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[2002] ZASCA 141
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Simelane NO and Others v Seven-Eleven Corporation SA (Pty) Ltd and Another (480/01) [2002] ZASCA 141; [2001-2002] CPLR 13 (SCA) ; [2003] 1 All SA 82 (SCA); 2003 (3) SA 64 (SCA) (26 November 2002)

THE SUPREME COURT OF APPEAL OF SOUTH
AFRICA
Case no 480/2001
REPORTABLE
In
the matter between
Menzi Simelane NO
First Appellant
Ahmore Burger NO
Second Appellant
Zoleka
Ntsaluba NO
Third Appellant
Willem Pretorius NO
Fourth Appellant
and
Seven-Eleven
Corporation SA (Pty) Ltd First
Respondent
Seven-Eleven Africa (Pty) Ltd
Second Respondent
Before: Hefer AP, Harms, Schutz,
Scott and Brand JJA
Heard: 14 November 2002
Delivered: 26 November 2002
Competition
Act – differing functions of Competition Commission and Competition
Tribunal -former investigates and refers – latter
adjudicates –
former’s doings not reviewable in the normal course – nor does it
have to give a hearing – as a policeman/prosecutor
it does not have
to display the impartiality of a judge – entitled to prosecute a
test case.
_______________________________________________________________
JUDGMENT
­­­­­­­­­­­_______________________________________________________________
SCHUTZ
JA
[1] This appeal arises out of a successful
review application before Van der Merwe J, reported as
Seven-Eleven
Corporation SA (Pty) Ltd and Another v Simelane NO and Others
2002
(1) SA 118 (T). The applicants (now the respondents) were two
companies to which I shall refer collectively as ‘Seven-Eleven’.

Their managing director is Mr George Hadjidakis (‘Hadjidakis’).
The ‘decision’ which was reversed was one by the Competition
Commission (‘the Commission’) to refer to the Competition
Tribunal (‘the Tribunal’) complaints that Seven-Eleven was
conducting
certain ‘prohibited practices’. The Commission and
the Tribunal were both established under the Competition Act 89 of
1998 (‘the
Act’). The commission was not cited by name, but four
of its officers were. They are the appellants. The first of them is
Mr
Menzi Simelane (‘Simelane’), the Commissioner. Like the other
three he is cited
nomine officii
. The second is Ms Vernolize
Ahmore Burger (‘Burger’), a Deputy Commissioner. The third is Ms
Zoleka Ntsaluba (‘Ntsaluba’),
an investigator employed by the
Commission. The fourth is Mr Willem Pretorius (‘Pretorius’), who
is an independent advocate
holding a general retainer to assist the
Commission. So the case will pass into history under Simelane’s
name.
[2] The reason why the review application could be
brought in the High Court was that at the time of its institution the
Act did not
confer review powers on the Tribunal, although it had
exclusive jurisdiction in respect of matters of the kind with which
this case
is concerned (s 65(3) of the Act). Although the Competition
Appeal Court (also a creation of the Act) had exclusive appellate and
review powers over the Tribunal’s decisions (s 65(4)), it also did
not have review powers in respect of the Commission. Accordingly
the
High Court at the time of institution retained its common law review
jurisdiction.
[3] Because of the general exclusion of the ordinary
courts from competition matters, I do not propose dealing with the
merits of
the complaints laid before the Commission or of its
referral of them to the Tribunal. However, I shall give a brief
general description
of the activities of Seven-Eleven, later to touch
on the merits, but only in so far as they have a bearing on the
review. The frequent
invitations by Seven-Eleven in the course of
argument to decide some aspects of the merits will not be accepted.
[4] There were over 200 Seven-Eleven retail convenience
stores. Some of them were operated by Seven-Eleven itself, but the
great
majority were operated by franchisees. A relatively small
number of franchisees laid complaints with the Commission. The rest,
or most of them, appear to be content. Indeed it is Hadjidakis’s
case that, apart from making a profit, he has guided numerous
first-time entrepreneurs to success. He may be correct, but that is
not for us to decide.
[5] Mainly by means of the individual franchise
agreements Seven-Eleven maintains a close control over important
aspects of the activities
of the franchisees. The name of the brand
is derived from the requirement that the stores be open for business
from at least 7 am
to 11 pm. Armed by its experience the franchisor
chooses the suppliers and determines the range of goods to be carried
and obtains
favourable prices from suppliers, using its buying power.
The franchisees are thus relieved of having to choose their stock,
but,
on the other hand, they are compelled to take what Seven-Eleven
determines they must stock. In some cases the goods are obtained
from a Seven-Eleven warehouse, in others directly from the supplier.
In either case Seven-Eleven pays the supplier. It attends
to
advertising on behalf of all the stores and makes available its trade
marks, logos and Seven-Eleven brands. At the time when
the
application was brought it also determined the prices at which the
franchisees sold. It would identify locations suitable for
the
opening of stores and would, in some cases, hire premises for
sub-letting to franchisees. When a store was opened Seven-Eleven
would at its own expense provision it with a full range of stock.
