Knysna Municipality v Grey Elephant Investments (Pty) Ltd (2025/071001) [2026] ZAWCHC 336 (24 June 2026)

IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
JUDGMENT
Case number no: 2025-071001
In the matter between:
KNYSNA MUNICIPALITY Applicant
and
GREY ELEPHANT INVESTMENTS (PTY) LTD Respondent
Coram : Nziweni, J
Heard : 26 November 2025 (virtually)
Delivered : 24 June 2026 (electronically)
Summary : Constitutional and administrative law - public procurement - deviation
from procurement prescripts - legality review - self -review by organ of state -
unreasonable delay-whether delay can be condoned - remedies - just and equitable
relief under s 172(1)(b) of Constitution - order of payment to lessor affected by
unlawful decision - evidence - proof of complicity - allegations of collusive or unlawful
conduct requires more - suspicion and conjecture insufficient to establish complicity.

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ORDER
1 . The Municipal Council resolution dated 26 October 2023, to approve the
conclusion of a lease agreement with the Respondent without undertaking a
competitive and open tender process ("the impugned resolution") is declared
unconstitutional, unlawful and invalid.
2. The conclusion of the lease agreement between the Applicant and the
Respondent on 12 December 2023 and the resultant lease agreement ("the
impugned lease agreement") is declared unconstitutional, unlawful and invalid.
3. The impugned resolution and the impugned lease agreement are reviewed and
set aside.
4. It is just and equitable that the Applicant be ordered to pay unpaid rental
amounts and consumption charges for its period of occupation commencing on
1 May 2024 and ceasing on 31 July 2025.
4.1. The unpaid rental amounts are to be calculated on 1268 square metres,
the actual space occupied by the Applicant during the period of its
occupation. The exact quantum is to be calculated by the Respondent.
Failing agreement between the parties on the final amount within 14
days of this order, the quantum shall be determined by an independent
auditor or referee jointly appointed by the parties, or, failing such
agreement on the appointment, by the Chairperson of the South African
Institute of Chartered Accountants (SAICA), whose determination shall
be final and binding, with the costs of such referee to be borne equally
by the parties.
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4.2. Consumption charges (water and electricity) are to be calculated on the
Applicant's actual consumption during the period of its occupation . On
this basis, the sum of the consumption charges is an amount calculated
and proven by the Respondent.
4.3. Interest on the unpaid rental amounts and consumption charges shall
be calculated at the rate prescribed in section 1 of the Prescribed Rate
of Interest Act 55 of 1975 from date of judgment to the date of payment.
4.4. The Applicant shall pay the unpaid tenant installation costs as
calculated by the Respondent. Failing agreement between the parties
on the final amount within 14 days of this order, the quantum shall be
determined by an independent quantity surveyor jointly appointed by the
parties, or, failing agreement on the appointment, by the President of
the Association of South African Quantity Surveyors (ASAQS), whose
determination shall be final and binding;
4.5. The Applicant to pay the costs of the application on scale C, which costs
include the costs of two counsel, one of whom is senior counsel.
JUDGMENT DELIVERED ELECTRONICALLY
Nziweni, J
Introduction and factual background
[1] At the outset it should be stated that this case is deeply troubling. Particularly, for a
nation that is built upon a rule of law and a Constitutional democracy. Regrettably, it
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reflects a persistent systemic notable malady. Our case law spanning from the High
Court to the Apex Court is replete with similar instances. Despite this established
jurisprudence, self-correction reviews, more so, those initiated by municipalities,
continue unabated. Judicial review cannot become a routine mechanism to clean up
the administrative messes of government institutions. Organs of State and public
officials must instead model the highest standards of ethics, accountability, and legal
compliance in the execution of their duties.
[2] Be that as it may, this application has its genesis from a resolution by the applicant's
Council, that approved a lease agreement between the applicant and the respondent.
In doing so, the Council bypassed the mandatory procurement process.
[3] The application is instituted under the doctrine of legality, wherein the applicant
("the Municipality") seeks a corrective action, by way of self-review, in respect of
resolution and an agreement. The respondent's ("Grey Elephant") opposition rests on
two distinct strands yet interrelated. The first strand of opposition is on merits and the
second one is on the time it took to bring this application.
[4] The Municipality seeks that the Municipal Council's resolution taken on 26 October
2023, to approve the conclusion of a lease agreement with Grey Elephant, without
undertaking a competitive and open tender process ("the impugned resolution") be
declared unconstitutional, unlawful and invalid.
[5] The Municipality also seeks that the conclusion of the lease agreement between
the Municipality and Grey Elephant, on 12 December 2023 and the resultant lease
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agreement ("the impugned lease agreement") be reviewed and set aside
retrospectively.
[6] The impugned lease agreement relates to 3250m2 of office space for a monthly
rental of R546 000. 00, at a rate of R168/m2• which compromises a base rental of
R120/m2 and a tenant installation cost of R48/m2•
[7] The Municipality asserts that by bringing this application, it discharges and fulfils
its constitutional duty to undo its own incorrect decisions and to vindicate the rule of
law since the impugned decisions are unlawful. The Municipality also maintains that
they are bringing the application in the interest of residents and ratepayers of Knysna,
the public interest and its own interest.
[8] The legality of the impugned lease agreement is also the subject of an investigation
by the office of the Public Protector. The complaint to the Public Protector was lodged
by Ms Julie Seton, acting on behalf of Action SA, on 12 December 2023.
[9] Grey Elephant Investment is a private company with limited liability, with its
principal place of business based in Knysna Mall.
[1 O] It is not in dispute that the services have been rendered by Grey Elephant by
providing office space to the Municipality, in terms of the impugned lease agreement.
It is common cause that the Municipality has not paid any rental to Grey Elephant. The
Municipality asserts that; in terms of the Municipal Finance Management Act 56 of
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2023 ("MFA"), they are not allowed to pay rental and other charges stemming from an
unlawful lease agreement, as this would constitute an irregular expenditure.
[11] The Municipality vacated the leased premises [at Knysna Mall] on 31 July 2025.
[12] Following the delivery of the replying affidavit, Grey Elephant's director, Mr Lurie
("Lurie"), applied to file a supplementary affidavit. In their response to Grey Elephant's
answering affidavit, the Municipality stated that they do not object to the admission of
the supplementary affidavit. As the application was not opposed, the court has
admitted these additional affidavits into the record.
[13] The lease period was to be a period of three years, starting on 01 March 2024
and terminating on 28 February 2027. The addendum to the lease agreement reflects
the amended period of the lease as starting from 01 May 2024 and terminating on 30
April 2027. The monthly rental was to be an amount of R 546 000,00. The leased
premises was to be office space in the Knysna Mall.
[14] The Municipality is seeking the review based on the following grounds:
a. the deviation procedure was not lawfully authorised;
b. the impugned decision violated the Constitution, the MFMA, the supply chain
regulations and the SCM policy of the Municipality;
c. the approval by the municipal council of the conclusion of the lease with Grey
Elephant is inconsistent with section 117 of the MFMA; and
d. irrationality.

