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[1]          An important foundation of our constitutional democracy is the doctrine of legality, a subset of the rule of law. This Court, as well as the Supreme Court of Appeal, has stressed in a number of decisions that the exercise of public power must strictly comply with ordained prescripts, and that failure to observe this contravenes the doctrine of legality.[1]

[2]          Before us is an application for leave to appeal against a judgment and order of the Supreme Court of Appeal in which an appeal by the applicant, Merifon (Pty) Limited (Merifon), against a judgment and order of the High Court of South Africa, Limpopo Division, Polokwane (High Court), was dismissed. Merifon had claimed payment of an amount of R52 million against the first respondent, the Greater Letaba Municipality (Municipality). At the heart of the matter is the interpretation and application of statutory provisions on an agreement concluded between the Municipality and Merifon for the acquisition of land for human settlement development purposes.

[3]          On 4 April 2011, the mayor of the Municipality addressed a letter to the Member of the Executive Council (MEC) of the Department of Local Government and Housing (Provincial Department), seeking assistance to purchase land suitable for integrated human settlement development. The objective of this correspondence was to resolve the Municipality’s inability, over a long period, to secure land, coupled with a lack of necessary funds for this purpose. The unavailability of land in particular had deprived the Municipality, over several years, of the allocation of funds from the Limpopo Provincial Government to build low cost housing for residents within its area. The mayor further mentioned that the public housing programme of the Municipality under the Reconstruction and Development Programme (RDP) had been negatively affected by the lack of available land, particularly around the Ga Kgapane area. She recommended the purchase of certain land and farms, one of which was the Farm Mooiplaats, to unlock the Municipality’s development potential and contribute to the expansion of the Municipality’s revenue base.