THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT


Reportable
Case no: 102/2023;103/2023;108/2023;110/2023

In the matter between:
BRAIN GEAR INVESTMENTS (PTY) LTD FIRST APPELLANT
SEMBCORP SILULUMANZI (RF) (PTY) LTD SECOND APPELLANT
SEMBCORP UTILITIES (NETHERLANDS) NV THIRD APPELLANT
MUNICIPAL MANAGER: CITY OF MBOMBELA
MUNICIPALITY FOURTH APPELLANT
SOUTH AFRICAN WATER WORKS (PTY) LTD FIFTH APPELLANT
SEMBCORP UTILITIES SOUTH AFRICA (PTY) LTD SIXTH APPELLANT
THE CHAIRPERSON: COUNCIL OF THE CITY
OF MBOMBELA MUNICIPALITY SEVENTH APPELLANT
THE CITY OF MBOMBELA MUNICIPALITY EIGHTH APPELLANT
and
BUHLE WASTE (PTY) LTD FIRST RESPONDENT
ZMG SCIENTIFIC SERVICES (PTY) LTD SECOND RESPONDENT

Neutral citation: Brain Gear Investments (Pty) Ltd and Others v Buhle Waste
(Pty) Ltd and Another (102/2023; 103/2023; 108/2023;
110/2023) [2024] ZASCA 168 (5 December 2024)
Coram: MOCUMIE, SCHIPPERS, WEINER and MOLEFE JJA and COPPIN AJA
Heard: 20 August 2024
Delivered: This judgment was handed down electronically by circulation to the
parties’ representatives by email, published on the Supreme Court of Appeal website,
and released to SAFLII. The date and time for hand -down is deemed to be 11h00 on

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5 December 2024.
Summary: Administrative law – review under Promotion of Administrative Justice Act
3 of 2000 – decision by Municipality to approve shareholding in water services provider
subject to oversight by the Municipality of 28% BBBEE shareholder – oversight
condition not complied with – decision reviewable.

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___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Mpumalanga Division of the High Court, Mbombela (Legodi JP,
sitting as a court of first instance):
1 The appeal is upheld in part.
2 Paragraphs 118.3 to 118.7 of the order of the high court are set aside.
3 Save as aforesaid, the appeal is dismissed with costs, including the costs of two
counsel where so employed.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Mocumie and Schippers JJA (Weiner and Molefe JJA and Coppin AJA
concurring):
Introduction
[1] This is an appeal, with the leave of this Court, against an order of the
Mpumalanga Division of the High Court, Mbombela (the high court) which reviewed
and set aside a decision taken by the eighth appellant, the City of Mbombela
Municipality (the Municipality), on 14 November 2018 (the impugned decision). In
terms of that deci sion, the Municipality: (a) finally consented to a change in the
shareholding and control of the second appellant, Sembcorp Silulumanzi (RF) (Pty)
Ltd (Silulumanzi), a water services provider under the Water Services Act 109 of 1997
(the Water Services Act ); and (b) confirmed that the conditions imposed in terms of
the Municipality’s conditional consent granted on 28 June 2018, had been fulfilled.
These conditions were, inter alia, the following:
(a) that 28% of the shares in Silulumanzi should be acquired by a black economic
empowerment (BBBEE) shareholder based in Mbombela;
(b) in a process overseen by the Municipality, represented by the Executive Mayor
and the Acting Municipal Manager; and
(c) that the selection of the BBBEE shareholder should take place in consultation with
the Municipality’s representatives (the conditions).

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[2] The first appellant, Brain Gear Investments (Pty) Ltd (Brain Gear), was
appointed as the 28% BBBEE shareholder in terms of the impugned decision. T he
third appellant, Sembcorp Utilities (Netherlands) NV ( Sembcorp Netherlands),
formerly controlled 100% of the shares in Silulumanzi. The fifth appellant, South
African Water Works (Pty) Ltd (SAWW), purchased all the shares in Silulumanzi from
Sembcorp Netherlands in terms of a share purchase agreement concluded on 21
February 2018 (the SPA). The sixth appellant, Sembcorp Utilities South Africa (Pty)
Ltd (Sembcorp SA), which previously held 52% of the shares in Silulumanzi, is a wholly
owned subsidiary of Sembcorp Netherlands.

[3] The first respondent is Buhle Waste (Pty) Ltd (Buhle Waste), a company that
provides waste management services. In July 2019 , the respondent launched the
application to review and set aside the impugned decision. The second respondent,
ZMG Scientific Services (Pty) Ltd (ZMG ), is the second company which participated
and was shortlisted, together with Buhle Waste, in the tender process in issue. ZMG
has not participated in these proceedings.

