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19 Sep 2023
BY Aslam Moosajee AND Fathima Omar

An important judgment on the time bar in relation to B-BBEE regulations

In Interwaste (Pty) Ltd and others v Broad-based Black Economic Empowerment and others, the Pretoria High Court dealt with an application to review and set aside the final findings of the Broad-Based Black Economic Empowerment Commission (the “Commission”).


On 3 February 2021, the Commission issued its final findings following an investigation based on a complaint by the second respondent, Mr Juris Ronny Mekgwe, which he had lodged four and half years before on 17 August 2016. In its final findings, the Commission found that the applicants had committed the offence of fronting and had undermined the objectives of the Broad-Based Black Economic Empowerment Act, 2003 (the “Act”).

The applicants instituted a review application regarding the Promotion of Administrative Justice (“PAJA”) and, where relevant, the principle of legality. The applicants relied on several grounds for review. Importantly, and for the purposes of this article, the applicants contended that the Commission had failed to comply with Regulation 15(4) of the Broad-Based Black Economic Empowerment Regulations, 2016 (the “Regulations”). According to this regulation, a complaint must be investigated, findings must be made and a report be issued  within one year from the date when the complaint was laid. Mr Mekgwe had lodged his complaint with the Commission on 17 August 2016.

The High Court’s judgment on the Commission’s non-compliance with Regulation 15(4)

The court held that the Commission was required to complete its investigation by 17 August 2017 but that the Commission’s final findings were only issued on 3 February 2021, four years and six months after the complaint had been lodged.

The court noted that the Regulations provided for an extension of the one-year period in terms of Regulation 15(15):

“(15) If the Commission is of the view that more time is warranted to conclude its process in respect of an investigation as contemplated in sub-Regulation (8), the Commission must inform the complainant of the need to extend the time, the circumstances warranting a longer period, and the exact period required as an extension.”

The court held that it is a matter of logic that Regulation 15(15) should be implemented before the investigation period expires and that Regulation 15(4) would be of no consequence if an extension could be granted any time after the expiry of the one-year period.

The various extensions granted to the Commission

  1. The Commission ostensibly applied for and received permission to extend the investigation from Mr Mekgwe on 21 December 2017, four months after the expiry of the one-year period.  In this regard, the court held that the request sent to Mr Mekgwe by the Commission did not comply with Regulation 15(15) requirements, because it did not refer to or mention any circumstances warranting a longer period.
  2. By 4 May 2018, once again after the expiry of the required four-month extension period, the Commission requested an extension from Mr Mekgwe, again requesting a further four months to finalise the investigation. Mr Mekgwe granted the request on 6 May 2018. In this regard, the court held that the request lacked any explanation warranting a further extension.
  3. On 13 September 2018, the Commission wrote to Mr Mekgwe to request a further extension of six months, which Mr Mekgwe granted once again.

In light of the aforesaid extensions, the Commission argued that it did not fail to comply with Regulation 15(4). In addition, the Commission argued that despite the provisions of Regulation 15(4), there is nothing in the Act that precluded the Commission from investigating any matter under the Act, and accordingly, the time bar set in the Regulations cannot be interpreted to prevent the Commission from exercising its mandate under the Act.

The Commission’s reason for the extraordinary delay

The court observed that after having received the further extension from Mr Mekgwe for six months on 13 September 2018, the Commission, in any event, failed to finalise its investigation within the six-month period as requested. Instead, the Commission only issued its findings on 3 February 2021 i.e., two years after the last extension for it to file the final findings.

The Commission alleged that capacity constraints caused the extraordinary delay. In this regard, the Commission explained in its answering affidavit that the official who dealt with the report resigned from the service of the Commission at the end of June 2020 but did not name the official. The Commission’s counsel was forced to divulge the official's name to the court.

The court held that the relevant official was not involved and did not sign any of the reports compiled by the Commission. In light of these circumstances, the court rejected the evidence that the delay was caused by the “official who dealt with the report”.

Legal submissions

The court made reference to the case of SASOL Oil Limited v The Broad-Based Black Economic Empowerment Commission and Others, where it found the following in respect of the non-compliance with Regulation 15(4):

“(62] In the circumstances, I find that the Commission's findings are reviewable in terms of section 6(2) of PAJA in that a mandatory and material condition prescribed by the empowering provision was not complied with within the meaning of section 6(2)(b) and that the findings themselves contravened Regulation 15(4) of the BEE Regulations within the meaning of section 6{2)(f)(i).”

