Michau v Maize Board

• Jurisdiction: South Africa
• Judge: Harms JA, Scott JA and Heher JA
• Judgment Date: 12 September 2003
• Citation: 2003 (6) SA 459 (SCA)
• Docket Number: 280/2002
• Hearing Date: 15 August 2003
• Counsel: D R Mitchell SC (with him R W F McWilliam SC) for the appellant. C H J Badenhorst SC (with him E J B Lingenfelder) for the respondent.
• Court: Supreme Court of Appeal

Scott JA: D

[1] The appellant farms maize in the district of Harrismith, Free State. On 27 July 1994 he entered into two written agreements with Rainbow Chicken Farms (Pty) Ltd (Rainbow) which carries on business as a breeder and producer of broiler chickens. The one was styled 'Agreement of lease purchase and sale' and the other, 'Management agreement'. In terms of the former, broadly stated, the E appellant was to hire a broiler site for the 1994 to 1995 season from Rainbow which in turn undertook to sell to the appellant at the beginning of each growing cycle its entire stock of day-old chickens at the broiler site and to repurchase same at a higher price from the appellant at the end of each growing cycle. In terms of the Management F agreement, Rainbow was appointed by the appellant as the latter's manager to manage the broiler operation, to take proper care of the chickens during their growing cycle and to procure the milling and processing of the maize which was to be provided by the appellant for the feeding of the chickens. It was not in dispute that the object of Rainbow and the appellant in entering into the agreements was to avoid G the payment of certain levies which would have been payable to the respondent had the appellant simply sold maize to Rainbow.

[2] During July and August 1994, and in circumstances more fully set out below, the appellant delivered in accordance with Rainbow's directions H a crop of yellow maize of 2 352,161 tons and was paid a total of R917 342,79, being the equivalent of R390 per ton. The respondent subsequently instituted action against the appellant in the Orange Free State Provincial Division for payment of the levies, alleging that the agreements referred to above were simulated and couched in terms aimed at disguising the true nature of the transaction I between the appellant and Rainbow which was the sale of maize. The respondent's claim was upheld in the Court a quo and the appellant now appeals with the leave of that Court.

[3] It is necessary at the outset to say something about the levies and the J

Scott JA

circumstances in which they became payable. At all times material to the action there existed a Summer Grain Scheme ('the A scheme') which was established in 1979 in terms of s 14(1)(a) of the Marketing Act 59 of 1968 (the Act). The scheme was administered by the respondent which is a control board contemplated in s 25 of the Act and established in terms of s 6 of the scheme. Although the Act has since been repealed the respondent continues to exist by virtue of the provisions of s 27(2) of the B Marketing of Agricultural Products Act 47 of 1996. The appellant planted, grew and harvested yellow maize on his farms in the Harrismith district and was accordingly a 'producer' of summer grain (maize) as defined in s 1 of both the Act and the scheme. As previously mentioned, he produced and delivered a total of 2352,161 tons of yellow maize during the months of July and August 1994. For that season the respondent, acting in terms of ss 23 and 24 of the scheme, imposed levies totalling R156,31 per ton of yellow maize produced and the C Minister of Agriculture, acting in terms of s 46A of the Act, imposed a general levy of R0,08 per ton of yellow maize produced. The levies were payable to the respondent on maize sold by the producer or 'utilised by the producer thereof for a purpose other than his own D household consumption or farming operations'. If, however, the producer wished to sell his maize he was required by the scheme, subject to certain exceptions, to sell it to the respondent at a price determined by the latter which also determined the consumer price, ie the price at which it, in turn, would sell the maize E to consumers. For the purpose of these transactions cooperative societies acted as agents for the respondent and purchased and sold maize for and on behalf of the latter. In 1994 the purchase...