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[2015] ZASCA 24
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Kwa Sani Municipality v Underberg/Himeville Community Watch Association and Another (180/2014) [2015] ZASCA 24; [2015] 2 All SA 657 (SCA) (20 March 2015)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case
no: 180/2014
In
the matter between:
KWA
SANI
MUNICIPALITY
...................................................................................
APPELLANT
and
UNDERBERG/HIMEVILLE
COMMUNITY
WATCH
ASSOCIATION
..........................................................................
FIRST
RESPONDENT
AUBREY
NGCOBO
NO
.....................................................................
SECOND
RESPONDENT
Neutral
citation:
Kwa Sani Municipality v
Underberg/Himeville Community Watch Association
(180/2014)
[
2015]
ZASCA 24
(20 March 2015)
Coram:
Mpati P, Lewis, Willis and Mbha JJA and Gorven AJA
Heard
:
25 February 2015
Delivered:
20 March 2015
Summary:
Application to declare agreement
invalid ─ Municipality alleging non-compliance with legislation
and consequent invalidity
─ invalidity not made out ─
agreement endured for some four years before declaration sought ─
unexplained delay
in approaching court ─ not necessary to deal
with delay in light of finding of validity.
ORDER
On
appeal from
KwaZulu-Natal High Court,
Pietermaritzburg (Koen J sitting as court of first instance):
The
appeal is dismissed with costs.
JUDGMENT
Gorven
AJA (Mpati P, Lewis, Willis and Mbha JJA concurring):
[1]
Kwa
Sani Municipality (the municipality) approached the KwaZulu-Natal
High Court, Pietermaritzburg for an order declaring invalid
and
setting aside an agreement. The agreement was for the provision of
disaster management services to the municipality by the
first
respondent (the association). It also sought consequential relief.
The municipality contended that the agreement was invalid
for want of
compliance with s 217 of the Constitution,
[1]
the provisions of the Local Government: Municipal Finance Management
Act (the MFMA)
[2]
and the
regulations promulgated under that Act.
[3]
This was disputed by the association. It denied any invalidity. It
also raised an unexplained and undue delay on the part of the
municipality in approaching the court for such relief.
[2]
The court below
(Koen J)
dealt
primarily with two issues. The first issue was whether the agreement
was invalid for want of compliance with s 217 of
the
Constitution. The court held that, on the evidence, it was ‘. .
. by no means persuaded that the process adopted was
necessarily not
in compliance with the Constitutional injunction’. The second
issue was whether the delay of the municipality
in challenging the
agreement non-suited it. The court below also found for the
respondent on that issue.
The application
was dismissed with costs and leave to appeal was refused with costs.
The appeal is with the leave of this court.
[3]
The factual background to the conclusion of the agreement is of some
moment.
The association was formed in 1998.
It grew out of a Farm Watch which had been established in conjunction
with the South African
Police Services (SAPS), from which two members
were assigned. Later, the association was established in consultation
with the SAPS,
the South African National Defence Force (SANDF),
residents in Himeville and Underberg, and the farming community. A 24
hour emergency
service was set up for the benefit of the whole
community. Twenty one security cells were established with volunteer
members from
the community, a volunteer cell leader and constant
radio communication with each cell. The association was funded by
contributions
from the community.
[4]
The role of the association was extended over the ensuing years. In
addition to the initial focus, it fulfilled the following
functions:
the
supply of a 24 hour emergency service to the entire community within
the magisterial district of Underberg;
the
supervision and co-ordination of the 21 security cells within the
district to be called upon by the association from time
to time to
respond to any emergency within the cell area;
from
2001 onwards, close co-operation with the SANDF, which was at that
time deployed to the district to fulfil duties on the
Lesotho
border, primarily relating to the theft of livestock;
the
inauguration of and participation in the Southern Berg Fire
Protection Association;
the
provision of radios in various vehicles in order to improve and
maintain communications throughout the municipal area; and
from
2008 onwards, the supervision and management of a Working on Fire
team.
[5]
During 2004 the municipality invited the association to base itself
in the newly constructed municipal offices in Himeville.
It was not
required to pay rent or service charges. This situation was
terminated approximately five years later. At some stage
the
municipality collected R20 per household per month on behalf of the
association. However, when it was realised that the municipality
was
not entitled to act as a cash collection agent for other parties,
this practice was terminated. During this period, the association
became a member of the Disaster Management Institute of Southern
Africa and remains such. Over the years, the association has
established a sophisticated communications network which enables it
to maintain communications with members of the community, SAPS,
neighbouring farmers, the 21 cells and Ezemvelo KZN Wildlife. No
comparable network systems exist or existed within the municipality.
