Majomatic 115 (Pty) Ltd v Kouga Municipality and Others (303/2009) [2010] ZASCA 17; [2010] 3 All SA 415 (SCA) (18 March 2010)

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Majomatic 115 (Pty) Ltd v Kouga Municipality and Others (303/2009) [2010] ZASCA 17; [2010] 3 All SA 415 (SCA) (18 March 2010)

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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
No: 303/2009
In the matter between:
MAJOMATIC 115 (PTY) LIMITED
Appellant
and
KOUGA MUNICIPALITY
First Respondent
JOHANNES RENIER FERREIRA
Second Respondent
FEDERATION OF KOUGA RATEPAYERS
ASSOCIATION
Third Respondent
Neutral citation:
Majomatic
Limited v Kouga Municipality
(303/09)[2010] ZASCA 17 (18 March 2010)
Coram:
MTHIYANE,
CACHALIA, LEACH JJA, MAJIEDT and SALDULKER AJJA
Heard: 23 February 2010
Delivered: 18 March 2010
Summary:
Whether
the
procedures prescribed by ss 124(1) and (2) and 172 of Municipal
Ordinance 20 of 1974 (Cape) for the alienation of municipal property
were of force and effect in November 2003 or whether they were
impliedly repealed by Item 2 of Schedule 6 of the Constitution.
_____________________________________________________________________
ORDER
On appeal from:
Eastern
Cape High Court (Port Elizabeth) (Schoeman J sitting as court of
first instance):
1. The appeal is dismissed with
costs.
2. The order of the court a quo
is set aside and replaced with the following:
‘
The plaintiff’s action is
dismissed with costs.’
JUDGMENT
MTHIYANE JA (Cachalia, Leach JJA,
Majiedt and Saldulker AJJA concurring)
[1] This is an appeal against the
judgment and order of Schoeman J sitting in the Eastern Cape High
Court, Port Elizabeth which is
before us with her leave. It concerns
her finding on a separated issue of whether or not the contract of
sale by the first respondent,
Kouga Municipality (the Municipality),
of certain municipal property to the appellant during November 2003
was lawfully concluded;
in particular whether compliance with the
provisions of s 124 and s 172 of the Municipal Ordinance 20 of 1974
(Cape) (the Ordinance)
was required for the conclusion of a valid
contract. The learned judge held that the provisions of the Ordinance
were of force and
effect at the time of the conclusion of the
contract and that compliance therewith was required.
[2] The contract of sale was
preceded by an advertisement which was placed in a local newspaper
inviting tenders for the purchase
of several immovable properties
including the property concerned in the present matter. The
advertisement appeared on 14 November
and invited interested
purchasers to submit applications on or before 28 November 2003.
Contrary to the prescribed requirements it
made no mention that
objections to the proposed sale could be made nor to whom or where
such objections could be made. The advertisement
also required
applications to be submitted to the Director: Planning and
Development within two weeks instead of the period of 21
days as
required by the Ordinance.
[3] Before discussing the prime
issue on appeal it is necessary to refer to the relevant provisions
of the Ordinance regulating the
alienation of municipal property at
the time. Section 124 provides:
‘
(1) Subject to
the provisions of subsection (2) and such directions as the
Administrator may from time to time determine, a council
may ─
alienate, let or
permit to be built upon, occupied, enclosed or cultivated any
immovable property owned by the municipality unless
it is precluded
from so doing by law or the conditions under which such property was
acquired by the municipality, and
with the consent of
the owner thereof or for the purposes of section 127(1) let or
permit to be built upon, occupied, enclosed or
cultivated any
immovable property under its control or management.
provided that the
Administrator may, either specifically in respect of any particular
action contemplated in paragraph (a) or (b)
or generally in respect
of a category of actions so contemplated, by notice in the
Official
Gazette
determine
that such action shall be subject to his prior approval.
