THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 180/2025
In the matter between:
QI LOGISTICS (PTY) LTD APPELLANT
and
THE COMMISSIONER FOR THE SOUTH AFRICAN RESPONDENT
REVENUE SERVICE
Neutral citation: QI Logistics (Pty) Ltd v The Commissioner for SARS (180/2025)
[2026] ZASCA 96 (3 July 2026)
Coram: ZONDI DP, SMITH and UNTERHALTER JJA, SERITI and MOLITSOANE
AJJA
Heard: 21 May 2026
Delivered: This judgment was handed down electronically by circulation to the parties’
representatives by email, publication on the Supreme Court of Appeal website and
released to SAFLII. The date and time for the handing down of the judgment is deemed
to be 11:00 on 3 July 2026.
Summary: Customs and Excise Act 91 of 1964 – statutory obligations of clearing
agents appointed under s 64B – proof required to acquit goods entered for removal in
bond or in transit – Commissioner’s assessment of proof of export – liability for duties and
levies – separate discretion under s 88(2) to demand an amount in lieu of forfeiture –
2
distinction between procedural rationality and procedural fairness – review under the
principle of legality and s 6(2)(f)(ii) of the Promotion of Administrative Justice Act 3 of 2000
– remittal to the Commissioner.
3
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Davis J sitting as court of
first instance):
1 The appeal is upheld with costs, including the costs of two counsel where so
employed.
2 The order of the high court is set aside and replaced with the following order:
‘1. The respondent’s decisions to hold the appellant liable for import duties and to
demand an amount in lieu of forfeiture under the letter of demand dated 3 July
2019, are reviewed and set aside.
2. The matter is remitted to the respondent for reconsideration.
3. The respondent is directed to pay the costs of the application, including the costs
of two counsel where so employed.’
JUDGMENT
Smith JA (Zondi DP, Unterhalter JA, Seriti and Molitsoane AJJA concurring):
Introduction
[1] On 31 July 2020, QI Logistics (Pty) Ltd (QI), a licensed clearing agent under the
Customs and Excise Act 91 of 1964 (the Act), instituted proceedings in the Gauteng
Division of the High Court, Pretoria (the high court) to review and set aside the decisions
of the Commissioner for the South African Revenue Service (the Commissioner) holding
it liable for import duties and levies arising from imported fuel , and requiring it to pay an
amount in lieu of forfeiture (the impugned decisions). The Commissioner’s letter of
demand, which was issued pursuant to the impugned decisions , was based on the
assertion that QI had failed to provide the information and documents required to prove
that the fuel had been duly exported in accordance with the statutory declarations it had
processed. The letter required QI to pay R35 080 475,35.
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[2] QI contended that it acted only as a ‘sub -agent’ in relation to 67 consignments of
fuel moved from Mozambique to Zimbabwe and Botswana under removal in transit and
removal in bond procedures. It asserted that it prepared the necessary transit
documentation but had no proprietary interest in the goods and exercised no control over
their transport, sale, or delivery. According to QI, the export documents obtained in the
ordinary course of business showed that the goods had in fact been exported, and there
was no reason to doubt their authenticity or accuracy.
[3] In its judgment of 8 August 2024, the high court rejected QI’s contention that it
avoided liability because it was not the principal clearing agent and had played only a
limited role in the movement of the fuel. The high court held that the decisive enquiry
under the Act was not the extent of QI’s commercial involvement, but whether QI had
satisfied the statutory requirements for exemption from liability. On the high court ’s
approach, QI failed to establish due export after the notices of intent were issued and did
not bring itself within the exculpatory requirements of s 99(2) of the Act. The high court
accordingly held that QI remained liable under the Act. The appeal is with the leave of the
high court.
[4] QI contended that the impugned decisions constitute administrative action. It
therefore brought the review application under the Promotion of Administrative Justice Act
3 of 2000 (PAJA), alternatively as a rationality review under the principle of legality. On
appeal, however, the issues have narrowed. QI no longer persists with the argument that
its liability was limited because it acted only as a ‘sub -agent’, had no proprietary interest
in the fuel, and was not involved in its transportation or export. That concession was
correctly made. Although the affidavits dealt at some length with whether QI had furnished
adequate proof of export and whether it attracted liability despite its limited role, the
adequate proof of export and whether it attracted liability despite its limited role, the
appeal is now directed to the rationality of two decisions: the decision to hold QI liable for
import duties, and the decision to demand an amount in lieu of forfeiture. The central
question is therefore whether the Commissioner’s decisions conform to the standards of
rationality under PAJA or the principle of legality.
