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[2013] ZASCA 88
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City of Tshwane v Marius Blom & GC Germishuizen Inc and Another (433/2012) [2013] ZASCA 88; [2013] 3 All SA 481 (SCA); 2014 (1) SA 341 (SCA) (31 May 2013)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 433/2012
In the matter
between:
CITY OF TSHWANE
......................................................................
APPELLANT
and
MARIUS BLOM &
GC GERMISHUIZEN
INCORPORATED
...........................................................
FIRST
RESPONDENT
KAWARI BELEGGINGS
CC
...................................
SECOND
RESPONDENT
Neutral citation:
City of Tshwane v Blom
433/2012
[433/12] 88 ZASCA (31 May 2013)
Coram: MTHIYANE
DP, LEWIS, SHONGWE, PETSE JJA et ZONDI AJA
Heard: 22 MAY
2013
Delivered:
Summary:
Local
authority – interpretation of
sections 8(1)
and
8
(2) of the
Local Government: Municipal Property Rates Act 6 of 2004
─
criteria according to which different categories are determined set
out in
s 8(2)
─list of categories of rateable property not
intended to be exhaustive ─ competent for municipality to add a
category
of 'non-permitted use' to the list.
____________________________________________________________________________
ORDER
On appeal from:
North Gauteng High Court, Pretoria (Hiemstra
AJ sitting as court of first instance):
1 The appeal is
upheld with costs including the costs of two counsel.
2 The order of the
court a quo is set aside and replaced with the following:
'The application is
dismissed with costs.'
______________________________________________________________
JUDGMENT
ZONDI AJA
(
Mthiyane DP, Lewis, Shongwe et Petse JJA concurring)
Introduction
[1] The central
issue in this matter involves the interpretation and application of
sub-sections 8(1) and (2) of the Local Government:
Municipal Property
Rates Act 6 of 2004 (the Rates Act) and in particular whether it
confers authority on the appellant to add to
the list of categories
of rateable property by creating in its rates policy a category
called 'non-permitted use' or 'illegal use',
and to levy a rate
accordingly. This issue arises because the appellant has categorised
the second respondent's property as 'non
permitted use' and levied a
higher rate on the property than it levied on properties used for the
purpose permitted.
[2] When the
respondents received an invoice for some R171 000 for rates they
brought an application in the court a quo seeking
the following
relief:
'1.
A
declaratory order that Act 6 of /2004, does not provide for a rating
category of "illegal use" but only the categories
provided
for in Section 8 of the said Act;
2.
A
declaratory order that all levies levied by the Respondent against
Portion 1 of Erf 91, Brooklyn, which is higher than the levies
levied
in respect of all other residential properties of a similar zoning,
in Brooklyn, should be repaid to the Applicant;
3. That the
Applicant be given leave to re-enrol this matter on the same papers,
supplemented by an affidavit, for an order for
the debating of the
account, should the Applicant not be satisfied that the correct
adjustment has been made by the Respondent
pursuant to the above;
4. Costs.'
[3] In the court a
quo the respondents contended that the appellant does not have
authority in terms of s 8 of the Rates Act to
add to the list of
categories of rateable property by creating a category called
'illegal use' or 'non-permitted use', and argued
that on a proper
interpretation of s 8 it was clear that the list of categories of
rateable property is exhaustive. The court a
quo rejected the
respondents' contention and held that it was competent for the
appellant to add to the list of categories of rateable
properties.
However, it found that the addition of 'illegal use' or
'non-permitted use' category was not competent and proceeded
to make
an order in the following terms:
'1. It is hereby
declared that it is not permissible for the respondent to include a
category of "illegal use" or "non-permitted
use"
for the rating of properties in its Rating Policy;
2. The respondent is
ordered to rate Portion 1 of Erf 91, Brooklyn, for as long as it is
used for business purposes according to
the rates applicable to
business properties in Brooklyn.
3. The respondent is
ordered to adjust the levies imposed on Portion 1 of Erf 91,
Brooklyn, to that applicable to properties for
business use from the
time that it imposed a rate for "illegal use" or
"non-permitted use" to the date of adjustment.
4. The applicant is
granted leave to re-enrol this matter on the same papers,
supplemented by an affidavit, for an order for the
debating of the
account, should the applicant not be satisfied with the adjustment of
the rates as ordered.
5. The respondent is
ordered to pay the costs of this application.'
