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

• Jurisdiction: South Africa
• Citation: 1999 (1) SA 374 (CC)

Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others
1999 (1) SA 374 (CC)

1999 (1) SA p374

Citation	1999 (1) SA 374 (CC)
Case No	CCT 7/98
Court	Constitutional Court
Judge	Chaskalson P, Langa DP, Ackermann J, Goldstone J, Kriegler J, Madala J, Mokgoro J, O'Regan J, Sachs J, Yacoob J
Heard	August 18, 1998; August 20, 1998
Judgment	October 14, 1998
Counsel	DJB Osborn (with him PJ Van Blerk) for the appellants; RM Wise (with him J Kentridge) for the first respondent; CZ Cohen (with him M Chaskalson) for the second, third, fourth and fifth respondent

Flynote : Sleutelwoorde F

Constitutional law — Local government — Powers and functions of — Having regard to provisions of s 174(1), (3) and G (4), s 175(2) and (4) and s 178(2) of Constitution of the Republic of South Africa Act 200 of 1993, powers of local governments not 'delegated' powers but 'original' powers.

Constitutional law — Local government — Council of — Legislative function of — Provisions of s 24 of Constitution of the H Republic of South Africa Act 200 of 1993 not applicable to legislative decisions of council — Enactment of legislation by council in terms of Constitution a legislative, not administrative, act.

Constitutional law — Local government — Council of — Rates and levies — Imposition of in terms of powers conferred by I s 178(2) of Constitution of the Republic of South Africa Act 200 of 1993 — Such not constituting 'administrative action' under s 24 of Constitution — Accordingly, imposition of rates and levies by Greater Johannesburg Transitional Metropolitan Council and its substructures and payment of subsidies by former to two of its substructures in terms of powers conferred on them by Constitution read with Premier's Proclamations 24 of 1994 (Gauteng), 35 of 1995 (Gauteng) and 42 of 1995 (Gauteng), enacted in terms of J

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s 10 of Local Government Transition Act 209 of 1993, not constituting 'administrative' action' under s 24 of Constitution. A

Constitutional law — Local government — Council of — Legislative function of — To extent that local government acts in breach of direct and mandatory provisions of chap 10 of Constitution of the Republic of South Africa Act 200 of 1993, such infringement subject to constitutional challenge — Common-law principles of ultra vires remaining, B underpinned and supplemented where necessary by constitutional principle of legality — In relation to legislative and executive acts of local government not constituting 'administrative action', principle of legality necessarily implicit in Constitution — Question whether local government act intra vires in such instances remaining a constitutional question. C

Local authority — Finance — Grant or donation in terms of s 79(15)(i) of Local Government Ordinance 17 of 1939 (T) — Transitional metropolitan council imposing levy on metropolitan substructure in amount equal to budgeted surplus of substructure — Such not justifiable as grant or donation under s 79(15)(i) of ordinance — Council of substructure D having considered draft budget on assumption that levy within powers of transitional metropolitan council for purpose of subsidising itself and other substructures — Not known what attitude of substructure council would have been if faced with decision to make donation or grant — Difference between levy and grant or donation not one of form but of substance. E

Local authority — Finance — Levies — Power of transitional metropolitan council to raise levies — Whether item 23(c) of Annexure A to Premier's Proclamation 35 of 1995 (Gauteng), enacted in terms of s 10 of Local Government Transition Act 209 of 1993, construed as condition for raising levy prescribed in Act by competent authority as contemplated by s 178(2) of Constitution of the Republic of South Africa Act 200 of 1993, or as power vested in F transitional metropolitan council independently of s 178(2), such levy has to comply with provisions of item 23(c).

Local authority — Finance — Levies — Power of transitional metropolitan council to raise levies — Transitional metropolitan council raising levy on two of its substructures in order to meet deficit in its own budget and in budgets G of two other substructures — Court evenly divided on question whether levy validly imposed in terms of item 23(c) of Annexure A to Premier's Proclamation 35 of 1995 (Gauteng), enacted in terms of s 10 of Local Government Transition Act 209 of 1993 — Accordingly, appeal against dismissal of application for setting aside of resolution to impose levy dismissed. H

Constitutional practice — Appeal — To Constitutional Court — Court evenly divided on issue before it — Appeal not successful and accordingly dismissed.