5
[5] QI advances two related complaints about defects in the Commissioner’s decision-
making process. The first concerns the treatment of the material submitted in response
to the notices of intent. QI asserts that the contemporaneous record does not show that
the Commissioner engaged rationally with that material, or explain why it was insufficient
to prove due export of the fuel. The second concerns the separate decision under s 88(2)
to demand an amount in lieu of forfeiture . QI contends that it was not afforded a proper
opportunity to make representations directed to the exercise of that discretion, and that
no reasons were provided when they were requested.
[6] I address those issues in the following sequence. First, I set out the material facts.
Secondly, I consider the statutory obligations imposed on clearing agents under the Act.
Thirdly, I examine the principles governing procedural rationality and , insofar as the s
88(2) decision is concerned, procedural fairness. Fourthly, I consider whether the reasons
advanced by the Commissioner were rationally connected to the impugned decisions.
Fifthly, I deal with the significance of the Commissioner’s failure to furnish reasons after
QI requested them. And finally, I consider the issue of a just and equitable remedy.
Factual background
[7] In 2018, QI received instructions from another clearing agent to process the
removal in transit and removal in bond on behalf of several import and export companies,
for the clearance of fuel shipments by road through the Komati border into Botswana and
Zimbabwe. During the period April 2018 to August 2018, QI processed the required
customs form s (SAD500) to clear certain consignments of the fuel imported from
Mozambique. The imported fuel constituted goods for removal in transit for export to
Zimbabwe and for removal in bond for export to Botswana, the latter being a member of
the South African Customs Union.
the South African Customs Union.
[8] In 2019, the Commissioner informed QI that he was auditing goods transported in
transit through the Republic from Mozambique to Zimbabwe during the period
1 April 2018 to 31 August 2018 . He requested QI to submit the relevant clearance
documents for consignments processed during that period. In response, QI provided
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copies of the acquittal and related documents in its possession. The Commissioner
thereafter issued a first notice of intent ion to raise debt (notice of intent) , alleging
contraventions of ss 18(13) and 75(19) of the Act and claiming approximately R47 million
in duties, levies and penalties, in terms of ss 80, 88(2) and 91 of the Act.
[9] In broad terms, th ese provisions regulate the movement and acquittal1 of goods
removed in transit or in bond, the consequences where such goods are not duly
accounted for or are diverted from their declared destination, the liability for duties and
other charges that then arise, and the Commissioner’s power to claim forfeit ure or an
amount in lieu of forfeiture. The Commissioner claimed that QI was liable on the basis
that certain entries lacked endorsements recording arrival and exit at the relevant border
posts, with the result – according to the Commissioner – that the goods had to be treated
as diverted from their declared destinations or delivered within South Africa.
[10] QI, through its representative, Custex Consulting (Custex), submitted detailed
representations in response , together with four lever -arch files of acquittal documents.
There is no evidence that the Commissioner engaged with those representations.
Instead, he issued a second notice of intent that substantially repeated the earlier
allegations and sought to hold QI liable for R12 719 955,52 in duties and penalties in
respect of 26 consignments of fuel.
[11] On 3 July 2019, the Commissioner issued the letter of demand, holding QI liable
for R14 199 139,35 in duties and R20 881 366 in penalties in lieu of forfeiture. The
reasons stated in the letter of demand were sparse and repeated only that some entries
were not endorsed for arrival and exit.
[12] On 15 August 2019, Custex requested reasons why the documents were said to
be insufficient to prove due acquittal and on what basis the Commissioner had decided
be insufficient to prove due acquittal and on what basis the Commissioner had decided
1 In this context, to ‘acquit’ in customs and excise parlance means to establish, through supporting export
documents, that the transit entry was properly discharged and that the goods in fact left the Republic as
declared.
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to demand payment of a sum of money in lieu of forfeiture. It is common cause that the
Commissioner never furnished any reasons.
[13] The Commissioner has since accepted that some of the fuel consignments listed
in the schedule to the letter of demand were duly exported. Those consignments have
subsequently been removed from the schedule.
Statutory responsibilities of clearing agents
[14] The Act imposes exacting responsibilities on licensed clearing agents. Section 64B
permits only a licensed clearing agent to make entries or submit bills of entry for reward
on behalf of a principal. But the role is not merely mechanical. A clearing agent does more
than lodge entries and supporting documents : by acting in that capacity, it assumes
defined statutory responsibilities for customs compliance.