The value of this initial stock would have to be repaid over three
years. Needless to say all of this was not done out of charity. In
various ways Seven-Eleven recompensed itself, for instance by
way of
royalties, rentals, commissions and rebates on purchases.
[6] The complaints were lodged late in 1999. In terms
of s 45(1) it was then the duty of the Commission to appoint an
inspector and
investigate the complaint. This it did.
[7] On 14 February 2000 Hadjidakis attended a meeting
presided over by Burger. Also present were Ntsaluba and Pretorius.
Together
with Simelane (who was not present at the meeting) these
persons are the appellants. Hadjidakis complains resentfully about
the
way in which he says he was inveigled into attending without
legal representation, and about the manner of the interrogation. I
shall revert to this meeting when dealing with his various
submissions.
[8] At about the time the franchisees lodged their
complaints with the Commission they also brought urgent proceedings
before the
Tribunal, seeking an interim interdict. Such relief was
granted (by a majority of two to one) on 31 March 2000, in respect
only
of s 5(2) of the Act – that is Seven-Eleven was interdicted
from imposing minimum resale prices. Seven-Eleven obeyed the
interdict
and claims that when it expired after six months, it merely
recommended retail prices without exercising any compulsion. The
remainder
of the interim relief claimed was refused.
[9] On 4 May 2000 Ntsaluba deposed to an affidavit in
support of a referral of the complaints of the discontented
franchisees to the
Tribunal. The referral itself is signed by
Simelane, purporting to act for the Commission. It invokes sections
included in Chapter
2, namely 4(1)(b) (restrictive horizontal
practices), 5(1) (restrictive vertical practices), 5(2) (minimum
resale price maintenance),
8(a) (charging an excessive price by a
dominant firm) and 8(d) (iii) (exclusionary acts by a dominant firm,
including selling goods
or services on condition that the buyer
purchases separate goods or services unrelated to the object of a
contract, or forcing a
buyer to accept a condition unrelated to the
object of a contract). Seven-Eleven is accused of:
‘
enforcing restrictive practices which include rental
agreements, forced purchases, shop fittings, price fixing, insurance,
sale of
business and designated supplier.’
[10] Hadjidakis’s complaints about the
Commission’s handling of matters leading to the referral are
numerous. Before dealing
with them it is desirable to broach two
matters arising in this appeal. The first is the application of the
rule in
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984 (3) SA 623 (A). The heads of argument filed on behalf of
Seven-Eleven are replete with instances where a proposition is
advanced
with reference to Hadjidakis’s founding or replying
affidavit, whilst the contrary version put forward by the appellants
is ignored
or diminished. Such an approach is the converse of that
laid down in
Plascon-Evans
at 634H-I, to the effect that in a
case such as this, the decision must be based on those facts averred
by the applicant which are
admitted by the respondent, together with
the facts averred by the respondent. Instances in which the rule has
been ignored will
be mentioned under the individual complaints.
The second aspect to which I refer relates to the nature
of the differing functions of the Commission and the Tribunal. Once
this
is clarified many of Seven-Eleven’s complaints may be simply
answered.
The respective functions of the Commission and the
Tribunal
[11] The main underlying legal
dispute is whether the Act provides for a dichotomous procedure for
the resolution of a complaint.
The appellants say that there are two
distinct stages. The role of the Commission is investigative,
whereas that of the Tribunal
is adjudicative. The Commission
receives a complaint, investigates it and then determines whether it
should be referred to the Tribunal.
If it does refer it, then it
appears before the Tribunal as prosecutor. The Tribunal, on the
other hand, conducts a trial in order
to determine whether the
complaint is well-founded, and if it is found to be so, it decides
what steps are to be taken.
Seven-Eleven,
by contrast, contends that the reliance on such a dichotomy
constitutes the fundamental flaw in the argument of the
appellants.
The functions of the Commission are said to be both investigative and
adjudicative and, particularly, adjudicative in
the respects with
which this appeal is concerned. Reliance is placed on cases such as
Greub v The Master and Others
1999 (1) SA 746 (C) at
750A-751D. In order to determine which of these contentions as to
dichotomy is correct, brief reference to
the statute needs to be
made.
[12] Both the Commission and the
Tribunal are creatures of statute, the statute being the Act. Both
bodies must exercise their functions
in accordance with the Act (s
19(1)(c) and s 26(1)(d)). The Commission consists of a Commissioner
and one or more Deputy Commissioners
as may be necessary, appointed
by the Minister of Trade and Industry (s 19(2)). It must be
independent and impartial and must perform
its functions without
fear, favour, or prejudice (s 20(1)). Among its functions are the
investigation and evaluation of alleged
contraventions of Chapter 2
(in which is contained sections 4 to 9) and the referral, where
appropriate, of complaints to the Tribunal
(sections 21(1)(c) and
(g)). Having so referred a matter it is then its duty and right to
appear before the Tribunal and participate
in its proceedings
(s 20(1)(g) and s 53(a)). Section 24(1) empowers the Commission
to appoint inspectors. Upon the Commission’s
receiving a complaint
of a prohibited practice (a practice prohibited under Chapter 2) the
Commissioner
must
appoint an inspector to investigate it ‘as
quickly as practicable’ (s 45(1)). The inspector is entitled to
question people and
they must answer, unless the answer is
self-incriminating (s 45(3)). Whilst an investigation is in progress
the Commissioner is
entitled to summon any person for interrogation
and may require production of books and documents (s 45(4)). Powers
of entry, search
and seizure are conferred by sections 46 to 49.