[6]
In 2008 the association expressed its dissatisfaction with the
existing arrangements for funding its activities. It called upon
the
municipality to conclude an agreement formalising the provision of
the services it was rendering. The parties negotiated and
concluded
an agreement which the municipality undertook to reduce to writing.
When it failed to do so, the association produced
a draft. This was
lost on two occasions, but was finally signed by both parties on
2 November 2010. The municipal manager
signed on behalf of the
municipality. He was authorised to do so by council resolution 117,
taken on 28 October 2010.
[4]
It
is this agreement which formed the focus of the application.
[7]
The agreement provided for a contract period of three years with
effect from 1 July 2008. It also provided for an extension,
absent
notice to the contrary, for a further three years. After that, it was
to be terminable on six months’ notice by either
party. Neither
party terminated it prior to 1 July 2011, when the agreement was
automatically renewed. The second three year period
was thus to
elapse on 30 June 2014. On 23 May 2012, however, the council of
the municipality resolved to terminate the agreement.
Pursuant to
that resolution, the municipal manager wrote to the association. The
material part of the letter reads as follows:
‘
This
letter serves as official termination of services by the Kwa Sani
Municipality. This notice is given in terms of the contract
(section
4.2) held between yourselves and the Kwa Sani Municipality.’
[8]
The association responded to this letter. It pointed out that the
municipality had not terminated the agreement before it was
extended
for the further three year period. Therefore, it said, the letter
could only serve as notice that the agreement would
terminate on 30
June 2014. This is what paragraph 4.2 of the agreement, on which the
municipality said it relied, provided. It
was clear that the basis
for termination relied upon by the municipality in the letter was
ill-founded. The municipality did not
seek in the court below or on
appeal to contend otherwise. When the municipality later claimed that
it could and did terminate
the agreement forthwith, the association
responded again. It pointed out that the purported termination
amounted to a repudiation
of the agreement, that the association did
not accept the repudiation and that it elected to abide by the
agreement. On the papers
it was common cause that the association
continued to provide the services under the agreement and there is no
indication that
this ceased prior to 30 June 2014. The municipality
has refused to pay the association for any services beyond June 2012.
[9]
The reason which was given in the founding affidavit for the decision
to cancel is instructive:
‘
.
. . [D]uring 2012, the [municipality’s] circumstances began to
change such that it did not require the services which the
[association] was to provide under the agreement. The monthly
repayment under the agreement became an unnecessary expense and
placed undue strain on the [municipality’s] financial
resources. The [municipality] had in place a permanent staff base
allocated
to disaster management and hence the service which the
[association] was to provide under the agreement was not required and
could
be performed by the [municipality]. The [municipality] was also
in financial distress and was required to implement cost cutting
measures for the 2012/2013 financial year.’
This
provoked a response from the association to the effect that the
expense had been budgeted for, that only one staff member was
employed as the disaster management official and that he had been so
employed since 2004. The response of the municipality in turn
claimed
that this official had been employed in that capacity since 2012. It
then stated that the disaster management service was
a district
function, not one for which the municipality was responsible. In the
next breath, however, it mentioned that the municipality
had
contracted for the provision of those services with KZN Rural Metro
Emergency Management Services (Pty) Ltd.
[10]
The net effect of all of this is that the municipality claimed that
it could perform the services itself. In addition it supposedly
could
not afford to contract them out. It then claimed that the services
were not its responsibility. It finally said that it had
contracted
another body to perform the services. Accordingly, the claims that
the municipality could itself provide the requisite
services and that
there were financial reasons for terminating the agreement were, on
its own version, shown to amount to sheer
sophistry.
[11]
The refusal of the municipality to continue paying for the services
led to the association claiming payment in arbitration
proceedings.
The second respondent was appointed the arbitrator. Thereafter the
municipality took the view that it was necessary
for it to approach
the court since its contention was that the agreement was invalid and
the arbitration, based as it was upon
the agreement, was therefore
not appropriate. This was the first time that the municipality had
claimed that the agreement was
invalid. The second respondent has
taken no part in the court proceedings.
[12]
On appeal, it was accepted that the decision to conclude the
agreement amounted to administrative action.
