Karoo Hoogland Municipality v Nothnagel (2015) 36 ILJ 2021 ; [2017] JOL 36767 (LAC) dated 15 April 2015 per Sutherland JA [Davis and Ndlovu JJA concurring]

“[26] The approach of the Labour Court [Nothnagel v Karoo Hoogland Municipality (2014) 35 ILJ 758 (LC)] to the decisions of the municipal manager, taken prior to his appointment being declared invalid, is inconsistent with higher authority cited above.  Despite its being possible for the decision a quo to be understood to be trumped by higher authority, it remains equally realistic to suppose that in a dispute ventilated in the SALGBC, especially among non-lawyers, that the dicta in the court a quo might not be interrogated as carefully as the best practice might require, especially among those disputants who confine their reading to the labour law reports.  The risk of avoidable appeals is real.  A correction by way of the qualification set out above is therefore wholly appropriate”.

Further excerpts [footnotes omitted]

[16]  . . . . A proper appreciation of the facts would have showed that no decision was necessary by the Labour Court about the validity of the authority of the municipal manager to make decisions.

[17] Notwithstanding this important aspect, the Labour Court decided the matter on the premise that Saayman was relevantly implicated in the decision to discipline the two respondents.  That premise was not substantiated and once that edifice is absent there is no factual basis for the order that was granted.

The application of the Oudekraal doctrine

[18] However, the more serious aspect is the notion that once a municipal manager’s appointment is set aside (paras 23 and 26 of the judgment a quo, cited above), whatever decisions taken during the incumbent’s reign purporting to exercise the authority now declared to have been invalidly exercised, are ipso facto, invalid too, and in consequence fall to be set aside automatically, without regard to the implications of so doing.

[19] On behalf of the appellant, it is argued that these dicta are incorrect.  As alluded to earlier, the dicta were not defended in argument on behalf of the respondents.  If these dicta are inaccurate, it is argued on behalf of the appellant that the publication thereof holds out the real and likely risk of the judgment being cited in future disputes about the impugned decisions of municipal managers and inviting undesirable results, especially in SALGBC arbitrations, where as a reading of the law reports reveal, the corps of municipal managers has, over several years, contributed at least its fair share to the volume of litigation.  It is argued that there is a threat to the interests of justice; more concretely, the real risk of public funds being consumed in litigation over the uncertainties.  Moreover, such a controversy could apply to any public official whose appointment is voided, not only to municipal officials.

[20] This view is countered by the submission that the dicta in the judgment a quo have no precedent value, because any realistic confusion about the ambit of the Oudekraal doctrine has been eliminated by the remarks made in the decision of the Constitutional Court in MEC for Health, Eastern Cape & another v Kirland Investments (Pty) Ltd tla Eye & Laser Institute 2014 (3) SA 481 (CC).  In that case, the court was divided about the process that was mandatory to set aside invalid decisions.  The majority, per Cameron J, rejected what they called a shortcut by an organ of state to be released from the invalid decision taken by itself by regarding it as non-existent, and held that a review application to declare the decision invalid had to be prosecuted, and upon that being decided, a further decision would have to be taken about what to do about the consequences (especially at paras 87-106).

[21] It must be fairly stated that comprehension of the Oudekraal doctrine is no easy task.  It is the classic example of common sense triumphing over mechanical legal reasoning in order to prevent self-help, which cannot be sanctioned, and to ensure that an invalid decision must be set aside pursuant to a legal process, rather than be ignored by the decision maker.

[22] The critical passages in Oudekraal are cited above.   The sting is in the idea that an act, albeit invalid for want of regularity, remains a fact.  Later acts perpetrated on the assumption of the validity (incorrectly) of the initial act remain enforceable unless and until they are set aside.  The important dimension of this doctrine is that once a court has declared the initial decision invalid, thereafter, another court, recognising the invalidity of decisions made later upon that premise, must have such later decisions placed before it whereupon it shall consider the problem and make two decisions; first, to declare the later decision invalid, and second, decide what appropriate relief, consequent upon such a declaration, ought to follow.

[23] There is no room on the Oudekraal doctrine for an ‘automatic’ washing away of the multitude of decisions made by a municipal manager, if his appointment, after usually several months if not longer, is declared to be invalid.  It is for this reason that the dicta in the judgment at paras 26 and 27 require qualification.  It cannot follow as a matter of course that in every instance it is appropriate to unwind what has been set in train based on an invalid decision.  A court must assess the consequences and on some occasions a pragmatic decision will be warranted, and when appropriate, an invalid decision will not be set aside.

[24] In the decision by Froneman J in Bengwenyama Minerals (Pty) Ltd & others v Genorah Resources (Pty) Ltd & others 2011 (4) SA 113 (CC) at paras 81-87 the approach of a court to dealing with invalidly made decisions was addressed.  The issue was the identification of what consequences would a court permit to flow from an invalid decision, in the exercise of its discretionary powers.

At para 83-86 it was held thus:

‘[83] …  This “generous jurisdiction” in terms of s 8 of PAJA provides for a wide range of just and equitable remedies, including declaratory orders, orders setting aside the administrative action, orders directing the administrator to act in an appropriate manner, and orders prohibiting him or her from acting in a particular manner.

[84] It would be conducive to clarity, when making the choice of a just and equitable remedy in terms of PAJA, to emphasise the fundamental constitutional importance of the principle of legality, which requires invalid administrative action to be declared unlawful.  This would make it clear that the discretionary choice of a further just and equitable remedy follows upon that fundamental finding.  The discretionary choice may not precede the finding of invalidity The discipline of this approach will enable courts to consider whether relief which does not give full effect to the finding of invalidity, is justified in the particular circumstances of the case before it.  Normally this would arise in the context of third parties having altered their position on the basis that the administrative action was valid and would suffer prejudice if the administrative action is set aside, but even then the “desirability of certainty” needs to be justified against the fundamental importance of the principle of legality.

[85] The apparent anomaly that an unlawful act can produce legally effective consequences is not one that admits easy and consistently logical solutions.  But then the law often is a pragmatic blend of logic and experience.  The apparent rigour of declaring conduct in conflict with the Constitution and PAJA unlawful is ameliorated in both the Constitution and PAJA by providing for a just and equitable remedy in its wake.  I do not think that it is wise to attempt to lay down inflexible rules in determining a just and equitable remedy following upon a declaration of unlawful administrative action.  The rule of law must never be relinquished, but the circumstances of each case must be examined in order to determine whether factual certainty requires some amelioration of legality and, if so, to what extent.  The approach taken will depend on the kind of challenge presented – direct or collateral; the interests involved, and the extent or materiality of the breach of the constitutional right to just administrative action in each particular case.

[86]      The High Court, after finding that the review was brought out of time and that there were no reviewable irregularities, nevertheless went ahead and stated that this was a case where a court in its discretion ought to decline to set aside the invalid administrative act.  The majority judgment in the Supreme Court of Appeal adopted this reasoning.  The reasons offered were fourfold, namely that:

  • (a) it would make little difference to the members of the community whether Genorah or Bengwenyama Minerals exploited the prospecting rights;
  • (b) reliance on s 104 of the Act was misplaced;
  • (c) if the grant in respect of the two community farms were set aside, it would probably affect the viability of the remainder of the project; and
  • (d) the public interest required finality.’ (Emphasis added.)

[25] As a result, such an enquiry follows as a matter of course, not an automatic setting aside of the decision, without more.