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[2019] ZAKZPHC 5
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Somai v National Minister: Department of Energy and Others (7690/2017) [2019] ZAKZPHC 5 (22 February 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 7690/2017
In
the matter between:
ROITH
HARILAL SOMAI
APPLICANT
and
NATIONAL
MINISTER:
FIRST RESPONDENT
DEPARTMENT
OF ENERGY
THE
CONTROLLER OF PETROLEUM
SECOND RESPONDENT
PRODUCTS
MIDLANDS
TRUST
THIRD RESPONDENT
QUICKSTEP
453 CC
FOURTH RESPONDENTS
REVERED
INVESTMENTS CC
FIFTH RESPONDENT
Coram:
Koen J
Heard:
8 February 2019
Delivered:
22 February 2019
O R D E R
(a) An
order is granted in terms of paragraphs 2.1 and 2.2 of the Notice of
Motion;
(b)
the matter is remitted to the second respondent for a reconsideration
of the site and retail
licence applications; and
(c) A
rule
nisi
is issued returnable on the 20th day of March 2019
at 9h30, calling upon the first and second respondents, in view of
their failure
to file any answering affidavits in reply to the
criticisms raised by the applicant in his founding affidavit, why
they should
not pay the applicant’s costs of the application;
(d)
The applicant is directed to serve a copy of this order on the first
and second respondents
forthwith;
(e)
The third, fourth and fifth respondents are directed to pay their own
costs of the application.
J
U D G M E N T
Koen
J
[1]
The applicant, who describes himself as a ‘historically
disadvantaged South
African as defined (HDSA)’ owns the
immovable property situate at 61/63 Illings Road, Ladysmith
(hereinafter referred to
as ‘the site’). The site was
previously used as a service station from which petroleum products
were retailed. It was
however decommissioned well before the time
that the applicant acquired the site.
[2]
In 2013 the applicant applied for a site and retail licence to sell
petroleum products
from the site. That application apparently went
astray. Fresh applications were subsequently made on 16 July 2014.
[1]
[3]
Such applications are made in terms of the provisions of the
Petroleum Products Act 120 of 1977
and the regulations promulgated
pursuant thereto (hereinafter referred to as ‘the Act’).
[4]
The Act contains
inter alia
the following provisions:
(a)
Section 3 provides that the Minister, being the Minister of Minerals
and Energy, shall appoint
a person in the public service as the
‘Controller of petroleum products and may appoint persons in
the public service as
regional controllers of petroleum products or
as inspectors for the Republic or any part thereof.’
(b)
Section 2A provides that:
‘
(1)
A person may not –
(a)
…
(b)
…
(c)
hold
or develop a site without there being a site licence for that site;
(d)
retail
prescribed petroleum products without an applicable retail licence,
issued
by the Controller of Petroleum Products.’
(c)
Section 2A(4) provides that any person applying for a site and retail
licence must in the case
of the site licence be the owner of the
property concerned (unless it is publicly owned land) and must do so
in the form and manner
prescribed.
(d)
Section 2B provides that:
‘
(1)
The Controller of Petroleum Products must issue licences in
accordance with the provisions of this Act.
(2)
In considering the issue of any licences in terms of this Act, the
Controller of Petroleum Products shall give effect to the
provisions
of section 2C and the following objectives:
(a)
Promoting an efficient manufacturing, wholesaling and retailing
petroleum industry;
(b)
facilitating an environment conducive to efficient and commercially
justifiable investment;
(c)
the creation of employment opportunities and the development of small
businesses in the petroleum sector;
(d)
ensuring country wide availability of petroleum products at
competitive prices;
(e)
promoting access to affordable petroleum products by low-income
consumers for household use.’
(e)
Section 2C deals with the ‘Transformation of South African
petroleum and liquid fuels industry’
and provides:
‘
(1)
In considering licence applications in terms of this Act, the
Controller of Petroleum Products shall –
(a)
promote
the advancement of historically disadvantaged South Africans; and
(b)
give
effect to the Charter.
(2)The
Controller of Petroleum Products may require any category of licence
holder to furnish information, as prescribed, in respect
of the
implementation of the Charter.
(f)
The Charter referred to is contained in Schedule 1 to the Act.
