About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2024
>>
[2024] ZAFSHC 338
|
|
Democratic Alliance v Premier of the Free State Province and Others (1623/2024) [2024] ZAFSHC 338 (22 October 2024)
FLYNOTES:
MUNICIPALITY – Breach of duties –
Declaratory
order
–
Failure
to ensure provision of services to community in a sustainable
manner – Incurred fruitless and wasteful expenditure
mainly
due to interest and penalties on late payments to suppliers –
Breach of obligations to meet financial commitments
–
Failure to promote safe and healthy environment – Conduct
inconsistent with Constitution – Declared to
be in breach of
duties – Constitution, ss 52(2), 153(a) and 172(1)(a).
IN THE HIGH COURT OF
SOUTH AFRICA
FREE STATE DIVISION,
BLOEMFONTEIN
Reportable / Not
reportable
CASE
No.:1623 /2024
In
the matter between:
THE
DEMOCRATIC ALLIANCE
Applicant
And
PREMIER
OF THE FREE STATE PROVINCE
First
Respondent
THE
MEC: HUMAN SETTLEMENTS, COOPERATIVE
GOVERNANCE
AND TRADITIONAL AFFAIRS,
FREE
STATE PROVINCE
Second
Respondent
PROVINCIAL
EXECUTIVE OF THE
FREE
STATE PROVINCE
Third
Respondent
MINISTER
OF COOPERATIVE GOVERNANCE
AND
TRADITIONAL AFFAIRS,
Fourth
Respondent
THE
PRESIDENT OF THE REPUBLIC OF
SOUTH
AFRICA
Fifth
Respondent
THE
NATIONAL EXECUTIVE
Sixth
Respondent
FREE
STATE PROVINCIAL LEGISLATURE
Seventh
Respondent
NATIONAL
COUNCIL OF PROVINCES
OF THE
REPUBLIC
OF SOUTH AFRICA
Eighth
Respondent
MATJHABENG
MUNICIPALITY
Ninth
Respondent
COUNCIL
OF THE MATJHABENG MUNICIPALITY
Tenth
Respondent
NATIONAL
TREASURY
Eleventh
Respondent
Neutral citation: XXX
Coram: Van Rhyn J
Heard: 15 August 2024
Delivered: 22 OCTOBER
2024
Summary: Declaratory
order – s172(1)
(a)
of the Constitution -breach of duties
of municipality of s52(2) and s153
(a)
of the Constitution.
Application for postponement for a period of one year–
principles restated.
ORDER
1.
It is declared that:
1.1
The Matjhabeng Municipality has breached s 152(2) of the
Constitution,
in failing to strive, within its financial and
administrative capacity to:
1.1.1
ensure the provision of services to its community in a sustainable
manner;
1.1.2
promote social and economic development; and
1.1.3
promote a safe and healthy environment
and its conduct is
declared invalid to the extent of these inconsistencies.
2.
It is declared that the Matjhabeng Municipality
has breached s 153
(a)
of the Constitution, in failing to structure and manage its
administration and budgeting and planning processes to give priority
to the basic needs of the community, and to promote the social and
economic development of the community, and its conduct is declared
invalid to the extent of these inconsistencies.
3.
It is declared that the Matjhabeng Municipality,
as a result of a
crisis in its financial affairs, is in serious or persistent material
breach of its obligations to provide basic
services and to meet its
financial commitments.
4.
It is declared that the Premier of the Free
State Province, the
Member of the Executive Council for Human Settlements, Cooperative
Governance and Traditional Affairs, Free
State Provincial Government
and the Provincial Executive of the Free State Province have failed
to comply with the duties to intervene
in the Matjhabeng Municipality
in terms of s 139(5) of the Constitution, and their conduct is
declared invalid to the extent of
these inconsistencies.
5.
It is declared that the Minister of Cooperative
Governance and
Traditional Affairs, the President of the Republic of South Africa
and the National Executive have failed to comply
with the duties to
intervene in the Matjhabeng Municipality in terms of s 139(7) and (5)
of the Constitution, and their conduct
is declared invalid to the
extent of these inconsistencies.
6.
The Premier of the Free State Province, the
Member of the Executive
Council for Human Settlements, Cooperative Governance and Traditional
Affairs, Free State Provincial Government
and the Provincial
Executive of the Free State Province are ordered to intervene in the
Matjhabeng Municipality in terms
of s 139(5) of the
Constitution and submit a written notice of such intervention to the
Minister, Free State Provincial Legislature
and National Council of
Provinces of the Republic of South Africa in terms of s 139(6) of the
Constitution within seven (7) days
of the intervention.
