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[2015] ZAKZDHC 85
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Sunrise Energy (Pty) Ltd and Another v Ports Regulator of South Africa and Others (8267/2015) [2015] ZAKZDHC 85 (20 November 2015)
In the High Court of
South Africa
KwaZulu-Natal Local
Division, Durban
Case No : 8267/2015
DATE: 20 NOVEMBER 2015
In the matter between :
Sunrise Energy (Pty)
Ltd
.................................................................................................
First
Applicant
Transnet National Ports Authority of
South Africa
..................................................
Second
Applicant
And
Ports Regulator of South
Africa
..................................................................................
First
Respondent
Transnet National Ports Authority of
South Africa
...............................................
Second
Respondent
Avedia Energy (Pty)
Ltd
.............................................................................................
Third
Respondent
Judgment
Lopes J
[1] The applicant, Sunrise Energy (Pty)
Ltd (‘Sunrise’), seeks an order reviewing and setting
aside a decision (‘the
Decision’) of the first
respondent, the Ports Regulator, made on appeal. The subject of the
appeal, which was brought in
terms of
s 46
of the
National Ports Act,
2005
(‘the
National Ports Act&rsquo
;), was the conclusion of a
concession agreement in terms of
s 56
of the
National Ports Act
between
Sunrise and Transnet National Ports Authority of South Africa
(‘the Authority’) on the 3rd June 2013. Although the
appeal panel consisted of three members, I shall refer to them
collectively as ‘the Regulator’.
History :
[2] The history of the matter is set
out as follows :
(a) In February of 2010 the Authority
invited interested parties to submit ‘Expressions of Interest’
(‘EOI’)
for the funding, development, design,
construction, installation, maintenance and operation of a liquid
petroleum gas facility
(‘the LPG facility’) at the Port
of Saldhanha Bay. Sunrise submitted an EOI.
(b) Pursuant to the EOI, the Authority
then issued a Request for Proposals (‘RFP’) in December,
2010. The RFP was amended
and re-issued during February 2011. The
re-issue amendments related to the date by which proposals had to be
submitted and the
time schedule for comments, etc.
(c) Sunrise is not a trader in LPG.
Its intention was to operate a facility to receive, store and
transfer LPG belonging to third
parties, using offloading and storage
facilities. On the 23rd February 2011 it had been granted licences
by the National Energy
Regulator of South Africa (‘NERSA’)
to construct a loading facility and a storage facility at the Port of
Saldhanha
Bay. Armed with the licences, Sunrise submitted its
proposal to the Authority on the 10th June 2011 to build a loading
facility,
consisting of a central buoy mooring (‘CBM’)
located offshore, connected to an undersea pipeline leading to a 1.8
kilometre
overland pipeline, and an LPG storage facility.
(d) On the 26th January 2012 the
Authority appointed Sunrise as the preferred bidder.
(e) The third respondent, Avedia Energy
(Pty) Ltd (‘Avedia’) also submitted an EOI. It did not,
however, submit a proposal
because :
(i) it is a trader in LPG and not a
proposed terminal operator, and did not wish to construct a berthing
facility; and
(ii) although it wished to construct a
storage facility for LPG in the vicinity of the port, Avedia’s
business model did not
cater for the basis of the RFP, which was
expressed to be ‘on the basis’ of a BOOT (Build, Own,
Operate, Transfer)
model. As Avedia stated in its email of the 5th
April 2012, at the end of the project the operator is obliged to hand
over a fully
functional and operating service to the State. That is
not the way in which Avedia conducts business.
(f) On the 6th March 2012, the
Authority’s Board Acquisitions and Disposals Committee informed
Sunrise of its decision to
negotiate and conclude a concession
agreement with it. This culminated in the conclusion on the 3rd June
2013 of a concession
agreement for the funding, design, development,
construction and operation of an LPG facility at The Port of
Saldhanha Bay (‘the
agreement’). The agreement was
concluded in terms of
s 56
of the
National Ports Act.
(g
) Simultaneously, Sunrise and the
Authority concluded a separate contract in terms of which Sunrise
sold to the Authority the land
upon which it intended to construct
the storage facility. This land was contiguous to the port limits
(but outside them), and
was by then owned by Sunrise.
(h) Avedia was aware by the 12th March
2012 that Sunrise had been appointed as the preferred bidder. In an
email dated the 5th
April 2012 addressed to the Authority, Avedia set
out the history of the matter as it saw it, and why it did not submit
a proposal.
Avedia complained, inter alia, of the fact that the land
on which Sunrise proposed to build its storage facility was located
outside
the port.
(i) Avedia believed that it was
entitled to connect with the Sunrise pipeline in order to pump LPG to
its own storage tanks, on
the basis that the agreement was concluded
on an ‘open access’ and ‘common user’ basis.
To this end a
meeting between the two companies was held in late
2012. Avedia wanted the pipeline connection to the Sunrise storage
facility
to be on land belonging to the Authority (i.e. between the
ocean and the Sunrise storage facility). If it could do this, it
would
avoid having to pay storage and other fees to Sunrise.
(j) What transpired at the meeting in
late 2012 is disputed. Avedia believes it had secured an agreement
to allow the interconnection
where it desired it. Sunrise denies any
such agreement was reached, and states that although Avedia is
entitled to an interconnection,
Sunrise is entitled to determine
where that should be. This dispute cannot be resolved in this review
hearing, and I am not requested
to decide it.
(k) Matters came to a head in early
2014, over a year later than the late 2012 meeting, and more than 18
months after Sunrise was
declared the preferred bidder. Avedia’s
perception was that Sunrise had changed its stance regarding the
pipeline interconnection
point, leaving Avedia with no option but to
pursue an appeal to the Ports Regulator. It delivered its appeal on
the 9th April
2014. The appeal was heard by the Regulator on the
12th and 13th July 2015, and the Decision was handed down on the
31st July
2015.
