11 March 2020 by and Dispute Resolution Alert

Failing municipalities – hope in sight?

Edmund Burke, an 18th century Irish statesman, famously ridiculed the Revolution that had just taken place in France and the period of Parisian Enlightenment that followed in his Reflections of the French Revolution. But as a critic of Democracy, he could not have known that Democracy would later permeate almost every government across the globe (including his own). It is tempting to idle the discussion in this alert on the romanz of historical revolution and early Democracy, but we will forbear that urge. Why? Because modern democracy (and constitutionalism) is far more exciting.

Take for instance the very recent judgment of the Eastern Cape High Court, Grahamstown, in Unemployed Peoples Movement v Premier, Province of the Eastern Cape and Others [2020] ZAECGHC 1 that decided a matter brought by the Unemployed Peoples Movement — an association in Makana Municipality (formerly Grahamstown Municipality) constituted to organise and mobilise the unemployed masses, to explore alternatives which undermine unemployment, to expose corruption on the part of government officials, and to take the necessary steps to prevent poor people from suffering the worst effects of unemployment, poverty, starvation, homelessness and similar social ills. And one might add, in the wake of the resulting judgment of the High Court, “to bring successful High Court applications to dissolve municipal councils that do not fulfil their constitutional obligations and serve the people that elected them into office”. Confused somewhat? Let us start at the beginning.

The Constitutional Court has confirmed that “[a] municipality under the Constitution is not a mere creature of statute, otherwise moribund, save if imbued with power by provincial or national legislation. A municipality enjoys ‘original’ and constitutionally entrenched powers, functions, rights and duties that may be qualified or constrained by law and only to the extent the Constitution permits”. The implication being that only under certain circumstances, usually exceptional, will the National and Provincial governments be permitted to interfere in the affairs of a municipality. One of those circumstances arise when a municipality fails to fulfil an executive obligation (section 139(1) of the Constitution), another is when the municipality, as a result of a crisis in its financial affairs, is in serious or persistent material breach of its obligations to provide basis services or meet its financial commitments (section 139(5) of the Constitution). The first is involves a discretionary interference by the Provincial government (section 139(1) of the Constitution), whereas the second involves a mandatory interference (section 139(5) of the Constitution). Both prescribe certain actions to be taken by the Provincial government to remedy the situation, but for purposes of this note we quote the entirety of section 139(5) as those actions are relevant to the discussion at hand:

“If a municipality, as a result of a crisis in its financial affairs, is in serious or persistent material breach of its obligations to provide basic services or to meet its financial commitments, or admits that it is unable to meet its obligations or financial commitments, the relevant provincial executive must-

(a)    impose a recovery plan aimed at securing the municipality’s ability to meet its obligations to provide basic services or its financial commitments, which –

(i) is to be prepared in accordance with national legislation; and

(ii) binds the municipality in the exercise of its legislative and executive authority, but only to the extent necessary to solve the crisis in its financial affairs; and

(b)   dissolve the Municipal Council, if the municipality cannot or does not approve legislative measures, including a budget or any revenue-raising measures, necessary to give effect to the recovery plan, and-

      (i)  appoint an administrator until a newly elected Municipal Council has been declared elected; and

      (ii) approve a temporary budget or revenue-raising measures or any other measures giving effect to the recovery plan to provide for the continued functioning of the municipality; or

(c)   if the Municipal Council is not dissolved in terms of paragraph (b), assume responsibility for the implementation of the recovery plan to the extent that the municipality cannot or does not otherwise implement the recovery plan.”

