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[2016] ZAGPPHC 93
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Telkom SA Soc Limited v Mncube NO and Others; Mobile Telephone Networks (Pty) Ltd v Pillay NO and Others; Cell C (Pty) Limited v The Chairperson of ICASA and Others; Dimension Data Middle East & Africa (Pty) Ltd t.a Internet Solutions v ICASA and Others (55311/2015; 77029/2015; 82287/2015) [2016] ZAGPPHC 93 (26 February 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case No: 55311/2015
DATE:
26/2/2016
Not
reportable
Not
of interest to other judges
Revised
In the
matter between:
TELKOM
SA SOC
LIMITED
Applicant
and
DR
STEPHEN MNCUBE N.O. &
OTHERS
Respondents
and in
the matter between:
Case No: 77029/2015
MOBILE
TELEPHONE NETWORKS (PTY)
LTD
Applicant
and
MS
KATHARINA PILLAY N.O. &
OTHERS
Respondents
and in
the matter between:
Case No: 55311/2015
CELL
C (PTY)
LIMITED
Applicant
and
THE
CHAIRPERSON OF THE INDEPENDENT
COMMUNICATIONS
AUTHORITY OF SOUTH AFRICA
&
OTHERS
Respondents
and in
the matter between:
Case No: 82287/2015
DIMENSION
DATA MIDDLE EAST & AFRICA (PTY) LTD
t/a
INTERNET
SOLUTIONS
Applicant
and
INDEPENDENT
COMMUNICATIONS AUTHORITY OF
SOUTH
AFRICA &
OTHERS
Respondents
D
S FOURIE, J:
[1]
This matter concerns four review
applications brought by four different applicants who are Telkom,
MTN, Cell C and Internet Solutions.
The decision sought to be
reviewed in all four applications is the conditional approval by the
Independent Communications Authority
of South Africa (ICASA) relating
to an application brought by two of the respondents, Vodacom and
Neotel, for the transfer of control
of individual and spectrum
licences from Neotel to Vodacom.
[2]
The parties have agreed that all the
applications should be heard together, but no order for consolidation
should be granted.
This arrangement was agreed upon for
purposes of costs and/or any possible application for leave to
appeal. However, I was
requested to prepare only one judgment
in all the applications.
BACKGROUND
[3]
On or about 18 May 2014 all of the various
shareholders of Neotel sold their shares in and claims against Neotel
to Vodacom in terms
of a written sale agreement which is subject to a
number of conditions precedent. Two of the conditions are the
approval
by ICASA in terms of the Electronic Communications Act No 36
of 2005 (“EC Act”) for the transfer of control of certain
licences and approval by the relevant Competition Authorities under
the
Competition Act No 89 of 1998
.
[4]
Pursuant to the conclusion of the sale
agreement the Neotel shareholders and Vodacom applied to ICASA for
the approval of the following:
·
transfer of control of the
Individual Electronic Communications Network Service Licence of
Neotel to Vodacom in terms of section 13(1)
of the EC Act;
·
transfer of control of an Individual
Electronic Communications Service Licence of Neotel to Vodacom in
terms of section 13(1) of
the EC Act; and
·
transfer of control of Radio
Frequency Spectrum Licences of Neotel to Vodacom in terms of section
31(2A) of the EC Act.
[5]
On 15 September 2014 ICASA published a
general notice in the Government Gazette inviting interested parties
to lodge written representations
within 21 days. The notice
also indicated the possibility of making oral submissions.
[6]
Written representations were received from
seven interested parties, namely Cell C, Telkom, MTN, the Service
Providers Association,
the Web Access Providers Association, Internet
Solutions and Crystal Web. They all indicated an intention to
also make oral
representations. ICASA then established a
special committee known as the Market Consolidations Committee to
inter alia
consider the application, conduct public hearings and make
recommendations to the ICASA Council regarding the application.
[7]
ICASA thereafter convened and held public
hearings on 15 and 16 January 2015. Subsequent to the
public hearings, ICASA
received what it describes as “unsolicited
supplementary written responses” from Cell C, MTN, Neotel and
Vodacom which
led to the remaining interested parties being invited
to submit supplementary written responses.
[8]
On 15 May 2015 the special committee
provided the Council of ICASA with an analysis report in terms of
which the committee recommended
that the Council approve the
application subject to a 30% historically disadvantaged
groups-requirement be met by the parties within
a timeframe still to
be decided. ICASA resolved to approve the application on 11
June 2015. The approval was subject
to:
·
a 30% equity ownership as
contemplated in section 13(6), read with section 9(2)(b) of the EC
Act and a requirement that the equity
ownership be met within a
reasonable period; and
·
consideration of a broadband
roll-out obligation in under-serviced areas.
[9]
The decision was published in the
Government Gazette on 2 July 2015. ICASA then invited the
applicants and other interested
parties on 2 July 2015 to lodge
written representations in relation to the reasonable period for
compliance with the black
economic empowerment-requirement and
whether the roll-out condition referred to above, should be imposed.
Having received
written representations on 22 July 2015, ICASA is yet
to make a determination in relation to the timeframes for complying
with
the black economic empowerment-requirement and the
appropriateness of the roll-out obligation.
[10]
In its reasons for its decision, ICASA
recognised that it had not promulgated regulations as contemplated in
the EC Act with regard
to the procedure relating to the transfer of
control of licences when the application of Neotel and Vodacom was
submitted.
It decided that the 2015 regulations which deal with
transfer of control of licences did not apply to the application,
because
they only came into effect on 1 April 2015 after the
application was submitted.
STATUTORY
FRAMEWORK
[11]
ICASA is a juristic person established in
terms of section 3(1) of the Independent Communications Authority of
South Africa Act,
No 13 of 2000 (“ICASA Act”).
ICASA’s primary objects and functions are set out in section 2
of the
Act. They are,
inter alia
,
to regulate broadcasting and electronic communications in the public
interest and to achieve the objects contemplated in the underlying
statutes.
[12]
The underlying statutes, as defined,
include the EC Act, which assigns to ICASA additional
responsibilities and obligations specifically
pertaining to the
regulation of electronic communications within the Republic of South
Africa. The primary object of this Act is
set out in section 2
thereof which includes,
inter alia
,
to promote competition within the information, communications and
technology sector, to promote broad-based black economic empowerment
and to ensure that broadcasting services and electronic communication
services are provided by persons or groups of persons from
a diverse
range of communities in the Republic.
[13]
Section 9 of the EC Act makes provision for
application and the granting of individual licences, whereas section
13 provides for
the transfer of individual licences, the transfer of
control of individual licences or the change of ownership with regard
to such
licences. Section 31 regulates the use and licensing of
a radio frequency spectrum licence. Subsection (2A) thereof
provides that a radio frequency spectrum licence may neither be
transferred nor may the the control of such a licence be transferred
without the prior written permission of ICASA.
[14]
Chapter 10 of the EC Act deals with
competition matters. Section 67(9) provides that, subject
to the provisions of the
EC Act, the
Competition Act No 89 of 1998
applies to competition matters in the electronic communications
industry. In terms of subsection (10) ICASA is, for the
purposes of the
Competition Act, a
regulatory authority defined in
section 1
of that Act.
ADMINISTRATIVE ACTION
[15]
On the papers it appears that ICASA denies
that the “processes” adopted by it constitute
administrative action within
the meaning of the Promotion of
Administrative Justice Act, No 3 of 2000 (“PAJA”).
