Katapi Trading CC v Minister Mines and Energy and Others (APPEAL 10 of 2011) [2011] NAHC 324 (28 October 2011);
CASE
NO: A 10 / 2011
IN
THE HIGH COURT OF NAMIBIA
In the matter between:
KATAPI TRADING CC
….........................................................................................APPLICANT
and
THE MINISTER OF MINES AND ENERGY
…..............................................1ST
RESPONDENT
SHELL NAMIBIA LIMITED
….......................................................................2ND
RESPONDENT
PAULO COIMBRA
…...................................................................................3RD
RESPONDENT
JOAO COIMBRA
…......................................................................................4TH
RESPONDENT
SANDRA MARIA COIMBRA
…....................................................................5TH
RESPONDENT
OSWALDO MENENDES
…..........................................................................6TH
RESPONDENT
CORAM: SCHICKERLING A.J.
Heard on: 25 October 2011
Delivered on: 28 October 2011
JUDGMENT
SCHICKERLING, A.J:
[1] During February 2011 the applicant initiated an application
against the first to fifth respondents, seeking the relief detailed
in the notice of motion dated 4 February 2011) (“the original
notice of motion”).
Volume 2, p 55 –
60
[2] After the main application was launched, the sixth respondent was
joined to this application and augmented relief was sought by means
of an amended notice of motion dated 6 June 2011 (“the amended
notice of motion”).
[3] In terms of the amended notice of motion, the relief sought was
divided into parts A and B. Part A seeks interdictory relief against
the third and sixth respondents. This relief is not relevant to the
present interlocutory application. Part B of the amended notice of
motion seeks the following relief:
“1. Calling upon the respondent’s – in terms of
rule 53 – to show cause why-
1.1 The first respondent’s decision, taken
on or about 27 July 2009,
to grant a retail license to the sixth respondent in respect of the
Wenela Shell retail outlet should not be reviewed, corrected or set
aside by the above Honourable Court, alternatively that the decision
be deemed null and void as being in conflict with article 18 of the
Namibian constitution and be set aside on that basis;
1.2 The second respondent’s decision to
enter into agreements with the third/or sixth respondents and
relating to the Wenela Shell retail outlet should not be reviewed and
set aside;
1.3 The agreements referred to in 1.2 supra should
not be set aside.”1
11.4 In the alternative to the relief sought as
per 13.2.1 (a) supra, the applicant seeks an order that the first
respondent be ordered to exercise his discretion, in terms of
regulation 31 (2) of the Petroleum Regulations, as to whether or not
to cancel the retail license issued to the sixth respondent on the
grounds of the sixth respondent’s non compliance with
regulations 9 (1) and 9 (3) of the Petroleum Regulations.”
[4] The first and second respondents, in the amended notice of
motion, were called upon to dispatch (and in so far as they had not
already done so), within 15 days of receipt of the notice of motion,
to the registrar of this Honourable Court, the record of the
proceedings of the decisions sought to be reviewed or set aside (and
as per the amended notice of motion), together with such
reasons as they by law are required to or desire to give or make, and
to notify the applicant that they have done so.
[5] The second respondent failed to comply with the aforementioned
requirement precipitating the present application.
[6] In the present application the applicant prays for an order in
the following terms:
“1. Compelling the second respondent to –
within 5 (five) after service of this Order upon the second
respondent – dispatch to the Registrar the record of
proceedings sought to be corrected and/or set aside in respect of the
second respondent’s decision as set out in prayer 1.2 of the
applicant’s amended notice of motion dated 6 June 2011, and
comprising annexure “DLS 1” to the applicant’s
founding affidavit herein, and to notify the applicant’s legal
practitioners of record that it has done so.
2. That the second respondent be ordered to pay
the costs of this application, including the costs of one instructing
and two instructed counsel.” 2
[7] I interpose here to record that in its replying affidavit the
applicant raised the point in limine that the second
respondent’s answering affidavit was late and out of time and
not in compliance with the order issued by this court on 20 September
2011.3
On the 14th of October 2011, prior to the applicant’s
replying affidavit having been filed the second respondent served and
filed an application for condonation. At the commencement of the
proceedings on 25 October 2011 Counsel for the applicant, Mr.
Tötemeyer indicated that the applicant does not oppose the
application and I granted the second respondent’s application
for condonation.
THE DEALER AGREEMENT:
[8] It is common cause between the parties that the applicant
(trading under the name and style of Zambezi Shell in Katima Mulilo)
(i) is one of the second respondent’s franchisees; (ii) It
holds a retail license issued in terms of the applicable provisions
of the Petroleum Products Regulations (“the Regulations”),
promulgated in terms of the Petroleum Products and Energy Act, No. 13
of 1990 (as amended) (“the Act”). The second respondent
in turn, is part of a global group of energy and petrochemical
companies and in Namibia, operates as a franchisor and wholesale
supplier of petroleum products. During May 2007, the applicant
entered into a franchise- and lease agreement (the second respondent
is the owner of this site) and a supply agreement (cumulatively
constituting and termed “the dealer agreement”). This
agreement remains, as tacitly relocated, of full force and effect on
date hereof. I shall later hereinafter return to the dealer
agreement.
[9] Clause 2(A) of the franchise agreement incorporates by reference
the provisions of section 4A of the Petroleum Products and Energy
Act, Act 13 of 1990
[10] Clause 3.4 of the lease agreement in turn refers to clause 2A of
the franchise agreement. I shall later hereinafter return to clause
3.2 of the lease agreement.
THE FACTUAL BACKGROUND TO THE APPLICATION FOR REVIEW:
[11] The main application was principally precipitated by the
following: During October 2010 it was determined (from records held
at the first respondent’s Ministry) that a retail license had
been granted by the first respondent to the third respondent in July
2009 (retail license number R/376/2009) and in respect of the site
described as Ngwezi Shell (also located in Katima Mulilo). It
subsequently transpired that the first respondent’s records did
not reflect the true state of affairs in that the retail license
(number R376/2009) was, in fact, issued by the first respondent to
the sixth respondent;4
When the record of the proceedings (incomplete) was provided by the
first respondent during these proceedings, it appeared that the first
respondent did not, in fact, grant a retail license to the third
respondent in respect of a retail outlet named Ngwezi Shell located
in Katima Mulilo, but that such retail license was granted to the
sixth respondent in respect of an outlet named Wenela Shell. This
notwithstanding, the retail outlet was at all times to be located at
Erf 545, Ngwezi Mpatcha Road, Katima Mulilo, in close proximity to
the applicant’s current Shell retail outlet. The wholesale
supplier for the Wenela Shell retail outlet is reflected as being the
second respondent (with reference to annexure SC22 to the additional
founding affidavit). The written confirmation by the second
respondent to the effect that it would be the wholesale supplier in
respect of the sixth respondent was already signed by a
representative of the second respondent on the 12th of
June 2009.5
[12] The second respondent’s conduct, so it is alleged, was
contradictory to certain undertakings it gave to the applicant. The
second respondent also failed to disclose to the applicant that the
sixth respondent was the licensed operator of Wenela Shell –
information which it must have been intimately aware of given the
sequence of events described in the founding papers.6
[13] The application alleges that second respondent never informed
the applicant of its intention to establish a Shell retail
outlet in close proximity to the applicant’s Shell retail
outlet, and which would be operated by an operator other than the
applicant.7
Furthermore, the second respondent did not bother to engage the
applicant concerning the development of a new Shell retail outlet
in Katima Mulilo. The first respondent also simply proceeded to issue
the retail license and without affording the applicant an opportunity
to be heard in that regard, and further without also, in a proper
manner (if at all), considering the criteria set out in the Petroleum
Regulations, which detail the criteria to be considered when issuing
a retail license. Reference is made to regulation 6 (1) of the
Petroleum Regulations;8
[14] In the main application the applicant contends that the second
respondent is collaborating with the third and the sixth respondents
in opening and operating a new Shell retail outlet in Katima Mulilo.
The second respondent’s conduct militates against its
obligations owed towards the applicant in terms of the applicable
provisions of the Act and in terms of the dealer agreement existing
between the applicant and the second respondent.9
[15] Wenela Shell has been operational since or about 7 March 2011.
