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[2019] ZAWCHC 6
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Kohler Bricks (Pty) Ltd v City of Cape Town and Another (21362/2017) [2019] ZAWCHC 6 (15 February 2019)
Republic of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Case No. 21362/2017
Before: The Hon. Mr Justice Binns-Ward
Date
of hearing: 13 February 2019
Date
of judgment: 15 February 2019
In the
matter between:
KOHLER
BRICKS (PTY)
LTD
Applicant
and
THE
CITY OF CAPE
TOWN
First
Respondent
THE CHAIRPERSON OF THE GENERAL APPEALS
COMMITTEE OF THE CITY OF CAPE
TOWN
Second
Respondent
JUDGMENT
BINNS-WARD
J:
[1]
The applicant, which is the owner of
certain immovable property in the Vissershok area outside Cape Town,
has applied for the review
and setting aside of a decision by the
City of Cape Town to expropriate part of its land. The review
and setting aside of
the decision to reject the applicant’s
appeal against the expropriation in terms of
s 62
of the
Local
Government: Municipal Systems Act 32 of 2000
was also sought, but the
applicant’s counsel, Mr
Breitenbach
SC,
correctly acknowledged that it would be unnecessary to consider that
part of the application if the decision to expropriate
were set
aside. In that eventuality, the appeal committee’s
decision would automatically be rendered of no effect.
[2]
The principal grounds upon which the
expropriation was challenged were that it was procedurally unfair in
that the decision was
made without the applicant having been afforded
prior notice of the intended action and an opportunity to make
representations
in the manner contemplated by s 3(2) of the
Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’)
and that
the decision-maker took the decision to expropriate without
having taken relevant considerations into account. It was
common
ground between the parties that the City’s decision to
expropriate the land constituted ‘administrative action’
as defined in PAJA.
[3]
An outline of the pertinent factual context
is necessary to give an understanding of the applicant’s
complaint.
[4]
The expropriated property is situated in
close proximity to a large landfill site that has for some years now
been used for the
daily disposal of approximately one quarter of the
solid waste that is generated by the City’s inhabitants.
The waste
is transported there daily by train from a sorting facility
at Athlone. The carriage of the waste occurs pursuant to a
contractual
arrangement between the City and Transnet. The
siding at which the waste is offloaded and part of the railway line
approach
to it is situate on the applicant’s property.
The affected part of the applicant’s land has been leased by
Transnet
from the applicant in terms of a succession of lease
agreements concluded periodically between them over the years since
1995.
The last of those leases lapsed by effluxion of time on
31 December 2016.
[5]
The City has invested a considerable sum in
the infrastructure that has been put in place at the siding to
facilitate the off-loading
of the waste containers transported there
by rail. The facility has moreover recently been enlarged in
order to accommodate
the reception of an increased daily load of
waste. Railing the waste to the facility is reportedly the most
practical and
economical method of transport. The alternative
of road transport would not only be much more expensive in terms of
direct
cost, but would also add materially to Cape Town’s
notorious traffic congestion and carry an additional indirect cost in
the form of extra wear and tear to the roads on affected road
routes. The evidence suggests that it is anticipated that the
lifetime of the landfill will extend into the 2030’s.
[6]
Transnet showed itself to be remiss in
timeously attending to the periodic renewal of the lease of the
property. It also ceased
to pay rental in respect of its
occupation of the land when the various leases expired. It
nevertheless continued, without
interruption, to use the property for
the purposes of its contract with the City during the intervals when
it was effectively in
unlawful occupation of the applicant’s
land. The applicant was driven by this on two occasions to
institute proceedings
to interdict Transnet from using the land after
the latter had failed to renew the lease arrangements. The
interdict proceedings,
which on each occasion were instituted without
notice to the City, were clearly directed (ultimately successfully)
at compelling
Transnet to conclude a new lease. Associated
threats by the applicant to pull up the railway line over its land
because no
lease was in place were never implemented.
[7]
Perhaps unsurprisingly in the context of
the periodically problematic contractual relationship between
Transnet and the applicant,
and also its own experiences with the
reportedly haphazard management by Transnet of its leasehold
responsibilities, the City gave
the applicant notice in April 2016 of
its intention to acquire part of the applicant’s land for the
purposes of the railway
line. The notice was titled ‘
Proposed
Expropriation of a Portion of Portion 2 of Cape Farm No. 152
’.
