THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable

Case No:  603/2011

In the matter between:

MOBILE TELEPHONE NETWORKS (PTY) LIMITED                                 Appellant
and
SMI TRADING CC

Respondent

Neutral citation:
MTN v SMI (603/2011) [2012] ZASCA 138 (28 September 2012)
Coram:
Mthiyane DP, Malan, Tshiqi, Pillay JJA and Plasket AJA
Heard:
7 September 2012
Delivered:
28 September 2012
Summary:
Section 22 of the Electronic Communications Act 36 of 2006
– s 25 of the Constitution – power of licensee to enter upon
land, construct and maintain base station – whether powers
exercised ‘arbitrarily’ – administrative action – ‘decision’.

_________________________________________________________________________
ORDER

On appeal from: the South Gauteng High Court, Johannesburg (Coppin  J sitting as
court of first instance):
The appeal is dismissed with costs including the costs of two counsel.
___________________________________________________________________
JUDGMENT
Malan JA (Mthiyane DP, Tshiqi, Pillay JJA and Plasket  AJA concurring):
[1] This is an appeal against the judgment and order of Coppin J that the
appellant, Mobile Telephone Networks (Pty) Ltd (‘MTN’), remove its base station on
a farm belonging to the respondent, SMI Trading CC (‘SMI’). The appeal is with his
leave.

[2] The appeal concerns the construction of s 22 of the Electronic
Communications Act 36 of 2005 (the ‘ECA’) and whether it infringes s 25 of the
Constitution. A secondary question is whether a monthly tenancy came into
existence after a written lease agreement concluded with a previous owner of the
farm came to an end and, if so, whether SMI cancelled it.

[3] On 21 April 1998 MTN concluded an agreement for the lease of a site with
one of the previous owners, Sisal Landgoed CC, of the farm, Langgewacht, in the
district of Vryheid on which its base station is situated. Sisal sold the farm to
Fynbosland 256 CC and the respondent, SMI, purchased it from the latter. Transfer
of the property to SMI was registered on 31 March 2008. The lease expired on 31
January 2008.

[4] The base station was constructed on a site on the farm some 110 m2 in
extent. It consists of a mast, a container room and equipment.  The farm itself
comprises 1090,4565 hectares. The lease was for a period of 9 years and 11 months
commencing on 1 February 1998 renewable at the option of MTN by giving 3
months’ notice prior to its expiry. The agreement entitled MTN to construct and
maintain a base station on the property and obliged it to pay to the lessor an initial
rental of R100 per month, escalating at 10% per annum. MTN was entitled to enter
onto the farm so as to gain access to the station. The lessor had to allow MTN’s
agents and employees 24 hour access per day but was entitled to require them to
identify themselves. Clause 14 provided that MTN indemnified the landlord from any
liability for personal injury or damage to property arising from its occupation of the
property save where such arose from the intentional misconduct or gross negligence
of the landlord, its employees or agents.  MTN’s equipment on the property was at its
exclusive risk and the landlord incurred no liability in respect of it save where any
damage to it was caused by its intentional misconduct or gross negligence or that of
its employees or agents. MTN also accepted the responsibility for any damage to the
road giving access to the station caused by its agents or employees, whether
intentionally or negligently. It was expressly provided that the base station was a
‘movable’ which did not accede to the property, and by implication that it would be
removed on termination of the lease. The lease, as I have said, expired on 31
January 2008, MTN not having elected to renew it.

[5] In August 2008 MTN proposed that a new agreement of lease be concluded.
It was, at that time, under the impression that the previous owner of the property was
still its owner. The attorney acting for SMI suggested that the rental be fixed at
R17 500 per month with provision for escalation. This proposal was rejected and in
the period from 16 September 2008 to 25 June 2009 the parties were engaged in
negotiations to agree on the terms, particularly the rental, of a new lease. SMI’s
offers fluctuated from R17 500 to R12 000 and again to R14 000 per month. MTN
offered rentals of R54 000 per annum and R2 500 per month. It substantiated its
offers with tables setting forth comparable rentals for other sites and an expert
evaluation. A new lease never materialised and MTN was on 18 November 2008
requested to remove the base station. It responded on 4 December 2008 that it had

identified a new site for the station and was in the process of obtaining the necessary
regulatory approval. SMI, however, wanted to know what compensation MTN
proposed paying for the period since termination of the initial lease and removal of
the station. On 16 January 2009 MTN denied that SMI was entitled to any
compensation but only to a rental of some R694 per month. It also stated that the
removal of the base station would take approximately 10 months. In its email
message of 30 June 2009 MTN drew the attention of MSI to the expert’s report
referred to above. The message referred to MTN’s being a licensee in terms of the
ECA entitled to take the action set out in s 22(1). The message concluded:
‘We therefore, wish to reiterate that we will not be vacating the site due to the reasons
furnished in our letter dated 6th of May 2009.  We are however, prepared to pay an amount
of R2 500,00 as per the valuation report. We will therefore instruct our leasing department to
continue to effect the payment as soon as possible.’ [The letter of 6 May 2009 was not
before court being part of the without prejudice settlement negotiations.]
No agreement, however, materialised.