After ‘completion’ of the investigation the Commission
must
refer the matter to the Tribunal if it ‘
determines
’
that a prohibited practice ‘
has been established
’ (s
50(a)) (emphasis supplied). (The argument on behalf of Seven-Eleven
is largely based upon the words ‘determines’ and ‘established’.
Seven-Eleven contends that these words indicate that a part of the
Commission’s functions is determinative or adjudicatory. I
shall
return to this aspect.) Section 50(b) goes on to provide that if a
positive determination is not made the Commission
must
issue a
notice of non-referral. If it does so the complainant may refer the
matter directly to the Tribunal (s 51(1)).
[13] The Tribunal is a tribunal of
record (s 26(1)(c)). When a complaint is referred to it, it may
adjudicate in order to determine
whether any conduct prohibited in
terms of Chapter 2 has occurred, and, if so, it may impose a remedy
provided for in Chapter 6 (s
27(1)(c)). The Tribunal must conduct
its hearings in public in an inquisitorial manner and in accordance
with the principles of
natural justice (s 52(2)). It must issue
written reasons for its decisions (s 52(4)). Powers of summoning,
interrogation and production
are given (s 54). A witness must answer
questions (s 56). The Commission, the complainant and the person
whose conduct is the subject
of complaint are entitled to legal
representation (s 53).
[14] The nature of the functions
allotted to the Commission and the Tribunal has been the subject of
detailed consideration by the
Tribunal itself, in
Norvatis SA
(Pty) Ltd and Others v The Competition Commission and Others
(CT
22/CR/B/Jun 01, 2.7.2001 paras 7 and 35-61). The reasons for the
Tribunal’s decision in the
Norvatis
case deal at length not
only with the underlying question whether the functions of the
Commission are determinative as opposed to
investigative, but also
with more specific questions which have arisen in the appeal before
us. Speaking generally and without reference
to all conceivable
specific cases, I approve of these reasons. Once they are adopted,
in my opinion they largely dispose of all
but one of the arguments
raised by Seven-Eleven. That argument will be dealt with separately
in paras [40] and [41] below. It relates
to whether the
decision-making body within the Commission was properly constituted.
Putting it aside for the moment, the contentions
raised by
Seven-Eleven may be listed.
[15] They are:
1. The referral by the Commission constituted an administrative
decision affecting Seven-Eleven’s rights, such as is subject to
review.
2. The Commission acted on a ‘hotch-potch’ of complaints without
investigating whether there was substance in them.
3. The Commission must observe the
audi alteram partem
rule
and failed to do so.
4. The persons making the decisions were biased and motivated by
malice.
5. Further, they were moved by an ulterior purpose.
The Norvatis case
[16] The following paragraphs of the
Tribunal’s reasons are relevant to this case:
’
40. The Commission argues that its decision to refer
a complaint is neither final nor does it have any consequences for
the applicants.
Its powers are of a preliminary and investigative
nature, comparable to those of the police services or the Directorate
of Serious
Economic Offences. Accordingly, the Commission submits,
it has not engaged in unfair administrative action.
41. To decide whether an administrative action has been
taken fairly it is crucial that the decision-making process be viewed
as a
whole. The demands of fairness will depend on the context of
the decision viewed within the procedural context in which it arises.
An essential feature of the context is the empowering statute, which
creates the discretion, as regards both its language and the
shape of
the legal and administrative system within which the decision is
taken.
1
1
42. In
Brenco
1
2
the Supreme Court of Appeal had to consider,
inter alia
,
whether the Board on Tariffs and Trade (BTT) had violated the
principles of natural justice by making recommendations to the
Minister
of Trade and Industry without giving the respondents access
to all information at its disposal or the opportunity to respond
thereto
prior to making the recommendation. The Court held that no
single set of principles for giving effect to the rules of natural
justice
is applicable to all investigations, official enquiries and
exercises of power. The Court emphasized the need for flexibility in
the application of the principles of fairness depending on the
context. The Court quoted the dicta of Sachs L.J. in
In re
Pergamon Press Ltd
1
3
where he stated:
“
In the application of the concept of fair play, there
must be real flexibility, so that very different situations may be
met without
producing procedures unsuitable to the object in hand …
It is only too easy to frame a precise set of rules which may appear
impeccable
on paper and which may yet unduly hamper, lengthen and,
indeed, perhaps even frustrate … the activities of those engaged in
investigating
or otherwise dealing with matters that fall within
their proper sphere. In each case careful regard must be had to the
scope of
the proceeding, the source of its jurisdiction (statutory in
the present case), the way in which it normally falls to be conducted
and its objective.”
