Majomatic 115 (Pty) Limited v Kouga Municipality

The Kouga Municipality (first respondent) placed an advertisement in November 2003 inviting tenders for the purchase of several immovable properties, including municipal property. The appellant (Majomatic 115 (Pty) Limited) submitted a tender. However, the advertisement did not comply with the requirements of sections 124(1) and (2) and 172 of the Municipal Ordinance 20 of 1974 (Cape). Specifically, the advertisement: (a) made no mention that objections to the proposed sale could be made; (b) did not state to whom or where such objections could be made; and (c) required applications to be submitted within two weeks instead of the prescribed 21 days. The contract of sale was concluded in November 2003. A dispute arose as to whether this contract was lawfully concluded, particularly whether compliance with the procedural provisions of the Ordinance was required or whether those provisions had been impliedly repealed by the Constitution.

• Whether the procedures prescribed by sections 124(1) and (2) and 172 of Municipal Ordinance 20 of 1974 (Cape) for the alienation of municipal property were of force and effect in November 2003
• Whether sections 124(1) and (2) of the Ordinance were impliedly repealed by Item 2 of Schedule 6 of the Constitution
• Whether the entire Ordinance was repealed due to inconsistency with the Constitution, particularly regarding the oversight powers of the Administrator (now Premier) over municipalities
• Whether section 10G(5) and 11 of the Local Government Transition Act 209 of 1993 provided alternative legislative framework for alienation of municipal property
• Whether non-compliance with the procedural requirements rendered the sale invalid

1. The appeal is dismissed with costs. 2. The order of the court a quo is set aside and replaced with the following: 'The plaintiff's action is dismissed with costs.'

The binding legal principles established are: (1) Old order legislation continues in force under Item 2 of Schedule 6 to the Constitution unless it has been repealed, amended, or is inconsistent with the Constitution, but only to the extent of such inconsistency. (2) Where pre-constitutional legislation contains provisions inconsistent with the Constitution, a 'pruning' or reading down approach should be adopted to discard only the offensive portions while preserving the non-offensive provisions. (3) The oversight powers of the Administrator (now Premier) in section 124(1) of the Municipal Ordinance 20 of 1974 (Cape) are inconsistent with the Constitution and are impliedly repealed to that extent. (4) Section 124(2) of the Municipal Ordinance 20 of 1974 (Cape), which requires municipalities to advertise their intention to sell municipal property and to consider objections, survived the Constitution and remained applicable in November 2003. (5) Compliance with the procedural requirements of section 124(2) is mandatory for the valid alienation of municipal property. (6) Failure to comply with the mandatory procedural requirements of section 124(2) renders a sale of municipal property invalid.

The court made non-binding observations distinguishing Wary Holdings (Pty) Ltd v Stalwo (Pty) Ltd & another 2009 (1) SA 337 (CC), noting that it dealt with agricultural land (where national ministerial oversight was justified) as opposed to municipal property where different considerations apply. The court observed that Wary Holdings was not authority for the proposition that the oversight power of the Premier referred to in section 124(1) of the Ordinance survived the Constitution. The court also noted that if the appellant's construction were upheld, it would mean that no legislative provision would be left to regulate the alienation of municipal property, which would be an undesirable outcome. The court observed that at the relevant time (November 2003) there were no other regulations or provisions under any other Act in place dealing with tenders or the sale of immovable property by a municipality, barring the Ordinance.

This case is significant in South African municipal law as it clarifies the approach to old order legislation under the Constitution. It establishes that pre-constitutional provincial ordinances regulating municipal functions are not automatically repealed in their entirety simply because they contain provisions inconsistent with the Constitution. Rather, a 'pruning' or reading down approach should be adopted pursuant to Item 2 of Schedule 6 to the Constitution, whereby only the offensive portions (such as inappropriate oversight powers of provincial authorities over municipalities) are discarded while the substantive procedural requirements survive. The case affirms the continued importance of procedural fairness and transparency in the alienation of municipal property, even in the absence of comprehensive replacement legislation. It also demonstrates the courts' commitment to ensuring that there is no legislative vacuum in regulating important municipal functions. The case provides clarity on the interaction between constitutional principles of municipal autonomy and pre-existing legislative controls over municipal property transactions.