Executive Council of the Western Cape Province and Others v Kannaland Local Municipality and Others (229/2021) [2021] ZAWCHC 51 (19 March 2021)

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[2021] ZAWCHC 51
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Executive Council of the Western Cape Province and Others v Kannaland Local Municipality and Others (229/2021) [2021] ZAWCHC 51 (19 March 2021)

Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Case No:
229/2021
Before:
The Hon. Ms Acting Justice Mangcu-Lockwood
Date of hearing: 1 March 2021
Delivered
electronically on: 19 March 2021
In
the matter between:
EXECUTIVE COUNCIL OF THE
WESTERN CAPE PROVINCE
First
Applicant
WESTERN
CAPE MINISTER OF LOCAL GOVERNMENT, ENVIRONMENTAL AFFAIRS AND
DEVELOPMENT PLANNING
Second
Applica
nt
WESTERN
CAPE MINISTER OF FINANCE AND ECONOMIC OPPORTUNITIES
Third
Applica
nt
ADMINISTRATOR
(FINANCIAL RECOVERY) OF KANNALAND LOCAL MUNICIPALITY
Fourth
Applica
nt
and
KANNALAND
LOCAL MUNICIPALITY + AND 20 OTHERS
Respondent(s)
___________________________________________________________________
JUDGMENT
MANGCU-LOCKWOOD
AJ,
INTRODUCTION
1.
The
applicants have brought an application seeking, as Part A, urgent
relief interdicting the first to tenth respondents (the respondents)

from certain conduct. Part B of the application will be determined in
due course, and will seek declaratory relief as well as review
of the
conduct complained about in these proceedings. The respondents oppose
the application on the basis of a collateral challenge,
and in the
alternative, they raise a counter-application.
2.
The
first applicant is the Executive Council of the Western Cape Province
(‘the Provincial Executive’). The second applicant
is the
Western Cape Minister of Local Government, Environmental Affairs and
Development Planning (‘the Local Government Minister’),

and the third applicant is the Western Cape Minister of Finance and
Economic Opportunities. The first respondent is the Kannaland
Local
Municipality (‘the Municipality’), and the second to
tenth respondents are political office-bearers and Municipal
Council
members of the Municipality, including the Municipal Manager, the
Chief Financial Officer, the Executive Mayor, the Speaker,
the Deputy
Executive Mayor and four ordinary councillors. These political
office-bearers and Municipal Council members are also
cited in their
personal capacities, as eleventh to nineteenth respondents. The
twentieth respondent is Inovasure (Pty) Ltd, and
the twenty-first
respondent is the National Minister of Finance.
THE RELEVANT FACTS
3.
The
background facts are common cause or are not seriously disputed. In
2016 the Kannaland Local Municipality was in such serious
financial
crisis that it was unable to provide basic municipal services, or to
meet serious financial commitments. Some of the
examples cited
include an Eskom bulk services account which was in arrears to the
tune of R12 million, almost resulting in the
disconnection of
electricity supply to the entire Municipality. Another example is the
deterioration of the municipal infrastructure
due to an inefficient
tariff structure. It is also common cause that, due to the conclusion
of many questionable contracts, the
Municipality was spending so much
money on litigation that service delivery was severely prejudiced.
4.
In
acknowledgement of its financial crisis, the Municipal Council
resolved on 2 December 2016 to request the Provincial Executive
to
intervene in its affairs in terms of section 139(5) of the
Constitution of the Republic of South Africa 108 of 1996 (‘the

Constitution’), and the latter resolved to accept the
invitation. Section 139(5) of the Constitution provides for what is

referred to as a ‘mandatory intervention’, as follows:
‘
If
a municipality, as a result of a crisis in its financial affairs, is
in serious or persistent material breach of its obligations
to
provide basic services or to meet its financial commitments, or
admits that it is unable to meet its obligations or financial

commitments, the relevant provincial executive must—
(a)
impose
a recovery plan aimed at securing the municipality’s ability to
meet its obligations to provide basic services or its
financial
commitments, which –
(i)
is
to be prepared in accordance with national legislation; and
(ii)
binds
the municipality in the exercise of its legislative and executive
authority, but only to the extent necessary to solve the
crisis in
its financial affairs; and
(b)
dissolve
the Municipal Council, if the municipality cannot or does not approve
legislative measures, including a budget or any revenue-raising

measures, necessary to give effect to the recovery plan, and –
(i)
appoint
an administrator until a newly elected Municipal Council has been
declared elected; and
(ii)
approve
a temporary budget or revenue-raising measures or any other measures
giving effect to the recovery plan to provide for the
continued
functioning of the municipality; or
(c)
if the Municipal Council is not dissolved in terms of paragraph (b),
assume responsibility for the implementation
of the recovery plan to
the extent that the municipality cannot or does not otherwise
implement the recovery plan.
5.
Pursuant
to the intervention, in March 2017 the Provincial Executive imposed a
comprehensive recovery plan (‘the Plan’)
upon the
Municipality as a framework for the latter’s financial
rehabilitation. Initially, the Municipality was charged with

implementing the Plan. However, after it admitted that it could not
take the executive measures necessary to implement the Plan,
and
requested to be placed under ‘full administration’, a
designate, referred to as the Administrator (Financial Recovery)
–
the fourth applicant - was appointed by the Provincial Executive for
the purpose of implementing the Plan, with effect
from December 2018.
The Administrator was accorded all the executive and administrative
powers of the Municipal Council necessary
to implement the Plan. The
Municipal Council was not dissolved. It retained residual executive
powers only to the extent that they
did not impact or relate to the
Plan. The Municipal Council also retained its legislative powers,
provided they were in alignment
with the Plan. In practice, the
Administrator interacted with the municipal officials on a daily
basis, and with the Executive
Mayor and the Speaker on a weekly
basis. He attended all meetings of the Municipal Council, and gave
guidance regarding any issue
arising that might affect the
Municipality’s finances, which advice would invariably be
followed by the Municipal Council.
It is common cause that this
arrangement continued until late 2020, when the events that
precipitated these proceedings ensued.
6.
Before
dealing with those events, it is necessary to mention that the
parties agree that significant strides have been made by the

Administrator in stabilizing the Municipality’s affairs. It is
also common cause, however, that despite the positive strides
made,
the Municipality remains in dire financial straits. As a result, on 2
August 2020 the National Minister of Finance, at the
request of the
Provincial Executive, approved a process to amend the Plan in terms
of section 144 of the Local Government: Municipal
Finance Management
Act 56 of 2003 (‘the MFMA’). On that same day the
National Minister of Finance authorized the Municipal
Financial
Recovery Service (‘MFRS’) to assist with the review and
amendment of the Plan. The amendment is aimed at
capitalizing on the
achievements made thus far, and to update the Plan to ensure that it
meets in the Municipality’s needs
going forward. Similarly, the
term of the Administrator was extended with effect from 1 December
2020 until the first sitting of
the Municipal Council after the 2021
Local Government elections.
7.
A
relevant positive stride made during the course of the intervention
is the review of the Municipality’s organizational structure,

and the development of an organogram that meets the Municipality’s
operational and financial needs. The development of the
new
organogram was facilitated by the Administrator, and was approved and
adopted by the Municipal Council on 31 May 2020. It is
not in dispute
that the implementation of this new organogram will result in a
cost-saving of approximately R8 900 000
for the
Municipality.
8.
During
September 2020, the Executive Mayor of the Municipality fell
seriously ill, and took a leave of absence. The sixth respondent

