20 May 2020 by and Dispute Resolution Alert

The synergy between the Promotion of Administrative Justice Act, 2000 and section 38 of the Constitution in Reviews conferring legal standing

The Promotion of Administrative Justice Act, 2000 (PAJA) was enacted to amongst others confer the right to review a decision taken in the exercise of public power or the performance of a public function that “adversely affects the rights of any person and which has a direct, external legal effect”. 

As conferred by Olsen J in the matter of The Premier of KwaZulu-Natal and Others v KwaZulu-Natal Gaming and Betting Board and Others 2019 (3) All SA 916 (KZP), review proceedings under PAJA have as their purpose the vindication of rights under section 33 of the Constitution to administrative action that is lawful, reasonable and procedurally fair. Section 6(1) of PAJA states that “any person” may institute proceedings for the judicial review of administration action. Section 38 of the Constitution however deals with who may approach a competent court for appropriate relief upon the basis that a right in the Bill of Rights is being infringed or threatened with infringement.

In this matter, the court had to decide whether an applicant operating a casino establishment had legal standing to join the review proceedings challenging the use of electronic bingo terminals in bingo halls throughout the KwaZulu-Natal Province.

In the aforesaid matter it was suggested by one of the applicants in argument that, as a participant in the gambling industry, the applicant had an interest in seeing that all administrative decisions made by the Gambling Board in connection with the gambling industry are made in compliance with PAJA.

The applicant, however, did not assert the aforesaid argument in its founding papers where it advanced two arguments that [1] the decisions made in favour of bingo operators would result in a significant loss of “gross gaming revenue” for the applicant and [2] that it was a party affected by the decision in that “from the outset it submitted objections to attempts to licence electronic bingo terminals and also submitted objections to the applications …

The court did not entertain the applicant’s claim that the right to approach the court on the basis that it is acting in its own interest, as provided for by section 38(a) of the Constitution. It was held that simply participating in hearings which preceded the award of licences (in this instances gambling licences), cannot afford you legal standing (locus standi). The court referenced Giant Concerts CC v Rinaldo Investments (Pty) Ltd 2013 (3) BCLR 251 (CC) at para 22, which held that:

It is not logical to assert that an own-interest standing qualification arises from participation in a process if the objection remain hypothetical and academic.

What the applicant relied upon in the matter to confer its standing was the detrimental effect upon its gaming revenue should the use of the electronic bingo terminals be allowed for use. The court held that “fanciful claims of potential prejudice are not sufficient to justify a conclusion that a claim to standing is premised on real interest, as opposed to ones which are hypothetical or academic.

Having regard to the above, it’s imperative in review proceedings to note that an interest to ensure lawful decisions are taken is insufficient to demonstrate legal standing in review proceeding. It is important not to confuse “direct external legal effect” in terms of PAJA with legal standing in terms of section 38 of the Constitution. “Direct external legal effect” is a characteristic used to determine whether any particular exercise of power constitutes “administrative action” within the meaning of PAJA, but it’s not used to determine legal standing.

The test for own interest legal standing is more akin to a “direct and substantial interest” test, but broader. Put differently, the facts may suggest that the decision has direct external legal effect on a litigant, but the [own interest] litigant must demonstrate that his or her interests or potential interests are directly affected by the unlawful decision sought to be impugned for example, the award of a tender is established administrative action, but it cannot be used as a test to determine any litigant’s legal standing.

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