Petroneft and Glencor V MinsiterGovernment+Namcor
Petroneft and Glencor V MinsiterGovernment+Namcor
Petroneft and Glencor V MinsiterGovernment+Namcor
CORAM: SMUTS, J
2
JUDGMENT
[2] Given the corporate structures of the different parties and their relevance
to the overall contractual scheme which I sketch below, I rather refer to the
parties by their names. I refer to the first applicant as “Petroneft” and to the
second applicant as “Glencore”. They are oil international traders.
[3] The background facts which have led to the present dispute – and indeed
most of the facts relevant to the issues raised in the application – are in essence
not in issue. I first refer to them and their statutory context.
[4] During 2004, Namcor (the fourth respondent) was granted the mandate by
the Government of Namibia to procure through importation 50% of the Namibia’s
annual required petroleum products. This was granted under Regulation 30(10)
of the Petroleum Products Regulations, 2000 (“the Regulations”) issued under
the Petroleum Products and Energy Act, 13 of 1990 (“the Act”). In terms of the
Act and Regulations, the Minister regulates the importation and distribution of
petroleum products in Namibia. Namcor is a parastatal (and a body corporate)
3
also tasked with advising the Minister on matters concerning the importation and
distribution of petroleum products in Namibia. In pursuit of the statutory objective
of securing the reliable supply of petroleum products to Namibia, the Minister of
Mines and Energy (first respondent) granted the mandate to Namcor in 2004.
When doing so, the Minister amended the wholesale licenses of local oil
companies by imposing a condition upon their licenses, requiring them to procure
50% by volume of each of the petroleum products, delivered by them annually
under their licenses, from the fifth respondent, Namcor Petroleum Trading &
Distribution (Pty) Ltd Corporation of Namibia (Pty) Ltd (“NPTD”). It is a wholly
owned subsidiary of Namcor and was utilized to give effect to its mandate to
import the 50% petroleum product needs of Namibia.
[5] To enable it to give effect to the mandate, it is common cause that Namcor
approached Glencore, given the latter’s capitalization, expertise and experience
in the importation of oil and petroleum products internationally. As a result of this
approach, three inter related contracts were then entered into. There is firstly a
joint venture agreement between Petroneft (Glencore’s subsidiary) and Namcor
dated November 2008. Secondly, a supply agreement was concluded between
Namcor and the joint venture company (established pursuant to the joint
venture), Namcor International Trading Ltd, the sixth respondent. This contract
was entered into on 13 March 2009. The third contract is a tripartite deed of
novation between Petroneft, Namcor and another of Namcor’s subsidiaries,
Namcor International Ltd, the seventh respondent, incorporated in Mauritius. It is
referred to as “assignee”, by reason the terms of this agreement.
[6] The joint venture agreement between Petroneft and Namcor established
the joint venture company to source and sell petroleum products and crude oil
pursuant to Namcor’s mandate. Namcor and Petroneft are equal shareholders in
the joint venture company and are each entitled to appoint two directors to its
board.
4
[9] The third agreement of relevance for present purposes is the deed of
novation. It is concluded between Namcor, Petroneft and the assignee. Under
this agreement, Namcor transferred its whole interest in the joint venture
company to the assignee and in terms of clause 2 guaranteed the assignee’s
performance under the joint venture agreement with Petroneft.
[10] This contractual scheme was described by the applicants (and not
disputed by the Governmental respondents opposing the application) as
essentially comprising a joint venture between Petroneft and the assignee in
terms of which Petroneft would be entitled to enforce Namcor’s obligation in
terms of clauses 6.6 and 6.7 of the joint venture agreement against the assignee
and against Namcor as guarantor of the assignee. These terms relate to the
obligation on the part of Namcor’s assignee to use its best efforts to ensure the
satisfactory performance of the joint venture company’s business in giving effect
to the mandate. It is also not disputed that the petroleum products which were
5
[12] It was also not disputed between the parties that Glencore was not only
approached and involved in the establishment of the contractual scheme with the
consequential interdependent contractual relationships, but also provided capital
to fund the joint venture company and absorbed the risks inherent in international
petroleum procurement, given the lack of experience and capitalization on the
part of Namcor to do so.
[13] It is also common cause between the parties that Namcor’s ability to
perform its mandate was adversely affected by the determination of the on sale
price of petroleum commonly referred to as the basic fuel price or BFP formula.
