Polokwane Local Municipality v Granor Passi (Pty) Ltd
| Jurisdiction | South Africa |
| Judge | Ponnan JA, Tshiqi JA, Wallis JA, Zondi JA and Dambuza JA |
| Judgment Date | 01 March 2019 |
| Docket Number | 289/2018 |
| Court | Supreme Court of Appeal |
| Hearing Date | 19 February 2019 |
| Citation | 2019 JDR 0346 (SCA) |
Wallis JA (Ponnan, Tshiqi, Zondi and Dambuza JJA concurring):
On 7 December 1988 the appellant's predecessor, the Pietersburg Municipality, [1] concluded an agreement with the respondent, Granor Passi (Pty) Ltd (Granor), for the sale to it of an immovable property described as lot 5665, Pietersburg Extension 12 (the property), for a purchase price of R181 000. A deposit of 20 per cent of the purchase price was payable in cash on the date of sale and the balance was payable thereafter in 60 equal monthly instalments, inclusive of interest. Possession of the property was given immediately and Granor was obliged, within three years of the date of conclusion of the agreement, to erect an industrial building on the site to a minimum value of R100 000. If it failed to do so the municipality would be entitled to take the property back.
Granor claimed that it paid the purchase price in accordance with the agreement and that the final instalment was paid by 1994. It was common cause that it constructed industrial buildings on the site with the
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Wallis JA (Ponnan, Tshiqi, Zondi and Dambuza JJA concurring)
approval of the municipality. The current value of the improvements it has made over the years was assessed as some R22 million. The property and the buildings so constructed, together with two adjacent properties owned by it, are used for the purpose of its business of processing fruits into liquid concentrates. Since 1994 the municipality has demanded and Granor has paid rates on the property on the footing that it was the owner. From 2010 rates were not charged separately in respect of the property, which Granor attributed to the consolidation of this rates account with those of its other two properties. While the municipality denied this, it gave no explanation for the sudden cessation of rates accounts and its denial can safely be rejected. In approximately 2011, it was discovered that the property was still registered in the name of the appellant municipality, now the Polokwane Local Municipality. Granor's investigations suggested that the municipality had given instructions to two separate firms of attorneys to attend to the transaction but this was not done. Further investigation did not reveal why the property was not transferred to Granor.
On 22 November 2013 a letter was written on behalf of Granor to the Municipal Manager of Polokwane asking that the municipality authorise transfer of the property to Granor. Matters proceeded slowly thereafter, and documents were furnished to the municipality with a view to establishing that the purchase price had been paid. The last item of correspondence was a letter dated 27 November 2014. Eventually on 26 February 2015 the council of Polokwane passed the following resolution:
'1. That Messrs Granor Passi's audited financial statements as proof of Erf 5665 Pietersburg Ext 12's loan repayment and further consents to transfer Erf 5665 Pietersburg Ext 12 to Messrs Granor Passi not be accepted.
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2. That negotiations be conducted with Granor Passi in relation to a lease agreement.
3. That the Municipal Manager be mandated to enter into negotiations with Granor Passi.'
The letter conveying this resolution to Granor concluded with the following sentence:
'Kindly advise Council within 7 days from date of this letter of your acceptance of the above listed conditions.'
On 4 August 2015 Granor launched the present proceedings to set aside this resolution and for an order that the municipality transfer the property to Granor. Thobane AJ granted the first order and remitted the matter to the municipality for reconsideration in the light of the principles set out in the judgment. From his judgment it is apparent that he thought that the municipality needed to consider its constitutional obligations especially in the light of its dealings with Granor over the previous 27 years. The appeal is with his leave.
