National Gambling Board V Premier Of Kwazulu-natal 2002
6 National Gambling Board v Premier KwaZulu-Natal and Others 2001 ZACC 8; 2002 (2) SA 715 (CC); 2002 (2) BCLR 156 (CC) para 20-2. National Gambling Board v Premier of KwaZulu-Natal and Others (CCT32/01) 2001 ZACC 8; 2002 (2) BCLR 156; 2002 (2) SA 715 (21 December 2001) Download original files PDF format.
SAFLII >> Databases >> South Africa: Constitutional Court >> 2002 >>2 Chapter 3 comprises sections 40 and 41 of the Constitution. The sections and the requirements of co-operative government are discussed in National Gambling Board v Premier KwaZulu-Natal and Others 2002 ` (2) SA 715 (CC; 2002 (2)BCLR 156 (CC) paras 29 to 39. 2 Section 41 (1) (h) (vi) of the Constitution. REPORT OF THE BOARD FOR THE YEAR ENDED 31 MARCH 2002 The Members of the Board have pleasure in presenting their report for the year ended 31 March 2002. INCORPORATION, FUNCTIONS AND POWERS The Gauteng Gambling Board is a statutory body established in terms of section 3 of the Gauteng Gambling Act, No 4 of 1995, as amended (“the Act”). To date, the National Gambling Board has taken the matter of KwaZulu-Natal's independent stance first to the Constitutional Court, where an application for an urgent interdict against its.
[2002] ZACC 11 Noteup LawCiteUthukela District Municipality and Others v President of the Republic of South Africa and Others (CCT7/02) [2002] ZACC 11; 2002 (11) BCLR 1220 ; 2003 (1) SA 678 (CC) (12 June 2002)
Download original files | Links to summary |
CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT7/02
UTHUKELA DISTRICT MUNICIPALITY First Applicant
ZULULANDDISTRICT MUNICIPALITY Second Applicant
AMAJUBA DISTRICTMUNICIPALITY Third Applicant
versus
THE PRESIDENT OF THEREPUBLIC
OF SOUTH AFRICA First Respondent
THE MINISTER OFFINANCE Second Respondent
THE MINISTER OF PROVINCIAL
AND LOCALGOVERNMENT Third Respondent
AND 64 OTHERS 4th to67th Respondents
Heard on : 14 May 2002
Decided on : 12 June2002
JUDGMENT
DU PLESSIS AJ:
[1] Government in the Republicof South Africa “is constituted as national, provincial and local spheresof government whichare distinctive, interdependent andinterrelated.”[1] Municipalitiesestablished throughout the territory of the Republic constitute the local sphereof government.[2]
[2] Thelocal sphere of government is structured as
“(a) self-standing municipalities, (b) municipalities that form part of acomprehensive co-ordinating structure, and (c) municipalitiesthat performco-ordinating functions.”[3]
The Constitution refers to these municipalities respectivelyas Category A, B and Cmunicipalities.[4] This case concernsthe entitlement of category C municipalities to an equitable share of revenueraised nationally.
[3] In terms of section 214(1)(a) of theConstitution, an Act of Parliament must provide for “the equitabledivision of revenueraised nationally among the national, provincial and localspheres of government”. Section 227(1)(a) of the Constitution inturnprovides that “local government and each province . . . is entitled to anequitable share of revenue raised nationallyto enable it to provide basicservices and perform the functions allocated to it”.
[4] In orderto comply with sections 214(1)(a) and 227(1)(a) of the Constitution, Parliamentannually enacts a Division of Revenue Act. At issue in this case is theDivision of Revenue Act 1 of 2001 (“the 2001 Act”) that dealt withthe 2001/2002 financialyear.[5] Section 3(1) thereof provided for the division of revenue raised nationallyamong the national, provincial and local spheres ofgovernment.[6] Section5(1)[7] in turn provided for theallocation to individual municipalities, of their equitable share. Thesubsection made no provision forthe payment to Category C municipalities of anequitable share of revenue raised nationally.