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[15] The issue in this review is whether the Municipality is entitled to the self-review
that it is seeking. Put differently, whether the Municipality was strictly obliged to follow
a competitive, open tender process, and whether its failure to timeously challenge its
own deviation is fatal to this application. The statute and procurement points raised in
Chief Executive Officer of the South African Social Security Agency N. 0. v Cash
Paymaster Services (Pty) Ltd [2011] ZASCA 13 are almost identical to the structural
failures in the instant case.
Factual Background
[16] It is necessary to sketch the events forming the background to the dispute. The
background to the matter, in brief, is this:
a. Around 2019, the Municipality resolved to commence a competitive and open
tender process to invite bids for the provision of office space;
b. The first tender was cancelled on 31 October 2019, on the recommendation of
the Bid Adjudication Committee which found that no suitable office space was
found;
c. On approximately 05 March 2020, a further open invitation for office space was
advertised; this constituted the final open procurement process prior to the
adoption of the impugned resolution;
d. During the evaluation of the bids that were received, the Municipality
reconsidered its position and decided to purchase a building;
e. On 31 March 2021, the Municipality resolved to purchase Erf 9762 Knysna (the
Wood Walk Building"). However, this decision was rescinded.
f. Around October 2022, the second tender was cancelled.
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g. On 21 September 2023, a discussion between Lurie and a previous Municipal
Manager, Mr Sebola took place regarding the impugned lease agreement.
h. On 11 October 2023, the Municipality received a lease proposal from Grey
Elephant.
i. On 26 October 2023, the erstwhile Municipality Manager, Mr Sebola, tabled a
report before the Municipal Council that sought the approval to conclude a lease
agreement between the Municipality and Grey Elephant, without following a
procurement process. On the very same day, two councillors serving in the
Municipal Council proposed and seconded that an approval be given to enter
into a lease agreement with Grey Elephant for a period of three years, from 01
January 2024 until December 2028.
j. Another proposal was also made by a councillor and was seconded. The
second proposal proposed that a tender process be advertised for a period of
3 years, 5 years and 10 years. The first proposal received the majority votes
from Council.
k. The Council then resolved that an approval be given to enter into a new lease
agreement with Grey Elephant and that the Municipal Manager be authorised
to approve a yearly deviation for the leasing of the office space for the 3 years.
I. On 12 December 2023, a lease agreement was then concluded and signed by
the Municipal Manager, without him signing the deviation form.
m. The office of the Public Protector sent a letter dated 24 January 2024, to the
Municipality informing them about an investigation related to the lease
agreement. The Public Protector launched the investigation following a formal
complaint lodged by Action SA .
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n. On 26 February 2024, Municipal Manager responded to the Public Protector,
justifying the deviation from the normal procurement process.
o. On 26 April 2024, the Municipal Manager, amended the lease agreement
period. The Municipal Manager was the one who signed the amendment.
Municipal submissions
[17] The Municipality holds the view that Grey Elephant does not appreciate that the
Municipality has a constitutional obligation to review and set aside the unlawful lease
agreement.
(18] It is the Municipality's contention that in the proposal received from Grey Elephant,
Grey Elephant was represented by Ms Human and Mr Lurie. It is further the
Municipality's contention that Lurie was a representative of one of the bidders in the
second tender process. The Municipality bases this contention on an email
correspondence dated 10 December 2020, wherein Lurie, wrote to Freddie Kruger
[the Manager of the Supply Chain Management Department of the Municipality],
enquiring if there are any news on the tender.
[19] Based on this enquiry by Lurie, the Municipality concludes that the representatives
of Grey Elephant were aware that any conclusion of the lease agreement with the
Municipality had to be preceded by an open tender process. The Municipality further
asserts that Lurie had already participated in one such open tender process in relation
to the second tender. According to the Municipality, Lurie is the controlling mind of
Grey Elephant.
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[20] It is the Municipality's contention that Grey Elephant is not an innocent party as
they were aware that the process was unlawful. The Municipality maintain that Grey
Elephant was aware that an open and competitive tender process had to be
undertaken. The Municipality contends that Lurie and Grey Elephant were complicit in
the wrongdoing that led to the impugned decisions sought to be reviewed. As such,
the Municipality contends that where a tenderer/ offeror/ bidder is not innocent but
complicit in the wrongdoing, they are not only barred from making a profit from the
unlawful agreement but they must suffer losses.
[21] The Municipality further asserts that Grey Elephant's debt, comprising millions of
rands in unpaid rates and taxes, was controversially written off. As such, the
Municipality launched this application seeking an order declaring the resolution taken
by the Council on 26 October 2023, approving the conclusion of a lease agreement
with Grey Elephant unconstitutional, unlawful and invalid.
[22] The Municipality further submits that in terms of the Municipality's Supply Chain
Management Policy, and the National Treasury's standard general conditions of
contract, no contract should be concluded with a bidder whose municipal rates, taxes
and charges are in arrears.
[23] Additionally, the Municipality contends that Grey Elephant has no right to benefit
from an unlawful agreement, whether it is an innocent party or a complicit party.
[24] It is the Municipality's assertion that due to the impugned lease agreement, any
payment made under such agreement would constitute irregular expenditure.
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[25] The Municipality further contends that one of their councillors, who knew Lurie,
informed him that concluding the impugned lease agreement without an open tender
process would be unlawful.
[26] The Municipality contends that it is in possession of an email that reveals that
Lurie seemed to have had unfettered access to high-ranking municipal employees and
has always been a party to attempts to lease office space at the Knysna Mall to the
Municipality.
[27] The Municipality maintains that Lurie is not telling the truth when he states that he
did not participate in the previous Municipal open tender processes.
[28] It is the Municipality's submission that Grey Elephant was at all times aware of the
illegality of the impugned lease agreement.
[29] The Municipality asserts that Mr Sebola was not authorised by the council to enter
into negotiations with Grey Elephant.
[30] The Municipality asserts that the report that was tabled by Mr Sebola sought to
justify the use of deviation process. as contemplated in section 34(1) (a} (v} of the
SCM Policy. According to the Municipality, the report stated that an exceptional case
existed because it was impractical and impossible to follow a tender process in terms
of the SCM Policy of the Municipality.

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[31] The Municipality contends that the lease agreement and the amendment of the
lease period, were signed without the involvement of the municipal's legal department
that has the duty to advise and comment on the conclusion of the agreements by the
Municipality with any third parties.
[32] Furthermore, the Municipality argues that the conclusion of the lease agreement,
and the amendment of the lease period, did not follow the official route process for
decision making within the municipality, that requires comments and inputs from
relevant departmental heads, prior to a decision made by the Municipal Manager, that
binds the Municipality.
(33] It is further the Municipality's submission that it was unlawful for the Municipality
to enter into an agreement with Grey Elephant as they were in arrears in its municipal
account.
[34] The Municipality further asserts that, even if the negotiations by the previous
Municipal Manager were authorised by Council, such authorisation would still be
unlawful since it would directly involve councillors in procurement matters by
identifying and selecting a potential service provider.
[35] Ms Susan Campbell, a municipal councillor [in a municipal council of the
Municipality], states in her confirmatory affidavit that she had known Lurie before the
conclusion of the impugned lease agreement. She also avers that she repeatedly
informed Lurie that any conclusion of the lease agreement between the Municipality
and Grey Elephant that was not preceded by open and transparent tender process

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would be unlawful. She denies the assertions by Lurie that she suggested that he
[Lurie] should meet with the former Municipal Manager. The Municipality maintains
that the resolution of 21 September 2023, refers to K2012 not Grey Elephant, and that
the former is an entity that had in fact tendered and submitted the lowest bid in the
second tender.
[36) At the time of the drafting of the founding affidavit [14 May 2025], the Municipality
claimed that it was in the process of vacating the premises.
Submissions pertaining to undue delay
(37] The Municipality asserts that there was inordinate delay in the launching of this
application since it was launched within six months from October 2024.
[38] The Municipality justified the delay by noting that it received a legal opinion on the
illegality of the impugned decision in October 2024, and it was considered during
February 2025, and the Municipal Manager was authorised to launch this review
application.
[39] The Municipality submitted that the delay was not undue as it had acted with due
expedience upon learning of the procurement process's unlawfulness. The
Municipality asserts that the clock started ticking for them from when the Municipality
was advised of the illegality. It is further the Municipality's contention that if the delay
is calculated from October 2023, the delay would be approximately 18 months and
seeks to justify this particular delay on the ground that it would be in the interest of

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justice to grant condonation. Consequently, it requested that if this Court is of the view
that clock started running from October 2023, the delay ought to be overlooked.
Grey Elephant submissions
[40] Grey Elephant submits that the Municipality has not made out a case for the
condonation sought for the delayed launching of this application. According to Grey
Elephant, there is no date mentioned by the Municipality, stating as to when they [the
Municipality] received legal opinion regarding the unlawfulness of the lease
agreement. Nor is there a date indicating as to when the Council resolved to institute
these proceedings. In addition, Grey Elephant states that there is no explanation for
the delay in instituting these proceedings.
[41] It is Grey Elephant's contention that, the Municipality's decision to enter a lease
agreement through a policy deviation was not unprecedented, as they had previously
cited 'exceptional circumstances' to bypass standard Supply Chain Management
procedures.
[42] Grey Elephant asserts that they were approached by the Municipality seeking
assistance with the replacement of a lease agreement that was expiring as they
wanted to reduce rental costs.
[43] Lurie asserts in his supplementary affidavit that a Special Council Meeting was
held on 21 September 2023, where the extension of the soon to expire lease was
discussed. Lurie further avers that at this meeting, the Municipality council adopted a

