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IN THE HIGH COURT OF SOUTH AFRICA

NORTH WEST DIVISION – MAHIKENG

 

CASE NO: M259/2022

Reportable: YES/NO

Circulate to Judges: YES/NO

Circulate to Magistrates: YES/NO

Circulate to Regional Magistrates: YES/NO

In the appeal of:

 

NALEDI LOCAL MUNICIPALITY                                                         Applicant

 

and

 

REITUM INVESTMENTS (PTY) LTD                                                   First Respondent

 

KOTZE LOUW SWANNEPOEL                                                           Second Respondent

 

VALUATION INDEPENDENT SERVICES CC                                     Third Respondent

 

REGISTRAR OF DEED                                                                       Fourth Respondent

 

TSHEPO MACDONALD BLOEM                                                        Fifth Respondent

 

Coram: Makoti AJ

Delivered: This judgment is handed down electronically by circulation to the parties through their legal representatives’ email addresses. The date for the hand-down is deemed to be 22 January 2025.

 JUDGEMENT

 

Makoti AJ

 

Introduction

 

[1]          Review applications in which organs of State and public institutions seek to set aside their own administrative decisions and actions have become regular occurrences. Used appropriately, they are useful instruments for correcting wrongdoings. Yet, it is not unheard of that such an important litigation tool is used as a cynical vice and mala fide.

 

[2]          The Applicant is Naledi Local Municipality (the Municipality/Naledi). It has listed five Respondents in its application. Due to non-participation of others, I avoid prolixity by mentioning only the two Respondents that are actively participating in this application and have filed papers, being the First and the Second Respondents - Reitum Investments (Pty) Ltd (Reitum) and Kotze Low Swannepoel (KLS).

 

[3]          This is just one amongst a plethora of similar cases that have seen the inside of our courtrooms - where an organ of the State is seeking to review and set aside its own decisions allegedly taken and actioned unlawfully. In this case, the main impugned decision is the selling of land in the town of Vryburg in a manner that the Municipality contends was in contravention of procurement laws (as well as the sanctioning of the sale), procedurally and substantively. Naledi also wants this Court to review and set aside a number of related decision, which, for elucidation purposes are apparent from the Amended Notice of Motion, are as follows:

 

“1.         Declaring the valuation; sale; transfer; registration and the approval of the first respondent’s rezoning application by the applicant of a portion of land described as certain portion of (remainder extent) of Erf 506 Vryburg, measuring approximately 100 000m2.

 

2.           Reviewing and setting aside the sale; transfer; registration and the approval of the first respondent’s rezoning application by the applicant of a portion of land described as certain portion of (remainder extent) of Erf 506 Vryburg, measuring approximately 100 000m2.

 

3.           …”

 

Summary of the facts

 

[4]          Both the Municipality and Reitum agree on certain facts which culminated in the conclusion of the transaction for the sale of municipal land to the latter. The property in question is Erf 11973, a portion of Erf 506 Vryburg (the property), measuring in extent 100 000 square meters. The sale transaction was preceded by certain actions, the important of which are inter alia the following:

 

[4.1]       a decision emanating from a special council meeting on 16 October 2014, in which it was resolved that certain municipal land properties would be disposed of by way of sale. At the same meeting Council delegated authority to its Municipal Manager to sign all agreements that were to be concluded on its behalf;

 

[4.2]       a valuation report dated 18 May 2018 composed by KLS was delivered to the Municipality setting as reasonable value for the property an amount of R200 000-00 (Two Hundred Thousand Rand). KLS and the Municipality have a historical relationship dating back to 2009 when the former was appointed as municipal valuer;

 

[4.3]       the persons who conducted the valuation were Messrs Herman Josias Swannepoel and Mr LPJ Bezuidenhout. Unless it becomes necessary, I shall not be mentioning these individuals in their names in this judgment; and

 

[4.4]       a few days later, on 21 May 2018, Reitum presented an offer to the Municipality to purchase the property for an amount of R200 000-00. This validity of this offer, which was unsolicited, forms the spine of the disputes in this application.

 

[5]          In its papers KLS accepts that its valuation of the property at R200 000-00 was an error. When the application was heard the parties appeared to have formed common cause that the valuation of the property was indeed an error, and that the appropriate value for the property ought to have been in the amount of R2 000 000-00.

