THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT
Case : 270/2007
REPORTABLE

In the appeal between:

THE MINISTER OF AGRICULTURE

First Appellant

THE DIRECTOR: ANIMAL HEALTH,
DEPARTMENT OF AGRICULTURE

Second Appellant

and

BLUELILLIESBUSH DAIRY FARMING (PTY) LTD

First Respondent
GRASSLANDS AGRICULTURE (PTY) LTD Second Respondent

Before:
Cameron JA, Nugent JA, Cloete JA, Maya JA, and
Cachalia JA
Heard:

Tuesday 20 May 2008
Judgment:
Thursday 29 May 2008

Animal Diseases Act 35 of 1984 – compensation under s 19(2) read
with regulation 30 – animals slaughtered because of infection or
reasonably suspected infection with bovine tuberculosis – dairy herd
– ‘fair market value’ connotes value of animals free of infection

Neutral citation: Minister of Agriculture v Bluelilliesbush Dairy
Farming (270/07) [2008] ZASCA 60 (29 May 2008)

CAMERON JA:

[1] This is an appeal by the Minister of Agriculture (the minister), the
director of animal health in the department (the director) and the
Member of the Executive Council for agriculture in the Eastern
Cape against a judgment of Jansen J sitting in the High Court in
Port Elizabeth.  The judgment reviewed and set aside a decision
of the minister confirming a recommendation of the director about
the basis on which compensation was to be calculated for animals
slaughtered under the Animal Diseases Act 35 of 1984 (the Act).1
The judgment upheld the basis for which the respondent
companies contended, and ordered payment to them of R14 395
537 (plus interest).2   The appeal, brought with leave granted by
Jansen J, requires us to resolve the parties’ contesting
approaches to the question of compensation.
[2] In May 2004, an outbreak of bovine tuberculosis (TB) occurred on
the farms on which the two respondents (the claimants) conduct
dairy farming.  The disease is extremely contagious and though it
can be treated the animals affected remain infectious: hence
policy is to cull those found or suspected to have the disease.

1 The Act has been repealed by the Animal Health Act 7 of 2002, which has not yet been brought

The claimants form part of a group of companies that runs the
largest dairy farming operation in the Eastern Cape, and one of
the largest in the country.  The first claimant owns the dairy cattle,
while the second is the trading entity that leases assets from other
companies within the group.  The outbreak affected all eight farms
on which the group farms.  More than 7 000 cows, heifers, heifer
calves, bull calves and bulls had to be slaughtered.  A director of
both claimants, Mr Elliott (who was the claimants’ chief voice in
the litigation), described the outbreak in the months immediately
after it occurred as ‘a catastrophic disaster’.
[3] The appeal concerns the extent to which public funds may
mitigate the disaster.  The Act provides that the owner of an
animal destroyed under its provisions may claim compensation for
the loss.3  The basis on which compensation may be awarded is
set out in s 19(2) (subsections (3) and (4) are not germane to the
appeal):

into operation.
2 Bluelilliesbush Dairy Farming (Pty) Ltd v Minister of Agriculture [2007] 3 All SA 35 (SE).
3 Animal Diseases Act 35 of 1984, s 19(1):
‘The owner of any animal or other thing which has been destroyed or otherwise disposed of
pursuant to any control measure, or any provision of section 17(3) or (5), or any other provision of
this Act, by the director or on his authority, may submit an application for compensation for the
loss of the animal or thing to the director.’
Section 1 read with s 2(1) defines ‘director’ as the director of animal health of the department of
agriculture, ‘who shall be a veterinarian’.

‘The director may, taking into consideration –
(a) the applicable compensation, based on a fair market value of the animal
or thing, which has been prescribed for purposes of this section or, where
no compensation has been so prescribed, any amount fixed by him in
accordance with any criterion deemed applicable by him;
(b) the value of any thing which has in connection with the animal or thing
been returned to the owner;
(c) any amount which is due by the owner pursuant to any provision of this
Act in respect of the animal or thing to the State; and
(d) any amount which may accrue to the owner from any insurance thereof,
fix a fair amount of compensation.’4

[4] The statute provides that a person who feels aggrieved by any
decision of or steps by the director may lodge an objection with
the Minister (s 23(1)).5  The objection must be lodged with the
director-general of agriculture, ‘who shall submit it together with
his recommendation to the Minister for a final decision’ (s 23(2)).6
In this case, the Minister, after considering a written report
submitted to her in terms of s 23(3)(a),7 upheld the director’s
decision.