(2) No council shall
act in terms of subsection (1) unless it has ─
(a) advertised its
intention so to act, and
(b) considered the
objections (if any) lodged in accordance with the advertisement
contemplated by paragraph (a);
provided that the
foregoing provisions of this subsection shall not apply where the
proposed letting will be for a period not exceeding
twelve months
without an option to renew.’
[4] Section 172(1) and (2) of the
Ordinance provides:
‘
(1) A council
shall, by notice published in the press, invite tenders before
entering into any contract which is for ─
(a) the execution of
any work for or the supply or sale of any goods or materials to the
council and which involves or is likely to
involve an amount
exceeding such amount as the Administrator may from time to time
either generally or specially determine in respect
of contracts
entered into by such council, and
(b) the sale of any
goods or materials by the council.
(2) The notice
contemplated by subsection (1) shall specify ─
(a) the nature of
the proposed contract;
(b) such particulars
of such contract as the council may deem fit;
(c) that all tenders
for such contract shall be submitted in a sealed envelope upon the
outside whereof is clearly stated that such
envelope contains a
tender and the contract for which such tender is being submitted;
(d) a day,
subsequent to the expiration of the period contemplated by paragraph
(b)(iii) of the definition of ‘publish in the press’,
and the
hour on such day at or before which tenders must be received, and
(e) the place where
and the hour and day when such tenders will be opened.’
In the view I take of the matter
I do not consider it necessary to quote the section in its entirety.
It suffices to refer merely
to the above provisions and to indicate
that s 172 provides for fair and transparent procedure for the
disposal of municipality property.
It also bears mention that Mr
Beyleveld, for the appellant, conceded that if the appellant is
unsuccessful in its contentions in
relation to s 124(2) that would be
the end of the matter and the appeal must fail.
[5] It is common cause that the
procedures laid down in s 124 (1) and (2) of the Ordinance were not
complied with. Mr Beyleveld, for
the appellant, contended that there
was no obligation to comply with these procedures as the Ordinance
had at that stage been impliedly
repealed by the Constitution. This,
he submitted, is apparent from the fact that s 124(1) confers the
power on the Administrator
(now the Premier) to give ‘such
directions as [he or she] may from time to time determine’. And, so
the submission went, because
the Premier, under the Constitution, has
no authority over a Municipality, s 124 in its entirety was repealed
when the Constitution
came into force. According to Mr Beyleveld
there is no scope for ‘pruning’ such oversight powers of the
Premier so as to harmonise
the Ordinance with the Constitution. The
Ordinance as a whole, he submitted, is at odds with the Constitution
and has thus failed
to survive the new constitutional dispensation.
[6] In my view the appellant’s
contention flounders in the face of the plain wording of Item 2 of
Schedule 6 to the Constitution.
Item 2 of Schedule 6 provides:
‘
2 (1) All law
that was in force when the new Constitution took effect, continues in
force, subject to ─
any amendment or
repeal; and
consistency with
the new Constitution.
Old order
legislation that continues in force in terms of subitem (1) ─
does not have a
wider application, territorially or otherwise, than it had before
the previous Constitution took effect unless subsequently
amended to
have a wider application; and
continues to be
administered by the authorities that administered it when the new
Constitution took effect, subject to the new Constitution.’
It is apparent that ‘old order
legislation’ (as it is described here) remains in force save only
where it has been repealed or
amended or where it is inconsistent
with the Constitution. It is also plain that Item 2 envisages some
form of pruning exercise ─
a reading of a pre-constitution statute
to conform with the new constitutional prescripts. In the context of
the present matter the
acceptable approach, in my view, involves
discarding the offensive portions of s 124(1) of the Ordinance and
giving meaning and effect
to the non-offensive ones. It seems to me
that the basic test for the survival of a pre-constitution provision
is whether it has
been amended or impliedly repealed or is
inconsistent with the Constitution, but only to the extent of such
inconsistency.
