PROVINCIAL INTERVENTIONS

THE “OVERBERG-CASE”

By Koos Celliers

Preface• The SCA judgement Premier of the Western Cape

and Others v Overberg District Municipality and Others is not that new. Why then the interest in it?

• Non-approval of a budget is usually the result of political instability in a municipality

• SA’s political scene is showing signs of change and shifts in political power are imminent

• Increase in number of interventions – KZN, Mpumalanga, North West, WC

• Don’t think it can’t happen in your municipality

• Ever thought that it could happen to the biggest world power – the USA?

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INTRODUCTION

• Intervention in the Overberg District Municipality - one of only two cases of provincial intervention that eventually found its way to court. The other was in the Eastern Cape involving Mnquma Municipality.

• In both cases the Provincial Executives dissolved the councils of the municipalities.

• Mnquma – s. 139(1) for failure ‘to fulfil an executive obligation in terms of the Constitution or legislation’,

• Overberg – s. 139(4) for failure ‘to approve a budget or any revenue-raising measures’.

GENERAL PURPORT OF SECTION 139 INTERVENTIONS

• Constitution permits in s. 139 a potentially radical intrusion in the autonomy of a municipality; it may –• assume responsibility for a municipality’s executive

obligations;

• approve a temporary budget or revenue-raising measures – usually reserved for the local legislature; and even

• dissolve the municipal council

Section 139 stands in stark contrast with the with the larger scheme of the Constitution which creates local government -

• as a separate sphere of government

• with specific powers, duties and functions and

• the right to govern, on its own initiative, the local government affairs of its community

But, autonomy of municipalities is not absolute

provincial governments to supervise the affairs of local governments and to intervene when things go awry

A provincial government is competent to -

•monitor and assist municipalities

•and by legislative and executive authority to “see to the effective performance by municipalities of their functions…”

The constitutional framework furthermore establishes a relationship between provincial and local governments based on co-operation - aimed at the advancement of inter-governmental participation and support. Provincial government must therefore -• respect the constitutional status, institutions, powers and

functions of local government

• not assume any power or function except those conferred on them in terms of the Constitution;

• exercise their powers and perform their functions in a manner that does not encroach on the geographical, functional or institutional integrity of local government;

• not compromise or impede a municipality’s ability or right to exercise its powers or perform its functions.

Viewed in this context, it seems logic that intervention was designed as a corrective instrument to assist where a municipality is unwilling or unable to meet its obligations. Its purpose is not punitive in nature and should never be used merely for political reasons  Section 139 must therefore be construed narrowly and by striking a balance between - •the constitutional imperative, to respect the integrity of local government on the one hand and

•the constitutional requirement of effective government on the other; as explained Constitutional Court in the First Certification judgment

[373] …….What the NT seeks hereby to realise is a structure for LG that, on the one hand, reveals a concern for the autonomy and integrity of LG and prescribes a hands-off relationship between LG and other levels of government and, on the other, acknowledges the requirement that higher levels of government monitor LG functioning and intervene where such functioning is deficient or defective in a manner that compromises this autonomy. This is the necessary hands-on component of the relationship.

Murray: “…once an intervention is formally justified by a municipal failure, the difficult question that arises is how to balance the constitutional imperative to respect the municipality’s integrity as far as possible while ensuring effective government, which the Constitution also requires. The way such a balance is struck from case to case will depend on many practicalities – and especially what resources are available both in the municipality and the province - but it must be governed by normative considerations. Respect for municipal integrity presumably means that an intervention should intrude on municipal integrity as little as possible”.

SECTION 139 AND THE FIRST INTERVENTION

• Original text permitted intervention only where ‘a municipality cannot or does not fulfil an executive obligation in terms of legislation’

• EC Provincial Executive intervened in March 1998 in Butterworth Transitional Local Council

• Municipality approached the High Court to invalidate the intervention and prevent from interference

• Case settled out of court - raised many questions.

• Also legislation, envisaged in subs (3) - aimed at regulating the process of intervention - absolutely necessary

(1) When a municipality cannot or does not fulfil an executive obligation in terms of legislation, the relevant provincial executive may intervene by taking any appropriate steps to ensure fulfilment of that obligation, including -

(a) issuing a directive …; and

(b)assuming responsibility for the relevant obligation

(2)….