4 The provisions of s 21 of the repealing 2002 statute appear to be substantially identical to s 19
of the Act.
5 Section 23(1):
‘Any person who feels aggrieved by any decision of or steps taken by the director, or by any other
person or body referred to in section 10(7)(a) [that is, a person or body empowered by the
Minister to exercise powers and duties under an animal health scheme established in terms of s
10], or by any employee or other person under the control or direction of any such person or
body, in terms of this Act, may within the prescribed time and on payment of the amount which is
prescribed, lodge in accordance with the provisions of this section an objection against the
decision or steps with the Minister.’
6 Section 23(2):
‘An objection shall be submitted in the prescribed manner to the Director-General, who shall
submit it together with his recommendation to the Minister for a final decision.’
7 Section 23(3)(a):
‘For the purposes of his recommendation contemplated in subsection (2), the Director-General
may, if he deems it necessary, designate one or more senior officers in the department to institute
an investigation regarding the reasons for the objection and the circumstances which gave rise to
the complaint, and to submit to him a written report concerning it.’

[5] In a letter recording her decision dated 19 January 2006, the
Minister indicated that she had decided to uphold the director’s
decision:
‘The reasons for my decision are that the Director was correct in determining
the fair amount of compensation and did not act contrary to the provision[s]
of section 19 of the Animal Diseases Act …
The Director has fixed the price at slaughter price as the animals infected
with TB cannot recover from the disease and will certainly die.’

[6] The appellants insisted that the decision to be targeted in the
review was not that of the Minister (who merely considers an
objection to the director’s decision), but that of the director
himself.  Though nothing turns on this, since both Minister and
director are before the court, in my view the claimants rightly
targeted the decision of the Minister, since in case of objection the
statute subjects the decision of the director to overruling by her,
while making hers the ‘final decision’8.
[7] It was common cause that the determination of the basis on which
compensation should be calculated constituted administrative

(Sub-paragraph (b) disqualifies the director and any other officer who has been involved in the
decision or steps from being designated to investigate.)
8 Section 23 (2), read with 23(4)(a):
‘The Minister may, after consideration of the objection and the recommendation of the Director-
General, confirm, vary or set aside the relevant decision or steps …’

action under the Promotion of Administrative Justice Act 3 of 2000
(PAJA),9 which was liable to review under that statute.
[8] Section 19(2) of the Act makes clear that –
(i)
the power to fix compensation is vested in the director;
(ii)
the compensation must be ‘a fair amount’;
(iii)
in addition to the factors set out in subparagraphs (b)-(d), the
director is obliged to take into consideration in terms of (a)
the applicable compensation prescribed for purposes of s
19, where such compensation is prescribed; and
(iv)
when compensation is prescribed, it must be ‘based on a fair
market value of the animal’.
[9] The power to make regulations conferred by s 31 of the Act was
indeed exercised,10  and reg 30 provides:
‘Compensation
When compensation is payable to a responsible person [defined as a
manager or owner of land or an owner of animals] in terms of section 19 of
the Act, the applicable compensation shall –
(a) in the case of an infected animal, be 80 per cent of the fair market value
thereof;
(b) in the case of an animal killed for any controlled veterinary act or for the
prevention of the spreading of a controlled animal disease, be 100 per
cent of the fair market value thereof;

9 Section 1 of Act 3 of 2000 defines ‘administrative action’ as ‘any decision taken … by (a) an
organ of state when – … (ii) exercising a public power or performing a public function in terms of
any legislation; … which adversely affects the rights of any person and which has a direct,
external legal effect …’.  On the interpretation of this definition, see Grey’s Marine Hout Bay (Pty)
Ltd v Minister of Public Works 2005 (6) SA 313 (SCA) paras 21- 24.
10 Animal Disease Regulations, Government Notice R2026, published in Government Gazette
10469 of 26 September 1986.

(c) in the case of an infectious thing, excluding an animal, and a
contaminated thing, be 50 per cent of the fair market value thereof.’

[10] The parties’ dispute centres on the meaning to be given to ‘fair
market value’ in reg 30(a).  Although the dispute was presented
as requiring interpretation of the concept of ‘fair market value’, this
is not quite correct.  The meaning of that phrase by itself is clear –
it means the price that a willing buyer would pay a willing seller in
the open market.  The real question is this: what is to be the
subject of the valuation?  Is it to be the animal in its infected state
(as the Minister and director contended) – in which case its value
is that of a slaughter animal (being the value of the usable parts of
the slaughtered carcass)?  Or is it to be the animal in its
uninfected condition (as the claimants contended) – in which case
the fair market value is that of a productive dairy animal, which is
about five times its value for slaughter?
[11] To value the animals as if they were fit only for slaughter would,
the claimants point out, reduce their compensation to a fraction of
the animals as a dairy herd.  But the director – supported by the
departmental officers who conducted the statutory investigation,
and confirmed by the Minister – contends that compensation
under reg 30(a) is limited to slaughter value.  This is because

once an animal is infected its value is irredeemably diminished.
Such an animal cannot be used for breeding or milking, it will
never recover from the disease, and it is anyhow infectious.  It can
therefore never be sold for any purpose other than slaughter.
This, the director says, is definitive of its statutory value.
[12] Were subparagraph (a) to be taken on its own, the subject of
the valuation (that is, the ‘infected animal’ before or after it
became infected) may be opaque.  But it does not stand on its
own.  It must be read with subparagraph (b), from which the
subject of the valuation emerges limpidly.  This prescribes
compensation at ‘100 per cent of the fair market value’ of an
animal killed ‘for any controlled veterinary act or for the prevention
of the spreading of a controlled disease’.  The Act’s definition of
‘controlled veterinary act’,11 read with its definition of ‘controlled