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resolution that inter alia, resolved that the Municipal Manager and the Director should
negotiate with the property owner of K2012150042 South Africa for leasing of property
for office accommodation.
[44) Lurie further contends that it is not in dispute that the Council are referring to and
had in mind the Knysna Mall. Further, Mr Lurie asserts that given the fact that by that
stage, Grey Elephant was the owner of Knysna Mall, the reference to K2012150042
South Africa, is clearly a reference to Grey Elephant.
[45] Grey Elephant denies that it did not comply with section 217 of the Constitution or
was in contravention of any of the applicable statutory prescripts, when it concluded
the impugned lease agreement with the Municipality.
[46] The deponent to Grey Elephant's opposing affidavit, Mr Lurie, denies any
involvement in any of the previous tender processes for the leasing of the premises to
the Municipality. Mr Lurie further submits that he insisted that the erstwhile Municipal
Manager obtain the necessary confirmation from the Council that he was duly
authorised to conclude the lease agreement.
[47] According to Grey Elephant, they contracted with the Municipality in good faith
and were therefore entitled to assume that the Municipality had complied with its
internal arrangement and the necessary legal formalities. Grey Elephant maintains
that the Municipality is in breach of the lease agreement.
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[48] It is asserted on Grey Elephant's behalf that in the circumstances of this case, it
would not be just and equitable for this Court to set aside the decisions sought to be
reviewed, alternatively the appropriate just and equitable remedy in this instance
would be for this Court to direct that the Municipality compensate Grey Elephant for
its loss.
(49] Grey Elephant asserts that despite their substantial investment of over R14 million
into the leased property, the Municipality has failed to pay any rental since the lease's
inception on 01 May 2024.
[50] It is argued on Grey Elephant's behalf that the Municipality failed to disclose in
these proceedings that it is currently in arrears in respect of the lease agreement.
According to Grey Elephant, the Municipality also failed to disclose pending litigation
between them.
[51] It is Grey Elephant's submission that the reason for the institution of the current
litigation is to avoid payment of the overdue rental and tenant installation charges.
Furthermore, Grey Elephant argues that the actions of the Municipality is an attempt
to avoid paying. Grey Elephant further maintains that the Municipality is not motivated
by fiscal responsibility in seeking to set aside the lease with them.
(52] Lurie denies that Grey Elephant submitted a bid in respect of the second tender.
He also maintains that he was not a director of K2012. According to Lurie, Grey
Elephant purchased Knysna Mall from K2012, and when he [ Lurie] wrote the email of

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September 2020, to the Municipality, it was part of pre-transfer investigation by Grey
Elephant in anticipation of Grey Elephant's purchase of the Knysna Mall.
[53] Lurie vehemently denies that he was intimately involved in the tender process.
Lurie further asserts that he did not bid for any of the two tenders.
[54] Concerning the exchange of emails between Lurie and the Municipality, he [
Lurie], maintains that there is nothing untoward about a party making a request for
information to an Organ of State, nor is there anything untoward about an employee
of ar.i organ of State advising an interested party that a tender is being evaluated. He
characterises the exchange of emails as appropriate exchange of information.
[55] Lurie asserts that if it is the Municipality's assertion that an unanswered email to
its manager constitutes unfettered access, that would amount to a meritless allegation
that is at best, legally untenable.
The emails exchanges
[56] It is necessary at this point to set out and say a little more about the email
exchanges between Lurie and various Municipality officials.
(57] On 17 January 2018, Lurie, wrote the following email:
"Hi Kam
I wish you all the best for 2018 and hope that it is prosperous year for you and your
family.

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I have heard via the Knysna grape-vine that there is a requirement for a substantial
amount of office space for the Knysna Municipality. Whilst I may not be personally
interested in the enquiry my partners Old Mutual, copied herein may. Please could you
let me know when the tender will be open so that they can decided (sic) on whether to
submit or not, if you are not the party responsible for this procurement please will you
redirect this to the correct party and copy me herein .. . "
[58] On 28 August 2019, Lurie wrote to Johny Douglas:
"Dear Sir
It has been bought (sic) to my attention, yesterday in fact, that the Knysna Municipality
is out to tender on an office requirement, attached.
Please see email below to the previous MM Kam Chetty expressing my interest in such
an enquiry. We are trying to complete the necessary information to submit our bid but
have been severely restricted by time.
We are the most significant commercial owners of developed lettable real estate in
Knysna and believe that given the opportunity our offer on price and BEE status wou ld
be unmatchable. This is a significant enquiry which could have a significant financial
impact on the municipality. This begs the question as to why we have not been
informed personally about this. It is clear and obvious that portions of the vacant mall
are perfect fit for your requirements and it is not as if Knysna is such a big town/ city
that this opportunity could have been missed.
Please let me know urgently what to do, the tender closes at 12 noon . .. "
[59] On 28August 2019, at 12: 11 , Susan Campbell, a municipal councillor wrote:
"Douglas is not the MM."
[60] On 28 August 2019, 12:20 Mr Lurie wrote to Susan Campbell"
·Yes I know but it's the same email address!!"
[61] On 28 August 2019, Susan Campbell wrote:
"Did you tender?"
[62] Lurie wrote on 28 August 2019, to Susan Campbell at 12:44, the following:
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"No it just wasn't possible we had to submit a 35 page document with a lot of info on
all of our directors with tax certificates for all of them, BEE certificates etc etc, I just
could not get it all together in 1,5 days.
It really annoys me, not that we missed out but that they don't apply their minds to
making sure that the process is though (sic) and fair (sic)"
[63] The Municipality asserts that there were events that led to the deviation from the
normal tender processes. First, on 02 September 2020, Mr Lurie, wrote an email to
Louis Scheepers of the Municipality stating the following:
"Dear Mr Scheepers
I refer to the email below. Our calculations reveal that the saving to KM, just for the
2, 100m2 that we tendered for will be in excess of R4 million over the three-year period
of the lease, this does not take into accoun\ the operation savings which would be
realised from operating from the mall.
It would be good to know that in these difficult times where budgets are being cut and
the economy is shrinking that we are all playing our part to try and save costs.
Please feel free to discuss anything with us that could make this decision easier, such
as amortising the cost of moving into rental, example.
I look forward to hearing the outcome of the evaluation committee decision."
[64] On 09 October 2020, Lurie wrote an email to a Municipal official and stated that:
"Good morning has there been any progress on this tender?"
[65] On the same day, the Manager of the Supply Chain Management responded as
follows"
"Good morning Mr Lurie,
The evaluation committee sat again on the matter and will finalize their report next
week Tuesday. Soon thereafter the BAC will sit and consider the matter. We anticipate
to have the bid committee matters finalized on this matter by end of next week.
Regards,"
[66] The Municipality maintains that Mr Lurie, wrote an email on 10 December 2020,
to Mr Kruger, the manager of supply chain management, that stated the following :
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"Any news on the tender?"
[67] On 14 December 2020, Mr Kruger replied to the email of Mr Lurie, by stating the
following:
"Hi Mr Lurie,
We have a meeting scheduled again this week, but I cannot promise anything. Due to
the value of the rental it must be carefully considered. The "hidden" costs of moving
offices and changing the space to something that will work for the municipality is also
under consideration with all the spaces.
Regards"
[68] On 23 February 2021, Lurie wrote the following email to Louis Scheepers from
the Municipality. The email in part reads as follows:
"Dear Mr Adonis
I refer to the email below.
We have not had a response from the municipality and did not receive any feedback
on the tender at all.
I have been following the correspondence circulated by yourself with regards to the
commencement of a process to identify a suitable building/s and commence a process
to procure same ... "
[69] Another email from Lurie was written to the Municipal personnel on 26 September
2023, stating the following:
"Dear Sir
Our meeting last week on Thursday has reference. We are able to accommodate the
Knysna Municipal offices as follows: . . .
I would like to have more time to put a comprehensive document together for you but
if you are able to get support on approving our premises I'm certain that we could flesh
out a lot more detail especially on your required layouts and the costing thereof. To this
end I will make our architect available to you to help with this process at no cost to
yourselves.
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I look forward to hearing from you."
[70) I tum first to the aspect of delay. Obviously, a delay in launching a self-review
application may have prejudicial effects.
Evaluation
a. The delay
[71] In Khumalo v Member of the Executive Council for Education, KwaZulu Natal
[2013] ZACC 49; 2014 (5) SA 579 (CC) ("Khumalo"), the following was stated
regarding delay in legality reviews.
"But what do we make of the Legislature's decision to remove these time limits? Does
this mean that litigants are not constrained by any requirement to act timeously? In my
view, the Legislature's decision to remove the 12- month prescription period opens the
actions of public functionaries in terms of the PSA to ongoing scrutiny and
transparency. Bearing in mind the purpose of the Repealing Act, 29 the repeal of
section 39 allows that an applicant cannot automatically be non-suited on the basis of
a delay. Nevertheless, it is a long-standing rule that a legality review must be initiated
without undue delay and that courts have the oower (as part of their inherent
jurisdiction to regulate their own proceedings) to refuse a review application in the face
of an undue delay in initiating proceedings or to overlook the delay. This discretion is
not open-ended and must be informed by the values of the Constitution. However,
because there are no express, legislated time periods in which the MEC was required
to bring her application, there is no requirement that a formal application for
condonation needs to have been brought.
In the previous section it was explained that the rule of law is a founding
value of the Constitution, and that state functionaries are enjoined to uphold
and protect it, inter alia by seeking the redress of their departments'
unlawful decisions. Because of these fundamental commitments, a court should be
slow to allow procedural obstacles to prevent it from looking into a challenge to the
lawfulness of an exercise of public power. But that does not mean that the Constitution