 

[6]          That besides, upon Naledi’s acceptance of Reitum’s offer, a sale agreement was concluded on 12 June 2018. The Municipality sold the property to Reitum at the purchase price of R200 000-00. Of the agreed purchase price, Reitum paid an amount of R125 000-00 (One Hundred and Twenty-Five Thousand Rand). The remaining balance of R75 000-00 (Seventy-Five Thousand Rand) was used to defray the costs associated with the rezoning of the property from classification as agricultural land to a business site.

 

[7]          The sale agreement was concluded on behalf of the Municipality by the Fifth Respondent, Mr Tshepo Macdonald Bloem (Mr Bloem) who was its then accounting officer. He signed the deed of sale, purportedly because he had been authorised by Council resolution to represent the Municipality as the signatory to all agreements that were concluded on its behalf. On behalf of Reitum, the deed of sale was signed by Mr Lesego Bakgaoganye Makwati (Mr Makwati), its director.

 

[8]          It is common cause that after the sale transaction was concluded, Reitum attended to the rezoning of the property, which took place on 02 September 2022. As I have pointed out already, in consideration of the rezoning costs, an amount of R75 000-00 was retained by Reitum when it paid an amount of only R125 000-00 towards the total purchase price to the Municipality. Mr Bloem was still the Municipal Manager at Naledi when the rezoning took place.     

 

[9]          I note that the sale transaction was not preceded by any publication to inform members of the public about the Municipality’s intention to dispose of the property. Reitum avers that it submitted an unsolicited bid to purchase the property from the Municipality. Curiously, its unsolicited bid was for the same amount of R200 000-00 as per KLS’s evaluation, which has been accepted to have been arrived at in error. I am alive to Naledi’s contention that the sale transaction was fraudulent and, because of that, I will deal with the question of the offer again below.

 

[10]        However, I make an observation at this stage that the disposal of the Municipality’s property did not comply with the procedures laid down in municipal by-laws requiring that the Municipality notify the public, by publication in the Provincial Gazette and a newspaper circulating in the relevant area, of its intention to dispose of its property.[1] How that affects this case is an issue that I shall revisit below as I intend to deal first with the technical point of unreasonable delay raised on behalf of Reitum.

 

Did the Municipality institute this application in a reasonable time?

 

[11]        Reitum contends that the Municipality did not pursue the review application on time and that, for that reason, it should be non-suited in this application. Its main point being that the Municipality was aware of the incorrect valuation during the course of 2019, when Mr Bloem was still the Municipal Manager, but it did not take any steps to review and set aside the transaction.

 

[12]        The amount of time that passed between 2019 and 2022 to institute the review application is, according to Reitum, inordinate and unreasonable. As a result, it is Reitum’s contention that the court should not condone the delay and dismiss the application. In Merafong City Local Municipality v AngloGold Ashanti Limited[2] we were warned about the potential calamitous effect that may result from delays in matters of this nature.

 

[13]        Where it is not properly explained, a delay may result in a party being non-suited.[3] That much is trite.

 

[14]        The Municipality, on the other hand, contended that the application should be entertained despite the lapse of time. It , i specifically challenged Mr Bloem to provide the Court with reasons why he did not do anything when he found out that the valuation of the property was incorrectly done. That invitation did not yield any response from Mr Bloem, ignoring it and not filing an affidavit to place his version before this Court. I am made to understand that with the passage of time, Mr Bloem was hauled before a disciplinary hearing to account for his role in the impugned transaction.

 

[15]        The law as laid down by the Constitutional Court in Khumalo and Another v Member of the Executive Council for Education: KwaZulu Natal[4] requires organs of State to avoid unreasonable delay when they intend to challenge decisions in review applications. It was held that a court hearing a review application has discretion - always to be exercised judiciously - whether to overlook an excessive delay. A court is bound by considerations of the interests of justice and avoidance of prejudice for all the parties in the litigation.

