existed,
acted
mala
fide
or from ulterior motive or failed to apply his mind to the matter”.
As stated in
Lucky Horseshoe
(Pty) Ltd v Minister of Mineral & Energy Affairs
1992 (3) SA 838
(T)
at 848 H – I
”
The content
of the opinion is subjective. It is the Minister’s opinion, not
that of a notional reasonable man or of the Court”.
However, as stated in
Walele
at para 60
“
[60] There
can be no doubt that these documents could not reasonably have
satisfied the decision-maker that none of the disqualifying
factors
would be triggered. None of these documents refer to those factors.
If indeed the decision-maker was so satisfied on the
basis of these
three documents, his satisfaction was not based on reasonable
grounds. The documents fall far short as a basis for
forming a
rational opinion. Nor does the mere statement by the City to the
effect that the decision-maker was satisfied suffice.
In the past,
when reasonableness was not taken as a self-standing ground for
review, the City’s
ipse
dixit
could have been adequate. But that is no longer the position in our
law. More is now required if the decision-maker’s opinion
is
challenged on the basis that the subjective precondition did not
exist. The decision-maker must now show that the subjective
opinion
it relied on for exercising power was based on reasonable grounds. In
this case, it cannot be said that the information,
which the City
admitted had been placed before the decision-maker, constituted
reasonable grounds for the latter to be satisfied”.
[20] According to Mr.
Gauntlett the jurisdictional facts necessary for a determination by
the respondent that a prohibitive practice
has been established are
information which objectively speaking enables the respondent to form
a reasonable suspicion
of its existence
.
On the approach of Mr.Wilson, the subjective
determination by the respondent that a prohibited practice has been
established
has to be based upon reasonable
grounds. Whether reasonable grounds existed for the determination,
requires an objective assessment
of the information which was before
the respondent, when the decision to refer the complaint to the
Tribunal was taken. In addition,
a reasonable suspicion could only be
entertained, if reasonable grounds justified its existence. I can
accordingly see no difference
in substance between the competing
submissions of the parties, as to the jurisdictional facts which have
to be present, to constitute
a valid determination by the respondent
that a prohibited practice has been established, which has as its
consequence, a valid
referral to the Tribunal. The test to be adopted
in the kind of application which appellants seek to launch may well
be that of
rationality rather than reasonableness. Most recently the
test for rationality review has been expressed by Yacoob J in
Democratic Alliance
,
supra
at para 37 as
follows:
“In my view, the decision of the President as
Head of the National Executive can be successfully challenged only if
a step
in the process bears no rational relation to the purpose for
which the power is conferred and the absence of this connection
colours
the process as a whole and hence the ultimate decision with
irrationality. We must look at the process as a whole and determine
whether the steps in the process were rationally related to the end
sought to be achieved and, if not, whether the absence of a
connection between a particular step (part of the means) is so
unrelated to the end as to taint the whole process with
irrationality.”
On the basis of this test, the
question remains: to what documents are appellants entitled in order
to exercise their right to review
the respondent decision for lack of
rationality?
The entitlement of the
appellant to discovery and production of the specified documents
[21] As pointed out
above, an appreciation of the fact that the relief sought by the
applicant in the dismissal application is more
correctly couched in
the context of a review of the decision of the respondent referring
the complaint to the Tribunal, facilitates
an application of the
correct principles to the dispute between the parties.
[22] In order to be in a
position validly and effectively to exercise its right to review the
decision of the respondent, the appellant
is entitled to the
production of “
the record”
. In the
context of review proceedings,
this is
“whatever
was before”
the respondent when it determined that
a prohibited practice has been established.
DA at 499 H – I
The significance of the
record in this sense is that
“ít will then fall
to the reviewing court to assess its value in answering the questions
posed in the review application”.
