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[2014] ZAGPPHC 335
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Nine Nine Ninety Nine Projects (Pty) Ltd and Another v Minister: Department of Energy and Others (A543/12) [2014] ZAGPPHC 335 (30 April 2014)
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
(
REPUBLIC
OF SOUTH AFRICA
)
DATE:
30/4/2014
Appeal
Case No: A543/12
REPORTABLE
OF
INTEREST TO OTHER JUDGES
In
the matter between:
NINE
NINE NINETY NINE PROJECTS (PTY)
LTD
....................................................
1
st
Applicant
GT
ATLAS STATION
CC
.................................................................................................
2
nd
Applicant
and
THE
MINISTER: DEPARTMENT OF ENERGY
NATIONAL
GOVERNMENT
(formerly known as
…...................................................
1
st
Respondent
THE
DEPARTMENT OF MINERALS AND ENERGY
)
THE
CONTROLLER OF PETROLEUM
PRODUCTS
.............................................
2
nd
Respondent
TARGA REEF
INVESTMENTS 10
CC
.......................................................................
3
rd
Respondent
JUDGMENT
MAKHUBELE
AJ
INTRODUCTION
[1]
This is an appeal, with leave of the Supreme Court of Appeal
[1]
,
against the whole judgment and cost order of the court a quo made by
Vorster AJ on 16 February 2012 in terms of which the application
launched by the appellants to review and set aside the refusal and
appeal thereof by the first and second respondents
respectively
of its application for a site and retail licence
in terms of the Petroleum Products Act, Act 120 of 1977, as amended
was dismissed
and appellant was ordered “
to
pay the costs of the First, Second and Third Respondents
jointly and severally, taking into account that the employment
of
senior counsel was justified”
[2]
[2]
The review application (as well as this appeal) was opposed by
the third respondent (“Atlas Service Station”).
It
appears from the judgment of the court a quo that there was
appearance for the first and second respondents (though they did
not
file papers) when the matter was argued. We do not have the benefit
of the essence of their submissions on the merits of the
review and
costs, save what is stated in the judgment that they “
informed
the Court that they abide by the decision of the Court, but
nevertheless they insisted that their respective decisions
were
correct and that the Applicant should pay their costs of the
hearing”.
THE
FACTUAL MATRIX
Application
for site and retail licences
[3]
The facts that gave rise to the dispute are largely common cause and
are summarized hereunder in chronological sequence.
[4]
The first appellant applied for and was granted authorization and on
30 August 2007 in terms of the Environment
Conservation
Act, Act 73 of 1989 by the Department of Agriculture, Conservation
and Environment to develop a filing station on
remainder of erf 765
Bonaero Park, Kempton Park.
[5]
On 23 October 2008, the first and second appellants simultaneously
submitted their respective applications for a site and retail
licence
to the Controller.
The
Controller on or about 20 October 2009 refused both applications.
[6]
The reasons given for the refusal of the site licence application is
that the application for the retail licence was declined.
This
is apparently in accordance with the provisions of section 2B (3)(c)
of the Act, which provides that a site licence remains
valid for as
long as there is, a corresponding retail licence.
[7]
In a letter dated 20 October 2009, the Controller gave two (2)
reasons for refusal of the retail licence application.
(a)
It was established during a site visit conducted on 06/03/2009 that
there is a filling station 100 metres apart from the proposed
site.
This, according to the Controller, would not “
promote
efficient retailing, instead will take volumes from existing
retailer”
(b)
An objection was received , assessed against the facts, the Act and
Regulations and was found to be valid.
Appeal
to the Minister
[8]
In their undated notice, the appellants raised, amongst other
grounds, a point in limine with regard to failure by the Controller
to give them an opportunity to respond to the objection that was
apparently lodged by the third respondent.
The
objection had an impact on the decision reached, and as such, they
argued, the rules of natural justice should have been applied
by
giving them an opportunity to be heard.
[9]
The site licence application was rejected on a technical basis in
that in terms of the Act there cannot be a valid site licence
without
a valid retail licence. The appellants’ argument in this regard
is that if the appeal on the refusal to grant the
retail licence
succeeds, then the site licence should be granted too.
[10]
Other than the point in limine,
the grounds of appeal
with
regard to the refusal to grant the retail licence are:
(a)
There is no definition of the word “
Efficient retailing”
in the Act or its subsequent amendment. The appellants argued that in
order to determine the true meaning of the word/phrase, one
has to
look at intention of the legislature by examining the objects of the
Act, Parliamentary Discussions, White Papers and Industry
Debates.
The
documents referred to were not attached to the appeal documents or
proceedings before the court a quo.
However,
the appellants’ argument (after referring to the
White Paper on Energy Policy of the Republic of South
Africa, Medium
–term Policy Priority: Objective 3) is that:
(i)
The development of a new filling station nearby an existing one
cannot be a reason to deny the application unless there is proof
of
direct and substantial impact on the existing site.
(ii)
There must be a balance between the needs of an existing site and a
new one as well as those of the consumers. There are compelling
interests of the appellants and the community that should be guarded
by the department. The traffic volumes on Atlas Road, the
extensive
developments in the immediate vicinity of the proposed new site are
indications that a new filling station is warranted.
(b)
With regard to the ground of appeal based on the “
Perceived
hardship of the BP Bonaero Site”,
the appellants argued
that:
(i)
“
The BP entrance and exit directly off Atlas Road was closed
off by the Department of Roads and Transport, when Atlas Road was
upgraded
as part of the Blue IQ Project.
