The Supreme Court of Appeal ruled that South African National Roads Agency (SANRAL) unlawfully hiked levies on service and rest area developers and ordered the entity to go back to the drawing board.

The ruling overturned a Gauteng High Court ruling that the increased levy was a commercial negotiation rather than administrative action.

The court action followed a dispute between the Kasselman Trust and SANRAL over the operation of a filling station. The Trust turned to court after it lost its high court bid against the road agency.

It wanted to construct and operate a filling station and rest facilities on the road between Klerksdorp and Wolmaransstad. Because SANRAL is the registered servitude holder of the road reserve next to that piece of road, the appellants negotiated with SANRAL during 2016.

At the time and in terms of a SANRAL policy that applied in 2016, a fee structure was in place, according to which SANRAL could levy 0.5% on the gross sale of petroleum products and 1% on the gross sale of all other products on the property.

SANRAL sent a draft agreement to be signed to the Trust which included increased levy percentages of 2.5% on petroleum products and 6% on all other products. These levy percentages, SANRAL said, were in accordance with a new fee structure adopted by its Board and set out in the new policy guidelines.

The new 2021 policy was the result of the so-called Horizon 2030 strategy, which envisaged, among other things, maximising the return of SANRAL’s assets to generate alternative funding sources.

The court was told that the revised levy percentages would not only mean that the filling station planned by the appellants would not be commercially viable anymore, but such an increase would also have a far-reaching effect on the whole fuel retailing sector.

The appellants were not aware of the new policy, nor was it published in the Government Gazette for public input. It was eventually established that the advertisement for the increased levy percentages was published only in an Afrikaans Sunday newspaper, and the 2021 policy document was then uploaded on SANRAL’s website.

The appellants subsequently brought an application to review and set aside the decision of SANRAL to adopt and retrospectively apply its new roads policy with increased levy percentages.

The main question before the SCA was whether the decision by SANRAL to adopt the new policy and retrospectively apply the increased levy percentages was reviewable under the Promotion of Administrative Justice Act (PAJA) or the principle of legality. It also had to consider whether SANRAL exercised a public power, and in particular, whether the decisions constituted administrative action as defined in PAJA.

The court noted that SANRAL is a State-Owned Entity (SOE) with the State as its sole shareholder. It emphasised that a failure to recognise the public power and constitutional obligations of boards of SOEs opens the door to abuse and mismanagement, which in turn impacts on the obligations of the state and its obligations towards citizens.

Because SANRAL performs public functions that are in the public interest, the SCA held that it is therefore an organ of state as defined in the Constitution. The SCA held that SOEs, like Transnet and SANRAL, may be companies in form, but are subject to public law when exercising public powers. Its decisions will generally be subject to review under PAJA or the principle of legality.

The SCA found that the appropriate remedy was to remit the matter to the original decision maker for reconsideration. There were also no exceptional circumstances in the case that allowed it to determine the appropriate levies to be charged, the court said.

zelda.venter@inl.co.za

Source link