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[2010] ZAGPPHC 15
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Diggers Development (Pty) Ltd v City of Matlosana and Another (47201/09) [2010] ZAGPPHC 15 (9 March 2010)
DELIVERED: 9 MARCH 2010
REPORTABLE
IN THE HIGH COURT OF SOUTH AFRICA
(NORTH GAUTENG HIGH COURT,
PRETORIA)
CASE NO: 47201/09
9 March
2010
In the matter between:
DIGGERS DEVELOPMENT (PTY) LTD
Applicant
and
CITY OF MATLOSANA
1
st
Respondent
ISAGO @ N12 (PTY) LTD
2
nd
Respondent
________________________________________________________________
JUDGMENT
________________________________________________________________
MURPHY J
1. The applicant seeks an order
reviewing and setting aside a resolution taken by the first
respondent, the City of Matlosana (“the
City”), in terms
of which it approved the sale of a substantial piece of land to the
second respondent (“ISAGO”).
It seeks further an order
compelling the respondents to restore the
status
quo
prior to the resolution
in respect of the immovable property forming the subject matter of
the sale agreement. The sale agreement
in question was concluded on
2 October 2007, while the resolution approving it and authorising its
execution was taken on 5 February
2009. The applicant in addition
seeks a declarator that the sale agreement is invalid and
unenforceable, an interdict restraining
the respondents from acting
in accordance with the sale agreement and an order “that first
respondent be instructed to comply
with all statutory prerequisites,
prior to concluding any further agreements in respect of the
immovable properties…”
2. The property in question comprises
1124 hectares of land consisting of various portions of the farms
Townlands and Palmfontein
lying adjacent to the N12 highway between
Klerksdorp and Potchefstroom in the North West Province.
3. During September 2006, the City
published an invitation in various newspapers for proposals to
develop the land. The notice
described the land and mentioned that
it was zoned for agricultural purposes, but that an environmental
impact assessment had been
approved for industrial development in
respect of “Phase 1”, being approximately 65,23 hectares
of the land. The notice
stated further: “Emphasis should be on
extending bulk services and the broadening of Council’s tax
base. Parallel
to this design/planning framework, proposals should
be made for the release of the Council owned land in the
marketplace”.
The wording and purport of the notice made it
evident that the invitation was aimed at development of the land with
socio-economic
benefits in the form of enlarging the City’s tax
base, job creation and benefitting historically disadvantaged
individuals.
It now appears that the development will include a new
shopping centre.
4. The applicant is a private company
that has developed and operated a shopping centre known as Flamwood
Walk upon property within
the boundaries of the jurisdiction of the
City as local authority. The shopping centre is situated on the N12
highway and presently
comprises 12 375 square metres gross leasable
area for retail purposes. It is common cause that the applicant
possesses development
rights in respect of the remaining extent of
its property. It has plans to engage in further development and thus
has an interest
in the development of competing shopping centres in
the same area, especially along the N12 highway.
5. The City, as intimated, is the
local authority in whose jurisdiction the applicant’s shopping
centre is situated. It also
was the owner of the immovable property
prior to its alienation to the second respondent, ISAGO.
6. The applicant did not respond to
the invitation to submit proposals published by the City in September
2006.
7. Various development proposals were
received for consideration by the City. On 23 March 2009 a
resolution in terms of section
115 of the Municipal Finance
Management Act 56 of 2003 resolved that the entity “Anglo
Saxon/Group 5 Consortium” be
approved “for appointment
for the planning and developing of the N12 corridor between
Klerksdorp and Stilfontein subject
to an agreement being entered into
with Council for the development of the vacant 1172 ha of land
adjacent to the N12 route between
Klerksdorp and Stilfontein”.
8. The consortium is not defined in
the resolution. However in para 2.6 of its answering affidavit the
City explains that the consortium
consisted of the five original
shareholders of ISAGO, namely Anglo Saxon Developments (Pty) Ltd,
Syfin Property Developers (Pty)
Ltd, RKK Family Trust, Group Five
Construction (Pty) Ltd and Moedi Bosele Investors (Pty) Ltd. The
members of the consortium are
all investors, developers and business
entities in their own right and had prior to 2006 been involved in
business activities either
as parties, shareholders, or members of
joint ventures with common business interests. The development of
the N12 project was
but one project among various other projects in
South Africa and Mauritius. ISAGO is a special purpose vehicle or
development
company comprising the members of the consortium.
9. The sale agreement concluded
between the City and ISAGO on 2 October 2007 (“the sale
agreement”), which the applicant
seeks to set aside, defines
“the purchaser” in clause 1.2.11 to mean ISAGO @ N12
(Pty) Ltd “with the shareholders
as described in clause 8
hereof”. Clause 8.1 in turn records that the shareholders of
the purchaser are the members of the
consortium to which I have
referred above. On account of delays experienced in implementing the
project some of the members of
the consortium, namely Group Five
Construction (Pty) Ltd, Syfin Property Developments (Pty) Ltd and RKK
Trust have relinquished
their shareholding in ISAGO during 2008-2009.
The relinquishing of shares by certain of the consortium members
does not mean they
will not be involved in the execution of the
project in their respective capacities as advisors, consultants,
building contractors,
or other service providers. They also remain
bound as sureties and in respect of certain guarantees given in the
sale agreement.
10. The resolution of 23 March 2007
appointing “the Anglo Saxon/Group 5 Consortium for the planning
and developing of the
N12 corridor accordingly led to the conclusion
of the sale agreement between the City and ISAGO on 2 October 2007.
11. In terms of the agreement the City
sold the property to ISAGO at a purchase price of R20 million plus
VAT. The price was payable
by way of an initial payment of R3
million plus VAT with the balance payable in the future at different
stages of the development
in accordance with clause 5.2. This
arrangement was later changed and the full purchase price was paid
prior to the commencement
of this litigation. In addition to the
purchase price, the City will be paid 10% of the net profit for each
portion of the sale
property rezoned and sold to a third party.
12. The entire sale agreement was
subject to the suspensive conditions contained in clause 4. These
are central to the issues in
dispute. Clause 4 reads as follows:
“
4.
SUSPENSIVE
CONDITIONS
4.1 This Agreement, save
for the provisions of this clause 4, and clauses 11,16,18,19,20,22
and 23, is subject to the suspensive
conditions that the Seller:
4.1.1 provides the
Purchaser with a certificate from either the head, legal department
or the municipal manager of the Seller that
the sale of the Land to
the Purchaser-
4.1.1.1 complies with
section 79(18) of the Local Government Ordinance 17 of 1939;
4.1.1.2 has complied with
section 84 of the Systems Act;
4.1.1.3. has complied
with the provisions of the MFMA, in particular sections 14, 20, 33,
90, 110(3), 116 and 168 thereof.
4.1.2. the full council
of the Seller will, after performing all the requirements, as set out
in the legislation applicable to local
government in respect of the
sale of the Land as contemplated herein, adopt a final resolution, to
endorse the sale of the said
Land in terms of this agreement.
4.2. The Seller
undertakes to use its reasonable endeavours to procure the
fulfillment of the conditions in clause 4.1 at its cost.
4.3. Unless the
conditions in clause 4.1 are duly fulfilled on or before the first
anniversary of the Date of Signature Hereof,
this Agreement, save for
the provisions of this clause 4, and clauses 11, 16, 18, 19, 20, 22
and 23, shall never become of force
or effect, and neither party
shall have any claim against the other arising from the entering into
of this Agreement, the implementation
thereof, and/or the Agreement
never becoming of force or effect (save where such failure is due to
a breach by the Seller of the
provisions of clause 4.2). The
Purchaser shall be entitled to extend the period for the fulfilment
of such conditions on one or
more occasions and for a maximum period
of 1(one) year on each occasion by giving written notice to that
effect to the Seller before
the date for the fulfilment of such
conditions.
4.4. The Seller
undertakes in favour of the Purchaser that, after fulfilment of the
conditions in clause 4.1, it shall for the duration
of this agreement
use its best endeavours to continue to comply with section 79(18) of
the Local Government Ordinance, 17 of 1939,
section 84 of the Systems
Act and sections 14, 17, 19, 20, 33, 90, 110(3), 115, 116 and 168
thereof, in as much as such sections
may be continue to be applicable
to this Agreement.
13. In spite of the suspensive
conditions the purchaser, ISAGO, was entitled to take occupation of
the land, and did in fact do
so, in terms of Clause 11. The relevant
provisions of clause 11 provided for the taking of occupation, the
commencement of improvements
and the installation of services on the
land immediately upon signature of the agreement. However, clause
11.1 goes on to state:
“
The construction
of such improvements shall be at the risk of the Purchaser and should
this Agreement be cancelled as a result of
default of the Purchaser,
then the land shall be vacated and all improvements, at the election
of the Seller, shall be removed
or shall remain on the Land and the
Purchaser shall have no claim against the Seller in respect of any
such improvements whatsoever.”
Similarly, despite the Purchaser being
entitled to enjoy all rights of ownership on taking occupation, the
seller retained the right
in terms of clause 11.4.3 on the Purchaser
ceasing to occupy the land “for any reason whatsoever” to
require
inter alia
that the Purchaser rehabilitate the land to its original state.
14. About seven months after
signature, on 21 May 2008 the City acting in terms of section
33(1)(a)(i)(bb) of the Municipal Finance
Management Act (“MFMA”)
56 of 2003 read with section 21A of the Municipal Systems Act (“MSA”)
32 of 2000
caused to be published a notice that the City intended to
enter into a contract which would impose financial obligations upon
the
City beyond the three year period covered in the annual budget
for the financial year. It was stated in the notice that the
contract
and an information statement summarising the City’s
obligations in terms of the contract would be open for inspection for
a period of 60 days at certain identified premises, and the local
community and interested persons were invited to submit comments
or
representations in respect of the contract by no later than 4 August
2008.
