Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others

• Jurisdiction: South Africa
• Judge: Mahomed CJ, Van Heerden DCJ, Olivier JA, Zulman JA, Melunsky AJA
• Judgment Date: 23 March 1998
• Citation: 1998 (2) SA 1115 (SCA)
• Docket Number: 328/97
• Hearing Date: 02 March 1998
• Counsel: D J B Osborn (with him P J Van Blerk) for the appellants R M Wise (with him J R Kentridge) for the first respondent C Z Cohen (with him M Chaskalson) for the second to fifth respondents
• Court: Supreme Court of Appeal

Mahomed CJ:

The Local Government Transition Act 209 of 1993 (the 'LGT') created machinery for the fundamental restructuring of local government in South Africa. Pursuant to s 10 of this Act the I Premier-in-Executive Council for the Province of Gauteng issued Proc 24 of 1994 which had the effect of dissolving a number of city councils within the area of Johannesburg, Soweto and Sandton and establishing in their place an overarching local authority called the Greater Johannesburg Transitional Metropolitan Council (the 'JTMC'), which is the first respondent in this appeal. This proclamation also created seven substructures within the JTMC which were subsequently reduced to four by Proc 42 of 1995, dated 1 September 1995. These four substructures are J

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the Eastern Metropolitan Substructure (the 'EMSS'), the Northern Metropolitan Substructure (the 'NMSS'), the A Western Metropolitan Substructure (the 'WMSS'), and the Southern Metropolitan Substructure (the 'SMSS'). These substructures are respectively the second, third, fourth and fifth respondents in this appeal.

The appellants are all ratepayers within the area of jurisdiction of the EMSS. They sought orders in the Court a B quo setting aside various resolutions adopted by the JTMC and the EMSS in June 1996, and further orders declaring that these resolutions were unlawful. In terms of these resolutions a general rate of 6,45 cents in the rand was imposed on ratepayers owning land and rights in land throughout the area of the JTMC. That formula C was designed to enable the areas within the JTMC as a whole to balance their income against expenditure, but the effect of the impugned resolutions would have been to yield an excess of income over expenditure within the areas of the EMSS and the NMSS. That excess was to be utilised by the JTMC, the SMSS and the WMSS, to D compensate for deficits between their own expenditure and income. The intention of the impugned resolutions was to generate a surplus of R438 330 000 from the EMSS, and R4 223 000 from the NMSS. Both these surpluses were to be diverted to compensate for budgetary deficits of R162 482 000, R187 945 000, and R92 E 126 000 within the JTMC, the SMSS and the WMSS respectively. This result was to be achieved by resolutions from the JTMC imposing levies on the EMSS and the NMSS, resolutions from the EMSS and the NMSS undertaking to pay such levies and resolutions of the JTMC directing the diversion of such levies in the form of subsidies to the WMSS and the SMSS, and to the JTMC itself.

Counsel for the appellants sought to attack the resolutions which authorised these arrangements on the following F grounds:

A.

It was contended that the resolutions of the JTMC pursuant to these arrangements imposing levies on the EMSS and the NMSS were ultra vires the powers of the JTMC in terms of s 23(c) of Annexure G A to Proc 35 of 1995, which defined the powers of the JTMC and which was issued by the Premier in terms of the LGT. In support of this submission it was pointed out that s 23(c) of Annexure A to this proclamation only permitted the JTMC to levy and claim 'an equitable contribution from any H transitional metropolitan substructure based on the gross (or) rates income' of such substructure, and it was argued that the levies imposed on the EMSS and the NMSS did not satisfy these requirements.

B.

It was further contended that the impugned resolutions were also ultra vires s 178(2) of the interim Constitution, the Constitution of the Republic of South Africa Act 200 of 1993 (the 'interim I Constitution') which provided that a local government could only levy and recover such property rates as were necessary to exercise its powers and perform its functions, and which was subject to the further proviso that such rates had to be based on a 'uniform structure for its area of jurisdiction'. It was argued that the levies imposed by the JTMC on the EMSS and the NMSS were not necessary for the JTMC to exercise its powers and perform its J

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functions, and that the levies sought to be imposed on these substructures were in any event not A 'based on a uniform structure for its area of jurisdiction'.

C.

The third attack was based on the provisions of s 58 of the Local Government Ordinance 17 of 1939 (the 'LGO') which provided that before the expiry of any financial year, the Finance Committee of the B relevant local authority was required to draw up and present to the relevant Council a detailed estimate of the revenue and expenditure for the Council for the next financial year, and that no expenditure could be incurred by the Council otherwise than in accordance with such an estimate C which had been approved by the Council itself. It was argued that the relevant organs of the JTMC and the EMSS had failed to comply with these requirements of s 58 of the LGO before agreeing to incur the expenditure they had approved.

Locus standi D

Counsel for the respondents contended in limine that none of the applicants had any locus standi to attack the impugned resolutions.

It was contended on behalf of the respondents that the appellants did not have an interest in the relief prayed for, sufficient to give them locus standi to attack the impugned resolutions of the JTMC and the EMSS. The E appellants countered this challenge by relying on the judgment of this Court in the case of Jacobs en 'n Ander v Waks en Andere 1992 (1) SA 521 (A). This was a case in which a white resident, ratepayer and director of a hardware shop in Carltonville, a black resident in an area just outside of the municipal boundaries of Carltonville, F and a South African of Indian descent who managed a clothing shop within that town, sought to attack the decision of the City Council of Carltonville setting aside certain parks for the exclusive use of whites. The applicants alleged that the decision of the City Council had provoked a black consumer boycott of businesses in G Carltonville which had adversely affected their interests. Botha JA dismissed this attack on the locus standi of each of these applicants. He held that what a litigant in the position of the applicants was required to show was that his interest in the relief sought was direct, that it was not abstract or academic, and that it was present and not hypothetical. This had to be determined by the circumstances of each case. He held that there was a H relationship of trust between the municipality and its ratepayers and that this gave to the first applicant the locus standi to stop the municipality from...