As
Professor Hoexter points out: ‘. . . public bodies use contract
as a method for exercising their powers and performing
their
duties’.
[5]
The
starting point as to how to act if one contends that administrative
action is invalid is found in
Oudekraal
Estates (Pty) Ltd v City of Cape Town & others
.
[6]
This court there held that, because administrative action often forms
the basis for subsequent acts, it must be treated as valid
until it
is set aside even if it was actually invalid. This was explained as
follows:
‘
Until
the Administrator's approval (and thus also the consequences of
the approval) is set aside by a court in proceedings
for judicial
review it exists in fact and it has legal consequences that cannot
simply be overlooked.’
[7]
This
does not mean that the administrative act is valid, only that it must
be treated as such. There is only one circumstance in
which it can be
ignored without being set aside. Thus:
‘
It
is in those cases - where the subject is sought to be coerced by
a public authority into compliance with an unlawful administrative
act - that the subject may be entitled to ignore the unlawful act
with impunity and justify his conduct by raising what has come
to be
known as a “defensive” or a “collateral”
challenge to the validity of the administrative act.’
[8]
[13]
On appeal, the municipality submitted that the launch of the
application was akin to its having raised a collateral challenge.
It
claimed that, because the association had attempted to enforce the
agreement by way of the arbitration, the municipality was
therefore
in a position where it was entitled to resist that enforcement. The
municipality sought to place itself in the position
of the applicants
referred to in a dictum of this court in
Kouga
Municipality v Bellingan & others
:
[9]
‘
In
my view, the correct approach to the relief sought by the applicants
would have been to recognise that the application was in
form a
direct challenge, but in substance a defensive or collateral
challenge, to the validity of the by-law. The two are
different’.
In
Kouga
, the respondents on appeal were the applicants in the
court below. The municipality had sought to prosecute them under a
by-law.
They brought a review application to declare the by-law
invalid. This court held they should not have done so since, in a
review
application, a court has a discretion to grant or refuse the
relief. As it happened, the court
a quo
declared the by-law
invalid but, applying s 172(1)(
b
) of the Constitution,
suspended the invalidity for a certain period to afford the
municipality the opportunity to rectify matters.
As this court
pointed out, there was no bar to the respondents being prosecuted
during the period of suspension and said:
‘
The
problems associated with the relief sought by the applicants in their
notice of motion and the order granted by the court
a quo would be
avoided if a declaratory order were to be granted that the by-law in
question is invalid for the purposes of a prosecution
of any of them
based thereon. A collateral challenge to the validity of a piece of
legislation can be mounted at any time and a
court has no discretion
to disallow such a challenge’.
[10]
[14]
In the present matter, it is the municipality which is the public
authority, and not the association. The municipality is also
not in
the position of a subject being coerced by a public authority whose
underlying administrative act is invalid. No collateral
challenge is
raised by way of the application. The application concerned a public
authority claiming that its own administrative
action was invalid.
This submission of the municipality thus falls far wide of the mark.
[15]
When a public authority takes that view, it is obliged to approach a
court to set it aside. This has been made clear by decisions
of this
court and the Constitutional Court, a few of which I shall briefly
discuss.
[16]
In
Municipal
Manager: Qaukeni Local Municipality & another v FV General
Trading CC
,
[11]
this
court approved of this course of action, saying:
‘
If
the second appellant's procurement of municipal services through its
contract with the respondent was unlawful, it is invalid
and this is
a case in which the appellants were duty- bound not to submit to an
unlawful contract, but to oppose the respondent's
attempt to
enforce it. This it did by way of its opposition to the main
application and by seeking a declaration of unlawfulness
in the
counter-application.’
[12]
In
MEC
for Health, Eastern Cape, & another v Kirland Investments (Pty)
Ltd t/a Eye and Laser Institute
,
[13]
Plasket
AJA, in rejecting an argument that what was claimed to be invalid
administrative action can be ignored without an application
to set it
aside, said the following:
‘
The
answer to their dilemma lies in the hands of the MEC and the
superintendent-general: if they want Diliza's decisions to be set
aside, they must bring a proper application for that relief, and
in all likelihood, their standing to do so will not be open
to
challenge.’
[14]
The
dilemma referred to was that, if the court did not set aside the two
impugned administrative decisions, this would
‘
clothe
the invalid approvals with the cloak of validity’.
[15]
This approach was upheld by the majority in the Constitutional Court
in an appeal from
Kirland
SCA.
