For property developers and investors, acquiring public land has traditionally centred on commercial fundamentals: Securing planning approvals, environmental authorisations, and financing. The Constitutional Court’s landmark judgment in Adonisi v Minister for Transport and Public Works, Western Cape, however, suggests that another consideration deserves equal attention – the legality of government’s decision-making process.
Delivered last Thursday, the judgment, which focuses on government’s obligation to provide social housing, offers particularly important guidance on the contours of due diligence in property development. Critically, the ruling carefully interprets the Government Immovable Asset Management Act (‘GIAMA’), Western Cape Land Administration Act (‘WCLAA’) and its accompanying Regulations, and the constitutional principles governing the disposal of public land. In declaring the WCLAA Regulations unconstitutional, the Court confirmed that, where legislation requires public participation in the disposal of provincial state land, that participation must occur while the decision remains genuinely capable of being influenced – not after a sale agreement has effectively been concluded.
For STBB’s Managing Director and experienced real estate attorney, Darren Brander, the ruling reinforces that due diligence extends beyond the property itself to the procedural integrity of the disposal process. ‘The ConCourt’s judgment is ultimately about lawful decision-making,’ he says. ‘In practice, I am acutely aware that developers want certainty, and certainty is best achieved when public authorities follow constitutionally compliant processes from the outset.’
Why this judgment matters
The litigation arose from the proposed sale of the Tafelberg property in Sea Point, Cape Town, to the Phyllis Jowell Jewish Day School for R135 million after the Western Cape Government had declared the property surplus to its requirements in that it no longer supported service delivery objectives.
Community organisations and the national Department of Human Settlements subsequently challenged the sale by arguing that the property should have been considered for social housing and that the disposal process failed to comply with the constitutional and statutory obligations imposed on the Western Cape and the City of Cape Town.
Although the sale was ultimately cancelled, the ConCourt held that the issues remained of considerable public importance because they affect future disposals of state-owned property. In particular, the Court recognised that GIAMA governs the management and disposal of government-owned immovable assets generally. As Brander observes, ‘the Court appreciated that this dispute extended well beyond one property. Its findings establish principles that public authorities and private sector participants will need to consider whenever government-owned land is brought to market.’
Public participation must be capable of influencing decision-making
Perhaps the most significant aspect of the judgment is the ConCourt’s treatment of public participation. Specifically, the impugned provisions of the WCLAA Regulations were deemed constitutionally deficient for postponing public participation until after the conclusion of a sale agreement. Meaningful participation forms part of fair administrative decision-making and thus requires consultation while government remains genuinely open to considering alternatives. Post-sale, the opportunity for members of the public to influence the decision is substantially diminished.
For Brander, this means that ‘consultation cannot be reduced to a procedural formality after commercial commitments have already been undertaken.’ Indeed, ‘once a property transaction has effectively been concluded, the commercial and political incentives naturally shift towards preserving that agreement,’ contends the Cape Town-based real estate lawyer.
Due diligence extends beyond the property itself
While the judgment does not prescribe how property developers should conduct their due diligence, it has important practical implications for transactions involving public land. Traditionally, due diligence following the acquisition of property focuses on assessing the development potential of the land and the conditions precluding it. ‘What this judgment demonstrates is that, where public land is involved, that exercise cannot stop at scrutinising title deed conditions and securing zoning and planning approvals,’ observes Brander.
‘Developers and investors should also consider whether the disposal process itself complied with constitutional and statutory requirements,’ he contends. Crucially, understanding a property’s procedural history ‘is essential to identifying and assessing legal risk before significant investment decisions are made or substantial development costs have been incurred,’ notes Brander.
The conveyancing attorney, however, cautions that the ruling does not mean every disposal of public land will become contentious. ‘Instead, it reinforces that projects founded on procedurally sound decision-making are inherently more resilient against subsequent legal challenges,’ he astutely remarks.
Indeed, Brander’s commentary supports the emphasis the Constitutional Court places on the prevailing legal framework. GIAMA, which promotes transparent, rational, and accountable management of state assets, seeks to prevent the ‘isolated and haphazard’ disposal of land by requiring a structured process in which government first considers whether another public user could utilise the property in pursuit of broader social development and socio-economic objectives. Critically, GIAMA’s provisions are mandatory and operate alongside the WCLAA.
A careful balance
Importantly, the judgment does not create a presumption that all well-located public land must be reserved for social housing.
Recognising the broader constitutional context in which disposal decisions are made, the ConCourt expressly acknowledged South Africa’s enduring spatial inequality, particularly in Cape Town, while also affirming government’s obligation to balance competing constitutional obligations, available resources, and legitimate policy considerations when deciding how public assets should be utilised.
‘While the Constitutional Court recognises the need to advance spatial equality and ensure the right to access to housing, it doesn’t suggest that every parcel of all public land must be used in the same way,’ says Brander. ‘It merely requires lawful – and transparent – decision-making with proper regard to competing constitutional considerations. For our purposes, this is critical to providing the certainty that property investment demands,’ he emphasises.
Constitutional obligations continue after policies are adopted
Crucially, the Court made a notable contribution to South Africa’s socio-economic rights jurisprudence. Rejecting an overly rigid application of subsidiarity, the ConCourt reaffirmed that, while legislation such as the Housing Act and Social Housing Act ordinarily provides the primary framework through which housing rights are enforced, the judiciary is not precluded from undertaking a constitutional reasonableness review where the implementation of government measures is challenged.
For property developers, this point is significant because it illustrates that the legality of government decisions concerning public land is measured against broader constitutional obligations, where appropriate. ‘Adherence does not end once a policy has been adopted,’ explains the property development law specialist. ‘Government must continue implementing its statutory powers in a manner that is constitutionally reasonable. Again, this ultimately supports greater legal certainty because it encourages transparent decision-making.’
Practical implications for property developers and investors
While the judgment arose from an exceptional set of facts, its practical lessons have wider relevance. According to Brander, it serves as a cautionary guardrail to developers considering opportunities involving public land. ‘Although responsibility for complying with legislative obligations rests with the relevant public authority, understanding that process may assist developers and investors in evaluating transactional risks,’ he notes.
Critically, the ruling does not require purchasers to second-guess every governmental decision nor does it restrict or dissuade property development. ‘It goes without saying that the Adonisi decision does not discourage investment in public land,’ says Brander. ‘On the contrary, it simply highlights that identifying and resolving any lingering questions before development costs are incurred is always preferable – and this is something I routinely emphasise in practice,’ he concludes.
Similarly, investors and lenders may wish to understand whether any constitutional or administrative law risks attach to a proposed acquisition of public land, especially where the property is strategically valuable or has attracted significant public interest. ‘The strongest projects are built on both commercial viability and procedural integrity,’ adds the STBB Cape Town Director. ‘Naturally, these are complementary rather than competing objectives.’
Looking ahead
The Constitutional Court’s judgment is likely to become a seminal authority on the disposal of public land and the procedural safeguards that accompany those decisions. Although much attention has focused on the Tafelberg property itself, the broader significance of the judgment lies in its affirmation that transparency, meaningful public participation, and accountable decision-making are integral to the lawful disposal of state land. Ultimately, this enhances confidence in the property market and reduces the risk of costly litigation.
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