THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Case No:   303/2009

In the matter between:

MAJOMATIC 115 (PTY) LIMITED                                           Appellant

and

KOUGA MUNICIPALITY                                               First Respondent

JOHANNES RENIER FERREIRA                             Second Respondent

FEDERATION OF KOUGA RATEPAYERS
ASSOCIATION                                                                Third Respondent

Neutral citation: Majomatic Limited v Kouga Municipality (303/09)[2010]
ZASCA 17 (18 March 2010)

Coram:
MTHIYANE, CACHALIA, LEACH JJA, MAJIEDT and
SALDULKER AJJA

Heard:
23 February 2010

Delivered:
18 March 2010

Summary:
Whether the procedures prescribed by ss 124(1) and (2) and 172 of
Municipal Ordinance 20 of 1974 (Cape) for the alienation of
municipal property were of force and effect in November 2003 or
whether they were impliedly repealed by Item 2 of Schedule 6 of
the Constitution.

_____________________________________________________________________
ORDER

On appeal from: Eastern Cape High Court (Port Elizabeth) (Schoeman J
sitting as court of first instance):

1.
The appeal is dismissed with costs.
2.
The order of the court a quo is set aside and replaced with the
following:
‘The plaintiff’s action is dismissed with costs.’

JUDGMENT

MTHIYANE JA (Cachalia, Leach JJA, Majiedt and Saldulker AJJA
concurring)

[1] This is an appeal against the judgment and order of Schoeman J
sitting in the Eastern Cape High Court, Port Elizabeth which is before us
with her leave. It concerns her finding on a separated issue of whether or
not the contract of sale by the first respondent, Kouga Municipality (the
Municipality), of certain municipal property to the appellant during
November 2003 was lawfully concluded; in particular whether
compliance with the provisions of s 124 and s 172 of the Municipal
Ordinance 20 of 1974 (Cape) (the Ordinance) was required for the
conclusion of a valid contract. The learned judge held that the provisions
of the Ordinance were of force and effect at the time of the conclusion of
the contract and that compliance therewith was required.

[2] The contract of sale was preceded by an advertisement which was
placed in a local newspaper inviting tenders for the purchase of several
immovable properties including the property concerned in the present

matter. The advertisement appeared on 14 November and invited
interested purchasers to submit applications on or before 28 November
2003. Contrary to the prescribed requirements it made no mention that
objections to the proposed sale could be made nor to whom or where such
objections could be made. The advertisement also required applications to
be submitted to the Director: Planning and Development within two
weeks instead of the period of 21 days as required by the Ordinance.

[3] Before discussing the prime issue on appeal it is necessary to refer
to the relevant provisions of the Ordinance regulating the alienation of
municipal property at the time. Section 124 provides:
‘(1)
Subject to the provisions of subsection (2) and such directions as the
Administrator may from time to time determine, a council may ─
(a)
alienate, let or permit to be built upon, occupied, enclosed or cultivated any
immovable property owned by the municipality unless it is precluded from so doing
by law or the conditions under which such property was acquired by the municipality,
and
(b)
with the consent of the owner thereof or for the purposes of section 127(1) let
or permit to be built upon, occupied, enclosed or cultivated any immovable property
under its control or management.
provided that the Administrator may, either specifically in respect of any particular
action contemplated in paragraph (a) or (b) or generally in respect of a category of
actions so contemplated, by notice in the Official Gazette determine that such action
shall be subject to his prior approval.
(2)
No council shall act in terms of subsection (1) unless it has ─
(a)
advertised its intention so to act, and
(b)
considered the objections (if any) lodged in accordance with the advertisement
contemplated by paragraph (a);
provided that the foregoing provisions of this subsection shall not apply where the
proposed letting will be for a period not exceeding twelve months without an option
to renew.’

[4] Section 172(1) and (2) of the Ordinance provides:
‘(1)
A council shall, by notice published in the press, invite tenders before entering
into any contract which is for ─
(a)
the execution of any work for or the supply or sale of any goods or materials
to the council and which involves or is likely to involve an amount exceeding such
amount as the Administrator may from time to time either generally or specially
determine in respect of contracts entered into by such council, and
(b)
the sale of any goods or materials by the council.
(2)
The notice contemplated by subsection (1) shall specify ─
(a)
the nature of the proposed contract;
(b)
such particulars of such contract as the council may deem fit;
(c)
that all tenders for such contract shall be submitted in a sealed envelope upon
the outside whereof is clearly stated that such envelope contains a tender and the
contract for which such tender is being submitted;
(d)
a day, subsequent to the expiration of the period contemplated by paragraph
(b)(iii) of the definition of ‘publish in the press’, and the hour on such day at or before
which tenders must be received, and
(e)
the place where and the hour and day when such tenders will be opened.’
In the view I take of the matter I do not consider it necessary to quote the
section in its entirety. It suffices to refer merely to the above provisions
and to indicate that s 172 provides for fair and transparent procedure for
the disposal of municipality property. It also bears mention that Mr
Beyleveld, for the appellant, conceded that if the appellant is unsuccessful
in its contentions in relation to s 124(2) that would be the end of the
matter and the appeal must fail.

[5] It is common cause that the procedures laid down in s 124 (1) and
(2) of the Ordinance were not complied with. Mr Beyleveld, for the
appellant, contended that there was no obligation to comply with these
procedures as the Ordinance had at that stage been impliedly repealed by
the Constitution. This, he submitted, is apparent from the fact that s

124(1) confers the power on the Administrator (now the Premier) to give
‘such directions as [he or she] may from time to time determine’. And, so
the submission went, because the Premier, under the Constitution, has no
authority over a Municipality, s 124 in its entirety was repealed when the
Constitution came into force. According to Mr Beyleveld there is no
scope for ‘pruning’ such oversight powers of the Premier so as to
harmonise the Ordinance with the Constitution. The Ordinance as a
whole, he submitted, is at odds with the Constitution and has thus failed
to survive the new constitutional dispensation.

[6] In my view the appellant’s contention flounders in the face of the
plain wording of Item 2 of Schedule 6 to the Constitution. Item 2 of
Schedule 6 provides:
‘2
(1)
All law that was in force when the new Constitution took effect,
continues in force, subject to ─
(a)
any amendment or repeal; and
(b)
consistency with the new Constitution.
(2)
Old order legislation that continues in force in terms of subitem (1) ─
(a)
does not have a wider application, territorially or otherwise, than it had before
the previous Constitution took effect unless subsequently amended to have a wider
application; and
(b)
continues to be administered by the authorities that administered it when the
new Constitution took effect, subject to the new Constitution.’
It is apparent that ‘old order legislation’ (as it is described here) remains
in force save only where it has been repealed or amended or where it is
inconsistent with the Constitution. It is also plain that Item 2 envisages
some form of pruning exercise ─ a reading of a pre-constitution statute to
conform with the new constitutional prescripts. In the context of the
present matter the acceptable approach, in my view, involves discarding
the offensive portions of s 124(1) of the Ordinance and giving meaning

and effect to the non-offensive ones. It seems to me that the basic test for
the survival of a pre-constitution provision is whether it has been
amended or impliedly repealed or is inconsistent with the Constitution,
but only to the extent of such inconsistency.

[7] On a proper interpretation and application of Item 2 of schedule 6
of the Constitution to s 124(1) and (2) of the Ordinance the conclusion is
unavoidable that s 124(2) and the non-offensive portions of s 124(1) have
survived the Constitution and remain applicable. That, in my view, is the
approach which was adopted by the majority in CDA Boerdery (Edms)
Bpk & others v Nelson Mandela Metropolitan Municipality & others
2007 (4) SA 276 (SCA). In that case the old order subordination of the
local authority’s power to levy rates under s 82(1) of the Municipal
Ordinance 20 of 1974 (Cape) to the Premier’s approval was held to have
been impliedly repealed by the Constitution. This is no authority for the
submission advanced by Mr Beyleveld that the entire Ordinance was
repealed, even to the extent that for the most part it is not inconsistent
with Constitution.

[8] It follows that the proper approach to the matter, which is in line
with Item 2 of Schedule 6 to the Constitution and the ruling in CDA
Boerdery favours a construction that would disregard the oversight
powers of the Administrator (now Premier) in s 124(1) of the Ordinance
so as to ensure that the subsection remains of force and effect. If the
construction contended for by the appellant is upheld it would mean that
no legislative provision would be left to regulate the alienation of
municipal property. Schoeman J found, correctly in my view, that at the
relevant time (November 2003) there were no other regulations or
provisions under any other Act in place dealing with tenders or the sale of

immovable property by a municipality, barring the Ordinance. Mr
Beyleveld, for the appellant, sought to meet this finding by submitting
that s 10G(5) and 11 of the Local Government Transition Act 209 of
1993 made provision for the alienation of municipal property and that
compliance with ss 124 and 172 of the Ordinance was therefore not
necessary.

[9] A brief discussion of the two subsections illustrates the fallacy of
the argument. Section 10G(5) provides as follows:
‘5(a)
A municipality shall award contracts for goods and services in accordance
with a system which is fair, equitable, transparent, competitive and cost-effective.
(b)
Notwithstanding paragraph (a), a municipality may, in accordance with a
framework prescribed by national legislation, in awarding contracts give preference to
the protection or advancement of persons or categories of persons disadvantaged by
unfair discrimination, and shall make the granting of such preferences public in the
manner determined by the council.
(c)
A municipality may dispense with the calling of tenders in the case of an
emergency or of a sole supplier or within such limits as may be prescribed by a
national law.’
It will be immediately apparent that all that subsection (5) does is to lay
down a principle applicable to the award of contracts. It does not
prescribe any procedures for awarding contracts and it makes no specific
reference to the alienation of municipal property. s 10G(5) was not meant
to apply to alienation of municipal property but to ‘financial matters’
relating to ‘goods and services’ as the heading of the section suggests. It
follows that the appellant’s reliance on s 10G(5) is misplaced and falls to
be rejected.

[10] Section 10G(11) also does not take the appellant’s case any further.
It provides:

‘(11) A municipality shall ensure that ─
(i)
the acquisition and disposal;
(ii)
the utilisation and control; and
(iii)
the maintenance,
of its assets are carried out in an economic, efficient and effective manner.’
It is clear that the subsection also sets out a policy without specifying any
procedures regarding its implementation. It provides that a municipality
must ensure that the acquisition and the disposal, utilisation and control
and the maintenance of its ‘assets’ are carried out in an ‘economic,
efficient and effective manner’. This provision, too, has no bearing on the
alienation of municipal land.

[11] For the above reasons the appellant’s contention that the whole
Ordinance has been impliedly repealed by the Constitution cannot be
upheld. It flies in the face of the clear and unambiguous wording of Item
2 of Schedule 6 to the Constitution. Section 124(2) in imperative terms
requires the municipality to advertise its intention to sell and to provide
for and consider objections, if any, to the proposed alienation of
municipal property. As Schoeman J correctly found, the appellant was
obliged to comply with these provisions and the failure to do so rendered
the sale invalid.

[12] I turn briefly to the submissions advanced by Mr Pretorius, for the
second and third respondents. He approached the matter from a different
and interesting angle. He argued that the oversight powers of the
Administrator (now Premier) referred to in s 124(1) of the Ordinance
were not impliedly repealed by the Constitution and that compliance
therewith was obligatory. For this submission Mr Pretorius strongly relied
on the judgment of Kroon AJ in Wary Holdings (Pty) Ltd v Stalwo (Pty)

Ltd & another.1 At issue in that case was the validity of a written
agreement in respect of land which was zoned as ‘agricultural land’. The
dispute revolved around whether the land sold was agricultural land or
not. If it was, the Minister’s consent to the subdivision of the land would
have been necessary. The purchaser had intended to use the property for
industrial purposes and for that reason had lodged an application with the
relevant local authority for the rezoning and subdivision of the land. The
subdivision was approved by the local authority concerned. A dispute
however subsequently arose as to whether the sale was valid and
enforceable as the Minister of Agriculture had not consented to the sale
and subdivision of the land as required by s 3(a) and (e)(i) of the
Subdivision of Agricultural Land Act 70 of 1970 (the Agricultural Land
Act). Kroon AJ (who wrote for the majority) upheld the provision
requiring ministerial consent and said that the enhanced status of present-
day municipalities and the fact that municipal ordinances accorded them
various powers, including those of planning, zoning and rezoning of land
and approval of applications for subdivision, was not a ground for
ascribing to the legislature the intention that national control over
‘agricultural land’ through the Agricultural Land Act, was effectively a
thing of the past. He added that there was no reason why the two spheres
of control could not co-exist even if they overlapped and even if, in
respect of the approval of subdivision of ‘agricultural land’, the one may
in effect veto the decision of the other (paras 79-80).

[13] The Wary Holdings case is clearly distinguishable from the present
matter in that it dealt with ‘agricultural land’ as opposed to ‘municipal
property’, in respect of which different considerations apply. It is clearly
no authority for the proposition that the oversight power of the Premier

1 2009 (1) SA 337 (CC).

referred to in s 124(1) of the Ordinance survived the new Constitution.
One is dealing here with municipal property where no such restrictions
are applicable. In any event in the light of the conclusion to which I have
come it is not necessary to explore the arguments advanced by Mr
Pretorius any further.

[14] It remains to consider the appropriate order to be made in the
present matter. All the parties were agreed that if it was found that s
124(2) of the Ordinance was of full force and effect and that compliance
therewith was required for the conclusion of the valid agreement of sale
between the appellant and the first respondent, the appropriate order
would be one dismissing the appeal with costs and replacing the order of
the court a quo with one dismissing the plaintiff’s claim with costs.

[15] For the above reasons the following order is made:
1.
The appeal is dismissed with costs.
2.
The order of the court a quo is set aside and replaced with the
following:
‘The plaintiff’s action is dismissed with costs.’

_____________________

K K Mthiyane

Judge of Appeal

APPEARANCES

APPELLANTS:

A Beyleveld SC (with him T Zietsman)
Instructed
by
Fredericks
Inc,
Port
Elizabeth
McIntyre & Van der Post, Bloemfontein

FIRST RESPONDENT:
PWA Scott
Instructed by Roland Meyer & Co, Port
Elizabeth
EG Cooper & Majiedt Inc, Bloemfontein

SECOND and THIRD
RESPONDENTS:

B Pretorius
Instructed
by
Christo
Swanepoel
Attorneys, Jeffreys Bay
Honey Attorneys Inc, Bloemfontein
SUPREME COURT OF APPEAL OF SOUTH AFRICA

PRESS RELEASE
18 March 2010
STATUS: Immediate

Northview Shopping Centre v Revelas Properties  (275/09) [2010] ZASCA
16 ( 18 March 2010)

Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal

A close corporation, like a company, is a legal fiction. It can enter into legal
transactions only through natural persons. The question for decision in this
appeal was whether an agent of a close corporation, who was not a member,
was required to have written authority from a member to enter into a contract
for the sale of land.
Section 2(1) of the Alienation of Land Act provides:
‘No alienation of land after the commencement of this section shall . . .  be of any
force or effect unless it is contained in a deed of alienation signed by the parties
thereto or by their agents acting on their written authority.’

Northview Properties had offered to purchase property, at a considerable
price, from Revelas Properties, a close corporation. The contract was signed
on behalf of Revelas by the husband of the sole member of the close
corporation. Northview instituted action claiming performance of the contract.
Revelas excepted (raised a legal defence that there was no cause of action)
on the basis that there was no allegation that he had written authority to bind
the close corporation.

The South Gauteng High Court (Johannesburg) upheld the exception finding
that the contract would not be binding in the absence of written authority. This
court today dismissed the appeal against that order. It held that while a
member of a close corporation does not require written authority to bind it to a
contract for the sale of land, in the same way as a partner would not need
such written authority, being able to bind a partnership without more, an
outside agent must have written authority from a member to enter into a valid
contract for the sale of land.