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[2016] ZAECPEHC 81
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Port Elizabeth Land Restitution and Housing Association (PELRHA) and Another v Nelson Mandela Bay Municipality and Others (2378/2016) [2016] ZAECPEHC 81 (15 December 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH
Case
No.: 2378/2016
Date
Heard: 8 December 2016
Date
Delivered: 15 December 2016
In
the matter between:
THE
PORT ELIZABETH LAND RESTITUTION
AND
HOUSING ASSOCIATION (PELRHA)
First
Applicant
PORT
ELIZABETH LAND AND COMMUNITY
RESTORATION
ASSOCIATION (PELCRA)
Second
Applicant
and
NELSON
MANDELA BAY MUNICIPALITY
First
Respondent
MINISTER
OF RURAL DEVELOPMENT AND
LAND
REFORM
Second
Respondent
THE DEPARTMENT OF
HOUSING AND
LOCAL
GOVERNMENT, EASTERN
CAPE
Third
Respondent
JUDGMENT
EKSTEEN
J:
[1]
The
dispute in this matter concerns the interpretation of section
17(1)(b) of the Local Government: Municipal Property Rates
Act,
6 of 2004 (the Act) and its application to certain properties
situated in Fairview and Salisbury Park in Port Elizabeth.
[2]
The
applicant seeks essentially the following relief:
“
1.
That a declaratory order be issued, declaring that the First
Applicant herein constitutes
a “land reform beneficiary”
as contemplated in Section 17(1)(g) of the Municipal Property Rates
Act, Act 6 of 2004.
2.
…
3.
That the First Respondent be ordered to permit transfer of erven from
the First
Applicant to individual beneficiaries entitled to such
erven in terms of Act 22 of 1994, without requiring any payment for
outstanding
rates purportedly due in respect of such properties.
4.
That a further declaratory order be granted declaring that the
individual beneficiaries
referred to in paragraph 3 above, are
entitled to enjoy the benefit of the ten year period reflected
in Section 17(1)(g)
of Act 6 of 2004, from the date of the original
transfer of the relevant properties to the First Applicant.
5.
That the First Respondent be ordered to repay to the Applicants all
amounts due
to the Applicants, and appropriated by the First
Respondent, and purportedly set off against amounts allegedly due by
the Applicant
to the first respondent in respect of rates accruing in
terms of the
Local Government: Municipal Property Rates Act,
Act
6 of 2004.”
[3]
In
paragraph 2 of the Notice of Motion the applicant seeks certain
relief in the alternative to paragraph 1. The alternative
relief is not material for purposes of this judgment.
Background
[4]
Fairview
and Salisbury Park (jointly referred to herein as “the
earmarked land”) are areas previously occupied by persons
disenfranchised and dispossessed of their land by racially
discriminatory laws under the pre-1994 dispensation.
[5]
Section
25(7) of the Constitution provides:
“
A
person or community dispossessed of property after 19 June 1913 as a
result of past racially discriminatory laws or practices
is entitled,
to the extent provided by an Act of Parliament, either to restitution
of that property or to equitable redress.”
[6]
During
or about 1993 the second applicant was formed as a voluntary
association to assist with claims for restitution of land in
Port
Elizabeth. Large numbers of persons had been dispossessed of
property on the earmarked land and all of their claims
had similar
features. It was accordingly deemed appropriate by the land
claimants for the second applicant to be formed in
order to
facilitate such claims on behalf of deserving claimants.
[7]
The
Restitution of Land Rights Act, 22 of 1994 (herein referred to as the
“Land Rights Act”) was enacted in order to
give effect to
the provisions of section 25(7) of the Constitution. The first
applicant was incorporated as an entity with
separate legal
personality in terms of section 21 of Act 61 of 1973. It was
established pursuant to the conclusion of an
agreement (the framework
agreement) in terms of section 42D(1) and (2) of the Land Rights
Act. This agreement established
a framework for the settlement
of claims for restitution of land and for developing vacant property
on the earmarked land.
It provided for land restitution on a
collective or community basis for the benefit of claimants who are
party to the framework
agreement and the broader community, by
subdividing the earmarked land into commercial or residential erven;
by supplying
bulk services; by building residential dwellings;
and by constructing community facilities.