(Councillor Antonie) assumed the position of Acting Executive Mayor.
Since then, the Municipal Council has taken steps which have
led to
the launching of this application, and which may be summarized as
follows:
8.1
Since
November 2020 the respondents have purported to terminate the
mandatory provincial intervention, and to remove the Administrator

from office.
8.2
The
respondents have taken steps to conclude a multi-decade contract with
Inovasure for the provision of energy, water services
and
infrastructure to the Municipality. According to the applicants the
contract contravenes various prescripts regarding municipal

procurement, and has not been concluded in compliance with a
competitive or transparent process. It will furthermore come at a

cost of hundreds of millions of rand which the Municipality cannot
afford.
8.3
The
respondents have resolved to establish a new organizational structure
or staff establishment. According to the applicants, this
new staff
establishment consists of a bloated contingent of political
appointees, and is wasteful, unnecessary and un-affordable.
The
respondents have also made personnel decisions and approved various
payments to current and former employees of the Municipality
that are
not due or owed.
9.
Each
of these developments is now discussed below.
Termination
of the provincial intervention
10.
At
a Special Council meeting held on 16 November 2020, the Municipal
Council resolved to ‘lift’ the provincial intervention

with immediate effect. Thereafter, the Administrator and the Local
Government Minister sent correspondence to the Municipal Council,

indicating that they regarded the resolution of 16 November 2020 as
unlawful, and of no force and effect. The Local Government
Minister
sought a series of undertakings that the Municipality would cooperate
with the Plan and the Administrator, and would cease
all attempts of
terminating the intervention. No such undertaking was forthcoming.
11.
Instead,
on 30 November 2020 the Municipal Council again passed a resolution
to terminate the provincial intervention, and also
to terminate the
services of the Administrator. Further to this, on 3 December 2020,
the Acting Municipal Manager issued communication
pointing to the
expiration of the Administrator’s term of contract, and
indicated that the Administrator was no longer part
of the
Municipality, and that officials were not to take instructions from
him or to give information without the permission of
the Acting
Municipal Manager or the Municipal Council.
12.
On
8 December 2020, the Administrator received written notification of
the resolution of 30 November 2020 purportedly lifting the
provincial
intervention. He was informed that his services had come to an end,
and was requested to vacate the offices of the Municipality
by end of
that day. On 10 December 2020 the Municipal Council resolved that
councillors should refrain from ‘leaking information’

pertaining to the affairs of the Municipality and items on the agenda
to the Local Government Minister or the Administrator, and
that
disciplinary action should be instituted against any councillors who
were found to have leaked information. When the applicants,
through
their attorneys, subsequently requested copies of the minutes
recording the decisions taken at the Municipal Council meeting
of 10
December 2020, none were provided by the respondents.
13.
Subsequently,
all remaining meetings relating to the Plan were cancelled, as the
Municipal Council maintained that the provincial
intervention has
been lifted. The Municipality has furthermore refused to participate
in any workshops relating to the review and
amendment of the Plan,
which are currently underway.
The
Inovasure contract
14.
In
about 2012 the Municipality appointed Inovasure to conduct a
feasibility study for the provision of energy, water and
telecommunications
security to Kannaland. In June 2020 the
Municipality advertised a draft Public-Private Partnership (PPP)
agreement that it proposed
entering into with Inovasure, as an
unsolicited bid.
15.
In
a letter dated 19 August 2020 and attached to the founding affidavit,
the National Treasury pointed out to the Municipality that
it had
failed to follow various provisions of the MFMA, Treasury PPP
Regulations, and the Unsolicited Bid Framework, as follows.
15.1
In
terms of section 33 of the MFMA the Municipality was required to
provide the draft PPP contract together with an information
statement
setting out its obligations in terms of the proposed contract, as
well as a notice inviting comments from the public.
Although the
Municipality had published the proposed contract, it had not complied
with the rest of these requirements.
15.2
In
terms of the MFMA, Treasury PPP Regulations, and the Unsolicited Bid
Framework, unsolicited bids were required to be fair, transparent,

competitive and cost-effective. It was pointed out that, contrary to
these principles, Inovasure was initially appointed to undertake
a
feasibility study of the project, and had used the information
obtained from the feasibility study to submit an unsolicited bid
to
the Municipality, which violated the MFMA, Treasury Regulations and
Supply Chain Management (‘SCM’) policies. It
also
constituted a conflict of interest in terms of the SCM Regulations.
15.3
The
Electricity Regulation Act 4 of 2006 requires the consultation with
the National Energy Regulator on all electricity projects.
There was
no evidence that the Municipality had complied with this requirement.
As a result, the affordability of the proposed
tariffs on the
citizens could not be confirmed.
15.4
The
letter concluded thus: ‘
The
issues raised above are pivotal for the three tests of a PPP
(affordability, value for money and significant risk transfer).
Given
the observations raised above, it is the views (sic) and
recommendations of the National Treasury that the project should
not
proceed until all the issues raised above have been addressed. The
municipality is currently under a section 139(5) intervention
as a
result of a crisis in its financial affairs. The National Treasury
cannot support the proposed project without first determining
the
financial impact that the proposed PPP project will have on the
financial resources of the municipality and the future of
affordability of the electricity service on the citizen. It is
therefore recommended that the municipality should wait for the
finalization of the Financial Recovery Plan to stabilize its finances
prior to making any future budgetary commitments.
’
16.
On
the same day, the National Treasury addressed another letter to the
Western Cape Provincial Chairperson: Standing Committee on
Finance,
Economic Opportunities and Tourism. In addition to pointing out the
Municipality’s non-compliances with the MFMA
and the
Constitution, it indicated that the Municipality had gone through
various procurement processes without the necessary input
from the
National Treasury.
17.
In
September 2020, further cautions were addressed to the Municipality,
this time by the Provincial Executive. In a detailed letter,
the
Provincial Executive advised and cautioned the Municipality on the
illegality of the resolution taken by the Municipal Council
to
appoint Inovasure for a period exceeding 25 years by way of an
unsolicited bid process. All the applicable laws and contraventions

were raised, together with the significant costs that would arise,
thereby undermining the objectives of the mandatory intervention
and
the Plan. It was specifically stated that any step taken by the
Municipality, including a decision to conclude the contract,
would be
unlawful insofar as it undermined the objectives of the intervention
and the Plan.
18.
On
2 October 2020 the Administrator issued a series of directives to the
Municipality, referred to as resolutions, noting that both
the
National and Provincial Treasuries had highlighted a number of
irregularities with regard to the Inovasure project. The resolutions

