2


PETROLEUM RETAILERS ’ ALIGNMENT FORUM Sixth Respondent

ROYALE ENERGY (PTY) LTD Seventh Respondent

NATIONAL ENERGY REGULATOR Eight h Respondent
OF SOUTH AFRICA


Constitutional Law – suspension of admin istrative action as just and equitable remedy
under section 172(1)(b) of Constitution -decisions of Minister of Mineral and
Petroleum Resources in terms of Petroleum Products Act 120 of 1977 relating to the
imposition of int erim amendments to Retail Accounting System governing the Fuel
Industry taken in contravention of judgment of High Court – inherently
unconstitutional - appropriate remedy is suspension of the decisions pending re view
– no necessity for declaration of invalidity or even for constitutional issue to hinge on
such invalidity for section 172(1)(b) to apply.




JUDGMENT

FISHER J
Introduction
[1] This application is the further instalment in a saga involving regulation of the fuel
industry in South Africa.

[2] The process es which have unfolded over more than a decade relate to how State
regulation of the petroleum industry affects the competing commercial rights of
retailers of fuel and other petroleum -based products and th e oil companies that
own the sites from which the fuel is distributed.

[3] The relief is sought as a matter of urgency by the applicant Association which
represents the petroleum industry in South Africa . The applicant brings the
application in its own right and on behalf of four of its members : Astron Energy
3

(Pty) Ltd , BP Southern Africa (Pty) Ltd, Engen Petroleum (Pty) Ltd , and Sasol
Limited .

[4] The purpose of the application is to achieve the urgent suspe nsion of two
decisions taken by the Minister of Mineral and Petroleum Re sources (the
Minster) pending the review of th ose decisions .

[5] The impugned decisions relate to the interim restructuring by the Minister of the
system of regulation that has governed the fuel industry and the determination of
the petrol price in South Africa for more than a decade .

[6] This restructuring purports to be a response to an order handed down by
Opperman J in this court in the matter of Fuel Retailers Association v Minister of
Energy and Other s1 (FRA).

[7] That judgment is central to this application . It involved the review by the Fuel
Retaile rs Association (which is the third respondent in this application ) of the
system of regulation of the industry that came into effect in 2013.

[8] In terms of FRA the court directed that the Minster conduct a review of the
decision taken in 2013 which imposed a system of governmental regulation that
did not allocate a retail margin .

[9] The Minster was directed to conduct the review contemplated within n ine months
of the order and according to specified directives of Opperman J .


1 Fuel Retailers Association v Minister of Energy and others 2023 JDR 3638 (GJ ,) [2023] 4 All SA
739 (GJ) .
4

[10] The review ordered by Opperman J has not been undertaken by the Minister .
There is no indication that it has even been commenced . Instead , an interim
position has been put in place by the Minster which is intended to operate
pending the ordered review.

[11] The applicant contend s that the interim pos ition that the impugned decisions
contemplate is unlawful , inter alia, for being in conflict with the order of Opperman
J in FRA.

[12] The applicant contends further that the implementation of the decisions on an
interim basis will result in irreversible and catastrophic consequence s for an
industry that is a driver of the South African economy.

[13] The third respondent has repre sented the retailers in the litigation throughout and
continues to represent them in these proceedings . It opposes the application ,
inter alia , on the basis that it is not urgent . It argues further that, far from being in
conflict with the order in FRA, it in fact represents compliance there with.

[14] The government respondents in the form of the Minister, the Controller and the
National Energy Regulator (NERSA) abide this court’s decision. The other
respondents don’t directly oppose.

[15] Viewed broadly , then, the case , involves the competing rights and interests
entailed in the commercial relationships between the owners of the retail sites ,
which are , in the main, the oil companies and the retailers that operate the sites
under State licence in the fuel in dustr y.

The impugned decisions

[16] The first decision in issue was taken on 22 August 2024 and is to the effect that
an interim retail margin would be allocated in the retail sector of the fuel industry
5

to operate pending a full review of the regulation of the indus try. The full review
is clearly that contemplated by Opperman J in FRA.

[17] The second decision was taken on 04 November 2024 and in terms there of, the
impugned retail margin in issue was put into effect pending the contemplated
review .

[18] The creation of this new notional interim margin entail s the reduction of a n
existing margin , in the form of an allow ance of a share of the fuel price which
was previously allocated to the owners of the retail site . A classic case of
borrowing from Peter to pay Paul .

[19] This abrupt change to the system comes in a context where there are existing
commercial relation ships between the oil companies and the retailers which are
based on the system that prevailed before the taking of the impugned decisions
– i.e. a regulatory landscape which did not set a margin in the retail sector .

[20] This shift , obviously creates a situation where the contracts which form the basis
of these relationship will require renegotiation.

[21] The oil companies argue that these decisions , if implemented , will lead to chaos
in the industry.

[22] This relief is sought under part A of the application and pending the determination
of the application for the review and the setting aside of the impugned decisions
contained in part B .

