63. The first question, which falls for determination, is whether or not the City
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can rely on section 25 at all. The other interveners, Link Africa, Telkom and Neotel (‘the interveners’) in their heads of argument at paras 42 to 53, address this issue comprehensively. MTN makes common cause with such submissions. Private landowners such as SMI are, of course, entitled to rely on section 25.
64. In First National Bank of SA Limited t/a Wesbank v Commissioner, South African Revenue Service and Another; First National Bank of SA Limited t/a Wesbank v Minister of Finance48 at paragraph 46, this Court sets out the appropriate approach to a challenge brought in terms of Section 25 of the Constitution. This Court in essence held that what falls to be determined is the following:
64.1 If there is a deprivation, whether the deprivation has occurred in terms of a law of general application and whether the deprivation is arbitrary. The Court held that deprivation can be arbitrary in substance or in procedure. The Court then provides a guideline to
48 2002 (4) SA 768 (CC).
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be used to determine whether or not the deprivation is arbitrary. If the deprivation is not arbitrary and in terms of a law of general application, then there is no infringement of Section 25(1) of the Constitution.
64.2 The next step is to determine whether or not the deprivation amounts to expropriation. If the deprivation amounts to a taking or acquiring of the right of ownership, then it is expropriation and the issue of compensation arises.
64.3 Lastly, if the action does amount to arbitrary deprivation or expropriation without compensation, then it must be determined whether the action can be justified under Section 36 of the Constitution.
Each of these steps is addressed hereunder.
Do sections 22 and/or 24 occasion deprivation?
65. Here too MTN makes common cause with the submissions made by the
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interveners at paras 54 to 72 of their heads of argument.
66. Applying the principles set out therein, MTN submits that the digging of trenches and the laying of optic fibre cables, does not lead to substantial interference in the owner’s use or enjoyment of the property and does thus not entail the deprivation of property.
67. It is not disputed that as a result of an ECNS licensee exercising its rights in terms of Section 22(1) of the ECA, a landowner is deprived of the use and enjoyment of a small portion of her/his property when it erects, for example, a mast on the landowners property.
Is the deprivation arbitrary?
68. Deprivation is arbitrary where there is insufficient reason for it (‘substantively arbitrary’) or when the process adopted in taking the decision is unfair (‘procedurally arbitrary’). Plasket AJA in a concurring unanimous judgment in the SCA judgment, finds the power in Section 22 of the ECA to be a
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public power.49 He concludes from this premise that Section 22 of the ECA is constitutionally valid as ‘s 22 can only validly be exercised in accordance with administrative justice rights, it insulates the ECA against constitutional invalidity by serving as a hedge against arbitrary deprivation….’
69. The rights embodied in section 22 and 24 are rationally based as they are necessary to ensure the effective and efficient rollout of ECA services and networks.
THE CITY’S CONTENTIONS
Proper construction of Sections 22 and 24 of the ECA
70. The City contends that before a licensee can exercise its rights in terms of Section 22(1) of the ECA, it is required to enter into some form of an agreement in relation thereto with the landowner. In support of this, the City relies on the fact that neither Section 22 nor Section 24 of the ECA states
49 at paragraph 31.
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that neither consent nor agreement of the landowner is required.50
71. What the City does not deal with is the fact that on its interpretation of the landowner’s consent or agreement being a requirement, same would render the provisions of Section 22(1) for all intents and purposes nugatory.
72. Referring to what we have dealt with hereinbefore, as well as the SCA judgment, it will be submitted that the City’s interpretation in this regard cannot be sustained.
73. The City appears to consider Section 22 and Section 24 of the ECA as being unconnected and separate provisions. This we submit is clearly not the case.
74. In terms of Section 22(1)(b), a licensee is empowered to “construct and maintain an electronic communications network or electronic communications facilities upon, under, over, along or across any land including any street, road, footpath or land reserved for public purposes,
50 At paragraphs 43 – 44 of the City’s Heads of Argument on page 22.
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any railway and any waterway of the Republic”.