included directives to suspend the process of establishing a PPP with
Inovasure; instructing the Municipal Manager not to sign
the PPP
agreement or to appoint transaction and legal advisors for the
purpose of furthering the agreement, which the respondents
were
embarking upon; instructing the Municipality to engage the National
Treasury and Provincial Government, including for the
purpose of
obtaining an unbiased opinion regarding the project.
19.
The
Municipality did not heed any of these cautions. Instead, on 8
December 2020, the Municipality’s Speaker published notice
of a
special council meeting to be held on 10 December 2020. The notice
attached a report dated 6 November 2020 from the Municipal
Manager,
which outlined the background and progress of the Inovasure project,
and recommended the management of the project as
a long-term contract
and an unsolicited bid.
20.
On
9 December 2020, the Local Government Minister sent a letter to each
councillor demanding that the Municipal Council should refrain
from
passing any resolution in respect of the project. At the meeting of
10 December 2020, the Municipal Council resolved to proceed
with the
project, and to conclude a 25-year contract in this regard. It was
resolved that the project would not be structured as
a PPP, but would
instead be managed as an unsolicited bid. The Acting Municipal
Manager was directed to appoint an external legal
advisor to
facilitate the conclusion of the process.
21.
Thereafter,
the parties exchanged correspondence, with the applicants
highlighting the views espoused in this application and requesting

copies of minutes and resolutions of the meeting of 10 December 2020;
and respondents asserting the Municipality’s ‘constitutional,

autonomous decision-making powers and rights’ to make decisions
as it did on 10 December 2020. By 7 January 2021, no agreement
has
been reached, no undertakings sought by the applicant had been given,
and the respondents had not furnished copies of minutes
and
resolutions of the meeting of 10 December 2020. This application was
launched on the following day.
22.
The
respondents do not deny the facts set out above regarding the
Inovasure project. What they emphasise is that the final contract

with Inovasure is a ‘long way in the future’, as the
referral to the Bid Adjudication Committee has yet to take place;
and
there are accordingly no financial obligations that are about to be
assumed by the Municipality. The respondents state that,
in any
event, if the project were to be implemented, Inovasure would carry
all the risk, and provide all the funding in exchange
for a share of
the municipal tariffs.
Amendment of staff establishment and personnel
decisions
23.
As
mentioned earlier, the Administrator facilitated the determination of
a new cost-saving organizational structure and staff establishment

for the Municipality, which was approved by the Municipal Council on
28 May 2020. On 10 December 2020 the Municipal Council resolved
to
amend that structure. The effect was to increase the staff complement
in the offices of the political office-bearers, from 6
to 12
employees - in other words, by a hundred percent. Of the 6 new
appointments, 5 were to be in the office on the Speaker, namely
an
office manager, a driver, a clerk, a ‘political support’
officer and a ‘support staff’ member.
24.
It
is admitted by the respondents that the Municipal Council has voted
to amend the staff establishment. The respondents have given
an
undertaking to not enter into a binding financial commitment in
respect of the hiring of new personnel pending Part B of this

application. The undertaking is further that, in the interim, the
vacant posts in essential roles will be filled by internal
secondments
that will entail no additional expenditure.
25.
In
addition to the above decisions relating to the staff establishment,
on 10 December 2020 the Municipal Council resolved to reinstate
a
senior employee (Mr Hendrik Barnard) who was previously dismissed,
with immediate effect, and the Acting Municipal Manager was

authorised to conclude a full and final settlement agreement with
him. The settlement agreement was entered into on 14 December
2020,
and was made an arbitration award on the same day.
26.
In
another instance, two employees (Ms Melrose Xego and Ms Naledi
Nqeketo) who were previously dismissed by the Municipality were

reinstated in terms of a Bargaining Council award which also provided
for payment of certain amounts to them.  On 10 December
2020,
the Municipal Council resolved to make additional payments amounting
to R204 903,19 to the employees, on the basis that
these were
benefits that should have been taken into account when the Bargaining
Council calculated its monetary award.
27.
Yet
another staff-related decision that is challenged is the decision to
pay a performance bonus in excess of R136 000 to the

Municipality’s former Municipal Manager (Mr Morne Hoogbaard).
According to the applicants, Mr Hoogbaard did not have a performance

agreement in place with the Municipality that would have entitled him
to a performance bonus. The payment of the bonus was placed
on the
agenda for a meeting that was to be held on 15 December 2020.
However, as the respondents point out, because no
quorum
could be reached, the meeting had been postponed twice and a
resolution in this regard had not been passed by the time the matter

was heard in Court. It bears mentioning that the reason no
quorum
could be reached is that those respondents who were opposed to the
decision to pay the bonus deliberately absented themselves from
the
meetings. This appears from the applicants’ papers.
THE
RESPONDENTS’ CASE
28.
The
respondents have raised a collateral challenge, on the basis of which
they argue that the interim interdict should be dismissed.
In the
alternative, they rely on a counter-application, based on the same
facts averred in the collateral challenge. In the counter-

application they seek the review and setting aside of the Provincial
Executive’s decisions to impose the intervention, the
Plan and
the appointment of the Administrator; as well as relief declaring
those decisions to be unlawful, unconstitutional and
of no force or
effect. Upon inquiry by the Court, the respondents were agreed that
if the issues relating to lawfulness of the
intervention are dealt
with in Part B, then it is appropriate that the
counter-application should be determined at that stage,
together with
Part B of the applicants’ application.
29.
The
essence of the respondents’ case is that the intervention by
the Provincial Executive was avoid
ab
initio
and
constitutes a nullity, for two main reasons, namely the failure to
comply with the MFMA requirements for developing a financial
recovery
plan; and the failure to comply with the constitutional requirements
for the appointment of the Administrator.
30.
Regarding
the development of the Plan, the respondents rely on a number of
provisions of the MFMA, namely sections 139, 141(2) and
143, and on
the Constitution.
31.
Section
139 provides as follows:
‘
(1)
If a municipality, as a result of a crisis in its financial affairs,
is in serious or persistent material
breach of its obligations to
provide basic services or to meet its financial commitments, or
admits that it is unable to meet its
obligations or financial
commitments, the provincial executive must promptly-
(a)
request
the Municipal Financial Recovery Service-
(i)   to determine
the reasons for the crisis in its financial affairs;
(ii)   to assess the
municipality's financial state;
(iii)   to prepare an
appropriate recovery plan for the municipality;
(iv)   to recommend
appropriate changes to the municipality's budget and revenue-raising
measures that will give
effect to the recovery plan; and
(v)   to submit to the
MEC for finance in the province-
(aa)
the
determination and assessment referred to in subparagraphs (i) and
(ii) as a matter of urgency; and
(bb)
the
recovery plan and recommendations referred to in subparagraphs (iii)
and (iv) within a period, not to exceed 90 days, determined
by the
MEC for finance; and
(b)
consult the mayor of the municipality to obtain
the municipality's co-operation in implementing the recovery plan,
including the
approval of a budget and legislative measures giving
effect to the recovery plan.
(2)      The MEC for finance in the
province must submit a copy of any request in terms of subsection
(1)
(a)
and of any determination and assessment
received in terms of subsection (1)
(a)
(v)
(aa)
to-
(a)
the
municipality;
(b)
the
Cabinet member responsible for local government; and
(c)
the
Minister.’
32.
The
respondents argue that the Provincial Executive should have requested
the MFRS, which is a unit of the National Treasury, to
undertake the
tasks identified in section 139(1) of the MFMA, and this was not
done. In terms of section 141(2) of the MFMA, only
the MFRS may
prepare a recovery plan for the municipality, and that did not take
place, according to the respondents. Instead,
the Provincial
Executive took it upon itself to undertake those tasks, to the
exclusion of the national government.
33.
The
respondents also rely on section 143(3) of the MFMA, which provides
as follows:
‘
(2)
On receipt of a financial recovery plan pursuant to a mandatory
intervention referred to in section
139, the MEC for finance must
verify that the process set out in section 141 has been followed and
that the criteria contained
in section 142 are met, and-
(a)
if
so, approve the recovery plan; or
(b)
if
not, direct what defects must be rectified.
(3)        The responsible
MEC must submit an approved recovery plan to-
(a)
the
municipality;
(b)
the
Minister and the Cabinet member responsible for local government;
(c)
the
Auditor-General; and
(d)
organised
local government in the province.’
34.
The
respondents state that the approval processes required by these
provisions were not adhered to. In terms thereof, the MEC for
Finance
is required to verify, before approving a plan, that the process in
section 141 has been followed, and that the criteria
in section 142
are met. The MEC for Finance could not have complied with those
requirements in this case because section 141(2)
was not complied
with. In addition, there is no evidence that the Plan was submitted
to the bodies mentioned in section 143(3)
for comment.
35.
Regarding
the appointment of the Administrator, the respondents cite section
139(5)(b) of the Constitution, and argue that the appointment
of an
Administrator is only available as an option if the Municipal Council
has been dissolved. Here, the Municipal Council was
not dissolved,
meaning that an essential jurisdictional requirement for the
appointment of the Administrator has never been met.
As a result of
the appointment was void and of no force or effect.
36.
On
the basis of the two arguments raised above, it is contended that
this Court may not order, even on an interim basis, the enforcement

