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CONSTITUTIONAL COURT OF SOUTH AFRICA

Cases CCT 125/18 and CCT 128/18

Case CCT 125/18

In the matter between:

TRUSTEES OF THE SIMCHA TRUST                                                                            Applicant

and

JOAO JOSE RIBEIRO DA CRUZ                                                                          First Respondent

BODY CORPORATE OF THE FOUR SEASONS                                           Second Respondent

SECTIONAL TITLE SCHEME

CITY OF CAPE TOWN                                                                                          Third Respondent

Case CCT 128/18

In the matter between:

CITY OF CAPE TOWN                                                                                                       Applicant

and

JOAO JOSE RIBEIRO DA CRUZ                                                                          First Respondent

BODY CORPORATE OF THE FOUR SEASONS                                           Second Respondent

SECTIONAL TITLE SCHEME

TRUSTEES OF THE SIMCHA TRUST                                                               Third Respondent

 

Neutral citation: Trustees of the Simcha Trust v Da Cruz and Others; City of Cape Town v Da Cruz and Others [2018] ZACC 8

Coram: Mogoeng CJ, Basson AJ, Cameron J, Dlodlo AJ, Froneman J, Goliath AJ, Khampepe J, Mhlantla J, Petse AJ and Theron J

Judgment: Theron J (unanimous)

Decided on: 19 February 2019

Summary: National Building Regulations and Building Standards Act — disqualifying factors — legitimate expectations test

 

ORDER

 

On appeal from the High Court of South Africa, Western Cape Division, Cape Town:

Under CCT 125/18 (Trustees of the Simcha Trust v Da Cruz and Others):

1. Leave to appeal is granted.

2. The appeal is dismissed.

3. The applicant must pay the costs of the respondents in this Court, including where applicable the costs of two counsel.

Under CCT 128/18 (City of Cape Town v Da Cruz and Others):

1. The application for condonation is granted.

2. Leave to appeal is granted.

3. The appeal is dismissed.

4. The applicant must pay the costs of the respondents in this Court, including where applicable the costs of two counsel.

 

JUDGMENT

 

THERON J (Mogoeng CJ, Basson AJ, Cameron J, Dlodlo AJ, Froneman J, Goliath AJ, Mhlantla J, Khampepe J and Petse AJ concurring):

 

Introduction

[1] The applicants in both applications seek leave to appeal against the judgment of the Full Court of the High Court of South Africa, Western Cape Division, Cape Town (Full Court).  The two applications were consolidated pursuant to directions issued by the Chief Justice on 22 August 2018.  The directions invited the parties to file written submissions on the interpretation of section 7(1)(b)(ii)(aa)(aaa)-(bbb) (disqualifying factors) of the National Building Regulations and Building Standards Act[1] (Act) and in particular the test for the establishment of the disqualifying factors therein.

[2] While the appeal falls to be dismissed for lack of prospects of success, both applications raise a narrow point of law that demands attention.  The point of law concerns the proper interpretation of section 7(1)(b)(ii)(aa) of the Act.[2]  The precise issue concerns whether the legitimate expectations test applied in the context of the disqualifying factor relating to derogation in value also applies to the other disqualifying factors found in section 7(1)(b)(ii)(aa).

[3] The legitimate expectations test is the means by which a decision maker determines whether there will be a derogation in value sufficient to disqualify a building application under the Act.[3]  The decision maker must be positively satisfied that a hypothetical purchaser of a neighbouring property would not harbour legitimate expectations that the proposed development application would be denied because it was so unattractive or intrusive.[4]  In the applications before us, the applicants submit that the Full Court erred when it applied the legitimate expectations test to the other disqualifying factors in section 7(1)(b)(ii)(aa) of the Act.

 

Parties

CCT 125/18

[4] In the application under case number CCT 125/18 (first application), the applicants are the trustees of the Simcha Trust (Trust), the owner of erf 5284 on Buitenkant Street, Cape Town (property).  The first respondent is Mr Joao Jose Ribeiro Da Cruz, the owner of unit 807 in the Four Seasons sectional title scheme.  The second respondent is the body corporate of the Four Seasons sectional title scheme (Four Seasons), which is located adjacent to the property of the Trust, at 43 to 47 Buitenkant Street, Cape Town.  The third respondent is the City of Cape Town (Municipality), a municipality duly established in terms of section 12 of the Local Government: Municipal Structures Act.[5]

 

CCT 128/18

[5] In the application under case number CCT 128/18 (second application), the applicant is the Municipality.  The first respondent is Mr Da Cruz.  The second respondent is Four Seasons and the third respondent is the Trust.

 

Factual background

[6] The Municipality approved a development application by Four Seasons to build balconies up to the boundary it shared with the property.  From 2005 to 2007, Four Seasons erected a 17 storey building with balconies abutting the boundary of the property.  The zoning regulations for the area permit owners to build up to the boundaries of their respective properties.  The Municipality does not normally approve plans with habitable areas or balconies on the boundaries abutting neighbouring erven.  Uninhabited spaces, like fire escapes, ordinarily occupy these spaces.  Contrary to common practice, the Municipality approved the plans of Four Seasons which placed balconies on the boundary abutting the neighbouring property.

[7] The Trust submitted a development application in October 2007 under the Act.  They sought to build an additional four stories to the existing structure, which consisted of four stories at the time.  All stories were to be built up to the boundary of the property.  If implemented, the top three stories of the new building would touch the existing balconies on the eighth, ninth and tenth floors of Four Seasons’ building.  The Municipality approved the Trust’s application in September 2008, construction commenced immediately thereafter and construction recommenced in May 2012 after a four-year delay.

 

Litigation history

[8] In December 2012, Four Seasons instituted an application in the High Court in which it sought an order that the Trust suspend construction pending a review of the approval of the development.  Dolamo J granted the interdict and Four Seasons instituted review proceedings.  The Municipality conceded that the approval it had granted to the Trust should be set aside as it had been improperly granted.  The approval was set aside by agreement between the parties and the High Court made an order to this effect in August 2013.

[9] The Trust submitted new plans to the Municipality in June 2014.  The application process was more rigorous this time.  The Municipality required that the Trust publish their plans and invite comment on the impact on the heritage of the area.  The Municipality also invited the owners of surrounding erven, including Four Seasons, to comment.  The Municipality received a number of submissions from the owners of neighbouring properties who were opposed to the Trust’s application.

[10] The building control officer recommended that the plans be approved.  The head of the Municipality’s Building Development Management Section, Mr Henshall Howard, approved the plans on the same day.

[11] Mr Da Cruz and Four Seasons instituted a review in the High Court, under the Promotion of Administrative Justice Act[6] (PAJA), of the Municipality’s decision to approve the plans.  Binns-Ward J set aside the development approval on 13 January 2017 on two grounds.  First, that Mr Henshall Howard, in approving the plans, was materially influenced by an error of law in that he misunderstood the requirements of section 7(1) of the Act, particularly that it requires a determination which is separate from the application of the zoning scheme.[7]  Second, Mr Henshall Howard failed to take into account a relevant consideration: whether the proposed development gave rise to any of the disqualifying factors in section 7(1) of the Act when viewed from the perspective of the neighbouring Four Seasons’ building.[8]  Binns Ward J set aside the decision to approve the Trust’s development application and remitted the application to the Municipality for a fresh determination by a new decision maker.[9]

[12] The Trust and the Municipality appealed to the Full Court.  The Full Court held that the relevant decision makers committed a number of errors of law.  First, the building control officer and Mr Henshall-Howard applied the incorrect test when considering whether any of the disqualifying factors were present.[10]  Second, both the building control officer and Mr Henshall-Howard incorrectly assumed that an application could not be refused on the grounds of the disqualifying factors where the application complies with the zoning regulations.[11]  Third, both decision makers failed to take the impact of the building plans on the neighbouring properties into account.[12]

[13] Accordingly, the Full Court dismissed the appeal on 2 February 2018.  A petition for special leave to appeal to the Supreme Court of Appeal was unsuccessful.

[14] The Trust and the Municipality then filed separate applications for leave to appeal in this Court.

 

In this Court

[15] On 22 August 2018, the Chief Justice issued directions requiring the parties to make written submissions on what the proper test for establishing the disqualifying factors in section 7(1)(b)(ii)(aaa)-(bbb) of the Act ought to be.  The parties were directed to refer to Camps Bay and other authorities if necessary.

[16] The Municipality and the Trust each filed submissions which were substantively the same.  They submit that the disqualifying factors are disjunctive and should be considered separately.  They submit that the legitimate expectations test is suited to application in the context of derogation in value from a particular property, rather than disfigurement of an entire area.  They further submit that the question of whether a building disfigures an area involves a value judgement which only the building control officer can make.  Finally, they submit that it is unduly burdensome on the Municipality to expect it to consult with all neighbours.

