Brief Summary

Immigration Law — Permanent residence application — Review of decision — Applicant sought to review the rejection of his permanent residence application under section 27(e) of the Immigration Act — Applicant initially applied in 2015, providing evidence of financial means and pension — Department failed to verify pension documents, leading to rejection of application — Court found that the department did not adequately explain its inability to verify the pension and had ample time to process the application — Decision to reject the application set aside, with the matter referred back for reconsideration.

Comprehensive Summary

Summary of Judgment

Introduction

This was an application for judicial review in the High Court of South Africa (Western Cape Division, Cape Town) under the Promotion of Administrative Justice Act 3 of 2000 (PAJA). The applicant, Paul David Harding, sought the review and setting aside of the Director-General of Home Affairs’ decision rejecting his application for a permanent residence permit under section 27(e) of the Immigration Act 13 of 2002, and further sought an order substituting the administrative decision with a direction that permanent residence be granted.

The respondents were the Minister of Home Affairs (first respondent), the Director-General of Home Affairs (second respondent), and the Minister of International Relations and Co-operation (third respondent). The judgment records that the first and second respondents conceded that the rejection decision should be reviewed and set aside, but opposed only the substitution relief, seeking instead that the matter be remitted to the Department for reconsideration.

The dispute concerned the Department’s rejection of a retirement-based permanent residence application on the ground that the Department was allegedly unable to verify pension-related documentation submitted by the applicant. The core controversy accordingly shifted from the lawfulness of the rejection (which was not ultimately defended) to the appropriate remedy after review, particularly whether the Court should remit the matter or substitute its own decision.

Procedurally, the matter was initially enrolled with other similar matters on the unopposed motion court roll on 17 October 2023. While other matters were finalised by agreement, this matter was postponed for argument to 25 October 2023, and the Court afforded the parties an opportunity to file heads of argument. The respondents did not file an answering affidavit (or an explanatory affidavit describing the verification process), and the matter proceeded to determination on the papers and argument, culminating in judgment delivered electronically on 30 October 2023.

Material Facts

The applicant purchased immovable property in South Africa on 1 December 2006, namely 1[…] St James Road, St James in the Western Cape, for R3.5 million, without the assistance of a bond. He also spent approximately R1 million on renovations. The deed of transfer was placed before the Court.

In November 2015, the applicant and his then wife applied for permanent residence at the South African High Commission in London. The application was made on the basis that the applicant satisfied the financial independence criteria associated with retirement residence. At that stage, the applicant declared ownership of four properties in the United Kingdom, from which he earned monthly rental income in pounds sterling. The application stated that the rental income amounted to no less than R37 000 per month, and asserted compliance with the prescribed requirements of section 27(e). The applicant also submitted supporting documents, including bank statements, police clearance and medical certificates, proof of ownership of the UK properties, and lease agreements.

The application was referred to the Department of Home Affairs in Pretoria. Several years later, in September 2019, the applicant and his wife divorced, and he continued with the application in his own name.

A material development occurred after the application had been pending for several years. On 29 November 2021, the Department requested that the applicant complete and sign a form to enable verification of his funds and assets, warning that failure to respond within five working days would result in the matter being considered finalised. By then the applicant’s circumstances had changed; he was a pensioner and had disposed of three of the UK properties. On 1 December 2021, he complied by submitting, among other documents, the deed of transfer of the St James property and documentation reflecting a pension entitlement from the Connells Group Pension Scheme administered by Mecer in the United Kingdom.

The pension documentation indicated that the applicant had received a lump sum of £194 769.69 (reflected in rand equivalent in the papers) and would receive an annual pension of £29 215.56, paid monthly, indefinitely. The consent form signed by the applicant recorded that he was applying under section 27(e) and granted approval to the Department to verify the documents submitted as proof of his financial status, including bank statements and the deed of property in South Africa, with handwritten additions referring to a UK bank statement and copy of pension documents.

On 25 August 2022, the Department informed the applicant that no response had been received pertaining to verification of assets listed on the consent form. Thereafter, by letter communicated on 9 January 2023, the Department rejected the application on the basis that during processing it was allegedly unable to verify the pension documentation with the relevant institution, and therefore concluded that the applicant did not qualify under section 27(e). The rejection decision was recorded as being taken by the Acting Director-General on 14 October 2022.

