Xuma v Engcobo Local Municipality and Others (383/2017) [2017] ZAECMHC 35 (8 August 2017)

IN

THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE LOCAL DIVISION, MTHATHA)

CASE NO. 383/2017

In the matter between:

SOLOMZI

XUMA

Applicant

and

ENGCOBO

LOCAL

MUNICIPALITY

1ST Respondent

THE SPEAKER:

ENGCOBO

LOCAL

MUNICIPALITY

2ND Respondent

THE

EXECUTIVE MAYOR:

ENGCOBO

LOCAL MUNICIPALITY 3RD Respondent

SILUMKO MAHLASELA, ACTING MUNICIPAL

MANAGER:

ENGCOBO LOCAL MUNICIPALITY

4TH Respondent

THE

MEMBER OF THE EXECUTIVE COMMITTEE FOR

LOCAL

GOVERNMENT AND TRADITIONAL

AFFAIRS

EASTERN

CAPE

5TH Respondent

CASE NO. 2854/2017

In the matter between

SOLOMZI

XUMA

Applicant

ENGCOBO

LOCAL MUNICIPALITY

1ST Respondent

CHIEF FINANCIAL OFFICER,

ENGCOBO

LOCAL MUNICIPALITY 2ND Respondent

CORPORATE SERVICE MANAGER,

ENGCOBO

LOCAL MUNICIPALITY 3RD Respondent

ACTING MUNICIPAL MANAGER,

ENGCOBO

LOCAL

MUNICIPALITY

4TH Respondent

MEMBER OF EXECUTIVE COMMITTEE,

FOR

LOCAL GOVERNMENT AND TRADITIONAL

AFFAIRS,

EASTERN CAPE

PROVINCE

5TH Respondent

JUDGMENT

JOLWANA AJ

[1] In these applications the applicant seeks to interdict the 1st to the 4th respondents from implementing the respective resolutions of the first respondent for the renewal of the contracts of the municipal manager, Mr Mahlasela and the chief financial officer, Mr Matomane and corporate services manager, Ms Mviko for further periods of 5 years.

[2] On the 14 December 2016 council of the 1st respondent resolved to advertise the position of the municipal manager as Mr Mahlasela’s contract was nearing its termination

date which was 26 January 2017. Council further resolved to extend his contract for 3 months to allow for the recruitment

process.

[3] On the 17 January 2017 a special council meeting was convened. In relation to the municipal manager’s position it was resolved to renew Mr Mahlasela’s contract in terms of section 56(6)(c) of the Municipal Systems Act 32 0f 2000, the Act, and section 151 of the Constitution[1] and to rescind the resolution of the 14 December 2016 in terms of which the post was to be advertised.

[4] During an ordinary council meeting held on the 27 January 2017 the 1st respondent resolved to implement its resolution of the 17 January 2017 and appoint the 4th respondent for the period 17 January 2017 to 17 January 2022, thus renewing the 4th respondent’s contract for a further period of five years.

[5] On the 01 February 2017 the applicant applied for and was granted an order interdicting and restraining the 1st to the 4th respondents from implementing the resolution of the 1st respondent’s special council meeting of the 17 January 2017 in terms of which the municipal manger’s contract was renewed and the decision to advertise the post of the municipal manager was rescinded.

[6] On the 22 June 2017 council of the 1st respondent resolved, among others, to renew the contracts of the chief financial officer and of the corporate service manager of the 1st respondent for five year periods commencing on the 26 June 2017 to the 25 June 2022 and 16 July 2017 to 15 July 2022 respectively. In its resolution the 1st respondent indicated that it was empowered to renew these contracts in terms of section 57(6) (c) of the Municipal System Act.

[7] On the 29 June 2017 the applicant was granted an order interdicting and restraining the implementation of the resolution of the 22 June 2017 in terms of which the 1st respondent renewed the employment contracts of the chief financial officer and the corporate service manager for further periods of 5 years pending the delivery of this judgement. The court further interdicted Mr Mahlasela from holding himself out as either the municipal manager or acting municipal manger of the 1st respondent pending the delivery of this judgement which was reserved. Both applications were heard jointly as the matters were consolidated.

[8] In rescinding its resolution of the 14 December 2016 and renewing the municipal manager’s contract for a further period of five years the 1st respondent relied on section 57(6) (c) of the Municipal System Act as well as section 151 of the Constitution. Section 151 of the Constitution provides:

“(1) the local sphere of government consists of municipalities, which must be established for the whole of the territory of the Republic.

(2) The executive and legislative authority of a municipality is vested in its municipal council.

(3) A municipality has a right to govern, on its own initiative, the local government affairs of its community, subject to national and provincial legislation, as provided for in the Constitution.

(4) The national or provincial government may not compromise or impede a municipality’s ability or right to exercise its powers or perform its functions.

