A Justified Procurement Deviation Is Not a Licence to Disregard the Constitution

The Labour Appeal Court reinforces municipal accountability

By Majang Inc. Attorneys| 29 October 2026

Introduction

Can a municipal manager who is justified in departing from ordinary supply chain management procedures nevertheless be dismissed for irregular procurement? Can financial difficulties justify the use of money collected on behalf of Eskom to pay municipal employees? These questions arose in Kgoale v Thaba Chweu Local Municipality and Others (A2025-058514), delivered by the Labour Appeal Court on 29 October 2026. In a unanimous judgment by Nkutha-Nkontwana JA, the Court dismissed the former municipal manager’s appeal. The judgment confirms that exceptional circumstances may justify procedural flexibility, but do not suspend constitutional procurement standards.

Background

Mr Thoka Makorwane Patrick Kgoale was appointed Municipal Manager on 2 May 2017. Following disciplinary proceedings on 11 charges, he was found guilty on eight and dismissed. At the CCMA, the commissioner upheld two charges: the irregular appointment of forensic investigators and the use of monies collected on behalf of Eskom for municipal purposes. The commissioner found dismissal fair. The Labour Court dismissed his review application, and he appealed.

The appointment of forensic investigators

The first charge concerned the direct appointment of Audit and Risk Management Solutions (ARMS), allegedly resulting in irregular and/or fruitless and wasteful expenditure of R931,240. Mr Kgoale explained that officials ordinarily involved in procurement were themselves subjects of the contemplated investigation. He relied on clause 38 of the Municipality’s Supply Chain Management Policy, allowing deviation where ordinary procedures were impractical or impossible. The commissioner accepted the justification for deviation, but found that the resulting process lacked meaningful safeguards promoting competition, fairness and transparency.

A deviation is not a constitutional exemption

At paragraphs 22–27, the Labour Appeal Court interpreted clause 38 consistently with section 217 of the Constitution and sections 111 and 112 of the Municipal Finance Management Act 56 of 2003 (MFMA). A deviation is an exception to prescribed procedures, not to the constitutional procurement standard. Recording and reporting the deviation could not, by itself, establish that the direct appointment was lawful. The Court held that the commissioner reasonably questioned why the Municipal Manager had not introduced some measure of competition or comparable safeguards.

what alternative safeguards are sufficient?

The constitutional principle is persuasive, but the judgment leaves an operational question unanswered: what precisely constitutes a sufficiently fair, transparent and competitive process when ordinary procurement is genuinely impractical? The Court recognised that obtaining alternative quotations was not necessarily mandatory. Yet it endorsed the finding that no meaningful competitive process had been adopted. Where procurement officials are implicated in a forensic investigation, confidentiality and independence may themselves be essential. A contextual assessment should therefore consider whether independent oversight, documented market testing, objective selection criteria, price verification or other practical safeguards were reasonably available. These are possible governance measures, not a mandatory checklist prescribed by the judgment.

The Eskom collections and municipal financial distress

The second charge concerned the failure to pay over funds collected on behalf of Eskom. The charge referred to approximately R94.65 million. It was common cause that some of the collected money was used for municipal purposes, including salaries. Mr Kgoale relied on financial distress, inherited debt and payments made to Eskom. The Court held that section 64(4) of the MFMA imposed specific duties in respect of funds collected for another entity. Financial hardship might explain the conduct, but could not excuse the unauthorised diversion of those funds.

Misconduct and sanction must remain distinct

The conclusion on statutory unlawfulness is compelling. Nevertheless, unlawfulness and the appropriate disciplinary sanction are distinct questions. Financial distress does not legalise diversion of third-party collections, but may be relevant to culpability, mitigation and sanction. The competing obligations to pay staff and maintain municipal services deserved careful consideration in that latter enquiry. The Labour Appeal Court acknowledged that the commissioner had not engaged in an extensive analysis of sanction, but accepted the Labour Court’s assessment of the cumulative misconduct and the responsibilities of the accounting officer. The result may be reasonable, although fuller reasoning on sanction would have strengthened the judgment.

Review is not appeal

The Court reaffirmed that judicial review is not an opportunity to reargue factual findings merely because another outcome might have been possible. Referring to Makuleni v Standard Bank South Africa Ltd and Others (2023) 44 ILJ 1005 (LAC), it warned that disguised appeals lacking tenable review grounds could justify adverse costs orders in appropriate cases. The Court nevertheless made no costs order here. Practitioners should identify a genuine reviewable defect and explain its effect on the reasonableness of the arbitration outcome.

Practical implications

Municipalities and accounting officers should document both the reasons for a procurement deviation and the safeguards adopted in the alternative process. Reporting a deviation does not cure an unconstitutional appointment. Funds collected on behalf of other entities must not be treated as ordinary municipal working capital. Employers should assess sanction separately from the establishment of misconduct, and litigants should distinguish carefully between review and appeal.

Conclusion

Kgoale reinforces the constitutional foundations of municipal procurement and the statutory accountability of municipal managers. Its central lesson is that administrative necessity can justify procedural flexibility, but not the abandonment of constitutional accountability. The decision also leaves important questions for future cases about the safeguards required during exceptional procurement and the proper weight of mitigating circumstances when dismissal is considered.

Disclosure: Majang Inc. Attorneys represented the appellant before the Labour Appeal Court. This article provides legal commentary on the judgment and its wider implications.

Case reference: Thoka Makorwane Patrick Kgoale v Thaba Chweu Local Municipality and Others, Labour Appeal Court, case A2025-058514, delivered 29 October 2026.

This article is general legal commentary and does not constitute advice on any particular matter.