THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT
CASE NO: 487/06
Reportable
In the matter between
THE MINISTER OF LOCAL GOVERNMENT,
HOUSING AND TRADITIONAL AFFAIRS
(KWAZULU-NATAL)
Appellant
and
UMLAMBO TRADING 29 CC
First Respondent
MANASE & ASSOCIATES
Second Respondent
NEDBANK LIMITED
Third Respondent
ILEMBE DISTRICT MUNICIPALITY
Fourth Respondent

Before:
Howie P, Van Heerden, Jafta, Mlambo and Cachalia JJA
Heard:
18 September 2007
Delivered:
28 September 2007

Summary:   Local Government: Municipal Systems Act 32 of 2000, ss 106(1)(b) and (2) – appointment of
person(s) to investigate maladministration, fraud, corruption or other serious malpractice in a municipality
in KwaZulu-Natal – in order for investigator to have powers of subpoena, commission must be appointed by
the Premier by proclamation in the Provincial Gazette in terms of s 2 of the KwaZulu-Natal Commissions
Act 3 of 1999

Neutral Citation: This judgment may be referred to as Minister of Local Government, Housing &
Traditional Affairs (KwaZulu-Natal) v Umlambo Trading 29 CC [2007] SCA 130 (RSA)

VAN HEERDEN JA:

[1] This is an appeal against a judgment of the Durban High Court in
terms of which subpoenas issued by the second respondent, Manase and
Associates, a firm of chartered accountants, were set aside.  The subpoenas
were purportedly issued during the course of a forensic investigation and
required the first respondent, Umlambo Trading 29 CC, a close
corporation, and its bankers, Nedbank Limited (the third respondent), to
produce certain documents, including bank statements.  The High Court
(per Nicholson J) ordered the appellant, the Minister of Local Government,
Housing and Traditional Affairs, who was an intervening party before it, to
pay the first respondent’s costs.  The appeal is before us with the leave of
the court below.
[2] I will for the sake of convenience refer to the appellant as the MEC,
the first respondent as Umlambo, the second respondent as Manase, the
third respondent as Nedbank and the fourth respondent, the Ilembe District
Municipality, as the Municipality.
[3] During November 2003, the Municipality called for tenders for the
conversion of recycled shipping containers into spaza shops, salons and
other work places.  This was part of a program called the Mayor’s
Container Initiative.  Umlambo was awarded a tender for the supply of 44
recycled containers.

[4] On 7 June 2005, the MEC appointed Manase to conduct an
investigation within the Municipality. The relevant part of the MEC’s five-
page letter of appointment reads as follows:
‘I have to inform you that the Minister of Local Government, Housing and Traditional
Affairs has, in terms of section 106(1)(b) of the Local Government: Municipal Systems
Act No. 32 of 2000, approved your appointment as the Investigator to conduct a
forensic investigation within the Ilembe District Municipality to cover the following
matters over the periods specified below . . .
. . .
The provisions of the KwaZulu-Natal Commissions Act No. 3 of 1999 apply directly to
the above investigation and you are, herewith, requested to report directly to the
Department, as your employer in this matter, regarding all progress with your
investigation. . . ’

[5] Pursuant to this, Mr Krumchund Hariparshad, one of the partners of
Manase, telephonically contacted Umlambo’s sole member, Ms Seetha
Singh, informing her that he was conducting an investigation into the
Mayor’s Container Initiative and that he required the following
information:
(i)   Umlambo’s original founding statement and any amendment thereto;
(ii)  a paid-up cheque;
(iii) a list of authorised signatories to Umlambo’s bank account;

