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CASE NO. 262/86

PICK 'N PAY RETAILERS (PTY) LTD. APPELLANT
and

THE MINISTER OF MINERAL & ENERGY AFFAIRS RESPONDENT

CASE NO 262/86

/ccc

IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)

In the matter between
PICK 'N PAY RETAILERS (PTY) LTD APPELLANT
and

THE MINISTER OF MINERAL AND, ENERGY RESPONDENT AFFAIRS

CORAM: Corbett, Smalberger, Vivier JJA

et Nicholas, Kumleben AJJA

DATE HEARD: 12 MARCH 1987 DATE DELIVERED: 26 MARCH 1987

JUDGMENT

KUMLEBEN, AJA:/

2.

KUMLEBEN, AJA:

Appellant is the proprietor of a number '
of large retail stores at which clothing, foodstuffs and other commodities are sold. Respondent is entrusted with the administration of the Petroleum Products Act, 120 of 1977 ("the Act"). Prior to its amendment by sec 1 of the Petroleum Products Amendment Act, 61 of 1985 ("the amending Act") the responsible authority was the Minister of Economic Affairs. Since in this appeal nothing turns on the substitution I shall, for conve-nience, refer to both Ministers as "respondent".

On 17 June 1986 appellant applied, in the Cape of Good Hope Provincial Division, for an order setting aside paragraph 2(b) of certain regulations

made/

3.

made in terms of sub sec 2(l)(d) of the Act and published in Government Gazette No. 10260 of 2 June 1986. The application failed but leave to appeal was granted by the Court a quo.

This was not the first dispute to have arisen between the parties as a result of the marketing practices adopted by appellant. Details of earlier disputes, and the facts giving rise to them, are fully recounted in the judgment of Berman J. For the purposes of deciding the question raised in this appeal only certain of these facts need be repeated.

Appellant operates, in addition to its

retail stores, twelve service stations at which petrol

is sold. These do not form part of any of the stores

but are located close to certain of them. In 1969

resale price maintenance was prohibited by law but

petrol/
4. petrol was excluded from this prohibition. The price at which it could be sold at retail outlets was at the time maintained by an agreement reached between re-spondent and the wholesale suppliers of petrol. The latter undertook not to supply petrol to retailers should they resell the petrol at a price other than that prescribed by respondent from time to time.

On 16 September 1977 the Act was pro-mulgated. Its purpose, as described in the long title, was inter alia "to provide measures for the saving of petroleum products and an economy in the cost of the distribution thereof, and for the maintenance of a price therefor;". Sub sec 2(1) of the Act confers upon respondent certain powers, which may be exercised by making a regulation or by serving a nocice in writing

on/
5.
on any person, in order to implement the provisions
of the Act. Sub sec 2(1)(a) and (b) deal with
matters unrelated to the issue on appeal. Sub sec

2(1)(c) empowers respondent to prescribe the price
at which petrol may be sold by any person. Notwith-

standing this provision, no such price was prescribed

and the price continued to be governed by contract.

On 21 June 1985 the amending Act became law. It

conferred additional regulatory powers on the Minister

by adding two further sub-sections - 2(1)(d) and 2(1)(e) -

to sec 2(1) of the Act..

In March 1986 appellant embarked upon

an/

6.
an advertising and sales campaign, referred to in the application as "the coupon scheme". It involved the issue of a coupon to a customer for each litre of petrol bought at one of appellant's service stations. The coupon entitled the holder to buy goods, apart from petrol, to the value of 4 cents at any of appellant's stores or to tender the coupon in part payment of goods purchased. In May 1986 respondent, acting in terms of sub sec 2(1) (c) of the Act, prescribed the price at which petrol was to be sold. Appellant proceeded to sell petrol at the price now prescribed by law but continued to operate its coupon scheme. On 2 June 1986 respondent published in terms of sub sec 2(1 )(d) the regulations to which I have referred. They are as follows:

"1. In/

7.

"1. In these Regulations, unless the context indicates otherwise -'benefit' means -

(a)	any money, article, service or concession having a commercial value; or
(b)	anything whatsoever which, either by itself or in conjunction with any other thing or with the performance of any act, entitles or purports to entitle the recipient there-of to receive such money, article, service or concession, or to participate in any competition;

and any other word or expression to which a meaning has been assigned in the Petroleum Products Act, 1977 (Act 120 of 1977), shall bear such meaning. 2. No person, in respect of whom the price at which petrol may be sold by that person at an outlet may have been prescribed by regulation or notice under the Petroleum Products Act, 1977 -

(a)	shall supply or offer to supply petrol at that outlet other than by way of sale for a wholly monetary consideration and at the price so prescribed;
(b)	shall, as a condition of or as a result of any sale of petrol by a business or undertaking conducted at that outlet,

give or offer any benefit to any consumer."

Sub/
8. Sub secs 2(1)(c) and (d) of the Act provide that:

"The Minister may by regulation or by notice in writing served on any person ...