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has dispensed with the basic procedural requirement that review proceedings are to
be brought without undue delay or with a court's discretion to overlook a delay."
[72] It must always be remembered that undue delay in launching a judicial review
application is highly detrimental to good administration because public bodies require
certainty, finality, and efficiency to govern effectively. When an affected party waits too
long to challenge an administrative action, it paralyses the machinery of governance
and compromises the rule of law. In Chairperson, Standing Tender Committee and
Others v JFE Sapela Electronics (Pty) Ltd and Others 2008 (2) SA 638 (SCA) at para
28, the following was stated:
"In a sense, therefore, the effect of the delay is to 'validate' what would otherwise be a
nullity. See Oudekraal Estates (Pty) Ltd, supra, para 27 at 242E-F. In the present case,
as I have found, there was no culpable delay on the part of the respondents. But the
object of the rule is not to punish the party seeking the review. Its raison d'etre was
said by Brand JA in Associated Institutions Pension Fund v Van Zyl 2005 (2) SA 302
(SCA) at para 46 to be twofold: 'First. the failure to bring a review within a reasonable
time may cause prejudice to the respondent. Secondly, there is a public interest
element in the finality of administrative decisions and the exercise of administrative
functions.' Under the rubric of the second I would add considerations of pragmatism
and practicality.~
[73] In Valor IT v Premier, North West Province and Others [2020] ZASCA 62; (2020]
3 All SA 397 (SCA) para 30; the following was stated:
"Whether a delay is unreasonable is a factual issue that involves the making of a value
judgment. Whether, in the event of the delay being found to be unreasonable,
condonation should be granted involves a 'factual, multi-factor and context-sensitive'
enquiry in which a range of factors - the length of the delay, the reasons for it. the

enquiry in which a range of factors - the length of the delay, the reasons for it. the
preludice to the parties that it may cause, the fullness of the explanation, the
prospects of success on the merits - are all considered and weighed before a
discretion is exercised one way or the other."
---- -----

23
[7 4] The assertions made by Grey Elephant requires this Court to establish as to
whether there was delay in launching this review application. On the onset, I would
like to state that it is now well settled that a legality challenge affords the courts a wider
discretion when evaluating undue delay, compared to the traditional approach under
section 7 of PAJA.
[75] Notwithstanding that this is not an easy point to resolve, the delay needs to be
viewed objectively. The authorities, including precedents from the Constitutional Court,
state that in legality reviews the courts have a broad discretion that needs to be
exercised with regard to the interest of justice.
(76] The first question to be posed in this matter is, whether or not the Municipality
delayed in launching this review application and if so, the next question would be
whether the delay in prosecuting the review application was unreasonable. See
Buffalo City Metropolitan Municipality v Asia Construction (Pty) Limited (CCT91/17)
[2019] ZACC 15; 2019 (6) BCLR 661 (CC); 2019 (4) SA331 (CC) (16April 2019.
[77] In the Govan Mbeki Municipality v New Integrated Credit Solutions (Pty) Ltd
("NICS") (121/2020) [2021] ZASCA 34; [2021] 2 All SA 700 (SCA); 2021 (4) SA 436
(SCA) (7 April 2021 ), provides critical guidance on delays in self-correction reviews
and establishing legal principles and factors for assessing delays. In NJCS the
Supreme Court of Appeal ("SCA") advanced this jurisprudence by synthesising
previous authorities, rendering its analysis highly instructive.
(78] In doing so, the SCA developed decisional law concerning the issue of delay in
such cases. Hence, I find it necessary to quote extensively from N/CS below. The

24
SCA, stated the following in respect of delay bringing a review. Paragraphs 34, 35, 39-
46 reveal the following:
"34. It is now firmly established that self-review by organs of state are not reviews in
terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), but rather are
legality reviews. Unlike the control period of 180 days provided for in PAJA and a
court's discretion in extending that period, where the interest of justice so requires, a
court dealing with a legality review has no such fixed period within which an application
must be brought. In Buffalo City Metropolitan Municipality v Asia Construction (Pty)
Ltd, the Constitutional Court, with reference to prior decisions, and comparing the
discretion under PAJA to the discretion to be exercised in a legality review, said the
following in relation to when the time period starts to run:
'[l]n both assessments the proverbial clock starts running from the date that the
applicant became aware or reasonably ought to have become aware of the action
taken.'
(Emphasis added.)
[35] The Constitutional Court went on to state the following:
'The approach to undue delay within the context of a legality challenge necessarily
involves the exercise of a broader discretion than that traditionally applied to s 7 of
PAJA. The 180-day bar in PAJA does not play a pronounced role in the context of
legality. Rather, the question is first one of reasonableness, and then (if the delay is
found to be unreasonable) whether the interests of justice require an overlooking of
that unreasonable delay.'
(36] In Asia, the Constitutional Court taught that even if the unreasonableness of
the delay has been established, it cannot be evaluated in a vacuum. The next leg of
the test is to see if it ought to be overlooked. It went on to state the following:
'Courts have the power in a legality review to refuse an application where there is an
undue delay in initiating proceedings or discretion to overlook the delay. There must

undue delay in initiating proceedings or discretion to overlook the delay. There must
however be a basis for a court to exercise its discretion to overlook the delay. That

25
basis must be gleaned from the facts made available or obiectivelY available factors.'
Footnote omitted.
[37] The Constitutional Court in Asia, with reference to its prior decisions, described
the appropriate approach as follows:
'The approach to overlooking a delay in a legality review is flexible. In Tasima I.
Khampepe J made reference to the "factual, multi-factor. context-sensitive framework"
expounded in Khumalo. This entails a legal evaluation taking into account a number of
factors. The first of these factors is potential prejudice to affected parties as well as the
possible consequences of setting aside the impugned decision. The potential preiudjce
to affected parties and the consequences of declaring conduct unlawful may in certain
circumstances be ameliorated by this court's power to grant a just and equitable
remedy and this ought to be taken into account.·
[38] . ..
[39] In Asia, the Constitutional Court spoke thus:
'(T)he extent and nature of the illegality may be a crucial factor in determining the relief
to be granted when faced with a delayed review. Therefore, this court may consider,
as part of assessing the delay, the lawfulness of the contract under the principle of
legality.'
[40] The Constitutional Court in As/a noted yet a further factor for consideration ,
namely the conduct of an applicant. In this regard it pointed out. as our courts have
done repeatedly in the past. that a much higher standard js required of organs of state,
On this aspect it cited the following dictum in MEG for Health, Eastern Cape and
Another v Kirland Investments (Pty) Ltd tla Eye and Laser Institute:
'[T]here is a higher duty on the state to respect the !aw, to fulfil procedural requirements
and to tread respectfully when dealing with rights. Government is not an indigent or
bewildered litigant. adrift on a sea of litigious uncertaint½ to whom the courts must
extend a procedure-circumventing lifeline. It is the Constitution's primary agent. It must

extend a procedure-circumventing lifeline. It is the Constitution's primary agent. It must
do right, and it must do it properly.'
In Merafong, it was said that it is the State's duty to rectify unlawful decisions.
[41] Finally, with reference to its decision in State Information Technology Agency
SOC Limited v Gijima Holdings (Pty) Limited, where it was held that even where there
was no basis to overlook an unreasonable delay, the court is nevertheless compelled
to declare the State's conduct unlawful, because s 172 (1 )(a) of the Constitut ion