of unlawful and unconstitutional decisions upholding the Plan and the
appointment at the Administrator. I will deal with the substance
of
the arguments later.
37.
For
now, it is necessary to mention that there are other arguments raised
by the respondents. They state that the Provincial Executive’s

manner of intervention was disproportionate to what was necessary in
order to address the financial difficulties of the Municipality.
In
this regard, the Provincial Executive failed to respect the
separation of powers between the spheres of government which are

established in the Constitution. According to the respondents, it was
open to the applicants to invoke section 32, read with section
171 of
the MFMA which provides for recoupment of wasted funds, as well as
for potential criminal charges against malfeasants.
38.
It
is also contended by the respondents that the Provincial Executive
has singled out the first respondent on political grounds.
Other
municipalities in the Western Cape have been plagued by chronic
underpayment for services. Indigent populations and a limited
rates
base, aggravated by the sharp rise of unemployment triggered by the
COVID-19 pandemic, have devastated several municipalities.
But only
Kannaland has been subject to the maximally intrusive intervention
that is the subject of this litigation. The Provincial
Executive has
not once invoked a section 135(5) intervention against any
municipality that is controlled by the Democratic Alliance
(‘DA’).
39.
There
are yet other challenges raised by the respondents. They raise a
point of non-joinder in respect of Mr Barnard, Ms Nqeketo,
Ms
Hoogbaard, as well as the South African Local Government Association
(SALGA). It is said that the named employees should be
joined in
light of their interest in the impugned decisions regarding personnel
in this application. According to the respondents,
SALGA should be
joined as the party to whom the MEC was required to submit an
approved recovery plan in terms of section 143(3)(d).
40.
The
respondents challenge the urgency of this application. They state
that the Inovasure project has been in the pipeline since
2012, and
that the Government parties have been engaging about it since then.
Further, that the applicants have known that the
Municipality was
engaging with Inovasure since at least February 2020. In any event,
no binding contract with budgetary implications
has been signed by
the Municipality. Similarly, the respondents charge that the
applicants have been aware of the changes to the
staff establishment
as early as October 2020, and by the latest on 16 November 2020, and
yet only launched this application on
8 January 2021.
41.
As
mentioned earlier, in the event that it is found in these proceedings
that the decisions of applicants in intervention are not
a nullity,
the respondents rely on a counter-application, relying on the
answering affidavit as the founding affidavit therein.
THE
INTERIM INTERDICT
42.
The
requirements for an interim interdict are well-known.
The
applicants must establish (a) a
prima
facie
right even if it is open to some doubt; (b) a reasonable apprehension
of irreparable and imminent harm to the right if the interdict
is not
granted; (c) the balance of convenience must favour the grant of the
interdict; and (d) the applicant must have no other
available remedy.
When
a court considers whether to grant an interim interdict it must do so
in a way that promotes the objects, spirit and purport
of the
Constitution.
[1]
PRIMA
FACIE
RIGHT
43.
The
accepted test for a
prima
facie
right in the context of an interim interdict is to take the facts
averred by the applicant, together with such facts set out by
the
respondent that are not or cannot be disputed and to consider
whether, having regard to the inherent probabilities, the applicant

should on those facts obtain final relief at the trial. The facts set
up in contradiction by the respondent should then be considered
and,
if serious doubt is thrown upon the case of the applicant, she cannot
succeed.
[2]
The
question is whether, having regard to the facts and the inherent
probabilities, the applicant should obtain final relief when
the main
case is heard.
[3]
It
is not necessary for an urgent court to make a final determination on
the legal issues.
[4]
44.
In
this case, it is common cause that the requirements for a mandatory
intervention in terms of section 139(5) of the Constitution
were
present in March 2017. The Municipality was in the middle of a
financial crisis and, as a result, was in serious and persistent

material breach of its obligations to provide basic services and to
meet its financial commitments. The Municipality furthermore
admitted
at the time that it was unable to meet its obligations and financial
commitments, which was evinced by its request for
the Provincial
Executive to intervene in its affairs.
45.
It
was also at the insistence of the Municipality that the mandatory
form of intervention was
embarked
upon.  The facts show that, after the Provincial Executive
started with a less intrusive form of intervention, the
Municipality
requested to be placed under ‘full administration’. This
belies the argument that the Provincial Executive
could have
undertaken a less drastic form of intervention. It was the
Municipality that insisted to be placed under ‘full

administration’. In any event, whether the Provincial Executive
could have undertaken a less drastic form of intervention
does not
detract from the fact that the jurisdictional requirements for the
mandatory intervention were present at the start of
the intervention.
46.
Even
further, the conditions for the mandatory intervention continue to
exist. As the respondents put it in their answering affidavit,
‘
the
Municipality remains in dire financial straits’
.
[5]
In
terms of section 148(2) of the MFMA, a mandatory intervention ends
when the crisis in the municipality's financial affairs has
been
resolved, and the municipality's ability to meet its obligations to
provide basic services or its financial commitments is
secured.
Neither of these events, which must exist simultaneously, have been
fulfilled, and this is common cause.
It
is therefore doubtful whether, in such circumstances, the Municipal
Council has power to terminate the provincial intervention
without at
least consulting with the Provincial Executive. A reading of section
139(5) of the Constitution suggests that this cannot
be, since in
terms thereof, an intervention is activated, managed and brought to
an end by a Provincial Executive. That interpretation
is fortified by
section 148(3) of the MFMA, which requires that
the
MEC for local government or the MEC for finance in the province
should notify the municipality when a mandatory intervention
comes to
an end. It is the Municipality that receives notification from the
Provincial Executive, not the other way round.
It
would not make sense, in any event, for the termination of a
mandatory intervention to be at the behest of a municipality,
especially
when it was the conduct of the latter that led to the
mandatory intervention in the first place.
47.
Furthermore,
the decision to not share information, records and documents with the
Administrator and Local Government Minister is
contrary to section
149 of the MFMA,
which states as follows:
“
[i]f
a provincial executive intervenes in a municipality in terms of
section 139 of the Constitution, the provincial executive and
its
representatives have access to such information, records and
documents of the municipality or of any municipal entity under
the
sole or shared control of the municipality as may be necessary for
the intervention, including for identifying or resolving
the
financial problem of the municipality.”
48.
It
is clear from this provision that the applicants have a right to all
information, records and documents of the Municipality which
relates
to the Municipality’s Financial affairs or the conduct of the
mandatory intervention.
49.
Most
importantly, the intervention, the Plan and the appointment have been
extant since March 2017 and December 2018, respectively,
without
murmur from the respondents, until late 2020. This is context in
which the respondents raise the collateral challenge.
The
respondents rely on several pre-constitutional and
post-constitutional authorities
[6]
for
the proposition that they need not bring a separate court application
for review if the decisions complained about were a nullity.
The
law relating to collateral challenges was set out by the
Constitutional Court in
Merafong
City Local Municipality v AngloGold Ashanti Limited (‘Merafong’)
.
[7]
The
majority judgment found that our courts have always allowed a degree
of flexibility in collateral (or reactive challenges) to

