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

Putco, a bus operator, has provided subsidised public bus services in Gauteng for decades under an Interim Contract 48/97 concluded with the Gauteng Department of Roads and Transport (GDRT) in 1997 under the National Land Transport Transition Act 22 of 2000. The City of Johannesburg (the City) developed an Integrated Public Transport Operational Plan to combine existing modes of public transport into a single network, known as the Rea Vaya Rapid Bus System, implemented in phases. The City negotiated with affected bus and taxi operators, including Putco, offering shares in new bus operating companies in exchange for operators reducing existing services. Putco became a 26% shareholder in Phase 1B. In 2017, Putco, the City, and various taxi associations entered into a Negotiation Framework Agreement (NFA) to negotiate Phase 1C(a) covering the North East Quadrant. Negotiations broke down when the City offered Putco only a 0.27% shareholding in the new operating company. The main dispute concerned the affectedness criteria used to determine operator shareholdings. After failed attempts at resolution through the NFA's dispute resolution procedures, Putco sought an interdict in the high court to prevent the City from proceeding with Phase 1C(a) pending resolution of the dispute through mediation or arbitration under s 46(2) of the National Land Transport Act 5 of 2009 (NLTA).

• Whether the dispute resolution mechanism in s 46(2) of the NLTA (mediation or arbitration) applies to disputes arising from negotiations under s 41 of the NLTA
• Whether Putco established a prima facie right entitling it to an interdict
• The proper interpretation and distinction between s 41 (negotiated contracts) and s 46 (existing contracting arrangements) of the NLTA
• Whether the City is bound by s 46(2) despite not being a party to Putco's existing interim contract with the GDRT
• Whether the court should admit further evidence on appeal in the form of an Inter-Governmental Authorisation Agreement

1. The application to adduce further evidence is refused with costs, including the costs of two counsel. 2. The appeal is dismissed with costs, including the costs of two counsel.

Section 41 and s 46 of the NLTA deal with entirely different situations and cannot be conflated. Section 41 applies to new negotiated contracts for integrating public transport services into an IPTN and does not provide for dispute resolution through mediation or arbitration because this would prevent municipalities from carrying out their statutory duty to integrate transport services timeously. Section 46 applies only to existing interim contracts concluded before the NLTA's commencement, and its dispute resolution mechanism in s 46(2) applies only where negotiations to amend such an existing contract under s 46(1)(b) have failed. The power to negotiate amendments under s 46 belongs to the parties to the existing contract, not to a municipality implementing a new s 41 contract in whose area the existing contract operates. A dispute arising from s 41 negotiations cannot be referred to mediation or arbitration under s 46(2), as this would be contrary to the different objects and scheme of these provisions and would impose a contract on parties who have not agreed to its terms. The municipality derives its power to conclude contracts for public transport services from s 11(1)(c)(xxvi) of the NLTA, which specifies the types of contracts it may conclude, and this does not include the power to amend existing interim contracts concluded by other spheres of government.

The court noted (without deciding) that the City's argument that the appeal had become moot because contracts had been concluded after the high court's judgment had not been properly substantiated with evidence regarding the current status of Phase 1C(a) of the Rea Vaya System. The court also observed that if Putco or any negotiating party could declare a dispute and demand resolution by mediation or arbitration during s 41 negotiations, it would be impossible to reach timely s 41 contracts, preventing the City from carrying out its duties under s 40 of the NLTA. The court emphasized that s 41 negotiations involve existing competitors with competing interests, creating manifest potential for disputes. The court also commented on the principle that further evidence on appeal is allowed only in special circumstances because finality to litigation is in the public interest, and that statutory interpretation is a matter of law not fact and cannot be based on evidence.

This case provides important guidance on the interpretation of the National Land Transport Act 5 of 2009, particularly the distinction between s 41 (negotiated contracts) and s 46 (existing contracting arrangements). It clarifies that the dispute resolution mechanism in s 46(2) applies only to disputes arising from existing interim contracts, not to disputes arising from negotiations for new contracts under s 41. The judgment emphasizes the purposive approach to statutory interpretation, examining the different objects of these provisions and their role in the overall scheme of the NLTA. It protects municipalities from being bogged down in endless mediation and arbitration during s 41 negotiations, enabling timely implementation of integrated public transport networks. The case also reinforces principles regarding the allocation of governmental responsibilities across different spheres and the principle of legality requiring public bodies to act within their lawfully conferred powers. It confirms that the NLTA assigns responsibility for concluding s 41 contracts to the municipal sphere, while existing interim contracts remain with the sphere that originally concluded them unless properly assigned. The decision has practical implications for the implementation of integrated transport systems in South African municipalities.