43. The Court then examined the provisions of the BTT
Act
1
4
as part of the context to determine what the requirements of fairness
are in BTT investigations. It found that in terms of that
Act BTT
performs both an investigative and determinative function. It went
on to hold that:
“
Whilst BTT has a duty to act fairly, it does not
follow that it must discharge that duty precisely in the same respect
in regard to
the different functions performed by it. When BTT
exercises its deliberative function, interested parties have a right
to know the
substance of the case that they must meet. They are
entitled to an opportunity to make representations. In carrying out
its investigative
functions, BTT must not act vexatiously or
oppressively towards those persons subject to investigation. In the
context of enquiries
in terms of sections 417 and 418 of the
Companies Act 61 of 1973, investigatory proceedings, which have been
recognised to be absolutely
essential to achieve important policy
objectives, are nevertheless subject to the constraint that the
powers of investigation are
not exercised in a vexatious, oppressive
or unfair manner.”
44. The Court was of the view that when BTT carried out
its investigative functions fairness did not demand that “every
shred of
information provided to BTT should be made available to the
respondents”
1
5
.
The standard applicable in the conduct of the investigative function
is the general principle that an interested party must know
the
“gist” or the substance of the case that it has to meet.
45. Another complaint made in this matter against BTT
was that its inspectors had obtained information from a party and
that the information
had not been given to the respondents so that
they could test its correctness. On this point the Court held:
“
There is no requirement that BTT in the investigation
of a matter must inform the parties of every step that is to be taken
in the
investigation and permit parties to be present when the
investigation is pursued by way of the verification exercise. There
is no
unfairness to the respondents in permitting the officials of
BTT to clarify information without notice to the respondents. To
hold
otherwise would not only unduly hamper the exercise of the
investigative powers of BTT, but would seek to transform an
investigative
process into an adjudicative process that is neither
envisaged by the BTT Act, nor what the
audi
principle
requires”.
1
6
46. The Court found that BTT had not engaged in unfair
procedural action when, in making the recommendation to the Minister,
it relied
on information that it had not disclosed to the
respondents.
47. Nor is the result in
Brenco
surprising or
novel. It represents the practical and flexible approach our courts
have taken on many occasions to administrative
fairness challenges.
48. In
Huisman v Minister of Local Government,
Housing and Works
1996 (1) SA 836 (A), Van den Heever JA placed a
significant emphasis on the theme of administrative efficiency and
held that proceedings
of administrative bodies could be endlessly
protracted were such “right” (in this case the right to reply) to
be held to exist.
Whilst the case deals with a different set of
procedures not analogous to those in this case it does illustrate the
consistent approach
of our courts in striking a compromise between
fairness and practical concerns of efficiency.
49. The same could be said of the Competition Commission
– the administrative efficiency of the Commission in rendering its
duties
could be severely affected if, in exercising its discretion in
terms of section 50(2), its every action would be subject to scrutiny
under the principle of administrative review in the manner suggested
by the applicants in this matter.
50. Moreover, there is no express provision in the Act
requiring or compelling the Commission to furnish reasons or to
afford the
applicant the opportunity to be heard prior to the
Commission referring the restrictive practice complaint to the
Tribunal. It would
have to be inferred, and it seems to be difficult
to read into the Act a necessary inference which compels the
Commissioner to afford
the applicant the right to be heard.
51. In
Park – Ross v Director for Serious Economic
Offences
1998 (1) SA 108 (C) Farlam J had to decide whether an
applicant subject to a proceeding in terms of the Serious Economic
Offences
Act was entitled access to written statements given by
witnesses to the Director of Serious Economic Offences. In coming to
the
conclusion that he was not, he remarked:
“
It is convenient to deal with the right to be heard
first. I agree with … that the applicant has no right at this
stage to invoke
the
audi alteram partem
rule. In my view, it
is clear that the powers of the respondent are as Mr Gauntlett
argued, of a preliminary and investigative nature.
In essence, in
this context, they do not differ from those vested in members of the
police service.”
1
7
52. In
Van der Merwe and Others v Slabbert NO and
Others
1998 (3) SA 613 (N), Booysen J, stated the principle that:
“
It is so that bodies required to investigate only
need in general not observe the rules of natural justice and that
bodies are required
to investigate facts and make recommendations to
some other body or person with the power to act need not necessarily
apply the rules
of natural justice, depending on the
circumstances.”
1
8
53. We turn now to the application of the above
conclusion to the above circumstances of the present case.
54. The
Brenco
decision is entirely in point in
relation to the matter at hand. It is our view that the distinction
drawn by the Court between
an investigative and a determinative
function performed by public bodies is crucial in ensuring that
public bodies are not unduly
restrained in their work where the
exercise of their powers carries no serious or final consequences for
affected parties.
55. In the context of this application the distinction
drawn by the Court between investigative and determinative
administrative conduct
by public bodies disposes of the applicants’
case. In terms of the decision in the
Brenco
case the
violations of natural justice alleged by the applicants against the
Commission can only be upheld if the complaint referral
by the
Commission constitutes a determinative action. Our view is that it
does not. Section 21 of the Act, which deals with the
functions of
the Commission, states that the Commission has the power to
investigate and evaluate alleged contraventions of Chapter
2.
