IN
THE HIGH COURT OF SWAZILAND
Civ.Case
No. 1961/94
In
the matter between:
MAKHOWE
INVESTMENT (PTY) LIMITED Applicant
And
USUTU
PULP COMPANY LIMITED Respondent
CORAM :
Hull, CJ.
FOR
THE APPLICANT Mr. Fine and Mr. Shilubane
FOR
RESPONDENT Mr. Wise S.C.
And
Mr.
Cloete
Reasons
for judgment;
Judgment
on costs
(30/11/94)
On
the afternoon of 9th November the applicant company ("Makhowe")
obtained from Mr. Justice Roos a rule nisi, returnable on 25th
November, calling on the respondent company ("Usutu") to
show cause why it should not be interdicted from stopping Makhowe
from taking and processing wild mushrooms from Usutu Forest. It also
procured, pending the return date, an interim interdict to the same
effect.
Makhowe
had come before the learned judge on a basis of urgency. The
application had been served, on Usutu itself, at 11 o'clock in the
morning. By the time when the order was made, it had not had
sufficient time to consult its lawyers.
2
In
the founding affidavit, which had been sworn on 8th November,
Makhowe's managing director said the following things:
In
1973 Makhowe was issued under King's Order in Council No 34/1973 (in
other words, the Wild Mushroom Control Order, 1973) an exclusive
licence to harvest and process wild mushrooms from "any forest
or other area of land in Swaziland" for a period of fifteen
years.
When
the licence expired in 1988, it was renewed and remains in force. To
exploit its rights, Makhowe had set up a factory on Swazi nation
land at Bhunya to enable it to harvest and process wild mushrooms
from Bhunya forest.
In
breach of Makhowe's "right", Usutu had instructed it to
stop collecting mushrooms from Usutu Forest and had "purported
to call for tenders from other companies to collect wild mushrooms
from the land 'leased' by Makhowe". (My emphasis added.)
The
matter was urgent because Makhowe was suffering irreparable
financial loss as it could not pick the mushrooms, it could not meet
its overseas contractual obligations, and it had to lay off
permanent workers temporarily - those workers therefore losing their
wages. It was also said, though I do not think that it adds
anything, that wild mushrooms have to be picked daily to be of any
value.
To
the founding affidavit, several documents were annexed. One was the
original licence (not in dispute) for a term of fifteen years
expiring in 1988. The second was a subsequent licence (also not in
dispute in these proceedings) dated 10th September 1988, the term of
which was expressed in paragraph 2(f) as being "for a period of
five years which may be renewable at the instance of the licensee".
A third was a general receipt issued on behalf of the
Accountant-General of the Swaziland Government on 28th February 1994
for ten emalangeni, and expressed as being a "licence fee for
Wild Mushrooms Control Order for period 1994".
3
Then
there was a letter dated 20th May 1994 from Usutu's financial
controller to the managing director of Makhowe. This stated that the
licence issued by the Minister of Agriculture to collect mushrooms
from Usutu forest areas had expired in September 1993, and that
Makhowe had been permitted to continue the collection of mushrooms
beyond the expiry date. It went on to say that as Makhowe had been
made aware, Usutu intended to call for tenders for the collection of
mushrooms from its forests; and therefore to give Makhowe notice that
it should stop collections by 30th June 1994. It concluded by saying
that Makhowe would be invited to tender.
A
copy of the public advertisement calling for tenders was also
annexed. This was issued by the Usutu Royal Trust. It invited tenders
in respect of land described as being leased to Usutu (the
respondent). It specified 24th June 1994 as the closing date for
receipt of tenders.
A
copy of the King's Order in Council - the Wild Mushroom Control
Order, 1973 - was also furnished to the judge with the application.
Both
of the licence annexed to the application were expressed as being
"exclusive" licences.
Usutu
in due course filed answering affidavits.
The
first of these was sworn by its financial controller. He said that
Usutu is the registered owner of the land in question and he also
disclosed the existence of two agreements in respect of the lands.
