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Last Updated: 8 June 2005
REPUBLIC OF SOUTH AFRICA
THE SUPREME COURT OF APPEAL
OF SOUTH
AFRICA
Reportable
Case Number : 521 / 03
In the matter between
DISTCOR
EXPORT PARTNERS FIRST APPELLANT
DISTCOR YACHT EXPORTERS SECOND
APPELLANT
and
THE DIRECTOR-GENERAL OF THE
DEPARTMENT OF TRADE AND
INDUSTRY RESPONDENT
Coram : HARMS and CONRADIE JJA,
COMRIE, JAFTA and PATEL AJJA
Date of hearing : 5 NOVEMBER
2004
Date of delivery : 23
MARCH 2005
SUMMARY
Claim for damages by Department of Trade and Industry
– director-general of department suing as nominal plaintiff in action
– appellants contending that procedure incompetent – held that not
only political head of department empowered to sue
– appeal
dismissed
___________________________________________________________________________
REASONS FOR ORDER
CONRADIE JA
[1] These are the reasons for an order handed
down on 30 November 2004 dismissing with the costs of two counsel an appeal
brought,
with his leave, against McLaren J’s dismissal of the
appellants’ special plea that the respondent, as plaintiff in the
court
below, lacked locus standi in iudicio to institute proceedings against
the appellants for delictual damages or alternatively for unjustified
enrichment. The claims arose
from payments made by the Department of Trade and
Industry (the Department) to the appellants in 1992 and 1994 in respect of
benefits
under the General Export Incentive Scheme
(GEIS).[1] Since upholding the special
plea would have put an end to the respondent’s claims against the
appellants, the parties agreed,
and the court below ruled, that the plea be
dealt with as a distinct issue.
[2] The first argument on behalf of the
appellants was that the State, like other entities having legal personality, may
only institute
action in its own name and may not do so in the name of one of
its officials.
[3] In the chapter on State Liability by Cilliers and
D’Oliveira in Lawsa (vol 25 1st re-issue p 188 para 239) the
State is described as ‘a diffuse public law entity’. It nonetheless
has juristic personality.
Judicial affirmation that it is a legal persona
is to be found in Die Spoorbond and Another v South African Railways
[2] where Watermeyer CJ
said;
‘The Governor-General -in -Council (whom I shall call the Crown
and who is also sometimes referred to as the Government of the
Union) is
regarded in law as a legal persona, with a perennial existence, and as
such, a legal persona distinct from the individual human beings or group
of persons who from time to time hold office as Governor-General and as members
of the Executive Council ...’
The State is, however, not a
corporation:
‘The executive power of the Union was vested in the
Governor-General acting with the advice of the Executive Council, known
as the
Governor-General-in-Council or commonly simply as the Government of the Union.
Although this Government is described by writers
as being an organ of the State,
nevertheless it would be incorrect to draw an analogy with the law relating to
companies and the
relationship between a company and its board of
directors.’[3]
These remarks
by Vieyra J echo those of Schreiner JA in the Spoorbond case at
1011):
‘It is no doubt convenient for certain purposes to treat the
Crown as a corporation or artificial person. But it is obviously
a very
different kind of person from the rest of the persons, natural and artificial,
that make up the community.’
[4] The appellants’ argument by
analogy to companies and their directors is not valid. The rule that has always
governed litigation
by corporations is that they are artificial persons and
that, since generally no one may sue as agent for
another,[4] a director cannot sue on
behalf of a company. Where the political or administrative head of a government
department sues or is sued
the litigation is conducted nomine officii.
The head is not regarded as the agent of the department but as the embodiment of
the department.
[5] There is no statutory provision on how the State may
initiate proceedings. There is one, however, providing how the State may
be
brought before the courts. It appears in s 2 of the State Liability Act 20 of
1957 which provides in ss (1) that ‘ ... the
Minister of the department
concerned may be cited as nominal defendant or respondent.’ The
sub-section does not oblige a litigant
to sue a
minister.[5] It was intended to
facilitate actions against the State by making it possible to sue the political
head of a department instead of
the State in its own name. It did not introduce
an inviolable rule. A plaintiff may still choose to sue the government of the
Republic
of South Africa[6] and this
has since 1957 often occurred.
[6] Although proceedings may, as commonly
happens,[7] be commenced in the name
of the Government of the Republic of South Africa, the government may also sue
through a nominal plaintiff
or applicant, usually the ministerial head of a
department. According to the appellants the latter practice is so inflexible
that
it precludes the administrative head of a department from instituting
action on behalf of a department of State. In my view the practice
is more
relaxed.[7] It is a matter of
authority. Since a minister as political head of a department has the overall
control of and responsibility for
the department and is the ultimate
decision-maker, the authorization for an action instituted by a minister can
hardly be impugned.
His or her external authority, by which I mean the
authorization to the state attorney to institute an action, might still be
challenged
although such cases must be very rare. Where a Minister sues as
nominal plaintiff, as the embodiment of her department, the potentially
more
troublesome issue of internal, intra-departmental, authority is eliminated.
Particulars of claim alleging that an administrative
head of a department sues
on behalf of the government may elicit a puzzled request for further particulars
on the scope of his authority
but if authority can be satisfactorily established
that is the end of the matter.
[7] The issue before us, considered by
the parties and by the court below to be one of locus standi, is
not really that. A nominal plaintiff does not sue for his or her own account
and the question of whether such a plaintiff has
a sufficient interest in the
proceedings (the essential locus standi enquiry) obviously does not
arise.[8] Such a plaintiff is there
(only) to put someone else’s case before the court: the question is
whether or not he has the authority
to do so.