(iv) the physical address of Umlambo at which the containers were being
refurbished;
(v) Umlambo’s bank statements.
[6] Umlambo’s attorney responded on its behalf, requiring Manase to
make the request for the information in writing and stating that Manase was
not entitled to the bank statements.  On 14 June 2005, Manase responded
by serving on Singh, in her capacity as Umlambo’s sole member, one of the
subpoenas in issue, signed by Hariparshad as ‘partner’.  The subpoena
claimed to be ‘in terms of section 106(2) of the Local Government:
Municipal Systems Act, Act 32 of 2000 (‘the Systems Act’) read with
section 4(1)(a) of the KwaZulu-Natal Commissions Act, Act 3 of 1999’. It
required the production of all the documents referred to in the preceding
paragraph, save for the bank statements.  On 20 June 2005, Umlambo
supplied the documentation required, under cover of a letter addressed to
Manase by the close corporation’s attorney.
[7] The bank statements were sought by Manase by way of a separate
subpoena which was served on Nedbank.  By this time Umlambo’s
attorney had begun to question the legality of Manase’s conduct and of the
entire investigation and had,  in various letters to Manase, sought the
production of its letter of appointment and the names of the chairperson
and secretary of the ‘commission’.

[8] In subsequent written communications, Manase refused to produce
its ‘engagement letter’, stating that the MEC had expressly prohibited its
dissemination and that release of the letter might be prejudicial to the rights
of the Municipality.  Relying, so it was contended,  on its powers of
subpoena derived from s 106(1)(b) of the Systems Act and s 4(1)(a) of the
KwaZulu-Natal Commissions Act 3 of 1999 (‘the KZN Commissions
Act’), Manase asserted that:
‘In terms of the powers granted to us as Commissioners of Enquiry, we are entitled to
call and subpoena witnesses and documentation, lead evidence and clarify matters
beyond a reasonable doubt.’
[9] Manase further indicated that it was concerned about ‘material
misrepresentations’ that might have been made to the Municipality in
relation to the Mayor’s Container Initiative. It now appears from Manase’s
answering
affidavit
(deposed
to
by
Hariparshad)
that
these
‘misrepresentations’ related to Umlambo’s empowerment credentials and
to what had been communicated in that connection to the Municipality
when the tender fell to be considered. Hariparshad also entertained a
suspicion that a corrupt relationship existed between Umlambo and
employees of the Municipality, because the tender had been awarded to
Umlambo although it had only ranked eighth on the list of tenderers.

[10] Umlambo challenged the legal authority of the ‘commission’, but
Manase persisted with its request for the bank statements whilst declining
production of the letter of appointment.  It informed Umlambo that
‘specific individuals from Manase & Associates, who will be undertaking
the investigation, are assigned the powers of a Commissioner of Enquiry’
and that ‘the commissioners are Messrs Hariparshad, Roopram and
Oosthuizen’. The latter two, it must be noted, are not partners of Manase.
[11] Nedbank did not wish to become embroiled in litigation. In the
result, Umlambo approached the High Court seeking to halt the
‘investigation’ in its entirety.   The MEC sought and was granted leave to
intervene.  In the affidavit filed on the MEC’s behalf, deposed to by Mr
Lionel Pienaar, the General Manager: Local Government (KwaZulu-Natal),
it was contended that the KZN Commissions Act was applicable, with the
‘necessary changes as the context may require’, as provided for in s 106(2)
of the Systems Act.  The letter of appointment was annexed to the MEC’s
affidavit, Pienaar stating that ‘the need for confidentiality regarding the
contents of the same has now passed’.  Manase indicated that it would
abide the decision of the court, but it filed Hariparshad’s affidavit ‘to
advise the court’ of the reasons for the issue of the subpoenas.

[12] In its replying affidavit, Umlambo attempted to amend significantly
the fairly wide relief which it had sought, as well as the grounds on which
it had initially relied.  In effect, the relief that Umlambo sought in its
amended form was for an order reviewing and setting aside Manase’s
appointment by the MEC.
[13] In dealing with the legality of the steps taken by the MEC,
Nicholson J commenced with a consideration of the applicable legislation.
First, he had regard to ss 106(1)(b) and (2) of the Systems Act which read
as follows:
‘(1) If an MEC [Member of a provincial Executive Council] has reason to believe that a
municipality in the province cannot or does not fulfil a statutory obligation binding on
that municipality or that maladministration, fraud, corruption or any other serious
malpractice has occurred or is occurring in a municipality in the province, the MEC
must –
(a) . . .
(b) if the MEC considers it necessary, designate a person or persons to
investigate the matter.
(2) In the absence of applicable provincial legislation, the provisions of sections 2, 3, 4,
5 and 6 of the Commissions Act, 1947 (Act 8 of 1947), and the regulations made in
terms of that Act apply, with the necessary changes as the context may require, to an
investigation in terms of subsection (1)(b).’

