Eastern Metropolitan Substructure v Peter Klein Investments (Pty) Ltd

• Jurisdiction: South Africa
• Citation: 2001 (4) SA 661 (W)

Eastern Metropolitan Substructure v Peter Klein Investments (Pty) Ltd
2001 (4) SA 661 (W)

2001 (4) SA p661

Citation	2001 (4) SA 661 (W)
Case No	97/031729
Court	Witwatersrand Local Division
Judge	Boruchowitz J
Heard	November 15, 2000
Judgment	November 15, 2000
Counsel	A G Amiradakis for the excipient (plaintiff).; D Spitz for the respondent (defendant).

Flynote : Sleutelwoorde G

Administrative law — Administrative act — What constitutes — What conduct characterised as administrative action for H purposes of s 33, read with item 23(2)(b) of Schedule 6, of Constitution of the Republic of South Africa Act 108 of 1996 — Issuing of summons not constituting administrative action — Decision by local authority to issue summons for recovery of arrear payments for services rendered not I falling within ambit of administrative action as contemplated in s 33 of Constitution.

Administrative law — Administrative act — What constitutes — What conduct characterised as administrative action for purposes of s 33 of Constitution of the Republic of South Africa Act 108 of 1996 — Decision by local J

2001 (4) SA p662

authority to recover arrear payments for services rendered not falling A within ambit of administrative action as contemplated in s 33 of Constitution.

Administrative law — Administrative function — Principles of natural justice — Audi alteram partem rule — When applicable — Legitimate expectation — Legitimate expectation arising where regular practice adopted giving rise thereto, or where party B entertaining expectation of substantive or procedural benefit.

Administrative law — Administrative function — Principles of natural justice — Audi alteram partem rule — When applicable — Prejudice to existing rights — Right of recourse — Section 49(1) of Local Government Ordinance 17 of 1939 (T) providing that owner of building entitled, upon payment thereof, to recover sanitary charges C from occupiers of building — Right of recourse arising only upon payment by owner — Mere demand by local authority for payment from owner not affecting owner's right of recourse — Owner not entitled to fair hearing before demand for payment made by local authority. D

Constitutional law — Human rights — Right to administrative justice in terms of s 33 of Constitution of the Republic of South Africa Act 108 of 1996 — Right to fair hearing — Audi alteram partem rule — Rule applying neither in respect of decision of local authority to issue summons for recovery of arrear payments for services, nor in respect of underlying decision per se of local authority to recover such payments. E

Estoppel — By representation — To prevent fulfilment of statutory duty — Common law rule that estoppel not operating if effect thereof being to prevent party from performing duty imposed by statute — Common law rule capable of development in terms of s 39(2) of Constitution of the Republic of South Africa Act 108 of 1996, to promote spirit, purport and objects of Bill of Rights — Blanket application of common F law rule in certain circumstances running counter to fundamental rights provisions or values underpinning Constitution — Inconsistent with right to reasonable administrative action, enshrined in s 33 of Constitution, that organ of State permitted, through own careless or negligent misrepresentation, to deprive person of right and then to render itself immune from defence to such deprivation which estoppel G would allow aggrieved person — Common law rule not to be set aside, but to be developed incrementally to ensure that underlying values and objectives of Constitution achieved, and to emphasise equitable nature of estoppel as rule allocating incidence of loss.

Headnote : Kopnota

In terms of s 49(1) of the Local Government Ordinance 17 of 1939 H (T) (the ordinance) '(a)ll moneys due for sanitary services, . . . shall be recoverable from the owner and occupier jointly and severally of the premises in respect of which the services were rendered, provided that the owner shall . . . be entitled to recover from the occupier of the said premises for the time being any such charges paid by him in respect of the occupation of such occupier'. In terms of s 49(2) '(i)f any charges due in respect I of any premises for sanitary services . . . shall remain unpaid for a period of six weeks after the date on which written notice shall have been given by the council to the owner or occupier of his indebtedness, the council may proceed jointly and severally against the owner and occupier for the time being of such premises for the amount of such charges or any part thereto, and may recover the same from such J

2001 (4) SA p663

owner or occupier, provided that every such occupier shall be entitled to A deduct from any rent or other amount payable by him to the owner of the premises . . .'.