15. On 29 July 2008 attorneys on
behalf of the applicant wrote to the municipal manager as follows:
“
1. We refer to the
abovementioned matter and confirm that we act herein on behalf of
Diggers Development (Pty) Ltd.
2. Our client is an
interested and affected party in respect of the agreement of sale
concluded between the City of Matlosana and
Isago @ N12 (Pty) Ltd
(“the agreement”).
3. The agreement was
concluded without compliance with the provisions of the Municipal
Finance Management Act or the Local Government
Municipal Systems Act.
4. As a result of the
above, the entire process followed by the City of Matlosana is
ultra
vires
.”
16. On 4 September 2008, the municipal
manager of the City caused the following letter to be sent to a
number of officials in the
national and provincial governments:
LOCAL GOVERNMENT:
MUNICIPAL FINANCE MANAGEMENT ACT: SECTION 33(1)(a)(ii)(aa)
PROCEDURE/AGREEMENT OF SALE/CITY OF MATLOSANA/ISAGO
@ N12 (PTY) LTD
The abovementioned matter
refers. In this regard the following:
1. The City of Matlosana,
a local government, and Isago @ N12 (Pty) Ltd concluded a written
Agreement of Sale in terms of which
certain portions of land were
sold by the City of Matlosana to Isago @ N12 (Pty) Ltd. The
operation of this Agreement of Sale
was however suspended in terms of
Clause 4.1 thereof, pending
inter
alia
compliance with the provisions of Section 33 of the Local Government:
Municipal Finance Management Act, Act 56 of 2003.
2. The City of Matlosana
is in the process of complying with the provisions of Section 33 of
the Local Government: Municipal Finance
Management Act, Act 56 of
2003 and as such, and in compliance with the provisions of Section
33(1)(a)(ii)(cc),
your
department’s views and recommendations are requested and hereby
solicited
as per provisions of Section 33(1)(a)(ii)(aa) of the Local Government
Municipal Finance Management Act, Act 56 of 2003.
3. Accordingly, we attach
hereto a copy of the Agreement of Sale, the Notice in Terms of the
provisions of Section 33(1)(a)(i) that
was published in the
Klerksdorp Record Newspaper of 5 June 2008, as well as the “Report
on the Isago @ N12 (Pty) Ltd Development
and the Implications in
terms of Section 33 of the Municipal Finance Management Act, Act 56
of 2003 as prepared by our Directorate
Finance Dated 14 May 2008 for
your attention and perusal, in order to enable you to supply us with
your views and recommendations.
4. We await your views
and recommendations.”
17. In response to the letter of 4
September 2008, the Acting Director General of the national
Department of Provincial and Local
Government on 7 October 2008
addressed a letter to the municipal manager in the following terms:
“
I refer to your
letter dated 4 September 2008 in the above regard, the contents of
which have been noted.
Kindly be advised that in
terms of section (33)(1) of the Municipal Finance Management Act, No
56 of 2003, a municipal manager has
to solicit the views and comments
of the
dplg
before the draft contract is placed before municipal council for
approval and not the other way round.
The fact that the
operation of this Agreement of Sale was suspended in terms of Clause
4.1 thereof pending compliance with the provisions
of
inter
alia
section
33 of the MFMA, does not detract from the requirement that the views
of the
dplg
must be solicited at least 60 days before the meeting of the council
at which the contract is to be approved. As the contract
was entered
into in September 2007, it would appear that the provisions of
section 33 (1) of the MFMA have not been complied with.”
18. On 21 November 2008 the City
caused to be published a further notice. It differed from the notice
of 21 May 2008 in certain
respects but most materially in that it
included a reference to section 79 (18)(b)(ii) of the Local
Government Ordinance 17 of
1939. The relevant part of the notice
reads:
“
Notice is hereby
given in terms of the provisions of Section 33 (1)(a)(i)(bb) of the
Municipal Finance Management Act, 2003 (Act
No 56 of 2003) and
Section 79 (18)(b)(ii) of the Local Government Ordinance 17 of 1939,
read together with Section 21A of the Municipal
Systems Act, 2000
(Act no 32 of 2000) (Act no 32 of 2000) that it is the intention of
the Municipality to enter into a contract
which will impose financial
obligations on the Municipality beyond the three-year period covered
in the annual budget for the current
financial year and in terms of
which the Municipality will dispose of immovable property of the
Municipality as described below.
The contract is in
relation to the development of the area between Klerksdorp and
Stilfontein, with the conditions thereof suspended,
as set out in
Clause 4.1 of the said agreement and the alienation of the said land
to Isago @ B12 (Pty) Ltd.
The contract and an
information statement summarizing the Municipality’s
obligations in terms of the contract will be open
for inspection as
from 20 November 2008 at the following places:
Room 109, Civic Centre as
well as the satellite offices and libraries of the Municipality and
on the Municipality’s official
web-site with address:
www.klerksdorp.org
.
The local community and
other interested persons are invited to submit comments or
representations or objections in respect of the
said contract by not
later than 19 January 2009 at room 109, Civic Centre, Klerksdorp,
where after such comments or representations
or objections will be
taken up in an item to serve before the Municipal Council for the
Council’s consideration.”
19. Between July and December 2008
correspondence passed between attorneys acting for the applicant and
the City in which certain
comments were made regarding the legality
of the contract and requesting information about amendments to the
agreement, the shareholding
of ISAGO and whether the suspensive
conditions had been fulfilled. The letter of 5 September 2008 from
the City’s attorneys
is important. It reads:
“
The abovementioned
matter as well as the comments or representations received from you
on behalf of your client Diggers Developments
(Pty) Ltd in respect of
the Agreement of Sale, by means of your letter dated 29 July 2008
refers. We confirm that we act herein
on behalf of our client by
City of Matlosana. In this regard the following:
1. We thank you for
submitting comments or representations as envisaged by the provisions
of Section 33 (1)(a)(i)(bb) in respect
of the Agreement of Sale
between the City of Matlosana and Isago @ N12 (Pty) Ltd.
2. Your comments and
representations will be taken into account by the City of Matlosana
as prescribed by the provisions of Section
33 (1)(b)(iii) of the
Local Government: Municipal Finance Management Act, Act 56 of 2003
(hereafter “the MFMA”) in
the taking of a decision
regarding the said agreement.
3. You will note that the
Agreement of Sale is subject to suspensive conditions, one of them
being compliance with the provisions
of Section 33 of the MFMA and
another the adoption of a final resolution by the Council of the City
of Matlosana to endorse the
sale of the land in question to Isago @
N12 (Pty) Ltd.
4. We note that you
commented that the
‘…
agreement was concluded without compliance with the provisions of the
Municipal Finance Management Act or the Local
Government: Municipal
Systems Act.”
Although the reasons for this submission is not set out or
motivated, the submission is not correct. Our client duly complied
with the relevant provisions of the Local Government: Municipal
Systems Act, the MFMA and any other applicable legislation.”
20. In response to the notice
published on 21 November 2008, the applicant’s attorney
addressed a letter dated 9 December
2008 recording the applicant’s
wish to place comments and representations before the City, but
indicated that information
required in terms of a letter dated 29
July 2008 had not been furnished. It was specifically pointed out
that information had
been obtained that shareholders of ISAGO had
withdrawn from the agreement and the City was required to indicate
what the position
relating to security was. The relevant letter of
29 July 2008 is a detailed account of the applicant’s position
regarding
the legality of the agreement. It further sought
information regarding certain amendments to the agreement, the
shareholding of
ISAGO and whether the suspensive conditions had been
fulfilled. The letter does not assert any legal basis for the
applicant’s
entitlement to the information. Notwithstanding
the absence of information, the applicant proceeded to make
representations in
the letter to the effect that the agreement was
illegal for want of statutory compliance; and further that it was not
in the interests
of the community to proceed with the agreement
because the “economic and community value” to be received
by the City
and the ratepayers had not been properly considered and
the agreement was “potentially very burdensome” to the
City.
The letter then briefly set out the basis for that view. It
concluded with a statement of opinion that the process was flawed
and
thus the City had “no option but to cease the current process,
considered all the relevant legislation and to follow
the due
processes.”
21. The City, through its attorneys,
responded to the letter of 9 December 2008, on 20 January 2009 about
two weeks before the resolution
was passed. The relevant part of
this letter stated:
“
1. We confirm the
contents of our letters dated 5 September 2008 addressed to you
regarding the comments and representations made
on behalf of your
abovementioned clients.
2. We regret to inform
you that your interpretation of the contents of Paragraph 4.8 of our
letter dated 5 September 2008 addressed
to you in response to the
comments and representations made by you on behalf of your client
Growthpoint Securitisation Warehouse
Trust, is not correct. We
kindly refer you to the contents of Section 33(1)(a)(i) read with the
provisions of Section 33(1)(b)(iii)
of the Local Government:
Municipal Finance Management Act, Act 56 of 2003 (hereafter “the
MFMA”) as referred to and
restated in Paragraph 4.8 of our
letter dated 5 September 2008 referred to above.
3. As stated it is
evident from the contents of the above referred to legislation that
the comments and representations that have
to be solicited from the
local community and other interested persons should be “…
in respect of the proposed contract
…”, so too will our
client take into account comments and representations made by your
clients “… on
the proposed contract…”
4. Both the contract and
the information statement summarising the municipality’s
obligations in terms of the proposed contract
were published as
prescribed by the relevant statutory provisions in order to allow for
your clients to submit comments and representations
“…
in respect of the proposed contract…” As previously
stipulated the provisions of Section 33 do not
allow for the
continuous process of exchanging information beyond what is
contemplated in the provisions of Section 33(1)(a)(i)(aa)
for the
mere purpose of allowing your clients to make their comments and
representations “… in respect of the proposed
contract…”.