This formula was utilized within the Southern African Customs Union (SACU) as
an import parity price construct at a time when South Africa served as the
exclusive supplier of petroleum to other SACU members. The applicants point
out that it was no longer apposite, given the fact that the mandate contemplated
the importation of petroleum products from other sources on an intercontinental
basis, thus including factors not contemplated within the context of a import parity
price construct within SACU, such as freight charges, decreases in product
density during transport and currency fluctuations.
determine the price with reference to these market conditions and not the
artificiality of the BFP construct. Despite these approaches, the Minister declined
to revise the pricing methodology. Instead, the Cabinet in October 2010
proceeded to revoke Namcor’s mandate and the Minister instructed the
termination of the supply contract. This decision making was preceded by a
briefing document marked confidential and dated 23 September 2010. It was
attached to the applicants’ founding papers. The Governmental respondents
challenge any reliance upon this document on the basis of what they term the
doctrine of “dirty hands”. I deal with this aspect below. The document in
essence recommended in its conclusion that because it was giving rise to debt
on the part of the Government, the arrangement with the applicants be
terminated (by revoking Namcor’s mandate).
[15] In a letter dated 21 October 2010 the Permanent Secretary of the Ministry
(second respondent) stated that the Cabinet “approved the revocation of
Namcor’s current mandate of importation of 50% of petroleum products” and
directed “Namcor to clear all its current obligations and commitments with the
supplier before 1 February 2011”. This letter was addressed to Namcor. It is the
decision set out in this letter which forms the subject matter of this application. It
is sought to be reviewed and set aside by the applicants.
[17] This application was then launched on 23 February 2011. The main relief
is to review and set aside the revocation of Namcor’s mandate and the decision
to direct Namcor to terminate its contractual obligations under the supply
agreement. The applicants also seek declaratory orders that Namcor remains
authorized to procure 50% of the fuel import requirement for Namibia and that
the supply agreement is of full force and effect and binding on NPTD. The
application is two pronged. Interim relief is sought pending the determination of
these matters. The interim relief is directed at restoring the status quo ante in
seeking to interdict and restrain the respondents from implementing the
Government’s decision to approve the revocation of the mandate and the
decision by the first respondent to require Namcor to terminate its contractual
obligations to the joint venture company.
[18] The application for the main (review and declaratory) relief is based upon
nine grounds raised in the founding affidavit. These are:
The lack of legal authority for the revocation and the directive,
contending that these are ultra vires the Constitution and the relevant
legislation;
Contending that the decisions were unfair given the failure on the part
of the authority is to disclose the gist of adverse information upon
which the decisions are sought to be based;
[19] When the matter was called, only the Minister, Permanent Secretary and
the Government (first, second and third respondents respectively) opposed the
application. Namcor’s Chairperson stated on its behalf that it was not aggrieved
by the decision and that sufficient and fair consultation had taken place before
the decision was taken and that the termination of the supply agreement between
the fifth and sixth respondents “simply occurred ex contractu”.
[20] In their opposition, the first to third respondents, through an affidavit by the
Minister, raised a number of preliminary points which I shall first deal with. These
relate to the questions of urgency, service on respondents located outside
Namibia, non-joinder of oil companies, a claim that the applicants approached
the Court with “dirty” hands, the locus standi of the applicants and delay in
bringing the review application.
[21] In the answering affidavits filed on behalf of the first, second and third
respondents, it is expressly stated that their answer is directed against both
interim and final relief. The affidavit was deposed to by the Minister himself. No
further time was sought by the respondents to file further papers. Mr Gauntlett
9
SC who appeared for the applicants together with Mr F Pelser contended that no
purpose would be served by a two-phase hearing in the circumstances. When I
raised this with Mr Namandje, who appeared for the first to third respondents, he
did not agree with this submission. He instead asserted that the applicants
would at best be entitled to interim relief and not to final relief at this stage. But
upon my enquiry, he was unable to point to any further aspect which the
respondents would want to cover to address the legality of the revocation on the
basis of authority, notice and the opportunity to be heard. These facts were
essentially common cause between the parties. Mr Gauntlett also stated that the
applicants would not rely upon the point of mala fides relating to the decision to
revoke the mandate.
[22] As the Minister’s answering affidavit does make it clear that he answers to
both the application for interim and final relief and, given the conclusion I reach
on the basis of facts which are not in issue, it would not serve any purpose to
proceed with a two-phase hearing. I turn now to the preliminary points raised by
the respondents.