[14] The High Court concluded that it was clear that, in terms of section
106(2) of the Systems Act, the relevant provisions of the Commissions Act
– national legislation – applied only in the absence of ‘applicable provincial
legislation’. There was no doubt that, in this case, there was applicable
provincial legislation in the form of the KZN Commissions Act.   The
provisions of the Provincial Act thus applied and it was accordingly
necessary to ascertain whether the actions complained of by Umlambo
were authorised in terms thereof.  In that regard, Nicholson J stated:
‘It seems to me that a contextual reading of the subsection does not allow such an
interpretation.  Clearly it was envisaged that provincial legislation would be
promulgated which would be applicable.  Such legislation is now in place.1  Until such
legislation was enacted the national Act was made applicable, with the necessary
changes as the context required in the meantime.  That seems to be to be the sensible
and proper interpretation of the plain meaning of the words.’
That, one would have thought, would have been the end of the matter.
However, notwithstanding his having expressed himself quite firmly on

1 It should be noted that, by the time the Systems Act came into operation on 1 March 2001, the following
eight out of the nine provinces of South Africa had legislation dealing with commissions appointed by the
relevant Premier in terms of s 127(2)(e) of the Constitution (s 147(1)(d) of the Interim Consitution): the
Provincial Commissions Act 3 of 1994 (Eastern Cape); the North West Commissions Act 18 of 1994; the
Northern Cape Commissions of Inquiry Act 4 of 1996; the Provincial Commissions Act 1 of 1997
(Gauteng); the Commissions Ordinance 5 of 1954 (Free State), as amended by the Commissions
Ordinance Amendment Act 4 of 1998 (Free State); the Western Cape Provincial Commissions Act 10 of
1998; the Mpumalanga Commissions of Enquiry Act 11 of 1998 and the KwaZulu Natal Commissions
Act 3 of 1999.  In the remaining province, the Northern Province, corresponding legislation was
promulgated in 2001 in the form of the Northern Province Commissions of Inquiry Act 4 of 2001.  See
further in this regard 2(2) Lawsa 2ed (2003) paras 196–216.

that issue, the learned judge nonetheless remarked that the interpretation of
the subsection was not ‘absolutely clear’.  He thus considered himself
compelled to decide the matter on the basis that the provincial Act also
applied ‘with the necessary changes as the context may require’.
[15] Section 2(1) of the KZN Commissions Act provides that –
‘The Premier may by proclamation in the Provincial Gazette of the Province of
KwaZulu-Natal –
(a) appoint a commission;
(b) define the matter to be investigated by the commission and the terms of
reference of such commission;
(c) make regulations –
(i)  providing for the procedure to be followed at the investigation and
for the preservation of confidentiality; and
(ii) providing generally for all matters which he or she considers
necessary or expedient to prescribe for the purposes of the investigation;
(d) appoint a secretary to the commission, and such other officials as he or she
may deem necessary to assist the commission; and
(e) designate any member of the commission as the chairperson of that
commission.’

A ‘commission’ is defined to mean a commission appointed under
s 127(2)(e) of the Constitution, in terms of which a Premier is responsible
for appointing commissions of enquiry for his or her province.
[16] It was common cause that there had been no publication of the
‘investigation’ or ‘commission’ in the Provincial Gazette. No matter for
investigation or terms of reference had been defined, no regulations had
been made, and no secretary or chairperson had been appointed, let alone
published in the Provincial Gazette.
[17] The principle of legality lies at the centre of the appeal.  It is a
fundamental principle of the rule of law that the exercise of public power is
only legitimate where it is lawful.  It is central to our constitutional order
that the legislature and the executive are in every sphere constrained by the
principle that they may exercise no power and perform no function beyond
those conferred on them by law.  (See in this regard Fedsure Life
Assurance Ltd & Others v Greater Johannesburg Transitional
Metropolitan Council & Others.2 )
[18] The MEC had no power to appoint a commission; this power vested
in the Premier in terms of the applicable legislation.  His appointment of

2 1999 (1) SA 374 (CC) paras 56 and 58.

