Minister of Environmental Affairs and Tourism and Others v Phambili Fisheries (Pty) Ltd and Another (32/2003, 40/2003) [2003] ZASCA 46; ; [2003] 2 All SA 616 (SCA) (16 May 2003)

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[2003] ZASCA 46
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Minister of Environmental Affairs and Tourism and Others v Phambili Fisheries (Pty) Ltd and Another (32/2003, 40/2003) [2003] ZASCA 46; [2003] 2 All SA 616 (SCA); 2003 (6) SA 407 (SCA) (16 May 2003)

THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
Case No 32/2003
Case No 40/2003
REPORTABLE
In the matter between
The Minister of Environmental Affairs and Tourism
First Appellant
The Chief Director: Marine and Coastal Management
Second Appellant
The Deputy Director-General: Environmental Affairs
and Tourism Third Appellant
Certain Rights Holders In The Hake Deep Sea Trawl
Fishery for 2002 to 2005
Fourth to Nineteenth
Appellants
and
Phambili
Fisheries (Pty) Ltd
Respondent
Bato
Star Fishing (Pty) Ltd
Respondent
Before: Howie P, Schutz, Mthiyane, Conradie JJA and
Jones AJA
Heard:
2 and 5 May 2003
Delivered: 16 May 2003
Marine
Living Resources Act – allocation of hake quotas – review of
Chief Director’s decision – numerous grounds – eg
non-compliance
with transformation goal – absence of reasons –
arbitrariness – fair administrative action – legitimate
expectation – all
of the grounds bad – in truth an attempt to
appeal to court against the allocation decisions – judicial
deference – particularly
in respect of administrative decisions of
a technical nature involving policy elements – one third of costs
of lengthy records
disallowed for failure to insert new page numbers
of exhibits – for not providing a core bundle – for repeating
case headings
in indexes – for repeating details of the attorneys
in each volume – replying affidavits must be drastically curtailed.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
SCHUTZ JA
[1] Up until 1978 our seas were increasingly being
plundered by all and sundry. In that year, in order to prevent the
further destruction
of our fishing stocks and indeed to an extent to
restore them, the notion of Total Allowable Catch (‘TAC’) was
introduced. In
respect of all the hake fishing sectors the TAC, once
determined for a fishing season, then set a limit on the total
tonnage that
might be caught. Quotas for individual companies were
introduced for the first time in the following year, 1979. Although
there have
been changes in detail over succeeding years, the limit
imposed by the TAC and the quota or later allocation system still
prevail.
This case is concerned with the allocation of quotas for the
2002 season in the hake deep sea trawling sector, which accounts for
the great bulk of the tonnage caught. The other hake sectors are
inshore trawling, longlining and handlining. The principles upon
which the 2002 allocations are based are intended to extend over the
medium term, that is also to the 2003, 2004 and 2005 seasons.
[2] As the annual hake catch is a limited resource and
as there is money to be made out of selling fish, it may be imagined
that quotas
are a much-coveted asset. Today’s competition to
acquire them is sharpened by the ownership patterns resulting from
the history
of the industry and by the deprivations imposed by the
previous political system upon those whom are referred to in this
case as
historically disadvantaged persons or people (‘hdp’).
Inevitably there is tension between the large established companies
(also
the ‘pioneer’ companies) and the small new aspirants coming
from the ranks of the hdp. There is a tendency to describe these
two
groups stereotypically. As with most generalisations, stereotypes are
apt to be misleading. Prosperous the established companies
may be,
but if one looks more closely into them one finds, in varying
degrees, how they improve the lives of hdp as co-owners,
shareholders,
managers, skippers, crews, other sorts of employees,
factory workers, consumers and the like. Also if one examines some of
the hdp
companies more closely one finds that they are not entirely
composed of the archetypal necessitous fisherman. Appreciating these
facts is but the starting point of a realisation that the person
making the quota allocations, who is mindful of the call for
fostering
‘transformation’ or ‘reconstruction’, has a
difficult task before him. A task which is not made more easy by the
fact that
it is notorious in the industry that some applicants are
not entirely frank as to who they are, or what exactly they intend
doing.
And his decision, however wise and reasonable, will satisfy
no-one entirely. This by way of introduction.
[3] The respondents are two fishing companies, Phambili
Fisheries (Pty) Ltd (‘Phambili’) and Bato Star Fishing (Pty) Ltd
(‘Bato’).
They brought review applications in the Cape Provincial
Division, which came before Ngwenya J and Potgieter AJ. The
applications
were heard together and succeeded, against the Minister
of Environmental Affairs and Tourism (‘the Minister’), the Chief
Director:
Marine Coastal Management (‘the Chief Director’), the
Deputy Director-General: Environmental Affairs and Tourism (‘the
Deputy
Director-General’), (collectively ‘the Government
appellants’) and 16 fishing companies which were successful in
obtaining
quotas and who opposed the applications (‘the Industry
appellants’). Among them are firms such as Irvin and Johnson Ltd
and Sea
Harvest Corporation Ltd, long-established fishing companies
and the two largest. But among them are also wholly black-owned
companies
and companies with quotas considerably smaller than those
of Phambili or Bato. There are also indications in the record that a
further
eleven of the smaller companies supported the opposition to
the respondents’ applications, even though they did not join as
parties.
[4] The quota allocations were made by the Chief
Director on 24 December 2001, under the powers vested in the Minister
under s18 of
the Marine Living Resources Act 18 of 1998 (‘the
MLRA’) which had been delegated to him in terms of s79. At the time
Phambili
and Bato were existing quota-holders with quotas much
smaller than those held by the large companies. For the 2002 season
in respect
of which they complain, they were again awarded quotas,
slightly larger than they had had, being increases originally from
1069 to
1083 tons and 803 to 856 tons respectively. They had applied
for considerably more than they were awarded. Their complaint is,
essentially,
that as hdp companies the increases in quotas should
have been much larger, at the expense of the established companies,
or even
by the elimination of some of the small quota holders. The
deep sea trawling TAC for the season was 138 495 tons.
[5] The procedure adopted for the determination of
allocations in the four hake sectors and the numerous other fishing
sectors was
a detailed and complex one. On 27 July 2001 a General
Notice was published in the Government Gazette. It invited interested
parties
to apply for fishing allocations. Attached to it was a pro
forma application form which required the insertion of numerous
details.
Among those that are relevant are the following: particulars
of the shareholding of applicant companies, full details of hdp as
owners,
directors, shareholders, members, beneficiaries, or as placed
in top, senior or middle management positions, and of the proportion
of professional, skilled, semi-skilled and unskilled hdp workers,
together with details of their earnings.
[6] Also forming part of the Government Notice were
certain Policy Guidelines. The introduction stated:
‘
The Minister intends to allocate rights for a period
not exceeding four years …, which will greatly enhance
opportunities for investment
and the promotion of
stability
in
the fishing industry’ (emphasis supplied).’
Under the heading ‘Evaluation of Applications’ the following,
i.a., was stated:
‘Applications will be evaluated
in accordance with the objectives and principles set out in
section 2 of the Act
and with regard to the policy guidelines set
out below.
No precedence, ranking or weighting is implied by the
order or content of the policy guidelines.
1. Business plan, fishing plan or operational and
investment strategy
Cognisance has been taken of the fact that substantial
investments have been made by many of the current rights holders.
This factor,
together with the need to create an environment that
will promote
further long-term investment in human and material
resources are important considerations
. Historical involvements,
proof of investment and past performance are therefore important
factors. Applicants that are able to demonstrate
the creation of
employment through the effective utilisation of their allocation will
be viewed in a favourable light.
2. Equity, transformation, restructuring and empowerment
The
transformation
of South Africa from an
unequal society rooted in discrimination and disparity to a
constitutional democracy founded upon freedom,
dignity and equality
poses particularly profound challenges for the fishing industry. It
is here that there are acute imbalances
in personal wealth,
infrastructure and access to financial and other resources. While it
is acknowledged that
transformation or restructuring of the
fishing industry cannot be achieved overnight, it nevertheless is a
primary objective to build
a fishing industry that in its ownership
and management, broadly reflects the demographics of South Africa
today.
