Kosmos Ridge Homeowners' Association v Madibeng Local Municipality and Others (30085/09) [2020] ZAGPPHC 565; 2022 (2) SA 207 (GP) (1 October 2020)
The court found that the relief sought by the applicant, namely an order compelling the Minister of Finance to ring-fence funds for the construction of a sewerage plant, is incompetent in law. The constitutional and statutory framework establishes the autonomy of municipalities and restricts intervention by national...
Source-derived case information.
- Citation
- [2020] ZAGPPHC 565
- Parties
- Applicant: Kosmos Ridge Homeowners' Association; Respondent: Madibeng Local Municipality; Respondent: Member of the Executive Council: Local Government, North West Province; Respondent: Minister of Water Affairs & Forestry; Respondent: SF Molokoane-Machika; Respondent: PM Mapulane; Respondent: Minister for Co-operative Governance & Traditional Affairs; Respondent: The Executive Mayor of the First Respondent; Respondent: The Municipal Manager of the First Respondent; Respondent: The Minister of Finance
- Court
- North Gauteng High Court, Pretoria
- Jurisdiction
- South Africa
- Case Number
- 30085/09
- Procedural Posture
- Civil Application / Final Judgment on Application for Relief Against the Minister of Finance
- Outcome
- Application dismissed.
- Judges
- Fabricius
- Legal Topics
- Municipal Autonomy, Contempt of Court, Division of Revenue Act, Mandamus, Constitutional Separation of Powers, Local Government Finance
Source-derived case record
Summary, issues, holding and outcome
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Parties
Kosmos Ridge Homeowners' Association
Applicant
Madibeng Local Municipality
Respondent
Member of the Executive Council: Local Government, North West Province
Respondent
Minister of Water Affairs & Forestry
Respondent
SF Molokoane-Machika
Respondent
PM Mapulane
Respondent
Minister for Co-operative Governance & Traditional Affairs
Respondent
The Executive Mayor of the First Respondent
Respondent
The Municipal Manager of the First Respondent
Respondent
The Minister of Finance
Respondent
Procedural Posture
Civil Application / Final Judgment on Application for Relief Against the Minister of Finance
Legal Issues
- 1 Whether the Minister of Finance can be ordered to ring-fence funds for the erection of a sewerage plant in Madibeng Local Municipality.
- 2 Whether the persistent non-compliance by the municipality with court orders justifies shifting constitutional obligations to the Minister of Finance.
- 3 Whether the relief sought is competent in law given the constitutional scheme and statutory framework.
Ratio Decidendi
The court found that the relief sought by the applicant, namely an order compelling the Minister of Finance to ring-fence funds for the construction of a sewerage plant, is incompetent in law. The constitutional and statutory framework establishes the autonomy of municipalities and restricts intervention by national government to specific circumstances, notably section 139 of the Constitution, which was not applicable in this case. The powers of the National Treasury under the MFMA are limited to monitoring and, in cases of breach, stopping funds, not reallocating or ring-fencing them for particular projects. The principle of legality requires that public power be exercised only when...
Court Disposition
Application dismissed.
Orders
- The application is dismissed.
- The first respondent (and/or the administrator or task team) is granted 14 days from date hereof to make submissions why it should not pay the costs of this application including costs of 2 counsel. Applicant may respond thereto within 5 days after receipt of such submissions, all of which are to be delivered in...
Full Case Text
Judgment text and source record
174 paragraphs
IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
(1) REPORTABLE: YES/NO
(2) OF INTEREST TO OTHERS JUDGES: YES/NO
(3) REVISED
CASE NO: 30085/09
In the matter between:
KOSMOS RIDGE HOMEOWNERS’
ASSOCIATION
Applicant
and
MADIBENG LOCAL MUNICIPALITY
First Respondent
MEMBER OF THE EXECUTIVE COUNCIL:
LOCAL GOVERNMENT, NORTH WEST PROVINCE
Second Respondent
MINISTER OF WATER AFFAIRS & FORESTRY
Third Respondent
SF MOLOKOANE-MACHIKA
Fourth Respondent
PM MAPULANE
Fifth Respondent
MINISTER FOR CO-OPERATIVE
GOVERNANCE & TRADITIONAL AFFAIRS
Sixth Respondent
THE EXECUTIVE MAYOR OF
THE FIRST RESPONDENT
Seventh Respondent
THE MUNICIPAL MANAGER OF
THE FIRST RESPONDENT
Eighth Respondent
THE MINISTER OF FINANCE
Ninth Respondent
JUDGMENT
FABRICIUS J
[1] This matter has a long and rather sad history inasmuch as it indicates how the first respondent has failed to comply with its statutory duties and even Court orders, either through institutional incompetence, maladministration and mala fides. It is also rather inexplicable why the applicant has not employed every lawful avenue to safeguard its rights in terms of the Court orders, although I understand, as does the ninth respondent, that there were practical difficulties.
