Case CCT 189/22; CCT191/22
[2024] ZACC 25
Ordered Date: 16 November 2023
Judgement Date: 19 November 2024
Post Judgment Media Summary
The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.
On 19 November 2024, the Constitutional Court handed down judgment in an application for leave to appeal against a judgment of the Supreme Court of Appeal. The application concerned the constitutionality and validity of transfer embargo provisions in section 76 of the Govan Mbeki Spatial Planning and Land Use Management By-Law 2016 (GM By-Law) and section 86 of the Emalahleni Municipal By-Law on Spatial Planning and Land Use Management 2016 (EM-By Law).
The applicants are Govan Mbeki Local Municipality (Govan Mbeki) and Emalahleni Local Municipality (Emalahleni). The respondents are Glencore Operations South Africa (Pty) Limited, Duiker Mining (Pty) Limited, Tavistock Collieries (Pty) Limited, Umcebo Properties (Pty) Limited and Izimbiwa Coal (Pty) Limited. Except for Umcebo Properties, which is a property holding company, the other four are mining companies.
At the heart of this dispute is a challenge against the municipal planning by-laws containing transfer embargoes that are intended to enforce compliance with municipal planning requirements of the applicants. They do so by requiring all property owners who want to apply to the Registrar for a transfer of their land to first obtain a certificate from the municipality. The planning certificate confirms that all spatial planning, land use management and building regulation requirements and payments applying to the land unit in question have been complied with. The respondents who challenge the by-laws all intend to transfer immovable properties in the jurisdictional areas of the municipalities.
Before the High Court, the property owners argued that the impugned provisions were unconstitutional and invalid for a number of reasons. First, the property owners alleged that the impugned by-laws were inconsistent with section 25 of the Constitution, as their application led to an arbitrary deprivation of property. Second, they submitted that the impugned by-laws extended beyond the scope of powers assigned to local government in terms of section 156 read with Part B of Schedule 4 and Part B of Schedule 5 to the Constitution. Third, they contended that the impugned by-laws were invalid because they were inconsistent with section 118 of the Systems Act. The property owners also sought a wide range of administrative review and interdictory relief in the alternative to their primary constitutional relief.
The High Court held that the impugned by-laws constituted a deprivation of property in terms of section 25(1) of the Constitution and concluded that this deprivation was arbitrary. The High Court also held that the impugned by-laws were inconsistent with section 118 of the Systems Act because they created additional requirements before transfer applications could be processed at the office of the Registrar of Deeds. The High Court also considered whether the by-laws were covered by the municipalities’ legislative competence over “municipal planning” under section 156(1)(a) read with Part B of Schedule 4 to the Constitution and concluded that the municipal planning competence under Part B of Schedule 4 did not extend to matters concerning the registration and transfer of properties. Accordingly, the High Court concluded that there was no enabling authority for the municipalities to make the impugned by-laws and that the by-laws were inconsistent with the constitutional principle of legality and declared the impugned by-laws to be unconstitutional and invalid. For reasons that are not clear from the judgment, the High Court limited the orders of invalidity to circumstances covered by the provisions of paragraphs (a) and (c) of subsection (2) of the impugned by-laws in relation to the property owners’ mining properties. This qualification of the High Court order (“the qualification”) was inconsistent with its judgment, because the by-laws by which the order was qualified were relevant only to the property challenge and not to the legality challenge. The High Court also suspended the declaration of invalidity.
The municipalities then appealed the decision to the Supreme Court of Appeal and the property owners cross-appealed the High Court’s qualification and suspension of the orders of invalidity. The Supreme Court of Appeal similarly found that there was no enabling authority for the impugned by-laws. Moreover, it upheld the High Court’s conclusion that the provisions were inconsistent with the Systems Act and went beyond the law-making powers conferred by section 32(1) of Spatial Planning and Land Use Management Act (SPLUMA) and that section 156 of the Constitution provides scant support for the argument advanced by the municipalities. The Supreme Court of Appeal also upheld the cross-appeal, reasoning that the High Court failed to provide reasons for suspending the declaration of invalidity. Accordingly, it upheld the cross-appeals of the property owners with costs and set aside the suspension of the declaration of invalidity of the by-laws. Apparently due to an oversight, the Supreme Court of Appeal did not remove the qualification from the High Court order.
