Continental Power Supplies (Pty) Ltd v Minister of Trade and Industry and Another (89256/2018) [2020] ZAGPPHC 732 (20 July 2020)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

CASE NO: 89256/2018

(1) REPORTABLE: YES/NO

(2) OF INTEREST TO OTHER JUDGES: YES/NO

(3) REVISED: YES/NO

DATE:

SIGNATURE: P D PHAHLANE

In the matter between:

CONTINENTAL POWER SUPPLIES (PTY) LTD

Applicant

and

THE MINISTER OF TRADE AND INDUSTRY

1st Respondent

ESKOM HOLDINGS SOC LTD

2nd Respondent

JUDGMENT

PHAHLANE, AJ

[1] This is a review application against the decision taken by the first respondent (“the dti”) in which the applicant was denied exemption in respect of the transformers under tender number 4565 and tender number 4584

respectively. At the commencement of the proceedings, the matter between the applicant and the second respondent (“Eskom”)

was separated from the main application and postponed, as agreed between the parties.

[2] The dti then sought a postponement of the matter between itself and the applicant, citing as its reasons, the non-joinder of the other two companies, ie. POWER-TECH and ACTOM which it argued, had interest in the matter as they would be referred to by the applicant in its case. In opposing the application for a postponement, the applicant argued and submitted that no allegations have been or will be made against these two companies and that no relief was sought against them. After listening to the arguments and submissions made by both parties in that regard, I was of the view that the matter had to proceed on the merits.

[3] The applicant approaches this court seeking the following orders:

1. “The decision of the first respondent, dated 26 November 2018 to refuse the applicant’s exemption in respect of class 1 of the transformers sought by the second respondent in tender number 4565 be reviewed and set aside.

2. The decision of the first respondent, dated 15 November 2018 to refuse the applicant’s exemption in respect of class 3(a), 3(b) and 4 transformers sought by the second respondent in tender number 4584 be reviewed and set aside.

3. The applicant’s application for exemptions be remitted back to the first respondent for reconsideration and for a decision to be made by the first respondent within 10 days from the date of remittal thereof”.

[4] On 29 July 2016, the National Treasury issued a National Instruction (“the Instruction Note”) titled: “National Treasury designated sectors instruction number 12 of 2016/2017. Invitation and evaluation of bids based on a stipulated minimum threshold of conversion processes for local production and content for transformers, shunt reactors and associated equipment”.

[5] On 14 September 2018 and 22 October 2018, Eskom issued invitations to tender under reference numbers CORP 4565 and CORP 4584 and the tenders were in respect of Eskom requiring the bidders of the industry to tender for class 1; 3a; 3b and 4 transformers. The scope of tender CORP 4565 was for the assessment, design, detailed engineering, manufacture, testing, supply, delivery, removal of existing transformers, placement on foundation, installation, erection, testing, commissioning and storage of class 1, 2, 3, and 4 power transformers and shunt reactors on an “as and when” required basis. The scope of tender CORP 4584 was for

the manufacturing at supplier’s factory, supply, delivery, installation, testing and commissioning of two (2) MVA 400/132/22KV

transformers for Komsberg and Kronos substation.

[6] In terms of the Instruction Note, directive bids in respect of transformers, shunt reactors and associated equipment (the units) would only be considered if the units are manufactured locally. The Instruction Note further provides that if the units are not manufactured locally, bidders should request and obtain written exemption from the dti. In this regard, the Instruction Note made provision for an exemption to be granted by the dti which exercises a discretion either to grant or refuse exemption, but having due regard to certain factors or requirements. Paragraph 4.2 thereof reads as follows:

“4.2 If the quantity; input materials; and/or components of transformers, shunt reactors and associated equipment required cannot be wholly sourced from South African (SA) based manufacturers to achieve the designated local content threshold at any particular time, bidders should request and obtain written exemption from the dti. Such exemption applications should be submitted and approvals should be obtained prior to the closure of the bid(s) concerned. The dti, in consultation with the procuring organ of state and the local industry, will consider the exemption applications on a case-by-case basis and will consider the following:

· Required volumes in particular bid

· Available collective SA industry manufacturing capacity at that time

· Delivery times

· Availability of input materials and components

· Technical considerations including operating conditions and technical compliance protocol

· Quality and reliability

· Materials of construction

· Security of supply and emergencies

· Localisation plans aimed at establishing and/or increasing local manufacturing capacity through ramping-up of capital investments in the initial phases

· Replacements of components/conversion processes on the existing fleet (ie. transformers procured prior to the implementation of this instruction notes) in order to honour the warranties and guarantees”.