[23] The application for the suspension of the decisions is brought in terms of section
172(1)(b) of the Constitution predominantly on the basis that the suspension
would be just and equitable remedial relief flowing from conduct of the Min ister
that is in direct defiance of a court order and, as such , constitutionally invalid .
6

Background

[24] It is helpful to begin with a character isation of the p articipants in the Fuel Industry
with reference to how their participation dictates the fuel price.

Participants in the fuel industry

[25] The focus of the fuel industry in South Africa is on the refining, storage,
transportation, and marketing of imported crude oil. This focus leads to specialist
services which include refiners, primary storage, secondary storage, wholesale
and retail.

[26] All market activity is closely regulated under licence . Som e oil companies hold
refining/ manufacturing licences and a wholesale licence while others hold one
or the other.

[27] With the exception of a few training sites, liquid fuel manufacturers and
wholesalers are prohibited by section 5(a) of the Petroleum Products Act 120 of
1977 (the Act) from holding retail licences for petroleum and liquid fuels. The oil
companies are thus reliant on licenced retailers to sell their product. This, in and
of itself , is a regulatory provision which protects the retai l industry.


[28] The petrol pump price is fully regulated. It comprises a number of price elements ,
some of which are calculated on the basis of external international factors and
others which pertain to the domestic market. The external factors are US Dollar -
based, and the internal factors are the subject of the close regulation in issue .

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[29] The external factors move constantly and account for most of the movements in
the petrol price. Both the world market price of oil and the exchange rate are
outside the control of the domestic industry.

[30] The domestic petrol price which is published monthly by the Department of
Energy (DoE) takes account of movements in these factors .

[31] At issue in these proceedings is the retail end of the fuel supply chain and more
specifically the commercial relationship s between retailers and the owners of the
retail sites . These owners are for the most part , the oil companies who are also
generally the wholesalers .

[32] It is, thus, convenient for present purposes to view the competing camps as the
owners or oil companies and the retailers. It is, however , accepted that , within
these two camps , there are differ ent ways of the participants doing business with
one another .

[33] There are approximately 5600 licensed retail sites in South Africa . The vast
majority are owned by the o il Compan ies who enter into commercial relationships
with licensed retailers in relation to the use of the retail site. These relationships
include lease agreements, franchising agreements and service level
agreements .

[34] A central focus of Opperman J in FRA was the differing commercial relationships
and forces which operate in these two types of ownership models . The sites
owned by the oil companies are known in the industry as Company Owned Retail
Operated (CORO) sites ; the sites owned by the retailer s themselves are known
as Retail Owned Retail Operated (RORO) sites.

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[35] A key feature of the domestic regulation is the providing of allowable return s or
margins along the value chain . In this manner , the petrol pump price is calculable
according to set margins and formul ae.

[36] This process has the effect of eradicating uncertainty and keeping the fuel price
stable . This, in turn , encourages investment by existing and new entrants into
the industry.

[37] The calibration of the margins along the chain is intrica te and is the product of
specialist economic intervention at gover nment level .

[38] The fuel price is pivotal to every aspect of the broader economy. If the fuel price
goes up this has a direct effect on the cost of living.

[39] It is helpful to understand the background to the formulation of the system of
regulation that maintained prior to the impugned decisions which have now
served to change this system.

The advent of the new regulatory system or RAS

[40] Before 2011, the fuel industry was regulated by the Marketing of Petroleum
Activities Return system and its guidelines.

[41] In 1996 the government began planning and working towards the institution of a
new system which would be purpose designed to regulate the domestic fuel
industry in a newly democratic South Africa. This system is known as the
Regulatory Accounting System (RAS).

[42] After intensive investigation of the market s over years , the RAS reached its
implementation stage in 2011.

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[43] The implementation commenced with a two -year transitional phase . This
transitional period was necessary to enable market participants to prepare for
the full implementation of the RAS as a new petrol price accounting and
regulatory system .

[44] This entailed stakeholder s, at each stage of the domestic fuel supply chain ,
bringing about changes in their commercial relationships so as to alig n these with
the new system.

[45] The DoE took the decision finally to implement the RAS in December 2013 (the
2013 decision).

[46] The adoption of the RAS , as one would expect in such a vital sector, had been
preceded by an intensive period of research , development , and assessment in
relation to the form the regulation s should take and the likely impact on the
various role players in the industry and the economy as a whole .

[47] This research process spanned nearly a decade and entailed intensive and
complex analy ses of the fuel price with reference to SA’s developing economy ,
the state of the commercial relationships within the sector , and the effect of
constitutional deve lopment and changes to the law after 1994.

[48] As part of this process and at great expense , the DoE appoint ed a cohort of
experts to report and make recommendations as to how the regulation could take
place in the most efficient and just manner possible.