Under the first, it had agreed to transfer them to The Ngwenyama in
trust for the Swazi nation, in return for a leaseback to Usutu and
the creation of a trust to administer the lands. 'The second provided
for the establishment of the Usutu Royal Trust for that purpose, the
donation of the lands by The Ngwenyama to it, and the appointment of
Usutu (the respondent) by the Royal Trust to administer the lands.
The financial controller explained that, since then, the Royal Trust
and Usutu had in fact administered the lands and the forests on them.
The
financial controller said that although Makhowe had obtained in 1973
an exclusive licence to harvest wild mushrooms, it had
4
nevertheless
also negotiated with Usutu for permission to enter the latter's
property to take mushrooms from its forests. He annexed to his
affidavit a copy of an agreement that had been made for that purpose
between the companies in 1982.
He
also annexed a copy of a letter written by Makhowe on 26th October
1993. This letter is in the following terms:
"Manager
Projects 26 October 1993
Tibiyo
Taka Ngwane P. 0. Box 181 KWALUSENI
"ATTENTION:
MR. D.D. MTETWA "Pear Sir, "RE: COLLECTION OF MUSHROOMS -
USUTU FORESTS
"1.
The validity of our 5-year licence, issued by the Ministry of
Agriculture, on the above subject expired on 10 September 1993. Much
as the collection season is about to start we are very apprehensive
to commence with the collections operations because doing so would
most likely be considered illegal and affect our position in the
tendering exercise to be initiated by the Usutu Royal Trust
Committee.
"2.
Furthermore, we have been communicating with Tibiyo on normalising
our position as a bona fide organisation whose actions in the past
five years, though bona fide, were based on 'good faith' following
the enclosed copy of the Ministry of Agriculture letter and unwritten
traditional understandings with the Zondwako community chief on
issues of land lease etc.
"3.We
herein submit further evidence that Makhowe has endeavoured to keep
its side of the bargain clean and did not deliberately try to take
advantage of the loose arrangements governing our mushroom business.
5
"We
sincerely thank Tibiyo's General Manager for his encouraging note of
February 17, 1993 assuring us that despite all the mistakes that have
happened we stand a chance of being considered fairly in the tender
proceedings to come.
"We
plead that Makhowe be allowed to commence mushroom collections
immediately for the current year whilst Tibiyo is formulating rules
and regulations that will govern future collections. We certainly
shall abide by such rules should we succeed in our tender.
"Yours
faithfully,
"MANAGING
DIRECTOR".
The
financial controller said that after Makhowe's licence had expired in
1993, Usutu in conjunction with the Royal Trust "and Tibiyo"
had permitted Makhowe to continue picking mushrooms at will (i.e. the
will of Usutu and the Royal Trust) pending the tender process, and
that Makhowe had indicated that it was happy with and would
participate in the tender process. He denied that Makhowe held any
leases over the forests.
He
also annexed to his affidavit the first two pages of Makhowe's
eventual tender, undertaking to make the whole document available if
required. These two pages are described as a summary of the proposal.
It is apparent from the last paragraph that Makhowe contemplated a
renewable five year lease. The financial controller said that the
tender was awarded eventually to another company.
An
affidavit was also sworn by Mr. Absalom Dlamini. In it, he said that
he was the general manager of "Tibiyo TakaNgwane" and that
he was "duly authorised" to make the affidavit. He stated
that Tibiyo TakaNgwane is the "management arm" of the
assets held in trust by The Ngwenyama for the Swazi nation and he
confirmed that the facts alleged in the affidavit of the financial
controller for Usutu were true, as far as they related to Tibiyo and
the Royal Trust.
6
Makhowe
filed affidavits in reply from the managing director and from the
business consultant to Makhowe.
