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[2016] ZAKZPHC 119
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Trustees of the MYK Family Trust v Msunduzi local Municipality and Another (9132/16P) [2016] ZAKZPHC 119 (5 December 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-
NATAL DIVISION, PIETERMARITZBURG
Case
No: 9132/16P
In
the matter between:
THE
TRUSTEES OF
THE
MYK FAMILY
TRUST
APPLICANT
and
THE MSUNDUZI
LOCAL
MUNICIPALITY
FIRST
RESPONDENT
MATRISOVE (PTY)
LTD
SECOND
RESPONDENT
JUDGMENT
Delivered on…………………
POYO
DLWATI J:
[1]
On 30 August 2016, after hearing argument from both parties, Vahed J
granted an order in the following terms:
‘
1. That a
rule nisi be and is hereby issued calling upon the respondents to
show cause, if any, before this court sitting at Pietermaritzburg
on
3 October 2016 at 09H30 or so soon thereafter as counsel may be
heard, why an order in the following terms should not be granted:-
a.
That the first respondent be and is hereby
directed to comply with, and to undertake all its obligations arising
from the lease
concluded between the first respondent and the second
respondent during or about September 2015, including the obligations
to pay
rental and service charges, which lease has now been assigned
to the applicant.
b.
That the first respondent pay the costs hereof.
2. That pending the
final determination of this application the provisions of Paragraph 1
(a) above shall operate as a temporary
order forthwith
.’
[2]
On the return date the applicant sought an extension of the rule
until the finalisation of the action brought under case No.9201/16P.
On the other hand, the first respondent sought an order discharging
the rule with costs. The first respondent had also, on 26 August
2016, launched a counter application where it sought an order that it
be exempted from complying with the provisions of the ‘lease’
pending the outcome of an action instituted by the first respondent
under case No.9210/16P for the review and setting aside of
the lease.
It, therefore, on the return date sought for an order as prayed in
its counter application.
Background
[3]
During December 2014, the first respondent, represented by its
erstwhile municipal manager, Mr Nkosi, entered into a lease agreement
with the second respondent, represented by Xolile Zimu, over the
property situated at 162 Pietermaritz Street, Pietermaritzburg.
The
lease commenced on 1 December 2014 and was to terminate on 30
November 2015 with a monthly rental of R152 375. It seems from
the
evidence presented before me that on subsequent negotiations between
Mr Nkosi and the second respondent, a further lease was
entered into
for the period 1 December 2015 to 30 November 2018.
[4]
During November 2015 the second respondent entered into an agreement
of purchase with the applicant and it purchased the property.
The
applicant, as a new owner of the property, was due to receive its
first rental in May 2016 but it did not. The officials of
the first
respondent made numerous promises on payment including its acting
municipal manager, Mr Hadebe, but these were not fulfilled.
When
payment was not received at the beginning of August 2016, despite an
undertaking by Mr Hadebe on 13 July 2016, the applicant
caused its
legal representatives to send out a letter of demand to the first
respondent for payment of the outstanding rental in
the sum of R796
108.16. The first respondent, through its legal representative,
responded to the letter of demand on 15 August
2016.
[5]
For the first time in that letter, the first respondent advised the
applicant of its intentions not to abide by the lease as
it was
invalid in its view as the first respondent had not followed a
competitive bidding process in concluding the lease. It advised
the
applicant that it was in a process of having the decision to enter
into the lease reviewed and set aside through a court action
as that
decision was an administrative action. It was also not in dispute
that at the time that the application was launched, the
first
respondent was still in occupation of the building. Furthermore, as
at the date of the application, the first respondent
had not filed
its review action.
Issues
[6]
The applicant elected to abide the lease and sought performance of
the contract in terms of clause 11 of the lease. The first
respondent
opposed the application. It also filed its review action on 24 August
2016. In opposing the application, the first respondent
alleged that
the lease agreement in question was one of the contracts that were
entered into by its previous municipal manager,
Mr Nkosi, without
following the first respondent’s supply chain management
policies. He, as a result, was suspended on allegations
of financial
misconduct.
[7]
This was further substantiated by a report of forensic auditors,
Sizwe Ntsaluba Gobodo whose view, according to the first respondent,
was that the lease was subject to irregularities as it was concluded
in breach of the provisions of the first respondent’s
supply
chain management policy designed to ensure a transparent, cost
effective and competitive tendering process in the public
interest.