In determining the degree of transformation, the
following factors will be taken into account:
ownership of, or equity within the applicant;
the distribution of wealth created gained through
access to marine living resources;
the extent to which the applicant
provides
employment
to members of historically disadvantaged sectors of
the community;
There is also a high degree of gender inequality
throughout the fishing industry. The manner in which this is
addressed, as well as
racial and other historical imbalances in the
context of contributing towards achieving equity, are important
factors.
In the more
capital-intensive sectors of the fishing
industry, a higher level of internal transformation of current rights
holders rather than
the introduction of new entrants is encouraged
.
To effectively address the injustices of the past in an
orderly and just manner and to achieve equity in the fishing
industry, it
is the intention to allocate a notable proportion of the
TAC/… to deserving applicants in order to encourage
transformation
,
either through the
internal restructuring of current rights
holders, or through the accommodation of new entrants
.
3. Impact on the resources, environment and the fishing
industry
A key responsibility is the need to conserve the marine
living resources for present and future generations, while at the
same time
achieving optimum utilisation and ecologically sustainable
development. In order to achieve this, the following considerations
will
apply:
……
……
The hake line sector (longline and handline) has been
identified as a suitable vehicle for the promotion of [HDP] in the
hake sector,
more specifically small-and-medium-sized enterprises
(SMME’S). In order to achieve the objectives contemplated in
section 2 of
the Act, particular regard will be paid to the need to
grant access to new entrants, particularly those from historically
disadvantaged
sectors of society’ (emphasis supplied).
[7] It is not in issue that the contemplated procedures were
followed. What is complained of is the ultimate decision of the Chief
Director, as will be explained below.
[8] Leaving aside the procedures for the moment, I draw
attention to what has been said in para [2] above as to
transformation. To
illustrate how internal transformation might take
place, I take the example of Sea Harvest, which achieved the highest
score for
transformation. For all operations wholly owned by Sea
Harvest, 96.3 % of the employees are from ‘designated groups’ as
defined
by the Employment Equity Act 55 of 1998 (‘black people,
women and people with disabilities’). 38 % of management comes from
‘designated
groups’. Of the board of nine, three (including the
chairman) are hdp. 5.3 % of Sea Harvest’s shares are in the hands
of employees.
73.2 % of Sea Harvest is owned by Tiger Brands Ltd
(‘Tiger’). Tiger is owned as to 38 % by pension funds (13 % of
this is owned
by the Public Investment Commissioner. He invests,
i.a., on behalf of government service retirement funds, the
Unemployment Insurance
Fund and the Workmens’ Compensation Fund). I
will not go into further detail. Mr. Penzhorn, the managing director
of Sea Harvest,
accordingly says ‘It is therefore naïve and
incorrect to categorise Sea Harvest as a “white-concerned entity”’.
I &
J also took meaningful transformation steps which it is
unnecessary to detail.
[9] I return to the allocation process. There were 110 applications
for quotas in the sector, 54 of them from existing rights holders
and
56 from new applicants. The two groups were separately evaluated,
first by the Advisory Committee. This body acted in accordance
with
the Advisory Committee Guidelines and the Advisory Committee
Instructions. Members of the first group were further evaluated
in
accordance with the Criteria for Existing Holders and of the second
in accordance with the Criteria for New Entrants. Points were
awarded
to each applicant and the results were presented to the Chief
Director. This committee evaluated each applicant as an applicant.
The process was a detailed one and the committee was guided by expert
advice. Overall hundreds of applications had to be processed,
leading
to a useful summary with recommendations to assist the Chief Director
in his final decision. The committee played no role
in regard to the
ultimate quantum of any allocation.
[10] The Chief Director decided not to admit any new
applicants and granted rights to 51 of the 54 existing rights
holders. Of the
TAC of 138 495 tons, 1487 tons were set aside for
appeals. This decision was the subject of one of the complaints
raised before the
Court below. A further 803 tons were set aside for
possible allocation to an applicant under investigation for his
fitness. After
the deduction of these amounts the remaining balance
of the TAC was 136 205 tons.
[11] Then come the steps which were the main target of the attack in
the review applications. The tonnages allocated in 2001 were
used as
the starting point for the 2002 allocations made to the 51 successful
applicants. Five percent was then deducted from each
applicant’s
allocation and placed in an ‘equity pool’ totalling 6810 tons,
which was distributed in proportion to their scores
in the
comparative balancing assessment. The manner in which this
distribution was made was such that the holders of large allocations
contributed more to the pool than they received back on the
distribution. For instance, Sea Harvest contributed 1842.45 tons and
received back only 152.66 tons. Correspondingly the holders of small
allocations received back more than they had contributed. Although
the tonnages of which the major companies have been deprived have
been derided as ‘piffling’, they are not of themselves small.
Irvin and Johnson’s 2001 quota of 47 662 tons was reduced by 2231
tons (4.7 %) and Sea Harvest’s 36 849 tons by 1690 (4.6 %).
[12] Proceeding from what has been set out above, we are
presented with a large body of evidence, which has been lucidly
summarized
in the various heads of argument. Much of what is
contained in them may be of interest to a future historian or a
present participant
in the industry, but I shall confine myself to
those facts which are directly relevant to the issues so that my
decision and the
reasons therefor may be apparent.
[13] The attack on the Chief Director’s decision is
conducted by both respondents with some stridency. It ranges around
most of
the review grounds to be found in the books, and more, but
the essential theme is a simple one. The central aim of the Chief
Director
should have been to bring about transformation in a drastic
fashion, and in this he has failed miserably. He should have taken
much
more from the big companies and he should have altogether denied
rights to many other, smaller applicants. Consequently both Phambili
and Bato should have received much larger allocations than they did.
There is a tendency towards indifference as to what happens
to other
applicants, large and small. The tone of the attack is that the
respondents know far better than the Chief Director does
how he
should do his job, but little appreciation is manifested of the
complexity of his task or of the competing interests involved.
We are
not asked to replace his allocations with our own, but we are
requested to set aside his allocations in their entirety, so
that he
may start again and make new allocations in the manner in which the
respondents say they should have been made in the first
place. A
warning to us emerges out of the form of this attack. Are we indeed
being asked to review the Chief Director’s decisions,
or are we
being asked to do his job for him, not in the sense of substituting
his allocations with our own, but in the sense of telling
him how, in
our opinion, he has erred, and how he should do his job properly, in
our opinion, the second time round? But before I
can answer that
question I shall have to consider the detailed grounds of review.
Leading up to that, some history.
Brief history of the hake deep sea industry and its
transformation to date
[14] The hake industry is more than a
century old in this country. It has come to be recognised as one of
the best managed fisheries
in the world. In 1979 the deep sea sector
had only five ‘pioneer’ participants. The number of participants
rose to seven in 1986
and 21 in 1992. Between 1992 and 2002 the
number rose to 51. Phambili first gained a quota in 1997 and Bato in
1999. Also in 1999,
after the MLRA had come into force, the decision
in
Langklip See Produkte (Pty) Ltd and Others
v Minister of Environmental Affairs and Tourism and Others
1999 (4) SA 734
(C) frustrated the Minister’s intention of awarding
10 000 tons to the new longlining sector, of which 6 000 tons were to
have
been deducted from the deep sea sector. The Minister then, in
saving the situation, secured the agreement of the larger quota
holders
to give up 10 000 tons, of which 3 000 went to new entrants
to the deep sea sector, 3 000 as additional quota to existing smaller
quota holders and 4 000 to the longlining sector. In 1979 one hundred
percent of the deep sea trawling TAC of 135 000 tons was
shared
among the five ‘pioneers’. By 2002 their tonnage had dropped to
100 841, which was 72.8 % of a TAC of 138 495.
[15] The ‘pioneer’ companies’ share has
deteriorated even more in the hake industry as a whole, as the other
sectors are more
accessible to newcomers than the deep sea trawl
sector and there has been a shift of quota to them. The inshore
trawling sector’s
catch has risen from 5 000 tons in 1979 to 10 165
tons in 2002. The longlining sector has risen from nil in 1993 to 10
840 tons in
2002. The handlining sector has increased from nil in
1997 to 5 500 tons in 2002. Overall then, the share of the ‘pioneer’
companies
in the hake industry as a whole had dropped to 60.7 % in
2002.