DA at 499 H – I
The need for the
production of the material that was before the decision maker at the
time the decision was taken, to enable a court
to perform its
constitutionally entrenched review function, is illustrated by the
following passage in DA
“
[37] In the
constitutional era courts are clearly empowered beyond the confines
of PAJA to scrutinise the exercise of public power
for compliance
with constitutional prescripts. That much is clear from the
Constitutional Court judgments set out above. It can
hardly be argued
that, in an era of greater transparency, accountability and access to
information, a record of decision related
to the exercise of public
power that can be reviewed should not be made available, whether in
terms of rule 53 or by courts exercising
their inherent power to
regulate their own process. Without the record a court cannot perform
its constitutionally entrenched review
function, with the result that
a litigant’s right in terms of s 34 of the Constitution to have
a justiciable dispute decided
in a fair public hearing before a court
with all the issues being ventilated, would be infringed. The DA, in
its application to
compel discovery, has merely asked for an order
directing the office of the NDPP to despatch within such time as the
court may
prescribe the record of proceedings relating to the
decision to discontinue the prosecution, excluding the written
representations
made on behalf of Mr. Zuma to the office of the NDPP.
Subject to the question of standing which is dealt with next I can
see no
bar to such an order being made”.
As pointed out in
Walele
,
the information which was
“placed before the
decision maker”
was
relevant in determining whether reasonable grounds
had been established for
the decision.
[23] The production of
the evidence which was before the respondent when it determined that
a prohibitive practice had been established,
is clearly necessary to
enable the Tribunal to objectively assess this evidence, to decide
whether reasonable grounds existed for
the referral.
[24] It is no answer for
the respondent to say that the decision was based upon all of the
information discovered in the seven discovery
affidavits. This does
not enable the Tribunal to decide whether the respondent properly
considered the matter, by considering relevant
information and
disregarding irrelevant information, or whether there was a rational
connection between the evidence and the determination
made by the
respondent.
[25] I accordingly
disagree with the submission of Mr. Wilson that it would be incumbent
upon the appellant at the very least, to
make out a
prima facie
case that the referral was unlawful, before the requested
documents should be produced. Such a submission effectively places
the
cart before the horse. It is only when the appellant is placed in
possession of the evidence which was before the respondent, when
the
determination was made, that the appellant will be able to
objectively assess the evidence and decide whether reasonable grounds
existed for the referral.
[26] I disagree with Mr.
Wilson’s further submission that this will subvert the
principle that pre-trial discovery, which
is simply a
“fishing
expedition”,
should not be countenanced, because
it will be open to every party to a complaint referral, to obtain
access prior to filing its
answer and merely on the asking, to all of
the documents in the possession of the respondent when it made its
referral decision.
This is not so. The documents to which a party in
such a case would be entitled, would only be those documents which
served before
the decision maker, when the determination was made,
subject to any legitimate claims in terms of Rules 14 and 15 by the
respondent,
that such information is restricted. Such an approach
will have a salutary effect upon the efficient administration of
referral
decisions by the respondent, to ensure that a proper record
is kept of the information which was placed before the decision
maker.
This documentation could quite simply be discovered in a
separate identifiable schedule, in which privilege could be claimed
in
respect of documents which the respondent identified as containing
restricted information. In addition, if the production of these
documents is correctly viewed as part of
“the record”
of the proceedings relevant to any review of the
referral decision, they cannot be regarded as part of a discovery
“fishing expedition”.
It also
obviates the difficulty expressed by the Tribunal that discovery in
application proceedings is a rare and unusual procedure,
which should
only be ordered in exceptional circumstances.
To summarise, once it is
accepted, as it must, that a party, in the position of appellant, is
entitled, as of right, to launch an
application for a review of the
respondent’s decision to refer a complaint based on grounds of
rationality, then such a party
is entitled to documents which are
relevant to such a review. Whatever the merits of an argument based
upon the expeditious resolution
of the dispute relating to the
complaint, the right to review a decision of respondent, on the
grounds of irrationality, must trump
the former argument.
The specific documents
which should be discovered and produced
[27] The appellant
applied for the discovery and production of copies
of all materials
including the report(s) and recommendation(s) on which the referral
decision was taken. At the hearing, Mr. Gauntlett
amended the relief
sought by the appellant, to make the discovery and production of
these documents
“subject to Rule 14 exclusions”
claimed by the respondent and that the documents should
be those which
“served before the decision maker”.
[28] In this regard Mr.
