The Municipal Manager: The City of Johannesburg Metropolitan Municipality and Others v San Ridge Heights Rental Property (Pty) Ltd

San Ridge Heights Rental Property (Pty) Ltd (respondent) owns Erf 827 Erand Gardens in Gauteng, consisting of 42 buildings with 470 separate flats on a single erf. The City of Johannesburg Metropolitan Municipality (second appellant) and/or Johannesburg Water (third appellant) classified the property as a 'multi dwelling' for sewerage and sanitation tariff purposes, attracting a charge of R416.47 per month per unit. The respondent contended it should be classified as 'blocks of flats' attracting a lower tariff of R250.00 per month per unit. The previous owner, Zotec, lodged an internal appeal in terms of s 62 of the Municipal Systems Act, which was ignored. After numerous letters and attempts to obtain reasons for the classification decision, the appellants provided no response. The respondent instituted review proceedings under PAJA in May 2020. The appellants filed a rule 53 record that did not relate to the decision or reasons for classifying the property as a 'multi dwelling'.

• Whether the appellants' failure to provide reasons for their administrative decision to classify the property as a 'multi dwelling' constituted a violation of PAJA
• Whether the high court correctly substituted its own decision for that of the administrator rather than remitting the matter for reconsideration
• What constitutes 'exceptional circumstances' justifying substitution under s 8(1)(c)(ii)(aa) of PAJA
• Whether the internal remedies under the Municipal Systems Act were properly exhausted before instituting review proceedings

1. The appeal is upheld to the limited extent indicated. 2. Paragraph 2 of the high court order is set aside and replaced with: 'The matter is remitted to the second and/or third respondents to reconsider their classification of Erf 827 Erand Gardens, Ext 36 Township, held by Certificate of Consolidated Title T1100883/2016, in terms of the second respondent's tariff policy under s 74(1) of Act 32 of 2000.' 3. Each party is to pay its own costs in the appeal.

1. Administrators must provide written reasons for administrative decisions that materially and adversely affect the rights of persons, as required by s 33(2) of the Constitution and s 5 of PAJA. 2. The failure to provide reasons for an administrative decision can lead to the presumption under s 5(3) of PAJA that the action was taken without good reason, in the absence of proof to the contrary. 3. A tariff policy that merely defines categories of property does not constitute adequate reasons for classifying a specific property into a particular category - the administrator must explain what factors were actually considered in making the classification decision. 4. Substitution of an administrative decision by a court under s 8(1)(c)(ii)(aa) of PAJA is an extraordinary remedy requiring exceptional circumstances; remittal is almost always the proper course. 5. A court cannot substitute its decision for that of an administrator when the court does not have sufficient factual information (such as rates valuations) to make the determination.

The Court noted that there may be instances where what is contained in a document may be sufficient to formulate an objection, referring to Commissioner for SARS v Sprigg Investment 117 CC. However, this was not such a case. The Court also observed that other relevant factors for determining whether substitution is appropriate include delay, bias or incompetence on the part of the administrator, though these factors were not determinative in this case. The Court further noted that it was not necessary to deal with the other grounds of review relied upon by the respondent under ss 6(2)(c), 6(2)(e)(iii), 6(2)(e)(vi) and 6(2)(i) of PAJA, as the failure to provide reasons was dispositive of the matter.

This case reinforces the fundamental constitutional and statutory obligation of administrators to provide reasons for administrative decisions that materially and adversely affect rights. It clarifies that failure to provide reasons under s 5 of PAJA can be fatal to the validity of administrative action, and that s 5(3) creates a rebuttable presumption that action taken without reasons was taken without good reason. The judgment also provides important guidance on the limited circumstances in which courts may substitute their own decisions for those of administrators under PAJA, emphasizing that remittal is almost always the proper course and that substitution is an extraordinary remedy requiring exceptional circumstances. The case demonstrates the importance of administrative responsiveness and the consequences of ignoring legitimate requests for reasons.