[8]
The
framework agreement stipulates that the monetary value of the
development planned shall be the sum of the monetary value of
all
individual claims for land restitution. Each land claimant is
listed in an annexure to the agreement and he is entitled
to
compensation averaging R30 000 or its equivalent in the form of
a plot and a dwelling. The total cost of the development
was to
be funded by the National Treasury. In turn the claimants
undertook neither to pursue individual claims for monetary
compensation nor to insist on the restoration of their original
portions of land in the two development areas.
[9]
The
second applicant negotiated and concluded the framework agreement
with the Minister of Rural Development and Land Reform and
other
government role-players, including the Port Elizabeth Municipality,
the predecessor to the first respondent, and the third
respondent.
The individual claimants authorised the second applicant to act for
them in advancing their claims in relation
to their original property
on the earmarked land. The first applicant was established in
terms of the framework agreement
in order to act as the developer for
the earmarked land and accordingly it took transfer of the earmarked
land in Fairview and
Salisbury Park during 2008 and 2011 respectively
on behalf of the individual beneficiaries. The earmarked land
had been owned
at the time by the National and Provincial
Governments.
[10]
At
the time all parties accepted that the formation of the first
applicant as “developer” would facilitate the transfer
of
land to deserving claimants in that the land made available for
restitution required development in the sense set out earlier
herein. All the administrative and legal work required in order
to effect transfer of individual sites to deserving claimants
would
be facilitated through the first applicant. The first applicant
contends that one of the main purposes for its formation
and the
transfer of the earmarked land to the first applicant was to ensure
that individual deserving claimants received the transfer
of
individual erven. All the individual erven to be transferred to
individual claimants have been identified as have the individual
claimants all of whom have rights recognised under section 25 of the
Constitution and the Land Rights Act.
[11]
By
virtue of the extent of the work and a number of difficulties which
have been experienced in the development of the areas the
execution
of the function of the applicants has been slow. Many of the
erven still vest in the first applicant while others
have been
transferred to individual beneficiaries. Many beneficiaries
have sold the land to which they became entitled.
[12]
Section
17(1)(g) of the Act (as it was at the time when the first applicant
acquired the earmarked land) provided:
“
(1)
A municipality may not levy a rate-
(a) …
(g) on
a property belonging to a land reform beneficiary or his or her
heirs, dependants or spouse, provided that this
exclusion lapses-
(i)
ten
years from the date on which such beneficiary's title was registered
in the office of the Registrar of Deeds.”
[13]
Section
118 of the Local Government: Municipal Systems Act, 32 of 2000, (the
Systems Act) requires that property may not be transferred
other than
on production of a certificate issued by the relevant municipality
certifying that all amounts that became due in connection
with that
property for municipal service charges, surcharges on fees, property
rates and other municipal taxes, levies and duties,
during the two
years preceding the date for application of the certificate have been
fully paid.
[14]
Initially
the first respondent acknowledged that the first applicant is a land
reform beneficiary by virtue of it holding the land
on behalf of the
individual beneficiaries and that no charges were to be raised in
terms of section 118 of the Systems Act in respect
of the alleged
outstanding rates on properties to be transferred by the first
applicant to such beneficiaries. More recently,
it would appear
that it occurred late in 2013, the first respondent had a change of
heart and it adopted the stance as evidenced
in correspondence that
it was only individual claimants who qualify for the
dispensation granted in section 17(1)(g).
It accordingly
contended that rates have accrued in respect of the properties still
owned by the first applicant and awaiting transfer
to individual
beneficiaries. This would have a significant monetary impact on
the land reform beneficiaries and for obvious
reasons pose an
obstacle to the transfer of the property to them. As alluded to
earlier herein the project on the earmarked
land was to be funded by
National Treasury. The first respondent had for some time been
administering funds belonging to
the applicants which were earmarked
for community projects on the earmarked land as provided for in the
framework agreement.
By virtue of its change of heart the first
respondent appropriated these funds in respect of alleged accrued
rates. These
events give rise to the application.