[2] It would go well beyond the purpose of this judgment to delve into the history of the present issue, and I will thus confine myself to the relief that the applicant now seeks against the 9th respondent.
[3] The applicant is an association incorporated in terms of s21 of the Companies Act of 1973, and was incorporated after the Kosmos Ridge Township has been established on 16 November 1999 on the authority of the 1st respondent’s predecessor in title, the Hartbeespoort local council.
[4] The founding affidavit under case no 30085/09 refers to the history of the matter and the statutory duties of 1st respondent. In that application a declaration was sought that first and other respondents were in contempt of a court order dated 25 February 2005, as well as a mandamus that this order be complied with.
[5] The 2005 order was to the effect that a complete and suitable purification/reticulation plant be erected in terms of the applicable town-planning scheme.
[6] First respondent, in the answering affidavit, pleaded amongst others, the lack of the necessary funds.
[7] Suffice it to say, that order was not complied with.
[8] Another order was made on 12/10/2011. This incorporated an undertaking by the first respondent, the acting municipal manager at the time, as well as the then executive mayor. This undertaking read as follows:
“We, the undersigned in our respective capacities as the First Respondent (Madibeng Local Municipality), as the Executive Mayor of the First Respondent and as the Acting Municipal Manager of the First Respondent declare that we are aware of the following facts:
1.
1.1 The court order in case number 20810/2004 dated 25 February (herein further referred to as “the 2005 order’);
1.2 The court order in case number 30085/2009 dated 24 November 2009 (to which Application will herein further be referred to as “the contempt application”)
1.3 The fact that the environmental authorization referred to in the said court order of 24 November was received by the First Respondent not later than the 28th June 2010
1.3 The despite this, the First Respondent has not complied with the 2005 order, and
1.4 That the Municipality is by law compelled to give effect to the 2005 order failing which the court may, on application by the Applicant who obtained the order in the first place, inter alia order the imprisonment of the officials or office bearers responsible.
2.
We undertake that the First Respondent will comply with prayers 2 (with its sub- paragraphs), 3 (with its sub-paragraphs), 4 (with its sub-paragraphs), 5 (with its sub-paragraphs),6,7 and 8 of the contempt application.
We agree thereto that all the time periods referred to in prayers 2 to 8 as referred to in paragraph 2 above, will be calculated from the 1st of September 2011.
4.
We undertake to provide Messr Len Dekker and Associates at 41 Elephant Stree, (cnr of Rhenoster Stree), Monument Park Pretoria, 0181 or at telefax number 086 677 8266 or at the e-mail address len@lendekker.co.za with progress reports every two months until full compliance with the obligations undertaken in this undertaking. The first report will be made on or before the 31st September 2011 and thereafter on or before the last day of every second month.
5.
We admit and agree thereto that if any obligation covered by the undertaking in paragraph 2 above is not complied with at any time as from the 1st August 2011 then the applicant will be entitled to immediately and without any further notice proceed with the contempt application as well as the proposed joinder application of the Applicant of which we were made aware.
6.
We, the First Respondent, Mpho Poppy Magongwa (Executive Mayor of the First Respondent) and AK Modise (Acting Municipal Manager of the First Respondent) agree thereto that this undertaking is made an order of court by way of a separate interlocutory application in the contempt application as soon as the Applicant may be able to enroll the said interlocutory application.
7.
