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IN THE HIGH COURT OF SOUTH AFRICA
FREE ST ATE DIVISION, BLOEMFONTEIN
In the matter between:
RURAL MAINTENANCE (PTY) LTD
RURAL MAINTENANCE FREE STATE (PTY) LTD
And
MINISTER OF FINANCE
MUNICIPAL FINANCIAL RECOVERY SERVICE
MINISTER OF COOPERATIVE GOVERNANCE
AND TRADITIONAL AFFAIRS
MEC FOR FINANCE, FREE STATE
MAFUBE LOCAL MUNICIPALITY
AUDITOR-GENERAL
Not Reportable I Reportable
Case No : 6068/2023
1 ST APPLICANT
2ND APPLICANT
1sr RESPONDENT
2ND RESPONDENT
3RD RESPONDENT
4TH RESPONDENT
5TH RESPONDENT
61H RESPONDENT
MINISTER OF COOPERATIVE GOVERNANCE AND
TRADITIONAL AFFAIRS, FREE STATE
PREMIER, FREE STATE
FREE ST ATE LOCAL GOVERNMENT ASSOCIATION
MAFUBE BUSINESS FORUM NPC
AFRIFORUM NPC
7TH RESPONDENT
am RESPONDENT
9TH RESPONDENT
10TH RESPONDENT
11TH RESPONDENT
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Neutral citation: Rural Maintenance (Pty) Ltd and Another v Minister of Finance and
10 Others (606812023)
Coram: Daniso, J
Heard: 05 September 2024
Delivered: This judgment was handed down electronically by circulation to the
parties' representatives by email and released to SAFLII. The date
and time of hand down is deemed to be at 16h00 on 30 December
2024. A hard copy has been placed in the pigeonholes of the legal
representatives of the parties.
Summary: Rule 53 (1 )(b) of the Uniform Rules -whether an obligation to produce
a record under rule 53 only arises once review jurisdiction has been
established by the party seeking to compel the production of a
record. Principle restated.
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ORDER
(1) The first and second respondents are directed to dispatch to the Registrar of this
court the record and reasons of the financial recovery plan sought to be reviewed
within ten days from the date of this order and to notify the applicants once they
have done so.
(2) The first, second and fifth respondents are ordered to pay the costs of this
application, including the costs of two counsel on Scale C, jointly and severally.
JUDGMENT
Daniso, J
[1] On 15 December 2011 the applicants (Rural), and the fifth respondent (the
municipality) concluded a contract in terms of which the municipality outsources
its electricity supply services to Ru ral for a fixed period of 25 years. At all material
times hereto, the municipality was beset with ongoing financial challenges which
impacted negatively on its ability to meet its financial commitments and to provide
the basic services to the inhabitants with result that on 28 April 2022, the tenth
and eleventh respondents obtained an order against the fifth respondent for the
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imposition of a mandatory financial recovery plan on the fifth respondent to
obviate its financial crisis as provided for in s139 (5) (a) of the Constitution.1
[2] Section 139 (5) (a) of the Constitution read with ss139 to 142 of the Local
Government: Municipal Finance Management Act (the MFMA) 2 permits the
provincial executive to intervene in the municipality's financial woes by requesting
the National Treasury-consisting of the first and second respondents3 to develop
a financial recovery plan detailing recommendations to ensure the municipality's
financial viability and ability to provide basic services to its inhabitants. In this
case, the National Treasury provided the requested financial recovery plan in
August 2023 and one of the intervention measures proposed to assist the
municipality in obviating its financial crisis is the re-assessment of the legality and
regularity of the contract concluded by Rural and the municipality including its
cancellation if the contract is found not to be in compliance with the relevant
policies, regulations and national legislation. The municipality passed a resolution
to implement the financial recovery plan on 5 September 2024.
[3] Aggrieved with the recommendations proposed in the financial recovery plan,
Rural launched review proceedings (the main application) in this court for the
review and setting aside of both the financial recovery plan and its implementation
by the municipality on the basis of unlawfulness and invalidity.
[4] In these proceedings, Rural initially sought an order compelling both the
municipality and National Treasury to produce the records and reasons of the
proceedings relating to the financial recovery plan and the resolution for its
implementation as contemplated in rule 53 (1) (b) of the Uniform Rules of Court.