[5] The three applicantsare Category C municipalities whose respective areas of jurisdiction fall withinthe KwaZulu-Natal (KZN)province. In three separate applications they appliedto the Natal High Court for orders declaring section 5(1) of the 2001 Actunconstitutional “in its omission to accord Applicant’s entitlementto an equitable share of revenue raised nationallyallocated to the local sphereof government”.[8] The threeapplications were consolidated and the High Court gave an order declaringsection 5(1) unconstitutional and “invalidto the extent that it excludesCategory ‘C’ municipalities from sharing with Category‘A’ and ‘B’municipalities in the local governmentallocation of revenue raisednationally.”[9] (It isconvenient to refer to Category B municipalities as “localmunicipalities” and to Category C municipalities as“districtmunicipalities”.)
[6] In this Court the applicants sought an orderconfirming the High Court’sorder,1[0] as well as an orderdirecting the national government to pay to them their respective equitableshares. When the application washeard in this Court, the 2001 Act had beenrepealed by the Division of Revenue Act,20021[1] (“the 2002Act”). The 2002 Act does not expressly exclude district municipalitiesfrom receiving an equitable shareof revenue raised nationally (“theequitable share”).1[2] Whether this Court should nevertheless deal with the confirmation is a questionthat I deal with later.
[7] The applicants cited 67 respondents. Onlythe first three respondents opposed both the High Court application and theapplicationbefore us. They are respectively the President of the RSA, thenational Minister of Finance and the national Minister of ProvincialGovernment.
[8] The fourth, fifth and sixth respondents are respectivelythe Premier of KZN, the Member of the Executive Council (MEC) for Financein KZNand the province’s MEC for Traditional and Local Affairs. The seventhrespondent is the Municipal DemarcationBoard.1[3] The eighth respondent isthe KwaZulu-Natal Local Government Organisation (KWANALOGA), an organisationrepresenting the majorityof municipalities in KZN. It is recognised as such interms of section 2(1)(b)1[4] of theOrganised Local Government Act.1[5] The South African Local Government Organisation (SALGA) is the nationalorganisation recognised in terms of section 2(1)(a) of thesameact.1[6] SALGA was not cited as arespondent, but the director of this Court notified it of the application forconfirmation. Neither ofthese organisations appeared to oppose or support theconfirmation of the order of the High Court.
[9] The ninth tosixty-seventh respondents are, together with the applicants, all the local anddistrict municipalities in KZN. Three local municipalities filed affidavitsopposing the relief sought, but they did not enter an appearance. One districtmunicipalityfiled an affidavit in support of the relief; another wrote a letterto the applicants’ attorneys in support of the relief.
[10] Duringthe course of argument before this Court the matter stood down in order for theparties to discuss a settlement. Thesix parties concerned settled the matteron the basis that the respondents pay to each of the applicants a specifiedamount. Theparties further agreed that the applicants would furnish therespondents with proof concerning revenue and expenditure and that therespondents would in specified circumstances be entitled to withhold money fromthe applicants’ 2002 equitable share. Theparties sought no order as tocosts. (The settlement was not made an order of Court and my summary thereof isno more than narrative). Mr Dickson who appeared for the applicants withdrewthe application for payment of the applicants’ 2001 equitable share. Counsel did not make any further submissions regarding the confirmation of theHigh Court’s order but the applicants did notwithdraw the application forconfirmation.
[11] In the event this Court is still seized with theconfirmation proceedings. However,
“[a]t least where the provision declared invalid by the High Court hassubsequently been repealed by an Act of Parliament,the Court has a discretionto decide whether or not it should deal with the matter. In this regard, theCourt should consider whetherany order it may make will have any practicaleffect either on the parties or onothers.”1[7]
Ifits order will have no practical effect, this Court will not deal withconfirmationproceedings.1[8]
[12] If theorder may, despite the repeal of the legislation under consideration, have somepractical effect on the parties or onothers, the Court will in its discretiondecide whether or not to deal with the confirmation. In doing so all thecircumstancesof the case will be taken into account. Factors that must betaken into account include the nature and extent of any practical effecttheorder may have, “the importance of the issue raised, its complexity andthe fullness of the argument on theissue”.1[9]
[13] Ifparties who may be affected by confirmation proceedings are organs ofstate,2[0] a further importantfactor must be taken into consideration. Organs of state have theconstitutional duty to foster co-operativegovernment as provided for in Chapter3 of the Constitution.2[1] Thisentails that organs of state must “avoid legal proceedings against oneanother”.2[2] The essence ofChapter 3 of the Constitution is that “disputes should where possible beresolved at a political level ratherthan through adversariallitigation.”2[3] Courts mustensure that the duty is dulyperformed.2[4] This is apparentfrom section 41(4) which provides:
“If a court is not satisfied that the requirements of subsection (3) havebeen met, it may refer a dispute back to the organsof stateinvolved.”