(l) The appeal to the Regulator by
Avedia was expressed to be against ‘the grant of the
concession’.
(m) The final paragraph of the Decision
of the Regulator was :
‘The
Section 56
process, together
with the awarded concession between the Respondent [the Authority]
and the Third Party [Sunrise] in the Port
of Saldhanha is, therefore,
declared null and void. As a result, in accordance with
Section
46(2)(e)
, the Ports Regulator sets aside the written decision by the
Respondent to award the concession and the process thereof.’
(n) Sunrise decided to review the
Decision on the 13th August 2015. The Authority separately applied
to review the Decision. By
consent, the two applications were
consolidated on the 25th August 2015. I initially heard argument on
the 13th and 14th October
2015.
The Law :
[3] The review applications by Sunrise
and the Authority are brought in terms of the provisions of the
Promotion of Administrative
Justice Act, 2000 (‘PAJA’).
Mr Dickson SC who appeared for the Regulator, submitted that a court
should only review
a decision if it was one that a reasonable
decision-maker could not have reached. My attention was drawn to the
specialist nature
of the Regulator and the ‘deference’
which a court should pay to such a body. This was in line with the
fundamental
constitutional principle of the separation of powers.
[4] Mr Dickson referred me to Bato Star
Fishing (Pty) Ltd v Minister of Environmental Affairs and Others
[2004] ZACC 15
;
2004 (4) SA 490
(CC) at paragraph 45 where O’Regan J stated :
‘What will constitute a
reasonable decision will depend on the circumstances of each case,
much as what will constitute a
fair procedure will depend on the
circumstances of each case. Factors relevant to determining whether
a decision is reasonable
or not will include the nature of the
decision, the identity and expertise of the decision-maker, the range
of factors relevant
to the decision, the reasons given for the
decision, the nature of the competing interests involved and the
impact of the decision
on the lives and well-being of those affected.
Although the review functions of the Court now have a substantive as
well as a
procedural ingredient, the distinction between appeals and
reviews continues to be significant. The Court should take care not
to usurp the functions of administrative agencies. Its task is to
ensure that the decisions taken by administrative agencies fall
within the bounds of reasonableness as required by the Constitution.’
(Footnotes omitted).
[5] The Decision taken by the Regulator
involved two preliminary issues as well as three issues on the
merits. The resolution
of all of these issues depended upon the
Regulator’s interpretation of the
National Ports Act.
[6
] The following issues are those
which were debated before me :
(a) The finding of the Regulator that
Avedia had the necessary standing to prosecute an appeal before it;
(b) The grant of condonation by the
Regulator of the late delivery by Avedia of its appeal;
(c) The finding by the Regulator that
the conclusion of the agreement was unlawful because :
(i) the exclusive use provisions in
Clause 14.1 of the agreement render it contrary to the
National Ports
Act and
the Petroleum Pipelines Act, 2003 (‘the Petroleum
Pipelines Act’);
(ii) the land upon which Sunrise is to
build its storage facility is not owned by the Authority; and
(iii) the land upon which Sunrise is to
build its storage facility is outside the port limits, and the
Authority has no jurisdiction
to grant a concession in respect of
such land.
Standing :
[7] At the hearing of the appeal,
Sunrise challenged the standing of Avedia to proceed with its appeal.
The right to an appeal
is contained in
s 46(1)
of the
National Ports
Act, which
provides :
‘(1) Any port user or licenced
operator whose rights are adversely affected by a decision of the
Authority may appeal against
that decision to the Regulator in the
manner directed under
section 30(3).
’
[8] The provisions of sub-s 30(3)
provide that the Regulator may, with the concurrence of the Minister,
issue directives not in
conflict with the
National Ports Act, and
with regard to matters relating to the proper performance of the
function of the Regulator including the administrative processes,
for
the holding of appeals and the hearing of complaints.
[9] Sunrise submitted to the Regulator
that Avedia did not have standing as it was not a port user, and even
if it was to be regarded
as one, its rights had not been adversely
affected by any decision of the Authority.
[10] In argument before me, Mr Farlam,
who appeared for Sunrise together with Mr Quixley, both of who were
led by Mr Pammenter
SC, submitted that it was necessary to determine
the decision against which the appeal was brought, in order to
determine whether
or not Avedia had the necessary standing to appeal.
Mr Farlam submitted that Avedia, at no stage during the appeal,
properly identified
the decision against which it wished to appeal.
He drew a distinction between a process and an agreement, and
submitted that the
adjudication by the Authority that Sunrise was the
‘preferred bidder’ was a decision, as was the resolution
to conclude
the agreement. Without a proper identification of the
precise resolution, no appeal was competent.
[11] Mr Farlam submitted that the
rights of Avedia had not in any way been affected by the conclusion
of the agreement. This was
because it was necessary for Sunrise to
comply with all the licence conditions imposed by NERSA in the
performance of its own functions.
Those conditions, read with the
terms of the Agreement ensure that Avedia is entitled to an
interconnection with the pipeline
to be constructed by Sunrise.
[12] The Regulator referred to the
directives published pursuant to the provisions of sub-s 30(3),
which provide at Directive 8(1)
that :
‘A port user or licenced operator
whose rights are adversely affected by a written decision of the
Authority and who wishes
to appeal against that decision must lodge a
Notice of Intention to Appeal with the Regulator within 15 days after
receiving that
written decision.’