[16] By contrast with the other sectors the deep sea
trawl sector is highly capital intensive. Its current fixed capital
investment
amounts to some R5.4 billion at replacement values. It is
labour intensive and currently employs 8 838 people (excluding those
employed
in distribution) with a further 1 300 people employed by
intermediary hake and catch-buying processors. The large ‘pioneer’
participants
play an important part in the industry’s success. They
are largely responsible for the international demand for South
Africa’s
hake through having developed high quality products and
effective international marketing and distribution. The industry
generates
sales of R1,45 billion annually and its exports are worth
R750 million. Small quota holders and new entrants rely to a
substantial
extent on the ‘pioneers’ for the processing,
marketing and distribution of their catches.
[17] Nor is transformation in the deep sea sector
achieved only by increased quotas for small holders and the entry of
new participants.
As indicated in paras [2] and [8] of this judgment
it is achieved also by internal transformation within the big
companies. Much
detail has been given in the papers as to who is
actually who, both in the case of the large companies and the small
ones. No point
would be served in repeating the detail but what is
demonstrated is that the allocation of quotas to small companies is
not the only
way in which transformation is effected. And the
generalisation that the issue is between large ‘white’ companies
and small ‘black’
ones is simply not accurate.
[18] A further important fact stated by Mr Kleinschmidt,
the Deputy Director-General and not disputed, is that transformation
initiatives
in the last few years have caused instability, which is
manifested by decreased investment, with the result that the trawler
fleet
is ageing. Consequently the industry runs the risk of becoming
less and less internationally competitive in the long term. This
consideration
played an important part in reaching the decision which
is under attack. I have relied on certain of the Government evidence
up
to this point, but before I proceed further I have to deal with
the respondents’ contention that most of it is not admissible.
Admissibility
of the Government’s evidence
[19] The
Government’s case, in the view of the court
a
quo
, was dead in the water from the start if
regard be had to the following finding:
‘[T]here
is no direct evidence before us as to how the Chief Director arrived
at his decision. Neither is there direct evidence
as to how the
advisory committee went about its task. To this extent we would
consider the applicants’ arguments as being unchallenged
to the
extent that they may be factual or unanswered where they raise
queries.’
[20] In
the court
a quo
the
Government’s main answering affidavit was made by Mr Kleinschmidt,
the Deputy Director-General. The Chief Director, the decision-maker,
Dr Mayekiso, made only a confirmatory affidavit, in which he
confirmed the facts in Kleinschmidt’s affidavit ‘insofar as they
refer or relate to me’. Consequently, found the court
a
quo
, it was left in the dark as to what
reasons had motivated Mayekiso’s decisions. The court
a
quo
was quite wrong. Among other things,
Mayekiso had made a supplementary affidavit in which he had said:
‘As
regards Mr Kleinschmidt’s main answering affidavit, in addition to
my general confirmation thereof insofar as it refers or
relates to me
(which I repeat), I specifically confirm the reasons given by Mr
Kleinschmidt for the decision and his explanation
of the information
and factors which I took into account. I would add that during the
medium term fishing rights allocations process
and thereafter Mr
Kleinschmidt and I often discussed issues relating to the process and
resulting allocations, including the policy
issues raised. Mr
Kleinschmidt was the other person delegated by the [Minister] to make
such allocations.’
Kleinschmidt
added in a supplementary affidavit:
‘I
would however emphasize that I and the [Chief Director] spent the
better part of a day together working through the draft affidavit
and
that the final product carries his unconditional imprimatur.’
[21] Kleinschmidt
also explained why only one main answer had been prepared. It was
because of the volume of the papers and the number
of issues raised
that the legal advisers decided that it would facilitate the court’s
understanding of the defence if a single
answering affidavit were
prepared, to be supported by confirmatory affidavits. The affidavits
to which I have referred above were
made in the Phambili matter but
similar affidavits were also made in the Bato matter.
[22] For
reasons that I find difficult to fathom the court
a
quo
also held that the explanations for the
allocations provided by Kleinschmidt were not within his personal
knowledge and should have
‘no probative value’. The court
a
quo
also commented adversely on the fact that
no affidavit was put forward on behalf of the Advisory Committee. As
it did not make the
decision, I do not see the need to have done so.
[23] I do
not agree with these findings on admissibility. They were not
supported by the respondents and I accept the Government affidavits
as evidence.
I now turn to the MLRA, which is pivotal to the review.
The long title to and sections 2 and 18 of the MLRA
[24]
The long title of
the MLRA reads:
‘To provide for the conservation
of the marine ecosystem, the long-term sustainable utilisation of
marine living resources and the
orderly access to exploitation,
utilisation and protection of certain marine living resources; and
for these purposes to provide
for the exercise of control over marine
living resources in a fair and equitable manner to the benefit of all
the citizens of South
Africa; and to provide for matters connected
therewith.’
Section 2, which is headed ‘Objectives and
principles’ reads:
‘The Minister and any organ of
state shall in exercising any power under this Act, have regard to
the following objectives and principles:
(a) The need to achieve optimum utilisation and
ecologically sustainable development of marine living resources;
(b) the need to conserve marine living resources for
both present and future generations;
(c) the need to apply precautionary approaches in
respect of the management and development of marine living resources;
(d) the need to utilise marine living resources to
achieve economic growth, human resource development, capacity
building within fisheries
and mariculture branches, employment
creation and a sound ecological balance consistent with the
development objectives of the national
government;
(e) the need to protect the ecosystem as a whole,
including species which are not targeted for exploitation;
(f) the need to preserve marine biodiversity;
(g) the need to minimise marine pollution;
(h) the need to achieve to the extent practicable a
broad and accountable participation in the decision-making processes
provided
for in this Act;
(i) any relevant obligation of the national government
or the Republic in terms of any international agreement or applicable
rule
of international law; and
(j)
the need to restructure the fishing industry to
address historical imbalances and to achieve equity within all
branches of the fishing
industry’
(emphasis supplied).
Section 18, which deals with the granting of rights,
reads in part:
‘
(1) No person shall undertake commercial fishing or
subsistence fishing, engage in mariculture or operate a fish
processing establishment
unless a right to undertake or engage in
such an activity or to operate such an establishment has been granted
to such a person by
the Minister.
(2) ….
….
(5)
In granting any right referred to in subsection
(1), the Minister shall, in order to achieve the objectives
contemplated in section
2, have particular regard to the need to
permit new entrants, particularly those from historically
disadvantaged sectors of society.
(6) All
rights granted in terms of this section shall be valid for the period
determined by the Minister, which period shall not exceed
15 years,
whereafter it (sic) shall automatically terminate and revert back to
the State to be reallocated in terms of the provisions
of this Act
relating to the allocation of such rights’ (emphasis supplied).
Were
sections 2 and 18(5) properly understood and were they heeded?
[25] The
judges
a quo
were of
the opinion that s 2 had been ignored, so that the Chief Director’s
decision was fatally flawed. The finding that the Chief
Director
ignored the section is a remarkable one, which is repeatedly rebutted
in the course of the extensive record. One reason
for the court’s
view was that the Chief Director had not expressly said that he had
had regard to it. Another reason articulated
was that:
‘It
appears that there are strong nuances which seem to underlie the
decision but what are not expressly articulated as part of
the
reasons. These are that there are a number of existing rights holders
who are
established in the hake industry
, that the industry is
capital intensive
, and that there must be
stability
in
the industry’ (emphasis supplied).
[26] As
will appear later the basis of the court’s finding on this aspect
of the case was that the Chief Director had ignored the
goal that the
Act had sought to achieve (transformation), whilst relying on
‘extraneous criteria such as stability or capital intensity’.
The
restoration of historical imbalances was said to be the ‘mischief’
that the Act was designed to remedy. Various of the subsections
of s
2 were said to be merely a replay of the past. I have difficulty with
this reasoning. No doubt s 2(j) was intended to remedy
the ‘mischief’
of past discrimination, but that does not mean that it overmasters
the other subsections merely because they lack
novelty.
[27] The
argument for the respondents is not capable of being stated
precisely, no doubt because it is not a precise argument. Contained
within it is the proposition that s 2(j) must be given effect to each
time; also that that subsection has a predominating force.
The
argument becomes particularly hazy when it is asked, ‘but how much
exactly should have been allocated to you through the proper
application of s 2(j) and at whose expense’? Perhaps an even more
difficult question to answer would be whether the respondents,
among
other existing rights holders, should not be made to give up some
part of their quota in favour of new entrants. The difficulty
in
answering questions of this kind again points to the possible
conclusion that we are dealing with a discretionary administrative
decision which in the view of the respondents lacked appropriate
generosity.
