Law Reports
Liebenberg NO and Others v Bergrivier Municipality (737/2011) …

Liebenberg NO and Others v Bergrivier Municipality (737/2011) [2012] ZASCA 153; [2012] 4 All SA 626 (SCA) (1 October 2012)

82 Reportability

Municipal Law

Brief Summary

Rates — Municipal rates — Lawfulness of rates imposed on rural landowners — Bergrivier Municipality sought declaratory orders regarding the validity of rates levied from 2001 to 2009 — Appellants contested the lawfulness of the rates, arguing non-compliance with statutory requirements — High Court found some rates lawful while others were not — Supreme Court of Appeal held that rates imposed from 2002 to 2009 were lawful under the Local Government Transition Act and the Municipal Finance Management Act, dismissing the appeal and upholding the cross-appeal with costs.

Full Judgment Text (Click to expand)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2012
>>
[2012] ZASCA 153
|

Liebenberg NO and Others v Bergrivier Municipality (737/2011) [2012] ZASCA 153; [2012] 4 All SA 626 (SCA) (1 October 2012)

Links to summary

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no
: 737/11
In the
matter between:
JACOBUS
JOHANNES LIEBENBERG NO
AND 86
OTHERS
......................................................................................
Appellants
and
BERGRIVIER MUNICIPALITY
...............................................................
Respondent
Neutral citation:
JJ Liebenberg NO v Bergrivier
Municipality
(737/11)
[2012] ZASCA 153
(1 October 2012)
Coram:
Nugent, Lewis, Bosielo, Theron and Wallis JJA
Heard:
7 September 2012
Delivered
1 October 2012
Summary:
Rates imposed on rural landowners by the Municipality
in the years from 2002 to 2009 were lawfully imposed under
s 10G(7)
of the
Local Government Transition Act 209 of 1993
and under the
Local Government: Municipal Finance Management Act 56 of 2003
.
ORDER
On appeal from Western Cape High Court (Cape Town) (Binns-Ward J
sitting as court of first instance):
1 The appeal is dismissed with costs, including those of two counsel,
to be paid by the appellants jointly and severally.
2 The cross appeal succeeds with costs, including those of two
counsel. Those costs and the costs of the application for leave
to
cross appeal in the high court are to be paid by the appellants
jointly and severally.
3 The orders of the high court are set aside. The following orders
are substituted:
‘
a The imposition of rates by the applicant
on the respondents in the financial years from 2002/2003 to 2008/2009
was lawful.
b The respondents are ordered to make payment to the applicant of the
amounts set out against their names, and corresponding municipal

account numbers, on the schedule headed “Uitstaande
Belastings”, deposited with the Registrar of the Supreme Court