[4] The court a
quo's
order was predicated on its finding that
the appellant's power to create additional categories of rateable
property is not unfettered.
In its view additional categories have to
be 'of a similar nature or of the same genus as those listed' in s
8(2). It reasoned
that since all the categories listed in s 8(2) are
lawful uses of the properties,
the appellant may
add only lawful uses. It held that the appellant may not add a
category 'illegal use' to the list as to do so
would make illegal use
lawful. The court a quo concluded by holding that to levy 'a higher
rate than the normal rate' on a property
because it is used for
non-permitted purposes amounts to an imposition of a penalty without
due process. The present appeal, with
the leave of the court a quo,
is directed against the judgment and the findings
underlying the order of the court a quo.
Background
[5] The facts in
light of which the issues in this matter are to be determined are
largely common cause. The second respondent is
the registered owner
of Portion 1 of erf 91, Brooklyn, also known as 835 Duncan Street,
Brooklyn, Pretoria (the property) which
is the subject of these
proceedings. The property is situated within the area of jurisdiction
of the appellant and is zoned for
residential purposes in terms of
the appellant's applicable Town Planning Scheme. The first
respondent, a firm of attorneys, occupied
the property in terms of a
lease with the second respondent and used the property for business
purposes, namely as attorneys' offices.
In terms of the lease, the
first respondent was responsible for the payment of rates and taxes,
which is why it took issue with
the appellant. The first respondent's
use of the property, which is zoned for use as 'residential', was
contrary to the provisions
of the appellant's Town Planning Scheme.
By allowing the first respondent to use the property as it did, the
second respondent
was committing an offence.
[6] Section 2 of the
Rates Act empowers a metropolitan or local municipality to levy rates
on properties within its area. In terms
of s 8(1) it may levy
different rates for different categories of rateable property
according to specified criteria. Section 8(2)
sets out the different
categories of rateable property that may be determined in terms of s
8(1). Acting in terms of s 3 of the
Act, the appellant adopted rates
policies from time to time and the relevant rates policy is the one
that came into operation on
1 July 2008. In this rates policy the
appellant introduced a 'non-permitted use' category of rateable
property for the purposes
of creating differential rates and
categorised the property as 'non-permitted use'. The effect of this
categorisation was that
not only did the second respondent lose the
benefit of a rebate, but also had to pay a higher rate.
Legal Framework
[7] Section 156(2)
of the Constitution empowers municipalities to make and administer
by-laws in order to give effect to the functional
areas in which they
are authorised to govern. Section 156(5) affords a municipality
'incidental powers', that is to say, it has
the right to exercise any
power concerning a matter reasonably necessary for, or incidental to
the effective performance of its
functions. In particular s 229(1)
(a)
of the Constitution expressly authorises a municipality to impose
'rates on property and surcharges on fees for services provided
by or
on behalf of the municipality'. But the exercise of this power is
subject to the provisions of the Constitution, the Rates
Act and the
rates policy which the municipality may have adopted.
[8] Section 3 of the
Rates Act, which deals with the adoption and contents of rates
policies, enjoins the council of a municipality
to adopt a policy for
the levying of rates on rateable property which is consistent with
the Act. Subsection (3) provides that
the rates policy must inter
alia determine the criteria to be applied by the municipality if it
levies different rates for different
categories of properties, and
determine or provide for the criteria for the determination of
categories of properties for the purpose
of levying rates and
categories of owners of properties or categories of properties.
[9] Section 8(1) of
the Rates Act provides for the determination of differential rates in
respect of different categories of rateable
property listed in s
8(2). To the extent here relevant those subsections provide:
'8 (1) Subject to
section 19, a municipality may in terms of the criteria set out in
its rates policy levy different rates for different
categories of
rateable property, which may include categories determined according
to the –
(a) use of the
property;
(b) permitted use of
the property; or
(c) geographical
area in which the property is situated.
(2) Categories of
rateable property that may be determined in terms of subsection (1)
include the following:
(a) Residential
properties;
(b) industrial
properties;
(c) business and
commercial properties;'
. . ."