Factual background
[4] The background to the impugned decision is the following. On 21 April 1999 ,
Silulumanzi (then known as the Greater Nelspruit Utility Company (Pty) Ltd) concluded
a concession agreement with the Municipality’s predecessor, Nelspruit Tra nsitional
Local Council (the concession agreement). Silulumanzi was appointed as a
concessionaire of water services, in terms of which it would supply potable water and
sanitation services to a part of the Municipality’s region for a period of 30 years.

[5] In 2010, Sembcorp Netherlands acquired 48% of the shares in Silulumanzi, and
its wholly owned subsidiary, Sembcorp SA acquired the remaining 52%. Sembcorp
Netherlands thus controlled 100% of the shares in the concessionaire – Silulumanzi.

[6] Clause 7.4.2.1 of the concession agreement provided that no shares in the

[6] Clause 7.4.2.1 of the concession agreement provided that no shares in the
share capital of Silulumanzi could be transferred to any person or entity, which would
result in that person or entity controlling the concessionaire immediately before such

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transfer, losing such control, unless such transfer of shares is effected with the prior
written approval of the Council of the Municipality.1

[7] In 2017, the Sembcorp Group decided to exit the South African municipal water
market. In 2018, Sembcorp Netherlands sold its entire shareholding to SAWW in terms
of the SPA, which contained a suspensive condition requiring Sembcorp Netherlands
to obtain consent from the Municipality as required by clause 7.4.2.1 of the concession
agreement.

[8] On 2 March 2018, Sembcorp Netherlands applied to the Municipality to approve
the change in the control of Silulumanzi , and on 28 June 2018, the Council of the
Municipality adopted a resolution in terms of which it granted conditional consent to
the change of control in Silulumanzi (the June 2018 decision). The resolution stated
the following:
‘(a) Council approve [s] and grant[s] conditional consent, in accordance with clause 7.4.2 of
the Water Sanitation Concession Agreement dated 21 April 1999, as amended, between the
municipality; as Water Services Authority and Sembcorp/Silulumanzi (RF) Pty Ltd, as a Water
Services Provider; pertaining to the change of control;
(b) conditional consent to be granted for the transfer of all the shares held by Sembcorp
Utilities (Netherlands) NV in the Co ncessionaire (in conjunction with the transfer of its 100%
shareholding in Sembcorp Utilities South Africa Pty Ltd) to SA Water Works Pty Ltd. . .;
‘(c) conditional consent be granted with the specific suspensive condition that SAWW and
Silulumanzi immediately after this Council resolution, commence with the process of obtaining
a 28% Mbombela-based BBBEE shareholder in Silulumanzi and conclude the process within
the prescribed 90 days from the date of the Council resolution;
(d) the City of Mbombela, represented by the Executive Mayor and the Acting Municipal
Manager, oversees the process administered by SAWW and Silulumanzi regarding the 28%
BBBEE Mbombela-based shareholder;

BBBEE Mbombela-based shareholder;

1 The said clause in the concession agreement is phrased as follows:
‘7.4 Nothing withstanding anything to the contrary contained in this contract –
7.4.1 . . .; and
7.4.2 no shares in the share capital of the concessionaire may be transferred to any person or entity
that will have the effect that the entity or person controlling the concessionaire immediately before
such transfer, loses such control, save for any such further transfer or change in control –
7.4.2.1 that is effected with the prior written approval of the COUNCIL and the lenders. . .’

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(e) SAWW and Silulumanzi to select the final 28% Mbombela-based BBBEE shareholder, in
consultation with the representatives of the City of Mbombela;
(f) the Acting Municipal Manager, as Accounting Officer, be mandated to confirm that the
requirements above have been met as per the terms of the conditions of th e Conditional
Consent granted;
(g) the Accounting Officer be authorised to sign all documents and do all things necessary in
order to implement the above;
(h) should the suspensive stipulated in (c) above not be met within 90 days from the date of
the Council resolution and written confirmation not having been issued by the Acing Municipal
Manager, confirming that all suspensive conditions for the conditional consent have been met,
the Conditional Consent will automatically lapse and be of no further cause or effect and may
not be relied upon by any party.’

[9] Silulumanzi appointed Price Waterhouse Coopers Advisory Services (Pty) Ltd
(PwC), to select and identify a BBBEE entity to which the 28% shareholding in
Silulumanzi would be sold. Various entities were invited to participate in a selection
process to acquire the 28% shareholding . Buhle Waste, Brain Gear and ZMG were
the only entities that participated in the selection process. Only Buhle Waste and Brain
Gear complied with the primary evaluation criteria and were identified as preferred
bidders.