Although this issue was not
pursued during argument, it is necessary
to make a ruling in this regard.
[16]
The definition of “administrative
action” in PAJA (in so far as it is relevant) refers to any
decision taken, or any
failure to take a decision, by an organ of
State when exercising a public power or performing a public function
in terms of any
legislation which adversely affects the rights of any
person and which has a direct and external legal effect. Both
these
requirements, i.e. “which adversely affects the rights”
and “direct (and) external legal effect” have been
explained as follows by Nugent JA in
Grey’s
Marine Hout Bay (Pty) Ltd v Minister of Public Works
[2005] ZASCA 43
;
2005 (6) SA 313
(SCA) at par 23:
"The qualification, particularly when seen
in conjunction with the requirement that it must have a ‘direct
and external
legal effect’, was probably intended rather to
convey that administrative action is action that has the capacity to
affect
legal rights, the two qualifications in tandem serving to
emphasise that administrative action impacts directly and immediately
on individuals.”
[17]
ICASA has been established in terms of
section 3 of the ICASA Act and is a juristic person. The object
of this Act (section
2) is to empower ICASA to regulate broadcasting
and also to regulate electronic communications in the public
interest. No doubt,
having regard to these provisions and the
definition of an “organ of State” in section 239 of the
Constitution, ICASA
is an organ of State exercising a public power or
performing a public function in terms of the EC Act.
[18]
Furthermore, the consequence of ICASA’s
decision is that Vodacom has been given permission to acquire control
of Neotel’s
licences. This is a decision that has direct
and immediate consequences for all operators in the mobile
communication market
and also for the public. Put differently,
this decision has the capacity to directly affect legal rights.
I therefore
conclude that ICASA’s decision to approve the
Neotel/Vodacom application amounts to administrative action within
the meaning
of PAJA.
GROUNDS OF REVIEW
[19]
The grounds of review advanced by the
reviewing parties fall into three main categories:
·
the first main category concerns the
question of what regulations, if any, were applicable to Neotel and
Vodacom’s application
to ICASA;
·
the second main category concerns
the procedure followed by ICASA; and
·
the third main category concerns the
substance of ICASA’s decision.
[20]
There are various review grounds raised on
the affidavits but not pursued in the reviewing parties’ heads
of argument.
These grounds of review were also not pursued
during oral argument. I shall therefore accept that those
grounds have been
abandoned and that it is not necessary to deal with
them in this judgment.
FIRST MAIN CATEGORY: REGULATIONS
[21]
A number of the reviewing parties’
grounds of review relate to the question of which regulations, if
any, were applicable
to ICASA’s consideration of the
application. Some of the reviewing parties contend that the
2015 Spectrum Regulations
(published under GN 279 in Government
Gazette 38641 of 30 March 2015) were applicable to the application
and had to be applied
by ICASA. However, Cell C contends in the
alternative that the 2011 Spectrum Regulations (published under GN
184 in Government
Gazette 34172 of 31 March 2011) were applicable to
the application and had to be applied by ICASA. On the other
hand, it
was pointed out by ICASA, Neotel and Vodacom that there were
no regulations in place which governed the application.
According
to them ICASA simply had to exercise its statutory powers
in terms of sections 13(1) and 31(2A) of the EC Act. I shall
first
consider the question whether the 2015 Spectrum Regulations
were applicable and thereafter the question, as contended for by Cell
C in the alternative, whether the 2011 Spectrum Regulations were
applicable.
[22]
The relevant chronology of events is
briefly as follows: On 17 June 2014 Neotel and Vodacom applied
to ICASA for the necessary
authorisation in terms of sections 13 and
31 of the EC Act. On 15 September 2014 ICASA invited interested
parties to submit written
representations. On 15 and 16 January
2015 ICASA held public hearings on the application. During
February and
March 2015 ICASA received supplementary written
submissions from various parties. It was only thereafter, on 30
March 2015,
that the 2015 Spectrum Regulations were published.
They came into force on 1 April 2015. ICASA resolved to approve
the application on 11 June 2015.
[23]
It is common cause that ICASA did not apply
the 2015 Spectrum Regulations when it made its decision to approve
the Neotel/Vodacom
application. Regulation 15(5) of the 2015
Regulations provides that an application to transfer control over a
spectrum licence
will be evaluated on the basis of five criteria,
including technical efficiency, functional efficiency and economic
efficiency.
Regulation 15(8) provides that ICASA will not
approve an application for the transfer of control of a spectrum
licence if the “transaction
will not promote competition”.
It has been contended by the reviewing parties that since the 2015
Spectrum Regulations
were in force at the moment when ICASA made its
decision, it had to apply these regulations and its failure to do so
constitutes
a material error of law justifying the decision to be
reviewed and set aside.
[24]
I do not agree with this submission.
These regulations are silent on the question of retrospective
application. There
is no express indication that they were
intended to apply to applications which were already pending before
ICASA and in respect
of which public hearings had already been
completed. Our courts have repeatedly made it clear that there
is a strong presumption
against statutes having retrospective
effect. For a statute to have a retrospective effect, there
must be clear language
requiring such an interpretation. That
legislation will affect only future matters and not take away
existing rights, is
basic to notions of fairness and justice which
are integral to the rule of law, a foundational principle of our
Constitution (
Veldman v Director of
Public Prosecutions
2007 (3) SA 210
(CC) at par 26-27).
[25]
In
Unitrans
Passenger (Pty) Ltd v Chairman, National Transport Commission
1999 (4) SA 1
(SCA) the question was whether a proclamation could
apply to matters which were already pending before the National
Transport Commission.
Olivier JA said the following in
paragraph 24:
“
It is unthinkable that the amending
legislation should affect cases where the hearing has already taken
place and the NTC, having
reserved judgment, is within a day or two
of announcing its decision. The gross injustice and
impracticability of applying
the amending legislation to such a case
is obvious. The principle is the same whether the application
has just recently been
made or just recently been heard.”
[26]
This approach was approved by the
Constitutional Court in
Sigcau v
President of the RSA
2013 (9) BCLR 1091
(CC) at par 20. The Court pointed out, with reference to
Unitrans, the following:
“
The ordinary rule of our law is that
statutes operate only prospectively. A distinction was often
made between substance and
procedure which then allowed rules that
affected only procedural matters to operate retrospectively. In
Unitrans the Supreme
Court of Appeal refined this to a distinction
between cases where the amending procedures come into effect before
the old procedures
had been initiated and situations where the
amendments only come into effect after the old procedures had been
initiated.
In the latter case, unless a contrary intention is
clear from the amendment, the old procedure remains intact.”
[27]
In
Poswa v
President RSA
2015 (2) SA 127
(GJ) at
par 63 CJ Claassen J pointed out that the new statutory
provisions regarding the “lodgement” of complaints
must
be distinguished from the new procedures for their “investigation”.
The Court held that it was permissible
to apply procedural changes to
already pending processes. However, this approach is of no
assistance to the reviewing parties,
because the decision in
Poswa
does not suggest that it would be permissible to apply substantive
changes to pending applications in the absence of clear language
to
that effect.
[28]
It is clear that the 2015 Spectrum
Regulations would, if applicable, stipulate substantive criteria to
be applied by ICASA’s.
None of these appear in the EC Act
as “criteria” per se for the transfer of control over a
spectrum licence.
