PUTCO (Pty) Ltd v City of Johannesburg Metropolitan Municipality and Others

PUTCO (Pty) Ltd, a long‑standing subsidised bus operator in Gauteng, rendered services under an interim contract concluded in 1997 with the Gauteng Department of Roads and Transport. The City of Johannesburg, as a planning authority under the National Land Transport Act 5 of 2009 (NLTA), implemented the Rea Vaya Integrated Public Transport Network through phased negotiated contracts with affected bus and taxi operators. For Phase 1C(a), negotiations between PUTCO and the City under a Negotiation Framework Agreement broke down over the extent to which PUTCO was ‘affected’ by the new system and the City’s offer of only a 0.27% shareholding in a new bus operating company. PUTCO sought an interdict preventing the City from proceeding with Phase 1C(a) pending mediation or arbitration under s 46(2) of the NLTA. The High Court dismissed the application for lack of a prima facie right, holding that s 46 did not apply. PUTCO appealed to the Supreme Court of Appeal.

The application to adduce further evidence was refused with costs. The appeal was dismissed with costs, including the costs of two counsel.

The decision clarifies the strict distinction in the NLTA between negotiated contracts under s 41 and existing contracting arrangements under s 46, confirming that s 46 dispute resolution mechanisms cannot be invoked to compel mediation or arbitration in failed s 41 negotiations. It reinforces the precedent set in Golden Arrow Bus Services and provides certainty to municipalities implementing integrated public transport networks about the limits of operators’ rights during negotiations.