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[2009] ZACAC 5
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Omnia Fertilizer Ltd v The Competition Commission in re: The Competition Commission of South Africa v Sasol Chemical Industries (Pty) Ltd and Others (77/CAC/Jul08, 31/CR/MAY05, 45/CR/MAY06) [2009] ZACAC 5 (16 October 2009)
IN
THE COMPETITION APPEAL COURT OF SOUTH AFRICA
CAC
CASE NO: 77/CAC/Jul08 CT CASE NO: 31/CR/MAY05
In
the matter between:
OMNIA FERTILIZER LTD
APPELLANT
And
THE COMPETITION COMMISSION
RESPONDENT
In Re:
CASE NO:
31/CR/MAY05 and CASE NO: 45/CR/MAY06
THE COMPETITION COMMISSION OF
SOUTH AFRICA APPLICANT
And
SASOL
CHEMICAL INDUSTRIES (PTY) LTD FIRST RESPONDENT
YARA (SOUTH
AFRICA) (PTY) LTD SECOND RESPONDENT
OMNIA
FERTILIZER LTD THIRD RESPONDENT
AFRICAN EXPLOSIVES AND
CHEMICAL
INDUSTRIES LTD
FOURTH RESPONDENT
NUTRI-FLO CC
FIFTH RESPONDENT
NUTRI FERTILIZER CC
SIXTH RESPONDENT
Judgment
DELIVERED
ON: 16 October 2009
Patel J
INTRODUCTION
[1] The
Competition Commission ("the Commission") applied to the
Competition Tribunal ("the Tribunal") for an
order
consolidating two complaint referrals under one case number. The
first complaint was lodged by Nutri-Flo CC and Nutri-Fertilizer
CC
(collectively referred to as "Nutri-Flo") on 04 May 2004.
The complaint concerned allegations of contraventions of
sections 4
(1) (a), 4 (1) (b), 8 (c) and 8 (d) (ii) of the Competition Act 89 of
1998 ("the Act"). The second complaint
was made by Profert
(Pty) Ltd ("Profert"). In terms of this complaint Profert
alleged contravention s of section 4 (1)
(b), alternatively s 4 (1)
(a) and sections 8 and 9 of the Act. In both referrals Sasol Chemical
Industries (Pty) Ltd ("Sasol")
is one of the respondents'
whilst Omnia Fertilizer Limited ("Omnia") is a respondent
in only the first complaint.
[2] On 5
October 2007 the Commission filed an application to consolidate the
Nutri-Flo and Profert complaints. Omnia opposed the
consolidation
application. The matter was set down for hearing on 14 February 2008
but was subsequently withdrawn by the Commission
on 13 February 2008.
At the hearing Omnia applied for wasted costs to be awarded against
the Commission. On 07 March 2008 the Tribunal
dismissed Omnia's
application and the reasons for the decision were issued on 20 June
2008.
[1]
This is an appeal against the Tribunal's finding that the "effect
of section 57, read with the rules of the Tribunal, is to
effectively
bar [the] Tribunal from awarding costs against the Commission or any
other party appearing before it except in the
context of a section 51
(1) referral".
RELEVANT
LEGISLATIVE PROVISIONS
[3] I set out herein below the applicable
legislative provisions of the Act:
3.1. In
section 1 (1) a complainant is defined to mean a person who has
submitted a complaint in terms of section 49B (2) (b).
3.2. Section 49B - Initiating a complaint
(1) The
Commissioner may initiate a complaint against an alleged prohibited
practice.
(2) Any
person may -
(a)
submit information concerning an alleged prohibited practice to the
Competition Commission, in any manner or form; or
(b) submit a complaint against an alleged prohibited practice to
the Competition Commission in the prescribed form.
3.3
.
Section
51 - Referral to Competition Tribunal
(1) If the Competition Commission issues a notice of non-referral in
response to a complaint, the complainant may refer the complaint
directly to the Competition Tribunal, subject to its rules of
procedure.
3.4.
Section 57 - Costs
(1) Subject to subsection (2) and the Competition
Tribunal's rules of procedure, each party participating in a hearing
must bear
its own costs.
(2) If the Competition Tribunal-
(a) has not made a finding against a respondent, the
Tribunal member presiding at a hearing may award costs to the
respondent, and
against a complainant who referred the complaint in
terms of section 51 (1); or
(b) has
made a finding against a respondent, the Tribunal member presiding at
a hearing may award costs against the respondent,
and to a
complainant who referred the complaint in terms of section 51 (1).