It contended that the lease was not concluded pursuant to a
competitive bidding process and was therefore invalid.
[8]
Furthermore, the first respondent had purchased a building in Gallway
Lane which was in the process of being renovated. It was
therefore
unnecessary for Mr Nkosi to have concluded a lease which would last
another three years. According to the first respondent
the reasoning
to enter into a new lease was irrational as only five employees of
the Integrated Rapid Public Transport Networks
(IRPTN) unit were to
be accommodated in the property at a cost of about R6 million.
These rental rates, it was averred, were
excessive compared to market
related rental rates in the Pietermaritzburg city centre. It was for
these reasons that the review
action had been launched in order to
review and set aside Nkosi’s decision. It was also for these
reasons that the first
respondent sought to be exempted from paying
any rentals to the applicant.
[9]
The first respondent further alleged that as the relief sought was
final in nature, especially in the absence of any undertaking
by the
applicant that should the decision to enter into the lease be set
aside, then it would repay all monies/rentals paid to
it, the
application ought to be dismissed. It contended that what the
applicant sought was specific performance and therefore
a mere
prima
facie
right is insufficient. The first
respondent contended that the specific performance demanded by the
applicant can be properly adjudicated
in conjunction with the review
proceedings but not on an interim relief basis.
[10]
It was submitted on behalf of the applicant that since the granting
of the rule nisi, the first respondent had launched its
action to
review and set aside its decision to inter into the lease agreement
with the second respondent. On that basis, it was
submitted, the
applicant sought an extension of the rule nisi, inclusive of the
interim relief, until the finalisation of the action
instituted by
the first respondent. Furthermore, it was contended on behalf of the
applicant that the lease was valid until set
aside by the court. It
was further argued that because a lot of material disputes of fact
had arisen, the matter ought to be referred
to oral evidence or be
determined at the same time as the adjudication of the action.
Discussion
and Findings
[11]
In my view the relief now sought by the applicant is not final in
nature now that the first respondent has launched its review
proceedings. Whether that review was launched without unreasonable
delay or whether there is any merit in the review is not an
issue to
be decided by me at this stage. The issues I must decide are the
status of the lease pending the review action and whether
the
applicant is entitled to the extension of the interim relief pending
the finalisation of the action or whether the first respondent
should
be exempted from complying with its obligations under the lease until
the determination of the review action.
[12]
It was not in dispute that the decision by Mr Nkosi to enter into the
lease agreement with the second respondent is administrative
action
for the purposes of the Promotion of Administrative Justice Act 3 of
2000 (‘PAJA’). That decision remains valid
until reviewed
or set aside by a court of law. This principle was enunciated in
Oudekraal Estates (Pty) Ltd v City of Cape
Town and Others
2004(6) SA 222 SCA para 26.
Howie P with Nugent JA concurring held that until the administrator’s
approval (and thus also
the consequences of the approval) is set
aside by the court in proceedings for judicial review it exists in
fact and it has legal
consequences that cannot simply be overlooked.
[13]
Mr
De Wet SC
on the
other hand argued that the lease agreement is invalid as it was
concluded without following a competitive bidding process
and is
unenforceable. For this proposition he relied on
Municipal
Manager: Qaukeni Local Municipality and another v FV General Trading
CC
2010(1) SA 356 SCA
paras 15 and 16. However, in my view, this argument is premature at
this stage. The first respondent contends
that the lease agreement is
invalid for the reasons advanced above whilst the applicant contends
otherwise. There has been no adjudication
on this point and this
will, I suppose, happen during the review proceedings. The lease
agreement therefore remains valid.
[14]
This principle has lately been confirmed by the Constitutional Court
in
MEC for Health,
Eastern Cape v Kirland Investments (Pty) Ltd
t/a Eye & Lazer Institute
2014(3) SA 481
(CC) para 65 where Cameron J held that:
‘
when
government errs by issuing a defective decision, the subject affected
by it is entitled to proper notice, and to be afforded
a proper
hearing, on whether the decision should be set aside. Government
should not be allowed to take shortcuts. Generally, this
means that
government must apply formally to set aside the decision. Once the
subject has relied on a decision, government cannot,
barring specific
statutory authority, simply ignore what it has done. The decision,
despite being defective, may have consequences
that make it
undesirable or even impossible to set it aside. That demands a proper
process, in which all factors for and against
are properly weighed’
.