of Appeal, together with interest
a tempore morae
, as provided
in the applicant’s credit control policy.
c The defendant or defendants in each action in the magistrates’
courts are ordered to pay to the applicant the costs of
the
proceedings for recovery of the amounts owed by them in the
magistrates’ courts.
d The respondents are ordered, jointly and severally, to pay the
applicant’s costs including the costs of two counsel.’
JUDGMENT
LEWIS JA (NUGENT, BOSIELO, THERON AND WALLIS JJA concurring)
[1] The appellants are rural landowners who farm within the area of
the Bergrivier Municipality, the respondent. I shall refer
to them as
the farm owners. Their dispute is about rates levied by the
Municipality over a number of years in the last decade,
in terms of
the new Constitutional and legislative dispensation that has brought
all land in South Africa within the jurisdiction
of municipalities.
The Municipality was established pursuant to the
Local Government:
Municipal Structures Act 117 of 1998
. This is one of the four
statutes that now regulate municipal governance throughout the
country.
[2] Prior to the adoption of the interim Constitution of 1993, rural
landowners were not affected by the provincial ordinances
that
governed the payment of municipal rates. They did not, therefore, pay
municipal rates. That dispensation changed with the
introduction of
the Local Government Transition Act 209 of 1993 (the Transition
Act),
1
designed to provide uniformity in local government throughout the
Republic and to establish new municipal structures, and with
the
enactment of the legislation that eventually replaced it.
[3] The long title to the Transition Act indicated that one of its
purposes was to establish transitional rural local structures,
and
part VA dealt with ‘rural local government’. Section 9D
provided for a framework for rural local government based
on the
principle that the whole of an area of a province should fall within
the jurisdiction of a council, of which there were
a variety
including transitional councils. The very name of the Transition Act
indicates that it was intended to apply in the period
between the
passage of the interim Constitution and the time when permanent
municipal structures and systems were put in place.
As it happened,
the Transition Act was amended on numerous occasions and remained
operative, at least in part, until 2011. I shall
deal with its
application in due course.
[4] The farm owners refused to pay amounts claimed from them by the
Municipality over several years, commencing in 2001. Eventually
the
Municipality brought actions against them in various magistrates’
courts in the Western Cape for payment of arrear levies
and rates. It
became apparent during the course of these proceedings that the farm
owners were defending the actions on the basis
that the levies and
rates were not imposed in accordance with the strictures of the
Constitution and the statutes then applicable.
The parties thus
agreed that the actions in the magistrates’ courts would be
abandoned, and instead, the Municipality would
seek declaratory
orders in the high court as to the validity or otherwise of the
levies and rates.
[5] In October 2010 the Municipality sought declaratory orders that
the levies and rates imposed by it in the financial years (which
ran
from 1 July to 30 June each year) from 2001/2002 to 2008/2009 were
lawful and valid, and if so, for an order that the farm
owners pay
the amounts claimed, set out in a schedule to the notice of motion.
By the time of the hearing in the high court the
farm owners had
conceded that rates imposed in the 2003/2004 year were lawfully
imposed and the Municipality conceded that the
levies it had sought
to impose in the 2001/2002 year were not lawfully imposed. The
Western Cape High Court, Cape Town (per Binns-Ward
J) found that the
levies imposed in the 2001/2002 financial year were not lawfully
imposed although that had been conceded); that
the 2002/2003 rates
were not lawfully imposed; that the rates imposed in 2004/2005 and
2005/2006 were lawfully imposed and that
the Municipality could
recover the amounts payable from the farm owners; but that the
Municipality had not complied with statutory
requirements in imposing
rates in the 2006/2007, 2007/2008 and 2008/2009 years and could thus
not recover them. The high court
granted leave to the farm owners to
appeal in respect of the 2004/2005 and 2005/2006 years, and to the
Municipality to cross appeal
in respect of the other years.
[6] About six weeks before the hearing of the appeal the Minister for
Local Government, Environmental Affairs and Development Planning,

Western Cape sought leave to intervene as a party in the appeal, or
to make representations as an amicus curiae. The court allowed
the
Minister to argue whether he had a direct interest entitling him to
intervene, or to act as an amicus. I shall deal with the
application
after considering the issues on appeal.
[7] A number of issues are common to all the years under discussion.
I shall thus deal first with the general statutory framework,
the
continued application of s 10G(7) of the Transition Act, the
pertinent authorities on which the parties rely and the general

principles applicable. I shall then turn to consider the lawfulness
of the imposition of rates in each year under consideration.
The legislative framework
[8] First, the Constitution itself provides for the objects (s 152)
and duties (s 153) of local government. It requires that national

legislation be enacted for the establishment of municipalities, the
determination of the criteria for distinguishing between different

kinds of municipality (s 155), and lays down the powers and functions
of municipalities (s 156). In s 229 the Constitution enables
a
municipality to impose rates and levies, and states that the power to
do so may be regulated by national legislation. Where national

legislation is in place, as it was throughout the relevant years, the
power to levy rates is derived from and exercised in terms
of that
national legislation. Initially the relevant national legislation was
the Transition Act, in particular s 10G(7).
Some of the problems
arising in this case stem from the transition from the Transition Act
to the national legislation referred
to in the following paragraph.
[9] The national legislation enacted pursuant to s 229 is now to be
found in four statutes. The Local Government: Municipal Structures

Act 117 of 1998 (the Structures Act), in terms of which the
Municipality was established, was enacted in 1998. Then followed the

Local Government: Municipal Systems Act 32 of 2000 (the Systems Act),
the Local Government: Municipal Finance Management Act 56
of 2003
(the Finance Act) (which came into operation on 1 July 2004) and
lastly the Local Government: Municipal Property Rates
Act 6 of 2004
(the Rates Act) (which came into operation on 2 July 2005).
[10] The farm owners contended that the Municipality failed to comply
with a number of provisions of the Transition Act, the Systems
Act,
the Finance Act and the Rates Act. They rely on the principle of
legality that has formed the backbone of several decisions
of this
court and the Constitutional Court in the last decade.
2
The principle is not in issue and I propose to say no more about it:
it is accepted that when imposing rates and levies a municipality