Urgency
[23] Mr Namandje pointed out that Glencore through its London solicitors
already on 17 November 2010 threatened legal proceedings within 7 days should
the supply agreement not be reinstated. He pointed out that no response was
given within 7 days and that the applicants should then have commenced
preparation of their application. This submission however overlooks the fact that
a response was provided to Glencore’s solicitors by the Government Attorney on
13 December 2010. It would in my view be prudent for the applicants to await
such a response, given the magnitude of the matter. Mr Namandje further
contends that the applicants’ delay in launching the application only on
23 February 2011 was excessive in the circumstances and that the applicants
have not made out a sufficient case for urgency as is required by Rule 6(12). He
10
referred to a decision of the Full Bench of this Court in Mweb Namibia (Pty) Ltd v
Telecom Namibia and Others1 and to Bergmann v Commercial Bank of Namibia
and Another2 and submitted that any urgency was self created.
1
Case number A 91/2007, unreported 31. 07. 2007
2
2001 NR 48 (HC).
11
[25] It is clear to me that the statutory and contractual context and commercial
setting of the application would need to be thoroughly considered prior to
launching the application. This is quite apart from the magnitude of the matter
and its importance to the various parties. This process would clearly entail
thorough and detailed preparation, preceded by research and consultation.
These aspects are undoubtedly highly relevant to the exercise of my discretion
whether or not to condone the non-compliance with the Rules of Court and hear
the matter as one of urgency.
[26] In exercising this discretion, it is firstly important to note that there are
varying degrees of urgency as was stated in Luna Meubel Vervaardigers (Edms)
Bpk v Makin and another 1977(4) SA 135 (W)3 which has been cited with
approval by this Court and its constitutional predecessor. This is also recognized
in the Bergmann matter, where it is stressed that Rule 6(12) allows a deviation
from the prescribed procedures in urgent applications and that, as far as
practicable, parties and practitioners should give effect to the objective of
procedural fairness when determining the procedure to be followed in such
instances to afford a respondent with reasonable time to oppose the application.
[27] Mr Namandje argued however that commercial issues would not give rise
to urgency. But this is not the case. This Court has frequently recognized that
form of urgency in following Twentieth Century Fox Film Corporation and another
3
Approved in Sheehama v Inspector General Namibian Police 2006 (1) NR 106 (HC).
Clear Channel Independent Advertising Namibia (Pty) Ltd v Transnamib Holdings Ltd 2006 (1) NR 121 (HC).
Old Mutual Life Assurance Co Namibia Ltd v Old Mutual Namibia Staff Pension Fund 2006 (1) NR 211 (HC).
Mulopo v Minister of Home Affairs 2004 NR 164 (HC).
Bergmann v Commercial Bank Namibia Ltd 2001 NR 48 (HC).
Swanepoel v Minister of Home Affairs 200 NR 93 (HC) at 95 A-C.
Eimbeck v Inspector General of the Namibian Police 1995 (NR) 13 (HC) at 20 C – D.
Mweb Namibia (Pty) Ltd v Telecom and Others Supra
See also IL & B Marcow Caterers (Pty) Ltd v Greatermans SA Ltd and another 1981(4) SA 108 (C) at 110 C.
12
v Anthony Black Films (Pty) Ltd4 that the protection of a commercial interest can
also justify urgent relief under Rule 6(12).
The above quoted portion in the Twentieth Century Fox – matter is stated after
counsel submitted, as Mr Namandje did in these proceedings, that there was no
urgency in the absence of some threat to life or liberty and that only commercial
urgency was raised in that matter Goldstone, J (as he then was) swept that
approach aside in the previous passage and added in that matter that:
[29] Whilst it is clear in this matter that the respondents were afforded a short
period of time to provide answering papers, they have not sought any
4
1982 (3) SA 582 (W) at 586 G Approved in Bandle Investments (Pty) Ltd v Registrar of Deeds and Others
2001 (2) SA 203 (SE) at 213 E-F
13
postponement and have in fact answered to both the interim and final relief
sought. The Minister does however point out that the respondents are
“massively prejudiced” by the short time periods. He points out that certain
officials were not available at the time. The Minister furthermore does not in his
affidavit point out what further factual matter, relevant to the determination of the
issues would need to be placed before Court. Nor was Mr Namandje able to do
so in argument, particularly with regard to the legality of the revocation of the
mandate on the issues I have already referred to. The parties were both able to
file heads of argument and presented detailed and thorough argument.
