Brief Summary

Administrative Law — Review of administrative action — Classification of property — Applicant sought to review the decision by the City of Johannesburg to classify its property as a "multiple dwelling" instead of "blocks of flats" for tariff purposes — The classification decision was found to lack rational justification and was deemed arbitrary and irrational as it was made without proper reasoning or consideration of relevant information — Court held that the classification should be corrected to "blocks of flats" in accordance with the tariff policy.

Comprehensive Summary

Summary of Judgment

1. Introduction

This matter concerned a judicial review application in the Gauteng Division, Johannesburg, brought in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), alternatively the constitutional principle of legality, to challenge an administrative classification decision used for municipal tariff billing.

The applicant was San Ridge Rental Property (Pty) Ltd, the owner and lessor of a large residential flat complex. The respondents were the Municipal Manager: City of Johannesburg Metropolitan Municipality (first respondent), the City of Johannesburg Metropolitan Municipality (second respondent), and Johannesburg Water (SOC) Ltd (third respondent). The dispute centred on the City’s and/or Johannesburg Water’s classification of the applicant’s property, which determined the sewerage and sanitation tariff applied to the property.

As to procedural history, the applicant became aware of the classification by the end of April 2019, requested reasons, and pursued an internal appeal; however, reasons were not provided and uncertainty existed as to whether an internal appeal was available. The review application was instituted on 19 May 2020. The applicant also sought condonation to the extent necessary under section 9 of PAJA, given the timing issues associated with the 180-day review period.

The general subject matter was the administrative-law validity of the tariff classification decision, and the appropriate remedial relief, including whether the court should substitute its own classification for that of the municipal authorities.

2. Material Facts

It was common cause that, in exercising its powers as a local sphere organ of state, the City provided sewerage and sanitation services to the applicant’s property and levied charges for those services in accordance with a tariff policy adopted annually by the City’s council in terms of section 75A (and also referred to in the judgment as adopted in terms of sections 74 and/or 75A) of the Local Government: Municipal Systems Act 32 of 2000.

The tariff policy distinguished between different classes of property and prescribed different charges accordingly. Under the 2019–2020 tariff policy, the monthly charge per unit for a “multiple dwelling” was R417,47 per unit, whereas the monthly charge per unit for “blocks of flats” was R250,00 per unit.

The applicant owned a residential flat complex on the relevant erf. The complex comprised 42 separate buildings or “blocks”, each containing eight flats, with a total of 470 flats. The applicant let the flats to lessees. Since the 2019–2020 financial year, the City levied charges on the basis that the property fell within the tariff class “multiple dwelling”, and charged accordingly.

The court treated as significant that, despite requests, the City failed to identify who took the classification decision, when it was taken, how it was taken (including what criteria or methodology was applied), and failed to provide reasons for the classification. The Rule 53 record and answering affidavit did not, on the court’s description, contain probative material showing what information was considered or what process was followed in classifying the property as a “multiple dwelling” rather than as “blocks of flats”.

The tariff policy contained a definition of “multi-dwelling” that expressly excluded a block of flats, while also containing a separate tariff category in the policy text for “Blocks of Flats”, without defining that phrase. The applicant contended that the property self-evidently consisted of blocks of flats; the City maintained that it fell within the “multiple dwelling” definition.

3. Legal Issues

The court was required to determine whether the classification decision constituted reviewable administrative action and, if so, whether it ought to be reviewed and set aside under PAJA and/or the principle of legality.

The central legal questions were whether the decision to classify the property as a “multiple dwelling”, rather than “blocks of flats” (or any other class), was rational and/or reasonable on the information and policy framework applicable, and whether the decision conflicted with the City’s own tariff policy definitions and structure.

The matter predominantly involved the application of legal standards to facts, namely the rationality and reasonableness of administrative action in light of the content of the tariff policy, the nature of the property, and the absence of demonstrated decision-making material. It also required a remedial determination: if the decision was set aside, what relief was just and equitable, and specifically whether substitution was permissible under section 8(1)(c)(ii) of PAJA, which requires exceptional circumstances.

A preliminary timing issue also arose: whether the review was instituted within the time constraints of section 7(1) of PAJA, and whether any extension under section 9 of PAJA was required.

4. Court’s Reasoning

On the timing and condonation aspect, the court approached the matter through the lens of section 7(1) of PAJA, which requires review proceedings to be instituted without unreasonable delay and within 180 days after internal remedies are concluded (where applicable). The court accepted that the applicant became aware of the decision at the end of April 2019, requested reasons, and launched an internal appeal, but that the absence of reasons and uncertainty about the availability of an internal appeal made it difficult to pinpoint when the 180-day period commenced. On the facts before it, the court was satisfied that the proceedings were instituted without unreasonable delay and, in any event, within 180 days on the court’s approach, such that no extension under section 9 was required.

On the merits, the court treated it as common cause that the classification constituted administrative action under PAJA. The core of the court’s reasoning concerned the alignment (or lack thereof) between the classification decision and the tariff policy. The court emphasised that the tariff policy definition of “multi-dwelling” expressly excluded a block of flats. It followed, in the court’s reasoning, that if the applicant’s development could properly be described as a block or blocks of flats, then it could not, as a matter of the policy’s own terms, be classified as a “multi-dwelling”.