administrative action, even before our Constitutional era. However,
the Constitutional Court re-asserted that the
import
of
Oudekraal
Estates (Pty) Ltd v City of Cape Town
[8]
and
MEC
for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd
t/a Eye & Lazer Institute
[9]
was
that a government institution cannot simply ignore an apparently
binding ruling or decision on the basis that it is invalid,
as that
would undermine the rule of law; rather, it has to test the validity
of that decision in appropriate proceedings. The decision
remains
binding until set aside.
[10]
Referring
to
Kirland
,
the Constitutional Court stated that it
did
not fossilise possibly unlawful – and constitutionally invalid
– administrative action as indefinitely effective.
It expressly
recognised that the Oudekraal principle puts a provisional brake on
determining invalidity. The brake is imposed for
rule of law reasons
and for good administration. It does not bring the process to an
irreversible halt. What it requires is that
the allegedly unlawful
action be challenged by the right actor in the right proceedings.
Until that happens, for rule of law reasons,
the decision
stands.’
[11]
50.
The
Constitutional Court pointed out that neither
Oudekraal
nor
Kirland
expressly circumscribed the circumstances in which an administrative
decision could be attacked reactively as invalid.
[12]
It
all depends on the circumstances.
[13]
A
collateral challenge should be available where justice requires it to
be; and that will depend, in each case, on the facts.
[14]
As
the Court stated,
the
permissibility of a collateral challenge by an organ of state
must depend on a variety of factors, invoked with a
'pragmatic
blend of logic and experience'
,
and it would be imprudent to pronounce any inflexible rule.
[15]
51.
As
indicated earlier, the respondents point to the irregularity of the
adoption of the Plan – that the MFRS was not the initiator
of
the Plan and did not undertake the tasks required by section
139(1)(a) of the MFMA. They point to section 141(2) of the MFMA
which
states that only the MFRS may
prepare
a financial recovery plan for a mandatory provincial intervention
referred to in section 139.  They also rely on section
143 which
sets out the requirements for approval and dissemination of the final
plan.
Regarding
the involvement of the MFRS, the applicants have attached to their
replying affidavit email correspondence between the
Provincial
Treasury and the MFRS dated February 2017, indicating that a draft of
the financial recovery plan was in fact submitted
to the MFRS, and
that in turn, the MFRS revised it and made significant and
substantive contributions to it. They have also attached

correspondence dated August 2020 in which the Provincial Executive
requested the National Minister of Finance to review and amend
the
Plan. The respondents complain that the correspondence of February
2017 is hearsay evidence because no confirmatory affidavit
from the
National Treasury was attached to the applicants’ replying
affidavit. Further, the fact that the Provincial Executive
requested
the National Minister of Finance in August 2020 to review and amend
the Plan is too little too late, according to the
respondents, and
cannot
ex
post facto
cure the nullity of the existing Plan. I do not think it is
appropriate to reject or ignore the email correspondence between the

Provincial Treasury and the MFRS dated February 2017 as hearsay
evidence at this stage for several reasons. The parties have
approached
the Court in urgent proceedings, with voluminous papers;
and the issue regarding the MFRS has never been raised between the
parties
until the answering papers, and the applicants sought to cure
it through a replying affidavit. It was after the delivery of the

replying affidavit that the hearsay argument was raised. Further, the
application seeks to deal with the substance of the validity
of the
Plan in the main proceedings, not now, and may therefore cure the
alleged inadmissibility in due course. I also, in any
event, do not
think that the respondents have cast serious doubt that the National
Treasury and the MFRS were involved in the process
of developing the
Plan. Whether and to what extent they were the originators of the
Plan, and what may be considered to be sufficient
compliance in those
circumstances, is an issue that may more appropriately be dealt with
in the main proceedings.
52.
On
the whole, I do not consider it appropriate to decide whether the
Plan or the appointment of the Administrator should be determined
as
void
ab
initio
at
this stage of the proceedings.
Those
determinations will more appropriately be made in Part B of the
proceedings, in the determination of the validity of the
intervention.
In
making that determination, I have taken into account several
considerations, some of which arose in
Merafong
.
Firstly, as in
Merafong,
the
Municipality has taken the approach that it should be entitled to
ignore a decision which was palpably and obviously beyond
the powers
of the decision-maker, in other words which
‘
lack[ed]
the facial imprimatur of lawfulness’,
until,
as a matter of process, that decision is sought to be enforced
against it, as the applicants here have done.
[16]
The
Constitutional Court rejected this argument as unsound in Merafong,
emphasizing that
even
decisions 'purportedly taken' under a statute, but which in fact lack
authorisation, are subject to review.
[17]
The
Court continued with the following which is apposite to this case:
‘
If
we were to sustain Merafong's argument that it was entitled to ignore
the Minister's decision until it was sought to be enforced,
this must
extend to all cases of patent invalidity. This would suggest that an
official may ignore a decision, taken under statutory
power (intra
vires), that is tainted by patently improper influence or corruption.
But that is precisely what happened in Kirland
— and
the self-help argument was not countenanced. What is more, not only
would what is or is not 'patently unlawful'
be decided outside the
courts, but there would be no rules on who gets to decide and how. If
failure to review a disputed decision
is defensible on the basis that
the decision was considered patently unlawful, the rule of law
immediately suffers. So the argument
is not tenable.’
[18]
53.
The
Court in
Kirland
had stated similar considerations as follows:
‘
the
Department’s argument entails that administrators can, without
recourse to legal proceedings, disregard administrative
actions by
their peers, subordinates or superiors if they consider them
mistaken.  This is a licence to self-help.  It
invites
officials to take the law into their own hands by ignoring
administrative conduct they consider incorrect.  That would

spawn confusion and conflict, to the detriment of the administration
and the public.  And it would undermine the courts’

supervision of the administration.
’
[19]
54.
The
considerations mentioned in the above extracts are apposite to this
case. From March 2017 until the end of 2020, if not February
2021 in
their court papers, the Municipality did not raise the nullity
arguments, until the applicants launched these proceedings.
One
example of this is that, according to the communication sent out on 3
December 2020, the purported reason for terminating the

Administrator’s service was the expiration of his term of
contract. It is only in the court proceedings that the void
ab
initio
argument is raised regarding his appointment.
55.
Furthermore,
as the Constitutional Court affirmed in
Kirland
and
Merafong
,
self-help should not be countenanced. The respondents in this case
have indulged in considerable self-help which has led to the

launching of these proceedings before challenging the decisions that
are now the subject of the collateral challenge.
[20]
In
my view, upholding the collateral challenge would, in effect lend
support to the self-help.
56.
In
the circumstances of this case, upholding the collateral challenge
would also have the effect of disrupting what the parties
have agreed
are positive strides made since the intervention, and create
instability in the Municipality. It must be remembered
that
ultimately, it is the citizens that are affected by the conduct of
the organ of states.
The
obligations borne by local government to provide basic municipal
services are sourced in both the Constitution and legislation.