[13] The Regulator then pointed out
that a ‘port user’, although not defined in the
National
Ports Act, was
defined in the directives to include future port users
because the definition of a ‘port user’ in Directive 1
states
:
‘… a port user means any
person, who on an on-going basis, or from time to time, utilises port
services and facilities,
or who wishes to utilise port services and
facilities …’
Reference was made to a previous
decision of the Regulator to justify the use of the directives as an
aid to interpretation of the
National Ports Act. The
Regulator
regarded the reference to the directive as a ‘natural
progression’.
[14] The Regulator also regarded the
Decision which was being appealed against by Avedia, as being the
entire process leading to
the conclusion by the Authority of the
agreement with Sunrise – i.e. that the EOI process, the RFP,
the adjudication, the
award and the conclusion of the agreement
could all have a direct and adverse effect on Avedia’s right to
utilise the port
services and a port facility (the LPG loading
facility) that Sunrise had contracted to construct and operate.
[15] In conclusion on this point, the
Regulator stated :
‘The appellant [Avedia],
therefore, satisfies the requirements set out in Directive 8(1),
namely, that the appellant is a
future port user whose rights are
adversely affected by a written decision
(Section 56
agreement) of
the Respondent [the Authority] and therefore wishes to appeal against
that decision.’
[16] I agree with the submission of Mr
Farlam that one cannot use the directives as an aid to interpretation
of the
National Ports Act. As
he submitted, doing so may have the
unfortunate consequence that the Regulator and the Minister would
then be able to amend the
provisions of the
National Ports Act
without
the consent of the legislature. In my view, an additional
problem is that the powers given to the Regulator and the Minister in
terms of sub-s 30(3) do not include the power to issue directives
defining what words used in the
National Ports Act should
mean. That
is a matter for interpretation of the act itself. Sub-s 30(3)
specifically guards against that occurring, where it
states that the
directives issued ‘not be in conflict with the Act …’
[17] However, that is not the end of
the matter. The common law of standing has been expanded by the
provisions of s 38 of the
Constitution. Although that is
specifically made applicable to standing in relation to a right in
the Bill of Rights which has
been infringed or threatened, it
reflects a broadening approach in our law to the matter of standing.
In the present case, however,
the standing of persons who may appeal
is set out in
s 46
of the
National Ports Act. The
parties are agreed
that the only relevant person with the right to appeal in this matter
is ‘any port user … whose
rights are adversely affected
by a decision of the Authority.’ (This is on the basis that
Avedia concedes that it is not
a licenced operator.)
[18] Does Avedia then fall within the
ambit of a ‘ports user’ and have its rights been affected
by the decision of the
Authority? As is made clear in the history
set out above, Avedia was involved in the EOI process and, for its
own reasons, elected
not to submit a proposal. However, at all
stages Avedia had the expressed intention to create a storage
facility for LPG in the
vicinity of, but not within, the Port of
Saldhanha Bay. The papers reveal that that was envisaged to be on a
piece of land outside
the port limits, but in close proximity to both
the port limits and to the proposed storage facility to be built by
Sunrise.
[19] Although the dispute between
Sunrise and Avedia with regard to the proper place for an
interconnection between the Avedia storage
facility and the pipeline
of Sunrise has not been finalised, it was the subject of debate and
an alleged agreement between the
parties. Whether an agreement was
actually concluded in late 2012 is not really the point. What is
important is that Avedia maintains
that it has the right to an
interconnection and in that regard has every intention of pursuing
the remedies available to it, both
legal and otherwise, to secure the
interconnection.
[20] It may be suggested that it is
somewhat illogical that someone who is in the process of negotiating
for the right to interconnect
with a pipeline situated within the
port limits does not constitute a ‘port user’. On this
basis it may not seem unreasonable
for the Regulator to have
considered Avedia as a ‘port user’. But I do not believe
that this conclusion is in accordance
with a purposive interpretation
of the statute and the interpretations of ‘port services’
and ‘port terminal’.
What
s 46
of the
National Ports Act
provides
is that existing port users whose rights are affected by a
decision of the Authority may appeal that decision. Avedia is an
own-interest
standing appellant whose rights have allegedly been
adversely affected by a decision of the Authority. In the
National
Ports Act, no consideration
has been given to potential or future
port users, whose future rights may be affected, in the future. Such
persons do not fall
within the category where the ‘right remedy
is sought by the right person in the right proceedings’ –
see Oudekraal
Estates (Pty) Ltd v City of Cape Town and Others 2004
(6) 222 (SCA) para 28.
[21] In my view the fact that the
provisions of sub-s 46(1) are couched entirely in the present tense
is a strong indication of
the intention of the legislature. There is
no doubt that decisions of the Authority may impact on existing port
users or licenced
operators. It seems clear that sub-s 46(1) was
intended to deal with persons whose rights were affected by decisions
of the Authority
which impacted on them. This would appear to me to
be in line with the functions of the Authority and the Regulator –
i.e.
to provide for the administration of the ports in South Africa
and to provide for matters connected therewith. The ambit of the
appeal provision is very narrow when compared to, for example,
s 47
which deals with complaints which may be lodged with the Regulator
against the Authority. Here the category of persons who may
complain
is much wider.
[22] Mr Rosenberg SC, who appeared
together with Ms de Villiers, submitted in Avedia’s heads of
argument that the words ‘port
user’ are used in sub-ss
12(c), 12(f), 46(1), 62(1)(d), 72(4) and
s 82
of the
National Ports
Act. None of these
sub-sections give any indication that ‘port
user’ should include future port users. Sub-s 82(1)(c) refers
to the National
Port Users Forum. One wonders how that body would
react to the suggestion that persons who are not currently port
users, but who
wish or intend to be so in the future, could influence
or direct the actions of the Forum.