11 Animal Diseases Act, s 1, definitions:
‘”controlled veterinary act”, in relation to any animal or thing, means –
(a) the isolation, detention, inspection, testing, immunization, observation, sampling, marking,
treatment, care, destruction or any other disposal of;
(b) the carrying out of any operation or of any post-mortem examination on; or
(c) the rendering of any service pertaining specially to the veterinary profession referred to in the
rules made under section 30 (1) (a) of the Veterinary and Para-Veterinary Professions Act, 1982
(Act 19 of 1982), in respect of,
any such animal or thing for any controlled purpose’.

purpose’,12 reveals that subparagraph (b) killings are for
prevention only.  The animals are in other words uninfected.
[13] It was common cause that the animals in this appeal were
slaughtered under (a), not (b).  (The claimants’ founding affidavit
asserts that because of a certain number of ‘false positive’
responses to the tests for bovine TB, and because all animals
suspected of being infected were slaughtered, the animals
slaughtered necessarily included some uninfected animals.13  In
his answering affidavit, the director, Dr Botlhe Michael Modisane,
disputes this, though he concedes that ‘once there is an outbreak
of a disease such as bovine TB, most animals [testing positive]
are normally condemned for slaughter as a control measure’ –
impliedly conceding that at least some of the animals slaughtered
may not have had the disease.)
[14] Nevertheless, the compensatory scheme contemplated by (b)
illuminates that in (a).  The compensation to be paid under (b) is
clearly the full fair market value of a healthy animal (in the case of

12 Animal Diseases Act, s 1, definitions:
‘”controlled purpose” means the prevention of the bringing into the Republic, or the prevention or
combating of or control over an outbreak or the spreading, or the eradication, of any animal
disease or, where applicable, of any parasite’.
13 Regulation 1 defines ‘infected animal’ as including an ‘animal that is infected, or is on
reasonable grounds suspected to be infected’.

a dairy cow, its value as a productive animal, and not merely its
value for slaughter).  The same compensatory scheme is plainly
contemplated in (a), which envisages that same value being
reduced by one-fifth for compensation purposes when the animal
is (or is reasonably suspected of being) infected.  Indeed, that (a)
allows for compensation at only a portion (four-fifths) of the ‘fair
market value’ of the animal seems to me to indicate conclusively
that the regulation envisages the value of the animal as if it was
not infected.  For if it was a reference to the value of the animal in
its infected condition there is no apparent reason why
compensation should be set at only 80%.  It would if that were so
serve the owner better to send the animal to slaughter him- or
herself, and thereby receive the full value of its carcass on
slaughter.  The regulation’s compensatory scheme retains
coherence only if the value to which it refers is the value to be
placed on the animal as if it is not infected.
[15] The Minister and the director have not attacked the validity of
the regulations – indeed, they relied on them as correctly guiding
the director in determining a fair amount as compensation under s
19.  And counsel for the Minister did not suggest in argument that

the basis of valuation in (b) could be anything other than disease-
free value; nor that the basis of valuation in (a) could be any
different that in (b).
[16] It follows that the contentions of the claimants are correct and
that the review was rightly granted, for substantially the reasons
set out by Jansen J.
[17] It should be added, however, that reasons of policy and good
sense appear to underscore the meaning in the regulations.  The
history that led to the dispute is partly chronicled in departmental
memoranda and records released to the claimants in response to
the application.  It appears that a voluntary animal health scheme
was introduced in 1969 to eradicate bovine TB.  All animals
testing positive were sent for slaughter: the compensation paid to
farmers was based on 80% of the full market value (not slaughter
value) of the animal.  In 1992, after farmers and stock-owners
from the former homelands joined the department’s control
scheme, the department reduced compensation to R200 per
animal slaughtered, irrespective of value, because of lack of
funds.  Unsurprisingly, this proved unpopular with farmers,
according to an account set out in a departmental memorandum,