must comply with the provisions of the statutes that govern their
powers and duties. The Municipality argued, however, that it
acted at
all times in compliance with the provisions of the statutes then in
operation. In the alternative it contended that there
had been
substantial compliance with the requirements of the legislation and
that any shortcomings did not invalidate the imposition
of rates.
[11] There is, however, an important difference between the parties
as to whether s 10G(7) of the Transition Act survived
the
enactment of the Rates Act, and thus whether the Municipality could
rely on its provisions as the source of its power to levy
rates in
the years after 2 July 2005. The high court held that s 10G(7) was
repealed by the enactment of the Rates Act, and I turn
first to
whether this finding was correct.
The continued application of s 10G(7) of the Transition Act
[12] The Municipality contended that the provisions of this section
applied throughout the period over which the contested rates
were
imposed. The provisions pertinent to this matter read:
‘
(7)(
a
)(i)
A local council, metropolitan local council and rural council may by
resolution, levy and recover property rates in respect
of immovable
property in the area of jurisdiction of the council concerned:
Provided that a common rating system as determined
by the
metropolitan council shall be applicable within the area of
jurisdiction of that metropolitan council: Provided further
that the
council concerned shall in levying rates take into account the levy
referred to in item 1(
c
)
of Schedule 2: . . . .
(ii) A municipality may by
resolution supported by a majority of the members of the council levy
and recover levies, fees, taxes
and tariffs in respect of any
function or service of the municipality.
(
b
)
In determining property rates, levies, fees, taxes and tariffs
(hereinafter referred to as charges) under paragraph (
a
),
a municipality may –
(i) differentiate between
different categories of users or property on such grounds as it may
deem reasonable;
(ii) in respect of charges
referred to in paragraph (
a
)(ii),
from time to time by resolution amend or withdraw such determination
and determine a date, not earlier than 30 days from
the date of the
resolution, on which such determination, amendment or withdrawal
shall come into operation; and
(iii) recover any charges so
determined or amended, including interest on any outstanding amount.
(
c
)
After a resolution as contemplated in paragraph (
a
)
has been passed, the chief executive officer of the municipality
shall forthwith cause to be conspicuously displayed at a place

installed for this purpose at the offices of the municipality as well
as at such other places within the area of jurisdiction of
the
municipality as may be determined by the chief executive officer, a
notice stating –
(i) the general purport of the
resolution;
(ii) the date on which the
determination or amendment shall come into operation;
(iii) the date on which the
notice is first displayed; and
(iv) that any person who desires
to object to such determination or amendment shall do so in writing
within 14 days after the date
on which the notice is first displayed.
(d
) Where –
(i) No objection is lodged
within the period referred to in paragraph (c) (iv), the
determination or amendment shall come into operation
as contemplated
in paragraph (
b
)(ii);
(ii) an objection is lodged
within the period referred to in paragraph (c) (iv), the municipality
shall consider every objection
and may amend or withdraw the
determination or amendment and may determine a date other than the
date contemplated in paragraph
(b)(ii) on which the determination or
amendment shall come into operation, whereupon paragraph (
c
)(i)
shall with the necessary changes apply.’
[13] The farm owners do not dispute that these provisions were
applicable in the 2003/2004 and 2004/2005 financial years: they

contend, however, that the Municipality did not comply with the
requirements of the section in the latter year. I shall return
to
that argument when dealing with those years. But they argue that when
the Rates Act came into operation on 2 July 2005, s 10G(7)
of
the Transition Act ceased to apply, and that the Municipality was
required to levy rates in terms of s 14 of the Rates Act.
As I have
said, the high court upheld that argument.
[14] The transitional provisions of the four statutes regulating
municipal governance are complex and confusing. On analysis, however,