[14] In view of the important requirementsof co-operative government, a court, including this Court, will rarely decide anintergovernmentaldispute unless the organs of state involved in the disputehave made every reasonable effort to resolve it at a political level. Whenexercising a discretion whether to deal with confirmation proceedings, thisCourt must thus bear in mind that Chapter 3 ofthe Constitution contemplatesthat organs of state must make every reasonable effort to resolveintergovernmental disputes beforehaving recourse to the courts.
[15] Inow proceed to consider whether, in view of these considerations, this Courtshould deal with the confirmation order.
The Practical Effect of anOrder.
[16] In view of the settlement and the repeal of the 2001 Act,an order regarding the confirmation of the High Court’s orderwill have nopractical effect as far as the applicants are concerned.
[17] Section 34of the 2002 Act provides:
“(1) Subject to subsection (2), the Division of Revenue Act, 2001 (Act No.1 of 2001), is hereby repealed with effect fromthe date on which this Act takeseffect or from 1 April 2002, whichever is the later.
(2) The repeal of the Act referred to in subsection (1) does not affect any act in terms of that Act which is necessary for theeffective implementation of thisAct or the performance of any outstanding duties or obligations under or interms of that Act.”
The presently relevant effect ofsubsection (2) is this: If this Court finds that district municipalities, orsome of them, were constitutionallyentitled to an equitable share in terms ofthe 2001 Act, the equitable share for that year must be paid to thosemunicipalities.2[5] An order inthis case may have a practical effect for the national government and the localsphere of government in general. Thereforeit is necessary to decide whether inour discretion we should deal with the confirmation.
Co-operativegovernment
[18] Municipalities are organs of state in the local sphereof government.2[6] The first,second and third respondents, are all organs of state in the nationalsphere.2[7]
[19] Apartfrom the general duty to avoid legal proceedings against one another, section41(3) of the Constitution2[8] placesa two-fold obligation on organs of state involved in an intergovernmentaldispute: First, they must make every reasonableeffort to settle the dispute bymeans of mechanisms and procedures provided for. Second, they must exhaust allother remedies beforethey approach a court to resolve thedispute.
[20] There is a dispute-resolution mechanism in place in thecontext of fiscal disputes between organs of state in the national andlocalspheres.2[9] Part 2 of theIntergovernmental Fiscal RelationsAct3[0] (the Fiscal Relations Act)establishes a Local
Government Budget Forum (the Forum). The Forumconsists3[1] of the nationalminister of finance, the member of the executive council for finance of eachprovince, five representatives nominatedbySALGA3[2] and one representativenominated by each provincial organisation recognised in terms of the OrganisedLocal Government Act.3[3] KWANALOGA, who represents the majority of municipalities in KZN, thus has onerepresentative on the Forum.
[21] Section 6 of the Fiscal Relations Actdeals with the functions of the Forum and provides:
“The Budget Forum is a body in which the national government, theprovincial governments and organised local government consulton–
(a) any fiscal, budgetary or financial matteraffecting the local sphere of government;
(b) any proposed legislation orpolicy which has a financial implication for local government;
(c) any matter concerning the financial management, or the monitoring of thefinances, of local government; or
(d) any other matter which the Minister has referred to theForum.”