A significant feature of the court’s analysis was the absence of reasons, process, or evidentiary basis from the City. The court noted that the City did not identify the decision-maker, the date of the decision, the decision-making process, the criteria applied, or any rationale for why the property fell under the “multiple dwelling” category. The court described the Rule 53 record and answering affidavit as containing no probative material showing that any information was considered or any means were used to reach the classification decision. On that basis, the court characterised the decision as arbitrary, irrational, and unsupported.

The City’s primary justification was that the property fell within the definition of “multiple dwelling”. The court rejected this as circular and unhelpful, because it did not explain why the definition applied. The court also considered that the City’s position overlooked the express exclusion in the “multi-dwelling” definition. The court further relied on the factual description of the development reflected in plans and photographs approved by the City, highlighting that there were several multi-storey buildings on the property, that each building accommodated multiple flats, and that each block had a common entry, which the court considered consistent with blocks of flats.

The court addressed a linguistic point arising from the exclusion’s phrasing, namely that the definition excluded “a block of flats” in the singular, whereas the applicant’s property consisted of “blocks of flats” in the plural. The court resolved this by applying section 6 of the Interpretation Act 33 of 1957, which provides (absent a contrary intention) that words in the singular include the plural and vice versa. The court found no contrary intention in the tariff policy, and reinforced this interpretation by noting that the tariff policy itself referred to “blocks of flats” in the tariff provisions. On that basis, the court treated the exclusion as covering both the singular and plural concept.

Having concluded that the property was properly described as blocks of flats and that such category was excluded from “multiple dwelling”, the court held that the classification decision conflicted with the tariff policy and could not have been taken rationally or reasonably. The court therefore found the decision reviewable and invalid under sections 6(2)(e)(vi) and 6(2)(f)(ii) of PAJA, and also referenced the principle of legality as grounded in section 1(c) of the Constitution (the judgment refers to “section 1C”).

On remedy, the court considered whether substitution was appropriate under section 8(1)(c)(ii) of PAJA, which requires exceptional circumstances. The court exercised its discretion to substitute, relying on considerations that the classification was clearly wrong and taken arbitrarily without reasons or process; that the court was in as good a position as the City to interpret and apply the tariff policy to the property description; that remittal would lead to a foregone conclusion if a rational and valid decision were taken; and that it would not be just and equitable to remit such a foregone conclusion for further consideration. The court nevertheless indicated that while classification was substituted, the determination and implementation of the applicable tariffs remained to be dealt with by the City, with the relevant rate for 2019/2020 identified as R250 per unit for blocks of flats.

5. Outcome and Relief

The court reviewed and set aside the decision of the second and/or third respondent classifying the property as a “multiple dwelling” in terms of the City’s tariff policy and/or tariff resolution adopted under the Municipal Systems Act.

The court substituted that decision with an order classifying the property as “blocks of flats” for purposes of the tariff policy and/or tariff resolution.

The respondents were ordered to pay the applicant’s costs, including the costs of two counsel where employed.

Cases Cited

No reported cases were cited in the judgment.

Legislation Cited

Promotion of Administrative Justice Act 3 of 2000.

Local Government: Municipal Systems Act 32 of 2000.

Interpretation Act 33 of 1957.

Constitution of the Republic of South Africa, 1996.

Rules of Court Cited

Uniform Rules of Court, Rule 53.

Held

The classification of the applicant’s residential development as a “multiple dwelling” constituted administrative action and was held to be irrational and arbitrary because the City and/or Johannesburg Water failed to demonstrate any rational decision-making process, reasons, or information supporting the classification, and because the classification conflicted with the tariff policy’s own structure and definitions, particularly the express exclusion of blocks of flats from “multi-dwelling”.

The property was held, on the accepted description of its physical features and the tariff policy’s terminology, to be properly classifiable as “blocks of flats”, and therefore could not be treated as a “multiple dwelling” for tariff purposes.

Exceptional circumstances were held to exist to justify substitution under section 8(1)(c)(ii) of PAJA, and the court substituted the administrative classification with its own classification of the property as blocks of flats, coupled with a costs order against the respondents.

LEGAL PRINCIPLES

Administrative action affecting rights and tariff liabilities must be rationally connected to the information before the decision-maker and to the purpose and content of the empowering instrument, and it must be capable of justification by reference to a discernible decision-making process; where the record and affidavits contain no probative material demonstrating process, criteria, or reasons, a decision may be found irrational and arbitrary and set aside under PAJA, including under sections 6(2)(e)(vi) and 6(2)(f)(ii).

A public authority applying a tariff policy must act consistently with the policy’s own definitions and internal structure; where a definition expressly excludes a category (here, blocks of flats), classification into the excluded category (here, “multi-dwelling”) conflicts with the policy and undermines rationality and reasonableness.

In interpreting terms used in legislation or policy, section 6 of the Interpretation Act 33 of 1957 applies such that, unless a contrary intention appears, words in the singular include the plural and words in the plural include the singular; this interpretive principle may be used to reconcile singular wording (“a block of flats”) with plural factual circumstances (“blocks of flats”).

On remedy, substitution under section 8(1)(c)(ii) of PAJA requires exceptional circumstances and remains discretionary; substitution may be considered appropriate where the original decision is clearly wrong and procedurally unsupported, the court is in as good a position as the administrator to make the decision on the existing material, remittal would be futile because the outcome is effectively a foregone conclusion if lawful decision-making is applied, and substitution is assessed as just and equitable in the circumstances.

San Ridge Rental Property (Pty) Ltd v Municipal Manager: City of Johannesburg Metropolitan Municipality and Others (11550/20) [2022] ZAGPJHC 106 (1 March 2022)