5. This said, our client
in the interest of transparency will provide you with the views and
recommendations received from the various
state departments as well
as our client’s responses thereto.”
The letter then detailed a list of
letters and representations received from other interested persons
and entities. It concluded
by addressing the questions raised about
the shareholding and the amendment of the agreements as follows:
“
As to the content
of Paragraph 5 of your letter, our client received no notification of
the withdrawal of any of the shareholders
of the prospective
purchaser from same. The proposed contract currently remains
unaltered.”
The shareholding changed at a later
date and the applicant was informed of that in July 2009.
22. A few months later, on 30 January
2009, the municipal manager signed the certificate of compliance,
required in terms of clause
4.1 of the sale agreement, certifying
that there had been compliance with the relevant statutory
provisions. The document is 24
pages in extent and deals with
various statutory provisions, some of which may not be entirely
relevant or applicable.
23. The matter was placed on the
agenda of the Council of the City for 5 February 2009. The “Item
to Council” comprised
a 60 page document together with detailed
annexures dealing fully with the development proposal, and including
the sale agreement
and the representations received regarding it.
The Council resolved to approve the sale, noting that the suspensive
conditions
had been fulfilled. The resolution reads as follows:
“
RESOLVED
a) That after taking into
account the contents of Section 16, Section 33(1)(b)(i) to Section 33
91)(b)(iv) of the MFMA, the relevant
provisions of the Supply Chain
Management Policy and Preferential Procurement Policy of the CoM, the
Municipal Asset Transfer Regulations
2008 as well as the contents of
the written Agreement of Sale and the other relevant statutory
provisions as referred to in Clause
4.1.1 of the Agreement of Sale
concluded between the CoM and Isago on 2 October 2007, it is being
resolved that:
The reasons forwarded by
the Municipal Manager for the deviation from the provisions of
Section 40(4)(a) and Section 40(4)(b) of
the Supply Chain Management
Policy and Preferential Procurement Policy be accepted and the
deviation from the Supply Chain Management
Policy and Preferential
Procurement Policy is hereby approved and will be noted in the annual
financial statements of the CoM as
required by Section 36(2) of the
Supply Chain Management Policy and Preferential Procurement Policy;
b) That after the Council
has taken into account the issues set out in the provisions of
Section 79(18)(c)(i) and the valuation
report as contemplated in the
provisions of Section 79(18)(d) of the Local Government Ordinance,
Ordinance 17 of 1939, as well
as the provisions of Section 33(1)(b)
of the MFMA, with specific reference to the objections, comments and
representations received
from interested persons and Government
Departments, the City of Matlosana determined that the municipality
will secure a significant
capital investment or will derive a
significant financial economic or financial benefit from the
Agreement of Sale and hereby approves
the entire written Agreement of
Sale entered into between the CoM and Isago on 2 October 2007 exactly
as it is to be executed;
c) That cognizance be
taken that the land that is being sold to Isago @ N12 (Pty) Ltd:
is an asset not needed
to provide the minimum level of basic municipal services; and
is sold for the fair
market value thereof and the transaction is structured in a fashion
that the community also receive value
in exchange for the land.
d) That the transfer of
ownership of the land, as referred to in the Agreement of Sale, is
accordingly in keeping with the provisions
of Section 14 of the MFMA
fair, equitable, transparent, competitive and consistent with the
supply chain management policy of this
municipality.
e) That the Municipal
Manager be authorised to take such further steps as may be necessary
for the further execution of the Agreement
of Sale.
f) That the requirements
as set out in Clause 4.1.1 of the written Agreement of Sale have been
performed and accordingly the City
of Matlosana herewith adopts a
final resolution to endorse the sale of the Land as described in
Clause 4.1.2 of the written Agreement
of Sale.
g) That the Technical
Steering Committee appointed for the N12 Development oversee the
implementation of the Agreement of Sale between
the City of Matlosana
and Isago @ N12 and reports to this effect be submitted to the
Council on a quarterly basis.”
24. There was no immediate response by
the applicant to the resolution taken by the Council on 5 February
2009. The properties
were transferred into the name of ISAGO on 19
May 2009. Ten days later, on 29 May 2009 an application by the
applicant for the
extension of the boundaries of its property with
business rights served before the relevant committee of the Council,
in terms
of which it seeks to exercise its development rights in
respect of the remaining extent of its property. Westbridge Shopping
Centre
(Pty) Ltd objected to the application. On 22 June 2009 the
committee upheld a technical point
in
limine
and postponed the
application
sine die
.
There is an appeal pending before the North West Province Townships
Board regarding that ruling.
25. The fate of the application before
the committee galvanized the applicant into action to bring the
present application. It
is understandably troubled by the prospect
of a competitor shopping centre in its immediate vicinity. The
applicant lodged its
application in this court on 4 August 2009
seeking: 1) to review and set aside the resolution adopted by the
Council on 5 February
2009; 2) the restoration of the status quo ante
in respect of the immovable property transferred to ISAGO; 3) to
declare the sale
invalid and unenforceable; 4) an interdict restoring
the respondents from acting in accordance with the sale; and 5) a
directive
that the City comply with all statutory pre-requirements
prior to concluding any further agreements in respect of the
immovable
property. About eight weeks later, on 17 September 2009,
the applicant brought an urgent application for an interim interdict,
pending the determination of the main application, interdicting the
respondents from giving effect to the resolution of the Council
and
in particular from proceeding with the further development of the
immovable property, and further interdicting ISAGO from alienating,
transferring or further encumbering the immovable property.
26. Both respondents opposed the
urgent application on the basis
inter
alia
that there were no
grounds for urgency. The second respondent however brought an urgent
application that the two applications,
the main and the urgent
applications, be heard together. On 29 October 2009 the Deputy Judge
President directed that the main
application would be heard on 26-27
November 2009 with the result that the relief sought in the urgent
application was no longer
proceeded with.
27. The applicant has attacked the
City’s action in entering into the sale of the immovable
property and the Council’s
resolution basically on two bases.
Firstly, that there has been non-compliance with the principle of
legality and secondly, that
the decisions taken constitute
administrative actions which were procedurally unfair, contravened a
law, were not authorised by
the empowering provisions or did not
comply with a mandatory and material procedure or condition
prescribed by an empowering provision.
So stated, the grounds relied
upon to review the administrative action are those provided for in
section 6 of the Promotion of
Administrative Justice Act 3 of 2000,
(“PAJA”), in particular: section 6(2)(b) (non-compliance
with a mandatory pre-condition
or procedure); section 6(2)(c)
(procedural unfairness); and section 6(2)(f)(i) and section 6(2)(i)
(contravention of a law). The
respondents have put up substantive
defences but have also pleaded that the application should be
dismissed on the ground of unreasonable
delay.
28. During argument counsel for the
applicant tended to conflate the various review grounds in a manner
posing some conceptual difficulty.
But perhaps most
unsatisfactorily, all parties failed to address adequately, or at
all, the threshold question of whether the
action and decisions taken
constitute “administrative action” in the first place.
Administrative action is defined
in section 1(i) of PAJA to mean a
decision or any failure to take a decision by an organ of state when
exercising constitutional
powers, public powers or performing public
functions in terms of legislation, or in certain instances where
natural or juristic
persons act similarly; and which decision or
failure to decide adversely affects the rights of any person and has
a direct, external
legal effect. In terms of section 1(i)(cc) of
PAJA, administrative action by definition does not include “the
executive powers
or functions of a municipal council”. The
intention of section 1(i)(cc) of PAJA is to exclude from judicial
review under
PAJA decisions or failures to decide by municipal
councils in the exercise or performance of their executive powers or
functions.
Administrative action in the context of municipal
government is then a decision by an organ of state exercising public
powers or
performing public functions unless the powers or functions
exercised or performed are the executive powers or functions of a
municipal
council. Section 1(i)(dd) similarly excludes the
legislative functions of a municipal council.
29. Additionally, a decision by a
municipal council, in order to constitute administrative action,
would need also to fall within
the parameters of the definition of
“decision” in section 1(ii) of PAJA. The relevant part
of section 1(ii) provides:
“
decision means any
decision of an administrative nature made, proposed to be made, or
required to be made, as the case may be, under
an empowering
provision, including a decision relating to …..(b) giving,
suspending, revoking or refusing to issue a certificate,
direction,
approval, consent or permission;….”
30. Two actions are relevant in this
case. The execution of the contract by the municipal manager and the
approval of the contract
by the resolution of the Council. It is the
latter which is the subject of the applicant’s challenge. While
the giving of
approval or consent by the Council to the sale of
council land is in general terms a decision, by reason of section
1(ii) and section
1(i)(cc) of PAJA, two further questions must be
asked: Firstly, is the approval of a commercial sale of land a
“decision
of
an
administrative nature
”;
and secondly, is it one taken pursuant to an exercise or performance
of the executive powers or functions of a municipal
council? If the
answer to the first question is negative, or the answer to the second
is affirmative, then in either case review
under PAJA would find no
application.
31. Regrettably, these critical issues
were not addressed directly, nor canvassed adequately in argument.
As I see it, they are
questions going to jurisdiction, and their
resolution determines the nature and ambit of any review challenge to
the decisions
in issue.
