Merifon (Pty) Limited v Greater Letaba Municipality and Another (CCT 159/21) [2022] ZACC 25; 2022 (9) BCLR 1090 (CC) (4 July 2022)

Merifon (Pty) Limited v Greater Letaba Municipality and Another (CCT 159/21) [2022] ZACC 25; 2022 (9) BCLR 1090 (CC) (4 July 2022)

The Constitutional Court held that section 19 of the MFMA is peremptory and applies to the acquisition of capital assets by municipalities. The agreement between Merifon and the Municipality entailed a capital project, and the Municipality failed to comply with section 19, as there was no Council resolution...

Source-derived case information.

Citation
[2022] ZACC 25
Parties
Applicant: Merifon (Pty) Limited; Respondent: Greater Letaba Municipality; Respondent: Housing Development Agency
Court
Constitutional Court
Jurisdiction
South Africa
Judgment Date
4 July 2022
Case Number
CCT 159/21
Procedural Posture
Leave to Appeal / Application for Leave to Appeal to the Constitutional Court From the Supreme Court of Appeal
Outcome
Leave to appeal is refused. Costs awarded against Merifon, including costs of two counsel.
Judges
Kollapen, Madlanga, Majiedt, Mhlantla, Mlambo, Theron, Tshiqi, Unterhalter
Legal Topics
Doctrine of Legality, Municipal Finance Management Act, Specific Performance, Estoppel, Turquand Rule
Constitutional Law Land and Property Civil Procedure Doctrine of Legality Municipal Finance Management Act Specific Performance Estoppel Turquand Rule

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Parties

Merifon (Pty) Limited

Applicant

Greater Letaba Municipality

Respondent

Housing Development Agency

Respondent

Procedural Posture

Leave to Appeal / Application for Leave to Appeal to the Constitutional Court From the Supreme Court of Appeal

Legal Issues

  1. 1 Whether non-compliance with section 19 of the Municipal Finance Management Act renders the contract between Merifon and the Municipality null and void and unenforceable.
  2. 2 Whether the doctrine of estoppel or the Turquand rule can validate a contract concluded in contravention of peremptory statutory provisions.
  3. 3 Whether the Constitutional Court's jurisdiction is engaged and whether it is in the interests of justice to grant leave to appeal.

Ratio Decidendi

The Constitutional Court held that section 19 of the MFMA is peremptory and applies to the acquisition of capital assets by municipalities. The agreement between Merifon and the Municipality entailed a capital project, and the Municipality failed to comply with section 19, as there was no Council resolution authorising the acquisition and no budget appropriation for the purchase. The doctrine of legality requires strict compliance with statutory prescripts, and any contract concluded in contravention thereof is invalid and unenforceable. The Court rejected Merifon's reliance on estoppel and the Turquand rule, confirming that these doctrines cannot cure an ultra vires act or validate a...

Court Disposition

Leave to appeal is refused. Costs awarded against Merifon, including costs of two counsel.

Orders

  • Leave to appeal is refused.
  • Merifon is ordered to pay the Greater Letaba Municipality’s costs, including the costs of two counsel.