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[2019] ZAWCHC 42
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Ocean Ecological Adventures (Pty) Ltd v Minister of Environmental Affairs and Others (6744/2018) [2019] ZAWCHC 42; [2019] 3 All SA 259 (WCC) (18 April 2019)
R
E P O R T A B L E
THE REPUBLIC OF
SOUTH AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: 6744/2018
Before the Hon. Mr
Justice Bozalek
Hearing: 15
November, 5, 6 and 11 December 2018
Delivered:
18 April 2019
In
the matter between:
OCEAN
ECOLOGICAL ADVENTURES (PTY)
LTD Applicant
and
THE MINISTER
OF ENVIRONMENTAL
AFFAIRS First
Respondent
THE CHIEF
DIRECTOR: SPECIALIST MONITORING SERVICES,
DEPARTMENT OF
ENVIRONMENTAL AFFAIRS Second
Respondent
VERSATEX
TRADING 249 (PTY) LTD
Third
Respondent
JUDGMENT
BOZALEK J
[1]
This
application concerns the 2017 Boat Based, Whale and Dolphin Watching
(‘BBWW’) permit allocation process insofar
as it applied
to Plettenberg Bay. The Applicant, Ocean Ecological Adventures (Pty)
Ltd, seeks the review and setting aside of two
decisions made by the
First Respondent, the Minister of Environmental Affairs (‘the
Minister’), on 13 March 2018. Her
first decision was to set
aside the decision of a delegated authority made on 9 November 2017,
awarding a provisional BBWW permit
in the area of Plettenberg Bay to
the Applicant. That delegated authority, the Chief Director:
Specialist Monitoring Services,
Department of Environmental Affairs
(Branch Oceans and Coasts) was cited as the Second Respondent. The
Third Respondent is Versatex
Trading 249 (Pty) Ltd which was cited
because the second decision of the Minister sought to be reviewed was
to award it the ten
year BBWW permit instead. In taking these
decisions the Minister was exercising her powers of appeal in terms
of section 43(6)
of the National Environment Management Act 107 of,
1998 (‘NEMA’). The review application was opposed by all
respondents.
The Legal and
Policy Framework
[2]
For
the past two decades or so, the BBWW sector has been regulated
through a system of permits established in terms of empowering
legislation, regulations and a policy framework. From 2010, the
Department of Environmental Affairs (‘DEA’) took over
from the Department of Agriculture, Forestry and Fisheries (‘DAFF’)
as the department responsible for the allocation
of such permits.
[3]
By
the time of the 2017 BBWW permit allocation process (‘the 2017
process’) the regulatory framework comprised the Threatened
or
Protected Marine Species Regulations, 2017,
[1]
commonly known as the ‘
TOPS
Regulations’
,
and the BBWW policy published in GG 40878 of 31 May 2017. The
enabling national legislation was the National Environmental
Management:
Biodiversity Act, 10 of 2004, (‘NEMBA’)
(pursuant to which the ‘TOPS Regulations’ were issued).
[4]
The
Minister delegated her authority to allocate the 2017 BBWW permits to
the Second Respondent in terms of section 42(1) of NEMBA
and
aggrieved applicants could appeal to the Minister against that
official’s decisions in terms of section 43 of NEMA. Section
43(6) of NEMA provides that the Minister may, after considering an
appeal, ‘
confirm,
set aside or vary the decision, provision, condition or directive or
make any other appropriate decision’
.
The
application/invitation process
[5]
On
4 June 2017, the DEA published an invitation notice regarding the
2017 process indicating inter alia that two permits would be
allocated to the Plettenberg Bay designated BBWW area. After awarding
BBWW permits in terms of the 2017 process the Second Respondent
issued a notice dated 9 November 2017 explaining the permit
allocation process and specifically setting out the ‘
criteria,
the process and the methodology for the decisions on allocation of
permits in the BBWW’
sector.
[6]
In
its November notice the DEA described the criteria used for
decision-making in the process as having been threefold: firstly,
exclusionary criteria were applied, namely, the use of the official
application form, payment of the application fee, and signature
of
the application form by an authorised person. Failure to comply with
any of these requirements eliminated an applicant from
the next stage
of the process, which was compliance with the ‘
compulsory
requirements’
.
There were nine such compulsory requirements, the criteria relevant
to the present matter being proof of adequate public liability
insurance or an undertaking to provide same; proof that a registered
tourist guide was employed or an undertaking that a registered
tourist guide would be employed and proof of access to a suitable
vessel, or an undertaking to acquire such access. Failure to
meet one
of these compulsory requirements resulted in elimination from the
evaluation process, which involved assessment of the
‘
balancing
criteria’
.
[7]
Four
such balancing criteria were listed, namely ‘
Entity
Transformation, Compliance and Enforcement, Investment and Financial
information
and
Operational
Plan’
.
The Compliance and Enforcement and Investment as well as Financial
Information requirements were applicable only to existing permit
holders. Importantly,
Entity
Transformation
was allocated a weighting of 75% of an applicant’s total score
for existing permit holders and 65% for new applicants.
[8]
The
DEA’s November notice stated that the ‘
delegated
authority awarded permits based on the scores generated through a
mathematical model against each application’
.
It stated further, that the decisions of the 2017 process were not
final but were subject to the outcome of the appeals process.
Under
the heading
‘Appeal
Process’
applicants were advised that each would be informed of their
respective right to appeal ‘
any
aspect of the Delegated Authority’s decision in accordance with
the provision of section 43 of (NEMA) in their notification
letters’
.
[9]
The
balancing criteria were explained as follows:
‘
Balancing
Criteria are applied based on the assigning of scores for each
criterion. The scores were generated based on the aforementioned
mathematical model. Each criteria under Balancing Criteria was
allocated a weighting out of 100%, as indicated below:
(i) Entity
Transformation (allocated a weighting of 75% for Existing Permit
Holders, and 65% for New Applicants)’.
There followed a
number of sub-categories including BBBEE status level, ownership,
management control and corporate social investment
‘
(ii)
Compliance and Enforcement (applied only on Existing Permit Holders,
with weighting of 10%)’
The sub-categories
here included convictions for transgressions of applicable laws, any
suspensions or revoking of permits for transgressions,
any admission
of guilt fines, transgressions as well as some further
sub-categories.
‘
(iii)
Investment and Financial Information (applied only on (sic) Existing
Permit holders), with a weighting of 15% which included
sub-categories such as size of personnel wage bill, expenditure on
marketing training and number of persons employed’.
‘
(iv)
The final criterion was Operational Plan. This was applicable to only
new entrants with a weighting of 35% assigned’.
[10]
Accordingly,
the scoring component of the evaluation process i.e. the application
of the Balancing Criteria had different structures
for existing
permit holders and for new entrants.
[11]
The
Plettenberg Bay permits were ultimately allocated by the Second
Respondent in November 2017, to two existing permit holders,
namely,
the Applicant and the Baartman family.
The
Applicant’s, the Third Applicant’s and the Baartman
family’s permit applications
[12]
The
Applicant had been conducting business as a BBWW operator in
Plettenberg Bay since 1998 and it employed 15 persons, had invested
in fixed and movable assets worth R15mil (including office
infrastructure), and had just ordered a new 60 seater vessel worth
more than R5.8mil. It was notified by the Second Respondent in a
letter dated 9 November 2017, that it had been granted a standing
BBWW permit, valid for a period of ten years. The Second Respondent
further advised the Applicant that the rationale for his decision
was
that the Applicant had satisfied the objectives set out in the BBWW
policy and also met the specific criteria set out in Annexure
A to
that policy. Under the heading
‘Appeal’
it advised the Applicant that:
‘
(i)
If you are not satisfied with the permit issued to you, the Permit
Holder may, in terms of section 43(1) of (NEMA) appeal against
the
decision of the Delegated Authority to the Minister within 20
calendar days…’
[13]
It
is common cause that there were two other applicants for BBWW permits
in the Plettenberg Bay area. The other existing permit
holder was the
Baartman family which was also successful in its application. The
Third Respondent was a new entrant into the sector.