75. Section 24 of the ECA merely provides for the procedure to be followed by a licensee who wishes to construct or maintain, remove or alter any pipes, tunnels or tubes required for its electronic communications network facility to be constructed or maintained “under any such street, road or footpath”.
76. Section 24 of the ECA does not afford the licensee any rights and is similar to the provisions of Section 22(2) in that it lays down a specific procedure to be followed by a licensee wishing to construct, maintain, alter or remove any pipes, tunnels or tubes under any street, road or footpath.
Reliance on other laws
77. The City maintains that in exercising any rights in terms of Section 22(1) of the ECA, a licensee is obliged to abide by its laws, by-laws and provisions.
78. Insofar as the City’s contention is limited to such laws, by-laws and provisions that relate to the licensee’s taking of the authorised actions in terms of Section 22(1) and does not limit the authorised action or render the
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provisions of Section 22(1) nugatory, and, in particular does not require consent as contended by it, MTN does not take issue therewith.
79. However, the City has not referred to any relevant laws, by-laws or provisions that are of any assistance to it in supporting its submissions relating either to its interpretation of the two sections or its contention that the sections are unconstitutional.
80. Should such laws, by-laws and provisions interfere with and/or limit the authorised action or render Section 22(1) nugatory, MTN takes issue therewith and refers to what is recorded above as well as paragraph 15 of the SCA judgment.
81. Reference is also made to paragraphs 36 to 43 above.
Section 217(1) of the Constitution and other laws
82. The City contends that Section 217(1) of the Constitution, the Municipal Finance Management Act 56 of 2003 (the “MFMA”) and the Municipal Asset
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Transfer regulations51 (the “MAT regulations”) are of application.52
83. We submit that Section 217(1) of the Constitution is not of application either generally in relation to Sections 22 and 24 of the ECA or specifically in relation to the facts of the main application. We say this as Section 217 of the Constitution provides for the situation where an organ of State
“contracts for goods or services” being obliged to do so “in accordance with a system which is fair, equitable, transparent, competitive and cost- effective”.
84. We submit that Section 217 of the Constitution as well as the MFMA and the MAT regulations are only of application to a municipality. Seeking to apply same to an ECNS licence holder, the City and Msunduzi Municipality are effectively attempting to force an external party to apply their internal policies.
85. Section 14 of the MFMA, upon which the City and Msunduzi Municipality
51 GNR 878 of 22 August 2008.
52 At paragraph 73 of the City’s heads of argument.
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rely, deals with how a municipality may transfer or dispose of its assets, as do the MAT regulations.
86. Effectively, the provisions upon which the City and Msunduzi Municipality rely deal with their own supply chain management and how they may dispose of their assets. These are internal provisions dealing with the financial and capital position of a municipality. This is immediately clear from Regulation 2(1) of the MAT regulations, which deals with the application of these regulations. It provides that the regulations apply to the transfer and disposal of capital assets by municipalities and municipal entities and the granting of rights to use, control or manage capital assets by municipalities and municipal entities. What is provided for is how a Municipality, as an actor, may transfer an asset or grant rights thereto. It does not deal with a situation envisaged by section 22 or 24 of the ECA, where an ECNS licence holder, exercises those rights.
87. No granting of rights or transfer of assets occurs because the power is exercised by the ECNS licence holder, and not by the Municipality. An ECNS licensee exercises its power in terms of section 22 without any action
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or decision being taken by an owner or a municipality. The Municipality is effectively subject of the administrative action taken by the ECNS licence holder, as authorised under section 22.
88. In exercising rights in terms of Section 22 or 24 of the ECA a licensee is neither contracting for the supply of goods or services nor is the landowner disposing of its land/assets or any rights therein.