It deals with
inter alia
the ‘the interpretation’
of ‘the term historically disadvantaged South Africans (HDSA)’
to refer to ‘all
persons and groups who have been discriminated
against on the basis of race, gender and disability.’ It
also deals
with the interpretation of ‘HDSA companies’
which are described as ‘those companies that are owned or
controlled
by historically disadvantaged South Africans which operate
on a basis to meet all aspects of this Charter…’.
(g) In
terms of s 12A(1) of the Act ‘any person directly affected by
decision of the Controller
of Petroleum Products may, notwithstanding
any other rights that such a person may have, appeal to the Minister
against such decision.’
In terms of sub-section (3) the
‘Minister shall consider the appeal, and shall give his or her
decision thereon, together
with written reasons therefor, within the
periods specified in the regulations.’
[5]
Excluding transitional licensing provisions contained in s 2D:
(a)
Regulation 18 to the Act provides:
‘
(1)
In evaluating an application for any retail licence, the Controller
must, subject to subregulation (2), verify that-
(a)
the
information and the documents submitted with the application form are
true and correct;
(b)
the
notice contemplated in regulation 16(1) was published.
(2)
In the case of an application for a retail licence made by a person
in respect of whom section 2D of the Act is not applicable,
the
Controller must be satisfied that that-
(a)
the
retailing business is economically viable;
(b)
the
retailing business will promote licensing objectives stipulated in
section 2B(2) of the Act.
(3)
In determining the economic viability contemplated in sub-regulation
(2)
(a)
, the Controller must be satisfied that the net present
value has been correctly calculated and is positive.’
(b)
‘Sustainability’ according to the interpretation
provision in the Charter refers to:
‘
Medium
to long term viability and adaptability through a presence across all
facets of the liquid fuels value chain, o ventures
with prospects of
long term profitability; and
Requisite
levels of skills and access to technology.’
[6]
The applicant duly submitted his applications with proof of the
relevant advertisement.
In terms of regulation 16(2)
(e)
read
with regulation 16(4) of the regulations, objections to the
application for licences to retail petroleum products must be
made
within 20 days of the advertisement of the application. It
appears that only the objection by the fifth respondent was
received
timeously, and not that by the third and fourth respondents, but all
the objections were seemingly considered.
[7]
Notwithstanding it being required that the Controller
[2]
make a decision within 90 days, which period expired on 24 November
2014, a decision was only made on 22 February 2016. In a written
letter by the Controller to the applicant, the latter was advised
that the Controller had ‘not approved the granting of the
Site
New in terms of the
Petroleum Products Act &hellip
;.’ The
reasons given were as follows (dealing with the objectives specified
in
s 2B
of the Act):
‘
a.
Promoting an efficient
manufacturing, wholesaling and retailing petroleum industry.
In
assessing whether an application for a site license will contribute
towards an efficient retailing petroleum industry, the Controller
conducts site visit to inspect the area where the proposed site will
be developed. During the site visit, competitor analysis is
conducted
to assess the impact the new development will have on the efficiency
of the retailing petroleum activities. The Controller
has conducted
the site visit for the development of this site, and came to a
conclusion that granting this site license will not
promote an
efficient retailing petroleum industry.
b.
Facilitating an
environment conducive to efficient and commercially justifiable
investments.
After
the thorough analysis on the documents submitted with the application
and the area where the development will take place,
the Controller
believes that granting a site license will not be facilitating an
environment conducive to efficient and commercially
justifiable
investments. There are three (3) existing service stations that are
situated within 1Km radius from the proposed site.
The existing sites
are currently pumping an average of 446,961.66 litres per month of
fuel. A new to industry service station will
negatively impact on the
economic viability of the existing service stations.
c.
The creation of employment
opportunities and the development of small businesses in
the
petroleum sector.
The
Controller acknowledges that the development of this service station
may contribute towards the creation of employment and the
development
of small businesses in the petroleum sector. However, the development
of this service station will have a negative
impact on the existing
sites and there is also no evidence to support that it will be
economically viable to sustain the jobs that
may be created.
d.
Ensuring countrywide
availability of petroleum products at competitive prices.’
