Sale of municipal land

In Strata International (Pty) Ltd v Ekhurhuleni Metropolitan Municipality (79/2014) [2015], the Supreme Court of Appeal dealt with an appeal pertaining to the sale of immovable property.

A developer approached the Municipality with a proposal to develop land as an industrial park for small and medium industries. The municipal council delegated authority to the Corporate Affairs Committee to approve the alienation of municipal property. Consequently, the Committee approved the sale of the land in question, subject to the finalisation of a land availability agreement.

Later, the municipal council revoked the above delegation. However, it went on to delegate to the Committee the power to decide, in terms of section 14(2) of the MFMA, whether a capital asset, identified for possible sale, is needed to provide a minimum level of basic municipal services, and to decide the fair market value for the asset.

The Committee met and approved the land availability agreement. It also resolved to give effect to the sale. The public was never notified of the meeting of the Committee. It was not open to the public.

Subsequently, the Municipality refused to give effect to the land availability agreement after the discovery of large-scale irregularities. The developer approached the High Court for an order against the Municipality, but the application was dismissed. Amongst other things, the High Court held that the power in section 14(2) of the MFMA cannot be delegated.

On appeal, the SCA held that the Committee was not entitled to accept an unsolicited bid and to dispose of the land without any public participation or transparency. The Constitutional principles of accountability, responsiveness and openness had to inform the sale of immovable property, as required by section 14(5) of the MFMA.