[15]
The
first respondent has opposed the application. The stance
articulated in the answering affidavit differs from that set
out
above and which emerged from correspondence at the time. The
gravamen of the first respondent’s case lies in the
fact that a
number of the individual beneficiaries have sold their allocated
plots, sometimes well in advance of taking transfer
thereof, with the
effect that it is perceived that the project is no longer of
long-term benefit to most of the land reform beneficiaries
listed in
the annexure to the framework agreement. In many instances, in
fact the vast majority of instances, where the land
has been
transferred from the first applicant to the individual beneficiary a
subsequent transfer occurred virtually immediately
thereafter, often
on the same day. The deponent on behalf of the first respondent
explains that the stance now adopted by
the municipality is “on
account of the stratagem … where the erstwhile land reform
beneficiary only acquires transfer
of the property for an instant,
ostensibly and purely to take advantage of the provisions of section
17(1)(g) of the Property Rates
Act”. The first respondent
is therefore of the view that prior to the transfer of the land to an
individual beneficiary
“the land does not in reality belong to
a land reform beneficiary; has in any event been alienated;
and the provisions
of section 17(1)(g) of the Property Rates Act are
hence not of application in this instance”.
Application
of the facts to the legal principles
[16]
Two
issues need to be addressed at the outset. Firstly, it is not
in dispute that many of the properties have been sold by
the
individual land reform beneficiaries prior to transfer into their
names. There can, however, be no merit in the conclusion
that
the transfer into the name of the individual land reform
beneficiaries for an instant only is a stratagem adopted purely to
take advantage of the provisions of section 17(1)(g) of the Act.
Section 14 to the
Deeds Registries Act, 47 of 1937
, stipulates that
all transactions must be registered in the Deeds Office in accordance
with the sequence in which they were concluded.
Where a land
reform beneficiary who is entitled to receive transfer of land sells
the land to a third party in issue prior to the
transfer to himself
the
Deeds Registries Act requires
that the land must first be
registered in the name of the beneficiary and thereafter it must be
transferred to the third party.
A transfer directly from the
first applicant to the third party is thus prohibited. This
accounts for the brief period of
“ownership” evidenced by
the Deeds Register. It is not a stratagem but a consequence of
the provisions of the
Deeds Registries Act.
[17
]
Secondly,
it is not correct to suggest that the project is no longer to the
long term benefit of the land reform beneficiaries
listed in the
annexure to the framework agreement. The land reform
beneficiaries were previously dispossessed of their land
which they
would have been entitled to sell at any stage and to utilise the
proceeds thereof to their benefit. Section 25(7)
of the
Constitution seeks to place them back in the position in which they
would otherwise have been to the extent that that can
be achieved.
But for the difficulties which have delayed the progress in the
project to which I have referred earlier each
land reform beneficiary
would have received transfer of his property long ago. Each
enjoys an entitlement to the land and
I can conceive of no reason in
law nor in logic why he should not be permitted to alienate his
property and to utilise the proceeds
thereof to his long-term
benefit. The fact that such land reform beneficiaries have done
so does not lead to the conclusion
that the project is no longer to
the long-term benefit of such beneficiaries.
[18]
I
turn to consider legal argument presented to me. At the outset
it is to be recorded that the first respondent has, in its
papers,
acknowledged that it was not entitled to appropriate funds which it
administered on behalf of the land reform beneficiaries
as it has
done and has tendered the return thereof. It is accordingly not
necessary to deal further with this issue.
[19]
Mr
Euijen
SC
,
who appears on behalf of the first respondent, argues that the
dispensation provided for in the section 17(1)(g) applies only
while
the land in issue belongs to the individual land reform beneficiary.
It is submitted that the legislator, in
using the term
“belongs” in section 17(1)(g), intended the section to
have wide application. In these circumstances
he acknowledges
that it clearly does apply to all land reform beneficiaries who have
an enforceable right of ownership to property,
even though it may not
be formally registered in their names. The consequence thereof,
it appears to me, is that it is conceded
that at the time that the
first applicant took transfer of the earmarked land the exclusion
contained in section 17(1)(g) became
applicable to the said
properties.