Furthermore, these regulations came into
operation after the application had been submitted and after the
public hearings took
place. The injustice and impracticability
of applying these regulations at such a late stage of the application
is obvious.
Having regard to these considerations, I have to
conclude that these regulations were not applicable.
[29]
I shall now consider the 2011 Spectrum
Regulations. It is common cause that these regulations were in
operation when Neotel
and Vodacom applied for the necessary
authorisation as well as on 11 June 2015 when ICASA resolved to
approve the application.
ICASA was (and still is) of the view
that the 2011 Spectrum Regulations applied only to applications for
the approval of the “transfer”
of spectrum licences and
not to the “transfer of control” of spectrum licences.
Three of the reviewing parties
do not take issue with ICASA on this
issue. However, Cell C persists (in the alternative and if it
is found that the 2015
Regulations did not apply to the application)
in contending that ICASA was wrong in concluding that the 2011
Spectrum Regulations
were not applicable to the application. In
advancing this argument, Cell C contended that there had never been
any true distinction
between a transfer and a transfer of control of
a licence.
[30]
I cannot agree with this submission.
It is the EC Act itself that distinguishes between the transfer of a
licence and the
transfer of control of licences. Initially,
section 13(1) of the EC Act dealt only with the “transfer”
of an
individual licence. It was only on 21 May 2014 that
section 13(1) was amended to deal both with the “transfer”
and the “transfer of control” of an individual licence
and that section 31(2A) was introduced to provide the same in
relation to a spectrum licence. If the transfer of a licence
and the transfer of control of a licence amounted to the same
kind of
transfer, there would be no need for the Legislature to distinguish
between the two. Taking into account that the
application only
concerned a transfer of control, I am of the view that ICASA was
correct to conclude that the 2011 Regulations
were not applicable.
[31]
The fact that there were no regulations in
place which governed the application, does not mean the application
could not properly
be considered. In the absence of regulations
contemplated in sections 13(2) and 31(3)(c) of the EC Act at the time
the application
was lodged, Neotel and Vodacom nevertheless provided
information in terms of the Regulations in respect of the Limitation
of Ownership
and Control of Telecommunication Services. They
contended that in terms of section 95 of the EC Act these are the
regulations
which were in existence at the time the application was
lodged and that these regulations were applicable, albeit only to the
extent
that they prescribed the form in which applications for
ICASA’s approval must be prepared and submitted.
[32]
In
Verstappen
v Port Edward Town Board & Others
1994 (3) SA 569
(D&CLD) it was held that the Minister’s
failure to promulgate regulations foreshadowed in section 20(2) of
the Environment
Conservation Act No 73 of 1989 did not render lawful
the conduct of the local authority in operating a waste disposal site
without
a permit. In view of the fact that no regulations
dealing with waste management have been promulgated under that Act,
Magid J
said the following at 537 E-G:
“
If some person desires to ‘establish,
provide or operate’ a waste disposal site he requires a permit
from the Minister
to do so. And if the Minister has failed to
prescribe the form on which such application is made or the
information which
must accompany it, such person may make an
application to the Minister in whatever reasonable form he desires,
furnishing all such
information as the Minister might reasonably be
likely to need. If the Minister were to decline to deal with
the application
because it was not on the appropriate form or did not
contain sufficient information, I have no doubt at all that any Court
would
hold such a decision by the Minister to be so grossly
unreasonable as to justify review. That is not to say, of
course, that
the Minister would not be entitled to require that such
an applicant furnish such further information as might reasonably be
required
to enable the Minister properly to assess the merits of the
application.”
[33]
I associate myself with this approach.
The absence of applicable regulations does not render the application
submitted, or
the procedure followed thereafter, unlawful. The
EC Act itself provides a statutory framework and ICASA was therefore
entitled,
in my view, to exercise its statutory powers in terms of
sections 13(1) and 31(2A) of the EC Act (the transfer of control of
an
individual licence and the transfer of control of a radio
frequency spectrum licence respectively) with regard to the
application.
I therefore conclude that this ground of review
falls to be dismissed.
SECOND MAIN CATEGORY: PROCEDURAL GROUNDS
[34]
While a range of procedural challenges are
raised on the papers, it appears that only three remain. First,
Telkom contends
that the notice published by ICASA in the Government
Gazette on 15 September 2014 and 12 December 2014 was misleading
and
confusing and did therefore not comply with the EC Act and PAJA.
Second, Telkom contends that the exclusion of Counsellor
Batyi from
the Special Committee established on 20 October 2015, was
procedurally irregular. Third, according to Telkom it
reasonably suspects that ICASA was biased within the meaning of
section 6(2)(iii) of PAJA. I shall now deal with each of
these
grounds in turn.
NOTICES PUBLISHED BY ICASA
[35]
The first notice to which Telkom objects is
a general notice published in the Government Gazette of 15 September
2014 (Notice 799
of 2014). The objection is twofold, namely
this notice is misleading and defective. I shall now only
consider the question
whether the notice is misleading. At a
later stage, when I consider the 30% equity ownership issue, I shall
also deal with
the question whether or not this notice is defective.
[36]
This notice (15 September 2014)
recorded that Neotel and Vodacom had made an application to ICASA
that,
inter alia
,
Vodacom would acquire the entire share capital of Neotel, that Neotel
will remain a licensee and that it will retain all its licences
which
had already been granted by the authority. The notice also
invited interested parties to lodge written representations
in
relation to the application and it gave the interested parties 21
working days to do so. Telkom contends that this notice
was
misleading and confusing as it did not reflect the true nature of the
transaction between Vodacom and Neotel accurately, i.e.
an
application for the transfer of control of licences.
[37]
Sections 9(2) and 13(6) of the EC Act, read
together, required ICASA to give notice in the Government Gazette of
the application
by Neotel and Vodacom to it. The same sections
require that interested persons be given an opportunity to make
representations
in this regard. On a proper reading of the
notice, it is difficult to see how the notice could be misleading.
It clearly
sets out:
·
the names of the parties to the
application;
·
that the notice was published in
terms of section 13(6) read with section 9(2) of the EC Act (section
13 deals with the cession,
assignment, transfer and transfer of
control of individual licences);
·
that the application and any
representations would be made available for inspection by any party;
and
·
that the application was for
approval of the acquisition of Neotel by Vodacom.
[38]
Any party interested in the issue would be
aware, by a proper reading of the notice, that Neotel holds various
licences issued by
“the authority” and that the necessary
consequence of the acquisition would amount to a transfer of control
of these
licences. The specific reference to section 13(6)
of the EC Act could leave no doubt in this regard.
[39]
After publication of the notice Telkom
provided its written representations in line with the requirements of
the notice. There
is nothing in those submissions to suggest
that Telkom was in any way confused as to the nature of the exercise
ICASA was undertaking.
Telkom also did not contend that the
notice was inadequate or misleading at any point prior to the launch
of its review application.
Telkom and the other parties also
participated in public hearings which were held on 15 and 16 January
2015. None of them
complained that they did not understand the
nature of the application under consideration by ICASA. Having
regard to all
these considerations, I am of the view that the
complaint that this notice was misleading, is without any merit.
[40]
Telkom contended that on 12 December 2014
ICASA published another misleading notice pertaining to public
hearings. Telkom
pointed out for the notice to be adequate, it
must contain all relevant information. The complaint, as I
understand it, is
that this notice does not provide sufficient
information with regard to the nature of the transaction for which
public hearings
had been scheduled.