The second respondent’s branding and marks already appear
publically at the site in question and by now, the second respondent
(on the one hand) and the third and/or sixth respondents (on the
other hand) have, in all likelihood, entered into agreements
(including a supply agreement) pertaining to the Wenela Shell retail
outlet and regulating the relationship between them pertaining
thereto.10
APPLICANT’S CASE IN THE REVIEW APPLICATION:
[16] Although the second respondent, with reference to clause 3.2 of
the lease agreement11
reserved the right to grant similar rights to persons at any other
premises, the second respondent, in exercising the aforementioned
discretion, is (and was at all material times) required to act in
terms of the applicable provisions of clause 2A of the franchise
agreement,12
including the relevant provisions of section 4A of the Act. This, so
it is alleged, the second respondent failed to do. The second, so
applicant alleges, is in flagrant disregard of the very clear and
pertinent provisions of clause 2A of the lease agreement, read with
section 4A of the Act, more particularly, so it is submitted: (i) The
exercise of a discretion by the second respondent in terms of clause
3.2 of the lease agreement (i.e a decision to open a new Shell
franchise in close proximity to Zambezi Shell) will have an
adverse effect on the rights and interests of the applicant as
contemplated by clause 2A of the lease agreement and section 4A of
the Act; (ii) As a result, the second respondent was required to
comply with the peremptory provisions of clause 3.2 of the lease
agreement and section 4A of the Act in the exercise of any such
discretion and before deciding to conclude an agreement with the
sixth respondent, which would grant the latter similar rights to
the second respondent at premises in close proximity to the
applicant’s site; (iii) No notice whatsoever was given to the
applicant regarding the exercise of the second respondent’s
discretion to establish a further Shell retail outlet in Katima
Mulilo; (iv) There was no compliance with the principle of providing
the applicant a reasonable opportunity to be heard. In fact, no
opportunity of whatsoever nature was given to the applicant. The
applicant was kept in the dark and, through its own investigations,
managed to uncover what is now contained in the founding papers in
the main application; (v) The second respondent did not act in good
faith and did not take into account clearly established facts and
circumstances – it could not have done so because it did not
even bother granting the applicant an opportunity to be heard; (vi)
The second respondent is required in terms of section 4A of the Act
to follow, in addition to the above, fair and reasonable practices
and procedures in the exercise of such discretion; (vii) the second
respondent did not apply any fair and reasonable practices and
procedures and, in fact, acted mala fide; (viii) It is not
justifiable and reasonable, under the circumstances, to depart from
the requirements of section 4A(a)(b)(iii) of the Act; (ix).13
[17] In addition, section 4A(a)(1)(e) of the Act provides that a
dealer agreement must ensure “promotion of security of tenure”.
This, the applicant respectfully submits, entails that a dealer
agreement requires to be of a sufficient duration and effect in order
to provide the retailer with adequate security to be able to run the
retail business in a sufficient and sustainable manner and to allow a
retail operator to not only recoup its investment but also obtain a
reasonable return on such investment. The second respondent’s
conduct undermines the principle of the promotion of security of
tenure and breaches the applicable provisions of the Act read with
the dealer agreement.14
[18] In the circumstances, so it is submitted: (i) The first
respondent’s decision to grant a retail license to the sixth
respondent stands to be reviewed and set aside alternatively the
first respondent should be ordered to exercised its discretion as to
whether or not to cancel the retail license issued to the sixth
respondent on the grounds advanced in the founding affidavit read
with the augmented affidavit; (ii) The second respondent’s
decision to enter into agreements with the third respondent and/or
the sixth respondent and relating to the Wenela Shell retail outlet,
stands to be reviewed and set aside; (iii) The aforementioned
agreements referred to in the proceeding paragraphs stand to be set
aside.15
[19] Applicant already in it’s additional founding affidavit
reserved the right in terms of rule 53 (4) the rules of this
Honourable Court, to, within 10 (ten) days after the registrar made
the full and complete record available, amend, add to or vary the
terms of its notice of motion and supplement the supporting
affidavit, and in so far as same pertains to the review relief. The
second respondent was, as stated, called upon to avail the full and
complete record envisaged in rule 53 (1) (b) of the rules of this
Honourable Court, and in light of the relief sought in the amended
notice of motion.16
THE FACTUAL BACKGROUND TO THE CURRENT APLICATION:
[20] I have already indicated above that the review application was
initiated on 4 February 2011; On 23 February 2011 the first
respondent filed an incomplete record of proceedings.
[21] It is also common cause on the papers before me that on 25
February 2011 the dies expired for the first and second
respondent to make available records in terms of Rule 53(1)(b); On 18
March Applicant requested further information from the first
respondent and that after a follow-up letter dated 24 March 2011
first respondent, more particularly on 18 April 2011 filed a
supplementary record; On 23 March 2011 the applicant served and filed
a notice of application to join the sixth respondent to the current
proceedings; This application was served on the second respondent and
set down for hearing on 3 June 2011 when it was granted.
[22] It is common cause that up and until that time the second
respondent did not file a record as envisaged by Rule 53(1)(b).
Second respondent instead elected to, on 6 June 2011 serve and file a
review application answering affidavit in response to the original
notice of motion and founding affidavit. Already in that affidavit,
the second respondent’s Davis Maphosa stated the following:
“There is no record of decision-making in
relation to the decision taken by Shell to enter into a supply
agreement with Mr. Oswaldo Mendez. The question of a record of
proceedings accordingly does not arise in this context. In any event,
in light of the fact that the decision sought to be impugned is a
purely commercial decision, Rule 53(1)(b) of the Rules of this
Honourable Court is not triggered. I accordingly deny that Shell is
obliged to provide any record in terms of Rule 53”
[23] What transpired after this is set out in the papers filed in the
application to compel second respondent to deliver a record in terms
of rule 35(1)(b), which I have to decide.
THE APPLICATION TO COMPELL THE RECORD:
[24] On 21 September 2011 the applicant served and filed the current
application.
[25] The applicant’s founding affidavit, deposed to by
applicant’s legal practitioner of record incorporates,
paragraphs 10, 14, 18 – 23, 30 and 32 of its additional
founding affidavit deposed to on 18 May 2011, after the first
respondent had, on 23 February 2011 availed to the Registrar of this
court an incomplete record, and its supplementary record on 18 April
2011. The applicant incorporates into its affidavit filed in support
of the current application paragraphs 21 – 27, 29, 37, 39, 40,
41, 44 and 46 of its founding affidavit deposed on 1 February 2011
for the purpose of demonstrating that Rule 53 applies to the relief
sought by the applicant against the second respondent in this
matter.17
I shall later return to these paragraphs
[26] In the founding affidavit to this application the applicant’s
legal practitioner of record states the following:
“On 21 July 2011 a letter was addressed to
Engling, Stritter & Partners, legal practitioners for the second
respondent, demanding the dispatch of the required record to the
Registrar and notification to the applicant that it has so dispatched
the record. A copy of the aforesaid letter forms annexure “DLS2”
hereto. The response received from Engling, Stritter & Partners,
dated 4 August 2011, forms annexure “DLS3” hereto. In the
premises, this application is unavoidable.” 18
[27] In annexure “DLS3” annexed to the founding
affidavit, the second respondent’s legal practitioner of
record, Mr. Mark Kutzner replied inter alia as follows to “DLS2”:
“In regard to your demand, we reiterate what
has already stated in this regard by our client in the answering
affidavit filed of record on 1 June 2011. For ease of reference, we
quote from this affidavit:
‘There is no record of decision-making in
relation to the decision taken by Shell to enter into a supply
agreement with Mr. Oswaldo Mendez. The question of a record of
proceedings accordingly does not arise in this context. In any event,
in light of the fact that the decision sought to be impugned is a
purely commercial decision, Rule 53(1)(b) of the Rules of this
Honourable Court is not triggered. I accordingly deny that Shell is
obliged to provide any record in terms of Rule 53’
We place on record – as our client did in
its answering affidavit filed on 1 June 2011 – that your client
has been extremely dilatory in launching this application. The same
applies to your client’s prosecution of this review
application. The application was launched on 4 February 2011. The 15
days within which - on your client’s version- our client was
required to file the record expired on 25 February 2011. It has taken
your client a further 5 months to demand that our client file the
record. It is in this context-and with the view of expediting
matters- that our client filed an answering affidavit, in the light
of the fact that your client was many months out of time to compel
the filing of the record (assuming for the moment that your client
indeed had such a right).
We further confirm that any application brought by
your client to compel our client to file the “record”
will be opposed.”19
[28] It is further stated by the deponent Sauls that the record was
requested, and is required, to enable the applicant to further
proceed with the application initiated by it, and wherein relief
delineated in the amended notice of motion is sought. The applicant,
so it is stated, is prejudiced as a result of the record not being
furnished. The second respondent is obliged to deliver the record,
but refuses to do so.20
[29] The deponent, Sauls submits in the affidavit that applicant “is
entitled to be availed of the record of the decision sought to be
corrected and/or set aside…in terms of and as contemplated by
Rule 53 of the Rules of Court; and “The Applicant
further relies on the provisions of section 4A of the Petroleum
Products Energy Act 1990 (as amended).”
[30] It is also alleged that in terms of annexure “DL2”
the Applicant’s legal practitioner of record requested the
second respondent’s legal practitioners of record to file “…the
record contemplated by the amended notice of motion…before
close of business on Wednesday, 3 August 2011…”21
By virtue of clause 1.2 of the amended notice of motion it is of
cause the “Respondent’s decision to enter into
agreements with the third and/or sixth respondents and relating to
the Wanela Shell retail outlet.”22
[31] On 14 October 2011 the second respondent served and filed its
answering affidavit to the application to compel. This affidavit also
is deposed to by Mr. Davis Maphosa. In the answering affidavit to the
application to compel the deponent Maphosa inter alia quotes what he
has stated in the review answering affidavit of the second
respondent,23
reiterates what Mr. Kutzner stated in his letter dated the 4th
of August 201124
and expressly reserves the right to advance the argument that the
applicant’s delay in brining the current application was
extremely dilatory and should be dismissed for that reason alone.25
[32] At the hearing of the current application Counsel for the second
respondent did not pursue this point and I shall not express myself
thereon.