[30] Mr Namandje also pointed out in argument that the respondents had not
been able to file the record in terms of Rule 53. This would ordinarily be a right
for the applicants to pursue which they have indicated they would decline to
exercise. Furthermore the applicants are not required to follow Rule 53 if they
seek to review decision making and can do so under the common law. 5
[31] Mr Gauntlett on the other hand, pointed out that there would be an
irretrievable loss to the applicants if the status quo ante were not restored and
further contended that the applicants were not culpable with regard to the time
taken in bringing the application. In this regard he also referred to paragraph 81
of the founding affidavit in which it was contended (and not squarely disputed)
that it would be extremely difficult for the applicants to compute the loss of
revenue and damages they would sustain and that there was not a clear remedy
for the recovery of damages of this nature so suffered in Namibian law. He also
referred to the logistical difficulties faced by the applicants’ as foreign litigants in
the preparation of the application and submitted that it was prudent for them to
await the response on behalf of the Minister to the letter of 17 November 2010.
clearly factors together with logistical difficulties caused by distance and being in
different jurisdictions should be taken into account in the exercise of my
discretion when considering whether to grant condonation under Rule 6 (12).
These factors were referred to in this context in an unreported decision of this
Court in The Three Musketeers Properties (Pty) Ltd and Another v Ongopolo
Mining and Processing Ltd and Others6 where it was held that in assessing
urgency a Court could have regard to the factors enumerated in Radebe v
Government of the Republic of South Africa and others7 when considering
whether there had been unreasonable delay in bringing a review. The following
was stated in the Ongopolo matter with reference to the factors listed in Radebe:
[33] Taking the factors raised by the applicants (in their founding affidavit and
especially in paragraphs 78 and 79) into account, I cannot fault the applicants for
taking some time “to marshal their forces”, as was found in Corium (Pty) Ltd and
6
Delivered on 30 November 2006
7
1995 (3) SA 787 (N) at 799 B-F
8
At P of the unreported judgment.
15
Others v Myburgh Park Langebaan (Pty) Ltd and Others.9 I accordingly do not
find that their delay was culpable. I also take into account that the respondents
have not sought a postponement to place further matter before this Court. Nor,
as I have said, has any evidential matter been identified by Mr Namandje which
the respondents would still need to address. I also take into account that the
respondents themselves have been on notice for some time that the applicants
may take legal action to challenge the decision making.
Service: non-compliance with Rule 5(1) and s 27 of the High Court Act
[35] The second preliminary point taken by the first to third respondents was
that there had been no edictal citation as provided for in Rule 5 of the Rules of
this Court which preclude service of process outside the jurisdiction of this Court
without leave of this Court. The respondents also took the point that the time
allowed for entering an appearance to defend is set in peremptory terms at being
not less than 21 days in s 24 of the High Court Act10 and that the application was
in direct conflict with this mandatory provision, in providing for shorter periods.
[36] In the course of his oral argument, Mr Namandje also pointed out that
there was no reference in paragraph 1 of the first part of the notice of motion
(seeking condonation) to Rule 5. He pointed out that there was only reference to
Rule 6(12). But the reference in Rule 6(12) is with a view to secure condonation
for non-compliance with the Rules of this Court. Rule 5 concerning edictal
citation is one such Rule. There is thus an application for condonation for non-
compliance with that rule.
9
1993 (1) SA 853 (C) at 858.
10
Act 16 of 1990
16
[37] He further pointed out that s 24 of the High Court Act is peremptory and
that the urgent relief against foreign respondents would be precluded by virtue of
the operation of that section. It provides:
[38] According to Mr Namandje, this section would preclude even interim relief
– not final in nature or effect – from ever being granted against a foreign
respondent if the time limit in s 24 were not adhered to.
[39] On the other hand, Mr Gauntlett submitted that the founding and replying
affidavits made out a proper case for non-complying with these formalities. He
further referred to the approach of the Supreme Court in Mahe Construction (Pty)
Ltd v Seasonaire11 which he contended lent support for the applicants’
application for condonation with the Rule’s service requirements for foreign
entities. He contended that its underlying rationale demonstrated that in
commercial circumstances like this matter where foreign entities operate in
Namibia the transactions and interactions with them leading to litigation are
routed on Namibian soil, edictal citation and associated procedural rules are not
mandatory.
[40] The Supreme Court held in Mahe Construction that a foreign entity with
substantial operations in Namibia was sufficiently subject to the jurisdiction of
Namibian Courts and that leave to sue by edictal citation was not required. In
reaching this conclusion, the Court cited Ochs v Kolmanskop Diamond Mines
Ltd12 with approval where it was held that:
11
2002 NR 398 (SC)
12
1921 SWA 8
17
[41] Although the Supreme Court did not deal with the provisions of s 24 in
Mahe Construction, the underlying approach of the Court would indicate that this
Court would have a discretion in granting non-compliance with Rule 5,
particularly where the foreign entities in question are the joint venture company in
which Namcor and Petroneft each have a 50% share and the assignee
registered in Mauritius is a wholly owned subsidiary of Namcor. The contracts in
question were concluded in Namibia and fundamentally relate to the supply of
petroleum products to Namibia through the joint venture corporate vehicle.