It is also common
cause that the Second Respondent concluded that the Third Respondent
had failed to meet one of the compulsory
criteria in that it had
failed to demonstrate that it would employ one or more tourist
guides. For that reason the Second Respondent
had not proceeded to
evaluate the balancing criteria applicable to the Third Respondent,
namely its entity transformation and its
operational plan. The Third
Respondent appealed against the Second Respondent’s decision.
The Applicant lodged no appeal
against any decision of the Second
Respondent.
[14]
Thereafter
the Applicant received a letter dated 13 March 2018, in which it was
informed by the Minister that following the appeals
process the
Applicant’s score was no longer high enough to be awarded a
permit in the Plettenberg Bay area. The Minister
added, however, that
owing to the good score it had achieved she considered it appropriate
to offer the Applicant a BBWW permit
in one of another eleven areas.
The Applicant did not accept this offer however, and, aggrieved by
the Minister’s decision,
launched these proceedings to review
her decision to set aside the Applicant’s BBWW permit and to
award such permit to the
Third Respondent.
[15]
In
May 2018 the Applicant was granted an order that pending the
finalisation of the present review proceedings an earlier permit
extension granted to it on 30 June 2017 would remain valid, and that
the decisions sought to be reviewed would be suspended pending
the
outcome of these proceedings.
[16]
At
the same time that the Applicant was advised that its permit had been
revoked the Third Respondent was advised that its appeal
to the
Minister had been successful in that it had satisfied her that it had
complied with the compulsory requirement relating
to the appointment
of a registered tour guide. The Minister had proceeded to score the
Third Respondent’s application for
a permit and found that its
overall score qualified it to be awarded a permit.
[17]
It
was common cause that in the initial evaluation, the Applicant had
scored 79.6% and the Baartman family 82%. After the Minister
decided
that the exclusion of the Third Respondent was not justified, she
scored its application 91.4%. The Minister also reconsidered
and
adjusted the Applicant’s score from 79.6% to 80.2%. The
Baartman family’s score was apparently also reconsidered
but
remained the same at 82%. The Minister awarded the two permits in the
Plettenberg Bay area to the highest scoring applicants,
namely, the
Third Respondent and the Baartman family.
Grounds of
review
[18]
In
its founding affidavit the Applicant identified three grounds of
review:
1.
that
the Minister failed to notify the Applicant of her intended decision
and to provide it with an opportunity to protect its rights
and
interests;
2.
that
the Minister had acknowledged in her letter of 13 March 2018, that
the Applicant’s application scored sufficiently high
to warrant
the allocation of a BBWW permit, albeit in some other area; and
3.
that
her notification letter confirmed that she had compared the scores
and weightings allocated to the Third Respondent and the
Applicant
which, it avers, was ‘
impermissible’
.
On these grounds it
was alleged that the Minister’s decision to revoke, or cancel
the Applicant’s standby permit was
unlawful and irrational.
The first two of these three grounds were not pursued at the
hearing and no more need to be said
of them.
[19]
In
its supplementary founding affidavit the Applicant added the
following further grounds of review:
1.
that
the Third Respondent should not have been awarded a BBWW permit since
it did not comply with the compulsory requirements as
set out in the
Regulations, the BBWW policy and the Second Respondent’s 9
November notice regarding the 2017 BBWW permit
allocation.
2.
that
the Minister exercised her discretion on appeal in an arbitrary and
unguided manner in assessing and scoring the Third Respondent’s
application;
3.
that
the manner in which the Minister scored the Third Respondent as a new
entrant, compared to existing operators, was unfair,
unguided by any
cognisable policy, arbitrary and irrational;
4.
that
the manner in which the Minister set aside the Applicant’s
permit was similarly unfair and unguided, arbitrary and irrational;
5.
there
was no rational basis for the limitation of the number of BBWW
permits (to two) in the Plettenberg Bay area.
This last ground of
review was, to all intents and purposes, not pursued by the Applicant
during argument and need not be traversed.
[20]
The
grounds that were pursued fall into two categories: firstly, those
relating to the Minister’s evaluation, or scoring of
the Third
Respondent’s application standing alone (set out in paragraphs
19(1) and (2) above), and those relating to the
Minister’s
evaluation or scoring of the Third Respondent’s application in
comparison to the Applicant’s application
(paragraphs 18(3) and
19(3) above). The review ground set out in paragraph 19(4) above is,
in effect, the corollary of all the
other ground relied on. Put
differently, the Applicant relied on review grounds which, vis-à-vis
the Third Respondent and
the Applicant, were both individualised and
which were comparative. I shall refer to them, where appropriate, as
the individual
grounds and the comparative grounds.
The
Applicant’s main arguments
[21]
Before
considering the review grounds in detail, it is appropriate to set
out in broad terms the Applicant’s main arguments.
Dealing
firstly with the individual grounds, the Applicant placed
considerable emphasis on the Third Respondent’s alleged
failure
to comply with compulsory BBWW permit allocation requirements,
namely, those relating to a tourist guide, access to a suitable
vessel and liability insurance. Central to this challenge was
the Applicant’s reliance on the Minister’s allegedly
unlawful, procedurally unfair and unreasonable conduct in applying a
‘
relaxed’
approach in assessing the Third Respondent’s compliance with
these compulsory requirements.
[22]
It
was submitted on behalf of the Applicant that the transformation
imperative was already reflected in the fact that such factor
constituted a high percentage of the score in respect of all
applicants, 75% for incumbents and 65% for new entrants. However,
the
Applicant contended, the evaluation of whether there had been
compliance with compulsory requirements as well as the balance
of the
scoring component could not be influenced by a new entrant’s
transformation credentials. This would amount to unlawful
additional
weighting, or double counting of the transformation factor which was
not in accordance with the regulations, the BBWW
policy or the
November 2017 notice issued by the Second Respondent.
[23]
A
further aspect of the Applicant’s challenge in respect of its
individual review grounds was the scoring of the Third Respondent’s
application on appeal which led to the Third Respondent obtaining a
total score of 91.4%. This score, the Applicant contended,
was
‘
astounding’
,
given that much of the Third Respondent’s compliance amounted
to aspirational statements or vague undertakings. The Minister’s
scoring was attacked also on the basis that it was heavily weighted
in respect of transformation rather than in relation to the
Third
Respondent’s objective capacity to demonstrate its ability to
conduct a BBWW operation.
[24]
The
Applicant’s second category of review grounds arose out of the
comparison between new BBWW entrants and existing operators,
both at
first instance and on appeal. The Applicant pointed to the
problematic nature of comparing an existing permit holder (the
Applicant and the Baartman family) to a new entrant (the Third
Respondent), and the fact that the matrix and model applied to
incumbents differed substantially from that applied to new entrants.
The Applicant contended that it was unfair, irrational and
arbitrary
that a new entrant could be scored on balancing criteria on the basis
of undertakings and aspirations; then thereafter
for those scores to
be directly compared to the scores of existing operators which were
measured against actual experience and
performance. It submitted
further that for the Minister to attempt such an exercise and to
exercise a broad discretionary power
in the appeals process without
any apparent guidelines for the exercise of such power, amounted to
an unfettered or unguided discretion,
thereby constituting an
unjustifiable limitation on the right to procedurally fair
administrative action.
[25]
The
Applicant’s further argument was that this irregular approach
was compounded when the Minister sought, at a late stage,
to justify
her decision to award a permit to the Third Respondent by explaining
that the decision was not made on the basis of
scoring comparison
alone but on the ‘
substance’
of the application. This, it was argued, was fatal to the
administrative fairness of the impugned decisions inasmuch as the
scores
achieved through the scoring matrix with its set of
predetermined and weighted factors could not be arbitrarily
disregarded by
the Minister by a finding that one application was, on
the basis of some or other criterion, preferable to another. In
conclusion
it was submitted that the Minister’s impugned
decisions fell to be set aside on the basis that she had made
material mistakes
of law in understanding the requirements for
scoring new entrants, had been swayed by irrelevant information, and
had failed to
take account of relevant information and in that her
decision was arbitrary and not rationally related to the purposes of
the guiding
policies or the information before her, or was
unreasonable.