[9] In this section there is nothing that deals with the renewal of a contract of a municipal manager or any other contract. It is not clear what the 1st respondent sought to convey in making reference to this section. Mr Cole, counsel for the 1st to the 4th respondents did not pursue any argument based on this section.

[10] Section 57(6) (c) of the Municipal Systems Act provides as follows:

“the employment contract for a municipal manager must stipulate the terms of the renewal of the employment contract, but only by agreement between the parties.”

[11] The applicant contends that the resolutions for the renewal of the municipal manager’s contract are in contravention of section 54A of the Municipal Systems Act. Section 54A provides as follows:

“(1) the municipal council must appoint-

(a) a municipal manager as head of the administration of the municipality; or

(b) an acting municipal manager under circumstances and for a period as prescribed.

(2) A person appointed as municipal manager in terms of subsection (1) must at least have the skills, expertise, competencies and qualifications as prescribed.

(2A)(a) A person appointed in terms of subsection (1)(b) may not be appointed to act for a period that exceeds three months.

(b) A municipal council may, in special circumstances and on good cause shown, apply in writing to the MEC for local government to extend the period of appointment contemplated in paragraph (a), for a further period that does not exceed three months.

(3) A decision to appoint a person as municipal manager, and any contract concluded between the municipality and that person in consequence of the decision, is null and void if –

(a) the person appointed does not have the prescribed skills, expertise and competencies or qualifications; or

(b) the appointment was otherwise made in contravention of this Act;

(4) If the post of municipal manager becomes vacant, the municipality must –

(a) advertise the post nationally to attract a pool of candidates nationally; and

(b) select from the pool of candidates a suitable person who complies with the prescribed requirements for appointment to the post.

(5) The municipality must re advertise the post if there is no suitable candidate who complies with the prescribed requirements.

(6)(a) The municipality may request the MEC for local government to second a suitable person, on such conditions as prescribed, to act in the advertised position until such time as a suitable candidate has been appointed.

(b) If the MEC of local government has not seconded a suitable person within a period of 60 days after receipt of the request referred to in paragraph (a), the municipality may request the Minister to second a suitable person, on such conditions as prescribed, until such time as a suitable candidate has been appointed.

(7)(a) The municipality must, within 14 days, inform the MEC for local government of the appointment process and outcome, as may be prescribed.

(b) The MEC for local government must, within 14 days of receipt of the information referred to in paragraph (a), submit a copy thereof to the Minister.

(8) If a person is appointed as municipal manager in contravention of this section, the MEC for local government must, within 14 days of receiving the information provided for in subsection (7), take appropriate steps to enforce the compliance by the municipality with this section, which may include an application to a court for a declaratory order on the validity of the appointment, or any other legal action against the municipality.

(9) Where an MEC for local government fails to take appropriate steps referred to in subsection (8), the Minister may take the steps contemplated in that section.

(10) A municipality may, in special circumstances and on good cause shown, apply in writing to the Minister to waive any of the requirements listed in subsection (2) if it is unable to attract suitable candidates.

(11) A person who has been appointed as acting municipal manager before this section took effect, must be regarded as having been appointed in accordance with this section for the period of the acting appointment.

(12) any pending legal or disciplinary action in connection with an appointment made before this section took effect, will not be affected by this section after it took effect.”

[12] It is clear that the legislature went into extensive detail in dealing with the appointment of a municipal manager. In

detailing how the appointment process should be followed by a municipality there is also provision for a request being made to the MEC to second a person until a suitable person is appointed. Subsection (8) empowers the MEC to take steps to enforce

compliance with the provisions of this section including seeking a declaratory order that such an appointment is invalid. If for any reason the MEC were to be disinclined to do anything about non-compliance with this section, subsection (9) empowers the

Minister to take the steps provided for in subsection (8). If the municipality is unable to attract a suitable candidate with the requisite skills, expertise, competencies and qualifications, the municipality may in terms of subsection 10 approach, not the MEC but the Minister in writing for authorisation to deviate from the stringent requirements of this section.

[13] This makes it clear beyond doubt that non- compliance is not to be tolerated and that the appointment of a municipal manager is to meet the stringent requirements of this section in all circumstances. Even where the municipality has satisfied itself that it has complied with the detailed provisions of this section, subsection (7) provides that the municipality must, within 14 days, inform the MEC on the process it followed to comply with this section and the outcome thereof. The MEC must submit a copy of the information he or she received from the municipality to the Minister. This is obviously intended to enable both the MEC and the Minister to effectively play a supervisory role that will ensure that all the provisions of this section have been complied with to the letter. If there has been non-compliance it comes to the attention of the MEC and the Minister through the reporting mechanism for corrective measures to be taken.

