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[2022] ZAECMKHC 125
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Enoch Mgijima Municipality v Minister of Finance and Others (4351/2022) [2022] ZAECMKHC 125 (30 December 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, MAKHANDA)
CASE
NO: 4351/2022
(1)
REPORTABLE: YES/NO
(2)
OF INTEREST TO OTHER JUDGES: YES/NO
(3)
REVISED
In
the matter between
ENOCH
MGIJIMA MUNICIPALITY
Applicant
And
MINISTER
OF FINANCE & OTHERS
Respondent
JUDGMENT
BROOKS
J:
THE
PARTIES AND THE RELIEF SOUGHT
[1]
The applicant in these proceedings is Enoch Mgijima Municipality, a
local authority
established in terms of the provisions of the
Municipal Structure’s Act 117 of 1988, with its address at
Komani within the
area of jurisdiction of this court.
[2]
The 1st respondent is the Minister of Finance of the Republic of
South Africa, a public
office bearer appointed by the 3rd respondent
and responsible for the administration of the National Treasury and
National Revenue
Fund from which all allocations to local government
are made in terms of the Constitution of the Republic of South
Africa, 1996
and the
Public Finance Management Act, 1999
.
[3]
The 2nd respondent is the Minister of Cooperative Governance and
Traditional Affairs,
a public office bearer appointed by the 3rd
respondent and responsible for the local government affairs in the
Republic of South
Africa.
[4]
The 3rd respondent is the President of the Republic of South Africa.
[5]
The 4th respondent is the Director General at the National Treasury
and is its accounting
officer.
[6]
The 5th respondent is the Deputy Director General Intergovernmental
Relations at the
National Treasury.
[7]
The 6th respondent is the National Cabinet Representative, a public
functionary appointed
by the National Executive consequent upon the
placement of the applicant’s affairs under national
intervention in terms of
section 139(7) of the Constitution of the
Republic of South Africa, 1996 (the Constitution) in circumstances
which will become
apparent hereunder.
[8]
The application before the court was divided into two parts, in Part
A of the Notice
of Motion the applicant seeks an interim order
pending a review contemplated and set out in Part B of the Notice of
Motion.
The nature of the initial relief sought in Part A of
the Notice of Motion is that of an interim or interlocutory
interdict.
This is a remedy that is granted pendente lite and
is designed to protect the rights of the complaining party, in this
case the
applicant, pending the finalisation of an action or
application launched to establish the respective rights of the
parties, in
this case the relief contemplated in Part B of the Notice
of Motion. A determination of the interlocutory relief does not
involve the final determination of the rights of the parties, and
does not affect such determination. If granted, the effect
thereof is to freeze the position only until the court determines
what the final rights are. Jordan and Another v Penmill
Investments CC and Another 1991(2) SA 430 (E).
[9]
In the interim relief the applicant seeks an order interdicting and
restraining the
1st respondent from withholding and compelling him to
pay funding referred to as “the equitable share allocation to
the applicant
made in terms of section 214 of the Constitution and
the
Public Finance Management Act, 1999
.” These being
motion proceedings the approach towards the assessment of the
entitlement of the applicant to the relief
that it seeks in Part A of
the Notice of Motion is that set out in Spur Steak Ranches Limited v
Saddles Steak Ranch 1996(3) SA
706 (C) at 714A-F as follows:
“
The well-known
requirements for the grant of an interdict are-
1.
A clear right or a right prima facie established, though open to some
hdoubt;
2.
A well-grounded apprehension of irreparable harm if the interim
relief is not
granted and ultimate relief is granted;
3.
A balance of convenience in favour of the granting of interim relief;
and
4.
The absence of any other satisfactory remedy.
Save that the
requirement of a prima facie right established, though open to some
doubt, is the threshold test, the factors are
not considered
separately or in isolation, but in conjunction with one another in
the determination of whether the court should
exercise its
overriding discretion in favour of the grant of interim relief.
I refer here to Olympic Passenger Services
(Pty) Limited v Ramlagan
1957(2) SA 382 (D), Eriksen Motors, Welkom Limited v Protea Motors,
Warrenton & Another, 1973(3)
SA 685 (A) and Beechem Group
Limited v B-M Group (Pty) Limited 1977(1) SA 50 (T).