[42] It would in my view also be inconceivable for this Court never to be able to
hear and determine urgent relief without the need for edictal citation and for
adherence to the time period contained in s 24. I would certainly consider that
this Court has the inherent jurisdiction to grant non-compliance with Rule 5 and in
the exercise of my discretion I would do so.
formal service in terms of the rules which would include s 27 of the then South
African Supreme Court Act13.
[44] Due regard should also be had for the purpose of edictal citation and s 24.
A South African Court stressed this in the context of a similar point being taken,
but in circumstances where an appearance to defend was entered.
[45] It would also seem to me that it is not a question of dispensing with the
relevant section but rather ruling that in sufficiently urgent circumstances, the
relevant section would not apply.
[46] It would also seem to me that the period provided for in s 24 applies once a
Court has granted edictal citation. If a Court dispenses with a need for edictal
citation, then the application of this section and the time period would not seem to
arise.
[47] In this instance, the seventh respondent has made an affidavit indicating that
the time for giving a notice to oppose and to file an answering affidavit had passed
by the time the papers were served. This respondent does not however state that it
wishes to oppose that relief. In the absence of stating that, there would not be
13
Davey v Douglas and Another 1999(1) SA 1043 (N) at 1060; Scott v Hough 2007 (3) SA 425 (0)
19
prejudice to that respondent as a consequence. This issue has also not been
raised by it, but by the governmental respondents. Furthermore, its parent
company, Namcor, has further stated that it does not oppose the application.
[48] It follows that the points taken by the first to third respondents concerning
service and s 24 do not avail them.
Non-joinder
[49] The Governmental respondents also take the point of non-joinder of local
oil companies. They do so with reference to the new oil importation
arrangements which were made in January 2011 and which came into force in
February 2011. In terms of these arrangements, the licenses of the local oil
companies have been varied to supply 100% of their market share of Namibia’s
oil products.
[50] Mr Namandje contended that the local oil companies would have a direct
and substantial interest in this application as a consequence and needed to be
joined.
[51] Mr Gauntlett on the other hand countered that these companies do not
have a direct and substantial interest in the question as to whether the revocation
of the mandate and termination of the supply agreement was lawful. I agree with
that submission. During argument I enquired from Mr Namandje whether the oil
companies would have standing to review the decision to revoke the mandate to
Namcor and the directive relating to the termination of the supply agreement. He
did not have an answer to this, and rightly so. In my view, they would not have
the requisite standing. Their interest is too remote.
[52] It would follow that it was not necessary to join them to these proceedings.
20
[53] I have already referred to the use of this expression by the respondents.
The preliminary point raised by the respondents is that the applicants’ application
substantially relied upon documentation illicitly obtained by them, as is asserted
in paragraphs 28 and 29 of the Minister’s answering affidavit. In argument, Mr
Namandje expanded upon this by stating that the applicants had avoided
disclosing how they had obtained the briefing note. In the replying affidavit, the
applicants however squarely deny that they had obtained or procured the
document illegally. As I understood Mr Namandje, the reliance upon this
document and the application of this doctrine would preclude the applicants from
their obtaining relief.
[54] In response, Mr Gauntlett pointed out that a doctrine of “dirty hands” did
not exist in Namibian law and that Namibian law only knows of a defence of
unclean hands. He is correct in this submission. The Supreme Court in Minister
of Mines and Energy v Black Range Mining (Pty) Ltd14 accepted that this doctrine
applies “in circumstances where there was some or other dishonesty on the part
of the person who claimed protection for his rights”,15 after a thorough survey of
authorities on the point. The Supreme Court concluded that:
14
15
Unreported, 15/7/2010
21
[56] Given the fact that there was no suggestion or evidence of impropriety on
the part of the applicants, there can be no question of the application of the
doctrine of unclean hands to this application.
