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[2017] ZAKZPHC 35
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Mavundla v Umvoti Local Municipality and Others (7069/17P) [2017] ZAKZPHC 35 (4 September 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 7069/17P
In
the matter between:
PH
I
LAN
I
GODFREY
MAVUNDLA
Applicant
and
UMVOTI
LOCAL
MUNICIPALITY
First
Respondent
THAMSANQA
CLIVE NGUBANE
N.O
. Second
Respondent
MEMBER
OF THE EXECUTIVE COUNCIL FOR
CO-OPERATIVE
GOVERNANCE AND TRADITIONAL
AFFAIRS,
KWAZULU-NATAL
Third
Respondent
MEMBER
OF THE EXECUTIVE COUNCIL
FOR
FINANCE
Fourth
Respondent
MINISTER
OF
FINANCE
Fifth
Respondent
PREMIER
FOR THE PROVINCE
OF
KWAZULU-NATAL
Sixth
Respondent
MINISTER
FOR CO-OPRATIVE GOVERNANCE
AND
TRADITIONAL
AFFAIRS
Seventh
Respondent
REASONS
FOR JUDGMENT
CHETTY
J:
[1]
On 30 June 2017, being the last day of the session, the applicant
launched an urgent application in this Court in which he sought
the
following relief:
‘
1.1 The
first respondent
,
Umvoti
Municipality, be and is hereby interdicted
,
prevented
and stopped from implementing on 1 July 2017 the budget approved at
the meeting of the Council of the Umvoti Municipality
held on 31 May
2017 pending finalization of this application;
1.2 The
first respondent be and is hereby interdicted
,
prevented
and stopped from transferring to any person the properties described
as Extension 9 and Extension 14 and advertised in
the Greytown
Gazette of the 21 June 2017 ("the proper
t
ies
"
)
pending the outcome of the review proceedings to be instituted by the
applicant within thirty (30) days of the granting of this
Order;
1.3
Pendente
lite
,
the
officials of the first respondent be and are hereby directed not to
sign any transfer papers
,
issue
any rates clearance certificates and or take any steps or do anything
which may facilitate the transfer of the properties
referred to in
paragraph 1.2 above;
1.4
The
applicant is directed to institute proceedings within thirty (30)
days of this Order for the review of the decision of the first
respondent to dispose of the properties;
1.5
Declaring
that the First Respondent failed to comply with the provisions of
section 215 (3) (c) of the Constitution (Act 108 of
1996) and with
the provisions of sections 16 (2); 22 and 23 of Chapter 4 of the
Municipal Finance Management Act 56 of 2003;
1.6
Directing
the Third
,
Fourth
and Sixth respondents to exer
c
ise
their powers in terms of Section 27(5) of the Municipal Finance
Management Act 56 of 2003 ("the MFMA
"
)
by taking such steps as are necessary to ensure that there is
compl
i
ance
with the provisions of Chapter 4 of the MFMA
and
must intervene in accordance with Section 139 (4) of the
Constitution
;
1.7
The
Fifth respondent is directed to exercise powers in terms of Section
38 (2) (a) to (c) of the MFMA to,
inter
alia,
call
for representations forthwith from the First respondent as to why the
Fifth respondent should not exercise his powers in terms
of Section
38 of the MFMA to stop the transfer of funds due to the municipality;
1.8
The
Fifth respondent is directed to stop the transfer of funds to the
First respondent should the first respondent fail to give
written
representations within seven (7) days of this Order, subject to the
Third
,
Fourth
and Sixth respondents ensuring that
,
if
the stopping of funds affect the provision of basic municipal
services, they monitor the continuation of those services.
1.9
The
Second respondent and any officials of the First respondent to the
extent that they have flagrantly disregarded their obligations
in
terms of the MFMA and the Constitution that they be ordered to pay
costs in their personal capacities such costs to include
costs of two
Counsel
.
Alternatively
that the First and Second Respondents be directed to pay the costs of
this application, jointly and severally, with
any other respondent
who opposes this application and such costs to include the costs
occasioned by the employment of two counsel;
1.10
The
Seventh Respondent is directed to stop the transfer of funds to the
First respondent pending the finalization of this application.’
[2]
The matter served before my colleague Bezuidenhout J as an unopposed
application on his Motion Court roll. After hearing counsel
for the
applicant, Bezuidenhout J granted the relief set out in the Notice of
Motion and issued a
rule nisi
returnable on 26 July 2017, save
for the deletion of paragraph 1.10 above and the insertion of para 2
to read:
‘
Pending
the final determination of this application, paragraphs 1.1; 1.2;
1.3; 1.4; 1.5; 1.6; 1.7 and 1.8 shall operate as interim
relief
forthwith.’
[3]
Upon the Order coming to the attention of the respondents, they
immediately took steps to have the application reconsidered,
alternatively that the return day be anticipated in terms of Rule
6(8) or Rule 6(12). The application was set down on 6 July
2017. At the same time the applicant brought an application for
the joinder of the seventh respondent, which was not opposed.
Despite Court being in recess, in light of the urgency foreshadowed
in the reconsideration papers filed by the respondents and
given that
all parties had filed detailed affidavits, I considered it in the
interests of justice to hear the matter.
[4]
On 6 July 2017 after hearing lengthy argument from all parties I
granted an order discharging the
rule nisi
issued by
Bezuidenhout J on 30 June 2017 with costs, including costs of two
counsel where so employed. The applicant thereafter
applied for
reasons for the Order, which are rendered below.
[5]
The following salient features emerge from the founding affidavit of
the applicant:
[5.1] The applicant
is a businessman, and former Mayor of Umvoti Local Municipality.
He owns property in five different
wards in the municipality.
[5.2] By virtue of
his former position as mayor, he is
au fait
with the budgetary
processes and obligations of the first respondent (‘the
municipality’) in terms of the Municipal
Finance Management Act
(‘MFMA’) Act 56 of 2003, read with the provisions of
section 215 of the Constitution. He is
a member of the African
National Congress.
[5.3] The Umvoti
Municipality falls within section 155(1)(b) of the Constitution and
the second respondent is the current
mayor. The MEC for
Co-operative Governance and Traditional Affairs, the MEC for Finance
and the Finance Minister of the Republic
of South Africa as well as
the Premier of KwaZulu- Natal are cited as respondents, by virtue of
their duty to perform certain functions
in terms of the MFMA.
[5.4] An
application was brought to interdict the implementation of the annual
budget of the municipality, which had been
approved at an earlier
meeting of the council on 31 May 2017. The applicant sought an order
interdicting the transfer of two properties
and that none of the
municipal officials are to sign any of the transfer papers, or issue
rates clearance certificates in respect
of the properties set out in
the notice of motion. In addition, the applicant seeks orders
directing the third fourth, first and
the sixth respondents to carry
out their responsibilities under the Constitution and the MFMA.
[6]
Although the applicant has brought this application in his own name,
he contends that he has also brings the application in
the wider
interest of his community. He contends that the community have been
disregarded in the process leading up to the approval
of the budget
of the municipality and out of a desire to ensure that properties
belonging to the state are disposed of in a fair
manner in accordance
with the constitution and the MFMA.
[7]
The applicant’s founding papers indicated that his application
is founded on the ‘constitutional and legislative
obligations
on the First Respondent, in particular and all the other Respondents
when dealing with matters relating to the budget’.
He
further asserts his right to bring the application where the values
of democracy, social justice and fundamental human rights
are
undermined by an organ of State, and does so on behalf of members of
the community whose rights have been disregarded, and
to ensure that
the disposal of state property takes place in accordance with law.
