Court name
Supreme Court
Case number
SA 11 of 2013

Transworld Cargo (Pty) Ltd v Air Namibia (Pty) Ltd and Others (SA 11 of 2013) [2014] NASC 11 (15 July 2014);

Media neutral citation
[2014] NASC 11
Ziyambi AJA





the matter between:









31 March 2014

15 July 2014


AJA (MAINGA JA and GARWE AJA concurring):

This is an appeal from a judgment of the
High Court in which it dismissed an application by way of notice of
motion made by the appellant for review of a decision taken by the
first respondent (Air Namibia).

The second, third and fourth respondents
did not participate in the appeal.

In the court below the appellant sought an

Calling upon the respondents to show cause why the decision taken by
the first respondent on or about 5 November 2008 –

to enter into an agreement with fourth respondent to permit the
second respondent to pre-book 12 tons of cargo space for fresh fish
on every international flight operated by first respondent departing
from Windhoek to Frankfurt Airport in the Federal Republic of Germany
and to Gatwick Airport in the United Kingdom, to the exclusion of all
other freight forwarders;

alternatively, to enter into an agreement with fourth respondent to
outsource its fresh fish exporting operations to second respondent;

not be declared in conflict with the Constitution of Namibia and
accordingly null and void, alternatively be reviewed and set aside in
terms of Rule 53(1).

the alternative to prayer 1:

Declaring that the agreement(s) aforesaid entered into between the
first respondent and the fourth respondent is in contravention of
section 23 and 26 of the Competition Act No 2 of 2003, and
accordingly null and void and of no force and effect.

Ordering that the first respondent and such further respondents who
may oppose this application, to pay the costs of this application
jointly and severally, the one paying the others to be absolved.’

alternative relief was not pursued at the hearing.

factual background

Air Namibia is a private company duly
incorporated and registered in terms of the company laws of the
Republic of Namibia and operates an airline which is the national
airline. Although it is not incorporated by statute, the State is the
sole shareholder. Its cargo services division is a component of its
commercial operations.

The appellant is a private company with
limited liability, and is incorporated in terms of the company laws
of Namibia. It is a cargo and freight company. Its business involves
exporting mainly refrigerated fresh fish on Air Namibia’s
flights from Windhoek to Frankfurt airport as well as Gatwick airport
in the United Kingdom. It has, for 15 years, been involved with Air
Namibia in the export of fresh fish to Europe.

The quantity of fresh fish exported by the
appellant varied in respect of each flight. This was because the
fishing industry is unpredictable due to sudden changes in the
weather and catch rates. There was no formal agreement between the
appellant and Air Namibia. Previously, all shipments had taken place
on the basis of bookings made by the appellant with Air Namibia prior
to the respective flights. In 1992, the appellant erected a cold room
at Hosea Kutako International Airport in order for the cold chain to
be maintained in the exportation of the fresh fish from Namibia by
air. The cold room was the only cooling facility at the airport. The
appellant sublet a portion thereof to Air Namibia for freight
purposes at a monthly rental of N$95 386,75. This business
relationship between the parties did not prove profitable to Air
Namibia. It incurred considerable losses on its cargo operations.

As a result of these losses, Air Namibia
engaged expert consultants from the International Air Transport
Association (IATA) for advice as to how to improve the financial
performance of its cargo operations as well as that of its other
departments. This process was completed during December 2007 and in
January 2008, Air Namibia appointed Mr van Vuuren (Van Vuuren) to
lead a group of senior employees assigned to implement the
recommendations. Prior to 2005, a South African entity called Morgan
Cargo (Pty) Ltd (Morgan Cargo) operated as principal freight
forwarders for the transportation of fresh fish exported from Namibia
to European markets on Air Namibia flights. These operations were
performed on the basis of what is known in the industry as block
space agreements. In 2005 negotiations for the renewal of the block
space agreement failed and it was not renewed.

In February 2008, Van Vuuren approached the
appellant and Morgan Cargo with a view to increasing Air Namibia’s
base freighting rates. At that time, the rates were low and had
remained unchanged for 5 years. According to Air Namibia, both the
appellant and Morgan Cargo, who then enjoyed an effective monopoly of
the market (of freighting fresh fish), resisted the increases in the
base rate. Both expressly indicated that they would not be prepared
to accept any increase beyond N$0,20 per kg.