Locus standi
16
Unreported, 15/7/2010
17
2000 NR 1(HC)
18
1972 (4) SA 409 (C)
19
1986 (4) SA 796 (T)
22
[58] In his argument, Mr Gauntlett stressed that the starting point is that the
Supreme Court has found that a corporate entity could have standing to invoke a
Chapter 3 right, as was held in Africa Personnel Services (Pty) Ltd v Government
of the Republic of Namibia.20 In doing so, the Court recognized that:
[59] Mr Gauntlett referred to the fact that the joint venture company, the
contracting party in the supply agreement, is 50% owned by Namcor, an entity
wholly owned by the decision-maker and that Namcor does not consider itself
aggrieved by the decision-making. The other 50% shareholding is held by
Petroneft. The joint venture company would thus be paralysed in the
circumstances and would not itself be able to institute the review application and
these proceedings by virtue of its shareholding. Mr Gauntlett also referred to a
decision of a Full Bench of this Court in Oshuunda CC v Blaauw21 which
confirmed that where a close corporation could not institute proceedings because
a majority decision to do so by its members could not be obtained, then an
individual member may do so. Although in a different context, this underlying
approach, firmly rooted in common sense, should in my view find application in
this matter.
20
2009 (2) NR 596 (SC)
21
2001 NR 203 (HC)
23
party but was rather made by exercising a public law power (under statute) to
revoke Namcor’s mandate. Mr Gauntlett also pointed out that the first applicant
was furthermore throughout the development partner in respect of the contractual
scheme under which effect was given to the public law mandate provided to
Namcor. This was also how the Government and Namcor regarded the position
as is borne out by the correspondence between the parties and the internal
documentation of both the Governmental and Namcor. In this regard Mr
Gauntlett referred to the factual averments contained in the founding affidavit
which were not put in issue by the respondents and correctly submitted that the
commercial reality was that the applicants had been engaged to fulfil the
Government’s commitment to ensure a sustainable supply of petroleum products
to Namibia.
“[12] Under common law, the question of standing (in the sense of
an actionable interest) has always been regarded as an
incidence of procedural law. The assessment of the concept
as an aspect of procedural (rather than substantive) law allows
the court a greater measure of flexibility in determining
whether, given the facts of the particular matter, the substance
of the right or interest involved, and the relief being sought,
locus standi has been established. Moreover, although the
22
2009(2) NR 670 (HC)
24
[62] The Court in Uffindel further followed the approach of the South African
Constitutional Court in Ferreira v Levin N.O. and Others; Vryenhoek and Others
25
v Powell N.O. and Others23 in dealing with standing constitutional matters under
the South African Constitution.
[63] In that same matter O’Reagan, J also stresses why a broader approach
should be adopted.24
[64] In applying this approach, the Court in Uffindel stated the following:
23
1996 (1) SA 984 (CC)
24
At para 229 on 1103 E-H
26
[65] Mr Namandje on the other hand submitted that only Namcor would have
standing by reason of the fact that the mandate is to it. But this narrow approach
does not take into account the full contractual setting which arose from and was
dependent upon the mandate. I agree with Mr Gauntlett that this approach is
untenable as it would effectively amount to the Government being afforded the
opportunity to contract out of the Constitution by incorporating a parastatal which
it controls and then exercising statutory powers through it. It would also seem to
me that the position in the McNamara matter is distinguishable. That decision
should be understood within its factual context. It was in a tender context where
an unsuccessful tenderer had brought a review and then withdrew it. The Court
held that subcontractors of that unsuccessful tenderer would not have standing to
review the allocation of the tender.
[66] Plainly the joint venture company would have standing to challenge the
revocation decision in the contractual scheme. If it cannot act by virture of the
equal shareholding between Namcor and Petroneft (where Namcor is controlled
by its sole shareholder, the decision maker) and thus cannot act by reason of this
paralysis, the question arises as to which party would have standing. Applying
the approach in Oshuunda CC, it should follow that Petroneft, as 50%
shareholder in the joint venture company would have standing. This would also
accord with a broad and purposive approach to standing in constitutional matters
eloquently set out in Uffindel with which I respectfully agree. I accordingly find
that the applicants have sufficient standing to bring this application.
27
[67] Mr Namandje contended on behalf of the first to third respondents that the
applicants have unduly and unreasonably delayed in bringing their review
application and that it should be dismissed for this reason. He submitted that the
delay was inordinate, taking into account that the decision had already been
made in late October 2010 with the application only being served in late February
2011 – a period of some 4 months. Mr Namandje referred to a recent decision of
this Court in Purity Manganese (Pty) Ltd v Minister of Mines and Energy and
Others25 where the Court held that a period of beyond three months to bring a
review would be unreasonable in the context of that matter (where the review
was brought 10 months after the impugned decision). He also referred to
Radebe matter26, which was followed by a Full Bench of this Court in Medical
27
Products (Pty) Ltd v The Tender Board of Namibia . What was stressed in the
latter matter is that the time within which to bring a review application would
depend upon the merits of each individual case.