The applicant purports therefore to act
in terms of s38(a), (c) and
possibly (d) of the Constitution. However, when one looks more
closely at the applicant’s
papers, the complaint he articulates
are those which affect him alone. It is his personal view that
there has been non-compliance
with MFMA. In a letter addressed
by his attorneys to the municipality on 26 June 2017, four days
before the hearing of the
urgent application, there is no indication
that the applicant acts for any broader coalition or in the interests
of any class of
persons. The letter is written on behalf of the
applicant alone and is more revealing on the subject of locus standi,
where
it states:
‘
Our
client, as a resident and a rate payer has an interest in the matter
and is also directly affected by the purported approved
budget.’
[8]
In response to my query as to what interest the applicant has in the
passing of the budget and the extent to which he is affected
thereby,
Ms
Norman
SC who appeared with Mr
Kuboni
for the
applicant, directed my attention to the publication of the final
budget in the
Greytown Gazette
on 21 June 2017.
According to the applicant, tariffs which were not part of the
Council’s agenda at its earlier meetings,
and therefore not
passed by council, nonetheless found their way into the final
budget. The applicant contends that the tariffs
should have
been published in advance to afford him an opportunity to comment.
He fails to add what he would have said in
relation to the proposed
tariffs, had they been so published. He thereafter proceeded to
analyse the increase in the costs
of plastic refuse bags.
[9]
The Applicant takes issue at the fact that at the meeting on 31 May
2017 the budget was not voted on, and therefore there has
been
non-compliance with a Constitutional imperative. Section 160(2)
of the Constitution provides that amongst others, the
function of the
passing of a budget by a municipality cannot be delegated.
Section 160(3)(b) provides that:
‘
All
questions concerning matters mentioned in subsection (2) are
determined by a decision taken by a municipal council with a
supporting
vote of the majority of its members.’
The
stance of the municipality is that the councillors did not vote on
the budget because it was accepted without opposition.
There
was only one budget presented for consideration. In light of
there being no alternative proposed, the budget as tabled,
was
accepted. Councillor Maharaj, on whose report the applicant
relies for this particular ground in his application, was
the lone
objector. The view of the majority carried the day and
according to the municipality there was therefore no need
to vote on
the budget. I am unable to find any basis of irregularity as
contended for by Ms
Norman
and in I am not persuaded by
counsel’s argument that the absence of the vote was contrary to
the constitution. This appears
to be the high watermark of the
applicant’s complaint.
[10]
We know from
Giant Concerts CC v Rinaldo Investments (Pty)
Ltd and Others
2013 (3) BCLR 251
(CC)
that
in order to satisfy the requirement of locus standi where one seeks
to challenge a decision of an organ of state, one needs
to show a
‘
demonstrable interest in the interests of the borough’
. The Court went on to add at para [25] that:
‘
Even
a complainant under section 38(a) of the Bill of Rights must have an
actual or a potential right or interest that is affected
by the
ultimate administrative decision.’
[11]
In my view, despite the applicant’s assertions that he acts for
a wider class of persons and has put up a petition to
this effect,
the only persons who have ‘supported’ his application are
two councillors from the Inkatha Freedom Party
and another from the
Democratic Alliance. The councillors are not parties to this
application. One cannot infer from their
‘supporting
affidavits’ that they align themselves with the relief sought
by the applicant. While these councillors
portray the
impression that their views were drowned out by the ANC, it is true
their views were simply out voted those of the
majority party.
Dissatisfaction resulting from a loss to a majority party as a
consequence of a democratic process, however aggrieved
one may feel,
does not vest the applicant with locus to bring an application of the
nature he did.
[12]
Moreover, while the councillors raised issues in their letters of 31
March 2017 and 31 May 2017 pertaining to the draft budget
and
deficiencies in that process, that does not automatically transform
the applicant’s status, in my view, from an own-interest
litigant, to one who is acting in a wider, public interest. In
Giant Concerts
, the court at para [33] said:
‘
An
own-interest litigant does not acquire standing from the invalidity
of the challenged decision or law, but from the effect it
will have
on his or her interests or potential interests.’
And
at para [35] that:
‘
where
a litigant acts solely in his or her own interest, there is no broad
or unqualified capacity to litigate against illegalities.
Something
more must be shown.’
I
am of the view that the applicant has failed to overcome the
threshold set out in
Giant Concerts
, and even if I am
incorrect in my conclusion that he is an own-interest litigant, I am
still not convinced of his standing on the
wider grounds set out in
s38(c) or (d) of the Constitution.
[13]
To the extent that the application was brought on an urgent basis,
the applicant contended that the matter was urgent as the
budget was
likely to be implemented from 1 July 2017, a day before the hearing
of this application before Bezuidenhout J. He
further contends
that in relation to the properties, Extension 9 and Extension 14, if
he is to wait for their transfer to take
place it is highly unlikely
that the act of transfer could be reversed. To that extent it is
contended that an interdict was necessary.
The applicant in terms of
section 35 of the General Law Amendment Act, 62 of 1955 is also
required to give at least 72 hours’
notice of an application
where it seeks relief against a State Department. The applicant
therefore seeks condonation for the time
periods in respect of the
provisions of the General Law Amendment Act, and the rules of court.
The issue of urgency assumes
a greater importance in light of the
arguments raised by the respondents in the reconsideration
application. I will deal with the
subject in further detail below.
[14]
After setting out the details of the legislative framework as
contained in the MFMA, the applicant points out that on 17 May
2017
the first respondent placed a notice in the
Greytown Gazette
of a roadshow for the 2017/2018 budget and the Integrated Development
Programme (IDP) to take place on the same day as the advert.
[15]
While the applicant avers that he does not know what transpired at
that meeting, he also contends that no meetings were held
in the
other 13 wards of the municipality. He presumably believes that
the meetings called in the wards were a sham. He does
not put up any
evidence for his contention that no meetings were called in the other
wards. In any event, he confirms that a special
council meeting was
scheduled for 31 May 2017. While the applicant was not present
at this meeting, he relies on the minutes
of the meeting to paint a
picture of what transpired on that day, particularly that tariffs and
rates were implemented without
any rand values attached to them. On
this basis he contends that the council was presented with a blank
document from which no
informed decision could be made. He relies on
the recollection of three members of the Executive Committee –
Rev. Mweli,
Mr RS Maharaj and Councillor R Maharaj. All three
councillors were present at the meeting on 31 May 2017 and they
contend
that the council proceeded to adopt the draft budget despite
lack of compliance with certain legislative formalities. None of
these
council members have stated under oath what these formalities
are. It is noteworthy that in a letter written by Rev Mweli to the
Speaker of the Umvoti Municipality on 31 May 2017 (the day when the
disputed budget was approved), he does not raise any issue
of
irregularities pertaining to the failure to consult in 13
wards. He raises other issues as well including budget
figures
which were not supplied, expenditure incurred by the municipality for
security personnel, usage through petrol cards and
the use of two
specific vehicles during the course of the by-election. These have
little in common to the issues giving rise to
the urgent application.
[16]
The applicant further contends in his founding affidavit that certain
objections were overruled during the course of the meeting
on 31 May
2017, and that no voting took place for the adoption of the municipal
budget. He contends that there has been non-compliance
with the
provisions of sections 160(2) and 160(3)(b) of the Constitution.
Although the applicant makes reference to
section 30
of the
Local
Government: Municipal Structures Act, 17 of 1998
, which deals with
quorums and decisions of municipal councils, no further details
emerge regarding non-compliance of this section,
nor is it apparent
from the minutes of the meeting on 31 May 2017. It is not clear what
submissions in this regard, if any, were
made to Bezuidenhout J at
the time of the hearing of the urgent application.