(3) National legislation may regulate the process established by this section.

THE REVISED SECTION 139

• The Butterworth incident may well have influenced the replacement of s. 139 and the subsequent introduction of regulatory measures in the MFMA

• The original text made it impossible for provincial executives to intervene in a municipality even when so dysfunctional that it could not agree upon a budget. –the approval of a budget and the revenue-raising

measures are legislative acts and the sole competency of a municipal council – s 160 of the Constitution.

• The 2003 amendment permitted provinces to intervene in legislative authority of a municipality – see subs (4)

• And subs (5) added a further ground – where a crisis in a municipality’s financial affairs, causes serious or persistent material breach of its obligations to provide basic services.

• Also introduced dissolution as an appropriate step

• Provincial intervention in Overberg was in terms of section 139(4) – the subject of this paper

OVERBERG’S FAILURE TO APPROVE A BUDGET TIMEOUSLY

• No council meetings – no Speaker

• Failed to comply with s 16(1) of MFMA

• Prohibited it from incurring any expenses

• MEC sought legal advice - advised Executive that it was obliged to dissolve the council - s 139(4)

• Provincial Executive intervened – approved temp budget, dissolved council appointed an administrator

• 11 Overberg councillors sucessfully approached the Western Cape High Court

• Premier’s appeal to Supreme Court of Appeal failed

PROPER CONSTRUCTION OF S.139(4) IN THE LIGHT OF THE SCA JUDGMENT

• Current Text- Elements• The Omission

• Intervention and Corrective Steps

–Peremptory intervention

–‘Appropriate’ steps

–Form of intervention

• Appropriateness–Suitability for the purpose

• Legality

• MFMA and Intervention

CURRENT TEXTIf a municipality cannot or does not fulfil an obligation in terms of the Constitution or legislation to approve a budget or any revenue-raising measures necessary to give effect to the budget, the relevant provincial executive must intervene by taking any appropriate steps to ensure that the budget or those revenue-raising measures are approved, including dissolving the Municipal Council and -

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

(b) approving a temporary budget or revenue-raising measures to provide for the continued functioning of the municipality.

• 

THE OMMISSION

• “cannot’ connotes inability

• ‘does not’ refers to a situation where a municipality may be capable of performing, but for some or other reason does not do so

• Overberg’s failure - inability to formally meet – for political reasons

• Reasons immaterial

• Jurisdictional fact must be satisfied – no formal approval by start of financial year

INTERVENTION AND CORRECTIVE STEPS

Views of parties

•Once the existence of the necessary jurisdictional facts is established Provincial Executive has no option but to exercise its statutory power to intervene - parties agreed

•Whether dissolution was obligatory – divergent views

Peremptory intervention

Premier -

•Executive was obliged to dissolve council, to appoint an administrator and to approve a temporary budget or revenue-raising measures

•The term ‘including’ is equivalent of ‘incorporating’; thus ‘appropriate steps’ must incorporate -

–dissolving the Municipal Council

–appointing an administrator

–approving a temporary budget and revenue-raising measures

• Strengthened by interpretation of s 26(1) of MFMA

SCA rejected this viewpoint

•.... the provincial executive must intervene. That is the imperative. Not that it must dissolve the council. Accordingly the executive is obliged to take some steps. It cannot do nothing. But the actual steps to be taken are left to the discretion of the executive. The only limitation imposed on that discretion is twofold. First, the steps must be ‘appropriate’, that is, the steps must be suitable. Secondly, these steps must be suitable for a particular purpose, that is, to ensure the approval of the annual budget.

DPLG, some 4 years earlier shared the views of the Premier –

•Since the council, having legislative authority, is the problem of this financial crisis, (a municipality cannot function without an approved budget), the solution is sought through the dismissal of the council, the appointment of an administrator until a new council is elected and the approval of a temporary budget until the new council approves one

•Steytler & De Visser held similar views

‘Appropriate’ steps

In Mnquma the court researched the meaning of the term and refered to CC cases where –•It was held that appropriateness in the context of the Constitution imports the elements of justice and fairness and that “In determining what is appropriate one must consider the conflicting interests of all those involved and affected” and that “One is really dealing with a balancing act implicit in the right of access…” In the present context I am of the view that “appropriate steps” are to be construed as steps that are such as would be suitable in the sense that it must fit the situation. The form of intervention must accordingly address the particular circumstances of the case.