[23] If
s 46
includes ‘future
port users’ must that status have been attained by Avedia at
the time of the agreement appealed against,
or could it rely upon the
status despite the fact that it would only acquire such status at a
later stage? This is complicated
by Directive 8(1) which provides
that Avedia had to have exercised its right to appeal within 15 days
of the written decision of
the Authority which adversely affected its
rights. This would have affected Avedia’s rights if it had
acquired the status
of ‘future port user’ after the 15
day period. Is it sufficient then that a person may merely want to
use the facilities
in the future? When does the cut-off time arise?
If other regulatory permissions will be required of a ‘future
port user’,
must they be obtained at the time of lodging an
appeal? If the Authority is unaware of the intention of a person to
become a ‘future
port user’, how is that to be dealt
with? Are ‘future licenced operators’ then also to be
included within the
ambit of
s 46(1)?
[24]If the legislature had intended to
broaden the ambit of potential appellants it would have been a simple
matter to word the
section differently. That it did not do so is an
indication of its intention to narrow the ambit of those who may
appeal. The
legislature clearly intended that the parties who could
appeal a decision of the Authority should be limited – i.e.
only
port users and licenced operators. Other persons are not
prevented from using, for example, a review procedure. This
limitation
is clearly with a view to achieving efficiency and
finality when the Authority makes decisions. In my view Avedia does
not fall
within the ambit of a ‘port user’ as set out in
s 46.
[25] In this regard the Regulator :
- erred in law by finding that the use
of the directives could be an aid to the interpretation of the
National Ports Act;
- failed to apply the recognised
principles of interpretation to interpret the meaning of ‘port
user’ in the
National Ports Act;
- did not provide a rational and
justifiable basis for concluding that Avedia fell within the
definition of a ‘port user’
as that phrase is used in the
National Ports Act;
- erred in using the provisions of s 39
of the Constitution as a basis for deciding on the proper
interpretation of ‘port
user’, without any rational
application of s 39 to the facts of the matter before it.
[26] I now need to consider whether, if
I am incorrect in my exclusion of Avedia as a port user, whether
Avedia’s rights have
been ‘adversely affected by a
decision of the Authority’.
[27] Mr Rosenberg submitted in Avedia’s
heads of argument that the Regulator noted in the Decision that
Avedia wished to use
Sunrise’s terminal to handle its LPG
cargo, and to deliver it through a pipeline to its own storage
facility, and if it could
not use that terminal, then another
existing facility in the port. This approach demonstrates clearly
that Avedia intended, in
the future only, to use the port facilities
and/or port services as defined in the Act. The whole purpose of the
EOI and RFP requires
the use of a method other than loading LPG at
the dock-side. This is for safety considerations.
[28] Two NERSA licences were granted to
Avedia, and referred to by Mr Rosenberg :
(a) a licence for the construction of a
petroleum storage facility granted on the 1st July 2014;
(b) a licence for the construction of a
petroleum pipeline running from what is described as ‘the
Sunrise Energy interconnection
point to the Avedia Energy storage
facility … in Saldhanha Bay’, also granted on the 1st
July 2014.
[29] In my view the Regulator was not
entitled to include, when considering the standing of Avedia, NERSA
licences which were issued
after the delivery of the appeal. Those
licences may never be used, if the project is abandoned for reasons
having nothing to
do with Avedia’s intention to use the port.
In that light, to grant Avedia the right of standing, is premature.
[30] In Administrative Law in South
Africa , 2nd edition by Cora Hoexter, at page 488 the learned author
states :
‘The issue of standing is
divorced from the substance of a case. It is therefore a question to
be decided in limine, before
the merits are considered.’
[31] In Giant Concerts CC v Rinaldo
Investments (Pty Ltd and Others 2013 (3) BCLR 251 (CC) the
Constitutional Court considered
at length the issue of standing. At
paragraph 30, Cameron J stated :
‘The Supreme Court of Appeal has
rightly suggested that “adversely affects” in the
definition of administrative
action was probably intended to convey
that administrative action is action that has the capacity to affect
legal rights, and that
impacts directly and immediately on
individuals. The effect of this is that Giant, as an own-interest
litigant, had to show that
the decision it seeks to attack had the
capacity to affect its own legal rights or its interests.’
[32] The provisions of sub-s 46(1) make
it clear in my view that the only persons entitled to appeal are
those who are effectively
‘own-interest litigants’.
[33] In Giant Concerts, Cameron J
continued at paragraph 33 :
‘[33] The separation of the
merits from the question of standing has two implications for the
own-interest litigant. First,
it signals that the nature of the
interest that confers standing on the own-interest litigant is
insulated from the merits of the
challenge he or she seeks to bring.
An own-interest litigant does not acquire standing from the
invalidity of the challenged decision
or law, but from the effect it
will have on his or her interests or potential interests. He or she
has standing to bring the challenge
even if the decision in law is in
fact valid. But the interests that confer standing to bring the
challenge, and the impact the
decision or law has on them, must be
demonstrated.
[34] Second, it seems that an
own-interest litigant may be denied standing even though the result
could be that an unlawful decision
stands. This is not illogical.
As the Supreme Court of Appeal pointed out, standing determines
solely whether this particular
litigant is entitled to mount the
challenge : a successful challenge to a public decision can be
brought only if “the right
remedy is sought by the right person
in the right proceedings”. To this observation one must add
that the interests of justice
under the Constitution may require
courts to be hesitant to dispose of cases on standing alone where
broader concerns of accountability
and responsiveness may require
investigation and determination of the merits. By corollary, there
may be cases where the interest
of justice or the public interest
might compel a court to scrutinize action even if the applicant’s
standing is questionable.