Joinder of the
Baartman family
[26]
Before
dealing in detail with the review grounds a preliminary point of
non-joinder raised by the Third Respondent must be addressed.
It was
contended by the Third Respondent that the Applicant should have
joined the Baartman family as a party to its review application.
The
Applicant was obviously satisfied with the original decision taken by
the Second Respondent in terms whereof, both it and the
Baartman
family were (provisionally) awarded permits and it seeks to restore
that decision and the status quo. The review grounds
upon which it
relied do not seek to alter the scoring system adopted by the First
and Second Respondent, as it applies to existing
permit holders such
as it and the Baartman family.
[27]
There
was thus no systematic challenge to the scoring and evaluation system
proclaimed by the Department prior to the inception
of the BBWW
process. More importantly, the Applicant’s review challenge
never threatened the permit which was awarded to
the Baartman family.
Whether successful or not, that permit would stand either because the
Baartman family application scored the
highest or second highest. I
do not consider therefore that this non-joinder point has merit.
The
‘
individual’
review grounds
[28]
I
shall deal firstly with the individual review grounds which are based
upon the Third Respondent’s alleged non-compliance
with the
compulsory requirements, most notably that relating to the employment
of a tour guide.
[29]
The
main documents governing the 2017 BBWW allocations process were the
Marine TOPS Regulations and the BBWW policy. Paragraph 2.2
of
annexure A to the Policy sets out the criteria for the allocation of
permits and states that ‘
an
applicant must provide proof that the applicant has employed, or will
employ one or more registered tour guides as provided for
in the
relevant tourism legislation’
.
Regulation 69(1)(c) of the TOPS Regulations provides that ‘
an
application for a boat based whale and dolphin watching permit must …
be accompanied by … an undertaking that the
applicant has
employed, or will employ – (i) one or more registered tour
guides …’
.
Regulation 72(a)(iii) provides ‘…
the
issuing authority must refuse to issue permits for boat based whale
and dolphin watching … if the applicant …
fails to
employ or demonstrate the applicant will employ one or more
registered tour guides …’
.
[30]
The
application form for new entrants posed the following question in
regard to the tourist guide requirement: ‘
(6.3.)
Do you have a tour guide employed or contracted to provide a boat
based whale and dolphin watching tour to passengers?
’.
The Third Respondent answered ‘
No’
and added ‘
N/A
new entrant’
.
However, in other sections of the application form it indicated that
it would provide learnership programmes for local youths
and, in
answer to the question ‘
How
many people do you intend to employ in your business?’
,
the Third Respondent stated
inter
alia
that it would employ ‘
2
PDI (previously disadvantaged individuals) guides fulltime in the
Plettenberg Bay area’
.
Other answers in its completed application form indicated that it
would employ a suitable, accredited and trained guide.
[31]
On
appeal, the Minister accepted that, notwithstanding the Third
Respondent’s answer to question 6.3, it had, in various other
parts of its application form and the annexures, made references
confirming its commitment to the future employment of a tour guide.
She concluded, therefore, that the Second Respondent’s decision
in this regard was incorrect.
[32]
In
challenging the Minister’s decision on this point, the
Applicant appeared not to take issue with the Minister’s
interpretation of the Third Respondent’s answers but rather
contended that the Minister had acted irrationally in accepting
the
Third Respondent’s mere undertaking, or promise to employ one
or more such tour guides rather than insisting upon proof
thereof.
The Applicant placed reliance on the wording ‘
must
demonstrate that they have or will employ’
.
It argued that the Third Respondent had apparently not been required
to demonstrate anything at all. In doing so the Applicant
relied on
Minister
of Environmental Affairs and Tourism v Pepperbay Fishing (Pty) Ltd
[2]
where the SCA confirmed the general principle
that
‘language of a predominantly imperative nature such as ‘must’
is to be construed as peremptory rather than
directory unless there
are circumstances which negate this construction’
.
In my view, however, where the required action is vaguely or loosely
described, or simply sets a low bar, the fact that the requirement
is
concluded in imperative terms cannot serve to render that requirement
more onerous.
[33]
As
regards the second compulsory requirement, Regulation 72 provides as
follows:
‘
Circumstances
in which permits must be refused
In addition to
the factors contemplated in Regulation 20, the issuing authority must
refuse to issue permits for boat based whale
and dolphin watching and
for white shark cage diving –
(a)
If
the applicant –
(i)
…
;
(ii)
fails
to demonstrate access to
(aa) a boat based
whale and dolphin watching vessel
…’
.
[34]
In
paragraph 2.3 of Annexure A to the BBWW Policy it is stated as a
compulsory requirement that ‘
BBWW
applicants will have to demonstrate that they have or are going to
invest in a vessel certified by SAMSA as suitable for BBWW
and
equipped with functioning BMS vessel monitoring system with
Integrated Global Positioning System appropriate for the vessel
size
and category’
.
Instructions included in the permit application form for new entrants
also referred applicants to the Regulations and the BBWW
Policy which
requires that new entrants ‘
must
demonstrate that, if granted a permit, they will have access to a
vessel that is likely to be certified (even if alterations
still have
to be made)’
.
[35]
In
its application form the Third Respondent indicated that it had
bought a vessel which could carry ten passengers and two crew
members. It attached the agreement of sale recording that the vessel
would be surveyed once the BBWW modifications had been done
and
attached a quote for those modifications. It made various other
claims including a statement that the vessel would be equipped
with a
fully functional Vessel Monitoring System.
[36]
These
factors were cited in the Third Respondent’s opposing affidavit
in response to the Applicant’s complaint that
the Minister’s
decision to award a permit to the Third Respondent was irrational
inter
alia
,
in that she arbitrarily and irrationally accepted that its
application complied with the mandatory requirements relating to
access
to a suitable vessel. The Applicant complained that the vessel
was a small fishing vessel with limited passenger capacity and had
not yet been suitably converted, or certified by SAMSA, or that SAMSA
safety standards had been complied with. Nor, its complaint
continued, had the Third Respondent demonstrated that the vessel,
even when suitably modified, was likely to be certified by SAMSA.
[37]
In
response to this ground, the Minister raised a preliminary
jurisdictional point but also dealt with the complaint on its merits.
The jurisdictional point was also invoked by the Minister in relation
to another aspect of the review ground based on alleged
non-compliance with a compulsory requirement, namely, that the Third
Respondent had failed to provide ‘
an
undertaking confirming that they will, prior to commencement of
operations, purchase liability insurance up to an amount to be
determined by the relevant insurance consultant and for the duration
of the permit’
.
Did the
Applicant exhaust its internal remedy?
[38]
The
preliminary jurisdictional point raised was that the attack on the
Minister’s decision on these bases could not be considered
because the Applicant had failed to exhaust its internal remedy.
This, it was contended, the Applicant should have done by appealing
against the Second Respondent’s decisions that the Third
Respondent had shown that it would have access to a suitable BBWW
vessel and that it had complied with the requirement regarding public
liability insurance. The respondents also relied on the fact
that
there had been no application in terms of section 7(2)(c) of PAJA
(Act 3 of 2000) for an exemption from the duty to exhaust
an internal
remedy.
[39]
In
response it was argued on behalf of the Applicant that the matter of
the Third Respondent’s access to a suitable BBWW vessel
and the
furnishing of an undertaking regarding public liability insurance
were
issues before the Minister during her consideration of the appeal. It
was argued that it was not incumbent upon the Applicant to
raise
these aspects by way of an internal appeal. The reason for this was
that the appeal process in terms of section 43 of NEMA
was ‘
an
appeal in the wide sense’
as described in
Tickly
and Others v Johannes NO and Others
[3]
inasmuch as it was ‘
a
complete rehearing of and fresh determination on the merits of the
matter’
.
The fact that the Minister had not considered these aspects on appeal
rendered her decision arbitrary and unlawful.
[40]
Given
the conclusions which I have reached on the merits of the review
challenges affected by this point, it is not necessary to
deal with
this preliminary point. Nonetheless, for the sake of completeness, I
will express my views thereon.