I consider that they show a clear purpose: to empower rating in every
municipality through a variety of mechanisms until uniform
and
permanent systems were put in place.
[15] The Finance Act, in operation from 1 July 2004, dealt with the
repeal of a number of the rating provisions previously in force
(the
relevant provisions here were in the Municipal Ordinance 20 of 1974
(C)), as well as s 10G(7) of the Transition Act.
Section 179 of
the Finance Act reads:
‘
Repeal
and amendment of legislation
(1) The legislation referred to
in the second column of the Schedule [including s 10G(7)] is hereby
amended or repealed to the extent
indicated in the third column of
the Schedule
(2) Despite the repeal of
section 10G of the Local Government Transition Act, 1993 (Act 209 of
1993), by subsection (1) of this
section, the provisions contained in
subsections (6), (6A) and (7) of section 10G remain in force until
the legislation envisaged
in section 229(2)(
b
)
of the Constitution is enacted.
. . . .’
[16] The legislation envisaged by s 229(2)(
b
) was, of course,
the Rates Act. That Act came into operation on 2 July 2005. The farm
owners argued thus that s 10G(7) was
repealed by s 179 of the
Finance Act with effect from the date of commencement of the Rates
Act. But the argument does not take
into account the transitional
provisions of that Act. These provide:
‘
Transitional
arrangement: Valuation and rating under prior legislation
88(1) Municipal valuations and
property rating conducted before the commencement of this Act by a
municipality in an area in terms
of legislation repealed by this Act,
may, despite such repeal, continue to be conducted in terms of that
legislation until the
date on which the valuation roll covering that
area prepared in terms of this Act takes effect in terms of section
32(1).
. . . .’
‘
Transitional
arrangement: Use of existing valuation rolls and supplementary
valuation rolls
89 (1) Until it prepares a
valuation roll in terms of this Act, a municipality may –
(
a
) continue to use a
valuation roll and supplementary valuation roll that was in force in
its area before the commencement of this
Act; and
(
b
) levy rates against
property values as shown on that roll or supplementary roll.
(2) If a municipality uses
valuation rolls and supplementary valuation rolls in terms of
subsection (1) that were prepared by different
predecessor
municipalities, the municipality may impose different rates based on
different rolls, so that the amount payable on
similarly situated
properties is more or less similar.
(3) This section lapses four
years from the date of commencement of this Act, and from that date
any valuation roll or supplementary
valuation roll that was in force
before the commencement of the Act may not be used.’
[17] The period of four years referred to in s 89(3) was extended to
six years. The Municipality argued therefore that the provisions
of
s 10G(7) of the Transition Act continued to apply until 2 July
2011. But the high court found that when the Rates Act came
into
operation, s 10G(7) was repealed. Rating provisions of the
ordinances previously in force were not. This is because the
Rates
Act repealed the Ordinances but did not itself repeal s 10G(7).
That section was repealed by s 179 of the Finance Act,
cited above.
Section 88(1) of the Rates Act thus did not keep s 10G(7) alive.
The high court found that one should not read
in a reference (in s
88(1)) to s 10G(7) unless failure to do so resulted in an absurdity.
[18] That interpretation fails, in my view, to give
meaning to s 89: that section specifically states that a municipality
may, until
it prepares a valuation roll in terms of the Rates Act,
continue to use a valuation roll in force before the commencement of
the
Act, and to levy rates against property values as shown on that
roll. The clear implication of this is that the Municipality could

continue to levy rates in terms of s 10G(7) of the Transition Act and
to use the valuation roll prepared pursuant to that section.
The
rating provisions of the Transition Act were thus in force until 2
July 2005: and the Transition Act was designed for the very
purpose
of bridging the period between the operation of the provincial
ordinances and the enactment of the legislation envisaged
in the
Constitution. Moreover, s 10G was introduced to ensure that
municipalities conducted their affairs in an effective fashion,
using
the rating provisions to ensure their financial resources, and to
meet their developmental obligations. It would be most
odd if its
provisions fell away in 2005 whereas those of the Ordinances remained
in place. It would be particularly odd as its
effect would be to
remove the legislation introduced in part to enable rating of rural
properties that had fallen outside the rating
ordinances, thereby
once more excluding those properties from rating. There is nothing to
indicate that it had been decided to
exclude rural properties from
rating and that this was the purpose of this provision.
[19] To hold thus that the Ordinances were operative before 2 July
2005, and were repealed on that date by the coming into operation
of
the Rates Act, but that their operation continued because of the
transitional provisions, whereas s 10G was not covered by the

transitional provisions, does give rise to an absurdity. In my view,
the transitional provisions of both the Finance Act and the
Rates Act
clearly kept the empowering provisions of s 10G alive until the
period referred to in s 89(3) had expired.
Throughout the period
in issue, therefore, s 10G(7) empowered the Municipality to
impose rates. However, when the Finance
Act came into operation it
determined the procedures to be followed in the municipal budgetary
process including rating. I turn
to these now.
Application of the Finance Act
[20] Chapter 4 of the Finance Act regulates the manner of levying of
rates from the date of its commencement – 1 July 2004.
After
that date the Municipality determined the rates payable in terms of
the provisions of ss 22 to 24 of the Finance Act. Section
22 makes
provision for the publication of a municipality’s annual
budget, and requires a municipality to invite the ‘local