[28] Safer
by far it is to start with the Act itself and learn from it what its
manifold objects are – see for instance,
Standard
Bank Investment Corporation Ltd v Competition Commission and Others;
Liberty Life Association of Africa Ltd v Competition
Commission and
Others
[2000] ZASCA 20
;
2000 (2) SA 797
(SCA) at 810D-812H
paras [16-23] and
Poswa v Member of the
Executive Council for Economic Affairs, Environment and Tourism,
Eastern Cape
2001 (3) SA 582
(SCA) at
586I-587F paras [9-11]. If one reads the Act it is apparent that it
introduces a mandatory requirement to have regard to
the redress of
certain wrongs of the past. And if the Chief Director were to fail to
heed this injunction he would fail in his duty
and his decision would
be open to attack. But that does not mean that the subsection swamps
the rest of the Act. Nor does the Act
suggest as much. It would be
absurd to suggest, for instance, that transformation should be
hastened by increasing the TAC drastically,
as this would subvert the
injunction to conserve marine living resources for both present and
future generations, as required by
s 2(b) and would result ultimately
in everybody being the loser.
[29] It
is true that sections 2 and 18 do contain two imperative words –
‘shall’ in s 2 and again in s 18(5) – and two compelling
phrases – ‘the need to restructure’ in s 2(j) – and ‘have
particular regard to the need to permit’ in s 18(5). However,
it should be noticed that in the English version each subsection of s
2 (other than s 2(i)) commences with the phrase ‘the need’,
whereas in the Afrikaans version only subsections 2 (a) and 2 (b)
commence with the phrase ‘die noodsaak’, whereas subsections
2
(c) to (h) and (j) commence with the less pressing phrase ‘die
behoefte’. But even taking the two relevant ‘shalls’ to
be
shalls, their object is not that each of subsections (a) to (j) shall
be given operative effect each time but only that the functionary
shall ‘have regard to’ or ‘have particular regard to’ them.
As to the meaning of this phrase, Ludorf J explained in
Joffin
and Another v Commissioner of Child Welfare, Springs, and Another
1964 (2) SA 506
(T) at 508F-H:
‘The
words “have regard to” in their ordinary meaning simply mean
“bear in mind”or “do not overlook”.
In
Illingworth v Walmsey
[1900] 2 QB 142
, the words “regard
shall be had to” the difference were held to mean the tribunal must
bear the difference in mind and that it
had a discretion.
In
Perry
v Wright
[1908] 1 KB 441
, similar words were said to be “a
guide, not a fetter”.
I quote
these two cases if authority in the use of the English language be
necessary but to my mind the section obviously enjoins
the
Commissioner to bear these matters in mind and to exercise a
discretion in regard thereto.’
[30] A
conclusion that the subsections are there to guide and not to fetter
functionaries is reinforced by the fact that the considerations
listed in s 2 are ‘objectives and principles’. According to the
SOED, an objective is ‘a thing aimed at or sought; a target,
a
goal, an aim’; and a principle is ‘a general law or rule adopted
or professed as a guide to action; a fundamental motive or
reason for
action’.
[31] Moreover
the various functionaries concerned, with many and diverse powers,
must have regard to a wide range of objectives and
principles. Those
objectives and principles will often be in tension and may even be
irreconcilable with one another. Accordingly
it would be impractical
if not impossible to give effect to every one of them on every
occasion. Nor does the section say that a
functionary must have
regard to each consideration in each case, nor what weight is to be
accorded it, nor how the various considerations
are to be balanced
against one another, nor when or how fast transformation is to take
place, nor that the listed considerations
are the only ones to be had
regard to. These matters are left to the discretion of the Chief
Director.
[32] I
would add, with regard to the applicability of s 18(5) which deals
with new entrants, that neither of the respondents is a
new entrant.
[33] Accordingly
I am of the view that the court
a quo
erred in its interpretation of the sections. And in any event I
consider that the court also erred in holding that the Chief Director
did not in fact have regard to the sections.
[34] The
record reveals a constant reiteration, in detail at times, of the
need to take transformation into account. These reiterations
are
contained in the guidelines and policy directions levelled at
functionaries forming part of the chain of decision making. No
purpose would be served in setting out the detail. The Advisory
Committee, having been so instructed, acted in accordance with the
instructions and the Chief Director accepted the consequent
recommendations of the Committee in leading up to making his
decision.
[35] I
have the Chief Director’s word that he did have regard to the need
for transformation. It would be difficult to believe that
he did not.
Moreover the reasons given for the decisions on the various
allotments demonstrate that he did:
‘7.
Chief Director’s Decision on Allocation of Rights
7.1 In
coming to his decision, the CD decided not to take the scoring in
respect of by-catch and offal strategies into account. During
the
process of considering the applications in the light of the scoring,
the DDG concluded that the information provided by the applicants
and
the percentages upon which the scores were determined were not
sufficiently reliable to warrant a distinction being drawn based
on
these criteria.
7.2 After
considering each application and having regard to the assessments of
the Advisory Committee, the CD decided –
that
no new entrants could be accommodated;
that
fifty one (51) of the 2001 rights holder applicants be granted
rights;
not
to make a decision in respect of application #17595 (Houtbay Fishing
Industries (Pty) Ltd). A decision will be made on this
application
once the section 28 enquiry into alleged breaches of that
applicant’s permit conditions and its alleged contraventions
of
the
Marine Living Resources Act 18 of 1998
, have been finalised.
7.3 The
decision not to grant rights to new entrants was based on the
following reasons–
The
Hake Long-line and Hand-line (which is soon to be regulated) sectors
provided a more suitable vehicle for the promotion of SMME’s
and
the admission of new entrants than the Hake Deep Sea Trawl sector
does.
The
Hake Deep Sea Trawl sector is highly capital intensive and is
already over subscribed. As a result, the amounts allocated to
smaller right-holders in the 2001 season were not economically
viable.
The
TAC for the Hake Deep Sea Trawl sector remains at 138 495 tons.
All
but one of the 2001 right-holders applied for rights.
The
inclusion of a new entrant in this environment could destabilise the
industry, threaten the investment in the industry, discourage
future
investment and may lead to job losses.
8.
Quantum
Allocated
8.1 A TAC
of 138 495 tons is available for allocation to hake deep sea trawl
right-holders.
8.2 An
amount of 1487 tons is set aside for appeals. A further amount of 803
tons is set aside for possible allocation to Houtbay
Fisheries (Pty)
Ltd. This leaves 136 205 tons for immediate allocation to successful
applicants. Any residue from the amounts set
aside will be
distributed proportionally to right-holders.
8.3 The
distribution of quantum amongst the right-holders is calculated and
determined in the “General Reasons” Document attached
hereto as
Annexure “B”. The starting point for the calculation is the
allocation made to right-holders in the 2001 season. Five
percent of
this amount was then deducted from each applicant, amounting to 6
810.25 tons in total. This amount was distributed
amongst the
right-holders in proportion to their scoring in the comparative
balancing assessment.’
In an
annexed document the following is also said about an earlier stage in
the process:
‘Of
the 54 applications from 2001 right-holders, 51 were successful. The
2001 right-holders were comparatively balanced against
one another in
accordance with assessment criteria based on –
the
degree of transformation;
the
degree of involvement and investment in the industry;
past
performance;
legislative
compliance;
degree
of paper quota risk.’
[36] On a
fair reading of these passages it is plain, in my opinion, that
transformation was taken into account. Para 7.3 of the first
document
sets out the reason for not granting any rights to new entrants. The
longline and handline sectors were more appropriate.
The deep sea
sector was highly capital intensive and over-subscribed. And the
inclusion of new entrants in the sector could destabilise
the
industry, threaten investment in it and discourage future investment,
which might lead to job losses.
[37] What
was done in the deep sea sector is set out in para 8.3. The starting
point was the allocations in the previous season. So,
at that point
no new allowance had yet been made for transformation. But in the
next step further allowance certainly was made. The
quotas of the
holders of larger allocations were reduced and the smaller rights
holders were the beneficiaries of that reduction.
[38] Accordingly
I am of the view that under this head of attack the court
a
quo
was wrong both on the law and on the
facts. The passages quoted will be revisited under other heads, such
as the suggestions that
the decisions were not expressed with
reasons, or were capricious, or were influenced by extraneous
criteria, or were too vague to
be understood; but the argument that
s
2(j)
of the MLRA was ignored must fail.