Therefore, Air Namibia explored further
alternatives to reduce the loss-making nature of its cargo
operations. Consultations were conducted by its Chief Executive
Officer with members of the fishing industry including the appellant.

During one of these consultations in early
2008, the Chief Executive Officer raised Air Namibia’s
intentions to secure better and more effective utilization of cargo
space on its European flights with one Sidney Martin, a prominent
Namibian businessman and a member of the local fishing industry. Mr
Martin conducted his own market research and engaged the assistance
of Adolf Burger, a South African expert in export and transportation
of fish products as well as Paul de Robillard, the Chief Executive
Officer of the leading South African freighting and forwarding
company, Rollex (Pty) Ltd. An agreement to enter into a joint venture
was concluded and as a result, the fourth respondent was then
incorporated. In due course, the fourth respondent approached the
Chief Executive Officer of Air Namibia expressing its interest in
doing business with Air Namibia and its willingness to enter into a
block space agreement in terms of which it would be liable for
penalties if space reserved was not fully utilised. It would,
further, pay a better rate than that being paid by the appellant. I
might mention here that the appellant’s managing director Mr
Liebich (Liebich) averred that he had advised Van Vuuren that the
appellant ‘was not prepared to enter into a block space
agreement of 12 tons per flight with Air Namibia for the simple
reason that Namibia does not produce 12 tons of fresh fish of export
quality per day’.

On 29 October 2008 the appellant made a
booking for Air Namibia’s entire cargo capacity for each day of
the months of November and December 2008. The appellant failed to
take up at least 90 tons of the space reserved for the first week of
November. The explanation given by the appellant was that there was
no fish to export because the Ministry of Fisheries had imposed a
moratorium (the appellant did not state when it became aware of the
moratorium) on catches for October 2008. The unused space was not
paid for by the appellant and indeed there was no contractual
obligation requiring it to do so. The result of that booking was that
other potential clients of Air Namibia were effectively prevented
from utilising the booked space. This resulted in further losses to
Air Namibia which could not penalise the appellant nor in any way
recover any financial losses suffered as a result of the
non-utilization of the space booked by the appellant.

On 4 November 2008 Van Vuuren informed the
appellant that Air Namibia would not honour the appellant’s
further cargo space booking for November and December 2008. He also
advised that the appellant would no longer be able to reserve all
cargo space on Air Namibia’s flights. However, he offered the
appellant a 50% share of the cargo space to accommodate other players
in the market. The offer was rejected by the appellant who suggested
that the 50-50 split be introduced after six months.

After various negotiations, and on or about
5 November 2008, Air Namibia took a decision to enter into an
agreement, a block space agreement, with the fourth respondent
(Binvis) to permit Binvis to pre-book 12 tons of cargo space for
fresh fish on every international flight operated by Air Namibia
departing from Windhoek to Frankfurt Airport and to Gatwick in the
United Kingdom. In terms of the agreement, the rates to be paid by
Binvis were higher than those then being paid by the appellant and
Binvis would be liable for penalties if the space booked was not
fully utilised. It was also agreed that Binvis would make
prepayments. This agreement was to endure for one year, subject to a
possibility of renewal on terms to be agreed between the parties. It
is Air Namibia’s claim that the implementation of the agreement
resulted in a considerable increase in its revenue from cargo flown
to Europe.

appellant was aggrieved by the decision. It took the view that the
negotiations leading up to the agreement and the agreement itself
were conducted by Air Namibia in secret without the appellant or any
other freight forwarder, such as Morgan Cargo, being given an
opportunity to bid for the contract. Furthermore, Air Namibia, being
the national airline and the only scheduled airline operating on
‘these routes’ with the capacity to carry fresh fish was
under a duty to act in the national interest and to exercise its
considerable powers for the public benefit. It criticised the process
by which the decision was taken as being not only unfair and
unreasonable and in conflict with Art 18[1]
of the Constitution of Namibia but also in contravention of the
Competition Act No 2 of 2003, in that it constitutes restrictive
practice in violation of s 23 thereof as well as an abuse of Air
Namibia’s dominant position in the market in contravention of s
26 of that Act.