[14] The submission by the 1st to the 4th respondents is that the requirements for a municipal manager’s post to be advertised does not apply to them. This is how the 3rd respondent put it at paragraph 24 of her answering affidavit:

“I further confirm that, at no stage, did the post of the Municipal Manager ever become vacant and there was accordingly no obligation on the Municipal Council to advertise the post at all in accordance with section 54A(4) of the Systems Act 32 of 2000.”

[15] The logical conclusion to be gleaned from this submission is that detailed as it is, section 54A of the Municipal Systems Act is not intended to apply to a municipality that has already appointed a municipal manager. It also means that while the legislature

wanted to ensure that there is strict control of the appointment of a municipal manager, the legislature did not intend to ensure that there is uniformity across the country in how municipal managers are appointed.

[16] In other words, in cases where there is a possibility of a contract being renewed, the legislature did not intend to ensure that the renewal does not result in the appointment or re appointment of somebody who does not have the required skill, expertise,

competencies and qualifications. Regardless of how under qualified a person may be, and regardless of how dissatisfied the MEC and the Minister may be with that person’s qualifications, skills, competencies and expertise, they would be powerless to intervene in the interests of good governance for as long as the relevant council of the municipality is happy with him or her.

[17] This clearly cannot be so as it would result in no control measures being applied at all in municipalities across the country in which contracts are being renewed and the provisions of section 54A of the Municipal Systems Act would only be applicable to new appointments. To the extent that the 1st to the 4th respondents construe reference to the post of a municipal manager becoming vacant in subsection (4), that is a clear misconstruction of that subsection.

[18] I am fortified in this view by the provisions of the regulations issued by the Minister of the Department for Corporative Governance

and Traditional Affairs in government gazette no 36223 dated 7 March 2013. Sections 9 and 10 and these regulations provide as follows:

“9(I) Recruitments, selection and appointment of senior managers must take place in accordance with the municipal policies contemplated in section 67 of the Act that are consistent with sections 54, 56 and 57 A of the Act.

(2) Senior management posts must be filled through public advertising in accordance with the procedure contemplated in regulations 11.

(3) Selection must be competence – based to enhance the quality of appointment decisions and ensure the affective performance by municipalities of their functions.

10(1) When the post of a senior manager becomes vacant, or is due to become vacant, the mayor, in the case of a municipal manager, or the municipal manager, in the case of a manager directly accountable to the municipal manager, must by not later than twenty one (21) days after being officially informed that the post of a senior manager will become vacant, obtain approval from council for the filling of such post.

(2) A vacant senior manager post may not be filled unless-

(a) approval to fill the post has been granted by the council; and

(b) the post has been budgeted for.

(3) The mayor or the municipal manager must request the speaker to convene a special council meeting within 7 days of being officially informed of the vacancy to obtain approval contemplated in subregulation (1).

(4) Notwithstanding the provisions of regulation (3), the speaker may convene a special meeting to obtain council approval for the filling of a senior manager post if the mayor or municipal manager fails to request the calling of such a meeting”.

[19] Furthermore and to the extent that there may have been doubt about whether or not section 54A of the Municipal Systems Act is applicable to the renewal of contracts of senior managers including the municipal manager, these regulations make it clear that section 54A is indeed applicable.

[20] Willis JA writing a judgment of the full court in Muldersdrift Sustainable Development Forum v Mogale City [2015] ZASCA 118 had this to say:

“The requirements, in s 54A (1)(a) of the LGMS, that it is the municipal council which must appoint the municipal manager, read together with s 59(2), that a delegation must not conflict with the provisions of the LGMS itself, indicate that the delegation by a municipal council of its obligation to appoint a municipal manager is not permissible. The re-appointment of the municipal manager was indeed procedurally defective”.

[21] These findings are applicable in this case to the extent that they indicate that section 54A is applicable even in the re-appointment of a municipal manager. I therefore find that section 54A of the Municipal System Act as well as regulations 9 and 10 were not complied with when the contracts of the Municipal Manager, Mr Mahlasela, the contract of the chief financial officer, Mr Matomane

and the contract of the corporate services manager, Ms Mviko were renewed for further periods of 5 years.

[22] Because of the similarities between the provisions of section 54 A which deals with the appointment of municipal managers and acting municipal managers and section 56 of the Municipal Systems Act, which deals with the appointment of managers directly accountable to the municipal manager reference in this judgment to the municipal manager will have equal application to the chief financial officer and the corporate services director. Therefore the resolutions to extend the contracts of the municipal manager of the chief financial officer and the corporate service manager by further periods of five years and actions taken pursuant thereto in contravention of sections 54A and section 56 of the Municipal Systems Act are hereby declared null and void and of no force or effect for non-compliance with these legislative prescripts.