[10] The selection process was completed within 90 days as required in terms of the
June 2018 decision . On 19 September 2018 , Brain Gear and Buhle Waste were
informed that Brain Gear had been selected as the 28% shareholder. On 28
September 2018, Silulumanzi wrote to the Municipality advising it that the selection
process had been completed ; that a local BBBEE shareholder had been appointed ;
and that Silulumanzi had complied with the June 2018 decision. The Acting Municipal
Manager was asked to confirm , by signing the letter , that Silulumanzi had complied

Manager was asked to confirm , by signing the letter , that Silulumanzi had complied
with that decision and that the consent to the transfer of shares had become
unconditional. The Municipality’s confirmation, signed by the Acting Municipal
Manager, reads as follows:
‘The City of Mbombela Local Municipality (duly authorised Mr Neil Diamond) confirms by its
signature hereto that, Silulumanzi has complied with the terms of Council’s Resolution an
extract of which is set out above, and that the consent referred to therein , has become

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unconditional.’2

[11] On 14 November 201 8, the Municipality, represented by the Acting Municipal
Manager, and Silulumanzi, entered into an agreement in terms of which the
Municipality acknowledged that the transfer of shares would result in a cha nge of
control in Silulumanzi; and unconditionally and irrevocably consented to that change.
The agreement also records that Silulumanzi had, to the satisfaction of the
Municipality, selected a local BBBEE shareholder and that the Municipality confirmed
the fulfilment of the conditions imposed in the June 2018 decision.

[12] The impugned decision is confirmed in both the answering affidavits of the
Municipality and Silulumanzi. The Municipality’s affidavit states:
‘On 14 November 2018, the municipality, gave its approval of the transfer of shares in
Silulumanzi to SAWW.’
Similarly, Silulumanzi’s affidavit states the following:
‘As envisaged in clause 7.4.2.1 of the concession agreement, the SPA was subject to approval
by the Municipality of the Change in Control of the fourth respondent. The Municipality granted
such approval on 14 November 2018 , as the parties formally recorded.’ (Emphasis in the
original.)

The proceedings in the high court
[13] On 17 July 2019 , Buhle Waste launched an application in the high court to
review and set aside the impugned decision, as well as the agreement concluded on
14 November 2018, giving effect to that decision.

[14] In its amended notice of motion filed in January 2021, Buhl e Waste sought an
order that the Municipality’s consent to the change in control , be reviewed and set
aside. It also sought an order of substitution directing Silulumanzi and SAWW to effect
the transfer of the 28% BBBEE shareholding in Silulumanzi to Buhle Waste, against
payment of the price of those shares. The substitution order was not granted and there
is no cross-appeal against the refusal of that order. No more need be said about it.

2 Although the duly authorised official is noted as Mr Neil Diamond, it is clear that the resolution was
signed by someone else with a different surname who signed on behalf of Mr Neil Diamond who as the
letter of SAWW and Silulumanzi later revealed, was not in that meeting.

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[15] Buhle Waste sought the review of the impugned decision based on the principle
of legality under the Constitution and the Promotion of Administrative Justice Act 3 of
2000 (PAJA), on the following grounds : The impugned decision was materially
influenced by an error of law or fact; the Municipality considered irrelevant factors and
ignored relevant ones ; the consent decision was not rationally connected to
the material before the Municipality and the purpose for which its conditional consent
had been given; the Municipality misconstrued its own powers and considered its role
as merely one of ‘rubberstamping’ the selection process, contrary to the June 2018
decision; and the impugned decision was unreasonable and, in any event, unlawful.

[16] The further review grounds advanced in the supplementary founding affidavit,
are that the Municipality’s stance in the selection of a BBBEE partner disregards the
principles underlying the concession agreement; Silulumanzi and SAWW ‘ignored
relevant considerations and were influenced by irrelevant considerations’, and were
conflicted in the process of selecting Brain Gear; and the process adopted by the
respondents in the identification of a 28% BBBEE shareholder was neither fair nor
transparent.

[17] On the eve of the hearing in the high court, on 26 May 2022, Buhle Waste and
Sembcorp Netherlands entered into a settlement agreement (the May 2022 order). In
terms of that agreement , Buhle Waste confirmed that it did not seek to impugn the
June 2018 decision nor the SPA. The agreement which was made an order of court
reads as follows:
‘1. The relief sought by the applicant in this application does not extend to the following:
1.1. The sale of shares agreement [SPA] concluded on 21 February 2018 between
[Silulumanzi], [SAWW], [ Sembcorp Netherlands] and [ Sembcorp South Africa], in terms of
which [Sembcorp Netherlands] sold:
1.1.1. Its shares in the ninth respondent;

which [Sembcorp Netherlands] sold:
1.1.1. Its shares in the ninth respondent;
1.1.2. Its shares in the fourth respondent to the seventh respondent (the SembCorp
Netherlands SPA).
1.2. The third respondent's council resolution passe d on 28 June 2018, conditionally
approving and consenting to the change of control in the fourth respondent (June 2018
resolution);
2. The Sembcorp Netherlands SPA and the June 2018 resolution are valid, enforceable and
binding;

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3. Each party, as between the applicant and the eighth respondent, shall pay its own costs.’

