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Procedure cuts both ways...

INTRODUCTION

Presently, I am involved in a matter which is the subject of some publicity. The matter is ongoing, therefore it would be remiss of me to comment on the hearing, however some of the reporting would give readers of this post an idea of some of the challenges that we face.

Nevertheless, the recent judgement handed down by the High Court, Western Cape Division in the matter of City of Cape Town v South African National Roads Agency Limited and others [2015] JOL 34167 (WCC) (AG Binns-Ward and NP Boqwana JJ) deals with some issues that I have touched on before and which are relevant to cases with which I am seized.

You may recall that some time ago I uploaded a post entitled "The Purpose of Procedure", see here. This post concerns the failure to follow procedure, and the potential for injustice when procedure is ignored. 

BACKGROUND

The subject matter of the judgement was the intended construction and upgrading of sections of the N1 and N2 national roads and their declaration as toll roads. Together, the South African National Roads Agency (“SANRAL”), the Minister of Transport and the Minister of Water and Environmental Affairs took various the decision upon which the implementation of the upgrades was based.

The City of Cape Town, ("the City") moved an application to challenge the various decisions.

Giving its judgement, the court referred to the doctrine of separation of powers. The decisions that the City sought to impugn fell exclusively within the functional domain of the executive arm of government. Whether the roads should be tolled was a matter to be decided within the relevant statutory framework by SANRAL and the Minister of Transport, and not by the courts.

The court accepted that the judiciary does not ordinarily have appellate authority over executive decisions. It is a fundamental constitutional principle of our law that public powers exist only to the extent that the law provides for it. These public powers are competently exercised only in accordance with such law. The courts' jurisdiction to review the exercise of public power is concerned with determining whether the impugned acts were made within the ambit of a power provided by law, and in accordance with the principles of such law, in particular, and the Constitution, in general.

Similar considerations are applicable to the exercise of corporate power and the boards authority. A company is bound by the Companies Act, the company's MOI and the laws applicable to the business of the company in question. If the members of the board of a company cause the company t act outside those powers, the members of the board are in breach of their fiduciary duties, and may be personally liable for the company's losses. 

Administrative decisions made by executive arms of government stand to be recognised as valid unless and until they are set aside by a court on judicial review. Any person who wants to have an administrative decision set aside on judicial review must institute proceedings within a reasonable time and not later than 180 days after the decision was made. In this case, the City had delayed in bringing the review application.

The Court addressed the question of whether it should condone the delay. In doing so, the court considered whether it was in the interests of justice to grant condonation. In the circumstances it would depend on the facts and circumstances of the case before them.

THE RELIEF SOUGHT AND THE DELAY

The notice of motion set out the relief sought by the City, as follows:

  1. The decision of the ‘competent authority’ on 30 September 2003 to grant environmental authorisation … for the construction or upgrading of the roads;
  2. The decision of the Minister of Environmental Affairs and Tourism on 10 October 2005 … to effectively dismiss the appeals against the grant of environmental authorisation by the competent authority;
  3. The decision of the Minister of Environmental Affairs and Tourism on 28 February 2008 … to grant a revised environmental authorisation for the project;
  4. The decision of the Minister of Transport on 2 September 2008 to approve the declaration of the roads as toll roads; and
  5. The decision of SANRAL, published on 15 September 2008, to declare the affected roads as toll roads.

The court found that it could not entertain the application for relief in terms of the first three paragraphs of the notice of motion due to the unreasonable delay in bringing the matter to court. Counsel for the City was unable to give a full and reasonable explanation for the delay, covering the entire period of delay, as required.

In the same way, a dissenting shareholder must notify a company that it will exercise its dissension rights and prosecute those rights within a particular time frame. Should the dissident fail to do so, it may lose the benefit of those rights. 

THE REMAINING RELIEF

Regarding the remaining relief, the Court pointed to the procedural requirements with which SANRAL needed to comply before the minister could consider the matter. The Court held that a fair procedural process in casu would have required SANRAL to furnish a copy of its report to the persons who had responded to its notices in time to afford such persons a reasonable period to make such further submissions to the minister in reaction to the report as they might wish.

At the end of its extensive deliberations, the Court set aside the Minister of Transport’s approval of SANRAL’s application to declare sections of the N1 and N2 national roads as toll roads.

The proposal to declare the said sections of the roads as toll roads was remitted to SANRAL for further consideration in accordance with the findings of the Court.

CONCLUSION

The judgement in this matter is over 270 paragraphs long, and a full analysis of it is not appropriate for present purposes.

What is clear however is that the respondents strayed far and wide of the laws applicable to each of them. They did not follow procedure. As a result, the City applied to court to have their "un-procedural" decisions set aside.

That said, the City did not follow the procedure in relation to the relief it would ordinarily have been entitled to. The reasons for its delay related to which particular political party held power in the municipality and province during the intervening periods. The point is, had the City made its application within "a reasonable time" it would have been more likely to succeed in its endeavours.

"Procedure" cuts both ways. Both the decision-maker and the Parties in relation to whom the decision is made should follow the procedure applicable to the making of the decision, on the one hand, and the procedure applicable to appealing the decision, on the other hand.

Adam Pike
Author: Adam Pike
Adam Pike holds BA, LLB and LLM degrees from the University of Cape Town. His LLM, attained from the School of Advanced Legal Studies at the University of Cape Town, focused on commercial and corporate law, particularly corporate governance and securities. Adam specialises in the implementation of corporate actions and transactions.

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