Hammarskjold (Pty) Ltd and Indy Pendant Films (Pty) Ltd v Department of Trade, Industry and Competition; Acting-Director-General, Department of Trade, Industry and Competition; Minister of Trade, Industry and Competition; Broad-Based Black Economic Empowerment Commission
Case No 19613/2022, High Court of South Africa (Western Cape Division, Cape Town)
Judgment delivered 17 July 2025 by Ndita J
This judgment is reportable because it clarifies the intersection between the Department’s Foreign Film and Television Production and Post-Production Incentive Guidelines and the statutory framework created by the Broad-Based Black Economic Empowerment Act 53 of 2003. It provides authoritative guidance on the scope of administrative review under the Promotion of Administrative Justice Act 3 of 2000, the circumstances in which a court may substitute its own decision for that of the administrator, and the extent to which the Department may rely on advice from the B-BBEE Commission when adjudicating incentive claims.
The decision is significant for the local and international film industry, for practitioners concerned with B-BBEE compliance, and for public-law litigants seeking relief in the form of substitution rather than remittal. By finding the Department’s refusal based on a material error of law, the court contributes to the growing body of jurisprudence on legality, rationality and the equitable implementation of economic transformation measures.
Pharmaceutical Manufacturers Association of South Africa and Another v President of the Republic of South Africa and Others 2000 (2) SA 674 (CC)
Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and Others 2011 (4) SA 113 (CC)
Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another 2015 (5) SA 245 (CC)
Minister of Defence and Military Veterans v Motau and Others 2014 (5) SA 69 (CC)
AllPay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African Social Security Agency, and Others 2014 (1) SA 604 (CC)
Constitution of the Republic of South Africa, 1996 – sections 1, 35, and 195
Promotion of Administrative Justice Act 3 of 2000 – sections 1, 6 and 8
Broad-Based Black Economic Empowerment Act 53 of 2003 – sections 13B and related Codes of Good Practice
Companies Act 61 of 1973 and Companies Act 71 of 2008
Co-operatives Act 14 of 2005
Foreign Film and Television Production and Post-Production Incentive Guidelines (Department of Trade, Industry and Competition, 2021)
Uniform Rules of Court, Rule 53 (review proceedings)
Uniform Rules of Court, Rule 34 (tender of costs)
The applicants, two South African production companies, applied in March 2022 for a R12 million foreign film incentive in respect of a feature film entitled “Hammarskjold”. The Department of Trade, Industry and Competition refused the application, relying on a finding by the B-BBEE Commission that the applicants did not meet the requisite B-BBEE contributor status. The applicants brought review proceedings under PAJA, contending that the Department misconstrued the incentive guidelines, improperly deferred to the Commission, and acted irrationally by refusing to waive the rule that principal photography may not commence before approval.
The High Court held that the refusal was materially influenced by an error of law, that the Department possessed an unfettered discretion to evaluate compliance for itself, and that the factual record left only one rational outcome – approval of the incentive and waiver of the timing requirement. The court therefore reviewed and set aside the impugned decisions, substituted its own decision granting the incentive, and awarded costs against the Department.
Whether the Department was entitled to treat the B-BBEE Commission’s view as binding in determining an incentive application.
Whether the Department’s refusal was affected by a material error of law as envisaged in section 6(2)(d) of PAJA.
Whether it was just and equitable for the court to substitute its own decision for that of the administrator.
Whether the refusal to waive the “no-principal-photography-before-approval” rule was rational and lawful.
The court found that the Department had abdicated its decision-making duty by treating the Commission’s interpretation as decisive. This amounted to a material error of law and rendered the refusal reviewable under sections 6(2)(d), (e)(iii) and (f)(ii) of PAJA. Once that error was removed, the evidence showed the applicants satisfied all substantive criteria, including B-BBEE compliance. The court was in as good a position as the Department to make the decision; remittal would serve no purpose. It therefore substituted a decision approving the incentive and retrospectively waiving the commencement-of-principal-photography requirement, with costs to be paid by the Department, the Acting-Director-General and the Minister jointly and severally.