Chapter 2 deals with prohibited practices. The Commission therefore
is empowered to investigate and evaluate alleged prohibited
practices, and, in terms of section 50(2), refer to the Tribunal
those complaints that in respect of which, it “determines”,
a
prohibited practice has been established. The Commission is an
investigative body, which in referring the complaint to the Tribunal
is only instituting the initial procedural step on the road to a
hearing.
56. The Tribunal, on the other hand, is specifically
empowered by section 27(a) of the Act to adjudicate on prohibited
practices and
to determine whether a prohibited practice has actually
occurred. In terms of section 52(2)(a) the Tribunal is explicitly
enjoined
to apply the rules of natural justice. A respondent in
proceedings before the Tribunal clearly is afforded administrative
justice
rights; in terms of the Tribunal Rules it may request
information prior to a hearing and be represented. The Tribunal
clearly exercises
a determinative action as it is empowered to do by
the Act and therefore it is enjoined to conduct its proceedings in
accordance
with the tenets of natural justice. The Commission is not
subject to the same requirement precisely because the legislature,
like
the Court in
Brenco
, sought, in this Act, to distinguish
between investigative and adjudicative procedures.
57. Thus if one looks at the complaint procedure
holistically, in accordance with the analysis in the
Brenco
case, and not in piecemeal fashion, one comes to the conclusion that,
on existing case law which is binding on the High Court, the
applicants’ argument that it is entitled to administrative justice
at the complaint referral stage has no prospect of success before
the
High Court. Their application attempts to transform an investigative
process into an adjudicative process which, in the words
of the court
in the
Brenco
case “is neither envisaged by the BTT Act
(read Competition Act), nor what the
audi
principle requires”.
58. Furthermore, this application incorrectly assumes
that if the applicants were in anyway prejudiced by the complaint
referral,
such prejudice cannot be remedied through the processes in
the Tribunal. This is clearly not the case. As a matter of fact
MSD,
one of the respondents in the complaint referral, has applied to
the Tribunal for a dismissal of the complaint referral on various
grounds. The applicants have therefore ignored the fact that
Tribunal Rules and procedures provide them with remedies if the
referral
is approached holistically.
59. If one examines the grounds of the applicants’
complaint about why the Commission proceeded unfairly we will see
that all three
are accommodated in the Tribunal’s procedures as set
out in the Act and the Tribunal’s Rules. Thus, in the proceedings
before
the Tribunal, the applicants would have to be given access to
material evidence adverse to them, would be given a hearing to
dispute
adverse evidence and the Commission would have to be able to
substantiate its allegations otherwise its case would fail.
60. If the applicants’ contentions are correct the
complaint referral process would amount to two sets of hearings, one
before the
Commission prior to its act of referring the complaint and
then the process before the Tribunal. The investigator, the
Commission,
would be asked to adjudicate over what it had thus far
investigated despite the fact that it is not the final arbiter. A
more pointless
and inefficient process is hard to imagine. At the
time that the Commission makes its referral the respondent firm (ie
the applicants
in this case) is not required to defend itself. That
takes place when the hearing procedures evolve as part of the
Tribunal process,
that is, after the step of referral. Fairness is
not compromised by denying natural justice prematurely; it is only
compromised
if it is ultimately denied.
61. In order to get around the difficulties occasioned
by the case law and in particular the
Brenco
decision the
applicants argued that in referring a complaint to us the Commission
exercises a determinative action. Their argument
revolves around the
wording of section 50(2), which states that the Commission shall
refer a complaint to the tribunal “if it determines
that a
prohibited practice has been established” (our underlining). In
the applicants’ argument the use of the word “determines”
is
proof that a complaint referral by the Commission is a determinative
function. In our view the applicants are emphasizing form
over
substance. On the basis of its investigation the Commission
determines whether or not a prohibited practice has occurred.
If the
Commission determines that a prohibited practice has occurred it
cannot impose a fine or any other remedy, it must refer the
complaint
to the Tribunal. Referring a complaint to the Tribunal is not
determinative of the complaint. All it means is that the
respondent
will have to face a hearing before the Tribunal where it will be
given an opportunity to respond to the allegations that
it has
engaged in a prohibited practice. Even where the Commission decides
not to refer a complaint this decision is also not determinative
of
the complaint – in terms of section 51(1) of the Act the
complainant has the right to refer the complaint to the Tribunal
directly.
We repeat what we have stated above that the decision by
the Commission to refer a complaint is merely one of the steps in the
resolution
of a complaint; it may be the most important one but it
is not determinative of the complaint. The respondent gets an
opportunity
to state its case before the Tribunal. The decision of
the Tribunal is determinative of the complaint as a whole and this is
why
the Act entitles a respondent in Tribunal proceedings to the
principles of natural justice. In the light of the above and the
Brenco
decision, we see no prospect of this argument
succeeding in the High Court.’
See also
The
Competition Commission of South Africa v Federal Mogul Aftermarket
Southern Africa (Pty) Ltd and Others
(CT 08/CR/B/May 01, 23.8.01
paras 31-35), Brassey
et al
Competition Law
301 and cf
The Master v Deedat and Others
2000 (3) SA 1076 (N) at
1082F-1084I.