[41]
The
parties were
ad
idem
that the appeal hearing was a wide one as envisaged in
Tickly
.
However, even if this is the case, in my view it does not follow that
the appeal to the Minister encompassed all the aspects of
the Second
Respondent’s decision or that, notwithstanding the absence of
any appeal by the Applicant against those aspects
of the Second
Respondent’s decision favourable to the Third Respondent, it
was barred from challenging those findings on
review.
[42]
It
must be borne in mind that the Minister had, before her, the Third
Respondent’s appeal which raised only two aspects; firstly;
the
issue of compliance with the tourist guide requirement and, secondly,
the (uncompleted) scoring of its application. In these
circumstances
the Minister was, in my view, not obliged to reconsider the Second
Respondent’s decision that the Third Respondent
had satisfied
the other two compulsory requirements. This would have widened the
ambit of an appeal beyond its intended limits.
Indirect authority for
this approach is to be found in
Groenewald
NO and Others v M5 Developments Cape (Pty) Ltd
[4]
where the Court stated as follows:
‘
[23]
Counsel for M5 conceded that s 62 involved an appeal in the wide
sense, and for present purposes I intend to accept that
he was
correct in doing so. But that does not mean that such an appeal
requires the re-evaluation of each submitted tender. If
that were so,
administrative anarchy would result. In a simple case such as this
involving the reconsideration of but three tenders,
the appeal
process took nine months and I shudder to think how long it would
have taken had it been necessary to deal with, say,
50 tenders just
because one unsuccessful tenderer had decided to appeal.
[24] The obvious
fallacy in the appellants' argument is found on an examination of the
section under which the appeal authority
is empowered to act. Section
62(1) allows a person to appeal by giving 'written notice of
the appeal and reasons' to the
municipal manager who, under s 62(2)
has then to submit 'the appeal' - obviously the notice of appeal and
the reasons lodged therewith
under s 62(1) - to the appeal authority
for it to consider 'the appeal' under s 62(3). Although in terms of
this latter subsection
the appeal authority is empowered to 'confirm,
vary or revoke the decision', it exercises that power in the
context of hearing
'the appeal', viz the appeal and the reasons
lodged by the aggrieved person under s 62(1). That defines the ambit
of the appeal,
the sole issue being whether that aggrieved person
should succeed for the reasons it has advanced. It is not for the
appeal authority
to reconsider all the tenders that had been
submitted. If that had been the legislature's intention, it would
have said so. It
did not, and for obvious reasons. There is a need in
matters of this nature for decisions to be made without unreasonable
delay.
If each and every tender had to be revisited it could easily
become an administrative nightmare with the appeal authority having
to hear representations from all parties who tendered, some of whom
might have no realistic prospect of success, in regard to a
myriad of
issues, many of which might in due course be proved to be wholly
irrelevant. This could never have been the legislature's
intention.
It is inconsistent with the requirement that a person aggrieved must
file a notice of appeal with reasons within a fairly
short period.’
[43]
Similar
considerations apply to the present matter. The Third Respondent
lodged an appeal against the Second Respondent’s
decision in
that it had failed to satisfy the requirement that it would employ or
undertake to employ at least one registered tour
guide. The second
leg of its appeal related to its scoring in terms of the balancing
criteria since this stage had not been reached
by the Second
Respondent as a result of disqualifying the Third Respondent for
non-compliance with the compulsory requirement.
There was nothing in
the appeal before the Minister to suggest that she had to look anew
at the two other compulsory requirements.
[44]
The
main reason why I consider the Applicant not barred from challenging
the Second Respondent’s decision on the two aspects
in question
is that, seen in proper context, its internal remedy was not
practical and was more apparent then real.
[45]
In
this regard, I agree with the Applicant’s contention that there
was no basis upon which it could reasonably have been expected
to
have appealed against the Second Respondent’s decisions that
the Third Respondent had satisfied two compulsory requirements,
given
that, overall, the Second Respondent’s initial decision was in
the Applicant’s favour.
[46]
The
terms of the letter advising the Applicant of the allocation to it of
a provisional permit hardly encouraged or suggested this
course of
action when it stated:
‘
(4)
Appeal
4.1
If you are not satisfied
with
the permit issued to you
,
the Permit Holder may, in terms of section 43(1) of (NEMA), appeal
against the decision of the Delegated Authority to the Minister
within twenty calendar days …’.
[my
underlining]
[47]
In
addition section 43(1), (2) and (6) of NEMA, despite its broad
wording does not suggests that conditional or pre-emptive appeals
against decisions favourable to other parties would be competent.
From the Applicant’s perspective the principal decision
taken
by the Second Respondent in regard to the Third Respondent was that,
through its failure to comply with a compulsory requirement,
it did
not even qualify to be evaluated for a permit to refuse to allocate
it a permit. With justification the Applicant asks on
what basis it
should have appealed against that decision?
[48]
Not
only do the applicable Regulation and section 43 of NEMA not suggest
a conditional or pre-emptive appeal by a successful Applicant
in such
circumstances, but taking such a step could have prejudicial and
unintended consequences for such an appellant. If the
Minister were
to approach such an appeal on the basis that it opened up the
appellant’s application to a complete re-evaluation
this could
make it vulnerable to being scored lower and losing any permit it had
already been granted.
[49]
Seen
from this perspective, there was no internal remedy which the
Applicant failed to exercise. At the appeal stage there was no
decision that the Applicant could meaningfully have appealed against,
even assuming it knew the detail of the Second Respondent’s
findings vis-à-vis the Third Respondent. The Applicant had
been awarded a permit and the Third Respondent had failed in
its
application. It would be unrealistic to expect the Applicant to have
anticipated the possibility of the Minister reversing
the Second
Respondent’s decision and then scoring the Third Respondent’s
application higher than the Applicant’s.
To have expected the
Applicant to have lodged a conditional or pre-emptive appeal to guard
against these possibilities would be
as unrealistic.
[50]
At
common law the rule that an aggrieved party must first exhaust
his/her domestic remedy was not absolute. In
Bindura
Town Management Board v Desai
,
[5]
van den Heever JA held that there was no general rule that ‘
a
person who considers that he has suffered a wrong is precluded from
having recourse to a Court of Law while there is no hope of
extra
judicial recess’
.
[6]
Whether legislation containing an internal remedy should be
interpreted as precluding, or deferring review of administrative
decisions
until the domestic remedy was utilised depended largely on
whether that remedy was effective and whether it was tainted by the
alleged unlawfulness.
[51]
By
definition, the Applicant had no internal remedy/right of appeal
against the Minister’s decisions. To the extent that the
Minister not only reversed the Second Respondent’s decision but
then proceeded to score the Third Respondent’s application
and
award it the permit, (and revoke the permit provisionally issued to
the Applicant), the only remedy left to the Applicant was
its right
to review such decision/s in terms of PAJA. In so doing it was
entitled, in my view, in the particular circumstances
of this matter,
to rely on review grounds relating to findings not specifically dealt
with by the Minister on appeal. The Applicant
left no internal remedy
unutilised. To require of the Applicant, or persons in the position
of the Applicant, already successful
applicants, to file conditional
appeals against decisions which at that stage are moot would be to
impose an unrealistic burden
both on the parties and the
administrative system.
[52]
The
circumstances of the present matter illustrate why a formalistic
approach to section 7(2) of PAJA would be inimical to expeditious
administrative justice. In my view, it was not the intention of the
Legislature in enacting section 43(6) of NEMA to require an
aggrieved
party (such as the Applicant) to pursue conditional or pre-emptive
appeals against sub-decisions favourable to the Third
Respondent
taken by the Second Respondent at the risk of being non-suited in
relation to these aspects in review proceedings. I
would thus not
uphold the preliminary or jurisdictional point taken by the
respondents.
The remaining
‘
individual’
review grounds
[53]
Having
dealt with the preliminary point I return to the Applicant’s
challenge based on the Third Respondent’s alleged
non-compliance with the two remaining compulsory requirements.