[15] Those responsibilities are particularly important where goods are entered for
removal in bond. Section 18(2) provides that a clearing agent is liable for duty on such
goods. If the goods are destined for export, that liability falls away only when the agen t
shows that they were duly exported in accordance with the relevant statutory declaration.
Section 18(3) accordingly requires the agent to obtain, retain, and produce documentary
proof that the goods were properly acquitted.
[16] The proof of acquittal is central because the Act treats unexplained non -acquittal
seriously. Section 18(13)(a)(i) prohibits bonded goods from being diverted to a destination
other than that declared on entry, or from being delivered within the Republic, without the
Commissioner’s permission. Where the agent cannot produce valid proof that the goods
were acquitted in accordance with the declaration, the goods may be treated as unlawfully
diverted.
[17] Section 99(2)(a) creates a further and distinct basis on which a clearing agent may
be liable for its principal’s obligations under the Act, including duties and related charges.
be liable for its principal’s obligations under the Act, including duties and related charges.
The agent may avoid that liability only by showing acquittance or bringing itself within the
8
statutory exception: it must prove that it was not party to the non-fulfilment, that it reported
the non-compliance to the Commissioner as soon as reasonably practicable, and that it
took all reasonable steps to prevent the breach. The section therefore places the burden
on the clearing agent to establish the facts necessary to bring itself within the statutory
exception.
[18] Finally, the Act separately addresses the consequences where goods liable to
forfeiture cannot readily be found. Section 88(2) (a)(i) empowers the Commissioner, in
those circumstances, to demand an amount in lieu of forfeiture. It provides:
‘If any goods liable to forfeiture under this Act cannot readily be found, the Commissioner may,
notwithstanding anything to the contrary in this Act contained, demand from any person who
imported, exported, manufactured, warehoused, removed or otherwise de alt with such goods
contrary to the provisions of this Act or committed any offence under this Act rendering such goods
liable to forfeiture, payment of an amount equal to the value for duty purposes or the export value
of such goods plus any unpaid duty thereon, as the case may be.’
This provision is discretionary in form. It therefore becomes important, later in the
analysis, to distinguish the liability that may arise from non -acquittal from the separate
decision whether to demand an amount in lieu of forfeiture.
Procedural irrationality
[19] Procedural rationality concerns whether the decision-making process is rationally
connected to the purpose for which the power was conferred, the empowering provision,
the information before the administrator and the reasons given. Both the principle of
legality and s 6(2)(f)(ii) of PAJA, 2 guard against arbitrary or capricious decision-making.
Procedural rationality must, however, be distinguished from substantive rationality .
2 Section 6(2)(f)(ii) provides that a court or tribunal has the power to judicially review administrative action
if:
‘the action itself—
if:
‘the action itself—
(ii) is not rationally connected to—
(aa) the purpose for which it was taken;
(bb) the purpose of the empowering provision;
(cc) the information before the administrator; or
(dd) the reasons given for it by the administrator.’
9
Procedural rationality concerns the process by which the decision was reached; whereas
substantive rationality concerns the rationality of the outcome of that process.
[20] The Constitutional Court has made clear that procedural rationality is an incident
of the principle of legality. In Democratic Alliance v President of the Republic of South
Africa,3 the Court explained that that both the process by which the decision is made and
the decision itself must be rational. An irrational step in that process may therefore taint
the ultimate decision and render it reviewable.
[21] The distinction between procedural rationality and procedural fairness is also
important. Procedural rationality concerns whether the steps taken by the decision-maker
bear a logical connection to the decision that has been taken. Procedural fairness, by
contrast, concerns the treatment of the affected party, including whether that party was
given a proper opportunity to be heard. Albutt v Centre for the Study of Violence and
Reconciliation (Albutt).4
[22] The Constitutional Court has also emphasised that the reasonableness test and
that of rationality must be kept conceptually distinct. That is because ‘[r]easonableness is
generally concerned with the decision itself. ’5 Although reasonableness and rationality
may overlap, they are conceptually different. As the Constitutional Court explained in
Albutt: 6
‘The Executive has a wide discretion in selecting the means to achieve its constitutionally
permissible objectives. Courts may not interfere with the means selected simply because they do
not like them, or because there are other more appropriate means that could have been selected.
