By Michael Dafel and Duncan Wild 

This matter pertains to the validity of a decision by the Western Cape provincial government to refuse a proposed development.  Lying at the heart of the matter is the constitutional inter-relationship between the provincial and municipal spheres of government and their powers to rezone and subdivide land.  The potential importance of the Constitutional Court’s decision in this matter lies in the fact that in the relationship between provincial and municipal power in deciding aspects of the same land development.

The Constitutional Court, in an unanimous decision authored by Acting-Justice Mhltantla, did not decide the issue of which level of government the Constitution gave the power to rezone or subdivide land, but did hold that under the applicable legislation the municipality was the competent authority to make the decision on subdivision, and the Provincial Minister the competent authority to decide on the rezoning application.

In terms of section 156(1)(a) of the Constitution, read with Part B of Schedule 4, a municipality has executive authority to administer ‘municipal planning’, and, in terms of section 104(1)(b), read with schedules 4 and 5, a provincial government has the power to pass legislation relating to ‘regional planning and development’ as well as ‘provincial planning’.  In this case, the parties agree that the municipality has the power to rezone/subdivide land.  The dispute is over whether the subdivision and rezoning of land also falls within the competencies of the provincial government in certain circumstances.  If it does, a further question arises over which sphere of government should have the final say.

Lagoonbay Lifestyle Estate (Pty) Ltd, the first respondent in this matter, envisages a large up-scale development on 655 hectares of farmland (land) located in the Municipality of George, the second respondent.  This R5 billion investment includes residential houses, golf courses, lodges, and commercial areas.  In order to proceed with the development, Lagoonbay had to obtain certain governmental authorizations. Two of these authorizations are of concern in this matter, namely:

• Step 1 – The Structure Plan Step: Lagoonbay had to secure an amendment to the George and Environs Urban Structure Plan in terms of section 4(7) of the Land Use and Planning Ordinance (LUPO), which would alter the permitted use of the land from ‘Agriculture/Forestry’ to ‘Township Development’.
• Step 2 – The Rezoning and Subdivision Step: Lagoonbay had to secure the rezoning and subdivision of the land in terms of sections 16(1) and 25(1) of LUPO.

In July 2007, the then Minister for Local Government, Environmental Affairs and Development Planning of the Western Cape, believing she was the competent authority to approve the structure plan step, approved the required amendment to the George and Environs Urban Structure Plan to allow the land to be used for ‘township development’.  However, the approval for the amendment was subjected to certain conditions, which included:

• The future zoning application of the land (step 2 – Rezoning and Subdivision Step) must be approved by the Western Cape Provincial Government because the proposed development constitutes ‘regional and provincial planning’.

Three years later, in June 2010, the Council of the George Municipality adopted a resolution allowing for the rezoning and subdivision of the land (step 2) which allowed for the development to commence.  However, the resolution was subject to certain conditions which included, in accordance with the Minister’s decision taken in July 2007, that the Municipality’s resolution to allow for the rezoning and subdivision of the land is subject to the final approval of the Provincial Department of Environmental Affairs and Development Planning.

In April 2011, the new Provincial Minister, the applicant in this matter, decided to refuse the application to rezone and subdivide the land.  Effectively, Lagoonbay was unable to proceed with any development.

In response to the Minister’s decision, Lagoonbay applied to the Western Cape High Court to overturn the Minister’s decision on the ground that only the Municipality, and not the Minister, had the constitutional power to rezone and subdivide (step 2) the land.  The application was unsuccessful in the High Court.  The application did however prove partially successful on appeal to the SCA.  A unanimous SCA held that the rezoning and subdivision of the land fell within the exclusive competence of the Municipality; and the impugned condition of the Minister (that her office should approve the rezoning and subdivision of the land) was an usurpation of her power and was therefore incapable of fulfillment.  In arriving at this conclusion, the SCA placed reliance on the differences between structure planning (step 1) at a provincial level and zoning schemes (step 2) at a municipal level.  In terms of LUPO, the general purpose of structure plans are to allow for the future spatial development as well to promote effectively the order and general welfare of the area.  The general purpose of the zoning schemes is to determine and control the usage of the land in the area of a local authority.  The SCA therefore confirmed the decision of the Municipality to rezone and subdivide the land.  However, the SCA held that since the power of the Minister to amend the George and Environs Urban Structure Plan (step 1) was deferred, the matter was referred back to the Minister to make a final decision on the Structure Plan.

