Last week, the Constitutional Court delivered a landmark judgment in the seminal case of Govan Mbeki Local Municipality v Glencore; Emalahleni Local Municipality v Glencore Operations. Centring on a long-running dispute between two Mpumalanga municipalities, namely Govan Mbeki Local Municipality and Emalahleni Local Municipality (‘the Applicants’), and various related companies (‘the Respondents’), the case concerned the constitutionality and validity of certain transfer embargo provisions contained in local government legislation.
In this case, the Constitutional Court was tasked with critically analysing the parameters of two near-identical legislative clauses: section 76 of the Govan Mbeki Spatial Planning and Land Use Management By-Law and section 86 of the Emalahleni Municipal By-Law on Spatial Planning and Land Use Management, respectively. Designed to enforce compliance with the Applicants’ spatial planning, land use, and building law requirements, the provisions require all property owners intending to transfer property to obtain a planning certificate from a municipality. In essence, the certificate confirms that all regulatory requirements have been complied with and any payments applicable to the land have been made. The practical implication of such provisions, which were introduced in 2016, is that the Applicants effectively imposed an embargo on the registration of the transfer of property absent the issuing of a valid planning certificate.
Constrained by these legal prerequisites, the Respondents were prevented from transferring numerous immovable properties within the municipalities’ jurisdictional boundaries. In mid-2019, they launched an application in the High Court for orders declaring the aforesaid by-laws unconstitutional and invalid. Crucially, the Respondents alleged that the impugned provisions amount to an arbitrary deprivation of property, which violates section 25(1) of the Constitution. In addition, they contended that the by-laws are unconstitutional to the extent that they regulate matters falling beyond the legislative scope of powers granted to local government under section 156 of the Constitution read with the relevant Schedules. Finally, they argued that the impugned provisions are inconsistent with section 118(1) of the Local Government: Municipal Systems Act (‘the Systems Act’), which mandates the presentation of rates clearance certificates as a prerequisite for the transfer of immovable property.
The Applicants countered that, given that section 156(2) of the Constitution empowers local governments to introduce and administer by-laws to facilitate the ‘effective administration’ of matters within their regulatory scope, the impugned sections provide a reasonable instrument to enforce land use, spatial planning, and building regulation requirements. In the alternative, the Applicants argued that the contested provisions are incidental to the powers conferred on municipalities by section 156(5) of the Constitution to effectively perform their functions. Moreover, the Applicants averred that section 32(1) of the Spatial Planning and Land Use Management Act, which empowers municipalities to promulgate by-laws designed to enforce land use schemes, should be widely interpreted to permit municipalities to incorporate reasonable enforcement mechanisms. In addition to denying the inconsistency between section 118(1) of the Systems Act and the by-laws, the Applicants further alleged that any deprivation of property flowing from the application of the impugned provisions is not arbitrary.
Upholding earlier rulings by the High Court and Supreme Court of Appeal, Chaskalson AJ, writing for the majority, rejected the Applicants’ contention that the enactment of the impugned by-laws falls within the legislative competence of local government. Outlining the parameters of municipalities’ law-making authority, Chaskalson AJ held that the prevailing legal framework does not confer any ‘constitutional or legislative source of power’ enabling municipalities to promulgate legislation imposing embargoes on the transfer of property in order to enforce compliance with the requirements of land use management, town planning schemes, and building regulations.
Dismissing the argument that a transfer embargo falls within municipalities’ original law-making powers conferred by the Constitution, Chaskalson AJ emphasised the important distinction between municipal planning functions and the functions of the national deeds registration system. Crucially, the Constitution separates these functions in line with the doctrine of the separation of powers. Consequently, the impugned by-laws were declared unconstitutional, unlawful, and invalid. Given the successful legality challenge, the Court did not consider the Respondents’ additional arguments based on section 25(1) of the Constitution and section 118(1) of the Systems Act.
Notably, the judgment reaffirms the constitutional and legislative boundaries of local governments’ law-making powers. To that end, the ruling provides clarity and reassurance to property owners and developers – in Mpumalanga and elsewhere – regarding the powers entrusted to municipal bodies in regulating the transfer of property. In light of the unconstitutionality of the impugned transfer embargo provisions, municipalities must devise alternative mechanisms to enforce compliance with spatial planning, land use, and building regulation requirements without violating the bounds of legislative competence.
To consult with a property law attorney specialising in the spheres of development, planning, and local government law, contact us at developmentlawunit@stbb.co.za.