But, where the decision is challenged on the grounds of rationality, courts are obliged to examine
the means selected to determine whether they are rationally related to the objective sought to be
achieved. What must be stressed is that the purpose of the enquiry is to determine not whether
3 Democratic Alliance v President of South Africa and Others [2012] ZACC 24; 2012 (12) BCLR 1297 (CC);
2013 (1) SA 248 (CC); 2012 (12) BCLR 1297 (CC).
4 Albutt v Centre for the Study of Violence and Reconciliation and Others [2010] ZACC 4; 2010 (3) SA 293
(CC); 2010 (2) SACR 101 (CC); 2010 (5) BCLR 391 (CC).
5 Democratic Alliance v President of the Republic of South Africa para 29.
6 Albutt para 51.
10
there are other means that could have been used, but whether the means selected are rationally
related to the objective sought to be achieved. And if, objectively speaking, they are not, they fall
short of the standard demanded by the Constitution.’
[23] Two principles guide the rationality enquiry. The first concerns the duty to engage
with relevant material. As the Constitutional Court made clear in Democratic Alliance v
President of the Republic of South Africa , 7 a failure to consider material relevant to the
exercise of public power may render the process irrational. That is because the decision-
maker then fails to take account of information that bears directly on the purpose for which
the power was conferred. That principle is directly engaged here because the
Commissioner’s decision to hold QI liable depended on an assessment of the very
documents and representations submitted in response to the notices of intent. The same
principle is also relevant to the s 88(2) decision. Because that provision confers a
discretion, the Commissioner had to consider the factors that could rationally bear on
whether an amount in lieu of forfeiture should be demanded at all, including the nature of
the alleged contravention, QI’s role, the explanation advanced, any prejudice to the fiscus
and whether the severe consequence of forfeiture was proportionate.
[24] The second principle concerns the limited role of a reviewing court. A court does
not substitute its own view of the facts merely because a different conclusion may have
been open. 8 That limitation is important in this appeal because th is Court is not called
upon to decide whether each consignment was in fact duly acquitted or whether the
Commissioner ought, on the merits, to have accepted QI’s documents. Nor is it for th is
Court to decide for itself whether forfeiture, or an amount in lieu of forfeiture, would have
been appropriate. The question is narrower: whether the Commissioner acted lawfully
been appropriate. The question is narrower: whether the Commissioner acted lawfully
and rationally on the material before him, and whether the contemporaneous re asons
disclosed a rational path from that material to the decisions taken. These two principles
7 Democratic Alliance v President of South Africa and Others paras 39 – 40.
8 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others 2004 (4) SA 490
(CC); 2004 (7) BCLR 687 (CC).
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therefore require scrutiny of the decision -making process without converting the review
into a merits appeal.
QI’s liability for duties and an amount in lieu of forfeiture
[25] The abovementioned principles must now be applied separately to the two
decisions implicated in this appeal. Although the two impugned decisions formed part of
the same letter of demand and arose from the same underlying transactions, they are
legally distinct. The decision to hold QI liable for duties and related charges depended
principally on whether the statutory requirements for liability were met and whether the
Commissioner rationally assessed the proof of export placed before him. The decision to
demand an amount in lieu of forfeiture under s 88(2) involves a distinct discretionary
power, requiring a separate consideration of whether the forfeiture-related demand should
be made at all and, if so, on what basis. The distinction matters because the procedural
requirements attaching to those decisions are not identical.
[26] In the circumstances of this case, the question of substantive rationality does not
arise. This is so because the alleged defect lies at an earlier stage, namely that there is
no contemporaneous record showing that the Commissioner undertook a rational
evaluation of the documentary evidence before reaching the impugned conclusions. In
particular, whether the record discloses how the Commissioner considered the material
furnished by QI , through Custex, or why that material was rejected. Those documents
were tendered to establish due acquittal and the export of the fuel and therefore bore
immediately on the legal basis for the demand. Whether the Commissioner rejected or
accepted them, he was required to do so after a rational evaluation of their contents,
reliability and legal sufficiency. A mere repetition that some entries lacked arrival or exit
endorsements does not explain whether the other acquittal material was considered, why
endorsements does not explain whether the other acquittal material was considered, why
it was inadequate, or how the statutory requirements remained unsatisfied.