32. Any argument that a resolution by
a municipal council approving a commercial transaction for the sale
of land by a municipal
council is a decision
not
of an administrative
nature, and hence excluded from review under PAJA, depends up to a
point upon the
a priori
classification of such as
an exercise or performance of the municipal council’s executive
powers or functions. Is the decision
one involving the exercise of
an executive power or the performance of an executive function and
therefore
not
a
decision of an administrative nature? Put in another way, the
question of whether a municipal council decision is of an
administrative
nature or not, begs the
a
priori
determination or
classification of the power or function involved as executive or
non-executive. And while courts and many administrative
lawyers have
expressed legitimate reservations about the usefulness of classifying
functions in administrative law, it would seem
to me that the express
provisions of PAJA render categorisation inescapable. The intention
of the legislature was to narrow down
the common law notion of
administrative action and the courts are not at liberty to ignore
that intention. I make that observation
conscious of the
apprehension that may be evoked by the idea that a wide range of
decisions of local authorities could escape review
under the
provisions of PAJA, which, to state the obvious, introduce legitimate
constraints upon governmental action in the interests
of efficiency,
accountability and fairness. The problem though may be less
troubling than it seems. The constitutional principles
of legality,
the
rechtstaat
and
proportionality will in any event operate to constrain exercises of
executive power and function by municipal councils. A municipal
council may not act
mala
fide
; nor may it
misconstrue its powers or act arbitrarily -
President
of the Republic of South Africa and Another v Hugo
1997
(4) SA 1
(CC) at 18A-C.
33. Moreover, there is a plethora of
statutes governing local authorities which in many instances
introduce special remedies, unique
review and appeal mechanisms, as
well as standards of procedural fairness, reasonableness and
rationality, which will be reinforced
by the constitutional principle
of legality guaranteeing adherence in specific instances. Therefore
the consequences of excluding
from PAJA review municipal decisions
taken when exercising executive powers or performing executive
functions may prove minimal
in practical terms. Nevertheless, the
distinction will not be one without difference. Review under law
other than PAJA will generate
specific remedies, as well as different
approaches to such matters as time delays, condonation and the
exhausting of remedies,
which may well benefit from and be improved
by the peculiar legislative, political, administrative and social
contexts in which
they evolve. Accordingly, it will become
important, if not essential, for litigants to formulate their causes
of action and review
grounds within the applicable constitutional and
legislative framework.
34. Turning back to the question at
hand: is the approval by a municipal council of a sale of land not
needed to provide basic
services a decision involving the exercise or
performance of “the executive powers and functions of a
municipal council”
and thus excluded from the definition of
administrative action in PAJA? The classification quite evidently
must depend on the nature
of the power exercised or the function that
is being performed. In one sense executive action might be construed
narrowly to relate
only to the development and formulation of policy.
A broader view might include executory acts of implementation. It
has been
held on the contrary that action not taken in implementation
of legislation is executive, while action taken to implement
legislation
is administrative -
Greys
Marine Hout Bay (Pty) Ltd v Minister of Public Works
[2005] ZASCA 43
;
2005
(6) SA 313
(SCA); and
Steele
v South Penunsula Municipal Council
2001
(4) BCLR 418
(C). I doubt the distinction is uncontentious or
unproblematic. The term “executive” etymologically in
certain contexts
implies action taken in implementation. One carries
into effect by executive action.
Webster’s
New International Dictionary
defines
“executive” to mean:
“
designed or fitted
for, or pertaining to, execution, or carrying into effect ….
qualified for, concerned with, or pertaining
to, the execution of the
laws or the conduct of affairs; belonging to that branch of the
government charged with such execution.”
Executive powers are typically
contrasted with legislative powers. A legislative power or function
is the making of or the power
to make laws. Law making is mostly the
product of elected, deliberative bodies such as parliament or
municipal councils. Original
legislation in the form of statutes or
municipal by-laws enacted through performance of the legislative
function does not constitute
administrative action (section 1(i)(dd)
of PAJA) -
Fedsure Life
Assurance Ltd v Greater Johannesburg Transitional Municipal Council
[1998] ZACC 17
;
1999 (1) SA 374
(CC). On
the other hand, delegated legislation is often the result of
legislative administrative action which refers to law or
rule making
by administrators authorised by empowering provisions to do so, and
could arguably in a specific context constitute
administrative
action. Both original and delegated legislation differ from
executive and typical administrative action in that
they usually
involve rules of general application, applied to broader groups
rather than to individuals, which endure for an indefinite
period.
35. The question posed by the
exclusion in section 1(i)(cc) is: What is meant by executive in the
context of decision making by
municipalities? Chapter 7 of the
Constitution of 1996, dealing with local government, draws a
distinction between “municipalities”
and “municipal
councils”. Section 151(1) provides that the local sphere of
government consists of municipalities,
which must be established for
the whole of the territory of the Republic. Importantly for present
purposes, section 151(2) provides:
“The executive and
legislative authority of a municipality is vested in its Municipal
Council”. The categorisation
into executive and legislative is
reiterated in section 156 dealing with the powers and functions of
municipalities. Section 156(1)
defines the areas of functional or
subject matter competence falling within executive authority, while
section 156(2) does the
same in respect of legislative functions by
providing: “A municipality may make and administer by-laws for
the effective
administration of the matters which it has the right to
administer.” These matters are identified in Part B of
Schedule
4 and Part B of Schedule 5 of the Constitution. Section
160, dealing with the internal procedures of municipal councils,
distinguishes
between legislative and executive functions. In terms
of section 160(2) of the Constitution a municipal council may not
delegate
the passing of by-laws, the approval of budgets, the
imposition of rates, and other taxes, levies and duties, and the
raising of
loans. In
Fedsure
Life Assurance v Greater Johannesburg TMC
(
supra
)
at 397C-D the Constitutional Court held that the exercise of the
taxing power by a municipal council is legislative action by
the
council acting as a deliberative legislative assembly with power to
enact original legislation in the form of by-laws and taxing
measures. The exercise of these powers is indisputably not
administrative action. In terms of section 160(3)(b), all questions
concerning these matters must be determined by a decision taken by
the council with a supportive vote of a
majority
of its members
. To that
end, section 160(4) provides that no by-law may be passed unless
all
the members
of the Council
have been given reasonable notice and the by-law has been published
for public comment. “All other questions”
before a
municipal council must be decided by a majority of
votes
cast
, provided at least a
majority of members are present - section 160(3)(c) read with section
160(3)(a). The constitutional arrangement
therefore distinguishes
between the legislative functions set out in section 160(2) (which
may not be delegated to administrators)
and “all other
questions” being those referred to in section 160(3)(c).
36. What is meant by “all other
questions”? One possible interpretation is that any decision
other than the passing
of by-laws, the approval of budgets, the
imposition of rates and taxes, and the raising of loans (being the
legislative functions),
prima
facie
will involve the
exercise of an executive power or a performance of executive function
because that is the stark dichotomy delineated
by the Constitution in
respect of the powers and functions of municipal councils. Such
“questions” or matters would
then not constitute
administrative action in terms of section 1 of PAJA, with the
consequence that PAJA would not apply and judicial
review of such
decisions will need to be brought on a different basis.
37. A different approach might be
preferable. The legislative powers and functions of municipal
councils, as contemplated in the
Constitution, and perhaps in the
exclusion in section 1(1)(dd) of PAJA, as just outlined, are those
related to the making of original
legislation of more general
application. Whether all other municipal council decision making,
including the implementation of
legislation and the making of
delegated legislation, can be categorised as “executive”
is debatable and possibly undesirable
from a policy perspective.
Certainly, executive actions might literally very well be those which
implement or give effect to a
policy, a piece of legislation or an
adjudicative decision, broadly encompassing any action aimed at
operationalising the law,
policy and functions of an institution. But
that is a very wide ambit of decisions indeed. Accordingly and
alternatively, executive
action might better be considered to be a
narrower sub-set of a wider category of action, which narrow field
would exclude administrative
action by administrators implementing
by-laws or resulting in delegated legislation or ministerial (purely
administrative) conduct
of officials. This line of reasoning informs
the decision in
Steele v
South Peninsula Municipal Council
(supra).
38. The legislative context, however,
militates against accepting the narrow view. Section 11 of the Local
Government: Municipal
System Act 32 of 2000 reiterates that all
executive and legislative authority of a municipality is exercised by
the council. This
distinction, drawn from the constitutional
framework, makes it difficult to reach any conclusion other than that
any action by
a council which is not legislative is executive. If
one accepts that, the result startlingly would be that no municipal
council
action qualifies as administrative. The conclusion is
reinforced by section 11(3) which provides that a municipality
exercises
its legislative or executive authority by
inter
alia
developing and
adopting policies, plans, strategies and programs; promoting and
undertaking development; implementing its own by-laws;
providing
municipal services; preparing, approving and implementing its
budgets; and, importantly, “taking decisions on any
of the
above-mentioned matters; and doing anything else within its executive
competence” - section 11(3)(iii) and (ii).
The distinction
between formulation of policy (executive action) and implementation
of policy (administrative action) preferred
by the Supreme Court of
Appeal in relation to the action of national government ministers in
Greys Marine Hout Bay (Pty)
Ltd v Minister of Public Works
[2005] ZASCA 43
;
2005
(6) SA 313
(SCA) therefore might not find easy application in the
sphere of local government.
39. It is not now necessary for me to
pronounce definitively on these difficult questions, because whether
or not the wider or
narrower concept of “executive action”
applies, I hold the view that the disposal of land by a municipal
council to
an individual, by means of a resolution, by its nature is
not action taken to implement legislation, nor is it ministerial, and
accordingly my
prima facie
view is that it does not constitute administrative action. It is an
instance of the council acting executively in the narrower
sense.
Furthermore, within the stark dichotomy of the powers and functions
of municipal councils adnumberated by the Constitution,
the
categorisation of such action as an exercise of executive action in
the wider sense would be unavoidable. When a council passes
a
resolution, by a majority of the members present, adopting or
ratifying conduct of the municipal manager, it does not act
legislatively.
The action is akin to a board of directors ratifying
the actions of its CEO. In such circumstances the council acts
executively.
In this case the municipal manager was authorised by
means of a standing resolution to execute any sale which the Council
was legally
authorised to conclude. His role was to act in concert
with the Council acting executively.