(c)	prescribe the price at which any petroleum product may be sold by any person;
(d)	regulate in such manner as he may deem fit, or prohibit, any business practice, method of trading, agreement, arrangement , or understanding which, in the opinion

of the Minister, is calculated to in-fluence, or which may have the effect of influencing, directly or indirectly, the purchase or selling price of petroleum fuel at any outlet;".

It was conceded in the Court a quo, and

on appeal, that the issue of a coupon by appellant under

the coupon scheme amounts tothe offer or giving of a

"benefit" as defined in regulation 1. It follows that

the regulations, if valid, prohibit the coupon scheme.

The issue is whether the regulations, particularly

regulation/
9. regulation 2(b), are ultra vires the enabling provision, sub sec 2(1)(d)..
At the hearing of the application the validity of regulation 2(b)'was challenged on two main grounds. Firstly, appellant argued that the respondent in making the regulation exceeded the powers conferred by the enabling sub-section. This ground, which is some-times referred to as "pure ultra vires", was not pursued on appeal. Alternatively, it was submitted that the regulation, though it be held to be intra vires in this sense, is nevertheless invalid inasmuch as it was made for an ulterior purpose, that is, one not intended by the enabling sub-section. For this submission appellant relied upon the well-established principle that:

"Where/

10.

"Where a power is granted for a speci-fic purpose it cannot be used for a purpose other than that for which it was intended. (van Eck N.O. and van Rensburg N.O. v Etna Stores 1947(2) S A 984 (A.D.) and cases there cited). In relation to such other purpose the power does not exist."

Broadway Mansions (Pty) Ltd vs Pretoria City Council 1955(1)
S A 517 (A) at 522.B. See too Minister van die Suid-
Afrikaanse Polisie en 'n Ander v Kraatz en 'n Ander 1973(3)

S A 490 (A)at 507 H.

In the course of rejecting each of

the grounds of alleged invalidity, the Court held that

the purpose of sub sec 2(1)(d) was to authorise regula-

tions necessary for maintaining the retail price of

petrol. This was conceded by appellant. Mr Aaron,
who with Mr Weinkove appeared for the appellant,

acknowledged - quoting from their heads of argument -

that:/

11.

that:

"from the language of ss.2(l)(d), it is clear that the power conferred there-by, like the power conferred by ss. 2(l)(c), was given for the purpose of maintaining the price of petrol."

Moreover, counsel for appellant did not dispute that

the effect of regulation 2(b) was, as the Court below

held, to prevent a circumvention of a price determination

made in terms of sub sec 2(1)(c), in casu by prohibiting

the coupon scheme. In the circumstances, inasmuch-as-

sub sec 2(1)(d), by means of regulation 2(b), attained

its intended purpose, it would seem that the scope for

an argument that it was used for an ulterior one is in

the nature of things restricted. The limited basis on which

appellant argued this ground of invalidity before us -

to/
12. to quote again from the heads of argument - was that sub sec 2(1)(d) was

"not introduced to cure any inadequacy or insufficiency in the application of ss.2(l)(c), or as a means of enforcing compliance with a determination of price prescribed thereunder, but related to an alternative regime."

Thus the crisp question to be decided in this appeal is

whether this is the correct interpretation to be placed

on the language of the sub-section.

As stated in Union Government (Minister of

Finance) vs Mack 1917 (A) 731 at 739, and stressed in

subsequent decisions,

"the primary rule in the construction of Statutes is that the language of the Legislature should be read in its ordinary sense."

Applying this rule to the wording of sub sec 2(1)(d),

it/

13.
it is in my view clear that it authorises respondent to regulate or prohibit a method of trading which is calculated to influence, directly or indirectly, the price at which petrol is sold by changing (increasing or reducing) it. Since the purpose of the sub-section is the maintenance of the prescribed petrol price, a change in price must refer to the resultant difference between the prescribed price and the actual selling price. Diction-ary definitions of the word "influence" confirm this con-clusion. I refer to but two of the many cited in argument: "To influence" according to the Random House Dictionary of the English Language means to produce an effect on a person or thing by intangible or indirect means and in the Longman Dictionary of the English Language

"to/
14. "to influence" is defined as inter alia "The act or power of producing an effect without apparent exertion of force or direct exercise of command." "Effect", it need hardly be stated, in the context of these defini-tions means to bring about a change in an existing condi-tion. Thus, where a price is prescribed in terms of sub sec 2(1)(c), the sub-section which follows authorises regulations prohibiting a business practice which changes the prescribed price by reducing or increasing it. The coupon scheme is a "method of trading" which does just that. By the issue of a coupon the prescribed price is indirectly reduced by 4 cents per litre. On this con-struction of the language of the sub-section, which I consider to be the correct one, its purpose was plainly

to/
15. to supplement sub sec 2(1)(c) by ensuring that, by means of appropriate regulations, a price determination made under it was not circumvented.
Mr Aaron, in arguing to the contrary on the literal meaning of the sub-section, construed and applied the words "to influence" differently. He sub-mitted that there is an active element (that which exerts an influence) and a passive element (that which is changed); that the former must be an "external operating factor" acting upon the supplier or supply; and that it therefore follows that when the supplier (in this case appellant) reduces his selling price he cannot be said to be influencing it. This submission was thus stated in the heads of argument:

"the/

16.

