Brief Summary

Costs — Municipal council — Liability of councillors for costs de bonis propriis — Appellants, elected councillors of Nala Local Municipality, voted on decisions affecting respondents, which were later set aside by the High Court — High Court ordered councillors to pay costs personally — Legal issue regarding the appropriateness of such costs order and the interpretation of section 28 of the Local Government: Municipal Structures Act — Constitutional Court held that councillors could be held liable for costs in civil proceedings under section 28(1)(b) as their conduct was related to council decisions, thus affirming the High Court's order for costs against the appellants.

Comprehensive Summary

Summary of Judgment

Introduction

The proceedings concerned an appeal to the Constitutional Court of South Africa limited to the correctness of a personal (de bonis propriis) costs order made against municipal councillors. The appeal did not revisit the merits of the High Court’s setting aside of two municipal council resolutions; it focused only on whether it was competent and appropriate to order individual councillors to pay costs personally, and on what costs order should follow once the High Court’s approach was found to be flawed.

The appellants were Gabriel Ntleli Swartbooi and seventeen others, all elected councillors of the Nala Local Municipality (the third respondent, referred to in the judgment as “the council”). The first and second respondents (Brink and Niewoudt) were also members of the municipal council and were the successful applicants in the Free State High Court review proceedings that challenged two council decisions affecting them.

In the Free State High Court, the respondents obtained an order setting aside both disputed council decisions. The High Court further made a rule nisi calling on the councillors who had supported the impugned decisions to show cause why they should not be ordered to pay costs personally on a punitive scale; on the return day it ultimately ordered the appellants to pay costs de bonis propriis on the scale as between attorney and own client. Leave to appeal was refused by the Supreme Court of Appeal, whereafter the appellants sought leave to appeal to the Constitutional Court on the costs issue only.

Upon granting leave, the Constitutional Court joined the municipal council as a party and invited further submissions from SALGA, the national minister responsible for local government, and members of provincial executive councils. The Court had already held (in the related leave-to-appeal judgment) that the matter raised a constitutional issue. In this merits judgment, the Court determined the circumstances (if any) in which councillors may be ordered to pay costs personally in litigation concerning the validity of council decisions, particularly in light of section 28 of the Local Government: Municipal Structures Act 117 of 1998 and section 161 of the Constitution.

The general subject-matter of the dispute was thus the interaction between statutory constitutional privilege/immunity for municipal councillors and the ordinary/common-law basis upon which courts may make punitive personal costs orders against persons acting in a representative capacity, together with the appropriateness of the particular order made by the High Court in this case.

Material Facts

The appellants were councillors who participated in deliberations and voted in favour of two municipal council decisions taken in April 2001, each of which materially affected the rights and position of the first and second respondents (who were also councillors). The High Court later set both decisions aside on review.

The first decision was taken on 19 April 2001 after deliberations concerning a settlement and payment of a claim by an agricultural society against the council’s predecessor (the Bothaville Town Council), concluded shortly before the municipal elections of November 1995, at a time when the municipal structures were in transition. Concerns were raised within the council about the propriety of the transaction and the settlement agreement signed by the first respondent (who had been mayor at the time). The council, without giving the respondents an opportunity to speak, decided in substance that the respondents should “recuse” themselves from all council meetings and stop communicating with council officials pending investigations by the South African Police Services, the Auditor-General, and the Public Protector.

On 20 April 2001, the mayor made a statement outside the council setting. The Court recorded that the statement was incorrect in at least two respects: it asserted that the report presented to the 19 April meeting clearly indicated looting and stealing of municipal funds of about half a million rand in 1995, and it further suggested that the report established the respondents’ complicity in stealing. The Court accepted that the report did not establish those conclusions and later proceeded on the assumption (favourable to the respondents) that this external statement was not protected by section 28.

The second decision was taken on 24 April 2001, when the council suspended the first respondent without pay for one year. The stated reason for the suspension was that she had instituted legal proceedings against the council to recover a sum of money admittedly due to her for a long time, and the council majority viewed the institution of those proceedings by a councillor as a breach of the council’s code of conduct. Because of the 19 April decision, the first respondent was not present at the 24 April meeting. The High Court set the suspension aside because the first respondent was not afforded a hearing, and because the council lacked power to suspend without approval from the relevant provincial executive authority.