[10] The rates
policy which finds application in this matter is the one adopted by
the appellant on 1 July 2008. Clause 3.1 of the
appellant's property
rates policy provides as follows:
'3.1 Different
Categories and Rates of Properties
Categories of
rateable property for purposes of levying differential rates are
determined as follows:
Residential
properties
Business and
commercial properties
Industrial
properties
Municipal property
[rateable]
Municipal property
[not rateable]
State-owned
properties
Public Service
Infrastructure
Agricultural
Agricultural vacant
Non-permitted
use
(my emphasis)
Multiple use
properties
Vacant land
State Trust Land'
[11] The appellant's
rates policy makes it clear that the criteria for levying different
rates for different categories of rateable
property are determined
according to the actual use of the property, permitted use of the
property or the geographical area in
which the relevant property is
located. And as required by s 6 of the Rates Act, the appellant
adopted the Property Rates By-Law
to give effect to the
implementation of its rates policy.
Interpretation
of section 8 of the Act
[12] Counsel for the
appellant submitted in the heads of argument that s 8,
properly
interpreted,
affords
the appellant a discretion to determine categories of rateable
property. Counsel argued that although s 8(1) refers to certain
factors that may be considered in determining categories of rateable
property, it is not a
numerus
clausus,
and
does not restrict or limit the appellant's discretion in any manner.
The use of the word 'include' in conjunction with 'may'
in the
section,
he
argued, signifies that the legislature intended to enlarge or extend
the specific guidelines and that the categories of properties
referred to in s 8(2) are merely guidelines.
Counsel
pointed out that even if only the factors referred to in s 8(1) must
be considered, it is clear from the context in which
the word
'include' is used that non-permitted use was intended to be included
in such categories. In advancing these arguments
reliance was placed
on the following dictum in
De
Reuck v Director of Public Prosecutions, Witwatersrand Local
Division, & others:
1
'[18]
The correct sense of
"includes" in a statute must be ascertained from the
context in which it is used.
Debele
[1956
(4) SA 570
(A)] provides useful guidelines for this determination. If
the primary meaning of the term is well known and not in need of
definition
and the items in the list introduced by "includes"
go beyond that primary meaning, the purpose of that list is then
usually
taken to be to add to the primary meaning so that "includes"
is non-exhaustive. If, as in this case, the primary meaning
already
encompasses all the items in the list, then the purpose of the list
is to make the definition more precise. In such a case
"includes"
is used exhaustively. Between these two situations there is a third,
where the drafters have for convenience
grouped together several
things in the definition of one term, whose primary meaning –
if it is a word in ordinary, non-legal
usage – fits some of
them better than others. Such a list may also be intended as
exhaustive, if only to avoid what was referred
to in
Debele
as
"'n moeras van onsekerheid" (a quagmire of uncertainty) in
the application of the term.'
[13] Counsel for the
respondents correctly pointed out in his heads of argument that s
8(1) authorises the municipality, in terms
of the criteria set out in
its rates policy, to levy different rates for different categories of
rateable property listed in s
8(2),
and
which authority has to be exercised in accordance with the provisions
of s 229 of the Constitution and the Rates Act. Counsel
argued that s
8(1) does not, however, empower the municipality to create further
categories not listed in s 8(2) as the list of
different categories
of rateable property is exhaustive. The basis for his argument is
that the terms 'property', 'category' and
'rates' contained in the
Rates Act are not infinitely elastic terms but are specifically
limited by the Act's definition. And using
the 'golden rule' of
interpretation,
2
which,
counsel submitted,
finds application in the construction of the provision of s 8 in the
instant matter, he argued that the Act's
definitions make it clear
that the municipality's power to levy different rates for different
categories of rateable property does
not include the power to create
a 'non-permitted use' or 'illegal use' category. He submitted that
the creation by the appellant
of a category in its rates policy of
non-permitted use was contrary to the provisions of s 8(1) and (2) of
the Rates Act,
and
that it was unfair to levy a punitive rate on the property.
[14] The proper
approach to the interpretation of statutes was recently repeated by
this court in
Natal
Joint Municipal Pension Fund v Endumeni Municipality.
3
Wallis JA writing
for the court explained:
4
'[18] The present
state of the law can be expressed as follows: Interpretation is the
process of attributing meaning to the words
used in a document, be it
legislation, some other statutory instrument, or contract, having
regard to the context provided by reading
the particular provision or
provisions in the light of the document as a whole and the
circumstances attendant upon its coming
into existence. Whatever the
nature of the document, consideration must be given to the language
used in the light of the ordinary
rules of grammar and syntax; the
context in which the provision appears; the apparent purpose to which
it is directed and the material
known to those responsible for its
production. Where more than one meaning is possible each possibility
must be weighed in the
light of all these factors. The process is
objective, not subjective.