During
the site visit to the area where the proposed site is to be
developed, the Controller established that there is sufficient
availability of petroleum products catering vehicles travelling past
the proposed site. There are three (3) service stations located
within short distances from the proposed site, with ample capacity
potential to accommodate additional demand should it be necessary.
An
additional service station in the area will negatively impact on the
already low volumes pumped in the area. The issuing of
the site
licence for this site will not contribute towards competitive prices
given that the price and margins of selling petroleum
products are
regulated.
e.
Promoting access to
affordable petroleum products by low income consumers for household
use.
There
is no evidence to suggest that the granting of the site license will
promote access to affordable petroleum products by low
income
consumers for household use as the product intended to be sold will
be diesel and petrol only. The site visit that the Controller
has
conducted and the documents or motivation by the applicant supports
the view that this site will not contribute towards achieving
the
objectives of licensing.
These
objectives are sufficiently analysed in view of all supporting
evidence and the approval of the new application will be detrimental
to the sustainability of the petroleum products retailing activity in
the area. The petroleum products’ market base
of this
area is very well supplied and thus the Controller cannot support a
new entrant, hence disapproves Roith Harilal Somai
new site license
application.’
[8]
On 19 April 2016 an appeal was lodged with the Minister
[3]
raising various issues on the point of promoting an efficient
manufacturing, wholesale and retailing petroleum industry, and
complaining
also of non-compliance with
s 2C
of the Act, specifically
that the Controller had not considered the important duty he has to
‘promote the advancement of
historically disadvantaged South
Africans, and give effect to the Chapter.’
[9]
On 23 January 2017 the Minister refused the appeal.
[10]
The applicant launched the present application on 13 July 2017.
Ex
facie
the notice of motion the relief claimed is as follows:
‘
1.
KINDLY
TAKE NOTICE THAT
the Applicant intends to make application to the above Honourable
Court for the review of the following administrative action:
1.1
The decision of the Second Respondent (the Controller of Petroleum
Products) to refuse to
grant site and retail licences to the
Applicant, pursuant to an application made by the Applicant in
respect thereof in terms
of S 2(B)(1) of the Petroleum Products Act,
120 of 1997 as amended ;
1.2
The decision of the First Respondent (the Minister of Energy) to
dismiss the Appeal by the
Applicant against the decision of the
Second Respondent and claims an order in the following terms:
2.1
That
the Second Respondent’s refusal to grant the site
and retail licences to the Applicant is hereby reviewed and set
aside;
2.2
That
the First Respondent’s dismissal of the Applicant’s
appeal is hereby reviewed and set aside;
2.3
That
the Second Respondent is ordered to issue the site and
retail licences applied for by the Applicant within 30 days of the
date
of Judgment herein; alternatively
2.4
That
the matter is remitted to the First Respondent for a
reconsideration of the appeal and/or to the Second Respondent for
reconsideration
of the licence application; and
2.5
That
the costs of this application, on the scale of between
attorney and client, be borne by those Respondents who oppose
this
application, jointly and severally, the one paying the other to
be absolved.’
[11]
The application is opposed by the third, fourth, and fifth
respondents, who were also the objectors
to the licence applications
made to the Controller, and who are the holders of site and retail
licences issued pursuant to the
provisions of the Act in respect of
service stations in the immediate area of the applicant’s site.
The first and second
respondents have not opposed the application,
have not participated in the application by filing any response
thereto at all, and
abide by the decision of the court. Their stance
might very well result from the fact that costs were only being
sought against
such respondents as may ‘oppose this
application.’ Such inactivity by the first and second
respondents appears to be
their common
modus
operandi
in applications of
this nature, if regard is had
inter
alia
also to the judgments
in
Nine Nine Ninety Nine
Projects (Pty) Limited and Another v The Minister of Department of
Energy National Government and Others
[4]
and
The Business Zone 101 CC
v The Controller of Petroleum Products and Two Others
[5]
in which there was likewise no appearance for the Controller and
Minister.
[12]
In the affidavit filed in support of the relief claimed, the
applicant’s specifically complains
that:
(a)
‘A reading of the decision of the Controller… makes it
very clear that the Controller failed entirely to consider
Section 2C
of the Act. There is no mention of Section 2C, nor is there any
narrative that could give the reader the impression
that the section
was considered. Further, in the result of the Appeal to the
Minister (at point e), the Minister states as
follows: “I am
satisfied that the Controller assessed the retailing businesses as
being 72% HDSA. Accordingly, the
Controller was very alive to
the HDSA status of the Appellant.” However the Controller
made no such finding.