DECISION
OF THE COMPETITION TRIBUNAL
[4] The Tribunal's approach
to the matter was dictated by two principles, firstly that the
Tribunal did not enjoy inherent jurisdiction,
and secondly that the
Legislature sought to circumscribe the powers of the Tribunal to
those set out in the Act. The Tribunal held
that the effect of s 57,
read with the Rules of the Tribunal, was to bar the Tribunal from
awarding costs against the Commission
or any other party appearing
before it except in the context of a s 51 (1) referral. And when the
Tribunal exercised its discretion
in that context, it had to do so in
accordance with its rules.
[2]
In the course of his judgment, the presiding member of the Tribunal
said:
"In summary, costs can be awarded against the State in
administrative, constitutional or delictual cases. In cases involving
statutory bodies or public officers, courts will not easily award
costs if the public officer acted, mistakenly, but in good faith.
However, this rule is not to be elevated to a rigid rule where
judicial discretion is fettered. Courts, however, are reluctant
to
award costs against a prosecutor or an entity akin to a prosecutor
acting in good faith. In the case of an interlocutory application
a
court would be even more reluctant to award costs against an
attorney-general. The award of costs is always an exercise of
judicial
discretion, even if it is done in terms of the provisions of
a statute".
[3]
The Tribunal stated that its decision should not be interpreted to
mean that the Commission or any other party for that matter
has carte
blanche in proceedings before the Tribunal.
OMNIA'S
GROUNDS OF APPEAL
[5] The
grounds of Omnia's appeal are set out below:
5.1
that the Tribunal erred in finding that it had no jurisdiction to
order an adverse costs order against the
Commission;
5.2. that the Tribunal's interpretation of s 57 (1) of
the Act and Rule 58 (1) of the Tribunal's rules was erred;
5.3. that there is no
general principle that each party bears its own costs but rather a
default position;
5.4. that the Minister, and not the Tribunal, has the
power to promulgate rules for the Tribunal in the form of
regulations;
5.5. that the Tribunal had erred in stating that Omnia's argument
was one which undermined the separation of powers;
5.6. that the Tribunal erred
by stating that regulations may not be used as an aid in interpreting
the statute or in order to extend
the powers granted in the statute;
5.7. that the Tribunal failed to find that it had the
discretionary power to order costs against the Commission and
5.8. Omnia submitted finally that a costs order was appropriate
for the following reasons:
5.8.1.
that the consolidation application was brought at a late stage which
was bound to cause inconvenience and prejudice;
5.8.2. the Commission had overstated the extent of the overlaps
between the two complaint referrals;
5.8.3. the Commission failed to take into account the
procedural consequences of a consolidation;
5.8.4.
the consolidation application was withdrawn at the last hour; and
5.8.5. the Commission had acted recklessly or at least negligently
in that the consolidation application was launched and later
withdrawn.
It was submitted on behalf of Omnia that the Tribunal's order be set
aside and replaced with an order directing the Commission
to pay its
costs in opposing the consolidation application.
THE ISSUES
[6] The
issue is whether the Tribunal can order the Commission to pay costs
in proceedings before it. Even if this question is answered
in the
negative, this court would have to decide whether it should, in any
event, order costs against the Commission.
STRUCTURE OF
THE INSTITUTIONS
[7] The
Act creates a hierarchy of three specialist institutions to apply and
enforce its provisions: the Competition Commission,
the Competition
Tribunal and the Competition Appeal Court. The Commission is an
independent administrative body created and generally
tasked with
policing compliance with the Act. In Sasol Chemical Industries (Pty)
Ltd v The Competition Commission and others; In
re The Competition
Commission v Sasol Chemical Industries (Pty) Ltd and others
[2008] 2
CPLR 351
(CT) at para 33 it was held that:
"As a
creature of statute, the Tribunal does not enjoy inherent
jurisdiction. Nor is it entitled to extend any of its substantive
powers beyond the four corners of the statute. Where powers
incidental and necessary are required for it to perform its
functions,
it must read such powers into its statute only by
necessary implication".
The Tribunal is a specialist administrative tribunal created under
the Act. As an administrative tribunal, it can exercise jurisdiction
only to the extent permitted by the Act. Its operation is given
further detail in the Rules for the Conduct of Proceedings in the
Competition Tribunal ("the Tribunal Rules"). The
Competition Appeal Court, on the other hand, derives its powers from
the Act. Its status is similar to that of a High Court.
COSTS
[8]
At this juncture it is important to consider the relevant provisions
of the Tribunal Rules.
