Independent Food Processors (Pty) Ltd v Minister of Agriculture and Others

• Jurisdiction: South Africa
• Judge: van Niekerk J
• Judgment Date: 05 June 1992
• Citation: 1993 (4) SA 294 (C)
• Court: Cape Provincial Division

Van Niekerk, J.:

In terms of the provisions of the Marketing Act 59 of 1968 ('the Act') the Minister of Agriculture ('the Minister'), the first I defendant, was empowered to and established a dairy control scheme ('the scheme') which is a set of rules regulating the marketing of dairy products and matters relating thereto. The scheme was published by Regulation R290 in Government Gazette 6206 on 10 November 1978. The scheme, in terms of s 5 thereof, applies to persons producing or dealing in the course of trade with dairy products and includes the distribution J of milk.

Van Niekerk J

A The plaintiff is such a purchaser and distributor of milk, operating in the Western Cape, and clearly operates within the ambit of the scheme. In terms of s 6 of the scheme a Dairy Control Board (the second defendant) was established to administer the scheme. It was the intention of the Legislature that the Dairy Board be constituted on a basis that it is representative of the various facets of the industry (see s 28 of the Act B and s 7 of the scheme).

Amendments to the scheme under the provisions of s 15(1) and (3) read with ss 9, 12 and 14 of the Act were published from time to time by the Minister. Section 41(1) of the Act states that

'(a) scheme shall provide for the imposition, with the approval of the C Minister, by the control board concerned, on such basis as such board may determine, of a levy on any product to which the scheme relates, or on any such product of a particular class, grade or standard of quality'.

The concept 'class' is very broadly defined in the Act. Section 44 provides that a scheme may empower its control board to impose with D Ministerial approval a special levy on such products. The levy in terms of s 42 shall be payable in such a manner and at such times as may be prescribed by regulation under s 89 and shall be payable by persons belonging to such class or classes of persons as may be prescribed in the scheme in question.

Under the authority provided by ss 41 and 44 of the Act, ss 21 and 22 of E the scheme as amended from time to time (and prior to its amendment by Government Notice R1506) duly authorised the Dairy Board to impose levies and special levies with the approval of the Minister on a dairy product or on a dairy product of a particular class, grade or standard of quality.

The dispute between the parties in this action arises as a consequence F of the publication by the Minister of certain amendments to the scheme and from the imposition by the Dairy Board of certain levies and special levies payable by distributors such as the plaintiff of, in the first instance, fresh milk and, at a later stage, milk.

Prior to 1988 the scheme distinguished between so-called 'fresh milk' G and 'industrial milk'. An amendment to the scheme introduced a so-called 'Milk is Milk' scheme, which was the subject of much controversy, in that year. The relevant Government Notices issued in terms of the Act, and in terms of the scheme under attack, fall into two categories.

The first category consists of proclamations:

(a)

Proclamation R297 published in Government Gazette 10607, dated 13 H February 1987, operative from 16 February 1987, which sought to substitute a new s 22 to the scheme dealing essentially with special levies on so-called fresh and industrial milk;

(b)

Proclamation R808 published in Government Gazette 10712, dated 10 April 1987, operative from publication, which sought to amend both I ss 21 and 22 of the scheme, s 21 dealing essentially with levies on so-called fresh milk; and

(c)

Proclamation R1506 published in Government Gazette 11436, dated 29 July 1988, operative from 1 September 1988, which sought inter alia to amend ss 21 and 22 of the scheme and which did away with the distinction between fresh milk and industrial milk and sought J to introduce the aforementioned 'Milk is Milk' scheme.

Van Niekerk J

A In the second category of proclamations:

(d)

Proclamation R1754 published in Government Gazette 11485, dated 31 August 1988, which sought to introduce certain levies and special levies referred to in the table annexed, effective from 1 September 1988;

(e)

Proclamation R307 published in Government Gazette 1708, dated 24 B February 1989, effective from 1 March 1989,

are under attack.