The
managing director now acknowledged that Makhowe did not hold any
leases in respect of Usutu forest lands, explaining that his
assertion to the contrary in his founding affidavit had been an
error, occasioned by the urgency of the situation. Referring to the
business consultant's affidavit, he explained that he himself, in
signing the letter of 26th October 1993, had done so under the
mistaken belief that it set out the correct position in fact and law,
and that he had relied on the business consultant's grasp of the
situation.
The
managing director said that the Royal Trust had never had the right
to call for tenders. He asserted that the tender advertisement had
been false, misleading and calculated to prejudice Makhowe's rights
under its exclusive licence. He raised allegations to the effect that
the tender process had in fact been a "farce", the decision
to select a tenderer having already been taken.
In
his affidavit, the business consultant stated that at the time when
he drafted the letter of 26th October, he had been misled into
believing that the lands had been transferred to The Ngwenyama in
trust for the Swazi nation, annexing a letter of 9th September 1991
from Usutu to Makhowe to that effect and a further letter of 13th
November 1992 to the same effect.
He
also asserted that this last letter "misled" him into
believing both that the 1988 licence was non-exclusive and that it
was renewable only at the option of the Minister for Agriculture.
I
will not set out the letter in full. In the end, 1 think it is
irrelevant to the issue. It is, however, a rather curious document.
Acknowledging that an exclusive licence had been granted for 15 years
initially, it goes on to assert that Makhowe had failed "totally
and utterly" to honour the annual payments of E10, which it
described (though the original licence does not do so) as "royalty"
fees. The use of the word "royalty" may reflect linguistic
differences. In other words, the writer may have meant to describe,
simply, a fee payable to the Crown, whereas in commercial parlance
the word usually
7
refers
to payments of some commercial significance in return for an
advantage or benefit. On the other hand, the tone of the letter does
to my mind tend rather to invest the alleged non-payment of the ten
emalangeni annual licence fee with commercial significance.
The
letter alleges other breaches. Then it asserts that in 1982, the
licence was cancelled and rendered "non-exclusive", and
that the new "non-exclusive" licence was to be for a period
of five years, renewable only at the option of the Minister. After
referring to the return of ownership of the lands to The Ngwenyama in
trust, the letter also asserts that the agreement between Usutu and
Makhowe had expired in 1985, and that Makhowe had been told in 1991
that Usutu no longer had the right to renew the agreement, and that
it was open to Makhowe to submit a tender to the Royal Trust.
What
is odd, of course, about the letter is that having earlier (in 1973)
issued an exclusive fifteen year licence, on 10th September 1988 the
Minister for Agriculture admittedly issued a second licence,
described in its opening words as being "An Exclusive
licence..." for a term of five years to Makhowe. Moreover, as I
have already indicated, paragraph 2(f), of that licence provides:
"The licence shall be for a period of five years which may be
renewable at the instance of the licensee".
As
I have mentioned, the 1973 and the 1988 licences were annexed to
Makhowe's own founding affidavit. The business consultant, in
describing how he was "misled" by the letter of 13th
November 1992, explained that he had not read the 1988 licence when
he drafted the letter of 26th October 1993.
In
summary, therefore, the business consultant is saying that he was
misled into writing the letter of 26th October; the managing director
is saying that he signed it in reliance on his business consultant's
advice; and Makhowe is thus - in reply - seeking to disavow it.
The
present application falls, however, to be determined in accordance
with principles of law. Whether or not and for whatever reasons, in
the situation to which the two letters related, either Makhowe or
8
Tibiyo
may have been confused as to the legal rights and obligations
involved, or may have found it convenient or expedient at the time to
put them aside, or in Makhowe's case may have felt forced to adopt a
pragmatic approach rather than one based on a proper view of the
legal position, it is irrelevant for present purposes whether the
business consultant and, vicariously, the managing director, were in
truth misled.
Although
the parties to the present application have also argued whether
Makhowe has a licence currently to harvest and process wild mushrooms
- the applicant asserting that it does and the respondent denying it
- I think with respect that this is also irrelevant.
Two
issues arise on the application.