When the public interest cries out for
relief, an applicant should not fail merely for acting in his or her
own interest.
[35] Hence, where a litigant acts
solely in his or her own interest, there is no broad or unqualified
capacity to litigate against
illegalities. Something more must be
shown.’
In the present matter Sunrise was
declared by the Authority to be the successful bidder in the RFP
process. Thereafter and after
considerable negotiation between the
Authority and Sunrise, the agreement was concluded.
[34] It is clear from the papers in
this matter that the only reason the appeal was eventually lodged was
because Avedia and Sunrise
could not agree on the exact location of
the pipeline interconnection proposed by Avedia. Indeed, Mr
Rosenberg stated in argument
before me that it was only because
Sunrise had, as he put it, ‘reneged on the agreement of late
2012’, that Avedia
proceeded with the appeal.
[35] It was also conceded by Mr
Pammenter that Sunrise had no option but to allow the interconnection
sought by Avedia. The only
point in dispute was where that
interconnection would take place. Even though the agreement refers
to the concession being granted
on ‘open access’ and
‘common user’ basis, that does not mean that the award to
Sunrise as the preferred
bidder and the conclusion of the agreement
have adversely affected the rights of Avedia. At the time those
decisions were made
by the Authority, Avedia did not have a licence
from NERSA for the construction of a pipeline from its proposed
storage facility
to the pipeline to be erected by Sunrise. The issue
of where the inter-connection is to take place, is in any event,
something
which can be placed before NERSA and decided by it in the
exercise of its mediation and/or arbitration powers.
[36] This is more particularly so when
one considers that the Regulator stated that ‘It would be
better left for NERSA to
rule on the legality of the Third Party’s
actions to refuse the tie-in on the basis of technical and financial
argument.’
[37] In arriving at its decision on
whether Avedia’s rights had been adversely affected, the
Regulator did not in any way
analyse or apply any meaningful
interpretation to the provisions of the
National Ports Act. What
it
did was to rely solely upon the provisions of Directive 8(1). In its
conclusion, the Regulator stated :
‘By virtue of the fact that the
Ports Regulator is convinced that the Appellant is a port user, and
on the basis that the
Appellant’s appeal is vested in their
legal right to make use of the port facilities and/or services in
terms of the Act,
the Appellant therefore satisfies the requirements
set out in Directive 8(1), namely, that the Appellant is a future
port user
whose rights are adversely affected by a written decision
(Section 56 agreement) of the Respondent and therefore wishes to
appeal
against that decision.’
[38] It is significant in assessing any
‘adverse effects’ to the rights of Avedia, that Avedia
had no intention of
competing with Sunrise in the bidding process
pursuant to the issue of the RFP. Avedia’s reasons for not
doing so were that
it is a trader in LPG products and that the form
of the concession did not fit within its business model.
[39] Avedia admitted in its email of
the 5th April 2012 that ‘upon a detailed and thorough
consideration of the RFP’,
it decided not to submit a bid. It
also suggested that the LPG project proposed by Sunrise (and accepted
by the Authority) departed
materially from the fundamental terms of
the RFP outlined above. These concerns were raised with the
Authority by Avedia in its
email. Avedia complained, inter alia,
that the concession model would be in the nature of BOOT model and
that the operator of
the facility would be obliged to construct and
operate a berthing facility, involving a longer time line for
construction, etc.
[40] In referring to the ‘fundamentally
flawed tender process’ Avedia complains that it ‘may well
have tendered’
if the Authority had issued an RFP on the basis
ultimately contemplated between Sunrise and the Authority. In the
light of other
statements in the email this latter suggestion seems a
hollow one – Avedia at no stage wished to construct and operate
a
mooring type loading facility, and clearly did not want to hand
over to the Authority the assets of any project it financed and
built! At the time of delivery of its appeal, Avedia had not yet
begun to construct its LPG storage facility, and had no licence
to
construct and operate such a facility. The agreement concluded
between Sunrise and the Authority did not affect Avedia’s
rights at all. The inability of Avedia to agree an interconnection
point with Sunrise is what has affected its rights. This has
nothing
to do with the award of the project to Sunrise and the resultant
agreement.
[41] The Regulator erred in law in
finding that the agreement ‘has a direct and adverse effect,
with a direct external legal
effect, on the Appellant’s rights
[Avedia’s] to utilise port services and a port facility (LPG
loading facility) that
the Respondent [the Authority] has contracted
the Third Party [Sunrise] to construct and operate.’
[42] No evidence of any adverse effect
as a result of that decision (as opposed to any stance adopted by
Sunrise) was put before
the Regulator. The Regulator also erred in
law by finding that the provisions of PAJA and s 33 of the
Constitution required it
to expand the ambit or interpretation of the
National Ports Act based
on accepted legal principles.
[43] In my view the decision of the
Regulator with regard to its interpretation of
s 46(1)
is not one at
which a reasonable Regulator could or should have arrived at.
[44] I am accordingly of the view that
the decisions taken by the Authority in following the process up to,
and the conclusion of
the agreement with Sunrise, have not ‘adversely
affected’ the rights of Avedia.
Condonation :
[45] Having considered the arguments
before it, the Regulator granted condonation of the late filing of
the appeal. In terms of
the provisions of Directive 8(2), any port
user whose rights are adversely affected, and who wishes to appeal,
must request written
information from the decision of the Authority
not more than 15 days after becoming aware of the decision. Even
where no written
confirmation of the decision is received, a Notice
of Intention to Appeal must be lodged within ten days after
requesting written
confirmation from the Authority. Directive 8(5)
provides that service of the notice of Intention to Appeal does not
suspend the
operation of the decision appealed against unless a Court
orders otherwise. Clearly then, the intention of the legislature is
that administrative appeals to the Regulator be dealt with
expeditiously.