8.1 Rule 50 - Withdrawals and postponements (3)
Subject to section 57-
(a) a
Notice of Withdrawal may include a consent to pay costs; and
(b) if no consent to pay costs is contained in a Notice of
Withdrawal the other party may apply to the Tribunal by Notice of
Motion
in Form CT 6 for an appropriate order for costs.
8.2. Rule 58 - Costs and taxation
(1)
Upon making an order under Part 4, the Tribunal may make an order for
costs.
(2)
Where the Tribunal has made an award of costs in terms of section 57,
the following provisions apply:
(a) The fees of one representative may be allowed between party and
party, unless the Tribunal authorises the fees of additional
representatives.
(b) The
fees of any additional representative authorised in terms of
paragraph (a) must not exceed one half of those of the first
representative, unless the Tribunal directs otherwise
…
....................
(j) Any decision by a taxing master is subject to the review of the
High Court on application.
[9] As a
general rule, each party participating in Tribunal complaint
proceedings is required to bear its own costs.
[4]
But the general rule is subject to two limitations, namely s 57 (2)
and the Tribunal Rules. Section 57 (2) allows the Tribunal
to award
costs in circumstances as between a complainant and a respondent and
only where the complainant and respondent are parties
in terms of s
51 (1). In my view, a referral in terms of s 51 (1) does not include
the Commission as a complainant.
[10]
Omnia's argument on the authority of the Tribunal to make costs
orders against the Commission is founded on two main propositions.
First, that the Tribunal has power to order costs against the
Commission and second, that the Tribunal has a discretion whether
or
not to invoke such power. In essence Omnia contends that the
Tribunal's power to order costs it deems appropriate is sourced
in
the Tribunal's rules of procedure on costs. Such rules it contends
are said to trump section 57 (1) of the Act.
[11]
When dealing with interpretation, the history, purpose and social and
economic context of the Act should be kept in mind.
[5]
The Act's prime purpose is to promote an efficient economy and to
provide consumers with competitive prices and product choices.
[12] A
primary rule of interpretation of statutes is that the language of
the legislature should be read in its ordinary sense unless,
if
effect is given to the ordinary grammatical meaning of the words that
fall to be interpreted, it could result in some absurdity,
inconsistency, hardship or anomaly which, from a consideration of the
enactment as a whole, a court is satisfied the legislature
could not
have intended (see University of Cape Town v Cape Bar Council and
another
1986 (4) SA 903
(A) at 913I-914J). Regard must also be had to
the decision of Dadoo Ltd and others v Krugersdorp Municipal Council
1920 AD 530
at 543 where Innes CJ remarked as follows:
"Speaking generally, every statute embodies some policy or is
designed to carry out some object. When the language employed
admits
of doubt, it falls to be interpreted by the Court according to
recognized rules of construction, paying regard, in the first
place,
to the ordinary meaning of the words used, but departing from such
meaning under certain circumstances, if satisfied that
such departure
would give effect to the policy and object contemplated. I do not
pause to discuss the question of the extent to
which a departure from
the ordinary meaning of the language is justified, because the
construction of the statutory clauses before
us is not in
controversy. They are plain and unambiguous. But there must, of
course, be a limit to such departure. A Judge has
authority to
interpret, but not to legislate, and he cannot do violence to the
language of the lawgiver by placing upon it a meaning
of which it is
not reasonably capable, in order to give effect to what he may think
to be the policy or object of the particular
measure."
[13]
The phrase 'subject to' has no a priori meaning (see Pangbourne
Properties Ltd v Gill & Ramsden (Pty) Ltd
1996 (1) SA 1182
(A) at
1187J - 1188A). While the phrase is often used in statutory contexts
to establish what is dominant and what is subservient,
its meaning in
a statutory context is not confined thereto and it frequently means
no more than that a qualification or limitation
is introduced so that
it can be read as meaning 'except as curtailed by' (see Premier,
Eastern Cape, and Another v Sekeleni
2003 (4) SA 369
(SCA) at para
14). And Megarry J stated in C & J Clark Ltd v Inland Revenue
Commissioners
[1973] 2 All ER 513
at 520:
"In my judgment, the phrase 'subject to' is a simple provision
which merely subjects the provisions of the subject subsections
to
the provisions of the master subsections.
When there is no clash, the phrase does nothing: if there is
collision, the phrase shows what is to prevail."
One is mindful of the fact that both the Tribunal Rules and the Act
employ the phrase 'subject to\ An example is that both s 57
and
Tribunal Rule 50 (3) use this phrase. This could only mean that the
Tribunal Rules and the Act work hand in hand.