[17]
On 12 June 2017 the applicant wrote to the second respondent
contending that on his assessment, the 2017/2018 budget was at
variance with the Constitution, the MFMA, the Municipal Budget and
Reporting Regulations, the Local Government Municipal Planning
and
Performance Management Regulations, the
Local Government: Municipal
Systems Act, 32 of 2000
and the Municipal Finance Management
Circulars issued by National Treasury with specific reference to
those dealing with municipal
budgets. The applicant then issued an
ultimatum to the second respondent in the following terms:
‘
In
terms of section 27 of the Municipal Finance Management Act there is
an obligation upon you to report this non-compliance. You
are
afforded an opportunity to engage directly with myself within 72
hours and also to call upon the speaker to convene a special
sitting
of council to discuss these non-compliance issues raised.’
The
letter further warned that if there was no response within 72 hours,
action would be instituted. When the applicant received
no response,
he approached the councillors who attended the meeting on 31 May
2017. It is however no answer as to why he
failed to take
action against the respondents following the expiry of his 72 hour
deadline. Instead, an application was brought
some two weeks after
the expiry of his self-created deadline.
[18]
The applicant relies on breaches observed by the three councillors to
mount his application against the respondents. It begs
the question
why the councillors, or their political party, failed to take the
decision of the first and second respondent on review
if they felt
that strongly about the failure of the first and second respondent to
comply with the provisions of the MFMA. As stated
earlier, Rev.
Mweli’s letter of 31 May 2017 gives no indication of a sense of
disquiet at the conduct of the first and second
respondent supposedly
acting contrary to law. Indeed, in an attempt to bolster his case,
the applicant relies on a petition from
the community as the basis
for the wider support of his application. Closer scrutiny of this
petition reveals that it consists
of no more than 25 petitioners,
including Councillor RS Maharaj, who also signed the petition.
Many of the petitioners appear
to be family members sharing the same
residential address. It is hardly the level of support which the
applicant contends for in
his founding papers, especially when the
total population of the area is 122 000. Moreover, any
concerns that individual
citizens had could have been addressed
through their respective ward councillors and tabled before the
council.
[19]
On 21 June 2017 the applicant saw a copy of the approved final budget
and charges in the
Greytown Gazette
. He complained that it
contained tariffs which were not part of the council agenda and
therefore, in his submission, not passed
by the council. In his
view the first respondent failed to follow procedures in respect of
the drafting and amending of the
bylaws. He thereafter dealt with the
decision of the first respondent to dispose of two pieces of land,
namely Extension 9 and
Extension 14, in the district of Greytown.
The council took a decision to dispose of this land at a meeting on
28 October
2016 without members of the public being advised of the
meeting as they should have in terms of section 14(2) of the MFMA. As
I
understood this aspect of the application, the applicant sought an
interdict to prevent the transfer of the two properties, but
without
even citing the developer of the property as an interested party.
No notice was given to the Department of Human
Settlements (KZN) who
also appear to have been part of the initiative to develop the
properties.
[20]
The applicant recited the provisions of Chapter 4 of the
Local
Government: Municipal Systems Act, 32 of 2000
for his contention that
the municipality is under a duty to develop a culture of
participatory governance and democracy at local
level, including
steps taken in the preparation of a municipal budget. As he received
no response from the municipality, he proceeded
to engage his
attorneys who addressed a letter on 26 June 2017 to the respondents,
in which they again recited non-compliance with
various legislative
prescripts and gave the recipients a period of 72 hours within which
to commence the budget process
de novo,
failing which legal
action would commence. The applicant relies on an editorial in the
Greytown Gazette
of 7 June 2017 of the 2017/2018 budget and a
later article on 21 June 2017 as support for his contention that the
first respondent
has taken decisions which directly impact on its
ratepayers, and those decisions have been taken without proper
consultation.
[21]
The arguments advanced in favour of a system of participatory
democracy at local level and the guaranteeing of ratepayers rights
are themes which are consistent with our Constitution. Is equally
correct that where procedures set out in the Constitution and
in
other legislation have been flouted by an arm of government, such
non-compliance cannot be condoned. The applicant contends
that the
breaches committed by the first and second respondent are material
and to date, the second respondent has failed to comply
with the
statutory duties in terms of s55 of the MFMA.
[22]
In light of the above the applicant contended that he established a
prima facie
case on the papers for an interdict preventing the
implementation of the 2017/2018 budget on 1 July 2017. Further, he
contends
that the balance of convenience favoured the granting of the
order in as much as:
‘
there
will be no prejudice to the respondents and in particular to the
local community of the first respondent if an interdict is
granted as
the MFMA sets out the process to be followed if any of the steps
prescribed by the act has been taken, including the
stopping of funds
transferred to the municipality.’
Section
38 of the MFMA permits the National Treasury to stop the transfer of
funds to municipality, provided that such action does
not adversely
impact on the provision of basic services within the municipality.
[23]
Upon the Order of 30 June 2017 coming to the attention of the
respondents, they separately applied to anticipate the rule,
whereas
the fifth respondent brought an application to clarify the Order.
Specifically, the first and second respondents
have anticipated the
rule and seek an order that it be discharged. The third
respondent abides the decision of the Court,
while the fourth
respondent (MEC for Finance) is opposed to the confirmation of the
rule and seeks either that the rule be discharged,
alternatively that
it be extended but without any form of interim relief. As the fifth
respondent’s application is largely
unopposed, I propose to
deal with the grounds of clarification before moving on to the more
contentious aspects of this application
for reconsideration.
[24]
The position adopted by Mr
Tokota
SC for the fifth respondent
was that he was not opposed to the rule being extended, but sought
clarity as to the interpretation
placed on paragraphs 1.7 and 1.8 of
the Order, which call upon the fifth respondent to exercise its
powers in terms of subsections
38(2)(a) to (c) of the MFMA as it
pertains to stopping the supply for funds to municipalities, and the
conditions precedent thereto.
In particular, the fifth
respondent, prior to taking any steps to stop the supply of funds to
a municipality
must
in terms of s38(2)(a) of the MFMA give the
municipality in question ‘an opportunity to submit written
representations with
regard to the proposed stopping of the funds.’
While the fifth respondent takes the view that it is not averse
to an
Order compelling it to perform its duties, its problems lie in the
interpretation of the Order when seen through the lens
of s154 of the
Constitution and the provisions of s5 of the Division of Revenue Act,
2017 (‘DoRA’). While paragraph
1.7 of the Order
requires the fifth respondent to act in accordance with s38(2) of the
MFMA, paragraph 1.8 goes further and directs
the fifth respondent to
stop funding ‘should the first respondent fail to give written
representations within seven (7) of
this Order.’
[25]
The fifth respondent submits that the Order creates uncertainty as to
whether the representations in para 1.7 are to be submitted
to the
Court or the fifth respondent. In
Natal Joint Municipal
Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para
18 Wallis JA succinctly summarised the approach towards interpreting
contractual or legislative documents having:
‘
regard
to the context provided by reading the particular provision or
provisions in the light of the document as a whole and the
circumstances attendant upon its coming into existence.’
The
Court added in para [18] that:
‘
A
sensible meaning is to be preferred to one that leads to
insensible or unbusinesslike results or undermines the apparent
purpose of the document.’
In
Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport
(Edms) Bpk
2014 (2) SA 494
(SCA) para 12 the Court
appropriately noted that:
'Whilst
the starting point remains the words of the document, which are the
only relevant medium through which the parties have
expressed their
contractual intentions, the process of interpretation does not stop
at a perceived literal meaning of those words,
but considers them in
the light of all relevant and admissible context, including the
circumstances in which the document came
into being.’