40. In the result, the sale of land
between the second and first respondents would seem to be either an
exercise of the executive
powers or the performance of an executive
function of the Council and hence would be excluded from review under
PAJA. The difficulty
though is the application has been brought and
defended on the premise that PAJA is applicable. The implications of
the non-applicability
of PAJA were not sufficiently weighed and
considered in argument. Without the benefit of full argument, I
accordingly hesitate
to reach a definitive conclusion. Fortunately,
my ultimate decision is sustainable under both PAJA and on
alternative legal bases.
In the final analysis, therefore, the
result will be the same whether I am right or wrong. Accordingly,
lest I be mistaken in
my
prima
facie
view that PAJA has no
application, I will proceed on the assumption that PAJA might well
apply.
41. Mr Maritz SC, who appeared on
behalf of the first respondent, characterised the crux of the case to
be whether the statutory
requirements applicable where a local
authority disposes of immovable property were complied with or not.
Non-compliance with
statutory requirements potentially could give
rise to three possible review grounds under PAJA, namely that a
mandatory and material
procedure or condition prescribed by an
empowering provision was not complied with (section 6(2)(b)); that
the action itself contravened
a law (section 6(2)(f)); and that the
action is otherwise unlawful (section 6(2)(i)). The case put
otherwise than on a PAJA basis
is simply that there has been
non-compliance with the principle of legality.
42. Various statutory provisions have
been referred to in the pleadings as requiring mandatory compliance.
Those mentioned in clause
4.1 of the sale agreement are:
section 79(18) of the Local
Government Ordinance 17 of 1939;
section 84 of the Municipal Systems
Act 32 of 2000; and
sections 14, 20, 33, 90, 110(3), 116
and 168 of the Municipal Finance Management Act 53 of 2003.
43. In argument, counsel for the
applicant, Mr Bergentuin SC, focused his efforts on section 79(18) of
the Ordinance and section
33 of the Municipal Finance Management Act
(“MFMA”). This was prudent in the light of the purport
of the other mentioned
provisions which renders them inapplicable.
44. Section 84 of the Local
Government: Municipal Systems Act (“the Systems Act”)
quite evidently finds no application
and probably was included in the
agreement by error or
ex
abundanti cautela
. The
provision describes a procedure to be followed in relation to
service
providers
selected from a
number of bidders. The second respondent, ISAGO, is not a service
provider. The mere fact that contracts with
developers may provide
for the provision of infrastructure aimed at the eventual delivery of
services by third parties does not
render the purchaser or developer
of the land a service provider.
45. Likewise, section 20 of the MFMA
has no conceivable application in that it deals with the obligation
of the Minister to prescribe
the form of the annual budget of
municipalities and his power to prescribe in relation to various
issues related to the budget;
none of which has any direct connection
to the issues in dispute in the present matter.
46. The applicant also did not persist
with any challenge that there had been non-compliance with section 14
of the MFMA; presumably
because no foundation was laid in support of
that challenge in the founding papers. The section prohibits
municipalities from
disposing of capital assets needed to provide the
minimum level of basic municipal services. Capital assets not needed
for that
purpose may be disposed of only after the municipal council
in a meeting open to the public has decided on reasonable grounds
that
such is indeed the case, and has considered the fair market
value of the asset and the economic and community value to be
received
in exchange for it. In terms of section 14(5) any transfer
of ownership of a capital asset must be fair, equitable, transparent,
competitive and consistent with the supply chain management policy.
It will be seen immediately that this provision sets up various
grounds of possible review, akin to, and potentially as effective as,
those available under PAJA. But, as just indicated, the
applicant
did not persist with the assertion that section 14 has been
contravened. In paragraph 38 of the founding affidavit the
claim is
made that the first respondent failed to comply with its supply chain
management policy, but that allegation is not substantiated
in any
way either in the founding affidavit or in any supplementary
affidavit in terms of rule 53. Nor did the applicant in reply
counter the second respondent’s contention in its answering
affidavit that the applicant had failed to make any case whatsoever
in support of its assertion of non-compliance with section 14. That,
to my mind, is the end of the matter and there is no need
to examine
or finally determine whether the section finds application in respect
of land transfers on account of being restricted,
as contended by the
respondents, to the transfer of ownership of capital assets which are
goods
,
meaning movables. The applicant’s failure to press the issue
suggests that it takes the point that the capital assets contemplated
by the section are those other than immovable assets.
47. The applicant has made no
allegations of any kind pertaining to compliance or non-compliance
with sections 90, 110(3), 116 and
168 of the MFMA. In consequence,
the only allegations of non-compliance remaining for consideration
are those relating to section
79(18) of the Ordinance and section 33
of the MFMA.
48. Section 79(18)(a)(i) of the
Ordinance authorizes a local authority to “let, sell, exchange
or in any other manner alienate
or dispose of any movable or
immovable property of the council…” Section 79(18)(b)
provides that:
“
Whenever a council
wishes to exercise any of the powers conferred by paragraph (a) in
respect of immovable property …. the
council shall cause a
notice of the resolution to that effect to be-
(i) affixed to the public
notice board of the council; and
(ii) published in a
newspaper in accordance with section 91 of the Republic of South
Africa Constitution Act, 1983;
in which any person who
wishes to object to the exercise of any such power, is called upon to
lodge his objection in writing with
the town clerk within a stated
period of not less than 14 days from the date of publication of the
notice in the newspaper….”
49. Section 33(1) of the MFMA
provides:
“
Contracts
having future budgetary implications. -
(1) A municipality may
enter into a contract which will impose financial obligations on the
municipality beyond a financial year,
but
if the contract will impose financial obligations on the municipality
beyond the three years covered in the annual budget for
that
financial year
,
it may do so only if -
(a) the municipal
manager, at least 60 days before the meeting of the municipal council
at which the contract is to be approved-
(i) has, in accordance
with section 21A of the Municipal Systems Act-
(aa) made public the
draft contract and an information statement summarising the
municipality’s obligations in terms of the
proposed contract;
and
(bb) invited the local
community and other interested persons to submit to the municipality
comments or representations in respect
of the proposed contract; and
(ii) has solicited the
views and recommendations of-
(aa) the National
Treasury and the relevant provincial treasury;
(bb) the national
department responsible for local government; and
(cc) if the contract
involves the provision of water, sanitation, electricity, or any
other service as may be prescribed, the responsible
national
department;
(b) the municipal council
has taken into account-
(i) the municipality’s
projected financial obligations in terms of the proposed contract for
each financial year covered by
the contract;
(ii) the impact of those
financial obligations on the municipality’s future municipal
tariffs and revenue;
(iii) any comments or
representations on the proposed contract received from the local
community and other interested persons; and
(iv) any written view and
recommendations on the proposed contract by the National Treasury,
the relevant provincial treasury, the
national department responsible
for local government and any national department referred to in
paragraph (a) (ii) (cc); and
(c) the municipal council
has adopted a resolution in which-
(i) it determines that
the municipality will secure a significant capital investment or will
derive a significant financial economic
or financial benefit from the
contract;
(ii) it approves the
entire contract exactly as it is to be executed; and
(iii) it authorises the
municipal manager to sign the contract on behalf of the
municipality.”
50. The factual basis in the founding
affidavit supporting the claim of non-compliance with the provisions
of section 33, is, to
say the least, skimpy. The heads of argument
provide some elaboration, albeit not entirely satisfactory.
51. Before dealing with the alleged
contravention of these two provisions, it may be helpful to recap
briefly on the chronology.
During September 2006 the City published
the request for proposals to enhance and promote development along
the N12 corridor.
There was no mention in the invitation of any
intended sale of land or the development of a shopping centre. The
latter issue
being of the greatest concern to the applicant. On 23
March 2007 the consortium was “approved for appointment for the
planning
and development of the N12 corridor… subject to an
agreement being entered into with Council for the development …”
of the land. The
approval was done in terms of resolution MM101/2007 - Exhibit A103.
Clause (d) of the resolution required the
developer to “address”
the alienation of the land. The sale agreement was signed by the
City on 6 September 2007 and
by ISAGO on 2 October 2007. Clause 2.7
of the sale agreement refers to the prior request for proposals for
development and states
that for such purpose the seller
is
prepared
to sell the land
to the purchaser who will assume the obligation related to planning,
rezoning and subdivision. Of most relevance
is clause 4.1 which
introduced the suspensive conditions. The first notice given to the
public was that stated to be in terms
of section 33(1)(a) of the MFMA
published on 21 May 2008. This was followed by the publication of
the second notice stated to
be in terms of both section 33(1)(a) of
the MFMA and section 79(18)(b) of the Ordinance, which was published
on 21 November 2008.
Both notices invited comments or
representations or objections in respect of the contract and advised
that the contract and an
information statement summarising the
obligations were open for inspection at the office of the
municipality. The item served
before the Council and the resolution
finally approving the sale and accepting that the suspensive
conditions had been fulfilled
was adopted on 5 February 2008.
52. The essence of the applicant’s
challenge is that the City had to comply with sections 33(1) of the
MFMA and section 79(18)
of the Ordinance
before
the “conclusion” of the sale agreement in October 2007,
and that it was neither sufficient nor proper to do so after
signature of the agreement and before the adoption of the resolution
in February 2008. The attack was formulated on two bases.
The first
was stated thus: “if there was no compliance with the
statutory prerequisites there was no procedural fair administrative
action (sic), and the administrative action of the First Respondent
stands to be reviewed and set aside in terms of PAJA.”
This,
it was submitted, entitled the applicant to relief in terms of prayer
1 of the notice of motion. The second leg of attack
was stated thus:
“If the formalities and requirements prescribed by law were
not complied with, the agreement of sale entered
into by Respondents
was simply void
ab initio
,
and Applicant will be entitled to the relief asked for in prayer 3 of
the notice of motion”, namely a declaration that the
sale
agreement is invalid and unenforceable.