[49] One of the experts that conducted intensive research into the model was Bates
White, a firm based in the US. The firm is specialist in providing econometric and
economic ana lysis with respect, inter alia, to fuel pricing across jurisdictions .
10

Bates White underto ok a detailed review of the market and reported and made
recommendations toward a new system .

[50] A further key stage in the process was the appointment of an entity called the
Institute for Petroleum and Research (IPSR). The expertise of this institute was
employed to enable the minister to set the activity -based margins for each part
of the industry on an annual basis.

[51] Ultimately , this process yielded the RAS in the form that it took prior to the
impugned decisions .

[52] A hallmark of the RAS is that it provides set or determinable recovery margins
across the various participa nts in the industry. This manifests in the cents per
litre that accrue to each identified activity along the retail petroleum value chain.

[53] Regulated firms may not increase prices so as to obtain profits in excess of these
stipulated margins. This consistency in the market allows for a set and stable
petrol price.

[54] The RAS, however, stopped short of regulating the retail industry in this respect.
This has been a bone of contention for ye ars and has resulted in the saga of
litigation of which th is application is the latest development.

[55] The RORO retailers obtain a margin on the basis of their ownership . The CORO
retailers previously got no margin.


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[56] The CORO retailers represented by their association, which is the third
respondent in this application sought to review the decision to implement the
2013 decision without setting a margin for them .

[57] This culminated in the judgment of Opperman J in FRA.

[58] The order in this judgment is central to the impugned decisions of the Minster in
this case . It deserves a sub- heading of its own .

Fuel Retailers Association v Minister of Energy (FRA)

[59] In FRA, the Fuel Retailers Association applied to review and set aside the 2013
decision to implement the RAS on the basis that it did not provid e for a margin
for retailers . The retailers were successful in th eir claim for a review of the RAS
model as embodied in the then Minister’s 2013 decision.

[60] The analysis by Opperman J of the process which had been undertak en by the
DoE for the purpose of the determination of the RAS under the 2013 decision is
detailed and requires no repetition here. It suffices to state that it is clear from
the judgment that the process unfolded over years and was rigorous and required
crucial expertise .

[61] The problem , as encapsulated by Opperman J , was as follows:
“ [22] As mentioned, the RAS stipulates a margin for each activity. This application is
concerned only with the margin allocated to the retailing sector within the petroleum
industry. The retail margin includes a return on the capital for the owner of t he assets
portion (CAPEX) through which they can achieve a return on their investment or capital
expenditure in the assets required along the petroleum value chain (tanks, storage units,
pumps, land and the like), and an operating costs portion (OPEX) w hich is a straight
cost-recovery facet to compensate parties for the costs involved in providing the services
required along the petroleum value chain. The OPEX recovery is not a profit -making
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margin. It covers costs such as labour and overheads incurred by the service station
operator (the retailer) in distributing petrol without adding a return or margin.
[23] The RAS does not differentiate between RORO and CORO sites but the margins
it provides for are based on and benchmarked against a RORO site.
[24] In theory, both the OPEX recovery and CAPEX return will be recovered by a
retailer in a RORO site. In a CORO site, the retailer will recover the OPEX and the oil
company the CAPEX return. ” (Emphasis added )
[62] Opperman J identified th at the ret ail margin contemplated would , in effect , be a
component stipulated for CORO retailers in the model which would take the form
of an amount that would compensate them for what was referred to as an
entrepreneurial compensation (EC). She characterised this compensation as
follows:
“An entrepreneurial compensation (EC) allocation (or trading margin) is a portion of the
retail margin, over and above the OPEX recovery, that would be allocated to retailers to
compensate them for the provision of services associated with operating service
stations. They ensure a return on a retailer’s risk and investment in providing services .”2
[63] In summary , the court found that there had been errors in the processes adopted
in making the determination s of margins in the retail sector . The central problem
identified in the judgment was what Opperman J saw as a failure of the Minister
to take cognisance of the fact that CORO sites predominate in the SA retail
industry .

[64] The Bates White report had recommended that a benchmarking analysis be
embarked upon in order to establish appropriate return on retail assets by the

2 Id at para 27.
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owners and the viability of service stations. An “efficient benchmark service
station model ” was proposed in the Bates White report .

[65] Opperman J had a diffi culty with the fact that th e benchmark service station
around which the economic modelling took place was a RORO site.

[66] The mandate of IPSR had been , inter al ia, to determine with reference to the
Bates White report and other industry dat a an appropriate rate of return for
owners for its assets based on a Capital Asset Pricing or CAPEX margin . Part of
the data considered was the benchmark service station contemplated in Bates
White report – i.e. a RO RO model.

[67] The CAPEX margin allowed to the owners of the sites was ultimately determined
based on the reasonable rate of return on investment of the site owners . No retail
margin was recommended in that, as the Minister explained, it was considered
that it was best for the retail industry to operate on the basis of market forces.

[68] In sho rt, the Minister took the decision not to create a retail margin and the 2013
decision approved the RAS model in this form.

