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[2021] ZASCA 157
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Trustees for the time being of the Legacy Body Corporate v Bae Estates and Escapes (Pty) Ltd and Another (304/2020) [2021] ZASCA 157; [2022] 1 All SA 138 (SCA); 2022 (1) SA 424 (SCA) (5 November 2021)
THE SUPREME
COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 304/2020
In
the matter between:
THE
TRUSTEES FOR THE TIME BEING OF THE LEGACY
APPELLANT
BODY
CORPORATE
and
BAE
ESTATES AND ESCAPES (PTY) LIMITED
FIRST RESPONDENT
PAM
GOLDING PROPERTY MANAGEMENT
SERVICES
(PTY) LIMITED
SECOND RESPONDENT
Neutral
citation:
The Trustees for the time being
of the Legacy Body Corporate v Bae Estates and Escapes (Pty) Ltd and
Another
(Case no 304/2020) [2021] ZASCA 157
(5 November 2021)
Coram:
PETSE AP,
MBHA
and
MAKGOKA JJA and POTTERILL and
PHATSHOANE AJJA
Heard:
26 August 2021
Delivered:
This judgment was handed down electronically
by circulation to the parties’ representatives by email,
publication on the Supreme
Court of Appeal website and release to
SAFLII. The time and date for hand down is deemed to be 10h00 on the
5
th
day of
November 2021.
Summary:
Sectional Title Scheme –
whether
a body corporate’s decision to prohibit an estate agency from
operating within its scheme amounted to administrative
action for
purposes of PAJA – if PAJA not applicable, whether decision
subject to judicial review in terms of the common
law.
ORDER
On appeal
from: Western Cape Division of the High Court, Cape Town (Bozalek J
sitting as court of first instance): judgment reported
sub nom
BAE Estates and Escapes (Pty) Ltd v Trustees for the Time Being of
the Legacy Body Corporate and Another
2020 (4) SA 514
(WCC).
The appeal is
dismissed with costs,
including the costs of two counsel.
JUDGMENT
Makgoka JA
(Petse AP, Mbha
JA and Potterill and Phatshoane concurring):
[1]
In May 2019 the appellant, the Trustees for the
Body Corporate for The Time Being of the Legacy Body Corporate (the
trustees), decided
to prohibit the first respondent, Bae Estates
and Escapes (Pty) Ltd (Bae Estates), from operating within a
sectional title
scheme (the scheme) administered by the trustees in
Green Point, Cape Town. On 4 February 2020 the Western Cape
Division of
the High Court (the high court), at the
instance of Bae Estates, set aside the trustees’
decision.
It concluded that the decision was an administrative action envisaged
in the Promotion of Administrative Justice Act 3 of 2000
(PAJA), and
that, in any event, the decision was reviewable at common law. The
appeal is with the leave of the high court.
[2]
The body corporate was established in terms of s
2 of the Sectional Title Schemes Management Act 8 of 2011 (the
‘Schemes Management
Act’ or ‘the Act’). In
terms of s 10 of the Schemes Management Act, a sectional title scheme
must as from the
date of the establishment of the body corporate, be
regulated and managed by means of rules which must provide for the
regulation,
management, administration and use and enjoyment of
sections and common property. In terms of s 10(2), the rules must
comprise
(a) management rules and (b) conduct rules.
[3]
The facts which gave rise to the dispute between
the parties are uncontroversial. Bae Estates is an estate agency that
sells and
rents properties on behalf of property owners in Cape Town
and the surrounding areas. In May 2018 it was engaged by a property
owner in the scheme, to procure a tenant for his property on a
long-term rental. Bae Estates delivered on its mandate, and
a
lease agreement was concluded between the tenant and the owner in
July 2018. In terms of the lease agreement, among other provisions,
the tenant was permitted to sub-let the property on short-term
holiday lease, which the tenant himself later did without reference
to Bae Estates. Subsequently, there were complaints by some property
owners about the conduct of some of the sub-tenants, including
excessive noise and other unruly behaviour. According to the
trustees, these sub-tenants were sourced by Bae Estates, which they
accused of having failed to properly vet the sub-tenants. For its
part, Bae Estates denied that it had procured the sub-tenants
on
behalf of the owner.
[4]
On 14 May 2019 the trustees informed the owner
that they had resolved in terms of rule 37.3 of the body corporate
conduct rules,
that he was no longer allowed to carry on with
short-term letting for his property. Rule 37.3 reads as follows:
‘37
An owner may let or part with occupation of his section provided:
. . .
37.3
that in order to retain the nature of the Scheme, short term holiday
letting shall be permitted provided
that such short-term holiday
letting is managed through a letting agency which is considered to be
reputable for such purpose in
the sole discretion of the Trustees.
The Trustees shall in their sole discretion have the right to
restrict any short-term letting.
. . .’
[5]
From 15-21 May 2019 the trustees wrestled with
the question asked by one of them whether, ‘[i]n light of all
the events .