[68] In this matter, it was clearly reasonable for the applicants to address a
letter to the respondents and to await their response before launching their
review application. That response was only forthcoming on 13 December 2010.
The annual year end break, specifically referred to by the applicants, thereafter
followed. In taking into account the various factors referred to in the Radebe
matter, to which I have already referred in addressing the question of urgency, it
is clear to me that there has not been an unreasonable delay in bringing this
review for the reasons I have given. This preliminary point accordingly also fails.
25
2009 (1) NR 277 (HC) at 278
26
supra
27
1997 NR 129 (HC)
28
Revocation of mandate
[70] I have already referred to the grounds upon which the revocation of the
mandate and instruction to terminate the supply agreement are challenged.
[71] As I have also indicated, much of the factual matter material to certain of
the grounds to which I refer has not been placed in issue. Mr Namandje
essentially argued that there was no need to provide the joint venture company
or the applicants of any notice prior to the decisions being taken to revoke the
mandate and instructing that the supply agreement be terminated. He argued
that the notice to Namcor was sufficient and that the audi alteram partem rule is
flexible and that on this basis as well, the notice given to Namcor would suffice.
[72] It is common cause that no prior notice of the revocation was given to
either the joint venture company or to the applicants.
[73] Mr Namandje also argued that the review grounds raised by the applicants
would not arise by virtue of the fact that the joint venture company and NPTD
were parties to the supply agreement. They had in that agreement expressly
agreed (in clause 9.2) that in the event of revocation of the mandate, the
agreement would terminate in 90 days. He submitted that the termination of the
agreement thus arose in terms of the contract itself following upon the revocation
of the mandate.
[75] This constitutional provision was recently explained by the Supreme Court in
Permanent Secretary of the Ministry of Finance v Ward28:
[28] It was further laid down by this court that the words which
enjoin officials and administrative bodies to 'act fairly and
reasonably' are not restricted to procedure only but also apply
to the substance of the decision. (See Minister of Health and
Social Services supra para [25] at 772.)”
[77] Mr Gauntlett on the other hand contended that the applicants had a vested
interest in the continuation of the mandate and supply agreement and thus had
the right to be afforded an opportunity to be heard in respect of the decision to
revoke the mandate to Namcor upon which the supply agreement depended and
was inextricably linked. He further contended that the common cause facts also
showed that the Government had considered itself at large to interfere in the
contractual relations of others (being the parties to the supply and other
agreements). This would not only be unlawful in common law, but would also be
unlawful for it to apply its public law power to revoke the mandate for the purpose
of escaping what it considered to be an unprofitable obligation. He contended
that this had been done in an arbitrary and a procedurally unfair manner and that
it was accordingly unlawful.
30
2006 (1) NR 275 (HC). See also President of the RSA v SA Rugby Football Union 2000 (1) SA 1 (CC) at par
141. Chirwa v Transnet Ltd and Others 2008 (4) SA 367 (CC) Gcaba v Minister of Safety and Security and
Others 2010 (1) SA 238 (CC)
31
matter, the Supreme Court however held that the termination of the specific
contract which arose in that matter constituted a purely contractual commercial
act by reason of the fact that the Government had in those circumstances merely
exercised a contractual remedy open to it under that contract.
[79] In this matter, the Government did not exercise any contractual power at
all in revoking the mandate, as occurred in the Ward matter. The fact that the
revocation gave rise to a consequence for the supply contract does not negate
the public law nature of the power exercised by the Government in the
revocation. The nature of the power exercised by the Cabinet was not
formulating policy but rather determinative of rights and was thus administrative
action. The source of the power was also statutory, and would arise from the Act
and its regulations under which the mandate would be granted. The public law
power, which arose from the statutory power to grant such a mandate, would in
my view be decisive of this issue. This is quite apart from Mr Gauntlett’s
submission that the termination by virtue of a revocation reflected in clause 9.2 of
the supply agreement would presuppose a lawful revocation. He made this
submission with reference to Kauluma en Andere v Minister van Verdediging en
31
andere. I agree with that submission. The revocation of the mandate
contemplated in clause 9.2 would contemplate one lawfully done.
[80] The applicants are clearly affected by the exercise of the public law power
to revoke Namcor’s mandate. At the very least, they would in my view have
enjoyed a legitimate expectation that their interest in the continuation of the
supply agreement would not be adversely affected without being notified in
advance and then being afforded the opportunity to make representations. At the
very minimum, the joint venture company would have such an expectation and
right. It received no prior notice and was not afforded the opportunity to be heard
in relation to the decision.