It advised that at that ‘
early
stage the extent of the land required
[had]
not been determined
’.
The notice was clearly of a preliminary nature, and did not call upon
the applicant to make any representations it
might wish to do in
respect of the proposed course of action.
[8]
During the second half of 2016, and as the
date of the expiry of the lease then in place approached,
negotiations commenced between
Transnet and the applicant concerning
the conclusion of a further replacement lease. These
negotiations commenced against
the background of the anticipated
rezoning of the applicant’s land from agricultural to ‘risk
industrial’ pursuant
to a land use and development application
submitted earlier by the applicant to the relevant authorities.
The applicant had
already obtained the environmental authorisation
necessary for the approval of the rezoning, and the planning approval
was expected
to follow virtually as a matter of course. The
anticipated rezoning of the property was considered by the applicant
to have
the effect of considerably enhancing its value. The
apprehension by the applicant that its property had increased in
value
led it to open the negotiations for the new lease by demanding
a hugely increased (approximately tenfold) rental.
[9]
On 19 October 2016, an attorney
representing the City contacted Mr Evans, an attorney acting on
behalf of the applicant, to advise
that in the face of the impending
end of the lease of the applicant’s property to Transnet the
City wished to purchase the
property. After taking
instructions, Evans responded on 25 October that, whether by a
renewal of the lease to Transnet or
the sale of the property to the
City, the applicant required the issue to be resolved before the
current lease expired at the end
of the year. Evans advised
that if no resolution had been achieved by then, the applicant would
‘
consider removing the rails on
its land and selling the land to a third party purchaser
’.
It was indicated that the applicant considered that the approximately
2,5ha property was worth approximately R51 million,
excluding
VAT, and that the applicant would also be willing in the alternative
to selling it at that price to consider letting
it to the City for
ten years at a commencement rental of R3 million per annum,
excluding VAT, escalating annually by eight
per cent.
[10]
The City did not follow up on the
applicant’s opening gambit, notwithstanding a prodding email to
its attorney from Mr Evans
on 3 November 2016 highlighting the
approach of the year’s end and pointing out that there would
‘
still be a lot to do
’
assuming the City and the applicant were able to reach an agreement.
In the meantime discussions about a renewed lease
proceeded between
the applicant and Transnet. It was apparent that the parties to
those negotiations found themselves very
far apart. The City
was kept apprised by Transnet of the state of its negotiations with
the applicant, and was prepared at
one stage to subsidise an
increased rental offer by the former.
[11]
On 9 December 2016, the City’s
attorney wrote to the applicant’s attorney advising that there
were various issues concerning
the possible purchase or lease of the
property that were under consideration by different departments
within the City, and that
discussions were ongoing internally as the
position it should take. The City’s attorney’s
letter went on to enquire,
having regard to the fact that the lease
to Transnet would be expiring in three weeks, whether the applicant
would be prepared
to allow the waste removal to continue pending the
conclusion of negotiations, ‘
even
if … for a limited period of say three months
’.
By email from its attorney to the City’s attorney sent on 13
December 2013, the applicant quite brusquely refused
to accede to the
City’s request and pressed it for a response to the
aforementioned proposals made by Mr Evans on its behalf
on 25
October.
[12]
It appeared to the City’s officials
that it was most unlikely, in the context of what seemed to them, and
to Transnet, to
be the applicant’s extravagant expectations,
that an agreement could be reached concerning the renewal of the
lease.
Transnet had also informed the City that it was not
willing to expropriate the land, but considered that the City would,
in its
view, be well advised to do so. It was accordingly
determined to recommend to the acting executive mayor that a decision
should be made in terms of s 3(2) of the City of Cape Town:
Immovable Property By-Law, 2014, read with the Expropriation Act
63
of 1975, to expropriate the property. Section 3(2) of the
by-law provides: ‘
Subject to the provisions of the
Expropriation Act, 1975 (Act No. 63 of 1975) the City may expropriate
immovable property and rights
in immovable property or may
temporarily take the right to use immovable property
’.