[20]
It
is argued, however, that the further implication of the use of the
term “belong” is that once a legally enforceable
obligation has been created in terms of which the property in
question may no longer be disposed of by the land reform beneficiary
as he/she pleases (as happens when a written agreement of sale is
concluded) then a key feature of ownership is removed and it
can no
longer be said that the property “belongs” to the land
reform beneficiary. In these circumstances, as
I understand the
argument, it is contended that the exclusion from rates liability set
out in section 17(1)(g) lapses upon the
conclusion of the agreement
of sale because the land reform beneficiary has then disposed of the
property.
[21]
I
have set out earlier the formulation of section 17(1)(g) of the Act
as it was at the time when the first applicant acquired the
earmarked
land. The section has since been amended. The amendment
came into force on 1 July 2015. Section 17(1)(g)
of the Act now
provides:
“
(1)
A municipality may not levy a rate-
(a)
…
(g)
on a property belonging to a land reform beneficiary or his or her
heirs, dependents
or spouse provided that this exclusion lapses-
(i)
ten years from the date on which such beneficiary’s title was
registered in the office
of the Registrar of Deeds; or
(ii)
upon
alienation of the property by the land reform beneficiary or his or
her heirs, dependants or spouse.”
[22]
The
issue is to be determined on an interpretation of the section as
amended. In interpreting legislation a sensible “business-like”
approach should be adopted which gives effect to the purpose of the
legislation rather an over technical interpretation which does
not.
(Compare
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) at 603E-604D and 608E-F.) Section 39(2)
of the Constitution further enjoins a court when interpreting
legislation or
developing the common law or customary law to promote
the spirit, purport and objects of the bill of rights. Section
25(7)
of the Constitution forms part of the bill of rights.
(See
City
of Tshwane Metropolitan Municipality v Link Africa (Pty) Ltd
and
Others
2015 (11) BCLR 1265
(CC) at 1296ff.)
[23]
Section
118 of the Systems Act to which I have referred earlier limits an
owner’s power to transfer immovable property by
providing that
the Registrar of Deeds may not affect the transfer of property
without a certificate issued by the municipality
as set out earlier.
Section 25(7) of the Constitution, as I have alluded to earlier, has
as its object to place persons unfairly
dispossessed of their
property back into the position in which they would have been to the
extent that it is now possible, had
they not been dispossessed.
Section 17(1)(g) of the Act provides relief to such land restitution
beneficiaries which serves
to assist them to take the best advantage
of their properties. The dispensation takes effect immediately the
property in issue
“belongs” to such beneficiary. It
is not in dispute in the present instance that the land began to
“belong”
to the individual beneficiaries when the first
applicant acquired the earmarked land.
[24]
Attributing
the ordinary English meaning to the words of the amended section
17(1)(g) I think that the exclusion from rates liability
will persist
for a period of ten years from the date upon which the beneficiaries
title was registered in the deeds office, or
until the alienation of
the land, whichever is the earlier. In the event that Mr
Euijen’s
interpretation of the section is accepted, as is set out earlier in
para [20] above, namely that the property no longer “belongs”
to the land restitution beneficiary once it is disposed of it by way
of contract of sale then it seems to me that the amendment
to the
section could serve no purpose. Mr
Euijen
,
during argument, was constrained to acknowledge that the introduction
of section 17(1)(g)(ii) constitutes mere surplusage and
he was unable
to advance any logical reason for the amendment. This
concession militates against the acceptance of such an
interpretation.
[25]
It
is accordingly necessary to consider the meaning to the attributed to
section 17(1)(g)(ii) and in particular to the word “alienation”.
In the interpretation of statutes words are generally afforded their
ordinary English meaning. The New Shorter Oxford Dictionary
(1993 ed) defines the term “alienate” as meaning “the
transfer to the ownership of another”. Mr
Buchanan
contends that the term alienate where it appears in section
17(1)(g)(ii) should bear a corresponding meaning and that the
exclusion
from rates liability should therefore persist until such
time as transfer is effected from the land restitution beneficiary to
a third party . Mr
Euijen
,
on the other hand, argues that the term should be given a wider
meaning in the context of the section so that the property is
deemed
to be alienated upon the conclusion of the agreement of sale which,
as set out earlier, occurred in many instances long
before the
transfer of ownership occurred. For this he relied on three
authorities. The first is
Strauss
v De Villiers
en
‘n ander
1981 (2) SA 163.