89. Section 22 of the ECA enjoins an ECNS licensee on the pain of financial penalty to rollout infrastructure in the form of telecommunication networks and facilities. It thereby turns the ECNS licensee into a public functionary which must exercise its powers as required by the legislation and by its licence. It does not do so as a private party but as an organ of State that is mandated by law to carry out a function.
90. At best for the City and Msunduzi Municipality, the provisions upon which they rely deal with how they are to give consent to use their assets (in instances where such consent may be required, which is not the case where licensees act in terms of Section 22). In other words, the provisions regulate their internal use of and decision-making about their own assets.
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91. The result is that the provisions upon which the two municipalities rely are irrelevant as they do not apply externally, i.e. they do not impose obligations on third parties. The provisions regulate the relationship between a municipality and its assets and finances and not its relationship to with other parties. When confronted by an ECNS licensee, it is effectively subjected as a whole to the administrative function and public power of that ECNS licensee and does not transact with it horizontally.
92. Section 217 of the Constitution is not authority nor does it support the two municipalities’ contentions regarding the need for a licensee to secure their consent in order to exercise the rights created in terms of Section 22(1) of the ECA.
93. Link Africa, by laying optic cables in the City’s “capital assets”, does not do so for and on behalf of the City and is accordingly not contracting with the City for the supply of goods and/or services. In addition, in so doing, there is no question of the City disposing of any or any portion of its capital assets or any rights therein.
94. At any rate, a Municipality has no competency or authority in respect of
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electronic communications. The City’s attempt to subject the ECA to section 217 of the Constitution, the MFMA and the MAT regulations is therefore ultra vires.
95. Section 41(1)(f) of the Constitution obliges all organs of state, including municipalities, not to assume any power or function except those conferred upon them by the Constitution. The powers of a Municipality are set out in section 156. It has the power to administer and make by-laws in respect any matter falling under Part B of schedules 4 and 5 of the Constitution or any other matter that is assigned to it by legislation.
96. The City can point to no provision in schedule 4 or 5 that enables it to make decisions in relation to telecommunication networks. There is none.
Therefore ECA cannot be subjected to the MFMA and the MAT regulations.
Distinguishing SCA judgment
97. The City attempts to distinguish the SCA judgment by pointing out the fact
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that:53
97.1 the SCA did not consider the constitutionality of Sections 22 and 24 of the ECA; and
97.2 the SCA was not required to consider the effect of the City’s laws, by-laws and provisions in relation to the interpretation of Sections 22 and 24 of the ECA.
98. Although it is correct that the SCA did not consider the constitutionality of Sections 22 and 24 of the ECA, it did consider the provisions of Section 25(1) of the Constitution and found that the two Sections of the ECA were compliant therewith and, accordingly, not unconstitutional.54
99. Although the SCA did not consider the City’s laws, by-laws and provisions as referred to by it, the learned Judges considered and placed an interpretation on Sections 22 and 24 of the ECA in paragraph 15, page
53 At paragraph 6 of the City’s replying affidavit at page 3.
54 At paragraphs 16 – 18 of the SCA judgment.
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647F to 648A of the SCA judgment where they recorded:
“The words ‘with due regard’ generally mean ‘with proper consideration’ and, in the context, impose a duty on the licensee to consider and submit to the applicable law. This duty arises only when the licensee is engaged ‘in taking any action in terms of sub-section (1)’: the ‘action’ referred to by Section 22(1) is entering, constructing and maintaining, altering and removing. These actions are authorised. It is ‘in their taking’ that due regard must be had to the applicable law. A fortiori, the ‘applicable law’ cannot limit the very action that is authorised by Section 22(1).”
100. The mere fact that the SCA did not consider the constitutionality of the two section in the manner addressed by the City as well as the City’s laws, by- laws and provisions does not support the City’s contention that the SCA judgment is distinguishable as the SCA pronounced on the interpretation of the two Sections in general terms and found the sections are consistent with Section 25(1) of the Constitution.
CONCLUSION
101. It will accordingly be submitted that: