Hangklip/ Kleinmond Federation of Ratepayers Associations v Minister for Environmental Planning and Economic Development: Western Cape and Others (4009/2008) [2009] ZAWCHC 151

This matter is of interest to Developers in so far as it confirms that the “social and environmental impacts” which are to be considered by the relevant authorities in terms of the Environment Conservation Act (73 of 1998) when approving a development, are limited to those that will arise from the activities sought to be authorized itself and not from extraneous factors such as an undertaking by the developer to contribute to worthy socio-economic causes.  The matter is moreover relevant in that it illustrates how lobbying of the authorities may create an impression of bias which in turn may result in a decision being set aside.

The Judgment can be viewed here.

Facts

In January 2006, the Director of Integrated Environmental Management (“the Director”), acting under Section 22(1) of the Environment Conservation Act 73, 1989 (‘ECA’) refused Arabella South Africa Holding (Pty) Ltd (‘the Developer’) approval for their proposed development.

The Developer, joined by a number of interested parties, then appealed to the Minister of Environmental Affairs of the Western Cape.  The appeal was opposed by the same parties who had earlier opposed the application to the Director.  In this first phase of the appeal process the Department of Environmental Affairs also joined sides and made a detailed submission to the Minister in which it recommended that the appeal be turned down.

The appeal hearing itself took place in August 2007 and thereafter, in September 2007, the Minister allowed the appeal and granted the Developer development rights subject to a detailed list of some 76 conditions.  She thereafter issued her Record of Decision (RoD).  Amongst the six key reasons for setting aside the decision of the Director, the Minister noted “that the socio-economic benefits of the development cannot be ignored as it will contribute to the upliftment of the disadvantaged local communities.”

The Hangklip/Kleinmond Federation of Ratepayers (‘the Ratepayers’) thereafter applied for a review of the Minister’s decision, inter alia on the basis that certain conditions imposed by the Minister were ultra vires her powers, specifically condition 14 which reads as follows:

“to give effect to the Agreement between Arabella Community Trust and the applicant, in accordance with the inclusionary housing requirements as adopted by the Western Cape Provincial Spatial Development Framework, the applicant must ensure that they contribute R5 million to inclusionary housing for previously disadvantaged communities within a timeframe as agreed between the parties”

Condition 14 found its way into the RoD as a result of intense lobbying to the then Premier of the Western Cape by the Arabella Community Trust (the Trust) which was formed by “the other interested parties” to the original application.  At the suggestion of the Premier, the Trust had entered into a BBBEE agreement with the Developer.

It was this “agreement” that was referred to in condition 14 and came to be included in the RoD at the written request of the Trust (addressed to the Premier) to the effect that if they were to be successful in their appeal, the condition be so included.  The Premier handed this written request to the Minister who then dealt with it as part of the Appeal submissions.

The inclusion of condition 14 also formed the basis of a second ground for the Ratepayers’ application for the setting aside of the Minister’s finding in that they alleged that the involvement of the Premier created a reasonable assumption of bias on the part of the Minister.

Held:

• The Court confirmed that Section 24 of the Constitution as read with various other bits of environmental legislation, introduces the need for a development to be assessed with reference to the impact on the environment, sustainable development and socio-economic interest.
• The concept of “impact" is limited to the impact of the activities sought to be authorized and does not include extraneous matters.
• In this regard it must be noted that it was common cause that the undertaking by the Developer (in condition 14) to contribute housing was not in respect of housing created in the development itself.
• The process of obtaining approval under Section 21(1) of the ECA is governed by regulations promulgated under the act itself (the EIA regulations).  Section 22 of the ECA and the EIA regulations have been repealed by the National Environmental Management Act 107, 1998 (NEMA) and by regulations promulgated thereunder.  It is common cause (save for one respect which is not relevant to the ratio of the judgment) that Arabella’s application and appeal remained subject to the ECA and its regulations.
• The legislation, the ECA read with NEMA, does not “allow environmental harm to be counterbalanced by a contribution to a worthy social cause” where such cause is not related to the impacts of the activity sought to be authorized.
• The Court accordingly found the Minister to have acted beyond her powers under Section 22(3) of the ECA.
• The Court moreover held that it was not possible to sever the condition and leave her decision otherwise intact because it was clearly an important fact in the mind of the Minister at the time of making the decision.  Moreover, it was not apparent whether she would have granted the authorization had there been no pledge for “social housing” by the Developer.
• The Court accordingly set aside her appeal ruling but also considered the alternative ground of reasonable apprehension of bias.  In this regard, although it was accepted that the Premier and the Minister never discussed the matter, in the mind of an informed observer the accumulation of various factors would result in the impression that the Minister’s decision may have been improperly influenced by factors such as the role played by the Premier, his position as the Minister’s superior and the fact that his office acted as a conduit for the renegotiated BBBEE agreement.