[27] The enquiry is not whether the material placed before the Commissioner was, on
its own, sufficient to establish due acquittal, nor whether an adverse conclusion could
ultimately have been reached on a properly considered record. Those are merits related
12
questions. The relevant question is more confined: whether the contemporaneous
reasons disclose why the Commissioner rejected QI’s acquittal documents. That required
some indication whether the documents were considered incomplete, unreliable, legally
insufficient, inconsistent with other customs records, or deficient for some other identified
reason. In the absence of that explanatory link, the Court cannot test whether the
decision-making process was rationally connected to the decision taken by the
Commissioner. Any attempt to assess the rationality of the outcome itself would therefore
be speculative and would risk converting this review into an impermissible merits
determination on an incomplete record.
[28] This case is therefore properly resolved as one of procedural irrationality and
fairness. Once the process is shown to be irrational because relevant material was not
demonstrably considered, the reasons are inadequate and no proper basis for the
exercise of the forfeiture discretion is disclosed, both the decision to hold QI liable for
unpaid duties and the demand for an amount in lieu of forfeiture must be remitted for
reconsideration. Whether a substantively rational outcome may yet be reached is for the
Commissioner to determine, on proper engagement with the record, and not for this Court
to pre-empt in review proceedings.
[29] QI’s challenge to the rationality of the decision to hold it liable for import duties —
and therefore to the letter of demand itself — turns on the adequacy of the reasons given
for that decision in the notices of intent and the letter of demand. There is no
contemporaneous record indicating that any additional reasons were considered.
[30] The letter of demand – which repeats the reasons stated in the notices of intent –
contains no more than bare assertions that certain entries were not endorsed for arrival
and exit. The following excerpt from that letter demonstrates the full extent of the reasons
provided by the Commissioner:
provided by the Commissioner:
‘Upon analysing the said documents our office established that some of the entries were not
marked for arrival and exit at both ports of exit which is Beitbridge border post for goods removed
in transit (RIT) and Botswana borders, for goods removed in bond (RIB). On the
13
27th of August 2018 letters requesting documents regarding movement of the trucks/hauliers
concerned were sent and to date no response has been received from your office providing such
documents or clarity of issues raised.’
The letter of demand further records that the Commissioner issued the demand because
QI had allegedly failed to provide the requested documents.
[31] The Commissioner gave a detailed treatment to the liability issue in his answering
affidavit, but this in turn triggered a series of further affidavits of reply and rebuttal - none
of which can cure the failure of procedural rationality in respect of the letter of demand .
This is because an irrational decision cannot ordinarily be saved by ex post facto
rationalisation in litigation, as this Court emphasised in National Lotteries Board v South
African Education and Environment Project.9 In this case, the Commissioner had already
committed himself to the reasons stated in the notices of intent and the letter of demand.
QI’s later request for reasons gave him a further opportunity to explain or elaborate on
that position, but he did not do so. The attempted ex post facto justification in the
answering affidavits must therefore be disregarded, and those further reasons need not
be considered.
[32] It is manifest that t he contemporaneous reasons advanced by the Commissioner
do not demonstrate rational engagement with the documents provided, nor do they
explain why the material failed to prove due acquittal. That omission is significant in the
context of this case because QI’s liability depended not simply on the absence of
endorsements on some entries, but on whether the documents submitted in response to
the notices of intent were capable of establishing that the fuel had in fact been exported
in accordance with the relevant declarations. The Commissioner was therefore required
to consider the acquittal documents, identify any material deficiencies in them, and
to consider the acquittal documents, identify any material deficiencies in them, and
explain why they did not satisfy the statutory requirements.
9 National Lotteries Board v South African Education and Environment Project [2011] ZASCA 154; [2012]
1 All SA 451 (SCA); 2012 (4) SA 504 (SCA).
14
[33] A bare statement that certain entries were not marked for arrival and exit does not
show that this evaluative task was performed. Nor does it disclose whether the
Commissioner rejected the documents because they were incomplete, unreliable,
inconsistent with customs records, or legally insufficient. The defect is compounded by
the Commissioner’s failure to provide reasons when requested. On this footing, the letter
of demand lacks a demonstrated rational connection between the information before the
Commissioner, the reasons given and the decision to hold QI liable for the unpaid duties.
It accordingly falls to be reviewed and set aside on this basis.