1 Constitution of the Republic of South Africa, 1996.
2 Local Governmen t: Muni cipal Finance M anagement Act 56 of 2003.
3 Ss 5 and 157 supra at fn 2.
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[5] The municipality has since complied as a result, the only relief sought against it
is that of costs. National Treasury insists that it is not obliged to provide the
requested records as the recovery plan is not reviewable either under the
Promotion of Administrative Justice Act (PAJA)4 or the principle of legality.
[6] Rule 53 provides thus:
"Reviews
(1) Save where any law otherwise provides, all proceedings to bring under review the decision
or proceedings of any inferior court and of any tribunal, board or officer performing judicial,
quasi-judicial or administrative functions shall be by way of notice of motion directed and
delivered by the party seeking to review such decision or proceedings to the magistrate,
presiding officer or chairperson of the court, tribunal or board or to the officer, as the case may
be, and to all other parties affected-
(a) calling upon such persons to show cause why such decision or proceedings
should not be reviewed and corrected or set aside, and
(b) calling upon the magistrate, presiding officer, chairperson or officer, as the case
may be, to despatch, within 15 days after receipt of the notice of motion, to the
registrar the record of such proceedings sought to be corrected or set aside,
together with such reasons as he or she is by law required or desires to give or
make, and to notify the applicant that he or she has done so."
[7] According to Rural, rule 53 (1)(b) entitles it to the requested record not only to
able to formulate the grounds of review as provided for in s6 of PAJA but for the
court in the main application to be able to assess the legality of the impugned
decision. Despite having made an undertaking to provide the record by 31
4 Act 3 of 2000.
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January 2024, ultimately on 14 February 2024 after numerous requests for
extensions, National Treasury reneged on its undertakings and refused to provide
the requested record citing non-reviewability of the impugned decision.
[8] Rural submits that National Treasury's grounds for refusing to provide the record
is inapt as it will require the court to venture into the merits of the main application ,
whereas, the issue of the reviewability of the impugned recovery plan ought to be
determined at the main application not at this interlocutory stage of the
proceedings. That aside, the impugned recovery plan is certainly a decision
reviewable under PAJA as the definition of a decision in PAJA includes a
proposed decision, in terms of s139(5) (a) (ii) of the Constitution read with ss
146(1) and (2) of the MFMA the financial recovery plan is mandatory, the
municipality is obliged to implement the financial recovery plan and the proposed
intervention materially affects Rural's rights as it is aimed at the re-assessment
and termination of its contract. The refusal by National Treasury to provide the
record constitutes an infringement of Rural's constitutional right to access to the
forming the subject matter of the review and to have Rural's dispute resolved in
a fair public hearing.5 The application must therefore succeed with costs of two
counsel on scale C.
[9] In sum, the gravamen of National Treasury's opposition against the relief sought
by Rural is embodied in its rule 6(5)(d)(iii) notice which raises the following
questions of law:
"1. Whether the "financial recovery plan" made by the First and
Second National Treasury is capable of "being reviewed and set
aside" pursuant to "the provisions of s139(5) of the Constitution of the
Republic of South Africa, 1996, read with ss139 to 143 of the Local
5 Ss 32 and 34 of the Constitution.
Government Municipal Finance Management Act 56 of 2003"?
2. Pursuant to question 2 {sic), above, whether.
2. 1. Section 139(5) of the Constitution applies to the First and/or
Second National Treasury, absent the jurisdictional
prerequisite of section 139(7) of the Constitution being
present;
2.2. Sections 139 to 143 of the Local Government Municipal Finance
Management Act, 56 of 2003: -
2.2.1. applies to the First and/or Second National
Treasury to the extent that the "financial recovery
plan" does not constitute a "decision" capable of
review; and/or
2.2.2. the First and/or Second National Treasury are the
relevant "decision-maker" for the purpose of the
review?
2.3. the "matter" {mentioned in paragraph 3 of the amended notice of
motion) can, ought, could, or should be "remitted to the first and
second National Treasury for the financial recovery plan to be
redrawn"?
3. Pursuant to questions 1 and 2, above, and question 2.3.2. in particular,
whether the First and/or Second National Treasury are, consequently,
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obliged to disclose the "record of decision" in terms of the Uniform Rules
of Court - Rule 53."