A
sensible meaning is to be preferred to one that leads to insensible
or unbusinesslike results or undermines the apparent purpose
of the
document. Judges must be alert to, and guard against, the temptation
to substitute what they regard as reasonable, sensible
or
businesslike for the words actually used. To do so in regard to a
statute or statutory instrument is to cross the divide between
interpretation and legislation; in a contractual context it is to
make a contract for the parties other than the one they in fact
made.
The "inevitable point of departure is the language of the
provision itself", read in context and having regard
to the
purpose of the provision and the background to the preparation and
production of the document.'
[15] Thus the
appropriate starting point in interpreting a statute is the language
of the provision itself (
South
African Airways (Pty) Ltd v Aviation Union of South Africa &
others;
5
Bastian Financial
Services (Pty) Ltd v General Hendrik Schoeman Primary School
6
)
read in the context
and having regard to the purpose of the provision and the background
to the preparation and enactment of the
statute.
[16] Turning to the
present matter, in my view the court a quo correctly held that the
list of categories of rateable property is
not exhaustive and that it
is competent for the appellant to add categories to that list. The
use of the word 'include' in s 8(2)
signifies that the list extends
the meaning of categories of rateable property that may be determined
in terms of s 8(1). (
De
Reuck
supra;
Ndlovu v Ngcobo; Bekker & another v Jika
7
).
This
means that other grounds of differentiation besides those mentioned
in s 8(1) may be used.
[17] In my view,
when consideration
is given to the words 'use of the property' and 'permitted use of the
property' appearing in s 8 in the light
of the ordinary rules of
grammar and syntax, the context in which they appear and the apparent
purpose to which they are directed,
it
is clear that 'use' is wide enough to include 'non-permitted use'. If
this were not the case no purpose would be served in having
a
separate category for 'use'. Non-permitted use is a form of 'use'
contrasted with permitted use. It is therefore competent for
the
municipality to include in its rates policy a 'non-permitted use'
category for the purposes of determining applicable rates.
[18] The term
'permitted use' is defined in the Rates Act as 'the limited purposes
for which the property may be used in terms of
. . . any restrictions
imposed by . . . a condition of title, a provision of a town planning
or land use scheme; or any legislation
applicable to any specific
property; or any alleviation of such restrictions'.
Section 8(2) lists a
number of categories of rateable property that may attract different
rates. These categories are optional.
8
The municipality may
adopt all of them, drop some or include new categories depending on
the nature of the objectives its rates
policy seeks to achieve.
The municipality has
a choice. Rates policies entail, by definition, policy choices which
lie at the core of municipal autonomy,
and
as long as the rates policy treats ratepayers equitably and is
consistent with the provisions of the Constitution and the Rates
Act,
there can be no
basis for questioning the choices it makes with regard to properties
that may be differentially rated with respect
to different categories
of property. The court a quo therefore erred in finding that the
creation of a 'non-permitted use' category
was improper.
[19] I reject the
respondents' contention that the appellant breached the
audi
alteram partem
principle
when it determined that the property's use falls under a 'non
permitted use' category without any prior reference to the
respondents. There was no obligation on the appellant to do so other
than through the process described below.
The
municipality's power to impose taxes is an original power which stems
from the Constitution in terms of s 229(1)
(a).
9
It is a legislative
act. As such, it is not an administrative action subject to
administrative law. That being the case,
the
setting of rates and determination of categories of rateable property
under s 8 of the Rates Act cannot be challenged,
as
counsel for the respondent seemed to suggest in his argument, simply
on the ground that it is unfair.
[20] The court a quo
also found that a punitive rate imposed on the property as a result
of its being categorised as non-permitted
use amounts to the
imposition of a penalty without due process. This finding is
incorrect. The Rates Act contains built-in mechanisms
in terms of
which the disputes about the propriety of rates levies can be
resolved. The property owner who is aggrieved by a rate
that has been
levied on his or her property is not without a remedy.
[21] Once the
determination of different categories of rateable property in terms
of s 8 is completed the valuation process begins.