[33] On page 4 of the second respondent’s answering affidavit
the deponent Maphosa continues as follows:
“However and with Shell’s express
reservation of its rights aforesaid and to expedite this matter,
Shell intends to, by way of its affidavit, indicate the applicant and
to the Registrar of this Honourable Court what “record of
proceedings” (To use the applicant’s nomenclature) it has
in its possession.26
I have done a full search of the records held by
Shell and there is no documentation in Shell’s possession
relating to a “decision to enter into agreements with the third
and/or sixth respondents and relating to the Wenela Shell retail
outlet.” This includes e-mail correspondence, letters and notes
and other documents. This is consonant with the general approach of
Shell that most of the business discussions around supply agreements
are concluded orally and only when an agreement is finally reached is
it reduced to writing and signed by the parties concerned.27
The only document which I am aware of which
relates to the decision (which is in fact not on file at Shell) is
the document signed by shell on 12 June 2009 stating that Shell would
be supplying “Oswaldo Mendez: with fuel “in the event of
a successful application” (annexure “SC 24” to the
applicant’s additional founding affidavit). This referred to an
application made by the sixth respondent to the first respondent for
a retail license to Shell Petroleum products. This was a decision
conditional upon Mr. Oswaldo Mendez obtaining a retail license to
sell petroleum products. For ease of reference this document is
annexed as “DM 2.”28
For applicant to suggest that there must be a
“record of proceedings” simply underlines the obvious
difficulties the appellant has to dress up Shell’s business
dealings and the commercial undertakings and agreements flowing
therefore as administrative acts in the public domain. This is a
fundamental flaw to these proceedings. It also underlines the futile
nature of the relief sought in the review application against
shell.”29
[34] In paragraphs 5 to 8 the applicant raises the point in limine
that the second respondent’s answering affidavit was filed late
and out of time which point, given the application for condonation
was, as I have indicated above, not persisted with.
[35] In paragraphs 9 to 13.5 the applicant in essence contends that:
second respondent fails to appreciate, and properly address, the
impact and application of section 4A of the Act and its undeniable
impact on what the second respondent wrongly terms a “purely
commercial decision”; it denies that the decision sought to
be impugned is purely a “Commercial decision”; it
denies that Rule 53(1)(b) is inapplicable; or that second respondent
is not obliged to provide any record in terms of rule 53. Paragraph
14 and 15 of the replying affidavit deals with the alleged
dilatoriness of the application and is no longer relevant.
[36] I shall later hereinafter deal with paragraph 16.4 of the
replying affidavit.
[37] The applicant denies that it has any difficulty to dress-up
shell’s business dealings and commercial undertakings and
agreements as administrative acts in the public domain or that it is
fundamental flawed as alleged by the second respondent.30
[38] The applicant submits in conclusion that the issue of
reviewability of Shell’s decision must be determined at this
stage of the proceedings. It is stated by Sauls that “It is
imperative that the mechanism provided for in rule 53 (including that
pertaining to availing the record of proceedings by the second
respondent) must be given effect to at this stage. Should this not be
done, the applicant’s procedural rights in terms of rule 53
will be undermined.”31
[39] At the hearing of the application to compel Counsel for the
second respondent also did not pursue the point that this application
should be postponed for hearing with the main application.
THE APPLICANT’S LEGAL CONTENTION:
[40] The applicant in its heads of argument contends that:
(i) The Act, read with the Regulations promulgated thereunder, sets
up an elaborate machinery that regulates the petroleum industry and
the functions and the conduct of the business of various role players
therein, including operators (i.e retailers, such as the applicant)
and wholesalers (i.e such as the second respondent). Their manner of
operation and duties, particularly in this instance, are specifically
circumscribed by statute. (Absa Insurance Brokers v Luttigh and
Another NNO,
32
Herbert Porter and Another v Johannesburg Stock Exchange,33
Johannesburg Stock Exchange and Another v Witwatersrand Nigel
Limited and Another34)
(ii) Section 4A(1) of the Act, by statutory imperative, requires - in
peremptory terms – that a dealer agreement (including any
supplementary provisions to such an agreement) shall be based
on and comply with, and in so far as the dealer agreement or any
provision supplementary thereto provides for the exercise of any
discretionary powers which adversely affects rights or interests,
such discretion shall, subject to the other provisions of this
section be exercised in accordance with fair and reasonable practices
and procedures, which shall include (unless justifiable and
reasonable to depart from same – which exception is
inapplicable in this matter) –
(a) the giving of adequate
notice of the exercise of the discretion and the nature and purpose
thereof, as well as the furnishing of reasons for a decision (if
requested thereto);
(b) Compliance with the principle of providing the other party
reasonable opportunity to be heard;
(c) Acting in good faith having regard to
clearly established facts and circumstances only.
(iii) By operation of statute, the wholesaler (in this instance, the
second respondent), was therefore required to apply the principles of
fair and reasonable administrative action.
(iv) Although the second respondent is clearly not an organ of State,
licensing legislation such as the Petroleum Act, by its nature,
imposes statutory control upon private entities that accords certain
rights, powers, functions and duties. Decisions taken by bodies of
this nature are subject to judicial review by the Courts (a
fortiori it is submitted where the manner of their
decision-making is strictly circumscribed by the Act). (Dawnlaan
Beleggings v Johannesburg Stock Exchange.)35
(v)
The
above accords with the principle that whether or not particular
conduct constitutes administrative action, depends primarily on the
nature of the power that is being exercised rather than upon the
identity of the person who does so. (Grey’s
Marine Hout Bay (Pty) Ltd v Minister of Public Works,36
Kouga
Municipality v De Beer,37
Transnet
Ltd & Others v Chirwa,38
(vi)
The above principles also find application in the constitutional
context. The Namibian Constitution requires that, where applicable,
natural and legal persons other than organs of the State should
comply with Chapter 3 of the Constitution (which would thus include
compliance with Article 18). In this case, this constitutional
requirement finds application by virtue of the provisions of section
4A of the Act, which requires compliance by the second respondent
with Article 18.
(vii)
As a result the second respondent’s decision is reviewable in a
Court of law and is accordingly also reviewable in terms of the
procedure provided for by Rule 53 of the High Court. This renders
Rule 53 (1) (b) applicable regarding the second respondent’s
obligation to make the record of its decision-making available.
(viii)
Even if the second respondent’s decision in question cannot be
regarded as an administrative act, both section 4A of the Act and
clause 2A of the lease agreement introduces essential principles of
administrative fairness into the contractual setting between the
parties. The private contractual sphere governing the relationship
between the applicant and the second respondent is therefore governed
by the principles underlying fair and reasonable administrative
action, as embodied in section 4A of the Act and clause 2A of the
dealer agreement. On this basis, so it is submitted: (i) The position
of the second respondent, and given the contractual discretionary
powers vested in it in terms of the dealer agreement, is akin to that
of a domestic tribunal; (ii) The exercise of a contractual
discretionary power by the second respondent, renders same
susceptible to review in accordance with the principles traditionally
applied to domestic tribunals. (LAWSA,39
Marlin
Durban Turf Club and Others,40
Turner
v Jockey Club of South-Africa,41
Blacker
v University of Cape Town and Another,42
National
Union of Namibia Workers v Naholo43)
(ix)
The
role of the Court in review matters is therefore not confined to
statutory bodies. On this basis the Courts, and on the basis of the
above common law principles, have frequently exercised their common
law jurisdiction to review decisions of tribunals, bodies or persons
who, by contract, are required to act fairly and/or reasonably.
(Jockey
Club of South Africa v Feldman,44
Theron
v the Ring van Wellington van die NG Sendingkerk in SA,45
Blacker
v University of Cape Town,46)
(x)
It
has further been held that Rule 53 finds application in cases where
the Court exercises its aforementioned common law jurisdiction. On
that basis the applicant is entitled to the record of the second
defendant’s decision-making. (Blacker,
supra, 407 G; Jockey Club of South Africa v Forbes47
SECOND
RESPONDENT’S LEGAL CONTENTIONS
[41]
The second respondent, on the other hand, contends in its heads of
argument that:
(i) the decision taken by the second respondent sought to be reviewed
and set aside does not constitute administrative action; accordingly
there is no record to be furnished and the issue of a “record
of proceedings” in terms of Rule 53(1)(b) does not arise;48
alternatively
(ii) Should the Court find that the decision taken by the second
respondent does indeed constitute administrative action, then the
second respondent states that there is no documentation in its
possession relating to the “decision to enter into
agreements with the third and/or sixth respondents relating to the
Wenela Shell retail outlet”.49
(iii) The exercise of the power by the Second Respondent to take a
decision to enter into a supply agreement with a third party is one
derived from contract.50
(iii) Those powers, so second respondent submits are derived from the
contractual powers to be found in clause 3.2 of the franchise
agreement.51
(iv) It is evident from clause 3.2 that where Shell would wish to
grant similar rights to other persons in other areas of the Premises,
Shell shall first offer the Franchisee the right to operate.
