Govan Mbeki Local Municipality and Another v Glencore Operations South Africa (Pty) Ltd and Others

Two municipalities (Govan Mbeki and Emalahleni) promulgated by-laws that placed restraints on the transfer of erven and land units within their municipal boundaries. Under these by-laws, property owners could not register transfer of property except upon production of a certificate from the municipality, certifying that all spatial planning, land-use management, and building regulation conditions had been obtained and complied with. The respondents were companies intending to transfer immovable properties within the municipal boundaries and challenged the validity of these by-laws. The municipalities relied on s 76 of the Govan Mbeki Spatial Planning and Land Use Management By-law and s 86 of the Emalahleni Municipal By-law on Spatial Planning and Land Use Management 2016, which effectively imposed an embargo on the registration of transfer of property until the municipality issued the required certificate. A third municipality (Steve Tshwete Local Municipality) did not appeal a similar order declaring its comparable by-law invalid.

• Whether the municipal by-laws fell within the legislative competence of municipalities as contemplated in s 156 of the Constitution read with Part B of Schedule 4 and Part B of Schedule 5
• Whether the by-laws exceeded the functional area of 'municipal planning' by regulating the transfer of property
• Whether the restraint on registration of property was an incidental power as envisaged in s 156(5) of the Constitution
• Whether the by-laws conflicted with s 118 of the Local Government: Municipal Systems Act 32 of 2000
• Whether the by-laws amounted to an arbitrary deprivation of property in terms of s 25(1) of the Constitution
• Whether the High Court was justified in suspending the declaration of invalidity

In both case no 334/2021 (Govan Mbeki Local Municipality) and case no 338/2021 (Emalahleni Local Municipality): (1) The appeals were dismissed with costs, including costs of two counsel; (2) The cross-appeals were upheld with costs, including costs of two counsel; (3) Paragraph 4 of the High Court's order (suspending the declaration of invalidity for six months) was set aside.

1. Municipalities' legislative competence regarding 'municipal planning' does not extend to regulating the transfer and registration of immovable property. Registration of transfer of property falls within national legislative competence and is regulated by the Deeds Registries Act 47 of 1937, not municipal competence. 2. By-laws that impose an embargo on the registration of transfer of property until municipal requirements are met exceed municipal legislative competence and are invalid for being ultra vires s 156 of the Constitution. 3. The restriction on transfer of property is not a necessary power incidental to land-use management as contemplated in s 156(5) of the Constitution, particularly where enforcement mechanisms of land-use schemes are already provided for in the enabling legislation (SPLUMA). 4. Section 32 of SPLUMA sets out comprehensive enforcement mechanisms for municipal land-use schemes, which do not include restrictions on property transfers. Municipalities cannot introduce enforcement mechanisms not contemplated in framework legislation. 5. By-laws that seek to impose on sellers of property liabilities in addition to those contemplated by s 118 of the Systems Act are in conflict with that section and thus invalid. 6. By-laws that lack lawful authority amount to arbitrary deprivation of property contrary to s 25(1) of the Constitution. 7. Suspension of a declaration of invalidity should not be granted absent reasons justifying deviation from the default position of immediate invalidity, particularly where municipalities have usurped legislative functions of other spheres of government.

The Court observed that the embargo on transfers could be seen as opportunism on the part of municipalities at the crucial stage when property has been sold and requires registration of transfer to the new owner. The Court noted that if the embargo were truly an enforcement mechanism to prevent unlawful use of land or buildings, it would apply equally to leases, but it does not. This reveals the arbitrary nature of the enforcement mechanism. The Court commented that the notion that the by-laws protect future buyers from acquiring land with legal impediments does not fall within the mandate of municipal planning, as such matters are governed by the law of contract between seller and purchaser. The Court also rejected the suggestion that the by-laws were a revenue-raising measure for municipalities, stating that if that were the real purpose, it would be an improper purpose. The Court emphasized that even though the by-laws deal on their face with municipal planning, the specific impugned provisions restrict transfer and registration of ownership and thus stray beyond that functional area.

This case is significant for clarifying the limits of municipal legislative competence in South Africa. It affirms that municipalities cannot regulate matters beyond their constitutional functional areas, even when such regulation is included in by-laws ostensibly dealing with municipal planning. The judgment reinforces the principle that the registration of transfer of property is a national competence regulated by the Deeds Registries Act, not a municipal function. It also establishes that municipalities cannot use by-laws to create enforcement mechanisms beyond those contemplated in framework legislation like SPLUMA, particularly where such mechanisms amount to restrictions on property transfers. The case emphasizes the importance of cooperative governance between spheres of government and that municipalities must exercise their powers within parameters set by national and provincial framework legislation. It also confirms that where by-laws usurp legislative functions of other spheres of government, courts should not suspend declarations of invalidity absent compelling reasons. The judgment serves as an important precedent on the interpretation of s 156 of the Constitution and the limits of incidental powers under s 156(5).