Before this Court, the municipalities challenged the Supreme Court of Appeal’s decision while the property owners sought leave to cross-appeal against the failure of the Supreme Court of Appeal to remove the qualification in the High Court orders that limited the orders of invalidity.
The primary argument raised by the municipalities was that section 156(2) of the Constitution empowered them to promulgate the impugned by-laws and that this power fell within their original constitutional powers as a reasonable mechanism chosen to enforce municipal planning and building regulation requirements.
Alternatively, it was argued that the impugned by-laws fall within original municipal powers over municipal planning and building regulations in terms of section 156(5) of the Constitution. It was also argued that section 32(1) of SPLUMA independently authorises the making of by-laws and that the by-laws are not inconsistent with section 118(1) of the Systems Act as there is no conflict between the by-laws and section 118(1). Finally, it was argued that if the transfer embargoes amounted to a deprivation of property, the deprivation was not arbitrary and does not violate section 25(1) of the Constitution.
The property owners, for their part, stand by the findings of the High Court and the Supreme Court of Appeal. They adopted the reasoning of the Supreme Court of Appeal and argued that the by-laws extensively and arbitrarily deprived them of the right to property. Moreover, it was averred that the impugned by-laws were unlawful as they go beyond the municipalities’ constitutional competence over “municipal planning” or “building regulations”. In sustaining this argument, it was suggested that the transfer embargoes were neither necessary for nor incidental to the local government competences related to section 156(5) of the Constitution. The property owners also alleged that the by-laws extended beyond the enabling provision – section 32(1) of SPLUMA – and that the impugned provisions were inconsistent with section 118(1) of the Systems Act.
The first judgment, which hold majority, was authored by Chaskalson AJ (Mathopo J, Mhlantla J,Schippers AJ and Tshiqi J concurring). It held that the Court’s constitutional jurisdiction is engaged as the case concerned the constitutional powers of local government and the fundamental right to property. A decision on these constitutional issues of substance was in the interests of justice.
On the merits, the first judgment embarked on an analysis of the powers afforded to local government to make the by-laws. In doing so, it focused on the legality issue and considered four features relevant of the scheme of local governments’ legislative competence under the Constitution. First it looked at the change in status of local government with the advent of the interim Constitution, highlighting that now municipalities are seen as an entrenched sphere of government with original powers that derive directly from the Constitution.
Second, it looked at the specific nature of the legislative powers conferred on municipalities by section 156 of the Constitution. On this point, it noted that the original legislative powers vested in municipalities are narrower than those conferred on Parliament and the provincial legislatures and are conferred only in relation to, and in aid of, the executive powers of the municipalities.
Third, the first judgment considered the interplay between the powers allocated to different spheres of government and acknowledged that there is a measure of overlap between these powers as they do not exist in hermetically sealed compartments.
The fourth and final feature analysed the scheme of co-operative government under the Constitution. The judgment stressed that section 156 of the Constitution must be interpreted within the broader context of how powers are distributed.
Taking into account these features and analysing the relevant provisions, the first judgment found that there is no enabling authority in the Constitution for the impugned by-laws. In particular, the first judgment held that a municipality has no legislative authority under section 156 of the Constitution to make by-laws that enforce its by-laws on local government matters by creating embargoes that operate within the fields of competence of national government or provincial government.
The first judgment held that section 32(1) of SPLUMA was also not a source for legal authority as the by-laws went beyond the bounds of this provision. Therefore, the first judgment concluded that the legality challenge to the by-laws succeeded and that they were unconstitutional and invalid.
Having found that the legality challenge was good in law, the first judgment dismissed the appeal and upheld the cross appeal so as to remove the qualification to the High Court order of invalidity.