The Provincial Minister has appealed to the Constitutional Court seeking an order that Lagoonbay’s application to review her decision to reject the rezoning/subdivision application (step 2) is dismissed.  The Minister forwards three arguments to support her claim:

• First, Lagoonbay cannot legally attack one condition of an administrative decision, which in this case is the condition that was attached the amendment of the Structure Plan, and not seek an order that sets aside the entire decision.  The Minister relies on earlier decisions which hold that administrative actions cannot be subdivided because it would allow applicants to choose to benefit from the advantageous conditions of a condition and not be burdened with the obligations.
• Second, sections 16(1) and 25(1) of LUPO expressly provide the Minister the power to decide on applications for rezoning and subdivision.  If these empowering statutory provisions are not constitutionally challenged, which they are not in this case, an unsatisfied applicant is precluded from challenging the decisions made in accordance with these provisions on the ground that the Minister had no authority.
• Last, despite the proposed development falling within the municipality of George, the development nonetheless directly impacts on many aspects of provisional and regional planning (including agricultural planning, property values, development along coastal strips, usage of significant water resources, visual degradation, as well as the fact that the large-scale development is not in accordance with the provinces other planning policies).  Accordingly, the Minister is entitled to consider the proposed development and reject it (as she did) if it does not accord with provincial interests.

Lagoonbay argue that the Minister’s refusal to subdivide and rezone the land was invalid and that the decision of the to do so stands.  In arriving at this conclusion, Lagoonbay dispute each of the Minister’s contentions:

• First, Lagoonbay was not required to challenge the so-called condition to the approval of the application to amend the Structure Plan as it is not in fact a condition but rather a directive by the then-Minister relating to the envisaged future rezoning and subdivision of the approval process by the Municipality.  Furthermore, the so-called condition did not in any way suspend the approval of the amendment to the Structure Plan and did not result in the deferral of the final decision by the Minister.
• Second, a proper reading of LUPO reveals that a minister may only decide on the rezoning and subdivision of land if they have been granted the power in terms of a specific Structure Plan, which in this case had not happened.
• Last, ‘municipal planning’ (which includes the power to zone and subdivide municipal power) is an exclusive function of municipalities, and that any provincial or national powers that infringe on the Municipality’s power are unconstitutional.  In effect, the Minister has no power to decide on the rezoning and subdivision of land in George.

The Cape Windlass Environmental Action Group, the third respondent, supports the Minister.  However, if the Court finds against the Minister and her decision not to rezone/subdivide the land is set aside, they argue that they should be afforded an opportunity to appeal the decision of the George Municipality to rezone and subdivide the land.

The Constitutional Court, in an unanimous decision authored by Acting-Justice Mhltantla, in which Deputy Chief Justice Moseneke and Justices Cameron, Froneman, Jafta, Madlanga, Nkabinde, Skweyiya, Van der Westhuizen and Zondo concurred), found that under LUPO the Municipality was the competent authority to make the decision on the subdivision application, however, was not the competent authority to decide the rezoning application on the basis of an interpretation of the terms of LUPO and its regulations.

The Constitutional Court also found that the Provincial Minister had a broad discretion to grant or refuse the applications, and so the decision could not be challenged under PAJA. The Constitutional Court therefore ordered that the subdivision be remitted to the Municipality for reconsideration, but dismissed the challenge against the Provincial Minister’s rezoning decision.

On the issue of whether the Constitution conferred the power to decide rezoning and subdivision on either the provincial or municipal authorities, the Constitutional Court held that these issued had not been properly plead and so it did not decide the issue.

Download the judgment here.