26
enjoins a court to declare invalid any law or conduct that it finds to be inconsistent with
the Constitution, the Constitutional Court in As/a recognised the tension between the
delay rules and the injunction to declare conduct unlawful that conflicts with the
Constitution. The Constitutional Court in As/a reflected on a long line of cases that held
that the State must apply timeously to courts and the implication in Gijima that time
hurdles must yield to that injunction. On this aspect the Constitutional Court
in As/a said the following:
'The Gijima principle should thus be interpreted narrowly and restrictively so that the
valuable rationale behind the rules on delay are not undermined. At the same time, this
is not a matter in which the Gijima principle can be ignored and thus impliedly
overruled. So the injunction it creates -to declare invalid that which is indisputably and
clearly inconsistent with the Constitution - must be followed where applicable.'
[42] In As/a the Constitutional Court went on to hold that there was no reason in
that case to overlook the delay. However, it held that the contract in the case was
clearly unlawful and declared it unconstitutional. It was common cause that the contract
in that case had been practically completed and the Constitutional Court said the
following in relation to the agreement in that case:
'In these circumstances, justice and equity dictate that the Municipality should not
benefit from its own undue delay and in allowing the respondent to proceed to perform
in terms of the contract. I therefore make an order declaring the Reeston contract
invalid, but not setting it aside so as to preserve the rights to that the respondent might
have been entitled. It should be noted that such an award preserves rights which have
already accrued but does not permit a party to obtain further rights under the invalid
agreement.'
[43] The minority judgment in Asia (Cameron J and Froneman J with Khampepe J

agreement.'
[43] The minority judgment in Asia (Cameron J and Froneman J with Khampepe J
concurring) chose another route, reaching the same practical result. The minority
considered that although the cases in which a public authority's delay in bringing self­
review is so prodigiously and lamentably inexcusable are rare, they exist, and thought
the case before them was one such instance. The minority postulated that in such a
case there was no public interest or constitutional necessity for pronouncing on the
validity of what was being challenged. The minority pointed to academic criticism
against Gijima for having selected legality as the pathway for public authority self­
review. The minority took the view that drawing a distinction between PAJA and legality
self-review promoted bifurcation. They considered that Gijima warranted re­
consideration because it departed from earlier decisions. It accepted that the case

27
before it was not the case to do so, not least of all because it did not have the benefit
of submissions in that regard.
[44] The minority in Asia recognised the tension created by prior decisions, where
despite not overlooking delay they had sought to 'impose a square on [a] circle' by
nevertheless inquiring into the legality of the conduct by the public authority and
granting a deserving subject just and equitable relief, as was done by the majority.
They noted that where there was no delay a declaration of unlawfulness should
invariably be made - it was the default position that accords with the principle of
legality. It was an affirmation that the State was complying with its duty to correct
suspected unlawful decisions, expeditiously and diligently. The minority described this
as a win-win for the rule of law.
(45] The minority saw the delay rule at common law as serving the public interest
in the certainty and finality of decision-making. The minority said the following:
'It is an opportunity for the state to demonstrate that its self-review seeks to promote
open, responsive and accountable government rather than the self-interest of state
officials seeking to evade the consequences of their prior decision.' (Emphasis added.)
[ 46] The minority accepted that even where a delay was found to be unreasonable,
according to precedent, our courts retained a discretion to overlook the delay provided
that it was in the interests of justice to do so. This evaluation was done with reference
to the effect of the delay on the parties and the nature of the impugned decision. It
explained how it differed from the majority as follows:
'We suggest an alternative route. This is that, in the absence of adequate explanation
for unreasonable delay, courts should not intervene to inquire into a final and
determinative holding into unlawfulness, unless the seriousness of the unlawfulness at
issue warrants overlooking the manifest deficiencies in the state actor 's
case.' (Emphasis added.)

case.' (Emphasis added.)
The minority went on to hold that on the facts before the Constitutional Court it was not
in the interests of justice to entertain the self-review. The minority stated that 'resorting
to s 172(1)(a) is not necessary to arrive at a just outcome'. The following passage of
the minority judgment, on the path to that conclusion bears repeating:
'When determining the unreasonableness of the delay and exercising its discretion
whether to allow consideration of the review, the court must balance the seriousness
of the possible illegality with the extent and unreasonableness of the delay. In the

28
circumstances of this case, the delay is sufficiently more inexcusable than the possible
illegality is egregious, and the balance tips against this Court's intervention.'
The minority agreed that it would be 'grossly unjust' to deprive the respondent in that
case of its contractual bargain and to leave it to an enrichment claim, that the
municipality in that case had submitted must suffice. I pause to note that the same
claim was made by the GMM in the present case."
[79] It is clear from the authorities that the court maintains the discretion to refuse the
substantive relief sought on the grounds of undue delay. It may do so [refuse to grant]
if it finds that granting the relief would likely cause substantial hardship, prejudice the
rights of any person, or prove detrimental to good administration. It is pertinent to note,
as was stated in Khumalo, that an additional consideration in overlooking an
unreasonable delay lies in the nature of the impugned decision. Skweyiya J observed
in Khumalo (supra) that this requires analysing the impugned decision and evaluating
the merits of the underlying legal challenge.
[80] It is also settled that a review based on the principle of legality is not bound by a
rigid or fixed timeframe and no condonation application is necessary, the court simply
considers the delay.
[81) In this matter, the Municipal Council passed a resolution authorising the
agreement, whereas the complaint subsequently lodged with the Public Protector
originated from an outside political party. In the instant case, the Municipality asserts
that it was only alerted to the unlawfulness of the impugned decision during October
2024, and that within six months from then, the Municipal Manager obtained
authorisation to launch this review. It is trite that a legality review must be brought

29
within a reasonable time. This raises the critical question of whether the Municipality
is deemed to have known about the illegality at the exact time the impugned decision
was made, or only when it received external legal advice.
Was the Municipality supposed to have known about the illegality at the exact
time the impugned decision was made or when the unlawful contract was
concluded? [the delay]
[82] In the As/a matter, at para 49, the Constitutional Court confirmed that the standard
for assessing delay under both PAJA and legality is whether the delay (if any) was
unreasonable, with the timeframe commencing from the date the applicant became
aware, or reasonably ought to have become aware, of the impugned action.
[83] The first question to determine is whether the Municipality ought to have known
about the unlawfulness of the impugned decision by October 2024. Put differently,
when did the proverbial clock begin to run? Crucially, a litigant cannot self-select the
date on which time starts ticking. Instead, the objective facts of the case dictate exactly
when the timeline was triggered.
[84] The fact that the Municipality purports to have discovered the unlawfulness of the
decision only upon receipt of a legal opinion is legally irrelevant to the commencement
of the delay period. The clock for launching a review is triggered by objective facts and
construct ive knowledge, not by the subjective date on which the Municipality chose to
obtain legal counsel.
------ ----~--~---·--- - ---- - ---

30
[85] In A/tech Radio Holdings (Pty) Limited and Others v C;ty of Tshwane Metropolitan
Municipality [2020) ZASCA 122 ( 5 October 2020 ), the following was stated:
"[22] It was incumbent on the City to provide a full explanation covering the entire
period of the delay. The explanation, such as it is, for the most part, is superficial and
unconvincing ...
The procurement process commenced during September 2014. Many of the City's key
personnel, who had been involved in the tender process and the conclusion of the
agreements, remained in the employ of the City after the August 2016 Municipal
elections. They were thus in a position (and ought) to have provided explanations for
the delay.
The City does not rely on a cover-up or contend that documents or information was
destroyed or concealed by officials loyal to the previous administration. There is no
evidence of what steps, if any, were taken in order to obtain the necessary information;
on what dates and by whom such steps were taken; what sources were accessed or
why any of these attempts proved unsuccessful. Nor, when, how and who allegedly
did not co-operate. The City chose not to ask officials such as Mr Ngobeni or Mr
Otumile to assist with their investigation. It says that it decided not to ask them for any
information because the investigation was 'sensitive' and consulting with them 'may
well compromise the investigation'. Those two individuals, who deposed to
confirmatory affidavits in support of the appellants' case, said that they were available
and willing to assist the City, but were never contacted.
[24] The core contention advanced by the City is that the delay is justified because
the DA only won control of the City in August 2016 and thereafter required time to
investigate the alleged irregularities perpetrated under the previous ANC-controlled
administration. That contention appears to have found favour with Baqwa J ...
[25] I cannot agree with the learned judge.

[25] I cannot agree with the learned judge.
[71] The objective of state self-review should be to promote open, responsive and
accountable government. The conduct of the City renders the delay so unreasonable
that it cannot be condoned without turning a blind eye to its duty to act in a manner
that promotes reliance, accountability and rationality and that is not legally and
constitutionally unconscionable. Here, the delay is stark and the egregious conduct
on the part of the City, even starker. The City has a 'higher duty to respect the law'."