The first applicant, Hammarskjold (Pty) Ltd, was incorporated as a single-purpose corporate vehicle to produce and post-produce the film in South Africa. The second applicant, Indy Pendant Films (Pty) Ltd, is a 52 percent black-owned production company established in 2017 but largely dormant until this project. On 10 March 2022 the applicants submitted a complete application for the foreign film incentive, fully within the forty-five-day window prescribed by clause 4.2 of the Guidelines.
In the weeks that followed, the Department’s film incentive unit sought additional information, in particular about Swedish financing and the corporate relationship between Indy Pendant and DO Productions (Pty) Ltd, another company associated with one of the directors. The applicants furnished detailed explanations and produced valid B-BBEE verification certificates showing the holding company at level 3 and the SPCV at level 4, thereby satisfying clause 5.
Despite this material, the Department informed the applicants in late April 2022 that the application was refused because the B-BBEE Commission had questioned whether the structure constituted genuine empowerment. The Department further declined to waive clause 4.2.2, which bars principal photography before approval, notwithstanding that filming had already begun on 28 June 2022 in reliance on assurances previously given by departmental officials.
The court was called upon to decide whether the Department’s refusal, and its refusal to waive the commencement rule, were lawful, reasonable and procedurally fair as required by PAJA. This entailed determining whether the Department misdirected itself on the law, whether it acted under dictation of the B-BBEE Commission, and whether the requirements for an order of substitution, rather than remittal, were met.
A further issue was whether the applicants were entitled to declaratory relief that the Department’s reasons were constitutionally invalid, and whether the court could backdate a waiver so as to regularise principal photography already undertaken.
In three complementary strands of reasoning the court concluded that the Department’s decisions could not stand. First, it held that the Department misunderstood its mandate: the B-BBEE Act designates the Commission as an advisory and investigative body, not a determinative authority over incentive applications. By treating the Commission’s view as binding, the Department fettered its discretion and thus committed a material error of law under section 6(2)(d) of PAJA.
Second, even if deference to the Commission were permissible, the factual premise of non-compliance was demonstrably wrong. The applicants had submitted valid verification certificates from an accredited agency. The Department’s failure to engage with that evidence rendered the decision irrational and unreasonable within the meaning of sections 6(2)(f)(ii) and 6(2)(h).
Third, applying the Constitutional Court’s dicta in Trencon Construction, the court examined whether substitution was appropriate. The record was complete; all objective criteria were satisfied; and no further factual inquiries were needed. Remittal would cause further delay, increased costs and potential loss of international finance. Substitution was therefore just and equitable under section 8(1)(c)(ii)(aa) of PAJA.
The court reviewed and set aside the Department’s decisions of 26 April 2022 and 2 May 2022. It substituted them with an order approving the applicants’ claim for the foreign film incentive in the amount of R12 million and retrospectively waiving the prohibition on commencing principal photography before approval. The respondents were ordered to pay the incentive within thirty days and to bear the applicants’ costs, including the costs of two counsel, jointly and severally.
An administrator cannot lawfully abdicate its statutory power by treating another entity’s opinion as definitive; to do so is a reviewable error of law.
Where the outcome is a “foregone conclusion” once the legal error is corrected and the record is complete, a court may substitute its own decision rather than remit the matter to the administrator.
Valid B-BBEE verification certificates issued by accredited agencies constitute prima facie proof of compliance and cannot be disregarded absent cogent contrary evidence.
The doctrine of legality requires organs of state to exercise discretionary powers rationally, consistently and in accordance with the empowering provision, including internal policy guidelines.
Under PAJA, remedies must be just and equitable; where delay would defeat the purpose of a statutory incentive and prejudice transformation goals, back-dated waivers and monetary substitution orders are permissible.