We
have been informed that the retailer received and possibly BP South
Africa as well, extensive financial compensation for the
actual and
future loss of income due to the closure of their entrance/exit off
Atlas Road”
(ii)
The appellants further argued that if the BP site has diminished
sales, it is due to the closure of its access to Atlas road
for which
it has been compensated and not the new development (appellants’).
(c)
Appellants further argued that it followed proper EIA processes, and
despite objections by the BP site, it was issued with authorization
to develop the site by the Department of Agriculture, Conservation
and Environment.
(d)
The upgrade of Atlas Road as part of the external road infrastructure
will increase traffic volumes and the proposed site is
the only one
with direct access to this road.
(e)
Future residential and commercial expansions in the surrounding area
were also mentioned as positive factors that would increase
traffic
volumes, hence a need for the proposed site.
(f)
Other grounds of appeal flirtingly mentioned are: facilitating
an environment conducive to efficient and commercially
justifiable
investment, creation of employment opportunities and development of
small businesses in the petroleum sector, ensuring
countrywide
availability of petroleum products at competitive prices, promoting
access to affordable petroleum products by low-income
consumers for
household use, promotion of ubuntu principles.
[11]
The decision of the Minister was communicated to the appellants by
letter dated 13 August 2010. The relevant parts read as
follows:
“
After
careful consideration of all the facts and arguments presented before
me, including the arguments presented in the appeal,
I hereby confirm
the decision of the Controller of Petroleum Products to refuse your
clients’ aforementioned applications
for a site and retail
licence.
The
reasons for my decisions are that the new proposed retailing business
will not promote an efficient retailing petroleum industry
and
facilitate an environment conducive to efficient and commercially
justifiable investment.
A
site visit was conducted during which it was established that the
proposed new site and retail activity is less than 800 metres
from an
existing service station and will take away substantial volumes from
the existing service station and thus compromise the
objectives set
out in section 2B (a) and (b) of the Act. Notwithstanding evidence of
growth patterns including he expansion of
residential and commercial
areas, the area in which the site is proposed is well serviced.
Section
2B(3)(c) of the Act provides that “
any licence
issued by the Controller of Petroleum Products remains valid for as
long as , in the case of a site, there is a corresponding
valid
retail licence.
”. In view of the above, the decision
of the Controller of Petroleum Products to refuse the application for
the site licence
is
justified.”
[12]
The reasons for the decision of the Controller are captured in an
internal memo dated 26 April 2010 addressed to the Acting
Director:
Legal Services.
(a)
The Controller stated, without substantiating, that the applicants
did not satisfy the requirements (a-e) in section 2B.
(b)
The close proximity (800 metres apart) between the proposed site and
the existing station was given as the reason for the finding
that the
former will not promote an efficient retailing petroleum industry and
facilitates an environment conducive to efficient
and commercially
justifiable investment . In this regard, the following factors were
taken into account:
(i)
The prices in petroleum industry are regulated; as such the proposed
site will take sales volumes from the existing filling
station
because the latter has no access to Atlas road.
(ii)
Both service stations will service the same market and because the
proposed site is conveniently located at the entrance /exit
of
Bonaero Park, the existing one will be rendered “
in-efficient”.
(iii)
The drop in sales will render the existing filling station not
feasible and sustainable.
(iv)
The Controller has a mandate to ensure a sustainable petroleum
industry. Approval of the proposed site will render retailing
in the
area inefficient because the existing retailer “
will have to
minimize his work force, people will lose jobs this will be
contradiction with the aforementioned objective (c) of
the Act”.
(v)
On why the objection was not made available to the appellants, the
Controller indicated, amongst other things that :
“
The
Petroleum Controller’s office is of the view that the appellant
could not have proved that the new site will not take
liters away or
will not have a major impact on the existing site.”
(vi)
The Controller indicated further that expansion of residential and
commercial areas “
does not necessarily call for a new
service station, it’s not like they are not catered for.
There
are other service stations in the area, an Engen site about 4km up
Atlas road from the proposed site and a Caltex site further
up the
Atlas road. Generally the area is well serviced.
(vii)
The Controller concluded by stating that “
There must be
consistency in the Petroleum Controller’s decision making, if
the applicant’s licence gets granted, the
Petroleum Controller
will be setting a precedent which will have to apply in all similar
cases in future”.
[13]
It appears from the submissions addressed to the Minister dated 06
August 2010 that the reasons provided by the Controller
were used as
a basis for the recommendation that the decision of the latter be
confirmed. The reasons of the Controller were simply
packaged into
headings to suit the requirements of each subparagraph of section 2B
of the Act.
[14]
The inspection that was conducted and referred to in both the
Controller and the Minister’s decision was conducted on
Friday
06 March 2009 by one
Ms Kholofelo Komane
. The appellants have
challenged the factual findings thereof. I will revert to it later.
THE
LEGISLATIVE BACKGROUND
[15]
Section
2A(1)
of the Petroleum Products Act, Act 120 of 1977
[3]
(“the Act”) provides, amongst other things that:
A
person may not—
(a) ……………………..
(b) ……………………..
(c)
hold or develop a site without there being a site licence for that
site;
(d)
retail prescribed petroleum products without an applicable retail
licence by the Controller of Petroleum Products.
[16]
Section
2B of the Act, titled “
Licensing”
provides, amongst other things that:
(1)
The Controller of Petroleum Products must issue licences in
accordance with the provisions of this Act.
(2)
In considering the issuing of any licences in terms of this Act, the
Controller of Petroleum Products shall give effect to the
provisions
of section 2C and the following objectives:
(a)
Promoting an efficient manufacturing, wholesaling and retailing
petroleum industry;
(b)
facilitating an environment conducive to efficient and commercially
justifiable investment;
(c)
the creation of employment opportunities and the development of small
businesses in the petroleum sector;
(d)
ensuring countrywide availability of petroleum products at
competitive prices: and
(e)
promoting access to affordable petroleum products by low-income
consumers for household use.