In determining whether
the applicant crossed the threshold the right relied upon for a
temporary interdict need not be shown by
a balance of probabilities,
it is enough, if it is prima facie established, though open to some
doubt. The proper approach is
to take the facts set out by the
applicant together with any facts set out by the respondents, which
the applicant cannot dispute,
and to consider whether, having regard
to the inherent probabilities the applicant should, not could, on
those facts obtain a
final relief at the trial.”
OPPOSITION
TO THE APPLICATION
[10]
The application was opposed by the 1st respondent, the 4th
respondent, the 5th respondent and
the 6th respondent. In
argument the basis of the opposition was confined to technical
issues, namely –
1.
The validity of the claim made by the applicant that it had
approached the court
in terms of a valid resolution taken by
its council.
2
The issues relating to the claim made by the applicant that the
matter is
urgent.
3.
An assertion that the applicant should be non-suited for
non-compliance with
the provisions of
section 40
of the
Intergovernmental Relations Framework Act, 13 of 2005
before the
launch of proceedings.
[11]
The time periods set out in the Notice of Motion were authorised by
Lowe J in a directive issued
on 15th December 2022. On the
morning of 20th December 2022, the date targeted by the applicant in
Part A of the Notice of
Motion, the applicant was faced with a
logistical difficulty. Its local attorneys of record were
closed for the recess period
and had failed to ensure that the court
file was furnished with at least a copy of the founding affidavit and
the Notice of Motion.
The answering affidavit deposed to on
behalf of the participating respondents had been filed of record.
The court postponed
the matter until 29th December 2022 and reserved
the question of wasted costs. This was not only to enable the
applicant
to place the court file in proper order, it was also to
provide the parties with an opportunity to resolve the issues between
them
extracurially Although not successful such opportunity was
utilised by the parties who reported having held a meeting on the
23rd
of December 2022. On resumption of proceedings on 29th
December 2022 the applicant had filed a replying affidavit. The
participating respondents moved an interlocutory application for
leave to file two further affidavits. That application was
not
opposed; the applicant had had the foresight to deal with the
allegations made in the affidavits sought to be introduced in
its
replying affidavit. In the circumstances the court granted the
respondents leave to file the further affidavits.
The costs of
the interlocutory application were ordered to be costs in the cause.
URGENCY
[12]
[In the founding affidavit the applicant set out the urgency claimed
in the following manner
–
“
The equitable
share that the 1st respondent has decided to withhold from the
applicant was payable on the 7th of December 2022,
that date has
recently passed and the 1st respondent has not paid same.
Instead of paying the equitable share the 1st respondent
came with a
condition and proposal that was manifestly unlawful, namely that
certain individuals be employed. The applicant
considered that
condition and proposal and could not agree for reason that it was
unlawful. As a Minister the 1st respondent
does not have powers
to appoint nor to recommend to the applicant who to appoint. I
have mentioned above that the applicant
responded to the 1st
respondent on 13 December 2022, since then the 1st respondent has not
communicated with the applicant.
At least at the time of
signature of this affidavit I was not aware of any correspondence
from the 1st respondent subsequent to
the 13 of December 2022.
The matter is urgent because operations of the applicant depend on
the expenditure sourced from
equitable share, it is a life and blood
of the applicant. Non-payment thereof will prejudice the
applicant since it will
not be able to pay service providers, as
required, by the very norms and standards set and monitored by the
1st respondent under
the Local Government Municipal Finance
Management Act, 2003. The non-payment of service providers may
result to the applicant
being taken to court and having to pay
interest and legal costs, the amount due which the 1st respondent
will regard as wasteful
expenditure and yet another indication of
lacking financial controls. The applicant uses the equitable
share to pay salaries
for its staff. Its non-payment by the 1st
respondent will result in these workers not being paid despite the
applicant being contractually
bound to them. This may result to
these workers engaging in strikes and impeding the ability of the
applicant to provide
services to the communities that it is legally
and constitutionally bound to serve, such as providing water and
other services
which are essential with the exercise and enjoyment of
the constitutional rights by these communities. The salaries
need
to be paid by the 20th of December 2022. In the event the
applicant experiences labour instability this will dent its image
to
the potential investors that the applicant is working so hard to
attract, it will also prejudice the communities that are so
desperately in need of the basic municipal services. The
applicant is without any other remedy except approaching this
Honourable
Court on an urgent basis, so as to obviate a crisis that
may ensue as a result of the non-payment of its staff and service
providers.
