Dalview Engineering (Pty) Ltd v The Manufacturing Development Board
| Judge | Mavundla J |
| Judgment Date | 13 April 2010 |
| Citation | 2010 JDR 0431 (T) |
| Docket Number | 40637/06 |
| Hearing Date | 13 April 2010 |
| Court | Transvaal Provincial Division |
Mavundla, J
The applicant seeks an order reviewing and setting aside the decision of the first respondent taken on 16 February 2005 and 21 June 2006, not approving the applicant's application for an expansion for Standard and Medium Enterprise Program expansion incentives, and remitting its application back to the first respondent.
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BACKGROUND
It is common cause that the applicant, was conducting business exclusively in the manufacture of automatic spares and accessories, from premises in Brakpan on the East Rand, Gauteng.
During the course of 2003, as the result of ageing manufacturing plant and dwindling profits, applicant reconsidered its line of business and decided to embark on a closely related field, namely the manufacturing of motor oils, brake fluids and anti-freeze agents. The applicant decided to dispose of its then ageing manufacturing plant of automotive spares and accessories, which was done during the course of 2003, for an insignificant return, as he stated. The applicant relocated its business in all its facets to Durban in KwaZulu and geared itself to commence its "expanded" business activities on 1 May 2004. It is the view of the applicant that its new business was still in line with the applicant's articles of association which mandates business activities in the motor
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industry. According to the applicant, its expanded activities included the manufacturing of various grades of motor oils, differential oils, clutch fluids, brakes fluids, anti-freeze agents and packaging thereof. According to the applicant it envisaged that its products would be sold in equal percentages to the wholesale and retail trade, which in turn supplies those who perform service activities.
The applicant further avers that at all times material to this application, it, as a manufacturer, constituted an entity which qualified for expansion incentives in terms of the guidelines contained in the information brochure issued by the first respondent in respect of the small, medium enterprise development program as contemplated by section 5(4) of the Act ("the guidelines"). The applicant attached annexure "B [1] " which is a copy of the aforesaid guidelines.
The application, according to the applicant, complied with the respondent's guidelines. It is common cause that on 20 April
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2004 the applicant formally applied to the first respondent for the grant of the incentives ("the application"). The applicant was informed by the first respondent per letter dated 11 March 2005 (annexure "D" [2] ) that the first respondent in its "meeting held on 16 February 2005 did not approve applicant's application, as it does not meet the requirements for incentives. The Board's decision is as follows:
"BM2005/02/16: The Board does not approve the application for an expansion for the standard SMEDP incentives, as there is no incremental investment in machinery and equipment from the base year to the end of the first financial year and also due to the fact the base year assets cannot be determined."
The first respondent further advised the applicant of its right to note an appeal to the Board within 60 days and that it should incorporate additional information and proper motivation as to why the application should be reconsidered by the Board.
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The applicant lodged an appeal against the aforesaid decision. Its appeal was noted by Mr. MJB De Chalain, per annexure 'E'. [3] The appeal was also unsuccessful. This fact was communicated to the applicant per letter dated 19 July 2006 (annexure 'F" [4] ). Essentially the previous reasons advanced in annexure 'E' were confirmed.
The reason for the refusal of the application and the appeal are
"...there is no incremental investment by the applicant in machinery and equipment from the base year
"...the base year assets cannot be determined."
The applicant contends that from paragraph 12 of the guidelines of the respondent, an existing entity such as the applicant qualifies for an expansion incentives when, inter alia, an expansion demonstrates a minimum of 35% increase in investment in machinery and equipment at cost, as determined in the base year. It further contends that it appears from
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annexure "2" to the original application for incentives (annexure "C") it is indicated under the list of the applicant's assets that the applicant possessed "no plants and machinery as at 29 February 2004, i.e. the end of the base year" and that it follows that the costs of such non existent plant and machinery was accordingly and indicated as zero. It further contends that annexure "2" demonstrate and describes the plant and machinery which was to have been acquired during the applicant's "start up period" from 1 May 2004 to the end of February 2005 and the intended first financial year acquisition 1 March 2005 to end February 2006 reflecting the costs of such acquisition and the dealers from whom it was acquired.
The applicant further contends that the very first entry in annexure 'C", which it had attached to its application under the list of its assets, reflected that the applicant was possessed with no plants and machinery as at 29 February 2004, i.e. the end of the base year. The costs of such non-existent plant and machinery was accordingly and naturally 0 (zero). The applicant
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further states that annexure 2, demonstrates and...
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