The City of Ekurhuleni was right to seek a rescission of a High Court settlement that compelled it to purchase 16 buildings which were occupied by 1 000 families illegally.

A Business Day report says this was the finding of the Constitutional Court which ruled the settlement had been made by attorney Steven Maluleke who did not have the authority to act on behalf of the municipality and therefore the High Court was wrong to certify the settlement.

The Constitutional Court’s ruling will affect how every litigant in SA and every court must consider settlements in future.

The 16 buildings in Ekurhuleni were hijacked and occupied by 1 000 families in 2017, the municipality said. The buildings various property owners obtained an eviction order from the Gauteng High Court (Johannesburg) to evict the families.

However, the occupants asked the High Court to suspend evictions until they were provided with accommodation by the municipality.

The property owners asked the court for damages from the municipality for not providing the accommodation in the first place and delaying the return of their buildings.

The municipality hired Maluleke to oppose both the occupiers and the property owners in court. In the end, in 2020, the High Court settled the matter between the parties in terms agreed to by each party’s lawyers.

However, the municipality was aggrieved and returned to court to have the order rescinded, telling the High Court that Maluleke had no legal authority to make and settle an agreement that would result in it buying the property.

In 2021, Acting Judge Amelia van der Merwe dismissed the municipality’s rescission application. 

She said the order accords with the Constitution and the law and found Maluleke had authority as the municipality’s lawyer.

The municipality approached the Constitutional Court, asking it to overturn Van der Merwe’s dismissal and rescind the order that would force the municipality to buy the 16 properties and scrap the millions in unpaid rates.

The property owners opposed, arguing Van der Merwe was right in her reasoning, add the Business Day report.

They said the municipality was using the rescission process as a disguised appeal.

However, the Constitutional Court agreed with the municipality, ordering a rescission of the original settlement.

The settlement does not relate to the primary (disputes) between the parties, Constitutional Court Acting Justice Alan Dodson wrote for a unanimous court. 

Dodson ruled a court could not order a settlement that did not actual settle disputes.

He also noted procurement processes were not followed such as obtaining municipal council approval. This was in direct violation of procurement regulations.

Further, Dodson said, a lawyer may not bind a municipality to an act that requires, but lacks, prior compliance with the law .

‘Yet, that is what happened here.’

The courts favour a settlement, Dodson noted. It reduces demands on the courts and allows them to reallocate their limited resources to other cases.

‘Unfortunately, the consent order in this case does not achieve this. If anything, it has birthed more litigation than it purported to settle.’ 

The matter has been sent back to the High Court for a fresh determination later. 

Dodson expressed concern for the occupiers who remain prejudiced and still face uncertainty about evictions.

Full Business Day report

Judgment