7.
If the Premier of the Free State Province,
the Member of the
Executive Council for Human Settlements, Cooperative Governance and
Traditional Affairs, Free State Provincial
Government and the
Provincial Executive of the Free State Province do not comply with
the duties under prayer 6 above within seven
(7) days, the Minister
of Cooperative Governance and Traditional Affairs, President of the
Republic of South Africa and the National
Executive are ordered to
intervene in the Matjhabeng Municipality in terms of s 139(5) of the
Constitution within seven (7) days.
8.
The Premier of the Free State Province, the
Member of the Executive
Council for Human Settlements, Cooperative Governance and Traditional
Affairs, Free State Provincial Government
and the Provincial
Executive of the Free State Province, alternatively, the Minister of
Cooperative Governance and Traditional
Affairs, President of the
Republic of South Africa and the National Executive are required to:
8.1
prepare a financial recovery plan for the Matjhabeng Municipality,
including complying with its duties to make requests to the Municipal
Financial Recovery Service of the National Treasury and consult
with
the Mayor of the Matjhabeng Municipality under
s 139
of the
Local
Government: Municipal Finance Management Act 56 of 2003
; and
8.2
within six months of this court order, file a copy of the financial
recovery plan with this Court.
9.
If the Matjhabeng Municipality cannot or does
not approve legislative
measures, including a budget or any revenue-raising measures,
necessary to give effect to the recovery
plan, the Premier of the
Free State Province, the Member of the Executive Council for Human
Settlements, Cooperative Governance
and Traditional Affairs, Free
State Provincial Government and the Provincial Executive of the Free
State Province, alternatively,
the Minister of Cooperative Governance
and Traditional Affairs, President of the Republic of South Africa
and the National Executive
must:
9.1
dissolve the council of the Matjhabeng Municipality, appoint an
administrator until a newly elected council for the Matjhabeng
Municipality has been declared elected, and approve a temporary
budget or revenue-raising measures or any other measures giving
effect to the recovery plan to provide for the continued functioning
of the Matjhabeng Municipality; or
9.2
assume responsibility for the implementation of the recovery plan
to
the extent that the Matjhabeng Municipality cannot or does not
otherwise implement the recovery plan.
10.
The first, second, third, fourth, ninth and tenth respondents jointly
and severally are ordered to pay the costs of the application on
scale C, such costs to include the costs occasioned by the employment
of two counsel.
JUDGMENT
Van
Rhyn J
[1]
This is an opposed application brought by the Democratic Alliance
(the DA), a registered political
party, for a declaratory order and
further ancillary relief concerning the serious and persistent
material breach by the Matjhabeng
Municipality of its duties to
ensure the provision of services to its community in a sustainable
manner, the failure to promote
social and economic development, the
failure to promote a safe and healthy environment and that it has
failed to structure and
manage its administration, budgeting and
planning processes in order to give priority to basic needs of
its community.
[2]
The fifth respondent, the President of the Republic of South Africa,
and the sixth respondent,
the National Executive filed notices to
oppose the application on 17 April 2024 but did not file any
answering affidavits.
The Free State Provincial Legislature,
cited as the seventh respondent, the National Council of Provinces of
the Republic of South
Africa, cited as the eighth respondent, and
National Treasury, cited as the eleventh respondent filed notices to
abide with the
decision of the court.
[3]
The application is opposed by the first respondent, the Premier of
the Free State Province (the
Premier), the Member of the Executive
Council for Human Settlements, Cooperative Governance and Traditional
Affairs, Free State
Provincial Government, cited as the second
respondent (the MEC), the third respondent, the Provincial Executive
of the Free State
(the Provincial Executive), the fourth respondent,
the Minister of Cooperative Governance and Traditional Affairs (the
Minister),
the ninth respondent, Matjhabeng Municipality and the
Council of the Matjhabneg Municipality cited as the tenth respondent.
[4]
The Matjhabeng Municipality comprises the towns of Welkom, Virginia,
Odendaalsrus, Hennenman,
Ventersburg and Allanridge. The DA contends
that the Matjhabeng Municipality is, as a result of a crises in its
financial affairs,
in serious or persistent material breach of its
obligations to provide basic municipal services and to meet its
financial commitments.
The DA seeks a declaratory order under
s
172(1)
(a)
of the Constitution concerning the breach by the
Matjhabeng Municipality of its duties under ss 152(2) and 153
(a)
of the Constitution as set out in the notice of motion.