(v) By Shell reserving its rights to grant similar rights (i.e.
franchise rights) to other persons at any other premises, Shell is
indicating in clear terms that the franchise agreement entered into
between it and the Applicant was not an exclusive franchise
agreement. The fact that the terms of the franchise agreement do
nowhere grant exclusive franchise rights to the Applicant renders
this clause superfluous. However, what it does mean is that there can
be no doubt that Shell is at liberty to enter into franchise
agreements with any other person on “any other premises”,
which would mean at any other premises in Katima Mulilo. This
involves Shell’s right of freedom of contract and its right in
terms of the Namibian Constitution to practice its trade in a manner,
which it deems fit and which makes commercial sense to it.
(vi) In exercising this right and making a decision to enter into a
franchise agreement with a third party, such as the Sixth Respondent,
Shell is not taking a decision necessarily in terms of the franchise
agreement. This discretion can be exercised outside of the franchise
agreement purely because the franchise agreement entered into between
the Applicant and the Second Respondent was a non-exclusive
agreement. The Applicant accordingly has no right to insist that
Shell only do business with itself at Katima Mulilo.52
(vii) This interpretation is fortified by the further provisions of
the franchise agreement wherein numerous paragraphs in the franchise
agreement and the attached “Shell Property Lease Agreement”
and the “Shell Petroleum Products Supply Agreement”,
clauses refer to “discretionary powers which adversely
affect the rights or interest of the Franchisee” and
specifically make reference to the applicability of clause 2(a) of
the agreement having application to such clauses.53
(viii) It is accordingly apparent that the Applicant and the Second
Respondent have agreed which clauses of the agreement would
incorporate clause 2A, incorporating, by reference as this clause
does, the provisions of Section 4A of the Act. In other words, the
parties have agreed which clauses of the franchise agreement and the
related agreements would depart from requirements containing clauses
2A.1 and 2A.2 and the first part of 2A.3 on the basis that to do so
whilst “justifiable and reasonable under the circumstances”.
[42] At the heart of the dispute between the parties are the
provisions of Rule 53 of the Rules of Court, Clause 2A and 3.2 of the
agreement and section 4A of the Petroleum Products and Energy Act, 13
of 1990.
[43] Rule 53(1)(a) and (b) of the Rules of Court provides as follows:
“(1) Save where any law otherwise provides,
all proceedings to bring under review the decision or proceedings of
any inferior court and of any tribunal, board or officer performing
judicial, quasi-judicial or administrative functions shall be by way
of notice of motion directed and delivered by the party seeking to
review such decision or proceedings to the magistrate, presiding
officer or chairman of the court, tribunal or board or to the
officer, as the case may be, and to all other parties affected-
(a) calling upon such persons to show cause why
such decision or proceedings should not be reviewed and corrected or
set aside; and
(b) calling upon the magistrate, presiding
officer, chairman or officer, as the case may be, to dispatch, within
15 days after receipt of the notice of motion, to the registrar the
record of such proceedings sought to be corrected or set aside,
together with such reasons as he or she is by law required or desires
to give or make, and to notify the applicant that he or she has done
so.”
THE APPLICANT’S APPLICATION AS IT STANDS:
[44] Mr. Tötemeyer argues that Rule 53(1)(b) is peremptory and
must be complied with. As such, so he submits, the second respondent
is compelled to make the record available. What has been provided by
the second respondent is not the record. Initially second respondent
took the stance that there is no record; then evidently, so he
submits, annexure “DM2” surfaced. If one has regard to
that document, so he argues, it reveals the existence of further
documents, also if one has regard to the record. He relies for this
proposition on the contents of paragraph 16.4 of the replying
affidavit.
[45] In paragraph 16 of the replying affidavit the applicant refers
to annexure “DM2”54
annexed to the answering affidavit in the interlocutory application,
documents which allegedly accompanied the applicant’s own
application for a dealership agreement,55
the agreement concluded between second respondent and sixth
respondent,56
board minutes which “should” be in possession of
the second respondent,57
documents obtained from the first respondent’s record and which
refers to franchise training,58
Regulation 4(2)(d) of the Petroleum Products Regulations which
provides for written confirmation by a supplying wholesaler,59
an EIA obtained from first respondent’s record,60
statements by Mr. Maphosa in the review answering affidavit,61
such as Maphosa’s “belief” that there was
room for another outlet in Katima,62
that the correct “situation” was that Mr. Mendes
was the owner of the site; 63
shell being “convinced” that there is room for two
economically viable Shell outlets in Katima Mulilo;” “financial
modeling and research undertaken”;64
the “decision” by second respondent being
“conditional upon Mr. Oswaldo Mendez obtaining a retail
license”65
from which, by inferential reasoning it is inferred that documents
forming part of a decision making process must or should exist.
[46] Asked by the court as to why all of this appears in the replying
affidavit for the first time, Counsel for the Applicant referred me
to Aonin Fishing (Pty) Ltd and Another v
Minister of Fisheries And Marine Resources,66
in which the High Court held that –
“It suffices however to
quote from the judgment of Marais J which was followed by Hoexter J:
'Mr Eloff, for the Administrator, has, however,
questioned whether the phrase ''record of proceedings'' in Rule
53 can properly be said to include the documents of the previous
application. The words ''record of proceedings'' cannot be otherwise
construed, in my view, than as a loose description of the documents,
evidence and arguments and other information
before the tribunal relating to the matter under review, at the time
of the making of the decision in question. It
may be a formal record and dossier of what has happened before the
tribunal but it may also be a disjointed indication of the
material that was at the tribunal's disposal. In the latter case it
would, I venture to think, include every scrap of paper throwing
light, however indirectly, on what the proceedings were, both
procedurally and evidentially. A record of
proceedings is analogous to the record of proceedings in a court of
law which quite clearly does not include a record of the
deliberations subsequent to the receiving of the evidence and
preceding the announcement of the court's decision plus the
deliberations of the Executive Committee are as little part of
the record of the proceedings as the private deliberations of the
jury or of the Court in a case before it. It does, however, include
all the documents before the Executive Committee as well as all
documents which are by reference incorporated in the file before it.
Thus the previous decision of the Administrator and the documents
pertaining to the merits of that decision could not have been
otherwise than present to the mind of the
Administrator-in-Executive Committee at the time he made the second
decision. If they were not, he could not have brought his mind to
bear properly on this issue before him, which is of course denied by
the respondents.”
He submitted that in terms of Rule 53(1)(b) the first step compels
second respondent to avail a record; only once this has been done can
a request for specific further documents be made. Once specific
documents have been provided then and only then can applicant
supplement its papers and only then is the respondent supposed to
answer. He submits that what one doesn’t do is to deny that
there is a record.
[47] He argues that “DM 2” signifies that an agreement
was reached; that implies a decision of some nature and it is
reasonable to expect that a decision of some nature must have been
taken. In the ordinary course of business, so the argument goes,
decisions to enter into agreements are taken by the Board of
directors. He poses the question: “What constitutes such
decision?” Relying on the Aonin-decision he answers: “Every
shred of paper which sheds light on the decision.” That, so
he submits includes for ex. annexure “DM 2” which in turn
identifies also other documents not availed.
[48] He argues that regard being had to paragraphs 16.4.1 onward it
reveals that there are various other documents which should exist;
that the second respondent’s stance is duplicitous in that, on
the one hand second respondent, in stating that it is not obliged to
deliver the record, accepts that a record exists. On the other hand
second respondent takes the stance that there is no record. On the
second respondent’s own version he must at the very least make
available a record in the form of annexure “DM 2” annexed
to the interlocutory answering affidavit.
[49] Mr. Frank on the other hand argues in reference to the documents
identified in the replying affidavit that applicant is at great pains
to persuade the court that the parties are still in the first stage
of the proceedings. He submits that if these documents were
identified in the founding affidavit, as they should have been, the
second respondent would have been put in a position to answer to or
explain same; He points out that what the second respondent had
stated in the review answering affidavit as early as 1 June 2011 was
this: “There is no record of decision-making in relation to
the decision taken by Shell to enter into a supply agreement with Mr.
Oswaldo Mendez. The question of a record of proceedings accordingly
does not arise in this context. In any event, in light of the fact
that the decision sought to be impugned is a purely commercial
decision, Rule 53(1)(b) of the Rules of this Honourable Court is not
triggered. I accordingly deny that Shell is obliged to provide any
record in terms of Rule 53”67
and submits that there is nothing ambivalent in the such statement at
all; that Annexure “DM 2” does not in any manner
whatsoever contradict the second respondent’s earlier statement
in the review answering affidavit; that second respondent throughout
alleged that no franchise agreement was entered into; that second
respondent instead entered into a supply agreement with sixth
respondent; 68
that sixth respondent is the owner of the property; that he has made
all the improvements on the property; and had asked for fuel to be
supplied. Regulation 4(2)(d), so Mr. Frank argues, requires written
confirmation of a supply agreement prior to the application for a
retail license and that is all that had happened. He submits that
prima facie annexure “DM 2 follows upon and is not part of a
decision making process; that no such list as referred to therein
exists because what the second respondent had entered into was simply
a supply agreement, not a franchise agreement.