[69] Whilst the process was un folding a Special Committee was appointed to deal
with the implementation of the RAS as the implementation p hase approached in
2011 . It was known as the RAS Technical Committee (RTC) .

[70] During the phasing in period between 2011 to 2013 , the R TC allowed for an
interim informal retail margin to flow to the retailers. This is relev ant in that it is
this informal position which has been reverted to by the Min ister in taking the
impugned decisions in issue.

[71] This interim retail allocation employed in the 2011 phasing in period entailed
certain components of the CAPEX due to owners being allocated to the retailers.
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These components of the CAPEX concerned are those known as : (i) the small
stock premium margin and (ii) the marketability adjustment margin.

[72] This phasing in position was univ ersally accepted as a makeshift temporary
arrangement which allowed for a bridging between the out going system which
had involved some return for retailers and the new RAS.

[73] It was cautioned in the report of ISPR that the if the shift of CAPEX margins
received by oil compan ies to retailer s was retained this was likely to have an
effect on the delicate commercial relationship s in the retail space in that such a
move would inevitably cause oil companies to extract returns from increased
franchise and rental fees .3 This stands to reason.

[74] After the 2013 decision , the DoE continue d to publish a notional EC or retail
margin as a guide to the industry. But this figure is part of the CAPEX which goes
to the o wners of the sites.

[75] It was accepted by Opperman J in FRA that the proposal that the CAPEX portion
of the retail margin be split between wholesalers and retailers (to accommodate
an EC) would requir e additional expe rt consultation .4The IPSR had stated that
this determination was beyond its mandate. The IPSR had also emphasised that
such a split would have to be based on ‘sound economic logic’5.


3 Id at para 52.
4 Id at para 63
5 Id at para 63.
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[76] It is important that the two components of the CAPEX which were employed in
the determination of the notional retail margin which was routinely published as
a guide only bear no relationship to the requirements of the retail industry . This
was accepted by Opperman J.6

[77] The carving out of these components was nothing more than convenience at a
time of transition of commercial relationships from the old system to the RAS .

[78] Under the impugned decisions the Minister has simply reinstated this interim
bridging phase of a deca de ago without any proper review process as to th e
viability of this move . These parts of the CAPEX are now abruptly afforded the
status of a set margin which owners are obliged to pay to the retailers . I will
expand on the effects of this move later .

[79] Opperman J appreciated that difficulties were likely to arise from a move which
resulted in the Capex being split between owners and retailers . She stated the
following with reference to the carving out of these components from the CAPEX :
“ Even if retailers were in a reasonable position to negotiate with the oil companies that
supply them (which they are not), the inevitable outcome of the DoE’s decision to allow
the EC to be determined by the commercial negotiations is that either the retailers are
under -compensated (because they cannot procure an adequate return for their retail
activities), or the asset -owners are under -compensated (because they have allowed
retailers to take an EC out of the CAPEX that they would otherwise be entitled to). This
flaw in the RAS means that it is arbitrary and incapable of giving effect to the objectives
that it was designed to achieve.”7

6 Id at para 117.
7 Id at para 118
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[80] This statement appears to acknowledge that this EC or retail margin must be
sourced as an extra feature of the RAS . Where this extra feature should be
sourced was not expanded upon by the court. It was, however , accepted by the
court that the determination of what a regulated split in the CAPEX between
owners and retailers would look like would entail a not insubstantial
reassessment of the industry .

[81] The court recognised th at the reassessment would be required to take into
account dynamic economic developments in the retail space of non -petroleum
activities such as convenience stores, eateries and the sale of non -controlled
products which contribute to the profitability of the retailor.

[82] To my mind the value attributable to the service station assets as drawcard for
other enterprises to be conducted by the retailer on site is indeed a relevant
consideration . For example, there may be sites where the retail of petrol is not
the focal point of the relationship, and the profit is intended to be derived from
the retailer’s use of the site for the other enterprises. Whether this aspect is likely
to be properly served by the implementation of a retail margin is beyond the
scope of this judgment. Judges are not economists.

[83] In her brief assessment of the position in the judgment , Opperman J
acknowledged that a decision by an oil company to forgo portion of its CAPEX
margin would inevit ably have the result that it would be unable to fully recover its
return on capital investment and that this would have repercussions for the whole
industry and for investment in the sector including investment by foreign oil
companies8.


8 Id at para 92.
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[84] After having framed the commercial relationship between the oil companies and
the retailers as one where the fate of retailers "is entirely in the hands of oil
compan ies”,9 the learned judge concluded by stating that “the very structure of
the RAS - the framework itself – is the source of the problem .”10

[85] The oil com panies argued that these assumptions were not necessarily founded
in evidence before the court . It was argued, there was no evidence to show that
the commercial negotiations had failed to provide adequate returns for retailers.

[86] The court found th is submission to be unpersuasive . It found that retailers were
forced to wo rk within a regulatory scheme that is hostile to their ability to profit
from the commercial relationship. This finding was made on the basis of what the
court found was an un equal bargaining relationship.