Vagueness?
Absence of reasons?
[39] The
much-reiterated argument for the respondents is that what the
appellants call reasons are not reasons at all. Alternatively,
they
are said to be vague as to
why
the allocations were made as they were and particularly they are said
not to constitute ‘adequate’ reasons within the meaning
of s 5(3)
of the Promotion of Administrative Justice Act 3 of 2000 (PAJA)
because they do not answer two questions;
why
choose the 2001 allocations as a starting point
,
and
why five percent
and not some larger percentage? The appellants do not challenge that
there was a constitutional duty resting on the Chief Director
to give
reasons for his administrative actions but they do say that quite
adequate reasons were given.
[40] What
constitutes adequate reasons has been aptly described by Woodward J,
sitting in the Federal Court of Australia, in the case
of
Ansett
Transport Industries (Operations) Pty Ltd and Another v Wraith and
Others
[1983] FCA 179
;
(1983) 48 ALR 500
at 507 (23-41), as
follows:
‘The
passages from judgments which are conveniently brought together in
Re
Palmer and Minister for the Capital Territory
(1978) 23 ALR 196
at 206-7;
1 ALD 183
at 193-4, serve to confirm my view that s 13(1)
of the Judicial Review Act requires the decision-maker to explain his
decision in
a way which will enable a person aggrieved to say, in
effect: “Even though I may not agree with it, I now understand why
the decision
went against me. I am now in a position to decide
whether that decision has involved an unwarranted finding of fact, or
an error
of law, which is worth challenging.”
This
requires that the decision-maker should set out his understanding of
the relevant law, any findings of fact on which his conclusions
depend (especially if those facts have been in dispute), and the
reasoning processes which led him to those conclusions. He should
do
so in clear and unambiguous language, not in vague generalities or
the formal language of legislation. The appropriate length
of the
statement covering such matters will depend upon considerations such
as the nature and importance of the decision, its complexity
and the
time available to formulate the statement. Often those factors may
suggest a brief statement of one or two pages only.’
To
the same effect, but more brief, is Hoexter
The
New Constitutional and Administrative Law Vol 2
244:
‘
[I]t is
apparent that reasons are not really reasons unless they are properly
informative. They must explain
why
action was taken or not
taken; otherwise they are better described as findings or other
information.’
See
also
Nkondo, Gumede and Others v Minister of
Law and Order and Another
1986 (2) SA 756
(A)
at 772I-773A.
[41] Detailed
reasons were spelt out for not granting entry to any new applicants.
Among the considerations were high capital investments,
the danger of
destabilising the industry and the discouragement of investment, with
accompanying job losses. These considerations
having been stated as
facts or motivating opinions did not go away when procession was made
to the next stage, what to do among the
existing rights holders. The
first criticism is that there is no explanation for why the 2001
allocations were used as a starting
point.
[42] Counsel
for the respondents declined to commit themselves to what the
starting point should have been, largely confining themselves
to
saying that it should not have been the 2001 allocations, which
reflected the
status quo
.
This unreadiness for commitment is unsurprising as it is difficult to
see what else could have been used, given that, already, consequent
upon those allocations and their predecessors, there was a whole
complicated structure of employment, vessels, skills, developed
markets and so forth. The respondents argue as if it were incumbent
upon the Chief Director to approach the allocations, on each
occasion, as if there were no existing fisheries, no existing
participants, no existing investments and no track record of
expertise
and of involvement in the industry in its various aspects.
That cannot be so. To my mind the respondents’ approach is an
approach
so unreasonable that it leads to a person embracing it to be
forced to seek an explanation for that which needs no explanation.
Transformation
should have been taken into account at this stage
already, it is implicitly suggested. Further implicit is the
suggestion that the
status quo
should have been altered to allow for transformation. Why this should
have been done when transformation was going to be allowed
for at the
next stage is obscure. Why the decision could not be understood is
itself not understood. Incomprehensibility is perceived
where there
is none.
[43] The
second main criticism is, why five percent? Again a question arises,
if not five per cent, then how many per cent? This unanswerable
question also is not answered. This is also not surprising. There
comes a time in quantification decision making when a discretionally
chosen number has to be adopted to reflect an allowance which,
although expressed as a percentage figure, is intended as an
expression
of degree, eg large, moderate, small – as the case may
be. This happens when a judge determines that the apportionment of
fault
is 60:40, when the contingency allowance for remarriage is
determined at 20 %, or where the general damages are fixed at R120
000.
There are moments when the fixing of a number is not capable of
exact rationalisation or explanation. To my mind, a fair reading
of
the reasons makes it clear that the Chief Director, suitably
assisted, in the exercise of his discretion, decided that an
appropriate
percentage for the diminution of quotas at the end of
2001 was five per cent. I also consider it to be plain that in doing
so he
took into account the immediate need for transformation as well
as the potential for creating instability in the industry, possibly
leading to inadequate investment and job losses.
[44] It
should be added that what reasons are to be given for is
the
decision
of the decision-maker. The decision
in this case is the allotment of certain tonnages to particular
applicants. The reasons for that
decision, in my opinion are set out,
and are chiefly that there will be no new entrants, that 51 of the
existing holders are to be
allotted quotas, that the allocations for
the previous year will be used as a starting point, save that five
per cent will be deducted
for redistribution to further
transformation. Further it is made plain that the need to achieve
stability has been taken into account.
These are reasons enough for
dissatisfied applicants to attack the decision should they so choose.
My
conclusion is that reasons were given, that they were reasonably
clear and that they were adequate.
[45] Before
proceeding to the next heading (arbitrariness) it should be noticed
that in the course of the second step transformation
was taken into
account at two levels. The first was the five percent reduction in
quotas followed by a reallocation which favoured
smaller quota
holders as a class. But the reallocations also favoured individual
smallest quota holders who had scored well on transformation.
For
instance, the allotment to Mayibuye Fishing CC went up by 30 %, that
of Combined Fishing Enterprises by 37 % and Khoi-Qwa Fishing
Development Corporation by 57 %. The scoring criteria set out in the
passage quoted at the end of para [35] above has the degree
of
internal transformation by applicants as the first criterion. Four
points out of ten were allotted to transformation. Thus one
finds,
for instance, when all the criteria had been taken into account, that
applicants having the same 2001 allocations did not
achieve identical
increases in quotas in 2002. As an example, five applicants enjoying
quotas of 599 tons in 2001, received in 2002
quotas of 772, 611, 628,
772 and 654 respectively. A few applicants with small quotas actually
lost quota when compared with 2001.
Were
the decisions capricious or based upon arbitrary or irrelevant
considerations?
[46] The
court
a quo
was of the
view that the Chief Director had taken extraneous criteria into
account (as already stated) and that the decision to use
the 2001
allocations as a starting point was arbitrary and capricious.
Section
33(1) of the Constitution enjoins that all administrative action must
be ‘lawful, reasonable and procedurally fair’.
The common law and
sections 3 to 6 of PAJA elaborate and give content to these
standards. They are not new. As was stated by Chaskalson
CJ in
Bel
Porto School Governing Body and Others v Premier, Western Cape, and
Another
[2002] ZACC 2
;
2002 (3) SA 265
(CC) at 292, para
[87]:
‘The
role of the Courts has always been to ensure that the administrative
process is conducted fairly and that decisions are taken
in
accordance with the law and consistently with the requirements of the
controlling legislation.’
[47] From
what has already been said as to the interpretation of sections 2 and
18 of the MLRA, it is apparent that the Chief Director,
as the
delegate of the Minister, has a wide discretion to strike a balance,
in furtherance of the objectives and principles of the
Act. To a
large extent he gives effect to government economic policies. In such
a case a judicial review of the exercise of powers
calls for
deference, in the sense stated in
Logbro
Properties CC v Bedderson NO
and
Others
2003 (2) SA 460
(SCA) at 471A-D paras
[21] and [22], that:
‘… a
judicial willingness to appreciate the legitimate and
constitutionally-ordained province of administrative agencies; to
admit the expertise of those agencies in policy-laden or polycentric
issues; to accord their interpretation of fact and law due respect;
and to be sensitive in general to the interests legitimately pursued
by administrative bodies and the practical and financial constraints
under which they operate. This type of deference is perfectly
consistent with a concern for individual rights and a refusal to
tolerate
corruption and maladministration. It ought to be shaped not
by an unwillingness to scrutinize administrative action, but by a
careful
weighing up of the need for – and the consequences of –
judicial intervention. Above all, it ought to be shaped by a
conscious
determination not to usurp the functions of administrative
agencies; not to cross over from review to appeal.’
