Brittania Beach Estate (Pty) Ltd and others v Saldanha Bay Municipality

Case No. Lower Court Judgments Hearing Date Judgment Date Majority Author  Vote
CCT 11/13 Western Cape High Court, 6 Jun. 2011
SCA, 30 Nov. 2012
28 May 2013
5 Sep. 2013 Froneman J.  Unanimous

By Duncan Wild on 12 September 2012

The case involves a challenge brought by a property developer (“Brittania“) against a tariff used to determine bulk infrastructure development levies by the Saldanha Bay Municipality (“the Municipality“).  Section 42 of the Land Use Planning Ordinance 15 of 1985 (“LUPO”) allows a municipality to impose conditions on the grant of applications for rezoning and sub-division of land (the applications are made in terms of sections 16 and 25 of LUPO).  The tariff for the calculation of capital contributions is set by council resolution.

In 1997 the tariff was determined by council resolution R55/9-97 (“R55“). In June 2007 the tariff was changed but this new tariff was later revoked. During the period after the new tariff came into force and prior its revocation tariff the Municipality had imposed conditions on rezoning approvals granted to Brittania that included the payment of capital contributions calculated under the new tariff.  

Brittania lodged six applications for rezoning and sub-division, three of which were decided before 1 July 2007. Conditions were imposed by the council that required capital contributions. Brittania did not object to the conditions and made payments as calculated under R55.

The other three applications were pending, when on 26 June 2007 the council adopted a new resolution R35/6-07 (“R35”) that provided a new tariff was to come into effect from 1 July 2007. In order to clarify that R35 would apply only to developments approved as from 1 July 2007 a further resolution, R43/12-07 (“R43”) was passed. Brittania objected to R43, council later withdrew R43 and a new resolution creating an interim policy on capital contributions was passed. Before the revocation of R43 Brittania’s further three applications were approved and conditions imposed that referred to R35.

The High Court found that due to the revocation of R43, there was an implied revocation of R35 and therefore R35 was of no force or effect. In addition, the High Court found that the municipality had a general duty of care to Brittania and therefore a duty to account to Brittania for the amounts it believed to be overpaid in accordance with R35.

The issue before the Supreme Court of Appeal was whether the High Court was correct in finding R35 had been revoked, and so whether the municipality was entitled to enforce capital contributions calculated in terms of R35. The SCA found that the capital contributions were conditions of each approval validly imposed in terms of section 42 of LUPO, and this was not disputed by Brittania. The tariff upon which the capital contributions were calculated was set out in the approval itself, although referring to R35 and R55 in the applicable cases, is independent of the council resolutions and therefore valid. As the conditions had been validly imposed, and could not be unilaterally amended by either party, the capital contributions could be enforced by the municipality.

The SCA then went on to state that the municipality’s obligations are set out in the Constitution and applicable statutes, and that the fiduciary duty to account is not found in this legal framework. Although the municipality must function in an open and transparent manner, the private law concept of fiduciary duties should not be imposed upon it.

The issue that remained to be determined in the Constitutional Court was whether this fiduciary duty to account existed in law. In unanimous judgment authored by Justice Froneman (Bosielo AJ, Jafta J, Khampepe J, Mhlantla AJ, Nkabinde J, Skweyiya J and Zondo J concurring), the Constitutional Court found that no such duty existed in law in these circumstances. As such, the appeal did not have reasonable prospects of success, and so the Constitutional Court refused to grant leave to appeal.

The Constitutional Court argued that the duty to account is one that exists in private law concept with regard to certain legal relationships such as partnerships or trusts, where a person in a position of trust has a legal obligation to account for money entrusted to them for the benefit of others. There is a Constitutional obligation of public accountability and transparency, but with regard municipalities there is a statutory regime that requires municipalities to publicly account for their finances. There is also the right to access to information, and rights of access to information in the litigation process.

The Constitutional Court found that the Brittania should have pursued the remedies available in existing law, and there was no basis for transposing the private law concept into this area.

Download the judgment here.

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