[5]
The Auditor General of South Africa issued a qualified audit report
regarding the financial statements,
as on 30 June 2023, of the
Matjhabeng Municipality. In respect of service charges, it was opined
that insufficient appropriate
audit evidence for water and
electricity included in service charges were available as the
municipality did not have adequate processes
for the billing of water
and electricity consumption. This was due to the inability to read
water and electricity meters regularly
which resulted in consumers
being billed for water and electricity consumption based on estimates
for extended periods.
[6]
In respect of payables from exchange transactions it was noted that
the Matjhabeng Municipality
did not correctly account for trade
payables in terms of the Standard of Generally Recognised Accounting
Practice (GRAP) 1,
Presentation of Financial Statements
, due
to the municipality not recording the suppliers’ invoices in
the accounting records for the corresponding period. The
figure of
trade payables disclosed in the financial statements was understated
by R49 167 522. Note 45 to the financial
statements
indicates that a nett loss of R1 115 679 647 was
incurred for the year ending 30 June 2023. From the
said date, the
municipality’s total liabilities exceed its total assets by
R4 197 678 664 whilst the total
current assets cover
only 21% of its total current liabilities.
[7]
Matjhabeng Municipality owed Eskom an amount of R5 630 675 806
on 30 June 2023.
The debt in 2022 amounted to R 4 763 669 846.
The debt in respect of Bloem Water in 2022 amounted to
R4 897 035 157.
The amount due to Bloem Water
accumulated to R5 436 424 698 in 2023. The Auditor
General indicated as follows with
reference to the aforesaid
liabilities: ‘These events or conditions, along with other
matters as set forth in note 45, indicate
that a material uncertainty
exists that may cast significant doubt on the municipality’s
ability to continue as a going concern.’
[8]
Material electricity losses of R89 357 033 were incurred
due to the status or condition
of the electricity network, weather
conditions and load on the system as well as non-technical losses
such as theft and vandalism.
Water losses of R239 831 884
were incurred due to metering inefficiencies, aging pipeline
infrastructure, burst pipes,
leakages and unmetered connections. The
Matjhabeng Municipality is the defendant in various legal claims
which causes material
uncertainty as to the outcome and financial
impact in respect of the financial statements.
[9]
The Matjhabeng Municipality incurred fruitless and wasteful
expenditure in the amount of R339 841 917
mainly due to
interest and penalties on late payments to suppliers. This amount has
increased since the previous financial statements
(2022:
R180 736 298). The irregular expenditure in the amount of
R146 754 378 was mainly due to non-compliance
with supply
chain management regulations. It was noted that reasonable steps were
not taken to prevent irregular expenditure as
required by s 62(1)
(b)
of the Municipal Finance
Management Act
[1]
(MFMA). The
Auditor General found that an effective system of internal control
for revenue and debtors was not in place as required
by s 64(2)
(f)
of the MFMA.
[10]
It was furthermore found that the municipality did not always pay
money owed within 30 days as required by
s 65(2)
(e)
and that,
in terms of s 140(2) of the MFMA the Matjhabeng Municipality is in
serious breach of its obligations to meet its financial
commitments.
An adequate management, accounting and information system was not in
place which recognised expenditure when it was
incurred as required
in terms of s 65(2)
(b)
of the MFMA. It was furthermore
found that some of the unauthorised expenditure incurred by the
municipality was not investigated
to determine if any person is
liable for the expenditure, as required by s 32(2)
(a)
of the
MFMA. Similarly, irregular expenditure incurred was not investigated
to determine if any person is liable for the expenditure
as required
in terms of s 32(2)
(b)
of the MFMA. An effective system of
internal control for assets was not in place as required by s
63(2)
(c)
of the MFMA.
[11]
The qualified audit opinions issued by the Auditor General of South
Africa on 14 January 2023 and 29 January
2024 concluded that there
was material uncertainty regarding the Matjhabeng Municipality’s
ability to continue as a going
concern. The water supply system is in
disrepair. Due to failing infrastructure the municipality loses 56%
of the water it procures.
Only three of the 13 Wastewater Treatment
Plants and 11 out of the 56 sub-stations are operational.
Approximately 30% of the streetlights
do not function. Sewage flows
into rivers and compromises local buildings and schools as well as
the Odendaalsrus Correctional
Centre. In total 1543km of sewer pipes
are blocked and 80% of the manholes within the stormwater system are
blocked. Residents
do not have an effective way to seek redress and
report issues due to a non-operational customer-care centre.
