Madibeng Local Municipality v Public Investment Corporation Ltd

The Public Investment Corporation Ltd (PIC) sued the Madibeng Local Municipality for repayment of three loans amounting to approximately R162 million. Madibeng argued that the loans were unenforceable because its predecessor, the Brits Town Council, had failed to obtain the prior written consent of the provincial Administrator as allegedly required by the Local Government Ordinance 17 of 1939. In the High Court, this issue was separated by agreement from the remaining issues and determined on affidavit evidence. The High Court rejected Madibeng’s defence and granted a punitive costs order against it.

The appeal was dismissed, and the High Court’s order, including the punitive costs order against Madibeng Local Municipality, was upheld.

The case clarifies the interpretation of borrowing powers of local authorities under historical municipal legislation, particularly distinguishing between new borrowing and loans incurred to refinance existing debt. It also affirms the binding nature of procedural agreements between litigants and underscores the courts’ willingness to penalise unethical or unconscionable litigation conduct through punitive costs orders.