 

[15]        That Court[5] further held that:

 

“[45]      [T]he rule of law is a founding value of the Constitution, and that state functionaries are enjoined to uphold and protect it, inter alia by seeking the redress of their departments’ unlawful decisions. Because of these fundamental commitments, a court should be slow to allow procedural obstacles to prevent it from looking into a challenge to the lawfulness of an exercise of public power. But that does not mean that the Constitution has dispensed with the basic procedural requirement that review proceedings are to be brought without undue delay or with a court’s discretion to overlook a delay.”

 

[16]        The question of discretion has come under scrutiny in a number of cases. Having had regard to the text in Khumalo, supra, the Court in Tasima Department of Transport v Tasima (Pty) Ltd[6] said the following:

 

“While a court ‘should be slow to allow procedural obstacles to prevent it from looking into a challenge to the lawfulness of an exercise of public power’, it is equally a feature of the rule of law that undue delay should not be tolerated.  Delay can prejudice the respondent, weaken the ability of a court to consider the merits of a review, and undermine the public interest in bringing certainty and finality to administrative action.  A court should therefore exhibit vigilance, consideration and propriety before overlooking a late review, reactive or otherwise.” (Emphasis added)

 

[17]        The above dictum led the Court in State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited[7] to express that the discretion cannot be exercised ‘in the air’. All these factors were considerations in Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd[8] where the majority of the Court, per Theron J, found the municipality to have failed to adequately explain a delay of fourteen months in bringing its review application. Moreover, being an organ of the state, the municipality bore a higher obligation to respect the law[9] and to take the court into its confidence by providing a full and frank explanation for its delay. Despite this, the Court overlooked the delay and proceeded to hear the merits of the case in the interest of justice.

 

[18]        Not even the inacceptable manner in which Buffalo City had conducted itself in continuing to give effect to a constitutionally invalid contract was sufficient to deter the Court from overlooking the delay. The court in Gqwetha v Transkei Development Corporation Ltd and Others[10] said that the delay must be considered with the prejudice to the parties and ‘having regard to the possible consequences of setting aside the impugned decision’.

 

[19]        It is common cause that the land in question was sold to Reitum on or about 12 June 2018, pursuant to the evaluation of the property by KLS. The Municipal Manager who replaced Mr Bloem assumed office on 01 September 2021. He alleges that he became aware of the irregularities which vitiated the transaction, from valuation to rezoning, during or about 01 February 2022.

 

[20]        Upon becoming aware of the irregularities, the Municipal Manager, Mr Modisenyane Thomson Segapo (Mr Segapo), on 28 April 2022, attended a Council meeting whereat he presented a report to the effect that the sale of municipal land was vitiated by irregularity and was therefore unlawful. At the meeting Mr Segapo requested that Council should pass a resolution to challenge the transaction. On the same date the Council passed the resolution and authorised Mr Segapo to institute a review application in order to set the sale transaction aside.

 

[21]        From the date on which he became aware of the irregularities the Municipal Manager took two months to present a report to Council, after which he was authorised to embark on this litigation. His actions were prompt and he cannot be accused of causing or contributing to the delay. That said, there is still the unexplained delay which took place before Mr Segapo took office.

 

[22]        Before preparing a memorandum to Council, on 11 February 2022, Mr Segapo approached the Municipality’s legal representatives to render an opinion on its rights with regard to the impugned sale transaction. Consultations followed between Mr Segapo and the lawyers. Then there was exchange of communication between the Municipality’s lawyers and Reitum on 18 February 2022. Counsel was briefed on 22 March 2022 for an opinion on the Municipality’s rights. Advise was provided on 30 March 2022, whereupon a memorandum to Council was prepared on 06 April 2022. It is common cause that the review application was ultimately instituted on 17 May 2022. This was approximately five years after the rezoning, last of the reviewable transactions, was concluded.

 

[23]        While I have been provided with an explanation of what transpired after Mr Segapo assumed duties as Municipal Manager, there was nothing as to the reason why Naledi did not, when it was still under the stewardship of Mr Bloem, take corrective action. I take it to be that he did not have a version that could better what was already part of the pleading in this application. This is because an attempt by the Municipality to get him to provide a version of what transpired drew blanks.