[6] On 25 June 2009 SMI gave notice of its intention to commence these
proceedings in view of the failure of the parties to conclude a new agreement of
lease. MTN responded by referring to its rights – perhaps more accurately described
as its powers – in terms of s 22 of the ECA stating that although it was under no
obligation to pay rental or compensation it had determined that an amount of R2 500
per month was fair and reasonable and would be paid. This offer was rejected, SMI
stating that all monies paid would be returned.

[7] Coppin J found that MTN was not entitled to remain in occupation of the
station whether by reason of s 22 or by virtue of a tacit lease. As far as the latter
issue is concerned, I agree with his finding that the facts do not support the coming
into existence of a monthly lease after MTN had intimated that it was moving its base
station away from the property. There was never any tacit agreement of lease.

[8] Coppin J found that even if s 22 authorised some form of deprivation of
property –
‘it most certainly does not authorise arbitrary deprivation of property. Section 21 of the ECA
clearly envisages fair procedures and processes to be put in place to facilitate any action
authorised by s 22(1). It is accepted that any administrative deprivations of property have to
be fair and must comply with the procedural prescripts of the relevant administrative justice
provision.’
He continued:
‘Licensees are not confined to public state organs but include private concerns which mainly
have profit as a motive. To interpret s 22 to mean that such a private licensee may enter
upon and/or encroach on any land and construct and maintain its communication network or
facilities on any private land of its own will or its own behest, without a fair process and
without taking into account the rights, inter alia, of the owner of that land in terms of the
applicable law, is draconian and allows for arbitrariness which the Constitution does not
countenance. The rationale for the proviso in s 22 is to prevent arbitrariness in the action of
licensees in terms of s 22(1).’
…
’The proviso contained in s 22(2) ameliorates the crudeness of s 22(1) and brings s 22(1) in
line with the dictates of the Constitution. The Constitution does not countenance arbitrary
action. Section 25(1) of the Constitution, for example, provides explicitly that there shall be
no deprivation of property except in terms of a law of general application and that no law
may permit arbitrary deprivation of property.’
He concluded:
‘Section 22 does not authorise occupation of the property based simply on the will of a
licensee. [MTN] has provided no motivation why the property, in particular, has to be
occupied and no other. Earlier on [MTN] appeared to be quite willing to move the base
station from the property to an alternative location. An arbitrary deprivation is illegal and
cannot serve as a defence against the landowner’s enforcement of his rights.’

[9] The relevant provisions of the ECA are the following:

‘21.   Guidelines for rapid deployment of electronic communications facilities.—(1)  The
Minister must, in consultation with the Minister of Provincial and Local Government, the
Minister of Land Affairs, the Minister of Environmental Affairs, the Authority and other
relevant institutions, develop guidelines for the rapid deployment and provisioning of
electronic communications facilities.
(2)  The guidelines must provide procedures and processes for—
(a)
obtaining any necessary permit, authorisation, approval or other governmental
authority including the criteria necessary to qualify for such permit, authorisation,
approval or other governmental authority; and
(b)
resolving disputes that may arise between an electronic communications network
service licensee and any landowner, in order to satisfy the public interest in the rapid
rollout of electronic communications networks and electronic communications
facilities.’

‘22.   Entry upon and construction of lines across land and waterways.—(1)  An electronic
communications network service licensee may—
(a)
enter upon any land, including any street, road, footpath or land reserved for public
purposes, any railway and any waterway of the Republic;
(b)
construct and maintain an electronic communications network or electronic
communications facilities upon, under, over, along or across any land, including any
street, road, footpath or land reserved for public purposes, any railway and any
waterway of the Republic; and
(c)
alter or remove its electronic communications network or electronic communications
facilities, and may for that purpose attach wires, stays or any other kind of support to
any building or other structure.
(2)  In taking any action in terms of subsection (1), due regard must be had to applicable law
and the environmental policy of the Republic.’

[10] The power to provide telecommunication services originally vested in the
State through the General Post Office, and thereafter, the Post Office which became

the Department of Post and Telecommunications. The telecommunications
enterprise of the State was incorporated in 1991 as Telkom SA (Pty) Ltd, a company
wholly owned by the State. Telkom was given the exclusive right to provide
telecommunication services although the Department continued to regulate it.
Telecommunication services were regarded as a resource entrusted to the State for
the public good. This led to earlier measures similar to those in s 22 of the ECA
entitling the telecommunications service provider to enter onto land and maintain and
construct its telecommunications infrastructure.1 Major changes were introduced by
the Telecommunications Act 103 of 1996: s 36 limited Telkom’s exclusivity in the
provision of telecommunication services to 5 years and s 37 granted MTN and
Vodacom rights as licensees for the provision of mobile cellular services. Section
70(1) provided for the right of a fixed line operator to enter upon land but without
requiring that compensation be paid to the owner (see also ss 70 to 77).2 Section 69
required the Independent Communications Authority of South Africa, the regulator of
the telecommunications industry, to prescribe regulations inter alia for the procedure
to be followed and consultations to be held between an operator and any affected
person or authority. No regulations were, however, made just as no ‘procedures and
processes’ were prescribed in terms of s 21(2)(b) of the ECA for ‘resolving disputes
that may arise between an electronic communications licensee and any landowner’.

[11] The ECA was passed in 2005 as a result of developments in technology that
made the convergence of different types of communication services, such as
broadcasting and telecommunication services, possible. The preamble to the ECA
provides explicitly that it is enacted to –
‘promote convergence in the broadcasting, broadcasting signal distribution and
telecommunications sectors’.