[12]
In the practice note filed on behalf of the first, second, third,
fourth, ninth and tenth respondents (the
opposing respondents) the
nature of the dispute is identified as an application to compel or
interdict the respondents to impose
a financial recovery plan which
application is opposed by the respondents on the grounds that the
respondents have intervened in
the Matjhabang Municipality and in a
short time, much progress has been made to improve the dire situation
of the said municipality.
The respondents therefor seek a
further period of 12 months to see the recovery steps to fruition.
[13]
The Municipal Manager of Mathjabeng Municipality, Lonwabo Ngonqo
deposed to an affidavit on behalf of the
opposing respondents. In
essence, no attempts are made at denying or disputing the factual
allegations and accusations levelled
by the DA against the
respondents. On behalf of the opposing respondents, it is argued that
the current administration came into
office on 29 November 2021. The
problems at the municipality emanates from a decline in the formal
economy arising from major mines
in the area having shut down. R2.8
billion has been spent in the past five years on service providers as
the municipality does
not have the internal capacity nor the fleet to
service the needs and provide services to the community. Having
regard to the fact
that the current administration came into office
during November 2021, it is evident that the current administration
has already
been in office for two years and approximately eight
months, during which period there has not been substantial
improvement.
[14]
It is contended by the opposing respondents that the project
management unit, in charge of infrastructure
projects of the
municipality, was outsourced at a cost of R500 000.00 per
month. This has been terminated. The preparation
of the annual
financial statements was outsourced and a cost of R900 000.00
per month. This practice has also been terminated
and employees at
the municipality are now tasked to perform this function. There is,
however, no indication when exactly the contracts
of the service
providers came to an end and no reason is provided why the
outsourcing was not ceased at an earlier stage. The municipal
manager
was appointed on 1 January 2023, being more than a year with no
significant improvement in the financial situation at the
municipality. The current chief financial officer has been in the
employment of the municipality since December 2017.
[15]
The municipality has entered into a debt recovery plan with ESKOM to
address the backlog of R5 billion. A
payment plan has been accepted
by ESKOM and the municipality is paying approximately R40 million to
Eskom per month. The Minister
explained that it is considered more
prudent and appropriate to implement focused and targeted supportive
and intervention programs
jointly with other sector departments in
the spirit of cooperative governance to support municipalities to
execute and manage its
affairs. In this regard the Minister and
provincial COGTA developed a Municipal Support and Intervention Plan
(MSIP) to facilitate
the implementation of the State of Local
Government Report which provides for Government’s involvement
to support and strengthen
the capacity of municipalities to perform
their functions.
[16]
A copy of the MSIP is appended to the answering affidavit of the
Minister. Regarding the financial viability
of the Matjhabeng
Municipality, the status pertaining to the closing balance to ESKOM
is indicated as R5 392 459 327.87
as at the end of
March 2023. The status of the closing balance at the end of March
2024 is indicated as R5 882 565 820.03.
The closing
balance of the amount owed to the Vaal Central Water Board at the end
of March 2023 was R5 330 280 485.73.
The status of the
closing balance in respect of the debt to the Vaal Central Water
Board amounted to R5 960 790 589.66
at the end of
March 2024.
[17]
In order to achieve coherent government in the Republic of South
Africa, the Constitution makes provision
for principles of
cooperative government. The commitment of the spheres of government
of the Republic and the provision of coherent
government entails that
the upper spheres should supervise the lower spheres in order to
prevent the decline of government in the
Republic. Accordingly,
provincial government as the sphere of government closest to local
government supervises local government
to ensure harmony in the
functioning of government.
[18]
Any municipality bears the primary responsibility
to identify, avoid, and solve all of its financial problems.
[2]
While the causes of financial distress at municipal level can be
complicated and varied, the solution inevitably includes bringing
its
revenues and expenditures into alignment. The municipal
council, as a governing body, has primary accountability and
responsibility for the government and performance of the
municipality. The municipal council is therefore primarily
responsible
for identifying, avoiding and solving any municipal
financial distress as it arises.
[19]
Section 139(5) of the Constitution introduces the concept of a
financial crises as a municipality’s
failure to fulfil its
mandate to provide basic services or to fulfil its financial
obligations because of its financial situation,
or when the
municipality admits that it is an able to do so. Sections 139
and 140 of the MFMA provide further guidance on
what constitutes a
‘crisis’ in a municipality’s financial affairs.
Section 139(1) the MFMA provides that: ‘If
a municipality, as a
result of a crisis in its financial affairs, is in serious or
persistent material breach of its obligations
to provide basic
services or to meet its financial commitments, or admits that it is
unable to meet its obligations or financial
commitments, the relevant
provincial executive must . . .’. This subsection goes on
to specify what the provincial
executive must do.