[15]
To sum up therefore when an organ of state seeks to set aside its own
administrative decision, PAJA applies. And when PAJA
applies,
litigants and the courts are not entitled to bypass its provisions
and rely directly on the constitutional principle of
legality, see
State Information Technology Agency Soc Ltd vs
Gijima Holdings (Pty) Ltd
(641/2015)
[2016]
ZASCA 143
(30 September 2016) para 44.
[16]
This was further emphasized by Khampepe J in
Department
of Transport and others v Tasima (Pty) Ltd
(CC75/16)
[2016] ZACC 39
(9 November 2016) para 147 where she held
that a declaration of invalidity of an administrative action must be
made by a court.
Therefore, until a court is appropriately approached
and allegedly unlawful exercise of public power is adjudicated upon,
it has
binding effect because of its factual existence. This is
despite the fact that it may be objectively invalid. It follows
therefore
that the lease agreement remains valid until reviewed and
set aside. (See also para 92 and 93 of
Kirland
above)
[17]
This leads me to the next question and this is whether the applicant
is entitled to the extension of the interim relief in
view, as Mr
de
Wet
SC
had
submitted, of the fact that the application brought by the applicant
is one for interim interdict ordering specific performance,
and not a
mandamus
as argued by
Mr
Dickson
SC
representing the applicant. This also
entails a consideration of whether the relief sought by the applicant
is final in nature.
[18]
Loggerenberg et al
Erasmus Superior Court
Practice
Vol 2 at D6-3describes a mandatory
interdict as an order requiring a person to do some positive act to
remedy a wrongful state
of affairs for which he is responsible, or to
do something which he ought to do if the complainant is to have his
rights (eg. to
demolish a building encroaching on the complainant’s
land). It has been said that a mandatory interdict can serve to
compel
the performance of a specific statutory duty, and to remedy
the effects of unlawful actions already taken. See
Transnet
BPK h/a Coach Express en n’ ander v Voorsitter, Nasionale
Vervoekommissie
1995(3) SA 844 (T) at 847F.
If the act to be performed must be carried out not by a private
person but by a public official, the
order is known as a mandamus.
[19]
In
Zokufa v Compuscan (Credit Bureau)
2011(1) SA 272 (ECM) the court emphasised that the most fundamental
requirement for the granting of the mandatory interdict is
the
existence of a clear right. Furthermore, there must be a refusal to
act in fulfilment of such right and the absence of no other
remedy
(see para 42). Even though the applicant does not seek a final
interdict at this stage, I must satisfy myself that in the
interim,
it has established a right. I am of the view that this enquiry would
have been dealt with by my brother Vahed J before
granting the
interim relief. What I must satisfy myself is whether the applicant
has made out a case for the continuation of that
relief until the
review proceedings have been finalised.
[20]
In my view the applicant established its
prima facie
right
through the lease signed with the first respondent. That agreement is
still valid until a determination has been made on its
validity. It
follows that the first respondent must fulfil its obligations in
terms of that agreement. It is refusing to do so.
It was in
occupation of the building until somewhere in the middle of the
proceedings. There is nothing stopping it from utilising
these
premises until the review has been dealt with. I am therefore
satisfied that a case has been made out for the extension of
the rule
nisi pending the finalisation of the review action. The balance of
convenience favours the extension of the rule nisi
.
It follows
that I make no order to the counter applications.
Order
[17]
In the result I make the following order:
(a) The rule nisi
inclusive of the interim relief is extended until the finalisation of
the review action under case no: 9210/16P;
(b) There is no
order made to the counter application;
(c) The costs of the
hearing are reserved and are to be determined by the court hearing
the review action.
________________
POYO
DLWATI J
APPEARANCES
Date
of Hearing: 10 October 2016
Date
of Judgment: 5 December 2016
Counsel
for Applicant : Adv Dickson SC
Instructed
by: PKX Attorneys
Counsel
for First Respondent: Adv A De Wet SC
Instructed
by: Matthew Francis Inc.