In terms of the contractual terms and conditions
between the applicant and its workers’ salaries are paid on the
25th of
every month, but due to the fact that the 25th of December
falls on Christmas day the applicant normally pays salaries on the
20th
which is basically 5 days away. If payment of the salaries does
not happen as per norm chaos will arise and labour unrest is
reality.
An ordinary form of application is likely to defeat
the purpose of the application since by the time the matter is argued
the decision
of the 1st respondent shall run its course, since such
decisions endure for a period of 4 months.
I would like to indicate
that at the end of that period the applicant shall have suffered
untold damage. Inasmuch as the 1st
respondent communicated its
intention to withhold the applicant’s equitable share on the
23rd of November 2022 the applicant
could not have proceeded to court
on the basis of that intention, this is because the 1st respondent
also invited the applicant
to make representations within 7 days from
that date. Any application to this court would have been
premature. The
applicant made representations on the 28th of
November 2022, still as at that date there would have been no basis
for the applicant
to initiate these proceedings since the applicant
had to wait for the 1st respondent to consider its representations.
At
the council meeting of the 8th of December 2022 still it was not
clear whether the 1st respondent would withhold the equitable share,
but in anticipation of that eventuality the applicant’s counsel
resolved in that event an urgent application would have to
be
initiated. It has since become clear that the 1st respondent
has taken a decision to withhold the equitable share.
The need
to approach court only arose once this became evident, it now is.
The applicant could not have approached court
at any time other than
now.
Moreover, applicant will
not obtain any adequate relief at any time in any other proceedings
instituted in the ordinary course,
if this Honourable Court does not
indulge the applicant that will be the end of the matter, and all the
anticipated damage shall
occur with persistent consequences. In
that eventuality the applicant shall have been denied a right of
access to court,
as enshrined in the Constitution, this court can
neither countenance nor justify such a contravention.”
[13]
The participating respondents who opposed the application rely
heavily on the content of the
two affidavits introduced into the
matter on 29th December 2022, in support of the argument that any
urgency there may have been
in the matter was dispelled by the
applicant’s own act. In the additional affidavits it is
alleged that in fact the
salaries due to be paid by the applicant
were paid on the 15th of December 2022. No attack is made in
the supplementary affidavits
on the allegations pertaining to the
requirement claimed by the applicant that it has to pay service
providers. In the replying
affidavit the applicant explains
that only the monetary element of the salaries due had been paid into
the bank accounts of the
applicant’s councillors and
employees. This had been done in order to avoid protests.
The portion of the salaries
normally paid to the South African
Revenue Service, to the relevant medical aid and pension funds could
not be, and were not, in
fact paid.
[14]
On the facts alleged by the applicant and those alleged by the
respondents that the applicant
cannot dispute I am satisfied that the
applicant was justified in bringing the application as a matter of
urgency.
[15]
Given the occurrence of the various public holidays, although the
time table envisaged by the
applicant was tight, it provided the only
mechanism whereby the applicant could address its liquidity issues
effectively before
its situation worsened. It is convenient to
refer to the judgment in this Division of Oliver Reginald Tambo
District Municipality
v Independent Electoral Commission and Others
1995/2021, 2021 ZAECMHC 31, 24 August 2021 where the following is
stated at para
[11]:
“
The court has a
wide discretion. It is incumbent upon it to ensure that its
Constitutional role in providing access to justice
is not vetted by
placing an emphasis on form regulated by the Uniform Rules of Court
over substance in circumstances where the
need for speedy
intervention is clearly demonstrated on the facts set out in the
founding affidavit. The present matter contains
allegations
which reveal a significant failure on the part of an executive mayor
to perform with due diligence certain basic duties
required of him.