1 Section 82 of the Post Office Administration and Shipping Combination Discouragements Act 10 of
1911; s 80 of the Post Office Act 44 of 1958; s 70 of the Telecommunications Act 103 of 1996.
2 Section 70(1) of Act 103 of 1996 read: ‘A fixed line operator may, for the purposes of provision of its
telecommunications services, enter upon any land, including any street, road, footpath or land
reserved for public purposes, and any railway, and construct and maintain a telecommunications
facility upon, under, over, along or across any land, street, road, footpath or waterway or any railway,
and alter and remove the same, and may for that purpose attach wires, stays or other kind of support
to any building or structure. Section 70(2) read: ‘In taking any action in terms of ss (1), due regard
must be had to the environmental policy of the Republic.’

The ECA deals with ‘electronic communications’ which is defined as
‘the emission, transmission or reception of information, including without limitation, voice,
sound, data, text, video, animation, visual images, moving images and pictures, signals or a
combination thereof by means of magnetism, radio or other electromagnetic waves, optical,
electromagnetic systems or any agency of alike nature, whether with or without the aid of
tangible conduct, but does not include content service’.
An ‘electronic communications network’ is any system of electronic communications
facilities including satellite, fixed and mobile systems and also fibre optic cables,
electricity cable systems and other transmission systems. An ‘electronic
communications service’ is
‘any service provided to the public, sections of the public, the State, or the subscribers to
such service, which consists wholly or mainly of the conveyance by any means of electronic
communications over an electronic communications network’ (excluding broadcasting
services).
These services may be provided only by the holders of certain licences (s 7). The
ECA granted the rights and privileges that in the past belonged to the fixed line
operators, such as Telkom, to all electronic communications network service
licensees. The rights contained in ss 70 to 77 of the Telecommunications Act came
to be re-enacted as ss 22 to 29 of the ECA. The purpose of the older sections was to
eliminate all possible constraints on the State in its providing of communication
services. Due to the convergence of these services and the introduction of
competition in the telecommunications industry the rights and privileges that existed
under the older sections now had to be extended to persons other than the State or
the fixed line operator. Hence the enactment of ss 22 to 29 of the ECA.

[12] The primary object of the ECA is ‘to provide for the regulation of electronic
communications in the Republic in the public interest’ (s 2). Two of its other objects
are to ‘promote the universal provision of electronic communications networks and
electronic communications services and connectivity for all’ (s 2(c)) and to ‘promote
an environment of open, fair and non-discriminatory access to … electronic
communication networks and to electronic communications services’ (s 2(g)). The

ECA mandates the Minister of Communications to ‘develop guidelines for the rapid
deployment and provisioning of electronic communications facilities’ (s 21). On
behalf of the Minister the statement was made that the purpose of this was to
‘provide connectivity to all the people in South Africa’. One of the functions of the
Universal Service and Access Agency of South Africa established under s 58(1) of
the Telecommunications Act 103 of 1996 (see s 80(1) of the ECA)  is to ‘promote the
goal of universal access and universal service’ (s 82(1)(a)). The Minister explained
what ‘universal access’ meant –
‘Universal Service for Electronic Communications Services is provided where all persons, if
they require it, are able to obtain quality, affordable and usable access to a minimum set of
electronic communications network service and electronic communications service, on either
a household or individual basis, including a voice and data electronic communications
service and, in the case of data, including a broadband connection, and access to
emergency services  using fee calls and messaging, where all services are offered on a non-
discriminatory basis.’3
All licensees, including MTN, must achieve an average of 95 per cent network
availability over a period of 6 months failing which they may incur a penalty of  R
5 000 000 and R 50 000 for every repeated offence.4

[13] Section 22(1) empowers a licensee to enter upon public and private land,
construct and maintain its network or facilities and alter and remove them. Section
22(2) provides that in taking these actions –
‘due regard must be had to applicable law and the environmental policy of the Republic’.
It was contended on behalf of MTN that there was no reason to construe s 22 in
such a way that a licensee had to have a legal basis such as a lease or servitude to
be entitled to act in terms of s 22. Such an interpretation would render s 22
unnecessary. Section 22 had to be interpreted in a way that a licensee is allowed all
the rights specified in s 22(1) but requiring it, when exercising those rights, to have

3 See the Determination issued under the Electronic Communications Act, 2005 (Act No 36 of 2005)
with regard to universal access to and the universal provision of electronic communications services
and electronic communications network services (GN 85, GG 32939, 8 February 2010).
4 Paras 4 and 7 of GN 774, GG 32431, 24 July 2009.

regard to the applicable law. The latter expression, it was submitted, meant all law
that did not restrict or extinguish the rights created by s 22(1). Examples of the
‘applicable law’ include planning laws, the law of delict, nuisance etc. The
construction contended for indeed gives effect to the purposes of the ECA and is
also in harmony with other sections in the ECA.