[7] The Instruction Note was issued on the strength of the Preferential Procurement Regulation (“the Regulation”) and in terms of the Preferential Procurement Policy Framework Act 5 of 2000 (“the PPPFA”) which prescribes for local production and content. Regulation 8 thereof provides that:

“(1) The Department of Trade and Industry may, in consultation with the National Treasury-

a. Designate a sector, sub-sector or industry or product in accordance with national development and industrial policies for local production and content, where only locally produced services or goods or locally manufactured goods meet the stipulated minimum threshold for local production and content, taking into account economic and other relevant factors; and

b. Stipulate a minimum threshold for local production and content.

(2) An organ of state must, in the case of a designated sector, advertise the invitation to tender with a specific condition that only locally produced goods or locally manufactured goods, meeting the stipulated minimum threshold for local production and content, will be considered.

[8] The applicant tendered and applied to the dti on the basis that it seeks to tender for the Eskom tender and to acquire these transformers from abroad. The applicant also applied for exemption as it did not have the capacity to produce these transformers locally.

[9] On 15 November 2018, the dti declined the applicant’s request in respect of tender number CORP 4565 (specific to class 3a; 3b; and 4 transformers) but however granted limited exemption of 18 months in respect of winding conductor. On the same date, the dti declined to grant an exemption in respect of tender number CORP 4584. In a letter dated 26 November 2018, the dit stated that: “In reviewing your request, the local industry does have the capability and capacity to manufacture class 1 transformers and hence your request is not granted. Please note that the importation of a fully built transformer unit is not supported by the dti as the economic intent of designation is to build a competitive local manufacturing capacity”.

[10] The dti had again on 28 November 2018, addressed another letter to the applicant and reiterated its earlier decision not to grant exemption and stated that granting the exemption where there is local capability and capacity in the country will be transgressing the PPPFA, 2017 Regulations and the Instruction Note. The Director General (DG) of the dti stated in this letter that the dti is empowered to assess the application for exemption on a case-by-case basis, based on the availability of designated materials/components in the country at the time of procurement, and advised the applicant to take note that the court in Powertech Transformers (Pty) Ltd v City of Tshwane Metropolitan Municipality and Other (44499/2017) [2018] ZAGPPHC 772 (20 March 2018) set aside a contract awarded by Tshwane Municipality for not complying with local content requirements.

[11] It is the applicant’s contention that granting the exemption would have enabled it to participate in the bidding process in relation to Eskom Tender number – CORP 4565 and CORP 4584. The applicant argued that the decision that there is local capability and capacity cannot be correct and based its argument on the letter of submissions made on 12 December 2018 by the Chief Director, IDD division of the dti, Ms Thandi Pele, to the DG regarding the request made by Eskom that the DG should deviate from the local content requirement for the delivery of supply of 2 x 500MVA 400/132/22KV transformers exemptions, and also requested the DG’s guidance and ruling on the exemption appeal submission submitted by Eskom. Ms Phele indicated that the dti had received a letter from Eskom requesting an exemption from local content requirement and stated that according to Eskom, the local manufacturer has failed twice in previous units awarded.

[12] The applicant argued that the dti should not have looked only at the availability of the material required at the time, but also the issue of whether the local industry was capable of meeting the turn-around time which can only be known by Eskom - as to when these transformers should be produced and delivered; as well as the availability of the manufacturing capacity for example. This argument is also based on the correspondence between the dti and Eskom, wherein the chief director of the dti indicated that delivery times of the transformers was not feasible and further that there is no capacity and capability. The other basis on which the applicant relies on in arguing that there is no local capacity and capability, is the allegation by the applicant that almost all the role players in the industry applied for exemption when the tender was advertised, save for Powertech, and thus confirming that there is no local content.