There are also allegations that demonstrate that the electoral
commission has failed to deal effectively
with communications from
the applicant addressing the need to ignore a communication from its
acting Municipal Manager relating
to the replacement of councillors.
At the end of the day the application reveals that the electoral
commission in any event
failed to promulgate the names of some of the
respondents who are intended by the relevant local municipalities to
replace others
as their councillors within a district municipality.
The prejudice to them is self-evident. These allegations are
largely
unchallenged. It is plain that viewed from the
prospective of constitutionality and public policy such circumstances
require
speedy attention. The urgency too is self-evident.
The applicant should not be penalised for its failure to address
the
issue of urgency more directly in the founding affidavit.
Indeed, had it done so, many of the same factual allegations
and
legal conclusion as are set out in the founding affidavit already
would merely have been repeated under an appropriate subheading
relating to urgency. The matter is entirely distinguishable from one
which addresses a purely commercial dispute such as Caledon
Street
Restaurants cc v Monica d’Aviera
1998 JOL 183(2)
SE.”
THE
RESOLUTION
[16]
The applicant relies on a precautionary resolution taken in respect
of these proceedings on 8th
December 2022. A copy of the
extract of the Minutes of a special council meeting of the applicant
is annexed to the founding
affidavit. It is evident from the
foot of the annexure that on 13 December 2022 the speaker certified
the correctness of
the extract of the Minutes. Section 110 of
the Local Government Municipal System’s Act 32 of 2000 reads as
follows:
“
Certain
certificates to be evidence in legal proceedings against a
municipality.
A certificate which
purports to be signed by a staff member of the municipality and which
claims that the municipality used the
best known or the only, or the
most practicable and available methods in exercising any of its
powers or performing any of its
functions, must on its mere
production by any person be accepted by the court as evidence of that
fact.”
[17]
Counsel for the respondents referred to an Agenda that had been
produced for the relevant council
meeting and highlighted the fact
that nowhere on the agenda was there a reference to any such
resolution. Various other arguments
were advanced on behalf of
the respondents to address the probabilities surrounding this issue.
Motion proceedings are not
designed to assess the probabilities in
any set of facts placed before the court in affidavits filed of
record in such proceedings.
National Director of Public
Prosecutions v Zuma 2009(2) SA 277 (SCA) para [26].
[18]
Moreover, the fact of the existence of the resolution was clearly
stated by the applicant in
its founding affidavit. This
allegation is supported by the production of the extract of the
Minutes from the relevant council
meeting. Upon the applicable
test the allegation falls to be accepted. The provisions of
section 110 of the Local Government
Municipal System’s Act 32
of 2000 provide a further basis upon which that fact should be
accepted by the court for the purposes
of the present application.
THE
INTERGOVERNMENTAL RELATIONS FRAMEWORK ACT 13 OF 2005
[19]
What remains of the respondents’ technical points is that
relating to the obligations created
by the
Intergovernmental
Relations Framework Act 13 of 2005
. In the applicant’s
founding affidavit extensive allegations are made about the history
of the matter. It is
apparent therefrom that in 2018 in an
attempt to deal with the financial crisis then evident in the
administration of the applicant
the Provincial Executive intervened
in the affairs of the applicant utilising the provisions of section
139 of the Constitution.
Eventually this was followed by a
decision on the part of National Government to intervene in the
affairs of the applicant under
section 139(7) of the Constitution.
Of this and of subsequent events the applicant states the following
in the founding affidavit:
“
Since the
applicant was of the view that any processes intended to genuinely
put its affairs in order, that is within the law, is
acceptable, the
applicant did not see a need to resist the intervention of the
National Government which took place a top and already
existing
financial recovery plan imposed by the Provincial Executive Council
and which had already been made an order of court
as Annexure EMM2
attests. This intervention brought about the appointment of the
6th respondent as the National Cabinet Representative
to facilitate
the intervention and which new terms of reference. I attach
hereto the letter received from the National Government
advising the
applicant of the intervention under section 139(7), I mark Annexure
EMM4. I refer the court to the terms of
reference of the 6th
respondent more shall be said about them in due course. In need
to digress and state that at the time
of imposing the national
intervention the applicant had gone through elections and a new
council was then in place as from the
1st of November 2021. The
council welcomed the responsibilities of the 6th respondent and
largely agreed with his diagnosis
of the problems besetting the
applicant which related to revenue enhanced measures which could give
the applicant financial stability.