. . there was any potential scope to prohibit [Bae
Estates] from operating within the Legacy. . . ’. By 21 May
2019, the
trustees had, by way of an email round-robin, voted to
prohibit Bae Estates from operating within the scheme. The same day,
the
resolution was communicated by email almost simultaneously to
both the owner and Bae Estates. The email to Bae Estates read as
follows:
‘In terms of rule
37.3 of the body corporate rules, short term holiday is permitted
provided that it is managed through a
letting agency which is
considered to be reputable in the sole discretion of the Trustees.’
After setting
out the provisions of rule 37.3, the trustees concluded:
‘
Due
to recent incidents at Unit 107 the Trustees have resolved to
restrict Bae Estates from operating within The Legacy with immediate
effect’.
[6]
Bae Estates immediately objected to the decision
and reiterated that it had nothing to do with the short-term letting
of the property.
Furthermore, Bae Estates stated, this had been the
responsibility of the tenants, who had been permitted to do so by the
owner.
It accordingly requested the trustees to reverse their
decision, which the trustees declined to do.
[7]
Consequently, Bae Estates launched an application
in the high court on an urgent basis, against the trustees and the
second respondent,
Pam Golding Property Management Services (Pty) Ltd
(Pam Golding) which is the managing agent of the scheme. Bae Estates
sought
an interim interdict against the trustees from implementing
the decision, pending an application to review and set it aside.
Despite
the relief in the notice of motion being for an interim
relief pending the outcome of a review application, the high court
treated
the application as one for the review of the trustees’
decision. Nothing turns on this aspect. No substantive order was
sought
against Pam Golding which, accordingly, did not oppose the
application, and consequently did not participate in this appeal.
[8]
Bae Estates asserted that the trustees’
resolution was: (a)
unlawful and passed in error
as conduct rule 37.3 had no application to it since it was not
engaged in any short-term holiday letting;
(b)
procedurally unfair as it was passed without any prior investigation
into its role and without any prior notice to it; and (c)
arbitrary
and taken with an ulterior motive, namely, to simply prevent it from
carrying on business within the scheme.
Bae
Estates further
contended that the
decision amounted to administrative action, and thus susceptible to
be reviewed in terms of PAJA, alternatively,
the common law read with
s 33 of the Constitution.
[9]
In
response, the trustees raised, among others, two preliminary points.
First, that there was a non-joinder of the director of Bae
Estates,
its estate agent and the owner of the property. Secondly, that
because Bae Estates had asserted that the decision of the
trustees
did not bind it, Bae Estates did not have standing before court to
bring the application. In respect of the merits of
the application,
the trustees contended that in taking the decision, they were not
exercising a public power nor performed a public
function. Thus, it
was submitted, the decision did not constitute administrative action,
as also, it did not adversely affect any
of Bae Estates’ rights
nor did it have a direct, external legal effect. In addition, the
trustees contended that the decision
was reasonable and lawful in the
circumstances of the case. The trustees then set out at length, the
complaints which culminated
in them taking the impugned decision.
[10]
The
trustees pointed out that the decision was taken in terms of rule
37.3 of the scheme’s Conduct Rules, which, as already
stated,
concerns short-term holiday letting.
Thus,
emphasised the trustees, the decision related only to ‘short-term
holiday letting’ and not any long-term letting
or sales. In
other words, Bae Estates was only prohibited from operating in the
scheme insofar as short-term letting was concerned,
and that the
decision did not amount to a blanket prohibition.
[11]
The high court concluded that the trustees’
decision satisfied two requirements of the definition of
‘administrative
action’ in PAJA, namely that of ‘public
character’ and ‘a direct external legal effect’.
It, accordingly,
concluded that the trustees’ decision
constituted administrative action envisaged in PAJA and thus
reviewable. The high court
also reviewed the trustees’
decision at common law ‘against the standards of lawfulness,
reasonableness and procedural
fairness’. It reasoned that it
was entitled to do so on the basis of its inherent power to develop
the common law. The high
court, accordingly, reviewed and set aside
the trustees’ decision, and ordered the trustees to pay Bae
Estates’ costs.
In this Court, the trustees challenge the
correctness of the high court's decision.
[12]
In order for PAJA to apply, the trustees’
decision must amount to ‘an administrative action’.
Administrative action
is defined in s 1 of PAJA as:
‘any decision taken,
or any failure to take a decision, by—
(a)
an organ of state, when-
(i)
exercising a power in terms of the Constitution or a provincial
constitution; or
(ii)
exercising a public power or performing a public function in terms
of
any legislation; or
(b)
a natural or juristic person, other
than an organ of state, when exercising a public power or performing
a public function
in terms of an empowering provision,
which adversely affects the rights of any person and which has a
direct, external effect. . . .’
Sub-sections (
aa
) – (
ii
) contain a
list of powers, functions and decisions which are excluded from
PAJA’s purview.