[18] The high court reviewed and set aside the impugned decision. Its main findings
may be summarised as follows:
(a) The Municipality abandoned its oversight role in the process of selec tion of the
28% BBBEE shareholder and failed to fulfil its role in terms of its own resolution
contained in the June 2018 decision – this was fatal to th e validity of the impugned
decision.
(b) The Municipality failed to ensure that the process was transparent and fair – Mr
John Shongwe, the Chairman and a director of Silulumanzi, and a director of Brain
Gear, was involved in the selection process of Brain Gear as the 28% BBBEE
shareholder. So too, Mr Eddy Mabuza, the Head of Economic Relations in Silulumanzi,
and a director of Brain Gear.
(c)The Municipality failed to carry out i ts duties under the Constitution, the Water
Services Act and the June 2018 decision. The BBBEE shareholder was required to
have strong technical knowledge and experience in the water sector because
Silulumanzi has to fulfil the Municipality’s constitutional and legislative obligations to
provide clean water and sanitation services to a part of the Mbombela area. Brain Gear
did not meet this requirement: it had no experience in the water sector and was
incorporated only on 16 April 2018 – five months before it was selected as the
preferred BBBEE shareholder . PwC had raised concerns about Brain Gear’s track
record and stated that it had misrepresented its contributor level rating as level 1 in its
proposal, whereas a certificate obtained from the relevant rating agency specified a
level 2 rating. The high court found that the Municipality’s answer to this ‘is that it
played no role in the selection process and in the same breath it came to the
conclusion that all suspensive conditions had been met and that it was satisfied that
everything was above board’.
(d)

everything was above board’.
(d)
The selection of Brain Gear as the preferred shareholder was not made in
consultation with the Municipality. The selection process was meant to be reported not
only to Silulumanzi and SA WW but also to the Municipality, as contemplated in the
June 2018 decision.

[21] On 17 August 2022, the high court granted the following order:

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‘118.1 The decision taken by the Municipality on 14 November 2018 in terms of which it
consented to a change in control of Silulumanzi is declared unlawful and is hereby reviewed
and set aside.
118.2 The request for the consent regarding change in control of Silulumanzi is hereby
remitted to the Municipality for reconsideration of its decision of 14 November 2018.
118.3 In reconsidering its consent to a change in the control of Silulumanzi, the Municipality
shall take into account all what has been alluded to in this judgment regarding the process
that led to the appointment of 28% B BBEE shareholder, its failure to exercise an oversight
role as per its resolution of 28 June 2018 regarding the adjudication process, issues of concern
raised in this judgment leading to the appointment of [Brain] Gear Investment as a successful
28% BBBEE shareholder in Silulumanzi including the transfer of shares to another entity after
the consent was granted on 14 November 2018 and any other relevant factor and alluded to
in this judgment.
118.4 A decision [regarding] the reconsideration of its consent t o a change in the control of
Silulumanzi should be concluded and delivered by not later than 17 October 2022.
118.5 Such a decision and the reasons thereof should be filed with the court registrar of this
court and by email at . . ..
118.6 The appointment of [Brain] Gear Investments Pty Ltd as a successful 28% BBBEE
shareholder in Silulumanzi and the effective date of the transfer of 28% BBBEE shareholding
in Silulumanzi to either [Brain] Gear Investments (Pty) Ltd or to [Brain] Gear Investment South
Africa (Pty) Ltd based on the decision of 14 November 2018 is hereby suspended pending the
reconsideration of the decision to grant consent for a change in the control of Silulumanzi.
118.7 It is hereby declared that pending the reconsideration o f the municipal decision of 14
November 2018, the suspensive conditions in the resolution of 28 June 2018, have not been
fulfilled.

fulfilled.
118.8 The first, second, third, fourth, fifth, seventh and ninth respondents are hereby ordered
to pay the costs of the appl ication including reserved costs and costs of employment of two
counsel for the applicant, such costs to be paid jointly and severally the one paying the other
to be absolved.’