[87] The oil companies and the DoE argued that retail sites as to location ,
infrastructure, income and expenditure were all individual and thus not
necessarily subject to an exercise which was based on uniformity. They
emphasised that the spread was between a service station in the heart of
Sandton and one in a remote rural area where there was little motor vehicle
traffic .

[88] It was argued on behalf of the oil companies that without evidence of the market
data the court should be hard pressed to conclude that the lack of regulation led
to a lack of viability .


9 Id at para 93.
10 Id at para 97.
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[89] The court reje cted this argument and held that the mere fact of unequal
bargaining power in the relationship between owner and retailer make s for the
necessity of regulation in this sphere .11

[90] The thrust of the judgment appeared to be to the effect that any system that did
not contain a regul ated margin for the retail sector was objectionable per se .

[91] The order reads as follows:
“The original decision of the first respondent or her delegates [the Minister], taken in
November 2013, to implement the RAS without providing for a ring -fenced
Entrepreneurial Compensation (EC) to be claimed exclusively by the retailers in
Company Owned Retailer Operated (CORO) sites and/or specifying the items to be
claimed under the EC by retailers in CORO sites, is reviewed and set aside.
3. The determination of the treatment and calculation of the EC for retailers in CORO
sites as an allocation within the retail margin of the RAS (the determination) is referred
back to the first respondent [the Minister] to decide in accordance with this Court’s
judgment, within a period of 9 months from the date of this order.
4. Pending the determination, the 2020 RAS Benchmark Service Station Matrix and
any subsequently issued (or yet to be issued) Matrices are to remain in force and effect.
5. Pending the determination, the status quo of the outcome of each CORO site fuel
retailer’s negotiation with its fuel supplier/landlord is to be maintained and all new
agreements still to be concluded between CORO site retailer’s and fuel
suppliers/landlord s are to be on the basis that the Minister’s decision has not been
reviewed or set aside. ” (Emphasis Added)

11 Id at para 114.
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[92] The order thus appeared , on the face of it, to suggest that the Minister had not
in 2013 been and was not then at liberty to deny the retailers a margin.

[93] The oil companies sought leave to appeal the judgment to the SCA on the basis,
inter alia, that it sought, impermissibly , to dictate to the Min ister as to the ex ercise
of his executive powers .

[94] They raised also that there was no evidence before the court that the unregulated
retail space was fundamentally non-viable and that the assumptions made in this
regard had not been open to the court to make.

[95] One would think the proliferation of CORO sites in the sector in and of itself may
suggest some viability in the industry . However , the ordered review may indeed
uncover problems of the nature identified in the judgment. This process has ,
however , not yet been undertaken.

[96] In her judgment in the application for leave to appeal , Opperman J clarified that
her judgment did n ot intend to dictate that the Minister was not entitled to approve
a RAS which did not allow for a set margin . She stated that it was merely required
in terms of her judgment that there be further consideration of the model in its
entirety as it relates to CORO si tes. The court stated that there was , in fact, no
prescription from the court which infringed against the doctrine of separation of
powers.

[97] The application for leave to appeal by the applicants was, on this basis ,
dismissed with costs .

[98] What is of some significance to this application is that there is no indication in the
judgment that any information was placed before Opperman J in relation to the
timeframe and budget considerations which would be required for the Minister to
undertake the further consideration of the RAS model in its entirety.
20


[99] The judge , however , expressed herself to be acutely aware of the fact that the re
had to be a viable interim position in place pending the reconsideration of the
RAS. This position was held to be the status quo, and this is reflected in the terms
of the order .12

[100] In fact, the Minister is precluded by the order from allowing a position other than
the status quo pending the reconsideration which the judgment contemplates.

[101] The court said the following in regard to the ordered interim position.
“Clearly such a holding pattern [the retention of the status qu o] while the DoE
reconsiders the position is preferable as it will ensure contractual stability and will
eliminate commercial uncertainty. This is what I seek to achieve in the order that I intend
making. ”13
[102] It is important that the process contemplated by the court was that a n expert
assessment of the RAS based on an economic modelling around CORO sites
be obtained and that recommendations flowing from such a process would “have
to be traversed with all stakeholders and the Minister [would] have to decide
whether the RAS in its amended form is to be implemented .”14

[103] The date of the order in RAF was 22 September 2023, and the nine months
allowed to the process was thus set to expire b efore the end of May 2024.


12 Id at para 140.
13 Id at para 138.
14 Id at para 139.
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The Ministers response to the order in FRA
[104] The Minister did not embark on the process contemplated in the order - i.e. an
expert review of the RAS which used the CORO site as its benchmark and
entailed consultation with stakeholders .

[105] There has been no consultation with stakeholders and no expert consideration
of the complex econ omic inquiries that such a process expressly called for .