[13]
In
Minister of Defence and
Military Veterans v Motau and Others
[1]
the Constitutional Court identified seven requirements
of the definition of an administrative action: ‘there must be:
(a)
a decision of an administrative nature; (b) by an organ of state
or a natural or juristic person; (c) exercising a public power
or
performing a public function; (d) in terms of any legislation or an
empowering provision; (e) that adversely affects rights;
(f) that has
a direct, external legal effect; and (g) that does not fall under any
of the listed exclusions’.
[14]
When regard is had to the structure of the
definition of an administrative action, the requirement that the
decision be of an administrative
nature, is a gate-way to determining
whether a particular decision constitutes administrative action. As
Wallis J explained
in
Sokhela
and Others v MEC for Agriculture and
Environmental Affairs
,
[2]
this requirement demands that a detailed analysis be
undertaken of the nature of the public power or public function
in question,
‘to determine its true character’. Thus,
the determination of what constitutes administrative action does
not occur
by default, and
‘
[t]he court
is required to make a positive decision in each case whether a
particular exercise of public power or performance of
a public
function is of an administrative character. . . .’.
[3]
[15]
The high court did not consider whether the
requirement that conduct be of an administrative nature, was met,
and as such, did not engage in the analysis exercise
suggested in
Sokhela
.
To my mind, this is a structural deficiency in the judgment,
amounting to a misdirection, for, if conduct is not of an
administrative
nature, a fortiori, it cannot constitute an
administrative action envisaged in PAJA. With regard to whether the
trustees exercised
a public power or performed a public function, the
high court noted that the body corporate derives its power to
formulate conduct
rules and to apply them, from a statutory source,
namely, the Schemes Management Act. The exercise of those powers, it
said, can
affect a substantial number of people in important matters
concerning the conditions under which they occupy the property
concerned.
To that extent, ‘a body corporate can be seen as
exercising a public power or performing a public function’.
Having
regard to these considerations, the high court concluded that
the trustees’ decision constitutes administrative action as
defined in PAJA and was, therefore, reviewable at Bae Estate’s
instance.
[16]
I cannot agree with the reasoning of the high
court. The fact that bodies corporate derive their powers from
statute, does not,
without more, translate their decisions into the
exercise of any public power or performance of a public function. As
explained
in
Chirwa v Transnet Limited
,
[4]
such
an approach would render the requirement that the decision be taken
‘in terms of any legislation’ meaningless,
as all
decisions taken by a body created by statute would meet the
requirement.
For example,
almost all of the excluded powers and functions in sub-sections (
aa
)
– (
ii
) in the
definition of administrative law in PAJA are exercised in terms of
statute, but decisions taken in terms thereof are not
administrative
decisions. And, to the extent the learned Judge seems to suggest that
bodies corporates exercise public power by
virtue of their power to
regulate the living arrangements of property owners in their schemes
and to control the common property,
this is at odds with this Court’s
decision in
Mount Edgecombe Country Club
Estate Management Association v Singh
.
[5]
[17]
The sum effect of these is that the high court
failed to properly engage in an analysis of the relevant requirements
of the definition
of administrative action. I turn to that aspect. It
is prudent right from the onset, to delineate which of those
requirements are
in dispute. As I see it, three of those are: (a)
whether the trustees’ decision is of an administrative nature;
(b) whether
the trustees exercised a public power or performed a
public function; (c) whether the trustees acted in terms of any
legislation
or an empowering provision.
[6]
Whether
the trustees’ decision is of an administrative nature
[18]
In
Grey’s Marine
Hout Bay (Pty) Ltd and Others v Minister of Public Works and
Others
[7]
it was pointed out that conduct of an administrative
nature is generally understood as the ‘. . . the conduct of the
bureaucracy
(whoever the bureaucratic functionary might be) in
carrying out the daily functions of the state which necessarily
involves the
application of policy, usually after its translation
into law…’ In the present case, there is nothing
bureaucratic
about the trustees’ decision, nor does it involve
‘application of policy’. Instead, the decision seems more
commercial
or managerial in nature, rather than administrative. The
trustees’ decision was made in the course of running and
managing
the scheme. The nature of the power is thus managerial or
business-related. Their decision is no different to a decision of a
meeting
of shareholders of a company.
[8]
[19]
I therefore conclude that the trustees’
decision was not of an administrative nature. Having failed at the
first hurdle, this
should be the end of the enquiry. However, given
the interrelatedness of the requirements, and the far-reaching
implications the
judgment of the high court holds for bodies
corporate generally, I will consider the other two requirements.
Whether
the trustees exercised a public power or performed a public function
[20]
The question whether private entities are capable
of exercising public powers or performing public functions is vexed.
In
Chirwa
it was held that
determining
whether a power or function is ’public’ has to be
determined with regard to all the relevant factors including:
(a) the
relationship of coercion or power that the actor has in its capacity
as a public institution; (b) the impact of the decision
on the
public; (c) the source of the power; and (d) whether there is a need
for the decision to be exercised in the public interest.
None of
these factors will necessarily be determinative; instead, a court
must exercise its discretion considering their relative
weight in the
context’.