[16]
Cameron J explained
the position as follows:
‘
When
government errs by issuing a defective decision, the subject affected
by it is entitled to proper notice, and to be afforded
a proper
hearing, on whether the decision should be set aside.
Government should not be allowed to take shortcuts. Generally,
this means that government must apply formally to set aside the
decision. Once the subject has relied on a decision, government
cannot, barring specific statutory authority, simply ignore what it
has done. The decision, despite being defective, may have
consequences that make it undesirable or even impossible to set it
aside. That demands a proper process, in which all factors
for
and against are properly weighed.’
[17]
The
Constitutional Court agreed with this court that, because the MEC had
not formally applied to set aside the impugned decision,
the
administrative act in question could not be set aside.
[17]
Having arrived at the view that the agreement was invalid, the
municipality was therefore obliged to approach the court to
have the
agreement declared invalid and set aside. Absent such a successful
challenge, or another basis on which it was entitled
to avoid its
obligations thereunder, it was obliged to give effect to the
agreement. The first question to resolve, therefore,
is whether it
made out a case that the agreement was invalid. In this, as the
association correctly submitted, the municipality
bore the onus. At
the outset, the court below pertinently posed the question whether
the municipality was prepared to argue the
matter on the papers since
certain factual disputes were apparent. The municipality elected to
do so.
[18]
In application proceedings, the affidavits both define the issues
between the parties and embody the evidence on which the
issues must
be adjudicated.
[18]
The
municipality relied on three grounds to found its assertion of
invalidity. First, that because the municipality failed to prepare
and implement a supply chain management policy as it was obliged to
do under the
MFMA,
the
agreement was invalid. Second, that the conclusion of the agreement
did not meet the prescripts of s 217 of the Constitution
which,
the municipality contended, in this instance required a public
process. Third, that certain processes and formalities provided
for
in the MFMA were not complied with.
[19]
With reference to the first ground, it is common cause that, in
breach of its obligations, the municipality failed to adopt
a
supply chain management policy as was
required by the MFMA. It only did so in 2011. This means that, at the
time the agreement
was concluded, whether initially or when reduced
to writing, no supply chain management policy was in place. Section
111 of the
MFMA reads:
‘
Each
municipality and each municipal entity must have and implement a
supply chain management policy which gives effect to the provisions
of this Part’.
There
is no indication that any failure on the part of a municipality to do
so would visit with invalidity agreements which would
otherwise fall
within the ambit of such a policy. The touchstone of validity remains
s 217 of the Constitution and compliance
with the provisions of
the MFMA and regulations. Contrary to what was submitted in this
first ground, therefore, this failure did
not, in and of itself,
render the agreement invalid.
[20]
The second ground was based on s 217 of the Constitution, which
provides as follows:
‘
(1)
When an organ of state in the national, provincial or local sphere of
government, or any other institution identified in national
legislation, contracts for goods or services, it must do so in
accordance with a system which is fair, equitable, transparent,
competitive and cost-effective.
(2)
Subsection (1) does not prevent the organs of state or institutions
referred to in that subsection from implementing a procurement
policy
providing for-
(a)
categories of preference in the
allocation of contracts; and
(b)
the protection or advancement of
persons, or categories of persons, disadvantaged by unfair
discrimination.
(3)
National legislation must prescribe a framework within which the
policy referred to in subsection (2) must be implemented.’
The
MFMA was promulgated, inter alia, to give effect to s 217(3) of
the Constitution. The regulations set out more detailed
requirements
based on the MFMA.
[21]
The primary point of attack by the municipality on this ground was
that a public bidding process was necessary.
The
association submitted that, although a public bidding process
admittedly did not take place, this did not necessarily mean that
s 217 of the Constitution and the provisions of the MFMA and
regulations had not been complied with. It pointed out that
regulation 36 of the regulations clearly demonstrates that a public
bidding process is not always necessary. In its material parts,
this
regulation provides as follows:
‘
(1)
A supply chain management policy may allow the accounting officer-
(a)
to dispense with the official
procurement processes established by the policy and to procure any
required goods or services through
any convenient process, which may
include direct negotiations, but only-
.
. .
(ii)
if such goods or services are produced or available from a single
provider only;
.
. . or
(v)
in any other exceptional case where it is impractical or impossible
to follow the official procurement processes’.