[20]
For a proper appreciation of the import of the intervention decision,
I must quote
s 139 of the Constitution in full:
‘
Provincial
intervention in local government
(1)
When a municipality cannot or does not fulfil an
executive obligation
in terms of the Constitution or legislation, the relevant provincial
executive may intervene by taking any
appropriate steps to ensure
fulfilment of that obligation, including-
(a)
issuing a directive to
the Municipal Council, describing the extent
of the failure to fulfil its obligations and stating any steps
required to meet its
obligations;
(b)
assuming responsibility for the relevant obligation in that
municipality
to the extent necessary to-
(i)
maintain essential national standards or meet established minimum
standards for the rendering of a service;
(ii)
prevent that Municipal Council from taking unreasonable action that
is prejudicial to the interests of another municipality or to the
province as a whole; or
(iii)
maintain economic unity; or
(c)
dissolving the Municipal Council and appointing an administrator
until
a newly elected Municipal Council has been declared elected, if
exceptional circumstances warrant such a step.
(2) If
a provincial executive intervenes in a municipality in terms of
subsection (1)(b)–
(a)
it must submit a written notice of the intervention to–
(i)
the Cabinet member responsible for local government affairs; and
(ii)
the relevant provincial legislature and the National Council of
Provinces,
within 14 days after the intervention began;
(b)
the intervention must end if–
(i) the Cabinet member
responsible for local government affairs disapproves the intervention
within 28 days after the intervention
began or by the end of that
those 14 days.
(4)
If 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, the
relevant provincial
executive must intervene by taking any
appropriate steps to ensure that the budget or those revenue-raising
measures are approved,
including dissolving the Municipal Council
and–
(a) appointing an
administrator until a newly elected Municipal Council has been
declared elected; and
(b) approving a temporary
budget or revenue-raising measures to provide for the continued
functioning of the municipality.
(5)
If a municipality, as a result of a crisis in its financial affairs,
is in serious or persistent
material breach of its obligations to
provide basic services or to meet its financial commitments, or
admits that it is unable
to meet its obligations or financial
commitments, the relevant provincial executive must-
(a) impose a recovery
plan aimed at securing the municipality's ability to meet its
obligations to provide basic services or its
financial commitments,
which-
(i) is to be prepared in
accordance with national legislation; and
(ii) binds the
municipality in the exercise of its legislative and executive
authority, but only to the extent necessary to solve
the crisis in
its financial affairs; and
(b) dissolve the
Municipal Council, if the municipality cannot or does not approve
legislative measures, including a budget or any
revenue-raising
measures, necessary to give effect to the recovery plan, and-
(i) appoint an
administrator until a newly elected Municipal Council has been
declared elected; and
(ii) approve a temporary
budget or revenue-raising measures or any other measures giving
effect to the recovery plan to provide
for the continued functioning
of the municipality; or
(c) if the Municipal
Council is not dissolved in terms of paragraph (b), assume
responsibility for the implementation of the recovery
plan to the
extent that the municipality cannot or does not otherwise implement
the recovery plan.
(6)
If a provincial executive intervenes in a municipality in terms of
subsection (4) or (5),
it must submit a written notice of the
intervention to-
(a) the Cabinet member
responsible for local government affairs; and
(b) the relevant
provincial legislature and the National Council of Provinces, within
seven days after the intervention began.
(7)
If a provincial executive cannot or does not or does not adequately
exercise the powers
or perform the functions referred to in
subsection (4) or (5), the national executive must intervene in terms
of subsection (4)
or (5) in the stead of the relevant provincial
executive.
(8)
National legislation may regulate the implementation of this section,
including the processes
established by this section.’
[21]
Both s 139(5) of the Constitution and s 139(1) of the MFMA are
mandatory – the provincial executive
must
act in the
circumstances described. Both the Constitution and the MFMA refer to
a ‘serious or persistent material breach’
of a
municipality’s obligations. Concerning a ‘serious
material breach’, s 140(2) of the MFMA provides
that some
factors are indicative of a municipality not fulfilling its financial
obligations which include the following: the municipality
is not
paying lenders or investors when due; the municipality does not meet
its contractual obligations; the municipality does
not pay monies
when due, which individually or cumulatively, adds up to more than 2%
of the municipality’s current operating
expenses budget; the
municipality’s non-payment has or is likely to have an adverse
impact on the availability or price of
credit to the local government
sector.