Sections 152 and 153 of the Constitution set out the objectives
of local government, read together with sections 4(2)(f)
and 73 of
the Local Government: Municipal Systems Act 117 of 1998. In terms of
section 7(2) of the Constitution, the state must
respect, protect,
promote and fulfil the rights in the Bill of Rights. At the very
minimum, the state must refrain from interfering
with existing
rights. The Constitutional Court has stated
[21]
that
where access to water, sanitation, electricity and fire and emergency
services once existed but is then taken away due to a
dispute within
or relating to the management of a municipality, there may be a
violation of fundamental rights of the inhabitants.
[22]
These
rights are affected, and are will continue to be affected by the
issues that are the subject of this case.
57.
Another
consideration which militates against granting the collateral
challenge in this case, which also arose in
Merafong,
is the Municipality’s delay in raising the collateral
challenge.
[23]
Nowhere
in the papers has the Municipality explained why it failed to raise
this challenge in the period since 2017. On the other
hand, the
applicants have set out evidence, which is not seriously disputed, to
show that the respondents opportunistically seized
the moment of the
Executive Mayor’s absence due to illness.
58.
In
my view, justice does not require that this Court should declare the
intervention, the Plan and the appointment of the Administrator

invalid and unlawful at this stage of the proceedings. Further, I do
not find that the respondents’ arguments have cast serious

doubt on the applicants’
prima
facie
right to intervene, to impose the Plan and to appoint the
Administrator.
59.
I
am also mindful that the Municipality relies on the same grounds for
the collateral challenge as it does in the counter-application.

Therefore, in dismissing the collateral challenge the Court is not
closing the door on the Municipality raising the invalidity
issues in
the main proceedings between the parties.
[24]
60.
As
regards the Inovasure contract, the respondents have not seriously
disputed that the project will have significant and long-term
effects
on the Municipality’s financial position, and the manner in
which it provides basic services over the next three
decades. The
fact that no contract has yet been concluded is not the point. The
Municipality has committed itself to a path of
unlawfulness by
seeking to accept an unsolicited bid of this magnitude, whilst under
mandatory intervention. It is exactly this
kind of contract that
needs to comply with the Plan, and in respect of which the
Administrator was given exclusive authority.
61.
In
taking steps towards this arrangement, the respondents have ignored a
whole range of legal requirements and considerations, which
were
repeatedly pointed out to them in the correspondence from the
National Treasury dated 19 August 2020 and the Provincial Executive

dated 29 September 2020, and which are set out earlier in this
judgment.
62.
Furthermore,
in terms of section 217 of the Constitution, municipalities and other
organs of state must contract for goods and services
in accordance
with a system that is fair, equitable, transparent, competitive and
cost-effective
.
Generally,
in respect of high-value or long-term contracts section 217 requires
that they be concluded following an open and competitive
tender
process. If a Municipality wishes to appoint an unsolicited bid, it
must comply with the provisions of the Municipal Supply
Chain
Management Regulations (‘SCM Regulations’). Regulation
37(2) of the SCM Regulations provides that an unsolicited
bid may
only be considered if –
(a)
the
product or service offered in terms of the bid is a demonstrably or
proven unique innovative concept;
(b)
the
product or service will be exceptionally beneficial to, or have
exceptional cost advantages for, the municipality or municipal

entity;
(c)
the
person who made the bid is the sole provider of the product or
service; and
(d)
the
reasons for not going through the normal bidding processes are found
to be sound by the accounting officer.
63.
Applying
these provisions, the applicants state firstly that Inovasure’s
proposal - which relates to renewable energy and
water technology -
is not a unique innovative concept; and Inovasure is not the sole
provider of the services in the market. Secondly,
according to the
applicants, Inovasure’s bid will not be exceptionally
beneficial, or have exceptional cost advantages to
the Municipality.
In this regard they refer to the framework document setting out of
the salient aspects of the project, which
indicates that a single
unit energy vault will cost approximately R735 000 000.
This amount excludes the costing for
the water, information
technology and management services to be provided by Inovasure.
According to the applicants, the Municipality
can ill-afford to pay
this amount for an energy security system, when its annual operating
budget is R174 290 000, which amounts
to 23% of the energy
security component of the Inovasure project.  Thirdly, the
applicants state that there are no sound reasons
for not procuring
energy security technology and water systems through a competitive
bidding process. Such a process would allow
a better opportunity to
assess what the market is willing and able to provide, and whether
those offerings are within the Municipality’s
means.
64.
The
respondents have not at all attempted to engage with these legal
considerations in these proceedings
.
They
also did not do so when the correspondence from the national and
provincial governments and was sent to them in August 2020
and
September 2020, respectively.
65.
A
municipality may not exercise executive powers to conclude contracts
with third parties beyond the powers conferred on it by law.
Where
the law constrains these powers, as contemplated in section 139(5)(a)
of the Constitution, read with section 146(2) of the
MFMA, the
municipality may only conclude contracts with third parties within
the scope of the powers it is permitted to exercise.
Given that the
Plan binds the Municipality in the exercise of its executive and
legislative authority to the extent necessary to
achieve the
objectives of the Plan, and has done so since its approval on 17
March 2017, since then, the Municipality has been
obliged to ensure
that all decisions takes, including decisions to conclude contracts,
do not prevent to undermine the successful
fulfilment of the
objectives set out in the Plan.
66.
Regarding
the impugned personnel decisions, I have already stated that it is
not in dispute that they have the potential to incur
significant
costs for the Municipality. It is furthermore common cause that the
staff establishment that was approved in May 2020,
was a cost-saving
organizational structure. Furthermore, the Plan expressly identified
the review of the organizational structure
and the placement of staff
as a key deliverable of the intervention. This is the reason that the
task of reviewing and updating
the organizational structure was
discharged. This was the background to the approval of the staff
establishment in May 2020. The
respondents’ amendment to that
approved staff establishment made no reference to the review already
undertaken by the Administrator
which resulted in the approved
establishment in May 2020, or the priorities identified in the Plan.
Even in these proceedings,
no attempt has been made to justify the
amendments. There is especially no justification given for why,
during a financial crisis
which is common cause, and a global
pandemic, a member of the Municipal Council whose office previously
only had one assistant,
should now require an additional five
employees.
67.
With
regard to the disputed payments to staff, it is not denied by the
respondents that there was no legal obligation to pay the
additional
amounts made to Ms Xego and Ms Nqeketo. However, they point out that
the same report that recommended that the payments
should be made
also states that all the amounts paid to these employees should be
investigated as possible wasteful expenditure.
The real issue,
however, is whether the payments should be made in the first place.
It is too late to investigate the payments
only after the payments
have been made. That decision is even more astonishing given that it
appears to be common cause that there
is no legal basis for the
payments in the first place. This is exactly the kind of
decision-making - the kind that appears to lack
a principled approach
- that requires supervision from the Administrator and which demands
conformity with the Plan.
68.
All
of these decisions, if followed through, will no doubt have a
significant impact on the Municipality’s finances. They
also
undermine the Municipality’s financial recovery, and are
inconsistent with the Plan. If unabated, and on an urgent basis,
the
respondents’ conduct will have the effect of undoing the good
work that has been achieved through the intervention, which
is common
cause.
IRREPARABLE
HARM
69.
There
is no doubt that the latest decisions made by the respondents have an
impact on the financial affairs of Municipality. The
evidence shows
that it is exactly the sort of conduct complained about in these
proceedings - the profligate spending, unnecessary
expenditure in
litigation, substandard SCM controls, and fruitless in wasteful
expenditure - that resulted in the mandatory intervention.
This sort of
conduct by public officials and political official bearers is harmful
not only to the rule of law and the applicants,
but to the residents
of Kannaland. It runs contrary to section 139(5) of the Constitution
- the provisions that permit the intervention.
It is a recipe for
chaos in governance.
70.
The
respondents state that it is the grant, not the denial of the relief
sought by the applicants that poses the real threat to
the rule of
law. They state that, since the intervention and the appointment of
the Administrator were unlawful
ab
initio
,
the rule of law ‘
demands
that the intrusion into the institutional and functional integrity of
Kannaland’s local government to be corrected
by this Court’
.
The respondents further rely on the following passage from
Mogalakwena
Local Municipality v Provincial Executive Council, Limpopo and
Others
[25]
:
‘
With
a stroke of his pen, the MEC attempted, in favour of a functionary of
the MEC’s own choosing, to circumvent the carefully
constructed
network of constitutional and other statutory powers which led to the
vesting in the municipal manager, by the democratically
elected
representatives of the community served by the municipality, of the
municipal manager’s powers to administer the
funds of the
municipality. The functionary selected by the province, declared the
MEC, would not be accountable to the council
of the municipality and
ultimately the voters within the municipality but effectively to the
MEC.’
[26]
71.
However,
the case of
Mogalakwena
Local Municipality v Provincial Executive Council, Limpopo
is
distinguishable from the facts of this case. Firstly, the municipal
councillors in that case objected to the provincial intervention