[26]
In my view the only sensible construction to be placed on the wording
used in para 1.7 of the Order was that the first respondent
was to be
invited by the fifth respondent to make representations to it (the
fifth respondent) regarding the transfer of funds.
There is no
room for the contention that the wording of para 1.7 was for these
representations to be received by the Court.
What purpose
would that serve? It is the National Treasury that must assess
the representation in the context of s38(2) of
the MFMA. I
therefore find no merit in the contention that the wording in para
1.7 was vague. The representations referred
to in para 1.7 of the
Order must be directed to the fifth respondent.
[27]
The further concern of the fifth respondent relates to the
calculation of the time period referred to in para 1.8 of the Order.
Applying the provisions of Rule 1 of the Uniform Court Rules to the
words ‘within seven (7) days of this Order’, would
entail
that the requisite period would expire on Tuesday, 11 July 2017.
In essence, the first respondent (in accordance with
s38(2)(a) of the
MFMA) would have until 11 July 2017 to make representations to the
fifth respondent. If no such representations
are made, the
fifth respondent could stop the transfer of funds the next court day
being 12 July 2017. It is in this regard
that the problem
arises.
[28]
As I understood the argument of Mr
Tokota
, with which none of
the co-respondents nor the applicant’s counsel took issue, it
is that the distribution of funds to municipalities
is done on an
annual basis by the National Department of Co-operative Governance
and Traditional Affairs (CoGTA). In terms
of s154 of the
Constitution, national and provincial governments must take
legislative and other means to strengthen and support
the capacity of
municipalities to manage their own affairs. This object is achieved
by the annual distribution of funds to municipalities
in terms of s5
of the Division of Revenue Act. The 2017 allocation of funds to local
government has been earmarked in three tranches,
to take place on 7
July 2017, 1 December 2017 and 19 March 2018. The National Treasury
is obliged to comply with these deadlines
for payment. The first
phase for the transfer of funds for 2017 is therefore predetermined
as 7 July 2017, being
a day after
the hearing of this
application for reconsideration. The point is made by the fifth
respondent in its reconsideration papers is
that the National
Department of CoGTA had not been joined in these proceedings, despite
the order affecting it. To that extent,
it contended that the Order
is not binding on CoGTA. It is perhaps for this reason that the
application brought to join the
National Minister for CoGTA was
not opposed.
[29]
As a matter of common sense, when the funds are distributed by the
National Treasury on 7 July 2017, as it is obliged to, the
seven-day
period in the Order will not have expired. The first respondent
therefore comes before this Court on the basis that it
is obliged to
comply the provisions of the Division of Revenue Act, 2017 to
distribute funds to the first respondent by 7 July
2017, and on its
interpretation, that distribution does not offend against the
provisions of paragraph 1.8. For these reasons,
Mr
Tokota
submitted that proverbially the horse has already bolted, and the
Order as against the fifth respondent is a
brutum fulmen.
In
any event, I am satisfied that if a stoppage of funds were to take
place in contravention of the provisions of DoRA, 2017,
there would
be insurmountable inter-governmental and bureaucratic problems, least
of which would be the immediate impact for the
adequate functioning
of the first respondent to deliver the necessary services to its
community. The fifth respondent’s
contention is therefore
that the provisions of paragraph 1.8 of the Order be expunged as
compliance therewith is neither practically
nor legally possible.
[30]
As set out earlier, there is no opposition to the relief sought on
behalf of the fifth respondent and I am in agreement with
Mr
Tokota
regarding the impact that paragraph 1.8 would have for the business
of the first respondent. For those reasons, I would grant the
relief
sought by the fifth respondent in its reconsideration application.
The fifth respondent seeks no costs against the applicant
and to that
extent no costs are ordered.
[31]
The position of the third respondent is somewhat nuanced in that she
abides by the decision of the Court, however the Chief
Director:
Municipal Finance filed an affidavit to explain that the monitoring
of municipal budgets is done by the Municipal Finance
section of the
KwaZulu-Natal Treasury. If there were issues of non-compliance in the
budgetary processes followed by the first
respondent in the adoption
of its 2017/2018 budget, the KZN Treasury would have been alerted to
such fact, and in turn would have
contacted the Municipal Finance
directorate. It was submitted further that the effect of the
Order of 30 June 2017 is that
the operations of the first respondent
are suspended, together with the cessation of all services and
service delivery. To the
extent that the order granted compels the
third respondent to exercise its powers in terms of section 27(5) of
the MFMA, it is
submitted that such an order is misplaced as it
usurps the prerogative and the discretion of the Provincial Council
as to when
it may intervene in the affairs of local government,
provided for in s139 of the Constitution. Section 139(4) of the
Constitution
provides for the intervention by the provincial
executive:
‘
(i)f
a municipality cannot or does not fulfil an obligation in terms of
the constitution or legislation to approve a budget or any
revenue-raising measures necessary to give effect to the budget’.
Such
a situation does not arise in the present circumstances, nor is there
a ‘crisis in the financial affairs’ of the
municipality
justifying such intervention. This is a similar argument to that
advanced by the first and second respondents, which
is considered
below.
[32]
The position of the first and second respondent in approaching this
court on an urgent basis for the reconsideration of the
Order or
anticipation thereof in terms of Rule 6(12) is that the immediate
effect of the Order has been to interdict the implementation
of the
municipal budget for 2017/2018 – one day before its scheduled
implementation. The point is not lost on the timing
of the
application for the interdict. The effect of the order is that the
municipality has ground to a standstill and that it is
paralysed by
virtue of it being unable to pay or receive revenue in the absence of
its budget being implemented. Ms
Gabriel
SC, who appeared for
the first and second respondents, indicated that at a practical level
the effect of the Order has prevented
the municipality paying
undertakers to carry out burials as part of a policy to assist poor
members of the community unable to
afford to bury their dead. Counsel
for the applicant objected to this example being introduced as it is
not referred to in the
papers. The municipal manager was
available in Court to give evidence on these matters, I was
informed. Even without
taking that example into account, I
postulated to counsel for the first respondent what would apply to
the issuing of fines for
traffic violations and others of a similar
nature, which would cause revenue to be paid to the municipality. I
was informed that
in the absence of the budget being implemented, the
municipality is unable to receive any revenue, nor for example, to
pay councillors
holding office, or staff rendering services to it.
Counsel submitted that the order has created a constitutional crisis
in
that approximately 122 000 ratepayers who live within the
jurisdiction of the Umvoti Municipality are directly affected by the
interim order which was sought by a disgruntled former mayor, without
notice to members of the community or the respondents. The
first and
second respondents accordingly seek that the order be set aside with
costs.
[33]
Ms
Gabriel
submitted that the provisions of Chapter 4 of the
MFMA have been complied with in the preparation of the 2017/2018
budget for the
Umvoti municipality including the requirement of
consultation with members of the community to give effect to the
constitutional
principles of participatory democracy. In this regard
the first and second respondent annexed to their papers a
comprehensive breakdown
of the issues on which the community have
been consulted in the lead up to the adoption of the budget. Also
annexed is a copy of
the 2017/2018 Integrated Development Planning
(IDP) process through which municipalities developed strategic plans
for a five year
period. This process involves extensive
consultation with the community, with the outcome being a reflection
of the council’s
vision for the long term development of the
municipality. It is not disputed that on 17 August 2016 the
municipality placed
an advert in the
Greytown Gazette
informing the public that a draft Process Plan had been prepared
which would guide the adoption of the IDP and the Budget for
2017/2018. It further informed the public that the documents
were available for inspection at the municipality’s offices.