[13] It appears on the record, as also stated by the respondent’s counsel that a review was conducted by the dti in March 2015. This review was conducted against the background of the executive committee of the dti when in 2012 they decided not to designate this part of the industry to local content because at that stage, the dti was of the view that there was not sufficient local capacity. Thus, in March 2015, the dti revisited the issue in order to analyse the local market/local manufacturing capacity. It also investigated the demands of Eskom for a period of 5 years which deals specifically with scientific technical requirements, forecast for future demand for transformers, and the forecast as obtained from Eskom, for example. That having been done, the recommendations in the review was that it came to the conclusion in which it stated that: “having considered the current capability and capacity of SA manufacturers, lost orders in recent times and the projected demand, it is recommended that transformers and associated equipment of all classes be designated for local manufacture with varying levels of local content”. In the ultimate, the dti indicated that it identified several manufacturers and that Actom and Powertech are the preferred main local suppliers.

[14] The dti having indicated that it had conducted an investigation and was satisfied that there is local capacity, the applicant argued that this explanation is not satisfactory and that the dti should have produced evidence to that effect. The reason according to the applicant, is that the dti was supposed to consider how many role players are there in the industry, and enquire from Eskom if those who are available will be able to meet the deadline and produce the quantities which Eskom require, and thus ensuring that the tender was competitive.

[15] In this judgment, I have desisted from considering any communications or correspondence between the dti and Eskom because those communications are not verified and confirmed under oath and their probative value have not been tested. I have also not considered what the dti have stated as its reasons for considering Powertech and Actom as the “preferred bidders” after it had reviewed the local industry and came to a decision that it was satisfied that the two companies are indeed in a position to satisfy the local market. (my emphasis).

[16] The crux of the dispute for determination by this court is whether the dti in refusing to grant exemption to the applicant complied with the procedure as required by the empowering provision and whether the exemption refusal was justifiable under circumstances where the dti said it was satisfied that there was enough local content. The court will also determine whether the decision of the dti was made in accordance with the requirements of section 6 of the Promotion of Administrative Justice Act 3 of 2000 (“PAJA”).

[17] The applicant’s main grounds of review are set out as follows:

(a) The refusal decision is irrational

(b) The refusal decision is unconstitutional because it infringes on the applicant’s right to freely choose its trade and compete fairly in the market.

(c) The refusal decision is not authorised by the empowering provision

(d) The refusal constitutes a material error of law

[18] In Pharmaceutical Manufacturers Association of SA and Another: In Re Ex Parte President of the Republic of South Africa and Others[1] the court stated that:

“…………The courts’ power to review administrative action no longer flows directly from the common law but from PAJA and the Constitution

itself……. The common law informs the provisions of PAJA and the Constitution, and derives its force from the latter. The extent to which the common law remains relevant to administrative review will have to be developed on a case-by-case basis as the courts interpret and apply the provisions of PAJA and the Constitution”.

[19] The decision of the dti is an administrative action within the context of section 33 (1) of the Constitution[2] and is therefore reviewable under section 6 (1) of PAJA. Such a decision must be lawful, reasonable, and procedurally fair.[3] The Constitutional court in Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others[4] stated that:

“What will constitute a reasonable decision will depend on the circumstances of each case, much as what will constitute a fair procedure will depend on the circumstances of each case. Factors relevant to determining whether a decision is reasonable or not will include the nature of the decision, the identity and expertise of the decision-maker, the range of factors relevant to the decision, the

reasons given for the decision, the nature of the competing interests involved and the impact of the decision on the lives and well-being of those affected. Although the review functions of the court now have a substantive as well as a procedural ingredient, the distinction between appeals and reviews continues to be significant. The court should take care not to usurp the functions of administrative agencies. Its task is to ensure that the decisions taken by administrative agencies fall within the bounds of

reasonableness as required by the Constitution”.

[20] Advocate Mokhare SC appearing for the applicant argued that the dti committed a gross irregularity because its decision was vitiated by a material error of law on the basis that the decision was not supported by the policy which the dti seek to implement. Counsel argued that the dti misinterpreted its legislative framework and did not comply with its own policy in that the applicant and the local industry were never consulted at the time when the dti came to a decision that there was local capacity and capability to manufacture the required transformers. Counsel further argued that by rejecting Eskom’s contention about lack of local capacity, the dti should have produced empirical evidence to show that Eskom’s accessions are false, and that this could have been done by showing that the dti conducted verifications and consulted with the local industry, rather than only stating that it was satisfied that there is local content.

[21] It is on this basis that counsel argued that in so far as consulting with the applicant; Eskom and the local industry, the dti was obliged and required to do so in terms of section 6 (1) and (2) of PAJA, otherwise the decision that it makes regarding exemptions

become procedurally unfair and falls to be set aside on that basis alone.