[8] The flexibility of the
practice in this regard is illustrated by the range of officials who have,
without demur, been allowed
to sue on behalf of departments or sub-departments.
Usually where the nominal plaintiff (or applicant) has not been a minister that
role has been taken by the head of a specialized unit within a department such
as the Registrar of Deeds or the Registrars of Companies,
Close Corporations,
Banks, Insurance or Pension
Funds.[9] Unlike the Commissioner
for Inland Revenue,[10] or the
Master,[11] these officials are not,
in the statutes setting up their sub-departments, given express authority to
institute or defend proceedings.
It is evidently considered that their authority
goes with the job and no one has ever thought of denying them the right to
institute
or defend legal proceedings.
[9] Where a director-general has
been brought in as a litigant it has often been because his decision was under
attack on review.[12] In other cases
the director-general was required to perform a specific act like signing a title
deed[13] or documents sought by a
litigant were in his possession.[15]
May he also nomine officii claim damages suffered by the department of
which he is the administrative head? The answer is that although it may be
unusual for
a director-general to do so, it is not impermissible.
[10] It seems to me that the decision to adopt this unusual procedure
might have been influenced by the notion (mentioned above) of
the top official
of a specialist unit being empowered to sue in respect of matters specially
entrusted to his authority and discretion.
As appears from paragraph 3.11 of the
GEIS Guidelines the respondent was in complete charge of the scheme and all
responsibility
with regard to its implementation and all discretion with regard
to the recovery of money wrongly claimed from the scheme rested
with him
alone:
‘The decision by the Director-General as to the eligibility of
any product for benefits under the General Export Incentive Scheme
as well as
the determination of the amounts of the incentives will be final and conclusive.
Nothing in this document shall be construed
as an offer open to acceptance
constituting any contractual or in fact any other obligation or any enforceable
right against the
Department. The Director-General may at any time conduct a
full-scale investigation to verify any information furnished by a claimant.
If
the Director-General is satisfied that the claim was based on false information
or that the claimant has furnished misleading
information, he may disallow the
claim and recover the full amount paid out to the claimant. Interest on bona
fide overpayments will
be levied at the rate prescribed in terms of section 1(2)
of Act No. 55 of 1975.’
[11] I do not mean to suggest that
authorization such as that appearing in paragraph 3.11 of the Guidelines was a
sine qua non. I merely indulge in speculation on what the motivation for
an unusual, but not impermissible, procedure might have been.
These are the
reasons for the order given.
J H CONRADIE
JUDGE OF APPEAL
CONCURRING:
HARMS JA
COMRIE AJA
JAFTA
AJA
PATEL AJA
[1] The background to GEIS is set out in
Dilokong Chrome Mines (Edms) Bpk v Direkteur-Generaal, Departement van Handel
en Nywerheid 1992 (4) SA 1 (A).
[2] 1946
AD 999 at 1005.
[3] Die Regering van die
Republiek van Suid-Afrika v SANTAM Versekeringsmaatskappy Bpk 1964 (1) SA
546 (W) at 547E-F.
[4]
Standard General Insurance Co Ltd v Eli Lilly (SA) (Pty) Ltd 1996 (1) SA 382
(W).
[5] Marais v Government of the
Union of South Africa 1911 TPD 127 at 132; the provision has remained
unchanged since the Crown Liabilities Act 1 of 1910. Where appropriate the term
‘Minister’ includes a member of the executive council of a province.
[6] There is an interesting
discussion by Baxter in an article ‘”The State” and other
basic Terms in Public Law’
(1982 99 SALJ 212 at 222 and 228) on
recognition by the courts of the government – the executive arm of the
State – as
a legal persona.
[]
[7] For
a recent case in which a director-general’s authority to counterclaim was,
at least tacitly, accepted see The Director-General: Department of Trade and
Industry and Another v Shurlock International (Pty) Ltd 2005 (2) SA 1
(SCA).
[8] See the full discussion of the
topic by Rogers AJ in Financial Services Board and Another v De Wet NO and
Others 2002 (3) SA 525 (C) from para [141].
[9] In Pepcor Retirement Fund and
Another v Financial Services Board and Another 2003 (6) SA 38 (SCA) the
Registrar of Pension Funds was held to have locus standi to apply to
review his own decision to grant approval for the restructuring of a pension
fund. In the specialized field of intellectual
property there are of course the
registrars of patents, trade marks and designs who enjoy considerable autonomy
in litigation and
are cited as defendants or respondents.
[10] Empowered by s 91 of the Income Tax
Act 58 of 1962 and by s 94 of the Customs and Excise Act 91 of
1964.
[11] Administration of Estates Act 66
of 1965, s 96.
[12] Cf Dilokong Chrome
Mines (Edms) Bpk v Direkteur-Generaal, Departement van Handel en Nywerheid
1992 (4) SA (A); South African Co-operative Citrus Exchange Ltd v
Director-General: Trade and Industry and Another 1997 (3) SA 236 (SCA);
Jayiya v MEC for Welfare, Eastern Cape, and Another 2004 (2) SA 611 (SCA)
decided that if a member of the executive council in charge of a department is
sued, it is not necessary to
join the director-general of the department.
[13] Khumalo v Director-General of
Co-operation and Development and Others 1991 (1) SA 158 (A). 14 Le Roux v
Direkteur-Generaal van Handel en Nywerheid 1997 (4) SA 174
(T).
[15] Le Roux v
Direkteur-Generaal van Handel en Nywerheid 1997 (4) SA 174 (T).
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