[106] The Minister abides this court ’s decision and has provided no information in
relation to why this process has not been undertaken in accordance with the
order in FRA.

[107] There may, however , be a clue in the fact that a set time period of only nine
months was allowed for this process.

[108] It appears that nine months may have been insufficient. This could be for a
number of possible reasons including the complexity of the ordered assessment
and budget constrain ts. Regardless, the Minister clearly understood himself by
the terms of the order to be immutably bound to act within this time limit.

[109] It seems to me that this understanding has led to him taking the precipitous step
in issue.

[110] What he should properly have done was place before a court the fact that the
time limit in the order had been set by Opperman J without any apparent
evidential assessment of the time it would actually take for the process to be
undertaken .

[111] On a proper assessment of what the process ordered by Opperman J would
entail based on evidence, one would think that a condonation of a failure to meet
22

the deadline imposed and a proper determination of a structural mandamus
going forward would have substantial prospects of success .

The aftermath of the Minster’s impugned decision s

[112] In resp onse to a complaint from the oil companies on 02 September 2024 to the
effect, inter alia, that they had not been consulted on these precipitous decisions
either as to content or to date of implementation , the Minister sent a notice in
terms of which he suddenly required that the oil companies individually provide
detailed submissions of the implementation challenges and their earliest
proposed implementation date. Such submissions were to reach the Minister by
16h00 on that same day.

[113] Thus , a matter of hours was allowed for submissions from the oil companies. It
was not clear whether the date for implementation which the decision set at 04
September 2024 would possibly be moved on the basis of these submissions.

[114] As it happened , there was no extension despite some hurried submissions by
some oil comp anies .

[115] The applicant alleges for the purposes of the review that this conduct of the
Minster amounts to procedural unfairness. It seems to me, prima facie, that this
ground of complaint has prospects of being upheld.

[116] There was , in tandem , an internal appeal process being conducted by the
applicants. The appeal failed on the basis that the Minister had made the
determination and could not sit in appeal of his own decision.

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The competing arguments which are raised against this background

[117] As indicated above , the applicant bases its case on section 172(1)(b) of the
Constitution . It argues that the decisions of the Minister are in direct
contravention of the court order of Opperman J and specifically the order s to: (i)
implement a comprehensive review of the RAS with the accent on a CORO
benchmark and including consultation with industry stakeholders ; (ii) to make
whatever changes to the RAS that are rationally recommended by that review
process ; (iii) to implement such changes in a rational manner ; and (iv) to maintain
the prevailing status quo in the industry pending the determination .

[118] The applicant characterises the impugned decisions as a cynical attempt by the
Minister to portray the decisions as complian ce with the order when they are , in
fact, a patent contraven tion. The conduct, furthermore , it argues, countermands
the interim facility put in place by Opperman J pending the contemplated review .

[119] This conduct , it argues , strikes at the heart of the rule of law. It thus argues that ,
once it is accepted that the decisions are in contravention of the court order, this
is determinative of the matter ; the decisions must be suspended, and there need
be no further consideration of any other aspects relating to justice and equity.

[120] In short , the argument of the applicant is that it is axiomatically the case that it is
just and fair under section 172(1)(b) to suspend a n administrative decision taken
in direct contravention of a court order.

[121] The third respondent argues , on the other hand, that the decisions represent
compliance with the court order and that the interim position required in the order ,
thus, no longer has any application .

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[122] It is not disputed on behalf of the third respondent that, to the extent that the
decisions represent non -compliance with the judgment , this would be actionable.


[123] The third respondent , however, takes issue with the cause of action under section
172 (1)(b) . The argument goes that the only cause of action available to the
applicant would have been an interdict against the implementation of the
decision s. This, it reasons , is because the case does not involve a constitutional
inquiry . It thus argues that section 172 (1)(b) has been , impermissibly , invoked in
a bid to circumvent having to establish the requirements for an interim interdict
against the Min ister – which, it is argued, the applicant is unable to do.

[124] I move now to consider these arguments .
Are the decisions in compliance with or in conflict with the order of Opperman J ?
[125] The inquiry begins with a determination of the meaning of the judgment . Once
this is established , it can be assessed whether the re has been compliance.

[126] The proper approach to interpreting court orders was set out by the Appellate
Division in Firestone15 and more recently by the Constitutional Court in Eke.16

[127] Essentially , the inquiry is purposive and is to be determined primarily from the
language of the judgement and order read as a whole.

[128] To my mind, there can be no doubt , on a reading of the judgment , that the court
required a n intensive expert reconsideration and a final determination of how the

15 Firestone South Africa (Pty) Ltd v Genticuro AG 1977 (4) SA 298 (A) at 304D -H.
16 Eke v Parsons 2016 (3) SA 37 (CC) at para 29.
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RAS should operate . It is, furthermore , abundantly clear that the court found that ,
in the interim to this final determination , there could be no change to the RAS.

[129] It is not seriously disputed that th e contemplated process has not been
undertaken. As I have said, there is no indication that it has even been
commenced.