(3)
Any licence issued by the Controller of Petroleum Products remains
valid for as long as—
(a) …………………………….
(b) ……………………………
(c) in the case
of a site, there is a corresponding valid retail licence.
[17]
Section
2C, titled “
Transformation
of South African petroleum and liquid fuels industry “
provides that:
(1)
In considering licence applications in terms of this Act, the
Controller of Petroleum Products shall—
(a) promote the
advancement of historically disadvantaged South Africans; and
(b) give effect
to the Charter.
(2)
The Controller of Petroleum Products may require any category of
licence holder to furnish information, as prescribed, in respect
of
the implementation of the Charter.
[18]
Section
3 of the Act, titled “
Appointment
and powers of controllers and inspectors” provides that:
(1) The Minister—
(a)
shall, subject to the laws governing the public service, appoint any
person in the public service as Controller of Petroleum
Products and
appoint persons in the public service as regional controllers of
petroleum products or as inspectors for the Republic
or any part
thereof;
(b)
may on such conditions and at such remuneration as he or she may in
consultation with the Minister of Finance determine, appoint
or
authorise any other person or person belonging to any other category
of persons to act as regional controller of petroleum products
or as
inspector for the Republic or any part thereof.
(2)
Subject to the provisions of this Act, the Controller of Petroleum
Products, a regional controller of petroleum products and
an
inspector-
(a)
may assist the Minister in the exercise of his powers and the
performance of his functions under this Act;
(b)
may gather such information in connection with the operation or
administration of this Act as the Minister may desire, and
investigate any offence relating to this Act.
(3)
The Minister shall, subject to the provisions of this Act, determine
the powers, duties and functions of the Controller of Petroleum
Products, a regional controller of petroleum products and an
inspector, and different powers, duties and functions may thus be
determined in respect of different persons or categories of persons
appointed or authorised under subsection (1).
[19]
Section
12A deals with
Appeals
against decisions of the
Controller
and reads as
follows:
(1)
Any person directly affected by a decision of the Controller of
Petroleum Products may, notwithstanding any other rights that
such a
person may have, appeal to the Minister against such decision.
(2)
An appeal in terms of paragraph (a) shall be lodged within 60 days
after such decision has been made known to the affected person
and
shall be accompanied by—
(a) a written
explanation setting out the nature of the appeal;
(b) any
documentary evidence upon which the appeal is based.
(3)
The Minister shall consider the appeal, and shall give his or her
decision thereon, together with written reasons therefor,
within the
period specified in the regulations.
[20]
In terms of section
12C, the Minister may, in
addition to any other regulatory powers make
Regulations
regarding, amongst other things
the
form and manner in which an application for a licence or an amendment
to an already issued licence shall be made and the procedures
to be
applied in the evaluation of an application for a licence, and the
period
within
which it shall be considered;
[21]
The procedure for application of site and retail licences is
prescribed in the “
REGULATIONS
REGARDING PETROLEUM PRODUCTS SITE AND RETAIL LICENCES”
in terms of the Petroleum Products Act, 1977 (Act No. 120 of 1977,
Promulgated and published in Government Gazette R286 of 27 March
2006
(“the Regulations”)
[22]
Regulations 3 and 15 prescribe the manner, documents and information
that must be provided to the Controller in respect of
applications
for site and retail licences respectively.
[23]
In terms of Regulation 16(4), both site and retail licence
applications must be submitted simultaneously.
[24]
Regulations 6 reads as follows:
“
Evaluation
of site licence application
6.
(1) In evaluating an application for any site licence, the
Controller must, subject to sub
regulation (2), verify that-
(a)
the information and the documents submitted with the application form
are true and correct; and
(b)
the notice contemplated in regulation 4(1) was published.
(2)
In the case of an application for a site licence made by a person in
respect of whom section 2D of the Act is not applicable,
the
Controller must be satisfied that-
(a)
there is a need for a site; and
(b)
the site will promote the licensing objectives stipulated in
sections 2B(2
)
of
the Act.
[25]
Regulation 18 reads as follows:
“
Evaluation
of a retail licence application
18.
(1) In evaluating an application for any retail licence, the
Controller must, subject to sub regulation (2), verify that-
(a)
the information and the documents submitted with the application form
are true and correct; and
(b)
the notice contemplated in regulation
16(1)
was
published.
(2)
In the case of an application for a retail licence made by a person
in
respect
of whom section 2D of the Act is not applicable, the Controller must
be satisfied that-
(a) the retailing
business is economically viable; and
(b)
the retailing business will promote licensing objectives stipulated
in section
2B(2)
of
the Act.
(3)
In determining the economic viability contemplated in sub regulation
(2)(a),
the
Controller must be satisfied that the net present value has been
correctly calculated and is positive.
[26]
Section 2D of the Act is a transitional provision that only applies
to
persons who at the time of commencement of
the
Petroleum Products Amendment Act 2003
held and were in the
process of developing a site or manufactures or wholesales petroleum
products, or retails prescribed petroleum
products.
[27]
This section is not applicable to the appellants.
PROCEEDINGS
BEFORE THE COURT A QUO
[28]
Appellants launched motion proceedings to review and set aside the
refusal of the applications and appeal thereof by the first
and
second respondents respectively of their applications for a site and
retail licence in terms of the
Petroleum Products Act, Act
120 of
1977, as amended.
They
also sought an order that the licence applications be granted,
alternatively that the appeal be referred back to the Minister
for
reconsideration.