[50] According to Mr. Frank “every scrap of paper” refers
to paper which forms part of the decision making process, not
documents following upon a decision.
[51] Mr. Tötemeyer submits in reply and in reference to the
statement in paragraph 77 on page 267 that this is the premature
answering affidavit and it only goes to show how misguided the second
respondent is; that the proposition at page 267 is wrong and the
result of this application. He also pointed out that on 15 July 2009
applicant’s Susan addressed a letter to the second respondent
of and concerning the granting of a license to sixth respondent and
submits that such document already constitutes part of the decision
making process;69
that a further indication clearly showing that there is a record of
decision making and which runs contrary to Mr. Frank’s argument
is to be found in DM 2 which records: “…find the
attached list of all buildings, structures, and plant and such other
items or assistance as we are currently providing / intend to provide
in the case of a successful application.”
[52] In am respectfully of the view that there is nothing ambivalent
in the second respondent’s approach to this matter. The second
respondent had already on 1 June 2011 stated in the review answering
affidavit: “There is no record of decision-making in
relation to the decision taken by Shell to enter into a supply
agreement with Mr. Oswaldo Mendez” In addition to that
second respondent stated: “In any event, in light of the
fact that the decision sought to be impugned is a purely commercial
decision…” The applicant wants to read these
statements as contradictory. They are not in my view contradictory at
all. I also find it difficult to see how the letter addressed by
applicant’s Susan can form part of a decision making process by
second respondent; It is in any event in applicant’s
possession.
[53] The clear stance taken by the second respondent in its review
answering affidavit that there is no decision making record, also, in
my view, is seemingly the very reason why the second respondent at
the time opted to file the review answering affidavit. In the
particular circumstances, I find nothing misconceived or untoward in
the second respondent, having at that stage, served and filed the
review answering affidavit. It is plainly consistent with the stance
taken right from the inception of the main application. It is in my
view appropriate in the circumstances, as was explained by Mr.
Maphosa, in the answering affidavit to applicant’s application.
[54] In their subsequent letter dated the 4th of August
2011 the second respondent’s legal practitioners reiterated
that stance – in fact quoting what was stated in the review
answering affidavit.
[55] It is trite that an applicant must stand and fall by his/her/its
founding affidavit. The applicant knew at least since the filing of
the review answering affidavit what the second respondent’s
stance was, particularly as regards the non-existence of an alleged
decision making record. Despite this applicant elected to approach,
not dealing, as it belatedly does in the replying affidavit, with the
existence of the alleged decision making record, at all.
[56] In its answering affidavit in the current application the second
respondent’s Maphosa, reiterates once again, that there is no
decision making record; that he has done a full search of the second
respondent’s record and that the only document which “I
was aware of which relates to the decision making (which is in fact
not in Shell’s possession) is the document signed by Shell on
12 June 2009 stating that Shell would be supplying ‘Oswaldo
Mendes’ with fuel ‘in the event of a successful
application)…”.
[57] Given the clear stance taken by second respondent since
inception of the review application, it was not competent for the
applicant to have approached this court, as far as the alleged
existence of the decision making record is concerned, on the skeleton
case and then attempt in the replying affidavit, to make out a case
that such record exists.
[58] I have no reason to go behind the affidavit of the second
respondent and must accept Mr. Maphosa’s statement that the
second Respondent does not have a decision making record pertaining
to its agreement to supply fuel to the sixth respondent and that “DMM
2 is not in the second respondent’s possession.
THE REVIEWABILITY OF THE SECOND RESPONDENT’S
“DECISION”:
[59] Before dealing with Counsel’s argument it is necessary to
first revert to the provisions of the act and the terms of the
agreement.
[60] Section 4 A of the Petroleum Products Energy Act, 13 of 1990
provides as follows:
“4A Agreements between
operators and wholesalers
(1) Any dealer agreement concluded between
a wholesaler and an operator, and any supplementary provisions to
such an agreement, shall be based on and comply with the
following:
(a) Any law, including a provision of the common
law, applicable in Namibia regarding competition and fair
contractual procedures and practices;
(b) In so far as the dealer agreement or any
provision supplementary thereto provides for the exercise of any
discretionary powers which adversely affects rights or interests,
such power shall, subject to the other provisions of this section be
exercised in accordance with fair and reasonable practices and
procedures, which shall include-
(i) the giving of adequate notice of the exercise
of the discretion and the nature and purpose thereof, as well as the
furnishing of reasons for a decision (if requested thereto);
(ii) compliance with the principle providing the
other party reasonable opportunity to be heard;
(iii) acting in good faith having regard to
clearly established facts and circumstances only;
unless it is justifiable and reasonable under the
circumstances to depart from the requirements set out in this
paragraph;
(c) notwithstanding paragraph (b), in so far
as the dealer agreement or any provision supplementary thereto
provides for the termination of the agreement in the event of a
breach thereof-
(i) in the case of a non-material breach, written
notice shall be given that such non-material breach has occurred and
a reasonable period shall be allowed to rectify such breach prior to
termination of the agreement;
(ii) in the case of a material breach, the
agreement may be terminated without prior notice or opportunity to
rectify the material breach if it is fair and reasonable under the
circumstances to do so, and for the purposes of this paragraph-
(aa) only a breach of the agreement which relates
to a fundamental and substantive term of the agreement shall be
deemed to be a material breach; and
(bb) no agreement shall contain a provision
deeming all provisions; of the agreement to be material;
(d) reasonable access to correspondence, documents
and property only in so far as they relate to the business of
operating an outlet in terms of the dealer agreement; and
(e) promotion of security of tenure, but subject
thereto that a reasonable probationary lease period may be provided
for in the case where a dealer agreement is concluded with a new
operator.
(2)(a) Without derogating from any other right a
person may have in terms of any other law or with regard to access to
a court, where a party is of the opinion that a provision in a
dealer agreement does not comply with a principle set out in
subsection (1), such party may refer the matter for arbitration as
provided in paragraph (b).
(b) The Minister shall by notice in
the Gazette determine the arbitration procedure which shall
apply with regard to a matter referred to in paragraph (a) and
the Minister may by regulation prescribe any matter supplementary to
such arbitration procedures.
(3) The provisions of this section, in so far as
they provide for a limitation on the right to conduct business
relating to the petroleum industry by any person, are enacted upon
the authority of Article 21(2) of the Namibian Constitution.
(4) Section 21 of this Act shall not apply to
subsection (1) of this section.
(5) For the purposes of this section-
(a) "wholesaler" means any person who
imports or distributes petrol or diesel for purposes of the wholesale
thereof by that person in Namibia or who exports petrol or diesel;
(b) "operator" means
any person who conducts business for the sale of petrol and diesel at
an outlet.”
[61] It is in my view apparent that the provisions of section 4A
provide protection, not only to the retailer but also wholesalers
within the industry. It is in my view wrong to assume that Section 4A
(1) is aimed solely at the protection of the retailer. Regard being
had to the provisions of section 4A(2)(a) it is apparent that what is
envisaged is that when any party to a contract is dissatisfied with a
term in the agreement, he/she/it is entitled to request that such
term be referred for determination by way of arbitration. What
section 4A, in my view, primarily aims at is to “level the
playing field”, so to speak, primarily during the negotiation
stages of the agreement. By that it lays down certain standards by
which the contents of an agreement must comply. It is in my view,
still open to parties to, in their agreements, negotiate and contract
specifically as to which powers shall be subject to and which powers
shall be excluded from the operation of section 4A(1).
[62] Clause 2A of the franchise agreement, in turn, provides as
follows:
“PETROLEUM PRODUCTS AND ENERGY ACT 13 OF
1990
2A Each provision in this Agreement shall be
interpreted in accordance with the provisions of Section 4A of
the Petroleum Products and Energy Act 13 of 1990, as amended. In
particular any provision in this Agreement which provides for the
exercise by Shell of discretionary powers which adversely affect the
rights or interests of the Franchisee, shall only be exercised by
Shell in accordance with fair and reasonable practices and procedures
including:
2A.1 the giving of adequate notice of the exercise
of the discretion and the nature and purpose thereof, as well as the
furnishing of reasons for the decision (if requested thereto);
2A.2 compliance with the principle of providing
the Franchisee with a reasonable opportunity to be heard;
2A.3 the acting in good faith having regard to
clearly established facts and circumstances, unless it is justifiable
and reasonable under the circumstances to depart from these
requirements in Clauses 2A.1, 2A.2 and in this sub-clause 2A.3.”
[63]
Clause 3.2 of the Franchise agreement however provides as follows:
“Shell reserves the right to grant similar
rights to other persons at other areas of the Premises in cases where
the Franchisee is for any reason not operating all of the available
business opportunities on the Premises within the Shell Retail
Franchise, provided that Shell shall first offer the Franchisee the
right to operate all available business opportunities within the
Shell Retail Franchise on the Premises. In
addition, Shell reserves the right to grant similar rights to other
persons at any other premises.”