[34] The same procedural defect affects the decision to demand an amount in lieu of
forfeiture under s 88(2) of the Act . Liability for duties and levies may arise ex lege once
the statutory requirements are met. By contrast, s 88(2) confers a discretionary power. If
goods liable for forfeiture cannot readily be found, the Commissioner may (my emphasis)
demand payment of an amount equal to their value for duty purposes or their export value,
together with any unpaid duty. The Commissioner must therefore determine whether the
jurisdictional facts for forfeiture exist, whether a demand in lieu of forfeiture should be
made and, if so, the amount to be demanded within the statutory limit.
[35] That discretion is not merely mechanical. It involves a distinct and reviewable
exercise of public power, which must be undertaken lawfully and rationally, consistently
with the purpose of the forfeiture provisions: to protect the revenue and the integrity of
customs control without imposing arbitrary or disproportionate punishment. Where the
decision to hold QI liable for duties is vitiated by procedural irrationality, the forfeiture -
related demand cannot stand on that foundation. A valid determination of duty liability is
logically anterior to the exercise of the discretion under s 88(2). But the converse does
logically anterior to the exercise of the discretion under s 88(2). But the converse does
not follow: even where liability for duty has properly been established, the Commissioner
must still consider independently whether the jurisdiction al facts for s 88(2) exist and
whether, in the circumstances, it is appropriate to demand an amount in lieu of forfeiture.
[36] While procedural fairness does not arise in relation to the Commissioner’s decision
to hold QI liable for duties – because QI does not assert non-compliance with the audi
15
alteram partem principle – the position is different in relation to the decision under s 88(2).
The relationship between the two decisions may be stated in two propositions. First, a
valid determination of duty liability is logically anterior to a demand for an amount in lieu
of forfeiture. Secondly, such a demand is not an automatic consequence of duty liability:
it involves a separate discretion that must be exercised independently. Because that
discretion required the Commissioner to decide whether, and on what terms, the power
should be exercised, QI had to be afforded a proper opportunity to make representations
directed to that issue. It is common cause that no such invitation was extended before the
s 88(2) decision was taken.
[37] That was necessary because, as explained above, the considerations relevant to
that discretionary sanction differ from those relevant to liability for duties. Although some
reasons were advanced for holding QI liable for duties – inadequate though they may be
– no reasons whatsoever were provided for demanding an amount in lieu of forfeiture
under s 88(2). That omission supports the inference that the Commissioner proceeded
on the mistaken view that liability for duties automatically triggered the severe
consequences of forfeiture or payment of an amount in lieu thereof.
[38] In conclusion, the evidence discloses no indication that the Commissioner treated
forfeiture as a distinct issue requiring separate consideration. In particular , there is no
indication that he invited QI to make representations on forfeiture, had considered the
relevant factors before deciding whether a forfeiture-related demand was appropriate, or
identified the basis for demanding an amount in lieu of forfeiture. In the absence of any
disclosed basis showing how the s 88(2) discretion was exercised, that decision too is
irrational and liable to be set aside.
The failure to provide reasons
irrational and liable to be set aside.
The failure to provide reasons
[39] The Commissioner’s failure to provide reasons when requested to do so is not
without consequence. The duty to give reasons serves both individual and institutional
purposes. It enables the affected person to understand why the decision was taken and
to decide whether to challenge it . It also promotes accountability, transparency and
16
rational administration. As the Constitutional Court explained in Koyabe and Others v
Minister for Home Affairs and Others,10 reasons are central to the constitutional culture of
justification. Section 5 of PAJA gives affected persons a right to reasons where their rights
have been materially and adversely affected by administrative action. Once reasons are
properly requested, the administrator must provide adequate written reasons within the
prescribed period, unless a lawful exception applies. The reasons need not be elaborate,
but they must be intelligible and informative enough to disclose the administrator’s
reasoning path.11
[40] Where reasons are absent or inadequate, and the contemporaneous record does
not reveal the basis for the decision, a court may infer that the administrator failed to
engage with relevant material or failed properly to exercise the power conferred. In terms
of s 5(3) of PAJA, if an administrator fails to furnish adequate reasons for an administrative
action, it must, subject to subsection (4)12 and in the absence of proof to the contrary, be
presumed that the administrative action was taken without good reason. And as explained
above, failure to provided reasons can ordinarily not be remedied by an ex post facto
rationalisation in litigation.
[41] The absence of reasons assumes particular significance where, as here, the
decision involves the exercise of a discretion . In such a case, reasons perform an
essential explanatory function. They enable a court to determine whether the decision-
maker identified and considered the relevant factors, excluded irrelevant considerations,
and exercised the discretion in a manner rationally connected to the statutory purpose
and the information before the administrator.