31
1987(2) SA 833 (A). See also S v Maphelle 1963(2) SA 651 (A) and Abbott v Commissioner for Inland
Revenue 1963(4) SA 552 (C) at 556 E.
32
[81] It would follow that the Government or Ministry would be required to afford
interested parties such as the applicants (or joint venture company) the
opportunity to make representations. The failure to have done so, which is
common cause in these proceedings, would render the decision to revoke the
mandate invalid for this reason alone. This is quite apart from the right to
reasons for the decision to revoke the mandate, is inherent in a fair and
reasonable procedure, to which the applicants were also entitled – and did not
receive.
[82] There is a further basis upon which the decision to instruct the termination
of the supply agreement is to be set aside. This Court in S v Carracelas (1)32
held33:
“The fact that the Cabinet is the executive authority in the country
does not take the matter any further. The Cabinet must still act within
the law and cannot under the guise of the executive authority, for
example, make legislative decrees. The fact that the executive may
have certain prerogatives in the field of foreign policy, as pointed out
by Mr Small, cannot assist them in the matter under consideration.
The issuing of notices, etc, is also not relevant to the present
proceedings if considered in vacuo. These notices, etc, must in any
event be issued pursuant to the law and cannot, in the absence of a
law permitting them, be of any force or effect. The Cabinet as
Executive Authority must administer laws in terms of the law and not
contrary thereto.”
[83] The respondents have not provided any statutory authority for the decision
of the Cabinet or Minister to instruct the termination of the supply agreement.
Given the purpose of the revocation of the mandate to achieve that end, it would
32
1992 NR 322 (HC)
33
At 327A-C
33
also follow that the decision to revoke the mandate would need to be authorized
and be subject to the constitutional rights of affected parties to administrative
justice and that the decision to revoke be taken in accordance with the requisite
statutory provisions. The respondents have in this context raised no legal
authority for the revocation of the mandate and the instruction to terminate the
agreement. The lack of authority for the decisions would also vitiate them.
[84] There would also in my view be considerable support on the facts for the
challenge by the applicants upon the decision making on the grounds that it was
not reasonable or on the basis of irrationality or arbitrariness. The main answer
of the Governmental respondents to these challenges was the ipse dixit of their
deponents that the decision itself was reasonable and rational. These are
however self serving conclusions without any factual matter raised to support
them and cannot avail the respondents in the face of the factual matter raised by
the applicants calling into question the reasonableness and rationality of the
decisions. Given the fact that the decision is vitiated by failing to accord the
applicants and the joint venture company the right to be heard and thus acting in
conflict with a fair procedure as is required by Article 18, it is not necessary to
further deal with this and the other review grounds raised by the applicants.
Conclusion
[85] In the result, I am satisfied that the applicants have established their
entitlement to the final relief sought in Part B of the notice of motion. Mr
Namandje rightly did not take issue with Mr Gauntlett’s submission that an order
for costs should include the costs of two instructed counsel. The complexity of
the legal issues and the importance of the matter to the applicants would warrant
such an order. I accordingly grant the following order:
34
1. Condoning the applicants’ non-compliance with the Rules of this Court and
authorise that this application be heard as one of urgency in terms of Rule 6
(12).
2. Reviewing and setting aside the decision by the third respondent, through the
Cabinet of the Republic of Namibia on or about 21 October 2010 purporting to
approve the revocation of the fourth respondents’ mandate to import 50% of
petroleum products into Namibia.
3. Reviewing and setting aside the decision by the first respondent, alternatively
second respondent, on to about 21 October 2010 requiring the fourth
respondent to terminate its contractual obligations to the sixth respondent.
4. Declaring that:
(a) the fourth respondent remains authorised to procure by import into
Namibia 50% by volume of each of the petroleum products required for
delivery by local oil companies pursuant to their respective wholesale
licences during each calendar year;
(b) the supply agreement entered into between the fifth respondent and
sixth respondent on 13 March 2009 remains valid, of full force and
effect and binding.
5. Directing the first, second and third respondents to pay the applicants’ costs,
including the costs of two instructed and one instructing counsel, jointly and
severally, the one paying the other to be absolved.
___________________________
SMUTS, J
35
ON BEHALF OF APPLICANT:
Adv JJ Gauntlett SC
and with him
Mr F Pelser
Instructed by
LorentzAngula Inc