[41]
On a proper reading of the notice, it is
again difficult to identify how the notice could be misleading.
The notice clearly
sets out:
·
a reference to the application
received for the acquisition of Neotel by Vodacom;
·
that public hearings have resulted
from the authority having called upon any interested persons to lodge
written representations
in response to the application;
·
that the public hearings will be
held on 15 and 16 January 2015 at 09h00 at Block C Presentation Room,
164 Catherine Street, Sandton;
and
·
that a programme for the hearings
has been attached in the schedule to the notice.
[42]
Any party sufficiently interested in the
issue would be aware that this notice was preceded by the notice of
15 September 2014 and
that the public hearings are a further step in
the process in respect of the application which had already been
presented by Neotel
and Vodacom. It should again be pointed out
that after publication of this notice (12 December 2014) Telkom also
participated
in the public hearings which were held on 15 and
16 January 2015. It did not complain that it did not
understand this
notice. Having regard to all these
considerations, I am of the view that there is no merit in this
complaint and therefore
this ground of review cannot succeed.
CONSTITUTION OF THE SPECIAL COMMITTEE
[43]
This ground of review concerns the
constitution of the special committee known as the Market
Consolidations Committee. This
committee was established by
ICASA to consider the application, conduct public hearings and make
recommendations to the ICASA Council
regarding the Neotel/Vodacom
application. According to the resolution in terms of which this
committee was established, the
committee consisted of two
counsellors, namely Counsellor Pillay (Chairperson) and Counsellor
Batyi (Deputy Chairperson).
The committee was required to be
supported by 11 staff members. The quorum of any meeting of the
committee is one counsellor
and 50% of the staff members.
Resolutions were to be taken by way of a majority vote. The
functions and powers of the
committee are outlined in the resolution
delegating the functions to the committee.
[44]
Telkom points out that according to the
record of proceedings, Counsellor Batyi attended only four out of
twelve meetings of the
special committee, two of which she is
indicated to be an “observer”. The consequence is,
so goes the argument,
that only one person, as opposed to a
committee, was performing the functions of the committee and this is
contrary to ICASA’s
delegation which appointed a committee
consisting of two counsellors. It is therefore contended by
Telkom that the absence
of Counsellor Batyi from certain meetings
constituted an irregularity that was fatal to the special committee’s
decision-making
process.
[45]
The Delegation Resolution provides
inter
alia
as follows in paragraph 2.4.5
thereof:
“
The quorum for any meeting of the
committee is a counsellor and 50% of the staff and resolutions are to
be taken by way of a majority
vote. Where the votes are equal,
the chairperson has a casting vote. The project leader or
project manager from the
staff must be present at all meetings as
well as a majority of the other members of staff. Where a
committee member or a
member of staff cannot be present at a meeting
for good cause, due notice, as agreed with the committee, must be
given to the chairperson.”
[46]
The fact that the Delegation Resolution set
the quorum for resolutions at one counsellor (and 50% of the staff)
is in my view a
clear indication that the special committee was
empowered to meet and take resolutions with one counsellor.
Also the fact
that this resolution made provision for the absence of
a committee member at a meeting is another indication that the
special committee
was empowered to meet and take resolutions with one
counsellor. This was clearly a realistic approach to appoint
two counsellors
in order to ensure that the committee remained
properly constituted should one counsellor be unavailable. It
does not mean
that both counsellors had to be present at every
meeting. Having regard to these considerations, I am of the
view that the
absence of Counsellor Batyi from certain meetings does
not constitute an irregularity as contended by Telkom and therefore
this
ground of review cannot be upheld.
THE PERCEPTION OF BIAS
[47] Telkom has argued that it reasonably suspects that ICASA was
biased, within the meaning of section 6(2)(iii) of PAJA.
The
substance of this complaint is that the record of proceedings reveals
that ICASA and its Committee held several confidential
meetings with
Vodacom and its agents and exchanged correspondence with them, to the
exclusion of other interested parties.
[48] During oral argument counsel for Telkom indicated that this
ground of review is founded upon “perceived bias, not actual
bias”. It was contended on behalf of ICASA that Telkom
failed to put forward facts to demonstrate a reasonable perception
of
bias and that ICASA has demonstrated there was nothing untoward about
the meetings held between Vodacom and ICASA. It
was pointed out
on behalf of Neotel and Vodacom that this ground of review was not
raised on the papers, suggesting that ICASA
had no opportunity to
answer it.
[49] I shall first consider the question whether or not this ground
was raised on the papers. In Telkom’s supplementary
founding affidavit reference is made to so-called “undisclosed
interactions”. It has been articulated as follows
in
paragraphs 26, 27, 28, 33, 79 and 131 of the affidavit:
“
26. Undisclosed interactions concerning
crucial issues bearing on the N/V application occurred between
members of ICASA’s
so-called special committee and
Vodacom/Neotel on numerous occasions. For example on 11
November 2014 when an undisclosed
meeting was held between ICASA and
Frontier Economics, an agent for Vodacom and on 15 April 2015 when
ICASA met with Vodacom, at
its request, ‘to receive feedback on
progress, the path being navigated towards a decision on the
aforesaid application,
and to address any concerns’.
27. Record two reveals nine of the letters
exchanged between Counsellor Pillay and Vodacom during the period
from 16 September 2014
to 10 March 2015, which were not brought to
the attention of Telkom and other interested parties until Record 2
was recently made
available – see Record 2 items 1-9 at pp
1-20. The Vodacom letter dated 16 September 2014 (from Vodacom
to ICASA) is
referred to in Ms Pillay’s letter dated 9 October
2014 (Record 2, item 1 p 1), but has inexplicably been withheld.
28. It is disturbing, to say the least, that
ICASA’s special committee indulged in such improper activities
behind the backs
of interested parties like Telkom and in
circumstances where it pretended to be conducting the investigation
in an open and transparent
forum where all interested parties were
given access to the relevant information placed before ICASA and the
special committee.
33. Telkom submits that the undisclosed
meetings with Neotel and Vodacom must in themselves result in the
setting aside of the process
under judicial review.
79. The fact that such a meeting was not
disclosed to the interested parties, as previously stated, is of
itself such a serious
departure from the requirements for
procedurally fair administrative action that the delinquent ICASA
process falls to be reviewed
and set aside.
131. The fact that Vodacom and the special
committee had arranged and planned yet another secret meeting is in
itself of significance
in the circumstances of this review – it
is improper conduct consistent with the special committee’s
willingness to
indulge Vodacom privately, to the exclusion of all
interested parties and the public, in violation of PAJA and the
principles of
‘administrative action’ that is lawful,
reasonable and procedurally fair.”