[130] The order made it clear that, until a determination in accordance with the
judgment is made by the Minister, the interim position which would be most just
and fair was for the status quo to remain – i.e. the RAS in its then form to remain
in place.

[131] Either the Minster is obtuse or creating a pretext of compliance with the order. It
matters not what the explanation is. The objective fact is the decisions do not
constitute compliance with the order.

[132] The Minister’s attempt to impose an interim order devised by him in the stead of
the court imposed interim position is patently incompetent.

[133] Where there is, prima facie, an indication that an order handed down by a court
is being circumvented , this is an affront to the rule of law and cannot be tolerated.

[134] The actions of the Minister, if left, unchecked threaten to undermine public trust
and respect for the court and their orders.

[135] This stands as its own prejudice and, to my mind, is determinative.

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[136] I am thus in agreement with Mr Snyckers SC , for the applicant , that the patent
unlawfulness of the decisions suffice s, in and of itself, to satisfy the requirement
of justice and equity under section 172(1)(b).

[137] The decision by the Minister to substitute what is in effect a structural mandamus
in the o rder with a decision that stands in direct circum vention of such structural
mandamus is obviously in conflict with the terms of the judgment.

[138] This brings me to the consideration of whether the remedial provisions of section
172(1) (b) can be invoked on these facts .

Can section 172 (1)(b) be competently invoked?

[139] Section 172 (1) of the Constitution reads as follows in relevant part:
“172. Powers of courts in constitutional matters
(1.) When deciding a constitutional matter within its power, a cou rt
a. must declare that any law or conduct that is inconsistent with the Constitution is
invalid to the extent of its inconsistency; and
b. may make any order that is just and equitable …”

[140] Thus, provided there is a constitutional issue involved in the determination of the
matter at hand, section 172 remed ial power is available to an applicant for relief.
The third respondent argues that there is not such an issue at stake. This is akin
to the taking of an exception.

[141] The third respondent argues further that , even if it is accepted that there is a
constitutional issue at stake in the matter, section 172(1)(b) does not empower
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this court to grant the remedial relief in the form of the suspensive order sought
because the constitutional matter in question must involve a declaration of
constitutional invalidity .

[142] Thus , in sum , the argument of the third respondent is that the case is not a
constitutional matter and that section 172(1) remedial powers cannot be invoked
for this reason and in any even t these remedial powers can only be invoked in
the context of a declaration of inconsistency with the Constitution .

[143] As to the question of whether a constitutional issue is at stake, The Constitutional
Court in Jiba stated that “for a constitutional issue to arise the claim advanced
must require the consideration and application of some constitutional rule or
principle in the process of deciding the matter.17 ”

[144] The decision s are manifestly against the purpose of the judgment of Opperman
J. The reconsideration of the margin was patently meant to be one which allowed
for finality and clarity in the sector.

[145] The judgment considered what the position interim to this finality should be and
stated that the least disruptive interim position would be to maintain the status
quo being the industry being left to market forces and negotiation.

[146] Properly construed , the judgment means that pending the final determination of
the position a court ordered interim position will prevail.


17 General Council of the Bar of South Africa v Jiba [ 2019] ZACC 23; 2019 JDR 1194 (CC); 2019
(8) BCLR 919 (CC) at para 38.
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[147] In EFF v Gordhan 18the Constitutional Court held that courts have a general
power to suspend adminis trative action in constitutional matters and that such
power is sourced in section 172(1)(b) of the Constitution.

[148] As to the question of whether the issue must involve a declaration of invalidi ty,
this issue was comprehensively addressed by the Constitutional Court in Head
of Department: Mpumalanga Department of Education and Another v Hoërskool
Ermelo and Another19, where it was held that the Court's power to make a just
and equitable order within its jurisdiction did not depend on first declaring law or
conduct invalid or even on the dispute hinging on constitutional invali dity.

[149] Moseneke DCJ writing for the majority had the following to say on this issue:
“It is clear that section 172(1)(b) confers wide remedial powers on a competent court
adjudicating a constitutional matter. The remedial power envisaged in section 172(1)(b)
is not only available when a court makes an order of constitutional invalidity of a law or
conduct under section 172(1)(a). A just and equitable order may be made even in
instances where the outcome of a constitutional dispute does not hinge on constitutional
invalidity of legislation or conduct . This ample and flexible remedial jurisdi ction in
constitutional disputes permits a court to forge an order that would place substance
above mere form by identifying the actual underlying dispute between the parties and

18 Economic Freedom Fighters v Gordhan and Others; Public Protector and Another v Gordhan and
Others (CCT 232/19; CCT 233/19) [2020] ZACC 10; 2020 (8) BCLR 916 (CC); 2020 (6) SA 325 (CC)
(29 May 2020) at para 114
19 Head of Department: Mpumalanga Department of Education and Another v Hoërskool Ermelo and
Another 2010 (2) SA 415 (CC) .
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by requiring the parties to take steps directed at resolving the dispute in a manner
consistent with constitutional requirements .”20
[150] On the application of these principles, it is clear that the constitutional authority
of the judiciary is at issue . Thus , section 172(1)(b) is properly invoked .