immediately. They did not wait for a period of three years before
challenging the intervention. Secondly, the applicants in that
case
approached the court in making their objectives known. Here, the
respondents opted to take the law into their own hands instead
of
approaching the court. Thirdly, as the quoted portion above
indicates, in that case the MEC did not consult the municipality

before appointing an administrator. In the present case, the
Municipality was not only consulted but requested the intervention.

The case of
Mogalakwena
Local Municipality v Provincial Executive Council, Limpopo
therefore provides no assistance to the respondents.
72.
I
have already referred to the Constitutional Court case of
Ngaka
Modiri Molema District Municipality v Chairperson, North West
Provincial Executive Committee and Others
.
There, the Court made the following statement which is apposite when
considering the requirement of harm to this case: ‘
It
needs to be stressed that the potential prejudice and urgency lie not
in the harm suffered by the Municipality or the municipal

councillors, but in the continued disruption of basic essential
services to the people and communities the Municipality is supposed

to serve.  The people who may suffer the real harm are not party
to these proceedings.  It is because of the alleged
failure in
its executive obligation to them that the Municipality was
dissolved.
’
[27]
The
common cause facts in this case are that, although positive strides
have been made, the situation in Kannaland remains dire.
In other
words, the provision of basic essential services continues to be
compromised, and as a result, the conditions for an intervention

continue to exist.
73.
The
respondents state that no harm will flow from the Inovasure project
because there is no final, binding agreement yet, and because
there
is a lengthy bid adjudication and public participation process ahead.
However, it has not denied that it has failed to comply
with the
minimum requirements for an unsolicited bid – in another words,
that the path that it has embarked upon is unlawful
.
Furthermore,
it is not clear why the respondents allege that the adjudication
process will be lengthy, given that the evaluation
has already been
completed. Another consideration is that it is common cause that the
financial crisis is, in part, attributable
to the Municipality’s
small rates base. I therefore find it startling that the Municipality
would, whilst under a mandatory
intervention, find it appropriate to
agree for a private company to have a R730 million share of future
tariffs, without proper
processes being followed. Even if the
contract has not yet been signed, the conduct already embarked upon
by the respondents with
regard to this contract, which is on record
in these proceedings, displays reckless disregard and failure, if not
refusal, to appreciate
the dire reality of the circumstances in which
the Municipality finds itself. It is not in dispute is that this
Municipality cannot
afford to lose hundreds of millions of rand in
future revenue. The residents will furthermore be forced to bear the
cost of this
multi-decade endeavour, if it is allowed to continue
unabated.
74.
Regarding
the staff appointments, I have already referred to the undertakings
given by the respondents, namely that no further appointments
will be
made pending the outcome of this interim application. In my view,
this is inadequate given the obvious cost implications
for the
Municipality. The undertaking also does not deal with the unlawful
appointments already made. It also does not extend beyond
these
interim proceedings, to Part B of the application. It means that,
unless this Court intervenes, the respondents can continue
with their
conduct until the conclusion of the main part of the proceedings.
75.
Lastly
on this point, no evidence has been supplied by the respondents for
the charge that the Municipality has been targeted on
political
grounds because it is not DA-controlled. The applicants deny this,
and state that at all relevant times of the intervention,
including
when the Plan was imposed, and when the Administrator was appointed,
the Municipality was led by a coalition that included
the DA. The
respondents have simply failed to make out a case in this regard.
76.
In
granting this Order, I have considered its impact on the
constitutional and statutory powers and duties of the respondents.
However, as the Constitutional Court stated in the
Ngaka
Modiri
case, what is even more important is the impact of the respondents’
conduct on the citizens of this municipality. Given the
ongoing
nature of the harm being propagated at the expense of the
Municipality’s citizens, it is only appropriate that the
status
quo
ante
be restored until the determination of Part B of the proceedings.
BALANCE OF CONVENIENCE
77.
A
court must be satisfied that the balance of convenience favours the
granting of a temporary interdict. It must first weigh the
harm to be
endured by an applicant, if interim relief is not granted, as against
the harm a respondent will bear, if the interdict
is granted. Thus a
court must assess all relevant factors carefully in order to decide
where the balance of  convenience rests.
78.
In
National
Treasury & Others v Opposition to Urban Tolling Alliance &
Others
[28]
(‘Outa’)
the Constitutional Court added that the
balance
of convenience enquiry must also carefully probe whether and to
which extent the restraining order will probably intrude
into the
exclusive terrain of another branch of government. ‘
The
enquiry must, alongside other relevant harm, have proper regard to
what may be called separation of powers harm. A court must
keep in
mind that a temporary restraint against the exercise of statutory
power well ahead of the final adjudication of a claimant's
case may
be granted only in the clearest of cases and after a careful
consideration of separation of powers harm. It is neither
prudent nor
necessary to define 'clearest of cases'. However, one important
consideration would be whether the harm apprehended
by the claimant
amounts to a breach of one or more fundamental rights warranted by
the Bill of Rights.’
[29]
79.
I
am alive to the constitutional and statutory prerogative and rights
accorded to the Municipality in terms of the Constitution
and
legislation, including the MFMA and the Municipal Systems Act.
However, I am also mindful of the
disruption
of basic essential services to the people and communities the
Municipality is supposed to serve
.
In my view, when taking into account the fact that the respondents
have endured the intervention since 2017, without murmur, indicates