[22] He insisted that the dti acted irrationally because its decision was not born by any evidence produced to counter the empirical evidence of what Eskom knows, because Eskom deals with transformers on a daily basis. Section 6 of PAJA provides as follows:

“(1) Any person may institute proceedings in a court or tribunal for the judicial review of an administrative action.

(2) A court or tribunal has the power to judicially review administrative action if -

(a) the administrator who took it –

(i) was not authorised to do so by the empowering provision

(ii) acted under a delegation of power which was not authorised by the empowering provision or

(iii) was biased or reasonably suspected of bias

(b) a mandatory and material procedure or condition prescribed by an empowering provision was not complied with

(c) the action was procedurally unfair

(d) the action was materially influenced by an error of law

(e) …………...

(f) the action itself –

(i) contravenes a law or is not authorised by the empowering provision or

(ii) is not rationally connected to

(aa) the purpose for which it was taken

(bb) the purpose of the empowering provision

(cc) the information before the administrator

(dd) the reasons given for it by the administrator”

[23] Advocate Erasmus SC on behalf of the dti argued, and correctly so, that the letter[5] which the applicant seeks to rely on in respect of the communication between the dti and Eskom, have not been confirmed under oath. Counsel further argued that the dti was exercising its discretionary power and enforcing a policy of the government; Regulation 8 provisions and the Instruction Note when refusing to grant exemption to the applicant. Counsel also argued that the applicant has not presented any evidence before court to substantiate the allegation that the dti acted irrationally when refusing to grant the exemption. He insisted that rationality must, to a limited extent, have some element of merit in the decision that was made, and thus keeping with the principle of the separation of powers because the decision was exclusively in the domain of the dti.

[24] He relied on the judgment in Electronic Media Network Limited and Others v Etv Limited and Others[6] where the Constitutional court stated that:

“[1] Our is a constitutional democracy, not a judiocracy. And in consonance with the principle of separation of powers, the national

legislative authority of the Republic is vested in Parliament, whereas the judicial and the executive authority of the Republic

repose in the Judiciary and the executive respectively. Each arm enjoys functional independence in the exercise of its powers. Alive to this arrangement, all three must always caution themselves against intruding into the constitutionally-assigned operational space of the others, save where the encroachment is unavoidable and constitutionally permissible.

[4] Driven by this reality, we were constrained to sound the following sobering reminder:

“The Judiciary is but one of the three branches of government. It does not have unlimited powers and must always be sensitive to the need to refrain from undue interference with the functional independence of other branches of government. Courts ought not to blink at the thought of asserting their authority, whenever it is constitutionally permissible to do so, irrespective of the issues or who is involved. At the same time, and mindful of the vital strictures of their powers, they must be on high alert against impermissible encroachment on the powers of the other arms of government”.

This court referred to Economic Freedom Fighters v Speaker of the National Assembly [2016] ZACC 11; 2016 (3) SA 580 (CC); 2016 (5) BCLR 618 (CC) at para 92 where the court stated that:

“The Judiciary is but one of the three branches of government. It does not have unlimited powers and must always be sensitive to the need to refrain from undue interference with the functional independence of other branches of government. It was with this in mind that this Court noted:

“Courts must be conscious of the vital limits on judicial authority and the Constitution’s design to leave certain matters to other branches of government. They too must observe the constitutional limits of their authority. This means that the judiciary should not interfere in the processes of other branches of government unless to do so is mandated by the Constitution. But under our constitutional democracy, the Constitution is the supreme law. It is binding on all branches of government and no less on Parliament”.

[25] In dealing with the limit on the court’s power of review against the exercise of a discretion, the court in Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others[7] supra stated that:

“[46] The use of the word “deference” may give rise to misunderstanding as to the true function of a review court. This can be avoided if it is realised that the need for courts to treat decision-makers with appropriate deference or respect flows not from judicial courtesy or etiquette but from the fundamental constitutional principle of the separation of powers itself.