Grounds
of review and judgment of the court a quo
[29]
The grounds of review are basically the same as those that were
presented to the Minister in the appeal. I will not repeat
them here.
[30]
The third respondent is the existing site referred to in the
decisions of both the Controller and the Minister.
It
filed an opposing affidavit and mainly defended the decisions of the
first and second respondents.
[31]
In his judgment, Vorster AJ accepted that the decisions of the first
and second respondents constitute administrative action
and are thus
subject to review in terms of the Promotion of Administrative Justice
Act, (PAJA).
[32]
The court a quo considered the merits of the attack on the decisions
on procedural grounds, that is, failure by the Controller
and the
Minister to afford the appellants a hearing with regard to the
objection.
This
ground of attack was rejected on the basis that the appeal before the
Minister was a hearing de novo, and as such, the appellants
were
afforded an opportunity to deal with and they did address the
objection.
[33]
Vorster J also dismissed the contention that the first respondent
misdirected itself on the issue of the impact of the proposed
new
site on the existing filling station. The fact that third respondent
lost access and was compensated for it is of no consequence
according
to the court a quo.
It
went on to state that “
It
is purely a question of fact what the impact of the proposed filling
station of the Applicants adjacent to Atlas Road would have
on the
facility of the Third Respondent in its present location. The
applicants themselves say that the impact is some 50 000 liters
of
fuel per month, which might well be material to a person in the
position of the Third Respondent.
[4]
[34]
It appears from the judgment that appellants requested the court a
quo to make a finding that the first respondent failed to
consider
all relevant facts properly or sufficiently, in particular certain
developments that were specifically mentioned by the
appellants.
The
court a quo refused to make such a finding and stated the following:
“
In
its reasons for decision the First Respondent does not say whether it
did or did not consider the abovementioned aspects alleged
by the
Applicants. In the absence of any evidence in that regard, what
remains to be considered is the inference that the First
Respondent
did not consider those aspects. Such inference is not justified on
the facts of this case and I cannot make such a finding”
[5]
THE
APPEAL TO THIS COURT
[35]
The court a quo dismissed the appellants’ application for leave
to appeal on 30 March 2012. Leave to appeal was subsequently
granted
by the Supreme Court of Appeal on 03 July 2012.
[36]
It is clear from a reading of the decision of the Minister
that the retail licence application was refused on two
grounds,
namely that
the new proposed retailing business will not
promote an efficient retailing petroleum industry and facilitate an
environment conducive
to efficient and commercially justifiable
investment.
[37]
Reference to section 2B (a) and (b) of the Act in the decision of the
Minister should actually be section
2B(2)(a) and (b)
which reads as follows:
“
2B
(2)
In considering the issuing of any licences in terms of this Act, the
Controller of Petroleum Products shall give effect to the
provisions
of section 2C and the following objectives:
(a)
Promoting an efficient manufacturing, wholesaling and retailing
petroleum industry;
(b)
facilitating an environment conducive to efficient and commercially
justifiable investment;
[38]
Therefore, the Minister and the Controller relied on the distance
between the proposed site and the existing filling station
as well as
the alleged taking of sales volumes as factors to be taken into
account in assessing whether the new proposed retailing
business will
promote an efficient retailing petroleum industry and facilitate an
environment conducive to efficient and commercially
justifiable
investment.
[39]
The appellants’ view, from a reading of their papers and
argument is that there are other factors and these were not
properly
or sufficiently considered by the court a quo that would have proved
that its proposed facility does comply with the requirements
of
section 2B.
These
are
[6]
:
(a)
The proposed facility will be the only facility within an 8 Kilometre
stretch along Atlas Road;
(b)
The impact on third respondent is a decrease of turnover of
approximately 18% or not more than 50,000 liters per month.
(c)
The evidence presented by the Traffic Engineer on behalf of the
Appellant, Mr Schreus that the facility had excellent potential
and
shall constitute a sustainable development.
(d)
The contents of the Site Motivation Report,
(e)
High volumes of traffic travelling on Atlas Road,
(f)
Market study undertaken by the petroleum group, Engen which found the
site to be very favorably situated and that as a result
of
substantial residential developments along Atlas Road to have
tremendous potential,
(g)
New developments in the immediate area creating a further need for
petroleum products,
(h)
It was mere speculation that the facility of the third respondent
would be left uneconomical or unsustainable by the approval
of the
appellants’ retail licence application.
(i)
The objection filed by the third respondent was similar to the one it
filed with the Department of Agriculture, Conservation
and
Environment and that it was dismissed.
(j)
In terms of the Environmental Management Act, 107 of 1998, economic
sustainability of the proposed facility as well as the existing
facility had to be considered by environmental authorities before
granting the Environmental Authorization.
(k)
The Environmental Authority of Gauteng did make a finding that both
facilities would be sustainable even if the appellants’
were
approved.
(l)
Sustainability does not outlaw competition and that there is no
guarantee of monopoly by one owner.
(m)
The decision was influenced by wrong facts, such as that there are
several other competing facilities that can render the same
service
to the traffic on Atlas Road.
[40]
During oral argument, this court made it clear from the outset that
the appeal before it is about the misdirections, if any,
of the court
a quo. This is so because there is a distinction between an
appeal and a review and this court is neither a
court of first
instance nor the decision-maker. The court did not have the benefit
of a transcript of record of proceedings, as
such we do not know
what was placed before the court a quo.
Submissions
were also made on behalf of the first and second respondents, but we
do not know what those are and there was no appearance.
