Case  CCT 296/23
[2025] ZACC 27

Hearing Date:  07 November 2024

Judgement Date: 15 September 2025

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 15 December 2025, the Constitutional Court handed down judgment in an application for leave to appeal and cross-appeal from the Supreme Court of Appeal, which heard an appeal from the High Court of South Africa, Gauteng Division, Pretoria. The applicant, Golden Core Trade and Invest (Pty) Limited, substituted for AngloGold Ashanti Limited (AngloGold), appealed against the judgment and order of the Supreme Court of Appeal insofar as that Court restricted its declaration of unlawfulness in respect of surcharges on the supply of water to one financial year. The first respondent, Merafong City Local Municipality, cross-appealed the Supreme Court of Appeal’s refusal to consider a constitutional challenge to section 8(9) of the Water Services Act 108 of 1997 (WSA). Both the second respondent, the Minister of Water Affairs and Sanitation (Minister), and AngloGold opposed such cross-appeal.

On 11 February 2004, AngloGold was informed by Merafong that, as of 1 July 2003, it had become a water service authority, pursuant to the WSA. It also requested that they apply for approval to be provided with water for industrial use in terms of section 7 of the WSA. On 6 April 2004, AngloGold applied to Merafong, requesting permission to continue receiving water from Rand Water for both industrial and domestic purposes at the then current Rand Water tariffs. On 31 May 2004, Merafong gave permission that Rand Water may supply water directly to the mines, charge and collect water sales revenue, and manage water quality and other technical issues. Certain tariffs were announced for water used for domestic and industrial use. It also set significantly higher tariffs than those of Rand Water for water provided to the mines. It approved AngloGold’s water supply application, with effect from 1 July 2004, under these conditions. Aggrieved by Merafong’s tariffs, AngloGold lodged an appeal against Merafong’s decision to the Minister, in accordance with section 8(4) of the WSA. Its main complaints were that Merafong’s tariff was excessively higher than Rand Water’s while it was not adding any value to, or assuming any responsibility for, any aspect of the water supply; and Merafong failed to recognise AngloGold’s role as a water services provider or make any attempt to understand its economic situation. The Minister, in accordance with section 8(9) of the WSA, upheld the appeal on 18 July 2005 and overturned Merafong’s decision. The Minister concluded that, in respect of the tariff for industrial use, the premium for water for that use was unreasonable, because Merafong provided no value for the services given to AngloGold by Rand Water, and water for industrial use is not classified as a water supply service under section 1 of the WSA.

Merafong continued to enforce the tariffs it had set on AngloGold for the supply of water for industrial and domestic use. AngloGold responded by withholding the contested portion of the tariffs. In September 2007, Merafong demanded that AngloGold pay the arrears or face water supply cuts, which would affect mining operations severely. As a result, AngloGold complied with the demand and paid the disputed surcharge and arrears under protest and without prejudice to its rights.

During July 2011, AngloGold sought to enforce the Minister’s 2005 appeal decision. Merafong contended that the WSA does not confer authority on the Minister to interfere with a tariff set and implemented by Merafong for water services. If the WSA did do as much, Merafong argued that section 8(9) of the WSA was unconstitutional. The High Court found in favour of AngloGold and dismissed Merafong’s counter-application. The Supreme Court of Appeal, too, held that Merafong ought to have sought judicial review of the Minister’s decision and that a collateral challenge to the validity of an administrative act was not available to it. When the matter came before the Constitutional Court for the first time, the majority held that it could bring a reactive challenge as Merafong had the right to challenge the administrative act of the Minister. It remitted the matter to the High Court to determine the lawfulness of the Minister’s decision. When the matter came before the High Court for a second time, AngloGold had sold its mining operations to Golden Core. Merafong sought to review and set aside the Minister’s 2005 appeal decision, and it further sought to challenge the constitutionality of section 8(9) of the WSA. The High Court found Merafong’s delay in bringing the review application for the first six years after the Minister’s decision undue and unreasonable, but the period of seven years after the first delay reasonable as the rights of the parties were in the hands of the courts. It further found that the Minister’s 2005 appeal decision was beyond what section 8(9) of the WSA empowered her to do and her decision was thus unlawful, invalid, reviewable and unconstitutional as section 229 of the Constitution enables municipalities to levy surcharges on water services it provides. It did not deal with Merafong’s constitutional challenge to section 8(9) of the WSA. On appeal to the Supreme Court of Appeal, it was accepted that the constitutionality of section 8(9) of the WSA should not be dealt with. On the delay on launching proceedings, it held that, for the first period, there was no explanation for Merafong’s failure to take the Minister’s decision on review. For the second period, the Supreme Court of Appeal held that Merafong resorted to self-help. The Supreme Court of Appeal only declared unlawful Merafong’s imposed rates for water for domestic and industrial use for one financial year, being 2004/2005.