The plaintiff, a metropolitan substructure of the Greater Johannesburg Metropolitan Council (and its predecessor), submitted regular invoices to the defendant, the owner of a block of flats situated within the municipal area of the plaintiff, for sundry municipal charges due by the latter. However, as a result of an B oversight, the plaintiff had for many years omitted to include in its invoices a charge in respect of certain sanitary services rendered by it, styled 'sewer adjustments'. When the oversight came to light, the plaintiff sought to recover the arrear amount due in respect of 'sewer adjustments' in a lump sum. By that time, however, many of occupiers of the defendant's flats, from whom it would have been entitled, in terms of s 49(1) of the ordinance, to recover the relevant charges, C had moved away and were untraceable. In the result, it was extremely difficult for the defendant, if not impossible, to exercise its right to recover the relevant charges from those occupiers. After an exchange of correspondence between the parties, the plaintiff, acting in terms of s 49(2) of the ordinance, issued summons against the defendant for payment of the amount of the arrear 'sewer adjustments'. The defendant raised a number of pleas, to which the D plaintiff excepted as not disclosing a defence. Two issues, inter alia, emerged, namely (1) whether the defendant had been entitled, at common law or in terms of s 33, read with item 23(2)(b) of Schedule 6, of the Constitution of the Republic of South Africa Act 108 of 1996 (the Constitution), to a fair hearing by the plaintiff, either prior to or after the issue of summons (the audi alteram partem issue); and (2) whether the plaintiff E was estopped from seeking to recover the sum claimed by it (the estoppel issue).

The audi issue

Held, that the defendant's right of recourse against occupiers, in terms of s 49(1) of the ordinance, only came into being once it had paid the relevant charges. The proviso to s 49(1) F specifically stated that the owner would be entitled to recover from the occupier 'such charges paid by him in respect of the occupation of such occupier'. A mere demand for payment such as that contained in the summons in casu would not trigger the right of recourse. Thus, the prejudice contended for by the defendant, namely its inability to recover the relevant charges from former occupiers, would only arise upon payment being effected or upon the G entry of judgment obliging it to pay. It followed that the mere issuing of summons, without a prior hearing, did not prejudicially impact on any of the defendant's existing rights. (Paragraphs [8] and [9] at 672A/B - D.)

Held, further, that there was little scope for reliance on the concept of a 'legitimate expectation' in the present matter. A legitimate expectation might arise where a regular practice had been H adopted which gave rise to such expectation; also where there was an expectation of a substantive benefit or a benefit of a procedural kind. The decision to recover payment and to issue summons did not materially impact on any right of the defendant; nor did it impact on any expectation, privilege or benefit enjoyed by it. (Paragraph [10] at 672H - J.) I

Held, accordingly, that the plaintiff's actions did not give rise to any right at common law to procedural fairness obliging it to afford the defendant an opportunity to be heard. (Paragraph [10] at 673A - A/B.)

Held, further, as to whether the constitutional right to lawful and procedurally fair administrative action was applicable, that the issuing of a summons per se did not constitute administrative action as contemplated in s 33 of the J

2001 (4) SA p664

Constitution. It was settled that the launching of legal proceedings was not an A administrative act but a procedural one open to any member of the public. (Paragraphs [11] and [13] at 673A/B - B and G.)

Held, further, that the underlying decision of the plaintiff to recover the arrear charges was one taken in the exercise of the powers conferred by s 49(2) of the ordinance. That, however, was insufficient to render the plaintiff's conduct justiciable in terms of s 33 of the Constitution. The decision to sue did not impact B prejudicially on the defendant's right of recourse against the occupiers of its premises. Moreover, the decision lacked the requisite finality to attract administrative justice rights. The decision to recover payment was a preliminary or interlocutory step having no determinate effect on the parties' rights. (Paragraph [14] at 674C/D - E.)

Held, that there was a constitutional obligation upon the Courts to foster a public administration which was efficient, effective C and accountable to the broader public. To expect the plaintiff to afford its debtors a hearing prior to employment of ordinary civil process to enforce payment was unreasonable and would create inefficiency, a consequence which ran counter to the aforesaid constitutional objectives...