"the subsection was introduced into the Act to control actions by one or more persons which cause or enable another person to charge a price diffe-rent from the one he would otherwise have charged."

Whilst "influencing" manifestly involves cause and
effect, I find nothing in the wording of this sub-

section to justify the proposition that the cause should

be an "outside influence". The sub-section expressly

refers to a "business practice" or a "method of trading",

which causes the price to change, not to an "outside

influence".

It was next submitted that the meaning

of the words "business practice" and "method of trading",

having regard to the words which follow - "agreement,

arrangement or understanding" - should be restricted to

agreements/
17. agreements between two of more persons that are not legally enforceable and to practices observed by two or more persons in the absence of any prior agreement. This argument is based on the application of the eiusdem generis rule. According to that rule

"a word of wider import, when used with words describing species of the same genus, must be so restricted in its sig-nification as not to include anything outside that genus. (Director of Education, Transvaal v. McCagie and Others, 1918 A.D. 616 at p. 623). In order to apply the principle one has to find some common quality or common denominator which is common to each of the words referred to by which the meaning of the word of wider import may be restricted."

S v Wood 1976(1) S A 703 (A) at 707 D. The rule need

only/
18. only be stated to demonstrate its inapplicability to the words concerned. They have a specific meaning which differs materially from those which follow. The Legislature plainly had two distinct causes in mind which, in the absence of appropriate regulations, could influence the price in the manner sub sec 2(1)(d) was designed to prevent.

I should remark in passing that the ar-guments on behalf of appellant based on a literal inter-pretation of the sub-section, which have been discussed in the foregoing two paragraphs, appear to me to apply more aptly to the first ground of alleged invalidity (pure ultra vires). This ground, as I have said, was argued in the Court below but abandoned on appeal. Be

that/
19. that as it may, for the reasons given I do not regard them as sound.

As part of.the argument that the two sub-sections are independent, appellant submitted that any cir-cumvention of the prescribed price could be dealt with by way of a criminal prosecution for a contravention of the provisions of sub sec 2(1)(c). There was therefore no need to rely upon regulations made in terms of sub sec 2(1)(d) to prevent this. Sec 12 of the Act makes a contravention of the provisions of sub sec 2(1)(c) an offence. Thus, so it was argued, the criminal sanction is an adequate means of ensuring that the price prescribed is maintained. In the instant case, it was said that appellant could have been prosecuted for each sale under

the/
20. the coupon scheme until it desisted from this practice. However, had this course been followed, I have little doubt that appellant in the criminal prosecution would have
raised the defence - perhaps successfully - that no offence was committed since the prescribed price was paid and the issue of the coupon was no more than an indirect benefit not prohibited by the Act or its regulations. This, one may confidently conclude, was foreseen by the Legislature and hence the amendment to introduce sub sec 2(l)(d).

Since no price had been prescribed at the time of the amendment, Mr Aaron submitted that this lent support to his contention. But here too, the answer is that the need for such a provision was foreseen

before/
21. before a price was prescribed and before any circum-vention took place.
Finally, appellant placed some reliance on the penalties in sec 12 of the Act. Those imposed for a contravention of the provisions of sub sec 2(1)(c) are less severe than those laid down for a contraven-tion of sub sec 2(1)(d). The essence of this sub-mission is that, if the purpose of sub sec 2(1)(d) was to supplement sub sec 2(1)(c), one would not have expected an indirect contravention to carry a heavier penalty than a direct one. I doubt that the differing penalties can serve as a reliable guide to the meaning of the sub-section. Moreover, I consider that the language of the sub-section is sufficiently clear to make any reference to the penalty provisions unnecessary.

In/ ....

22.

In any event this argument fails to take into account the fact that a circumvention by means of, say, an agreement may be of such a nature that it warrants a more severe punishment than that to be imposed when a single sale of petrol in contravention of sub sec 2(1)(c) takes place.

During argument we were referred to the element of discretion introduced into sub sec 2(1)(d) by the words "in the opinion of the Minister", which broadens the scope of the authority conferred on him. The nature and effect of this discretion was debated at considerable length by both counsel for different reasons. It was however agreed that,should appellant's interpretation of sub sec 2(1)(d) not be upheld, the need

to/

23.

to consider this question falls away. In the light of the conclusion reached, it is therefore unnecessary to discuss it.
The appeal is dismissed with costs which are to include the costs of two counsel and those incurred in the application for leave to appeal.

M E KUMLEBEN, AJA

OORBETT, JA )

SMALBERGER, JA) CONCUR

VIVIER, JA ) NICHOLAS, AJA )

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