[14] The powers given by s 22 are, as I have said, required to enable the providers
of both fixed line and wireless telecommunications operators to achieve their
objectives. It does not follow, counsel for SMI countered, that these operators may
appropriate significant portions of land on which to construct permanent or semi-
permanent installations as part of their networks. This is no doubt correct. The power
given by s 22 is understandable in the case of a fixed line operator which would
otherwise have to negotiate with thousands of land owners for permission to erect
telephone poles and suspend cables across their land.5 In Telkom SA Ltd v MEC for
Agricultural and Environmental Affairs, Kwazulu-Natal & others6 it was said:
’By contrast, to lay cables on land would require permission or servitudes from a huge
number and variety of owners. Hence the need for an all-embracing permission such as is
contained in s 70 [now s 22].’
The same need does not exist with regard to sites required to build base stations
such as those of MTN and Vodacom. The phrase ‘due regard must be had to
applicable law’ did not appear in s 70 of the repealed Act.  Stricter requirements than
before were thus introduced for the exercise of the powers now given by s 22(1).

[15] Counsel submitted that a purposive construction of s 22 would not authorise a
licensee to occupy the land indefinitely but that s 22(2), by emphasising that the
actions in terms of s 22(1) must be taken ‘with due regard for applicable law’, also
referred to private land ownership. A proper, constitutional, interpretation thus meant
that the consent of the land owner had to be obtained for an exercise of the rights in

5 See para 10 above.
6 2003 (4) SA 23 (SCA) para 30.

terms of s 22(1). I find this interpretation ‘unduly strained’.7  It cannot be correct
simply because the reason for the powers given by s 22(1) would fall away if consent
of the owner were to be a requirement. Section 22(1) specifically dispenses with the
need to obtain the owner’s consent. It is no answer to suggest that because no
provision is made for, for example, the delictual liability of the licensee, limitations on
the liability of the land owner and responsibility to maintain access roads, an
agreement of lease or other agreement is required. It seems to me that the general
provisions of the law are sufficient to provide for these eventualities. The words ‘with
due regard’ generally means ‘with proper consideration’8 and, in the context,
imposes a duty on the licensee to consider and submit to the applicable law. This
duty arises only when the licensee is engaged ‘in taking any action in terms of
subsection (1)’: the ‘action’ referred to by s 22(1) is the entering, constructing and
maintaining, altering and removing. These actions are authorised. It is ‘in their taking’
that due regard must be had to the applicable law. A fortiori the ‘applicable law’
cannot limit the very action that is authorised by s 22(1).

[16] Section 25 of the Constitution provides:
‘(1)
No one may be deprived of property except in terms of law of general application,
and no law may permit arbitrary deprivation of property.
(2)
Property may be expropriated only in terms of law of general application –
(a)
for a public purpose or in the public interest; and
(b)
subject to compensation, the amount of which and the time and manner of payment
of which have either been agreed to by those affected or decided or approved by a
court.’

7 Investigating Directorate: Serious Economic Offences & others v Hyundai Motor Distributors (Pty)
Ltd & others: In re Hyundai Motor Distributors (Pty) Ltd & others v Smit NO & others 2001 (1) SA 545
(CC) para 24.
8 Cf  Joffin & another v Commissioner of Child Welfare, Springs & another  1964 (2) SA 506 (T) at
508F-G where it was said that the words ‘have regard to’ meant ‘bear in mind’ or ‘do not overlook’. In
Perry v Wright [1908] 1 KB 441 (CA) at 458 Fletcher Moulton LJ, dealing with the expression ’regard
may be had to’, said that ‘the facts which the Courts may thus take cognizance of are to be a “guide,
and not a fetter”’. See also Illingworth v Walmsley [1900] 2 QB 142 (CA) at 144 where the phrase
‘regard shall be had to’ was said to mean ’bear in mind and have regard’.

[17] Property includes ‘the bundle of rights that make up ownership such as the
right to use property or to exclude other people from using it or to derive income from
it or to transfer it to others.’9 The ‘deprivation’ of property entails the limitation in
respect of the acquisition, use of and control over property,10 or, as it has been
expressed,  –11
‘any interference with the use, enjoyment or exploitation of private property involves some
deprivation in respect of the person having title or right to or in the property concerned. If s
25 is applied to this wide genus of interference, “deprivation” would encompass all species
thereof and “expropriation” would apply only to a narrower species of interference.’
A ‘substantial interference or limitation that goes beyond the normal restriction on
property use or enjoyment found in an open and democratic society’ is required.12
The parties have accepted that the actions of MTN complained of do not amount to
‘expropriation’ but constitute a ‘deprivation’. To my mind they are correct.

[18] Expropriation can be distinguished from other forms of deprivation in that it
involves a ‘real’ taking away of the property from the owner and its transfer to the
State or a third party.13 In Harksen v Lane NO & others14 it was said:
‘The distinction between expropriation (or compulsory acquisition as it is called in some
foreign jurisdictions) which involves acquisition of rights in property by a public authority for a
public purpose and the deprivation of rights in property which fall short of compulsory
acquisition has long been recognised in our law.’