The
first is whether the application should be dismissed as a matter of
discretion, with an appropriate order for costs, because Makhowe
obtained the order for urgency and the interim interdict effectively
on an ex parte basis and, in doing so, failed to make full and frank
disclosure to Roos J. of all the material facts that were within its
knowledge.
The
second is whether the rule should be discharged on the merits.
I
was of the view that the rule should be discharged on the merits. I
will give my reasons for that conclusion first, dealing with the
issue of non-disclosure in relation to the matter of costs.
Even
assuming for the argument that Makhowe does hold a current licence
under the Wild Mushroom Order 1973, it could not have succeeded in
this application unless it were able to show that that licence
authorises it to go on to private property and to take wild mushrooms
without the need to obtain the prior agreement of the landowner. It
is common ground that at present it has no such permission from the
registered owner, Usutu.
Makhowe
argues that the intention of the Wild Mushroom Control Order 1973 is
that a licence granted under it empowers the holder to enter
9
on
any land in Swaziland - including privately owned land and whether or
not the private landowner consents - to collect wild mushrooms.
In
my judgment that is clearly an incorrect interpretation of the Order.
The
long title, or preamble, to the Order is expressed as being "A
King's Order-in-Council to provide for the prohibition of the sale,
export and picking of wild mushrooms without a licence." Under a
heading "Control of wild mushroom industry", section 3(1)
prohibits the sale, the collection and processing (except for
personal and family consumption) "from or in any forest or other
area of land", and the export of wild mushrooms, without a
licence.
Then
under a heading "Wild mushroom licence", section 4(1)
empowers the Minister on a written application to grant a licence to
any person "to do all or any of the matters referred to in
section 3(1)". The subsequent provisions of that section empower
the Minister to stipulate conditions of a licence, including a fee,
the period of the licence, and a requirement that the licensee shall
engage the services of a qualified toxicologist, clearly for the
protection of the public. The section also creates an offence of
breaching any condition of a licence and, in subsection (5), requires
the written consent of the Minister to the disposal of a licence.
Makhowe's
case is simply that because, by the terms of section 4(1), a licence
authorises the holder "to do all or any of the matters referred
to in section 3(1)", a licensee can go on to private land,
without the consent of the owner, and take his mushroom crop - in
other words, for this is what it comes down to, regardless of the
owner's proprietary rights in respect of his land and his crops.
A
statute will be presumed not to interfere with rights of private
property (such as the right to control who comes on to one's land or
takes crops from it) unless the legislature has expressly or by
necessary implication curtailed those private rights. This is
particularly so where no provision is made for compensation. (See
Attorney-General v. Homer (1884) 14 Q.B.D. 245, 257, Deeble v.
Robinson (1954) 1 Q.B. 77).
10
In
some instances a statute may, on its proper construction, have such
an effect, but I do not consider that that is the intention at all
here.
The
purpose of the Order is to prohibit persons from harvesting wild
mushrooms for commercial purposes without licences. One evident
reason for that lies in considerations of public health. The Order is
drafted in terms that are, I think, sufficiently wide to allow the
Minister also to control commercial harvesting as a matter of policy
for economic reasons, e.g. to treat the activity as one that may be
permitted under franchise for the benefit of the public revenues. The
concept of an exclusive licence, as well as the discretion of the
Minister to determine the amount of a licence fee, both suggest that
to my mind. On the other hand, the annual fee of ten emalangeni
charged in respect of the 1973 and 1988 licences indicates that this
was not done, as a matter of policy, on those occasions: an annual
fee of that amount for an exclusive licence is nominal, rather than
revenue-raising.
There
are no provisions in the Order for applications for licences to be
advertised or for affected owners to object; and there are no
provisions for the payment of compensation to land owners whose
crops, on Makhowe's argument, could be taken.