[14] The
question must be asked: what is the significance of the Tribunal
Rules in relation to the Act? It is important to consider
the
judgment of Jali JA in Anglo South Africa Capital (Pty) Ltd and
others v Industrial Development Corporation of South Africa
and
another
[2003] 1 CPLR 10
(CAC), where he said at 17:
"In any event
regulations or (rules in this case) which have not been drafted by
the legislature cannot be treated together
with the Act as a single
piece of legislation, nor can these regulations be employed as an aid
to the interpretation of the Act...
Thus, rule 46 cannot be used to
interpret provisions of the Act and in particular, section 53(1) and
to restrict the express provision
of section 53(1) (c)."
[15] On
a literal interpretation of the Tribunal Rules, it appears that Rule
58 (2) (a) - (j) merely sets the procedure to be followed
when
seeking a costs order. If the legislature had intended to include the
Commission as being capable of having costs awarded
against it, the
Act would have so stated. The fact that it did not do so is, in my
view, an indication that that is not what it
had in mind. Words
cannot, by implication, be read into a statute unless the implication
is necessary in the sense that, without
it, effect cannot be given to
the enactment as it stands (see American Natural Soda Ash Corp and
Another v Competition Commission
and Others
2005 (6) SA 158
(SCA) at
para 27).
[16] In
Mainstreet 2 (Pty) Ltd t/a New United Pharmaceutical Distributors
(Pty) Ltd & others v Novartis SA (Pty) Ltd & others
[2006]
JOL 18314
(CT) it was held that the Tribunal's authority to order
costs is not limited to the circumstances contemplated by s 57 and
that
the Tribunal was entitled to make a costs award in terms of Rule
50(3). At para 12 the Tribunal held as follows:
"The reason the Act contains an express provision dealing with
costs in section 57 rather than leaving such issues to the
Rules is
that complaint proceedings involve both a public and private method
for their prosecution. A complaint referral is normally
brought at
the instance of the Competition Commission, but where the Commission
has issued a notice of non-referral the complaint
can be brought at
the instance of the private party who made it, in terms of section
51(1). As the applicants point out, the procedures
are analogous to
criminal proceedings where no costs orders are provided for against
the state in bringing a prosecution, but when
an individual
institutes a private prosecution a cost award is competent. For this
reason the legislature sought to make it clear
that costs in these
proceedings were (a) discretionary, and (b) only between the private
parties. The
Commission can neither benefit from nor be burdened with costs in
these proceedings".
The Tribunal went on to hold at para 16 that, even if the Commission
was an initiating party and withdrew its application, it would
not be
liable for costs nor could it seek costs if the converse occurred.
The cross-reference is to ensure that the policy of the
legislature
has been imported into the rule.
[17] The
only other case in which the issue of costs was taken up is
Competition Commission v South African Airways (Pty) Ltd
[6]
where the Tribunal indicated that it did not consider itself barred
from awarding costs in matters involving the Commission. The
Tribunal
stated:
"Our previous order reserved costs 'if competent'.
That rider was inserted specifically in deference to the possibility
that
the Tribunal may not be able to award costs for or against the
Commission. That matter remains to be resolved. However, while the
legal questions are unanswered, from a public policy standpoint it is
clear that the prevalent notion that we are barred from awarding
costs in a matter involving the Commission is responsible for a
perverse set of incentives - in short it enables the Commission
to
adopt what Mr. Bhana in this matter aptly characterized as a
'slapdash' approach to its role in litigation. On the other hand
it
enables defendants to oppose matters, even matters already decided in
the Tribunal and the High Court, for no apparent reason
other than
pique and the desire to prevent opponents from having their day in
court. This matter is ripe for determination and
after the final
resolution of the substantive issues in this matter it will be
decided. Since the award of costs for or against
the Commission has
serious implications for it, we did not want to decide our competence
to do so without giving both parties the
opportunity to fully argue
the matter and hence our decision to reserve".
However in Competition Commission v South African Airways (Pty) Ltd
(1)
[2004] 1 CPLR 230
(CT) in footnote 4 the Tribunal stated that:
"Note that in
an earlier decision in this matter we left open for later argument
the question of whether in complaint referrals
initiated by the
Commission we can give costs for or against the Commission. Our
reservation of costs should not be construed as
presupposing that we
can". (My emphasis)
Therefore the Tribunal
chose not to deal with the issue of costs.
