A decision to adopt and retrospectively apply a new policy on rest and service facilities on national roads by the South African National Roads Agency (Sanral) has been declared unlawful and of no force and effect by the Supreme Court of Appeal (SCA).
Also reviewed and set aside was Sanral’s decision to increase the levy percentages paid to it by the developers of these facilities on their gross turnover value excluding value-added tax (Vat) from:
- 0.5% to 2.5% on petroleum products; and
- 1% to 6% on all other sales on the property.
The SCA referred the matter to Sanral for reconsideration and compliance with the Sanral Act.
Costs were ordered against Sanral.
The SCA issued these orders to an appeal lodged by Casper Kasselman, Gertruida Kasselman, BDV Administration of States (Pty) Ltd and Loxodonta (Pty) Ltd, collectively known as the Trust.
Sanral and the ministers and departments of transport and mineral resources and energy were cited as respondents.
This followed the High Court in Pretoria dismissing an application by the Trust to review and set aside a decision of Sanral to adopt and retrospectively apply the new roads policy, with increased levy percentages, for permission to obtain access to and egress from national roads.
The Trust wants to construct and operate a filling station and rest facilities on the road between Klerksdorp and Wolmaransstad, and started negotiations with Sanral in 2016.
Sanral is the registered servitude holder of the road reserve next to national roads, including the N12, where the Trust wants to erect its filling station and rest facility.
At the time, and in terms of a Sanral policy that applied in 2016, a fee structure was in place, according to which Sanral could levy 0.5% on the gross sale of petroleum products and 1% on the gross sale of all other products on the property.
The process to obtain permission to construct the filling station went through three stages. All requirements were met and the parties were at the point of finalising the agreement at the end of 2020.
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Then the goalposts moved …
In January 2021, Sanral sent a draft agreement to the Trust – but it included increased levy percentages of 2.5% on petroleum products and 6% on all other products.
Sanral claimed these levy percentages were in accordance with a new fee structure adopted by its board and set out in its new 2021 policy guidelines.
Sanral said in April 2021 the reasons for the increase of the levies were that the previous percentages were determined in 1998 and were outdated, and the board had already decided in 2013 to review the percentages.
A feasibility study obtained by the Trust revealed that if the revised levy percentages were implemented, the filling station would not be commercially viable.
The increases would also have a far-reaching effect on the fuel retailing sector.
Attorneys for the Trust indicated in correspondence on 7 July 2021 it disagreed that Sanral was entitled to review and implement the levy percentages in its sole discretion.
The letter said that:
- Any revision of policy must be done in line with fair administrative process based on rational considerations with the input of stakeholders;
- No publication of the revised policy or an invitation to stakeholders and affected parties to provide input could be found;
- The revised decision was only circulated within Sanral after the Trust was notified of the revision; and
- The grounds upon which and considerations in terms of which the board decided to implement the increase were unknown.
It further pointed out that Sanral is governed by the Sanral Act and is obliged to follow a fair administrative process, and the feasibility study conducted on its behalf indicated the increase of the levy percentages was irrational.
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How the high court saw things …
The High Court in Pretoria concluded that although Sanral performs a public function, the terms of the contract, particularly the levy percentages, were negotiated in a manner comparable to that of a commercial contract.
It said these negotiations have no direct external effect on the public.
It said it could therefore not find that Sanral acted irrationally when it adjusted the levy percentages or adopted the new policy in terms of which it made such an adjustment.
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SCA disagrees
However, acting SCA Judge Ronel Tolmay – with SCA deputy president Dumisani Zondi, and SCA judges Caroline Nicholls and Phillip Coppin and acting SCA Judge Steyn concurring – said in a judgment handed down on Monday that the main question before the SCA was whether the decisions by Sanral to adopt the new policy and retrospectively apply the increased levy percentages in a proposed agreement was reviewable under the Promotion of Administrative Justice Act (Paja) or the principle of legality.
Tolmay said the fact that Sanral is a state-owned enterprise (SOE) is significant.
She said SOEs occupy a hybrid position in South African law and although often incorporated as companies under the Companies Act, are creatures of statute and perform public functions.
Tolmay said the boards of SOEs must be held accountable to the public due to the performance of these public functions and the Constitutional Court has reaffirmed that all exercises of public power, irrespective of the identity of the actor, are governed by the Constitution and must conform to its normative standards.
She said despite counsel for Sanral’s insistence to the contrary, there can be no doubt that Sanral is an organ of state and performs public functions, and its decisions will generally be subject to review under Paja or the principle of legality.
Tolmay said the boards of SOEs must act fairly, transparently and in accordance with the principles of public law – and how the boards of SOEs exercise their discretion should be exercised with due regard to the place of SOEs within the constitutional framework and applicable legislation and can be neither unfettered nor unlimited.
“It should always be exercised in the public interest,” she said.
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There was no public participation …
Tolmay said it is common cause the public participation process, as required by sections of the Sanral Act, was not followed and Sanral also did not comply with sections of Paja, which require the administrative action that adversely affects the rights of others to be procedurally fair.
She said Sanral’s action or conduct was reviewable under Paja and the decision to adopt the new policy and increase the levy percentages should therefore be reviewed and set aside.
Tolmay said the Trust implored the SCA to direct that the levy percentages set out in the 2016 policy should apply, but ruled that the appropriate remedy is to remit the matter to the original decision-maker for reconsideration.
“This approach respects the principle of separation of powers, as it allows the administrative body to exercise its expertise and discretion,” she said.
“There are no exceptional circumstances in this case that would allow this court to determine the appropriate levies to be charged.”
This article was republished from Moneyweb. Read the original here.
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