Glencore tackles municipalities

Glencore will battle it out with two Mpumalanga municipalities at the Constitutional Court in November, challenging local councils’ authority to regulate the transfer of properties.

The outcome of the case will have an impact on the property market, municipal planning and the mining industry.

The diversified mining major will tell the apex court that the by-laws enacted by the Govan Mbeki and Emalahleni municipalities that impose an embargo on the registration of transfer of immovable property until the municipalities certify that their requirements have been met are not in the purview of local government.

The two municipalities promulgated by-laws obliging a transferor of land to first obtain a certificate from the municipality confirming, among other things, that all funds due by the transferor in respect of the land have been paid and that the land use and buildings constructed on the land comply with the requirements of their respective land use schemes.

Without this certificate, the transferor may not approach the registrar of deeds for the transfer of that property.

The municipalities have blocked the transfer of 55 multimillion rand properties between Glencore and other entities after they failed to comply.

“In this case, the by-laws place restrictions on the owner of immovable property to transfer ownership of that property to another person.

“Quite clearly, therefore, one of the incidents of ownership — the right to transfer — is affected. This is property worthy of constitutional protection,” Glencore says in its court papers.

“Municipalities do not have unlimited plenary powers. Their legislative powers have to be sourced in the constitution. It is clear that the two land-use bylaws in question deal generally with municipal planning.”

In a ground-breaking judgment in 2022, the Supreme Court of Appeal (SCA) held that some of the by-laws enforced in terms of the Spatial Planning and

Land Use Management Act are invalid. These by-laws contain provisions that authorise local authorities to issue certificates of compliance with spatial planning regulations and require attorneys to obtain certificates of compliance prior to registrations of transfer of properties.

Property experts say the issuing of these certificates has been a major stumbling block in the property market.

The Emalahleni Local Municipality will tell the apex court when the matter is heard on November 14 that the embargo is a sensible way of ensuring compliance with the planning requirements of a municipality.

“The enforcement of zoning legislation and land use management schemes falls squarely within the competence of a municipality. It forms part of the executive authority and the administration of the municipality in respect of its planning functions,” the municipality says in its papers.

“A further concern is that a municipality is required to use limited resources, such as water, in order to provide services to all persons within its jurisdiction in a sustainable manner. One could easily imagine the impact on the municipality’s access to basic resources, such as water, if the respondents were given carte blanche to use their 55 properties for mining purposes.”

This view will also be advanced by the Govan Mbeki Municipality, which argues that municipalities have constitutionally entrenched powers to manage municipal planning.

“The functional areas cornered on provinces, or national government, whether concurrently or exclusively, cannot be construed to include components of municipal planning as that would run counter to the scheme of the constitution, particularly its provisions that safeguard the autonomy of municipalities and insulate them from interference by the other spheres,” Elliot Maseko, the municipal manager, said.

The City of Cape Town has asked to intervene in the matter, an application which Glencore is opposing. Geordin Hill-Lewis, the mayor of Cape Town, said in his affidavit his administration has a “direct and substantial” interest in the case’s outcome.

“The order of the SCA is premised on reasoning which has profound implications for the city in the exercise of its legislative powers,” Hill-Lewis said. “All the city’s by-laws pertaining to the government matters listed in schedules 4B and 5B of the constitution in respect of which there is no national legislation or pertaining to matters of which such legislation is silent, would be open to constitutional challenge on a similar basis.”