Manase as a ‘commission’ was thus unlawful.  Moreover, as the MEC also
had no power to issue subpoenas, his purported delegation of that power to
Manase or anyone else was likewise unlawful.  That, it seems to me, is the
short answer in this appeal.
[19] Furthermore, section 4, which was expressly relied upon by Manase
and the MEC, provides that a commission shall have the power to subpoena
any person to attend a sitting of the commission in order to give evidence
or to produce any book, document or object before the commission at the
time and place specified in the subpoena. The court below considered that
no such place had been specified in the subpoenas in question and that, for
that reason alone, they were probably defective.
[20] Moreover, s 4(2) provides that a subpoena shall be signed and
issued by the secretary of the commission, and shall be served by the
secretary or any person authorised by the secretary to do so, in the same
manner as a subpoena for the attendance of a witness at a criminal trial in
the High Court. As no secretary had been appointed, plainly there could not
have been compliance with this provision. The signature of Hariparshad or
a member of his staff could thus obviously not suffice.
[21] Importantly, the court below expressed the view that the MEC was
entitled in terms of s 106(1)(b) of the Systems Act to appoint a person to

investigate the maladministration and/or corruption he believed was taking
place in the Municipality, but that once the appointed investigator required
powers of subpoena, the only viable route open to the MEC was to
approach the Premier with a request for the proper appointment of a
commission in terms of s 2(1) of the KZN Commissions Act.
[22] The court below went on to hold that the failure properly to appoint
a commission by proclamation in the Provincial Gazette and all the other
deficiencies to which I have already alluded could not be regarded as
‘necessary changes required by the context of the appointment of an
investigator’ in the present case.
[23] The court concluded that the subpoenas issued to Umlambo and to
Nedbank were fatally defective as they had not been preceded by the
proper appointment of a commission by proclamation in the Provincial
Gazette. All the other deficiencies in the subpoenas flowed from that fatal
flaw.  The court thus ordered that the subpoenas be set aside and that the
MEC pay the costs of Umlambo’s application.  In that, the court was
correct.

[24] The KZN Commissions Act 3  certainly constitutes ‘applicable
provincial legislation’ as contemplated by s 106(2) of the Systems Act.
Moreover, having regard to the ordinary grammatical meaning of s 106(2),
it is clear that it is only in the absence of applicable provincial legislation
that ss 2 to 6 of the (national) Commissions Act, apply, ‘with the necessary
changes as the context may require’, to an investigation in terms of s
106(1)(b).  The quoted phrase does not to my mind apply to any ‘applicable
provincial legislation’.  Nicholson J was quite correct in his conclusion that
this is ‘the sensible and plain meaning’ of the words of s 106(2).  This
being so, it was not necessary for him to have considered whether the
failure to comply with the KZN Commissions Act in the respects set out
above could be accommodated within the ambit of the quoted phrase.
[25] As the subpoenas which Manase purported to issue and serve on
Umlambo and Nedbank were not preceded by the proper appointment of a
commission by proclamation in the Provincial Gazette, as required by s 2
of the KZN Commissions Act, and as Manase had no authority to issue any
subpoena, these subpoenas were unlawful and were correctly set aside by
the court below.

3 As also the other provincial statutes referred to in n 1 above.

Order
[26] In the circumstances, the appeal is dismissed with costs.

B J VAN HEERDEN
JUDGE OF APPEAL

CONCUR:
HOWIE P
JAFTA JA
MLAMBO JA
CACHALIA JA

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

28 September 2007

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Minister of Local Government, Housing & Traditional Affairs (KwaZulu-Natal) v
Umlambo Trading 29 CC [2007] SCA 130 RSA

Media Statement

Today the SCA held that, in order for a person(s) appointed to investigate maladministration, fraud,
corruption or other serious malpractice in a municipality in KwaZulu-Natal to have the power to
subpoena witnesses and documentation, a commission of inquiry must be appointed by the Premier
of the province by proclamation in the Provincial Gazette in terms of section 2 of the KwaZulu-Natal
Commissions Act 3 of 1999 (‘the KZN Commissions Act’).  The SCA accordingly dismissed an appeal
by the Minister of Local Government, Housing and Traditional Affairs (KwaZulu-Natal) (‘the MEC’)
against a judgment of the Durban High Court (Nicholson J) in terms of which subpoenas issued by a
firm of chartered accountants, Manase & Associates (‘Manase’), were set aside.