The
Strauss
matter was concerned with a title deed containing a prohibition on
alienation. Basson J considered a number of common law
authorities relating specifically to a prohibition upon alienation.
The position, it seems to me, is best summarised by
Huber:
Jurisprudence of my Time
(Gane’s Translation) 2.54.1 quoted by Basson J which explains:
"
But
there still remains a chapter on prohibited alienations. In order to
treat properly of these, I shall first say that alienation
is simply
the transfer of property, but that nevertheless the word alienation,
when we are speaking of prohibition, has a wider
signification, so
that he who is forbidden to alienate anything may also not mortgage
it, nor lay a servitude upon it, nor petition
for partition, nor part
with it, whether by way of renunciation or of agreement, nor yet by
compromise or concession, much less
can he exchange it or give it in
payment; or do any other thing of that kind which will occur to us."
[26]
As
I understand the passage it confirms the ordinary meaning of the term
alienation and sets out an exception in common law which
applies
where there is a prohibition on alienation.
[27]
In
the same judgment he considered the work of
Sande:
A Treatise upon Restraints upon the Alienation of Things
(Webber’s Translation) Part 1 Chapter 1 para 3 where it was
stated:
"Now
let us consider what acts are deemed to be forbidden when alienation
is forbidden.
16.
Alienation is any course of dealing by which dominium is transferred:
…
Seneca (lib 5 de
benefic) defines alienation as the transfer of one's property and
one's rights to another.”
This
passage too seems to me to confirm that at common law the term
alienation bears its ordinary meaning, although it may be treated
differently in law where we deal with a prohibition on alienation.
This I do not think is authority for the proposition that
the term
may be given a different meaning when used in legislation.
[28]
The
second decision upon which Mr
Euijen
seeks to rely is
Cronje
NO v Paul Els Investments (Pty) Ltd
1982
(2) SA 179
(T) at 195-196. The facts of this matter were
somewhat unique. The legislator in the
Insolvency Act 24 of
1936
stipulated for various voidable dispositions. In
section
34(1)
of the
Insolvency Act dealing
with a voidable sale of a
business the legislator used the Afrikaans word “vervreemding”
in the Afrikaans text and
the English word “alienation”
in the English text. The dilemma which arose from this state of
affairs was that
the term “vervreem” was specifically
defined in the
Insolvency Act to
bear a wide meaning which would
include the transfer or abandonment of rights to property and
includes a sale, lease, mortgage,
pledge, delivery, payment, release,
compromise, donation or any contract therefor. The term
alienate, however, was not defined
in the Act. Ackermann J
recognised that alienate carries the limited meaning of transfer of
rights which did not include
the wide definition given to the term
“vervreem” and at 188A-B Ackermann J stated:
“
Daar is,
sover my kennis strek, geen pertinente beslissing van ons Howe oor
die betekenis van die woorde 'vervreemding'/'alienation'
soos hulle
in art 34 (1) voorkom nie, en of die woorde die wye betekenis het wat
ingevolge art 2 van die Wet, aan 'vervreemding'
gegee word, dan wel
die beperkte betekenis van 'alienation'.”
[29]
After
a lengthy analysis of legal principles Ackermann J concluded that the
legislator had erred in the utilisation of the term
“alienation”
in the English version and that it ought in those unique
circumstances to be given the meaning of “disposition”
as
defined in the Act. The definition of the term “disposition”
coincided with the definition of the term “vervreemding”.
Section 34(1)
of the
Insolvency Act was
amended thereafter. In
these circumstances I do not consider that the
Cronje
matter is authority for the proposition that the term “alienation”
may be given a wider meaning where it appears in
legislation, save
where a special definition is attributed to it in the Act. On
the contrary, the reason for the dilemma
in Cronje’s case was
precisely because Ackerman J recognised the true meaning of the term
“alienation”.