31
(86] The City of Tshwane case, supra, demonstrates that that a municipality cannot
use political regime change or internal administrative dysfunction to justify
unreasonable delays in launching review applications. The judgment emphasises that
an organ of state must provide a detailed 1 "full and convincing" explanation for the
entire period of delay, as failure to do so, especially when institutional memory is
available, violates the rule of law.
[87] On the facts of this case, it is not difficult to find that the Municipality ought to have
known that the impugned decision was unlawful long before it sought legal counsel.
In this matter, the illegality was born on the day the Municipal Council passed the
impugned resolution.
(88] As mentioned previously and as demonstrated by the authorities cited above, our
courts have repeatedly held that a much higher standard of accountability is required
of organs of state. It is well-established that an organ of state may only in truly
exceptional circumstances plead ignorance of an illegality arising directly from its
highest decision-making structures. In this matter, the Municipality's claim of ignorance
is entirely unsustainable. The patent nature of the illegality in this matter, is
demonstrated by the fact that a political party immediately appreciated the
unlawfulness of the decision and promptly referred the matter to the Public Protector.
[89] The apt question that then arises is whether the delay is undue and if so whether
it can be overlooked. This question is relevant here because an unreasonable delay
can legally validate an otherwise invalid act.

32
Is the delay adequately explained?
[901 The authorities are clear that once the court finds that a delay exists, the question
that arises is whether: (1) the delay was adequately explained; (2) the explanation
covers the entirety of the delay; and (3) it is justified. If these three questions are
answered in the affirmative, then the delay is deemed reasonable, allowing this Court
to consider the merits of the review.
[91] In this matter, the Municipality has proffered no explanation for the delay spanning
from 2023, the date upon which it objectively ought to have known of the illegality.
Consequently, this Court lacks the necessary factual foundation to find that the delay
was reasonable.
[92] A reasonable organ of state in the Municipality's position, exercising standard
diligence would have discovered the illegality as far back as 2023. For that matter, it
is now well settled that a municipality cannot claim timely ignorance of the facts where
a decision was taken by its own functionaries.
[93] In City of Cape Town v Aurecon South Africa (Pfy) Ltd 2017 ( 4) SA 223 (CC), the
Constitutional Court rejected the notion that an organ of state can claim timely
ignorance of decisions taken by its own functionaries, affirming that a municipality
cannot separate itself into different factions to escape the consequences of its internal
actions.
- - - ~ --- ---- -----

33
[94] Council decisions are primarily shaped or driven by immediate political agendas
rather than an impartial application of professional expertise, resulting in actions
motivated by political expediency instead of strict adherence to legal or institutional
precedent. Consequently, because these decisions may reflect subjective political
agendas rather than objective technical proficiency, they do not warrant a heightened
degree of deference on review.
[95] Flowing from this principle, a subsequent change in the political control of the
Council or a turnover of Municipal Managers does not excuse or reset the period of
delay. The applicant before this Court remains the Municipality as a continuous legal
entity; consequently, shifting political administrations or administrative personnel
cannot be used to bypass the strict requirements of finality and certainty in
administrative law.
[96] Furthermore, the Municipality's own assertions serve to implicate it directly to the
illegality of the agreement and destroy any remaining basis for condonation. The
Municipality contends that the representatives of Grey Elephant were fully aware that
an open tender process was a mandatory prerequisite for the lease agreement. See
paragraph 17 of this judgment. Of course, this begs the question of, if this legal
requirement was so glaringly obvious to an external private party, it must, a fortiori,
have been immediately apparent to the Municipality itself. By its own admissions, the
Municipality did not require an extended period or a forensic investigation to discover
the illegality; it was a patent defect from the outset. Its failure to act timeously from
2023 onwards, in the face of an illegality it objectively [and likely subjectively] knew of,

34
constitutes the very type of supine inaction and egregious conduct that disentitles an
organ of state from judicial condonation.
[97] Similarly, Lurie's email dated 26 September 2023, referencing a direct meeting
between the parties; in my mind, conclusively establishes that the Municipality was
actively seized with this matter in 2023. By initiating these negotiations and
maintaining continuous custody of the entire Supply Chain Management paper trail,
the Municipality objectively possessed full knowledge of the material facts at that time.
Its absolute failure to provide an adequate, all-inclusive explanation for its delay from
September 2023 onwards remains fatal to its application for condonation.
[98] In Aurecon, the Constitutional Court stated the following in respect of the City
seeking to claim timely ignorance of the decision taken by its functionaries at paras
41-43:
"[41) On a textual level, the City's contention confuses two discrete concepts:
reasons and irregularities. Section 7( 1) of PAJA does not provide that an application
must be brought within 180 days after the City became aware that the administrative
action was tainted by irregularity. On the contrary, it provides that the clock starts to
run with reference to the date on which the reasons for the administrative action
became known (or ought reasonably to have become known) to an applicant.
[42] On a purposive level, the City's interpretation would give rise to undesirable
outcomes. As the SCA pointed out, the City's interpretation would-
"automatically entitle every aggrieved applicant to an unqualified right to institute
judicial review only upon gaining knowledge that a decision {and its underlying
reasons}, of which he or she had been aware all along, was tainted by icregu!aritv,
whenever that might be. This result is untenable as it disregards the potential prejudice
to [Aurecon] and the public interest in the finality of administrative decisions and the
exercise of administrative functions.

35
[43] In my view, the City cannot suggest that it "was not aware of the reasons for
the decision prior to receipt of the [Ernst & Young] report". The decision was taken by
the BAC which approved the BEC's report without qualification. The resolution of the
BAC records that it awarded the tender to Aurecon "for the reasons set out in the
[BEC's] report". Since the BEC's report served before the BAC, the BAC must have
been aware of those reasons when it made its decision."
[99] Back to the instant case, section 237 of the Constitution provides that all
constitutional obligations must be performed diligently and without delay. To this end,
where an organ of state fails to provide a full and satisfactory explanation for its delay,
it is exceptionally difficult for a court to overlook it. The delay spans from 26 October
2023 to October 2024, when the Municipality received legal opinion.
[100] Grey Elephant asserts that the Municipality failed to provide explanation for the
delay catering for the entire Period. Regarding the explanation for the delay the
Municipality chose to limit themselves to the period of October 2024.
[101] Accordingly, the Municipality has failed to explain the delay between 26 October
2023 to October 2024, in launching these proceedings. This is because, while the
Municipality claims it only became aware of the illegality upon obtaining a legal
opinion, the objective evidence establishes that the Municipality ought to have had
knowledge of the illegality from the moment the decision was taken. Consequently,
there is a total vacuum in explaining why the Municipality remained blissfully unaware
of the illegality of its own decision between 26 October2023 and October 2024. In this
regard, the Constitutional Court in Khumalo (supra) at para 51 dealt with a failure to
proffer an explanation. In Khumalo the Constitutional Court emphasised that when an
organ of state fails to account for an unreasonable delay, it suggests a lack of valid

36
reasons. The Constitutional Court noted that such unexplained, serious delay is
particularly unacceptable given the state's constitutional obligation to act expeditiously
and its access to resources for identifying unlawful decisions.as follows:
[102] As it was stated in Asia [referred to in NICS supra], surely, the Municipality
cannot escape the requirement of launching a self-review application within a
reasonable time by claiming it only discovered the illegality after consulting legal
counsel. It cannot, however, escape observation that a much higher standard is
required of organs of state. Hence, the authorities clearly indicate that organs of state
cannot hide behind legal advice in trying to avoid a finding of delay in prosecuting a
review.
[103] In order for the court to determine the existence of undue delay; the common­
law approach to the undue delay rule requires a two-prong analysis. The first stage is
whether there was an unreasonable delay and, second, if so, whether the delay should
in all the circumstances be overlooked [condoned].
[104] On the facts of the instant case, however, I am in no doubt whatsoever that an
unreasonable delay in the prosecution of this review occurred.
[105] The question that remains for determination is whether, in the specific
circumstances of this matter, the Municipality's unreasonable delay ought to be
overlooked in the interests of justice.
Did the Municipality unreasonably delay In launching the application?