 

[24]        For a man who played a crucial role in the transaction his silence is regrettable. He did not file an affidavit to share his knowledge of the transaction with the court and the parties. He was not even bothered by an allegation that he resigned from his employment the Municipality when he was faced with charges of misconduct, including for the role that he played in selling the property to Reitum. Anyways, it is Mr Bloem’s constitutional right to choose not to participate in these proceedings – disappointing as this is.

 

[25]        All of the facts considered, and in considering the failure by Mr Bloem to provide an explanation, I am of the view that the delay in instituting the review application ought to be condoned. The interests of justice favours such a conclusion; it will enable the Court to probe the propriety of the currently impugned sale of municipal land.

 

Whether the sale was lawfully concluded

 

[26]        The sale, like other conduct, ought to have taken place within the dictates of the law and policy. Constitutionally, that implies compliance with the dictates of section 217(1) of the supreme law of the land. Many findings have been made by our courts regarding state contracts which have been concluded in contravention of constitutional and statutory provisions  and obligations.

 

[27]        In Eastern Cape Provincial Government v Contractprops 25 (Pty) Ltd[11] the SCA held that:

 

“As to the consequences of visiting such a transaction with invalidity, they will not always be harsh and the potential countervailing harshness of holding the province to a contract which burdens the taxpayer to an extent which could have been avoided if the tender board had not been ignored, cannot be disregarded. In short, the consequences of visiting invalidity upon non-compliance are not so uniformly and one-sidedly harsh that the legislature cannot be supposed to have intended invalidity to be the consequence. What is certain is that the consequence cannot vary from case to case. Such transactions are either all invalid or all valid. Their validity cannot depend upon whether or not harshness is discernible in the particular case.” (Emphasis added)

 

[28]        There are two important considerations in this case. The first is that the sale transaction was conducted through an unsolicited bid, and the agreement reached which was not advertised publicly. There is also the question of regulation 37(2) which applies to the Municipality and which requires that goods or services to be procured must be demonstrably or proven to be unique or innovative. It also states that the product or service procured should have exceptional cost benefits for the municipality. Then, it says that the person who approaches a municipality with an unsolicited bid must be the sole provider of the product or service.

 

[29]        Section 113 of the Municipal Finance Management Act provides for adherence to strict measures for procuring goods via unsolicited bids. The Act says that a municipality may only consider unsolicited bids in compliance with an approved framework. The use of the words ‘may only do so’ indicate the peremptory nature of the statutory provision.

 

[30]        Importantly, the regulation sings the adjective ‘and’, and makes it a requirement that the reasons for not going through normal bidding processes must be found to be sound by the accounting officer. This may sound as if it is only applicable when the Municipality is procuring inwardly. However, I hold that the principles are equally applicable when the Municipality is disposing off its properties, especially because it is required that the transaction and the resultant contract should be publicised.

 

[31]        The second consideration concerns the fact, which is common cause amongst the parties, that the sale price was vitiated by an error that was committed during the land’s valuation. Mr Herman Josias Swannepoel who deposed to an explanatory affidavit that was filed on behalf of KLS explained it thus:

 

“21        Ex facie the valuation it is patently clear that a typing error occurred in the equation set out at the bottom of paragraph 8.1. Thus I readily, although with some embarrassment, admit. Simply, instead of typing the result of the calculation multiplying R20 with 100 000 as R2,000,000.00, a single zero was left out, and the figure thus reads R200,000.00. It is extremely unfortunate that this error then carried through the rest of the report and went unnoticed at the time.”

 

[32]        It is not just a zero that was left out, but the coma which was supposed to be inserted immediately after the digit number 2. I make no meal of this and I accept that an error occurred which influenced the setting of purchase price when the sale transaction was finalised between the Municipality and Reitum. The result is that the land property was sold for an equivalent of ten percent (10%) of its then true value, part of which purchase price was used to finance the rezoning costs.