53. Despite the lack of privity of
contract between the applicant and the other parties, there has been
no challenge to the standing
of the applicant to seek a declarator
that the contract between the respondents is invalid and
unenforceable. The applicant has
sufficient interest as a competitor
of the second respondent and as a ratepayer of the first respondent
entitling it to impugn
the validity of the action.
54. Mr Maritz, however, argued that I
should not issue a declarator where neither consequential relief is
asked for, nor reversal
of the transfer is sought. A prayer for
consequential relief might be prudent in practice, but I am unable to
agree that such
is a necessary pre-condition to the grant of a
declarator. Section 19(1)(a)(iii) of the Supreme Court Act permits
the High Court,
in its discretion, and at the instance of any
interested party, to inquire into and determine any existing, future
or contingent
right or obligation, “notwithstanding that such
person cannot claim any consequential relief upon the determination”.
The present application does not give rise to a dispute or question
which is hypothetical, abstract or academic. There is a real
and
pertinent dispute between the parties in respect of which the
applicant has an interest; and hence I see no justifiable basis
to
refuse to exercise the discretion to grant a declarator on that score
-
Compagnie Interafricaine
de Travaux v SA Transport Services
[1991] ZASCA 16
;
1991
(4) SA 217
(A) at 230 I - 231 C. It is, of course, another matter
altogether whether or not the applicant is entitled on the merits to
the
declaratory relief it seeks.
55. The applicant’s formulation
of the ground of review as an allegation of procedurally unfair
administrative action, in
my opinion, is a category mistake. Although
non-compliance with the two statutory provisions undoubtedly would
have a procedural
dimension, the issue at hand does not concern the
routine issues of procedural fairness envisaged in section 3 of PAJA,
which relate
to the observance of the tenets of due process, such as
notice, the opportunity to make representations, rights to
representation,
the right to an appeal and so on. The real issue
here is whether a mandatory and material procedure or condition
prescribed by
an empowering provision was not complied with. That is
an issue of legality. There can be no doubt, whatever the
applicant’s
formulation of the dispute, that such has always
been the applicant’s case. And, at risk of being trite,
illegality is in
and of itself a sufficient ground of review, whether
the cause of action is founded in PAJA or not. In
Fedsure
Life Assurance Ltd and others v Greater Johannesburg Transitional
Metropolitan Council and other
(supra)
at para 56 the Constitutional Court stated:
“
A local government
may only act within the powers lawfully conferred upon it. There is
nothing startling in this proposition -
it is a fundamental principle
of the rule of law, recognized widely, that the exercise of public
power is only legitimate where
lawful. The rule of law - to the
extent at least that it expresses this principle of legality - is
generally understood to be
a fundamental principle of constitutional
law.”
56. As I understand the applicant’s
case, it is not contended that the applicant was denied a reasonable
opportunity to make
representations or was shut out from the public
participation process which is the object of section 79(18) of the
Ordinance.
Rather the applicant argues that a municipal council may
only exercise the power to dispose of land if the publication
inviting
objections and the public participation process takes place
before a sale agreement is concluded. Prior publication of the notice
inviting objections and the consideration of those objections are
jurisdictional requirements for the exercise of the power to
conclude
a sale of immovable property. In this instance, according to the
applicant, the sale was concluded in October 2007, and
the
publication of the notices and the receipt and consideration of
objections occurred subsequently in May and November 2008;
consequently, it was submitted, there was non-compliance with the
mandatory statutory requirements.
57. A similar submission was made
regarding section 33 of the MFMA. That provision requires the
municipal manager at least 60 day
before any meeting convened to
approve the contract to make public the
draft
contract and information statement summarising the obligations, and
inviting comments or representations from the public. He or
she is
likewise expected to solicit the views and recommendations of the
relevant government officials identified in section 53(1)(a)(ii).
No
case is made out that such was not done. Rather, the applicant’s
case is that the publication, invitation and solicitation,
as well as
the consideration of objections, all occurred after the contract was
entered into; and such constituted non-compliance
with a mandatory
and material procedure or condition in breach of the principle of
legality.
58. The immediate difficulty
encountered with the contention regarding non-compliance with section
33 of the MFMA is that no factual
foundation is laid in the founding
affidavit in support of the assertion that it is applicable in this
case. Before the procedures
in section 33(1)(a), (b) and (c) of the
MFMA will apply, the municipality must intend to enter into a
contract which will impose
financial obligations on the municipality
beyond the three years covered in the annual budget for that
financial year. The applicant
has not made any factual averments in
its papers that the agreement will impose financial obligations
beyond the three year budget
cycle. The only substantive reference
to section 33 in the founding affidavit is contained in paragraph 34
thereof, where it is
stated that the invalidity of the initial sale
cannot be cured by subsequent compliance and approval. The deponent
continues:
“
For example,
section 33(1)(a)(i)(aa) of the MFMA makes reference to a “draft
contract” and “proposed contract”:
First respondent
did not make a “draft” or “proposed”
contract public, but an agreement with final terms,
already creating
rights and obligations.”
59. The assertion begs the question of
whether the City had any obligation to publish a draft contract under
that section. What
financial obligations, if any, did the contract
impose on the municipality beyond the three year budgetary cycle?
None are mentioned
or alluded to in the papers; nor are any
immediately apparent from reading the terms of the sale agreement.
When pressed in argument,
counsel, seemingly caught off guard,
referred me to clause 17.2 of the sale agreement dealing with the
obligation of the City to
procure an access road at its cost. The
relevant part of the clause provides that in the event that the
Seller fails to procure
that the land required for construction of
the access road is available by the fourth anniversary of the
signature date, the Purchaser
shall be entitled to construct the
access road. While this clause could conceivably operate to extend
the duration of the contract
beyond three years, that alone does not
mean any unbudgeted expenditure will be imposed beyond the three year
budgeting cycle.
One might speculate that it may, but no case to
that effect has been made. In
Swissborough
Diamond Mines (Pty) Ltd v Government of the Republic of South Africa
1999 (2) SA 279
(T) at
324F-G, the court stated:
“
Regard being had
to the function of affidavits, it is not open to an applicant or a
respondent to merely annex to its affidavit
documentation and to
request the Court to have regard to it. What is required is the
identification of the portions thereof on
which reliance is placed
and an indication of the case which is sought to be made out on the
strength thereof. If this were not
so the essence of an established
practice would be destroyed. A party would not know what case must
be met.”
More recently the Supreme Court of
Appeal in
Minister of Land
Affairs and Agriculture v D and F Wevell Trust
2008
(2) SA 184
(SCA) at 200 observed in similar vein:
“
It is not proper
for a party in motion proceedings to base an argument on passages in
documents which have been annexed to the papers
when the conclusions
sought to be drawn from such passages have not been canvassed in the
affidavits … Trial by ambush cannot
be permitted.”
60. Nor does the fact that the City
assumed, perhaps wrongly, that the provision applied, save the
applicant. As discussed earlier,
the agreement incorrectly and
unnecessarily required compliance with a number of inapplicable
statutory requirements. Before the
City can be held to be in
non-compliance with section 33(1)(a) of the MFMA it must be
established that the provision is objectively
applicable by reason of
it imposing financial obligations beyond the three year cycle. As I
have said, the applicant has neither
alleged nor shown that in its
papers.
61. Be that as it may, the main answer
of the respondents to the claim of illegality applies equally to
section 33(1)(a) of the
MFMA as it does to section 79(18) of the
Ordinance. As already explained, the applicant’s case does not
rest on allegation
of total non-compliance in the direct sense, it
contends rather that the City’s ultimate compliance was
compromised by having
signed the sale agreement in October 2007,
prior to compliance, albeit subject to the suspensive conditions in
clause 4.1.1 and
4.1.2 of the sale agreement.
62. The applicant’s position, in
my view, loses sight of the legal effect attributed to a suspensive
condition in an agreement
of sale of immovable property, as well as
the fact that the first respondent in any event achieved and
satisfied the legislature’s
purpose of securing public
participation. The effect of clause 4.1 of the sale agreement was
that the exercise of the power to
alienate the immovable property was
suspended until compliance with the applicable statutory
requirements, as it turns out only
section 79(18)(b) of the
Ordinance, and, perhaps, section 33(1)(a) of the MFMA. Clause 4.3
leaves no ambiguity in that it explicitly
provided that unless the
conditions in clause 4.1 were duly fulfilled at the relevant time,
the key clauses of the agreement “shall
never become of force
or effect, and neither party shall have any claim against the other”.
In terms of clause 4.3, clause
11 remained binding with the result
that the purchaser was explicitly placed at risk for any improvements
it made while occupying
the land and may have become compelled to
rehabilitate the land to its original state.
63. The respondents’ argument is
predicated on the principle enunciated in
Corondimas
v Badat
1946 AD 548
at 560,
which holds that an agreement to sell property subject to a
suspensive condition is a legal agreement, by the making of
which a
definite contractual relation is established, but that relationship
is not the relationship of purchaser and seller until
the condition
is fulfilled. Stated simply, a contract of sale will only be
concluded when any condition to which it is subject
is fulfilled -
Tuckers Land and Development
Corp v Strydom
1984 (1) SA
1
(A) at 18; and
Palm
Fifteen (Pty) Ltd v Cotton Tail Homes (Pty) Ltd
1978
(2) SA 872
(A) at 888A. The first respondent argued accordingly that
it was entitled to comply with the applicable statutory requirements
for public participation subsequent to signature of the agreement
because the coming into force of the obligation to transfer the
property was suspended and not operative until approved by resolution
of the Council. Where legislation seeks to prohibit a sale,
an
agreement of sale subject to a suspensive condition cannot, pending
fulfilment of the condition, be regarded as prohibited.