Regarding access to, or ownership of a vessel, on a proper
construction
of the Marine TOPS Regulations and the BBWW Policy read
together with other relevant documents, a new entrant did not have to
show
access to a vessel already compliant with all the requirements
for a BBWW vessel. It merely had to demonstrate access to a vessel
which could comply with such requirements. The overall requirement as
set out in the documentation must be considered in its proper
context. It would be unrealistic to expect a new entrant to incur the
expense and effort of preparing a vessel with no certainty
that it
would be granted a permit. In addition, the BBWW Policy made
provision for all applicants (including particularly new entrants)
to
undertake that they would commence operation within one year of being
issued a permit failing which it would be cancelled. Clearly,
this
provision envisaged a successful applicant using that period, if
necessary, to comply with all the requirements for exercising
the
permit, the most important of which would be the acquisition or
modification of a suitable vessel.
[54]
To
this end section 2 of the Instructions which form part of the
application form explicitly states that ‘
the
Department appreciates that new entrants may not be in a position to
nominate vessels which have been certified by SAMSA [as]
safe and
suitable for BBWW operations. … New Entrants must however,
demonstrate that, if granted a permit, they will have
access to a
vessel which is likely to be certified (even if alterations still
have to be made)’
.
Against this background and having regard to the Third Respondent’s
response to this portion of the application form (set
out in para 35
above), I consider that the Minister’s decision to grant the
Third Respondent a permit cannot be set aside
on the basis that she,
or the Second Respondent acted arbitrarily and irrationally in
accepting that the Third Respondent’s
application complied with
the compulsory requirements in this regard.
[55]
Another
compulsory requirement as set out in the BBWW Policy was that new
entrants had to provide ‘
an
undertaking confirming that they will, prior to commencement of
operations, purchase liability insurance up to an amount to be
determined by the relevant insurance consultant and for the duration
of the permit’
.
The application form for new entrants requests the applicant only to
indicate whether it has purchased public liability insurance.
The
Second Respondent’s May 2017 Policy document (in annexure ‘A’)
stated that an applicant must provide ‘
proof
of adequate public liability insurance’
if an existing permit holder or ‘
an
undertaking to provide public liability insurance’
if
it was a new entrant wanting to enter the sector
.
In
its application form in response to the question of whether it had
purchased public liability insurance, the Third Respondent
ticked the
‘
No’
box adding ‘
N/A
New Entrant’
and the words ‘
Will
purchase if successful’
.
As was pointed out on behalf of the First and Second Respondents, the
requirement was that the new entrant must merely ‘
undertake
to obtain insurance prior to commencing operations’
.
The Applicant argued that the Third Respondent should, for example,
have at least produced a quotation from an insurance consultant
and
indicated that it would be able to afford such public liability
insurance. There might be warrant for criticising the laxness
of the
requirement in requiring no more of a new entrant than it give an
undertaking that it would obtain such insurance. This,
however, is
how the requirement is framed and how was it interpreted by the
Minister. It is not tenable to argue on review that
the decision of
the Second Respondent (or the Minister) to regard the Third
Respondent’s response as proper compliance was
arbitrary or
irrational.
[56]
It
is also relevant in relation to these compulsory requirements, to
note that the Minister appeared to recognise that they set
a low bar
for new entrants. What must also be taken into account is that the
Applicant did not seek to challenge the formulation
of the compulsory
requirements in relation to new entrants as being so unexacting as to
be meaningless i.e. there was no systemic
challenge to the manner in
which these requirements were set for new entrants.
[57]
For
these reasons, I consider that the Applicant has failed to establish
a case for the reviewing of the Minister’s decisions
based on
the Third Respondent’s failure to comply with any of the
compulsory grounds.
[58]
I
turn now to the Applicant’s grounds of review based on the
scoring of the Third Respondent’s application. The Applicant
noted that the Third Respondent was scored 39 out of a possible 49
points for its operational plan, which in turn constituted 35%
of its
entire score – the balance being awarded for entity
transformation. The Applicant pointed out that the Third Respondent
had obtained a total score on appeal of 91.4% and described this as
‘
astounding’
.
It contended that the Third Respondent’s operational plan had
not included the minimum information as prescribed, appeared
to be
entirely ‘
aspirational’
,
rather than operational, and gave no indication of any experience in
the tourism sector or of the availability of technical expertise
within the BBWW sector notwithstanding that this was indicated as a
minimum requirement for an operational plan in the BBWW Policy.
[59]
Whilst
there may be room to argue with the scores allocated by the Minister
in respect of the various criteria or elements of the
Third
Respondent’s operational plan, it cannot, in my view, be said
that her decisions in this regard were not rationally
connected to
the purposes of the guiding policy, did not relate to the information
before her, that she took irrelevant information
into account or
failed to take account of relevant information or that her scoring
was procedurally unfair, irrational or unreasonable
– all
grounds relied upon by the Applicant. Needless to say, the Applicant
enjoys a right of review, and not a right of appeal
against the
scoring decisions made by the Minister.
The
‘
comparative’
review grounds
[60]
I
now deal with those review grounds relating to the scoring system
insofar as it compared existing permit holders to new entrants
and
which I have termed the comparative grounds.
[61]
In
its founding papers the Applicant contended that ‘
the
manner in which the Minister scored a new entrant like Versatex,
as
compared to existing operators
like the applicant, was unfair, unguided by any cognisable policy,
arbitrary and irrational;’
[my
underlining]. In its supplementary affidavit the Applicant returned
to this theme under the heading
‘The
unguided assessment and scoring of new entrants’
and made the point that the Minister appeared to be satisfied with
uncorroborated expressions by the Third Respondent that it would
comply with various requirements and that these ‘
uncorroborated’
aspirational expressions often resulted in the Minister allocating
very high scores to new entrants. By comparison, it noted,
established operators were judged strictly – and marked down –
based on their established business model and practice.
It was
pointed out on behalf of the Applicant that the BBWW Regulatory
framework includes no provisions as to the manner of comparison
between the applications of new entrants to the sector and existing
operators. Implicit if not explicit in these contentions was
the
notion that, even having regard to the different structures of the
scoring systems, it was inherently unfair if not irrational
to
compare new entrants with existing permit holders.
[62]
In
its supplementary affidavit, the Applicant raised a new aspect to
this ground of review, namely, that the Minister had impermissibly
double-counted the transformation factor when comparting new entrants
to existing permit holders.
[63]
Having
regard to her opposing affidavit, the Minister appears to have been
alive to the illogicality of simply comparing the scores
of new
entrants with those of existing permit holders. She explained that a
more nuanced test had been applied, stating as follows
in para 10 of
her opposing affidavit:
‘
[10]
Versatex was then scored and achieved a score of 91.4%. I decided
that, in the light of that score
and
the substance of the two applications,
Versatex’s
application was stronger than that of the lowest scoring existing
permit holder i.e. the applicant. The lack of
transformation of the
latter was considered to be of particular concern. This issue has
been repeatedly raised in BBWW policies
adopted over the years and
all the applicants were fully apprised of its importance.
[my
underlining]
[11] The
decisions of the Chief Director to provisionally allocate a permit to
the applicant was then reversed ...’
[64]
The
Minister responded directly to the review ground that she was not
legally entitled to compare the scores of a new entrant
to an
existing competitor as follows in paragraph 52.3:
‘
The
comparison: I did not directly compare the scores of Versatex with
that of the applicant. The scores are merely an indication
of the
strength of an application. Versatex scored higher than the
applicant,
but
it was determined with reference to the substance of the applications
themselves
,
that Versatex as a new entrant should be preferred over the
applicant.
Here
the aspect of transformation was of particular importance
’.
[my
underlining]
[65]
In
para 77 the Minister made the point, again, that direct scoring
comparisons were not used when she stated:
‘
I
deny that I directly compared the scores of Versatex with that of the
applicant. As stated above, the applicant’s scores
are merely
an indication of the strength of an application’.