[22]
As regards a ‘persistent material breach’, s 140(3) of
the MFMA adds that this is a continuous
or recurring failure of a
municipality to pay its debts and that this failure substantially
impairs the ability of a municipality
to procure goods, services or
credit on usual commercial terms. The ‘serious or
persistent material breach’ must
be rooted in a financial
crisis, but the crisis can manifest in service delivery failures or
in financial failures. However,
when the problems escalate and
become more serious or persistent, then action in accordance with the
MFMA is no longer discretionary
– it is required. Intervention
comprises the most powerful form of supervision of local government.
[23]
It is not disputed that Matjhabeng
Municipality is facing a serious crisis. Both the DA and the opposing
respondents have set out the facts to sketch the disastrous state of
affairs. The opposing respondents admit that a crisis in the
financial affairs of the municipality exist and this has resulted in
serious and persistent material breaches of its obligations
to
provide basic services or to meet its financial affairs. This state
of affairs had already prompted the fourth respondent to
implement
the MSIP aimed at securing the Matjhabeng Municipality’s
ability to meet its obligations to provide basic services
and its
financial commitments.
[24]
In reply, the DA contends that notwithstanding the debt recovery plan
entered between Matjhabeng Municipality
and ESKOM in terms whereof
the municipality will make monthly payments of R40 million to ESKOM,
even without any interest on the
said amount, it would take more than
125 months which is in excess of 10 years to pay off its debt to
ESKOM. In any event the monthly
payment of R40 billion to ESKOM
would, in all likelihood, cause further financial problems and will
also harm the municipality’s
capacity to provide basic services
to the community.
[25]
The respondents admit that a crisis exits in the financial affairs of
the Matjhabeng Municipality and that
this has resulted in serious and
persistent material breaches of the municipality’s obligations
to provide basic services
or to meet its financial affairs. The
opposing respondents, more specifically the municipal manager and
employees at the Matjhabeng
Municipality, who are, or should be in
the best position to advise this court on the reason for the
financial problems encountered
by the municipality and the best
solution to overcome the financial and service delivery crisis,
merely opted to blame the economic
situation in the area as well as
crime, poor infrastructure and poor revenue collection, to name but a
few, as reasons for the
current situation.
[26]
The opposing respondents propose that the MSIP has been put in place
and that a period of 12 months is needed
to bring the plan to
fruition. The opposing respondents did not explain why the financial
crisis experienced by the Matjhabeng
Municipality has not improved
notwithstanding the implementation of the MSIP during 2023. In
deciding whether the interest of justice
demand the postponement of
this application it is vital for the court to consider the following
requirements:
(i)
the imperative for matters before court to be finalised without undue
delay
[3]
;
(ii)
the broader public interest,
[4]
and
(iii)
the prospects of success on the merits.
[5]
[27]
An application for postponement must always be bona fide and not
simply used as a tactical manoeuvre for
purposes of obtaining an
advantage to which the applicant for postponement is not legitimately
entitled.
[6]
In
Mwelase
v Director-General for the Department of Rural Development and Land
Reform
[7]
it was held that the vulnerability of those who suffer most from
failures to act ‘. . . underscores how important it is for
courts to craft effective, just and equitable remedies.’
[8]
Besides making bald and unsubstantiated assertions that it
would be just, fair and in the interest of justice to postpone
the
application, no compelling reasons have been demonstrated. During the
past year no significant improvement in the financial
situation of
the municipality has been achieved. In fact, quite the opposite
appears from the MSIP report, appended to the
opposing respondents’
affidavit. To my mind the opposing respondents failed to present any
justifying grounds for the postponement
of this application for
another year.
[28]
In the premises it goes without saying that it is not in dispute that
section 172(1)
(a)
of the Constitution is relevant, and that
this court is obliged to declare the Matjhabeng Municipality’s
conduct constitutionally
invalid. The DA further seeks declarators
that the Premier, the MEC, the Minister, the President and the
National Executive have
failed to comply with their duties under ss
139(5) and 139(7) of the Constitution to intervene in the Matjhabeng
Municipality.
Section 154 of the Constitution requires the national
and provincial governments to support and strengthen the Matjhabeng
Municipality’s
capacity to manage its own affairs, exercise its
powers and perform its functions.
[29]
Neither the Minister nor the Provincial
respondents dispute the DA’s case that the Matjhabeng
Municipality
has breached its duties under ss 152(2) and 153
(a)
of the Constitution. On 26 September 2023 the National Council of
Provinces (the NCOP) adopted a motion called upon the Provincial
Executive to immediately intervene in the Matjhabeng Municipality
under s 139(5) of the Constitution by taking over the finances
of the
municipality through a competent and qualified individual who can
oversee the financial turnaround in the interest of its
residents.