The applicant requested adequate reasons for the rejection on 17 January 2023 and again on 18 April 2023, but the Department did not acknowledge receipt of these requests.

For purposes of the review and remedy, the Court treated as material the following financial facts appearing from the documents before it. The judgment recorded that in 2015 the applicant’s rental income meant he met the prescribed threshold under section 27(e), and that there was no dispute that he met the prescribed net worth from rental income at that time. The Court further accepted that by 2021 the applicant met the requirements of section 27(e) on the basis of his pension, and that bank statements corroborated that pension payments were being made. The Court referred to UK bank statements reflecting pension payments and South African bank statements reflecting substantial credit balances, as well as updated pension correspondence evidencing annual increases.

Legal Issues

The central legal question was the appropriate remedy following the conceded unlawfulness of the rejection decision: specifically, whether the matter should be remitted to the Department for reconsideration, or whether the Court should grant a substitution order directing the issue of a permanent residence permit.

This remedial question required an evaluative determination under PAJA, informed by constitutional principles (including the separation of powers) and the criteria developed in Constitutional Court jurisprudence for when substitution is justified. It also required application of the statutory requirements in section 27(e) of the Immigration Act and the relevant Immigration Regulations to the facts placed before the Court, in order to determine whether the administrative outcome was effectively a foregone conclusion.

Although the Department’s stated basis for refusal was an inability to verify pension documentation, the dispute before the Court was not framed as a factual contest on the applicant’s financial position (the Court recorded that the applicant met the threshold). Rather, it concerned the adequacy and explanation of the Department’s verification process and whether, given the prolonged delay and absence of an explanatory account, remittal would serve any purpose consistent with just administrative action.

Court’s Reasoning

The Court began by setting out the relevant statutory scheme. Section 27(e) of the Immigration Act 13 of 2002 empowers the Director-General to issue a permanent residence permit to a foreigner of good and sound character who intends to retire in South Africa, provided the foreigner proves to the Director-General’s satisfaction that they have the right to a pension, irrevocable annuity, or retirement account yielding a prescribed minimum payment for life, or that they have a prescribed minimum net worth. The Court read this with Immigration Regulation 24(11), which ties the minimum payment and net worth thresholds to amounts determined by the Minister by notice in the Gazette, and referred to the relevant Gazette notice setting the threshold at R37 000 per month.

On the facts, the Court considered that in 2015 the applicant’s application relied on the net worth route (through rental income from UK properties) and that there was no dispute that he met the prescribed threshold at the time. The Court further found that the 2021 information placed before the Department indicated the applicant also met the pension-based route because he was receiving an irrevocable pension producing monthly payments exceeding the prescribed minimum, and the Court considered his current information to confirm continued compliance. Against this background, the Court treated the statutory enquiry as straightforward: section 27(e) requires demonstration of financial independence at the prescribed level, and the documents before the Court showed the applicant met that standard.

A key aspect of the Court’s reasoning concerned the Department’s stance that it could not verify the pension information. The Court noted that the Department did not indicate why verification was not possible, what steps were taken to verify, or what defect in consent or cooperation prevented verification. The Court also observed that the respondents resisted substitution but failed to “take the court into their confidence” as to the verification difficulty and how it would be addressed if the matter were remitted yet again. The applicant, in the Court’s view, was left to speculate whether additional steps were required of him, including whether he should have engaged the pension fund or compelled cooperation.

The Court placed weight on the respondents’ failure to file an answering affidavit or explanatory affidavit, despite having been afforded an opportunity after the postponement. In the Court’s assessment, the absence of any explanation meant there was no basis to conclude that remittal would produce a different result, especially given the extraordinary length of time (approximately eight years) during which the Department had possessed the application. While the Court acknowledged general pressures on the Department due to volume of applications, it noted that the Department did not rely on a lack of capacity as an explanation for the failure to finalise verification or process the application.

The Court referred to judicial criticism of unclear verification processes in Maier and another v Minister of Home Affairs and another, where the court observed uncertainty as to what verification entailed and expressed concern about the Department’s understanding of the statutory confines. In the present case, the Court considered it similarly problematic that the Department invoked a verification process without explaining what it involved, thereby enabling an application to be held in abeyance indefinitely.

