Mbambisa and Others v Nelson Mandela Bay Metropolitan Municipality

The appellants were former senior officials of the Nelson Mandela Bay Metropolitan Municipality, including the Municipal Manager, Chief Financial Officer and senior directors. In February 2014 the Municipality appointed Erastyle (Pty) Ltd as a lead consultant for a communications and marketing strategy for its Integrated Public Transport System, at a value of approximately R6 million. The appointment was made without a public tender and in breach of the Municipality’s Supply Chain Management Policy. Pursuant to this unlawful appointment, the Municipality paid Erastyle amounts totalling R7 638 177.10. Following a forensic investigation initiated by National Treasury, the Municipality instituted action in the High Court to declare the appointment unlawful and to recover the payments from Erastyle and various officials under s 32 of the Municipal Finance Management Act 56 of 2003 (MFMA), alternatively in delict. The High Court largely found in favour of the Municipality. The officials appealed to the Supreme Court of Appeal, primarily challenging the interpretation and application of s 32 of the MFMA in light of s 176(1).

The appeal was upheld in part. Paragraphs 2, 3 and 4 of the High Court’s order were set aside and replaced with revised orders holding specific appellants jointly and severally liable for distinct amounts of irregular expenditure, together with interest and costs. Save for these amendments, the appeal was dismissed with costs, including the costs of two counsel.

This judgment clarifies the interpretation of s 32 of the MFMA and its relationship with s 176(1), providing authoritative guidance on the personal liability of municipal officials for irregular expenditure. It confirms that s 32 is not a strict penalty provision, but one grounded in fault-based accountability, while reinforcing the statutory duty of municipalities to recover irregular expenditure. The case is significant for public finance governance and accountability in local government.