(This
passage is a quotation from Hoexter’s
The
Future of Judicial Review in South African Administrative Law
(2000) 117 SALJ 484
at 501-502.)
[48] See
also Sachs J in
Du Plessis and Others v De
Klerk and Another
1996 (3) SA 850 (CC)
at 931J-932B para 180:
‘The
matter is not simply one of abstract constitutional theory. The
judicial function simply does not lend itself to the kinds
of factual
enquiries, cost-benefit analyses, political compromises,
investigations of administrative/enforcement capacities,
implementation
strategies and budgetary priority decisions which
appropriate decision-making on social, economic, and political
questions requires.
Nor does it permit the kinds of pluralistic
public interventions, press scrutiny, periods for reflection and the
possibility of later
amendments, which are part and parcel of
Parliamentary procedure. How best to achieve the realisation of the
values articulated by
the Constitution is something far better left
in the hands of those elected by and accountable to the general
public than placed
in the lap of the Courts.’
[49] Similarly
Chaskalson P in
S v Lawrence
1997 (4) SA 1176
(CC) at 1195G-1196E para [42]:
‘To
apply that test to economic regulation would require Courts to sit in
judgment on legislative policies on economic issues. Courts
are ill
equipped to do this and in a democratic society it is not their role
to do so. In discussing legislative purpose Professor
Hogg says:
“
While a
court must reach a definite conclusion on the adjudicative facts
which are relevant to the disposition of litigation, the
court need
not be so definite in respect of legislative facts in constitutional
cases. The most that the court can ask in respect
of legislative
facts is whether there is a rational basis for the legislative
judgment that the facts exist.
The
rational-basis test involves restraint on the part of the court in
finding legislative facts. Restraint is often compelled by
the nature
of the issue: for example, an issue of economics which is disputed by
professional economists can hardly be definitively
resolved by a
court staffed by lawyers. The most that can realistically be expected
of a court is a finding that there is, or is
not, a rational basis
for a particular position on the disputed issue.
The more
important reason for restraint, however, is related to the respective
roles of court and Legislature. A Legislature acts
not merely on the
basis of findings of fact, but upon its judgment as to the public
perceptions of a situation and its judgments
as to the appropriate
policy to meet the situation. These judgments are political, and they
often do not coincide with the views
of social scientists or other
experts. It is not for the court to disturb political judgments, much
less to substitute the opinions
of experts. In a democracy it would
be a serious distortion of the political process if appointed
officials (the Judges) could veto
the policies of elected officials.”
’
[50] Judicial
deferrence does not imply judicial timidity or an unreadiness to
perform the judicial function. It simply manifests
the recognition
that the law itself places certain administrative actions in the
hands of the executive, not the judiciary.
[51] The
respondents’ complaint is that in reaching his decisions the Chief
Director acted arbitrarily, capriciously or irrationally.
But in
pressing for what would be to the advantage of the respondents they
show little concern for the interests of others, or the
benefit of
the public as a whole. That is not an approach that should or may be
adopted by the Chief Director. He is obliged to have
regard to a
broad band of considerations and the interests of all that may be
affected. If the Chief Director had indeed acted in
accordance with
the respondents’ prescriptions one may imagine the fate of a review
application brought by the ‘pioneer’ companies,
they pointing to
the trawlers rusting by the quayside, the one-time crewmen lounging
in the streets and the fishing nets, like the
regimental colours,
laid up in the cathedral; the ‘pioneers’ in consequence
complaining of capricious action. The Chief-Director’s,
decision is
indeed a polycentric one. And in deciding whether his decision is
reviewable it should be remembered that even if the
respondents had
succeeded in proposing what to my mind would be a better solution
than that adopted by him (they did not attempt
to do so), it would
not be open to me to adopt it, for the reason stated by Chaskalson P
in
Bel Porto
above at
282F-G para [45]:
‘The
fact that there may be more than one rational way of dealing with a
particular problem does not make the choice of one rather
than the
others an irrational decision. The making of such choices is within
the domain of the Executive. Courts cannot interfere
with rational
decisions of the Executive that have been made lawfully, on the
grounds that they consider that a different decision
would have been
preferable.’
See
also
Pharmaceutical Manufacturers Association
of SA and Another: In re ex parte President of the Republic of South
Africa and Others
[2000] ZACC 1
;
2000 (2) SA 674
(CC) at
709D-H para [90].
[52] During
the course of the argument for Phambili we were frequently told that
something that the Chief Director had done was ‘wrong’.
This is
the language of appeal, not review. I do not think that the word was
misused, because time and again it appears that what
is really under
attack is the substance of the decision, not the procedure by means
of which it was arrived at. That is not our job.
I agree with what is
said by Hoexter (op cit) at 185:
‘The
important thing is that judges should not use the opportunity of
scrutiny to prefer their own views as to the correctness of
the
decision, and thus obliterate the distinction between review and
appeal.’
[53] Judicial
deference is particularly appropriate where the subject matter of an
administrative action is very technical or of a
kind in which a court
has no particular proficiency. We cannot even pretend to have the
skills and access to knowledge that is available
to the Chief
Director. It is not our task to better his allocations, unless we
should conclude that his decision cannot be sustained
on rational
grounds. That I cannot say. Accordingly I am of the view that the
attack based on capriciousness must also fail.
[54] Nor
do I think that there is merit in the suggestion that he was swayed
by considerations, particularly stability, that he should
have
regarded as extraneous, or that he was too much swayed by them (the
argument against stability as a consideration weakened as
the case
proceeded). I do not think that considerations such as instability in
the industry, under capitalisation and loss of jobs
were extraneous
to the proper making of allocations. Some of the objectives or
principles named in s 2(d) are the achievement of
economic growth,
human resource development, capacity building and employment
creation. It would have been irresponsible of the Chief
Director to
have deprived the industry to any marked extent of the obvious
benefits of the large fleets of trawlers, the existing
skills and the
secure employment offered by the ‘pioneer’ companies. In the
latter connection it is to be noted that the labour
unions consider
that those companies tend to be more labour intensive and provide a
variety of side benefits that go with secure
employment. Ignoring
stability would also not have been consonant with the need to have
regard to achieving optimum utilisation in
terms of s 2(a).
[55] In my
opinion the rationality and reasonableness of the Chief Director’s
decision is further demonstrated by what has been
said already, at
some length, in paras [41] to [43] and [45] above under the heading
‘Vagueness? Absence of reasons?’
[56] It
should also be observed that the Policy Guidelines quoted in
paragraph [6] above made it perfectly clear that stability was
a
factor much in the mind of the Department. An applicant participating
in the allocation process was therefore fully alerted to
the fact
that stability was likely be taken into account, to a greater or
lesser but to an unknown extent, so that it simply did
not lie in its
mouth to complain when it was taken into account.
[57] It
remains to say that the court
a quo
erred, again, in regarding stability and the need for investment as
extraneous matters.
The
tonnage set aside for appeals
[58] It
will be remembered that before allocating the deep sea TAC the Chief
Director ‘set aside’ 1 487 tons to allow for the
possibility of
appeals. Section 80 of the MLRA provides for an appeal to the
Minister against a decision of one of his subordinates.
Phambili
contended that the Chief Director was not entitled to set aside a
part of the TAC for this purpose and, secondly, that by
acting as he
did he had ‘impermissibly fettered’ and ‘rendered nugatory’
the Minister’s powers on appeal. The court
a
quo
did not uphold these two contentions.
[59] They
seem to contradict each other. The first (no right to set aside)
suggests that no part of the TAC should have been reserved.
The
second (impermissibly fettered) suggests that even more should have
been set aside. Be that as it may, neither the MLRA, nor
the Minister
in delegating his powers enjoined the Chief Director to allocate the
entire TAC at one time. So much for the first contention.
