Merafong City Local Municipality v AngloGold Ashanti Limited

Merafong City Local Municipality, designated as a water services authority under the Water Services Act 108 of 1997, imposed a surcharge on water supplied to mining houses in its jurisdiction, including AngloGold Ashanti Limited. The water itself was supplied by Rand Water, appointed by Merafong as its agent. AngloGold appealed the surcharge to the Minister of Water Affairs and Forestry under section 8 of the Act. On 18 July 2005, the Minister upheld the appeal, overturned the surcharge on water used for industrial purposes, and directed that a reasonable tariff be negotiated for water used for domestic purposes. Merafong considered the Minister’s decision unlawful but did not institute review proceedings. Instead, it continued levying the surcharge. AngloGold paid under protest and, in 2011, approached the High Court to compel compliance with the Minister’s decision. Merafong resisted enforcement by raising the alleged invalidity of the Minister’s decision and counter-applied for declaratory relief asserting exclusive municipal competence over water tariffs.

Leave to appeal was granted and the appeal was upheld. The orders of the High Court and the Supreme Court of Appeal were set aside. The matter was remitted to the High Court for determination of the lawfulness of the Minister’s decision and, if necessary, the appropriate remedy. Costs were reserved.

This case is significant for clarifying South African administrative law on the permissibility of collateral or reactive challenges, particularly by organs of state. It rejects a categorical bar on such challenges and affirms a flexible, context-sensitive approach. The judgment also underscores the distinction between declaring administrative action constitutionally invalid and crafting just and equitable remedies, and it has important implications for intergovernmental disputes and the enforcement of administrative decisions.