[50] Section 6(1) of PAJA provides that any person may institute
proceedings in a court or a tribunal for the judicial review of
an
administrative action. Subsection (2)(a)(iii) stipulates that a
court has the power to judicially review an administrative
action if
the administrator who took it was biased or reasonably suspected of
bias. The question is whether the facts pleaded
by Telkom (as
referred to above) can be regarded as a clear formulation of a ground
of review as referred to in section 6(2)(a)(iii)
of PAJA? In
Yannakou v Apollo Club
1974 (1) SA 614
(A) at 623G Trollip JA
said the following in this regard:
“
Hence, if he relies on a particular
section of a statute, he must either state the number of the section
and the statute he is relying
on or formulate his defence
sufficiently clearly so as to indicate that he is relying on it …”
[51] However, it is not necessary to refer specifically to the
statute or section relied on, provided that the case is formulated
clearly. Put differently, it is sufficient that the facts
pleaded justify the conclusion that the provisions of the statute
apply (
Fundstrust (Pty) Ltd v Van Deventer
1997 (1) SA 710
(A)
at 725H-J and 726A). Telkom referred to undisclosed
interactions between ICASA and Vodacom, to the exclusion of other
interested parties and the public, as improper conduct in violation
of PAJA. Having regard to the principles referred to
above, I
am satisfied that the facts pleaded in Telkom’s supplementary
founding affidavit, and the reference to PAJA therein,
are sufficient
to justify the conclusion that the provisions of PAJA, more
particularly section 6(2)(a)(iii) thereof, are being
relied upon.
[52] What is the test for bias? Although the rule against bias
finds application essentially in judicial and “
quasi-
judicial”
contexts, the Constitutional Court has made it clear that the rule
against bias applies in all types of decisions
(
President of the
RSA v South African Rugby Football Union
[1999] ZACC 9
;
1999 (4) SA 147
(CC) par
35 where the Court referred to both criminal and civil cases as well
as to
quasi
-judicial and administrative proceedings).
It should also be pointed out immediately that absolute neutrality on
the part
of a judicial or administrative officer can hardly, if ever,
be achieved and a reasonable person should expect that triers of fact
will be properly influenced in their deliberations by their
individual perspectives (
President of the RSA v South African
Rugby Football Union
supra
, par 42). It would also
be a mistake to assume that a fundamental breach of administrative
justice necessarily indicates
bias on the part of the administrator
(
Commissioner, Competition Commission v General Council of the Bar
of South Africa
2002 (6) SA 606
(SCA) at par 16 where Hefer AP
said that the mere fact that
audi alteram partem
was not
observed does not by itself justify an inference of bias). Put
differently, the mere fact that a party considers that
the
decision-maker erred at the level of substance or procedure to their
prejudice does not necessarily amount to bias.
[53] In
President of the RSA v South African Rugby Football Union
,
supra
, par 48 the test for bias has been formulated as
follows:
“
The question is whether a reasonable,
objective and informed person would on the correct facts reasonably
apprehend that the Judge
has not or will not bring an impartial mind
to bear on the adjudication of the case, that is a mind open to
persuasion by the evidence
and the submissions of counsel. The
reasonableness of the apprehension must be assessed in the light of
the oath of office
taken by the Judges to administer justice without
fear or favour; and their ability to carry out that oath by reason of
their training
and experience.”
[54] Although this dictum refers to judicial officers, there appears
to be a considerable overlap in the law as it applies to
administrators and as it relates to judicial officers. However,
it appears that the burden is generally heavier on the litigant
who
alleges bias in a Judge as the reasonableness of the apprehension
must be assessed in the light of the oath of office taken
by Judges
and the fact that they are judicially trained officers. What is
the position with regard to administrative decision-makers
who are
not subject to an oath of office and who are not necessarily
judicially trained persons? This question has been dealt
with
as follows by Conradie J (as he then was) in
Monnig & Others v
Council of Review & Others
1989 (4) SA 866
(CPD) at 880D-E:
“
(I)n the case of non-judicial officers
performing functions indistinguishable from the judicial process, the
test operates more
strictly even than in the case of judicial
officers. Reasonable litigants are less likely to regard
judicially trained officers
as inclined to succumb to outside
pressures or to be influenced by anything other than the evidence
given before them. The
quality of impartiality is not so
readily conceded to non-judicial adjudicators.”
[55] This differentiation should still be read subject to the
requirement of reasonableness, i.e. that both the person who
apprehends
bias and the apprehension itself must be reasonable (
cf
.
Bernert v ABSA Bank Ltd
2011 (3) SA 92
(CC) par 34). No
doubt, the party who relies on bias or reasonably suspected bias
bears the onus to prove this ground of
review.
[56] When applying these principles the next question should be, what
are the correct facts? The following appears from the
record of
proceedings:
·
On 1 April 2015 (after the public
hearings were held but before the special committee provided the
Council of ICASA with their analysis
report) the Chief Executive
Officer of Vodacom addressed a letter to the Chairperson of ICASA
(also copied to Ms Pillay, Ms Batyi
and the Chief Executive Officer
of ICASA in which
inter alia
the following was said: “…
we
will appreciate having a meeting as soon as possible with the ICASA
Council Committee on Market Consolidation to receive feedback
on
progress, the path being navigated towards a decision on the
aforesaid application, and to address any concerns”
;
·
On 2 April 2015 Ms Pillay replied by
saying that “…
the
authority is currently obtaining the availability of key members of
the Committee on Market Consolidations and will revert with
the
proposed dates for said meeting”
;
·
On 24 April 2015 Ms Pillay addressed
another letter to the Chief Executive Officer of Vodacom in which
reference is made “…
to the
meeting between the Independent Communications Authority of South
Africa … and Vodacom … held on 15 April
2015”
and also to the fact that Vodacom requested the authority to provide
it with “…
an estimated
date by which the authority would finalise its assessment and
determination of the application for approval of the
acquisition of
Neotel (Pty) Ltd by Vodacom”
;
·
On 11 May 2015 another letter was
addressed to the Chief Executive Officer of Vodacom by Ms Pillay in
which reference is made to
a meeting between ICASA, Neotel and
Vodacom “…
scheduled for
today, 11 May 2015 at 13h00”
but
which apparently did not take place as “…
the
authority has decided that it will no longer be necessary to meet
with the parties in this regard”.
[57] In its answering affidavit ICASA, under the heading “
OVERVIEW
OF THE GROUNDS OF OPPOSITION”
states that Telkom’s
complaints that there were inappropriate discussions between ICASA
and Vodacom is misplaced (par 7.9).
According to ICASA only one
meeting was held which dealt with substantive issues. This
related to the Frontier Report which,
at the time, was the subject of
an application by Vodacom for confidentiality. Before that
application had been decided,
it was not open for ICASA to share the
contents of the report with other parties. According to ICASA
another meeting with
Vodacom was held, but it related to an enquiry
from Vodacom regarding timelines within which ICASA envisaged
finalising the application.
It further explains that Vodacom
was advised that ICASA was not in a position to give an indication,
given the processes which
were underway. A third meeting
(requested by ICASA) was cancelled by ICASA.
[58] In the answering affidavit to Telkom’s supplementary
founding affidavit ICASA again draws a distinction between the
meeting relating to the confidential Frontier Report which was held
following requests by Neotel and Vodacom for certain information
to
be treated as confidential under section 4D of the ICASA Act
(par 136.2), and another meeting which was held on 15 April
2015. With regard to this meeting the following explanation has
been given (par 136.4):
“
The meeting of 15 April 2015 was held
pursuant to a request from Vodacom for such a meeting. At that
meeting Vodacom wanted
an indication of when the application was
going to be finalised. We informed them that we would revert on
this. This
was reflected in the letter from ICASA to Vodacom
and Neotel dated 24 April 2015.”
[59] With regard to the so-called third meeting, ICASA explains
(par 153.1) that this meeting would be different from the
other
two meetings as it sought to deal with substantive issues which were
not subject to a confidentiality application.