[60] As to
the second, it is inappropriate to consider it at this stage. The
objection could become relevant only if an applicant
should succeed
on appeal but not receive the tonnage to which it was entitled,
because there was too little left to allocate, or
if it failed in its
appeal for the same reason. Then there might be talk of an unfair
appeal. But we are dealing with a review of
the original allotment
decision. Both respondents have in fact appealed to the Minister and
we now know (as the result of further
evidence tendered by Bato which
I consider should be admitted – the appellants not objecting) that
as a result of their appeals,
Phambili has been awarded a further 43
tons and Bato an additional 17. There has been no suggestion that
they have not received what
they were awarded on appeal to the
Minister. There is no logic in setting aside all the allotments
because too much or too little
was, in the opinion of the
respondents, set aside for appeals.
The
Chief Director did not consider the tonnages applied for
[61] Bato
raises a further argument – that the Chief Director did not apply
his mind to its allocation, in that he did not give
consideration to
the tonnage sought by Bato or to its ability to fish that tonnage.
Notwithstanding the Chief Director’s uncontroverted
statement that
he did consider each application separately, the argument is that
there is no trace in the record that he considered
the two points
raised. What the purpose would have been in considering them when it
was manifest that the aggregate of all the tonnages
sought exceeded
the TAC is not clear. On examination this argument is revealed as an
oblique attack on two other stages leading up
to the decision. The
first is that the quota holders would ‘retain’ 95 % of their
former quotas come what may. This limited the
tonnage available to
assuage Bato’s demands. The permissibility of the   95-5
split has been considered above. The further
complaint is that
certain ‘paper quota’ holders were allowed to ‘retain’ their
old quotas (or rather 95 % of them). The result
was, again, that
there was less tonnage available for Bato than there should have
been. This decision, also, was one based on policy,
which according
to Bato was ‘wrong’. Failing a permissible ground of review, the
fact that we may consider a decision not to
be the wisest (I do not
say that I hold that view) is not a matter for review.
Minimum
viable quota
[62] A
further ground of review raised by Bato, not dealt with by the court
a quo
, is that the
director did not have regard to the notion of minimum viable quota
(MVQ), by which is conveyed the belief that there
is some
determinable level below which a quota is too small to be operated
profitably. The short answer to this contention is that
the Economic
Sectoral Fishery Profile Study (‘ESS’), an investigation and
report commissioned by the Department from Rhodes University,
rejected the concept of the MVQ. It has not been adopted by the
Department. Nor does it form part of the MLRA. The concept has been
disregarded by scientists as of no scientific value. Consequently
there is no basis on which Bato may foist it on the Director-General.
[63] In
any event the fact is that small quotas are capable of successful
exploitation. Experience shows that some holders of small
quotas have
put them to fruitful use by forming joint ventures, or concluding
co-operative arrangements, or by buying additional
quota from other
holders. One of the hopes of the Department was that over the medium
period, 2002 to 2005, market forces would operate
so that small quota
holders would make better use of their quotas by merging,
co-operating and so forth.
Legitimate
Expectation
[64] Phambili
claimed that it had a legitimate expectation of a ‘substantial
allocation and increase’ in the allocation to it,
in that it
‘believed that the application for a right to catch 5 000 tons
would be favourably considered’. Both Phambili and
Bato relied on
the Policy Guidelines and a Ministry media statement, each dating
from 2001. In addition Phambili relied on the Minister’s
speech in
the National Assembly in May 2001 and a further Ministerial media
statement. Bato further relied on a white paper in 1997
and two draft
discussion documents. The general tenor of these documents was that
the government intended doing something positive
about transformation
in the fishing industry. Phambili’s case was based on the doctrine
of legitimate expectation. Bato’s case,
which will be explained
below, had a different basis.
[65] Dealing
first with legitimate expectation, the test to be applied has
recently been restated in this court in
South
African Veterinary Council and Another v Szymanski
,
unreported, SCA. The judgment was delivered on 14 March 2003, by
Cameron JA who stated at para [19]:
‘The
requirements relating to the legitimacy of the expectation upon which
an applicant may seek to rely have been most pertinently
drawn
together by Heher J in
National Director of Public Prosecutions v
Phillips and Others
2002 (4) SA 60
(W) para 28. He said:
“The
law does not protect every expectation but only those which are
‘legitimate’. The requirements for legitimacy of the expectation,
include the following:
(i) The
representation underlying the expectation must be ‘clear,
unambiguous and devoid of relevant qualification’: De Smith,
Woolf
and Jowell (op cit [
Judicial Review of Administrative Action
5
th
ed] at 425 para 8-055). The requirement is a sensible one. It accords
with the principle of fairness in public administration, fairness
both to the administration and the subject. It protects public
officials against the risk that their unwitting ambiguous statements
may create legitimate expectations. It is also not unfair to those
who choose to rely on such statements. It is always open to them
to
seek clarification before they do so, failing which they act at their
peril.
(ii) The
expectation must be reasonable
: Administrator, Transvaal v Traub
(supra
[1989] ZASCA 90
;
[1989 4) SA 731
(A)] at 756I-757B); De Smith, Woolf and Jowell
(supra at 417 para 8-037).
(iii) The
representation must have been induced by the decision-maker: De
Smith, Woolf and Jowell (op cit at 422 para 8-050);
Attorney-General
of Hong Kong v Ng Yuen Shiu
[1983] UKPC 2
;
[1983] 2 All ER 346
(PC) at 350h-j.
(iv) The
representation must be one which it was competent and lawful for the
decision-maker to make without which the reliance cannot
be
legitimate:
Hauptfleisch v Caledon Divisional Council
1963 (4)
SA 53
(C) at 59E-G.” ’
[66] The
numerous and disparate statements, by different persons, on which the
respondents rely, cannot amount to a representation
that is ‘clear,
unambiguous and devoid of relevant qualification’ – for instance
statements such as ‘broadening future participation’;
‘a system
which ensures greater access to the resources by those who have been
denied access previously’; ‘the achievement
of equity in the
fishing industry in addressing the historical imbalances’;
‘broadening future participation’; ‘an end product
… which
differs radically from the situation that obtains today’; ‘the
beginning of a fundamental change in the fishing industry
in South
Africa’; the achievement of the twin objectives of ‘stability and
black economic empowerment’; and ‘Up to 25 % of
the “remaining”
[remaining after what?] TAC will be set aside and will be allocated
to deserving applicants in order to encourage
transformation and
restructuring,
either through the internal
restructuring of current rights holders
, or
through the accommodation of new entrants’ (emphasis supplied). How
are the tonnages apparently expected by Phambili reasonably
to be
extracted from such statements? To arrive at tonnages is made even
more difficult by the respondents’ counsel’s understandable
unreadiness to suggest a percentage to replace 5 % or a different
starting point. They confine themselves to generalisations. The
percentage should be considerably higher and the starting point
should be different (with some tentative suggestions as to where
it
should be). That is the argument.
[67] It
should also be borne in mind that some of the documents and
statements arose during discussions as to the future. To hold
politicians and bureaucrats to every word uttered in the course of
negotiation might hamstring open discussion. Moreover, nothing
that
they say can alter the meaning of the MLRA, which does not always
reflect earlier thinking which must be taken to have been
abandoned.
[68] Nor,
to apply the second test in the
Phillips
case
(above), was Phambili’s reliance on what it thought had been
represented reasonable. [69] It is unnecessary to probe legitimate
expectation further. Enough has been said to demonstrate that there
is no substance in this ground of review.
Fair
administrative action
[70] As
I have indicated Bato does not rely on legitimate expectation but
presents an argument that is much akin to it and which is
based on
much the same material. The argument relies on s 33(1) of the
Constitution, which entitles everyone to ‘administrative
action
that is lawful, reasonable and procedurally fair’. The complaint is
that when the allocations were made there was an unheralded
change in
policy, which was procedurally unfair to applicants who had earlier
relied on previous and oft-repeated statements as to
how
transformation would be treated in the allocation process. Reliance
is placed on
Premier, Mpumalanga, and Another
v Executive Committee, Association of State-Aided Schools, Eastern
Transvaal
1999 (2) SA 91
(CC) at 110 C-D para
[41]:
‘Citizens
are entitled to expect that government policy will ordinarily not be
altered in ways which would threaten or harm their
rights or
legitimate expectations without their being given reasonable notice
of the proposed change or an opportunity to make representations
to
the decision-maker.’
[71] The
right that is relied upon is the right to be fairly treated. That an
applicant has such a right is clear (see eg
Transnet
Ltd v Goodman Brothers (Pty) Ltd
[2000] ZASCA 151
;
2001 (1) SA
853
(SCA) at 871F-G paras [11-12]). This is so even though it had no
right to receive an allocation. But was the right violated? In order
to answer this question one needs to ask what was it in the
decision-maker’s mind of which an applicant was not aware and which
conflicted with earlier policy statements.