9 Geyser v Msunduzi Municipality 2003 (3) BCLR 235 (N) at 249 cited by I M Rautenbach Bill of
Rights Compendium (Service Issue 17) para 1A73.1.
10 Rautenbach para 1A73.2.
11 First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service &
another; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) para
57 (hereafter referred to as First National Bank).  See Minister of Minerals and Energy v Agri South
Africa 2012 (5) SA 1 (SCA) paras 12 ff (herafter referred to as Agri South Africa).
12 Mkontwana v Nelson Mandela Metropolitan Municipality & another; Bisset & others v Buffalo City
Municipality & others; Transfer Rights Action Campaign & others v MEC, Local Government and
Housing, Gauteng, & others (Kwazulu-Natal Law Society and Msunduzi Municipality as Amici Curiae)
2005 (1) SA 530 (CC) para 32 (hereafter referred to as Mkontwana) where it was stated that
‘[w]hether there has been a deprivation depends on the extent of the interference with or limitation of
use, enjoyment or exploitation.’  See Offit Enterprises (Pty) Ltd & another v Coega Development
Corporation (Pty) Ltd & others  2011 (1) SA 293 (CC) para 39 (hereafter referred to as Offit ).
13 Rautenbach para 1A73.2. In Harksen v Lane NO & others 1998 (1) SA 300 (CC) para 31 it was
stated that the word ‘is generally used in our law to describe the process whereby a public authority
takes property (usually immovable) for a public purpose and usually against payment of
compensation.’ See also paras 32 ff and Agri South Africa paras 12-15.
14 1998 (1) SA 300 (CC)  para 32.

The present case does not involve an acquisition or ‘taking’ of rights. It concerns
deprivation by regulatory measures to ‘enable the State to regulate the use of
property for public good without the fear of incurring liability to owners of property
affected in the course of such regulation.’15 Our courts have left open the question
whether the doctrine of constructive expropriation should be part of our law.16 Due to
the seriousness of expropriation, property may only be expropriated subject to the
payment of compensation.17 There is no such requirement in the case of deprivation.
However, compensation or the offer of compensation may well take the action
complained of out of the realm of arbitrariness.18

[17] SMI did not challenge the constitutionality of s 22. Its objections were more
limited. It submitted that MTN’s reliance on s 22 was misconceived, first, because it
did not and does not occupy the base station by virtue of s 22 (and s 22 does not by
operation of law render its occupation lawful) and, secondly, because the manner in
which it invoked s 22 was in violation of s 25 of the Constitution.

[18] The regulation of property to protect the common good must not amount to
arbitrary deprivation. ‘The idea is not to protect private property from all State
interference, but to safeguard it from illegitimate and unfair State interference.’19 The
nature of the arbitrariness enquiry was summarised in Reflect-All: 20
‘Central to the arbitrariness enquiry is the relationship between the law in question, the ends
it seeks to achieve and the impact restrictions have on the use and enjoyment of property. In

15 Reflect-All 1025 CC & others v MEC for Public Transport, Roads and Works, Gauteng Provincial
Government & another 2009 (6) SA 391 (CC) para 63 (hereafter referred to as Reflect-All).  In
Reflect-All the Constitutional Court had to deal with the validity of ss 10(1) and (3) of the Gauteng
Transport Infrastructure Act 8 of 2001. These sections allowed for the deprivation of land falling within
road reserves. Nkabinde J said para 64: ‘It must be emphasised that s 10(3) does not transfer rights
to the State. What it does is this: it deprives the landowner of rights to exploit the affected part of the
land within the road reserve and thus protects part of the planning process which has economic value
and is in the long run in the public interest.’ See Steinberg v South Peninsula Municipality 2001 (4) SA
1243 (SCA) para 4; Agri South Africa paras 12-15.
16 Steinberg v South Peninsula Municipality 2001 (4) SA 1243 (SCA) para 8; Reflect-All para 65.
17 Section 25(2)(b) of the Constitution.
18 Cf Antonie Gildenhuis Onteieningsreg (2001) 2 ed at  24 ff.
19 Reflect-All para 33 and see Haffejee NO & others v Ethekwini Municipality & others 2011 (6) SA
134 (CC) paras 30-1.
20 Reflect-All para 49 and see First National Bank 2002 (4) SA 768 (CC) para 100.

some instances a deprivation will escape arbitrariness if a rational connection between the
means adopted and the ends sought to be achieved is present. In other instances, however,
the means adopted will have to be proportional to the ends in order to justify the deprivation
in question. Marginal deprivations of property will ordinarily not be arbitrary if they are
rationally connected to a legitimate purpose. More severe deprivations will ordinarily have to
be shown to be proportionate. In this case, the deprivations are sufficiently serious to require
a proportionality analysis. For present purposes, therefore, the following questions arise:
does s 10(3) protect the hypothetical road network and if it does, is it proportional? In
determining that, a court must have due regard to the purpose of the law in question, the
nature of the property involved, the extent of the deprivation and the question whether there
are less restrictive means available to achieve the purpose in question.’

[19] Any decision by MTN in terms of s 22 is, counsel correctly submitted,
administrative action.21 In the Promotion of Administrative Justice Act 3 of 2000,
‘Administrative action’ is defined in terms of ‘a decision taken’.22 The kind of action
that will constitute a ‘decision’ is a matter of construction in the context of the case.23
Administrative action which adversely affects the rights or legitimate expectation of
any person must be procedurally fair. Section 3(2)(b) of PAJA contains detailed
prescriptions concerning  advance notice of any proposed administrative action to be
taken and of the right to be heard before such decision is taken. The taking of a
decision must be procedurally fair. Procedural fairness –24
‘is concerned with giving people an opportunity to participate in the decisions that will affect
them, and – crucially – a chance of influencing the outcome of those decisions. Such
participation is a safeguard that not only signals respect for the dignity and worth of the
participants, but is also likely to improve the quality and rationality of administrative decision-
making and to enhance its legitimacy.’

