THE LABOUR APPEAL COURT OF SOUTH AFRICA, GQEBERHA

Reportable
Case No: PA 01/2024
In the matter between:
M.C MANANA Appellant

And
KING SABATA DALINDYEBO LOCAL
MUNICIPALITY Respondent
Heard: 25 February 2025
Delivered: 7 May 2025
Coram: Van Niekerk JA, Nkutha- Nkontwana JA, and Mooki AJA
Summary: Section 158(1)(c) of the Labour Relations Act – enforcing a
settlement agreement – failure to prove authority to bind the Municipality –
legality implicated – invocation of ostensible authority untenable.


JUDGMENT

2

NKUTHA -NKONTWANA, JA

[1] This appeal is with the leave of the Labour Court and concerns a claim by the
appellant (Mr Manana) to enforce a settlement agreement against the respondent (the
Municipality ) by making it an order of the court in terms of s 158(1)(c) of the Labour
Relations Act1 (LRA) . Mr Manana invoked the principle of ostensible authority to resist
the Municipality’s defence that Mr Simlindile Nodo (Mr Nodo), the official who signed the
settlement agreement , lacked the requisite authority . The Labour Court dismissed Mr
Manana’s claim on the basis that ostensible authority cannot be imputed to an official of
the organ of state because the source of their authority can only come from the proper delegation of statutory powers to such a functionary.
[2] There is not much controversy concerning the factual matrix in this matter. Mr
Manana referred an unfair discrimination dispute to the CCMA , challenging the
inequitable implementation of the TASK evaluation job grading collective agreement
(TASK agreement). Th e dispute was amicably resolved through a settlement agreement
in which the Municipality undertook to pay some outstanding amount s due to Mr
Manana in terms of the TASK agreement .
[3] The Municipality failed to honour its obligations in terms of the settlement
agreement . Mr Manana sought to enforce the settlement agreement through a section
158(1)(c) application that served before the Labour Court. He contended that Mr Nodo,
the Director: Corporate Services, professed to have been duly authorised to settle the
dispute on behalf of the Municipality . Alternatively, Mr Manana contended that Mr Nodo
had actual authority derived from the Municipal Manager’s delegated authority to enter
into settlement agreements on behalf of the Municipality , which he alleged was duly
sub-delegated to Mr Nodo. The Municipality successfully opposed the application on the
basis that Mr Nodo lacked the requisite authority to conclude the settlement agreement .


1 Act 66 of 1995, as amended.
3

[4] At the heart of the matter is whether the Municipality is bound by the settlement
agreement based on the principle of ostensible authority or, as phrased by the Labour
Court, ‘ whether the municipality can be estopped from denying Mr. Nodo's authority
because of the principle of ostensible authority ’.

[5] The Labour Court found, on the strength of Merifon (Pty) Ltd v Great Letaba
Municipality and Another2 (Merifon ) that, unlike in the case of private individuals or
entities , the principle of ostensible authority cannot be successfully invoked in
instances , as in the present case, involving actions of state organs creat ing an
impression that a representative has authority to act on their behalf.
[6] In this Court , Mr Manana contends that the Labour Court erred in failing to
appreciate that the principles of ostensible authority and estoppel do apply to organs of
state insofar as the second category referred to in City of Tshwane Metropolitan
Municipality v RPM Bricks (Pty) Ltd
3 (RPM Bricks ) and quoted with approval in Merifon .
Mr Manana further contends that his case falls within the second category referred to in
RPM Bricks , and the Municipality should be estopped from denying that Mr Nodo had
ostensible authority .
[7] Conversely, the Municipality contends that the invocation of ostensible authority
in the present case is untenable as Mr N odo was not amply clothed with authority in
terms of section 59 of the Local Government: Municipal Systems Act
4 (Systems Act) .
Section 59 provides:
‘(1) A municipal council must develop a system of delegation that will
maximise administrative and operational efficiency and provide for adequate checks and balances, and, in accordance with that system, may -
(a) delegate appropriate powers, excluding a power mentioned in section 160
(2) of the Constitution and the power to set tariffs, to decide to enter into a