[21]
In
Calibre Clinical
Consultants
[9]
this Court at para 31 cited with approval the following
remarks by Lord Bingham in
YL v Birmingham
City Council
:
[10]
‘[T]he
role and responsibility of the state in relation to the subject
matter in question . . . the nature and extent of any
statutory power
or duty in relation to the function in question . . . the extent to
which the state, directly or indirectly, regulates,
supervises and
inspects the performance of the function in question, and imposes
criminal penalties on those who fall below publicly
promulgated
standards in performing it . . . whether the function in question is
one for which, whether directly or indirectly,
and whether as a
matter of course or as a last resort, the state is by one means or
another willing to pay. . . .’
[22]
This Court went on to observe (at para 38) that
‘courts have consistently looked at the presence or absence of
features of
the conduct concerned that is “governmental”
in nature’. Relevant considerations in this regard include:
‘[a] the extent to
which the functions concerned are “woven into a system of
governmental control”, or [b] “integrated
into a
system of statutory regulation”, or [c] [that] the government
“regulates, supervises and inspects
the performance of the
function”, or [d] it is “a task for which the public, in
the shape of the state, have assumed
responsibility”, or [e] it
is “linked to the functions and powers of government”, or
it [f] constitutes “a
privatisation of the business of
government itself”, or [g] it is publicly funded, or [h]
there is “potentially
a governmental interest in the
decision-making power in question”, or [i] the body concerned
is “taking the place of
central government or local
authorities”. . . .’
[23]
To determine in this case whether the above
features are present, it suffices to refer to three sections of the
Schemes Management
Act, the regulations promulgated in terms thereof
and the conduct rules of the scheme. Government’s involvement,
through
the Minister of Human Settlement, is confined to the
following matters: the management of the reserve fund levels (s 3);
the powers,
functions and composition of the Advisory Council (s 18)
and the power to make regulations (s 18). None of these concerns or
governs
the relationship between bodies corporate and estate agents.
[24]
Therefore,
when deciding to prohibit an estate agent from operating in the
scheme, the trustees did not perform a function that
is ‘woven
into a system of governmental control’ or ‘integrated
into a system of statutory regulation’.
Government does not
‘regulate, supervise and inspect the relationship between
bodies corporates and estate agents like Bae
Estates. It is not
an
aspect
for
which ‘the public has assumed responsibility’; it is not
‘linked to the functions and powers of government’;
it is
not ‘a privatisation of the business of government itself’;
there is no ‘potentially a governmental interest
in the
decision-making power in question’; the body corporate is not
‘taking the place of central government or local
authorities’,
and, no public money is involved.
[25]
What
is more,
the trustees’
decision does not affect the public at large. The general public does
not have access to the estate. In
Mount
Edgecombe
at para 15 this Court held that
‘[i]n this context the word “public” does not
include persons who are there with
the permission of the owners of
property within the estate’. Thus
the
public must be the general public, not a special class of members of
the public who have occasion for business or social purposes
to go to
the estate. In this case, there is no doubt that estates agents such
as those representing Bae Estates, are not general
members of the
public, but belong to the special class of members of the public who
are there for business purposes.
[26]
I therefore conclude that the trustees did not
exercise a public power or perform a public function.
Whether
the trustees acted in terms of any legislation or an empowering
provision
[27]
It is important to locate the trustees’
decision to prohibit Bae Estates from operating in the scheme, within
‘an empowering
provision’. In other words, under what
empowering provision did the trustees act for that decision? The high
court said that
they acted in terms of the Schemes Management Act. In
coming to this conclusion, the high court failed to appreciate that
the statutory
powers conferred on the trustees by the Schemes
Management Act, where relevant, regulate the relationship between the
body corporate
and the home-owners. This case is not about that
relationship. It is about a body corporate’s relationship with
a third party,
an estate agent. There is no provision in the Act
which empowers the trustees to prohibit an estate agent from
operating in the
scheme.
[28]
The relevant sections here are ss 3 and 4.
Section 3 provides for the functions of bodies corporate. In terms
thereof, a body corporate
must perform the functions entrusted to it
by or under the Act or the rules, and such functions include the
establishment of an
administrative fund; the repair, maintenance,
management and administration of the common property; the
establishment of a reserve
fund. Section 4 provides for powers
of the bodies corporate. Neither of them concerns the trustees’
power to regulate
the estate agents’ right to operate in
sectional titles schemes.
[11]
[29]
As to the regulations promulgated in terms of the
Act,
[12]
they deal with the following issues: minimum amounts for
reserve funds; other risks to be insured against; powers of a
provisional
curator-ad-litem and curator-ad-litem; notifications;
rules and representative nature of the Advisory Council established
in terms
of s 18 of the Schemes Management Act. Similarly, none of
the regulations concern the relationship between the bodies corporate
and estate agents.
[30]
The scheme’s conduct rules also qualify as
‘an empowering provision’, as the
latter
expression is defined in s 1 of PAJA as
‘
a
law, a rule of common-law, customary law, or an agreement, instrument
or other document in terms of which an administrative
action was
purportedly taken’. But even here, the scheme’s conduct
rules do not have any provision empowering the trustees
to prohibit
an estate agent from operating in the scheme.