 

[33]        Based on the failure to follow procedures when concluding the impugned sale transaction, and the error that was admitted by KLS which vitiated the setting of the purchase price, I have no difficulty in reaching a finding that the sale transaction cannot withstand scrutiny. It was concluded unlawfully. The natural consequence of procurement that breaches legislative prescripts is that:

 

“… a public procurement contract concluded in breach of the legal provisions ‘designed to ensure a transparent, cost-effective and competitive tendering process in the public interest, is invalid and will not be enforced.”[12] (Emphasis added)

 

[34]        The SCA in Valor IT v Premier, North West Province and Another[13] added the following to the case law:

 

“[44]      Thereafter, VIT and the Department purported to enter into new agreements on two further occasions before the first cancellation. … The award of these contracts was unlawful and invalid because their award had not been preceded by an open procurement process in accordance with the required constitutional and legal prescripts. This was the state of affairs that prevailed when the provincial government cancelled the SDA and the agreements that followed it for the first time….” (Emphasis added)

 

[35]        Though unlawful, however, the sale transaction would carry legal effect unless it was taken on review and set aside. This is accordance with the decision in MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd t/a Eye and Laser Institute[14] where the majority of the Court held inter alia that the “… essential basis of Oudekraal was that invalid administrative action may not simply be ignored, but may be valid and effectual, and may continue to have legal consequences, until set aside by proper process”.[15]

 

[36]        The conclusion of the majority confirmed the dictum from Oudekraal Estates (Pty) Ltd v City of Cape Town and Others[16] in which it was held that an invalid administrative decision will carry legal effect until it is set aside by a court. The specific passage that was favourably referred to by the court in Kirland reads:

 

“… Is the permission that was granted by the Administrator simply to be disregarded as if it had never existed? In other words, was the Cape Metropolitan Council entitled to disregard the Administrator’s approval and all its consequences merely because it believed that they were invalid provided that its belief was correct? In our view, it was not. Until the Administrator’s approval (and thus also the consequences of the approval) is set aside by a court in proceedings for judicial review it exists in fact and it has legal consequences that cannot simply be overlooked. The proper functioning of a modern State would be considerably compromised if all administrative acts could be given effect to or ignored depending upon the view the subject takes of the validity of the act in question. No doubt it is for this reason that our law has always recognised that even an unlawful administrative act is capable of producing legally valid consequences for so long as the unlawful act is not set aside.” (Emphasis added)

 

[37]        Thus, it is a requirement for a Court that is faced with a review application to pronounce on the lawfulness of the transaction concerned. Declaring the transaction unlawful is itself not the end of the matter, and the Court is required afterwards to make a determination of what in its view constitutes a just and equitable remedy.[17] I have no difficulty concluding that the sale was unlawful and invalid, hence I now have to determine what would amount to a just and equitable outcome.

 

Valuation of the property by KLS

 

[38]        The case made here is that the valuation of the property by KLS ought to be declared unlawful. This is because of the valuation report which did not correctly provide the true value for the property. According to the Municipality the valuation report stands to be declared unlawful and, consequently, set aside for that reason. It has already been established that the Municipality relied on the valuation report to conclude the impugned sale agreement with Reitum.

 

[39]        The review of the valuation report is predicated on the authority in Tahilram v Trustees of the Lukamber Trust and Another[18] which suggests that the valuation shall stand until it is set aside by Court in review proceedings. The judgment reads inter alia that:

 

“[24]     To hold otherwise (as was done by the majority judgment in Perdikis) would lead to uncertainty and a lack of finality; how many times then may a valuer withdraw his or her valuation and issue an amended one to correct mistakes of fact or value in a previous one? Values of finality and certainty are foundational, especially to administrative law – even an unlawful and invalid administrative decision exists in fact and has legal consequences until it is set aside by a court in proceedings for judicial review: Oudekraal Estates (Pty) Ltd v City of Cape Town and others  2004 (6) SA 222 (SCA) para 26 – and to contract law.”

 

 [40]       On the principle of Tahilram the report as it stands shall remain unless it is set aside. The decision accords with earlier authorities.[19] To assail the decision a review application is a necessity. I have no difficulty accepting that the valuation report is a reviewable instrument. The explanation by KLS was simply that an error occurred in the final computation of the amount. It is an error that led to the setting of the price for the property, the sequelae to which was the conclusion of the sale transaction. All the parties accept that the correct value for the land property ought to have been R2 000 000-00 and there is no point belabouring the issue.