In late 2003, as part of a program called the Mayor’s Container Initiative, the Ilembe District
Municipality (‘the Municipality’) called for tenders for the conversion of recycled shipping containers
into spaza shops, salons and other work places.  Umlambo Trading 29 CC (‘Umlambo’) was awarded
the tender.  On 7 June 2005 the MEC, purporting to act in terms of section 106(1)(b) of the Local
Government: Municipal Systems Act 32 of 2000 (‘the Systems Act’), appointed Manase to conduct an
investigation into the Mayor’s Container Initiative within the Municipality, According to Manase’s letter
of appointment from the MEC, the provisions of the KZN Commissions Act applied to this
investigation.  One of the partners of Manase, Mr K Hariparshad, then contacted Umlambo’s sole
member, Ms S Singh, informing her that he was conducting the investigation and that he required
certain information and documents, including Umlambo’s original founding statement and any
amendments to this and Umlambo’s bank statements. Umlambo’s attorney required Manase to
request the information in writing and stated that Manase was not entitled to the bank statements. In
response, Manase served a subpoena on Singh, in her capacity as Umlambo’s sole member. This
subpoena claimed to be ‘in terms of section 106(2) of the Local Government: Municipal Systems Act,
read with section 4(1)(a) of the KwaZulu-Natal Commissions Act, Act 3 of 1999’. The subpoena
required the production of all the documentation already requested, except the bank statements.
Umlambo supplied the documentation required.

The bank statements were then sought by Manase by way of a separate subpoena served on
Nedbank, Umlambo’s bankers. In subsequent correspondence between Umlambo’s attorney and
Manase, Manase refused to produce its letter of appointment from the MEC on the grounds that the

MEC had expressly prohibited its dissemination. Manase stated that it was entitled to subpoena
witnesses and documents in the exercise of its powers derived from section 106(1)(b) of the Systems
Act and section 4(1)(a) of the KZN Commissions Act.  Nedbank did not want to become involved in
litigation, so Umlambo ultimately approached the Durban High Court, seeking to stop the whole
‘investigation’. The MEC was granted leave to intervene and attached Manase’s letter of appointment
to its affidavit, stating that the need for confidentiality regarding its contents had passed.

Nicholson J considered the wording of section 106(2) of the Systems Act, which provides that, ‘in the
absence of applicable provincial legislation’, certain sections of the Commissions Act 8 of 1947 (the
National Act) apply to an investigation in terms of section 106(1)(b) ‘with the necessary changes as
the context may require’. The learned judge concluded that, in this case, there was ‘applicable
provincial legislation’ in the form of the KZN Commissions Act and that the provisions of the Provincial
Act thus applied. The court concluded that the subpoenas issued to Umlambo and to Nedbank were
fatally defective as they had not been preceded by the proper appointment of a commission by
proclamation in the Provincial Gazette. All the other deficiencies in the subpoenas flowed from that
fatal flaw. Nicholson J therefore ordered that the subpoenas be set aside and that the MEC pay the
costs of Umlambo’s application.

On appeal, the SCA emphasised that it is a fundamental principle of the rule of law that the exercise
of public power is only legitimate where it is lawful. The SCA held that the MEC had no power to
appoint a commission; this power vested in the Premier. His appointment of Manase as a
‘commission was thus unlawful.  Furthermore, as the MEC also had no power to issue subpoenas, his
purported delegation of that power to Manase was likewise unlawful. It agreed with the finding of the
High Court that, as the subpoenas which Manase had purported to issue and serve on Umlambo and
Nedbank were not preceded by the proper appointment of a commission by proclamation in the
Provincial Gazette, as required by section 2 of the KZN Commissions Act, and as Manase had no
authority to issue any subpoena, these subpoenas were unlawful. That, in the view of the SCA, was
the end of the matter. The MEC’s appeal was thus dismissed with costs.

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