From the above it is
clear that the national intervention took place in the face of an
existing financial recovery plan which the
applicant was busy
implementing and had made significant progress. That financial
recovery plan had been prepared by the
financial recovery services
located within the office of the 3rd respondent. It was my
expectation and that of the applicant
that the national intervention
process would take over the implementation of the existing financial
recovery plan since the applicant
had already made significant
progress in its implementation. Ironically the 6th respondent
criticised the financial recovery
plan already in existence and
promised to prepare, or cause to be prepared, a new one. There
has been of late attendance
on the part of the 6th respondent to
embrace the recovery plan as a matter of convenience and insist on
the applicant implementing
it, and later object to actions taken by
the applicant’s functionaries to implement the financial
recovery plan. This
has caused confusion within the applicant;
it has also left applicant suspecting that the 6th respondent is not
genuine about taking
the applicant to financial health. It is
also clear that the applicant has been, and still remains under
intervention albeit
under a national dispensation as opposed to the
previous one which came from Provincial Government. In the
course of the
national intervention through the National Cabinet
Representative there were certain differences which arose making the
applicant
doubt the effectiveness of the intervention. Chief
amongst these was the failure of the National Cabinet Representative
to
produce a financial recovery plan, none has come forth to date.
These differences resulted in the applicant invoking the dispute
resolution mechanism under the
Intergovernmental Relations Framework
Act 2005
raising the dispute with regard to the effectiveness of the
intervention and readiness of the 6th respondent to live up to his
terms of reference. I attach hereto the letter sent to the 1st
respondent under marked Annexure EMM5. It will be evident
from
the content of the letter that the applicant had genuine concerns
about the 6th respondent and the efficacy of the entire
intervention.
The above course of action was initiated by the applicant since the
relations with the 6th respondent were mounting
and compromising the
ability of the applicant to move away from its financial instability,
as an example during May 2022 the applicant
prepared a budget for
adoption by council, the 6th respondent wrote to the applicant
through my offices and that of the speaker
commenting on the budget. The council of the applicant
adopted
the budget subject to the comments made by the 6th respondent, a
later communication from the 5th respondent suggested
that the
council ought to have sought concurrence of the 6th respondent as
opposed to mere consultation. This requirement
does not appear
in the terms of the reference, not is it part of the extent statutory
provisions, this issue was dealt with in
Annexure EMM5 referred to
above.”
[20]
A reading of Annexure EMM5 to the founding affidavit being a letter
dated the 22nd November 2022
addressed to the 1st respondent and
headed “Notice in terms of
section 40(1)(a)
of the
Intergovernmental Relations Framework Act 13 of 2005
” indeed
reveals an intention on the part of the applicant to declare a
dispute in respect of co-operative assistance.
A response to
this letter is also attached to the founding affidavit. The
response is a letter written on a letterhead of
the 4th respondent
and dated 23rd November 2022. This letter indicates the 4th
respondent’s intention to invoke the
provisions of section
216(2) of the Constitution read together with
section 38
of the
Local
Government Municipal Finance Management Act 56 of 2003
with the
effect of stopping payment of the funding due to the applicant.
The applicant was therein afforded a mere 7 working
days within which
to submit written representations about the proposed stopping of
funds.
[21]
On these facts, in my view, there is no room to argue successfully
that the applicant was expected
to invoke the provisions of
section
41
of the
Intergovernmental Relations Framework Act 13 of 2005
once
again before approaching this court. The following
statement again drawn from Oliver Reginald Tambo District
Municipality v Independent Electoral Commission and Others supra at
para [16] is apposite to the circumstances of this matter.
“
In such
circumstances it is difficult to imagine what else the applicant
could have done in an attempt to settle the dispute that
had arisen.
There was also an obligation on the part of the 1st respondent as an
Organ of State to make every reasonable
effort to resolve the
dispute, what was required was a response to the applicant’s
letter followed by a genuine attempt to
resolve the dispute.”