The court a
identified the issue to be decided
as whether when Air Namibia entered into the block space agreement
with fourth respondent, it was exercising a public power and
performing a public function constituting reviewable administrative
action. It concluded that the decision in question did not constitute
administrative action and was, therefore, not susceptible to review
in terms of the Constitution and the common law. It dismissed the
application with certain orders as to costs. It is this decision
which forms the subject of the present appeal.

Application for

As is commonly the case in appeals before
this Court, the appellant made an application for condonation in
terms of rule 18 for the late filing of its notice of appeal. The
notice was filed with this Court 21 days late. The explanation
proffered by the appellant’s legal representative is that
although service of the notice had been effected timeously on the
Registrar of the High Court and the first and third respondents, he
inadvertently omitted to serve the notice on the Registrar of the
Supreme Court. When the matter came to his notice, he immediately
filed the notice of appeal but by then it was 21 days late and, due
to an oversight, he omitted to file, as he ought to have done, an
application for condonation.

Mr Corbett, for the appellant, submitted
that the explanation for the delay should be accepted because neither
the appellant nor its legal representative was the cause of it; that
the appellant would suffer prejudice if the doors of the Court were
shut to it whereas, the respondent has not suffered any prejudice
since the appeal has not been delayed by the late filing of the
notice; for the aforestated reasons, this non-compliance has not
caused inconvenience to this Court nor caused unnecessary delays in
the administration of justice; that the application was
and the prospects of success on
appeal were good.

We are satisfied that in this case the
indulgence of condonation may be granted. The application was brought
as soon as the legal representative became aware of the oversight.
The explanation for the non-compliance with the rules has not been
disputed nor is the application for condonation opposed by Mr Frank.
There was no inconvenience to the Court or any prejudice to the
respondent occasioned by the late filing of the notice with this
Court, since the notice had been filed with the Registrar of the High
Court and the necessary appeal processes were not delayed.

The issue of costs relating to the
application for condonation was not argued before us but we are of
the view that each party should bear its own costs.

Accordingly we would grant the order for
condonation with each party bearing its own costs.

The appeal

The appellant’s

The main argument advanced by Mr Corbett in
his heads of argument and in oral argument, is as follows: Air
Namibia is an organ of the Government, exercising a public power and
performing a public function which includes the provision of air
transport services in the public interest. Although it is constituted
as a private company it is also identified as a State-owned
enterprise in terms of Schedule 1 (para 46) of the State-Owned
Enterprises Governance Act No 2 of 2006. One of the objectives of
this Act is to make provision for the efficient governance of
state-owned enterprises and the monitoring of their performance. Also
the State, as the sole shareholder, can control the appointment of
the directors who run the company. It is, he submitted, a public
authority both because it is under the control of a recognised public
authority and also because Cabinet has a constitutional prerogative
to supervise its activities. He submitted that, as a parastatal, Air
Namibia is also an agency for the purposes of Art 5 of the
Constitution of Namibia which provides that the fundamental rights
enshrined in Chapter 3 ‘shall be respected and upheld by the
Executive, Legislature and Judiciary and all organs of the Government
and its agencies . . . ’.

Accordingly, its decisions are subject to
review where the specific decision itself involved the exercise of a
public power.

Counsel for the appellant was mindful of
the difficulty which arises in determining whether the decision
involved the exercise of a public power. He referred the Court to the
remarks of Langa CJ in
Chirwa v Transnet
Ltd and Others
2008 (4) SA 367 (CC) p
430D that:

whether a power or function is “public” is a notoriously
difficult exercise. There is no simple definition or clear test to be
applied. . . . ’.

He also referred to the remarks made by
Strydom AJA in
Permanent Secretary of
the Ministry of Finance and Others v Ward

2009 (1) NR 314 (SC) p 320 which reiterated the difficulty involved
in such an exercise stressing that each case must be judged on its
own facts and circumstances. At para 22 the learned Acting Judge of
Appeal said:

. . The basis on which this distinction is drawn depends on whether
the functionary’s decision amounts to administrative action or,
as was alleged in this instance, he acted purely in terms of his
contractual rights. To decide whether a decision by a functionary
amounts to administrative action is not always easy and a reading of
the cases on this issue bears out this difficulty. Certain guidelines
have crystallised out of judgments of the courts in Namibia, and also
in South Africa, but it is clear that
courts are careful not to lay down hard and fast rules and each case
must be judged on its own facts and circumstances. There is also no
doubt that in deciding the issue courts must have regard to
constitutional provisions which, in certain instances, have broadened
the scope of reviewable action.

