Kasselman NO and Others v The South African National Road Agency SOC Ltd (SANRAL) and Others

The Trust (comprising the first to fourth appellants) sought permission from SANRAL to construct and operate a filling station and rest facilities on the N12 national road between Klerksdorp and Wolmaransstad. Negotiations commenced in 2016 under a 2016 policy that levied 0.5% on gross petroleum product sales and 1% on other products. After completing all requirements by the end of 2020, SANRAL sent a draft agreement in January 2021 with increased levies of 2.5% on petroleum products and 6% on other products, based on a new 2021 policy adopted by SANRAL's Board pursuant to its "Horizon 2030" strategy. The Trust obtained a feasibility study showing the project would not be commercially viable at the increased rates. Negotiations continued until 28 February 2022 when SANRAL rejected the Trust's settlement proposal. The Trust launched review proceedings on 2 June 2022. The high court dismissed the application, finding that SANRAL's decision involved commercial contractual negotiations rather than administrative action.

• Whether the decision to adopt the 2021 policy and apply increased levy percentages constitutes 'administrative action' as defined in PAJA
• Whether there was undue delay in instituting the review proceedings
• Whether the Trust was required to exhaust internal remedies under section 57 of the SANRAL Act before approaching the court
• Whether SANRAL's failure to publish the policy in the Gazette and conduct public participation constitutes grounds for review under PAJA
• Whether SANRAL's decisions were procedurally and substantively lawful under PAJA and the SANRAL Act

The appeal was upheld with costs, including costs of two counsel. The high court order was set aside and replaced with an order: (a) reviewing and setting aside the decision to increase levies from 0.5% and 1% to 2.5% and 6% respectively; (b) declaring the 2021 'Policy for Rest and Service Facilities on National Roads' unlawful and of no force and effect; (c) remitting the matter to SANRAL for reconsideration and compliance with the SANRAL Act; and (d) ordering SANRAL to pay the appellants' costs, including costs of two counsel.

The binding legal principles established are: (1) Decisions by SANRAL to adopt policies and levy fees under sections 34 and 35 of the SANRAL Act constitute administrative action as defined in PAJA, as they involve the exercise of public power with direct, external legal effect; (2) State-Owned Entities, though incorporated as companies, are organs of state that exercise public power and must comply with constitutional and administrative law requirements when performing statutory functions; (3) The discretion of SOE boards is not unfettered but must be exercised within the frameworks of the Constitution, PAJA, and enabling legislation; (4) An internal remedy under PAJA must be effective and readily available; where legislation fails to prescribe the manner, form, and time period for an appeal as required by the enabling Act, no effective internal remedy exists; (5) Administrative actions by organs of state must comply with mandatory procedural requirements including Gazette publication and public participation where required by enabling legislation; (6) The 180-day period for instituting review proceedings under section 7(1) of PAJA runs from when the affected party became aware of both the administrative action and the reasons for it.

The Court made several non-binding observations: (1) It discussed the concept of South Africa's 'Financial Constitution' and how SOEs create critical exceptions to constitutional architecture, emphasizing the need for enhanced accountability through good corporate governance by SOE boards; (2) The Court observed that the failure to recognize the public power and constitutional obligations of SOE boards 'opens the door to abuse and mismanagement, which in turn impacts on the obligations of the state and its obligations towards citizens,' referencing recent SOE failures; (3) The Court commented that 'whether an action constitutes administrative action can only be determined within the factual matrix of each case'; (4) The Court applied interpretive principles from Endumeni, emphasizing the unitary and objective exercise regarding text, context, and purpose, and the purposive approach from Cool Ideas; (5) The Court noted that while the Trust requested that the 2016 policy levies be applied, the appropriate remedy respecting separation of powers was to remit the matter to SANRAL rather than the court determining appropriate levies, as there were no exceptional circumstances justifying judicial determination.

This case is significant for clarifying the constitutional and administrative law obligations of State-Owned Entities (SOEs) in South Africa. It confirms that SOEs, despite being incorporated as companies, exercise public power when performing statutory functions and are therefore subject to PAJA and the principle of legality. The judgment emphasizes that boards of SOEs must act transparently, fairly, and in accordance with public law principles, particularly given the 'accountability deficit' created by their corporatization. The case reinforces the importance of procedural fairness, public participation, and compliance with enabling legislation when SOEs make policy decisions affecting the public. It also clarifies that internal remedies must be effective and readily available to satisfy the exhaustion requirement under PAJA, and that the absence of prescribed procedures renders such remedies ineffective.