The municipal officials’ recommendation was
incorporated in a written report to the mayor that appears to have
been drawn
up on or about 14 December 2016. The report was
circulated to, and endorsed by, a number of officials in the relevant
administrative
departments of the City, including the city manager.
Judged by the dates of their signatures, it would appear that it
reached
the city manager on 20 December 2016 and the acting mayor on
22 December.
[13]
Against the factual background sketched
above, the essence of the motivation was that the City required
urgently to secure the continued
use of the siding so as to ensure
that there was no disruption to an essential component of the
municipal waste disposal system
when the Transnet lease expired at
the end of the month. In this regard the report drew attention
to the threat by the applicant
to remove the rail line at the end of
the month should a new agreement not be in place by then. It
stated that ending the
use of the offloading facility at the railway
siding would result in an accumulation of waste in parts of the City
with an attendant
risk to public health. In short, the report
unambiguously presented a situation of potential emergency that
called to be
addressed by urgent measures. The acting mayor
signified his acceptance of the recommendation, thereby making the
decision
that the applicant’s property should be expropriated,
sometime during 22 December 2016. Notices of expropriation
as provided for in terms of the Expropriation Act were consequently
served on the applicant on 23 January 2017.
[14]
In my judgment, the situation of potential
emergency posited in the report to the acting mayor was reasonably
stated by the responsible
officials in the factual context in which
they acted as at 14 December 2016. The position was
changed, however, by an
exchange of correspondence between the
parties’ attorneys on 19 December 2016. The exchange was
triggered by a letter
from the City’s attorney that was written
in response to applicant’s above-mentioned rebuff of 13
December to the City’s
request for a three month period of
indulgence to finalise substituted arrangements for the use of the
railway line and siding
after the expiry of the lease to Transnet.
[15]
On 19 December 2016 the City’s
attorney wrote to the applicant’s attorney pointing out that it
was exactly because the
City was not party to the subsisting lease
that was about to expire that it found itself in an invidious
position as to how to
deal with the threat to the City’s waste
disposal system should the use of the Vissershok siding and railway
line be terminated.
The City’s attorney’s letter
continued ‘
The City has given due
consideration to your client’s proposal of 25 October
2016. Our instructions are that the
proposal is unacceptable.
The parties are too far apart. The City is also not prepared to
negotiate price on the assumption
that your client’s rezoning
application to risk industrial will be successful. The City
will continue to consider the
various options available to it and
revert in due course
’.
There was no mention that a process towards expropriation of the
property had actually been set in train five days
earlier. The
applicant contends that the non-disclosure is indicative of bad faith
on the part of the City or its attorney,
but in my view there is
insufficient detail in the evidence as to who in the chain knew what
at the relevant time to make a finding
to that effect.
[16]
The applicant’s attorney replied to
the lastmentioned letter by email later the same day. The reply
went as follows
in material part:
Our client instructs that it is currently in
negotiations with Transnet regarding the land in question. It
will permit Transnet
to continue operating over its land until 28
February 2017. Should it fail to enter into an agreement with
Transnet by the
aforementioned date, it will enter into negotiations
with [the City].
I trust that this will provide [the City] with the
comfort it requires at least for the first two months of next year.
I look
forward to hearing from you again once the City has, as you
have suggested, considered the various options available to it.
In the meantime all our client’s rights are reserved.
[17]
In my judgment, the letter from the
applicant’s attorneys defused the situation of emergency
described in the officials’
aforementioned motivational report
to the acting executive mayor. It moved the critical date by
which the recommended decision
to expropriate or any alternative
arrangement had to be made from 31 December 2016 to 28 February
2017. This change
of circumstances had a material bearing on
the appropriate procedural approach to be adopted in respect of any
decision to expropriate
the applicant’s property. Any
decision-maker involved in taking administrative action is required
to make the decision
concerned with regard not only to its
substantive import and effect, but also with conscientious regard to
the consideration of
the affected parties’ constitutional right
to procedural fairness. An integral approach is required.
[18]
Section 3 of PAJA entrenches the
constitutional right of everyone in terms of s 33(1) of the
Constitution to administrative
action that is procedurally fair.