According to the first respondent, ward meetings were held in each of
the 14 wards in the municipality in order for these communities
to
feed into the budget process. As such, it is submitted that
there has been full compliance with section 21 of the MFMA.
None of these averments are contested by any credible evidence.
[34]
Where there has been non-compliance with any of the provisions of the
budgetary processes set out in Chapter 4 of the MFMA,
it was
submitted that rather than approaching the Court for relief, the
legislature has created an alternative mechanism in terms
of which
the fourth respondent is given wide powers under s27 of the MFMA to
ensure compliance. Perhaps most important are
the provisions of
s27(4) of the MFMA which states:
‘
(4)
Non-compliance by a municipality with a provision of this Chapter
relating to the budget process or a provision in any legislation
relating to the approval of a
budget-related
policy,
does not affect the validity of an annual or adjustments
budget.’
(my emphasis)
In
light of the above provision, it would appear that irrespective of
whatever the complaint of the applicant is with the budgetary
process
of the first respondent, the validity of the budget cannot be
toppled. If there are deficiencies with the process,
he is
entitled to proceed by way of a legality review in the normal
course. The provisions of section 27(4) only provide
a
‘band-aid’ against challenges to the validity of the
budgetary process and others matters set out in Chapter 4.
As
such, it is submitted by the municipality that the budget adopted on
31 May 2017 remains valid and enforceable, and that s27(4)
is a
complete answer to defeat the applicant’s application.
[35]
Ms
Norman
submitted that the first and second respondents (and
to an extent the fourth respondent) have conflated the issue in that
they
misunderstand the applicant’s case. Ms
Norman
submitted that s27(4) has no application to the present case as the
applicant is not asking for the budget to be reviewed or be
invalidated. His case, as it was conveyed to me, is that the
respondents have not complied with their statutory obligations
and he
has approached the court to compel them to do so. I am of the
respectful view that this is a rear-guard attempt to
defeat the
argument of the respondents who rely on s27(4). I say so because in
his letters of demand to the respondents on 26 June
2017 the
applicant clearly declares:
‘
Should
you wish to avoid litigation in this matter, we are instructed that
an undertaking to the effect that the process will be
started
de
novo
.’
He
adds further in the penultimate paragraph of his letter:
‘
Should
you fail to give the aforementioned undertaking our instructions are
to bring an urgent application to have the budget set
aside and to
seek interdictory relief preventing yourselves from implementing the
budget.’
[36]
The only sensible interpretation to be placed on these extracts is
that the applicant was adamant that the budgetary process
was
deficient, and it should be set aside and commence afresh. This
is a departure from the manner in which the applicant’s
case
came before Bezuidenhout J on 30 June 2017 and how it is now
presented. In
Rhino Hotel & Resort (Pty) Ltd v Forbes and
others
2000 (1) SA 1180
(W) it was held that when a
reconsideration of a rule is heard under rule 6(12)(c), the matter is
re-heard (with the additional
advantage of argument from the
respondent) on the original application papers, and nothing more.
However it is submitted that a
more preferred view is that the court
reconsidering the order has a wide discretion, inter-alia, to redress
imbalances where an
injustice and oppression flow from the order
granted in the absence of a party, and in the course of this hearing,
further affidavits
or evidence may be taken into account.
See
Chesterfin (Pty) Ltd v Contract Forwarding (Pty) Ltd and
others
2002(1) SA 155 (T) at 167-168;
The Reclamation Group
Pty Ltd v Smit & others
2004 (1) SA 215
(SEC) at 218D.
[37]
It was argued that the legislative framework set out in the MFMA does
not give the applicant the
locus
to approach the court for
relief. Instead, our political dispensation allows him to
express his dissatisfaction with the
passing of the budget through
any five of the ward councillors in areas where he owns property, qua
ratepayer. These concerns
would have been ushered through his
party political structures, which he informs the court, he is a
member. As I understood
this argument, the mere fact that one
citizen is disgruntled with the passing of a municipal budget does
not confer on him or her
a right to bring the municipality to a
grinding halt.
[38]
The fundamental problem raised with the applicant’s complaint
is its lack of particularity – what right or interest
is he
seeking to protect? He has failed to specify how the alleged
deficiencies in the first respondent’s budgetary
processes have
adversely affected his rights. The papers reveal that he owns
properties in five different wards. Given that
scenario, how
does the passing of the budget affect him? He may be aggrieved
at certain tariffs or charges being included
in the budget. He
may be aggrieved that the costs of refuse removal or refuse bags may
have increased in the 2017/2018 financial
year, despite the
municipality failing to specify what the increases are. Does
this entail that he has a right to bring an
application to stall the
entire municipal budget, and even more so, on an urgent basis, one
day before the budget can be implemented?
I think not. As
the court in
Rates Action Group v City of Cape Town
2004 (5)
SA 545
(CC) pointed out in para 17 to 18 that:
‘
[w]hile
the extent of the charges explains the anger felt by some at the new
charges, it does not, of itself, provide a legal basis
for a
challenge to the charges. The City has the statutory power to enact
by-laws, pass budgets and impose various charges.’
[39]
Referring to the decision in
Fedsure Life Assurance
Ltd and Others v Greater Johannesburg Transitional Metropolitan
Council
and others
[1998] ZACC 17
;
1999 (1) SA 374
(CC), the court
in
Rates Action Group
at para 17 and 18 reiterated that
decisions pertaining to the passing of tariffs by a municipal council
is a
decision:
‘…
by a democratically
elected deliberative body, is inevitably influenced by political
considerations. It is for the members
of the municipal council, and
not the courts, to judge how to weigh the various competing factors
and interests ... This
is a necessary consequence of the
separation of powers.
[18]
The applicant's complaint that the new charges were 'unfair' or
'disproportionate' therefore does not of itself raise a legal
question. It raises a political question. The legal question is
whether the City acted within its powers in determining those
charges.’
[40]
The broad brush strokes used by the applicant to impute a disregard
for clean and open governance of the Umvoti municipality
is not
confined to the founding papers. In his replying affidavit the
applicant continues the trend stating that:
‘
The
culture of illegality and the abuse of the public purse which has
taken root in the first respondent, as more fully set out
in my
founding affidavit, has to be dealt with decisively and the fifth
respondent as the guardian of the public purse has to take
steps as
soon as he becomes aware of the serious breach of the measures set
out in section 216 of the Constitution.’
[41]
The first and second respondents submit that the interim relief
granted by the order puts on hold a constitutionally sanctioned
executive and legislative process of the municipality implementing
its budget for the 2017/18 financial year. The argument advanced
is
that this is an impermissible intrusion into exclusive municipal
functions, and consequently violates the doctrine of separation
of
powers. The foundations for this argument lay in
Fedsure
para
[45] where the court held:
‘
I
t
seems plain that when a legislature, whether national, provincial or
local, exercises the power to raise taxes or rates, or determines
appropriations to be made out of public funds, it is exercising a
power that under our Constitution is a power peculiar to elected
legislative bodies. It is a power that is exercised by democratically
elected representatives after due deliberation. There is
no dispute
that the rate, the levy and the subsidy under consideration in this
case were determined in such a way. It does not
seem to us that such
action of the municipal legislatures, in resolving to set the rates,
to levy the contribution and to pay a
subsidy out of public funds,
can be classed as administrative action as contemplated by section 24
of the interim Constitution.
. . . It follows that the imposition of
the rates and the levies and the payment of the subsidies did not
constitute “administrative
action” under section 24 of
the interim Constitution.’