Meetings of the Forum are convenedby the Minister of Finance, and any person may attend meetings oninvitation.3[4]
[22] Thatthe mechanism provided for in the Fiscal Relations Act is applicable to disputesconcerning the 2001 equitable share oflocal government is evident from section31(1) of the 2001 Act:
“An organ of state involved in an intergovernmental dispute regarding anallocation provided for in this Act must, before approachinga court to resolvesuch dispute, make every effort to settle the dispute with the other organ ofstate concerned, including makinguse of the structures established in terms ofthe Intergovernmental Fiscal RelationsAct.”3[5]
Intheir affidavits the applicants contended that section 31(1) is not applicableto the present dispute because it does not concern“an allocation providedfor” in the 2001 Act, but the absence of an allocation to districtmunicipalities. It is unnecessaryto express a view on the merit of thiscontention: Section 41(1)(h)(vi) obliges organs of state to avoid litigationagainst one anotherirrespective of whether special structures for that purposeexist or not.3[6]
[23] Ifmunicipalities are aggrieved by the omission of district municipalities from the2001 equitable share, they can and mustmake use of the dispute-resolutionprocedures described above. If such municipalities are unable to resolve theirgrievances, theymust approach the relevant national minister directly. Thepapers before this Court do not suggest that the national organs of stateinvolved are not willing to address, at a political level, problems regardingthe 2001 equitable share. From an annexure to an affidavitfiled in this Courtby the first three respondents it appears that the Minister of Finance, dealingwith the present issue, saidin Parliament:
“Our intergovernmental system for dealing with financial and fiscalmatters is maturing, and flexible enough to allow us todeal with some of theunintended consequences of section 5(1) of the Division of Revenue Act,2001.'
[24] In the circumstances and in the interest ofco-operative government, this Court should not exercise its discretion to decidethe confirmation issue. It must first be left to the organs of state toendeavour to resolve at a political level such issues asthere may stillbe.
[25] There is a further reason why we should not exercise ourdiscretion to decide the confirmation issue. Due to the repeal ofthe 2001 Actand the settlement, we did not have the benefit of full argument on thedifferent and complex questions raised by theconfirmation issue. It is notadvisable in the circumstances to deal with it.
Theorder
[26] In the result the following order is made:
1. No order is made in respect of the confirmationapplication.
Chaskalson CJ, Langa DCJ,Ackermann J, Goldstone J, Kriegler J, Madala J, Ngcobo J, O’Regan J, SachsJ and Skweyiya AJ concurin the judgment of Du Plessis AJ.
For the appellants: AJ Dickson SC and AA Gabriel instructed by E R BrowneInc, Pietermaritzburg
For the respondents: T Beckerling SC and F Kathree instructed by the StateAttorney, Durban
[1] Section 40(1) of theConstitution of the Republic of South Africa.
[2] Section 151(1) of theConstitution.
[3]Ex Parte Chairperson of theConstitutional Assembly: In re Certification of the Amended Text of theConstitution of the RSA, [1996] ZACC 24; 1996, 1997 (2) SA 97 (CC); 1997 (1) BCLR 1 (CC)para 77.
[4] Section 155(1).
[5] The 2001 Act has now beenrepealed by the Division of Revenue Act 5 of 2002. The effect of this will beconsidered later.
[6]Section 3(1)provided as follows:
“Revenue anticipated to be raised nationally in respect of the financialyear is divided among the national, provincial andlocal spheres of governmentfor their equitable share as set out in Column A of Schedule1.”
[7]Section5(1) provided as follows:
“The national accounting officer responsible for local government mustdetermine the allocation for each category A and B municipalityin respect ofthe equitable share for the local sphere of government set out in Schedule 1 forthe financial year and such determinationmust be published by the Minister in aGazette by 15 May2001.”
[8] Prayer2.2 of the First Applicant’s Notice of Motion. The Second and ThirdApplicants’ prayers are identically worded.
[9] The form of the order is suchthat it did not bring about the invalidity of section 5(1). It is unnecessaryto discuss that here. See National Coalition for Gay and Lesbian Equality vMinister of Home Affairs[1999] ZACC 17; 2000 (2) SA 1 (CC); 2000 (1) BCLR 39 (CC) para 63and 64.
1[0] Section 172(2)(a) of theConstitution provides: “The Supreme Court of Appeal, a High Court or acourt of similar status maymake an order concerning the constitutional validityof an Act of Parliament, a provincial Act or any conduct of the President, butan order of constitutional invalidity has no force unless it is confirmed by theConstitutional Court.”
Act 5 of 2002.
1[2] Section 5(1) of the 2002Act.
1[3] A juristic personestablished in terms of section 2 of the Local Government: Demarcation Act, 27of 1998.