[66]
In
para 104 she stated:
‘
The
relaxation of the requirements in respect of new entrants must be
seen against the background of a lack of transformation in
the BBWW
sector and the resultant need to create a real chance for new
entrants to be successful in their applications, particularly
in
cases where they compete with untransformed entities. The scoring for
new entrants is accordingly heavily weighted in respect
of
transformation and capacity to demonstrate ability to conduct a BBWW
operation i.e. the operational plan’.
[67]
Notwithstanding
these statements, the fact is that in her letter to the Applicant
advising of her decision to withdraw its permit
and award same to the
Third Respondent, the Minister simply stated that ‘
as
a result of the assessment of these appeals, which occurred during
the appeal process, your score is no longer high enough to
be awarded
a permit in the area you applied for’
.
The Minister made no mention of any other basis for her decision
other than score, and certainly made no reference to considering
the
‘
substance’
of the competing applications.
[68]
It
was contended on behalf of the Applicant that, quite apart from the
fact that the matrix and model applied to incumbents differed
substantially from that applied to new entrants, what was not evident
was how the different methodologies applied were assessed
and weighed
during the appeal process to enable the Minister to conclude that the
Applicant’s score was no longer high enough
for it to be
awarded a permit. It was further contended that it was unfair,
irrational and arbitrary that the Third Respondent
could, on the
basis of undertakings and aspirations (in relation to the 35% of
score allocated to the operational plan), reach
an elevated score and
for that score to be directly compared to those of existing permit
holders who were measured against actual
experience and performance.
The argument proceeded that the Minister appeared to have exercised a
broad discretionary power during
the appeals process without any
apparent guidelines for the exercise of such power; furthermore, that
such unfettered or unguided
discretion could well contribute to the
exercise of administrative power constituting an unjustifiable
limitation on the right
to procedurally fair administrative action.
In this regard reliance was placed on
Dawood
v Minister of Home Affairs
[7]
and on
Janse
Van Rensburg NO v Minister of Trade and Industry NO
.
[8]
The argument was also made that discretionary decision making power
needed to be guided by clear policy where fundamental rights
were at
play.
[69]
As
regards the role of transformation as a critical determinant in her
decisions under review, the Minister sought to defend its
use,
stating as follows in paragraph 75 of her opposing affidavit:
‘
[75]
One of the objectives of the BBWW Policy is to achieve transformation
in the sector through various mechanisms. Applicants
for permits are
encouraged to develop the industry so as to achieve transformation.
In this regard clause 3.1 of the BBWW Policy
promotes the
participation of new entrants into the industry, providing that “as
far as current permit holder applicants
are concerned, specific
consideration will be given to applicants who can demonstrate how
they intend to provide training or mentorship
to new entrants in the
BBWW Policy industry”’.
[70]
In
its heads and in argument before the Court, the Applicant developed
this ground by emphasising that the transformation factor
had been
‘
double
counted’
or given undue weight firstly, by the Minister’s relaxation of
the compulsory requirements vis-à-vis new entrants
and,
secondly, by treating this factor as decisive when the Minister
considered the ‘
substance’
of the competing application.
Can the
Applicant rely on the ‘
double-counting of the
transformation’
ground?
[71]
I
consider that the first leg of this argument is covered by the ground
of review set out in paragraph 19.1. The balance of the
challenge
(regarding the Minister’s approach to the ‘
substance’
of the applications) was first expressed in the Applicant’s
replying affidavit. This led to objections from the respondents
that
the Applicant was raising new grounds of review which had not been
previously canvassed by it in its founding or supplementary
affidavit
but only, impermissibly, in reply. The question was also posed as to
whether the Minister should not least have been
permitted to
supplement her answer in response thereto. A preliminary issue that
must be determined therefore is whether the Applicant
is entitled to
rely as a review ground on the Minister’s alleged impermissible
double counting of the transformation criteria
when she had regard to
the ‘
substance’
of the applications.
[72]
This
aspect was pointedly raised by the Applicant in reply when it was
stated on its behalf (in paragraph 18)
‘
(18)
The Minister also alleges repeatedly that her decision to award BBWW
permit to Versatex, was not made on the basis of scoring
comparison
alone but on the substance of the application.
(19) This too
points to a fatal flaw the scoring matrix was provided with a set of
predetermined weighted factors. The scores achieved
in this process
could not be disregarded in favour of some nebulous sense that the
Minister had that one application was preferable
to another’.
…
(21) Furthermore
it is difficult to understand on what basis the Minister compared the
substance or, indeed lack thereof of the
Versatex application as a
new entrant to that of the applicant.
…
(23) The Minister
also focusses on the issue of transformation, and asserts that this
weighed heavily in her decision to award the
BBWW permit to Versatex.
Transformation is of course, a very important injective. The
transformation imperative is clearly, and
I submit correctly,
reflected in the fact that transformation constitutes such a high
percentage of the score awarded to BBWW permit
applicants.
Transformation constitutes 75% of the score for incumbents and 65% of
the score for new entrants.
…
(33) I do not
understand what is meant by ‘substance’ in this
paragraph. The Minister’s allegation in this paragraph
supports
my contention, set out above, that the Minister in effect attached
additional weight to the aspect of transformation above
the 65%
and 75% attached to this aspect in terms of the evaluation sheet for
BBWW new entrants and incumbents respectively’.
[73]
There
is authority for the proposition that if facts alleged in a
respondent’s answering affidavit reveal the existence of
a
further ground for the relief sought, a court will allow the
applicant to utilise what has been revealed by the respondent and
to
set up an additional ground for relief arising from the answering
affidavit. See in this regard
Shakot
Investments (Pty) Ltd v Town Council of the Borough of Stanger
[9]
where Miller J stated as follows:
‘
In
consideration of the question whether to permit or to strike out
additional facts or grounds for relief raised in the replying
affidavit, a distinction must, necessarily, be drawn between a case
in which the new material is first brought to light by the
applicant
who knew of it at the time when his founding affidavit was prepared
and a case in which facts alleged in the respondent's
answering
affidavit reveal the existence or possible existence of a further
ground for the relief sought by the applicant. In the
latter type of
case the Court would obviously more readily allow an applicant in his
replying affidavit to utilise and enlarge
upon what has been revealed
by the respondent and to set up such additional ground for relief as
might arise therefrom’
.
[74]
In
the present matter none of the respondents sought to strike out the
material or the additional ground of relief in the Applicant’s
replying affidavit. Secondly, and more fundamentally, as was pointed
out by the Applicant, it could not have been expected to raise
this
aspect of ‘
double
counting’
earlier for a number of reasons. The most important of these reasons
was that only for the first time in her answering affidavit
did the
Minister indicate that she did not directly compare the scores of the
Applicant and the Third Respondent, that these scores
were only one
factor and that she had considered the ‘
substance’
of the applications and found that, given the need for
‘
transformation’
,
the Third Respondent should be awarded the permit rather than the
Applicant. As was pointed out by the Applicant’s counsel
this
methodology was not set out in any of the documentation made
available to the Applicant at the time of drafting its founding
papers, nor was it set out in the Rule 53 record so that the
Applicant could have included such ground in its supplementary
affidavit.
[75]
The
authority referred to in
Shakot
has been endorsed by the Supreme Court of Appeal in the matter of
Finishing
Touch 163 (Pty) Ltd v BHB Billiton Energy Coal South Africa Ltd and
Others
[10]
where the Court held as follows:
‘
It
is true that the explanation was proffered by BHP in reply, but the
rule that all the necessary allegations upon which the applicant
relies must appear in his or her founding affidavit is not an
absolute one. The court has a discretion to allow new matter in a
replying affidavit in exceptional circumstances. A distinction must
be drawn between a case in which the new material is first
brought to
light by the applicant who knew of it at the time when his founding
affidavit was prepared, and one in which facts alleged
in the
respondent's answering affidavit reveal the existence or possible
existence of a further ground for the relief sought by
the
applicant’.