(Emphasis as in the original.)

submitted that although the focus in such an exercise is on the
nature of the action, the identity of the actor is not irrelevant.
The easiest organ of the State to identify, he submitted, is one that
operates within the central government structures and which is
established under the Constitution or in terms of applicable
legislation. More controversial is an actor which does not fit into
this box but exists at the fringes of the State. There is, he
submitted, considerable authority that parastatals, given their
nature and functions, can be classified as organs of Government. In
this context, Art 40(f) of the Constitution provides that it is a
function of Cabinet to establish-

. . economic organisations, institutions, and parastatal enterprises
on behalf of the State . . .’

for the Cabinet in terms of Art 40(a):

direct, co-ordinate and supervise the activities of Ministries and
Government departments including parastatal enterprises . . . ’

submitted that, constituted as it is, as a state-owned enterprise and
parastatal, Air Namibia is thus inherently part of the executive.

respondent’s submissions

On behalf of Air Namibia, Mr Frank
submitted that the decision to allocate the cargo freight rights to
Binvis was a purely commercial decision taken in a contractual
context and is not a reviewable administrative act. In any event, the
agreement had expired by the time of commencement of the trial and
any action taken by this Court in respect of the agreement would be a
brutum fulmen, there
being no averment by the appellant that the agreement was renewed
after, or extended beyond, the date of its expiry. Mr Corbett,
however, countered that whilst the agreement may have expired by
effluxion of time, and considering that Air Namibia might be inclined
to conduct itself in the same fashion in future, the issue was really
one of principle so that it is made clear as to what Air Namibia can
or cannot do.

Mr Frank submitted further that the fact
that Air Namibia was considered a parastatal for purposes of the
State-Owned Enterprises Act does not assist the appellant since Air
Namibia is not an administrative body or organ and its decision was
not an exercise of public power. The selling of cargo space is
essentially a commercial business activity and cannot constitute the
exercise of a public power but is merely an incident, and part and
parcel, of operating an airline in accordance with business
principles. The power thus exercised in entering into the agreement
is a contractual power, as opposed to a public power, which arises
from the commercial activity engaged in by Air Namibia.

submitted that, as found by the court
the starting point is the meaning of administrative action for the
purposes of the Constitution and that useful guidelines to
determining whether any given conduct constitutes administrative
action, have been provided by the South African Constitutional Court
of the Republic of South Africa and Others v South African Rugby
Football Union and Others

2000 (1) SA 1 (CC)[2] (SARFU).

He submitted that even where entities
established by statute exercise powers conferred by statute, the
courts have held that the exercise of contractual powers would not be
reviewable. In support of this submission he referred to
Metropolitan Council v Metro Inspection Services (Western Cape) CC
and Others
2001 (3) SA 1013 (SCA) where
the Supreme Court of Appeal of South Africa held that :

The section (section 33 of the South African Constitution) is not
concerned with every act of administration performed by an organ of
State. It is designed to control the conduct of the public
administration when it performs an act of public administration i.e.
when it exercises public power . . . (Brackets are mine.)

It follows that whether or not conduct is “administrative
action” would depend on the nature of the power being exercised
(SARFU at para [141].) Other considerations which may be relevant are
the source of the power, the subject-matter, whether it involves the
exercise of a public duty and how closely related it is to the
implementation of legislation (SARFU at para [143]).’

In essence the submission on behalf of Air
Namibia is this: it is not an administrative body or organ of
Government; it is an economic organisation as contemplated by Art
40(f); it has no special powers created by statute beyond those
ordinarily applicable to companies; the decision in question was not
taken by an administrative body but by the managing director of a
private company; and the source of the power exercised by Air Namibia
is not statutory but is to be found in its Memorandum of Association
and Articles of Association as in the case of any company.

As to the nature of the contract, so
submitted Mr Frank, it was a decision taken by Air Namibia to
increase the revenue it achieved on a then loss-making division. It
was a decision based on ordinary business principles following an
investigation and subsequent recommendations by IATA.

He suggested that the approach of this
Court in the
Permanent Secretary v Ward
matter would find application in this matter and submitted that the
appeal ought to fail on the basis that Air Namibia’s decision
did not constitute administrative action.