community’ to submit representations in connection with the
budget (s 22(
a
)(ii)). Section 23 requires a municipality
to consider the views of the local community and various bodies, such
as the National
Treasury. The municipal council must give the mayor
an opportunity to respond to the submissions and to revise the budget
if necessary.
Section 24 requires the municipality to consider
approval of the budget at least 30 days before the start of the
budget year (1
July in each year). And the municipal council must
approve the budget before the start of the budget year.
[21] Section 25 regulates the position where a municipal council has
failed to approve a budget ‘including revenue-raising
measures
necessary to give effect to the budget’. Clearly rates payable
by property owners within its jurisdiction are the
chief source of
revenue for any municipality. Non-compliance with the procedures
required to levy rates could thus have serious
consequences for the
budget of a municipality. However, in the event of non-compliance
with a provision of chapter 4 of the Act,
s 27(4) provides that
the budget for the year is not invalidated. Mechanisms are, however,
put in place to ensure compliance.
The provincial government and the
national treasury must be informed of any non-compliance by the
mayor, and the provincial executive
may intervene under s 139 of the
Constitution in that event.
[22] The Municipality contended that it had complied with all these
provisions in the years post 1 July 2005. It also submitted
that
there had been compliance with the provisions of s 10G(7)(
c)
of the Transition Act. But that section imposed requirements that are
not consistent with the process determined by the Finance
Act, and to
the extent that this is so, the later provisions of the general
enactment must prevail.
3
This must be especially so where the provisions of an Act are
designedly interim and transitional. The power to levy rates is thus

to be found in s 10G of the Transition Act until 2011, whereas the
manner of doing so was regulated by the provisions of the Finance
Act
once it had come into operation. Before turning to the specific years
in issue I shall deal with compliance with s 10G(7),
in force in the
financial years 2002/2003 and 2004/ 2005.
Compliance with s 10G(7) generally
General purport
[23] One of the attacks on the process followed by the Municipality
in all the years in question (but as I have held, only relevant
until
the procedural requirements of the Finance Act were introduced) was
that it did not publish a notice setting out the general
purport of
the rating resolution adopted by its council. Section 10G(7)(
a
)(i),
set out above, provided that a municipality may by resolution levy
and recover property rates in respect of immovable property
within
its jurisdiction. After such a resolution was passed a notice had to
be ‘conspicuously displayed’ at the offices
of the
municipality as well as at other places stating, amongst other
things, the ‘general purport of the resolution’
and that
any person who desired to do so could object in writing to such
‘determination’ (of the rate) within 14 days
of the date
on which the notice was first displayed.
[24] The farm owners argued that the Municipality had not published a
notice setting out the general purport of the resolution.
The meaning
of this phrase has been considered in two decisions of this court
recently, and, according to the high court in this
matter, were, at
least to some extent, in conflict with one another. In
Kungwini
Local Municipality v Silver Lakes Home Owners Association
4
this court held that the object of s 10G(7)(
c
) –
that the notice set out the general purport of the resolution –
was that ratepayers should ‘know what rates
they would have to
pay, and from when those rates would be payable’. They should
also know that they could object to the
rate determination. In that
case the notice had referred to two different rates, thus providing
conflicting information. It was
held not to have set out the general
purport of the resolution.
[26] On the other hand, in
Nokeng Tsa Taemane Local Municipality v
Dinokeng Property Owners Association
5
this court held that the phrase ‘general purport’ meant
that details of the rates resolution did not have to be set
out in
the notice. It stated:
6
‘
The
adjective “general” qualifies the noun “purport”.
The conjunction was not accidental but deliberately
intended to make
clear that specific details are not required. In this case the
requirement was satisfied because interested parties
were advised
that the resolutions were available for inspection. This accords with
what Alexander J stated about this phrase in
Rampersad
v Tongaat Town Board
1990
(4) SA 32
(D) at 37G:
“
. . .
‘general purport’ then involves an intimation that what
follows broadly covers a specific topic.”’
[27] It was enough, therefore, for the notice to state that the
details could be scrutinised elsewhere. This court thus held, in
Nokeng
, that where notices of a rates resolution advised that
the resolution was available for inspection at the town council
offices
during normal office hours, this was sufficient to meet the
requirement of s 10G(7)(
c
) of the Transition Act that the
general purport of the resolution be displayed.
[28] The high court in this matter considered that the decision of
Nokeng
in this regard is in conflict with
Kungwini
(to
which it referred). But I consider not.
Kungwini
turned on
specific facts, where the notice contained a contradiction. It is
true that the notice also advised that the resolution
was available
for inspection. But given the confusion that may have followed the
notice, I think that the notice in
Kungwini
is to be
distinguished from one that does not set out details of the rates
resolution. It is true that the court there said that
ratepayers are
entitled to know what rates they have to pay and from when. But that
they can establish from an inspection of the
resolution, as
Nokeng
held. In
Kungwini
an inspection of the resolution may not have
clarified the confusion caused by the notice. The high court in this
matter thus correctly
held that where a notice did state that the
resolution could be inspected elsewhere, that was sufficient to
indicate the general
purport of the resolution.
Substantial compliance
[29] The Municipality argued that in the event of any notice not
being fully compliant with s 10G(7)(
c
), there had at
least been substantial compliance. It relied on the decision in
Nokeng
in this regard as well.
7
This court, referring to
Nkisimane v Santam Insurance Co Ltd
,
8
held that ‘mere failure to comply with one or other
administrative provision does not mean that the whole procedure is
necessarily
void’. In determining whether a failure should be
‘visited with nullity’ one must look to whether the
legislation
in question contemplates that failure strictly to comply
with the requirement should result in the process being invalidated.
The
court said, in this regard, that ‘[t]o nullify the revenue
stream of a local authority merely because of an administrative