The
judgment of the court a quo dealt with two issues only, namely,
(a)
The attack on the decisions of the Controller and the Minister based
on alleged procedural irregularity due to their failure
to afford the
appellants an opportunity to comment on the objection by the third
respondent;
(b)
The impact that the proposed facility would have on the third
respondent’s existing filling station. The enquiry here
was
limited to the closure of the access road and the loss of sales
volume.
[41]
This court would have benefited from the submissions of the first and
second respondents’ counsel, but as it turned out
there was no
appearance.
Submissions
on behalf of the appellants
[42]
Mr Erasmus, on behalf of the appellants was invited by the court to
go through the Layout Plan of the proposed access to the
filling
station. It is common cause that the third respondent has no direct
access to Atlas road, this having been closed due to
upgrades some
years earlier. There are various other entry/ exit points to and from
other filling stations in and around the area
in question.
[43]
The appellants commissioned a study by an engineer,
Harms Schreus
of WSP Civil and Structural Engineers (“Schreus”) to
“
investigate in more detail the possible impact the new site
will have on the exiting site”
[43.1]
Schreus conducted a number plate survey with a view to determine what
percentage of the vehicles visiting the BP site also
passes the
proposed site.
He
concluded that 17,5% of the traffic visiting the BP site past the
proposed site, and that 18,2% of the passing traffic for the
proposed
site on Atlas Road also passes the Caltex, which is situated some 6
kilometers from the proposed site. He also made a
finding that based
on the information that the BP is selling 4000,000 liters of fuel in
a month, the impact would be a maximum
70 000 liters a month (17.5%).
Schreus
argued that the BP site would remain feasible at 350 000 liters of
fuel a month.
[44]
According to the affidavit of Schreus, this evidence was obtained
“
after
the initial site and retail license applications for Bonaero Park
were rejected”
[7]
.
This,
it seems, formed part of the appeal record to the Minister.
It
is an indication that indeed the appeal before the Minister was a
hearing de novo. Whether or not it was treated as such by the
Minister is another matter.
[45]
Mr Erasmus went on to submit that the inspection report of 06 March
2009 was flawed because it contains several material defects.
The
decision of the Controller and ultimately the Minister was based on
the findings of the inspection report; as such it had a
direct
negative effect. These are the defects identified:
(a)
It is not correct that the appellant’s proposed site will only
have access from Templehof Road and not Atlas Road. In
fact, the
proposed site main road is from Atlas road.
(b)
The 100-meter distance between the proposed site and the BP site is
not correct. This distance may be “as the crow flies”,
but in reality, by road, it is 500 metres.
(c)
The Caltex garage referred to in the inspection report closed down
more than 5 years before the upgrade of the Atlas Road.
Therefore,
this is an irrelevant consideration that was taken into account.
(d)
It is not correct that there is not much development going on that
would create a need for fuel. There are several residential,
commercial developments and this information was addressed in the
motivation.
[46]
It was submitted on behalf of the appellant that they only had sight
of the third respondent’s objection on receipt of
the review
record of proceedings. Before this, they only guessed what the nature
of the objection is because the third respondent
had earlier filed an
objection with the Environmental Authority, and this was dismissed.
The
appellants filed a supplementary affidavit and addressed the issues
raised in the objection directly for the first time. As
it turned
out, the objection was based on the same facts as the objection and
subsequent appeal at the Gauteng Department
of Agriculture ,
Conservation and Environment (“GDACE”) that was
dismissed.
[47]
The objection is based on a submission that there are four (4)
filling stations within a 3 (three) kilometre radius from the
appellants’ proposed site.
[48]
According to appellants, it is not correct that there are four (4)
filling stations within a radius of 3 (three) kilometers
of
appellants’ proposed new site.
(a)
The Caltex filling station had been in disuse due to lack of business
for five (5) years and is situated on the opposite side
of atlas
road. It was not considered by GDACE.
(b)
The Sasol Parkhaven that according to third respondent is situated
about 1.2 kilometers further on the opposite side.
According
to Appellants, there is no such filling station and it did not exist
at the time the relevant decisions were made. Documents
were attached
to prove that there is no pending or approved filling station by this
name.
(c)
The existing Engen filling station is , on third respondent’s
own admission in the objection summary, situated about
four (4) kilometers away. There is no reason why it should be
included in the 3 (three) kilometer radius too.
(d)
According to the appellants, the only competitor is the BP outlet.
[e]
It is also not correct, as the Controller has stated in his reasons,
that there are other filling stations in the area, referring
to the
Engen (4 km) and the closed Caltex.
[49]
It was also submitted on behalf of the appellants that the third
respondent appears to accept Schreus's evidence and that its
2-year
projected expenditure and expense over a two-year period is similar
to that of Scheurs. The third respondent has however
failed to give
actual figures to support its sales and the impact the proposed site
would have.
[50]
In conclusion, Mr Erasmus submitted that reliance by the third
respondent on the case of
Fuel
Retailers Association of Southern Africa v Director-General,
Environment Management, DACE, Mpumalanga Province and 11 Others
[8]
was misplaced.
This
case does not say that there must not be competition. The case was
decided in the context of applications for environmental
authorizations. The approach of environmental authorities was that
they did not have to consider socio-economic issues. The judgment
of
Ngcobo J (majority) is to the effect that economic considerations are
relevant.
[50.1]
In response to a question from the court as to what the powers of
the inspector were, Mr Erasmus indicated that the Minister
is
enjoined, in terms of Section 2E of the Act to prescribe the system.
This has not been done yet.
It
was further submitted in this regard that the inspector should have
asked for more information to verify the allegations of the
objector.