It only
becomes a sale when the condition is fulfilled, and before that there
will be no contravention of the prohibition -
Geue
and Another v Lith and Another
[2003] ZASCA 118
;
2004
(3) SA 333
(SCA) at 340G-I.
64. The applicant’s rejoinder is
that the
Corondimas
principle does not apply
where the context indicates otherwise. Section 79(18)(b) of the
Ordinance, it argued, does not oblige
a municipality to give notice
and to consider objections only when an agreement of sale is
concluded, the trigger rather is “whenever
a council
wishes
to exercise any of the powers conferred by paragraph (a) in respect
of immovable property”. The powers concerned are the
power to
“let, sell, exchange or in any other manner alienate”.
Accordingly, the timing of the requirement of causing
a notice to be
published is linked to the arising of the wish to exercise the
relevant power, and in this case that was prior to
October 2007.
65. The respondents submitted in reply
that the power in question is the power to alienate immovable
property and not the power
to enter into the
causa
,
the sale or exchange. The purpose of section 79(18) is to ensure
public participation before alienation occurs. The argument
has much
to commend it from the perspective of logic and policy.
Linguistically it proceeds from the premise that the words “sell,
exchange or in any other manner alienate” postulate alienation
or transfers of ownership, and sales and exchanges are merely
manners
which may result in such. The obstacle in the way of accepting the
proposition, or interpretation so put, is that the
provision includes
also the power “to let”. A lease of property does not
involve the power or an act of alienation.
However, the
qualification is not destructive of the argument. The transactions
contemplated in the provision should be considered
disjunctively.
The power exercised in the present instance was the power to sell and
that power was exercised effectively with
permanent consequences only
once the suspensive conditions were fulfilled and alienation
occurred. The power of leasing was never
exercised. ISAGO’s
right to take occupation of the land, with the right to commence
improvements and the installation of
services, prior to the sale
being perfected, and subject to the reversionary rights in clauses
11.1 and 11.4.3, did not arise pursuant
to a lease, a completed sale,
an exchange or any other manner of alienation. These rights arose
pursuant to the
sui generis
contractual arrangement existing pending the fulfilment of the
suspensive condition; and since they did not involve alienation
of
the land there was no obligation to comply with section 79(18)(b)
before conferring them. The exercise of the power of sale
and the
concomitant power of alienation occurred only with the perfecting of
the sale by fulfilment of the conditions, most particularly
the
adoption by the Council of the final resolution contemplated in
clause 4.1.2. The wish to exercise that power most certainly
occurred some time before then. Considering the legislative purpose
that public participation should occur, in the case of a sale,
before
the obligation to alienate the property is perfected and operable, in
both logic and policy it will be sufficient if the
notice is
published and the objection process is undergone before then.
Provided the process occurs between the wish to exercise
the power of
alienation and its actual exercise, there has been compliance.
66. An interpretation along these
lines avoids sacrificing substance to form. It is the duty of court
to get at the real intention
of the legislature by attending to the
whole scope of the statute to be construed. The question is: Has
the thing ordered by
the legislature to be done been done? -
Leibrandt v South African
Railways
1941 AD 1
at 13.
Although the applicant has raised issues of due process and
reasonableness which I discuss later, no case has been made
that the
objection procedures contemplated in section 79(18) of the Ordinance
and section 33 of the MFMA were applied defectively
in relation to
the representations received on grounds of procedural shortcomings,
irrationality or a discounting of relevant considerations
by the
first respondent. The notices were published in May and November
2008, objections were received, placed before the Council
and
considered by its members before the resolution exercising the power
of alienation was taken in February 2009. What the legislature
ordered to be done was in fact done.
67. By the same token, even if one
were to interpret the provision to mean that the publication of the
notice calling for objections
is required immediately upon
contemplating the wish to exercise the power, and thus in the present
instance prior to the municipal
manager executing the conditional
agreement, I doubt that the legislature intended the timing to be
mandatory. I have essentially
already made the point, but from a
different perspective. The general object intended to be secured by
the section is that a public
participation process must take place
before a binding and fully operative lease, sale, exchange or
alienation occurs. And that,
hence, is mandatory. The statutory
directive that it should occur as soon as the wish to exercise the
power arises, and before
any further executory steps are taken, if
that was indeed the intention, is, in my opinion, merely directory,
for the simple reason
that it would not be an essential prerequisite
to achieving the legislative purpose to ensure public participation
before disposal
or alienation. In
Howard
v Bodington
(1877) 2 PD 203
the distinction was described thus:
“
Now the
distinction between matters that are directory and matters that are
imperative is well known to us…. I am not sure
that it is the
most fortunate language that could have been adopted to express the
idea; but still that is the recognized language
and I propose to
adhere to it. The real question in all these cases is this: A thing
has been ordered by the legislature to be
done. What is the
consequence if it is not done? In the case of statutes that are said
to be imperative, the Courts have decided
that if it is not done the
whole thing fails, and the proceedings that follow upon it are all
void. On the other hand, when the
Courts hold a provision to be ….
directory, they say that, although such provision may not have been
complied with, the
subsequent proceedings do not fail. Still,
whatever the language, the idea is a perfectly distinct one.”
68. For those reasons, therefore, I am
not persuaded that the resolution to approve and execute the sale
agreement stands to be
reviewed and set aside on the grounds of
non-compliance with a mandatory and material procedure or condition
prescribed by legislation.
Likewise, the resolution did not
contravene any law, nor is it otherwise unlawful. There is
accordingly no basis for declaring
either the resolution or the sale
agreement invalid and unenforceable on the grounds of illegality.
69. The applicant raised another
possible ground of illegality which it did not substantiate in its
papers and which counsel prudently
did not pursue with any enthusiasm
in argument. In paragraphs 29.4 and 30.5 of the founding affidavit
the allegation is made that
the first respondent was obliged to
comply with its Supply Chain Management Policy and Preferential
Procurement Policy prior to
concluding the conditional agreement on 2
October 2007 and that the sale agreement is
ultra
vires
and/or void and
unenforceable due to the fact that compliance with the policies is
not a suspensive condition. In paragraph 38
it further alleged that
the first respondent had failed, prior to conclusion of the sale
agreement, to consider its deviation from
the policies, to record the
reasons for deviation and to report same to the Council. Once again
no case was made out in the founding
affidavit in support of this
challenge by identifying the parts of the annexed policy
documentation upon which reliance is placed
and stating the case to
be made out at the hearing on the strength thereof with reference to
the particular allegation of non-compliance
or deviation made. That
is the end of the matter; save to say that I agree with the
submission made by Mr Raath SC, on behalf
of the second respondent,
that the policy is in any event restricted to supply chain management
in respect of goods and services
as appears from the language of the
Municipal Supply Chain Management Regulation GN868 GG 27636 of 30 May
2005.
Black’s Law
Dictionary
(8ed) defines
“goods” as “tangible or
movable
personal property other
than money; esp., articles of trade or items of merchandise (goods
and services)”. The sale of immovable
property by a council
most likely does not fall within the ambit of the policy.
70. The applicant has not limited its
impugnment of the resolution to the ground of illegality. In
addition, it submitted in paragraph
14 of its heads of argument that
“the procedure followed by the first respondent in concluding
the agreement, on first respondent’s
version on 5 February
2009, was unfair and unreasonable to an extent that no reasonable
municipality could have acted accordingly”.
On the face of it,
the ground of review is a conflation of two grounds, namely, that the
action was procedurally unfair and also
that it was unreasonable.
When unpacked with reference to the factual allegations upon which
the attack appears to be founded,
it is clear that the applicant
challenges the reasonableness of the decision. Review on such ground
is permissible in terms of
section 6(2)(h) of PAJA, which provides:
“
A court or
tribunal has the power to judicially review an administrative action
if the exercise of the power or the performance
of the function
authorised by the empowering provision, in pursuance of which the
administrative action was purportedly taken,
is so unreasonable that
no reasonable person could have so exercised the power or performed
the function.”
71. The foundation for the argument is
laid in different threads in various paragraphs of the founding
affidavit. In paragraph
14.3 the applicant complains that the first
respondent had committed itself, and/or had compromised the exercise
of its discretion
and/or had prejudged the outcome of any subsequent
attempt to comply with the statutory prerequisites by concluding the
sale agreement
with specific terms and conditions. This allegation
is supplemented in paragraph 42.4 by the assertion that there had not
and
could not be an unfettered exercise of first respondent’s
discretion in compliance with the statutory requirements, given
its
conclusion of the sale agreement, with the outcome of any public
participation process therefore being predetermined. The
point is
enlarged upon in paragraphs 52 and 53 as follows:
“
The fact of the
matter is that the first respondent had already negotiated final and
binding terms, setting the structure of the
deal as a sale, agreeing
to the purchase price, manner of payment, benefits to first
respondent, etc. This resulted in first respondent
already having
decided on all the terms, even before embarking on the compliance
procedure otherwise put, any compliance procedure
had a
pre-determined outcome ……. The latter is borne out by
each and every response, submission and resolution by
first
respondent in the compliance procedures. It had no room to manoevre
and to consider alternative structures and/or terms
and conditions.”
72. Before examining the complaint
more closely, it might help to say what it is not. There is no
allegation made, nor evidence
adduced, that the action taken by the
Council was for a reason not authorised by the empowering
legislation, or for an ulterior
purpose, or because irrelevant
considerations were taken into account. The suggestion though is
made that relevant considerations
were not considered, namely
“alternative structures and/or terms and conditions”.
However, nowhere does it appear
in the record that “alternative
structures and/or terms and conditions” were placed before the
Council at any time,
and there is no allegation or evidence that the
Council refused or failed to consider them. The best that can be
made of the point,
therefore, is the allegation of unlawful
fettering, or the Council acting under dictation, resulting from the
terms of the agreement.