The DA further addressed a demand to the Provincial Executive and the
Minister on 16 November 2023 to comply with its
duty to intervene in
the Matjhabeng Municipality under s 139(5) of the Constitution,
failing which the Minister must intervene
in its stead in terms of s
139(5) and (7) of the Constitution. This demand has been rejected.
[30]
The provincial respondents contend that their failure to have
intervened in the affairs of the Matjhabeng
Municipality is justified
by the unspecific prejudice this would inflict upon the service
delivery programme adopted by the municipal
council. I am not
convinced that any gains have been made in advancing service delivery
during the past year with the result that
the DA has made out a
proper case for intervention. In any event, the provincial
respondents have not denied the averments that,
as result of a crisis
in its financial affairs, the Matjhabeng Municipality is in serious
or persistent material breach of its
obligations to provide basic
municipal services and to meet its financial commitments. In the
result, their duty to intervene in
terms of s 139(5) of the
Constitution is peremptory.
[31]
Furthermore the Minister does not dispute the allegations concerning
the state of despair at the Matjhabeng
Municipality. Section 139(7)
requires the Minister, the President and the National Council to
intervene in the stead of the provincial
respondents. I am convinced
that the triggers contained in s 139(7) are present and there is no
discretion as to whether to intervene
as intervention is
constitutionally required in the prevailing circumstances.
[32]
The opposing respondents do not dispute that the jurisdictional facts
for mandatory intervention are present.
In the premises mandatory
intervention is what is called for. In
Fose
v Minister of Safety and Security
,
[9]
the Constitutional Court held as follows:
‘
Appropriate relief
will in essence be relief that is required to protect and enforce the
Constitution. Depending on the circumstances
of each particular case
the relief may be a declaration of rights, an interdict, a
mandamus
or such other relief as
may be required to ensure that the rights enshrined in the
Constitution are protected and enforced. If it
is necessary to do so,
the courts may even have to fashion new remedies to secure the
protection and enforcement of these all-important
rights.’
[10]
[33]
The Constitution demands of all those on whom it imposes obligations
to fulfil those obligations diligently
and without any delay.
[11]
In this matter the respondents have failed to raise any, let alone a
real, genuine and good-faith dispute of fact concerning the
DA’s
version. I am of the view that the court is entitled in terms of the
provisions of s 172(1)
(a)
of the Constitution, when
deciding constitutional matters, to declare that the conduct by the
respondents, where applicable, is
inconsistent with the Constitution
and to grant structural interdictory relief called for in terms of
the constitutional and legislative
provisions upon which the DA rely
for the relief. The order I intend to grant in this application goes
toward ensuring that basic
services be provided to the residents of
the Matjhabeng Municipality and that the municipality be financially
capable of meeting
its obligations and resolving the financial crises
experienced for a considerable time.
[34]
Turning to the issue of costs, there is no reason why costs should
not follow the result and should include
the costs of two counsel on
scale C.
ORDER:
[35]
In the result the following order is made:
1.
It is declared that:
1.1
The Matjhabeng Municipality has breached s 152(2) of the
Constitution,
in failing to strive, within its financial and
administrative capacity to:
1.1.1
ensure the provision of services to its community in a sustainable
manner;
1.1.2
promote social and economic development; and
1.1.3
promote a safe and healthy environment
and its conduct is
declared invalid to the extent of these inconsistencies.
2.
It is declared that the Matjhabeng Municipality
has breached s 153
(a)
of the Constitution, in failing to structure and managed its
administration and budgeting and planning processes to give priority
to the basic needs of the community, and to promote of the social and
economic development of the community, and its conduct is
declared
invalid to the extent of these inconsistencies.
3.
It is declared that the Matjhabeng Municipality,
as a result of a
crisis in its financial affairs, is in serious or persistent material
breach of its obligations to provide basic
services and to meet its
financial commitments.
4.
It is declared that the Premier of the Free
State Province, the
Member of the Executive Council for Human Settlements, Cooperative
Governance and Traditional Affairs, Free
State Provincial Government
and the Provincial Executive of the Free State Province have failed
to comply with the duties to intervene
in the Matjhabeng Municipality
in terms of s 139(5) of the Constitution, and their conduct is
declared invalid to the extent of
these inconsistencies.
5.
It is declared that the Minister of Cooperative
Governance and
Traditional Affairs, the President of the Republic of South Africa
and the National Executive have failed to comply
with the duties to
intervene in the Matjhabeng Municipality in terms of s 139(7) and (5)
of the Constitution, and their conduct
is declared invalid to the
extent of these inconsistencies.