The SCA in the Overberg-case –

•held the view that appropriate steps must suitable for a particular purpose, that is, to ensure the approval of the annual budget

The only limitation imposed on that discretion is twofold. First, the steps must be ‘appropriate’, that is, the steps must be suitable. Secondly, these steps must be suitable for a particular purpose, that is, to ensure the approval of the annual budget

Form of intervention

Overberg-case has shown the power of the provincial executive to intervene and to introduce corrective steps is very wide. It can only be limited by the Constition itself –

•the steps must be ‘appropriate’

•the steps must be suitable for the particular purpose, i.e. in this instance, the approval of the budget

•the steps decided upon must have been based on the principles of legality

Appropriateness

What is appropriate must be informed by the facts and circumstances of each particular case, e.g. -

•Validating a belated approval of the budget by the municipal council

•Directing the approval of the budget within a stipulated time after the expiry date of 1 July.

•Directing the convening of a meeting of the council to consider the budget.

•Dissolution

Appropriateness - dissolution

• Dissolution can only be appropriate if the fulfilment of the obligation to approve the budget cannot be achieved otherwise than by the dissolution of the existing council and replacement by an administrator until such time as a new council has been elected.

• The decision to dissolve must have been preceded by a consideration of other forms of intervention that are effective and less intrusive. Failure to consider such other forms may jeopardise an intervention - as was the case in Overberg

Suitability for the purpose

The purpose of intervention in terms of section 139(4) of the Constitution –

to ensure that a municipality has an approved budget allowing it to expend funds in order to comply with its constitutional mandate to govern t he local government affairs of the community it serves

Any other motive would be unlawful for want of compliance with the principle of legality

Legality

• Intervention in terms of s. 139 of the Constitution constitutes executive action (and not administrative action) as contemplated in s. 1 of PAJA

• Thus, when contemplating corrective steps a Provincial Executive must ensure that it exercises its discretion within the framework of the principle of legality

• The Principle of Legality as expounded upon by our courts demands that –

The holder of public power must, when exercising a public power, duty or function –

• act within the its constitutional mandate

• comply with the Constitution

• act in good faith

• not misconstrue his or her powers

• act within the powers lawfully conferred

The exercise of public power -

• is only legitimate where lawful

• must not be arbitrary or irrational

• must be rationally related to the purpose for which the power was given

SCA - the Provincial Executive’s decision to dissolve the Overberg council offended the principle of legality – it misconstrued its powers under s 139(4) - 

[38] ... by deciding to dissolve the council without considering a more appropriate remedy, the cabinet, in my view, offended the provisions of s 41(1) of the Constitution which requires all spheres of Government to respect the constitutional status, powers and functions of Government in other spheres and ‘not [to] assume any power or function except those conferred on them in terms of the Constitution’

MFMA AND INTERVENTION

• Featured prominently in the Overberg-case

• Represents legislation contemplated in s.139(8) - interventions arising from financial causes

• Contains many provisions re approval of a budget and interventions in terms of s.139(4)

• Appellants in the Overberg-case relied on the MFMA– no legal basis to adopt a budget after 30 June

– province has no power to authorise something which the MFMA does not allow

–approval of the budget is the sole duty of the municipal council

The SCA rejected these arguments

•MFMA can only inform the provisions of s 139(4)

•MFMA imposes no limitation on the powers of the provincial executive - a directive that compels approval of the budget by the council after 1 July

•The fact that the MEC cannot in terms of s 27(2) extend the deadline, does not mean that the provincial executive cannot do so under s 139(4)

•Where the budget is ready and awaiting approval after 1 July a directive to approve the budget within a stipulated time would clearly be the appropriate step

THE OVERBERG-CASE IN PERSPECTIVE

The Overberg-case provided much needed guidance on interventions in terms of s.139(4) •Peremptory intervention when the jurisdictional fact, i.e. non-approval of the budget, is satisfied

•Wide discretion of provincial executive

•Dissolution must be a last resort

•Compliance with the principle of legality

•MFMA to inform s. 139(4) - does not impose a limitation on provincial executive’s discretion

Also highlighted ‘side-issues’ that may spark an intervention - absence of Speaker to convene council meetings

THE END

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