[31]
The upshot of the above is that there is no
‘empowering provision’ in terms of which the trustees
were entitled to take
a decision to prohibit Bae Estates from
operating in the scheme. The trustees were therefore not enforcing or
applying any statutory
or regulatory provision.
[32]
To sum up. The trustees’ decision is not an
administrative decision envisaged in PAJA. It was thus not reviewable
in terms
thereof. The high court erred in concluding to the contrary.
This bring me to a consideration as to whether the decision is
reviewable
at common law.
Reviewability
under the common law
[33]
Before us, the trustees had an about-face. They
abandoned the defence adopted in the high court. To recap, that
defence was that
the prohibition against Bae Estates was only
applicable to short-term holiday letting, and therefore, Bae Estates
was entitled
to operate in the scheme for other purposes such as
long-term letting or sales. Counsel for the trustees was constrained
to concede
that the trustees’ decision amounted to a total
prohibition on Bae Estates to operate in the scheme, and that: (a)
the decision
was taken without affording Bae Estates any hearing; (b)
Bae Estates was not responsible for the sub-letting which culminated
in
the complaints in respect of the property, and that Bae Estates
became involved only after the problems arose.
[34]
Despite the above, counsel submitted that the
common law does not allow for the judicial review of the trustees’
decision
because there is no contractual nexus between the body
corporate and Bae Estates, as a result of which, Bae Estates did not
have
an enforceable right against the trustees to operate in the
scheme. The result, counsel submitted, was that the trustees did not
owe Bae Estates a duty to act fairly towards it before they
terminated Bae Estates’ ability to operate in the scheme. It
was therefore submitted that Bae Estates lacked locus standi to set
aside the trustees’ decision.
[35]
Significantly, this point was not even pleaded.
In paras 8-10 above, I have set out fairly comprehensively, the
points in the trustees’
answering affidavit upon which they
rested their defence to the application. This was not one of them.
The point was raised for
the first time in the application for leave
to appeal. Ordinarily, a point of lack of locus standi should have
been pertinently
raised in the answering affidavit to enable Bae
Estates to meet it, and for the high court to pronounce on it.
[36]
It is so that the mere fact that a point of law
is raised for the first time on appeal is not in itself a sufficient
reason for
refusing to consider it. If the point is covered by the
pleadings, and if its consideration on appeal involves no unfairness
to
the other party against whom it is directed, a court may in the
exercise of its discretion consider the point.
[13]
It would be unfair to the other party if the point of
law and all its ramifications were not canvassed and investigated at
trial.
[14]
In this case, the point was neither covered in the
affidavits, nor was it canvassed and investigated in the high court.
It is, therefore,
patently unfair to Bae Estates to have to be
confronted with the point for the first time on appeal. For this
reason alone, the
locus standi point must be dismissed. But, in any
event, as I show below, there is no merit to the point.
[37]
At common law, a person who approached a court
for relief was required to have an interest in the sense of being
personally adversely
affected by the wrong alleged.
[15]
In
Jacobs
v Waks
[16]
this Court set out the following requirements to
determine whether an applicant has the necessary locus standi to
challenge an impugned
decision:(a) the applicant for relief must
have an adequate interest in the subject-matter of the litigation, in
other words,
a direct interest in the relief sought; (b) such
interest must (i) not be too far removed; (ii) be actual, not
abstract or
academic; (iii) be current, and not a hypothetical
one. The Court further pointed out that issues of locus
standi should
be dealt with in a flexible and pragmatic manner,
rather than a formalistic or technical one.
[38]
It brooks no debate that Bae Estates has a
substantial and direct interest in the decision of the trustees, the
subject-matter of
this litigation, and that such interest is real and
current. Bae Estates, accordingly, fulfils all of the above
requirements. It
was sufficiently and directly affected in its rights
and legal interests by the trustees’ decision. Also, since the
advent
of the constitutional order, the issue of locus standi is
regulated by s 38 of the Constitution,
[17]
in terms of which the class of persons who may approach
a court include ‘anyone acting in their own
interest.’ Thus, at both common law and in
terms of the Constitution, Bae Estates has thus established the
required locus
standi to challenge the validity of the
decision. A contrary conclusion would be tantamount to the adoption
of a ‘formalistic
or technical’ approach cautioned
against in
Jacobs
and,
contrary to s 38 of the Constitution. It follows that the trustees’
contention that Bae Estates lacks locus standi,
does not withstand
scrutiny. Bae Estates has established an enforceable right against
the trustees, and thus, the necessary standing
to review the
trustees’ decision at common law.
[39]
Bae Estates’ alleged lack of standing was
the only defence proffered by the trustees on the reviewability of
their decision
under common law. Having found no merit in that point,
it remains to decide whether the trustees’ decision is in fact,
reviewable
at common law. Decisions of private bodies are not immune
from judicial review.
The
principles in this regard have mostly evolved from the so-called
‘Jockey Club’ cases, where voluntary associations
are
required to afford their members a fair and impartial hearing before
their domestic tribunals.
