Sterea Digital CC and Another v The City of Cape Town and Others

Sterea Digital CC (Sterea) owned a 1,514m² property at 1 Basson Street, Durbanville, located in a secluded residential neighbourhood. The property was zoned Single Residential 1 (SR1) and Sterea applied to the City of Cape Town to rezone it to Local Business 1 (LB1) to convert the residential dwelling into offices for Sandenbergh Nel Haggard (SNH), a mid-sized attorneys' firm employing approximately 22 staff members. Previously, the property had been granted temporary consent use for two years to operate as a private school for children with learning disabilities, which ended when Sterea purchased the property in May 2019. On 10 March 2020, the Municipal Planning Tribunal (MPT) refused the rezoning application, finding inter alia that the application did not justify deviation from the Northern District Plan (NDP), which sought to retain the residential character of the Basson Street neighbourhood and prevent "business creep". Sterea appealed to the Appeal Authority (AA), who was the City's former executive mayor, who dismissed the appeal on 12 October 2020. Sterea then sought judicial review, which was initially granted by the High Court (Goliath DJP) on 6 April 2022. The City appealed to the Full Court, which upheld the City's appeal on 21 November 2023. Sterea then appealed to the Supreme Court of Appeal.

• Whether the Municipal Planning Tribunal's decision to refuse the rezoning application was lawful and reasonable under the City of Cape Town Municipal Planning By-Law, 2015
• Whether the Appeal Authority was biased or reasonably suspected of bias in dismissing the appeal under section 6(2)(a)(iii) of PAJA
• Whether the Appeal Authority failed to consider relevant considerations (specifically the property's prior use as a school) under section 6(2)(e)(iii) of PAJA
• Whether deviation from the Northern District Plan (NDP) was justified in the circumstances
• Whether the decision-makers were entitled to refuse the application based on failure to justify deviation from the district spatial development framework
• Whether costs should be awarded against an unsuccessful litigant in constitutional/administrative law litigation

The appeal was upheld in part. The full court's order was set aside and replaced with an order that: (1) the appeal to the full court is upheld; (2) the high court's order (granting the review) is set aside and replaced with "The application is dismissed." No costs order was made against Sterea at any level of the litigation.

The binding legal principles established are: (1) In reviewing municipal planning decisions, courts must assess the regularity (lawfulness and reasonableness) of the administrative action, not substitute their own views on the merits of the application. (2) Under section 16 of the City of Cape Town Municipal Planning By-Law, 2015, decision-makers must be guided by district spatial development frameworks (such as the NDP) and may deviate from their provisions only if circumstances justify the deviation. The onus is on the applicant to justify any deviation. (3) Refusal of a rezoning application on the basis that the applicant has failed to justify a deviation from a spatial development framework constitutes compliance with statutory duty, not objectionable bias. (4) "Departmental bias" - where officials uphold departmental policies - is not objectionable bias under section 6(2)(a)(iii) of PAJA, provided the decision-maker brings an open mind to the particular case and does not treat policy as a binding rule. Government functionaries are entitled to refuse applications that conflict with pre-determined policy. (5) Disagreement with the weight afforded by a decision-maker to a particular consideration does not establish that the decision-maker failed to consider relevant considerations under section 6(2)(e)(iii) of PAJA. (6) The Biowatch costs principle applies to administrative law challenges in the municipal planning context - unsuccessful litigants should not ordinarily pay costs unless the application is frivolous, vexatious, manifestly inappropriate, or involves conduct deserving censure.

The Court made several non-binding observations: (1) It noted the inconsistency in Sterea's arguments regarding whether the school consent use was or was not considered - on one hand pleading it was not given sufficient weight, while on the other arguing that consideration of community backlash to the school evidenced bias. (2) The Court observed that rezoning to business use would fundamentally differ from the school consent use because: the school permission was temporary to assess impact; educational use was consistent with SR1 zoning; rezoning would be permanent with different rights and greater impact. (3) The Court noted that "business creep" refers to the incremental conversion of residential properties to businesses, gradually undermining an area's residential character. (4) The Court observed that employing 22 staff members (six attorneys, four paralegals, 12 support staff) constitutes "large scale" use that is not conducive to a purely residential area. (5) While finding the bias allegations did not deserve censure in this case, the Court's citation of Turnbull-Jackson suggests that "wanton, gratuitous allegations of bias" against public officials could warrant departure from the Biowatch costs principle.

This case is significant for several reasons: (1) It clarifies the limited scope of judicial review in municipal land use planning decisions, emphasizing that courts must review the regularity of administrative decisions rather than substitute their own views on the merits. (2) It confirms that municipalities have exclusive competence over zoning and subdivision decisions and that their discretion must be respected by courts. (3) It provides guidance on when "departmental bias" or policy-based decision-making is permissible and does not constitute reviewable bias under PAJA - government functionaries are entitled to apply pre-determined policies and refuse applications that conflict with such policies, provided they bring an open mind to the particular case. (4) It clarifies the operation of section 16 of the City of Cape Town Municipal Planning By-Law regarding district spatial development frameworks, confirming that decision-makers must be guided by such frameworks and may deviate only if circumstances justify deviation, with the onus on the applicant to justify deviation. (5) It applies the Biowatch costs principle to administrative law challenges to municipal planning decisions, protecting litigants from adverse costs orders in constitutional/administrative litigation absent frivolousness, vexatiousness, or conduct deserving censure. (6) It demonstrates the application of the SARFU II test for bias (as adapted in Turnbull-Jackson) to administrative decision-making in the municipal planning context.