[48] In treating the decisions of administrative agencies with the appropriate respect, a court is recognising the proper role of the executive within the Constitution. In doing so a court should be careful not to attribute to itself superior wisdom in relation to matters entrusted to other branches of government. A court should thus give due weight to findings of fact and policy decisions made by those with special expertise and experience in the field. The extent to which a court should give weight to these considerations will depend upon the character of the decision itself, as well as on the identity of the decision- maker. A decision that requires an equilibrium to be struck between a range of competing interests or considerations and which is to be taken by a person or institution with specific expertise in that area must be shown respect by the courts. Often a power will identify a goal to be achieved but will not dictate which route should be followed to achieve that goal. In such circumstances a court should pay due respect to the route selected by the decision-maker. This does not mean however that where the decision is one which will not reasonably result in the achievement of the goal, or which is not reasonably supported on the facts or not reasonable in the light of the reasons given for it, a court may not review that decision. A court should not rubber-stamp an unreasonable decision simply because of the complexity of the decision or the identity of the decision-maker”.

[26] The Supreme Court of Appeal in MEC for Environmental Affairs and Development Planning v Clairison’s CC[8] stated that:

“…….When the law entrusts a functionary with a discretion, it means just that. The law gives recognition to the evaluation made by the functionary to whom the discretion is entrusted and is not open to the court to second guess his evaluation. The role of a court is no more than to ensure that a decision maker has performed the function with which he was entrusted”.

[27] There is a dispute of fact as to the existence of local capacity and capability to produce and manufacture the classes of transformers

required by Eskom and in respect of which the applicant sought an exemption from the local content requirement. It was argued on behalf of the applicant that an order should be granted in favour of the applicant purely on common cause facts or those facts which have not been seriously disputed. The applicable legal principle according to the Plascon-Evans[9] rule is that ‘when factual disputes arise, the relief should be granted only if the facts stated by the respondent, together with the admitted facts in the applicant's affidavits, justify the order, or where it is clear that facts, though not formally admitted, cannot be denied, and they must be regarded as admitted’.

[28] The applicant contended that it was never consulted as required by the Instruction Note before a decision to refuse to grant the exemption was taken. Though advocate Erasmus submitted that the dti ‘vehemently dispute/deny’ the allegation that the dti had not consulted with the applicant, the dti had in paragraph 148.5 of its answering affidavit confirmed not having consulted with the applicant. The paragraph reads as follows:

“It is not clear what the applicant means that it was also not consulted. The fact of the matter is that the dti was supposed to consult with the relevant local producers of the transformers required by Eskom, following Eskom’s request. On the applicant’s own version, the applicant does not have the capability and capacity to produce the required transformers and therefore, it does not make sense at all to contend that it ought to have been consulted”.

[29] It is on this basis that advocate Mokhare argued that paragraph 4.2 of the National Instruction required the dti to consult with the organ of the state, which is Eskom; the applicant and the local industry, and that this provision was never complied with. He submitted that failure to consult the applicant was offending against the basic principle of procedural fairness. On the same token, counsel further submitted that such failure to consult forms and covers the ground of review dealing with the requirement that the dti’s decision was not authorised by the empowering provision. Counsel however confirms that the policy indicates that the dti has the discretion to decide whether to deviate and grant the exemption where circumstances permit, taking into consideration all the factors in paragraph 4.2. He submitted that the refusal to grant exemption was based on a decision that was irrational, procedurally unfair, and unlawful for want of compliance with the law.

[30] Procedural fairness is said to be an aspect of rationality. Put differently, procedural fairness expands the test of rationality because for a decision not to be regarded as arbitrary and irrational, there must be fairness on how the administrative power is being exercised. Thus, the decision maker has the opportunity to hear the side of the individual who will be affected by the decision. In so doing, this would encourage the decision maker to make the decision after considering all the relevant factors, thus minimising arbitrariness. On the other hand, procedural irrationality is more concerned with testing and ensuring that there is rational connection between the exercise of power regarding the process and the decision; and the purpose sought to be achieved through exercise of that power. Ultimately, the relation to both process by which the decision is made and the decision itself, and the purpose sought to be achieved through the exercise of that power, must be rational. Thus, the procedural component arises from the way the decision was taken.

[31] The Constitutional court in Democratic Alliance v President of the Republic of South Africa[10] stated that:

“The conclusion that the process must also be rational in that it must be rationally related to the achievement of the purpose for which the power is conferred, is inescapable and an inevitable consequence of the understanding that rationality review is an evaluation of the relationship between means and ends. The means for achieving the purpose for which the power was conferred must include everything that is done to achieve the purpose. Not only the decision employed to achieve the purpose, but also everything done in the process of taking that decision, constitute means towards the attainment of the purpose for which the power was conferred”.