The Commission’s counsel relied on the case of the Competition Commission of South Africa v Pickfords Removals. In this matter, the Constitutional Court considered the time bar contained in section 67(1) of the Competition Act, where a complaint regarding a prohibited practice may not be initiated more than three years after the practice has ceased.

The court held that the Pickfords matter was distinguishable for the following reasons:

  • In the Pickfords matter, the complainant was barred from submitting a complaint after three years. However, in the Interwaste matter, the court held that the functionary of the particular state power was compelled to execute its functions within one year from the complaint being lodged. In particular, the court held that the Commission is enjoined in terms of section 13B of the Act to exercise the functions assigned to it in the most cost-effective and efficient manner and in accordance with the values and principles mentioned in section 195 of the Constitution. By delaying the finalisation of the investigation, those imperatives are contravened to the detriment of the accused party.

In the Pickfords matter, the Constitutional Court considered that if the time bar in the Competition Act was found to be inflexible and absolute, this might deprive complainants of access to courts. The court held that this was not the position in the Interwaste matter, as the Commission was obliged to finalise and execute its powers within a specified time.

  • The court noted that it is conceivable that a complainant, in respect of a prohibited practice, may not have knowledge or sufficient knowledge of the facts giving rise to such a complaint but may only become aware of the existence thereof after the three-year period had lapsed. However, the Court held that in the Interwaste matter, the Commission was expressly supplied with allegations and facts contained in the complaint, which need to be investigated.
  • Finally, the court observed that section 58(1)(c) of the Competition Act grants the Competition Tribunal the power to condone, on good cause shown, any non-compliance with the rules of the Commission or the Tribunal and of any time limit set out in the Competition Act. but that no such condonation procedure is contained in the Act or the Regulations. In this regard, the Court held that the only possible extension of time to finalise the investigation would be in terms of Regulation 15(15), and that if the legislator intended that the non-compliance with Regulation 15(4) (read together with Regulation 15(15)) should be condonable by the Court, it would have expressly provided for it in the Act or the Regulations.

The court accordingly concluded that the Pickfords matter did not support the Commission’s arguments.

The Commission further argued that it should be held that the time bar in Regulation 15(4) is merely procedural and not a substantive one, as it would defeat the Act's purpose and undermine the Commission's work. In this regard, the court held the Commission did not take cognisance of the fact that a pending investigation by the Commission may have devastating consequences on the accused party in conducting its business while under investigation for an indeterminate period.

In conclusion, the court stated that even if it was found that the time bar in Regulation 15(4) is condonable by the court, there was no application or any reliable or credible evidence before the Court that would constitute an application for condonation or that would constitute good cause for condoning the Commission’s reckless delay in finalizing its investigation.

The court accordingly found that the Commission acted beyond its powers when it issued its findings in breach of the empowering provisions of Regulation 15(4).

In light of the above, and for other reasons, the court held that the decisions and final findings of the Commission were tainted to the extent that they were irregular and in violation of PAJA as well as the principle of legality. In addition, the court held that once a ground of review under PAJA has been established, the court is enjoined to declare the decision or finding unlawful. Consequently, the Court ordered that the final findings made by the Commission were unconstitutional, unlawful and invalid, and, therefore, reviewed and set aside.

The Commission was ordered to pay the Applicants’ costs, including the costs of two counsels.

Key takeaways

Where the Commission has failed to issue its final findings within the prescribed one-year period in Regulation 15(4), and/or has failed to properly obtain extensions under Regulation 15(15), a party who is reviewing the decision of the Commission should ensure that it relies on Regulation 15(4) as one of the grounds of review in the review application.

ENS recently acted for Hatch Africa (Pty) Ltd in a review application where it sought to review the decision of the Commission on various grounds. One of the grounds of review that Hatch relied on was the fact that the Commission had acted ultra vires in issuing its decision after the prescribed period for the delivery thereof in terms of Regulation 15(4). When the parties attended court for the hearing of the application, the Judge directed that in light of the Interwaste judgement on Regulation 15(4), the Commission’s attorneys take instructions from the relevant official at the Commission and that depending on the instruction of the relevant official, the Judge would consider an appropriate cost order. The Commission acted sensibly, withdrew its opposition, and tendered Hatch’s legal costs.

Aslam Moosajee

Executive | Dispute Resolution

Fathima Omar

Associate | Dispute Resolution