We admit that the First Respondent is liable for the opposed costs of the contempt application, including the costs of the appearance on the 24th November 2009 as well as the unopposed costs of the interlocutory application referred to in paragraph 6 above. “
[9] Prior to that undertaking however, and on 24 November 2009 this court had issued another order which read as follows:
“…
3. The First Respondent, alternatively the Fourth Respondent, alternatively the Fifth Respondent must submit a comprehensive progress report to the Registrar of this Court and to the Applicant’s attorney
on or before 1 May 2010, dealing with the progress made with obtaining an environmental authorisation (“the authorisation”)
permitting the First Respondent to construct a sewer treatment plant on Erf 128 Kosmos Ridge Township, and in the event of the
authorisation having been obtained before 1 May 2010, the report should also contain a timeframe within which the First Respondent
commits itself to construct the sewer treatment plant and the other outstanding issues referred to in the Order of this Court dated 25 February 2005 under case no. 20810/2004. “
[10] The position then was that in essence the 2005 order had still not been complied with.
[11] Ultimately, this court, by way of Neukircher J issued the following order on 18 July 2019:
1. The supplementary founding affidavit of this application for inter alia the joinder of the Seventh, Eighth and Ninth Respondents (herein after referred to for brevity sake as “the 2018/2019 supplementary relief application”) also serves as supplementary founding affidavit in support of the main application dated 18 May 2009 (and hearing further referred to for brevity sake as “the main application”).
2. The filing of the supplementary founding affidavit in support of the main application and of the 2018/2019 supplementary relief application be and hereby are condoned.
3. The first respondent is declared to be in contempt of the court orders of this Court dated 25 February 2005 (case number 20810/2004) (hereinafter referred to as “the 2005 order”) and dated 12 October 2011 (case number 20085/09) and herein after “the October 2011 order” or “the Van der Byl order”).
4. The Seventh and the Eighth Respondent jointly and severally are ordered to place
4.1 the 2005 order;
4.2 the October 2011 order; and,
4.3 this order
on the agendas of both the full council and the male committee of the First Respondent where it will remain until the 2000 order and the Van der Byl order as amended by this order will have been complied with.
5. The Seventh Respondent and the Eighth Respondent jointly and severally will table the progress reports referred to in paragraph 7 of the notice of motion of the main application at each meeting of the may mayoral executive committee and at each meeting of the full council of the First Respondent until the 2005 order and the Van der Byl order as amended by this order will have been complied with.
6. The undertaking of the First Respondent as contained in the Van der Byl order dated 12 October 2011 to comply with paragraph 3 of the notice of motion dated 18 May 2009 is replaced alternatively amended in order to substitute the sewerage purification plant referred to in prayer 3.1 of the Notice of Motion dated 18 May 2009 with the sewerage purification plant described in “Annexure DR2” will hereinafter be referred to as ”the sewerage plant”.
7. The First Respondent is ordered to:
7.1 apply for an environmental authorisation in terms of section 24 (2)(a) of the National Environmental Management Act 107 of 1998, within one month of the date of this order.
7.2 insofar as it may be necessary, apply for a licence in terms of section 45 of the National Environmental Management Waste Act 59 of 2008 for the construction of the sewerage plant including associated structures, within one month of the date of this order.
7.3 apply for any permits that may be required for the removal or disturbance of any flora or fauna species of conservation importance from or on Erf 128, within one month of the date of this order.
7.4 apply for any permits that may be required for the removal of any protected tree species on Erf 128 within 2 (TWO) months of date of this order.
7.5 apply for such water license, as are required by the provisions of the National Water Act 36 of 1998 in addition to the existing water use license referenced 03/A21C/E/2204 within one month of the date of this order.
8. Subject to the authorisation or licenses as referred to in prayer 7, the First Respondent is ordered to erect the sewerage plant on Erf 128, Kosmos Ridge Township within 12 months from the date of the last of such authorisations.
9. The First Respondent shall follow the prescripts of its supply chain management policy to procure the erection of the sewerage plant.
10. The First Respondent will provide the Applicant with the following in respect of the procurement process:
10.1 Copies of the applications for the environmental authorisation and licences and any permits as referred to above within ten days of the filing or receipt thereof.
10.2 Copies of all written communications between the First Respondent and the Environmental Authorities concerned within ten days of the dispatch or receipt thereof.
10.3 The decision of the Environmental Authorities concerned within ten days of the receipt thereof.
10.4 The notice of any meeting and the agenda for every meeting of the Bid Specification, Bid Evaluation and Bid Adjudication Committees (collectively referred to hereinafter as “the Committees”) involved with the procurement process for the sewerage plant not later than five days before any meeting.