The relief sought is a declaratory order relating to the various amendments and levies imposed. The orders sought are that:

'1.1.1

Regulations R297, R808 and R1506 are declared ab initio void, C alternatively voidable and herewith voided; alternatively,

1.1.2

the provisions of Regulations R297, R808 and R1506 (insofar as they purport to empower the board to impose levies on plaintiff and other milk purchasers and distributors) are void, alternatively voidable and herewith voided, and

1.1.3

imposition of the levies referred to in items 1 and 2 of the D table annexed to the schedule in Regulation R1754 is declared ab initio void, alternatively voidable and herewith voided, and

1.1.4

Regulation R307 is declared ab initio void, alternatively voidable and herewith voided. Alternatively,

1.2

a declaratory order in terms of which it is declared that second E defendant's allocation of special levies to the stabilisation fund and to "industry services" is ultra vires the Act and not payable by plaintiff as long as second defendant thus allocates the special levies.

1.3

In the further alternative to prayers 1.1 and 1.2, a declaratory order in terms of which it is declared that: F

1.3.1

second defendant's conduct as set out in para 12bis above is ultra vires the Act; and

1.3.2

as long as second defendant acts in the manner referred to in para 12bis above, there is no obligation on plaintiff to pay the said special levies to second defendant.' G

(The reference to para 12bis is a reference to a stabilisation fund into which the bulk of special levies imposed are and have been paid by second defendant.)

'2.

That first and second defendants be ordered to pay the costs jointly and severally including the costs of two counsel.

3.

H That third defendant (ie the National Marketing Council), in case of opposition, be ordered to pay the costs jointly and severally with first and second defendants, including the costs of two counsel; and

4.

Further and alternative relief.'

The various grounds of attack on the Government Notices are set out comprehensively in the pleadings and encompass plaintiff's case. Plaintiff I alleges that it was at all times and is a milk purchaser and distributor in terms of the scheme. It is common cause that the plaintiff was first registered as a company late in April 1987, commenced doing business on 29 July 1987 and was registered as a distributor on 30 July of that year.

Having regard to these facts defendants contended that the plaintiff J cannot attack Procs R808 and R297 inter alia on the grounds that it was not

Van Niekerk J

A afforded a hearing before these regulations were published since the plaintiff did not exist at the time. This will be dealt with in due course.

As far as the formalities for effecting amendments to the scheme are concerned, it is common cause that each of the amendments reflected in Procs R297, R808 and R1506 were initiated by proposals made by the Dairy B Board, ie the Control Board, to the Minister. The requirements as stated are prescribed by s 15(3) read with ss 8, 12 and 14 of the Act. The procedure where the proposal is made by the Control Board involves five separate steps, namely:

(i)

The submission of a proposal by the Control Board concerned to the Minister (s 15(1)).

(ii)

C On receipt of the proposal the Minister is obliged to consult third defendant, the Marketing Council, after which he may either

(a)

reject the proposal, or

(b)

approve the proposal provisionally, or

(c)

refer the proposal back to the Board for consideration of and report on modifications suggested by the Minister (s 9(1)). D

(iii)

If the proposed amendment has been provisionally approved by the Minister 'he' shall refer the proposed amendment 'to that council (ie to third defendant) for investigation and report' (s 9(2)(a)).

(iv)

After the Minister has considered any report which the E Marketing Council may make on the matter, he may 'accept' ('aanneem') the proposed amendment (s 9(2)(c)).

(v)

After accepting the proposed amendment the Minister may implement it by publishing it in the Government Gazette (s 14(1)).

The provisions of such an amendment are binding on the persons to whom F it applies as from a date declared and specified by the Minister in the relevant notice (s 14(2)).

To enable second defendant (the Dairy Board) to impose valid levies in terms of ss 21 and 22 of the scheme, the Board had to make a decision, which entailed inter alia exercising its discretion in a bona fide manner. It had then in terms of ss 41 and 32 of the Act:

(i)

G To submit such decision together with any minority proposal to the third defendant.

(ii)

The third defendant, the marketing council, had to submit the decision and minority report to the Minister together with its report and recommendations thereon.

(iii)

H The Minister had then to approve such decision and make it known by notice in the Government Gazette.

Prior to February 1987, the scheme contained several provisions relating to levies and special levies on fresh milk as it was then defined. As far as ordinary levies were concerned, s 21(1) of the scheme provided that the Board may with the approval of a Minister and on such basis as the Board I may determine impose a levy on a product which:

In the case of fresh milk,

(i)

is sold by producers or exempted producers through the Board;

(ii)

is sold by producers or exempted producers otherwise than...