Administrative decision or no –
Point 1
[17] I cannot do better than refer to
what is said in the
Norvatis
case. For the reasons there
stated it is clear that in a case such as the one we are concerned
with the function of the Commission
is investigative and not subject
to review, save in cases of ill-faith, oppression, vexation or the
like. Seven-Eleven should husband
its powder for the contest before
the Tribunal.
The ‘hotch-potch’ referral
without proper investigation – Point 2
[18] I do not think that it would be
unduly unkind to say that the argument under this heading is itself
something of a hotch-potch.
In the first place it is complained that
the referral extends to a considerable number of practices of a
disparate nature. I have
difficulty with this argument. If
complainants lodge a cluster of complaints and the Commission finds
that there is
prima facie
merit in all of them, then the
cluster will be replicated in the referral.
[19] But then it is said that it did
not conduct its investigations in sufficient depth and failed to take
all the evidence into account.
For instance, emphasis is placed on
the complaints by franchisees that Seven-Eleven inflicted its
shop-fittings and its insurance
policies on them, when Hadjidakis is
supposed to have repelled these complaints at the interrogation on 14
February 2000. If there
is merit in Hadjidakis’s criticisms (and I
express no view on that) then it may show incompetence on the
Commission’s part and
result in the failure of the prosecution on
those counts, but I fail to see how it makes the Commission’s
actions reviewable.
[20] Then it is complained that a
majority of franchisees actually approve of Seven-Eleven’s
policies, so that those of them who
have resorted to the Commission
are simply a dissident minority. The Commission, it is said, should
have polled all of them and
should then have been guided by the
popular will. The Commission retorts that it is not its function to
conduct a popularity poll,
but to investigate and refer prohibited
practices. If they occur it is its duty to do so. This is a
legitimate stand, in my opinion.
[21] I consider that there is no
merit in Point 2.
Audi alteram partem
–
Point 3
[22] Seven-Eleven contends that the
Commission, already at the investigation stage, should have put its
cards on the table, should
have told it what its evidence was, and
should then have held a hearing at which Seven-Eleven would have been
given the opportunity
to refute the evidence. For the reasons set
out in the
Brenco
and
Norvartis
judgments, as set out
above, I consider that there is no merit in these submissions.
Again, when it appears before the Tribunal,
Seven-Eleven will have a
full opportunity to view documents, hear the witnesses, cross-examine
them and lead evidence and make submissions.
According to the
authorities all that it is entitled to at the investigation stage is
the ‘gist’ of the case against it (see
para [44] of
Norvartis
above), and that, I think it has been told, by means of a copy of the
referral document which it received in May 2000. This document
is
mentioned in para [9] above. Brief it may be, but it gives dates,
sections and the alleged prohibited practices. As a matter
of law I
do not think that Seven-Eleven was entitled to more than it got. It
may be added that by May 2000 the hearing of the application
for an
interim injunction had been concluded. During the course of this
proceeding detailed evidence was produced. There can be
no
suggestion that by the time of the referral Hadjidakis was still
stumbling in the dark. He knew in detail what the case was and
he
chose not to avail himself of the invitation to have a further
meeting with the Commission, as will be set out below.
[23] But that is not the only reason
for holding that there is no merit in the
audi
point. In my
opinion Hadjidakis was given the opportunity of a full hearing. If
he did not make the most of his opportunity, the
blame for that does
not lie with the Commission.
[24] A meeting was arranged at the
Commission’s offices for 14 February 2000. According to Hadjidakis
he was led into an ambush.
His version is that a message from the
Commission was passed on to him by Seven-Eleven’s financial
manager, Mr Griesel. When
Hadjidakis and Griesel later parted they
were no longer on good terms. An affidavit was obtained from Griesel
by the Commission,
but Seven-Eleven’s counsel did not request that
he be subjected to cross-examination. (Indeed Seven-Eleven made no
request that
anyone should give oral evidence.) According to
Hadjidakis the message conveyed that the meeting would be ‘quite
informal’,
that it would be ‘off the record’ and that it was
unnecessary that he be accompanied by his legal advisors. Burger and
Griesel
agree that the word ‘informal’ was used, but say that by
this was intended that formalities would be curtailed to a minimum
and
that the structure would be that of a meeting and not a trial.
At this point the rule in
Plascon-Evans
becomes decisive.
They deny that statements to the effect that the meeting would be
‘off the record’ or that lawyers could be
dispensed with were
made. This is the version which must be accepted. And the matter
goes much further. Griesel says that he was
told that the purpose of
the meeting was to allow Hadjidakis to establish Seven-Eleven’s
version or defence and that he would
be fully entitled to legal
representation and to put his case before the Commission in whatever
way he saw fit. Griesel further
says that he and Hadjidakis’s
attorney, Mr Simon, were fully aware of the gravity and importance of
the meeting. He pressed upon
Hadjidakis the importance of legal
representation and initially Hadjidakis seemed to agree with him. At
that stage the intention
was to brief Seven-Eleven’s legal team,
which included senior counsel. There was even an initial
consultation with the team.