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In this Court
[22] The Municipality did not participate in the appeal. Sembcorp Netherlands
submitted that the high court granted an order reviewing and setting aside the
impugned decision, despite the May 2022 order confirming that Buhle Waste was not
challenging the June 2018 decision nor the SPA. The former order, so it is submitted,
‘had the effect of undoing the operation of the Sembcorp Netherlands SPA’, which was
an error; and ‘the May [2022] Order ought to be reinstated’.

[23] In the alternative, Sembcorp Netherlands submitted that ‘Buhle Waste’s review
application was stillborn from the start because Buhle Waste attacked a non-existent
decision’. The Municipality, Sembcorp Netherlands says, did not take a decision on 14
November 2018. Instead, it had already decided to consent to a change of control in
the concessionaire in June 2018; the condition attached to the consent was fulfilled in
September 2018 (when Brain Gear was selected as the BBBEE shareholder); and the
transaction had become unconditional and fully operative.

[24] The remaining appellants contended that Buhle Waste should have exhausted
an internal remedy provided in s 62 of the Local Government: Municipal Systems Act
32 of 2000 (the Municipal Systems Act), and that it delayed unreasonably in launching
the review application. They endorsed the submissions of Sembcorp Netherlands and
contended that no decision was taken on 14 November 2018: all that happened on
that date was that the fulfilment of a condition in the June 2018 decision was recorded.
The appellants submitted that the impugned decision did not constitute administrative
action, because the consent to the change of control of Silulumanzi was given in terms
of a provision in the concession agreement; the fact that the agreement concerned the
provision of water services d id not mean that any action taken in terms of the
agreement is administrative action; and the imposition of the condition that a BBBEE

agreement is administrative action; and the imposition of the condition that a BBBEE
shareholder should be selected is ‘purely a contractual matter’.

[25] Buhle Waste submit ted that the contention that the Municipality took no
decision on 14 November 2018, was incorrect. It contend ed that, once that was
accepted, the appeal should fail. It is further submit ted that t he lawfulness of the
process in selecting the BBBEE shareholder must be determined in light of the
conditions imposed by the Municipality in the June 2018 decision. It is common cause

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that the M unicipality was not involved in the selection process and on t his ground
alone, the impugned decision was correctly reviewed and set aside. Buhle Waste
further submit ted that the high court exercised a discretion in granting just and
equitable relief and that this Court should not interfere with the exercise of that
discretion.

An internal remedy?
[26] The appellants’ contention that Buhle Waste should have exhausted the
internal remedy contained in s 62(1) of the Municipal Systems Act , can be dealt with
summarily. It has no merit. Section 62 provides, inter alia, that a person whose rights
are affected by a decision taken by a councillor or staff member of a municipality in
terms of a power duly delegated, ‘may appeal against that decision by giving written
notice of the appeal and reasons to the municipal manager within 21 days of the date
of the notification of the decision’.

[27] Section 62(3) provides:
‘The appeal authority must consider the appeal, and confirm, vary or revoke the decision, but
no such variation or revocation of a decision may detract from any rights that may have
accrued as a result of the decision.’

[28] Brain Gear was notified of its selection as the BBBEE shareholder in September
2018 and was aware of this selection when the impugned decision was taken on 14
November 2014. By then , it had already acquired rights as a result of that decision
and any internal remedy would have been ineffective. 3 Moreover, there was no point
in Buhle Waste pursuing an internal remedy,4 given the Municipality’s stance that the
selection of the BBBEE shareholder was the exercise of a contractual power which
‘has nothing to do with any conduct on the part of the municipality’.

Delay
[29] The appellants’ contention that Buhle Waste delayed unreasonably in
launching the review application, likewise, has no merit. Even if there was any delay,

3 Basson v Hugo and Others [2018] ZASCA 1; [2018] 1 All SA 621 (SCA); 2018 (3) SA 46 (SCA) paras
56-57.
4 Koyabe and Others v Minister for Home Affairs and Others [2009] ZACC 23; 2009 (12) BCLR 1192
(CC); 2010 (4) SA 327 (CC) para 45.

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Buhle Waste sought and obtained condonation from the high court. Condonation was
granted, essentially on the grounds that the Municipality and the other parties hindered
Buhle Waste’s requests for information, wh ich ‘actually contributed to the delay’; that
the proceedings were instituted less than two months after the expiry of the 180 days
calculated from 28 November 2018 (when Buhle Waste became aware of the
impugned decision); that , during the two-months period, none of the appellants
claimed that they had suffered prejudice; and that the Municipality’s conduct regarding
the requests for access to information was obstructive and dilatory. And nothing turns
on the fact that Buhle Waste asked for condonation in ‘ an informal prayer’ , as the
appellants put it.