10.5 The minutes and reports of the committees relevant to the sewerage plant by no later than one month after the meetings thereof and by no later than one month after the production of any reports.
10.6 Any progress reports issued by the consulting engineer that oversees the project regarding the construction of the sewerage plant within ten days of receipt thereof.
11. The first respondent yearly will confirm with the applicant that funds are allocated for the construction of the sewerage plant starting with the allocation of its equitable share during June 2019 and thereafter at each allocation date of its equitable share in terms of the yearly Division of Revenue Act (for 2018 Act 1 of 2008) (hereafter “DORA”) until finalisation of the erection of the sewerage plant.
12. The costs:
12.1 of the design of the sewerage plant will be paid by the First Respondent not later than three months after granting of this order.
12.2 of construction will be paid by the First Respondent in the amounts and at the time specified in the construction agreement with the successful bidder.
13. The First Respondent is ordered to file a report to this Honourable Court on or before the expiry of the fourth month after the date of granting of this order and thereafter at intervals of four months until such time as the sewerage plant will have been erected on the following issues:
13.1 Its compliance with the 2005 order and the Van der Byl order as
amended by this order.
13.2 The compliance by the First Respondent with the obligations imposed
by each of the prayers granted in terms of this order.
13.3 Reasons for nay non-compliance or delays in progress in respect of compliance.
14. The Applicant will at any time be entitled to approach this court under this case number on the same papers suitably amplified, for any supplementary relief that it may regard necessary and such supplementary relief may include demanding of the Eighth Respondent to appear before this court and to advance reasons why he should not be imprisoned pending compliance with the court order.
15. Costs of suit on an attorney and own client scale including the costs of two counsel to be paid by the First Respondent and which costs include the costs of the enrolment of the application on the unopposed role of 5 September 2012.
16. The relief sought against the Ninth Respondent in prayers 1,2,4,5 (with its sub-paragraphs), 6,7,8 (with its sub-paragraphs), 9,10,11 (with its sub-paragraphs), 12 (with its sub-paragraphs),13,14 (with its sub-paragraphs), 15,16 (with its sub-paragraphs), 17 (with its sub-paragraphs), 18,19 and 20 of the notice of motion dated 30 January 2019 are postponed sine die.”
It will therefore be noted that the relief sought against the 9th respondent, the Minister of Finance, was postponed sine die.
[12] This relief, as per a supplementary notice of motion of 30 January 2019, and as per par 15 thereof, read as follows:
“The ninth respondent is ordered to hold the funds allocated alternatively required for the purposes of erection of the sewerage plant separately and specifically for the execution of the first respondents obligations in terms of this order and to release such funds only for purposes of the execution of the first respondent’s obligations in terms of this order.”
[13] Paragraph 18 deals with the possibility that in future the 9th respondent may be in contempt of an order. It is not appropriate to deal with that topic at this stage.
[14] During argument I was told that first respondent had been placed under administration in terms of s 139(1)(b) of the Constitution. I invited the applicant to provide further written submissions, regarding the powers and duties of such administrator but no specifics could be provided. It seems as if a “Task Team” had been appointed by the Minister of Cooperative Governance during August 2020. In my view, applicant has the detailed order of Neukircher J at its disposal and must exercise its rights thereunder, no matter how difficult it may be.
APPLICANT’S ARGUMENT
[15] I accept that the first respondent is “dysfunctional” as it was put. I also accept that applicant’s requirements as expounded by the order of 18 July 2019 are of ecological importance. I also accept that the first respondent and its officials, have “failed dismally” having regard to their duties referred to in s152 of the Constitution. Shorn of all frills it is applicant’s case that I can grant the order sought almost on the basis of necessity. It was argued that although there was no constitutional or other legislative measure that would allow me to grant the order, but that there was also no provision that prohibited it. Reference was made to s155(7) of the Constitution which deals with the oversight function of the national government by way of ensuring the effective performance of municipalities in respect of matters listed in Schedule 4 Part B of the Constitution. Schedule 4 Part B deals with water and sanitation services and sewerage disposal systems. In addition, reliance was placed on s216 (1) and (2) of the Constitution which deals with certain duties of the national treasury. The conclusion was that the 9th respondent has a “constitutional oversight obligation over the first respondent. Lastly, I was asked to provide this “innovative
relief” based essentially on “necessity”, with reference to s172 (1)(b) of the Constitution. This argument is
misplaced, and the authorities relevant thereto do not apply here, inasmuch no law or conduct of or by the 9th respondent has been declared to be inconsistent with the Constitution.
