Ferndale Crossroads Share Block (Pty) Ltd v City of Johannesburg Metropolitan Municipality

The appellants, owners of a shopping centre in Randburg, concluded an agreement with the City of Johannesburg in March 2002 in terms of which the City agreed to lease a portion of municipal land in the Randburg Civic Precinct at a nominal rental. The lease enabled the appellants to construct a pedestrian bridge over Hendrik Verwoerd Drive linking a taxi rank to their shopping centre, with the aim of improving pedestrian safety and increasing commercial foot traffic. The agreement included various obligations, including construction of the bridge and enclosure of the taxi rank. However, before concluding the agreement, the City failed to comply with section 79(18) of the Local Government Ordinance 17 of 1939, which required publication of notice of its intention to lease immovable property and invitation of objections. Several years later, after objections were received following belated publication, the City sought a declaratory order that the agreement was invalid ab initio due to non-compliance with the statutory requirements.

The appeal was dismissed with costs, including the costs of two counsel. The declaration that the lease agreement was invalid ab initio was confirmed.

The case affirms that municipal councils must strictly comply with statutory preconditions when alienating or leasing immovable property. It underscores that failure to satisfy jurisdictional facts under section 79(18) renders such transactions void ab initio, regardless of subsequent performance or perceived fairness. The judgment reinforces principles of legality, transparency, and public participation in local government dealings with public property.