[30] The appellants failed to make out a case that in granting condonation, the high
court failed to exercise its discretion judicially.5 They contended that ‘[t]he Court should
have considered the lack of an adequate explanation for the delay together with the
poor merits of the application and dismissed the application on that basis alone’. This
contention is however unsustainable on the evidence, speci fically in relation to the
prospects of success of the review application, one of the factors to be considered
when deciding whether it is in the interests of justice that any delay should be
condoned.

The impugned decision
[31] The appellants contend tha t no decision was taken by the M unicipality on 14
November 2018, and that Buhle Waste should have reviewed the June 2018 decision.
Therefore, the first issue that must be determined is what, precisely, was decided by
the Municipality on 14 November 2018.

[32] In terms of the June 2018 decision, the Municipality granted conditional consent
for the transfer of shares held by Sembcorp Netherlands to SAWW. That consent was
expressly rendered subject to fulfilment of the conditions. As stated above, the

expressly rendered subject to fulfilment of the conditions. As stated above, the
Municipality’s version is that it finally approved the transfer of shares in Silulumanzi to
SAWW on 14 November 2018. This is admitted by Silulumanzi. It is also admitted by
SAWW, which says that the SPA was subject to approval by the Municipality as

5 TWK Agriculture Holdings (Pty) Ltd v Hoogveld Boerderybeleggings (Pty) Ltd and Others [2023]
ZASCA 63; 2023 (5) SA 163 (SCA) para 13.

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envisaged in clause 7.4.2.1 of the concession agreement; and that the Municipality
‘gave its approval on 14 November 2018’.

[33] It is thus clear from the evidence that the Municipality approved the transfer of
shares and the change in the control of Silul umanzi on 14 November 201 8 – not on
28 June 2018, when it gave conditional consent. The submission by Sembcorp
Netherlands that all that happened in November 2018 was the conclusion of an
agreement confirming that the conditions had been fulfilled, is wron g. It also misses
the point that the change in the control of Silulumanzi could not be approved without
the conditions being fulfilled. That is the complaint by Buhle Waste, and why it brought
an application to review the decision of 14 November 2018.

[34] Thus, the May 2022 order is unaffected by the high court’s order reviewing and
setting aside the impugned decision . As stated in the May 2022 order, the SPA and
the June 2018 decision are valid and enforceable. That must be so, otherwise Buhle
Waste would have no grounds to challenge the decision of 14 November 2018 on the
basis that the Municipality failed to comply with the conditions. In addition to this,
paragraph 1.2 of the May 2022 order makes it clear that the Municipality ‘conditionally
approved and consented’ to the change of control of Silulumanzi. It follows that t he
submission by Sembcorp Netherlands that Buhle Waste ‘attacked the wrong decision’,
is incorrect and there is no inconsistency between the May 2022 order and the high
court’s order reviewing and setting aside the impugned decision.

[35] The next issue is whether the impugned decision constitutes administrative
action. In deciding w hether a decision consti tutes administrative action , the focus is
not on the functionary but the function . Other considerations are the nature of the
power being exercised, its source, its subject matter, whether it involves the exercise

power being exercised, its source, its subject matter, whether it involves the exercise
of a public duty, and how closely it is re lated to the implementation of legislation. 6
Whether a decision is administrative action must be assessed in the light of t he facts
of the case.7

6 President of the Republic of South Africa and Others v South African Rugby Football Union and Others
[1999] ZACC 11; 2000 (1) SA 1; 1999 (10) BCLR 1059 paras 141 and 143.
7 Viking Pony Africa Pumps (Pty) Ltd t/a Tricom Africa v Hydro -Tech Systems (Pty) Ltd and Another
[2010] ZACC 21; 2011 (2) BCLR 207 (CC); 2011 (1) SA 327 (CC) para 37.

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[36] The source and the subject matter of the impugned decision is public law . The
origin of the conditions is the Municipality’s June 2018 decision. Further, Silulumanzi
is a concessionaire under the Water Services Act and, as such, exercises a public
duty. As this Court stated in Umgeni Water v Sembccorp Siza Water (Pty) Ltd and
Others:8
‘. . . Siza is discharging a constitutional obligation resting upon Ilembe in the same manner
and in terms of the same constitutional and statutory obligations as those resting on Ilembe.
. . .
In summary , it performs exactly the same function as every other municipal customer
purchasing bulk water from Umgeni Water. It is like them, a water services provider subject to
the same constitutional and statutory obligations as the municipalit ies. The fact that i t is a
private entity is irrelevant.’