The provision acknowledges that procedural fairness in a given case
is always dependent
on the circumstances of the matter. Section
3(2), however, provides for what might be regarded as a default
position that
should be departed from by administrative
decision-makers only to the extent that circumstances might make it
appropriate to do
so. Section 3(2) provides as follows
(
2)
(
a
)
A fair administrative procedure depends on the circumstances of each
case.
(b) In order to give effect
to the right to procedurally fair administrative action, an
administrator, subject to
subsection
(4), must give a person referred to in subsection (1)—
(i)
adequate notice of the nature and purpose of the proposed
administrative action;
(ii)
a reasonable opportunity to make representations;
(iii)
a clear statement of the administrative action;
(iv)
adequate notice of any right of review or internal appeal, where
applicable; and
(v)
adequate notice of the right to request reasons in terms of section
5.
Subsections
3(4) and (5) provide:
(4) (a) If it is reasonable and justifiable in the
circumstances, an administrator may depart from any of the
requirements referred
to in subsection (2).
(b) In determining whether a departure as contemplated
in paragraph (a) is reasonable and justifiable, an administrator must
take
into account all relevant factors, including—
(i) the objects of the empowering provision;
(ii) the nature and purpose of, and the need to take,
the administrative action;
(iii) the likely effect of the administrative action;
(iv) the urgency of taking the administrative action or
the urgency of the matter; and
(v) the need to promote an efficient administration and
good governance.
(5) Where an administrator is empowered by any
empowering provision to follow a procedure which is fair but
different from the provisions
of subsection (2), the administrator
may act in accordance with that different procedure.
[19]
In his written
arg
ument, counsel for the City, Mr
de Jager
,
appeared to contend that in the given circumstances it was sufficient
for the City to rely only on the procedures set forth in
the
Expropriation Act. That seemed to me to be an invocation,
albeit without express reference to the provision, of s 3(5)
of
PAJA. I am not persuaded that there is any merit in the
contention; certainly not on the peculiar facts of the current
matter. As pointed out by the City’s counsel, the
Expropriation Act does not make provision for the making of
representations
by the expropriatee prior to the service of an
effective notice of expropriation. The effect is illustrated by
the facts
of the current case, in which the first that the applicant
came to know of the expropriation was when notices of expropriation
were served on it on 23 January 2017. The effect of such
service was to transfer ownership in the affected land to the
City
forthwith because the date of expropriation stated in the notices was
also 23 January 2017 (see s 7 of the Expropriation
Act).
Even if the procedures provided in the Expropriation Act could be
used in lieu of those provided in terms of s 3
of PAJA, as to
which I make no finding, they would have to be applied in a manner
that gave effect to the applicant’s right
to procedural
fairness. In the current matter the applicant alleges that had
it been given the opportunity to make representations
it would have
argued that ‘less invasive’ means than outright
expropriation were reasonably available to address the
public purpose
need to which the decision in question was directed. The
service upon it of notices of expropriation that
had immediate effect
unfairly deprived it of the opportunity to do so.
[20]
It
is not clear on the evidence whether the content of the applicant’s
attorney’s email of 19 December 2016 was
communicated to
the city manager or the acting executive mayor before the decision to
expropriate was made on 22 December.
It obviously should
have been, and there is no explanation offered as to why it was not.
If the email had been put before
the acting mayor before he made the
impugned decision, I would have expected the City’s answering
papers to have included
an affidavit by the acting mayor explaining
why he had nevertheless proceeded as if there were a critical
deadline of 31 December
still to be addressed, and why he had
not considered it appropriate that the breathing space afforded
should not be used to follow
a notice procedure in line with s 3(2)
of PAJA. I consider that the most probable inference to be
drawn in the circumstances
is that the email did not come to
decision-maker’s attention before he took the administrative
action. But whether
that was actually the case does not
matter. For if the decision were made without regard to the
information in the email
it would follow that the decision was taken
in a manner materially distinguishable from the procedure
contemplated in terms of
s 3(2) of PAJA because a very relevant
consideration was not taken into account (s 6(2)(e)(iii) of
PAJA); and if it were
taken with knowledge of the email, then it was
procedurally unfair because the applicant was unreasonably denied the
opportunity
to make representations (s 6(2)(c) of PAJA).