hiccup appears to me to be so drastic a result that it is unlikely
that the Legislature could have intended it.’
[30] The farm owners’ argument that there had not been
substantial compliance with any of the provisions of the statutes

applicable at the relevant time must be examined in relation to each
of the years under consideration. It should be noted, however,
that
they have several complaints about all of the notices, and procedures
adopted, in every year.
The 2002/2003 financial year: the cross appeal by the Municipality
[31] On 13 June 2002 the Municipality’s council resolved to
impose what it termed a levy on properties, which was based on
the
size of the land owned: the amount levied varied from R300 for
properties of less than 75 hectares to R4 500 for properties
of
more than 1000 hectares. A maximum of R4 500 was payable by each
owner, irrespective of the number of registered properties
comprising
the farm.
[32] A notice setting out the sliding scale with the rates payable in
respect of different property sizes was published in terms
of
s 10G(7) of the Transition Act. It called for objections within
a two-week period. After considering objections the council,
on 29
July 2002, confirmed the determination but undertook to conduct
valuations in the year and to adjust the amounts payable
on the basis
of the valuations. Although described as a levy, this was clearly a
rate and was not lawfully raised or levied:
Gerber v Member of the
Executive Council for Development Planning and Local Government,
Gauteng
.
9
The attempt, in argument, to justify it as a levy foundered on the
fact that it was not, as required by s10G(7)
(a)
(ii) levied ‘in
respect of any function or service of the municipality’.
[33] On 26 May 2003, before the financial year end, the council
resolved to levy a true rate of .2474 cents in the rand on the

properties, plus interest on amounts not paid by 25 June 2003, and to
set off against the rate whatever had been paid earlier in
the year.
In effect, then, amounts claimed pursuant to the sliding scale were
recovered only provisionally. Adjustments, based
on actual values,
were made subsequently.
[34] The high court found that the initial ‘levy’ was a
rate: it was based on land ownership and was not permitted
by s 10G.
The subsequent resolution to levy a rate on 26 May 2003 for that year
was in effect an amendment of the earlier resolution,
for which s
10G(7) did not provide. It was thus ultra vires. Moreover, no notice
was given of the later resolution, nor was there
any call for
objections. There was therefore material non-compliance.
[35] The Municipality argued, however, that the valuations were done
pursuant to the objections made to the sliding scale by farm
owners.
The second resolution was taken as a result of those objections. The
only basis upon which the farm owners challenged the
validity of that
resolution was that it was ultra vires in terms of s 10G(7)(
b
)(ii).
However, that section deals with amendment or withdrawal of levies
and other charges, not rates. The farm owners cannot,
on the one
hand, argue that the levy was in truth a rate, and on the other hand
complain, when it was replaced by a lawful rate,
that it should have
been amended as if it were a levy. That challenge must accordingly
fail.
[36] I consider that the high court accordingly erred in concluding
that the rates levied on 26 May 2003 were not validly imposed.
The
Municipality is entitled to recover the amounts owed in the 2002/2003
financial year and the cross appeal in respect of this
order must be
upheld.
The 2004/2005 financial year: appeal by the farm owners
[38] The high court found that the rates levied in terms of s 10G(7)
of the Transition Act were lawfully imposed and that
the requirements
of publication were met. The farm owners argued that the rates were
payable before the expiry of the 14-day period
for objections. Rates
should be imposed prospectively, not retrospectively. The notice of
the resolution was published in the
Cape Times
on 7 July 2004,
and in
Die
Burger
on 8 July. It set out the general
rate in the rand, stated that rebates were applicable and that the
rates were payable before
30
September 2004 or in monthly
instalments. The notice also stated that a summary of the budget was
available for inspection at the
office of the municipal manager. The
high court rejected the argument that ratepayers were faced with a
fait accompli
. The notice called for objections and it was
thus clear that the resolution was subject to amendment. Any rates
accounts sent out
before the final decision was made in respect of
the rates for the year would accordingly be provisional and
susceptible to adjustment
in the light of the final decision as to
the rates that would be payable.
[39] I do not agree with the minority judgment in
Kungwini
10
that the publication of a notice advising of a draft rates
resolution, and calling for objections, amounts to a
fait
accompli
. The resolution is obviously open to amendment –
otherwise there would be no purpose in calling for objections.
[40] The high court also found that there was no merit in the
argument that the notice was defective because it did not state (as