21 Section 1 of PAJA defines administrative action to include ‘any decision taken, or any failure to take
a decision, by – ‘(b) a natural or juristic person, other than an organ of state, when exercising a public
power or performing a public function in terms of an empowering provision’. See Dawnlaan
Beleggings (Edms) Bpk v Johannesburg Stock Exchange & others 1983 (3) SA 344 (W) at 362F ff
and Cora Hoexter Administrative Law in South Africa 2 ed (2012) at 189 ff.
22 Section 1 of PAJA. See Grey’s Marine Hout Bay (Pty) Ltd & others v Minister of Public Works &
others 2005 (6) SA 313 (SCA) para 22.
23 Bhugwan v JSE Ltd  2010 (3) SA 335 (GSJ) para 7 ff. See the discussion of R C Williams ‘The
Concept of a “Decision” as the Threshold Requirement for Judicial Review in terms of the Promotion
of Administrative Justice Act’ PER/PELJ 2011 (14) 5.
24 Cora Hoexter Administrative Law in South Africa (2007) at 326-7 cited with approval in Joseph &
others v City of Johannesburg & others 2010 (4) SA 55 (CC) para 42; Zondi v MEC for Traditional and
Local Government Affairs & others 2005 (3) SA 589  (CC) para 112.

[20] It was contended that the manner of MTN’s reliance on s 22 and its reasons
for so doing amounted to an arbitrary deprivation of property in violation of s 25 of
the Constitution. For deprivation not to be arbitrary it must be both substantively and
procedurally fair.25 Procedural fairness is ‘a flexible concept and … the requirements
that must be satisfied to render an action or a law procedurally fair depends on all
the circumstances.’26 Arbitrary action is conduct which is ‘capricious or proceeeding
merely from the will and not based on reason or principle.’27 Arbitrariness is
inconsistent with the ‘values which underlie an open and democratic society based
on freedom and equality’.28

[21] As Coppin J remarked in the court below, s 22 does not mean that a private
licensee ‘may enter upon and encroach on any land and construct and maintain its
communication network or facilities … of its own will or its own behest, without a fair
process and without taking into account the rights … of the owner of that land’.
While it is correct that MTN took occupation of the site in 1998 in terms of a lease,
the lease had expired. Its continued occupation of the base station was thus unlawful
and could only be justified by s 22. But s 22 is concerned with public power the
exercise of which must not be arbitrary. After expiry of the lease MTN unilaterally
held over and remained in occupation. When asked to vacate the site it agreed to do
so but subsequently refused to leave. It explained its decision to remain only in the
answering affidavit with the laconic statement that, although an alternative site had
been identified, ‘nothing has materialised with regard thereto’. There is no evidence
that the objects of the ECA cannot be achieved without depriving SMI of its property.
There was no intimation to SMI that MTN was no longer negotiating in order to reach
agreement on the rental but was enforcing its statutory right. It was only when
threatened with eviction proceedings that MTN sought to invoke s 22 and, again
unilaterally, determined that it could remain in occupation without paying

25 First National Bank para 100; Mkontwana para 65; Reflect-All paras 44 ff; cf A J van der Walt
‘Procedurally Arbitrary Deprivation of Property’ 2012 Stellenbosch Law Review 1.
26 Mkontwana para 65.
27 Beckingham v Boksburg Licensing Board 1931 TPD 280 at 282. See further Livestock and Meat
Control Board v R S Williams 1963 (4) SA 592 (T) at 598A-C; First National Bank para 100;
Mkontwana para 61 ff.
28 S v Lawrence; S v Negal; S v Solberg 1997 (4) SA 1176 (CC) para 33.

compensation. This is an abuse of a statutory power amounting to conduct that is
arbitrary.29

[22] But there is another, decisive, reason why the appeal should be dismissed.
MTN’s original entry upon the site, its construction and maintenance of the base
station took place pursuant to a commercial lease. Section 22 came into force only
thereafter. These actions at that time could not have amounted to a ‘decision’. The
question is rather whether MTN, after expiry of the lease agreement, took a
‘decision’ to invoke its statutory rights to justify its continued occupation of the base
station. There is no evidence that it did so. Not even its email message of 30 June
2009 referring to MTN’s being a licensee in terms of the ECA and entitled to take the
action set out in s 22(1) can be construed as a ‘decision’ to exercise its statutory
powers: at best it is a threat to invoke them in future. Section 22 does not solely by
operation of law render MTN’s continued occupation lawful. Absent a ‘decision’ a
judicial review is not possible.30 But without a ‘decision’ having been taken lawfully,
reasonably and procedurally fairly, MTN has no right to occupy SMI’s property: it has
not exercised its powers to do so in terms of s 22 of the ECA either properly or at all.

[23] In the result the appeal should be dismissed.
The appeal is dismissed with costs including the costs of two counsel.

_____________
F R Malan
Judge of Appeal

29 Unfortunately, no procedures or processes have been prescribed in terms of s 21(2)(b). This case
illustrates the need for prompt action by the authorities in this regard.
30 See Bhugwan v JSE Ltd  2010 (3) SA 335 (GSJ) paras 5 ff and authorities cited.