and very few presented their herds for testing.  This led the
department to recommend in September 1999 that a new system
of compensation be introduced to take account of the slaughter
value of the animals – which was an improvement on the previous
system, but ignored the productive value of dairy herds.
[18] As the claimants pointed out, the departmental policy
inadequately takes account of the Act’s objectives, which are
designed to elicit the voluntary cooperation of farmers.   (The
bovine TB control scheme is itself voluntary.)  To give infected or
suspect dairy cows their slaughter value for compensation
purposes offers no incentive to farmers, small-scale or large-
scale, to participate in disease control measures.
[19] By corollary, as the claimants also pointed out, if fair market
value were assessed on the basis that the animals destroyed
were infected, the state would not be required to pay any
compensation at all – since the farmer could simply sell the
infected cattle out of hand for whatever could be achieved on the
open market (that is, the animal’s hide and whatever meat could
be salvaged from it).  The meaning in the regulations, by contrast,
ensures the cooperation of farmers and their continued ability to

farm.  It also eliminates the prejudicial disadvantage dairy farmers
would have suffered in comparison with beef farmers had the
director’s basis prevailed.
[20] Jansen
J
granted
the
claimants
the
full
amount
of
compensation they claimed in their notice of motion, declining
over the Minister’s initial opposition to refer the matter back to the
director for reconsideration, as PAJA requires bar in exceptional
cases.14  In doing so, he took account of a detailed schedule the
claimants attached to the application, setting out extensive details
of the cattle destroyed, the meat and hide value recovered, and
the dairy value as indicated by sworn valuations.  The answering
affidavit’s disputation of these details was oblique, and no
controverting facts of bases for valuation were put forward.
[21] However, in argument before this court, the claimants
conceded that the figure awarded should be reduced to 80% of
the market values they set out in the schedule, since their claim
had been made under reg 30(a), and not (b), as seems to have
been assumed in the court below.  In the result, the claimants
conceded that the amount awarded in the court below fell to be

14 PAJA s 8(1)(c)(ii), Remedies in proceedings for judicial review, provides that a court that sets

reduced.    After an adjournment to enable Mr Buchanan on
behalf of the claimants to consult, the agreed figure that is
reflected in the order below was proffered to the court, and
accepted by the Minister and the director.
[22] In the light of this, Mr Nthai on behalf of the Minister and the
director, after the same adjournment, indicated that he conceded,
were the claimants’ contentions on fair market value to prevail,
that there would be no need to remit the matter.
[23] Although the reduction of the amount of compensation
represents a measure of success for the appellants in monetary
terms, the main and indeed overriding focus of the proceedings all
along has been the correct method of calculating the
compensation payable under the regulations.  It was the Minister’s
and director’s approach to this issue that obliged the claimants to
go to court and to defend the judgment on appeal.  It would
therefore be unjust to deprive them of any portion of their costs.
[24] The following order is issued:
1. The appeal succeeds to the extent that the amount of
compensation the first and second appellants are ordered to
pay is reduced from the sum of R14 395 537 to R10 853 777.

aside administrative action may ‘in exceptional cases’ substitute or vary the action or correct a
defect itself without remitting the matter.

2. Save in this respect, the appeal is dismissed with costs.

E CAMERON
JUDGE OF APPEAL

CONCUR:
NUGENT JA
CLOETE JA
MAYA JA
CACHALIA JA

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal

Date:
Thursday 29 May 2008

Status:
Immediate

Please note that the media summary is intended for the benefit of
the media and does not form part of the judgment of the Supreme
Court of Appeal

Minister of Agriculture v Bluelilliesbush Dairy Farming
(270/07) [2008] ZASCA 60 (29 May 2008)

In a judgment delivered today, the Supreme Court of Appeal has
held that when compensation is paid to a dairy farmer under the
Animal Diseases Act 35 of 1984 (read with the 1986 regulations)
for dairy cattle slaughtered because of bovine tuberculosis (TB),
the full productive value of the cattle, and not only their slaughter
value, must be paid.
The claim was brought by the Grasslands group of companies,
which runs the largest dairy farming operation in the Eastern Cape,
and one of the largest in the country.  In a bovine TB outbreak in
May 2004, the farming group lost more than 7 000 cows, heifers,
heifer calves, bull calves and bulls which had to be slaughtered to
contain the outbreak.
The director of animal health in the department of agriculture,
whom the statute requires to determine ‘a fair amount of
compensation’, decided that only the slaughter value of the
animals would be paid, because they were infected with TB and
could never be used productively in dairy farming again.

The farming group objected to this method of calculation, because
it gave only one-fifth of the productive value of dairy cattle.  The
farming group relied on the wording of the Act and regulations, and
the fact that the statutory scheme sought to create incentives for
farmers to join bovine TB control schemes – which compensating
on the basis of slaughter value would not do.
The High Court in Port Elizabeth (Jansen J) upheld the farming
group’s challenge to the director’s method of compensation, and
the SCA has confirmed the judgment of the High Court.
The Minister was ordered to pay the farming group R10 853 777 in
compensation, plus costs.