73. Mr Bergenthuin argued that the
procedure followed “was designed to avoid the prior compliance
with statutory prerequisites”.
This submission he based on the
provisions of clause 4.2 of the sale agreement in terms of which the
first respondent undertook
“to use its reasonable endeavours to
procure the fulfilment of the conditions in clause 4.1 at its cost”.
By doing
this, he said, the Council deprived itself of a proper
evaluation of competing purchasers of the property. He did not
identify,
and the record does not disclose, any competitors who
claimed that they were deprived of consideration or evaluation.
Moreover,
he added, the first respondent could not evaluate
objections and representations objectively after it had “effectively
bound”
itself in the agreement with ISAGO, with the outcome
that the procedure leading up to the resolution was not transparent,
reasonable
and fair, and thus the resolution itself could never
amount to fair, transparent and reasonable administrative action. It
is not
clear from the founding papers in what respects the applicant
regarded the process as lacking in transparency and what the
consequences
of that might be in terms of the law. Accordingly, I
shall restrict my assessment to the valid concern about fettering and
dictation.
74. I tend to agree that a more open
process without pre-ordained arrangements generally might have been
better, leading the council
to pursue more effective competition.
Yet, on the other hand, questions of efficiency may in specific
instances justify putting
a contractual proposal on the table before
the public participation process begins. Indeed, section 33 of the
MFMA envisages the
publication of a “draft” contract
before the public participation process. There is not a great deal
of difference
between a draft contract and one which is not operative
until the suspensive condition of approval by a council resolution is
fulfilled.
If the Council was not impressed by the agreement it
could have refused to approve it.
75. In paragraph 17.3 of the replying
affidavit the applicant builds its case on this aspect by referring
in greater detail to various
clauses in the agreement. This
paragraph is the subject of a striking out application (along with
many other paragraphs) on the
ground that none of the references were
identified in the founding affidavit, and nor was the case made on
the strength of them.
The paragraph thus seeks to import new
material in the replying affidavit in contravention of the trite
principle that in motion
proceedings the case must be made out in the
founding affidavit. The paragraph should properly be struck out. I
will return to
the striking out application in due course. But
because I hold the view that paragraph 17.3 of the replying affidavit
and the
averments it contains do not advance the case of the
applicant in any meaningful way, I am prepared to comment upon it.
76. The case made is that the various
clauses of the agreement commit the first respondent in a manner
resulting in a fettering
of discretion. Thus, it is claimed that
clauses 2.7 and 2.8 commit the respondent to sell the land. That is
true, but the commitment
had no operative capacity until the
conditions were fulfilled and the Council approved of the sale.
Likewise, the undertaking
by the City in clause 4.2 to use its
reasonable endeavours is no more than an agreement not to act
unreasonably to thwart compliance
with the conditions. It certainly
is not an agreement to fulfil the conditions. It means that the City
will do what is necessary
to ensure that the public participation
process takes place properly and that the procedural steps involved
in placing the matter
before the council for consideration of a
resolution are followed. There is no fettering in that. Similarly,
while the rights
of the second respondent to take occupation before
transfer (clause 11), to effectuate improvements and the installation
of services,
and the commitment to develop the project (clause 16)
created immediately binding “facts on the ground”,
admittedly
of some influence, they were not irreversible rights by
virtue of clauses 11.1 and 11.4.3 allowing for reversal without any
financial
consequence for the Council in the event that the
suspensive conditions were not fulfilled.
77. There may be truth in the
suggestion that there was a better and more competitive means of
going about the sale of the land
along the N12 corridor for the
purposes of development than the method followed by the City. But it
cannot be said that no reasonable
local authority would proceed as
the Council did. Objections and representations were received. The
item that served before the
Council disclosed fully and in detail the
relevant information required for the Council to make a decision.
There is no evidence
that any material relevant information was
omitted or not considered, or that the Council acted in bad faith or
with an ulterior
motive or purpose. There was a rational
relationship between the material placed before the Council and the
decision taken; meaning
that there was a rational objective basis for
the resolution. Moreover, and perhaps most importantly, prior to the
resolution
no other ratepayer, or interested member of the community,
objected forcefully to the method of contracting followed or the
circumstance
that the contract was entered into subject to suspensive
conditions, despite that circumstance being public knowledge. There
is
accordingly no basis for setting aside the decision on grounds of
unreasonableness.
78. In keeping with its “broad
sweep” approach to review, casting the net as wide as possible,
the applicant has made
various unsubstantiated allegations of bias,
unfairness,
functus officio
and others. None of these
was pursued meaningfully in argument and therefore all can be safely
ignored.
79. Lastly, the applicant has alleged
that there was no resolution taken by the first respondent
authorising the sale agreement
or resolving to conclude it. The
point is badly and ambiguously “pleaded” in paragraph
30.2 of the founding affidavit.
All that is said is: “There
is no resolution by the first respondent, resolving to conclude such
an agreement”.
It is doubtful whether such an averment,
without further ado, is sufficient to put the authorisation of the
signatories to the
agreement in issue. If the intention was to
question the sufficiency of the authorisation bestowed by the two
standing resolutions,
and there may be merit in such a challenge,
that needed to be pleaded with some specificity with reference to the
terms of the
standing resolutions. Whatever the case, paragraph (b)
of the impugned resolution of the Council passed on 5 February 2009
can
be construed to have ratified the action of 2 October 2007 in
that it contains the following:
“
the City of
Matlosane … hereby approves the entire written Agreement of
Sale entered into between the CoM and Isago on 2
October 2007 exactly
as it is to be executed.’
80. The finding that there is no merit
in the review application or any entitlement to the relief sought in
either prayer 1 or 3
of the notice of motion, makes it unnecessary to
decide the issue of unreasonable delay. Taking account though of the
possibility
of an appeal, I will state my findings succinctly. First
of all, there may be doubt that an application for a declarator in
terms
of section 19(1)(a)(iii) of the Supreme Court Act for the
determination at the instance of an interested party of a rights
issue
based on the principle of legality is subject to the undue or
unreasonable delay rule applicable in proceedings to review
administrative
action. As for the review on the grounds of legality
and unreasonableness, it is evident from the record that the
applicant was
aware of the sale agreement at the latest (if not
before) in July 2008 as is evidenced by its attorneys challenging the
legality
of it in the letter dated 29 July 2008, that is more than a
year before it brought review proceedings. The only other meaningful
administrative law review ground it raised, namely that the Council
fettered its discretion by the manner in which the agreement
was
structured, could have been raised at that time too had it wished to
review that action. It became aware of the action almost
a year
before launching proceedings and that
prima
facie
would have been an
unreasonable delay. On the other hand, if the relevant action was
the adoption of the resolution on 5 February
2009, the proceedings
for judicial review were instituted 180 days after that on 4 August
2009. Counsel for the second respondent
has argued forcefully that
such too amounted to an unreasonable delay. Given the history
between the parties, so he argued, the
applicant ought to have sprung
into action earlier and have avoided the possible disruption that
would be experienced by having
to reverse the significant steps of
implementation that took place between February and August 2009.
81. In my view, the applicant’s
delaying until the adoption of the resolution was entirely
reasonable. The resolution is
the appropriately impugned action.
The applicant had no certainty before then that the council would not
be influenced by its
entreaties that there had been non-compliance.
The Council may well have altered course. The applicant was
accordingly prudent
and within its rights to deploy litigation as a
last resort once the resolution was taken, and this action was the
right target.
It is unnecessary to resolve the dispute of fact about
when precisely the applicant learnt of the resolution. The
proceedings
were instituted within 180 days of the resolution. 180
days is the statutory yardstick in section 7 of PAJA, even though the
standard
is expressed as “without unreasonable delay
and
not later
than 180 days”.
The applicant has put up reasons for it taking as long as it did,
albeit in somewhat unsatisfactory fashion
in its replying affidavit.
I do not propose to canvass them because even were I persuaded that
its failure to act sooner within
the 180 day period was unreasonable,
I would condone the unreasonable delay for two principal and
overriding reasons: firstly,
the public interest in this contract
favours a finding that it be subjected to judicial scrutiny; and
secondly, being within 180
days, the delay in instituting
proceedings, even if unreasonable, was relatively short and did not
outweigh the imperative for
review.
82. I have been able to arrive at the
conclusion that there is no merit in the application without
considering the second respondent’s
striking out application.
It is a sensible canon of judicial practice that where an application
can be disposed of on its merits,
without striking out the offending
averments, the court should proceed accordingly and there is no need
to determine the striking
out application. The relief sought by the
second respondent was directed at striking out an extensive number of
averments in the
replying affidavit introducing new matter in
relation to both the merits and the undue delay point. The applicant
did not oppose
it in a coherent fashion and effectively conceded.
Therefore, despite not determining the application for striking out,
I am satisfied
that the second respondent is entitled to its costs in
respect of it. The complexity of the matter and the public interest
in
it justified the use of two counsel and senior counsel.
83. In the premises, the following
order is issued:
The application is dismissed with
costs including the costs of two counsel and senior counsel, where
applicable; as well as the
second respondent’s costs in the
application for striking out.
JR MURPHY
JUDGE OF THE HIGH COURT
Dates Heard: 26 & 27 November
2009
For the Applicant: Adv JG Bergentuin
SC
Instructed By: Van Zyl Le Roux &
Hurter Inc.
For the 1
st
Respondent: Adv. NGD Maritz SC, Adv NG Laubscher
Instructed By: Rooth Wessels Motla
Conradie
For the 2
nd
Respondent: Adv RJ Raath SC, Adv JA Venter
Instructed By: Roestoff Venter &
Kruse Attorneys