South African National Roads Agency Limited v City of Cape Town

The South African National Roads Agency Limited (SANRAL) sought to declare portions of the N1 and N2 national roads in Cape Town as toll roads under section 27 of the South African National Roads Agency Limited and National Roads Act 7 of 1998. After an unsolicited bid in 1998 and environmental impact assessments, SANRAL informed the City of Cape Town of its intent to toll in March 2008. On 2 September 2008, the Transport Minister approved SANRAL's proposal, and SANRAL published a declaration of the roads as toll roads on 15 September 2008. The City opposed the tolling, arguing it would negatively affect disadvantaged communities and lead to traffic diversion. After failed engagements and an intergovernmental dispute process, the City launched a review application in March 2012 to set aside the environmental authorisations and the toll road declaration, citing non-compliance with statutory procedures. The delay in bringing the application was approximately three years from the Minister's approval. SANRAL had spent approximately R136 million on the project by that stage. The Western Cape High Court granted condonation for the delay and set aside the Minister's approval and SANRAL's declaration, finding that the SANRAL Board had not validly decided to seek the Minister's approval, and that the Minister had misconstrued his role under section 27 of the Act.

• Whether the delay of approximately three years in bringing the review application should be condoned under section 9 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA)
• Whether the SANRAL Board made a valid decision to seek the Transport Minister's approval for the toll road declaration
• Whether the Transport Minister's approval of SANRAL's proposal was administrative action subject to PAJA review
• Whether the Transport Minister misconstrued his powers and functions under section 27 of the Act
• Whether the round-robin resolution by SANRAL's Board in 2014 could cure the earlier defects
• Whether the City was entitled to an interdict preventing SANRAL from entering into a concession contract
• Whether costs should be awarded against one organ of state in favour of another

Appeal dismissed with costs, including costs of two counsel. Cross-appeal upheld in part with costs, including costs of two counsel. The order of the High Court was amended to declare the 2014 round-robin resolution and its subsequent ratification invalid and of no force and effect, and to review and set aside the 2014 declaration decision. The application for leave to appeal against refusal to admit further affidavits was dismissed with costs.

The binding legal principles established are: (1) Under sections 15 and 17 of the SANRAL Act, the Board must make decisions at properly constituted meetings with a quorum, and minutes must be kept. A decision of the magnitude of seeking ministerial approval to declare multi-billion rand toll roads requires documented evidence of proper board deliberation. Bare assertions of a decision, unsupported by any documentary or corroborative evidence, will be rejected where the nature and importance of the decision makes the absence of such evidence inexplicable. (2) A subsequent round-robin resolution or ratification cannot cure a fundamental failure to make an initial decision where it does not involve proper consideration of all relevant factors required by the governing statute, particularly where the board composition has changed. (3) The Transport Minister's function under section 27(1) read with section 27(4) of the SANRAL Act is not merely oversight or clerical, but requires the exercise of independent judgment considering conformity with government policy, financial viability, socio-economic impacts, and the public interest. The Minister must bring an independent mind to bear on whether to approve a toll road proposal. (4) Delay in bringing review proceedings may be condoned under section 9 of PAJA, or at common law in relation to legality challenges, where the interests of justice so require. Relevant factors include the nature and seriousness of the statutory non-compliance, the public interest in lawful administration, constitutional values of transparency and accountability, prejudice to the parties, and the costs already incurred. Egregious breaches of legality affecting fundamental rights and broad public interests may warrant condonation despite unreasonable delay and prejudice to the decision-maker. (5) All exercises of public power, whether or not constituting administrative action under PAJA, are subject to the principle of legality and constitutional control. Public functionaries may not act beyond powers conferred by law or misconstrue the nature and scope of their powers.

The Court made several non-binding observations: (1) While the High Court categorized the Transport Minister's decision as administrative action under PAJA, the Supreme Court of Appeal expressed doubt about this characterization, suggesting that developing and implementing national policy and coordinating state functions may fall within excluded executive powers. However, the Court did not definitively resolve this question, noting it was not strictly necessary given that the legality principle applies regardless. (2) The Court suggested that fair procedure under section 27(4) would require SANRAL to furnish its report to the Transport Minister to interested parties who had commented, allowing them opportunity to make further submissions. (3) The Court commented that socio-economic assessment and traffic impact assessment are integrally necessary components of any assessment for toll road proposals to inform proper assessment of financial viability and socio-economic impacts. (4) The Court noted that actions of SANRAL's Board when exercising powers under the Act likely do constitute administrative action under PAJA, given the Act's framework and purpose, though this too was not definitively decided. (5) The Court observed that the time involved in a fresh section 27(4) process, if efficiently undertaken, would not unduly delay construction and upgrading of roads if it were lawfully decided to proceed. (6) The Court noted with puzzlement the apparent failure of SANRAL and the Transport Minister to make common cause in the appeal, given their statutory relationship and the fact that the current Transport Minister did not oppose the appeal.

This case is significant in South African administrative and constitutional law for several reasons: (1) It clarifies that the principle of legality applies to all exercises of public power, regardless of whether the conduct constitutes administrative action under PAJA. (2) It reinforces the importance of proper corporate governance and compliance with statutory procedures by state entities, particularly where multi-billion rand projects affecting the public interest are concerned. (3) It emphasizes that ministerial approval functions under statutes requiring consideration of complex policy, financial and public interest factors cannot be reduced to clerical or oversight roles. (4) It demonstrates that condonation for delay in review proceedings may be granted where statutory non-compliance is egregious and constitutional values of transparency, accountability and legality are at stake, even where significant costs have been incurred. (5) It confirms that subsequent attempts to ratify or cure fundamentally flawed decision-making processes will not be effective. (6) It clarifies that organs of state in different spheres with different funding sources may be ordered to pay each other's costs. The judgment is a strong affirmation of the constitutional principles of accountable, transparent and lawful governance, and a reminder that even large infrastructure projects must comply with statutory procedures designed to protect the public interest and enable meaningful public participation.