[32] The rationality test as applied in Albutt v Center for Study of Violence and Reconciliation[11] is as follows:

“………….Courts may not interfere with the means selected simply because they do not like them, or because there are other more appropriate means that could have been selected. But, where the decision is challenged on the grounds of rationality, courts are obliged to examine the means selected to determine whether they are rationally related to the objective sought to be achieved. What must be stressed is that the purpose of the enquiry is to determine not whether there are other means that could have been

used, but whether the means selected are rationally related to the objective sought to be achieve”.

[33] Though granting an exemption is catered or provided for by the empowering provision, the wording of paragraph 4.2 of the Instruction Note is couched in a manner which does not make it peremptory for the dti to grant such an exemption. It is therefore clear from the contents of paragraph 4.2 that the dti had a discretion to exercise, - on whether to grant the request for exemption or refuse such a request. Both parties agreed and confirmed that the dti had the power to exercise its discretion. Having said that, the court has to determine whether failure to consult the applicant was procedurally unfair, irrational, and in violation of the provisions of PAJA, and thus vitiating the very purpose for which the power was conferred.

[34] Regulation 8 was designed with the purpose of catering specifically for local content and production. Though the discretionary powers are given to the dti, it is imperative that the exercise of its discretion fall within the prescripts of the law from which the discretion flows. The dti indicated that it was supposed to consult with the relevant local producers for which the applicant is part of, but did not do so, stating that it did not make sense to have consulted with the applicant while the applicant indicated that it did not have capability and capacity to produce the required transformers. The applicant argued that though it did not have the capacity and capability at the time, it still wanted to be consulted by the dti as provided for in paragraph 4.2.

[35] The question therefore is whether this decision was procedurally unfair and irrational. The enquiry lies in the determination whether the means selected was rationally related to the objective sought to be achieved by the empowering provision. In other words, the exercise of a discretion by the dti must have been rationally related to the purpose sought to be achieved by the Regulation.

[36] In my view, the decision of the dti not to afford the applicant the opportunity to present itself on whether it has the capacity and capability to manufacture the required transformers was in line with achieving the objectives of Regulation 8 (2) which is specific on its instruction and purpose. The identifying feature of the purpose and instruction given in this provision is that “the invitation to tender is given with a specific condition that only locally produced goods will be considered”. It may very well be that paragraph 4.2 identifies the factors to be taken into consideration in the process of looking at the exemption

application, but those factors cannot be looked at in isolation, by ignoring the purpose for which Regulation was enacted for, which purpose is in line with the provisions of section 6(2)(f)(ii) of PAJA and what was stated by the court in Albutt. It would therefore be wrong to conclude that the dti misinterpreted its legislative framework and did not comply with its own policy.

[37] I therefore do not agree with the applicant’s submission that there was no connection between the material before the decision maker and decision that was made. The dti stated that it conducted an investigation in March 2015 in order to analyse the local market and local manufacturing capacity. What the applicant has issues with, is the fact that it needed the dti to supply it with the evidence to show that it has indeed conducted an investigation, while the applicant itself wants to rely on the correspondence between other parties in its allegations that there is no local capacity and capability. I therefore align myself with the decision in Bato Star Fishing supra that a court should give due weight to the policy decisions made by those with special expertise and experience in the field.

[38] I am of the view that when the dti’s came to a decision that there was indeed local content, it already had, at its disposal, the information which was based on the investigation conducted after a review of the industry was done, confirming that the local manufacturers had capacity and capability to produce the required transformers. I am inclined to agree with advocate Erasmus that the decision maker exercised his discretionary power, which was conferred on him by the empowering provision, while serving the purpose for which the power was conferred.

[39] In my view, the decision of the dti was rationally related to the purpose sought to be achieved by the Regulation, - which was to cater for local production and content. I am unable to find any violation of the provisions of paragraph 4.2 by the dti and I am of the view that dti’s decision was therefore not procedurally unfair or irrational.

[40] In emphasising the importance between the rational decision and the purpose for which the discretion to make such a decision was given, the Constitutional court in Electronic Media Limited and Others[12] explained rationality under the doctrine of legality by referring to the judgment in Minister of Defence and Military Veterans v Motau[13] as follows:

“Khampepe J recently emphasised that “review for rationality is about testing whether there is a sufficient connection between the means chosen and the objective sought to be achieved”. She summarised the position on behalf of the Court thus:

“The principle of legality requires that every exercise of public power, including every executive act, be rational. For an exercise of public power to meet this standard, it must be rationally related to the purpose for which the power was given. It is also well established that the test for rationality is objective and is distinct from that of reasonableness.”

