Brief Summary

Roads — Toll roads — Erection of toll gate — City Council of Johannesburg objecting to the declaration of the N13 as a toll road and the erection of a toll gate — City Council claiming ultra vires action by the National Transport Commission as the N13 had not been declared a toll road — Legal issue of whether the Commission was required to provide the City Council with a hearing prior to the declaration — Court a quo finding in favor of the City Council, leading to an appeal by the South African Roads Board — Appeal dismissed, confirming the Commission's actions were unlawful as the N13 had not been duly declared a toll road.

Comprehensive Summary

Summary of Judgment

1. Introduction

The proceedings were an appeal to the Appellate Division of the Supreme Court of South Africa against orders granted in the Witwatersrand Local Division. The dispute concerned the lawfulness of steps taken to implement tolling on a national road, including the erection of a toll gate and the administrative process followed in deciding to declare the road a toll road.

The appellant was The South African Roads Board, which, by consent at the appeal hearing, was substituted for the National Transport Commission because the Commission’s powers, functions and duties had been entrusted to the Board under section 3 of the Transport Deregulation Act 80 of 1988. The respondent was the City Council of Johannesburg, which had been the applicant in the court a quo. Toll Highway Development Company (Proprietary) Limited (a contracting party engaged in implementing the tolling project) and the Minister of Transport had been cited in the court a quo; Toll Highway did not pursue an appeal and the Minister abided the decision both below and on appeal.

In the court a quo, the City Council succeeded in obtaining interdictory relief and in having the Commission’s decision to declare the relevant road a toll road set aside. The judgment of the court a quo is reported as Johannesburg City Council v National Transport Commission & Others 1990 (1) SA 199 (W). The appeal, brought with leave, raised primarily (subject to a qualification noted by the Appellate Division) two issues: whether the erection of a toll gate on a national road not yet declared a toll road was authorised, and whether the Commission was legally obliged to afford the City Council a hearing before deciding to declare the road a toll road.

The general subject-matter of the dispute was the interpretation and application of the National Roads Act 54 of 1971, especially the provisions introduced by amendment relating to toll roads and toll gates, and the application of procedural fairness (audi alteram partem) to a decision preceding the formal declaration of a toll road.

2. Material Facts

The road in question, the N13, runs through the southern suburbs of Johannesburg from an interchange known as Uncle Charlie’s in the west to the Rand Airport in the east. It is sometimes referred to as the Southern By-pass. It was common cause that the N13 had been declared a national road in terms of section 4 of the National Roads Act 54 of 1971.

It was also common cause that, at all times relevant to the proceedings, the N13 had not been declared a toll road in terms of section 9 of the Act, nor had the necessary Gazette notice (contemplated by section 9(2)) been given. Despite this, it was common cause that the Commission had decided that the N13 would be used as a toll road for a period while a separate major toll motorway project (the M4, also described as part of the Krugersdorp/Springs tollway and known as the Hendrik Schoeman Expressway) was under construction.

The reasons for the Commission’s decision to include the N13 in the tolling scheme were recorded as disputed in the judgment, but the court accepted that the decision was linked to the Commission’s broader toll-road financing and construction plans, including the assertion (in an affidavit for the Commission) that the overall project would lose financial viability if the N13 were not included as a temporary toll road.

In pursuance of the decision, the Commission entered into a contract with Toll Highway Development Company (Proprietary) Limited. While the Commission declined to disclose the contract’s contents, it was common cause that in August 1988, and in pursuance of that contract, Toll Highway began erecting a toll gate on the N13.

The City Council’s interest was grounded in facts the Appellate Division treated as material to the procedural-fairness issue. The N13 fell within Johannesburg’s municipal area, and the City Council had contributed approximately R10 million to the cost of constructing interchanges leading onto the N13. The City Council alleged that imposing a toll on the N13 would likely divert traffic onto alternative municipal roads, causing congestion, disrupting planned traffic flows, and imposing additional maintenance and upgrading obligations (including widening and upgrading costs estimated at about R3,6 million). The court considered that, on the probabilities, tolling would lead to a diversion of traffic and consequent municipal expenditure and operational burdens, including traffic-control demands during toll gate construction and operation.