C Plasket (Mthiyane DP, Malan, Tshiqi and Pillay JJA concurring):

[24] I have read the judgment of Malan JA and agree with both his reasoning and
his conclusion that the appeal must be dismissed with costs. I wish to add my
comments on one issue dealt with by Malan JA, namely that the invocation of s 22 of
the ECA by a licensee who is not an organ of state constitutes administrative action
for purposes of the Promotion of Administrative Justice Act 3 of 2000 (the PAJA).
This is, I believe, necessary because the issue as to when a private body exercises
administrative power is a difficult one that has created definitional problems here and
in comparable jurisdictions.

[25] As Malan JA has indicated in his judgment, MTN is a private company
licenced to provide electronic communications services in terms of chapter 3 of the
ECA. Being a licensee, it enjoys the powers set out in s 22(1) – the powers to enter
upon land, construct and maintain electronic communications networks or facilities
and alter or remove those networks or facilities. The ECA, in this way, vests in MTN
the power to deprive people of their property, a power that s 25 of the Constitution
only countenances if it is effected by a law of general application and is not arbitrary,
both substantively and procedurally.

[26] Section 1 of the PAJA defines administrative action in two distinct ways. In the
first instance, it defines administrative action when the actor is an organ of state and
secondly it defines administrative action when the actor is not an organ of state. This
case concerns this second aspect of the definition. It provides that administrative
action means:
‘. . . any decision taken, or any failure to take a decision, by –
(a) . . .
(b) a natural or juristic person, other than an organ of state, when exercising a public
power or performing a public function in terms of an empowering provision
which adversely affects the rights of any person and which has a direct, external legal effect
. . .’

[27] The invocation of s 22 in any particular case would entail the taking of a
decision, the effect of which would involve ‘the imposing of a condition or restriction’

as envisaged by paragraph (d) of the definition of a decision, also in s 1 of the PAJA.
As stated above, MTN is a private company. It is not an organ of state. It therefore
qualifies as a ‘natural or juristic person, other than an organ of state’. When it
invokes its s 22 powers, it does so in terms of an empowering provision, namely the
ECA. I shall return to whether it exercises a public power or performs a public
function. Finally, in my view, there can be no doubt that when MTN invokes its s 22
powers it adversely affects the rights of the landowner whose land it wishes to utilise
and that exercise of power also has a direct, external legal effect.31

[28] I return now to whether the invocation of s 22 by MTN would constitute the
exercise of a public power. (I shall refer no further to the performance of a public
function, because it seems to me that, in s 22, one is dealing with the exercise of a
power.) It is notoriously difficult to define with any precision what is meant by a public
power. Indeed, the concept is probably incapable of precise definition.32
Furthermore, it is not static but changes over time as different forms of public
administration are implemented.33 (This case is a good example of how the
administration of tele-communications has changed over time, from an organ of state
providing the service, to a state-owned enterprise doing so, to both state-owned and
privatised, but regulated, service providers doing so.)

[29] In Police and Prisons Civil Rights Union & others v Minister of Correctional
Services & others,34 I tried to capture the essence of the concept of public power as
follows:
‘In my view, however, the elusive concept of public power is not limited to exercises of power
that impact on the public at large. Indeed, many administrative acts do not. The exercise of
the power to arrest is a good example of an administrative action that would only have a
significant impact on the arrestee and, perhaps, the complainant. Another example would be

31 As to the meaning to be attributed to these last two elements of the definition of administrative
action, see the judgment of Nugent JA in Grey’s Marine Hout Bay (Pty) Ltd & others v Minister of
Public Works & others 2005 (6) SA 313 (SCA) para 23, endorsed by the Constitutional Court in
Joseph & others v City of Johannesburg & others 2010 (4) SA 55 (CC) para 27 and Viking Pony
Africa Pumps (Pty) Ltd t/a Tricom Africa v Hidro-Tech Systems (Pty) Ltd & another 2011 (1) SA 327
(CC) para 37.
32 See the remarks of Du Plessis J in AAA Investments (Pty) Ltd v Micro Finance Regulatory Council
& another 2004 (6) SA 557 (T) at 564B.
33 Paul Craig ‘What is Public Power?’ in Hugh Corder and Tiyanjana Maluwa (eds) Administrative
Justice in Southern Africa (1997) at 25.
34 Police and Prisons Civil Rights Union & others v Minister of Correctional Services & others 2008 (3)
SA 91 (E) para 53.

a decision by the Amnesty Committee of the erstwhile Truth and Reconciliation Commission
to grant a person amnesty from the civil and criminal consequences of his or her politically
motivated crimes. In these instances what makes the power involved a public power is the
fact that it has been vested in a public functionary who is required to exercise it in the public
interest, and not in his or her own private interest or at his or her own whim. This is
articulated clearly in the dissenting judgment of Schreiner JA in Mustapha and Another v
Receiver of Revenue, Lichtenburg, and Others, now considered to be correct, in which he
held that where a minister exercised a statutory power having a “contractual aspect” he
acted “as a State official and not as a private owner, who need listen to no representation
and is entitled to act as arbitrarily as he pleases, so long as he breaks no contract”. Instead,
the minister, because he received his powers from the statute, could only “act within its
limitations, express or implied”. This passage encapsulates the essential difference between
public and private power.’

