Appointment of managers

In Member of the Executive Council for the Department of Co-Operative Governance and Traditional Affairs: Free State v Maluti-A-Phofung Local Municipality and Others [2022] 3 All SA 403 (FB), application by MEC for court to review and declare on the alleged unlawful appointment of municipal managers.

By Merilyn Rowena Kader LLB (Unisa), Legal Editor at LexisNexis South Africa.

Local government - Appointment of managers to municipality under administration: By virtue of ss 154 and 155 of the Constitution, the applicant (the Member of the Executive Council (MEC)) in Member of the Executive Council for the Department of Co-Operative Governance and Traditional Affairs: Free State v Maluti-A-Phofung Local Municipality and Others [2022] 3 All SA 403 (FB), as the executive authority of the Free State Provincial government, was responsible for co-ordination, monitoring and support of municipalities in the province. In this case, the MEC sought to have the court review and declare on the alleged unlawful appointment of the second and third respondents on alleged unlawfully increased remuneration packages and the resultant unlawful drawing of the salaries.

The first respondent was a municipality, which had been placed under administration by mandatory intervention. Consequently, only the administrator had the authority to contract on behalf of the municipality with the second and third respondents.

The respondents acknowledged the standing of the MEC to bring a matter concerning the appointment of a municipal manager to court but complained about the unreasonable delay in doing so in this case.

It was held that, s 152 of the Constitution sets out the minimum standards applicable to a municipality in the execution of its duties.

In explaining the delay in bringing the present application, the MEC referred to attempts to afford the respondents sufficient opportunity to remedy the situation, and to the obstructive conduct of the respondents regarding the administrator’s attempts to discharge his duties. The allegations against the respondents were serious and the conduct of all the parties in dragging their feet in bringing the matter to court brought the administration of justice into disrepute. In that light, the court was constitutionally obliged to excuse the delay and hear the matter.

The first issue addressed by the court was whether the contracts entered by the respondents were legal on the facts and the applicable legal framework. At the relevant time, the municipality had been experiencing a financial crisis and was in serious and persistent breach of its obligations to provide basic services or meet its financial commitments. The administrator was required to scrutinise all budgetary matters. He had investigated the appointments of the second and third respondents and fixed a salary range for such appointments. However, the second and third respondents were appointed without the knowledge, involvement, or ratification of the administrator – and at variance with the remuneration scale determined by him. That was illegal and ultra vires the intervention. Even after realising that their contracts were not legal, the second and third respondents allowed the unlawfulness to persist without seeking to rectify the situation. The consequence of the finding that the contracts were unlawful was that any salary or remuneration pursuant thereto were also ultra vires and falling to be set aside.

That left for the court’s determination, the question of the remedy in law for the illegal contracts concluded by the respondents.

Applicable to a public interest case, such as this, was the local government legislative regime, regulating the powers and function of the municipal council and its resolutions, which were subject to salary determinations by the Minister of Co-operative Governance and Traditional Affairs. In terms of the rule of law and the Constitution, the fixing and payment of exorbitant salaries, which were ultra vires and in defiance of the needs of the people and constitutional governance, will be illegal in terms of s 2 of the Constitution.

Having regard to s 41 of the Constitution, which vests a court with a discretion to hear a matter even if not satisfied that the parties have made every reasonable effort to settle the dispute, the MEC could not be said to be non-suited by the provisions of the Intergovernmental Relations Framework Act 13 of 2005.

Both impugned contracts were set aside and the payment in excess of that permitted was to be repaid by the second and third respondents.

Merilyn Rowena Kader
Legal Editor at LexisNexis