[46] In granting condonation, the
Regulator set out the factors which it considered were relevant.
They include :
(a) the extent and cause of the delay;
(b) the prejudice to other litigants;
(c) the reasonableness of the
explanation for the delay;
(d) the significance of the issues to
be decided; and
(e) the prospects of success.
The Regulator also referred to
authority for the proposition that none of the above factors are
decisive save where there are no
prospects of success.
[47] The reasoning of the Regulator was
based upon the view that a wider approach is desired where the Act is
unclear, in order
to allow the Regulator an area of discretion to
prevent undesirable conduct by the Authority and to create legal and
regulatory
certainty by enforcing the principle of legality. The
Regulator further expressed the view that :
‘If it is clear from the facts of
the Appeal that the Respondent [the Authority] is acting in
contravention of the Act, and
the Appellant has a possible prospect
of success, then condonation cannot close the door to such.’
[48] This is one of the statements by
the Regulator which indicate that it considered the question of
legality as being a factor
which overrides all others. The Regulator
failed to consider all aspects of the requirements for condonation.
[49] The Regulator did not properly
consider the extent and cause of the delay and the reasonableness of
the explanation for the
delay. The Regulator stated with regard to
the prejudice suffered by Sunrise, that no documents had been
submitted in detail to
demonstrate the prejudice suffered by Sunrise,
and Sunrise had not asked the Regulator to invoke the confidential
provisions which
would have entitled the Regulator to scrutinise
Sunrise’s documents in confidence to establish the extent of
any prejudice
that Sunrise may have suffered. The Regulator
recorded, however, that Sunrise claimed that 60 per cent of the LPG
bullet structures
(the tanks in which the LPG was to be stored) had
been completed.
[50] The Regulator also dismissed the
submissions of Sunrise that if the process were to be delayed by
several years, it would be
to the detriment of the public interest.
The Regulator merely regarded the concept of legality as trumping
that submission. The
argument of Sunrise in this regard was
described by the Regulator as being ‘without any substance’.
The Regulator
also appeared to regard it as important that Avedia
had attempted to prevent any further expenditure and possible
prejudice to
Sunrise by :
(a) bringing these facts to the
attention of Sunrise through correspondence prior to the appeal;
(b) by requesting an urgent and
foreshortened process to be followed by the Regulator in terms of
directive 8(7).
The Regulator regarded these aspects as
significant, despite the complete lack of any analysis of the delay
and the reasons therefor
by Avedia. The Regulator clearly regarded
Avedia’s prospects of success as decisive, and referred to the
fact that ‘the
vital importance of this case to set a precedent
for any future reckless application of the Act by the Respondent [the
Authority]
and the public’s right and interest to have the Act
upheld, ensuring the Respondent’s adherence thereto, triumphs
over
any other factors in consideration of condonation in this
matter.’
[51] In considering the grant by the
Regulator of condonation, it is necessary firstly to look at the
nature and extent of the delay
and Avedia’s explanation for it.
In doing so it is important to bear in mind that the entire
procedure extended over a number
of years, obviously involving a
great deal of time and effort on the part of the employees of the
various companies involved, and
all of which was no doubt carried out
at great expense. The process began in 2009 with the issue of the
EOI. The RFP was issued
in December 2010, and Sunrise was appointed
as the preferred bidder on the 26th January 2012. On its own
version, as early as
the 12th March 2012, Avedia became aware that
Sunrise had been appointed as the preferred bidder. The Avedia email
of the 5th
April 2012 indicates that Avedia was well aware of what it
viewed as significant problems, both in the RFP, and the basis upon
which it was intended that the Authority would conclude the agreement
with Sunrise. The agreement was subsequently concluded on
the 3rd
June 2013 some 15 months later.
[52] Avedia contends that during that
15 month period, it was negotiating with Sunrise to finalise the
interconnection of its own
proposed pipeline with that which is to be
built by Sunrise. According to Mr Rosenberg, it was only when
Sunrise ‘reneged’
on its agreement with Avedia as to
where the interconnection would take place, that it considered the
appeal application. This
was in late February 2014. Avedia then
delivered its appeal on the 2nd April 2014.
[53] In my view it is not necessary to
set out detailed extracts of the correspondence between Sunrise and
Avedia during the intervening
period between March of 2012 and April
of 2014. What is clear is that the parties were involved in
commercial negotiations in
order to attempt to agree on the
interconnection point. It was only when Avedia realised that it
would not succeed in extracting
an agreement from Sunrise that the
decision to appeal was made. When Mr Rosenberg was asked why, if
Avedia had been aware during
March 2012 of the legal problems
involved in the matter, it had not immediately launched an appeal, he
submitted that in November
of 2012 Avedia’s concern had been to
get the interconnection where it wanted it, and that was its main
concern. He submitted
that it would not have been commercially
astute to ‘bring the legal magnifying glass to bear’, at
an early stage when
Avedia was negotiating with Sunrise. It was only
when Sunrise reversed its attitude that it was necessary to launch
the appeal.
[54] Mr Rosenberg also submitted that
in terms of the
Petroleum Pipelines Act, Sunrise
was obliged to
permit access on a ‘common user’ basis if it was
technically feasible to achieve the inter-connection.
What the
correspondence and the submissions by Avedia make clear is that it
was attempting to negotiate a commercial position
of advantage, which
it was unable to do. When it realised that it could not do so, it
launched the appeal. Whilst there may be
debates about which party
was ‘in bad faith’ I do not believe that it is necessary
to reach a definitive answer to
that question.