Although the City Council also attacked the toll project on the basis that toll revenues might be used unlawfully to finance the M4 (allegedly contrary to section 2(3A) of the Act), the Appellate Division recorded that this aspect was not dealt with in the court a quo’s judgment and was not fully argued on appeal; the court indicated it was unnecessary to say more than that such use (if proved) would appear to be unlawful.

3. Legal Issues

The appeal required the court to determine two central legal questions.

The first was a question of law, namely whether, under the National Roads Act 54 of 1971, the Commission was empowered to erect a toll gate on a national road that had not yet been declared a toll road under section 9(1)(a) and notified under section 9(2). This issue turned on statutory interpretation, in particular the meaning of “toll road” in section 9(1)(c), read with the Act’s definition of that term.

The second was a question of law involving the application of legal principles to the facts, namely whether the Commission was obliged to afford the City Council an opportunity to be heard before deciding to declare the N13 a toll road. This required the court to consider the scope and application of the audi alteram partem principle in relation to a decision said to be “legislative” in character, and whether the statute expressly or by implication excluded the duty to act fairly.

A related subsidiary issue addressed in the reasoning (as part of the procedural fairness debate) was whether the matter was premature because the Commission’s decision was said to be only an “expression of intention” without immediate legal effect, raising considerations associated with multi-staged administrative decisions.

4. Court’s Reasoning

On the first issue, the court approached the matter as one of statutory construction. Section 9(1)(c) authorises the Commission to collect tolls and, “for that purpose”, to erect a toll gate “on the toll road”. The court emphasised that the Act defines a “toll road” as a portion of a national road that has been declared a toll road under section 9(1)(a) and of which notice has been given in the Gazette under section 9(2), unless inconsistent with the context. The court found nothing in the context that justified departing from the defined meaning.

The appellant argued that “toll road” in section 9(1)(c) should be read as referring to an intended toll road, but the court rejected that construction. It reasoned that the legislature had used the phrase “intended toll road” elsewhere in section 9(3), indicating that it was able to draw that distinction expressly when intended. The court also considered it improbable that the legislature would use the term “toll road” in the same subsection to mean both (i) a declared toll road (in relation to “moneys payable as toll”, which could not be levied before declaration) and (ii) an intended toll road (for erection of a toll gate). The court further held that practical difficulties raised by the appellant about upgrading and tolling an existing road did not justify the strained interpretation, noting in the present case that an alternative route was available (including municipal roads controlled by the City Council, which the court regarded as a “road authority”).

The appellant’s alternative contention was that the power to erect toll gates could be sourced in section 5(1)(c), which empowers the Commission to “plan, design or construct any national road”, read with the wide definitions of “construct” and “road”. The court rejected this. It held that, as a matter of law, section 5(1)(c) could not bear the meaning contended for, and it observed that the toll gate being built was in part outside the road reserve. More fundamentally, the court viewed section 5 as conferring general powers, while section 9 constituted the special legislative scheme that introduced the concept of toll roads and toll gates. Accepting the appellant’s construction would render section 9(1)(c) effectively superfluous, and the court was not persuaded by the suggestion that it had been enacted merely ex abundanti cautela.

Accordingly, the court held that erecting a toll gate on the N13 while it was merely a national road and not yet a duly declared toll road was ultra vires, and it followed that the interdict restraining erection of the toll gate had been correctly granted.

On the second issue (the hearing requirement), the court accepted as common cause that the Commission did not afford the City Council a hearing before deciding to declare the N13 a toll road, and that it was apparently the Commission’s practice not to consult local authorities. The court nevertheless analysed whether the law imposed such an obligation in the circumstances.