The same objection was considered by GDACE four months before it was
lodged with the Controller. GDACE adjudicated the
objection in terms
of prescribed guidelines and dismissed it. The decision was upheld on
appeal.
[50.2]
Mr Erasmus accepted that if there are no Regulations or guidelines
one has to look at the material placed before the decision
–maker
and how it was adjudicated.
He
submitted further that the approach of the court a quo in holding
that appellants have not shown how the Minister misdirected
herself
was a narrow one. The fact that only one of the requirements was
considered makes the decision unfair.
Submissions
on behalf of the third respondent
[51]
Mr Davis, on behalf of the third respondent started off by inviting
the court to look at the facts /documents before the Controller
and
the Minister.
He
referred to the letter / objection dated 26 November 2008, and in
particular a submission on behalf of third respondent in paragraph
6.2.5 that it would suffer an 80% “
drop in our client’s
business, purely from an ease of access and convenience perspective.
The entrance and exits of the Applicant’s
site is far more
accessible than our client’s site, as per the annexed sketch
hereto, drawn to scale, marked as Annexure
“E””
[52]
He also referred to the inspection report on the inspection conducted
on 05 August 2008 where the inspector indicated that
“
There
is a direct competition a BP service station situated only a 100
metres away from the proposed site and another Engen service
station
about 5 kilometers up Atlas road and the Caltex service station that
closed down on Atlas road, I believe its because of
the lack of
business’.
Reference
to a distance of 100 metres in the inspection report is a
mistake according to Mr. Davis and it was not carried
over to the
submissions made to the Minister. It is correct that the Minister was
advised that the distance is 800 metres, but
there is no evidence as
to how this correction came about. The distance being 100 or 800
metres does not take the issues
any further.
[53]
I have already referred to the objection lodged by the third
respondent and the appellants’ submissions in response thereto.
[54]
The third respondent’s concern is the negative effect that the
appellant’s proposed new site would have on its
business and
employees. There are sufficient other filling stations in the area to
service the existing clientele.
[55]
Accordingly, these are relevant considerations that the Minister was
obliged to take into account.
[56]
Mr Davis went on to refer to a map
[9]
depicting all filling stations in the area. He submitted that this
information was before the Controller and the Minister.
[57]
He went on to refer to the reasons provided by the Controller for the
decision and submitted that it is clear that the emphasis
was on
economic growth
[58]
The reliance on the Fuel Retailers case was intended to demonstrate
that the impact on the third respondent’s site would
not be
negligible.
[59]
In conclusion, Mr Davis submitted that if the court finds that the
decision should be reviewed, it should be referred back
to the
Minister because the issues involved are of a technical nature.
DID
THE CONTROLLER AND THE MINISTER EVALUATE THE APPLICATIONS PROPERLY?
[60]
This question, proper, belongs to an enquiry that should have been
undertaken by the court a quo to determine whether the Minister
took
into account (all) relevant considerations and whether there has been
misdirection.
I
have quoted the relevant parts of the Regulations with regard to how
applications for site and retail licences are to be evaluated
and
factors to be taken into account.
[61]
The problem, as the appellants have submitted, is that there is no
definition of the words /phrases used in section 2B, such
as
“efficient retailing” or at least an indication of what
kind of evidence would support such a requirement.
DID
THE COURT A QUO MISDIRECT ITSELF?
[62]
In the matter of
MEC
For Environmental Affairs and Development Planning v Clairison’s
CC
[10]
,
Nugent
JA and Swain AJA
[11]
reiterated the distinction between a review and an
appeal.
“
It
bears repeating that a review is not concerned with the correctness
of a decision made by a functionary, but with whether he
performed
the function with which he was entrusted. When the law entrusts a
functionary with a discretion it means just that: 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 his evaluation. The role of a court is no more than to
ensure that the decision-maker has performed the function
with which
he was entrusted.”
[
63]
The court went on to say that:
“
[19]
The power of review is sourced today in the Constitution, and not the
common law, but sound principles are not detracted from
because they
were expressed in an earlier era. As was said in Pharmaceutical
Manufacturers of South Africa: In re Ex parte President
of the
Republic of South Africa
[12]
‘
That
is not to say that the principles of common law have ceased to be
material to the development of public law. These well-established
principles will continue to inform the content of administrative law
and other aspects of public law, and will contribute to their
future
development’.
[20]
It has always been the law, and we see no reason to think that PAJA
has altered the position that the weight or lack of it
to be attached
to the various considerations that go to making up a decision, is
that of the decision-maker. As it was stated by
Baxter:2
[13]
‘
The
court will merely require the decision-maker to take the relevant
considerations into account; it will not prescribe the weight
that
must be accorded to each consideration, for to do so could constitute
a usurpation of the decision-maker’s discretion.’
[21]
That was expressed by this court as follows in Durban Rent Board and
Another v Edgemount Investments Ltd,
[14]
in
relation to the discretion of a rent board to determine a reasonable
rent:
‘
In
determining what is a reasonable rent it is entitled and ought to
take into consideration all matters which a reasonable man
would take
into consideration in order to arrive at a fair and just decision in
all the circumstances of the case.... How much
weight a rent board
will attach to particular factors or how far it will allow any
particular factor to affect its eventual determination
of a
reasonable rent is a matter for it to decide in the exercise of the
discretion entrusted to it and, so long as it acts bona
fide, a Court
of law cannot interfere’.