[37] There is no debate that the June 2018 decision constitutes administrative action.
It is a decision by the Municipality, that forms part of the local sphere of government,9
exercising a power in terms of the Constitution or exercising a public power or public
function in terms of legislation, 10 which adversely affected the rights of Sembcorp
Netherlands and Silulumanzi.11 When the Municipality granted conditional consent to
the change of ownership of Silulumanzi, it imposed the conditions, ie that a Mbombela-
based BBBEE shareholder should acquire 28% of the shares in a process overseen
by the Mayor and Acting Municipal Manager; and that the selection should take place
in consultation with the m. In fact, the Municipality state d that, when imposing the
condition that a BBBEE shareholder should acquire 28% of the shares in Silulumanzi,
it was ‘influenced by the provisions of the Broad -Based Black Economic
Empowerment Act 53 of 2003’.

8 Umgeni Water v Sembcorp Siza Water (Pty) Ltd and Others; Minister of Water and Sanitation v

8 Umgeni Water v Sembcorp Siza Water (Pty) Ltd and Others; Minister of Water and Sanitation v
Sembcorp Siza Water (Pty) Ltd and Others [2019] ZASCA 133; [2019] 4 All SA 700 (SCA); 2020 (2) SA
450 (SCA) paras 10 and 46.
9 Section 151(1) of the Constitution.
10 The Municipal Systems Act; the Water Services Act; and the BBBEE Act 53 of 2003.
11 Section 1 of PAJA defines ‘administrative action’ as follows:
“Administrative action” means any decision taken, or any failure to take a decision, by-
(a) an organ of state, when-
(i) exercising a power in terms of the Constitution or a provincial constitution; or
(ii) exercising a public power or performing a public function in terms of any legislation; or
(b) a natural or juristic person, other than an organ of state, when exercising public power or performing
a public function in terms of an empowering provision, which adversely affects the rights of any person
and which has a direct, external legal effect . . ..’; see also Grey’s Marine Houtbay (Pty) Ltd and Others
v Minister of Public Works and Others [2005 ZASCA 43; [2005] 3 All SA 33 (SCA); 2005 (6) SA 313
(SCA); 2005 (10) BCLR 931 (SCA) para 21-24.

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[38] It follows that if the imposition of the conditions constitutes administrative action,
then a decision as to whether those conditions have been fulfilled, cannot be anything
other than administrative action. The appellants’ submission that the imposition of the
condition that a BBBEE shareholder be selected is a contractual matter, is also
incorrect. Further, it is at odds with their contention that Buhle Waste should have
reviewed the June 2018 decision – the appellants acknowledge that the imposition of
the conditions is administrative action and not the exercise of a contractual power.

The review grounds
[39] The review grounds can be dealt with briefly. In terms of the conditions,
although the selection process had to be administered by SAWW and Silulumanzi, the
Municipality, represented by the Mayor and the Acting Municipal Manager, was
required to oversee the process; and the selection had to be done in consultation with
the Municipality’s representatives.

[40] However, the Municipality’s representatives were not involved in the selection
process at all. In the Municipality’s answering affidavit made by Mr Mojaki Mosala, its
Senior Manager, Legal Services, he states:
‘. . . I must immediately point out that the municipality did not in any way, either directly or
indirectly, influence the appointment of the eventual successful local partner, Brain Gear. The
entire process was conducted by PwC at the instance and behest of Silulumanzi.
. . .
The Municipality did not take part in the RFP [request for proposal] processes, including the
selection and appointment of Brain Gear.’ (Emphasis added.)

[41] In their answering affidavit, Silulumanzi, SAWW and Sembcorp SA state:
‘It is correct that the report prepared by PwC was not given to the Municipality. As set out in
the letter by SAWW to the Municipality dated 16 July 2018 as well as the minutes of the
steering committee, the choice of the BBBEE partner was within the sole and absolute

steering committee, the choice of the BBBEE partner was within the sole and absolute
discretion of SAWW’. (Emphasis added.)

[42] Nothing could be clearer. The Municipality played no part in the selection
process; neither was it consulted when Brain Gear was selected as the BBBEE
shareholder. Consultation was both necessary an d important. As was stated by the

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Court of Appeal in R (MP) v Secretary of State for Health and Social Care,12 approved
by this Court in Independent Regulatory Board for Auditors:13
‘“[C]onsultation must be undertaken at a time when proposals are still at a formative stage; it
must include sufficient reasons for particular proposals to allow those consulted to give
intelligent consideration and an intelligent response; adequate time must be given for this
purpose, and the product of consultation must be conscientiously taken into account when the
ultimate decision is taken”.’

[42] The high court was thus correct in holding that the Municipality had abandoned
its duty to oversee the selection process. The Municipality played no role in that
process. The letter dated 19 September 2018, advising of the selection of Brain Gear
as the BBBEE shareholder, and purportedly confirming that SAWW and Silulumanzi
had complied with the conditions, was presented to the Municipality as a fait accompli.
Consequently, the impugned decision, in terms of which the Municipal Manager, acting
on behalf of the Municipality, purportedly confirmed: (a) that Silulumanzi, to the
satisfaction of the Municipality, had selected a local BBBEE shareholder; and (b) that
the conditions had been fulfilled, is unlawful and invalid.