[76]
It
is noteworthy furthermore that none of the Respondents sought an
opportunity to deal with what is now said to constitute the
impermissible raising of a further ground of review in reply. In
Tantoush
v Refugee Appeal Board and Others
,
[11]
the Court held as follows in relation to a similar situation:
‘
As
these averments were made in the replying affidavit the second
respondent strictly speaking had no entitlement to respond to
them
and in the normal course they could not be denied or explained by the
respondents. Nevertheless, if the allegations by Ms
Peer were untrue,
or if an adequate explanation were possible, leave of the court could
and should have been sought to answer them’.
[77]
In
my view, it is insufficient for the respondents to simply aver that
the Applicant should have called upon them to deal with this
additional or expanded ground of review. The respondents must be the
watchdogs of their own rights, procedural and otherwise, and
not rely
on the Applicant to fulfil this role on their behalf.
[78]
There
is a further reason why the objection on the part of the respondents
cannot be sustained, namely that is that the Applicant’s
argument based on ‘
double
counting’
of the transformation factor is no more than that i.e. a legal
argument based on facts alleged by the Minister. The Applicant
introduced no new factual material in reply, only more pointedly
honing its argument in regard to an irrational (comparative) scoring
system. The new legal argument was fully pleaded in the sense that it
was set out in the Applicant’s affidavits and was dealt
with
without any apparent difficulty in the respondents’ heads of
argument. As such the Applicant’s handling of this
ground of
review complied with the minimum requirements as set out inter alia
in
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs and
Tourism and Others
[12]
where it was stated inter alia:
‘
However,
it must be emphasised that it is desirable for litigants who seek to
review administrative action to identify clearly both
the facts upon
which they base their cause of action, and the legal basis of their
cause of action.’
[79]
Having
found that the Applicant is not precluded from advancing any new
review ground it relied on in relation to its ‘
comparative’
grounds, I turn to their merits. The first such argument is that,
through adopting a ‘
relaxed’
approach in regard to the compulsory requirements, in order to
promote transformation in the sector, the Minister (or the Second
Respondent) double-counted the transformation factor.
[80]
This
challenge is based to a large extent on the passage from the
Minister’s opposing affidavit quoted in para 66 above. A
careful reading of this passage does not in my view support the
submission that the approach of the Minister or the Second Respondent
to the compulsory requirements vis-à-vis new entrants
necessarily resulted in a double-counting, or unauthorised weighting
of the transformation factor. The compulsory requirements are either
complied with or not and thus produce no score. As discussed
earlier,
the compulsory requirements were ‘
relaxed’
for new entrants, irrespective of their degree of transformation,
and, in any event, in my view not irrationally so.
[81]
The
Applicant is, however, on much stronger ground in regard to the
alleged lack of any rational basis upon which a comparison was
made
between new BBWW entrants and existing operators as well as in the
role that transformation played vis-à-vis applicants
who
satisfied the compulsory requirements and were scored. On behalf of
the Applicant it was highlighted that the evaluation matrix
and
mathematical model which were developed as part of the BBWW
allocation process to generate scores for individual applications
differed quite substantially between that applied to new entrants to
that applied to existing operators (inevitably so, given the
different circumstances of the two classes of applicants). The
Applicant’s further contention, however, was that it was not
evident how the different methodologies which were applied were
assessed or weighed by the Minister during the appeals process
for
her to conclude that the Applicant’s score was no longer high
enough for it to be awarded a BBWW permit.
[82]
It
is in this regard that the Minister’s repeated assertions that
the score alone was not used to determine the outcome of
the appeal
acquires particular importance. The Minister, as has been previously
stated, appeared to recognise, and correctly so
in my view, that she
could not rely on the scoring assessments alone since, colloquially
speaking, this would amount to comparing
apples with pears. Instead,
according to the Minister, the scores were merely a guide that
indicated to her the strength of the
application and what was equally
important was ‘
the
substance of the applications’
.
Upon closer examination, the ‘
substance
of the applications’
appeared
to amount to the Minister’s view of the extent to which any
given applicant advanced the goal of transformation or
not. However,
as the Applicant pointed out, there are at least two problems with
this approach. Firstly, the scores achieved in
the scoring process
could not arbitrarily be disregarded in favour of some ‘
nebulous
sense’
the Minister had that one application was preferable to another by
reason of the transformation criterion. Secondly, and more
importantly, the transformation factor had already been weighed (and
heavily so) in the detailed scoring assessment of each applicant.
As
the Minister stated:
‘
(t)he
scoring
for new entrants is accordingly heavily weighted in respect of
transformation
and capacity to demonstrate ability to conduct a BBWW operation …’
[my
underlining]
[83]
In
support of this argument as a whole the Applicant relied on the cases
of
Allpay
Consolidated v Chief Executive Officer, South African Social Security
Agency
[13]
and
Westinghouse
Electrical Belgium SA v Eskom Holdings (SOC) Ltd and Another
.
[14]
In
Allpay
the
Constitutional Court held that:
‘
Once
a particular administrative process is prescribed by law, it is
subject to the norms of procedural fairness codified in PAJA.
Deviations from the procedure will be assessed in terms of those
norms and procedural fairness. This does not mean that administrators
may never depart from the system put in place or that deviations will
necessarily result in procedural unfairness. But it does
mean that,
where administrators depart from the procedures, the basis for doing
so will have to be reasonable and justifiable,
and the process of
change must be procedurally fair.’
[15]
The Constitutional
Court held that the underlying purpose of setting out clear criteria
for such a process, and insistence on compliance
with process
formalities, has a threefold purpose in that it ensures fairness to
all participants, it enhances the likelihood of
an efficient and
optimal outcome, and it serves as a guardian against corrupt
influences.
[84]
In
Westinghouse,
the Supreme Court of Appeal held that in assessing the lawfulness of
a tender process the Court must consider only whether the
bids have
been properly evaluated against the tender criteria.
[16]
[85]
In
the Department’s own general notice of 9 November 2017 it
described the criteria used for decision making as those set
out in
the official policy document on BBWW as well as Regulations 8, 69, 71
and 72. It went on to describe the evaluation process
as comprising
the exclusionary criteria, the compulsory requirements, and the
balancing criteria. It added, in paragraph 2.4, that
the delegated
authority’s final decision an award of permits was based on the
scores generated ‘
through
a mathematical model against each application’
.
No mention was made of any consideration of the ‘
substance’
of an application and the fact that scores alone had not been used to
evaluate applications.
[86]
It
is so that in the relevant policy document the importance of
transformation of the BBWW industry is clearly expressed. The high
water mark of the Minister’s case must be the statement in the
policy document to the effect that ‘
preference
will be given to applicants whose operations integrated or aimed to
integrate Historically Disadvantaged Individuals
(HDI’s) in the
ownership and management of the operation’.
[87]
There
is, however, no reference in that, or any other relevant document to
an overarching discretion on the part of the Minister
to favour those
applications which she subjectively considered better advanced
transformation. On the contrary, a detailed system
for scoring how
each applicant advanced transformation was formulated. Paragraph 5.2
under the heading
‘Transformation
of the BBWW industry’
states
as follows:
‘
In
promoting transformation the Department shall use the B – BBEE
Tourism Sector Codes and applicable tools in order to advance
its
objectives. Additional factors to be considered include placing
restrictions on changing of shareholding or controlling interests
in
Companies or Close Corporations that have been allocated permits’.
It continues:
‘
When
considering competing permit applications, applicants will be
evaluated on whether the operation complies with ... Codes of
Good
Practice on Broad Based Black Economic Empowerment ...’
[88]
The
transformation requirement, moreover, appears to have been made
concrete in the scoring matrix which applied to both new entrants
and
existing permit holders i.e. in that 65% and 75% respectively of an
individual applicant’s score was assessed having
regard to that
entity’s transformation profile. There is no express warrant
for the Second Respondent, or the Minister on
appeal, to use the
transformation criterion once again when assessing new entrants
against existing permit holders i.e. over and
above the score that an
evaluation of that factor had resulted in. Nor was there any explicit
reference to the Minister exercising,
or reserving to herself a
general discretion to favour applicants on the basis of her
subjective view on which would better advance
transformation.