[22]
What was said in Durban Rent Board is consistent with present
constitutional principles and we find no need to re-formulate
what
was said pertinently on the issue that arises in this case. The law
remains, as we see it, that when a functionary is entrusted
with a
discretion, the weight to be attached to particular factors, or how
far a particular factor affects the eventual determination
of the
issue, is a matter for the functionary to decide, and as he acts in
good faith (and reasonably and rationally) a court of
law cannot
interfere. That seems to us to be but one manifestation of the
broader principles explained – in a context that
does not arise
in this case
[15]
–
in
Bel Porto School Governing Body v Premier, Western Cape
[16]
and
Bato
Star
Fishing (Pty) Ltd v Minister of Environmental Affairs.
[17]
[64]
In the matter before us, and in order to determine whether the court
a quo misdirected itself or not, we have to take into
account
firstly, the legislative considerations and secondly the facts that
were placed before the functionaries (the Controller
and the
Minister) and against that background assess whether they performed
their respective functions reasonably and rationally.
[65]
It may be so that the functionary has discretion to decide which
factors to consider as well as the weight to attach.
However,
in this case, the Act and Regulations prescribe the
requirements / factors to be taken into account in order to
be issued
with a site and retail licence. The Regulations also prescribe how
applications are to be evaluated.
[18]
[66]
The difficulty in this matter for the functionaries is that certain
word/phrases are used in the Act without at least an explanation
or
guidelines in the Regulations on how applicants would achieve the
threshold. This is the reason why the appellant went to great
length
to bring in factors that in its opinion would meet the requirement of
“
efficient retailing”.
[67]
The role of the inspector is also critical because he/she has a
mandate to gather information and bring it to the Controller
and the
Inspector. Objections aside, one would have expected the
inspector to investigate the allegations made by appellants
in their
application, more especially those that relate to compliance with
section 2B.
[67.1]
To simply pick up the issue of proximity between the two filling
stations and the hardship one would suffer can hardly be
regarded as
the type of investigation that would enable the Controller to
discharge his duties.
[68]
Therefore, in my view, the question of what material was before the
Controller and the Minister only becomes relevant after
the
investigations by the inspector. The inspector became aware that the
facilities were in close proximity. This could never be
the end of
the enquiry because the Act and Regulations list many requirements
for purposes of complying with section 2B. Close
proximity and
hardship could be one of many factors. There is no indication that
the others were investigated, save for being mentioned
by the
appellants.
[69]
The court a quo was enjoined to consider whether the decision is
reviewable on any of the grounds of review in terms of PAJA.
[70]
This has nothing to do with and is not a blurring of the distinction
between review and appeal. If anything, the essence of
the judgment
of the court a quo is that it became concerned with the correctness
of the decision of the Minister in as far as the
impact of the
proposed retail facility on the third respondent is concerned.
[71]
The court a quo correctly stated in paragraph 22 of the judgment that
“
It is
purely a question of fact what the impact of the proposed filling
station of the applicants adjacent to Atlas Road would have on the
facility of the Third Respondent in its present location.
It
however went on to state that:
“
I cannot
find that the First respondent misdirected itself to take into
account the impact of the Applicants’ facility on the
existing facility
of the Third Respondent”
[72]
The court a quo was enjoined to take into account whether the
functionary (Minister) had relevant material before him to make
a
finding one way or the other with regard to the alleged impact.
Instead it shied away from this responsibility and chose the
easy way
out; not making a finding.
This,
in my view is a misdirection.
[73]
It is not even a question of material error of fact.
[19]
This can only arise if facts have been brought before the
functionary. In this case, as I have already stated, it is not only
the responsibility of the appellant to bring relevant facts, but the
inspector too has a duty to verify and investigate those facts.
SUBSTITUTION
OF THE DECISION
[74]
In his heads of argument, counsel for the appellants referred to the
unreasonable delays in processing the applications that
have already
taken place as well as the financial hardship that the appellants
have already suffered.
He
submitted that referring the matter back would cause further
prejudice to the appellants. Under the circumstances, he submitted
that the court is in the same position as the functionary to make the
decision itself.
[75]
During oral argument, and after the court engaged both counsel on the
issues highlighted in this judgment, notably, the deficiencies
in the
Act and Regulations as to exactly how the requirements in section 2B
are to be met, they both conceded that the court would
not be in a
position to make a decision.
[76]
Mr Davis correctly submitted that the issues in this matter are of a
technical nature and require relevant expertise.
I
may add that as I have stated above, there is a need for proper
assessment of the various reports submitted for purposes of assessing
exactly the issues referred to in section 2B and Regulation 16.
[77]
It is common cause that the Minister has not yet prescribed a
“
system”
in terms of Section 2E of the Act.
However, the reasons given for the decision (hardship or impact on
third respondent) seems to
be a backdoor implementation of the system
that does not exist because it seeks to limit the number of filling
stations in a certain
radius. The appellants have raised issues such
as section 22 of the Constitution of the Republic of South Africa
that guarantees
each person a right to choose his/her trade. They
also raised issues of lawful competition amongst retailers.
[78]
The Minister is entitled to take as long as he/she wants or never, to
prescribe “a system”, however, in the interim,
there are
sufficient safeguards in the Act and the Regulations. All that is
required is implementation of the relevant provisions
by advising
applicants how to achieve the objectives of the Act, which, in all
fairness are policy statements that are capable
of several meanings.
[79]
The appellants have referred to the Guidelines in terms of the
requirements for environmental authorizations that are implemented
by
GDACE, for example.
These
guidelines prescribe things like distances between outlets, etc. An
applicant can argue the rationale behind the prescription,
but at
least it is entitled to know what to comply with. There is a need for
uniformity and consistency.
[80]
I am inclined to refer the matter back to the Minister for
reconsideration. However, I am also going to give directives with
regard to the issues I have raised above, namely, the role of the
inspector in the whole equation.