it was required to do in terms of ss 21(4) and 21A of the Systems
Act) that persons who could not read or write could request
assistance from a staff member of the municipality. It could not have
been the intention of the legislature that this feature of

non-compliance rendered the whole rates process invalid. The high
court invoked
Nkisimane
11
in holding that substantial compliance was sufficient. In that case
Trollip JA said that in determining whether exact compliance
with a
peremptory provision of a statute was necessary a court must construe
the provision – ‘ascertain the intention
of the lawgiver’
– by having regard to the ‘language, scope and purpose of
the enactment as a whole’. Compliance
with a statutory
provision might in some cases be desirable, but not necessary to give
effect to the object of the statute. In
my view, while a municipality
should do all it can to ensure effective communication with its
ratepayers, an administrative omission
of this kind should not
undermine the entire rates base on which its budget rests. That
cannot have been intended by the legislature.
[41] The appeal against the order that the farm owners pay the rates
imposed in this year must thus fail.
The 2005/2006 financial year: the farm owners’ appeal
[42] In this year the provisions of ss 22 to 24 of the Finance Act
were operative. On 5 May 2005 the Municipality published a notice
in
terms of s 22 of the Finance Act stating that the draft budget, as
well as the draft reviewed integrated development plan, were
open for
inspection. Dates, times and places where these drafts would be
discussed were also advertised. On 31 May 2005 the council
met and
resolved to approve the budget, including, of course, the rates. On
23 June 2006 a further notice was published setting
out the rates and
rebates for rural properties. The high court found that there had
been compliance with the provisions of the
Finance Act.
[43] The farm owners argued that the provisions of the Finance Act
dealt not with the levying of rates and the procedures to be
followed
after the resolution had been adopted, but with the ‘run-up’
to the adoption of the budget. They submitted
that s 10G(7), on the
other hand, laid down the procedures to be followed after the
adoption of the resolution. That section required
an additional
notice and comment procedure after the notice of the draft budget had
been given, they argued, and this was still
necessary. That cannot be
so. The Finance Act did not impose any requirement other than the
publication, in the prescribed manner,
of the draft budget. Its
provisions are in this respect quite different from those of s
10G(7), which they superseded.
[44] The notice complied with the provisions of ss 22 to 24 of the
Finance Act. It stated that the draft budget was open for inspection

and that written objections should be lodged with the municipal
manager by 27 May 2005. Moreover, on 31 May 2005, the mayor described

the public participation process and noted the objections. As the
Municipality adhered to the provisions of the Finance Act –and

it was not suggested that it had not done so – the rates were
lawfully determined and levied.
[45] The high court correctly found, thus, that the proper procedures
were followed in imposing the rates in the 2005/2006 financial
year.
The appeal against the order that the farm owners pay the rates for
this year must fail.
The 2006/2007 financial year: the Municipality’s cross
appeal
[46] The principal objection to the process of imposing rates in this
and subsequent financial years was that s 14(2) of the Rates
Act, in
force from 2 July 2005, required promulgation of the rates resolution
in the provincial gazette. Section 14(1) provides
that a rate is
levied by resolution passed by the municipal council. Section 14(2)
states that the resolution must be promulgated,
and s 14(3) requires
that it be displayed in specified places and advertised in the media.
[47] The Municipality did not comply with the requirement of
promulgation. Instead, it published a notice in the press on 13 April

2006 stating what the rates resolution provided, in broad terms,
where it was to be found, and that objections could be made before
15
May 2006. (The notice also stated that persons who could not write
could request assistance from the municipal staff, thus complying

with s 21(4) of the Systems Act.) The notice was published in terms
of s 22 of the Finance Act.
[48] The high court held that promulgation was necessary and that the
Municipality, having failed to ensure promulgation in the
provincial
gazette, was not entitled to claim in respect of the rates in this
year. I have already found that s10G was not repealed
(save to the
extent that it was incompatible with the provisions of the Finance
Act) until July 2011 (s 89(3) of the Rates Act).
It therefore
continued to apply in this and subsequent years until 2 July 2011.
That section, and not the Rates Act, was accordingly
the source of
the power to levy rates and it was therefore unnecessary for the
Municipality to satisfy the requirements of the
Rates Act in order to
set a rate and levy it. Promulgation was thus not necessary for the
rates to have been validly imposed. The
farm owners nonetheless
argued that the notice had still to comply with the provisions of s
10G(7) of the Transition Act. In my
view, for the reasons already
discussed, it did not have to.
[49] One further objection made by the farm owners was that the
notice stated that the executive mayor would consider the objections,