In the High Court review proceedings, the respondents sought not only to have the decisions set aside but also sought punitive costs against the council. The High Court granted the review relief and, in addition, issued a rule nisi and later made the impugned order that the appellants (and others who supported the decisions) pay costs personally. The Constitutional Court treated it as common cause that the High Court’s personal costs order was based on the councillors’ conduct in the council meeting processes (including the production of a report, statements in support, and votes), as well as the mayor’s subsequent public statement, and that the High Court’s judgment reflected an intention that a personal costs order might operate to induce greater care by councillors in future.

Legal Issues

The central legal questions concerned the application of law to largely undisputed facts and the interpretation of constitutional and statutory provisions governing councillor privilege and immunity.

The Court was required to determine whether section 28(1)(b) of the Local Government: Municipal Structures Act 117 of 1998, enacted to give effect to section 161 of the Constitution, conferred immunity on municipal councillors in relation to the kind of personal costs order made by the High Court. This required a determination of whether a costs order that makes councillors liable in connection with review litigation constitutes “liab[ility] to civil … proceedings” within the meaning of section 28(1)(b), and whether the conduct relied upon for personal liability (statements, production/submission of material, and voting in council) fell within the protected sphere of “anything that they have said in, produced before or submitted to the council”.

A further issue was the proper scope of section 28 protection: whether it protects councillor participation only in the council’s legislative functioning, as opposed to administrative or executive decisions; and whether immunity could be denied where the council’s resolution was later found unlawful or unconstitutional.

In addition, assuming the High Court misdirected itself by not applying section 28, the Court had to determine what costs order should properly follow, including whether punitive costs were appropriate, and against whom (the council, the respondents, or both) the appellants’ costs in the Constitutional Court should lie.

Court’s Reasoning

The Court first located the relevant privilege and immunity framework within Chapter 7 of the Constitution (local government), focusing on section 161, which permits provincial legislation (within a national framework) to provide for privileges and immunities of municipal councils and their members. The Court then treated section 28 of the Municipal Structures Act as the enacted national framework provision giving effect to section 161, and noted that because the Free State’s contemplated provincial legislation had not yet come into effect at the relevant time, section 28(1)(a) and (b) applied in the Free State through section 28(2).

On the text of section 28(1)(b), the Court emphasised two interpretive aspects: the category of liability from which councillors are protected (civil or criminal proceedings, arrest, imprisonment, or damages), and the nature and location of protected conduct (what councillors have said in, produced before, or submitted to the council or its committees, and anything revealed as a result). The case did not concern criminal process, arrest, imprisonment, or damages, and therefore turned on whether the personal costs order entailed “liab[ility] to civil … proceedings”.

The Court held that the underlying High Court review application was plainly civil proceedings, and that the High Court’s rule nisi (calling upon councillors to show cause) made the councillors parties to those civil proceedings for the purpose of determining costs. The Court reasoned that no costs order could have been made against the appellants unless they had been parties at the time of the order, and the order requiring them to pay the costs of those civil proceedings accordingly rendered them liable to civil proceedings within the meaning of section 28(1)(b). On this approach, the personal costs mechanism used by the High Court was, in substance, a form of civil proceeding against councillors and therefore attracted the statutory immunity if the conduct relied upon was protected.

The Court then considered whether the relevant conduct fell within section 28(1)(b). The High Court had relied on the councillors’ conduct in supporting the impugned resolutions, which (on the papers) comprised the production of the speaker’s report, statements in support of the resolutions, and votes in favour. The Court interpreted the words “said in”, “produced before” and “submitted to” the council together as sufficiently broad to cover conduct integral to deliberations at a full council meeting and the legitimate business of that meeting. On that basis, the conduct relied upon by the High Court for imposing personal costs was, in general, conduct falling within section 28(1)(b).

The respondents argued for a narrower interpretation of section 28 protection, limited to conduct integral to the legislative functioning of the council, excluding administrative or executive decision-making. The Court rejected that limitation. While acknowledging the historical roots of absolute privilege as a concept tied to legislatures, the Court treated the present question as one governed by the supreme Constitution and the text of section 28. The Court found no constitutional warrant to restrict section 161 or section 28 to legislative functions only, particularly given that municipal councils exercise both executive and legislative authority and the primary function of a municipality is the exercise of administrative authority. The Court held, for purposes of this case, that section 28 protection covers councillor conduct constituting participation in deliberations of the full council in the course of its legitimate business, regardless of whether the resulting resolution is characterised as legislative, executive, or administrative. The Court expressly regarded it as unnecessary to classify the particular resolutions in issue.