that there can be no possible prejudice for them to wait until the
determination of Part B of this application. The  sudden,

unlawful change in the governance philosophy of the Municipality, as
at the end of 2020, weighs considerably in favour of granting
the
interim relief. I am not persuaded that the respondents will suffer
harm or prejudice if the interdict is granted.
ALTERNATIVE
REMEDY
80.
The
applicants have no other remedy in ensuring the respondents’
compliance with their legal obligations, other than through
the
relief sought in these proceedings. The Court papers include
correspondence from, not only the applicants, but also from the

National Treasury, directing the respondents to comply with their
legal obligations before these proceedings were launched. Those
pleas
fell on deaf ears.
81.
The
respondents have placed reliance on the Intergovernmental Framework
Relations Act 13 of 2005 (‘IRGFA’), stating
that the
applicants should have avoided this litigation, and should have
rather taken the matter to mediation in terms of that
statute in the
spirit of cooperative governance. The swift answer is that, in terms
of section 39 of the IRGFA, a
dispute
concerning an intervention in terms of section 139 of the
Constitution is
specifically
excluded from the ambit of that statute that deals with settlement of
intergovernmental disputes. The respondents have
invited the Court to
nevertheless be disinclined to rule in favour of the applicants on
the merits, and should rather afford to
the parties an opportunity to
negotiate in the spirit of intergovernmental cooperation embodied in
the Constitution. Given the
applicants’ futile attempts thus
far in engaging  the respondents to comply with their legal
obligations, it is doubtful
whether that route provides a realistic
alternative remedy. In any event, nothing prohibits the parties from
engaging after the
granting of this Order and before the
determination of the main matter. For the purposes of granting this
Order, it suffices that
the applicants have made out of case for the
interim interdict.
82.
As
indicated earlier, the respondents also argue that the applicants
could have used ‘
a
plethora of legislative machinery to counter [the] alleged
malpractices’
instead
of approaching this Court. The specific remedies mentioned in this
regard are
recouping
wasted funds, and laying criminal charges against the recalcitrant
individuals. In my view, such a piecemeal approach
to dealing with
the fundamental governance problems posed by the conduct of the
respondents, would be inadequate. What is required
is relief that
will be adequate enough to bring to an end what the applicants have
referred to as the ‘capture of the Municipality’.
83.
For
all these reasons I am not persuaded that the applicants have
alternative remedy other than to approach this Court.
84.
It
is implicit in granting this Order, that I am persuaded that the
matter is urgent, and warrants urgent intervention by this Court.

I am not persuaded by the respondents’ argument that the matter
lacks urgency.
85.
During
the hearing of this matter, the parties were in agreement that the
costs can stand over for later determination, together
with Part B of
the application.
ORDER
86.
In
the circumstances, I grant an order in the following terms:
(a)
An
order in terms of the draft order handed up by the applicants, which
shall be attached as “X” to this judgment, with
the
timetable adjusted by arrangement between the parties, failing which
the parties may approach the Court for determination of
the dates;
and
(b)
The
respondents’ collateral challenge is dismissed.
________________________
N.
MANGCU-LOCKWOOD
Acting
Judge of the High Court
Legal
representatives:
Applicants’ Counsel: J De Waal SC, A. Pillay
Instructed
by: Ms S Karjiker, Cape Town State Attorney.
Respondents’ counsel: M. Osborne & Adv
Snyders.
Instructed
by: Mr H. Mills, HDRS Attorneys Inc.
[1]
At para [45].
[2]
Spur Steak Ranches Ltd and
Others v Saddles Steak Ranch, Claremont and Another
1996 (3) SA 706
(C) at
714E-H;
See also
Gool
v Minister of Justice and another
1955 (2)
SA 682
(C) at 688 (E)
[3]
Spur Steak Ranches Ltd and
Others v Saddles Steak Ranch, Claremont and Another
1996 (3) SA 706
(C) at
714E-H;
See also
Gool
v Minister of Justice and another
1955 (2) SA 682
(C) at 688 (E).
[4]
Zulu v Minister of Defence
and Others
[2005] ZAGPHC 16
;
2005
(6) SA 446
(T) paras 41 - 42.
[5]
Record p 522, para 133.
[6]
Harris and others v
Minister of the Interior and Another
1952
(2) SA 428
(A);
The
Master of the High Court (North Gauteng High Court, Pretoria) v
Motala and Others
2012 (3) SA 325
(SCA); Merafong City v Anglogold
Ashanti Ltd
2017
(2) SA 211
(CC);
Schierhout
v Minister of Justice
1926
AD 99.
[7]
See also
Gobela Consulting v Makhado Municipality
(Case no 910/19)
[2020] ZASCA 180
(22 December 2020)
para
[18].
[8]
Oudekraal Estates (Pty)
Ltd v City of Cape Town
[2004] ZASCA 48; 2004 (6) SA 222 (SCA).
[9]
MEC
for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd
t/a Eye & Lazer Institute
2014
(3) SA 219 (SCA).
[10]
At para [41].
[11]
At para [43].
[12]
At para [44].
[13]
At para [44].
[14]
At para [55].
[15]
At para [56].
[16]
At para [50].
[17]
The Court was
specifically referring to relief in terms of PAJA on this point, but
the principle is equally applicable to review
based on the grounds
of legality.
[18]
At para [54].
[19]
At para [89].
[20]
See
Gobela
Consulting v Makhado Municipality
(Case no 910/19)
[2020] ZASCA 180
(22 December 2020) at
para [22] where the SCA took
impermissible self-help as an important consideration in whether a
collateral challenge should have
been allowed by the court
a
quo.
[21]
Ngaka Modiri Molema District Municipality v
Chairperson, North West Provincial Executive Committee and Others
2015 (1) BCLR 72
(CC) at paras [13] - 14], [22].
[22]
See
Ngaka Modiri Molema District Municipality
v Chairperson, North West Provincial Executive Committee and Others
2015 (1) BCLR 72
(CC) at paras [13] - 14], [22].
[23]
At paras [72] – [77].
[24]
This was one of the factors
taken into account by the Constitutional Court in
Merafong
at paras [67] – [68].
[25]
Mogalakwena Local
Municipality v Provincial Executive Council, Limpopo and Others
(35248/14) [2014] ZAGPPHC 400;
[2014] 4 All SA 67
(GP) (19 June
2014).
[26]
At para [43].
[27]
At para [9].
[28]
National
Treasury & Others v Opposition to Urban Tolling Alliance &
Others
2012
(6) SA 223 (CC).
[29]
At para [47]; [65] –
[66]