[17] Mr Da Cruz and Four Seasons submit that the test is not worded so as to limit it to the disqualifying factor of derogation in value.  It is an expectations test, rather than a valuation test.  They submit that the test concerns the legitimate expectations of not only the neighbours, but also the area and the community in general.

 

Condonation

[18] The Municipality seeks condonation for the late filing of the second application.  The application for condonation is unopposed.  The application was filed a day late and no prejudice was occasioned by the delay.  Condonation is granted.

 

Jurisdiction and leave to appeal

[19] This Court will grant leave to appeal where the application raises a constitutional issue and where it is in the interests of justice to grant leave to appeal.^[13]  This Court has jurisdiction to consider the appeal because all PAJA reviews concern the right to just and fair administrative action under section 33 of the Constitution.[14]  They are constitutional matters.

[20] While prospects of success are important in determining whether leave to appeal should be granted, they are not determinative.^[15]  There are no prospects of success in this matter yet there is a narrow question of law which this Court should pronounce upon. It is therefore in the interests of justice to grant leave to appeal.

[21] The question of law to be addressed is whether the legitimate expectations test applied in the context of the disqualifying factor relating to derogation in value also applies to the other disqualifying factors found in section 7(1)(b)(ii)(aa).

 

Merits

[22] It was settled in Turnbull-Jackson[16] that the appropriate approach to section 7(1)(b)(ii) is to be found in Walele[17] rather than True Motives.[18]  In essence, Walele requires that the local authority must be positively satisfied that there are no disqualifying factors present, separate from the requirements under the Act.[19]  I agree with the Full Court that both the building control officer and Mr Henshall Howard applied the True Motives test rather than the Walele test.[20]  Mr Henshall-Howard wrote the following in respect of the disqualifying factors:

“I am not satisfied that the area will be disfigured by the additions to the existing building and nor am I satisfied that the building will be unsightly or objectionable.”

[23] The building control officer wrote:

“I can find no reason to be satisfied that the proposed building would disfigure the area.”

[24] The correct formulation of the reasons would have been “I am satisfied that the area will not be disfigured”.  The first ground of appeal has no prospects of success.  This disposes of both applications for leave to appeal, because the applicants must succeed on all grounds in order to have the order of the Full Court set aside.[21]  In the circumstances I make no finding in respect of the remaining grounds of appeal as it is not necessary to do so, save for the ground concerning the legitimate expectations test.

 

Question of law

[25] The question of law in this appeal concerns whether the legitimate expectations test applies to all of the disqualifying factors in section 7(1)(b)(ii)(aa).  The legitimate expectations test is the means by which a decision maker determines whether there will be derogation in value sufficient to disqualify a building application under the Act.[22]  In the applications before us, the applicants submit that the Full Court erred when it applied the legitimate expectations test to the other disqualifying factors in section 7(1)(b)(ii)(aa) of the Act.

[26] In terms of section 7(1)(b)(ii)(aa) of the Act, the local authority must be “satisfied” that none of the disqualifying factors are present.  Discretionary power is an essential tool in the administration and the legal system that governs it.[23]  The latitude of discretionary power varies with context.[24]  Section 7(1)(b)(ii)(aa) confers a broad discretion on the local authority to consider a range of factors.  However, this discretion is not untrammelled.  All administrative action must be lawful, reasonable and procedurally fair.[25]  In my view, the legitimate expectations test correctly circumscribes the discretion of the decision maker with the constitutionally mandated requirements of lawfulness, reasonableness and procedural fairness.

[27] The concept of legitimate expectation finds its origins in administrative law.  In Traub, the then Appellate Division cited with approval the following passage from a judgment of an English Court:[26]

“But even where a person claiming some benefit or privilege has no legal right to it, as a matter of private law, he may have a legitimate expectation of receiving the benefit or privilege, and, if so, the courts will protect his expectation by judicial review as a matter of public law.  Legitimate, or reasonable, expectation may arise either from an express promise given on behalf of a public authority or from the existence of a regular practice which the claimant can reasonably expect to continue.”[27]

[28] The Full Court correctly distinguished the creature of legitimate expectations known to administrative law from the phrase as it is used in Camps Bay.  The Full Court held:

“The reference to ‘legitimate expectations’ in Camps Bay Ratepayers is therefore to be understood as a reference to the hypothetical range of future possibilities which the parties to a notional sale would, as a legal construct, be considered to have had in the forefront of their minds, at the time, and is not to be confused with the concept of a ‘legitimate expectation’ as it has been established in law, in order to protect a party, by way of a procedural remedy, from the adverse consequences of a decision being taken by another without a prior opportunity to be heard.”[28]

[29] The language of legitimate expectations in the context of derogation from value does not refer to an independent right held on behalf of a neighbour to have their opinion heard by the decision maker.  The phrase refers to an objective factual inquiry into the legitimate expectations of a party to a hypothetical sale of a neighbouring property.  In the context of derogation in value, the decision maker must be positively satisfied that a hypothetical purchaser of a neighbouring property would not harbour legitimate expectations that the proposed development application would be denied because it was so unattractive or intrusive.[29]

[30] The purpose of the Act colours the way in which the constitutional requirements of reasonableness, lawfulness and procedural fairness apply to administrative action taken under the Act.  It was held in Odendaal[30] and quoted with approval by the minority in Walele that the purpose of the Act is to ensure the harmonious, safe and efficient development of urban areas.[31]  Local authorities must exercise powers conferred on them under the Act in pursuit of that purpose.[32]  They are the caretakers of the community interest in relation to building applications.[33]  This impels them to consider the impact of a building proposal on the surrounding area and particularly the neighbours.

[31] When applied to each of the disqualifying factors in section 7(1)(b)(ii)(aa), the legitimate expectations test is an accurate translation of the duties of local authorities under the Act and the Constitution.  It requires the decision maker to consider the impact of the proposed development on neighbouring properties, from the perspective of a hypothetical neighbour.  This infuses the exercise of the discretionary power under section 7(1)(b)(ii)(aa) with the constitutionally mandated requirements of reasonableness, lawfulness and procedural fairness, informed by the contextual approach mandated by the Act.  The test is consistent with the objects of the Act and the constitutional requirement of just administrative action.

[32] The Municipality expressed considerable concern in its submissions about the administrative burden which the legitimate expectations test would impose on it.  The test does not impose any additional duty on the Municipality to consult with the public above and beyond the existing requirements of the law.  The legitimate expectations test is not a subjective test determined by the whim of a sensitive neighbour.  The test is objective and based on relevant facts, which would, in the ordinary course, be placed at the disposal of the decision maker.

[33] The legitimate expectations test applies to the disqualifying factors in section 7(1)(b)(ii)(aa)(aaa)-(ccc).  In contrast to the disqualifying factor in subsection (ccc), the disqualifying factors in subsections (aaa)-(bbb) make no mention of neighbouring or adjoining properties.  Accordingly, we use the phrase “neighbouring property” flexibly and its scope will vary in light of all of the circumstances of the case.  The decision maker should consider whether the proposed building will probably, or in fact, be so disfiguring of the area, objectionable or unsightly that it would exceed the legitimate expectations of a hypothetical owner of a neighbouring property.

[34] The ordinary Walele requirements also apply, namely that the decision maker must be positively satisfied as to the existence of the disqualifying factors and that the disqualifying factors must be considered separately from compliance with the other requirements of the Act.[34]

 

Conclusion

[35] For these reasons, the legitimate expectations test is the appropriate means through which to establish the existence of the disqualifying factors in section 7(1)(b)(ii)(aa)(aaa)-(ccc) of the Act.

[36] The appeal is dismissed.  There is no reason why the ordinary rule that costs follow the result should not apply.

Order

[37] In the result, I make the following order:

Under CCT 125/18 (Trustees of the Simcha Trust v Da Cruz and Others):

1. Leave to appeal is granted.

2. The appeal is dismissed.

3. The applicant must pay the costs of the respondents in this Court, including where applicable the costs of two counsel.

Under CCT 128/18 (City of Cape Town v Da Cruz and Others):

1. The application for condonation is granted.

2. Leave to appeal is granted.

3. The appeal is dismissed.

4. The applicant must pay the costs of the respondents in this Court, including where applicable the costs of two counsel.

 

For the Applicant in CCT 125/18 and the Third Respondent in CCT 128/18: G Budlender SC and J de Waal SC instructed by BDP Attorneys

For the Third Respondent in CCT 125/18 and the Applicant in CCT 128/18: S P Rosenberg SC and E F van Huyssteen instructed by Webber Wentzel

For the First and Second Respondents in both CCT 125/18 and CCT 128/18: D W Baguley instructed by Slabbert Venter Yanoutsos Inc

 

[1] 103 of 1977.

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