In
my view the extract from the Oliver Reginald Tambo District
Municipality v Independent Electoral Commission and Others judgment
is pertinent to the conduct of the 1st respondent in this matter.
It is further apposite to note that the Supreme Court of
Appeal has
extended the duty to exhaust intergovernmental dispute resolution
processes under the
Intergovernmental Relations Framework Act 13 of
2005
even to those decisions that do not ultimately result in
litigation, but also to those that entail the taking of an adverse
decision
against another Organ of State such as the decision taken by
the 1st respondent which forms the subject of the contemplated
review.
Eskom Holdings SOC Limited v Resilient Properties
2021(1) All SA 668 (SCA) para [84].
[22]
Consequently, in my view there is no merit in any of the technical
points adopted for argument
on behalf of the respondents. It is
to be noted that no argument was advanced by counsel appearing on
behalf of the respondents
against that placed before the court on
behalf of the applicant to address the requirements of an
interlocutory interdict and the
sufficiency of the applicant’s
case in this regard. Such an approach adopted by or on behalf
of the participating respondents
appears to constitute a deliberate
step away from the spirit and provisions of the
Intergovernmental
Relations Framework Act 13 of 2005
. Such a step is regrettable
particularly where the resultant arguments adopted are devoid of
merit and invite the undesirable
prospect of an adverse costs order
being made against the respondents.
THE
INTERLOCUTORY INTERDICT
[23]
The requirements for the establishment of an entitlement to an
interlocutory interdict have been
reaffirmed recently by the
Constitutional Court in Eskom Holdings SAC Limited v Vaal River
Development Association (Pty) Limited
and Others CCT 44/2022 ZACC 44
23 December 2022, para [253]. It is convenient to deal with
these requirements as they are
addressed by the applicant seriatim
and as follows.
[24]
Prima facie right:
The
proceedings which support Part A of the Notice of Motion are about
the protection of the rights of the applicant to receive
or to be
paid funding in the form of the equitable share. The right to
be paid the equitable share arises from section 214
of the
Constitution which provides as follows:
“
Equitable shares
and allocations of revenue:
1.
An Act of Parliament must provide for –
(a)
The equitable division of revenue raised nationally among the
National Provincial and
Local spheres of Government;
(b)
The determination of each province’s equitable share of the
Provincial share of
that revenue; and
(c)
Any other allocations to provinces, local government of
municipalities from the National
Government share of that revenue
and any conditions on which those allocations may be made.”
The
Division of Revenue Act 5 of 2022 [DORA] is the Act of Parliament
that has been promulgated as contemplated in section 214 of
the
Constitution. Section 5 of DORA provides as follows:
“
Equitable
division of local government share among municipalities –
1.
Each municipality’s equitable share of local government share
of revenue
raised Nationally in respect of the 2022/23 financial year
is set out in column A of schedule 3.
2.
The envisaged equitable share for each municipality of revenue
anticipated to
be raised Nationally in respect of the 2023/24
financial year and the 2024/25 financial year and which is subject to
the Division
of Revenue Act for those financial years is set out in
column B of schedule 3.
3.
The National department responsible for local government must
transfer a municipality’s
equitable share referred to in
subsection (1) to the primary bank account of the municipality in
three transfers on 6 July 2022,
7 December 2022 and 15 March 2023 in
the amounts determined in terms of section 22(2).”
In
National Treasury v Opposition to Urban Tolling Alliance 2012(6) SA
223 (CC) at para [51] the Constitutional Court stated:
“
If the right
asserted in a claim for an interim interdict is sourced from the
Constitution it would be redundant to enquire whether
that right
exists.”
In
my view the applicant has established a prima facie right to be paid
funding in the form of the equitable share that is targeted
by Part A
of the Notice of Motion.
[25]
A reasonable apprehension of irreparable and imminent harm to the
right if the interdict is not granted:
It
is clear that the 1st respondent has withheld the payment of the
December 2022 equitable share that was due to be paid to the
applicant. The decision to withhold the equitable share
materially and adversely impacts upon the applicant’s
right to
payment of the equitable share. The applicant has an obligation
to provide basic municipal services to members of
the community who
live within its area of jurisdiction. Section 152 of the
Constitution provides:
“
Objects of local
municipality-
1.