[18]
Much mention was made in the papers that one should look at the
function of public bodies. The position was aptly set out by
the
Tribunal in this case where the presiding member of the Tribunal
said:
"In relation to public officers and quasi-judicial bodies or
regulators the general rule is that a court will make no order
as to
costs if that entity was unsuccessful in its opposition but acted
bona fide. In Fleming v Fleming
1989 (2) SA 253
(A) the Appellate
Division confirmed the rule established in Coetzeestroom
1902 TS 216
and held that the costs should not be awarded against a public
officer who carried out his official duties mistakenly, but in good
faith. In Attorney-General, Eastern Cape v Blom
1988 (4) SA 645
(A)
the court expressed the view, in obiter, that this rule should not be
elevated to a rigid rule which would fetter judicial
discretion.
Nevertheless, courts are reluctant to award costs against prosecutors
or entities which are akin to a prosecutor. In
Nortje v Attorney
General, Cape and Another
1995 (2) SA 460
(C), a full bench of the
Court expressed the view that prima facie it is undesirable to
inhibit attorneys-general, and those delegated
by them to prosecute,
in the bona fide performance of their constitutional duty by the
"spectre of costs being ordered against
the state when
prosecutions fail, appeals succeed or applications they resist are
granted" (our emphasis). In the case of
an interlocutory
application there is even less reason to consider granting a costs
order against an attorney-general."
[7]
The Commission appears before the Tribunal as prosecutor.
[8]
In practice there is generally nothing said about a prosecutor who
withdraws a case on the day of the trial. Why should it be any
different with the Commission?
[19] In
English law a number of authorities have been cited concerning the
approach to applications for costs against a regulatory
authority.
Lord Bingham of Cornhill CJ, giving the principal judgment in City of
Bradford Metropolitan District Council v Booth
[2000] COD 338
at
paras 23-26, distilled the relevant
principles as follows:
"I would
accordingly hold that the proper approach to questions of this kind
can for convenience be summarised in three propositions:
1. Section 64(1) confers a discretion upon a
magistrates' court to make such order as to costs as it thinks
just
and reasonable. That provision applies both to the quantum of the
costs (if any) to be paid, but also as to the party (if
any) which
should pay them.
What the court will think just and reasonable will depend on all
the relevant facts and circumstances of the case before the court.
The court may think it just and reasonable that costs should follow
that event, but need not think so in all cases covered by the
subsection.
Where a complainant has successfully challenged before justices an
administrative decision made by a police or regulatory authority
acting honestly, reasonably, properly and on grounds that reasonably
appeared to be sound, in exercise of its public duty, the
court
should consider, in addition to any other relevant fact or
circumstances, both (i) the financial prejudice to the particular
complainant in the particular circumstances if an order for costs is
not made in his favour, and (ii) the need to encourage public
authorities to make and stand by honest, reasonable and apparently
sound administrative decisions made in the public interest without
fear of exposure to undue financial prejudice if the decision is
successfully challenged."
[20] I
therefore find that the Tribunal was correct in finding that costs
cannot be granted against the Commission, but this court
may, in
terms of section 61 (2) of the Act, make an order for the payment of
costs against any party in the hearing, or against
any person who
represented a party in the hearing, according to the requirements of
the law and fairness.
[21] In
this case, it becomes apparent that the Commission should have
realized the possible problems it would encounter with consolidating
the two complaints. However this does not mean that the Commission
acted maliciously or recklessly. The Commission explained that
it had
attempted to set down the application for an earlier date but had
been unsuccessful. The fact that the consolidation application
was
withdrawn a day bearing the hearing is somewhat disconcerting but one
has to also consider the circumstances and pressure under
which the
Commission operates. The efficiency of the Commission in rendering
its duties could be severely affected if its every
misjudged decision
is scrutinized. In any event, any preparation done for the
consolidated hearing will not be wasted since the
Commission has not
withdrawn against Omnia and such preparation. The consequent costs
occasioned by such preparation will not be
wasted when the matter
finally serves before the Tribunal.
[22] It is for the
above reasons that the appeal is dismissed. Consideration of fairness
demands that there will be no order as
to costs.
PATEL JA
DAVIS JP and DAMBUZA AJA concurred
[1]
The decision is reported at
[2008] 2 CPLR 337 (CT).
[2]
Ibid
at para 39.
[3]
Ibid
at para 13.
[4]
Section 57 (1).
[5]
Reyburn, Competition Law of
South Africa, page 4-12.
[6]
[2001] ZACT 44.
[7]
Supra note 1 at para 11.
[8]
Simelane and Others NNO v
Seven-Eleven Corporation SA (Pty) Ltd and Another
2003 (3) SA 64
(SCA)
at 71.