A Bullock NO & 2 Others v Provincial Government of North West Province

The appellants were trustees of the Transvaal Yacht Club (TYC), which owned property on the northern side of Hartebeestpoort Dam. The TYC had continuously operated a yacht club since 1922 and had occupied the relevant foreshore (immediately south of the second respondent's adjacent property) since 1969 under a series of leases with the Provincial Government (first respondent). The final lease expired on 31 July 2001. The TYC had erected substantial improvements on the leased foreshore vital to its operations, including a crane with concrete foundation and embankments with retaining walls. In December 1999, the TYC entered negotiations with government representatives for lease renewal. However, unbeknown to the TYC, the Premier of the first respondent had already approved registration of an exclusive servitude over the relevant foreshore in favour of the second respondent on 29 July 1999. This decision was based on legal advice that the second respondent was entitled to the servitude due to a 1918 contract with one Schoeman, embodied in a notarial contract registered in 1922, and that Schoeman's rights had devolved upon the second respondent. On 12 October 2001, the first respondent informed the TYC it would not renew the lease. A power of attorney for registration of the servitude was executed on 18 April 2001, and a notarial deed of servitude on 12 July 2001.

• Whether the disposal by an organ of State of a right in property vested in it may constitute administrative action as contemplated in section 33 of the Constitution (read with item 23 of Schedule 6)
• Whether the TYC had standing to challenge the Premier's decision to grant the servitude
• Whether the TYC had a legitimate expectation to be heard before the first respondent decided not to renew its lease
• The proper interpretation of 'rights' in paragraph (d) of the transitional constitutional provisions regarding administrative justice
• Whether the Premier's decision was justifiable in relation to the reasons given for it

The appeal was allowed with costs, including costs of two counsel. The order of the court a quo was set aside. The decision of the first respondent to register the notarial deed of servitude over the relevant portion of the Farm Hartebeestpoort in favour of the second respondent was set aside. The first respondent was directed to pay the applicant's costs of the application, including costs of two counsel.

A decision by an organ of State to dispose of a right in property vested in it may constitute administrative action where: (1) it is not a policy decision taken in light of broad policy considerations; (2) it affects the public interest (such as public access to a valuable recreational resource); and (3) it involves exercise of public power rather than purely private contractual rights. For purposes of standing to challenge administrative action under paragraph (d) of the transitional constitutional provisions (item 23, Schedule 6), 'rights' should be interpreted broadly beyond rights strictly enforceable at law, to include sufficient interest in the subject matter of the decision. A party with 30 years of successive leases, substantial approved improvements on leased property, and advanced negotiations for lease renewal has a legitimate expectation under paragraph (b) of the transitional provisions to be heard before a decision not to renew the lease is made. Administrative action that is not justifiable in relation to the reasons given for it (because based on incorrect legal advice) may be set aside under paragraph (d) of the transitional constitutional provisions.

Cloete JA noted that it was unnecessary to seek to define comprehensively the concept of 'rights' as contemplated in paragraph (b) of the transitional provisions, observing that it is one thing to be accorded standing to have an unjustifiable administrative decision set aside, and another to be heard before an administrative decision is taken - the same policy considerations do not necessarily apply to both situations and the requirement of accountability is not common to both to the same extent. The court acknowledged that difficult boundaries may need to be drawn in deciding what should and should not be characterized as administrative action, and that these need to be drawn carefully on a case-by-case basis in light of constitutional provisions and the overall constitutional purpose of an efficient, equitable and ethical public administration. The court noted that academic authors have pointed out interpretive difficulties arising from differences in wording between paragraphs (a), (b), (c) and (d) of the transitional provisions - paragraphs (a) and (c) contemplate 'rights or interests', paragraph (b) contemplates 'rights or legitimate expectations', while paragraph (d) only mentions 'rights'.

This case is significant in South African administrative law for establishing that disposal by an organ of State of rights in property vested in it can constitute administrative action subject to constitutional scrutiny under section 33 of the Constitution. It expands the scope of administrative action beyond purely statutory decisions to include decisions by government as property owner where public interest is affected. The judgment provides important guidance on: (1) the distinction between policy decisions (not subject to judicial scrutiny) and administrative decisions affecting public resources; (2) the broad interpretation of 'rights' for purposes of standing in administrative law challenges; (3) the application of legitimate expectation doctrine in the context of government dealings with lessees; and (4) accountability requirements for organs of State when disposing of public resources. The case clarifies that government cannot escape administrative law obligations simply by acting in its capacity as property owner when the decision affects the public interest and involves exercise of public power over public resources.