The objects of local government are –
(a)
To provide democratic and accountable government for local
communities;
(b)
To ensure the provision of services to communities in a
sustainable manner;
(c)
To promote social and economic development;
(d)
To promote a safe and healthy environment; and
(e)
To encourage the involvement of communities and community
organisations in the matters
of local government.
2.
A municipality must strive within its financial and administrative
capacity
to achieve the objects set out in subsection (1).”
It
is clear that in providing basic municipal services the applicant
does so in fulfilment of its Constitutional obligation. In
Joseph and
Others v City of Johannesburg and Others 2010(4) SA 55 (CC) the
Constitutional Court held as follows in para [47]:
“
In my view
therefore when city power supplied electricity to Enondale Mansions
it did so in fulfilment of the Constitutional and
statutory duties of
local government to provide basis municipal services to all persons
living in its jurisdiction. When
the applicants received
electricity, they did so by virtue of their corresponding public law
right to receive this basic municipal
service.”
In
my view it is clear that the decision to withhold payment of the
equitable share frustrates the constitutional obligations imposed
upon the applicant. It is by the institution of these
proceedings and particularly by seeking the relief that it does in
Part A of the Notice of Motion that the applicant seeks to protect
that right to provide basic municipal services. The protection
of the right in the nature of the relief sought will be pending the
review of that decision as contemplated in Part B of the Notice
of
Motion.
[26]
The balance of convenience
In
Economic Freedom Fighters v Gordon 2020(6) SA 325 (CC) the
Constitutional Court held the following at para [42]:
“
Before a court may
grant an interim interdict it must be satisfied that the applicant
for an interdict has good prospects of success
in the main review.
The claim for review must be based on strong grounds which are likely
to succeed, this requires the court adjudicating
the interdict
application to peak into the grounds of review raised in the main
review application and assess their strength.
It is only if a
court is convinced that the review is likely to succeed that it may
appropriately grant the interdict.”
A
number of bases are raised in the applicant’s founding
affidavit upon which the applicant places reliance for the
contemplated
review proceedings pertaining to the 1st respondent’s
decision to withhold the funding provided by the equitable share.
I do not consider it to be desirable to analyse each of these in
order to reach a conclusion on this aspect. Indeed, to do
so
would be to trespass into the realm of the review itself
unnecessarily. It suffices to state that in my view on the
facts
set out in the application papers it is apparent that the
decision to withhold the equitable share has no rational connection
to
the purpose that is sought to be achieved. It is clear from
the intervention by National Government that the applicant is
in some
measure of financial distress. The decision to withhold the
equitable share does not solve such a problem.
In my view such
a decision can only have the outcome of exacerbating the circumstance
of financial distress. It has long
been held that for the
exercise of public power to be valid a decision such as that taken by
the 1st respondent in this matter
must be rationally connected to the
purpose for which the power was confirmed. Pharmaceutical
Manufacturers Association of
South Africa in re ex parte President of
the Republic of South Africa 2000(2) SA 674 (CC) para [85].
Such an enquiry entails
determining whether there is a rational link
between that decision and the purpose sought to be achieved.
Law Society of
South Africa v Minister of Transport 2011(1) SA 400
(CC) para [32].
[27]
Taking a peek into the allegations with which the court will be
concerned in considering the
relief in Part B of the application, in
my view it is apparent that the applicant’s case in the review
is a strong one.
Moreover, in my view the decision to withhold
the equitable share is irrational in itself. In other
correspondence attached
to the application papers the 1st respondent
raises the question of the debt due by the applicant to both the
Auditor General and
Eskom. To withhold payment of the equitable
share to the applicant will not achieve the payment by the applicant
of those
debts. In my view there is a strong case to be made
out for the argument that the decision within itself is irrational.
[28]
It follows that I am of the view that the applicant has established
that on the facts placed
before the court it should obtain final
relief under Part B of the Notice of Motion. In such
circumstances the balance of
convenience favours the ground of the
interim relief provided by the interlocutory interdict.
[29]
Absence of alternative satisfactory remedy
The
requirement that the applicant has is for the protection of a right.