[41] With regards to the ground that the refusal decision is unconstitutional because it infringes on the applicant’s right to freely choose its trade and compete fairly in the market, the applicant contended that the decision stifles competition and oppresses small and medium size role players in the industry and goes against the constitutional imperative of government’s support

for previously disadvantaged persons through Black Economic Empowerment policies. This ground was not properly canvassed in court

or by the applicant in its papers. Advocate Erasmus submitted that the applicant has not made out a case in its papers to challenge the constitutionality of the Regulation as well as the PPPFA. This ground in my view is misplaced. I am inclined to agree with advocate Erasmus that this ground of review constitutes a constitutional challenge of the provisions of the Regulation and the PPPFA. The dti had in its answering affidavit stated that the decision of the dti was based on the legislative imperatives of Preferential Procurement Act. Further that the constitutionality of this provision has to date, not been challenged. In the circumstances, this ground cannot stand.

[42] I have seriously considered the circumstances of this case, as well as the arguments and submissions made on behalf of both parties, and I can find no substantial reasons why this court should set aside the decision taken by the dti, which I find to have been rational, lawful, reasonable, and procedurally fair. In my view, the decision of the dti not to grant the exemption to the applicant was justifiable. It is also my view that the dti did not fail to consider the relevant facts at the time when its decision was taken.

[43] Having considered all the circumstances of this case, I find that the applicant failed to satisfy the court that an order reviewing and setting aside the decision of the first respondent in respect of in tender number 4565 and tender number 4584 should be granted in its favour.

[43] In the circumstance, the following order is made:

1. The application for the review and setting aside of the decision in of the first respondent, dated 26 November 2018 to refuse the applicant’s exemption in respect of class 1 of the transformers is dismissed

2. The application for the review and setting aside of the decision in of the first respondent, dated 15 November 2018 to refuse the applicant’s exemption in respect of class 3(a) 3(b) and 4 of the transformers is dismissed

3. The applicant should pay the costs of the application, which costs should include the costs of the two counsels.

P. D. PHAHLANE

ACTING JUDGE OF THE HIGH COURT

For the Applicant: ADV. W.R. MOKHARE SC ADV. D. MOKALE Instructed by: WEKSMANS ATTORNEYS SANDTON, JOHANNESBURG Tel: (011) 535-8000 Email: kmotshwane@werksmans.com C/O LEBESE ATTORNEYS BROOKLYN, PRETORIA Tel: (012) 807-2930 For the First Respondent: ADV. M.C. ERASMUS SC ADV. H.A. MPSHE Instructed by: THE OFFICE OF THE STATE ATTORNEY - PRETORIA SALU BUILDING PRETORIA Tel: (012) 309-1500 Email: Mmatubatuba@justice.gov.za For the Second Respondent: ADV. M. DEWRANCE SC ADV. M. SIKHAKHANE Instructed by: AA SOLWANDLE ATTORNEYS INC WOODMEAD, SANDTON Tel: (011) 656-4740 Email: shalini@aasolwandleattorneys.co.za Date Delivered: 20 JULY 2020

[1] 2000 (2) SA 674 (CC); 2000 (3) BCLR 241 (CC).

[2] Act 108 of 1996.

[3] Section 33 (1) of the Constitution which provides that: “Everyone has the right to administrative action that is lawful, reasonable and procedurally fair”.

[4] [2004] ZACC 15; 2004 (4) SA 490 (CC) at para 45.

[5] See para [11]

[6] [2017] ZACC 17; 2017 (9) BCLR 1108 (C) at para 1 and 4

[7] At para 46 and 48

[8] (408/2012) [2013] ZASCA 82 (31 May 2013); 2013 (6) SA 235 (SCA) at para 18.

[9] Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A).

[10] [2012] ZASCA 24; 2013 (1) SA 248 (CC); 2012 (12) BCLR 1297 (CC) at para 36

[11] 2010 (3) SA 293 (CC) at para 51.

[12] At para 123

[13] [2014] ZACC 18; 2014 (5) SA 69 (CC); 2014 (8) BCLR 930 (CC) at para 69.