[41]
In relation to attacks against budgets based on an increase in
rates, the Court had the following to say at para [63],
which I
consider to be directly relevant to the complaint of the applicant:
‘
Where
an amount has been incorrectly but reasonably included as an item of
expenditure the fact that it turns out not to be payable
at all would
in no way invalidate the budget or decisions taken in consequence of
its adoption.
It follows that where it turns out that the
rate levied on property was unnecessarily high, the levy of such a
rate would in no
way be invalid or subject to attack. The surplus in
revenue that the rate might then yield would be a source which the
local authority
could use to defray any lawful payments which might
have to be made during the financial year in question; it could be
brought
forward to the ensuing financial year; or it could also be
used to allow a rebate to ratepayers.’
The
Court added that as long as the increases were done in a bona fide
manner, their validity could not be attacked.
[42]
The first and second respondents submit, with respect, that the court
hearing the urgent application on 30 June 2017 was not
fully
appraised, alternatively failed to take into account, the critical
factor of whether the balance of convenience favoured
the grant of
the relief sought by the applicants. In this regard reliance
was placed on the decision in
National
Treasury and Others v
Opposition
to Urban Tolling Alliance and Others
2012 (6) SA 223
(CC) (‘
OUTA
’).
In considering whether the requirements had been met for an interim
interdict the court made reference to
Gool
v Minister of Justice and another
1955 (2) SA 682
(C ) where the court was called upon to grant an
interim interdict restraining a minister from exercising powers
vested in him
by statute. The court found that ‘in the absence
of any allegation of
mala fides
,
the court does not readily grant such an interdict.’ It went on
to add that a ‘strong case’ had to be made out
for such
relief, and only when ‘exceptional circumstances’ exist.
[43]
In the matter before me, the applicant obtained an interim order
interdicting the first respondent from implementing its budget
for
the 2017/2018 financial year. The high watermark of the applicant’s
case appears to be his disgruntlement with the consultation
process,
or lack thereof, with certain communities prior to the adoption of
the present budget. Added to this, he obtained an order
interdicting
the transfer of two pieces of land belonging to the first respondent.
As set out earlier, it is not clear from
the applicant’s
papers what his interest in the budgetary process is, and what
interest he has in the sale or allocation
for development of the two
pieces of land falling within the jurisdiction of the first
respondent. The applicant does not allege
any impropriety in respect
of the sale of the land or the manner in which such sale is in
contravention of existing legislation.
[44]
The obvious question which must arise is whether the applicant has
made out a ‘strong case’, and whether any exceptional
circumstances exist to have granted an order interdicting the first
respondent from carrying out its functions which are vested
in
statute. The court in
OUTA
,
para [45] stated that:
‘…
when
a court considers whether to grant an interim interdict it must do so
in a way that promotes the objects, spirit and purport
of the
Constitution.’
It
is not clear from the applicant’s founding papers as to what
object of the Constitution would be advanced by the interdict
which
was obtained.
[45]
The point stressed by the counsel for the first and second
respondents was that the interim order has effectively paralysed
the
first respondent. The court in
OUTA
paras 46 to 47 stressed
the importance of the balance of convenience test when deciding
whether to grant an interim interdict.
The court stated”
‘
[46]
….
Similarly, when a court weighs
up where the balance of convenience rests, it may not fail to
consider the probable impact of
the restraining order on the
constitutional and statutory powers and duties of the state
functionary or organ of state against
which the interim order is
sought.
[47]
The balance of convenience enquiry must now carefully probe whether
and to which extent the restraining order will probably
intrude into
the exclusive terrain of another branch of government. The enquiry
must, alongside other relevant harm, have proper
regard to what may
be called separation of powers harm. A court must keep in mind that
a temporary restraint against the exercise
of statutory power
well ahead of the final adjudication of a claimant's case may be
granted only in the clearest of cases and after
a careful
consideration of separation of powers harm.’
[46]
The Constitutional Court in
OUTA
at para 66 sounded a caution
that courts must recognise that when they are asked to restrain the
exercise of a statutory power
within the exclusive domain of a
particular branch of government, they must carefully assess the
extent to which the interdict
will disrupt the executive or
legislative functions conferred by law. The Court went on to
add:
‘
Thus
courts are obliged to recognise and assess the impact of temporary
restraining orders when dealing with those matters pertaining
to the
best application, operation and dissemination of public resources.
What this means is that a court is obliged to ask itself
not whether
an interim interdict against an authorised state functionary is
competent but rather whether it is constitutionally
appropriate to
grant the interdict.’
[47]
The Court reiterated the earlier position that a proper and strong
case has to be made out for the relief, and then only in
the clearest
of cases. The test is therefore whether it is constitutionally
appropriate to grant the interdict.
[48]
I am of the view, having assessed the case made out by the applicant
in its founding papers, weighed against the impact of
the order on
the community of Umvoti, that the balance of convenience clearly
militated against the granting of such relief, and
I would
accordingly not have done so.
[49]
It is common cause that the application for the interdict was brought
on an urgent basis. The order was granted in the absence
of
representation on behalf of any of the respondents. The first and
second respondents state that the application was not served
on the
municipality by Sheriff as it should have, but rather the attorneys
for the applicant sent an email to the address of the
second
respondent at 15h39 on 29 June 2017, one day before the application,
and shortly before the offices of the municipality
close for
business. The email containing the application papers contains
nothing in the subject line which would alert the recipient
to the
nature and subject matter of the message, and more importantly,
whether it requires urgent attention. There is no hint from
the
contents of the email either that the matter was urgent. On the
contrary, it simply reads:
‘
Kindly
find attached hereto court application papers for your attention. We
trust that you will find all in order.’
If
the applicant was constrained because of the urgency of the situation
not to effect service by sheriff, the least one would have
expected
of the applicant was to hand deliver the application, alternatively
send it by facsimile to the municipal manager.
Where it chose
to send the application via email, it should have followed up with a
telephone call to confirm that the email has
been brought to the
attention of the intended recipient, drawing the attention of the
person to the urgency of the relief being
sought. A hard copy of the
application papers were only served on 30 June 2017, the same day on
which the order was granted. In
the absence of the precautionary
measures being taken to ensure that the application papers came to
the attention of the respondents,
this application in my view came
before the court on a basis akin to an
ex parte
application.
[50]
In addition there appears to be no compliance with the provisions of
s35 of the General Law Amendment Act, 1955 to give the
State 72
hours’ notice before approaching the court for the
rule
nisi
. To this extent, the applicant asks that his
non-compliance be condoned. He contends that the respondents
were forewarned
of the application in his letters of 26 June 2017. I
am not persuaded that the threat of an urgent court application
referenced
in a letter can be a substitute for the giving of a
statutory notice. If that were the case, a letter of demand to
an organ
of state, couched in rather general terms that an
application would follow in the event of the demand not being
complied with,
would constitute a basis to by-pass the provisions of
s35. Accordingly, I would not have condoned the non-compliance.
[51]
The urgency of the application, in my view, appears to be carefully
crafted so as to afford almost no, alternatively, minimal
notice, to
the respondents to oppose the application which had far reaching
consequences. The applicant knew on 31 May 2017
that the budget
for 2017/2018 had been formally adopted by council. He has not
explained why he waited until 26 June 2017
to issue his ultimatum to
the municipality, and what factors prevented him from giving
requisite notice to the respondents earlier
than he did. The fact
that the budget was to be implemented on 1 July 2017 did not
necessitate bringing an application overnight,
in circumstances
where those acting for the applicant would more likely than not have
known that the application would not come
to the attention of the
relevant officials. It was pointed out that the second
respondent receives scores of emails daily
and there was nothing in
the message to have alerted him to the urgency of the matter.
