Union Government (Minister of Mines and Industries) v Union Steel Corporation (South Africa) Ltd

• Jurisdiction: South Africa
• Judge: Solomon CJ, De Villiers JA, Wessels JA, Curlewis JA and Stratford JA
• Judgment Date: 16 March 1928
• Citation: 1928 AD 220
• Hearing Date: 01 March 1928
• Court: Appellate Division

De Villiers, J.A.:

The respondent brought an action in the Transvaal Provincial Division at Pretoria against the appellant for an order directing the defendant to issue to it a certificate in terms of regulation 4 framed under Act 41 of 1922 for the payment to it as bounty under the Act of the sums of (1) £24,870 14s. 2d. in respect of 33,160 tons of pig iron produced by it at its works at Newcastle from 1st June, 1926, to 31st March, 1927, and (2) £15,073 10s. in respect of 23,946 tons of steel produced by it at Vereeniging during the period 27th June, 1926, to 31st March, 1927. The Act empowers the Governor-General, under certain circumstances, to authorise the payment of bounties in respect of pig iron and steel produced in the Union from ores mined in the Union. As a condition precedent to the payment of such bounties there is the following proviso: "Provided that such bounties shall only be paid if the Minister is satisfied, on data supplied to him by the producer, that the plant for the production of such pig iron or steel is capable of producing at least fifty thousand tons per annum of such pig iron or steel, as the case may be."

The action was based upon the following allegations in par. 7 of the declaration: "The plaintiff company has more particularly satisfied the defendant by supply of data that its plant at its said works for the production of pig iron at Newcastle and of steel at Vereeniging is capable of a production at each place of at least fifty thousand tons per annum of pig iron and steel respectively or

De Villiers, J.A.

alternatively the data supplied to defendant by plaintiff company in proof of such capacity are such that it is unreasonable and wrongful for defendant not to be satisfied thereon of the prescribed capacity of fifty thousand tons per annum of plaintiff's plant at each of the said places." The trial court, after hearing evidence, held that the plaintiff had failed to establish the first proposition upon which it relied. But it found that the plaintiff had proved that the plant both at Newcastle and at Vereeniging was capable of producing at least 60,000 tons of pig iron per annum and 50,000 tons of steel per annum, and made the following order: "Case referred back to the Minister with a direction to exercise his discretion in conformity with the view expressed in the judgment as to the meaning and object of the section. The plaintiff company will be at liberty to supply the Minister with any further data as to the capacity of both plants." The Court was of opinion that the Minister]ad insisted upon an actual production of a minimum of 50,000 tons over a period of 12 months in each case, that in this respect he had misinterpreted the law and had misdirected himself, and it therefore made the above order. BARRY, J., put the following interpretation upon the section: "As I read the section the amount of the bounty depends on the actual production of iron or steel of the requisite quality, but the right to claim the bounty depends on the capacity of the plant." He proceeds: "I do not: think the actual or theoretical capacity affects the present case. On the uncontradicted evidence of the plaintiff company it has been proved that the plant at both places is capable of producing at least 50,000 tons per annum of pig iron and steel." SOLOMON, J., went further. In his opinion sec. 1 of the Act contemplates the supply by the producer of technical data on which capacity can be calculated with certainty.

Now the meaning of sec. 1 of the Act is to my mind clear.

Bounties are only payable if the Minister is satisfied that the plant is actually capable of producing a minimum of 50,000 tons per annum, and he is to be satisfied by data supplied to him by the producer. It is not theoretical, but actual, capacity which is contemplated in the section. That is the construction placed upon the section by the Secretary for Mines and Industries as far back as the year 1923. On the 5th July of that year he wrote: "It is a, condition precedent under the Iron and Steel Bounties Act before

De Villiers, J.A.

any bounties can be paid, (a) the Minister must be satisfied that the plant is capable of producing at least 50,000 tons per annum of iron or steel as the case may be, and (b) that the production, in respect of which the bounty is paid must be from local ores. Under the Act it would therefore be competent for the Minister to pay a bounty in respect of a less tonnage than 50,000 tons during the first year if he is satisfied that the plant can produce 50,000 and that there is a good reason for this figure not being attained. The same applies to any short production during subsequent years when the Minister would be prepared to sanction the payment of a bounty in respect of a less amount than the full tonnage required if the shortfall in production were for reasons which appear to him satisfactory." The letter was written at the instance of the then Minister of Mines, and shows a correct appreciation on the part of the Minister of the proper construction to be placed upon the Act. But in spite of the fact that the Act prescribes that data should be furnished to the Minister as to the capacity of the plant before he can be called upon to decide, the remarkable part of the procedure followed in this case is that no attempt in the first instance was made on the part of the plaintiff to comply with the Act in order to satisfy the Minister as to the capacity of either plant. It was apparently taken for granted that the Minister was satisfied, and upon this assumption applications for the payment of the bounties on the actual production claimed, When these applications were sent in, all that the Minister had before him were the particulars furnished under sec. (2) of the Act before production had been commenced. These particulars were sent in a letter of the 10th November, 1925. Amongst others that section requires that the producer before commencing production shall furnish the Minister with particulars as to (c) the estimated productive capacity of the plant; (d) the amount expended in the erection of the plant, and (h) such other particulars as the Minister may require. The information that was sent on these heads was the following (c): "Vereeniging 50,000 tons of steel per annum; Newcastle 60,000 tons of pig iron per annum. (d) Vereeniging - machinery and plant to 30th September, 1925, at costs, £262,033 5s. 6d. Estimated further expenditure on additional plant, £26,000, exclusive of buildings. Newcastle - machinery plant and buildings expenditure to 30th September, 1925 (exclusive of share consideration),

De Villiers, J.A.

£47,511. Plant in course of completion - final figure of cost not yet available." As regards (h) a request was contained in one of the letters of 19th November, 1925, to the Minister to let the company know what particulars he requires other than those mentioned in section 2 (a)-(g). Beyond giving this information and the statement in one of the letters of that date that "our capacity for production will meet the 50,000 tons called for," it was apparently not deemed necessary to supply the Minister with any data to enable him to satisfy himself as to the capacity of the plant. The next step taken was the application for, payment of the bounties. This was contained in a letter of the 10th November, 1926: "We have the honour to enclose herewith certified statement of pig iron production at our Newcastle Blast Furnace for the months of June, July, August and September, together with certificate of accuracy signed by our auditors, Messrs. Deloitte, Plender, Griffiths, Annan & Co. We beg to make application for payment of the bounty due thereon at the rate of 15s., per ton of pig iron produced in respect of this period in terms of the Iron and Steel Industry Encouragement Act, 1922." Accompanying this letter was a certificate from the manager certifying that the output of pig iron from the blast furnace at Newcastle for the period June, 19th to September 30th, 1926, was as follows: June, 792 tons, July, 3,851 tons, August...