[30] Although the POPCRU matter concerned an organ of state, the essential
enquiry as to whether the power exercised by a private actor is a public power is
similar. Does the power have to be exercised in the public interest? It was on that
basis that Goldstone J, in 1983, held the Johannesburg Stock Exchange to a public
law duty to act in accordance with its own rules in Dawnlaan Beleggings (Edms) Bpk
v Johannesburg Stock Exchange & others35 when he held:
‘Strictly speaking, a stock exchange is not a statutory body. However, unlike companies or
commercial banks or building societies formed under their respective statutes, the decisions
of the committee of a stock exchange affect not only its own members or persons in
contractual privity with it, but the general public and indeed the whole economy. It is for that
reason that the Act makes the public interest paramount. To regard the JSE as a private
institution would be to ignore commercial reality and would be to ignore the provisions and
intention of the Act itself. It would also be to ignore the very public interest which the
Legislature has sought to protect and safeguard in the Act.’

[31] I am of the view that the power conferred on MTN by s 22 is indeed a public
power. It is a power that is central to the attainment of the primary object of the ECA,
namely ‘to provide for the regulation of electronic communications in the Republic in
the public interest’.36 There can be no doubt that, even if MTN is motivated by the

35 Dawnlaan Beleggings (Edms) Bpk v Johannesburg Stock Exchange & others 1983 (3) SA 344 (W),
364H-365A.
36 ECA s 2.

making of profit from providing its service, it is required by the ECA to provide that
service in the public interest.

[32] It has been held in this court, in Calibre Clinical Consultants (Pty) Ltd &
another v National Bargaining Council for the Road Freight Industry & another37  that
the enquiry centres on whether the power in question is of the nature of a
governmental power, the reasoning being that governmental-type powers are
quintessentially subject to a requirement of accountability. It is not necessary to
comment on whether that approach has the potential to cast the net of accountability
too narrowly because in this case we are dealing with what Hoffmann LJ in R v
Disciplinary Committee of the Jockey Club, ex parte Aga Khan38 described as ‘a
privatisation of the business of government itself’ in which the private body has been
‘integrated into a system of statutory regulation’. Coercive powers to enter land, and
even to deprive owners of the use of land, for public purposes is a typical
governmental power that is provided for in democracies such as ours precisely in
order to further the public interest.

[33] For the reasons set out above, I accordingly conclude that the invocation of
the power vested in MTN by s 22 would constitute administrative action. That being
so it attracts the fundamental rights that are vested in an affected landowner to
administrative action that is lawful, reasonable and procedurally fair. That, in turn,
has two effects: first, on the macro-level, because s 22 can only validly be exercised
in accordance with administrative justice rights, it insulates the ECA against
constitutional invalidity by serving as a hedge against arbitrary deprivation; and
secondly, when a particular deprivation is challenged, the requirements of
administrative justice determine whether it was, on the micro-level, arbitrary or not.

___________________
C Plasket

Acting Judge of Appeal

37 Calibre Clinical Consultants (Pty) Ltd & another v National Bargaining Council for the Road Freight
Industry & another 2010 (5) SA 457 (SCA).
38 R v Disciplinary Committee of the Jockey Club, ex parte Aga Khan [1993] 1 WLR 909 (CA) at
931H-932A.

APPEARANCES:

For  Appellant:

M Basslian SC

T Manchu

Instructed by:

Mashiane Moodley & Monama Inc

Johannesburg

Lovius Block AtTorneys

Bloemfontein

For  Respondent:

C Watt-Pringle SC

L Franck

Instructed by:

Eugene Marais Attorneys

Johannesburg

Symington & De Kock

Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From: The Registrar, Supreme Court of Appeal

Date:
28 September 2012

Status: Immediate

Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.

MTN v SMI

The Supreme Court of Appeal today dismissed an appeal by MTN against the
judgment and order of the South Gauteng High Court in Johannesburg ordering MTN
to remove its base station on the farm Langgewacht in the district of Vryheid. The
base station was constructed on a site on the farm some 110 m2 in extent. It consists
of a mast, a container room and equipment.  The farm itself comprises 1090,4565
hectares. The lease was for a period of 9 years and 11 months commencing on 1
February 1998 renewable at the option of MTN by giving 3 months’ notice prior to its

expiry. The agreement entitled MTN to construct and maintain a base station on the
property and obliged it to pay to the lessor an initial rental of R100 per month,
escalating at 10% per annum. MTN was entitled to enter onto the farm so as to gain
access to the station. The lessor had to allow MTN’s agents and employees 24 hour
access per day but was entitled to require them to identify themselves. The lease
expired on 31 January 2008, MTN not having elected to renew it. In justifying its
continued occupation of the farm MTN relied on section 22 of the Electronic
Communications Act 36 of 2006 which entitles an electronic communications
network service licensee such as MTN to enter upon any land, including any street,
road, footpath or land reserved for public purposes, any railway and any waterway of
the Republic; construct and maintain an electronic communications network or
electronic communications facilities upon, under, over, along or across any land,
including any street, road, footpath or land reserved for public purposes, any railway
and any waterway of the Republic; and alter or remove its electronic communications
network or electronic communications facilities, and may for that purpose attach
wires, stays or any other kind of support to any building or other structure. Because
the exercise of its powers under this Act constitutes administrative action they must
be exercised lawfully, reasonably and procedurally fairly. The SCA found that in the
circumstances of the case MTN’s holding over after expiry of the lease was unlawful
and could not be justified in terms of s 22. Not only was its remaining in occupation
arbitrary but also not pursuant to a ‘decision’ as required by the Promotion of
Administrative Justice Act 3 of 2000.