[18]
Counsel
for the trustees sought to distinguish these cases from the present
case on two bases: first, that the trustees did not
act in their
capacity as a domestic tribunal. Secondly, that as members of such
associations, they were persons affected by the
finding of a domestic
tribunal which was invalid for want of observance of the rules of
natural justice. As Bae Estates was not
a member of the body
corporate, so it was submitted, the trustees were not obliged to
observe the rules of natural justice.
[40]
In my view, there is no merit to either of the
two propositions. As to the first, it is mechanical, and amounts to
placing form
over substance. It is reminiscent of, and akin to, the
former classification of administrative powers and functions as
‘purely
administrative’ or ‘quasi- judicial’,
that was discredited and discarded in our administrative law even
pre-constitutional
order. The identity or form of the decision-maker
is immaterial. What is important is the effect of its decision and
its implications
on the subject to whom it is directed. It is
therefore irrelevant whether the body entrusted with the decision is
styled ‘tribunal’,
‘committee’, ‘task
team’, ‘board of trustees’, etc. As to the second,
it is common cause that
Bae Estates was directly and materially
affected by the trustees’ decision. There is no rational and
justifiable basis, why
the rules of natural justice should not apply
to the trustees’ decision. This is particularly so in
circumstances where Bae
Estates had, to the knowledge of the
trustees, been freely operating within the scheme for at least a
year.
[41]
I turn now to consider the grounds on which a
decision of a private body can be subjected to judicial review at
common law. This
would be the case where a decision-maker failed to
comply with
the
elementary principles of justice, such as for example, where the
tribunal misconceives the nature and ambit of its powers, or
where it
acts capriciously or mala fide
,
or
where its findings in the circumstances are so unfair that they
cannot be explained unless it is presumed that the tribunal acted
capriciously or with mala fides
.
[19]
[42]
In
Johannesburg
Consolidated Investment Co v Johannesburg Town Council
,
[20]
Innes CJ observed that the grounds upon which a review
may be brought under common law are ‘somewhat wider’ than
those
that would justify a review of judicial proceedings. It is
well-established that common law review, inter alia, applies also to
cases where the decision under review is taken without a hearing
having taken place. And, where the duty or power is created not
by
statute but consensually as in relation to domestic tribunals.
[21]
[43]
It is so that ordinarily, Bae Estates does not
have a right to operate in the scheme. However, once it was permitted
to do so by
the trustees, about which there is no dispute, Bae
Estates held
a
well-founded belief and expectation
that
its continued ability to operate in the scheme and service its
clients there, would not be arbitrarily terminated by the trustees.
Therefore, the duty on the trustees to act fairly in
accordance with the tenets of natural justice came about consensually
when
Bae Estates was allowed to practice its occupation or profession
in the scheme for over a year without hindrance. It is common cause
that the decision under review was taken without affording Bae
Estates a hearing in circumstances where Bae Estates was not
responsible
for short-term leases in the scheme.
[44]
As already stated, in this Court the trustees
accepted that Bae Estates was not responsible for the short-term
letting in the scheme.
This notwithstanding, the trustees contended
that they acted perfectly within their rights in prohibiting Bae
Estates from operating
in the scheme despite the fact that Bae
Estates was not afforded an opportunity to be heard. The trustees
sought to justify their
conduct purely on the grounds that Bae
Estates was neither an owner nor a member in the scheme, in which
event they would have
been obliged to afford Bae Estates a hearing.
[45]
The contentions advanced by the trustees entirely
overlook the fact that before their decision to bar Bae Estates from
operating
within the scheme the latter had in pursuit of its
occupation or profession enjoyed such right for over a year without
hindrance.
For the trustees to now contend that they were entitled,
without rhyme or reason as it turned out, to deny Bae Estates the
right
to continue servicing its clients in the scheme without
affording Bae Estates a hearing is manifestly untenable.
[46]
The trustees’ decision is admittedly: (a)
procedurally unfair and unreasonable; (b) without any justifiable
basis and thus
irrational; (c) in breach of the principles of natural
justice; and (d) most importantly, unjust. The trustees’
decision
is
so
unfair that ‘it cannot be explained unless it is presumed that
they acted capriciously or with mala fides’
.
This is buttressed by the conduct of one of the trustees,
Mr
Graham Cowburn, who is an estate agent with Dogon Group Properties.
His company is thus a direct competitor of Bae Estates.
[47]
On 22 May 2019, a day after the decision was
taken to prohibit Bae Estates from operating in the scheme, Mr
Cowburn addressed an
email to the property owner, in which he
suggested to the owner to give the mandate to find a tenant, to his
company. This is a
clear conflict of interest. Mr Cowburn, having
been part of the decision to prohibit Bae Estates from operating in
the scheme,
immediately sought to benefit his company from the
latter’s ‘banning’.
Earlier, on
17 May 2019, he had enthusiastically agitated for Bae Estates’
prohibition from the scheme with a curt ‘Ban
them!’.