[16] Reference was also made to the provisions of s5 of the Local Government: Municipal Finance Management Act 56 of 2003. The obligation to, “monitor” in that context is something totally different to the alleged right by the 9th respondent to interfere with the executive functions of a Municipality referred to in s151 (2) read with s156 of the Constitution. The submissions made by the 9th respondent’s counsel make this abundantly clear, and I agree with him.
[17] 9TH RESPONDENT’S ARGUMENT: THE CONSTITUTIONAL ROLE OF MUNICIPALITIES
[17.1] Section 40 of the Constitution provides that the 3 spheres of government (national, provisional and local) are “distinctive,
interdependent and interrelated”. Each sphere must however not encroach on the functional integrity of government in another sphere (s41(1)(g)).
[17.2] The autonomy of municipalities is recognised in s151(3) which states that municipalities have the right to govern on their “own initiative”. Section 151(4) states that other spheres of government “may not compromise or impede a municipality’s authority or right to exercise its powers or perform its functions.”
[17.3] The local sphere of government vests in municipalities and the executive and legislative authority resides in its municipal council. Municipalities have the autonomy to allocate resources to meet the basic needs of communities and respond to local priorities.
[17.4] The constitutional scheme was made clear by the Constitutional Court in City of Johannesburg Metropolitan Municipality v Chairman of the National Building Regulations Review Board (CoJ case) 2018 (5) SA 1 (CC) where the following was said:
"This constitutional scheme gives effect to the principle of separation of powers among the spheres of government. In addition, this scheme abolishes the notion that municipalities are creatures of statute entrusted to provincial councils to administer. On the contrary the Constitution establishes and entrenches the status and autonomy of municipalities which constitutes the local sphere of government. It confers on them original constitutional powers that are exercised exclusively by municipalities.
In Robertson this Court declared:
"The Constitution has moved away from a hierarchical division of governmental power and has ushered in a new vision of government in which the sphere of local government is interdependent, 'inviolable and possesses the constitutional latitude within which to define and express its unique character subject to constraints permissible under our Constitution. A municipality under the Constitution is not a mere creature of statute otherwise moribund save if imbued with power by provincial or national legislation. A municipality enjoys 'original' and constitutionally entrenched powers, functions, rights and duties that may be qualified or constrained by law and only to the extent the Constitution permits."
[17.5] While it appears that the Applicant acknowledges that a municipality ordinarily is autonomous and governs on its own initiative, it argues that based on the facts of this case with Madibeng Local Municipality's consistent failure to comply with this Court's orders, means that the Municipality has "forfeited" any constitutional autonomy. The Applicant argues that the Madibeng Local Municipality "has no autonomy to allocate resources, it simply has to comply with a court order by erecting a sewerage treatment plant. The Applicant argues that section 155(7) read with section 216 of the Constitution and 5(2)(f) of the Local Government: Municipal Finance Management Act, 56 of 2003 ("the MFMA") provide the constitutional authority for the intervention that it seeks from the Minister of Finance and the ring-fencing of funds allocated to the Municipality in terms of the DoRA.
[17.6] The Applicant provides no authority for its argument that a constitutional institution can forfeit its original constitutional powers. While the Constitution does provide mechanisms for the Provincial and National government to intervene in dysfunctional municipalities, those processes are limited and circumscribed by the Constitution in section 139, which is not applicable in the present matter.
[17.7] Furthermore, while sections 155(6) and (7) of the Constitution provide that National and Provincial government have "oversight" over municipalities by regulating how municipalities exercise their executive authority, this does not mean that National or Provincial
government may abrogate to itself the powers of a municipality or take over the executive authority functions of that municipality.
This was made clear by the Constitutional Court in the CoJ case where the Court sought to clarify the meaning of section 155(7) of the Constitution, it held at par 34:
“At first blush, this provision may be read as authorising the national and provincial spheres to exercise the executive authority of municipalities. But when carefully read it does not. What section 155(7) means is that the national and provincial spheres may exercise their legislative and executive powers to enable municipalities to exercise their own powers and perform their own functions. Therefore, the exercise of legislative and executive authority by these spheres is limited to capacitating municipalities to manage their own affairs and regulating how this must be done. It does not mean that the national sphere may itself take over and exercise the executive authority of a municipality.”