[30]
In
the present matter there is no ambiguity in the section and I do not
consider that the Cronje case constitutes authority for
me to
attribute a different meaning to the term alienation.
[31]
The
third matter to which I have been referred is the matter of
Crous
NO v Utilitas Beville
1994 (3) SA 720
(C). On behalf of the first respondent it is
submitted that in the
Crous
matter it was held that transfer was not a definitive feature of an
“alienation”. Again I do not consider that
the
submission correctly reflects the content of the judgment. The
Crous
matter concerned a property which had been acquired by a testator
subject to a right of pre-emption. The right of pre-emption
provided:
“
Die
hierinvermelde eiendom is verder onderhewig aan ‘n uitdruklike
voorkoopsreg wat opgelê is ten gunste van Utilitas
Beville, of
sy regsopvolgers, teen die transportnemer, sy erfgename, eksekuteurs,
administrateurs of regsverkrygendes waarkragtens
die eiendom nie
vervreem sal word nie, tensy dit eers ten koop aangebeed is aan
Utilitas Beville of sy regsopvolgers teen dieselfde
koopprys as wat
die aanbieder daarvoor betaal het.”
[32]
In
due course the testator died and the property was transferred to his
heirs nominated in his will. Van Deventer J was called
upon to
consider the meaning of the term “vervreem” (in English
“alienate”). After considering a
number of
authorities and dictionaries he concluded that the term alienate bore
the meaning of a voluntary transfer of ownership
at the pleasure of
the transferor.
[33]
I
do not think that the conclusion reached by Van Deventer J conflicts
in any material respect with the ordinary English meaning
of the term
alienate which corresponds with the meaning adopted by the courts and
the common writers referred to earlier.
[34]
Reverting
to the provisions of section 17(1)(g), viewed in its context and with
due consideration to its purpose I conclude that
it is clear and
unambiguous. A property which belongs to a land restitution
beneficiary, in the broad sense, is exempt from
property rates for a
period of ten years, or until such time as it is alienated in the
sense that it is transferred to a third
party, whichever is the
earlier. By virtue of the broad meaning of the term “belongs”
the ten year period would
commence running from the date upon which
the first applicant acquired the property. Where a land
restitution beneficiary
takes transfer of a property from the first
applicant and retains the property the rates exclusion will lapse ten
years after the
date upon which it was registered in the name of
first applicant on behalf of the beneficiary. In the event that
the beneficiary
disposes of the property before the lapse of then
yeas the rates exclusion will cease on the date that the property is
transferred
to the third party
The
relief sought
[35]
During
argument Mr
Buchanan
acknowledged that in view of the revised stance of the first
respondent as set out in the papers, as opposed to the position
adopted
in the correspondence prior to the launching of the
application, a declaratory order in terms of para 1 of the Notice of
Motion
is not necessary. The relief sought in para 5 of the
Notice of Motion has been acknowledged and tendered.
[36]
In
the result, I make the following order:
1.
The
first respondent is ordered to permit a transfer of erven from the
first applicant to individual beneficiaries entitled to such
erven in
terms of Act 22 of 1994 without requiring any payment for outstanding
rates purportedly due in respect of such properties.
2.
The
individual beneficiaries referred to in para 1 above are declared to
be entitled, from the date of the original transfer of
the relevant
properties to the first applicant, to the rates exclusion referred to
in section 17(1)(g) of Act 6 of 2004 for a period
of ten years,
alternatively, until the property is transferred into the name of a
third party.
3.
The
first respondent is ordered to repay to the applicants all amounts
due to the applicants, and appropriated by the first respondent
and
purportedly set off against the amounts allegedly due by the first
applicant to the first respondent in respect of rates accruing
in
terms of the
Local Government: Municipal Property Rates Act, 6
of 2004
.
4.
The
first respondent is ordered to pay the costs occasioned by the
application.
J
W EKSTEEN
JUDGE
OF THE HIGH COURT
Appearances:
For
Applicants:
Adv Buchanan SC instructed by Lexicon Attorneys, Port Elizabeth
For First
Respondent: Adv
Euijen SC instructed by Goldberg & De Villiers, Port
Elizabeth