The appellant argued, first, that the Commission’s “decision” was merely an expression of intention, and that relief could only be granted once a declaration had been made and gazetted. The court treated this as a question arising in “multi-staged” administrative decisions. It held that, on the evidence, the decision had practical and prejudicial consequences already: it had been implemented by the conclusion of a contract with Toll Highway and the commencement of toll gate construction. The court considered that the City Council faced prejudice at that stage because road planning, upgrading and budgeting could not occur instantaneously and would have to be undertaken in advance of toll operation. The court distinguished Republican Publications (Pty) Ltd v Publications Control Board 1970 (1) SA 577 (C), finding that case concerned a materially different “decision” (to keep a close watch) that did not prejudice the applicant.

The appellant’s second argument was that the declaration of a toll road was “legislative” in nature and therefore not subject to the audi rule. The court rejected a rigid, label-driven approach. It referred to developments in South African law reflecting a preference for the proposition that the audi principle applies whenever a statute empowers a public body to act prejudicially affecting an individual’s liberty, property or existing rights, or where a legitimate expectation exists, unless excluded by statute. It also referred to the move away from classifying powers as judicial, quasi-judicial or administrative as a prerequisite for applying natural justice.

The court engaged with Pretoria City Council v Modimola 1966 (3) SA 250 (A) and S v Moroka en Andere 1969 (2) SA 394 (A), where it had been held that individuals prejudicially affected by powers exercised for the benefit of the community at large (such as taxation or general restrictions) cannot generally insist on a hearing. The court did not treat those cases as establishing a simple rule that any “legislative” act is immune from audi. Instead, it proposed a functional distinction between statutory powers that affect the community equally and those that, while possibly general in impact, are calculated (likely in the ordinary course) to cause particular prejudice to a specific individual or a particular group. Where the latter is present, and absent a contrary statutory indication, procedural fairness would ordinarily require a hearing.

Applying that approach, the court held that the decision to declare the N13 a toll road had a particular and foreseeable impact on the City Council (as a municipal corporation responsible for an urban road network likely to bear diverted traffic, maintenance burdens, upgrading costs and traffic management demands). The court therefore treated the declaration and its preceding decision as falling within the category where the audi principle applies, notwithstanding any possible characterisation of the eventual Gazette notice as delegated legislation. The court considered that the case fell outside the general rule described in Modimola on its particular facts, while indicating that the application of that rule might require reconsideration in appropriate circumstances.

The appellant’s third argument was that the statute impliedly excluded audi because the Act contained express consultation provisions in other sections but not in section 9. The court rejected this reliance on the maxim unius inclusio est alterius exclusio, treating it as an unsafe basis for implying an exclusion of the common-law hearing requirement. The court held that the consultation mechanisms in sections 4(2) and 6(2)(b) did not justify an inference that section 9 intended to deprive persons in the City Council’s position of the right to be heard before a prejudicial decision was taken.

On this basis, the court concluded that the Commission was obliged to afford the City Council a hearing before deciding to declare the N13 a toll road, and that the court a quo had been correct to set aside that decision.

5. Outcome and Relief

The appeal was dismissed.

The Appellate Division upheld the substantive result reached in the court a quo, including the conclusion that the erection of a toll gate on the N13 prior to its lawful declaration as a toll road was not authorised, and that the Commission’s decision to declare the N13 a toll road was liable to be set aside for failure to comply with procedural fairness by affording the City Council a hearing.

The court ordered the appellant to pay the costs of appeal, including the costs of two counsel.

Cases Cited

Attorney-General, Eastern Cape v Blom and Others 1988 (4) SA 645 (A).

Staatspresident en Andere v United Democratic Front en 'n Ander 1988 (4) SA 830 (A).

Administrator, Transvaal, and Others v Traub and Others 1989 (4) SA 731 (A).

S v Moroka en Andere 1969 (2) SA 394 (A).

Pretoria City Council v Modimola 1966 (3) SA 250 (A).

Rex v Ngwevela 1954 (1) SA 123 (A).

Le Roux v Minister van Bantoe-Administrasie en -Ontwikkeling 1966 (1) SA 481 (A).

Johannesburg Liquor Licensing Board and Another v Short 1946 AD 713.

Republican Publications (Pty) Ltd v Publications Control Board 1970 (1) SA 577 (C).