[81]
I make the following order:
[81.1]
The appeal is upheld with costs.
[81.2]
The judgment and order of the court a quo is set aside and
substituted with the following:
“
1.
The refusal of the site licence application of the first applicant,
and the dismissal of the appeal in respect thereof in terms
of the
Petroleum Products Act, 120 of 1977
, as amended, by the first and
second respondents, is hereby reviewed and set aside.
2.
The refusal of the retail licence application of the second
applicant, and the appeal in respect thereof, by the first and second
respondents is hereby reviewed and set aside.
3.
The decision of the first respondent not to uphold the appeals filed
by the first and second applicants in respect of their site
and
retail licence applications, are referred back to the first
respondent for reconsideration.
4.
The following directives are hereby issued to assist the first
respondent to formulate guidelines that should be issued to the
applicants for purposes of compliance with the provisions of section
2B of the Act, read with Regulation 16.
4.1
The Minister should issue guidelines on factors that will be taken
into account in order to comply with each and every objective
in
terms of section 2B of the Act.
4.2 The inspector
is directed to within 30 days of this order:
(a) compile
a copy with all information in the applications, together with
any expert report and provide a copy thereof
to the third respondent
and or any interested person and give them a reasonable
opportunity to respond and submit any
contrary evidence.
(b) investigate,
or cause to be investigated by relevant persons with relevant
expertise any issues arising from the application
and the
responses of the applicant and any interested person.,
(c) Provide a
copy of the findings of the investigations to the parties and solicit
their response.
(d) Submit the
application, with comments, findings and any other report to the
Minister for consideration.
4.3
The Minister must consider the applications within a period of 30
days after receipt of the documents referred to in paragraph
4.2
5. The parties
are afforded an opportunity to approach the court within 05 (five)
days of this order should they wish to make any
submissions on the
directives in 4 above, whereafter, the court may, on its own
discretion amend, vary or add any directive therein.”
MAKHUBELE
AJ
Acting
Judge of the High Court
I
agree
RAULINGA
J
Judge
of the High Court
I
agree
THULARE
AJ
Acting
Judge of the High Court
APPEARANCES:
APPELLANTS:
MC ERASMUS SC
Instructed
by: Adriaan Venter Attorney
Menlo Park, PRETORIA
Tel: (012) 346 1075
Ref: Mr Venter
/JLR/AN0009
FIRST
AND SECOND RESPONDENT: NO APPEARANCE
C/O:
The State Attorney, PRETORIA
Tel:
(012) 309 1500
Ref: Mr Nkuna
/NL/0606/2011/Z80
THIRD
RESPONDENT: N DAVIS SC
Instructed
by:
FJ Jordaan Incorporated
Arcadia, PRETORIA
Tel: (012) 344 6860
[1]
Case No: 310/12, per Lewis et Pillay JJA
[2]
paragraph 11 of the judgment
[3]
as amended by Act 58 0f 2003
[4]
paragraph 9, from line 22.
[5]
Paragraph 10 of the judgment
[6]
Notice of appeal
[7]
paragraph 2 of Schreus affidavit dated
[8]
Case no. CCT.67/2006 dated 07/06/2007
[9]
p121, part of the Engen Feasibility study undertaken to predict the
average monthly fuel sales in 3 years time and to estimate
the
impact on the surrounding sites by the proposed site.
[10]
(408/2012)
[2013] ZASCA 82
(31 May 2013)
[11]
Ponnan and Tshiqi JJA and Willis AJA concurring
[12]
Pharmaceutical Manufacturers of South Africa: in re Ex parte
President of the Republic of South Africa
[2000] ZACC 1
;
2000 (2) SA 674
(CC) para
45
[13]
Lawrence Baxter Administrative Law 1ed (1984) at 505
[14]
Durban Rent Board and Another v Edgemount Investments Ltd
1946 AD
962
at 974, adopted in Johannesburg City Council v Administrator,
Transvaal and Mayofis 1971 (1) SA 87 (AD)
[15]
Bel Porto was concerned with rationality, and Bato Star with the
reasonableness of executive decisions.
[16]
[2002] ZACC 2
;
2002 (3) SA 265
(CC) para 45
[17]
2004 (SA) 490 (CC) esp. paras 44 and 45.
[18]
“
Evaluation
of a retail licence application
18.
(1) In evaluating an application for any retail licence, the
Controller must, subject to sub regulation (2), verify that-
(a) the information
and the documents submitted with the application form are true and
correct; and
(b) the notice
contemplated in regulation
16(1)
was
published.
(2) In the case of
an application for a retail licence made by a person in respect of
whom section 2D of the Act is not applicable,
the Controller must be
satisfied that-
(a) the retailing
business is economically viable; and (b) the retailing
business will promote licensing objectives stipulated
in section
2B(2)
of
the Act.
(3)
In determining the economic viability contemplated in sub regulation
(2)(a),
the
Controller must be satisfied that the net present value has been
correctly calculated and is positive.
[19]
I am mindful of what has been stated in the matter of
Collen
Mzingisi Dumani v Desmond Nair & another (144/2012)
[2012] ZASCA
196
(30 November 2012) that misdirection with regard to evaluation
of material fact does not render the decision reviewable. However,
what has been said in the matter of
Pepcor
Retirement Fund v Financial Services Board
2003 (6) SA 38
(SCA
)
referred to in paragraph 29 is applicable in this matter because the
Controller and the Minister were empowered by legislation
to
consider the applications . There should be material facts before
them. How they evaluate those facts should not render
the
decision reviewable. The point here is that the facts brought by the
appellants were not investigated or verified by the
inspector
against any other facts brought by other interested parties, such as
the third respondent.