Allowing the applicant a reasonable opportunity to make
representations
could easily have been accommodated in the period
between 19 December and 28 February.
[21]
It was held by the appeal court in
Erf
16 Brynterion (Pty) Ltd v Minister of Public Works
[2011] ZASCA 246
(1 December 2011) at para. 16 that ‘[i]
t
is for the expropriating authority to decide how best to achieve its
object. The evaluation of whether an expropriation
is expedient
or necessary lies with the expropriating authority. The facts
that there are other ways to achieve the purposes
of the
expropriation is irrelevant provided that the expropriation is for a
“public purpose”
.
Apprehending that the dictum might be construed to suggest that there
was nothing that the applicant might be able to effectively
put up by
way of representations and that affording him an opportunity would be
pointless in the circumstances, Mr
Breitenbach
stated during argument that it had been subjected to stringent
criticism by some commentators. I have not found it necessary
to read the criticism and do not think that what the court held in
the quoted passage can properly be interpreted as purporting
to give
a warrant to expropriating authorities to act unreasonably. The
import of the dictum in any event does not appear
to me to detract
from an expropriatee’s right, in ordinary circumstances, when
it is practicable that it be permitted to
do so, to make
representations before its property is taken. The expropriating
authority would ordinarily be bound, in terms
of constitutional
principles, to have regard to such representations in its ‘
evaluation
of whether an expropriation is expedient
or necessary
’.
[22]
For the reasons given in paragraph [20]
above, the review must succeed and the impugned
decision must be set aside and the matter remitted to the City for
reconsideration.
It would not be just and equitable, nor in the
public interest, however, for this outcome to expose the City’s
waste disposal
system to disruption while the necessary
reconsideration takes place. The order to be made will
therefore be formulated,
in terms of s 8 of PAJA, so as to
preserve the City’s ability in the interim to continue to use
the railway line and
siding facilities as it has been doing.
[23]
The applicant sought in its papers costs
against the City on the scale as between attorney and client.
Mr
Breitenbach
did not press for such an order in his oral argument. I am not
persuaded that it would be appropriate. While the City
was
remiss, I do have some sympathy for the position in which it found
itself in the context of the applicant’s hardnosed
negotiating
tactics. Costs will follow the result in the ordinary course,
and in accordance with
Biowatch
principles.
[1]
[24]
The following order will issue:
1.
The
decision of the City of Cape Town made on 22 December 2016 to
expropriate the applicant’s property measuring approximately
26 822,48
m
in
total extent on portions of Portions 2 and 3 of Farm 152,
Frankendale, respectively, is reviewed and set aside.
2.
The
question of whether the said properties should be expropriated by the
City is remitted for consideration by the City afresh,
and to that
end, the City is directed, should it intend to pursue the possibility
of expropriating the properties, to give notice
in writing of its
intention to the applicant within ten days of the date of this order,
and in such notice to notify the applicant
that it is afforded not
less than 21 calendar days from the delivery of such notice within
which to make such representations concerning
the proposed action as
it may be advised to do.
3.
Pending
the final determination of any process of expropriation, should the
City give notice as provided for in terms of paragraph
2 of this
order, the applicant shall, unless otherwise authorised by order of
this Court or by agreement with the City, refrain
from taking any
measures to interrupt or interfere with the current use of the said
property by the City and its contractors for
the purposes of solid
waste removal to the landfill facility site at Vissershok.
4.
The
City shall pay the applicant’s costs of suit.
A.G.
BINNS-WARD
Judge
of the High Court
APPEARANCES
Applicant’s
counsel: A.M. Breitenbach SC
Applicant’s
attorneys: Webber Wentzel
Cape
Town
Respondents’
counsel: N.C. de Jager
Respondents’
attorneys: Cluver Markotter Inc.
Stellenbosch
Walkers
Attorneys
Cape
Town
[1]
See
Biowatch Trust v Registrar Genetic Resources and Others
[2009] ZACC 14
,
2009 (6) SA 232
(CC),
2009 (10) BCLR 1014
especially
at para. 23.