 

Rezoning of the property

 

[41]        The Municipality, rather belatedly, decided to institute a review application against the granting of the application for land use pertaining to Erf 11973 Vryburg. That application was approved by the Municipality approximately five years ago in 2019. As Reitum pointed out in its answering affidavit, the rezoning application was prepared with the help of consultants who ply trades in various fields such as engineers, environmental specialists, land surveyors etc. This was not directly disputed by the Municipality which contended that the rezoning ought to be reviewed and set aside as it was done as a result of the unlawful valuation [not fraudulent] and sale of the property.

 

[42]        The main ground upon which the rezoning of the property is impugned are as stated in the founding affidavit. They are that the one Mr Kgaugelo Arnold Manamela who oversaw the rezoning application he did not consider how ownership of the property was acquired by Reitum not the legality questions related thereto. Apart from asserting that the rezoning application formed part of irregular composite decisions, it is not clear why the decision as a stand alone has offended the requirements in terms of any applicable laws.

 

[43]        Rather troubling about this issue is the fact that this part of the application is, on the version of the Municipality, based on facts that Mr Segapo is mostly unfamiliar with. Such constitute hearsay which, despite Mr Manamela’s apparent cooperation, was not asked to confirm under oath. The order sought in this regard falls on this account.  

 

Just and equitable remedy

 

[44]        Naledi seeks, primarily, the total obliteration by this Court of the sale transaction. It says so due to the grounds of unlawfulness that I have already dealt with above and, importantly, based on allegations that the sale transaction was fraudulent. The law on how fraud impacts transactions was famously expressed by Lord Denning in Lazarus Estate Ltd v Beasley,[20] which principle has been embraced in our jurisprudence, in which he held that:

 

“No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The Court is careful not to find fraud unless it is distinctly pleaded and proved, but once it is proved, it vitiates judgments, contracts and all transactions whatsoever.”

 

[45]        That the effects of fraud are insidious and corrosive in society was discussed and confirmed by the SCA in Namathethu.[21] When proven, therefore, fraud may lead to the granting of the order sought by the Municipality.

 

[46]        On the objective facts, however, I have not found proof of fraud, but an error that was in the face of all the parties when the transaction of sale was concluded. Neither against KLS nor on the part of the Municipality. A careful eye could have picked up the calculation error. I am curious of how Reitum got to submit its unsolicited bid for the exact value for the property which was determined by KLS in error. That curiosity ends there as there is no evidence proving fraud, more so when this was not an isolated transaction which fact I shall canvass below.

 

[47]        If ever fraud was at issue, one would have expected to see its traces in the misconduct charges against Bloom. The National Prosecuting Authority declined to prosecute the criminal allegations.

 

[48]        There is no singular meaning to what is a just and equitable remedy, which has to be determined on a case-by-case basis. I understand the concept to require that a court must do its best to find a remedy that is fair and reasonable; one which attempts to strike a balance between the competing interests in a case. In Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources and Others it was held that:[22]

 

“84.       It would be conducive to clarity, when making the choice of a just and equitable remedy in terms of PAJA, to emphasise the fundamental constitutional importance of the principle of legality, which requires invalid administrative action to be declared unlawful. This would make it clear that the discretionary choice of a further just and equitable remedy follows upon that fundamental finding. The discretionary choice may not precede the finding of invalidity.”

 

[49]        The court’s power to determine a remedy that is just and equitable was described in State Information Agency SOC Ltd v Gijima Holdings (Pty) Ltd[23]as a wide one and that ‘… So wide is that power that it is bounded only by considerations of justice and equity.’ Thus, the court is enjoined to make a determination of what would in its view constitute a just and equitable remedy, within the context of a case that is before it, after reaching a conclusion that conduct is unlawful. The parties in this case approach this notion from different vantage positions, the one seeking complete cancellation of the contract and the other asking for its terms to be retained despite the unlawful manner in which it was concluded.

 

[50]        One has to recall the constitutional injunction that contracts for goods or services must follow ‘a system which is fair, equitable, competitive and cost-effective’.[24] That command is peremptory and it is exemplified by the employment of the word ‘must’ in the Constitution. Similar wording can be found in ordinary legislation, in particular the Municipal Finance Management Act.[25]

 

[51]        In Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African Social Security Agency and Others,[26] it was held that compliance with the constitutional or the legal framework necessarily entailed that, for a procurement to be valid, the process and its components had to satisfy the values enshrined in s 217(1) of the Constitution. Failure to comply with the constitutional dictates leads to an ineluctable position that a contract concluded in that manner will not be enforced.