[64]
Mr. Tötemeyer argues that the fuel industry is highly regulated
by legislation; it inter alia requires compliance with the
provisions of section 4A of the act; it is a regime that entails both
procedural and substantive fairness. Where an agreement provides for
an exercise of discretionary powers the exercise of such discretion
must be fair and reasonable; this includes adequate notice,
opportunity of being heard and acting in good faith unless certain
circumstances prevail. The second respondent’s decision is
reviewable for any one of two important considerations: (1) Despite
2nd respondent being a private corporate entity its
decision is reviewable because it involves the exercise of statutory
powers and obligations; (2) The agreement incorporates certain
statutory provisions as a result of which the parties agreed that
decisions taken by the second respondent must adhere to procedural
and substantive fairness. Clause 3.2, so he argues is a provision
which governs the exercise of discretion by the second respondent in
the nature as contemplated by section 4A of the Act.
[65] He argues that it is implicit in the agreement that the one
party will not undermine the rights of the other party and that if
one reserves the right to in fact grant similar rights to persons
occupying other premises those rights should be exercised with due
compliance with the fairness regime it being required by statute and
reinforced in terms of the agreement. Because of this obligation it
matters not whether or not the decision taken is classified as
administrative action or not. On this basis this court is entitled to
review that decision in terms of its inherent common law power.
Courts have in the past exercised that jurisdiction because in terms
of the contract the parties were bound to act in a procedural and
substantively fair manner. For that reason rule 53 is applicable.
[66] In dealing with the judicial review of private and domestic
tribunals Baxter70
states as follows:
“There is an essential difference between
the rules that constitute and empower such bodies
(i.e. private and non-statutory bodies, such as disciplinary
tribunals of churches, trade unions and clubs, or to arbitrators) and
those that relate to public authorities. The former are based on the
voluntary, contractual agreement of their subscribing members,
whereas the latter are based upon statute. In order to apply the
principles of the review the court must deduce what is required, not
from a statute, but from the terms of the agreement, express or
implied…
This ‘voluntariness is often considered to
be of crucial significance in distinguishing the scope of review of
public authorities from that of private bodies. Yet paradoxically
this has induced two opposing conclusions:
On the one hand, a number of judges have stated
that the voluntary nature of the agreement – fiction though it
is in so many cases – is an important reason for construing the
agreement as strictly as possible, thereby inhibiting review. On the
principle of caveat subscriptor the complainant ought to have known
what he was letting himself in for; and the courts have as such
refused to read into the agreement such implications as a duty to
provide a fair hearing before disciplinary action is taken.
On the other hand, the private nature of the
agreement has enabled some courts to adopt a more expansive view of
the scope of review. They have seemed more prepared to read into the
agreement provisions of fairness and reasonableness as these concepts
are interpreted at common law…based
partly on the realization that members of private organizations have
little or real choice over the terms of their agreements at all,
including those relating to penal and disciplinary provisions.”
[67] It is apparent that it is particularly in the latter context
(i.e penal and disciplinary decisions) that some courts have adopted
a more expansive view. As for the rest courts have insisted on a
strict approach.
[68] As for the first school of thought, Baxter refers in particular
to Mustapha v the Receiver of Revenue71
and Hebert Porter & Company v Johannesburg Stock Exchange;72
As for the second proposition he refers to Thereon v Ring van
Wellington van die NG Sendingkerk van Suid-Afrika,73
Dawnlaan Beleggings (Edms) BPK v Johannesburg Stock Exchange74
and Jockey Club of South-Africa v Feldman75.
[69] Mr. Frank has started off his argument by referring to the
following statement of Corbett J in L F Boshoff v Cape Town
Municipality76
“In determining whether
this Rule (i.e. Rule 53) applies
to the proceedings initiated by the company by way of summons, it is
to be noted that it applies to all proceedings to review the decision
or proceedings “of
any inferior court and of any tribunal, board or officer”.
Pausing here for a moment, it is clear that in the present case the
only one of these categories which could possibly apply to the
Municipality is a “board” and the question is whether
that term, interpreted in its context, does so apply. The remainder
of the portions of the Rule quoted above give a clear indication of
what sort of body was intended to be included in the term “board”.
Firstly, it must be one performing judicial, quasi-judicial or
administrative functions. Of these functions only the latter two
could be performed by a board.
…. All these provisions
indicate that this Rule was intended to apply where a decision has
been arrived at by, inter alios, a board, presided over by a
chairman, after
something in the nature of proceedings (of which a record is kept)
have taken place before it.
The proceedings might be quasi-judicial, e.g. the proceedings of a
local transportation board ….
These provisions indicate the type of board, which
is contemplated in Rule 53 and, in my opinion, a corporate body such
as the Municipality, acting in the capacity in which it did in this
case is not such a board. I, therefore, hold that Rule 53 does not
apply and that accordingly the summons cannot be set aside for want
of compliance with that Rule.”
[70] Mr Tötemeyer has submitted in reply that
had the Boshoff-case
been decided under the Namibian constitutional dispensation the
outcome would have been much different. As was stated by Cameron J in
CDA Boerdery (Edms) Bpk and Others v
Nelson Mandela Municipality and Others:77
“[37]…The
constitutional status of local authorities was therefore different
from the pre-constitutional era…”
[71] I agree with this submission – as far as local authorities
are concerned. In my view it by no means changes the position as far
as private commercial transactions between two private individuals or
entities are concerned.
[72] Mr. Frank submits that in the first instance
the decision taken by the second respondent to supply fuel to the
sixth respondent is not an administrative function at all and such
proceedings did not occur in the current matter. There is not even,
so he argues, a suggestion to that effect in the current matter; that
the act itself, so he argues, acknowledges that infringements on
constitutional rights may occur. Authority for that, so he argues, is
to be found in sub-sections (2) (3) and (4) of section 4A of the Act.
He poses the question: “Is the act expressly implied into
the terms of the agreement.” He submits no – “there
is no duty outside the duty created in the contract and one cannot go
beyond the duty in the contract.” This is so because the
party has a right to contract with whomever he wants to contract.
[73] As was stated in by Coetzee J in Herbert Porter-case:
“That Stock Exchanges not only exist in
modern developed capitalistic economies but that they are
indispensible is a simple fact of life. It is equally true that
public interest demands that they should be orderly and fairly
conducted, which is ensured by a
measure of statutory control.
To refer however to the Stock Exchange Control Act, 7 of 1947, as its
‘empowering Act’…is inaccurate…Neither
directly nor indirectly, does the Stock Exchange Control Act create
statutory stock exchanges. This act falls nicely in the general
pattern of South-African enacted to control a large variety of
financial institutions such as banks, building societies, pension
funds, benefit funds, insurance companies etc. It is fundamentally
licensing legislation. Any stock exchange which functions as such
requires to be licensed under the Act. Its rules must conform with
certain standards laid down in the act, and must be approved by the
registrar of Financial Institutions. A board of appeal is established
by section 11 of the Act, to which appeals may be made under section
but this does not affect the
purely contractual relationship between a licensed exchange and its
listed companies….this does not detract from the contractual
quality of its subsequent relationship with such company. The J.S.E.
is no more a creature of statute than any bank or building society,
and I am not going to approach these problems of construction as if
they arise in the field of public law.”78
[74] The remarks of Coetzee J, in my view, apply in point to the
relationship between the applicant and the second respondent. Both
are required to be licensed in terms of the Act. That license is
issued by the Minister. In terms of section 4A of the Act any
agreement entered into between a wholesaler and a retailer must
comply with certain standards. If a party to an agreement is
dissatisfied with a term of the agreement he/she/it may request that
the determination of such term(s) be referred for arbitration. The
above however does not in any manner whatsoever affect the
relationship between the applicant and the first respondent.
[75] In my view the following statement by Malan
AJA in Reddy v Siemens
Telecommunications (Pty) Ltd 792007
(2) SA 485 (SCA) at par 15 is in point:
“…the public
interest requires that parties should comply with their contractual
obligations, a notion expressed by the maxim pacta sunt servanda”.
[76] I am respectfully of the view that the authorities relied upon
by the Applicant do not support the proposition that purely because
the Act introduces certain requirements for agreements between
wholesalers and retailers, that any decision taken in terms of such
agreement is for that reason reviewable. Such an approach would in my
view operate harshly against wholesalers within the industry and can
only serve to stifle the industry. In any event, ABSA Insurance
Brokers (Pty) Ltd v Luttig and Another NNO was concerned with an
agreement between an agent and an insurer authorising the agent to
deal with premiums in contravention section 20bis(3) of the Insurance
act which prohibited such manner of dealing. It was not concerned
with a review at all.
