Merafong City Local Municipality v AngloGold Ashanti Ltd (CCT106/15) [2016] ZACC 35 ; 2017 (2) BCLR 182; 2017 (2) SA 211 (CC) (24 October 2016) per Cameron J (majority judgment). Allowed appeal from SCA judgment.
Coram: Moseneke DCJ, Bosielo AJ, Cameron J, Froneman J, Jafta J, Khampepe J, Madlanga J, Mhlantla J, Nkabinde J and Zondo J
Judgments:
- Cameron J (majority): [1] to [84]
- Jafta J (dissenting): [85] to [178]
. . . .
[33] It is here, where “legality and certainty collide”, that AngloGold’s dispute with Merafong asks for answers that have not previously been provided. Those must be grounded in the Constitution. The Constitution is the supreme law, and conduct inconsistent with it is invalid. The Constitution provides that, when deciding a constitutional matter within its power, a court “must declare that any law or conduct that is inconsistent with [it] is invalid to the extent of its inconsistency”. To this injunction the Constitution adds a discretionary “may”: a court deciding a constitutional matter “may make any order that is just and equitable”.
[34] In Bengwenyama, this Court explored the Oudekraal paradox, that an unlawful act can produce legally effective consequences. The apparent anomaly, Froneman J noted, “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.” [footnotes omitted]
CC summary:
collateral or reactive challenge by organ of state — inter‑governmental dispute — national and local functional areas of competence — exclusive municipal power to levy surcharge on water supply
binding nature of administrative action — permissibility of collateral or reactive challenge by organ of state — justification of delay — distinction between declaration of constitutional invalidity and just and equitable remedy
Further excerpts without footnotes
[17] Merafong’s principal contention is that the Supreme Court of Appeal misapplied Oudekraal and Kirland. This is because of an alleged fundamental distinction between decisions that fall within the scope of powers with which a public official is clothed, but are merely wrongly taken, and those that are “on their face, beyond the powers of the decision-maker”.
In the latter case, so the contention goes, the person or entity subject to the decision is entitled to ignore it until, as a matter of process, that decision is sought to be enforced against it. Then, the person or entity is entitled to raise the nullity of the decision as a defence. That, Merafong says, is what it did here. In oral argument, Merafong also contended that the particular circumstances surrounding its defence permitted it to be raised in these proceedings.
. . . . .
Issues
[22] The principal question is whether the Supreme Court of Appeal and High Court were right to enforce the Minister’s ruling. Behind that question is the broader issue of when a public authority may collaterally or reactively challenge an administrative act, like the Minister’s ruling, that is sought to be enforced against it, outside proceedings brought to review it.
Merits
Collateral or reactive challenges
[23] As noted above, the Supreme Court of Appeal held against Merafong on the basis that, so long as an administrative decision has not been set aside, an organ of state may not raise its invalidity as a defence to proceedings against it to enforce that decision.[1] Relying on the invalidity of an administrative act as a defence against its enforcement, while it has not been set aside, has been dubbed a collateral challenge[2] – “collateral” because it is raised in proceedings that are not in themselves designed to impeach the validity of the act in question.[3] While the object of the proceedings is directed elsewhere, invalidity is raised as a defence to them.
. . . . .
[27] In Johnstone there was an impending prosecution. But reactive challenges to administrative decisions can be raised in any coercive setting, not only criminal. In Panasonic,[1] a trade union sought to attack collaterally the validity of industrial council proceedings on whose validity the employer’s lock-out depended. The complaint, the Court held, had to be raised by way of review, and not collaterally in other proceedings.[2]
Conradie J located the reason in the nature of the employer/employee contest, in which the Court acts as a referee. The referee may intervene if a blow is struck below the belt. But the referee
“would be astounded while the bout is in progress to receive a complaint that something had gone wrong with the weigh-in”.[3]
In other words, in contests of force between organised labour and employers, the fight had to proceed regardless of possible defects in the preconditions giving rise to it.
[28] But the Panasonic Court found that it was “impossible to lay down any fixed rule” on when a reactive challenge should be countenanced:
“Each case will depend on its own circumstances, in particular the nature of the alleged irregularity, the reason that it had not been raised earlier, the stage which the economic contest had reached and whatever other factors may be relevant.”[4]
[29] By contrast, in Photocircuit,[5] also with no prosecution in issue, a reactive attack on the validity of the establishment of an industrial council was allowed. The council sought an order to force employers to render returns to enable it to exact contributions from them. The employers responded by challenging the validity of the establishment of the council and of the extension to them of agreements requiring the contributions.
Scott J pointed out that in collateral challenges judicial scrutiny of an administrative act or subordinate legislation arises not because a discretionary remedy is sought, namely review or a declaratory order, but to determine “the entitlement of the party seeking enforcement or the guilt or innocence of an accused person”.[6] He concluded that the defendant or accused in collateral challenge proceedings cannot be precluded from raising the invalidity defence merely on the grounds of delay.
But, as in Panasonic, the Court emphasised that whether a collateral attack will be permitted depends on the circumstances.[7]
[30] These cases predate the Constitution. But they show that, in South African law, the permissibility of a reactive attack on administrative action has always been approached with a measure of flexibility.[8] And its availability is not limited to those at risk of criminal conviction.[9] A subject at risk of criminal conviction or other coercive action by the state may indeed raise a reactive or defensive challenge to the lawfulness of the administrative act on which the prosecution or coercion is based. But reactive challenges in our law have never been limited to these circumstances. In Panasonic, the challengers were employees facing a lockout. They were denied a collateral challenge not because of the absence of state coercion, but because the challenge was inappropriate to the proceedings they brought. Given the power play taking place, it would have been unjust to allow the challenge to be brought.