The question to be determined is whether
the conduct of Air Namibia in taking the decision in question
involved the exercise of a public power and therefore constitutes
administrative action for the purposes of Art 18 of the Constitution
of Namibia.

The approach of the Constitutional Court of
South Africa where an enquiry of this nature, involving an act of an
organ of Government, public body or authority, has been to focus not
on the arm of Government to which the actor belongs, but on the
nature of the power which is exercised by him or her. Determining the
nature of the power would involve considerations such as the source
of the power, the subject matter, for example whether or not it
involves the exercise of a public duty, and how closely it is related
on the one hand to policy matters, which are not administrative, and
on the other hand to the implementation of legislation, which is.

approach is articulated thus in SARFU matter para 141-143[3]:

In s 33[4] the adjective
“administrative” not “executive” is used to
qualify “action”. This suggests that the test for
determining whether conduct constitutes “administrative action”
is not the question whether the action concerned is performed by a
member of the executive arm of government. What matters is not so
much the functionary as the function. The question is whether the
task itself is administrative or not. It may well be, as contemplated
that some acts of a legislature may constitute “administrative
action”. Similarly, judicial officers may, from time to time,
carry out administrative tasks. The focus of the enquiry as to
whether conduct is “administrative action” is not on the
arm of government to which the relevant actor belongs, but on the
nature of the power he or she is exercising.

As we have seen, one of the constitutional responsibilities of the
President and Cabinet Members in the national sphere (and premiers
and members of executive councils in the provincial sphere) is to
ensure the implementation of legislation. This responsibility is an
administrative one, which is justiciable, and will ordinarily
constitute “administrative action” within the meaning of
s 33. Cabinet Members have other constitutional responsibilities as
well. In particular, they have constitutional responsibilities to
develop policy and to initiate legislation. Action taken in carrying
out these responsibilities cannot be construed as being
administrative action for the purposes of s 33. It follows that some
acts of members of the executive, in both the national and provincial
spheres of government will constitute “administrative action”
as contemplated by s 33, but not all acts by such members will do so.

Determining whether an action should be characterised as the
implementation of legislation or the formulation of policy may be
difficult. It will, as we have said above, depend primarily upon the
nature of the power. A series of considerations may be relevant to
deciding on which side of the line a particular action falls. The
source of the power, though not necessarily decisive, is a relevant
factor. So, too, is the nature of the power, its subject-matter,
whether it involves the exercise of a public duty and how closely it
is related on the one hand to policy matters, which are not
administrative, and on the other to the implementation of
legislation, which is
. While the subject-matter of a power is not
relevant to determine whether constitutional review is appropriate,
it is relevant to determine whether the exercise of the power
constitutes administrative action for the purposes of s 33. Difficult
boundaries may have to be drawn in deciding what should and what
should not be characterised as administrative action for the purposes
of s 33. These will need to be drawn carefully in the light of the
provisions of the Constitution and the overall constitutional purpose
of an efficient, equitable and ethical public administration. This
can best be done on a case by case basis.’ (Emphasis provided.)

In the Cape
Metropolitan Council
case the appellant
was an organ of State as defined in s 239 of the South African
Constitution. It had cancelled a contract with the respondent (with
whom it had contracted to identify non–paying levy payers and
to collect outstanding levies) on grounds of material breach of
contract involving substantial fraudulent claims. The respondent had
successfully applied to the High Court for the setting aside of the
termination of the contract on the ground that its constitutional
right to lawful and procedurally fair administration had been
violated by such termination. On appeal, Streicher JA remarked:

The appellant is a public authority and, although it derived its
power to enter into the contract with the first respondent from
statute, it derived its power to cancel the contract from the terms
of the contract and the common law. Those terms were not prescribed
by statute and could not be dictated by the appellant by virtue of
its position as a public authority. They were agreed to by the first
respondent, a very substantial commercial undertaking. The appellant,
when it concluded the contract, was therefore not acting from a
position of superiority or authority by virtue of its being a public
authority and, in respect of the cancellation, did not, by virtue of
its being a public authority, find itself in a stronger position than
the position it would have been in had it been a private institution.
When it purported to cancel the contract
it was not performing a public duty or implementing legislation; it
was purporting to exercise a contractual right founded on the
consensus of the parties in respect of a commercial contract. In all
these circumstances it cannot be said that the appellant was
exercising a public power.
Section 33
of the Constitution is concerned with the public administration
acting as an administrative authority exercising public powers, not
with the public administration acting as a contracting party from a
position no different from what it would have been in had it been a
private individual or institution.’ (Emphasis provided.)