Before this Court, AngloGold submitted that it challenged the Supreme Court of Appeal’s declaratory finding that Merafong’s tariff for the domestic and industrial use of water was unlawful for only one financial year. A supplementary order was required declaring unlawful all subsequent tariffs Merafong imposed on it after the 2004/2005 year for water supply, for both industrial and domestic use. As the original decision was set aside, no valid decisions could subsequently have been taken. The effect of the Supreme Court of Appeal’s restriction on its declaration of unlawfulness, argued AngloGold, was that despite being “victorious in its long battle to enforce the Minister’s decision”, it was left with empty relief. AngloGold submitted that it allowed Merafong to benefit from its continued breach of its statutory and constitutional duties by keeping the proceeds of tariffs unlawfully imposed after the 2004/2005 year.

Conversely, Merafong submitted that the Supreme Court of Appeal was correct in limiting the impugned decision to one financial year. It persisted with a constitutional challenge to section 8(9) of the WSA, albeit by way of cross-appeal, and argued that once it was declared invalid, it ought to have retrospective effect. AngloGold contested such challenge on the basis that it was not raised before the High Court. The Minister argued that its 2005 appeal decision should be upheld and that section 8(9) of the WSA was not unconstitutional.

In a unanimous judgment written by Tolmay AJ (with Maya CJ, Madlanga ADCJ, Kollapen J, Majiedt J, Mhlantla J, Seegobin AJ, Theron J and Tshiqi J concurring), the Court held that the Supreme Court of Appeal was correct in holding that Merafong’s delay in launching the review application was unreasonable because of its explanation and because it was aware that it had to bring such application. It held that in the circumstances, condonation ought to be refused. It further held that the Supreme Court of Appeal correctly concluded that the Minister’s decision rendered the tariffs for water for industrial use unlawful and that a similar conclusion is warranted regarding water for domestic use. It held that as the original decision was set aside, no valid decisions could subsequently have been taken by Merafong, until the Minister’s decision was reviewed and set aside. The effect of the Supreme Court of Appeal’s restriction on its declaration of unlawfulness was that Merafong was allowed to benefit from its continued breach of its statutory and constitutional duties by keeping the proceeds of tariffs unlawfully imposed after the 2004/2005 year. A review and setting-aside of the Minister’s decision was still required by the municipality. The subsequent tariffs owed their existence to the original decision because each following year builds on the base of the original tariff setting. Merafong could not merely proceed to levy surcharges on the same basis in subsequent years, considering the Minister’s decision that it was unreasonable to do so. Based on the principle set out in Oudekraal Estates (Pty) Ltd v City of Cape Town [2004] ZASCA 48; [2004] 3 All SA 1 (SCA); 2004 (6) SA 222 (SCA), namely, that if a party wishes to nullify or avert consequences that owe, or would owe, their existence to an initial unlawful administrative act, that initial act must be set aside, Merafong could not enforce the same decision in subsequent years.

On a just and equitable remedy, AngloGold submitted that just and equitable relief requires Merafong to repay amounts unlawfully exacted, but during argument conceded that the financial implication of ordering such repayment may have calamitous financial implications for Merafong, which is constitutionally obliged to deliver services to the public. An order was thus structured in a way that ensures repayment but also ensures sustainable service delivery by Merafong to the public. Under these circumstances, the Court concluded that the only viable option was to order negotiation of reasonable surcharges and repayment, but to give the parties the opportunity to agree on a repayment schedule within a period of six months, from date of this order. Failing which, they must resort to mediation and, if so required, the matter must go to the High Court for adjudication.

On the constitutionality of section 8(9) of the WSA, this Court held that the Minister’s powers in terms of section 8(9) are in harmony with the WSA and the provisions of the Constitution, as contemplated in sections 155(7) and 229(2)(b). It is further constitutional because section 8(4) grants a right of appeal to the Minister and that right then comes to fruition in section 8(9), where the Minister is given powers on appeal to confirm, vary or overturn any decision of the water authority. The right of appeal would be rather hollow without the accompanying powers to act on appeal.

Accordingly, the appeal was upheld, and the order of the Supreme Court of Appeal set aside. It held that the surcharge on the supply of water for industrial and domestic use is unlawful and that reasonable surcharges must be negotiated, as well as the method of repayment or set-off, within six months of this judgment. Failing this, the matter must go to mediation and, if mediation fails, to the High Court for adjudication.

The Full judgment  here