The valuation is
done by a municipal valuer who is designated by the municipality in
terms of s 33 of the Rates Act. The valuer
must inter alia value all
the properties and prepare a valuation roll of all the properties in
the municipality. After the compilation
of the valuation roll, it is
open for objections by the public and the municipality. A property
owner may then object, within a
stipulated period, to the valuation
or categorisation. If his or her objection is not dealt with to his
or her satisfaction he
or she may then appeal to a valuation appeal
board whose decision is final and binding on the municipality.
[22] It is not
suggested by the respondents that they were not aware that, in the
valuation roll, the use of the property was termed
'illegal' for the
purposes of determining the applicable rate. (It should have been
termed 'non-permitted use'). It is therefore
not open to the
respondents to now contend that the categorisation of the property
and the resultant rate is unreasonable on the
basis that it
constitutes a penalty without due process. The respondents should
have used the legal mechanisms provided for in
the Act if they wished
to challenge the correctness of the property categorisation and the
rate determined. This they failed to
do.
[23] To conclude,
the court a quo erred in finding that it is not competent for the
appellant to add to the list of categories in
s 8(2) by creation of a
category called 'non permitted use' in the rates policy and that to
levy a 'higher rate than the normal
rate on a property' on the basis
of such categorisation is to impose a penalty without due process.
[24] With regard to
costs counsel for the appellant submitted on authority of
City
of Tshwane Metropolitan Municipality v Grobler & other
10
that,
should the appeal
succeed,
the
respondents should be ordered to pay costs on the scale as between
attorney and client on the basis that when they brought the
application they knew that their use of the property was in
contravention of the appellant's town-planning scheme. They were
using
it for commercial purposes for which they had not been granted
permission by the appellant. It was presumptuous of the respondents,
his argument proceeded, to contend that the property should be rated
as residential property. He argued that the respondents' conduct
was
in flagrant disregard of the provisions of the Act.
[25] In my view the
punitive costs order is not appropriate in the instant matter. While
I accept that the respondents were aware
that their use of the
property was in contravention of the appellant's town-planning
scheme, I do not agree that that knowledge
in itself constitutes a
sufficient basis for this court to order them to pay costs on a
punitive scale. The dispute between the
parties is essentially about
the interpretation and application of s 8 of the Rates Act, the
provisions of which are far from clear
and thus susceptible to
different interpretations. The respondents were entitled to come to
court and challenge the correctness
of the construction of the
section contended for by the appellant. In these circumstances there
can be no basis for the contention
that their conduct was vexatious
such as to warrant the special order of costs. In my view costs
should be ordered on a normal
scale.
[26] In the result
the following order is made:
1 The appeal is
upheld with costs including the costs of two counsel.
2 The order of the
court a quo is set aside and replaced with the following:
'The application is
dismissed with costs.'
________________ D H
ZONDI
Acting Judge of
Appeal
APPEARANCES
For Appellant: T
Strydom SC
J J Botha
Instructed by:
Hugo Ngwenya
Attorneys
Pretoria
Claude Reid
Attorneys
Bloemfontein
For Respondents: S
Güldenpfennig
H J Snyman
Instructed by:
Couzyn Hertzog &
Horak Inc
Pretoria
Honey Attorneys
Bloemfontein
1
De
Reuck v Director of Public Prosecutions, Witwatersrand Local
Division, & others
[2003] ZACC 19
;
2004 (1) SA 406
(CC) para 18.
2
25
LAWSA,
2 ed para 314.
3
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA
593
(SCA) paras 17-26.
4
Para
18.
5
South
African Airways (Pty) Ltd v Aviation Union of South Africa &
others
2011 (3) SA 148
(SCA) paras 25-30.
6
Bastian
Financial Services (Pty) Ltd v General Hendrik Schoeman Priamry
School
2008 (5) SA 1
(SCA).
7
Ndlovu
v Ngcobo; Bekker & another v Jika
2003 (1) SA 113
(SCA) para
20.
8
Professor
N Steytler and Dr J de Visser,
Local Government Law of South
Africa
(2012) at 13-35.
9
City
of Cape Town and another v Robertson & another
[2004] ZACC 21
;
2005 (2) SA
323
(CC) para 57;
Fedsure Life Assurance Ltd & others v
Greater Johannesburg Transitional Metropolitan Council & others
[1998] ZACC 17
;
1999 (1) SA 374
(CC).
10
City
of Tshwane Metropolitan Municipality v Grobler & others
2005
(6) SA 61
(T) para 12.