Authored by Patrick Bracher.
In May 2025 the Labour Appeal court, relying on past authority, reaffirmed that where a municipal official purported to enter into a settlement agreement but had no authority to do so under the applicable law, the municipality was not bound by the agreement.
According to section 59 of the Local Government: Municipal Systems Act of 2000, any delegation by a municipality to a staff member of a power confirmed on a municipal manager must be approved by the municipal council in accordance with a system of delegation referred to in section 59(1).
There are two categories of cases involving the exercise of power by a state functionary where the authority is not bound. The first category pertains to an act beyond or in excess of the legal powers of the public authority. The second category pertains to the irregular or informal exercise of a power which has been granted to the functionary.
The municipal official who signed the settlement agreement had no written authority to do so in the form of a sub-delegation of authority by the Municipal Manager. Sub-delegation needed to be in writing. The peremptory provisions of section 59 regulate the delegation of authority and have established the boundaries beyond which the municipality may not venture. The system of delegation of authority within a local government is not gratuitous. It ensures that the appropriate checks and balances are in place to prevent abuse of power and to ensure that decisions are made within the bounds of the law. Ostensible authority cannot be invoked against public functionaries cannot be upheld where the impugned authority is regulated by legislation and exercised outside the powers permitted by the legislation.
Care must be taken when dealing with public authorities to ensure that the person signing any agreement on behalf of the authority has the properly delegated power to do so, proved by documentary evidence.