The Court then addressed the remedy of substitution by reference to Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Ltd and another, which identifies important factors: whether the court is in as good a position as the administrator to make the decision, and whether the administrator’s decision is a foregone conclusion (to be considered cumulatively), as well as other factors such as delay, bias, or incompetence, with the ultimate enquiry being whether substitution is just and equitable. The Court expressly recognised the separation of powers concern and the general undesirability of courts making decisions entrusted to administrators, but held that on these facts substitution was warranted.

Applying Trencon, the Court found that the evidentiary material before it was the same information that had been before (or could have been before) the Department and was sufficient to determine compliance with the Act and Regulations. The Court was persuaded that bank statements corroborated the applicant’s pension income and that the pension documentation contained the relevant information and contact details. In addition, the Court inferred that the prolonged delay and lack of responsiveness (including ignoring requests for reasons) reflected “tardiness” and an obstructive attitude, rather than a genuine unresolved eligibility issue. The Court also considered the applicant’s age (65) and the protracted history as relevant to the justice and equity of granting final relief without further delay.

In concluding that the administrative outcome was a foregone conclusion, the Court reasoned that the applicant had complied with the requirements of the Act and Regulations and was entitled to just administrative action. Given the absence of any articulated verification obstacle and the prolonged processing history, the Court held that remittal would cause further unnecessary delay and leave the applicant at the mercy of unexplained administrative inaction.

Outcome and Relief

The Court reviewed and set aside the second respondent’s decision (dated 14 October 2022) rejecting the applicant’s permanent residence application under section 27(e) of the Immigration Act.

The Court granted a substitution order, directing the second respondent to issue the applicant a permanent residence permit in terms of section 27(e) within 10 days of the court order, with the permit to be made available at VFS, Cape Town.

The Court ordered the first and second respondents to pay the costs of the application jointly and severally, the one paying the other to be absolved.

Cases Cited

Maier and another v Minister of Home Affairs and another 2023 JDR 0118 (WCC) / (4145/2022) [2022] ZAWCHC 264.

Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Ltd and another (2016) JOL 33413 (CC).

Aquila Steel (South Africa) (Pty) Ltd v Minister of Minerals Resources and Others 2019 (3) SA 621 (CC).

Legislation Cited

Immigration Act 13 of 2002.

Promotion of Administrative Justice Act 3 of 2000.

Constitution of the Republic of South Africa, 1996.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The rejection of the applicant’s permanent residence application under section 27(e) of the Immigration Act 13 of 2002 was reviewed and set aside, and the Court granted substitution rather than remittal. On the evidence before the Court, the applicant met the prescribed financial requirements and the Department’s unexplained inability to verify pension documentation, coupled with extraordinary delay and failure to provide reasons, rendered remittal unjust. The Department was directed to issue the permanent residence permit within 10 days, and the first and second respondents were ordered to pay costs jointly and severally.

LEGAL PRINCIPLES

A permanent residence application under section 27(e) of the Immigration Act 13 of 2002, read with Immigration Regulation 24(11) and the relevant Gazette notice, turns on whether the applicant demonstrates the prescribed level of financial independence, expressed in this matter as R37 000 per month, whether via pension/annuity/retirement account payments for life or via prescribed net worth.

Where an administrative decision is reviewed under PAJA, the remedial choice between remittal and substitution must respect the separation of powers, but substitution may be granted in exceptional circumstances. The judgment applied the principles articulated in Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Ltd and another (2016) JOL 33413 (CC), namely that significant considerations include whether the court is in as good a position as the administrator to make the decision and whether the administrative outcome is a foregone conclusion, together with other relevant factors such as delay and the justice and equity of final relief.

An administrator’s reliance on an internal “verification process” without explaining what it entails, what efforts were undertaken, and why verification failed may weigh against remittal where the record and undisputed facts demonstrate compliance with the statutory threshold, particularly in the presence of prolonged delay and failure to engage with requests for reasons.

Harding v Minister of Home Affairs and Others (14733/2023) [2023] ZAWCHC 267 (30 October 2023)