The reasoning in the SARFU
and Cape
cases was adopted and
applied by this Court in the
Secretary v Ward

The appellant therein had cancelled a
contract concluded with the respondent, a medical doctor who
practised for his own account, to become a service provider to the
Public Service Employees Medical Aid Scheme (PSEMAS). The scheme
provided for by the agreement was that a service provider would
render his professional services to members of PSEMAS at a prescribed
professional tariff. For these services the service provider would
then be remunerated by the administrator of the scheme on behalf of
the second appellant, the Minister of Finance. The termination was on
grounds that the respondent had been guilty of dishonest conduct in
breach of a clause of the agreement. At paras 59 to 61 of the
judgment, the Court said:

In the present instance there can be no doubt that the first
appellant is a public authority and that the power to enter into the
agreement was derived from statute. However, the terms of the
agreement are not statutorily prescribed, in fact nowhere is there
even any direct mention of an agreement. Clause 11.5, in terms
whereof the first appellant had cancelled the agreement, contained
only common-law grounds on which the agreement could be cancelled.
Correctly, in my view, the respondent did not deny the right of the
first appellant to cancel the agreement if such grounds in fact
existed. These grounds existed in the common law and the fact that
they were contained in the agreement did not alter that fact. These
were therefore not terms which the first appellant imposed by virtue
of one or other superior position in which he found himself
the respondent. In cancelling the agreement the first appellant was
also not implementing legislation.

Furthermore, the subject-matter of the agreement between the parties
was the rendering of medical services to members of the medical-aid
scheme. Seen in this context the subject matter of the agreement was
a service agreement and purely commercial.

For the above reasons I conclude that the first appellant, when he
cancelled the agreement, was not performing a public duty or
implementing legislation but was acting in terms of the agreement
entered into by the parties and that it could not be said that the
first appellant, in doing so, was exercising a public power

In my view, the court a
correctly found that the decision
complained of did not constitute administrative action. Air Namibia
is a State-owned enterprise. It is a private company and operates as
such. The day to day decisions (for example the purchase of light
bulbs or stationery or entering into contracts) necessary for the
efficient running of the company are taken by its directors acting in
terms of its Memorandum and Articles of Association which is the
source of their power. The decision
, in
, was such a decision.

The fact that the Government is its sole
shareholder and that it is regarded as a parastatal for purposes of
the State-Owned Enterprises Act, is insufficient to elevate its
decisions, made in the ordinary course of business for the efficient
and profitable running of the company, to administrative action.

In the present case, the decision to enter
into the agreement with Binvis was taken with a view to moving the
company from a loss-making position to one of profitability. It did
not, as the court
a quo
correctly found, arise from any statutory provision nor did it relate
to the exercise of any statutory power. I agree with the court
that the power exercised in
entering into the challenged agreement is not a public power but a
contractual power which arises from the commercial activity by Air
Namibia to increase its revenue.

I conclude, therefore, that the decision
taken by Air Namibia to enter into the agreement with Binvis is not
susceptible to review in terms of Art 18 of the Constitution of
Namibia or the common law. In view of this conclusion, it becomes
unnecessary to determine the secondary issue raised by Mr Frank
regarding the expiry of the agreement.

I would therefore dismiss the appeal.

Accordingly the following order is made:

appeal is dismissed with costs, such costs to include the costs of
one instructing and two instructed counsel.





A W Corbett

by Engling, Stritter & Partners

RESPONDENT: T J Frank, SC (with him R L Maasdorp)

by AngulaColeman

18 provides: ‘Administrative bodies and administrative
officials shall act fairly and reasonably and comply with the
requirements imposed upon such bodies and officials by common law
and any relevant legislation, and persons aggrieved by the
exercise of such acts and decisions shall have the right to seek
redress before a competent Court or Tribunal’.

141-143 set out in para 34.

judgment has been cited with approval by this Court in
Traditional Authority and Another v Kahuure and Others

2008 (1) NR 55 (SC).

of the Republic of South Africa (Act No 108 of 1996).