In the circumstances, service of the
papers by the Sheriff would have
been imperative, not only because of the short notice but because of
the drastic and far reaching
effect of the relief sought.
[52]
There was also no basis, in my view, for the need to have brought an
urgent application to interdict the transfer of two pieces
of land
described as Extension 9 and Extension 14, Greytown. This
relief was sought without notice to the developer, who
has a
substantial interest in the matter. The applicant merely states
that he was not able to establish the identity of the
developer
despite the effort of his attorneys. The court is not told what
these efforts entailed or whether transfer was
imminent.
Even if it were, Courts are routinely asked to set aside transfers of
property long after the transfer has
been completed. Transfer is not
an insummountable obstacle standing in the way of appropriate
relief. I would not have been
persuaded that the application
was urgent or that a proper case had been made out for the matter to
have ascended to the top of
the queue on barely a night’s
notice. I would have struck the matter off the roll for lack of
urgency on this ground
alone.
[53]
The complaint to the applicant, apart from the allegations of lack of
public consultation, is that the municipality led the
community to
believe that there would be no increases in rates and tariffs, but
has gone ahead and done so regardless. One
of the tariff’s
the applicant takes issue with is the increase in the price of refuse
bags. This theme
is also pursued in an editorial in
the
Greytown Gazette
of 21 June 2017. The applicant
aligns himself with the editor for raising these matters as they
impact directly on ratepayers
and should be the subject matter for
consultation. In an earlier article on 7 June 2017, the editor
raised concerns of cellular
phone and petrol allowances of the mayor,
speaker and deputy speaker. These are referred to in the
applicant’s founding
papers, as are the increases in the
electricity and rates.
[54]
It is apparent that the issue of the first respondent adopting new
tariffs and municipal expenditure were in the public domain
prior to
the institution of the application. Where a litigant raises a
constitutional issue of a failure by an organ of state to
follow
proper process in arriving at a budget and seeks relief which has the
prospect of bringing that organ of state to a standstill,
it is
incumbent on such an applicant to give notice of such proceedings in
accordance with Rule 16A. This was not done.
In the
present case, as an alternative the applicant could have used the
local newspapers or community radio stations to give notice
of his
intention to challenge the first respondent in court and in this way
achieve the purpose of the Rule 16A. The point
was aptly summed
up in para 21 in
Rates Action Group
where the Court held:
‘
The
reason for the Rule is that constitutional cases often have
consequences which go far beyond the parties concerned. The
purpose of the rule is to bring the constitutional challenge to the
attention of persons who may be affected, or who may have a
legitimate interest in the case:
Shaik v Minister of Justice and
Constitutional Development and Others
[2003] ZACC 24
;
2004 (3) SA 599
(CC)
(2004 (4) BCLR 333)
at para
[24]
. This enables such persons to
seek to intervene either as a party, or as
amicus curiae
. While
the views of the parties are undoubtedly relevant to the interests of
justice, they can, therefore, not be dispositive.’
[55]
The interests of justice would not have required that this
application be dispensed with on 30 June 2017. I would have
struck the matter from the roll for want of compliance with Rule 16A,
despite the court in
Rates Action
Group
, which concerned the budget of
a large city, concluding that the interest of justice dictated that
the requirements of Rule 16A
be dispensed. where the
application
had received wide notice in the public media, and therefore the
attention it received was “considerably greater than would
have
been occasioned by placing a notice on a notice board at this Court.
“ [para 21]
[56]
Mr
Dickson
SC
,
who appeared for the fourth respondent, drew to my attention that s21
of the MFMA sets out in detail the time frames which must
be complied
with in the budget preparation process. The impression created
by the applicant in his founding papers is that
nothing had been done
by the fourth respondent to ensure compliance with the MFMA by the
municipality until shortly before the
deadline could be reached.
This is borne out from the contents of his letter dated 12 June 2017
to the second respondent.
The fourth respondent shows, with
reference a letter to the second respondent dated 6 September 2016
that it had been vigilant
regarding compliance with the time periods
set out in s21(1)(b) of the MFMA
[1]
.
[57]
The letter of 6 September 2016 reflects that as soon as the
municipality missed its deadline, the fourth respondent immediately
wrote to the municipality indicating that the municipality ought to
have tabled its budget by end August 2016. The point
stressed
by counsel is that there is no basis in law or fact for the applicant
to contend that the fourth respondent failed in
its duties to monitor
and supervise the financial affairs of the first respondent with
respect to the passing of the 2017/2018
budget. In light of the
letter of 6 September 2016, the first respondent remedied matters
when it tabled the 2017/2018 Budget
and IDP at a meeting of the
Executive Committee, where the minutes of the meeting reflect that
Councillor R Maharaj was present
and in fact proposed the adoption of
the budget.
[58]
After the budget was tabled, the fourth respondent wrote to the
municipality on 11 April 2017 informing them that they had
failed to
meet the deadline of 7 April 2017 for submission of hard copies of
the Service Delivery and Budget Implementation Plan
(SDBIP).
Treasury requested compliance with section 22(b((i) of the MFMA by
not later than 12 April 2017. This again
is proof of the forth
respondent ensuring that the municipality complied with its
obligations under the MFMA. Upon the municipality
submitting
its budget to Treasury, the latter on 27 May 2017 sent a detailed
letter of its assessment of the budget dealing with
aspects of
compliance with statute, under the themes of credibility of the
budget, relevance (alignment with priorities); sustainability
(noting
that electricity revenue is budgeted to operate at a surplus of
R52,2m and refuse revenue is budgeted to operate at a deficit
of
R30.9m). The municipality was further warned that in the event
of weaknesses being identified in the budget, the fourth
respondent
reserved the right to stop the transfer of an equitable share of
funds to it in terms of section 38 of the MFMA.
This
demonstrates, in my view, the vigilance which the fourth respondent
exercised in the budget process followed by the municipality.
[59]
If there was any doubt that the fourth respondent abdicated its
responsibilities, this is completely dispelled by the contents
of a
letter from Treasury to the second respondent, dated 29 June 2017, a
day before the applicant obtained the interim order.
The letter
concerns a high level assessment of the approved budget for the
2017/2018 financial year, noting that the municipality
appeared not
to take into account the recommendations previously made to reduce
non-essential expenditure and implement cost containment
measures. It
was pointed out that the budget would not be sustainable and that
this will impact adversely on the financial viability
of the
municipality, as well as its ability to deliver services to the
community. Accordingly, the Provincial Treasury indicated
that it
could not support the 2017/ 2018 budget. The fourth respondent went
on to point out that she had no choice but to escalate
the matter to
the National Treasury, should the first respondent not comply with
her recommendations.
[60]
Mr Donnelly, the deponent to the affidavit on behalf of the MEC for
Finance and a director in the Department: Municipal Finance
at the
Provincial Treasury, confirms the contents of the letter dated 29
June 2017 but adds that a process is underway to ensure
that the
budget is compliant with national and provincial strictures. As such,
government is doing what it is required to do in
terms of the in the
MFMA and the Treasury regulations. He submits that is not
necessary for the applicant to enlist the assistance
of the Court to
remedy the budgetary concerns which have already been highlighted by
the fourth respondent, as well as the National
Treasury. However Ms
Norman
submitted that when the applicant wrote to the fourth
respondent pointing out various deficiencies in the budgetary
process, the
fourth respondent was obliged to revert to him and
explain that there was an on-going assessment process in place to
ensure compliance
with the MFMA. The fourth respondent failed
to revert to the applicant, causing the latter to approach the
court.