37
[106] It is undisputed that before passing the resolution and concluding the lease
agreement, the Municipality had already undergone two procurement processes for
office space.
[107] In this matter, it is common cause that the Municipal Council passed a resolution
to enter into the impugned lease agreement. It is further common cause that the
Municipal Manager was authorised to approve a yearly deviation from the
Municipality's Supply Chain Management Policy, based on the purported existence of
'exceptional circumstances' for the leasing of the office space for three years.
[108] It is undisputed that the Municipal Manager who oversaw and was serving at the
time of the impugned resolution and the resultant lease agreement has since resigned.
Furthermore, it is common cause that the impugned resolution was passed narrowly
by 11 votes to 9, and that the impugned lease agreement was not an interim
agreement, nor did it foreshadow any future competitive bidding process. As such, it
stood as a stand-alone contract.
[109] In addition, the evidence shows that Lurie and the previous Municipal Manager,
Mr. Sebola, met on 21 September 2023, where direct discussions took place relating
to the leasing of Grey Elephant's office space to the Municipality. Despite these
objective touchpoints, the Municipality failed to take immediate legal action.

38
[11 OJ In Merafong City Local Municipality v AngloGold Ashanti Limited 2017 (2) SA 211
(CC), the Constitutional Court grappled with the intersection of legality and certainty
where an organ of state seeks to escape its own choices, stating:
"[33] ... The Constitution provides that, when deciding a constitutional matter within its
power, a court "must declare that any law or conduct that is inconsistent with [it] is
invalid to the extent of its inconsistency" ... [but] a court deciding a constitutional matter
"may make any order that is just and equitable.
[34) ... The rule of law must never be relinquished, but the circumstances of each case
must be examined in order to determine whether factual certainty requires some
amelioration of legality and, if so, to what extent...
[41) The import of Oudekraal and Kirland was that government cannot simply ignore
an apparently binding ruling or decision on the basis that it is invalid. The validity of the
decision has to be tested in appropriate proceedings... Government itself has no
authority to invalidate or ignore the decision. It remains legally effective until properly
set aside."
[111] As Merafong dictates, the government cannot simply dilly-dally when
challenging a suspect decision. It must formally apply to a court to set aside the
defective decision so that the judiciary can properly weigh the factual effects on those
subject to it, alongside the state's delay in making the challenge.
[112] Consequently, the Municipality's conduct falls short of the "higher duty to respect
the law" imposed upon organs of state. To overlook a delay so stark and inexcused
would undermine the core principles of responsiveness, reliance, and accountability
that govern public administration. I thus find that the delay by the Municipality was
unreasonable.
Can the Unreasonable Delay be Overlooked in the Interests of Justice?

39
[113} Having found that the Municipality's delay is stark, egregious, and completely
unexcused, the inquiry would ordinarily end, and the application would be dismissed
without further consideration. However, the jurisprudence of the Constitutional Court,
most notably articulated in As/a, dictates that a finding of unreasonable delay does not
automatically cloister a potentially unlawful administrative act from judicial review.
Under the second stage of the delay analysis, this Court retains a constitutional duty
to declare any law or conduct that is inconsistent with the Constitution invalid to the
extent of its inconsistency. I am therefore compelled to look at the merits of the review,
not to vindicate the Municipality's tardy conduct, but to evaluate whether the underlying
contract is so patently illegal that the interests of justice and the principle of legality
require this Court to overlook the delay and address the merits. It is to that substantive
inquiry concerning the legality of the Council resolution and the resultant lease
agreement that I now turn.
[114] The core substantive issue in this review is whether the Municipality was
constitutionally obliged to follow a competitive bidding process, or whether it was
legally entitled to bypass those systems by executing a direct lease. Section 217(1) of
the Constitution dictates that when an organ of state in the local sphere of government
procures goods or services, it must do so in accordance with a system that is fair,
equitable, transparent, competitive, and cost-effective.
[115] The statutory framework and procurement principles raised in Chief Executive
Officer of the South African Social Security Agency N. 0 . v Cash Paymaster Services
(Pty) Ltd [2011] ZASCA are directly applicable to the structural deviations in the instant
case. In Cash Paymaster, the SCA clarified the strict boundaries governing an

40
accounting officer's power to dispense with competitive procurement processes,
holding at paragraph 21 :
'The regulation pennits an accounting officer or the chief executive officer to deviate
from a competitive process subject to conditions ... First. there must be rational reasons
for the decision. That is a material requirement. Second. the reasons have to be
recorded. That is a fonnal requirement. The basis for these requirements is obvious ...
The provision of reasons in writing ensures that Treasury is informed of whatever
considerations were taken into account in choosing a particular source and of
dispensing with a competitive procurement process."
[116] Applying this standard to the common cause facts, the Municipality's departure
from standard procurement protocols lacks the mandatory material foundation of
rationality. It is undisputed that before passing the resolution and concluding the lease
agreement, the Municipality had already undergone two separate competitive
procurement processes for office space.
[117) Despite this, the Municipal Council passed a resolution authorising the Municipal
Manager to approve a consecutive, three-year annual deviation from the Municipality's
Supply Chain Management Policy, based on the purported existence of 'exceptional
circumstances. The Municipal Manager who oversaw this resolution and executed the
resulting standalone agreement has since resigned, and the resolution itself was
passed by a narrow margin of 11 votes to 9. Furthermore, it is common cause that
Lurie, and the previous Municipal Manager, Mr. Sebola, met privately on 21 September
2023 to discuss these office space requirements.
[118] According to the Municipality's own version, no rational or objective basis existed
to justify a total deviation from a competitive tender process. In actual fact, the

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Municipality now concedes that every step taken toward the conclusion of the
impugned lease agreement was unlawful, procedurally flawed, and invalid.
[119] Grey Elephant does not seriously dispute that the Municipality lacked a rational
basis to bypass a competitive tender. Instead, Grey Elephant raises a defence
regarding motives and reliance. They contend that they contracted with the
Municipality in good faith and was entitled to assume internal legal formalities were
met. They further assert that the Municipality's pursuit of this self-review is a mere
pretext to evade its ongoing rental obligations.
[120] A similar argument regarding an ulterior commercial motive was addressed in
Cash Paymaster(at para 26), where the Court noted a "lingering impression" that the
litigant's motive in challenging an agreement was driven by a desire to protect its own
financial position rather than a bona fide concern for regulatory compliance.
[121] However, in a state self-review, a private party's commercial reliance cannot cure
a patent, irrational subversion of Section 217 of the Constitution. Because the
recorded reasons for the three-year deviation fail the material test of rationality
established in Cash Paymaster. In the present matter, the Council resolution and the
resultant lease agreement are objectively unlawful.
[122] This Court is aware, of course, that having found that the Council resolution and
the subsequent lease agreement are substantively unlawful and invalid under Section
217 of the Constitution, this Court is bound by the mandatory injunction of Section
172(1 )(a) to declare the conduct and the agreement invalid. This much was conceded
- ----·------ -----------------

42
in the Municipality's heads of argument that once a ground of review is established, a
court has no option but to declare the impugned action invalid.
[123] In the circumstances, it would not be in the interest of justice , to overlook the
unreasonable delay.
The Remedy And Just and Equitable Relief
(124] The Constitutional Court clarified in Merafong and Al/Pay, that there is a clear
distinction between a declaration of constitutional invalidity and the just and equitable
remedy that must follow it. When a court encounters a situation of a clear illegal
impugned decision, it is the duty of the trial judge to determine what fairness demands.
Fortunately, the law is a pragmatic blend of logic and experience; it permits this Court
to exercise broad remedial powers to ameliorate the harsh consequences of invalidity
where factual certainty and fairness demand it.
The general principles emerging from the case law on the issue of what fairness
demands have been summarised in a plethora of cases. I tum, in particular, to the
principles stated in Special Investigating Unit v Phomella Property Investments (Ply)
Ltd and Another 2023 (5) SA 601 (SCA). In Phomella, the SCA clarified that a careful
and contextual reading of Alf Pay shows that the Constitutional Court did not hold that
a party could derive no benefit from an unlawful contract. This approach , allowing a
party to retain payments, and thus to benefit under an unlawful contract, has been
echoed in a number of matters. One such example is found in Buffalo City, where the
majority in the Constitutional Court held:
' ... I therefore make an order declaring the Reeston contract invalid, but not setting it
aside so as to preserve the rights to [which] the respondent might have been entitled.