Gauntlett submitted that the respondent, on at least two previous
occasions, had the opportunity to make
discovery of these documents
and claim privilege in respect of the production of certain of them
in terms of Rule 14, but had simply
refused to discover them.
[29] The approach of the
Tribunal was to have regard solely to the reports and recommendations
submitted to the decision maker,
in respect of which the appellant
sought discovery and production. The Tribunal concluded that this
constituted restricted information
in terms of Rule 14, to which the
appellant was not entitled. It did not consider that, in addition,
what was sought was the discovery
and production of all material, and
more specifically that material upon which the decision was based. In
this regard the Tribunal
concluded that the respondent
“had
already discovered all the information it had before it at the time
of the referral through the seven discovery affidavits
referred to
earlier in this decision. The documents containing this information
have been placed before the Tribunal in the expanded
bundle. There is
no need, even on Computicket’s own version, for the Commission
to produce the recommendation”.
The Tribunal
emphasised that even if the appellant was correct in its reliance
upon the test formulated in Woodlands, this required
“an
objective assessment of the information before the Commission at the
time when it decided to refer and not an assessment
of the
Commission’s views. Hence there is no compelling case for us to
order the disclosure of the Commission’s recommendation”.
[30] It was, with
respect, no answer for the Tribunal to say that the respondent had
already discovered all the information it had
before it at the time
of the referral, by way of the seven discovery affidavits. For the
reasons set out above, what had to be
discovered was the information
that was placed before the decision maker. Clearly, all of the
documents discovered in seven discovery
affidavits were not placed
before the decision maker.
[31] As regards the
reports and recommendations made to the decision maker, having
carefully considered the contents of the dismissal
application, I am
satisfied that this is not a case where an order should be made in
terms of Rule 15 (1) (b) (ii) directing that
they may be inspected by
the appellant. In coming to this conclusion, I do not overlook the
amendment which Mr. Gauntlett proposed
to the relief sought,
providing for the respondent to claim that such reports and
recommendations constitute restricted information
in terms of Rule
14. My object in dealing with this issue is to prevent any further
delays in the hearing of this matter. However
this finding does not
exonerate the respondent from discovering the reports and
recommendations which were placed before the decision
maker, albeit
that privilege may be claimed in respect of their contents, save and
except in respect of the evidence upon which
such reports and
recommendations are based. In other words, the respondent will be
obliged to discover and produce the evidence
upon which such reports
and recommendations were based, as well as any other evidence which
was placed before the decision maker.
[32] As regards the issue
of costs. The appellant has achieved substantial success in this
appeal, albeit not in the precise form
and, to the extent originally
sought, and consequently is entitled to an award of costs in its
favour.
I grant the following
order
The appeal is upheld and
paragraph 71 of the Tribunal’s decision is substituted by the
orders in paragraphs (b), (c) and
(d) below.
The respondent is
directed to discover the reports and recommendations which were
placed before the Competition Commissioner and/or
the Executive
Committee of the Competition Commission, when the decision was taken
to refer the complaints of alleged dominance
against the appellant
to the Competition Tribunal, save however that the respondent is not
obliged to produce the contents of
such reports and recommendations
in accordance with Rule 14 of the Rules of the Commission, except to
the extent and in the respects
set out in paragraph (c).
The respondent is
directed to discover and produce for inspection all of the evidence
which was placed before the Competition
Commissioner and/or the
Executive Committee of the Competition Commission, when the decision
was taken to refer the complaints
of alleged dominance against the
appellant, to the Competition Tribunal, including the evidence upon
which the reports and recommendations
referred to in paragraph (b),
were based.
The appellant is awarded
costs, such costs to include the costs of two Counsel.
_____________
SWAIN A J A
DAVIS J P and DAMBUZA J A
agreed
Appearances:/
Appearances:
For the Appellants
:
Adv J Gauntlett S C
Adv L Kuschke
Adv G Engelbrecht
Instructed by
:
:
Cliff Dekker Hofmeyer Inc Cape Town
For the 1
st
Respondent
:
Adv J Wilson Adv P M P Ngcongo
Instructed by :
The Competition Commission Pretoria
Date of Hearing
:
25 September 2012
Date of Filing of
Judgment :
2012