 

[52]        The sale transaction came as a result of an unsolicited bid, according to Reitum. It contended in its answering affidavit that unsolicited bids are common in municipalities, and that its offer was valid and compliant as the Municipality had not placed any facts to contradict that statement. Moreover, in Reitum’s letter dated 21 February 2022 it is recorded that similar transactions were made in respect of land properties that were sold to a number of individuals. This is a factor for purposes of deciding a just and equitable remedy that there were similar transactions, not so much that such rendered this sale or the ones referred to in the letter valid. So, too, that the evaluation of the properties was done by KLS. The letter states:

 

“7.          Various municipal land sales including that of, Messrs …, the late … were done in the same process, as mune by the municipality in the past. All those transactions were done by Segapo when he was the municipal manager by then. Kotze Louw Swannepoel, evaluated all those posrtins of land sold, the same as mine. I hope he complied with these laws you are mentioning here.”

 

[53]        On Reitum’s behalf it was argued that a just and equitable remedy would be achieved should it be order to pay an amount of R1 850 000-00, which is the difference between the actual value of the land at R2 000 000-00 and the R150 000-00 that was paid pursuant to the impugned sale. Naledi does not accept this and contends that the sale transaction should be set aside in toto, with the effect being that Reitum would be refunded the purchase price and the rezoning fees that it has paid. The statement in the answering affidavit asserts inter alia that:

 

“262.     In the event of the court founding that the grounds for review had been reached by the Municipality, Reitum accepts the offer made in paragraph 158 and offers to pay the sum of R1 850 000.00.”

 

[54]        The basis for the submission that Reitum should be allowed to pay the abovementioned sum of money is that it had already incurred expenditure exceeding one million rand developing and improving the property. What the improvements are and the exact amount that was allegedly spent on the property was not detailed in the answering affidavit. I am left to ponder whether indeed such improvements did take place. Reitum bore an evidential burden to prove such allegations, which I cannot accept without proper substantiation. However, I do not close the door for Reitum to provide proof of developments and improvements that it has alleged in its answering affidavit.

 

[55]        Notionally, one may accept that rezoning of land may result in the value of the property being upgraded. As I understand the case before me, that exercise was done using a portion of the purchase price that was supposed to be paid to Naledi for the land. On its own version, Reitum paid to the Municipality R150 000-00 of the agreed price of R200 000-00. If that be the case, I do not see how Reitum can claim the fruits of rezoning except and to the extent that it had to put more money into developing the property.

 

[56]        There is yet another consideration, being a lease agreement that was concluded between Reitum and the National Department of Public Works and Infrastructure. The lease agreement was concluded for purposes of accommodating the South African Social Security Agency. The lease agreement was signed on behalf of Reitum on 19 November 2021 and on behalf of the Department on 06 December 2021.

 

[57]        The offices which were to be occupied by SASSA were to be constructed within a period of eight (8) months from the date on which the lease agreement came into effect. This is in accordance with the terms of a letter that was penned by the Department’s legal services manager, Mr Oageng Mogale, and dated 11 November 2021. The intended construction was possibly disturbed by the issuing of this review application. I make this point to illustrate that construction of offices or business premises on the property have not yet taken place.

 

[58]        In AllPay[27] Froneman J summed the purpose of administrative remedy as follows:

 

“The emphasis on correction and reversal of invalid administrative action is clearly grounded in section 172(1)(b) of the Constitution, where it is stated that an order of suspension of a declaration of invalidity may be made ―to allow the competent authority to correct the defect. Remedial correction is also a logical consequence flowing from invalid and rescinded contracts and enrichment law generally.”