[22]
The association submitted that it was a single provider of unique
services at the time. As such, the association submitted,
even if
there had been a supply chain policy in place, this would have
allowed the agreement to be concluded without a competitive
bidding
process. If this was the case, it could therefore not be said that
the conclusion of the agreement transgressed the statutory
precepts.
There was no challenge that the provisions of regulation 36 fell foul
of s 217 of the Constitution or the provisions
of the MFMA.
On
the face of it, it is appropriate to provide an exception to a public
bidding process where there is a single service provider
offering a
unique service.
The factual situation is
therefore determinative of the point.
[23]
The municipality averred in its founding affidavit that it was
‘unaware of the precise facts and circumstances in which
the
agreement was concluded.’ The strong case made out by the
association, by way of affidavits of people involved in the
association and the provision of services in the area at the time,
was that the association provided a unique service and that
the
services outlined in the agreement could not be provided by any other
person or entity at the time. The only counter to this
was a bald
assertion, without any admissible evidence to support it, that two
other service providers could have done so. Why I
say that it was a
bald assertion is because no affidavits were forthcoming from any
persons who claimed to know of the capabilities
of those two entities
at the time, least of all from the service providers themselves. This
was not admissible evidence of the
fact contended for. Even if it was
admissible, this raised a factual dispute which had to be resolved in
favour of the association
since the version of the association was
not so clearly untenable that it could be rejected out of hand.
[19]
[24]
A remark made by Cameron J in
Kirland
CC applies with equal force to the present matter. That case, like
this, was not a matter where there was any hint that the conclusion
of the agreement could be ‘. . . impeached by political
shenanigans.’
[20]
A
resolution taken at a council meeting authorised the municipal
manager to sign the agreement. The meeting was an ordinary one
and
was thus open to the public. The association was known in the area to
have provided these services since 1998, initially on
a voluntary
basis funded by donations of time and money from the community it was
serving. It continued to rely on the community
to carry out its
functions. During a certain period, contributions were collected on
behalf of the association by the municipality.
The services were
provided for a period of time from a base within the municipal
offices. The association was deeply embedded within
the community. It
had built up and maintained clear voluntary structures which enhanced
the services provided by it as well as
good working relationships
with other entities involved in various aspects of disaster
management. There was no evidence that anyone
challenged either the
conclusion of the agreement or the service rendered by the
association until the municipality purported to
cancel it without
legal cause.
[25]
In support of its submission that s 217 of the Constitution had
not been complied with, the municipality relied on
Qaukeni
.
[21]
The
facts in that matter were as follows. No supply chain management
policy had been adopted. The respondent submitted a tender
to collect
refuse in both Lusikisiki and Flagstaff. This tender gave rise to an
oral agreement for the period November 2005 to
30 June 2006. The
validity of that agreement was not challenged. Thereafter, that
municipality invited the respondent to present
its budget for the
following 12 month period. Instead of doing so, it submitted a
quotation for its services amounting to in excess
of R350 000
per month. The council resolved to contract on that basis without
obtaining other tenders and an agreement was
drawn up and signed.
Amongst other things, the agreement provided for a 20 percent annual
increase in remuneration for the respondent
and provided for the
possibility that the agreement could endure for a number of years.
Far from being a unique service, it related
to refuse collection.
There was also no evidence that other persons could not provide the
same service. The terms of the agreement
were clearly onerous as to
annual escalation, even if the initial monthly remuneration of
R350 000 was appropriate.
[26]
Qaukeni
must be understood within the context in which it was decided. In
addition, attention must be given to what was decided. This court
did
not hold that the consequence of a failure to adopt a supply chain
management policy was to invalidate all agreements to which
it would
normally apply but said:
[22]
‘
.
. . [T]
he second appellant's failure
to implement a supply chain management policy cannot relieve it
of its statutory obligation to
act in a manner as summarised above,
and it would be untenable to suggest that the second appellant was
therefore not obliged to
act openly, transparently and without
following a fair, equitable, competitive and cost-effective process
when contracting with
an external service supplier to render a
municipal service.’
It
went on to find that there had been a ‘failure to comply with
these statutory precepts’. In such circumstances, it
held, a
court has no discretion to enforce such a contract because the
question is one of legality.
[23]
It should be noted that the exceptions to a competitive bidding
process provided by regulation 36 did not arise in
Qaukeni
and therefore did not excite comment from this court in that matter.