[151] Thus , the argument that the applicant has not established a cause of action is
rejected. It is also accepted that the mere fact of the non -compliance in the
circumstances serves to establish th at the suspension is just and fair.

[152] But, even i f this were not the case , an evaluation of what is just and fair on the
facts of this case , regardless of the inherent unlawfulness for breach of the order
must also clearly favour the applicant. For the sake of completeness, I turn to
this separate evaluation.

[153] It is clear that, even if the applicant had sought to interdict the implementation of
the decisions, which would have been a n unnecessarily cumbersome and less
direct approach, the applicant would have succeeded . A consideration of the
balance of convenience would have served to keep the court -ordered interim
position in place pending in this context pending the review.

[154] To my mind , considerations of justice and fairness in the weighing up of the
considerations in both matters would result in similar outcomes.

[155] The assertion on behalf of the third respondent that the applicant has sought, by
way of resort to suspension , to obtain a less rigorous evaluation of just ice and
fairness is without any merit.


20Id at para 97.
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[156] A determination of a just and equitable order , of necessity , requires a careful
consideration of the interests of parties on both sides of the litigation21.

[157] The oil companies raise that the industry at large is based on long standing and
carefully crafted commercial relationships. There are , they say , back -to-back
agreements that sit like dominoes behind the relationships with the retailers.

[158] This government intervention which has come suddenly and with no consultation
and no warning puts these relationships in jeopardy. This , the applica nts argue ,
has the potential to bring about immediate closures of retail businesses. This ,
they say is especially true of the more marginal retailers who are being managed
by many of the oil -companies on the basis of the extending of loan finance and
other support structures which are designed to allow for their long-term viability.

[159] If these symbiotic commercial structures are to be dismantled , this will also have
a knock -on effect on the relationships which the retailers have with others – for
example persons who run convenience stores on the sites.


[160] The interim feature of the relief is a further problem for the industry. It stands to
reason that the suspension or cancellation of these pivotal relationships in this
sector will make it impossible for projections and business policies to be set along
the fuel chain.



21 Hoërskool Ermelo - above n 10 supra at para 96.
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[161] This has negative implications for business confidence and foreign investment in
this sector.

[162] The uncertainty that this brings is prejudicial to all parties , including the retailers.
Recall , the warning of IPSR when the RAS was considered in the first instance
to the effect that the likely result of the imposition of a margin which takes from
the owners will be a r aising of the cost of the use of the services for the retailers.

[163] The point made by the applicant is that these lease s, supply contracts, and
service contracts which are currently in place as a natural incident of market
forces serve to balance risk and return .

[164] A renegotiation of these contracts would be costly and time consuming for all
parties. The scope for legal disputes to arise is wide .

[165] The applicant makes a compelling case to the effect that the disruption to the
retailer industry will hit retailers who may be operating on slim profit margins
hardest . Closures of retail sites will lead to significant job losses across the value
chain.

[166] These sites often serve as economic and social hubs in their communities. This
is particularly relevant in ru ral areas. The closure of these sites would reduce
local economic activity and create insecurity in marginal areas.

[167] The applicants raise that many marginal sites are operated by historically
disadvantaged individuals and if these decisions are not suspended this will
affect the drive towards economic empowerment.

[168] The lack of certainty in such a vital sector which is dominated by international
companies has the potential to deter investment across the board and not only
in the fuel industry.
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[169] Furthermore , on a prima facie assessment of the review ground s, there are
substantial prospects of success for the applicant with respect to the Part B relief.
Urgency

[170] The weighing up of the justice and equity consideration reveal also that these
decisions must be suspended urgently. The rule of law pre judice also dictates
that the matter be treated as one of urgency .

Costs

[171] To my mind there is no reason why the costs should not follow the re sult. The
only respondent that joined issue with the applicant was the third respondent.
The other respondents sensibly did not put in opposition.

[172] I agree with Mr Snyckers that the matter is sufficiently complex and important to
warrant a cost award on scale C.

Order

[173] In the circumstances , I grant the following order.

1. The applicant’s non-compliance with the Uniform Rules of Court relating to
forms, service and time periods is condoned, and this application is dealt with
as a matter of urgency under Uniform Rule 6(12).

2. Pending the final adjudication of the relief that will be sought in Part B of
this application:
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Heard: 24 February 2025
Delivered: 21 March 2025
APPEARANCES:
Applicant’s counsel: Adv. F Snyckers SC
Adv. D Sive
Applicant’s Attorneys: Fasken (Bell Dewar Incorporated)
Third Respondent's Counsel: Adv. G Quixley
Adv. F Hobden
Third Respondent Attorneys: Seton Smith & Associates









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