Central Energy Fund SOC Ltd and Another vs. Venus Rays Trade (Pty) Ltd and Others

South Africa

13.04.2022

Civil

Discretion may be interfered only if the Court is satisfied that it was not exercised judicially or had been influenced by wrong principles

Present appeal arises from a successful application by the Appellants, the Central Energy Fund SOC Limited (CEF) and the Strategic Fuel Fund Association NPC (SFF), to review and set aside certain decisions taken in 2015 and 2016, concerning the rotation of South Africa’s strategic stock of some 10 million barrels of crude oil (the strategic stock), and the transactions that followed. The strategic stock comprised 5 million barrels of Basrah Light, an Iraqi oil, and 5 million barrels of Bonny Light, a Nigerian oil. The SFF is responsible for the management of the strategic stock and is a wholly owned subsidiary of the CEF. The decisions and transactions were approved by the ninth respondent, the Minister of Energy (the Minister). Neither the Minister nor the tenth respondent, the Minister of Finance, participated in the proceedings below.

The high Court reviewed and set aside the decisions and resultant transactions. It made an order granting the fourth and fifth respondents, and the sixth to eighth Respondents, compensation for their out-of-pocket-expenses as contemplated in Section 172(1)(b) of the Constitution and Section 8(1)(c) of the Promotion of Administrative Justice Act, 2000 (PAJA).

The exercise of a remedial discretion under Section 172(1)(b) of the Constitution and Section 8(1) of PAJA, constitutes a discretion in the true sense. It may be interfered with on appeal only if this Court is satisfied that it was not exercised judicially, or had been influenced by wrong principles or a misdirection of the facts, or if the court reached a decision which ‘could not reasonably have been made by a Court properly directing itself to all the relevant facts and principles’. The Appellants must show that the high court’s remedial order is clearly at odds with the law.

The High Court was called upon to determine just and equitable relief in a case where the issue was not simply whether an administrative decision should be set aside, but one presenting a combination of features of substantial importance. The irregularities were a serious violation of the rule of law. The agreements had been in existence for some years. Contango and Vitol were innocent parties who had incurred significant expenses in reliance on the Appellants’ conduct and those agreements. The extent of those costs was exacerbated by the Appellants’ delay in launching and prosecuting review proceedings.

Setting the agreements aside would deprive Contango and Vitol of their contractual rights. In that event, a balance had to be struck taking into account the public interest, and whether the status quo ante could be restored to an equitable extent. The High Court considered that justice and equity would best be served by an order setting aside the impugned decisions and agreements, and granting Contango and Vitol compensation for the losses they suffered as a result of the impugned agreements being declared invalid. The appellants have not established that the court erred in law or reached a plainly unreasonable decision. Appeal dismissed.

Tags : Compensation Decision Review

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