This distinction between discretionary interference and mandatory interference becomes important later, but for the meantime, the facts giving rise to the matter must be noted. It is well documented in the media that Makana has been afflicted with a severe multi-year drought that has brought the Municipality to its knees. What is not as well documented is that the Municipality’s inability to manage the drought effectively is due to it being in a state of complete financial disarray for more than a decade. The judgment sets out an impressive chronology of events that explain how Makana has spiralled into the abyss, the mains event being:

  • On 6 October 2014 after mounting pressure from groups such as the Public Service Accountability Monitor of University of Rhodes, calling for provincial intervention in terms of section 139, the Provincial government intervenes and appoints an administrator under section 139(1)(b) of the Constitution;
  • then in February 2015, the Provincial government is forced to intervene once again and this time an extensive 100 page financial recovery plan is developed;
  • the plan never gets off the ground due to the unwillingness of the Makana Municipal Council;
  • on 1 September 2015 the Select Committee on Co-operative Government and Traditional Affairs (CoGTA) releases a report on the intervention further damning the Makana Municipality’s executives;
  • during March 2016 the administrator is substituted for another administrator in terms of section 139(1)(b) of the Constitution;
  • in 2015 the Unemployed Peoples Movement address a memorandum to Makana Municipality, its Council, the mayor, the acting manager and the MEC for CoGTA calling for the Municipality to inter alia implement the financial recovery plan adopted two years ago;
  • on 7 May 2018 the Legal Resource Centre on behalf of the Unemployed Peoples Movement address a letter of demand to the CoGTA MEC to conduct a mandatory intervention in terms of section 139(5) of the Constitution;
  • thereafter on 1 August 2018 the Minister of CoGTA responds to the letter stating that they have heard the calls from the people of Makana but that the responsible branch of government for intervention is the Provincial government who is copied into the reply;
  • after the letter from the Minister there is silence from all three branches of government.

The Unemployed Peoples Movement were then forced to launch an application, asking for several declaratory orders including a declaration that the Makana Municipality is in breach of s 152(1) of the Constitution, in that it has failed to ensure the provision of services to its community in a sustainable manner and has failed to promote a safe and healthy environment and that the jurisdictional facts for “mandatory” intervention in terms of section 139(1)(c) are present. The Unemployed Peoples Movement also asked the court to direct the Executive Council for the Province to dissolve the Municipal Council of Makana Municipality and to appoint an administrator until a newly elected Municipal Council has been declared elected.

The opposing respondents grouped themselves into three categories, the Provincial respondents, the Municipal respondents and the Minister for CoGTA. None of the respondents denied the allegations regarding the deplorable state that the Municipality is in, and of consequence, did not oppose the declaratory relief. Rather, what becomes the crisp issue before the court is the distinction between the discretionary interference by the Provincial government (section 139(1) of the Constitution), and the mandatory interference (section 139(5) of the Constitution) referred to above. After all affidavits were exchanged, the Provincial respondents filed a further affidavit, stating that the Provincial government had taken a resolution, after the applicants launched proceedings, for mandatory intervention in Makana Municipality. But the resolution was unsigned, and no further affidavits were filed to explain what steps the Provincial government had taken or were going to take. Nevertheless, in essence the respondents alleged that what the applicant asked for was discretionary and the court could not grant them their relief as the Provincial government had now taken a decision in terms of section 139(5) for mandatory intervention.

The court did not entertain the argument, but it did agree with the Provincial respondents that mandatory intervention was required. Consequently, it granted the applicants all of their declaratory relief and instead of ordering intervention under section 139(1) of the Constitution ordered mandatory intervention in terms of section 139(5) of the Constitution, which incidentally also allows for the Province to dissolve a municipality’s Council, and which was further ordered by the court.

What are the implications of this judgment? The long story is that intervention by the National or Provincial government into the affairs of Local government will only happen under exceptional circumstances in terms of our Constitution. Such circumstances were present in Makana Municipality, and it is arguable that similar circumstances are present in many other municipalities across South Africa – with media outlets reporting on service delivery issues on a daily basis, let alone the shocking statistics relating to irregular expenditure recorded in the Auditor General’s annual reports on the state of municipalities. Clearly, many municipalities are in a state of crisis. Which leads us to the short story, being that accountable democracy and constitutionalism is alive and well in South Africa (despite our many other problems), where the people residing within the jurisdiction of a municipality can and have exercised their rights to bring change. With local government elections around the corner in 2021, aspirant Council members and their political parties would do well to remember that.

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