[7] On a proper interpretation
and application of Item 2 of schedule 6 of the Constitution to s
124(1) and (2) of the Ordinance the
conclusion is unavoidable that s
124(2) and the non-offensive portions of s 124(1) have survived the
Constitution and remain applicable.
That, in my view, is the approach
which was adopted by the majority in
CDA
Boerdery (Edms) Bpk & others v Nelson Mandela Metropolitan
Municipality & others
[2007] ZASCA 1
;
2007 (4) SA 276
(SCA). In that case the old order subordination of
the local authority’s power to levy rates under s 82(1) of the
Municipal Ordinance
20 of 1974 (Cape) to the Premier’s approval was
held to have been impliedly repealed by the Constitution. This is no
authority
for the submission advanced by Mr Beyleveld that the entire
Ordinance was repealed, even to the extent that for the most part it
is not inconsistent with Constitution.
[8] It follows that the proper
approach to the matter, which is in line with Item 2 of Schedule 6 to
the Constitution and the ruling
in
CDA
Boerdery
favours a
construction that would disregard the oversight powers of the
Administrator (now Premier) in s 124(1) of the Ordinance
so as to
ensure that the subsection remains of force and effect. If the
construction contended for by the appellant is upheld it
would mean
that no legislative provision would be left to regulate the
alienation of municipal property. Schoeman J found, correctly
in my
view, that at the relevant time (November 2003) there were no other
regulations or provisions under any other Act in place
dealing with
tenders or the sale of immovable property by a municipality, barring
the Ordinance. Mr Beyleveld, for the appellant,
sought to meet this
finding by submitting that
s 10G(5)
and
11
of the
Local Government
Transition Act 209 of 1993
made provision for the alienation of
municipal property and that compliance with ss 124 and 172 of the
Ordinance was therefore not
necessary.
[9] A brief discussion of the two
subsections illustrates the fallacy of the argument. Section 10G(5)
provides as follows:
‘
5(a) A
municipality shall award contracts for goods and services in
accordance with a system which is fair, equitable, transparent,
competitive and cost-effective.
(b) Notwithstanding
paragraph (a), a municipality may, in accordance with a framework
prescribed by national legislation, in awarding
contracts give
preference to the protection or advancement of persons or categories
of persons disadvantaged by unfair discrimination,
and shall make the
granting of such preferences public in the manner determined by the
council.
(c) A municipality
may dispense with the calling of tenders in the case of an emergency
or of a sole supplier or within such limits
as may be prescribed by a
national law.’
It will be immediately apparent
that all that subsection (5) does is to lay down a principle
applicable to the award of contracts.
It does not prescribe any
procedures for awarding contracts and it makes no specific reference
to the alienation of municipal property.
s 10G(5) was not meant to
apply to alienation of municipal property but to ‘financial
matters’ relating to ‘goods and services’
as the heading of the
section suggests. It follows that the appellant’s reliance on s
10G(5) is misplaced and falls to be rejected.
[10] Section 10G(11) also does
not take the appellant’s case any further. It provides:
‘
(11) A
municipality shall ensure that ─
(i) the acquisition
and disposal;
(ii) the utilisation
and control; and
(iii) the
maintenance,
of its assets are
carried out in an economic, efficient and effective manner.’
It is clear that the subsection
also sets out a policy without specifying any procedures regarding
its implementation. It provides
that a municipality must ensure that
the acquisition and the disposal, utilisation and control and the
maintenance of its ‘assets’
are carried out in an ‘economic,
efficient and effective manner’. This provision, too, has no
bearing on the alienation of municipal
land.
[11] For the above reasons the
appellant’s contention that the whole Ordinance has been impliedly
repealed by the Constitution cannot
be upheld. It flies in the face
of the clear and unambiguous wording of Item 2 of Schedule 6 to the
Constitution. Section 124(2)
in imperative terms requires the
municipality to advertise its intention to sell and to provide for
and consider objections, if any,
to the proposed alienation of
municipal property. As Schoeman J correctly found, the appellant was
obliged to comply with these provisions
and the failure to do so
rendered the sale invalid.