The respondents also contended that section 28 should not protect conduct supporting resolutions later set aside (on the premise that unlawful municipal acts are contrary to the Constitution and thus could not attract immunity). The Court rejected this argument as inconsistent with the purpose and wording of section 28. It reasoned that, on the respondents’ approach, protection would evaporate whenever a decision was later set aside, regardless of whether the councillor knew of its unlawfulness, thereby materially undermining the aim of the protection. The Court identified the purpose of the immunity as enabling vigorous and open debate fundamental to democracy, and concluded that the protection is not limited to conduct supporting only lawful resolutions.

The Court dealt separately with the mayor’s external statement of 20 April 2001. Proceeding on the assumption that it was not protected by section 28, the Court nevertheless found that the statement was made after the 19 April meeting and did not contribute to the decisions that were set aside. As a result, it did not provide a basis for imposing personal costs in the application to set aside the council decisions.

Having established the protective scope of section 28, the Court then evaluated the High Court’s approach. It observed that the High Court did not consider section 28 and instead appears to have applied common-law rules for personal costs orders, relying on what it regarded as incompetent, malicious, and partially racist conduct, and on the impropriety of the decisions. While the Constitutional Court acknowledged that many criticisms of the councillors’ conduct and the quality of the decisions were justified, it held that, had section 28 been applied, those criticisms could not deprive the appellants of the immunity conferred by the statute. The failure to apply section 28 was a material misdirection, entitling the Constitutional Court to reconsider the costs question afresh.

The Court also criticised the High Court’s apparent reasoning that a personal costs order would ensure councillors take more care in future. The Constitutional Court characterised this as a punitive, lesson-teaching motive and found it to be an improper purpose, because it amounted to judicial conduct aimed at influencing legislative/executive behaviour. While courts may set aside unconstitutional decisions, the Court held they may not use costs orders to punish councillors so as to shape future conduct, which would intrude upon separation of powers. This reinforced the conclusion that the High Court’s personal costs order could not stand.

Once the personal costs order was set aside, the Court turned to what costs order should replace it. It concluded that the council should bear the High Court costs, and that a punitive scale (attorney and client) was fair because the council’s stance was marked by considerable ineptness, the decisions were obviously unfairly taken and ought to have been conceded as invalid, and the respondents should not have been put to the inconvenience and expense of litigation to defend untenable decisions. The Court also noted that the council had contended in the High Court that the respondents should themselves pay attorney-and-client costs, which supported the fairness of ordering attorney-and-client costs against the council.

As to costs in the Constitutional Court, the Court held that the council should pay the respondents’ costs in this Court as well, because the respondents were entitled to be represented to protect their interests (including the scale of costs) and because the council persisted in defending the correctness of the set-aside decisions in written argument.

The Court then addressed the appellants’ costs in the appeal. Although the respondents were the parties who unsuccessfully supported the High Court judgment and disputed that the council should bear High Court costs, the Court considered it would be unfair to saddle the respondents with all of the appellants’ costs given what they had already suffered from the council’s decisions and their aftermath. The Court thus exercised a fairness-based allocation, ordering the council to pay part of the appellants’ costs and the respondents to pay the remainder.

Outcome and Relief

The Constitutional Court allowed the appeal and set aside the High Court’s personal costs order against the appellants. It held that there was no legal basis to impose civil liability on the appellants for costs arising from their protected participation in council proceedings, given the immunity conferred by section 28.

The Court ordered that the appellants’ costs of the appeal be shared equally between the respondents and the council, with the first and second respondents paying half and the third respondent (the council) paying half.

The Court set aside paragraph 2 of the High Court order of 10 December 2001 (which had embodied the rule nisi/personal costs consequences) and replaced it with an order (quoted in Afrikaans in the judgment) directing the relevant respondent in the High Court proceedings to pay the costs of the application on the scale as between attorney and client, which in substance placed the costs burden on the municipal council rather than on individual councillors.