2 2022 (9) BCLR 1090 (CC) (Merifon ).
3 City of Tshwane Metropolitan Municipality v RPM Bricks Proprietary Ltd 2008 (3) SA 1 (SCA) (RPM
Bricks) .
4 Act 32 of 2000, as amended.
4

service delivery agreement in terms of section 76 (b) and to approve or amend
the Municipality's integrated development plan, to any of the Municipality's other political structures, political office bearers, councillors, or staff members;
(b) instruct any such political structure, political office bearer, councillor, or
staff member to perform any of the Municipality's duties; and (c) withdraw any delegation or instruction.
(2) A delegation or instruction in terms of subsection (1) –
(a) must not conflict with the Constitution, this Act or the Municipal Structures
Act;
(b) must be in writing;
(c) is subject to any limitations, conditions and directions the municipal
council may impose;
(d) may include the power to sub- delegate a delegated power;
(e) does not divest the council of the responsibility concerning the exercise of
the power or the performance of the duty; and (f) must be reviewed when a new council is elected or, if it is a district 39
council, elected and appointed.
(3) …
(4) Any delegation or sub -delegation to a staff member of a power conferred
on a municipal manager must be approved by the municipal council in
accordance with the system of delegation referred to in subsection (1). ’
(emphasis added)
[8] Therefore, the Municipality contends that this case falls within the first category
referred to in RPM Bricks , as correctly found by the Labour Court . In RPM Bricks , the
Supreme Court of Appeal explicitly distinguished between the two ‘categories’ of cases
involving the exercise of power by the state functionaries . The first category pertains to
an act beyond or in excess of the legal powers of a public authority . In contrast, the
second category pertains to the irregular or informal exercise of power granted.
5
Expounding on these categories , the court made the following observation:

5 RPM Bricks above fn 3 at para 11.
5

‘[12] In the second category, persons contracting in good faith with a statutory
body or its agents are not bound, in the absence of knowledge to the contrary, to
enquire whether the relevant internal arrangements or formalities have been satisfied , but are entitled to assume that all the necessary arrangements or
formalities have indeed been complied with... Such persons may then rely on
estoppel if the defence raised is that the relevant internal arrangements or formalities were not complied with.
[13] As to the first category: failure by a statutory body to comply with
provisions which the legislature has prescribed for the validity of a specified transaction cannot be remedied by estoppel because that would give validity to a transaction which is unlawful and therefore ultra vires …’

[9] In Merifon, the Constitutional Court endorsed the dictum in RPM Bricks per the
first category that when the principle of legality is manifestly implicated, estoppel cannot be upheld as it would be tantamount to a court sanctioning an illegality.
6 In that matter,
the sale agreement the applicant sought to enforce was found to be unenforceable for
want of compliance with peremptory provisions of s 19 of the Local Government:
Municipal Finance Management Act.7
[10] While I accept that both Merifon and RPM Bricks dealt with the invocation of
estoppel, they apply in this case by parity of reasoning because of the l egality principle.
I also do not deem it imperative that I traverse the etymological perspective of the variation between estoppel and ostensible authority expounded by the Constitutional Court in Makate v Vodacom (Pty) Ltd
8 (Makate ). That is so because, to the extent that
this matter implicates the principle of legality, Makate finds no application in the present
instance. In Makate, the Constitutional Court upheld ostensible authority, defined as ‘the authority of an agent as it appears to others’, in the context of an agreement between an individual and a private company. Therefore, it is not helpful for Mr Manana to rely on Makate.

6 Merifon above fn 2 at para 27- 28.
7 Act 56 of 2003.
8 2016 (6) BCLR 709 (CC) (Makate).
6


[11] Mr Manana asserts in his founding affidavit that Mr Nodo professed to have the
requisite authority to conclude the settlement agreement. Mr Nodo, however, disavowed that he had the authority to settle the dispute and made the following assertions in his confirmatory affidavit that:

‘… I confirm that no authority from the Council of the respondent existed for the signing of the settlement agreement I signed. I was under the wrong impression that I could sign on behalf of the respondent. Given the absence of a delegation or a Council Resolution for signing the settlement agreement, I now notice that I was not supposed to sign.’