[55] It is clear that in our law a
party cannot abide a decision by an administrative body or an action
by any other person, for
an extended period of time, whilst it
decides whether to appeal, and that decision depends upon resolving
the matter by way of
an appeal or recourse to a court of law.
[56] That Avedia sat and did nothing
about prosecuting the appeal for a period of two years cannot in my
view be explained or condoned
by the fact that it was attempting to
resolve the matter on a commercial basis. The effect of allowing
that, would be that Avedia
was permitted to use the prospect of a
pending appeal as a pressure tactic in its commercial negotiations.
No doubt that may be
a valid tactic for a negotiating party to adopt,
but it cannot be acceptable for it simply to ignore the time limits
laid down
for the appeal, and allow an extended period to pass,
before it takes the necessary action.
[57] There are important policy
considerations, relating to the finalisation of matters and certainty
in the law, that require that
appeals are proceeded with
expeditiously and in accordance with the rules laid down to enable
them to be dealt with. In the founding
affidavit in Avedia’s
appeal, the following is stated :
‘119. As I explained above,
Avedia only became aware in late February 2014 that the concession
adversely affects its rights.
Up until then it had every reason to
believe that the concession had been concluded so as to incorporate
the inter-connection
agreement.
120. As soon as Avedia became aware
that the concession had not been granted on that basis, it took steps
to protect its rights.
It briefed legal representatives and a
competition economist with expertise in petroleum facilities. Avedia
sent letters of demand
to the Authority and met with the Ports
Regulator.
121. In the circumstances of the above,
it is submitted that Avedia has shown good cause for the condonation
of the time periods
within which to lodge this appeal as provided for
in s 54(1)(b) of the Ports Act and Ports Directive 19.’
The explanation set out above is in my
view inadequate to begin to deal with the time period which had
elapsed. It is clear from
the email of the 5th April 2012 that
Avedia was aware of the problems, as it saw them, in the RFP and the
proposed agreement to
be concluded with Sunrise. Mr Rosenberg
submitted that Sunrise only gained access to the agreement during
early 2014. In my view
there is no reason why Avedia could not have
obtained the agreement earlier. The agreement was only requested for
the first time
on the 11th December 2013. It would have been an easy
matter for Avedia to have obtained a copy of the agreement. That it
chose
not to do so until December of 2013, indicates in my view that
it did not at that stage think it was necessary or desirable to
proceed with the appeal.
[58] In my view it is also significant
that Avedia’s principal complaint appears to be that the
agreement concluded between
Sunrise and the Authority does not
provide for the precise interconnection point. Mr Rosenberg submits
that because of the conditions
contained on the NERSA licences (both
those obtained by Sunrise and those obtained by Avedia) an
interconnection is to be allowed
if it is technically feasible. As
indicated above, the Regulator thought this should be decided by
NERSA.
[59] In all the circumstances, the
conclusion that Avedia took no steps whatsoever to protect its rights
by way of the prosecution
of its appeal or any other legal process,
because it wished to reach a commercial agreement with Sunrise,
cannot assist it in endeavouring
to explain away its excessive delay
in bringing the appeal.
[60] The Regulator did not adequately
deal with this aspect in arriving at its decision on condonation. It
only deals with this
aspect in the following statement by it :
‘Therefore, although the
Appellant cannot have been expected to be aware of the terms of the
Concession agreement prior to
when it received same in March 2014,
having sight of the RFP, a model similar to BOOT is clear, the fact
that it is not on land
and within the port boundary is also apparent.
The Appellant attempted to prevent any further expenditure and
possible prejudice
to the Respondent and the Third Party by bringing
these facts to the parties’ attention through correspondence
prior to the
appeal, and by requesting an urgent and foreshortened
process be followed by the Regulator in terms of Directive 8(7).
Nevertheless,
the Appellant’s prospects of success, and the
vital importance of this case to set a precedent for any future
reckless application
of the Act by the Respondent, and the public’s
right and interest to have the Act upheld, ensuring the Respondent’s
adherence thereto, triumphs over any other factors in consideration
of condonation in this matter.’
[61] The first part of this reasoning
is clearly fallacious because Avedia was clearly aware that the
Authority and Sunrise proposed
to conclude an agreement on the very
factors referred to by the Regulator – i.e. the BOOT model and
that the storage land
was not within the port boundary . I say that
because these aspects are raised in the email of the 5th April 2012.
It is also
clear from the above extract that the Regulator regarded
the issue of legality to be so decisive, and its own interpretation
of
that issue so certain, that all other aspects of condonation were
to be overridden by them.
[62] The Regulator also dismissed the
submissions of Sunrise with regard to the prejudice it had suffered
as a result of the delay.
The Regulator gives no basis for
dismissing the allegation by Sunrise that 60 per cent of the LPG
bullet structures were complete.
[63] It is also unclear on what basis
the Regulator dismisses as being ‘without any substance’
the suggestion that it
is in the public interest that the agreement
proceed and that the LPG facility be constructed and operated
forthwith. It is clear
from the original correspondence that the
driving motive for construction of the facility was safety. Some
four years had passed
since the concept was mooted in the EOI and
what is clear is that the whole process was being held up by the wish
of Avedia to
continue to conduct its commercial negotiations. In my
view the entire project is a significant one, and it is clearly in
the
public interest that projects of this nature proceed with
expedition. It cannot reasonably be contended otherwise.
[64] The final aspect which falls to be
considered is the prospects of success which Avedia had in succeeding
in the appeal. This
the Regulator regarded as a trump card. That is
not as I understand the principles laid out in Giant Concerts and in
M S v S
( Centre for Child Law as amicus curiae)
2011 (2) SACR 88
,
para 15.