[17.8] The power to decide how a municipality allocates its budget rests with the municipal council (section 16(1) of the Municipal Finance Management Act (“MFMA”). The budget sets out the expenditure and capital projects that will be undertaken by the municipality (Section 15 of the MFMA). Similarly, the decision on which projects are considered for implementation in any budgetary year rests with the municipal council, which must be implemented in accordance with the municipality's Integrated Development Plan (IDP) (Section 19 of the MFMA read with section 35(1)(a) of the Municipal Systems Act 32 of 2000). To the extent that the Minister of Finance decides to ring-fence certain funds for specific projects in respect of the Madibeng Local Municipality, the Minister would be abrogating to himself powers of the municipal council. While the Applicant correctly points out that the Madibeng Local Municipality has failed to comply with several court orders to build the sewerage treatment facility, none of the court orders in question empower or authorise the Minister of Finance to usurp the constitutional autonomy of Madibeng Local Municipality and to ring-fence funds for a specific project on the Applicant's behalf.
[18] Moreover, there remain specific mechanisms for dealing with parties that are in contempt of court orders. Those processes do not involve shifting the constitutional obligation for compliance with the court orders away from Madibeng Local Municipality to the Minister of Finance.
[19] The essence of the issue is thus as follows, and I agree with 9th respondent’s counsel’s submission:
19.1 First, section 155(7) does not contemplate or authorise the intervention sought by the Applicant from the Minister of Finance or the National Treasury.
19.2 Second, while the Constitution does provide mechanisms to deal with errant municipalities, those mechanisms are carefully circumscribed in section 139 of the Constitution. This case does not involve section 139 of the Constitution. According to the Constitutional Court, "the only interference permissible in the exercise of executive authority is the one contemplated in section 139 of the Constitution. That provision authorises the provincial sphere to intervene under certain expressly defined circumstances only (CoJ at para 27).
19.3 Third, in CoJ, the Constitutional Court specifically stated that "there is no constitutional provision that allows a member of Cabinet to intervene in the exercise of constitutional powers by municipalities. This intervention is at odds with the separation of powers created by the constitutional scheme mentioned earlier" (CoJ at para 26). This is particularly significant because the intervention sought by the Applicant is from the Minister of Finance, a cabinet member, in his capacity as the political head of the Department of Finance and National Treasury.
THE ROLE OF THE NATIONAL TREASURY IN THE ALLOCATION AND MANAGEMENT OF FUNDS:
[20] The primary role of National Treasury is in the management of government expenditure, setting financial management (norms and standards for organs of state) and monitoring their performance (s216 of the Constitution read with s 5(1) and (2) of the said MFMA). In line with this, the National Treasury has the role of monitoring and assessing fiscal management and budgets within municipalities.
[21] The Applicant placed a lot of emphasis on section 5(2)(a) and (f) of the MFMA arguing that these provisions provide the legal authority for the Minister of Finance to take appropriate steps if a municipality commits a breach of the MFMA. These sub-sections provide that the National Treasury must:
“(e) take appropriate steps if a municipality or municipal entity commits a breach of this Act, including the stopping of funds to a municipality in terms of section 216 (2) of the Constitution if the municipality, or a municipal entity under the sole or shared control of that municipality, commits a serious or persistent material breach of any measures referred to in that section; and
(f) take any other appropriate steps necessary to perform its functions effectively.”
[22] Section 5(1)(e) of the MFMA applies where the municipality has committed a breach of the MFMA. Furthermore, the primary power granted to the National Treasury where there has been a breach of the MFMA is for it to stop funds to the municipality in terms of section 216(2) of the Constitution and not to re-allocate or ring-fence funds on behalf of the Municipality.
[23] Furthermore, section 5(2)(f) states that the National Treasury can "take any other appropriate steps" to perform its functions effectively. The appropriate steps that may be taken are constrained and confined by what the proper functions of the National Treasury are. Thus section 5(2)(f) must be read in light of the whole of section 5(1) and 5(2) of the MFMA. If a particular action does not fall within the functions of the National Treasury, it would be impermissible to use section 5(2)(f) as the authority for
taking such action. Section 5(2)(f) only empowers the National Treasury to take appropriate steps to fulfil functions which are
already within its remit. It does not on its own, extend the powers and functions of the National Treasury.