[72] In
this connection reference needs to be made to the ‘Evaluation of
Applicants’ section of the Policy Guidelines quoted in
para [6]
above. There applicants for quotas were expressly warned that s 2 of
the Act would be applied. That Act makes no mention
of MVQ. Yet the
first alleged subject of ignorance is said to be that applicants were
not aware that that concept had been jettisoned.
Not only did the Act
not mention MVQ but applicants were expressly warned that no
precedence, weighting or ranking was to be derived
from the
Guidelines themselves. Those Guidelines made it clear that the
Minister or his delegate was going to use his discretion,
within the
parameters of the Act. The second subject of which applicants were
said to have been ignorant was that the decision-maker
had abandoned
the intention to award a ‘notable proportion’ of the TAC to hdp,
as had been stated in para 2 of the relevant section
of the
Guidelines – see para [6] above. The reference to ‘notable
proportion’ is said to be to the percentage that was to be
placed
in the ‘equity pool’, but I do not think that that is the correct
interpretation of what was said. The true meaning is
that a notable
proportion of the total TAC would be allotted to the hdp. The fact is
that 23.86 % of the hake deep sea quantum for
2002 was allocated to
rights holders which were 50 % or more owned by hdp. More than 80 %
of the quantum in the longline sector was
awarded to concerns
similarly owned. Surely these are ‘notable proportions’. And in
any event, what constitutes a notable proportion
is largely a matter
of opinion and I do not think that Bato has succeeded in showing that
there was a departure from what had been
previously foreshadowed. The
third subject of ignorance was said to be that applicants did not
know that the ‘pioneers’ would
not lose tonnage, or a substantial
tonnage. The fact is that they did. The fourth subject is that the
decision-maker was claimed
to have misunderstood the law. In the
light of what I have said earlier he understood the law very well.
The fifth subject was that
it was not known that the Department hoped
that there would be consolidation, co-operation and so forth among
smaller quota holders.
I fail to see how the Department’s failure
to proclaim its hopes for the future (if indeed it did not so
proclaim) can be presented
as some form of trap for supposedly
ignorant applicants. In sum I do not consider that there is any
substance in any part of the
argument that prospective quota-holders
were led into the dark and left there until it was too late.
[73] In
any event, I am at a loss to see where the argument would lead if
there were any substance to it. Bato concedes that if it
was brought
under a misapprehension, that in itself did not entitle it to receive
a particular larger quota. But, it says, it should
have been given a
hearing on the intention to change the policy. In other words the
whole cumbersome procedure would have had to
be brought to a halt
while representations were made as to why the Department’s formerly
stated policies (whatever they actually
were) were better than the
Department’s more recent thinking as to how its discretion should
best be exercised having regard to
what the MLRA required of it. This
would, on the facts in this case, be taking the right to fair
procedural action over the brink.
I conclude that there is no
substance in this point either.
[74] In
the result I am of the view that there is not any merit in any of the
respondents’ review grounds. The court
a quo
should not have upheld the review. These huge reviews, running to
some 45 volumes, were based upon a preconception that was not
sustained
by evidence and lacked all substance. The essential message
of this judgment is that it is not the function of a court to sit in
appeal on decisions to grant fishing allocations, or to constitute
itself as an authority as to how to make such allocations. That,
however much it is denied, is what the respondents are asking us to
do.
[75] This
conclusion makes it unnecessary to deal with two matters raised by
the Industry appellants in defence. The first was that
in terms of s
7(2) of PAJA an action is not to be reviewed unless any internal
remedy provided for has first been exhausted. Section
80 provides for
an internal appeal to the Minister and although the respondents had
appealed, the Minister had not reached his decision
when the reviews
were brought. In the light of the appellants’ successful opposition
to the reviews on other grounds it is unnecessary
to deal with this
point. Similarly with the Industry appellants’ request to admit the
evidence of one Rory Williams.
Costs
of the record
[76] A
request that the two appeals now before us be treated as urgent was
acceded to and they were set down for hearing on 2 and
5 May 2003.
The heads of the appellants were to be filed by 31 March and those of
the respondents by 15 April. That meant that the
judges had to
commence work on a combined record of 45 volumes without both sides’
heads. This made it particularly imperative
to comply with SCA Rules
8(6)(d)(ii) and 8(7). The former provides that all references in the
record to page numbers of exhibits
shall be transposed to reflect the
page numbers of such exhibits in the appeal record. This rule was not
complied with. Nor was the
position alleviated by reflecting the old
numbers in the index. That was also not done. Rule 8(7) requires that
where it is appropriate
a core bundle must be prepared. Before us are
appeals in which it was peculiarly appropriate to prepare a core
bundle. The effects
of its absence until a late stage were aggravated
by the records being cluttered with large numbers of documents that
were not relevant
to the appeal. The combined effect of these lapses
was that five appeal judges wasted a great deal of time trying to
find their way
through the record. Failure to comply with these rules
is a serious matter at any time, but especially so when an appeal is
urgent
and the record long. Urgency is not an excuse for remissness.
It is the more reason for compliance. There is no excuse for the
failure
to comply with these two rules. This Court has spoken often
enough about the frequency and flagrancy of the flouting of the
Rules.
In some cases it has made punitive costs orders. These appeals
call for such an order. It is accepted that all the appellants are
jointly responsible for the state of the record.
[77] I
have mentioned already that there are many unnecessary documents
contained in the records. There has not been a sufficient
compliance
with Rule 8(9). The reason given for this state of affairs is,
again, urgency. I have some sympathy for that resort
in this
particular respect. The process of accurate winnowing of chaff is not
made more easy by the need for haste. By agreement
some parts of the
record
a quo
were not
included in the appeal record. The final state of that record bears
the agreement of all parties. Accordingly, in these
special
circumstances I do not consider that a punitive order is warranted
for this breach of the Rules.
[78] There
is further ground for complaint about the record. The indexes in the
index volume and in the volumes following volume one,
in each case
contain a repetition of the full heading of the case, and the names
of all the attorneys, which take up a page and a
half. It was made
clear a long time ago that such a practice with regard to indexes
should not be followed and that the adoption
of it will lead to an
appropriate disallowance of costs. Nor is it only a
matter of costs. It wastes everybody’s
time having to plough
through these pages and other totally unnecessary pages in the
record. It is not uncommon to find page after
page on each of the
index pages of which the only substantive item is, for instance,
‘Smith. Evidence in chief (continued)’.
This is a sloppy,
cost-inflating practice not to be endured and attorneys should make
it clear to those who prepare records that
they will not pay for a
defective product (this comment is not intended to be confined to
indexes). In the appeals before us this
unnecessary repetition will
also be taken into account in determining on a punitive order.
[79] Taking
together the failure to insert the new numbers, the absence of a core
bundle and the inflated indexes and lists of attorneys,
I consider
that the appropriate order would be to disallow the recovery by the
appellants’ attorneys from the respondents on their
clients’
behalf, or from their own clients, the appellants, one third of the
cost of preparing the record.
Replying
affidavits
[80] There
is one other matter that I am compelled to mention – replying
affidavits. In the great majority of cases the replying
affidavit
should be by far the shortest. But in practice it is very often by
far the longest – and the most valueless. It was so
in these
reviews. The respondents, who were the applicants below, filed
replying affidavits of inordinate length. Being forced to
wade
through their almost endless repetition when the pleading of the case
is all but over brings about irritation, not persuasion.
It is time
that the courts declare war on unnecessarily prolix replying
affidavits and upon those who inflate them.
Result
[81] The
appeal is upheld with costs including the costs consequent upon the
employment of two counsel; save that the appellants’
attorneys are
forbidden to recover one third of the cost of preparing the record,
either from the respondents or from their own clients,
the
appellants.
[82] The
orders numbered 2, 3 and 4 in the judgment in each of case no 1171/02
and case no 1417/02 in the court
a quo
are set aside and replaced by an order in the following terms:
‘
The
application is dismissed with costs including the costs of two
counsel.’
_____________
W P SCHUTZ
JUDGE OF APPEAL
CONCUR
HOWIE
P
MTHIYANE
JA
CONRADIE
JA
JONES
AJA