The second judgment, written by Dodson AJ (Kollapen J concurring), agreed with the first judgment that the matters engaged this Court’s jurisdiction and that it is in the interests of justice to hear them. However, unlike the first judgment, it found that the transfer embargoes in the by-laws are within the municipalities’ legislative competence, and it therefore must consider the property owners’ other challenges to the by-laws and their implementation. In doing so, the second judgment considered the components of the by-laws’ transfer embargoes separately.
On the Systems Act conflict challenge, it found that component (a), which requires a conveyancer’s certificate confirming payment of funds due by the transferor in respect of land, conflicts with section 118(1) of the Systems Act. This is because it renders meaningless the limitation in section 118(1), whereby the transfer embargo applies only to amounts that fell due in respect of the property during the preceding two years. It found that the remaining components of the transfer embargoes survived the conflict challenge as they have distinct purposes and are thus capable of co-existing with section 118(1), provided that the phrase “in terms of any law” in the opening paragraph of the transfer embargoes is struck down.
On whether the remaining components of the transfer embargoes contravened section 25(1) of the Constitution by resulting in arbitrary deprivations of property, the second judgment found that the transfer embargoes gave rise to a deprivation of property because they limited the right to alienate property. The question was whether the deprivation is arbitrary. As regards the (b) and (c) components of the transfer embargoes– which require proof of payment of any contravention penalty and proof of compliance with any directive under the compliance and enforcement chapter of the by-laws, along with proof that the land use and buildings comply with the land use scheme – the second judgment found there to be a rational relationship between the purpose of each deprivation and the person whose property is affected. By contrast, the (d) to (e) components of the EM By-Law, and (d) to (f) components of the GM By Law – which aim to ensure compliance with the requirements imposed when a land development application was approved – do not have a rational relationship between the purpose of the deprivation and the person whose property is affected. This is because their effect was to saddle subsequent owners of the properties with the obligations of the developer. The second judgment found that these components’ arbitrary deprivations of property could not be justified through a limitations analysis, nor could they be read down to apply only to an owner who is also a developer, as the third judgment found.
Testing the surviving (b) and (c) components of the transfer embargoes against the legislative competence challenge, unlike the first judgment, the second judgment found that the substance, purpose and effect of the by-laws was municipal planning, not the national legislative competence of deeds registration and that, even if this were not so, under section 156(5) of the Constitution the transfer embargo provisions were reasonably incidental to municipal planning, and so survive the legislative competence challenge. Because of this, and SPLUMA’s inability to usurp municipalities’ legislative competence, the SPLUMA challenge failed against the (b) and (c) components.
On Glencore’s alternative review of the municipalities’ implementation of the transfer embargoes, the second judgment would have ordered that the municipalities may not require the production of any document or information relevant to the paragraphs declared to be invalid, including an occupancy certificate under the National Building Regulations and Building Standards Act and the affidavit confirming payment of all development charges. Due to its findings on the constitutional and review challenges, the second judgment would not grant the mandatory relief compelling consideration of applications for transfer certificates, nor the relief against the Registrar of Deeds, Mpumalanga.
The second judgment found that the High Court’s suspension of the constitutional invalidity order was inappropriate as the surviving (b) and (c) components of the transfer embargoes, read with section 118 of the Systems Act, sufficiently protect the interests of the municipalities and public. Despite the municipalities’ substantial success, the second judgment found that Biowatch shielded Glencore from paying their costs, and that Glencore’s success in its cross-appeal entitled it to its costs therein, including the costs of two counsel.
The third judgment, authored by Rogers J, agreed with the second judgement’s analysis and conclusions, save in one respect. The third judgement disagreed with the second judgment’s interpretation of paragraphs (d) to (f) of section 76(2) of the GM By-Law and paragraphs (d) and (e) of section 86(2) of the EM By-Law. According to the third judgment, the obligations imposed by those paragraphs should be interpreted as applying only to the developer on whom the relevant obligations rest, and not to the individual buyers of resultant land units. This interpretation, the third judgment finds, would prevent individual buyers from being burdened with obligations that ordinarily ought to be placed on developers. According to the third judgment, this interpretation is in line with the legislative intent, avoids unreasonable results and renders the provisions consistent with section 25 of the Constitution.
The Full judgment here