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[10) According to National Treasury, the relief sought by Rural would be incompetent
as the impugned decision is merely a recommendation and not a decision thus
not capable of being reviewed under PAJA or the principle of legality.
Furthermore, National Treasury is not the relevant decision maker in the context
of review. The first respondent should not have been cited in these proceedings
as he merely plays a supervising role in the intervention process therefore, he
cannot be compelled to produce a record which is not his and the second
respondent's role was merely to produce the financial recovery plan. Rural hopes
that the reasons will fill in the gaps in their case, based on these reasons, National
Treasury contends that the application must be dismissed with costs and the
questions of law be upheld with costs on scale C.
[11] National Treasury has delivered an unmeritorious opposition to Rural's case. As
correctly pointed out by counsel for Rural, rule 53(1)(b) proceedinQS are not
intended to be a mechanism for determining the reviewability of an impugned
decision, that is a matter for the main application. The law is trite on this aspect.
In Murray and Others NNO v Ntombela and Others6 the SCA held that:
"[14 J ... this Court - as was the high court -is not at this stage called upon to enter
into the substantive merits of the review proceedings. Rather, what this Court is
seized with is the interlocutory application brought by the respondents (as
applicants) for an order directing the liquidators (as respondents) to provide them
with the record of their decision ... "
"[27) ... the fact that the respondents' review application may well be manifestly
doomed to failure because the relief sought therein is legally untenable matters
not at this stage. That issue will be ripe for determination only when the time
comes for the substantive merits of the review itself to be considered. What we
6 (729/2022) (2024) ZASCA 24 (14 March 2024) para 14
are concerned with at this stage of the proceedings, is solely the respondents'
entitlement, as of right, to the record evidencing the decision taken ... "
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[12] I am thus of the view that the above sums up the issue of contention between the
parties and confirms that Rural's entitlement to receive the record in terms of rule
53(1)(b) does not only arise once it is established as a jurisdictional fact, that the
proceedings sought to be reviewed are reviewable.
[13] Regarding National Treasury's contention that the reasons are sought in order to
fill in the gaps in Rural's case, I hold the view that it is indeed the purpose of rule
53 (1)(b). As stated in Helen Suzman Foundation v Judicial Service Commission,7
the record is intended to enable an applicant to interrogate the lawfulness of
decision sought to be reviewed, assess its options whether to advance its case
and, if so inclined, to amend its notice of motion and supplement its grounds for
review or even abandon it.8 In the result, I am of the view that a proper case has
been made out for the granting of the order sought by Rural. The application
succeeds.
Costs
[14] There is no reason why the costs should not follow the result Counsel for Rural
and National Treasury argued for costs on scale C, clearly taking into account the
importance, complexity of the matter and either party's conduct and how it shaped
these proceedings. Having regard to the scant basis of opposition, I am also of the
7 2018 (4) SA 1 (CC) para 13.
8 See also Bridon International GMBH v International Trade Administration Commission (2012) ZASCA 82; 2013 (3)
SA 197 (SCA) at para 31.
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view that the costs of two counsel on scale C is warranted under these
circumstances.
[15] Inexplicably, despite not having opposed the application counsel for the
municipality rose to oppose the award of costs on scale C on the grounds that the
application was unopposed therefore the costs should be ordered on a party and
party scale. I do not agree as on the facts germane to this matter, Rural had to
launch an application to compel the municipality to provide the record and no
reasons have been provided for failing to do so timeously.
Order
[16] In the premises, I make the following order:
(1) The first and second respondents are directed to dispatch the record and
reasons of the financial recovery plan sought to be reviewed to the Registrar
of this court within ten days from the date of this order and to notify the
applicants once they have done so.
(2) The first, second and fifth respondents are ordered to pay the costs of this
application, including the costs of two counsel on Scale C , jointly and
severally.
APPEARANCES
Counsel on behalf of the applicants:
Instructed by:
Counsel on behalf of the 1st and 2nd respondents:
Instructed by:
Adv EC Labuschagne SC with
Adv EJJ Nel
Shepstone & Wylie Attorneys,
C/O Symington De Kok
BLOEMFONTEIN
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Email: deidre.venter@wylie.co.za
Adv K Premhid
State Attorney, PRETORIA
C/O State Attorney
BLOEMFONTEIN