[77] Herbert Porter and Co Ltd. and Another v Johannesburg Stock
Exchange80
was concerned with a tribunal or adjudicating body created by
agreement, charged with the duties to decide. The remedies for this
breach Coetzee J held: “are those which an innocent party
usually has ex contractu”.81
[78] Johannesburg Stock Exchange and Another v Witwatersrand Nigel
Limited and Another was concerned with the power of the president
of the J.S.E to suspend the listing of shares under section 17(3) of
the Stock Exchange Act and the court had set aside the power
exercised by its president. It is clear it was reviewed on the same
basis as the other stock exchange cases.
[79] In Dawnlaan Beleggings (Edms) Bpk. v
Johannesburg Stock Exchange and Others82
the review was entertained purely because the
Stock Exchange Act had imposed a public duty on a governing body
created by agreement.83
[80] Grey’s
Marine Hout Bay (Pty) Ltd and Others v The Minister of Public Works84
was concerned with the decision of the Minister to
lease a portion of land. It was concerned with the Promotion of
Administrative Justice Act, 3 of 2000. It was there held:
“Administrative action is conduct
of the bureaucracy in carrying out daily functions of State that
necessarily involves application of policy with direct and immediate
consequences to persons.”
[81] Kouga
Municipality v De Beer and Another85
where it was held by Cameron that in a
constitutional dispensation “our
constitution has not only enhanced the status of municipalities but
accords it powers, which, like
other organs of state, can be
reviewed by courts.”86
[82] Transnet Limited
and Others v Chirwa87
concerned a contract of employment concluded
between the State and a private individual and it was there held that
“in taking a decision to dismiss
an employee the State was not acting as a public authority but merely
as an employer” and that such
decision did not constitute administrative action.
[83] In the matter of Turner
v Jockey Club of South Africa88
the following was stated:
“It is common cause that
the relationship between a jockey licensed under the respondent’s
rules – such as the appellant – and the respondent, is
contractual,
and that that relationship is governed by the respondent’s
rules and regulations, which constitute the terms of the contract
between the parties, and the applicable principles of the common
law.”
The Court went on further to state:
“It is clear, I think,
that the reference to “the nature of the tribunal”, in
its context in the passage cited, is a reference to the nature of the
tribunal’s constitution, i.e. according to whether it was
created by statute or by contract. In the case of a statutory
tribunal its obligation to observe the elementary principles of
justice derives from the expressed or implied terms of the relevant
enactment, while in the case of a tribunal created by contract, the
obligation derives from the expressed or implied terms of the
agreement between the persons affected …”
[84] In Blacker v
University of Cape Town and Another89
it was held that Rule 53 of the Rules were applicable to certain
disciplinary proceedings, of an entity which keeps a record of the
proceedings conducted before it.
[85] How does one distinguish between a right and discretion in an
agreement? Mr. Frank submits that the exercise of discretion
inevitably involves the weighing up against one another of all the
pro’s and cons.
[86] In Mustapha and Another v The Receiver of Revenue,
Lichtenburg & Others90
Schreiner J held as follows:
“Although a permit granted under sec. 18(4)
of Act 18 of 1936 has a contractual aspect, the powers under the
subsection must be exercised within the framework of the Act and the
regulations which are themselves, of course controlled by the Act.
The powers of fixing the terms of the permit and of acting under
those terms are all statutory powers. In exercising the power to
grant or renew or to refuse to grant or renew, the permit, the
Minister acts as a state official and not
as a private owner, who need listen to no representations and is
entitled to act as arbitrarily as he pleases, so long as he breaks no
contract.”
[87] That the Petroleum Products Energy Act regulates the industry
and that it provides for certain requirements to which agreements
between retailers and wholesalers must conform, is common cause. It
is common cause that neither applicant nor second respondent are
public bodies and that they are private entities. Their relationship
with the Minister is in my view is analogous to those licensing
authorities as was referred to by Coetzee J in the Herber
Porter-case. Inter se their position is different; it is
purely contractual.
[88] Much of the argument concerned the discretion exercised by the
second respondent to have entered into the agreement with the sixth
respondent. What does discretion entail?
“Discretion may be defined in various ways,
but however defined, it usually involves (1) a choice between
alternative causes of action; and (2) that such choice not be made
arbitrarily, wantonly, or carelessly, but in accordance with the
requirements of the situation; and the definition of a ‘discretionary
power’ adopted by the Council of Europe’s Committee of
Minister’s: ‘The term “discretionary power’
means a power which leaves an
administrative authority some
degree of latitude as regards decisions to be taken, enabling it to
choose from among several legally admissible decisions the one it
finds to be most appropriate.”91
[89] As Ronald Dworken states:
“Discretion, like the hole in a doughnut,
does not exist except as an area left open by a surrounding band of
restriction. ‘Discretion under which standards?’ or
‘Discretion as to which authority?”
“…Not all decisional referents will
be proper, but it is only those factors that the decision-maker has
internalized (i.e. those which he considers himself under an
obligation to uphold) which will really act as constraints upon his
power of decision.”92
[90] In my view the answer is to the two questions posed above is to
be found in the express terms of the agreement between the parties.
[91] It is clear to me that when the parties hereto entered into the
agreement in question they had specifically, and by reference,
incorporated into the agreement the provisions of section 4A of the
Act. Not only did they do that. The agreement in fact states that it
has been entered into on the basis of section 4A. They deemed it
necessary and they have stipulated in the agreement which clauses
shall be subject to the provisions of clause 2A and by that, section
4A of the Act.93
By doing that they incorporated into their agreement a scheme of
fairness and reasonableness as contemplated by section 4A of the Act.
It became part of the contractual terms. The second respondent
furthermore expressly reserved its common law right to grant similar
rights to other parties on different premises. By agreeing to that
the parties obviously intended that clause 2A will not apply to
clause 3.2 and as a consequence thereof section 4A was excluded from
the exercise of such discretion. Having regard to the clear language
of the agreement, the parties clearly intended exactly this. It is
clear in my view that the agreement was not an exclusive agreement at
all. This in my view is a reservation also of the second Respondent’s
constitutional right to practice any trade in a manner which it deems
fit and which makes commercial sense to it. The second respondent
could exercise its discretion to award such rights to any other
person in respect of any other premises in whatever way it deemed fit
and appropriate without involving the applicant.
[92] In my view Mr. Frank correctly submits that a reservation of
rights can never amount to a curtailment of rights. What this
reservation confirms in my view is that the second respondent has a
discretion which can be exercised outside of the agreement,
particularly because the agreement does not grant exclusive rights to
the applicant. The second respondent’s decision (i.e. the
exercise of that discretion), is a business decision taken in the
ordinary course of business to advance second respondent’s own
business interest and such decision in my view fall squarely within
the statements by Coetzee J to which I have referred above.
[93] Mr. Tötemeyer has submitted in reply that there are various
other clauses in the agreement which clearly envisages the exercise
of a discretion, but which is not identified and made subject to the
terms of the agreement. My view of this is that the parties did not
intend those to be subject to the provisions of clause 2A. This is
not to say that the applicant cannot demand that such clauses be
referred to and possibly be resolved by way of arbitration.
[94] The fact that the parties hereto imported into their contractual
relationship a regime providing for a fair and reasonable conduct in
certain instances does not by that render the exercise of any
discretionary power by either one of the parties reviewable, nor does
it bring administration of the agreement into the public domain. It
is in my view a purely commercial transaction and so was the decision
to supply fuel to the sixth respondent.
[95] As a general matter of interpretation, a court will try to avoid
concluding that words in a contract are meaningless.94
Generally, words in commercial contracts are intended to have
business efficacy and should be interpreted consistently with such a
purpose. Of course, any interpretation must be consistent with other
provisions of the contract, and with the statutory provisions
relevant to the contractual relationship. Moreover, in determining
the meaning of the provision a court may consider both the conduct of
the parties and the ordinary commercial practices of the environment
in which they contract.
[
96] There is in my view no other provision in the dealership
agreement which conflicts with interpreting clause 3.2, as expressly
reserving the second respondent’s right to grant similar rights
to any other party on any other premises. Consequently, that
interpretation would not be repugnant with any other provision of the
lease agreement, nor would it lead to any absurdity. This is because
the parties expressly identified those clauses which they deemed to
be subject to clause 3.2.
[97] I am fortified in this by the following statements of
Mtambanengwe AJA in his dissenting judgment in Southline Retail
Centre CC v B P Namibia (Pty) Limited95
:
“…adopting an interpretation of the
clauses that accords with the language used in the contract as a
whole, that harmonises clause 2 and clause 4.2 and that accords with
what the lessee, according to the language of clause 4.2 and its own
conduct…
With respect, it seems to me that the approach
taken in the judgment, of reading clause 2 apart from clause 4.2 and
straining to find that an irrevocable option was granted to the
lessee, amounts to making a contract for the parties… I do not
understand the basis of the judgment concluding (paragraph [46]) that
“there is no other provision in the lease agreement that would
conflict with interpreting clause 2 of the Lease Schedule as
affording an option to the lessee”. That
can only be said by regarding the words of clause 4.2 as completely
meaningless. The conduct of the
parties,…provides a very strong indication that neither
regarded that clause 2 conferred an option upon the lessee (see in
particular paragraph [47] of the judgment).