[61]
Mr
Donnelly
contends that the relief sought for by the
applicant, and secured under the interim order, is contrary to the
principles of separation
of powers, as the court is called upon to
compel the fourth respondent to exercise what is purely a
discretionary power contained
in the Act, to stop the transfer
of funds due to the municipality. Counsel referred to the
Constitutional Court’s
recent decision in
Electronic Media
Network Limited and Others v e.tv (Pty) Limited and Others
[2017]
ZACC 17
(8 June 2017) where it noted at para 5 that:
‘
Permissible
judicial intervention is quite distinct from the Judiciary’s
imposition of its preferred approach to the issues
or what it
considers to be the best or superior choice in relation to matters
that the political arms are constitutionally mandated
and therefore
best-placed to handle.’
[60]
The remaining aspect dealt with by Mr
Donnelly
concerns the
disposal of municipal property, which is referred to by the applicant
in his founding papers as a further reason for
the granting of the
interim order in his favour. Section 14 of the MFMA sets out
the basis for the disposal of capital assets
by a municipality. Mr
Donnelly
points out that the Provincial Treasury has a file on
the proposed development of a housing scheme on the portions of land
in respect
of which the applicant has obtained an interdict,
preventing its transfer. A perusal of the documents attached to Mr
Donnelly’s
affidavit reflects that there has been
compliance with the provisions of section 32 of the Supply Chain
Management Regulations
and that the developer, Lwazi Project
Management, concluded a binding agreement with the municipality in
October 2015. The
properties in question are intended for the
development of a middle income housing project and an upper income
housing project,
in partnership with the KwaZulu-Natal Department of
Human Settlements. In a letter addressed to the National Treasury by
the municipal
manager of the first respondent, it is pointed out that
a survey conducted in the Greytown area revealed that there is a
significant
number of middle income earners who do not own properties
as they earn above the threshold to qualify for low income housing.
It
is this sector of the population which the municipality wishes to
target and to make housing available. There can be no compliant
with the municipality pursuing a legitimate objective to provide
additional housing. What then is the applicant’s basis
for seeking to interdict the transfer?
[61]
The problem lies with the applicant’s founding papers in that
he does not specify what his interest is in relation
to the two
properties, referred to as Extension 14 and Extension 9. He does not
indicate whether he is a disgruntled bidder for
the development of
the site, or whether he has some or other vested interest in the
property being disposed of, nor does he say
whether the greater
community of Umvoti, whom he purports to represent, are adversely
affected by this sale absent him setting
out what his precise
complaint is, I see no reason why the transfer of this portion of
land should have generated an urgent application
or why orders
interdicting the transfer should have followed.
[62]
In light of what I have set out above in relation to the fourth
respondent, I am in agreement with Mr
Dickson
that it is
appropriate that the order granted on 30 June 2017 be reconsidered,
with the interim relief granted by Bezuidenhout
J set aside.
[63]
Ms
Norman
SC contended that Mr
Donnelly’s
affidavit on behalf of the MEC for Finance reveals a persistent
failure by the first respondent to arrange its affairs relating
to
the budget in accordance with the provisions of the MFMA. There
is much merit in the submission as it seems that the municipality
has
significant problems in adhering to Treasury’s guidelines.
Does that however warrant an application to court by
an upset
ratepayer? When the applicant came to court, he asked that the fourth
respondent be given what I would call a ‘judicial-nudge’
to do what it is required to in terms of the MFMA. Mr
Donnelly
has now shown, contrary to what was contended for by the
applicant, that the fourth respondent has been diligently urging the
municipality
along the correct path for some time. Courts
should be slow, in my view, to enter the terrain where governmental
departments
are exercising their mandates, albeit somewhat slowly.
It is an entirely different scenario if the pace at which a
government
department is discharging its functions adversely affects
a right, for example, the Department of Education failing to
timeously
conclude a contract with a service provider to ensure the
prompt supply of text books to school children, or where the
Department
of Public Works is dragging its heels on a contract to
build a bridge over a river so that children can safely acquire
access to
school. In am mindful of the Constitutional Court’s
observation in
United Democratic Movement v Speaker of the
National Assembly and Others
(Counsel for the Advancement of
the South African Constitution and Others
Amici Curiae)
2017 (8)
BCLR 1061
(CC) where the following is said at para 63 in
relation to separation of powers:
‘…
considerations
of separation of powers demand an ever-abiding consciousness of the
constitutionally-sanctioned division of labour
among the arms and a
refrain from impermissible intrusions.’
[64]
In the final result, I am satisfied that on a reconsideration of the
Order, I would not have granted the rule issued by my
colleague
Bezuidenhout J. The matter came before him that morning before the
commencement of the Motion Court and his opportunity
to reflect of
the issues raised in the papers was minimal, if at all. Had he
had the benefit of the opportunity that I have
had to consider the
argument of the parties and the authorities referred to, I am sure
that he would not have issued the Order
he did..
[65]
Ms
Gabriel
urged me to discharge the rule and if the applicant
wished to review the processes followed (or not followed) by the
municipality
he could do so on review. She was insistent that
the interim relief be set aside. Mr
Dickson
was not tied
to either form of relief, save that he argued for the interim relief
to be set aside. He had no issue with a
rule in the matter
being extended, but without interim relief. Ms
Norman
submitted that even if I was inclined to discharge the interdict in
para 1.1, I should retain 1.2; 1.3 and 1.4; 1.5 and 1.6 of
the
Order. Paragraph 1.8 has been discharged by agreement with the
fifth respondent, represented by Mr Tokota.
[66]
Having had the benefit of full and comprehensive argument by all
counsel, I did not deem it necessary to retain the rule in
whole, or
in part. In those circumstances I made the following an order:
1. The rule issued on 30
June 2017 is discharged;
2. The applicant is
ordered to pay the costs of the respondents, including the costs of
two counsel, where so employed.
____________________
M
R CHETTY
Appearances
For
the Applicant: Adv T Norman SC and Adv S Kuboni)
Instructed
by: TL Mbaili Attorneys
c/o
Ngcobo Poyo @ Diedricks Inc
190
Hoosen Hafejee Street
Pietermaritzburg
Ref:
TM/C/0009/17
033 341
9240
For
the 1
ST
Respondent: Adv AA Gabriel SC
Instructed
by: Seethal Attorneys
c/o
Stowell & Co
Ref
A Irons
For
the 3
rd
& 4
th
Respondent: Adv AJ Dickson SC
PKX
Attorneys
Pietermaritzburg
Ph
: 033 347 5354
For
the 5
rd
Respondent: Adv B Tokota SC
Instructed
by: Cajee Setsubi Chetty
196
Boshoff Street
Ref:
Mr Essa
Date
of Order : 6 July 2017
Reasons
Delivered 4 September 2017
[1]
21. (1) The mayor of a municipality must—
(a)
co-ordinate
the processes for preparing the annual budget and for reviewing the
municipality’s integrated development plan
and budget-related
policies to ensure that the tabled budget and any revisions of the
integrated development plan and budget-related
policies are mutually
consistent and credible;
(b)
at
least 10 months before the start of the budget year, table in the
municipal council a time schedule outlining key deadlines
for—
(i) the preparation,
tabling and approval of the annual budget;
(ii) the annual review
of—
(aa)
the
integrated development plan in terms of section 34 of the Municipal
Systems Act; and
(bb)
the
budget-related policies;
(ii) the tabling and
adoption of any amendments to the integrated development plan and
the budget-related policies; and
(iii) any consultative
processes forming part of the processes referred to in subparagraphs
(i), (ii) and (iii).’