[25] Then Hadjidakis changed his
mind. He decided, said Griesel, that he did not need an expensive
legal team to deal with something
which he was more than capable of
himself disposing of in a morning. Both Griesel and Simon strongly
advised him against what they
considered to be a ‘rash decision’,
but he persisted and went to the meeting alone. He was, said
Griesel, ‘a man notorious
for his temperament and persistence’.
It is clear that on the papers we must reject Hadjidakis’s version
that he was led into
an ambush. The version of the facts which we
must accept is that, having been earnestly warned against doing so,
he decided to encounter
the Commission on his own.
[26] The record of proceedings before
the Commission’s representatives, Burger, Pretorius and Ntsaluba,
annexed to Seven-Eleven’s
application, is 148 pages long. The
meeting lasted for five hours, with two short breaks. Hadjidakis
version was that he was taken
aback to find the cozy meeting which he
had been led to expect, replaced by aggressive cross-examination, in
circumstances in which
he was not legally represented, ‘despite my
express desire to consult legal advisors’. This last statement is
contradicted not
only by the Commission’s Burger, who says that she
was rather surprised that Hadjidakis had arrived without
representation, but
by the record itself. After welcoming him she
said:
‘
You are aware that you can be assisted by an attorney
or an advocate in these proceedings and you elected to attend in your
own capacity,
is that correct?’
Hadjidakis responded:
‘Yes,
I understand that.’
[27] The meeting then proceeded.
Some time later Hadjidakis protested that he had been brought there
under false pretences, the pretence
being that all that would happen
was a cozy chat. Instead he was being interrogated. But, he added:
‘
I just want it to go on record, I will carry on with
the interrogation, I am quite capable of answering your questions.’
Some time later he accused the
Commission’s representatives of bias against him. Pretorius then
said to him:
‘
George if you want to go, we will just subpoena you
back George, it is fine.’
Hadjidakis replied:
‘
I am sorry, next time I will come with my advocate
and then they will take measures.’
[28] Pretorius then told him that if
he wished to go home he was free to do so, but that he would have to
come back with his lawyers.
Burger then said ‘I will then adjourn
this meeting’, to which Hadjidakis responded ‘You do not have to
adjourn the meeting’.
[29] Towards the end of the meeting
Pretorius told him that he was under no obligation to come back to
them but that he was welcome
to do so if he wished, after he had
spoken to his lawyers.
[30] To be added to all this is what
Griesel further has to say. He says that on the day of the meeting
he received two or three
telephone calls from Hadjidakis, who told
him that they were having a break in the proceedings. Hadjidakis
expressed concern at
the manner in which matters were developing.
The atmosphere was not amiable and serious allegations were being
made. Griesel advised
him to stop the proceedings and arrange a new
date when his legal team could attend. Hadjidakis did not take his
advice.
[31] From all this it emerges that
the Commission representatives were ready to respect Hadjidakis’s
rights, and that it was his
own headstrongness that caused that he
went to the meeting unprepared and unrepresented, and insisted on
remaining there despite
offers that he could withdraw and come back
on another day with his legal team.
[32] Accordingly, on the facts also,
assuming even that there was a duty to afford a hearing, Hadjidakis
had his hearing. Both on
the facts and the law there is no merit in
Point 3.
Bias – Malice – Point 4
[33] Hadjidakis’s complaint is that
in a variety of ways the investigating team manifested forejudgement,
with a consequent malicious
intent to harm him. Examples advanced
include the request by the Commission that the Tribunal impose a
maximum penalty percentage
of 10 % on certain income, the making of
an application for a default judgment, the failure to interview all
franchisees, unfavourable
and favourable (with this point I have
dealt already), and the behaviour of the Commissions’
representatives at the meeting of
14 February. I do not consider it
necessary to determine whether any ‘bias’ in such respects has
been demonstrated, because
the point can be disposed of on another
basis. But I would point out that it is not unusual for a prosecutor
or plaintiff to pitch
a strong opening bid (the 10 %), that the
Commission was entitled to apply for a default judgment when
Seven-Eleven delayed in filing
its opposition and that a measure of
robustness is unsurprising in an interrogation or a cross-examination
(a measure of, not license
for, robustness).
[34] But supposing that there was
some ‘bias’ I do not think that any right of Seven-Eleven was
infringed. The policeman may
be impatient to have the suspect behind
bars, but that does not entitle the suspect to his freedom. Similar
was the situation that
arose in
Receiver of Revenue, Port
Elizabeth v Jeeva and Others: Klerck and Others NNO v Jeeva and
Others
1996 (2) SA 573 (A). The respondents on appeal were to be
examined at an enquiry in terms of s 418 (read with s 417) of the
Companies
Act 61 of 1973. They complained that the liquidator had
shown bias against them. This Court drew a clear distinction between
the
functions of the Commissioner, who presides at the enquiry, and
the liquidator who represents the company in liquidation and the
creditors at the enquiry (at 579G-580B). The Commissioner has to act
in a quasi-judicial capacity. The liquidator, by contrast,
acts
neither in an administrative nor a quasi-judicial capacity. He is
not in a position of authority
vis-à-vis
the witness.
