Member of the Executive Council for Local Government, Environmental Affairs and Development Planning, Western Cape & another v Hans Ulrich Plotz NO & another

The McGregor Trust, operating the Ocean View Guesthouse in Bakoven, Cape Town, conducted various activities (including construction of weirs, lining stream banks, building boardwalks and decks) within and adjacent to the Kasteelspoort River stream channel on public open space erven owned by the City of Cape Town. These activities constituted listed activities under s 24(2) of the National Environmental Management Act 107 of 1998 (NEMA), which required prior environmental authorisation. The trust had not obtained such authorisation before commencing the activities, in contravention of s 24F(1). The trust applied for rectification under s 24G of NEMA. On 11 January 2013, the Director determined an administrative fine of R475,000 under s 24G(4) of NEMA. The trust was advised of its right to appeal to the MEC within 20 days under s 43(2) of NEMA and the EIA Regulations. The trust submitted its appeal 44 days out of time, on 2 May 2013, without seeking condonation and without complying with procedural requirements. On 8 July 2013, the MEC refused to consider the appeal due to non-compliance with the regulations. On 21 July 2014, the trust launched a review application under PAJA, seeking to set aside both the MEC's refusal and the Director's administrative fine decision. The Western Cape Division granted condonation and set aside the Director's decision, substituting a fine of R75,000. The MEC and Director appealed.

• Whether the trust was required to exhaust its internal remedy of appeal under s 43(2) of NEMA before instituting judicial review proceedings under PAJA
• Whether the court a quo was correct in granting exemption from the duty to exhaust internal remedies under s 7(2)(c) of PAJA
• What constitutes 'exceptional circumstances' within the meaning of s 7(2)(c) of PAJA
• Whether a failed attempt to pursue an internal appeal, submitted out of time and procedurally defective, constitutes exhaustion of internal remedies
• Whether the merits of a review application constitute a basis for exemption from the duty to exhaust internal remedies

The appeal succeeded with costs, including those of two counsel, to be paid by the first respondent (the trust). The order of the Western Cape Division was set aside and replaced with an order dismissing the review application with costs, including those of two counsel.

The binding legal principle established is that s 7(2)(a) of PAJA imposes an absolute duty on an aggrieved party to exhaust internal remedies before instituting judicial review proceedings, unless exempted under s 7(2)(c) on the basis of exceptional circumstances and the interest of justice. The mere lapsing of the time period for exercising an internal remedy, or the submission of a procedurally defective internal appeal out of time without seeking condonation, does not constitute exhaustion of the internal remedy and does not establish exceptional circumstances warranting exemption. An aggrieved party must take reasonable steps to exhaust available internal remedies with a view to obtaining administrative redress. The merits or prospects of success of a review application do not constitute grounds for exemption from the duty to exhaust internal remedies.

The court noted that the litigation was undertaken to assert a commercial interest of the trust rather than to vindicate constitutional rights, and therefore the general rule that unsuccessful litigants who seek in good faith to vindicate constitutional rights should not have costs awarded against them did not apply. The court also observed that for as long as the Director's decision was not set aside, it existed in fact and had legal consequences, and that non-compliance with time periods in regulations will not necessarily render an appeal a nullity if the non-compliance has been condoned.

This judgment is a leading authority on the strict duty to exhaust internal remedies under s 7(2) of PAJA before instituting judicial review proceedings. It clarifies that: (1) The duty to exhaust internal remedies is absolute except where exemption is granted under s 7(2)(c); (2) An applicant for exemption must satisfy the court both that there are exceptional circumstances and that exemption is in the interest of justice; (3) 'Exceptional circumstances' are circumstances out of the ordinary that require immediate judicial intervention rather than resort to internal remedies; (4) The mere lapsing of time for exercising an internal remedy, or submission of a defective appeal out of time without seeking condonation, does not constitute exhaustion and does not establish exceptional circumstances; (5) An aggrieved party must take reasonable steps to exhaust available internal remedies with a view to obtaining administrative redress; (6) Strong prospects of success on the merits of a review application do not constitute grounds for exemption from the duty to exhaust; (7) Where an effective internal remedy is available that could provide the same relief as review proceedings, exemption is not justified. The judgment reinforces the constitutional principle that administrative justice must first be sought through administrative channels before resorting to judicial review.