[12] In reply, Mr Manana referred to the Municipality’s delegation of authority protocol
adopted in terms of s 59(1), which states, inter alia, that the Municipal Manager has a delegated authority to litigate and conclude settlement agreements on behalf of the Municipality, which he, in turn, could sub- delegate.
[13] Mr Manana’s counsel, realising the hurdle of proving that Mr Nodo had sub-
delegat ed authority , submitted that, while a delegation of authority by the Municipality to
the Municipal Manager in terms of s 5 9 had to be in writing, that requirement does not
apply to the sub- delegation of authority by the Municipal Manager . This construction of s
59 is untenable and, if accepted, would lead to insensible or unbusinesslike results or
fundamentally undermine the apparent purpose of the legislation.
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[14] It is apparent from s 59(2)(a) and (d) that the requirement that a delegation of
authority must be in writing extends to sub- delegation of authority. Moreover, as
correctly pointed out by counsel for the Municipality, s 59(4) enjoins the municipal
council to approve any sub- delegation to a staff member of an authority conferred on a
Municipal Manager.


9 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) at para 18.
7

[15] It follows that , absent proof that the municipal council had approved the sub-
delegation of the Municipal Manager’s authority to settle disputes, Mr Nodo could not
give himself such authority unilaterally . It is well accepted that w henever the principle of
legality is implicated , an agent who seeks to act on behalf of the organ of state ,
pertinently a local government , must be specifically authorised. This notion was
highlighted by the Constitutional Court in Fedsure Life Assurance Ltd and Others v
Greater Johannesburg Transitional Metropolitan Council and Others10 where it was
stated: ‘[A] local government may only act within the powers lawfully conferred upon it.
There is nothing startling in this proposition - it is a fundamental principle of the
rule of law, recognised widely, that the exercise of public power is only legitimate where lawful. The rule of law - to the extent at least that it expresses this principle
of legality - is generally understood to be a fundamental principle of constitutional
law.’
11
[16] The peremptory provisions of s 59 regulate the delegation of authority and have
established the boundaries beyond which the Municipality may not venture. The system
of delegation of authority in a local government is not gratuitous. Still, it ensures that
appropriate checks and balances are in place to prevent abuse of power and to ensure
that decisions are made within the bounds of the law . Mr Nodo's conduct in concluding
the settlement agreement on behalf of the Municipality is at variance with the injunctions of s 59. It is therefore apparent that the invocation of ostensible authority is untenable,
as what Mr Manana seeks, if granted, would amount to sanctioning illegality .
12

[17] Understood within the context of the finding I have arrived at above, the Labour
Court correctly found that the invocation of ostensible authority against public
functionaries cannot be upheld where the impugned authority is regulated by legislation
and exercised ultra vires its provisions. Otherwise stated, where the principle of legality

10 1999 (1) SA 374 (CC) .
11 Ibid at para 56.
12 Merifon above fn 2 at para 26 and 29.
8

is implicated, the invocation of ostensible authority is untenable on the strength of the
first category referred to in RPM Bricks .
[18] The last issue pertains to costs. The Labour Court awarded costs against the
Municipality, the successful party. It furnished plausible reasons for deviating from the general rule applicable in labour matters that, ordinarily, costs do not follow the result. In short, the Labour Court expressed displeasure with how the Municipality treated Mr Manana. However, it was not convinced that punitive costs were warranted. In this
Court, Mr Manana impugns the Labour Court’s decision not to award punitive costs. In my view, this impugn ing is devoid of merit. There is accordingly no reason for this Court
to interfere with the judicially exercised discretion by the Labour Court .

[19] Insofar as costs in this Court are concerned, there is no exceptional
consideration to justify a departure from the general rule that costs do not follow the result in labour matters.
[20] In all the circumstances, I make the following order:

Order
1. The appeal is dismissed.
2. There is no order as to costs.

P Nkutha -Nkontwana
Van Niekerk JA and Moo ki AJA concur.

Appearances
For the A ppellant : Adv M Simoyi SC
Instructed by : B Mwelase Attorneys
For the R espondent : Adv M Gwala SC
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Instructed by : Jolwana Mgidlana Inc