The issues
Counsel for the appellant submitted that there were three grounds upon which the appeal should be upheld. As set out in the answering affidavit and the heads of argument for the municipality, his starting point was the contention that the main cause of action was a claim for specific performance of the contract of sale. On this footing he advanced three propositions. First, the claim to transfer of the property had prescribed. Second, and in any event, the requirements for specific performance of the sale contract were not satisfied, in that Granor had not proved its contractual entitlement to specific performance. In particular he contended that there was insufficient proof that it had paid the purchase price in full. Third, he submitted that in the light of these problems the
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resolution took the matter no further and was not relevant to the dispute between the parties. Setting it aside served no purpose.
This approach inverted the proper enquiry, by ignoring the way in which the application was brought and dealt with in the high court. The municipality's resolution must be seen against the background that Granor had furnished it with documents in proof of its payment of the purchase price. In the light of that proof, it asked that the municipality transfer the property to it. Paragraph 1 of the resolution stated that the municipality's council considered the tendered proof of payment insufficient to satisfy it that the purchase price had been paid. For that reason, and for that reason alone, it was unwilling to consent to transfer of the property to Granor.
The only issue under consideration at the council's meeting on 26 February 2015 was whether Granor had furnished adequate proof that it had paid the purchase price of the property. Granor asked that the documents it had furnished be accepted as such proof. The request for transfer of the property would, so it believed, flow automatically from such acceptance. Prior to the council meeting there was no indication that any other reason existed for not transferring the property in accordance with the sale agreement. In the entire period between 2011, when Granor first raised the issue, and February 2015 when the resolution was taken, the municipality had not advanced any other reason for not transferring the property to Granor.
The application was expressly directed at reviewing and setting aside the council's resolution. The claim for transfer of the property flowed from that. It was incorrect to say that the cause of action was a
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claim for specific performance founded in the law of contract. Not only did the prayer for relief start with an order for the review and setting aside of the resolution, but the founding affidavit, after setting out the facts of the case, proceeded under the heading "Reviewable Administrative Action'. It would be hard to find a clearer indication that the case was primarily based in public law and not the law of contract.
That is how the high court understood the case before it. The order it made set aside the resolution, but did not order the municipality to transfer the property to Granor. The judge said that whether the municipality should be ordered to transfer the property to Granor was a question that would arise 'in the event that the resolution is set aside'. He then referred that question and any issues relating to it back to the municipality for reconsideration in the light of various other considerations set out in the judgment. The appeal is directed against the order upholding the review and setting aside the resolution. There was no cross appeal. Accordingly the question whether Granor is entitled to transfer of the property into its name was not an issue before us in this appeal. The only issue was whether the high court was correct to set aside the resolution.
Reviewing the resolution
In a manner that has repeatedly been deplored by the courts, Granor's founding affidavit relied on a cornucopia of grounds under PAJA [2] for setting aside the resolution. Each of ss 6(2)(a)(iii), (c), (d), (e)(ii), (iii) and (vi), (f)(ii) and (h) was invoked, without any endeavour to identify which was truly relevant and on what factual basis it was being
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relied on. The judgment of the high court adopted a number of these in setting aside the resolution.
In the high court the municipality contended that the resolution did not embody administrative action in terms of PAJA and accordingly could not be reviewed under that statute. It did not pursue the argument in its heads of argument, or before us, so the point can be disposed of quite simply. The resolution undoubtedly embodied a decision. Was it of an administrative nature? In my view a decision regarding the implementation of a contract to which the municipality is a party is an act of administration. It was taken by an organ of state, exercising a public power or function in relation to the enforcement of a contract concluded in terms of the empowering provisions governing transactions of this character. [3] It had a direct, external legal effect and adversely affected Granor's rights. It did not fall within any of the statutory exceptions. Accordingly, it was administrative action and reviewable under PAJA. [4]
The municipality contended that Granor's review was fatally defective because it was not pursued in terms of rule 53 of the Uniform Rules of Court. There was no merit in the point. This court long ago held that this is 'sterile formalism' and that there is no obligation on a litigant to pursue a review in terms of rule 53. [5] The only impact of its not doing...
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