6.
The Premier of the Free State Province, the
Member of the Executive
Council for Human Settlements, Cooperative Governance and Traditional
Affairs, Free State Provincial Government
and the Provincial
Executive of the Free State Province are ordered to intervene in the
Matjhabeng Municipality in terms
of s 139(5) of the
Constitution and submit a written notice of such intervention to the
Minister, Free State Provincial Legislature
and National Council of
Provinces of the Republic of South Africa in terms of s 139(6) of the
Constitution within seven (7) days
of the intervention.
7.
If the Premier of the Free State Province,
the Member of the
Executive Council for Human Settlements, Cooperative Governance and
Traditional Affairs, Free State Provincial
Government and the
Provincial Executive of the Free State Province do not comply with
the duties under prayer 6 above within seven
(7) days, the Minister
of Cooperative Governance and Traditional Affairs, President of the
Republic of South Africa and the National
Executive are ordered to
intervene in the Matjhabeng Municipality in terms of s 139(5) of the
Constitution within seven (7) days.
8.
The Premier of the Free State Province, the
Member of the Executive
Council for Human Settlements, Cooperative Governance and Traditional
Affairs, Free State Provincial Government
and the Provincial
Executive of the Free State Province, alternatively, the Minister of
Cooperative Governance and Traditional
Affairs, President of the
Republic of South Africa and the National Executive are required to:
8.1
prepare a financial recovery plan for the Matjhabeng Municipality,
including complying with its duties to make requests to the Municipal
Financial Recovery Service of the National Treasury and consult
with
the Mayor of the Matjhabeng Municipality under
s 139
of the
Local
Government: Municipal Finance Management Act 56 of 2003
; and
8.2
within six months of this court order, file a copy of the financial
recovery plan with this Court.
9.
If the Matjhabeng Municipality cannot or does not approve legislative
measures, including a budget or
any revenue-raising measures,
necessary to give effect to the recovery plan, the Premier of the
Free State Province, the Member
of the Executive Council for Human
Settlements, Cooperative Governance and Traditional Affairs, Free
State Provincial Government
and the Provincial Executive of the Free
State Province, alternatively, the Minister of Cooperative Governance
and Traditional
Affairs, President of the Republic of South Africa
and the National Executive must:
9.1
dissolve the council of the Matjhabeng Municipality, appoint an
administrator until a newly elected council
for the Matjhabeng
Municipality has been declared elected, and approve a temporary
budget or revenue-raising measures or any other
measures giving
effect to the recovery plan to provide for the continued functioning
of the Matjhabeng Municipality; or
9.2
assume responsibility for the implementation
of the recovery plan to the extent that the Matjhabeng Municipality
cannot or does not otherwise implement the recovery plan.
10.
The first, second, third, fourth, ninth and tenth respondents jointly
and severally are ordered to pay
the costs of the application on
scale C, such costs to include the costs occasioned by the employment
of two counsel.
I
VAN RHYN
JUDGE
OF THE HIGH COURT,
FREE
STATE DIVISION, BLOEMFONTEIN
Appearances
On
behalf of the Applicant:
ADV.
N FERREIRA
ADV.
D SIVE
Instructed
by
SYMINGTON
& DE KOK ATTORNEYS
BLOEMFONTEIN
On
behalf of the First, Second, Third, Fourth,
Ninth
and Tenth Respondents:
ADV.
N A CASSIM SC
ADV.
E B YAWA
Instructed
by:
STATE
ATTORNEYS
BLOEMFONTEIN
[1]
Local
Government: Municipal Finance Management Act
56
of 2003 (MFMA).
[2]
Section
135(1) of the MFMA.
[3]
National
Police Service Union v Minister of Safety and Security
[2000] ZACC 15
;
2001
(8) BCLR 775
(CC) at para 4.
[4]
Lekolwane
v Minister of Justice and Constitutional Development
[2006]
ZACC 19
;
2007 (3) BCLR 280
(CC) para 17.
[5]
Ibid
para 17.
[6]
Myburgh
Transport v Botha t/a SA Truck Bodies
1991
(3) SA 310
(NmSC) at 315 E-F.
[7]
Mwelase
v Director-General for the Department of Rural Development and Land
Reform
[2019]
ZACC 30; 2019 (6) SA 597 (CC).
[8]
Ibid para 49.
[9]
Fose v
Minister of Safety and Security
1997
(3) SA 786 (CC).
[10]
Ibid para 19.
[11]
Section
237 of the Constitution.