The
Order does not explicitly say that a licensee may infringe the rights
of a private landowner or take the property of a private person. On
its proper construction, its purpose is to prohibit an activity
without a licence - namely the commercial harvesting of wild
mushrooms - and not to authorise intrusions on private property and
the confiscation of private property. On a proper construction, all
that a licence does is to permit the holder to carry on an activity
notwithstanding the prohibition. The words in section 4(1) that deal
with the effects of a licence are descriptive of the extent to which
the licensee is released from the prohibition, but I do not consider
that they are intended at all to confer prescriptive rights of any
kind over private property.
For
those reasons, I refused Makhowe's application, reserving the
question of costs.
11
As
far as they are concerned, they must clearly follow the event.
Ordinarily they would be on a party and party basis. There is,
however, an issue as to whether in the way in which Makhowe procured
the granting of urgency and the interim interdict, they should be on
an attorney and client basis. Mr. Wise has gone further, contending
that Makhowe's conduct in pursuing this application constituted a
clear abuse of the process of this court. On that premise, he asked
for costs on the English attorney and own client basis.
Two
issues arise on the question of the Kind of costs to be awarded. The
first is whether Makhowe procured urgency, and the interim interdict,
by failing to disclose material facts. The other is whether on the
return date, the application was pursued vexatiously.
As
to the first, a litigant who seeks an order ex parte is bound to
display the utmost good faith by disclosing fully and frankly to the
court all material facts within his knowledge: See Mantori
International Limited v. Injobo (Pty) Limited (High Court Civil Case
No. 324/88), and the cases therein cited. The reason for this is that
the court hears only the applicant, and not the respondent. In
entertaining his one-sided application, it therefore relies on his
complete candour. If it transpires that the applicant has withheld
wilfully or negligently material facts that might have influenced the
decision of the court, then in its discretion the court may set the
order aside for that reason alone.
Mr.
Fine contended that because the application had been served on Usutu
before it came before Roos J. it was not an ex parte matter. Formally
(for what mere form is worth) that may be so, but I am satisfied that
in substance it fell to be governed by the principle that applies to
ex parte applications. Usutu was not given sufficient time to respond
to the application. On the facts as they emerged later, but were not
disclosed in the founding affidavit, there was no good reason why
Usutu should not have been allowed a more reasonable period of time
in which to respond. At the time when it Drought this application,
Makhowe had already been aware, for many weeks, that it was being
denied any right that it may genuinely have believed that it had to
go into the Usutu forests to harvest mushrooms without Usutu's
permission.
12
It
is obvious in those circumstances that it could have allowed Usutu,
at the very least, a day or so in which to respond. Its own founding
papers were prepared the day before they were filed, but it goes
further than that. Given the time over which the two companies had
been in discussion, there is a question whether there was immediate
urgency at all. I do not consider that there was. The way in which
Makhowe requested urgency smacks of a tactical move. To my mind, it
tells heavily against Makhowe that to try to justify the way in which
it chose to act, it had to seek to rely strenuously in the end on its
replying affidavits because of its initial, inadequate disclosure. If
Roos J. had been informed of the background to the matter, I do not
think he would have made the order for urgency on 9th November.
Certainly he might well have decided not to do so.
In
seeking to persuade the judge to grant interim relief on that day, I
consider that it was also incumbent on Makhowe to tell him that
-whether mistakenly or otherwise - it had in the past acted as if it
needed to obtain the consent of the private land owner (Usutu) to go
into the forests, in addition to obtaining a licence to do so under
the Order. My own conclusion, as I have said, is that on the correct
interpretation of the Order, Makhowe's licences never did authorise
it to intrude on private property without the consent of the
landowner. If Roos J. had heard the contested application on the
return date, I have no doubts that he would have come to the same
view.
One
implication of that might be thought to be that as the outcome of the
application eventually turns on a point of law - of statutory
interpretation - the non-disclosure of facts could never be material.