[48]
Should the trustees’ stance prevail in
these circumstances, it would mean that the court’s hands are
tied in the face
of an injustice. As remarked in
Barkhuizen
v Napier
,
[22]
the
hands of justice can never be tied under our constitutional order.
That would give the trustees a
license to act with impunity by arbitrarily and whimsically
prohibiting estate agents from operating
in the scheme. Courts must
endeavour to
do simple justice
between parties.
Maripe explains it well:
‘The ends of justice
should transcend the boundaries that so often restrain the courts,
and it is the courts' responsibility,
to rule against abuse of power
and dispense justice in deserving cases, and to lay down particular
rules whose effect is to promote
the exercise of power or discretion
in regular fashion. Doing so in relation to decisions of private
bodies would not involve a
“quantum leap’’, but
would rather prevent injustices in demonstrably deserving cases.’
[23]
(Footnote omitted.)
[49]
The facts of this case call to mind the English
case of
Breen v Amalgamated Engineering
Union
.
[24]
The case concerned an application to review the decision
of a committee of a trade union, which admittedly was made in
circumstances
of utmost bad faith. But the remedy for judicial review
was denied because the union was a private body and not the subject
of
judicial review. The majority acknowledged the injustice, but
considered their hands bound. Edmund Davis LJ, writing for the
majority,
lamented the result in the introductory paragraph of his
judgment at 194:
‘I
entertain substantial doubts that the judgment I am about to deliver
will serve the ends of justice. That is, to say the
least, a most
regrettable situation for any judge, but I see no escape from it. Its
effect is to throw away empty-handed from this
court an appellant
who, on any view, has been grossly abused. It is therefore a judgment
which gives me no satisfaction to deliver.’
[50]
Fortunately, the constraints
which inhibited Edmund Davis LJ from doing justice between the
parties, have no place in our law. In
our constitutional order,
private entities are not enclaves
of
power, immune from the obligation to act fairly, lawfully and
reasonably. In the present case, it is not necessary to develop
the
common law, as the high court purported to do. The common law, which
now yields to the Constitution and must be viewed through
the prism
thereof, is adequate to meet the ends of justice. It follows, in my
view, that the trustees’ decision is reviewable
at common law.
[51]
It remains to briefly dispose of a residual
argument on behalf of the trustees. It was submitted that there were
other remedies
available to Bae Estates, such as an interdict, and a
claim for damages based on unlawful interference with contractual
obligations,
or remedies under the anti-competition law. That may
well be so. However, none of those remedies would adequately redress
the effect
of a permanent prohibition against Bae Estates to service
clients in the scheme. A damages claim, for example, would be
retrospective
and limited to any clients that Bae Estates might have
had at the time of the prohibition. In addition, such a damages claim
might
prove difficult to quantify. For future purposes, however, the
permanent prohibition would still stand, and Bae Estates would be
unable to service its clients in the scheme.
[52]
In all the circumstances I am of the view that
the trustees’ decision ought to be reviewed and set aside. To
hold otherwise
would give an imprimatur to an injustice, totally
inimical to our constitutional order and values. Accordingly, the
appeal cannot
succeed.
[53]
I therefore make the following order:
The
appeal is dismissed with costs, including the costs of two counsel.
T M Makgoka
Judge of Appeal
APPEARANCES
For Appellant:
I Jamie SC (with him F W Landman)
Instructed by:
Marlon Shevelew & Associates, Cape Town,
Honey & Partners, Inc., Bloemfontein.
For First Respondent:
R F van Rooyen SC (with him K Felix)
Instructed by:
C & A Friedlander Attorneys, Cape Town,
Symington & De Kok, Bloemfontein.
[1]
Minister of Defence and Military Veterans v Motau and Others
2014 (5) 69 (CC) para 33.
[2]
Sokhela
and Others v MEC for Agriculture and Environmental Affairs
(Kwazulu-Natal) and Others
2010
(5) SA 574 (KZP) para 61. See also
Fedsure
Life Assurance Ltd and Others v Greater Johannesburg Transitional
Metropolitan Council and Others
1999 (1) SA 374; 1998 (12) BCLR 1458 para 26.
[3]
Sokhela
para 61.
[4]
Chirwa v Transnet Limited and Others
[2007] ZACC 23
;
2008 (4) SA 367
(CC);
2008 (3) BCLR 251
(CC) para
183.PAJA
[5]
Mount Edgecombe Country Club Estate Management Association II
(RF) NPC v Singh and Others
[2019] ZASCA 30
;
2019 (4) SA 471
(SCA). The essence of the decision is that, as between home owners
and a homeowners’ association, conduct rules have a
contractual basis, and therefore PAJA does not find application
where home owners’ association enforced rules against property
owners.
[6]
The expression ‘an empowering provision’ is defined in s
1 of PAJA as ‘a law, a rule of common law, customary
law, or
an agreement, instrument or other document in terms of which an
administrative action was purportedly taken’.
