Boost for food producers in court battle over inspection fees

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(Photo: Pixabay)
(Photo: Pixabay)
  • Food producers took the Minister of Agriculture, Forestry and Fisheries, among others, to court over the cost of inspection fees they must pay. 
  • They were unhappy because by law, produce must meet certain standards, but producers must pay the inspection fees. 
  • They argue the authority responsible has too much power to determine its own fees. 

The Supreme Court of Appeal last week delivered judgment in a legal wrangle that saw the Minister of Agriculture, Forestry and Fisheries – among others – taken to court over inspection fees for fresh produce.

The process followed to determine these fees had been unfair, it found.

The high court previously dismissed an attempt to review and set aside the Product Control for Agriculture (Procon) fee determination process on the grounds that internal remedies had not been exhausted.

But on 14 July, the SCA ruled that this was an error.

How inspection fees work

Food producers were unhappy because by law their produce, including for export, is obliged to meet certain standards. This is determined through an inspection process, but producers must pay for it – and they argued the authority responsible for inspection has too much power to determine its own fees.

They said there was insufficient public consultation over the fees and that the decision was unilateral, not subject to supervision, and had no ministerial or other controls - although Procon said it had consulted extensively. 

The appellants also contended that the fees amounted to a deprivation of property and that sections of the Agricultural Product Standards Act were unconstitutional.

Appellants in the case included the Tomato Producers' Organisation, the Noordelike Uie Komitee, and the Fresh Produce Importers' Association.  

Respondents include the Minister of Agriculture, Forestry and Fisheries; Procon; the Perishable Products Export Control Board; and the Agency for Food Safety, among others.

"The high court did not consider the merits of the review because it found that the appellants had failed to exhaust their internal remedy. In that it erred, and the appeal in respect of the high court’s order dismissing the review succeeds," said Judge David Unterhalter.

However, while the SCA found that the determination of inspection fees had been procedurally unfair, it did not agree there had been a deprivation property or a breach of the Constitution.

"The fees are charged for the service rendered by executive officers and assignees. Owners thus receive consideration for the payment of fees – the inspection of their products to ensure that they may be sold in compliance with the Act.

'Bad bargain'

"That is not a deprivation of property any more than the payment of a price for goods sold and delivered constitutes such a deprivation. To receive a service for a fee is not a deprivation of property," said Unterhalter.

"To pay more for something than it is thought to be worth may be a common place experience, but it is not a deprivation of property rights. It is a bad regulatory bargain."

However, Unterhalter said Procon had "irredeemably compromise[d] the fairness of the consultative process that was followed" in determining its fees.

"It must be reviewed and set aside," he said.

The appeal was upheld with costs, including the costs of two counsel, but otherwise dismissed. The application to declare certain sections of the Agricultural Product Standards Act unconstitutional and invalid was dismissed, but the determination of inspection fees was reviewed and set aside.

The costs of the review must be paid by the minister of agriculture, Procon, and the SA Meat Industry Company. 

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