He does not determine or affect any of his rights. He may act as
adversary of the witness, and he owes no higher duty
to him than any
other litigant. In my opinion the analogy is close. The duty of the
Tribunal corresponds to that of the Commissioner
(under s 418) and
the Commission to that of the liquidator.
[35] Accordingly I do not consider
that Point 4 has any merit either.
Ulterior motive – Point 5
[36] The principle relied upon by
Seven-Eleven is that a person or body which is given powers for a
certain purpose may not use them
in order to achieve another purpose:
van Eck NO and van Rensburg NO v Etna Stores
1947 (2) SA
984(A). The complaint is that the object of the referral is not the
possibly legitimate one of securing the conviction
of Seven-Eleven,
but the improper one of securing from the Tribunal a favourable
decision on ‘relational dominance’, for use
in future cases –
this while using the prosecution of Seven-Eleven as a stalking-horse.
Cf Highstead Entertainment (Pty) Ltd t/a ‘The Club’ v
Minister of Law and Order and Others
1994 (1) SA 387 (C) at
394B-I.
[37] I do not propose giving a
detailed description of the meaning of ‘relational dominance’.
Its relevance is to s 8 of the
Act (one of the sections relied on by
the Commission) which requires for proof of contravention the element
that the person arraigned
is ‘dominant’. From the internal
papers of the Commission disclosed in the course of the review it is
clear that the Commission
does not consider that it will be able to
prove ‘dominance’ in any of the better-established ways. Hence
to secure a s 8 conviction
it wishes to obtain a favourable decision
on ‘relational dominance’, which is concerned with the power of
the franchisor to dominate
the franchisee and impose anti-competitive
practices on him. The Commission believes that a favourable decision
will ease its burden
of proof in some future cases. To this extent
Seven-Eleven’s case is being used as a test case. But I can see
nothing wrong in
that. Indeed I would have thought it the duty of
the Commission to obtain a definitive decision as soon as possible.
If that is
done in a particular case, for the other party it may be
irksome, but he has to bear the imposition as one of the hazards of
litigation.
The Commission was not a party to the interim interdict
proceedings, in which the Tribunal found that relational dominance
had not
been established. Those proceedings were brought by some
franchisees. The Commission was merely an observer. It believes
that
it can make a better case than did the franchisees.
[38] But even though Seven-Eleven’s
prosecution is being used as a test case, it is clear, from the
Commission’s internal documents
and its affidavits, that it is
seeking to obtain the conviction of Seven-Eleven under s 8 and that
it considers that a favourable
decision on relational dominance is
crucial to such a conviction. That is a legitimate object. Indeed
it may be the Commission’s
duty, depending on the merits of the
case upon which it acts.
[39] Accordingly I do not consider
that there is any substance in Point 5 either.
Did the correct body, correctly
constituted, decide the referral? Point 0
[40] The point here is the
loose-standing one referred to in para [14]. The Act requires that
the Commission decides on a referral.
Seven-Eleven submits that the
Commission did not decide – that either the decision was made by a
committee called Exco, which
is not the Commission – or that, if
the Commission did purport to decide the referral, it is invalid
because not all its members
participated in the decision – which is
what the Act is said to require. As to this last point, the legal
one, argument was addressed
to us, but I do not consider if necessary
to deal with it, as the facts are clear and do not support either of
Seven-Eleven’s factual
submissions.
[41] Again applying the rule in
Plascon-Evans
, we must act on the Commission’s version.
Whatever supposed inconsistencies there may be in the affidavits of
Simelane and Burger,
their purport is plain. The decision to refer
was taken by the Commission, whatever may have gone before, and it
was taken by all
its members. No purpose would be served by setting
out the details of the evidence. Seven-Eleven’s case under this
head is no
more than speculation based on some of the Commission’s
documents. Accordingly I consider that there is no merit in this
Point
0 either.
Conclusion
[42] Van der Merwe J,
a quo
,
found for Seven-Eleven on all the points with which I have dealt.
For the reasons I have given I find for Seven-Eleven on none
of them.
Seven-Eleven’s application should have been dismissed.
[43] The appeal is allowed with
costs, including the costs of two counsel. The order made
a quo
is set aside and is replaced with the following:
“The
application is dismissed with costs including the costs of two
counsel.”
____________
W P SCHUTZ
JUDGE OF APPEAL
CONCUR
HEFER AP
HARMS JA
SCOTT JA
BRAND JA
1
1
[I have retained the original footnote numbers.]
Doody v
Secretary of State for the Home Department
and Other Appeals
quoted extensively by the Supreme Court of Appeals in
Chairman:
Board on Tariffs and Trade and Others v Brenco Incorporated and
Others
2001 (4) SA 511(SCA) at 520H-521E para [13]
1
2
See footnote 11
1
3
[1970] 3 ALL ER 535 (CA)
1
4
Act No 107 of 1986
1
5
At paragraph [42]
1
6
Brenco
supra at paragraph [51]
1
7
See judgment at 122. Although the applicants argued that cases
dealing with criminal procedures were not analogous we fail to
see
why. A complaint referral is brought at the instance of a public
body in much the same way as a prosecution and the Tribunal
can
impose penalties in event of a contravention including an
administrative fine.
1
8
See judgment at 624