In a judgment that highlights the importance of exhausting internal remedies before seeking judicial review of an administrative action, the Supreme Court of Appeal (SCA) delivered a unanimous decision in the case of Pine Glow Investments (Pty) Ltd v The Minister of Energy and Others.
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FreepikDelving into the intricacies pertaining to the Petroleum Products Act 120 of 1977 (the Act) and the Promotion of Administrative Justice Act 3 of 2000 (PAJA), this case highlights the importance of exhausting internal remedies to challenge a decision by an administrative body before approaching a court for judicial review in terms of PAJA.
Contesting petroleum licences in its operational vicinity
The appellant, Pine Glow Investments (Pine Glow) is a fuel wholesaler and holds a site license for the Caltex Acornhoek Mall filling station. It contested the granting of new petroleum licences in its operational vicinity.
Of those, were the retail and site licenses applied for by the third respondent Erf 6 Highveld Technopark Investments (Erf 6) and the fourth respondent NAD Property Income Fund (Pty) Ltd (NAD). Pine Glow raised an objection against their license applications. The Controller of Petroleum Products (the Controller) refused their license applications.
Erf 6 and NAD successfully appealed the Controller’s decision of refusal to the Minister of Energy under section 12A of the Act. The Minister upheld the appeal and remitted their licence applications to the Controller for re-evaluation, based on the information and other documentation that was presented during the internal appeal process.
Pine Glow was of the view that the Minister’s appeal decision of remitting the license applications of NAD and Erf 6 back to the Controller were ‘unlawful’ on the basis that the Minister was required to decide the appeal and was not empowered to refer license applications back to the Controller for re-evaluation.
It further expressed that any decision taken by the Controller pursuant to the Minister’s appeal decision would be ultra vires and of no legal force and effect.
Section 12 A(3) of the Act provides that “[t]he Minister shall consider the appeal, and shall give his or her decision thereon, together with written reasons therefor within the period specified in the regulations”.
Remitted back to the Controller
Disagreeing with Pine Glow’s legal position, the Controller was of the view that since the enactment of the petroleum licensing system in 2006, decisions by the Minister to refer matters back for reconsideration by the Controller have never been challenged, and that in accordance with the decision in Oudekraal Estates (Pty) Ltd v The City of Cape Town and Others (Oudekraal) invalid administrative action continues to have legal consequences and is valid up until such times as reviewed and set aside in an appropriate forum. The Controller approved the NAD and ERF 6’s license applications in terms of the Act in and during November 2020.
Pine Glow brought an application, in terms of PAJA, to review and set aside the Minister and the Controller’s decision. Although Pine Glow abandoned its challenge against the Minister’s decision, it persisted with a judicial review of the Controller’s decision.
The court of first instance dismissed Pine Glow’s review of the Controller’s decision and concluded that:
“the Minister was entitled to refer the matter back to the Controller; the Controller was expected to assist the Minister as requested and in doing so was discharging his responsibilities set out in s 3(2)(a )[of the Act]; in doing so the Controller was not revisiting his own decision but was merely executing instructions of the Minister; the Controller was therefore not functus officio; the Controller’s decision re-assessing the applications was part of the Minister’s consideration of the appeal; and therefore there was no internal appeal available to the Minister in respect of the Controller’s re-evaluation and grant of the licences; the Minister could not be functus officio as he had upheld the appeal; and the decision to re-assess the applications was that of the Minister and not the Controller.”
Nkululeko Zuma 3 Nov 2023 Appeal to a full court
Pine Glow appealed the court of first instance’s decision to a full court. The full court concluded, inter alia, that the Minister and the Controller’s decision were separate administrative acts in terms of PAJA; and that section 7(2)(a) of PAJA required Pine Glow to exhaust internal remedies provided in law before taking any administrative action on judicial review and s12A of the Act provided such remedy, which it failed to exhaust or to apply for an exemption from its obligation to do so.
In essence, the full court held that Pine Glow’s review application was instituted too soon. Pine Glow petitioned the SCA to appeal the full court’s decision.
Appeal to SCA
The SCA had to consider, inter alia, the following intertwined issues:
- Whether the Minister’s decision to remit license applications to the Controller for re-evaluation was lawful under section 12A of the Act;
- Whether the Controller’s decision in re-evaluating and granting the license applications were ultra vires on the basis that the Controller was functus officio after its initially refusing the licensing applications;
- Whether the Controller conducted a re-evaluation of the license applications in a fair manner in terms of the prescripts of PAJA; and
- Whether Pine Glow should’ve exhausted internal remedies prior to seeking judicial review.
Key findings of the SCA
The Minister’s decision was lawful
The SCA found that the Minister’s decision to remit the matter to the Controller for re-evaluation was indeed an administrative action, as contemplated by PAJA. Pine Glow’s rights were directly affected.
Crucially, the SCA found that section 12A(3) of the Act grants the Minister wide discretion when considering an appeal. Although the Minister cannot issue petroleum licenses directly, his power to remit a matter for re-evaluation is necessarily implied to ensure effective adjudication and compliance with the Act’s purpose.
On this basis, the Minister’s decision to remit the license applications back to the Controller was lawful under s 12A of the Act.
The Controller was not functus officio
Rejecting Pine Glow’s argument that the Controller could not reconsider his original decision, the SCA found that the re-evaluation of Erf 6 and NAD’s license applications was not a mere reconsideration of the same facts but rather a legitimate administrative process duly ordered by the Minister.
Linda Shwana and Jamié-Lee Jacobs 20 Dec 2024 Failure to exhaust internal remedies was fatal
A pivotal basis for the SCA’s dismissal of the appeal was Pine Glow’s failure to exhaust the internal appeal route prescribed under section 12A of the Act. The SCA reinforced the mandatory nature of internal remedies under PAJA, reiterating what was held in Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development Co Ltd:
A review application that is launched before exhausting internal remedies is taken to be premature and the court to which it is brought is precluded from reviewing the challenged administrative action until the domestic remedies are exhausted or unless an exemption is granted. Differently put, the duty to exhaust internal remedies defers the exercise of the court’s review jurisdiction for as long as the duty is not discharged.
Pine Glow neither appealed the Controller’s final decision of granting the petroleum retail and site licenses to the Minister, nor sought exemption under section 7(2)(c) of PAJA. Its assumption that the Minister was ‘functus officio’ was found to be legally flawed and procedurally fatal.
Allegations of procedural unfairness and bias were unsubstantiated
The SCA also dismissed Pine Glow’s claims of bias and procedural unfairness, noting that it had been consulted during the re-evaluation and provided data on traffic volumes and economic viability of the proposed filling station. These allegations, even if taken at face value, should have formed part of a new appeal to Minister, one which Pine Glow failed to lodge.
Conclusion
For any companies that procure work from public institutions or organs of state through a tender process, this decision by SCA serves as a reminder of how our courts adopt rigorous enforcement of PAJA’s requirement to exhaust internal remedies before reviewing any decision – which amounts to administration action as contemplated in PAJA – of such public institution or organ state.
This SCA decision reaffirms the need to follow proper procedural channels, especially where technical and polycentric factors are at play when challenging decisions made by public institutions or organs of state that have a direct external legal effect.
This case is more than a dispute over petroleum licenses. It is a cautionary tale about procedural diligence, the necessity of exhausting internal remedies and the courts’ deference to specialised administrative processes in terms of PAJA.
For legal practitioners and public bodies alike, it offers a compelling reminder: in administrative law, process often defines outcome.
