Naledi Local Municipality and Others v Appolus and Others

The Naledi Local Municipality (first appellant) and its Municipal Council (second appellant) appointed Mr Modisenyane Segapo (fifth appellant) as Municipal Manager for a third term. This followed a recruitment process that commenced in October 2022 after a vacancy was advertised. Eight candidates initially applied, but only Mr Segapo and Mr Appolus (first respondent) were shortlisted. After Mr Appolus withdrew, the Municipality received legal advice to re-advertise to avoid bias. The position was re-advertised, 13 applications were received, five candidates were shortlisted including Mr Segapo, and he was ultimately recommended and appointed at a Special Council meeting on 10 March 2023. The respondents (comprising a municipal employee and three councillors) raised concerns about irregularities in the recruitment process, including: (1) the Mayor's involvement in the recruitment panel despite a conflict of interest arising from Mr Segapo having previously appointed the Mayor's twin brother and sister-in-law to positions in the Municipality; (2) the Mayor's failure to disclose this relationship or recuse himself as required by Regulation 12(5) and (6); and (3) various procedural irregularities. The MEC for Cooperative Governance declined to approve the appointment. The respondents brought an urgent application to set aside the appointment, which Reid J granted. The appellants appealed with leave of the High Court.

• Whether the respondents had locus standi to challenge the appointment of the Municipal Manager
• Whether the proper interpretation of section 54A(7)-(10) of the Municipal Systems Act limited enforcement action exclusively to the MEC and Minister
• Whether the MEC's failure to respond within the statutory timeframe rendered the appointment compliant under section 54A(10)
• Whether the respondents established valid grounds for review of the Municipal Manager's appointment
• Whether the Mayor's conflict of interest and failure to recuse himself from the recruitment panel vitiated the appointment process
• Whether the principle of legality applied to override statutory interpretation that would restrict access to courts
• What costs order was appropriate given the conduct of the parties and use of public funds

1. The appeal is dismissed. 2. The third to fifth appellants (Councillor PG Gulane N.O., Councillor Groep N.O., and Mr Modisenyane Segapo N.O.) are ordered to personally pay the costs of the appeal, including the costs of the application for leave to appeal on a party-and-party scale, jointly and severally, the one paying the others to be absolved. Such costs to include costs of two counsel where so employed. The effect is that the High Court's order setting aside Mr Segapo's appointment as Municipal Manager and directing the Municipality to initiate a new recruitment process is upheld.

The binding legal principles established are: 1. Municipal employees and councillors have locus standi to challenge the appointment of a municipal manager on the basis of the principle of legality, as section 34 of the Constitution guarantees access to courts and this right cannot be restricted by narrow interpretation of section 54A of the Municipal Systems Act. 2. The appointment of a municipal manager constitutes an exercise of public power subject to the constitutional principle of legality and reviewable under section 172(1) of the Constitution, not merely administrative action under PAJA. 3. A member of a municipal manager recruitment panel who has a conflict of interest arising from perceived indebtedness to a candidate (such as where the candidate previously made nepotistic appointments benefiting the panel member's family) must disclose that relationship and recuse himself under Regulation 12(5) and (6) of the Local Government Regulations on Appointment and Conditions of Employment of Senior Managers. 4. Failure to disclose conflicts of interest and recuse oneself from a recruitment panel vitiates the entire appointment process on legality grounds. 5. The MEC's failure to take enforcement action under section 54A(8) of the Municipal Systems Act, or failure to respond within the timeframes in section 54A(10), does not preclude judicial review of an unlawful appointment or render such review premature. 6. Where public officials abuse their positions and waste public funds defending manifestly unlawful conduct through protracted litigation, courts may order those officials to personally bear the costs of such litigation to protect the public purse.

The Court made several obiter observations: 1. Regarding the section 18(4)(a)(ii) automatic appeal that remained pending: The Court observed that once judgment on the main appeal is handed down, the section 18(3) enforcement order and the automatic appeal under section 18(4)(a)(ii) will automatically fall away, as section 18 appeals serve only to regulate the interim position between litigants pending final judgment. Section 18(4) allows for only a single right of appeal, and multiple appeals are not permitted. 2. The Court noted with concern the pattern of conduct by the appellants, including: (a) the urgent nature of the matter involving public interest; (b) the minimal burden of the High Court's order merely requiring re-advertisement; (c) the ongoing use of public funds since 2023 to support an indefensible position; (d) the continued occupation of office by Mr Segapo despite enforcement orders; (e) the Municipality supporting an appointment not approved by the MEC; (f) the failure to withdraw or prosecute the section 18(4) appeal; and (g) the "flagrant abuse of office or positions by public officials who are acutely aware of the egregious breaches of the legal frameworks governing the local government sphere." 3. The Court expressed the view that the Mayor's attempt to dismiss allegations of nepotism as "pure malice" and "speculation" without addressing the undisputed facts of the appointments was inadequate under the Plascon-Evans principle. 4. The Court observed that "neither the councillors nor the community should passively allow bureaucracy to override legality in their oversight role," emphasizing the importance of active oversight in local government. 5. The Court noted that there were additional significant irregularities beyond those identified by the MEC that warranted consideration, and that the High Court had "ample reasons" to set aside the appointment even beyond those it expressly relied upon.

This judgment is significant for South African local government law in several respects: 1. **Standing and access to justice**: It confirms that municipal employees and councillors have standing to challenge appointments of municipal managers on legality grounds, rejecting narrow statutory interpretations that would limit such challenges only to the MEC or Minister. Section 34 constitutional rights override restrictive statutory interpretations. 2. **Principle of legality in local government**: The judgment reinforces that the appointment of a municipal manager is a constitutional issue subject to the principle of legality, not merely an administrative matter. All exercises of public power must comply with the law and are subject to judicial review under section 172(1) of the Constitution. 3. **Conflicts of interest in recruitment**: It emphasizes the importance of compliance with Regulation 12(5) and (6) regarding disclosure and recusal where conflicts of interest exist. The judgment demonstrates that nepotistic appointments creating perceived indebtedness can vitiate an entire recruitment process, even if not explicitly reciprocated. 4. **MEC oversight limitations**: The judgment clarifies that while section 54A(7)-(10) of the Municipal Systems Act provides for MEC oversight, the MEC's inaction does not immunize unlawful appointments from judicial review or render court applications premature. 5. **Personal costs orders**: The judgment establishes important precedent for courts to order public officials to personally bear costs where they abuse their positions and waste public funds through indefensible litigation, protecting the public purse from being depleted by officials defending unlawful conduct. 6. **Factual disputes in motion proceedings**: The application of the Plascon-Evans principle confirms that bare denials characterizing serious allegations as "speculation" without addressing undisputed facts are insufficient to create genuine factual disputes in motion proceedings.