[43] What is more, the Municipality misconceived its own decision of 28 June 2018
and acted in complete disregard of the conditions it had imposed. In the answering
affidavit Mr Mosala states:
‘It is evident from Buhle Waste’s papers, this answering affidavit and a record of these
proceedings that this matter involves a private contractual sale of shares which has nothing to
do with any conduct on the part of the municipality. . .’
and
‘[T]his application stands to be dismissed with costs as there is no administrative action to be
reviewed and set aside.’

[44] It goes without saying that, if the Municipality was not involved in the selection

[44] It goes without saying that, if the Municipality was not involved in the selection
process at all, then the selection of Brain Gear as the 28% locally based BBBEE
shareholder, was not made in consultation with the Municipality’s representatives.
Indeed, that is the Municipality’s version. Again, on this ground, the high court cannot

12 R (MP) v Secretary of State for Health and Social Care [2020] EWCA Civ 1634 para 29.
13 Independent Regulatory Board for Auditors and Others v East Rand Member District of Chartered
Accountants and Others [2024] ZASCA 114; [2024] 4 All SA 23 (SCA) para 83.

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be faulted.

[45] The high court also rightly found that Brain Gear did not qualify for selection as
the BBBEE shareholder because it had no experience nor any track record in the
provision of water services. It was a shelf company purchased by Mr Mabuza and Mr
Shongwe, solely ‘for the purpose of bidding for the shares in Silulumanzi’. Despite this,
Brain Gear was described in the selection process as an ‘existing operator in the water
sector’ and that it has ‘strong technical knowledge and experience in the water sector’.
These alleged qualities were attributed to Brain Gear by Mr Shongwe, the Chairperson
of the Board of Directors of Silulumanzi and Mr Mabuza, the Head of Economic
Relations of Silulumanz i. Their personal interests in Brain Gear were plainly
incompatible with those of Silulumanzi, which, according to the PwC report, had
engaged in the selection process with the following objective:
‘. . . to manage the end -to-end process in a transparent manner and objectively adjudicate
identified participants which would lead to the selection of the most suitable final participant to
conclude the final transaction’. (Emphasis added.)

[46] Buhle Waste therefore established that the impugned decision is unreasonable:
no reasonable person could have approved the sale of shares in Silulumanzi without
compliance with the conditions. The Municipality misconceived the nature and effect
of its own decision of 28 June 2018 and thus erred on the facts and the law. The
impugned decision is not rationally connected to the purpose for which it was taken ,
the information before the Municipality , and the reasons given for the decision.
Additionally, the Municipality ignored relevant considerati ons and took into account
irrelevant ones. The high court correctly reviewed and set aside the impugned
decision.

[47] What remains is the relief granted by the high court, apart from the order
reviewing and setting aside the impugned decision and the costs order . The parties

reviewing and setting aside the impugned decision and the costs order . The parties
conceded that the following orders are unnecessary or tautologous: the declaratory
order that the conditions have not been fulfilled; the order suspending the impugned
decision, pending the taking of a new decision; and the order that the Municipality
must take into account what is stated in the high court’s judgment when taking the new
decision. The parties further conceded that the order that a fresh decision must be

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taken by a certain date and that it should be filed with the registrar is likewise
unnecessary. Accordingly, the unnecessary orders will be set aside.

[48] In the result the following order issues:
1 The appeal is upheld in part.
2 Paragraphs 118.3 to 118.7 of the order of the high court are set aside.
3 Save as aforesaid, the appeal is dismissed with costs, including the costs of two
counsel where so employed.

___________________________
BC MOCUMIE
JUDGE OF APPEAL

__________________________
A SCHIPPERS
JUDGE OF APPEAL

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Appearances

For the first appellant: J Whitaker
Instructed by: Van der Schyff and Associates Inc,
Cape Town
Webbers Attorneys, Bloemfontein

For the second appellant: R Stelzner SC with D Van Reenen
Instructed by: Van der Schyff and Associates Inc,
Cape Town
Webbers Attorneys, Bloemfontein

For the third appellant: K Hofmeyr with M Salukazama
Instructed by: Norton Rose Fullbright South Africa
Inc, Johannesburg
Webbers Attorneys, Bloemfontein

For the first respondent: J G Wasserman SC with S Tshikila
Instructed by: Malatji and Co Attorneys,
Johannesburg
Phatshoane Henney Inc,
Bloemfontein.