1[4] Section 2(1)provides:
“(1) Subject to section 6, the Minister must, by notice in theGazette—
(a) recognise one national organisation representing the majority of theprovincial organisations contemplated in paragraph (b);and
(b) with the concurrence of the responsible member, recognise one organisationineach province representing the majority of municipalitiesin the province inquestion: Provided that all the different categories of municipalities in theprovince in question are representedin the organisation inquestion.”
1[5] Act52 of 1997.
1[6] Id.
1[7]President, Ordinary CourtMartial and Others v Freedom of Expression Institute and Others[1999] ZACC 10; 1999 (4) SA682 (CC); 1999 (11) BCLR 1219 (CC) para 16.
1[8]Independent ElectoralCommission v Langeberg Municipality[2001] ZACC 23; 2001 (3) SA 925 (CC); 2001(9) BCLR 883(CC) para 11.
1[9] Id.
2[0] Section239 of the Constitution defines “organ of state” as:
(a) any department of state or administration in the national, provincial orlocal sphere of government; or
(b) any other functionary or institution—
(i) exercising a power or performing a function in terms of the Constitution ora provincial constitution; or
(ii exercising a public power or performing a public function interms of any legislation,
but does not include a court or a judicialofficer;”
2[1] Chapter3 comprises sections 40 and 41 of the Constitution. The sections and therequirements of co-operative government are discussedin National GamblingBoard v Premier KwaZulu-Natal and Others 2002 `(2) SA 715 (CC; 2002 (2)BCLR156 (CC) paras 29 to 39.
[2]2 Section 41(1)(h)(vi) of theConstitution.
2[3]Ex Parte Chairperson ofthe Constitutional Assembly: In re Certification of the Constitution of theRepublic of South Africa, [1996] ZACC 26; 1996 1996 (4) SA 744 (CC); 1996 (10) BCLR 1253(CC) para 291.
2[4] It does not seem as if theparties fully addressed the issue of co-operative government in argument beforethe High Court.
2[5] It is unnecessary to decidewhether, absent subsection (2), the effect would have been the same.
2[6] Para (a) of the definitionof “organ of state” above n 22. And see Independent ElectoralCommission v Langeberg Municipality[2001] ZACC 23; 2001 (3) SA 925 (CC); 2001 (9) BCLR 883(CC) para 19.
2[7]National Gambling Boardcase above n 21 paras 19 to21.
2[8] Section 41(3)provides:
“An organ of state involved in an intergovernmental dispute must makeevery reasonable effort to settle the dispute by meansof mechanisms andprocedures provided for that purpose, and must exhaust all other remedies beforeit approaches a court to resolvethedispute.”
2[9] Section41(2) of the Constitution provides:
“An Act of Parliament must –
(a) establish or provide for structures and institutions to promote andfacilitate intergovernmental relations; and
(b) provide for appropriate mechanisms and procedures to facilitate settlementof intergovernmental disputes.”
In the National Gambling Board case, above n 22 para 33, it was said thatthe Act envisaged in section 41(2) has not been enacted. Our attention was notdrawnto the Fiscal Relations Act 97 07 1997 which was not relevant then. Part2 of the Fiscal Relations Act deals only with specifieddisputes and does notdetract from the duty of the legislature pointed out in National GamblingBoard.
3[0] Act97 of 1997.
3[1] Section 5 of the FiscalRelations Act.
3[2] Above para 8.
[3]3 Section 2(1) of theOrganised Local Government Act quoted above at n 14.
3[4] Section 7 of the FiscalRelations Act.
3[5] Section 31(1)of the 2002 Act provides:
“An organ of State involved in an intergovernmental dispute regardingany provision of this Act must, before approaching a court to resolvesuch dispute, make every effort to settle the dispute with the other organ ofstate inquestion, including making use of the structures established in termsof the Intergovernmental Fiscal Relations Act.” (Ownunderlining)
3[6]NationalGambling Board above n 21 para 33.
