Two cases clarify the requirements of South Africa’s ‘delay rule’

Parties intent on challenging administrative decisions should pay close attention to the impact of these cases on the so-called ‘delay rule’, since they clarify when the clock starts to tick on the time limit for challenging an administrator’s decision through judicial review.

What is the delay rule?

The delay rule, set out in section 7(1) of PAJA, is designed to ensure that administrative decisions are concluded with a measure of certainty and finality. According to the law, any attempt to seek a judicial review of an administrator’s decision must be launched “without unreasonable delay” and within 180 days following the conclusion of internal remedies or where the party concerned had become aware of the administrative action and the reasons for it.

Section 9 allows for the 180-day period to be extended either by agreement between the parties or, where the parties are unable to reach such agreement, by a court on application by a concerned party

Veniscope challenges the Department of Trade and Industry

In the first case, heard by the High Court, Veniscope sought to challenge a decision by the Department of Trade and Industry (DTI) to reject its claim for a rebate. At the outset of the court proceedings, the DTI objected to the proceedings on the basis that the application was brought outside of the time period set out in PAJA.

The High Court considered whether, firstly, internal remedies were exhausted, and secondly, when the count down on the 180-day application period commenced. This case involved two separate processes: the DTI’s administrative action to reject Veniscope’s claim, and subsequently, the internal appeal process launched by Veniscope.

The High Court noted that following discussions between the parties regarding the internal appeal initiated by Veniscope, the DTI informed the company by letter that it would be futile to hold further meetings since the parties had already discussed the issues in dispute. This marked the end of the internal appeal process - and therefore the commencement of the 180-day period - because the DTI had already provided Vensicope with its reasons for cancelling the approval and rejecting its claim prior to the internal appeal.

Notably, the High Court held that the application for judicial review ought to have been initiated once the decision had been made by the DTI dismissing any further engagements by the parties. Any subsequent action taken by the parties - such as the DTI’s request for further information from Veniscope, or Veniscope’s demand for a decision of an appeal - had no bearing on this. The court held that the letter closed off any possibilities of internal remedies being explored.

The High Court emphasised the importance and the critical nature of the time limitations set out in PAJA, stating that they are “peremptory” and have the effect of preventing a party from challenging administrative action. However, the High Court reiterated that an extension of the time limitation under section 9 exists to grant an applicant some latitude to mitigate the impasse imposed by the limitation set out in section 7(1).

Ultimately, the High Court found that the proceedings were not instituted within the 180-day period and therefore dismissed Veniscope’s application.

Sasol Chevron challenges the South African Revenue Service

In the second case, heard by the Supreme Court of Appeal, Sasol Chevron sought an order reviewing and setting aside a decision by the South African Revenue Service (SARS) to decline Sasol’s request for a value added tax refund under the 1991 Value Added Tax Act and the Export Regulations.

In the High Court hearing, SARS opposed the application on the basis that it was brought outside the 180-date period. Without an agreement between the parties, or an application to the court for an extension of the time-period, SARS argued that the application should be dismissed without consideration as to the merits of the case.

Sasol Chevron proceeded with its application, arguing that it had instituted the proceedings within the 180-day period - adding that it was unnecessary for it to bring an application for extension. The High Court dismissed SARS contention and granted an order in favour of Sasol Chevron. SARS then appealed the High Court’s decision to the Supreme Court of Appeal.

The Supreme Court of Appeal disregarded the fact that the parties continued engaging with each other following SARS’ decision to decline Sasol Chevron’s request. Therefore, once Sasol Chevron had received SARS’ reasons for its decision, the clock started ticking and commenced the 180-day period. The Supreme Court of Appeal upheld the appeal and found that Sasol Chevron instituted its application for judicial review outside the 180-day time period.

In coming to its decision, the court reiterated that granting an extension under section 9(2) depends on a court being satisfied with a reasonable explanation as to the nature and extent of the entire period of the delay, taking into account the circumstances and without disregarding the merits of each case. However, where a court has not been asked to grant an extension of the 180-day period, the court will not consider the substantive merits of the case. Where it is found that there is delay in instituting proceedings and without an application for extension, this should be the end of the enquiry and the court should not consider the merits of the case.

Impact of the cases on the delay rule

The Supreme Court of Appeal highlighted that the delay rule in section 7(1) of PAJA is clear regarding the moment that time starts running. It said this happens once the administrative action and reasons for the decision are known or reasonably ought to have become known to the party seeking judicial review of the decision. Further, the court clarified the meaning of the word “institute” in the legislation, elaborating that that institution of the proceedings would only be satisfied once the founding papers had been issued by the court and served on the respondent decision-maker.

Ultimately, both cases illustrate that the clock starts ticking once internal remedies have been exhausted, or the decision-maker finalises its decision and provides reasons for the decision or such reasons ought to reasonably become known - not at the end of ancillary engagements between the parties. This is the case, regardless of other circumstances or discussions that may ensue between the parties. An extension under section 9(1) by agreement between the parties or granted by a court on application or the court under section 9(2) may wind back the clocks and allow the courts to hear an application for judicial review on the merits.

Applicants seeking judicial review should bear in mind that if the responding public decision-maker contends that an application is brought outside the 180-day period, it should apply to the court for an extension under section 9(2). Failing to do so will preclude the court from hearing its case on the merits, and the enquiry will end as soon as the court finds that the application was not initiated within the required timeframe.

Co-written by Maseeha Chothia of Pinsent Masons.