10 Koyabe and Others v Minister for Home Affairs and Others (Lawyers for Human Rights as Amicus Curiae)
[2009] ZACC 23; 2010 (4) SA 327 (CC); 2009 (12) BCLR 1192; see also: Mphahlele v First National Bank
of SA Ltd 1999 (2) SA 667 (CC).
11 Minister of Environmental Affairs and Tourism v Phambili Fisheries (Pty) Ltd 2003 (6) SA 407 (SCA) and
National Lotteries Board v South African Education and Environment Project fn 9.
12 Subsection 5(4) provides: ‘An administrator may depart from the requirement to furnish adequate reasons
if it is reasonable and justifiable in the circumstances, and must forthwith inform the person making the
request of such departure.’
17
[42] In the circumstances of this case, the Commissioner’s failure to provide reasons
justifies the inference that he did not engage properly with the material furnished by QI or
exercise the discretion under s 88(2) in the manner required by law. QI responded to the
notices of intent with detailed representations and extensive acquittal documents. It later
asked specifically why those documents were said to be insufficient and why an amount
in lieu of forfeiture had been demanded. The Commissioner gave no answer. Nor does
the contemporaneous record disclose any evaluation of the documents, any finding that
they were unreliable or legally inadequate, or any consideration of the factors relevant to
the exercise of the s 88(2) discretion.
[43] The absence of reasons leaves unexplained both the rejection of QI’s submitted
proof of export and the separate decision to impose a forfeiture-related demand. In those
circumstances, the only proper inference is that the Commissioner failed to demonstrate
the rational engagement and discretionary judgment required by law before the letter of
demand could lawfully be issued.
Just and equitable remedy
[44] What remains then is the question of an appropriate remedy under s 8 of PAJA. In
terms of s 8(1) of PAJA, a reviewing court has wide powers to determine a just and
equitable remedy but ‘ substituting or varying the administrative action or correcting a
defect resulting from the administrative action ’ is only allowed in ‘exceptional cases’. As
the Constitutional Court explained in Trencon Construction (Pty) Ltd v Industrial
Development Corporation of South Africa Ltd and Another ,13 substitution is, even under
common law, an exceptional remedy, while remittal remains the ordinary course. That
approach accords with the earlier decision of this Court in Gauteng Gambling Board v
Silverstar Development Ltd and Others,14 which held that a court should ordinarily refer a
Silverstar Development Ltd and Others,14 which held that a court should ordinarily refer a
matter back to the administrator unless exceptional circumstances justify departure from
that rule.
13 Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Limited and
Another [2015] ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC).
14 Gauteng Gambling Board v Silverstar Development Ltd and Others 2005 (4) SA 67 (SCA).
18
[45] Substitution is generally inappropriate where the administrator has not yet properly
performed the evaluative task entrusted to it by statute, where the contemporaneous
record is incomplete, and where the court is not in as good a position as the decision -
maker to assess the customs documentation, determine whether the goods were duly
acquitted, and decide whether a penalty should be imposed. Those difficulties are all
present here and weigh heavily against substitution. Nor can it be said on the present
record that the outcome is a foregone conclusion. The identified defects go to the
rationality of the decision-making process, not to the inevitable substantive result.
[46] For these reasons, and mindful of the separation of powers, the matter should be
remitted to the Commissioner for reconsideration. The appeal must therefore succeed to
this extent.
[47] In the result the following order is made:
1 The appeal is upheld with costs, including the costs of two counsel where so
employed.
2 The order of the high court is set aside and replaced with the following order:
‘1. The respondent’s decisions to hold the appellant liable for import duties and to
demand an amount in lieu of forfeiture under the letter of demand dated 3 July
2019, are reviewed and set aside.
2. The matter is remitted to the respondent for reconsideration.
3. The respondent is directed to pay the costs of the application, including the costs
of two counsel where so employed.’
________________
J E SMITH
JUDGE OF APPEAL
19
Appearances:
For the appellant: C E Puckrin SC, J M Barnard and L D Haskins
Instructed by: Shepstone & Wylie, Durban
MM Hattingh Attorneys Inc, Bloemfontein
For the respondent: M P D Chabedi SC and W N Mothibe
Instructed by: Ledwaba Mazwai Attorneys, Pretoria
Honey Attorneys, Bloemfontein.