The Court further ordered that the third respondent (the council) pay the first and second respondents’ costs in the Constitutional Court. No costs orders were made in relation to submissions by SALGA, the national minister, or the Gauteng MEC, as they sought no costs.

Cases Cited

Swartbooi and Others v Brink and Another 2003 (1) BCLR 21 (CC).

Regional Magistrate v Du Preez Walker 1976 (4) SA 849 (A).

Cooper v First National Bank of SA Ltd 2001 (3) SA 705 (SCA).

Darries v Sheriff, Magistrate’s Court, Wynberg, and Another 1998 (3) SA 34 (SCA).

Poovalingam v Rajbansi [1991] ZASCA 124; 1992 (1) SA 283 (A).

Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others [1998] ZACC 17; 1999 (1) SA 374 (CC); 1998 (12) BCLR 1458 (CC).

Church of Scientology of California v Johnson-Smith [1972] 1 All ER QBD 378.

Ward v Sulzer 1973 (3) SA 701 (A).

Rondalia Assurance Corporation of SA Ltd v Page and Others 1975 (1) SA 708 (A).

Blou v Lampert and Chipkin, NNO, and Others 1973 (1) SA 1 (A).

Attorney-General, Eastern Cape v Blom and Others 1988 (4) SA 645 (A).

Premier, Mpumalanga, and Another v Executive Committee, Association of State-Aided Schools, Eastern Transvaal [1998] ZACC 20; 1999 (2) SA 91 (CC); 1999 (2) BCLR 151 (CC).

Nel v Waterberg Landbouwers Ko-operatieve Vereeniging 1946 AD 597.

Legislation Cited

Constitution of the Republic of South Africa, 1996 (sections 58, 71, 117, 151(2), 156(1), 156(2), 160(6), 161; Part B of Schedule 4; Part B of Schedule 5).

Local Government: Municipal Structures Act 117 of 1998 (section 28).

Free State Privileges and Immunities of Municipal Councillors Act 2 of 2002.

Republic of South Africa Constitution Act 32 of 1961 (section 75).

Rules of Court Cited

No rules of court were cited in the judgment.

Held

Section 28 of the Local Government: Municipal Structures Act 117 of 1998 conferred immunity on municipal councillors against being made liable in civil proceedings (including by being joined via a rule nisi for purposes of a costs order) for conduct consisting of what they said in, produced before, or submitted to the municipal council in the course of the legitimate business of a full council meeting.

The High Court’s failure to consider and apply section 28 was a material misdirection. The High Court’s reliance on councillors’ participation in council deliberations and voting could not, in the face of section 28, justify a de bonis propriis costs order. The mayor’s external statement, assumed to be unprotected, did not provide a proper basis for personal costs because it occurred after the relevant meeting and did not contribute to the impugned decisions.

A personal costs order motivated by an intention to “teach councillors a lesson” was treated as an improper approach inconsistent with the separation of powers. Consequently, the personal costs order against the appellants was set aside and substituted with an order placing the High Court costs liability on the municipal council on an attorney-and-client scale, with further tailored orders on costs in the Constitutional Court, including a split of the appellants’ appeal costs between the respondents and the council.

LEGAL PRINCIPLES

Section 28(1)(b) of the Local Government: Municipal Structures Act 117 of 1998 provides municipal councillors with immunity from liability to civil proceedings where the alleged liability arises from protected conduct, namely what they have said in, produced before, or submitted to the council (and related revelations), when that conduct forms part of participation in the legitimate business of a full council meeting.

The statutory protection is not confined to councillors acting only in a narrowly defined legislative capacity. For purposes of section 28 protection, the classification of a council’s resolution as legislative, executive, or administrative was not determinative where the impugned conduct consisted of participation in full council deliberations.

The protection does not fall away merely because the underlying resolution supported by councillors is later set aside as invalid. Limiting immunity to conduct supporting only lawful resolutions would undermine the purpose of the protection, identified as facilitating vigorous and open debate fundamental to democratic decision-making.

A court’s discretion to craft costs orders does not extend to using personal costs orders as a mechanism to punish elected councillors so as to influence future conduct in the legislative and executive domains; such an approach was treated as an improper purpose that implicates separation of powers concerns.

Swartbooi and Others v Brink and Another (2) (CCT27/02) [2003] ZACC 25; 2006 (1) SA 203 (CC); 2003 (5) BCLR 502 (CC) (3 April 2003)