[27]
The facts in
Qaukeni
are clearly distinguishable from those in the matter at hand. That
related to a routine contract for refuse disposal, not a
multi-faceted
operation requiring the co-operation and co-ordination
of a number of entities and volunteers within a number of theatres of
operation.
There were multiple service providers rather than a single
one which was integrated into the community after years of initiating
and providing the service informally.
Qaukeni
is therefore not authority for the proposition that, in all instances
where a municipality concludes an agreement with an outside
body for
the provision of services, a public bidding process is required.
[28]
I can find no basis for concluding that the agreement did not comply
with ‘the statutory precepts’. The substantive
challenge
to the validity of the agreement was therefore correctly found
wanting by the court below, albeit that this finding was
couched in
somewhat diffident terms.
[29]
Turning to the third ground, the municipality submitted that s 116
of the MFMA was not complied with. This required agreements
to be
reduced to writing and that, if an agreement endured for longer than
three years, it must be subject to review at least once
every three
years. The first aspect was satisfied. Even though the initial
agreement was concluded verbally in 2008, it was subsequently
reduced
to writing and signed after the municipality so resolved in a council
meeting. The association denied the assertion of
the municipality
that the agreement was given effect in 2008 and said that it was only
complied with by the municipality after
signature. Once again, it
seems strange that, when the municipality disclaimed any knowledge of
the circumstances at the time,
it made such an assertion. At best,
again, the assertion gives rise to a factual dispute which must be
resolved in favour of the
association.
[24]
[30]
As for the need to review the agreement, either party was entitled to
terminate it after the initial three year period. Despite
this
provision, the municipality failed to do so. It was silent as to
whether it in fact reviewed the agreement but the mechanism
for this
was clear and available to it. The third ground, based on a failure
to comply with s 116 of the MFMA is accordingly
found wanting.
[31]
The second defence raised by the association was that there had been
an undue delay. The court below upheld this defence. It
held that the
award of a contract for services by an organ of state amounts to
administrative action.
[25]
It
went on to hold that the Promotion of Administrative Justice Act 3 of
2000 (the PAJA) applied to the agreement in question.
Therefore
s 7 of the PAJA, requiring an application to be brought within
180 days of the impugned administrative act, meant
that the
application, which was tantamount to a review, was brought out of
time. The court below went on to hold that, if the PAJA
did not
apply, the application amounted to a common law review and that there
had been an undue delay. Because the parties had
changed their
positions to comply with its terms, it held that it would be highly
prejudicial to review and set aside the agreement
and that to do so
would undermine the finality of administrative decisions.
[26]
[32]
For present purposes, the nature of such an application need not
detain us. In
Kirland
CC, the process by which a public body would seek to have its own
administrative decision set aside was characterised as a review.
[27]
Cameron J motivated this on the basis that the public authority must
explain ‘. . . the history of the decision, its shifting
attitudes towards it and its delay in dealing with it.’
[28]
The party resisting such an application must then be entitled to ‘.
. . be heard on whether it has been prejudiced and why
it would be
unfair to it to set the decision aside now.’
[29]
In
Qaukeni
,
this court left open the precise nature of the application to be
brought, saying that a public body may not need to proceed by
review
‘when a municipality seeks to avoid a contract it has concluded
in respect of which no other party has an interest.’
[30]
Regardless of the precise nature of such an application, which need
not be decided here, what is clear is that, if any undue delay
is not
adequately explained, an invalid administrative act may be
‘insulated’ against being set aside on that basis.
[31]
[33]
Of course, if the impugned administrative action is not so insulated
and does not pass muster, a court is obliged to declare
it
invalid.
[32]
However,
s 172(1)(
b
)(ii)
grants a discretion to the court which is obliged to make such a
declaration to use ‘. . . its just and equitable remedial
powers, [to] make an order “suspending the invalidity for any
period and on any conditions”’.
[33]
But this discretion only arises after, and does not precede, a
declaration of invalidity.
[34]
In the present matter the issue of delay does not require decision
since it has been found that the municipality failed to show
that the
agreement was invalid.
[34]
In summary, the following is the position. If a public body believes
one of its administrative acts is invalid, it may not
simply ignore
it. This is because even invalid administrative acts are treated as
valid until they are set aside. The public body
contending for
invalidity is thus duty bound to approach the court to have it set
aside. Since it is administrative action which
must be set aside, the
delay rule applies. If there has been an undue delay, it must provide
an acceptable and adequate explanation.