The committee
then took advice on the appropriateness of such a meeting.
According to ICASA:
“
The advice received was that the scheme
of the ECA did not envisage nor permit issues of a substantive nature
being embarked upon
other than by way of a process open to the
public. In view of that advice, the Committee cancelled the
meeting of 24 April
2015.”
[60] In their combined answering affidavit Neotel and Vodacom under
the heading “
Meetings and engagements between Vodacom,
Neotel and ICASA”
also distinguish between the meeting
relating to the confidential Frontier Report and “
other
meetings”
which, according to them, did not deal with any
issue of substance. The explanation with regard to these other
meetings reads
as follows (par 98):
“
There were no other meetings or
engagements between ICASA and Vodacom or Neotel which dealt with any
issue of substance. The
only other meetings or engagements that
occurred were concerned exclusively with the attempts by Vodacom and
Neotel to ensure that
ICASA made a decision on the application before
it expeditiously – whatever that decision was to be. This
was because,
as a matter of public record, Vodacom and Neotel were
concerned about the length of time the process was taking.
There is
nothing unlawful or improper about this.”
[61] Having regard to the record of proceedings and the explanations
given by ICASA, Neotel and Vodacom, the following appears
to be
common cause (or at least not in dispute):
·
There was a meeting between ICASA,
Vodacom and Neotel during November 2014 following requests by Neotel
and Vodacom for certain
information in the Frontier Report to be
treated as confidential under section 4D of the ICASA Act;
·
There was another meeting at the
request of Vodacom held on 15 April 2015 between ICASA and Vodacom;
·
The request for this meeting (15
April 2015) is contained in a letter of Vodacom dated 1 April 2015.
[62] The November 2014 meeting with regard to the Frontier Report has
been explained with reference to the provisions of section
4D of the
ICASA Act. Subsection (1) thereof provides that a person may
request that specific information be treated as confidential.
The fact that such a request was received appears in the minutes of
the committee meeting dated 22 April 2015 in paragraph 4 thereof
under the heading “
Request for confidentiality”
.
However, no harm would be done if at least the interested parties who
submitted written representations (Telkom, Cell C,
MTN, the Service
Providers Association, the Web Access Providers Association, Internet
Solutions and Crystal Web) were to be informed
about the fact that a
request for confidentiality had been received under section 4D of the
ICASA Act as such an approach would
dispel any suspicion about
private meetings. Notwithstanding the failure to do so, I am
satisfied that the explanation given
with regard to this meeting is
acceptable. Taking also into account the correct facts in this
regard I am of the view that
a reasonable, objective and informed
person will also accept this explanation. I therefore conclude,
as far as the November
2014 meeting is concerned, that no inference
of bias or perceived bias can be drawn.
[63] Unfortunately, I am not convinced that the same can be said with
regard to the April 2015 meeting. The purpose of this
meeting
is unrelated to confidential information referred to in section 4D of
the ICASA Act. The purpose of this meeting
is clearly stated in
Vodacom’s letter of 1 April 2015 “
to receive feedback
on progress, the path being navigated towards a decision on the
aforesaid application, and to address any concerns.”
The stated purpose was not limited to a discussion “
regarding
timelines”
. It also included a request to discuss
“
the path being navigated towards a decision”
and
“
to address any concerns”
. In the absence of
a proper explanation in this regard, I find it difficult not to
conclude that this meeting was intended
to also deal with issues of
substance.
[64] This meeting is also veiled in obscurity if one takes into
account the following. First, there appears to be no minutes
of
this meeting. Neither ICASA nor Telkom or Neotel referred to
any minutes to indicate what was discussed at this meeting.
Second, if the intention was to only discuss timelines, why was a
meeting necessary? The same purpose could have been achieved
by
correspondence, also copied to the other interested parties.
Third, there appears to be a contradiction between the answer
given
by ICASA and that of Neotel and Vodacom. According to ICASA a
third meeting was cancelled, suggesting that only two
meetings took
place, i.e. the November 2014 and April 2015 meeting. However,
according to Neotel and Vodacom “
other meetings or
engagements”
also occurred which were concerned with
attempts by Vodacom and Neotel to ensure that ICASA made a decision
on the application
before it expeditiously. No particulars are
pleaded with regard to how many other meetings took place, when they
were held
and where the minutes are. Finally, if it was not for
the record of proceedings, it is possible that Telkom would not have
been aware of these other meetings.
[65] The context within which the April 2015 meeting (and possibly
other such meetings as well) took place, is also important.
The
EC Act makes provision in section 9(2) read with section 13(6) that
the authority (ICASA) must give notice of the application
in the
Gazette and invite interested persons to submit written
representations. It is also authorised to conduct a public
hearing in this regard. Written representations were received
from seven interested parties, namely Cell C, Telkom, MTN,
the
Service Providers Association, the Web Access Providers Association,
Internet Solutions and Crystal Web. They all indicated
an
intention to also make oral representations. ICASA convened and
held public hearings on 15 and 16 January 2015.
Subsequent
to the public hearings, ICASA received what it describes as
“
unsolicited supplementary written responses”
from
Cell C, MTN, Neotel and Vodacom which led to the remaining
interested parties being invited to submit supplementary written
responses. The four reviewing parties – Telkom, MTN, Cell
C and Internet Solutions – are all commercial firms
in the
telecommunications industry. At least three are direct
competitors of Vodacom and/or Neotel. This is not a case
where
the interested parties, more particularly the four reviewing parties,
supported the Neotel/Vodacom application. Fierce
competition
and opposition indicated from the beginning that this would be an
opposed application between opposing parties.
For an
administrator to attend a private meeting with one of the parties
under these circumstances is, in my view, not only improper,
but also
unlawful. The public and interested parties will have more
faith in the administrative process when justice is not
only done,
but also seen to be done. Having regard to all these
considerations, I am of the view that a reasonable, objective
and
informed person, having regard to these facts, would reasonably
apprehend that ICASA would not have brought an impartial mind
to bear
on the application before it. I therefore conclude that it has
been proven that ICASA as the administrator who took
the decision is
reasonably suspected of bias. I have to point that Vodacom
played an active role in this regard by initiating
the process giving
rise to this finding.
THIRD
MAIN CATEGORY: ICASA’S DECISION
:
[66] The reviewing parties engaged in a number of substantive attacks
on ICASA’s decision. These attacks are essentially
twofold:
·
ICASA’s alleged failure to
have regard to the impact on competition; and
·
ICASA’s treatment of the 30%
equity ownership requirement which is allegedly unlawful.
I shall first consider the competition issue and thereafter the 30%
equity requirement.
THE
COMPETITION ISSUE
:
[67] In its answering affidavit (par 31) ICASA states that after
receipt of the Neotel/Vodacom application it commissioned Acacia
Economics to provide a preliminary economic analysis of the proposed
transaction. Following a consultation process that was
conducted by Acacia with various major licensees, ICASA received a
report from Acacia which indicated that the proposed transaction
may
raise a number of potential anti-competitive effects and recommended
various possible remedies that could be undertaken by
ICASA.