Further, the HDSA status of the Applicant
herein is 100% and not 72%. It is submitted that this statement
by the Minister
and the failure of the Controller to consider Section
2C amounts, on this basis alone, to a reviewable irregularity on the
basis
on section 6(2)(b) and sections 6(2)(f)(cc) and (dd) of PAJA’;
(b)
Objection is taken to a finding by the Controller that ‘the
granting of the license will not promote an efficient retailing
industry.’ The difficulty with this determination is that the
Controller does not state exactly what the meaning of ‘efficiency’
is in this context.
[13]
Mr Kemp has confined the argument of the applicant to the above two
considerations.
[14]
Although the application is opposed by the objectors (the third to
fifth respondents), on aspects
regarding what the Minister and the
Controller had or should have taken into account, the third to fifth
respondents expressly
deferred to the Minister and Controller,
plainly in the expectation that they would file an affidavit(s) to
deal with the applicant’s
specific complaints. Unfortunately no
such affidavits were filed by the first and second applicants
respectively, on these material
issues.
[15]
It is most unfortunate, notwithstanding it being for the applicant to
demonstrate to this court
that there are grounds upon which a review
can be sustained, for functionaries such as the Minister and the
Controller not to take
this court into their confidence by explaining
fully their motivation, particularly in regard to specific complaints
raised in
the founding papers which clearly called for an
explanation. That is particularly so in the present matter in regard
to the alleged
finding by the Controller that the retailing business
would be ‘72% HDSA’.
[16]
It is trite law that the decision of the Minister and the Controller
would be reviewable in terms
of the provisions of the PAJA as their
decisions amount to ‘administrative action.’
[17]
A misdirection with regard to the evaluation of material facts
generally does not render a decision
reviewable.
[6]
That statement must however be confined to the facts that are placed
before the Minister and/or the Controller and are evaluated.
But if there are facts not investigated or evaluated which should
have been evaluated as they could and would have a material bearing
on the outcome of the applications, then the decisions fall to be
reviewed. The reason for the decisions being reviewable is that
a
mandatory and material condition prescribed by an empowering
statutory provision was not considered, or that the decision was
materially influenced by an error of law.
[18]
All Pay Consolidated v Chief
Executive Officer, Sassa
[7]
emphasised the importance of ‘black economic empowerment’
in matters of this nature. Significantly in paras 55
it was
stated:
‘
Substantive
empowerment, not mere formal compliance, is what matters. It makes a
mockery of true empowerment if two opposite ends
of the spectrum are
allowed to be passed off as compliance with the substantive demands
of empowerment
’
.
[19]
Section 2C of the Act does not simply enjoin the Controller to have
regard to an applicant being
an HDSA, but enjoins the Controller
actively ‘…to promote the advancement of historically
disadvantaged South Africans’
and to give effect to the
Charter.
[20]
Ex facie the reasons given by the Controller for refusing the
licences he had not taken into
account that the applicant was a HDSA,
leave aside promoting the advancement of such persons. No mention is
made thereof.
[21]
The Minister’s reference in the appeal to the applicant being
72% HDSA is perplexing. The
applicant is a natural person, not a
corporate entity. One would expect him to be 100% HDSA as he contends
in his application to
the Controller, or not at all. Notwithstanding
this aspect being specifically queried and raised as pointing to the
applicant’s
HDSA status never being considered at all or not
considered properly, alternatively that the Minister materially
misdirected himself
in regard thereto, the point was simply left
unanswered by the first and second respondents. The only reasonable
inference is that
s 2C was not considered, alternatively if
considered that the reasoning in respect thereof suffers from some
irrationality, which
the applicant has complained of but which the
Minister and the Controller have not sought to explain, hence
allowing the inference
to stand un-contradicted. The Minister’s
and the Controller’s silence is deafening. The HDSA status was
a highly
relevant consideration which was apparently not considered
at all, alternatively in regard to which there was a misdirection.
[22]
I agree with the submission by Mr Kemp for the applicant that on that
basis alone, the review
must succeed.