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It should be noted that such an award preserves rights which have already accrued
but does not permit a party to obtain further rights under the invalid agreement. '
[125) In Phomella, the SCA emphasised that the contractor in Buffalo City had
completed its performance under the agreement. As such, the Constitutional Court
appropriately held that the contractor was entitled to receive payment for the work it
had performed.
(126] One final point bears mentioning. It has been strenuously submitted on the
Municipality's behalf that it has been demonstrated that Grey Elephant was not an
innocent tenderer but complicit in wr:ongdoing. So, the argument continues, it follows
from the principle enunciated by the SCA in Central Energy Fund, that Grey Elephant
is not only precluded from profiting from the unlawful lease agreement but must also
be required to suffer losses. This, of course, is a serious allegation, which if true is
quite relevant to the detennination of this Court.
[127) To my mind, this contention plainly overlooks the far-reaching effects of the
conduct by the Municipality's own personnel including its most senior officials. The
evidence in this matter evinces that when Lurie dealt with the Municipality's personnel
he did not do so nicodemously. He was entirely transparent about his dealings and
the meetings he attended. There was absolutely no attempt on his part to hide his
communications with the Municipality's staff. This is plainly not the conduct of a party
that acted in bad faith or one that can be held responsible for the resulting
unlawfulness. The email exchanges present fairly, in all material respects, what Grey
Elephant was discussing with the Municipality's officials.

44
[128] Beyond that, there is no other evidence save for the affidavit of Ms Campbell,
stating that she repeatedly told Lurie that any conclusion of the lease agreement
between the Municipality and Grey Elephant that was not preceded by an open and
transparent tender process would be unlawful. This begs the question as to why Ms
Campbell, a municipal official, would whisper warnings to Lurie rather than notifying
the Municipality, where she holds a statutory obligation to do so. Furthermore, the
circumstances surrounding these warnings remain entirely unclear. The email
exchanges between Ms Campbell and Lurie do not bear out this point. Aside from the
claim of warning there is nothing to create a distinct pattern of complicity. As such, it is
difficult to find that Grey Elephant was complicit. Certainly, a mere suspicion and
conjecture by a Court cannot suffice as proof.
(129] In the circumstances of this case, it is difficult to see on what basis the
Municipality seriously avers that Lurie was complicit in the unlawful act committed on
26 October 2023. What is worse, a fair reading of the email exchange between Mr
Lurie and the municipal staff compels the conclusion that Lurie was not an accomplice,
but rather a victim of this illegality.
[130] In fact, it is a striking feature of this case that, at the time the Municipality was
drafting the papers to launch this application, the Municipality had still not vacated the
leased premises, and Grey Elephant had been forced to issue an application for arrear
rental which remains unpaid. The Municipality's ongoing beneficial occupation of the
property, paired with its refusal to pay rental under the guise of constitutional invalidity,
is a material consideration that strongly influences the formulation of a just and
equitable remedy.
- --------- - - -----

45
[131] Having rendered complete performance while the Municipality enjoyed beneficial
occupation of the premises, Grey Elephant cannot be deprived of its accrued rights.
Fairness, and established precedent dictate that Grey Elephant is fundamentally
entitled to financial repayment, including the immediate payment of all outstanding
arrear rentals.
[132) In paragraph 3321-333 of the Answering Affidavit, it is asserted on Grey
Elephant's behalf that:
"Given the conduct of the Municipality ... in the event that this Court finds that the
lease was concluded unlawfully it would be just and equitable for the Court to grant an
order:
Declaring the lease and the resolution invalid:
Directing that the order of invalidity operates prospectively only from the date of
judgment; and
Directing the Municipality to make payment of the following amounts in terms of the
lease:
• R11 461 152.55 in respect of unpaid rental together with interest at the rate of
at 2 % (two percent) compounded per month or part thereof from due date of
payment to date of final payment.
• R14 348 091.44 in respect of unpaid tenant installation costs together with
interest at the rate of at 2 % (two percent) compounded per month or part
thereof from due date of payment to date of final payment."
(133] On the facts of the instant case, however, I am in no doubt whatsoever that the
submissions made on behalf of Grey Elephant are to be preferred. The evidence also
bears this finding. The contemporaneous correspondence conclusively demonstrated
that Grey Elephant acted in good faith, repeatedly demanding open competitive
bidding processes and relying entirely on the explicit assurances of senior Supply
Chain Management officials.

46
I 134] The Municipality's conduct is a critical factor for this Court to consider when
exercising its discretion regarding a remedy. In fashioning this relief, the Court cannot
ignore or overlook the Municipality's egregious, year-long delay and its
unconscionable attempt to paint Grey Elephant as a mala fide, complicit actor. It is
particularly egregious for a wrongdoer to shift blame onto an innocent party that is
equally victimised by unlawful conduct originating from the Municipality's highest
executive tier.
[135] It is, I think, worthwhile pausing at this point in order to examine the implications
of the Municipality conduct. For the Municipality to permit a private entity to invest
capital, allocate resources, and alter its commercial position based on an active
Council resolution, only to attempt to escape its financial rental obligations years later
thorough a self-review, is legally and constitutionally unconscionable. Grey Elephant
has performed under the contract. Surely, Grey Elephant as an innocent lessor is
entitled to payment for the performance done.
[136] The principle to be deduced from the authorities regarding the distinction
between a party that is complicit and one that is innocent is succinctly stated by
Schippers JA in Central Energy Fund SOC Ltd and Another v Venus Rays Trade 220
(Pty) Ltd and Others [2022] ZASCA 54; 2022 (5) SA 56 (SCA) at paras 41-42 as
follows:
"The second guiding principle is the 'no-profit-no-loss' principle which the Court
articulated as follows:
'It is true that any invalidation of the existing contract as a result of the invalid tender
should not result in any loss to Cash Paymaster. The converse, however, is also true.
It has no right to benefit from an unlawful contract.·
(42] The law draws a distinction between parties who are complicit in
maladministration, impropriety, or corruption on the one hand, and those who are not,
on the other. The category into which a party falls has a significant impact on the

47
appropriate just and equitable remedy that a court may grant. Parties who are complic it
in maladministration, impropriety or corruption are not only precluded from profiting
from an unlawful tender, but they may also be required to suffer losses. On the other
hand, although innocent parties are not entitled to benefit from an unlawful contract,
they are not required to suffer any loss as a result of the invalidation of a
contract."
Conclusion
[137] Regarding the unpaid rental amounts, consumption charges, and the applicable
interest rates, the papers do not clearly reveal the precise amounts outstanding.
Consequently, this Court cannot make a definitive determination on quantum without
further evidence. In the circumstances, it would be just and equitable to make the
following order.
(138] In the result, the following order is made:
1. The Municipal Council resolution dated 26 October 2023, to approve the
conclusion of a lease agreement with the Respondent without undertaking
a competitive and open tender process ("the impugned resolution") is
declared unconstitutional, unlawful and invalid.
2. The conclusion of the lease agreement between the Applicant and the
Respondent on 12 December 2023 and the resultant lease agreement ("the
impugned lease agreement'') is declared unconstitutional, unlawful and
invalid.
3. The impugned resolution and the impugned lease agreement are reviewed
and set aside.

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4. It is just and equitable that the Applicant be ordered to pay unpaid rental
amounts and consumption charges for its period of occupation commencing
on 1 May 2024 and ceasing on 31 July 2025.
4.1 The unpaid rental amounts are to be calculated on 1268 square metres, the
actual space occupied by the Applicant during the period of its occupation.
The exact quantum is to be calculated by the Respondent. Failing
agreement between the parties on the final amount within 14 days of this
order, the quantum shall be determined by an independent auditor or referee
jointly appointed by the parties, or, failing such agreement on the
appointment, by the Chairperson of the South African Institute of Chartered
Accountants (SAICA), whose determination shall be final and binding, with
the costs of such referee to be borne equally by the parties.
4.2Consumption charges (water and electricity) are to be calculated on the
Applicant's actual consumption during the period of its occupation. On this
basis, the sum of the consumption charges is an amount calculated and
proven by the Respondent.
4.3 Interest on the unpaid rental amounts and consumption charges shall be
calculated at the rate prescribed in section 1 of the Prescribed Rate of
Interest Act 55 of 1975 from date of judgment to the date of payment.
4.4 The Applicant shall pay the unpaid tenant installation costs as calculated by
the Respondent. Failing agreement between the parties on the final amount
within 14 days of this order, the quantum shall be determined by an
independent quantity surveyor jointly appointed by the parties, or, failing
agreement on the appointment, by the President of the Association of South
--~- ---

49
African Quantity Surveyors (ASAQS), whose determination shall be final
and binding;
4.5The Applicant to pay the costs of the application on Scale C, which costs
include the costs of two counsel, one of whom is senior counsel.
Appearances:
Counsel for Applicant
Instructed by
Counsel for Respondent
Instructed by
CN NZIWENI
JUDGE OF THE HIGH COURT
Advocate TG Madonsela SC
Advocate M Nombewu
Noko Maimela Attorneys
Mr N Maake
Advocate M Adhikari
Advocate M Ebrahim
A Chimes van Wyk Inc.
Mr D Curtis