ICASA then took the view (answering affidavit, par 33) that the
Competition Commission was best placed to adequately
assess and
regulate the potential effects on competition arising from the
proposed transaction. It decided to defer the competition
issue
to the Competition Commission and “did not pursue the
competition related issues any further”. ICASA’s
answering affidavit (par 96) also states that it considered its
statutory obligations and is of the view that these “obligations
can, if necessary, be exercised post the process to be undertaken by
the Competition Commission”. The question is whether
ICASA misdirected itself in law by concluding that it was not
necessary to consider the impact of the Neotel/Vodacom application
on
competition and by deferring this issue to the Competition
Commission.
[68] In considering this question I should remind myself of the
principle that a review is not concerned with the correctness of
a
decision made by a functionary, but with whether it performed the
function with which it was entrusted. When the law entrusts
a
functionary with a discretion the law gives recognition to the
evaluation made by the functionary to whom the discretion is
entrusted and it is not open to a court to second-guess this
evaluation (
MEC for Environmental Affairs and Development Planning
v Clairison’s CC
2013 (6) SA 235
(SCA) at par 18). I
also have to take into account the constitutional principle of the
separation of powers. In
Bato Star Fishing (Pty) Ltd v
Minister of Environmental Affairs and Tourism
[2004] ZACC 15
;
2004 (4) SA 490
(CC) O’Regan J sounded a warning (in par 48) that a court
should be careful “not to attribute to itself superior wisdom
in relation to matters entrusted to other branches of government”.
It was also pointed out that a court should therefore
give due weight
to findings of fact and policy decisions made by those with special
expertise and experience in their field.
[69] It was contended on behalf of ICASA that there was no clear and
direct obligation to consider and determine whether the
Neotel/Vodacom
application would promote competition in the ICT
sector or not. It was pointed out in this regard that the
Competition Commission
has primary authority to investigate past or
current commissions of alleged prohibited practices within any
industry or sector
and to review mergers in terms of the
Competition
Act. Therefore
, so it was submitted, the decision by ICASA to
defer to the Competition Commission on this issue is entirely
consistent with the
provisions of the ICASA Act and the Memorandum of
Agreement between these two authorities. It was also contended
on behalf
of Neotel and Vodacom that the reviewing parties overstated
the role to be played by competition considerations and failed to
recognise
that ICASA took a perfectly legitimate decision to defer
the resolution of the competition issues to the Competition
Commission.
[70] Section 13 and 31(2A) of the EC Act provide that the transfer of
control of individual licences and a radio frequency spectrum
licence
may not be assigned, ceded or in any way transferred without the
prior written permission of the authority (ICASA).
These
sections confer a discretion on ICASA. When it comes to
exercising that discretion, ICASA is required to have regard
to all
relevant considerations. The question is whether the
competition issue is a relevant consideration? The object
of
the EC Act is set out in section 2 thereof. The primary object
is to provide for the regulation of electronic communications
in the
public interest and for that purpose to,
inter alia
, promote
competition within the ICT sector. In their written submissions
to ICASA (Record: Notes for Public Hearing,
p 298, par 19.1.5)
Neotel and Vodacom accepted that ICASA “must consider
competition, as one factor among many, in order
to promote the goals
of the ECA”.
[71] Furthermore, it has also been pointed out by MTN in its founding
affidavit that:
·
Spectrum is a scarce resource and
access to spectrum is a critical constraint in the mobile
telecommunication sector at the current
time (par 126);
·
Vodacom has a greater market share
than the other mobile network operators (par 112);
·
If Vodacom were to acquire control
of Neotel’s IMT spectrum, Vodacom would be able to create a
national LTE network at a time
when its competitors are unable to do
so (par 116).
[72] Following a consultation process that was conducted by Acacia,
ICASA received a report from Acacia which indicated that the
proposed
transaction may raise a number of potential anti-competitive effects
and it recommended various possible remedies that
could be undertaken
by ICASA. It was also pointed out by MTN in its founding
affidavit (par 144) that Counsellor Pillay has
admitted in her
affidavit in proceedings before the Competition Tribunal that “if
Vodacom is assigned Neotel’s spectrum,
it will gain an
irrevocable advantage in the market and further delay the full
benefits that would result from there being a competitive
market for
information and communication technology services in South Africa”.
[73] Section 4B(8)(b) of the ICASA Act specifically refers to the
Competition Commission which has primary authority to detect
and
investigate past or current commissions “of alleged prohibited
practices within any industry or sector” and also
to review
mergers. In terms of section 1 of that Act “prohibited
practice” means a practice prohibited in terms
of Chapter 2
of the
Competition Act which
is primarily concerned with restrictive
practices in terms of an agreement between parties and the abuse of a
dominant position
by a particular firm. The purpose of this Act
is to promote and maintain competition “in the Republic”
in order
to,
inter alia
, promote the efficiency, adaptability
and development of the economy. The purpose of the EC Act is,
on the other hand, much
more defined and focused when it refers “to
promote competition within the ICT sector”. It therefore
appears
that the
Competition Act does
not deprive ICASA of
jurisdiction over competition matters relevant to the communications
sector or that ICASA is exempted from
its duty to properly consider
the competition issue.
[74] Having regard to all these considerations, I have to conclude
that competition within the ICT sector was a relevant consideration
with regard to the Neotel/Vodacom application. Facts placed before
ICASA also demonstrated that the Neotel/Vodacom application
raised
various competition concerns. Furthermore, having regard to the
statutory provisions referred to above, I am of the
view that ICASA
had a statutory duty to also consider the issue of competition in
order to promote the objects of the EC Act before
a decision was
taken. Put differently, the statutory obligation to promote
competition within the ICT sector implies an obligation
to also
consider and take into account competition which is part of the
decision making process and cannot be delegated or deferred
to
another organ of state. ICASA’s failure to do so and its
decision to defer to the Competition Commission were both, in
my
view, wrong in law. I therefore find that ICASA’s failure
to also consider competition and to defer to the Competition
Commission in this regard was materially influenced by an error of
law within the meaning of section 6(2) of PAJA.
THE 30% EQUITY OWNERSHIP ISSUE
[75] The next ground of review relates to ICASA’s treatment of
the 30% equity ownership requirement which was, according
to Cell C
and Internet Solutions, unlawful. This ground of review is also
linked to the condition relating to a 30% ownership
requirement.
It was contended in this regard that once ICASA considered that such
a requirement was mandatory, it was not
lawfully open to ICASA to
make compliance with that requirement the subject of a further
open-ended condition. ICASA is of
the view that it had a
discretion to direct compliance by a future date and that its
discretion is inherent in the empowering legislation
which entitles
ICASA to impose conditions of this nature.
[76] ICASA approved the Neotel/Vodacom application subject to the
condition of a 30% equity ownership as contemplated in section
13(6),
read with section 9(2)(b) of the EC Act and a further requirement
that the equity ownership be met within a reasonable period.
The decision was published in the Government Gazette on 2 July 2015.
ICASA then invited the applicants and other interested
parties to
lodge written representations in relation to the reasonable period
for compliance with the Black Economic Empowerment
requirement.
[77] With regard to an application in terms of the EC Act section
9(2)(b) provides as follows:
"[2] The Authority must give notice of the
application in the Gazette and –
(a) …
(b) include the percentage of equity ownership
to be held by persons from historically disadvantaged groups, which
must not be less
than 30%, or such other conditions or higher
percentage as may be prescribed under section 4(3)(k) of the ICASA
Act;”
.