Only a court can protect the right to the funding
provided by the
equitable share. In the circumstances where the 1st respondent
has decided to withhold that funding the appropriate
relief is an
interlocutory interdict pending the finalisation of review
proceedings. There is no alternative satisfactory
remedy
available to the applicant.
It
follows that I am of the view that the applicant has placed
sufficient material before the court to demonstrate an entitlement
to
the interlocutory interdict that it seeks.
COSTS
[30]
What remains for determination is the issue of the costs of the
application. As indicated
earlier in this judgment the focus of
the act of opposition to these proceedings was a trio of technical
points largely unrelated
to the main issues with which the
application in both Part A and Part B is concerned. Within the
context of a dispute between
two Organs of State that has a history
of the dimensions and complexity demonstrated in this matter such an
approach is at best
unhelpful. Both the response to the
applicant’s plea for co-operative assistance set out in its
letter dated 22nd November
2022 namely the communication of the
following day of a decision to suspend vital funding within a mere 7
working days, and the
nature of the opposition to the consequential
urgent approach to this court, demonstrate an apparent unwillingness
or failure on
the part of the participating respondents to apply
themselves diligently and creatively to the difficult task of finding
a viable
solution to the applicant’s predicament. What is
required in such circumstances is a solution that enables the
applicant
to discharge its public functions under carefully managed,
diligent, proficient and efficient guidance in a manner that also
maintains
the applicant’s liquidity and ability to honour its
financial obligations. What the applicant has received in place
thereof, in my view, falls markedly short of the desired standard of
co-operative intergovernmental governance envisaged in both
the
Constitution and the provisions of the
Intergovernmental Relations
Framework Act 13 of 2005
.
[31]
In such circumstances it would be appropriate for the participating
respondents to be directed
to pay the costs of the application.
The intricacies involved therein and the need for the applicant to
move swiftly in the
face of a barrage of public holidays to protect
its interests and concomitantly the interests of those fall under its
municipal
governance, both required and justified the use of two
counsel in the drafting and presentation of this urgent application.
[32]
In the circumstances the following order will issue:
1.
The applicant’s non-compliance with the time periods in
relation to the
service and filing of papers is condoned and the
applicant’s application is treated as one of urgency in terms
of Rule 6(12)
of the Uniform Rules of Court.
2.
The 1st respondent is hereby interdicted and restrained from
withholding any
equitable share due to the applicant in terms of
section 214(1) of the Constitution of the Republic of South Africa
1996 read with
section 8
of the
Intergovernmental Fiscal Relations
Act, 97 of 1997
and the applicable Division of Revenue Act 2022 for
the financial year 2022/2023 forthwith and pending the finalisation
of the
review of the decision to withhold the applicant’s
equitable share for the financial year 2022/2023 as set out in Part B
of the Notice of Motion.
3.
The 1st respondent is hereby ordered to pay to the applicant’s
bank account
the equitable share due to the applicant for the month
of December 2022 in terms of the applicable Division of Revenue Act
2022
and all remaining amounts due in respect of equitable shares
payable to the applicant for the remainder of the financial year
2022/2023
pending the finalisation of the review of the decision to
withhold payment of the applicant’s equitable share for the
financial
year 2022/2023 as set out in Part B of the Notice of
Motion.
4.
The 1st, 4th, 5th and 6th respondents are hereby directed to pay the
costs of
this application jointly and severally the one paying the
others to be absolved, such costs to include the reserved costs
occasioned
by the postponement of the application on 20 December 2022
and the costs occasioned by the employment by the applicant of two
counsel.
RWN
BROOKS
JUDGE
OF THE HIGH COURT
Appearances
For
the applicant:
Adv
Gwala SC with Adv Maswazi
Instructed
by:
MBABANE
AND MASWAZI INC
c/o
HYMIE ZILWA ATTORNEYS
Office
No 3
41
African Street
MAKHANDA
For
the respondent:
Adv
Gajjar
Instructed
by:
STATE
ATTORNEY (Mrs. M Botha)
For
the 1st, 4th, 5th and 6th Respondents
c/o
WHITESIDES ATTORNEYS
53
African Street
MAKHANDA
Date
of hearing:
29
December 2022
Date
delivered:
30
December 2022