Eastern Cape
Free State
Gauteng
KwaZulu-Natal
Limpopo
Mpumalanga
Northern Cape
North West
Western Cape
Eastern Cape
Eastern Cape Provincial Government
Department of Cooperative Governance and Traditional Affairs
Department of Economic Development, Environmental Affairs and Tourism
Department of Education
Department of Health
Department of Human Settlements
Department of Roads and Public Works
Department of Rural Development and Agrarian Reform
Department of Safety and Liaison
Department of Social Development
Department of Sport, Recreation, Arts and Culture
Department of Transport
Eastern Cape Provincial Legislature
Eastern Cape Provincial Treasury
Free State
Free State Provincial Government
Department of the Premier
Department of Agriculture and Rural Development
Department of Cooperative Governance and Traditional Affairs
Department of Economic Development, Small Business Development, Tourism and Environmental Affairs
Department of Education
Department of Health
Department of Human Settlements
Department of Police, Roads and Transport
Department of Public Works and Infrastructure
Department of Social Development
Department of Sports, Arts, Culture and Recreation
Free State Provincial Treasury
Free State Provincial Legislature
Gauteng
Gauteng Provincial Government
Department of Agriculture and Rural Development
Department of Cooperative Governance and Traditional Affairs
Department of Community Safety
Department of Economic Development
Department of Education
Department of Health
Department of Human Settlements
Department of Infrastructure Development
Department of Roads and Transport
Department of Social Development
Department of Sport, Arts, Culture and Recreation
Gauteng Provincial Treasury
Gauteng Provincial Legislature
eGovernment
KwaZulu-Natal
KwaZulu-Natal Provincial Government
Provincial Legislature
Office of the Premier
Department of Agriculture and Rural Development
Department of Arts and Culture
Department of Community Safety and Liaison
Department of Cooperative Governance and Traditional Affairs
Department of Economic Development, Tourism and Environmental Affairs
Department of Education
Department of Health
Department of Human Settlements
Department of Public Works
Department of Social Development
Department of Sport and Recreation
Department of Transport
Provincial Planning Commission
Provincial Treasury
Limpopo
Limpopo Provincial Government
Department of Agriculture
Department of Cooperative Governance, Human Settlements and Traditional Affairs
Department of Economic Development, Environment and Tourism
Department of Education
Department of Health
Department of Public Works, Roads and Infrastructure
Department of Safety, Security and Liaison
Department of Social Development
Department of Sport, Arts and Culture
Department of Transport
Provincial Treasury
Mpumalanga
Mpumalanga Provincial Government
Office of the Premier
Department of Agriculture, Rural Development, Land and Environmental Affairs
Department of Community Safety, Security and Liaison
Department of Cooperative Governance and Traditional Affairs
Department of Culture, Sport and Recreation
Department of Economic Development and Tourism
Department of Education
Department of Health
Department of Human Settlements
Department of Public Works, Roads and Transport
Department of Social Development
Mpumalanga Provincial Legislature
Mpumalanga Provincial Treasury
Northern Cape
National Gambling Board V Premier Of Kwazulu-natal 2002 Masters
Northern Cape Provincial Government
Office of the Premier
Department of Agriculture, Land Reform and Rural Development
Department of Cooperative Governance, Human Settlements and Traditional Affairs
Department of Education
Department of Environmental Affairs and Nature Conservation
Department of Finance, Economic Development and Tourism
Department of Health
Department of Roads and Public Works
Department of Social Development
Department of Sport, Arts & Culture
Department of Transport, Safety and Liaison
Northern Cape Provincial Legislature
National Gambling Board V Premier Of Kwazulu-natal 2002 Full
North West
National Gambling Board V Premier Of Kwazulu-natal 2002 Edition
North West Provincial Government
Office of the Premier
Department of Community Safety and Transport Management
Department of Culture, Arts and Traditional Affairs
Department of Education and Sport Development
Department of Finance, Economy and Enterprise Development
Department of Health
Department of Local Government and Human Settlements
Department of Public Works and Roads
Department of Rural, Environment and Agricultural Development
Department of Social Development
Department of Tourism
North West Provincial Legislature
Western Cape
Western Cape Provincial Government
Western Cape Provincial Legislature
Department of Agriculture
Department of Community Safety
Department of Cultural Affairs and Sport
Department of Economic Development and Tourism
Department of Education
Department of Environmental Affairs and Development Planning
Department of Health
Department of Human Settlements
Department of Local Government
Department of Social Development
Department of Transport and Public Works
Department of the Premier
Provincial Treasury