 

[59]        In Buffalo City, supra, the Court declined to set aside an invalid agreement due to the Municipality’s delay in reviewing a transaction that it had found invalid. The Court held that:

 

“[105]    In these circumstances, justice and equity dictate that the Municipality should not benefit from its own undue delay and in allowing the respondent to proceed to perform in terms of the contract. I therefore make an order declaring the Reeston contract invalid, but not setting it aside so as to preserve the rights to that the respondent might have been entitled. It should be noted that such an award preserves rights which have already accrued but does not permit a party to obtain further rights under the invalid agreement.”  (Emphasis added)

 

[60]        The Municipality, in paragraph 158 of the founding affidavit, tendered an offer in the following terms:

 

“In the alternative, and unless Reitum is prepared to do so, Reitum be ordered to pay R1 875 000.00, being the balance of the true market related value of the property.”

 

[61]        Reitum accepts the offer, albeit contingent on the Court reaching a conclusion that the grounds of review have been satisfied – which I already have. The Municipality did not specifically address the acceptance of the offer in its replying affidavit, and it can be accepted that it had no intention of withdrawing the offer. In any case the offer had already been made by the Municipality’s lawyers in a letter of 18 February 2022 to Reitum in which a demand was made to the latter to pay an amount of R1 800 000-00. 

 

[62]        Taking all these factors into consideration, I am of the view that the dictum in Buffalo City ought to be followed and that it would not be just and equitable to deny Reitum contractual rights that accrued a long time ago. The Municipality had been aware of the unlawfulness of the agreement since 2018 and only took decisive action in 2022. Reitum should be allowed to retain the property, subject to payment of the sum of R1 850 000-00 to the Municipality.

 

Question of costs

 

[63]        The parties are all asking for costs to be awarded in their favour, including KLS which seems aggrieved by the tenor of the application against it.  KLS’s agitation was completely unwarranted and it cannot be entitled to an award of costs, especially in circumstances where it committed the error which resulted in the sale of municipal property at a price that was far below its actual value. It readily admitted its error and that should be the end of it.

 

[64]        In Buffalo City the Court declined to award costs, holding that:

 

“[106]    Ordinarily in a commercial matter like this, even though there are broad issues of public interest at stake, costs would follow the result.  Both parties have been partially successful in that the Reeston contract was declared unlawful but the payment obligations have been preserved.  For this reason, there should be no order as to costs.”

 

[65]        Indeed, in this application too, both Naledi and Reitum as the main parties to the suit have each attained partial success. I therefore have no hesitation in following the example set by the Apex Court in that authority and I therefore decline to award costs in this litigation to any of the parties.

 

Order

 

[66]        I accordingly make the following order:

 

[i]           The valuation and the sale of the Municipality’s property, Erf 11973 Vryburg (a portion of Erf 506 Vryburg), are hereby declared unlawful and therefore invalid; and

 

[ii]          The First Respondents is ordered to pay an amount of R1 875 000-00 (One Million, Eight Hundred and Seventy-Five Thousand Rand) to Naledi Local Municipality to retain ownership of the property, Erf 11973 (Portion of Erf 506) Vryburg, which amount shall be paid to the Municipality in full within 60 days of the date of this order, failing which the sale transaction shall cease automatically;

 

[iii]         Should the sale transaction cease in terms of paragraph [ii] above, the Municipality shall refund Reitum the purchase price of R200 000-00 (Two Hundred Thousand Rand Only) for the property, also within a period of 60 days from the date on which the order in [ii] above lapses;

 

[iv]         There is no order as to costs.

 

 

M. Z. MAKOTI

ACTING JUDGE OF THE HIGH COURT

NORTH WEST DIVISION

 

 

APPEARANCES:

 

FOR APPELLANT:                                        ADV MOKUTU SC; with

                                                                       ADV MORETLWE

                                                                       MODIBOA ATTORNEYS INC

                                                                       MAHIKENG

 

FOR 1^ST RESPONDENT:                               ADV PIENAAR SC

                                                                        ADV RAUTENBACH

                                                                      SYMINGTON DE KOK ATTORNEYS

                                                                      C/O NIENABER AND WISSING ATT

                                                                      MAHIKENG

 

FOR 2^ND RESPONDENT:                              ADV STEYN

                                                                       KOTZE LOW & SWANNEPOEL ATT

                                                                       C/O VAN ROOYEN TLHAPI WESSELS INC

                                                                       MAHIKENG

 

JUDGMENT RESERVED:                      26 JULY 2024

JUDGMENT HANDED DOWN:              22 JANUARY 2024

 

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