[12] I turn briefly to the
submissions advanced by Mr Pretorius, for the second and third
respondents. He approached the matter from
a different and
interesting angle. He argued that the oversight powers of the
Administrator (now Premier) referred to in s 124(1)
of the Ordinance
were not impliedly repealed by the Constitution and that compliance
therewith was obligatory. For this submission
Mr Pretorius strongly
relied on the judgment of Kroon AJ in
Wary
Holdings (Pty) Ltd v Stalwo (Pty) Ltd & another
.
1
At issue in that case was the validity of a written agreement in
respect of land which was zoned as ‘agricultural land’. The
dispute revolved around whether the land sold was agricultural land
or not. If it was, the Minister’s consent to the subdivision
of the
land would have been necessary. The purchaser had intended to use the
property for industrial purposes and for that reason
had lodged an
application with the relevant local authority for the rezoning and
subdivision of the land. The subdivision was approved
by the local
authority concerned. A dispute however subsequently arose as to
whether the sale was valid and enforceable as the Minister
of
Agriculture had not consented to the sale and subdivision of the land
as required by s 3(a) and (e)(i) of the Subdivision of Agricultural
Land Act 70 of 1970 (the Agricultural Land Act). Kroon AJ (who wrote
for the majority) upheld the provision requiring ministerial
consent
and said that the enhanced status of present-day municipalities and
the fact that municipal ordinances accorded them various
powers,
including those of planning, zoning and rezoning of land and approval
of applications for subdivision, was not a ground for
ascribing to
the legislature the intention that national control over
‘agricultural land’ through the Agricultural Land Act,
was
effectively a thing of the past. He added that there was no reason
why the two spheres of control could not co-exist even if
they
overlapped and even if, in respect of the approval of subdivision of
‘agricultural land’, the one may in effect veto the
decision of
the other (paras 79-80).
[13] The
Wary
Holdings
case is
clearly distinguishable from the present matter in that it dealt with
‘agricultural land’ as opposed to ‘municipal
property’, in
respect of which different considerations apply. It is clearly no
authority for the proposition that the oversight
power of the Premier
referred to in s 124(1) of the Ordinance survived the new
Constitution. One is dealing here with municipal property
where no
such restrictions are applicable. In any event in the light of the
conclusion to which I have come it is not necessary to
explore the
arguments advanced by Mr Pretorius any further.
[14] It remains to consider the
appropriate order to be made in the present matter. All the parties
were agreed that if it was found
that s 124(2) of the Ordinance was
of full force and effect and that compliance therewith was required
for the conclusion of the
valid agreement of sale between the
appellant and the first respondent, the appropriate order would be
one upholding the appeal with
costs and replacing the order of the
court a quo with one dismissing the plaintiff’s claim with costs.
[15] For the above reasons the
following order is made:
1. The appeal is dismissed with
costs.
2. The order of the court a quo
is set aside and replaced with the following:
‘
The plaintiff’s action is
dismissed with costs.’
_____________________
K K Mthiyane
Judge of Appeal
APPEARANCES
APPELLANTS: A Beyleveld SC
(with him T Zietsman)
Instructed by Fredericks Inc,
Port Elizabeth
McIntyre & Van der Post,
Bloemfontein
FIRST RESPONDENT: PWA Scott
Instructed by Roland Meyer &
Co, Port Elizabeth
EG Cooper & Majiedt Inc,
Bloemfontein
SECOND and THIRD
RESPONDENTS: B Pretorius
Instructed by Christo Swanepoel
Attorneys, Jeffreys Bay
Honey Attorneys Inc, Bloemfontein
1
[2008] ZACC 12
;
2009
(1) SA 337
(CC).