[78] Section 13 makes provision for the transfer of the control of an
individual licence and subsection (6) thereof provides that
the
provisions of section 9(2) to (6) apply, with the necessary changes,
to this section. Given the use of the word “must”
in section 9(2)(b), it appears that the provisions of this section,
with regard to the minimum requirement of 30% equity ownership,
are
peremptory. To the extent that there is a discretion, it
appears that such discretion relates only to a higher percentage
or
such other conditions as may be prescribed under section 4(3)(k) of
the ICASA Act.
[79] The notice referred to in section 9(2) of the EC Act was
published on 15 September 2014 by ICASA in the Government Gazette
inviting interested parties to lodge written representations within
21 days. Although it is clearly stated that this is a
notice in
terms of section 13(6) read with section 9(2)(a) of the EC Act,
no reference to equity ownership was included, let
alone a reference
to the minimum requirement of 30%. It was submitted in this
regard that the words “with the necessary
changes” as
they appear in section 13(6) justify the omission as the
Neotel/Vodacom application was not made at the instance
of ICASA as
envisaged in section 9(1) of the EC Act. I do not agree with
this submission. If the intention was to differentiate
between
an application referred to in section 9(1) and an application for
permission in terms of section 13(1) with regard to the
30% equity
ownership requirement, any reference thereto in section 13(6) could
and would have been omitted. On the contrary,
it has been
included. As was already pointed out above, that requirement is
peremptory. The notice was therefore defective
as it did not comply
with the provisions of section 9(2)(b) of the EC Act.
[80] The defective notice has further been compounded by the approval
of the application subject to a 30% equity ownership to be
met within
a reasonable period. This means that compliance with a
statutory requirement has been postponed
sine die
. It
also implies that for the interim any percentage equity ownership
would be sufficient and acceptable. I find it
difficult to
reconcile such a condition with the clear language of section 9(2)(b)
and the fact that the 30% minimum requirement
appears to be
peremptory. In my view the language of section 9(2)(b)
presupposes that an applicant must arrive at ICASA’s
door with
a minimum of 30% BEE shareholding. An applicant does not have
an opportunity to garner the necessary shareholding
after the
application has been made, let alone after the application has been
approved. ICASA’s decision to postpone
the date by which
equity should have been obtained has the effect of condoning the
applicant’s failure to meet the threshold
requirements,
contrary to the express intention of the EC Act. I therefore
conclude that ICASA’s approval of the Neotel/Vodacom
application subject to the condition that they comply with the
requirement of 30% equity ownership at a time yet to be determined
was contrary to the provisions of section 9(2)(b) of the EC Act and
therefore unlawful. The approval and condition attached
thereto
was materially influenced by an error of law within the meaning of
section 6(2) of PAJA.
REMEDY
:
[81] It has been contended on behalf of Neotel and Vodacom that if
this court finds that the decision of ICASA was unlawful, this
court
should exercise its remedial discretion to allow the decision to
stand for reasons which are mainly concerned with prejudice.
It
has been argued that Neotel and Vodacom are being prejudiced by the
considerable delay that has thus far characterised their
application
and by strategic uncertainty caused thereby. It has been argued
on behalf of the applicants that the court should
follow the “default
position” by setting aside the unlawful conduct and its
consequences.
[82] Section 172(1)(a) and (b) of the Constitution provides that when
deciding a constitutional matter, a court must declare that
any law
or conduct that is inconsistent with the Constitution is invalid to
the extent of its inconsistency and may then make any
order that is
just and equitable. This case is, in my view, a constitutional
matter as it deals,
inter alia
, with “just
administrative action” as provided for in section 33(1) of the
Constitution. Section 8 of PAJA gives
legislative content to
this remedy. It also allows the court to grant any order that
is just and equitable.
[83] I have already concluded that ICASA’s decision is unlawful
as it is reasonably suspected of bias, it failed to take
account of
relevant considerations and was materially influenced by errors of
law, all within the meaning of section 6(2) of PAJA.
In
Allpay
Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer
of the South African Social Security Agency
2014 (1) SA 604
(CC)
the Constitutional Court has pointed out (in par 25) that once a
ground of review under PAJA has been established there is
no room
from shying away from it. Section 172(1)(a) of the Constitution
requires the decision to be declared unlawful.
The consequences
of the declaration of unlawfulness must then be dealt with in a just
and equitable manner. In the follow-up
decision between the
same parties
(2014 (4) SA 179
(CC) at par 30) the Constitutional
Court explained that:
"Logic, general legal principle, the
Constitution and the binding authority of this Court all point to a
default position that
requires the consequences of invalidity to be
corrected or reversed where they can no longer be prevented. It
is an approach
that accords with the rule of law and principle of
legality.”
[84] As was explained in
Joubert Galpin Searle v Road Accident
Fund
2014 (4) SA 148
(ECP) at par 97, there must be compelling
reasons to depart from the default position that unlawful
administrative action should
be corrected. It is therefore not
surprising that our courts have exercised their discretion not to set
aside invalid administrative
actions very sparingly (
Chairperson,
Standing Tender Committee v JFE Sapela Electronics (Pty) Ltd
2008
(2) SA 638
(SCA) and
Millennium Waste Management (Pty) Ltd v
Chairperson Tender Board: Limpopo Province
2008 (2) SA 481
(SCA)).
[85] Having regard to these principles, the reasons advanced by
Neotel and Vodacom why ICASA’s decision should not be set
aside, are not convincing. Even if Neotel and Vodacom are being
prejudiced by delay, this would not make it appropriate to
decline
setting aside ICASA’s decision. If that were the case, no
regulatory decision of this nature would ever be set aside.
For
these reasons I am of the view that ICASA’s decision should be
reviewed and set aside. Taking into account my findings
in this
regard, more particularly that of suspected bias and the fact that
the statutory notice of 15 September 2014 did not comply
with section
9(2)(b) of the EC Act, I do not deem it appropriate to refer the
matter back for reconsideration on the same papers.
[86] This brings me finally to the question of costs. The issue
as to what order of costs would be appropriate falls primarily
within
the discretion of a court which must be exercised in a judicial
manner. I take into account that this is a constitutional
matter and one should be sensitive to the fact that an adverse costs
order may have a potentially “chilling effect”
on
prospective litigants in relation to suits between private parties
and the State (
Biowatch Trust v Registrar, Genetic Resources
2009 (6) SA 232
(CC) at par 21). However, this litigation is
between private commercial entities (as opposed to private
individuals) and
ICASA, a statutory body who has decided to oppose
the application. Having regard to these considerations, I fail
to see why
the usual rule, i.e. that costs should follow the event,
should not be applied.
ORDER
:
In the result I grant the following order:
1. The decision of the Independent Communications Authority taken on
or about 11 June 2015 in terms of
sections 13(1)
and
31
(2A) of the
Electronic Communications Act No 36 of 2005
and published in General
Notice 684 on 2 July 2015 in terms whereof the transfer of control of
various individual and radio frequency
spectrum licences of Neotel
(Pty) Ltd to Vodacom (Pty) Ltd has been approved, is hereby reviewed
and set aside in its entirety;
2.
Neotel (Pty) Ltd, Vodacom (Pty) Ltd and the Independent
Communications Authority are ordered to pay the costs of all four
applications
(referred to in the heading), jointly and severally,
costs of two counsel included.
_________________
D
S FOURIE
Judge
of the High Court
Pretoria
Date:
26
February 2016