Rex v Koenig 1917 CPD 225.

Byers v Chinn and Another 1928 AD 322.

Mabaso v West Rand Administration Board and Another 1982 (3) SA 977 (W).

Laubscher v Native Commissioner, Piet Retief 1958 (1) SA 546 (A).

Administrator, Transvaal & Others v Zenzile & Others 1991 (1) SA 21 (A).

Homex Realty & Development Co Ltd v Village of Wyominq 116 DLR (3rd) 1.

CREEDNZ Inc v Governor-General [1981] 1 NZLR 172.

Fowler & Roderique v Attorney-General [1987] 2 NZLR 56.

State of South Australia v O'Shea: O'Shea v Parole Board of South Australia 73 ALR 1.

Attorney-General of Canada v Inuit Tapirisat of Canada et al (1981) 115 D.L.R. (3d) 1.

F E Jackson & Co Ltd v Price Tribunal (No 2) [1950] NZLR 433.

New Zealand United Licensed Victuallers Association of Employers v Price Tribunal [1957] NZLR 167.

DREWITT v Price Tribunal [1959] NZLR 21.

Legislation Cited

National Roads Act 54 of 1971.

Transport Deregulation Act 80 of 1988.

Transport Co-ordination Act 44 of 1948.

Local Government Ordinance (Transvaal) 1939.

Group Areas Development Act 69 of 1955.

National Development Act (as referenced in relation to section 3(3) in CREEDNZ Inc v Governor-General [1981] 1 NZLR 172).

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that, on a proper interpretation of the National Roads Act 54 of 1971, the Commission’s power in section 9(1)(c) to erect toll gates is confined to a “toll road” as defined, namely a portion of national road that has been duly declared a toll road and gazetted. The erection of a toll gate on the N13 while it had not been declared and notified as a toll road was therefore unauthorised, and the interdict restraining erection of the toll gate was correctly granted.

The court further held that the Commission’s decision to declare the N13 a toll road was taken without affording the City Council an opportunity to be heard, and that the audi alteram partem principle applied in the circumstances because the decision was likely to cause particular prejudice to the City Council in a manner different from the public generally. The statute did not expressly or by necessary implication exclude the application of audi. The decision was therefore liable to be set aside, and the court a quo’s setting aside of that decision was upheld.

LEGAL PRINCIPLES

The judgment applied the principle that statutory language should be construed in accordance with defined terms where the context is not inconsistent, and that a court will not readily adopt an interpretation that causes the legislature to use the same term in materially different senses within the same provision without clear indication.

The judgment applied the principle that general statutory powers (such as general powers to plan and construct roads) do not ordinarily displace or subsume special statutory schemes enacted to introduce a distinct legal mechanism, here the toll-road system in section 9, including the specific power to erect toll gates.

On procedural fairness, the judgment applied and developed the principle that the audi alteram partem rule operates as a common-law requirement where a statutory power authorises a public authority to act prejudicially affecting rights, property, liberty, or existing rights, or where legitimate expectation arises, unless the empowering statute expressly or by implication indicates the contrary. The judgment emphasised that rigid classification of powers as legislative versus administrative is not invariably determinative of whether audi applies.

The court articulated a distinction between statutory powers that affect the community at large equally (where individual hearings are not generally demanded as a matter of natural justice) and powers that, while possibly general in form, are likely in the ordinary course to produce particular prejudice to an identifiable person or group. In the latter situation, procedural fairness will ordinarily require that the affected party be afforded an opportunity to be heard, absent statutory exclusion.

The judgment further applied the principle that an implied exclusion of audi cannot safely be inferred merely because other provisions of the statute expressly provide for consultation; the maxim unius inclusio est alterius exclusio is not a rigid interpretive rule and must be applied with caution, particularly where the consequence would be the removal of a common-law procedural safeguard.

South African Roads Board v City Council of Johannesburg (485/89) [1991] ZASCA 63; 1991 (4) SA 1 (AD); [1991] 4 All SA 722 (AD) (24 May 1991)