not the council itself. Section 23 of the Finance Act provides that
the council must consider submissions and if necessary revise
the
budget. But the mayor reported to the council and it took the final
decision. There is no merit in the objection.
[50] The high court thus erred in finding that the rates were not
validly imposed, and the appeal against this order must be upheld.
The 2007/2008 and 2008/2009 financial years: the Municipality’s
cross appeal
[51] The objections to the rating processes and the principles
applicable to the 2006/2007 year are the same in these years as
those
in the previous one. Again, s 10G of the Transition Act (in so
far as it conferred the power on the Municipality to
levy rates) and
the provisions of the Finance Act dealing with procedures applied.
Notices were published under the Finance Act,
the draft budget and
rates resolutions were available for inspection and objections were
called for. The council of the Municipality
met representatives of
the farmers to discuss the budgets and little or no objection was
made to their substance. The council approved
the respective budgets
at its meetings. In my view, the Municipality complied with the
provisions of the Finance Act and the rates
were lawfully imposed.
[52] The farm owners’ challenges to the imposition of rates in
these years must also be rejected and the Municipality’s
appeal
against the orders for these years upheld.
The Minister’s application for leave to intervene or to be
admitted as an amicus curiae
[53] The Minister for Local Government, Environmental Affairs and
Development Planning, Western Cape applied for leave to intervene,
or
to advance submissions as an amicus curiae at the hearing of the
appeal. The farm owners opposed the application. The Municipality
did
not. The court heard argument on the application, and has decided to
grant leave to the Minister to act as an amicus curiae.
[54] The essence of the argument on the right to intervene was that
the provincial government would, in the event of the Municipality
not
being financially sustainable because of the farm owners’
refusal to pay the rates in the years in question, be required
to
fund the Municipality itself. That obligation arises from s 139(
b
)
of the Constitution. The primary response of the farm owners was that
the Municipality was not in financial difficulty. It sought
to adduce
evidence to this effect and the Minister responded with other
evidence. The farm owners’ response – to the
effect that
the Municipality was financially sound despite their refusal and
failure to pay rates (on purely technical objections
to the rating
processes) – is cynical.
[55] The Minister argued also that should it be found that the rates
had not been lawfully imposed (as to which he made no argument)
then
the court should grant an order in terms of s 172(1) of the
Constitution on the basis that the Municipality’s conduct
was
inconsistent with the Constitution, but that a just and equitable
order should be imposed rather than declaring that the rates
were not
payable. That order might have had the consequence that the rates
paid by other property owners in the jurisdiction of
the
Municipality, in the years under consideration, were repayable, or
could be set off against future rates imposed.
[56] In view of the conclusions that I have reached, it is not
necessary to consider the evidence sought to be adduced. And the

consequence of this court’s decision is that the provincial
government will not be the funder of last resort. Should that
not
have been the case, however, it is my view that the Minister’s
submissions as to the kind of order that this court could
have made
were in the public interest and of assistance to the court. Hence the
decision to admit the Minister as an amicus.
The Municipality’s schedule of debtors
[57] The Municipality attached to its notice of motion a schedule of
debtors – the farm owners who had failed to pay rates
over the
years in question –
reflecting the details of the owners, their municipal account numbers
and the amounts they owed. In making its orders the high
court gave
the parties the opportunity to correct any errors in the schedule.
The Municipality has attached a corrected schedule
in respect of all
the years in question to its heads of argument on appeal. That
schedule is accepted as correct and the order
that is made on appeal
refers to it.
Costs
[58] The Municipality has had complete success in this appeal. There
is no reason to deprive it of its costs either in this court
or that
of the high court where it should not have been non-suited in respect
of several years.
Order
[59] 1 The appeal is dismissed with costs, including those of two
counsel, to be paid by the appellants jointly and severally.
2 The cross appeal succeeds with costs, including those of two
counsel. Those costs and the costs of the application for leave
to
cross appeal in the high court are to be paid by the appellants,
jointly and severally.
3 The orders of the high court are set aside. The following orders
are substituted:
‘
a The imposition of rates by the applicant
on the respondents in the financial years from 2002/2003 to 2008/2009
was lawful.
b The respondents are ordered to make payment to the applicant of the
amounts set out against their names, and corresponding municipal

account numbers, on the schedule headed “Uitstaande
Belastings”, deposited with the Registrar of the Supreme Court

Back to Law Reports