[24] While the Applicant correctly notes that the DoRA envisages the making of conditional grants, the Applicant elides the explanation given by the Minister of Finance in his answering affidavit as to how this is done.
[25] The DoRA makes provision for conditional grants directed at specific purpose allocations to municipalities. There are a variety of conditional grants, falling into two main groups; infrastructure and capacity-building grants.
[26] The conditional grant allocated to municipalities is informed by the national government share and gets allocated to municipalities to deliver a service on behalf of national government for purposes of redressing fiscal imbalances.
[27] While conditional grants can be directed at specific earmarked projects, it is for the municipality to determine which projects it earmarks for such a grant and for such a project to fall within the objectives set by the National government. The National Treasury, therefore, allocates based on the direction given by the municipality.
[28] The detailed process of approving a conditional grant is as follows:
28.1 Conditional grants are determined through a consultation process with the municipality. A Department (for example the Water and Sanitation Department) will allocate to a municipality the conditional grants they administer. The grant allocations are sent through to National Treasury for inclusion in the Division of Revenue Bill for the upcoming financial year.
28.2 The Division of Revenue Bill once finalised, with all conditional grant allocations as determined by the Departments is then tabled by the Minister of Finance together with the national budget for the year. The President will only enact the DoRA after both the National Assembly and National Council of Provinces have debated on the Bill in Parliament and through various provincial legislatures.
28.3 Each conditional grant has an individual grant framework that outlines the following, inter alia:
28.3.1 The strategic goal and purpose of the grant;
28.3.2 The outcome statements and outputs of the grant,
28.3.3 The priority outcome(s) of government that the grant primarily contributes to;
28.3.4 The conditions of the grant (additional to what is required in DoRA)."
[29] Municipalities must adhere to what the grant is funding and the conditions imposed. Once the conditional grant is approved as outlined above, neither the Minister of Finance or National Treasury can decide to repurpose funds as is being sought by the Applicant. It is evident from what is set out above that conditional grants are not determined on an ad hoc basis but are included in the annual DoRA that is approved by both houses of parliament. The relief sought by the Applicant not only ignores this but either seeks to rely on future or past DoRAs, which is impermissible.
[30] It appears clearly that I cannot grant the relief sought. It is incompetent in law. A minister cannot “ring-face” funds on the basis of “necessity” and empathy which he has indicated. According to the rule of law and the principle of legality public power may not be exercised if it is not conferred by law: See: Affordable Medicines Trust v Minister of Health and Others [2005] ZACC 3; 2006 (3) SA 247 (CC) at par [49].
[31] Accordingly with following order is made: The application is dismissed.
[32] There remains the question of costs. This lies within the discretion of the Court which must be exercised judicially and on the basis of all relevant facts. It must be a fair order. There is no reason why the 9th Respondent should bear any costs. The opposition to the application was important for constitutional law reasons. The applicant did not succeed but has 4 court orders in its favour which have been largely ignored. The First Respondent was not a party to these proceedings, also it directly caused them. It was not heard on the question of costs. The order of Neukircher J is wide-ranging and can be enforced. The fact that this may be difficult due to continuing personnel changes is not sufficient reason. Under the circumstances I deem it fair to make the following provisional costs order:
The first respondent (and/or the administrator or task team) is granted 14 days from date hereof to make submissions why it should not pay the costs of this application including costs of 2 counsel. Applicant may respond thereto within 5 days after receipt of such submissions, all of which are to be delivered in hard copy to my secretary at the High Court of South Africa, Gauteng Division, chamber 5.5 (fifth floor). If no such submissions by the 1st respondent are received the costs order against the 1st respondent will become final.
H FABRICIUS
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
DATE OF HEARING: 4 SEPTEMBER 2020
DATE OF JUDGMENT: 1 OCTOBER 2020
COUNSEL FOR THE APPLICANT: AJ LOUW SC & MF ACKERMAN
INSTRUCTED BY: LEN DEKKER ATTORNEYS
COUNSEL FOR THE NINTH RESPONDENT: NG MAENETJE & L ZIKALALA
INSTRUCTED BY: STATE ATTORNEY