- Kgetlengrivier Municipality brought Magalies Water back just weeks after ending its previous contract with the utility for poor performance.
- The three-year arrangement was expected to cost R37.5 million. However, the municipality could not provide proof of the required financial approvals.
- This appointment happened while there was still ongoing sewage pollution and the municipality was struggling to provide residents with clean drinking water.
Kgetlengrivier Local Municipality appointed Magalies Water Board to take charge of its water and sanitation services, even though it had ended an earlier contract with the same utility for poor performance.
The appointment, made in January 2021, led to a legal battle over how the municipality handled its water crisis, whether Magalies Water was the right choice, and how public funds were being used.
In a judgment delivered on 2 November 2026, the Supreme Court of Appeal (SCA) found that the municipality did not provide a valid agreement confirming the appointment and had ignored evidence that Magalies Water had previously performed poorly.
The dispute centred on water supply and sanitation problems in Koster and Swartruggens. Raw sewage had been flowing into the Koster and Elands rivers, which are sources of drinking water for local communities.
Previous contract terminated after poor performance
The municipality was under pressure to deal with ongoing sewage pollution and its failure to provide clean drinking water. The Kgetlengrivier Concerned Citizens (KCC), a group representing residents, had gone to court several times to try to force the municipality to live up to its service delivery duties.
An interim court order granted on 18 December 2020 told the municipality to stop sewage pollution, fix the causes of the spills and rehabilitate affected areas. But the KCC said the municipality failed to comply, and the situation got worse. Reservoirs in Koster and Swartruggens were left without drinkable water.
Another court order, agreed to on 12 January 2021, required the municipality to appoint a suitable service provider to run its water and sanitation services by the end of the month. The municipality then appointed Magalies Water, even though it had ended its previous contract with the utility on 26 November 2020 for poor performance.
On 5 January 2021, the municipality also told the court under oath that Magalies Water had failed to deliver and that a different service provider would be brought in. Appointing the same utility just seven days later raised questions about how the municipality decided Magalies Water was suitable.
Appointment agreement raised further questions
The residents’ group asked for documents explaining the appointment, including the agreement between the municipality and Magalies Water and proof the utility had formally accepted the job. The municipality eventually handed over an appointment letter and an operations and maintenance agreement. However, these documents did not show that the new appointment had been properly finalised.
Acting Judge of Appeal GN Mjali found that the appointment letter made the arrangement conditional on signing an operations and maintenance agreement. The document provided by the municipality was dated 27 May 2020 and related to the earlier contract, which had already been terminated.
So, the municipality failed to provide a valid agreement for the January 2021 appointment. Mjali also found that the municipality did not provide a full explanation for why it thought Magalies Water was suitable, especially after previously saying the utility had failed to do its job.
The judge said the municipality ignored important evidence about Magalies Water’s previous poor performance when making its decision. “Nothing points to the capacity and suitability of Magalies Water, the entity that the municipality itself, barely a week before the impugned appointment, called incompetent,” Judge Mjali said.
R37.5 million arrangement lacked financial documentation
A separate judgment by Judge of Appeal KE Matojane looked at the financial and constitutional rules that apply to agreements between municipalities and other government bodies.
The proposed three-year contract was set to cost R37.5 million. But the municipality did not show any proof that this spending was included in an approved budget, authorised through the proper channels or approved by a council resolution.
Judge Matojane explained that municipalities can appoint other organs of state without going through some of the usual procurement steps. But this does not mean they can ignore their constitutional duty to account for how they spend public money.
Section 217 of the Constitution says that public procurement systems must be fair, equitable, transparent, competitive and cost-effective. “Section 110(2) relieves a municipality of procedural machinery. It does not release the municipality from the constitutional standard that machinery exists to serve,” Judhe Matojane said.
He explained that municipalities still have to show why they chose a particular service provider, what they agreed to pay, the terms of the agreement, and how the spending would be funded and tracked. He added that urgent appointments might sometimes be needed if a court order or emergency requires it, but municipalities must still explain their choices and keep proper financial records.
Residents’ constitutional rights considered
The SCA also looked at the costs that the High Court had ordered the KCC to pay in the original proceedings. Mjali found that the group had gone to court to defend residents’ constitutional rights to clean water and proper sanitation.
The judge said the High Court had not considered the Biowatch principle, which usually protects private parties from being ordered to pay costs when they litigate against the state to assert constitutional rights.
The SCA upheld the appeal and set aside both the municipality’s decision to appoint Magalies Water and Magalies Water’s acceptance of the job.
The municipality was ordered to pay the costs of the original review application and the application for leave to appeal. Magalies Water was ordered to pay the costs of the appeal, including those for two counsel.
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