THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
1 June 2018
Status:
Immediate
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.

MADIBENG LOCAL MUNICIPALITY
v
PUBLIC INVESTMENT CORPORATION LTD

The SCA today dismissed an appeal by the Madibeng Local Municipality
(Madibeng). The Public Investment Corporation Ltd (the PIC) had sued Madibeng for
the repayment of three loans totalling approximately R162 million. Madibeng pleaded
that the loans were unenforceable because in order to raise the loans, Madibeng’s
predecessor, the Brits Town Council (Brits), had been required in terms of the Local
Government Ordinance 17 of 1939, which was then in force, to have obtained the
prior written consent of the Administrator of the province, and it had not done so.

The high court had, by agreement separated this issue from the remaining issues
and had, also by agreement, dealt with the separated issue on the basis of affidavits

filed by the parties. It found that there was no merit in the point and awarded a
‘punitive costs order’ against Madibeng.

On appeal, the SCA held that, on the assumption that the Ordinance applied, the
type of loans in this case – loans to repay other loans – did not, in terms of the
Ordinance require the consent of the Administrator. Madibeng also argued that the
procedure adopted in the high court was irregular and that the proceedings should
be set aside and remitted. The SCA held that the procedure was sanctioned by the
uniform rules of court and, in any event, Madibeng had agreed to it. That being so, it
was too late to object on appeal. The SCA commented on the unethical and
unconscionable manner in which Madibeng had conducted its defence, which had
justified the high court making a punitive costs order against it.