[23] In the resolution of the 1st respondent dated 22 June 2017, the 1st respondent’s council indicated therein that it is authorised to renew the contracts by section 57(6)(c). This is incorrect for the reason that section 57(6) makes it clear that it is applicable to the employment contract for a municipal manager. This, therefore, means that in addition to non-compliance with section 56 in respect of these two managers, the purported right to renew the contracts based on section 57(6)(c) cannot stand and therefore the resolution dated 22 June 2016 is invalid.

[24] 5th respondent, the MEC raised 1st to 4th respondents’ non-compliance with section 30(5) (c) of the Local Government: Municipal Structures Act 117 of 1998, the Municipal Structures Act. Section 30 (5)(c) reads as follows:

“Before a municipal council takes a decision on any of the following matters it must first require its executive committee or executive mayor, if it has such a committee or mayor, to submit to it a report and recommendation on the matter.

(a)

(b)

(c) the appointment and conditions of service of the municipal manager and a head of a department of the municipality”.

[25] It is not clear in the papers whether the 1st respondent’s council does have a mayoral committee. However, it seems that it does have a mayor as the 2nd respondent is described as the Executive Mayor in the papers. At paragraph 16 of his answering affidavit this is how the 5th respondent raised the issues of non-compliance:

“16 In appointing and/or renewing the fourth respondent’s contract of employment, the first respondent:

16.1 Contravened the law as it acted in contravention of sections- 30(5) (c) of the Structures Act;54 A (3)(b); 54A (4)(a) of the Systems Act; and 54A(4)(b) of the Systems Act.

16.2 Was neither authorised nor permitted in terms of sections 57(6)(c) of the Systems Act read together with section 151 of the Constitution”.

[26] The 1st to the 4th respondents did not respond to the 5th respondent’s challenge. The council of the 1st respondent did not require, as it should have a report from the mayor in terms of section 30(5)(c) of the Structures Act and consequently no report was submitted before the renewal of the contract of the municipal manger was considered. The mayor did, however, give four reasons to council as the basis on which the municipal manager’s contract should be renewed. On the papers before me this issue is simply not dealt with by the 1st to the 4th respondent. I therefore find in favour of the 5th respondent in this regard. It is important to note that the other respondents had the opportunity since 26 May 2017 when the third party notice and the 5th respondent’s answering affidavit were filed but elected not to avail themselves of the opportunity to deal with the allegations therein contained.

[27] This takes me to the report tabled by the 4th respondent in a special council meeting of the 12 May 2017 regarding the two managers. This report is not without problems.

[28] The report indicates that it was compiled by Mr Mahlasela and it is dated the 9 May 2017 and he refers to himself in the report as municipal manager. On the 1 February 2017 my brother Notununu AJ issued an order which in part reads:

“Interdicting and restraining the respondents from implementing the council resolution 02/20/01/2017 renewing the employment of Silumko Mahlanela for a further five (5) years.”

[29] This means that at all material times when the renewal of the chief financial officer’s contract and the contract of the corporate services manager were considered, the 1st respondent was interdicted from doing so and therefore it was acting unlawfully. It also means Mr Mahlasela could not and should not have compiled the report. It is clear that the whole process was tainted with illegality from the start.

[30] I need to add something about the importance of the municipalities being circumspect about how they conduct their business.

Section 195 of the Constitution provides in part as follows:

“(1) Public administration must be governed by the democratic values and principles enshrined in the Constitution, including the following principles:

(c)

(d)

(e)

(f) Public administration must be accountable.

(g) Transparency must be fostered by providing the public with timely, accessible and accurate information.

(h) Good human resource management and career-development practices, to maximise human potential, must be cultivated.

(2) The above principles apply to

(a) administration in every sphere of government;”

[31] It is unfortunate that the municipality and indeed its officials were reluctant to comply with pieces of legislation like section 54A of the Municipal Systems Act which were passed in order to assist them to comply with these constitutional provisions and most importantly to foster transparency in governance which is a constitutional requirement.

[32] The following order will issue:

Section 57(6) (c) cannot, in my view, be used to avoid compliance with the provisions of section 54A

1. The rule nisi issued by this Court in case no. 383/2017 is confirmed.

2. The rule nisi issued by this court in case no. 2854/2017 is confirmed.

3. The respondents are ordered to pay costs on a party and party scale.

SM

JOLWANA

JUDGE OF THE HIGH COURT (ACTING)

Appearances:

Counsel for the Applicant: Mr Malunga

Instructed by Makangela, Mtungani In.

No. 51 Victoria Street

MTHATHA

Counsel for the Respondent: Mr Cole for the 1st to the 4th Respondents

Mr Bodlani for the 5th Respondent

Instructed by Makaula Zilwa & Co.

1st to the 4th Respondents

08 Miriam Raziya Street

Matter heard on: 29 June 2017

Judgment delivered on: 08 August 2017

[1] Constitution of the Republic of South Africa,1996