The two minute version

The key take away points from Minister of Mineral Resources and Energy and Others v Sustaining the Wild Coast NPC and Others [2024] ZASCA 84 (3 June 2024) (“the Judgment”) are:

1. Period within which to launch a review application: Section 4 of Promotion of Administrative Justice Act 3 of 2000 (“PAJA”) regulates public consultation affecting the It requires that the public must be notified of an administrative decision, in this case the granting of an exploration right (“ER”). When the ER was granted interested and affected parties (“IAPs”) should have been notified. The 180-day notice period within which to launch review proceedings only starts from the date on which the public are notified.
2. Meaningful consultation: Meaningful consultation requires that the applicant identify the most suitable way to notify / engage with IAPs. That is, publishing notices in newspapers only where certain IAPs will not have access to newspapers or in languages which the majority of the IAPs do not speak or read is not acceptable. In this case, most IAPs in the area received their news from radio stations. This would have been a more suitable / additional form of notification.
3. Appropriate remedy: Having decided that the public participation process was inadequate and the decision to grant the ER was unlawful, the Supreme Court of Appeal did not declare the ER invalid but rather suspended the order pending the outcome of BG International Limited’s application to renew the ER which would, at the instruction of the court, include a public participation The rationale underlying this approach was that a declaration of invalidity would not be ‘just and equitable’ as (i) it would have a sterilizing effect on the resources; (ii) the review application was brought eight years after the ER was first granted; (iii) it is disproportionate to set aside an entire project as a consequences of an imperfect process; and (iv) in the eight year period since the granting of the ER, significant amounts of money had been in the project and the chilling effect that a decision of invalidity may have on foreign investment.

We understand that the respondents on appeal (the applicants in the court a quo) are appealing this decision to the Constitutional Court.

Background and court a quo

On 29 April 2014, the Minister of Mineral Resources and Energy (“the Minister”) granted an exploration right (“ER”) to Impact Africa Limited (“Impact”) to be exercised by Shell Exploration and Production South Africa B.V. (“Shell”) and BG International Limited (“BG”).

On 17 May 2017, Impact applied for a renewal of the ER which was granted on 20 December 2017.

On 13 March 2020, Impact applied for a second renewal of the ER which was granted on 30 July 2021. When Impact and Shell tried to exercise the ER by conducting seismic surveys off the Wild Coast of South Africa, the first to seventh respondents sought urgent interdictory relief in the Eastern Cape Division of the High Court, Makhanda on 2 December 2021.

Part A of the relief sought and on 28 December 2021 interdicted Impact and Shell from undertaking seismic survey operations under the ER pending finalisation of Part B. Part B of the relief sought and on 1 September 2022 reviewed and set aside (a) the decision taken by the Minister on 29 April 2021 to grant an ER to BG; (b) the decision taken by the Minister on 20 December 2021 to grant a renewal of the ER; and (c) the decision taken by the Minister on 26 August 2021 to grant a further renewal of the ER.

Issues before the Supreme Court of Appeal

The Minister, Impact, Shell and BG (“the Appellants”) raised two issues in the court a quo which remained in the appeal. First, the review application should have been dismissed as the respondents fell foul of the 180-day limit imposed by section 7(1) of the PAJA (“First Issue”). Secondly, the respondents failed to exhaust their internal remedies in terms of section 96 of the Mineral and Petroleum Resources Development Act 28 of 2002 (“MPRDA”) (“Second Issue”).

First Issue

The respondents claimed that they became aware of the the ER grant in October/November 2022 and the review application was launched in January 2022, falling within the 180-day limit. However, Shell claimed that when the individuals became aware of the decisions and their reasons is irrelevant because the decisions affected the public at large. As such, the 180 days began elapsing when the public at large might reasonably have been expected to have become aware of the decisions. Shell claims this occurred on 20 May 2020 when an Environmental Compliance Notice was sent to IAPs and the general public alerting them to the ER grant.

Impact claims that the test is when the public at large could have reasonably be expected to have become aware of the decisions and their reasons. Impact claims this happened in 2013 when it alerted the public of its application for an ER. The Minister claims the same but that they became aware of it in 2014.