Headnote : Kopnota

The interim Constitution (the Constitution of the Republic of South Africa Act 200 of 1993) recognises and makes I provision for three levels of government - national, provincial and local. Each level of government derives its powers from the interim Constitution although, in the case of local government, the powers are subject to definition and regulation by either the national or the provincial governments which are the 'competent authorities' for enacting such legislation. Under s 174(1) of the interim Constitution there is, however, a constitutional obligation on the 'competent J

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authority' to establish local government, which has to be 'autonomous and, within the limits prescribed by or under A law . . . entitled to regulate its affairs' (s 174(3)). In s 174(4) it is specifically provided that 'Parliament or a provincial legislature shall not encroach on the powers, functions and structure of a local government to such an extent as to compromise the fundamental status, purpose and character of local government'. In terms of s 175 (2) B the competent authority is also obliged to assign to a local government '. . . such powers and functions as may be necessary to provide services for the maintenance and promotion of the well-being of all persons within its area of jurisdiction'. In s 175(4) the interim Constitution specifically provides that '(a) local government shall have the power to make by-laws not inconsistent with this Constitution or an Act of Parliament or an applicable provincial C law'. Section 178(2) gives local government a taxing power subject to certain conditions. The constitutional status of local government is thus materially different to what it was when Parliament was supreme, when not only the powers but the very existence of local government depended entirely on superior legislatures. Although the detailed powers and functions of local governments have to be determined by laws of a competent authority, this D does not mean that the powers they exercise are 'delegated' powers and does not prevent the powers from being regarded as 'original' and not 'delegated'. (Paragraphs [35]—[39] at 393E—394B, 394C and 394E—F.)

Whilst s 24 of the interim Constitution applies to the exercise of powers delegated by a council to its functionaries, E it is difficult to see how it can have any application to by-laws made by the council itself. The council is a deliberative legislative body whose members are elected. The legislative decisions taken by them are influenced by political considerations for which they are politically accountable to the electorate. Such decisions must, of course, be lawful but the requirement of legality exists independently of, and does not depend on, the provisions of s 24(a). F The procedures according to which legislative decisions are to be taken are prescribed by the Constitution, the empowering legislation and the rules of the council. Whilst this legislative framework is subject to review for consistency with the Constitution, the making of by-laws and the imposition of taxes by a council in accordance with the prescribed legal framework cannot appropriately be made subject to challenge by 'every person' affected by them on the grounds contemplated by s 24(b). Nor are the provisions of s 24(c) or (d) applicable to decisions G taken by a deliberative legislative assembly. The deliberation ordinarily takes place in the assembly in public where the members articulate their own views on the subject of the proposed resolutions. Each member is entitled to his or her own reasons for voting for or against any resolution and is entitled to do so on political grounds. It is H for the members and not the Courts to judge what is relevant in such circumstances. Paragraphs 24(c) and (d) cannot sensibly be applied to such decisions. The enactment of legislation by an elected local council in accordance with the Constitution is, in the ordinary sense of the words, a legislative and not an administrative act. (Paragraphs [41] and [42] at 394H—395F.)

It seems plain that when a legislature, whether national, provincial or local, exercises the power, conferred by s I 178(2) of the interim Constitution, to raise taxes or rates, or determines appropriations to be made out of public funds, it is exercising a power that under the Constitution is a power peculiar to elected legislative bodies. It is a power that is exercised by democratically elected representatives after due deliberation. Such action of the municipal legislatures, in resolving to set the rates, to levy the contribution and to pay a subsidy out of public funds, cannot be classed as J

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administrative action as contemplated by s 24 of the interim Constitution. In the past, the action of a municipal A council in setting rates was considered to be an action that was subject to judicial review on the principles of administrative law, but the principles upon which that jurisprudence was based are no longer applicable. It follows that the...