Maize Board v Jackson

• Jurisdiction: South Africa
• Judge: Howie P, Streicher JA, Van Heerden JA, Ponnan JA and Nkabinde AJA
• Judgment Date: 19 September 2005
• Citation: 2005 (6) SA 592 (SCA)
• Docket Number: 396/04
• Hearing Date: 05 September 2005
• Counsel: D A Gordon SC (with P G Naudé) for the appellant. J A Ploos Van Amstel SC (with A Stokes) for the respondent.
• Court: Supreme Court of Appeal

Ponnan JA: A

[1] The dispute in this case turns upon the true nature of two simultaneously concluded, separate, but interrelated, written agreements. As a general rule, parties to a contract intend it to be exactly what it purports to be. Not infrequently, however, they may endeavour to conceal its true character. In such a case, when called B upon, a court must give effect to what the transaction really is and not what, in form, it purports to be. [1]

[2] The appellant, the Maize Board (Maize Board), is a control board contemplated in s 25 of the Marketing Act 59 of 1958 (the Act), charged with the responsibility of administering the Summer Grain C Scheme (the Scheme). [2] From 1944 onwards, the marketing of maize was governed in South Africa by what has been described in the evidence as a 'single channel fixed price system'. Simply put, the effect of that system was that there was a single buyer and seller of all maize in the country - the Maize Board. D A pre-season announcement by the Minister of Agriculture (the Minister) fixed both the producer and consumer prices of maize. The advantage of that system, so it was suggested, was that there was price stability in the market place.

[3] In terms of the Act and the Scheme, a levy, special levy and general levy were imposed on maize. Those levies, which were fixed by E the Minister, were payable by a producer of maize to the Maize Board in respect of maize sold or utilised for any purpose otherwise than for his own household consumption or to feed his own animals. [3] During each marketing season, the consumer price was determined by adding the levies to the producer F price. [4] The imposition of the levies caused unhappiness amongst the consumers and producers of maize, who sought to regulate their affairs in such a way as to attempt to circumvent their levy obligations. [5] The single channel system came to be replaced during the 1995/6 marketing season with what was described in the G

Ponnan JA

evidence as a free market system. The free market system, as the name suggests, permitted a maize producer to sell maize A to a willing purchaser at a mutually agreed price.

[4] Rainbow Chicken Farms (Pty) Ltd (Rainbow), which carries on business as a breeder and producer of broiler chickens, is, according to the evidence, the largest consumer of yellow maize in this country. For each of the production seasons 1992/3, 1993/4 and 1994/5, Rainbow B entered into two written agreements with the respondent, a farmer in the Bergville area of KwaZulu-Natal. [6] In terms of the first, an agreement of lease, the respondent let to Rainbow certain portions of his farm. In terms of the second, styled a management agreement, Rainbow employed the respondent as the C manager of its maize farming operations on the leased land. Pursuant to those agreements, the respondent produced and delivered to Rainbow, during the 1993/4, 1994/5 and 1995/6 marketing seasons, 1322,067; 2250; and 1453,936 tons of maize, respectively.

[5] The Maize Board instituted action against the respondent in the Pietermaritzburg High Court for payment of levies in the sum of D R576 439,63, alleging in para 7 of its particulars of claim that

'. . . the lease and management agreements were simulated and were concluded in their terms with the intention: E

7.1

of disguising that the defendant, in fact, sold and Rainbow, in fact, purchased the yellow maize produced on the land; and

7.2

of evading the payment of the levies referred to in para 8 below, on the basis that Rainbow was the ''producer'' of the crop for its own use and thereby exempt from the said levies;

whereas, in truth and in fact, the defendant was, in respect of each such crop, the ''producer'' of it, as defined in the said F Maize Marketing Scheme and therefore the entity obliged to pay the levies'.

In dismissing the claim of the Maize Board, Hugo J concluded in the Court below that 'the plaintiff has not succeeded in proving that the agreements entered into between the defendant and Rainbow were not what they purported to be but that, in fact, that they were a G simulated agreement of purchase and sale'. The present...