The Appellants argued that the court a quo erroneously applied section 3 of the PAJA (referring to administrative action affecting a person) instead of section 4 of the PAJA (referring to administrative action affecting the public at large). Nevertheless, Ponnan JA said that even if the court a quo applied section 4 in lieu of section 3, neither the Minister nor Impact specify how the public actually became aware of the ER. Impact contended that the public became aware of the ER in 2013 following newspaper publications, emails

to IAPs and public meetings. However, these only notified the public of Impact’s application

for an ER and not the grant or renewals thereof.

Ponnan JA held that the Minister was required to give clear notice of his decision to grant the ER and its renewals and to inform all IAPs (individuals and the public) of their right to appeal and request reasons. The public only became aware of the intention to commence seismic surveying after 29 October 2021 when the media picked up on Shell’s intentions.

Second Issue

The respondents claim they did not pursue an internal remedy because: (a) they only found out about the grant and its renewals in November 2021; (b) the initial approach to the Court was for urgent interdictory relief since the seismic survey was imminent and an internal appeal would have been too slow; and (c) there existed a reasonable belief of bias against the Minister based on the Minister’s opposition to the interdict sought against Impact and Shell on 28 December 2021.

After learning of the existence of the ER, the Minister and the Petroleum Agency of South Africa were apprached with a request for copies of the ER, the decisions and their reasons. The request was ignored.

The decisions only came to light when the rule 53 record in the review was furnished. Ponnan JA quotes the court a quo as calling this ‘a classic case of an internal remedy that would not have been objectively implemented’. As such, the court a quo exempted the respondents from the relevant internal remedy provisions in terms of section 7(2)(c) of the PAJA. The appellants did not satisfy the test for interference in this respect.

Merits

Procedurally fair administrative action is guaranteed by section 33 of the Constitution of the Republic of South Africa, 1996 (“Constitution”). The ER grant is administrative action (“AA”) and AA that materially and adversely affects a person’s rights triggers their right to procedural fairness. Section 3 of the PAJA, read with the MPRDA, prescribes requirements for procedural fairness: (a) notice of the nature and purpose of the AA to affected persons;

(b) an opportunity to make representations; and (c) consultation with affected persons.

The court uses the general principles set out in Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and Others 2011 (4) SA 113 (CC): the IAPs must be informed in detail of the proposed mining activities and the consultation must be meaningful.

The respondents argued that the consultation was not meaningful since the language was technical and inaccessible, the geographic location described was vague and the notices in the newspapers were in English and Afrikaans.

The court viewed that the consultation was ‘more illusory than real’ and ‘inadequate’ since the majority of people in the communities along the Wild Coast do not speak English or Afrikaans and get their news from the radio.

A further issue raised by the court was the failure to take into account relevant considerations in terms of section 6(2)(e)(iii) of the PAJA, including: the detrimental impact of seismic surveying on spiritual and cultural practices of the communities; the livelihood of the communities along the Wild Coast; and the requirements of the National Environmental Management: Integrated Coastal Management Act 24 of 2008.

Order

The court declared the decision to grant an ER unlawful in terms of section 172(1)(a) of the Constitution. However rather than declaring the ER invalid, the Supreme Court of Appeal suspended the order of invalidity pending the outome the ER renewal application and further public consultation. In granting this relief, the court held that declaring the ER invalid would not be ‘just and equitable relief’ in terms of section 172 of the Constitution because:

1. it would have a sterilizing effect on the resources;
2. the review application was brought eight years after the ER was first granted;
3. it is disproportionate to set aside an entire project as a consequence of an imperfect process;
4. in the eight year period since the granting of the ER, significant amounts of money had been invested in the project; and
5. the chilling effect that a decision of invalidity may have on foreign

Conclusion

The court upheld the court a quo’s decision to set aside the granting and renewals of the ER to the Appellants due to procedural unfairness but the orders were suspended pending the outcome of a pending renewal application, ensuring a comprehensive public participation process to address the identified procedural flaws.

The judgment emphasised the necessity for meaningful public participation and proper notice to IAPs, as required by the PAJA and the MPRDA.

The appeal was dismissed with costs, reinforcing the need for adherence to constitutional and statutory requirements in administrative decision-making.