In this case, however, I do not consider that it was at all obvious
from the founding papers that the application did turn simply on the
construction of the Order. The founding affidavit did assert,
incorrectly, that Makhowe held a lease or leases, and in my view it
does give something of an impression that that company (and not
merely because of the licence alone) was carrying out its mushroom
-gathering activities under some colour of right. I do not consider
that the disclosure of Usutu's letter of 20th May 1994 and of the
advertisement for tenders dispels that impression. It was important,
in my view, to ensure on this urgent application that the judge
understood the position clearly.
13
Even
if Makhowe had been misled by the correspondence to which I have
referred, as to the true position in law and fact , its subsequent
explanation in its affidavits in reply is irrelevant. What mattered
was that it was for the company to tell the judge fully, at the time
when it came to him for interim relief, how and for whatever reason
it had in fact conducted itself. It was for him, and not for Makhowe
in retrospective justification after it had procured interim relief,
to decide what to make of those things. If the judge had been
informed fully, I do not think that he would have granted an interim
interdict on 9th November; and again I certainly think that he might
well have refused it.
As
I indicated during the hearing, I did myself have a concern, too, as
to whether Makhowe was on and after the return date acting
vexatiously. Mr. Fine had objected in limine that Mr. Dlamini had not
demonstrated his authority in giving his affidavit. On my
questioning, counsel made it clear that he was saying that (but
saying not more than that) Mr. Dlamini's statement that he was so
authorised was too bare, and not adequate. His affidavit,
nevertheless, had been filed by Usutu in the proceedings, and it
plainly relied on it. I do not consider that this objection to Mr.
Dlamini's authority can be glossed over gently as a "technical"
legal point. In my view, it had no merit at all.
Mr.
Fine also argued in limine that the contentions set out in Usutu's
replying affidavits, that Makhowe had withheld material information,
were somehow nothing short of scandalous and should be struck out
accordingly. I said at the time that I would consider this objection
in the light of the whole evidence. It will be apparent that I
disagree entirely with that view, and that I do not consider that it
could be seriously maintained, except on a misconceived attitude that
attack is the best means of defending a bad cause.
I
also had concerns, as the hearing on the return date progressed, that
Makhowe was clinging doggedly to a submission that was patently
untenable - namely that a licence under the Order in itself
authorises incursions into private proprietary rights. In principle,
there is no reason why an unsound submission in law should not, in
14
appropriate
circumstances, be held to be vexatious, but on balance in this case I
do not think that it would be right to do so.
The
concepts of urgency and of interim relief pending the outcome of
litigation are very important in the legal process. When they are
invoked properly, they enhance its efficacy, but they are not to be
abused. In the present case, putting the matter as simply as I can in
summary, I am of the view that Makhowe procured orders for urgency
and for interim relief without making full and frank disclosure of
the relevant, surrounding circumstances as known to it. The result of
that was that pending the judgment of this court on the merits of
Makhowe's complaint, Usutu was obliged contrary to its own rights to
allow the other company to come wrongly on to its own land and take
away produce that rightfully belonged to Usutu.
It
was said in argument that it has thereby had to bear the loss
involved in the taking of mushrooms during the period that the
interim interdict remained in force. I doubt , with respect, that
that is right. An interlocutory interdict does not determine the
eventual legal rights of the parties. It merely imposes an
interlocutory regime pending final judgment. If, in the outcome, one
party's rights - in this case, Usutu's - are affected, I can see no
reason why it should not be entitled, if it chooses, to enforce them
by recovering its losses.
Whether
or not that is so, however, in procuring court orders as it did,
Makhowe in my judgment did abuse the process of this court and
thereafter to a degree tried to sustain its position vexatiously. As
in Mantori, and the cases cited in that judgment, I consider that it
is appropriate to award costs to Usutu on an attorney and client
basis. However, after consideration, I am not persuaded that I should
go further than that.
I
so order, and I also direct under rule 68(2) of the High Court Rules
that in taxing the costs of senior and junior counsel, the taxing
master is not to be bound by the amounts set out in that section.
DAVID
HULL
CHIEF
JUSTICE