[65] What is disturbing in the decision
of the Regulator, is that it regards its own view of the prospects as
being so decisive
that it sweeps away any other considerations.
Although I do not deal with the merits of the appeal :
(a) the Regulator’s decision on
the merits relies upon an interpretation of the
National Ports Act;
(b
) that interpretation is by no means
a straightforward matter given that various of the aspects are not
defined or described in
the
National Ports Act;
(c) the submissions of the various
senior counsel who appeared before me provide ample evidence of the
complexity of any decision
on the merits.
[66] In all the circumstances I am of
the view that the Regulator’s decision on condonation is
constructed upon an incorrect
application of the law (i.e. in the
respect that the prospects of success and legality trump all other
matters). In addition the
Regulator has failed to take into account
relevant factors such as the extensive delay in bringing the appeal
without any or any
adequate explanation therefor. The Regulator has
also dismissed out of hand suggestions of prejudice suffered by
Sunrise and a
consideration of the public interest. Whilst it may be
correct that Sunrise did not provide detailed documentation, such
financial
prejudice is, in the nature of the launching of a project
such as the LPG offloading facility, obvious. Clearly, considerable
cost must have gone into the preparation of Sunrise’s responses
to the EOI and its proposal together with the negotiations
with the
Authority and the conclusion of the agreement. In this regard, a
significant factor which was ignored by the Regulator,
is that
Sunrise purchased the land upon which the bullet storage tanks were
to be situated, and had finished 60 per cent of the
construction of
the bullet storage tanks. The purchase of the land by the Authority
is evidenced by the simultaneous agreement
which was concluded with
Sunrise undertaking to transfer that land to the Authority.
[67] In all the circumstances I am
satisfied that the decision of the Regulator both with regard to
standing and with regard to
condondation are fundamentally flawed in
the aspects set out above. It is therefore unnecessary, and indeed
undesirable for me
to deal with the merits of the agreement. As the
decision which the Regulator should have arrived at is clear, it
would serve
no purpose to refer the matter back to the Regulator.
[68] On the 23rd October 2015, and
prior to my finalising this judgment, Avedia delivered an application
to lead further evidence
in the review proceedings. The further
evidence related only to a letter dated the 28th July 2015 addressed
by the Chief Executive
of the Authority to NERSA. The letter, inter
alia, refers to the NERSA licence issued to Avedia for the
construction of a petroleum
pipeline to interconnect with the Sunrise
pipeline. The letter records that the Authority will not approve of
such an interconnection
by Avedia or any other party between the
Multi-buoy mooring and the Sunrise storage tanks, but will support an
interconnection
at the back-end of the Sunrise storage facility.
[69] Various objections to the
admission of the further evidence have been raised by both Sunrise
and the Authority. They complain,
inter alia, that the letter has
not been signed and there is no evidence that it was sent.
[70] Upon receiving the application, I
gave directions to the parties for the filing of affidavits with a
view to completing the
application papers so that the matter could be
heard by me on Thursday 5th November 2015 at 9.30am.
[71] Ms de Villiers, who appeared for
Avedia conceded that there was no rule or authority which would
enable me to expand the record
compiled in terms of
Rule 53.
Given
that the record was the basis upon which the Regulator made its
decision, I have difficulty with the notion that I could
expand the
record with evidence which was not before the Regulator, and then
make a decision which I think the Regulator would
have made if it had
seen the new evidence.
[72] Ms de Villiers submitted that the
‘just and equitable’ jurisdiction given to a court in
terms of
s 8(1)
of PAJA, could be invoked by me to expand the record
with the new evidence which Avedia sought to adduce.
[73] As submitted by Mr Singh,
s 8
deals with remedies which a court may invoke once it has established
that the decision had been validly challenged. Ms de Villiers
conceded this argument in reply, and, in my view, correctly so.
[74] Mr Slabbert, who appeared for
Sunrise submitted that no reliance could be placed upon the letter
which was an unsigned letter,
almost certainly illegally obtained and
was a communication between two regulatory bodies.
[75] In my view there are many possible
reasons why the letter may have been drafted. There is no evidence
it was ever sent. All
that is a mystery which I am not called upon
to solve! In the circumstances I do not believe that I have the
power to admit the
letter as further evidence. Even if I did so, as
I do not consider the merits of the main application in this
judgment, it would
be of no moment, given the little weight which
could be attached to it.
[76] I accordingly dismiss the
application to adduce the letter as evidence, with costs.
[77] I make the following additional
order :
(a) the Decision of the Ports Regulator
handed down on the 31st July 2015 is reviewed and set aside.
(b) the Decision is replaced with an
order that the appeal of Avedia Energy (Pty) Ltd is dismissed with
costs;
(c) Avedia Energy (Pty) Ltd is directed
to pay the review costs (including the costs of the application to
adduce further evidence)
of the first and second applicants including
those costs consequent upon the employment of senior counsel, and
where applicable,
three counsel;
(d) I make no order with regard to any
costs payable by the first respondent, the Ports Regulator of South
Africa, to any other
party.
Date of hearing : 13th and 14th
October and 5th November 2015
Date of judgment : 20th November
2015
Counsel for the First Applicant :C J
Pammenter SC with P Farlam and G Quixley
Iinstructed by Slabbert Venter
Yanoutsos Inc)
Counsel for the Second Applicant : N
Singh SC
(Instructed by Woodhead Bigby Inc)
Counsel for the First Respondent : A
J Dickson SC
(Instructed by PKX Attorneys)
Counsel for the Third Respondent : S
P Rosenberg SC with C de Villiers
(Instructed by Werksmans Attorneys)