If this is not done, the
invalid administrative act may be insulated against being set aside.
In such a case, the administrative
act will continue to have effect
and be treated as valid, despite its invalidity. If the public body
has not delayed unduly and
shows that the act is invalid, a court is
bound to make a declaration of invalidity. There is no discretion
afforded a court not
to do so. If a declaration of invalidity is
made, a court is then granted a discretion under its just and
equitable powers to suspend
the invalidity for any period and on any
conditions. In the present matter, the municipality did not even
surmount the first hurdle
of showing invalidity.
[35]
In the result, the appeal is dismissed with costs.
___________________
T
R Gorven
Acting
Judge of Appeal
Appearances
For Appellant: K J
Kemp SC (with him H Gani)
Instructed
by:
Matthew
Francis Inc. Attorneys, Pietermaritzburg Rossouws Attorneys,
Bloemfontein
For
Respondent: A de Wet SC
Instructed
by:
McCarthy
& Associates Attorneys, Mount West Matsepes, Bloemfontein
[1]
The
Constitution of the Republic of South Africa, 1996.
[2]
The
Local Government: Municipal Finance Management Act 56 of 2003
.
[3]
The
Municipal Supply Chain Management Regulations,
GN
868,
GG
27636,
30 May 2005, which came into effect on 1 July 2005.
[4]
The
resolution read as follows: ‘Council RESOLVED NO. 117, OCTOBER
2010 to authorise the Municipal Manager to sign the service
level
agreement with Community Watch.’
[5]
Cora
Hoexter
Administrative
Law in South Africa
2 ed (2012) at 444.
[6]
Oudekraal
Estates (Pty) Ltd v City of Cape Town & others
2004 (6) SA 222 (SCA).
[7]
Paragraph
26.
[8]
Oudekraal
p
ara
32.
[9]
Kouga
Municipality v Bellingan & others
2012
(2) SA 95
(SCA) para 12.
[10]
Kouga
para
18.
[11]
Municipal
Manager: Qaukeni Local Municipality & another v FV General
Trading CC
2010
(1) SA 356
(SCA) para 26.
[12]
References
omitted.
[13]
MEC
for Health, Eastern Cape, & another v Kirland Investments (Pty)
Ltd t/a Eye and Laser Institute
2014
(3) SA 219
(SCA) (
Kirland
SCA).
[14]
Paragraph
33, references omitted.
[15]
Paragraph
31.
[16]
MEC
for Health, Eastern Cape, & another v Kirland Investments (Pty)
Ltd t/a Eye and Laser Institute
2014
(3) SA 481
(CC) (
Kirland
CC).
[17]
Paragraph
65.
[18]
MEC
for Health, Gauteng v 3P Consulting (Pty) Ltd
2012 (2) SA 542
(SCA) para 28.
[19]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634E-635D.
[20]
Kirland
CC
para 79.
[21]
Footnote
11,
para
12.
[22]
Paragraph
13.
[23]
Paragraph
14.
[24]
Plascon-Evans
Paints Ltd
above.
[25]
Steenkamp
NO v Provincial Tender Board, Eastern Cape
2007
(3) SA 121
(CC) para 90.
[26]
In
this regard the court below relied on the dictum of this court in
Chairperson:
Standing Tender Committee v JFE Sapela Electronics (Pty) Ltd
2008 (2) SA 638
(SCA) para 28 where potential prejudice and finality
of administrative decisions were said to be the reason for the
discretion
to refuse a review application where there had been an
unreasonable delay in bringing the review.
[27]
Paragraphs
64, 97 and 106.
[28]
Paragraph
67.
[29]
Ibid.
[30]
Paragraph
26.
[31]
Kirland
CC
para 97;
Harnaker
v Minister of the Interior
1965
(1) SA 372
(C) at 380B-381A;
Wolgroeiers
Afslaers (Edms) Bpk v Munisipaliteit van Kaapstad
1978
(1) SA 13
(A) at 29H-30G.
[32]
Section
172(1)(a) of the Constitution;
Kirland
CC (minority decision) para 46.
[33]
Allpay
Consolidated Investment Holdings (Pty) Ltd & others v Chief
Executive Officer, South African Social Security Agency
& others
2014
(4) SA 179
(CC) para 63.
[34]
Bengwenyama
Minerals (Pty) Ltd & others v Genorah Resources (Pty) Ltd &
others
2011
(4) SA 113
(CC) para 84.