[89]
Chapter
11 of the TOPS Regulations deals specifically with permits for the
BBWW sector and in particular Regulations 71, 72 and
75 are relevant.
Only Regulation 71 addresses transformation and then only as one of
four additional factors relevant to the BBWW
sector which must be
taken into consideration when permits are issued, namely:
(a)
promoting
the economic growth of the sector;
(b)
the
need to improve the regulatory and compliance framework;
(c)
the
need to address transformation of the industry;
(d)
…
..
(e)
the
need to provide control over the number of boat based whale and
dolphin watching permit holders.
[90]
Transformation
is not listed as a criterion which could give rise to circumstances
in which permits must be refused in terms of
Regulation 72. Overall,
there is nothing in the Regulations to suggest that transformation
was a factor of such importance that
the Minister could employ it as
a general trumping requirement, or the sole criterion in considering
the ‘substance of an
application’, either when comparing
new entrants with other new entrants, existing permit holders with
existing permit holders
or new entrants with existing permit holders.
[91]
The
Minister herself stated that the requirements in respect of new
entrants are set low or, to use her phrase ‘
are
relaxed’
in order to give weight to the transformation factor. To allow the
Minister the general discretion to which she lays claim to when
assessing the ‘
substance’
of
an application of a new entrant as opposed to an existing permit
holder i.e. over and above the formal assessment and scoring
of each
application, is to make transformation the dominant or trumping
criterion without express warrant for doing so. Importantly,
over and
above the scoring system, this criterion of transformation could not
be objectively applied inasmuch as it depended on
the subjective, and
thus unmeasurable, view of the Minister.
[92]
In
my view the Minister purported to exercise a broad discretionary
power during the appeals process based on the transformation
profile
of the Applicant and the Third Respondent, without any guidelines for
the exercise of such discretionary power.
[93]
In
Dawood
v Minister of Home Affairs
(supra) it was held that in a constitutional democracy the
responsibility to protect constitutional rights in practice was
imposed
both on the legislature and on the executive as well as its
officials. The legislature had to take care when legislation was
drafted
to limit the risk of an unconstitutional exercise of the
discretionary powers it conferred. Guidance would often be required
to
ensure that the Constitution took root in the daily practice of
governance. Where necessary such guidance had to be given. Guidance
could be provided either in the legislation itself or, where
appropriate, by a legislative requirement that delegated legislation
be enacted properly by a competent authority. It was for the
legislature, in the first place, to identify the policy
considerations
that would render a refusal of a temporary permit
justifiable.
[17]
The Court,
per O’Regan J stated at para 47:
‘
It
is an important principle of the rule of law that rules be stated in
a clear and accessible manner. It is because of this principle
that
section 36 requires limitations of rights may be justifiable only if
they are authorised by law of general application. Moreover,
if broad
discretionary powers contain no express constraint, those who are
affected by the exercise of the broad discretionary
powers will not
know what is relevant to the exercise of those powers or in what
circumstances they are entitled to seek relief
from an adverse
decision’.
[94]
The
Applicant also relied on
Janse
Van Rensburg NO v Minister of Trade and Industry NO
(supra) which dealt with the right to administrative justice in terms
of section 33 (1) of the Constitution and the Minister of
Trade and
Industry’s power, in terms of section 8(5)(a) of the Consumer
Affairs (Unfair Business Practices), Act 71 of 1988,
to stay or
prevent for up to six months any unfair business practice under
investigation and to attach any money or property relating
to such
investigation.
[95]
In
holding that it would not be appropriate to strike down the offending
statutory provision, Goldstone J, on behalf of the Court,
stated as
follows:
‘
At
the same time it is inappropriate that the Minister should be able to
exercise an unfettered and unguided discretion in situations
so
fraught with potentially irreversible and prejudicial consequences to
business people and others who may be affected.’
[18]
[96]
There
are strong parallels between the situation described above and the
present one, where the Minister, in the appeal process,
removed a
provisionally granted permit from an established permit holder with a
sizeable investment in that venture and awarded
it to a new entrant
on the basis of her subjective view of which applicant better
advanced transformation in the industry, transformation
being a
criterion which had already been empirically scored in the assessment
and scoring process.
[97]
I
find that the Minister’s decisions to revoke the Applicant’s
permit and in effect to award it to the Third Respondent
were not
rationally related to the purposes of the guiding policy or the
information before her and was irrational and procedurally
unfair. In
my view, the Minister misunderstood the requirements of law and thus
made a material mistake in understanding the requirements
for
evaluating new entrants as against existing permit holders. She was
furthermore swayed by irrelevant information and her decision
was
arbitrary.
Remittal back
to the Minister
[98]
On
behalf of the Third Respondent it was contended that, should any
ground of review succeed, the matter should be remitted back
to the
Minister for rehearing of the appeal. This relief was not sought by
way of a conditional counter-application and thus its
competency or
merits were not addressed in the papers and only superficially in
argument. Nonetheless, it appears that logic and
administrative
justice require such an outcome. The rationale of this judgment is
that the Minister fell into error at that stage
of the Third
Respondent’s appeal when she had regard to the ‘substance’
of the Applicant’s and the Third
Respondent’s
applications in determining which applicant should be awarded the
permit. In fairness to the Third Respondent
it deserves to have its
appeal determined by the Minister properly applying the principles of
administrative justice and the legal
framework within which the
applications fall to be considered. The dilemma faced by the
Minister, one which she must resolve, however,
is how to fairly
compare or score two applicants competing for one permit in
circumstances where they cannot be directly or meaningfully
compared
because they fall into different categories of applicant and to which
are applied different scoring or evaluation structures.
Costs
[99]
The
relief sought was opposed by all the respondents and I see no reason
to distinguish between their circumstances or positions.
Costs must
follow the event and to the extent that the Applicant used two
counsel, I consider that this was justified. It follows
then that the
respondents must bear the costs in both these and the interim
proceedings, jointly and severally.
[100]
In
the circumstances and for these reasons the following order is made:
1.
The
First Respondent’s decision on 31 March 2018, to unilaterally
revoke and/or terminate and/or cancel the Applicant’s
standing
permit granted to it by the Second Respondent on or about 9 November
2017, in terms of authority delegated to him by the
First Respondent
in terms of
section 42(1)
of the
National Environmental Management
Act, 107 of 1998
, is reviewed and set aside;
2.
The
First Respondent’s decision to award the Third Respondent a
permit to operate a Boat Based Whale Watching business in
the
Plettenberg Bay Area is reviewed and set aside;
3.
The
Third Respondent’s appeal against the decision of the Second
Respondent is remitted back to the First Respondent for
reconsideration in light of this judgment;
4.
The
First, Second and Third Respondents are ordered to pay the
Applicant’s costs both in the application for interim relief
and in the review proceedings, jointly and severally, the one paying
the others to be absolved.
____________________
BOZALEK J
For the
Applicant: Adv D Borgstrom
Adv
A Du Toit
As
Instructed by:
For the 1
st
and 2
nd
Respondent: Adv HJ De Waal
As
Instructed by:
For the 3
rd
Respondent: Adv M Steenkamp
As Instructed by:
[1]
GN
R477 of 2017; GG 40876 of 30 May 2017.
[2]
2004 (1) SA
208
(SCA) at para 3.
[3]
1963 (2) SA
588 (T) 591.
[4]
2010 (5) SA
82
(SCA) at paragraphs 23 and 24.
[5]
1953 (1) SA
358
(A) at 362 H.
[6]
At 362H.
[7]
2000 (3) SA
936 (CC).
[8]
2001 (1) SA
29
(CC) para 29.
[9]
1976
(2) SA 701
D at 705 A – B.
[10]
2013 (2) SA
204
(SCA) at para 26.
[11]
[2007] ZAGPHC 191
;
2008 (1) SA
232
(T) at para 51.
[12]
[2004] ZACC 15
;
2004 (4) SA
490
(CC) at para 27.
[13]
2014 (1) SA
604.
[14]
2016 (3) SA
1 (SCA).
[15]
At para 40.
[16]
At para 37.
[17]
At para 46 –
48 and 54.
[18]
At para 29.