“…one must also assume that both
parties were aware of these principles and deliberately chose the
language they used in both clause 2 and clause 4.2. Moreover, there
is no suggestion on the record, nor did either party submit that
either of them negotiated from a position of inferiority to the
other. These considerations leave no room for speculation.”
[98] Mr. Tötemeyer has submitted in reply that in terms of rule
53 also the decisions of individuals are in any event reviewable. He
relies for this proposition on Federal Convention of Namibia v
Speaker, National Assembly of Namibia96.
I do not see how this authority can assist the applicant. The
individual there concerned was the Speaker of the National Assembly
who had taken a decision to remove a person as a member of the
National Assembly in terms of section 48(1) (b) of the Constitution
and to replace him in terms of Article 48(2) with a person nominated
by a political party. It was held that the word “officer”
in Rule 53 was wide enough to include a person who holds office as
Speaker of Parliament. It is clearly within the public domain.
[99] In my view the non-compliance with or a breach of any of the
terms and conditions, or for that matter Section 4A will amount to a
breach of contract for which the other party has the normal
contractual remedies. It may even be that the applicant may have a
delictual remedy for unfair competition, but that does not make the
second respondent’s conditional decision to deliver fuel to the
sixth respondent reviewable. Given what I have said above, Article 18
of the Namibian Constitution, in my view, finds no application here.
[100] As was stated in Carr
v Jockey Club of South Africa97:
“The Supreme Court
however also exercises its powers of review in the case of
non-statutory bodies (such as clubs,
churches and other voluntary associations).
In this type of case such powers are generally more narrowly
circumscribed. The reason for this arises not only from the different
nature of the tribunal but from the fact that the
scope and manner of the exercise of the tribunal's discretion
is regulated not by any statutory provisions, but by its own rules.
In order to determine the review jurisdiction of the Courts various
situations must be distinguished.
(a) In the case of an application by a non-member
for membership or for permission (by way for example of the grant of
a licence) to use certain facilities of the non-statutory body, the
latter may, just as any person may decline to consider an offer to
enter into a contract, decide, for whatever reason, not to receive or
consider the application. Such decision is in effect not reviewable.
It matters not that membership may be of considerable economic
benefit. ---
(b) Where the application is received and the body
actually does proceed to consider it then a contractual relationship
might be created in terms whereof the applicant is entitled to have
the application dealt with in accordance with the rules of such body.
(Ricardo v. Jockey Club of South Africa, supra at p. 357). The power
of a Court to interfere on review in this situation and the basis on
which it does so is the same as that described in para. (c) below.
(c) Where the exercise by the authority of a
discretion relates to an existing member thereof or to a person
who (e.g. by way of a licence) has been granted the right to use
certain facilities of such body, then the Court will interfere on
review only if it is shown that such decision was not arrived at
in accordance with the rules of such body. This is because such
rules form the terms of a contract between the parties and unless
there has been a breach thereof no grounds for review arise (Martin
v. Jockey Club of South Africa, 1951 (4) SA 638 (T) at p. 647;
Anschutz v. Jockey Club of South Africa, supra at p. 80; Turner H v.
Jockey Club of South Africa, 1974 (3) SA 633 (AD) at p. 645). More
particularly as regards the manner in which non-members become bound
by such rules, I refer to what VAN DEN HEEVER, J.A., said in Rowles
v. Jockey Club of South Africa and Others, 1954 (1) SA 363 (AD) at p.
364. The learned Judge stated:
'The Club's rules are the domestic statutes of a
voluntary association. In order to achieve its objects its rules also
refer to the conduct of non-members. But since the rules have no
statutory authority they cannot, save in so far as a non-member has
bound himself by agreement to observe them, be legally binding upon
non-members. Similarly, the Club cannot, apart from contract, impose
its will upon non-members by legal process. It can do so
extra-judicially, however, because it is a powerful organisation, in
the same way as a financially strong brewery may factually exercise
control over hotel proprietors and the victualling trade'.
It therefore becomes a matter of construction of
the rules in order to determine what the terms of the contract are
and accordingly whether there has been a reviewable breach thereof.
More particularly, as regards whether the rules of natural justice
apply, BOTHA, J.A., in Turner's case, supra at pp. 645 - 6, stated:
'In the case of a statutory tribunal its
obligation to observe the elementary principles of justice derives
from the expressed or implied terms of the relevant enactment, while
in the case of a tribunal created by contract, the obligation derives
from the expressed or implied terms of the agreement between the
persons affected. (Maclean v. Workers' Union, (1929) 1 Ch.D. 602 at
p. 623). The test for determining whether the fundamental principles
of justice are to be implied as tacitly included in the agreement
between the parties is the usual test for implying a term in the
contract as stated in Mullin (Pty.) Ltd. v. Benade Ltd., 1952 (1) SA
211 (AD) C at pp. 214 - 5, and the authorities there cited. The test
is of course always subject to the expressed terms of the agreement
by which any or all of the fundamental principles of justice may be
excluded or modified. (Marlin's case, supra at pp. 125 - 130).'
COETZEE, J., in Herbert Porter & Co. Ltd. and
Another v Johannesburg Stock Exchange, 1974 (4) SA 781 (W) D at p.
788, formulated the test as follows:
'In Marlin v. Durban Turf Club and Others, 1942 AD
112, it was held (at p. 126) that this test of fairness must be
applied with due regard to the nature of the tribunal or adjudicating
body and the agreement which exists between the persons affected. The
relations between the parties are contractual and the rights which
such relations give rise to depend on the rules to which Vrede has
subjected itself, the written contract between it and the J.S.E. and
on the principles of the common law. (See Marlin's case at p.
122). It does not follow that in every case where one of the
parties has the right to decide or approve something under their
contract the other is entitled to insist that the rules of
fundamental fairness be observed by the other in arriving at this
decision, or that he may have the remedy of the kind now sought if
that be not done. Only when on a proper construction of the agreement
a 'tribunal or adjudicating body', which obviously may even be an
individual, is created, which is charged with the duty to decide,
does this principle apply'.
[101] Having regard to the authorities referred to above and the
facts of the matter it cannot be contended that the second respondent
falls within anyone of the categories of bodies mentioned in Rule
53(1) nor is the decision it took to supply the sixth respondent with
fuel and reviewable administrative action or otherwise, within the
meaning of Rule 53 or otherwise. The decision taken by the second
respondent is a purely commercial decision which is not reviewable in
terms of rule 53 or otherwise.
[102] Furthermore the second respondent’s Maphosa has made it
very clear since inception of the review application that no decision
making record exists at all. I have no reason to and cannot go behind
the affidavit of the second respondent and must accept that the
second respondent does not have any decision making record in its
possession. I do not agree with Mr. Tötemeyer’s submission
that at least “DM 2 constitutes a document which forms part of
a decision making record.
[103] As was stated by Kriegler AJA in Jockey Club of South Africa
V Forbes98:
“This is a good example of the
stultification inherent in reading Rule 53 as a law of Medes and
Persians, as Counsel for the Jockey Club would have it…the
party whose executive bodies had allegedly infringed Forbe’s
contractual rights – and was holding his money – was the
Jockey Club as such. Forbes was in possession of the records of the
hearings before each of the three tribunals and needed production of
no more to enable him to put his case fully before the court. He knew
what he had submitted to those tribunals, what they had decided and
could infer on what grounds they had done so. His founding affidavit
sets out his complaints in detail and indicated with precision what
his basic legal contentions were.”99
[104] I am respectfully of the view that the same applies in point to
the approach taken by the Applicant in this matter. What the
applicant had done is this; It asked the second respondent to provide
a record; when second respondent replied that it did not have record
of a decision making proceeding, the applicant disputed this and it
lodged the application to compel. The application is, as far as the
existence of the alleged record is concerned, founded upon a skeleton
case, which applicant then tried to supplement in its replying
affidavit – which it cannot do.
CONCLUSION:
In the result I make the following order:
1. The application by the Applicant to compel the Second respondent
to deliver a record as envisaged by Rule 53(1)(b) is dismissed;
2. The Applicant is ordered to pay the Second Respondents costs of
the application; such costs shall include the costs of one
instructing and two instructed Counsel.
__________________________
SCHICKERLING, AJ
COUNSEL ON BEHALF OF
THE APPLICANT: Adv. R Tötemeyer, SC
assisted by
Adv D Obbes
Instructed by: Sauls
& Co Law Chambers
COUNSEL ON BEHALF OF
THE RESPONDENT: Adv T Frank, SC
Assisted by
Adv N Bassingthwaighte
Instructed by: Engling
Stritter & Partners
94See
Kühn v Levey and Another 1996 NR 362 (HC) at 336 C –
F. For South African authority on this point, see Soteriou v
Retco Poyntons (Pty) Ltd 1985 (2) SA 922 (A) at 931 G – H;
Burroughs Machines Ltd v Chenille Corporation of SA (Pty) Ltd
1964 (1) SA 669 (W) at 670 G - H; Heathfield v Maqelepo
2004 (2) SA 636 (SCA) at 641 B - F