[23]
There are also various submissions that were advanced in regard to
the question of ‘efficient
industry’ which is a vague
term, not defined and subjective. In view of the conclusion to which
I have come above it is not
necessary to submit the arguments in this
regard to any further scrutiny, and I accordingly refrain from doing
so, particularly
where the applications are to be remitted and
considered afresh.
[24]
The review accordingly succeeds. The matter has not been properly
considered and should be referred
back to be considered properly. I
am not disposed to, and the present matter is in my view not an
instance where this court should,
substitute its finding for that of
the Minister and the Controller.
[25]
Regarding the issue of costs, although the application was opposed by
the third to fifth respondents
on further grounds, not considered in
this judgment, it appears to me that the primary issue related to the
Minister and the Controller
having adopted a supine approach in
regard to the criticisms raised by the applicant in the founding
papers,
inter alia
on the applicant’s HDSA status. The
Minister and the Controller should be called upon to show cause why
they should not be
directed to pay the costs of this application,
excluding the costs of the third, fourth and fifth respondents. The
costs of the
third, fourth and fifth respondents should, in the
exercise of my discretion on costs and the reasons for reviewing the
decisions
of the Minister and the Controller, be borne by those
respondents rather than them being also liable for the applicant’s
costs due to the applicant having been substantially successful but
due to the failure of the first and second respondents to respond.
[26]
Accordingly, I make the following order:
(a) An
order is granted in terms of paragraphs 2.1 and 2.2 of the Notice of
Motion;
(b)
the matter is remitted to the second respondent for a reconsideration
of the site and retail
licence applications; and
(c) A
rule
nisi
is issued returnable on the 20th day of March 2019
at 9h30, calling upon the first and second respondents, in view of
their failure
to file any answering affidavits in reply to the
criticisms raised by the applicant in his founding affidavit, why
they should
not pay the applicant’s costs of the application;
(d)
The applicant is directed to serve a copy of this order on the first
and second respondents
forthwith;
(e)
The third, fourth and fifth respondents are directed to pay their own
costs of the application.
KOEN J
APPEARANCES
PLAINTIFF’S
COUNSEL
: Mr
K J KEMP SC with S MOODLEY
PLAINTIFF’S
ATTORNEYS
:
NARAIN
NAIDOO & ASSOCIATES
Ref.:
- N Naidoo/Kevin/S17
Tel.:
033 345 8146
1
ST
AND 2
ND
RESPONDENT’S COUNSEL
:
No appearance –
Abide
by the decision of the court.
1
ST
AND 2
ND
RESPONDENT’S ATTORNEY
:
STATE
ATTORNEY (KWAZULU NATAL)
Ref.:
572/00000/17/S/P27
Tel.:
031 365 2558
C/O
Cajee Setsubi Chetty Inc.
3
RD
,
4
TH
AND 5
TH
RESPONDENT’S COUNSEL
:
MR J.C. KING SC
3
RD
,
4
TH
AND 5
TH
RESPONDENT’S ATTORNEY:
SHAUKAT
KARRIM AND COMPANY
Ref.:
MR S KARRIM/tm/R799
Tel.:
031 301 0285/6
C/O
GRANT SWANEPOEL ATTORNEYS
Ref.:
MR SWANEPOEL/RUFAIDA/02S007517
Tel.:
033 342 0375
[1]
Although some adverse
inferences were sought to be drawn in the application papers from
the fact that the first application went
astray, Mr Kemp SC with him
Mr
S Moodley in argument disavowed drawing any such inference, in my
view correctly so.
[2]
The Controller is
the second respondent in this application.
[3]
The Minister is
the first respondent in the application.
[4]
[2014] ZAGPPHC 335, dated 30 April
2014, judgment of Makhubele AJ with whom Raulinga J and Thulare AJ
concurred.
[5]
Judgment of
Prinsloo J: 2014 JDR 0952 (GNP),
Gauteng
Division, Pretoria Case No. 7282/2013, dated 9 May 2014.
[6]
Dumani v Nair and another
[2012] ZASCA 196,
2013
(2) SA 274 (SCA), [2013]
2
All
SA
125
(SCA).
[7]
2014 (1) SA 604
(CC) at paras 46 to
55.