[7]
Greys Marine Hout Bay (Pty) Ltd and Others v
Minister of Public Works and Others
[2005] ZASCA 43
;
[2005] 3
All SA 33
(SCA);
2005 (6) SA 313
(SCA) para 24.
[8]
Compare for example,
Pennington v Friedgood
2002 (1) SA 251
(C) where it was held that decisions taken at the annual meeting of
a medical aid scheme were not exercises of public power.
[9]
Calibre Clinical Consultants (Pty) Ltd and Another v
National Bargaining Council for the Road Freight Industry and
Another
[2010] ZASCA 94
;
2010 (5) SA 457
(SCA);
[2010] 4 All SA 561
(SCA) para 31.
[10]
YL (by her litigation friend the Official
Solicitor) v Birmingham City Council and Others
[2007] UKHL 27
;
[2007] 3 All ER 957
(HL).
Although the remarks are in the
minority judgment, on the point made by Lord Bingham the court was
unanimous.
[11]
Section 4 reads as follows:
‘
Powers of
bodies corporate
4. The body corporate may
exercise the powers conferred upon it by or under this Act or the
rules, and such powers include the
power—
(a)
to appoint
such agents and employees as the body corporate may consider fit;
(b)
when essential
for the proper fulfilment of its duties and upon special resolution,
to purchase or otherwise acquire, take transfer
of, mortgage, sell,
give transfer of or hire or let units;
(c)
to purchase,
hire or otherwise acquire movable property for the use of owners for
their enjoyment or protection or in connection
with the enjoyment or
protection of the common property;
(d)
where
practicable, to establish and maintain on the common property
suitable lawns, gardens and recreation facilities;
(e)
upon special
resolution, to borrow moneys required by it in the performance of
its functions or the exercise of its powers;
(f)
to secure the
repayment of moneys borrowed by it and the payment of interest
thereon, by notarial bond over unpaid contributions
whether levied
or not, or by mortgaging any property vested in it;
(g) to invest any moneys
of the fund referred to in section 3(1)
(a)
;
(h)
to enter into
an agreement with any owner or occupier of a section for the
provision of amenities or services by the body corporate
to such
section or to the owner or occupier thereof, including, upon special
resolution, the right to let a portion of the common
property to any
such owner or occupier by means of a lease other than a lease
contemplated in section 5(1)
(a)
;
(i)
to do all
things reasonably necessary for the enforcement of the rules and for
the management and administration of the common
property.
[12]
The regulations were promulgated by the Minister on 7 October 2016,
the Minister made regulations in terms of the Sectional Title
Schemes Management Act 8 of 2011.
[13]
Alexkor
Ltd and Another v The Richtersveld Community and Others
[2003] ZACC 18
;
2004
(5) SA 460
(CC);
2003
(12) BCLR 1301
(CC)
para 44;
Cole
v Government of the Union of SA
1910
AD 263
at
273;
Paddock
Motors (Pty) Ltd v Igesund
1976
(3) SA 16
(A
)
at 24-5; and
Bank
of Lisbon and South Africa Ltd v The Master and Others
1987
(1) SA 276 (A) at 290.
[14]
Road
Accident Fund v Mothupi
2000
(4) SA 38
(SCA);
[2000] 3 All SA 181
(A) para 30;
Barkhuizen
v Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC);
2007 (7) BCLR 691
(CC) para 39.
[15]
See for example,
Cabinet
of the Transitional Government for the Territory of South West
Africa
v
Eins
1988
(3) SA 369
(A) at 389I.
[16]
Jacobs
and Another
v Waks and Others
[1991] ZASCA 152
;
1992
(1) SA 521
(A) at 534A-E.
[17]
Section 38 of the Constitution states:
‘
Anyone listed in this section has the right to
approach a competent court, alleging that a right in the Bill of
Rights has been
infringed or threatened, and the court may grant
appropriate relief, including a declaration of rights. The persons
who may approach
a court are—
(a)
anyone
acting in their own
interest;
(b)
anyone
acting on behalf of another person who cannot act in their own name;
(c)
anyone
acting as a member of, or in the interest of, a group or class of
persons;
(d)
anyone
acting in the public interest;
and
(e)
an
association acting in the interest of its members.’
[18]
See for example
Turner v Jockey Club of South Africa
1974 (3)
SA 633 (A).
[19]
South
African Railways
v
Swanepoel
1933
AD 370 at 378
;
Theron
and Others v Ring van Wellington van die NG Sendingkerk and Others
1976
(2) SA 1 (A).
[20]
Johannesburg Consolidated Investment Co v Johannesburg Town
Council
1903 TS 111
at 115.
[21]
Hira and Another v Booysen NO and Another
1992 (4) SA 69
(A)
at 93A-94A.
[22]
Barkhuizen v Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC);
2007
(7) BCLR 691
(CC) para 73 in a contractual context.
[23]
B Maripe ‘Judicial Review and the Public/Private Body
Dichotomy: An Appraisal of Developing Trends’ (2006)
University
Botswana Law Journal 23 at 42.
[24]
Breen v Amalgamated Engineering Union and others
[1971] 2 QB
175.