Minister of Defence and Chief of the South African National Defence Force v Bongani Postolie Xulu

The respondent, Mr Xulu, joined the South African National Defence Force (SANDF) on 29 July 1996 on a fixed term contract of two years. His contract was extended three times (1998, 2000, and 2005), with the final extension until 31 July 2011. In November 2010, the SANDF informed him it would not renew his contract when it expired on 30 June 2011, citing two historical disciplinary offences: a 1997 "mutiny" (a minor work stoppage resulting in a R75 deduction) and a 2001 incident where he was unfit for duty (resulting in a reprimand). These offences had not prevented previous renewals. Mr Xulu's commanding officer strongly recommended renewal, noting his excellent performance and recent completion of a leadership course. Despite representations by Mr Xulu and his attorney, the decision was confirmed in April 2011. The Review Board that made the decision was chaired by Major General Nkabinde (later Lieutenant General), who had initiated the review process through his subordinates and who stated he would not have renewed the contract in 2006 had he been involved. The SANDF failed to follow its own Policy document which required commanding officers to initiate non-renewal applications and prescribed specific procedural steps.

• Whether the decision not to renew a fixed term contract of a member of the SANDF constituted administrative action in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA)
• Whether the principle of legality could be applied to avoid determining whether the conduct constituted administrative action under PAJA
• Whether the SANDF's failure to follow its own Policy in deciding not to renew the contract rendered the decision reviewable
• What relief was appropriate where an unlawful decision not to renew a contract had been made

Special leave to appeal was granted. Paragraph 1 of the full court's order was amended to read: "The appeal is upheld with costs, and paragraphs 2 and 5 of the high court's order are set aside." The appeal was otherwise dismissed with costs. The SANDF was ordered to compensate Mr Xulu for further losses incurred as a result of the non-renewal of his contract in 2011, with the amount to be agreed within 30 days or determined by an arbiter chosen by the parties or appointed by the Chair of the Pretoria Bar.

The decision not to renew a fixed term contract of a member of the SANDF constitutes administrative action under PAJA because: (1) it is a decision of an administrative nature involving bureaucratic application of policy; (2) it is made by an organ of state; (3) it involves the exercise of a public power sourced in the Defence Act 42 of 2002 and related policy, not contractual power; (4) it adversely affects the member's rights; (5) it has direct external legal effect; and (6) it does not fall within the employment-related exceptions identified in Chirwa and Gcaba because members of the SANDF do not have ordinary employment contracts and are excluded from the Labour Relations Act. Courts must first determine whether conduct constitutes administrative action under PAJA before resorting to review under the principle of legality; the principle of subsidiarity requires prioritizing the specific provisions of PAJA where applicable. An administrative decision that fails to follow prescribed procedures and is based on irrelevant considerations while ignoring relevant ones is both procedurally unfair and substantively unreasonable under sections 6(2)(c) and 6(2)(f) of PAJA.

Wallis JA criticized the full court's approach of avoiding the question whether the decision constituted administrative action and proceeding directly to apply the principle of legality, stating this approach should be discouraged. The Court noted that the scope of rationality review under the principle of legality has broadened somewhat to include both the decision itself and the decision-making process, but cautioned that this does not justify ignoring PAJA. The judgment distinguished Albutt v Centre for the Study of Violence, noting it involved special circumstances regarding the presidential pardon power and provided no warrant for avoiding PAJA analysis in ordinary cases. The Court acknowledged there may be a species of judicial review based on unconscionable state conduct falling under neither PAJA nor the principle of legality, but noted the scope of such review is unclear and applies only in exceptional cases. The judgment emphasized the need for coherent development of administrative law through proper application of the hierarchy: first PAJA, then (if PAJA does not apply) the principle of legality, and only then other possible grounds of review.

This judgment provides crucial guidance on the application of PAJA to decisions affecting members of the SANDF, clarifying that decisions regarding non-renewal of fixed term contracts constitute administrative action subject to judicial review under PAJA. The case reinforces the principle of subsidiarity in administrative law, requiring courts to first determine whether conduct constitutes administrative action before resorting to legality review under the Constitution. It emphasizes that the principle of legality is a "safety net" for exercises of public power that do not constitute administrative action, and should not be used to circumvent PAJA's specific requirements and limitations. The judgment is significant for military law, confirming that members of the SANDF, though excluded from the Labour Relations Act, are entitled to procedural fairness and substantive reasonableness in decisions affecting their service. It demonstrates that administrative bodies must follow their own policies and procedures when making decisions that affect individuals' rights.