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[2023] ZAKZPHC 37
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Locom Investments (Pty) Ltd and Others v Msunduzi Municipality and Another (5959/21P) [2023] ZAKZPHC 37 (15 March 2023)
FLYNOTES:
FAIR PROPERTY VALUATIONS BY MUNICIPALITY
MUNICIPALITY
– Rates – Valuation of property – Functions of
Valuations Appeal Board – Must give proper
consideration to
material presented by owners – To determine market value
based on all available relevant material
– Not to conduct
appeals in rushed manner – In this case failed to carry out
its core function to determine the
market values in a fair and
transparent manner without prejudging the issue –
Local
Government: Municipal Property Rates Act 6 of 2004
.
IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case no: 5959/21P
In the matter between:
LOCOM INVESTMENTS
(PTY) LTD
FIRST APPLICANT
CATWALK INVESTMETNS
295 (PTY) LTD
SECOND APPLICANT
SA MATHER (LADYSMITH)
(PTY) LTD
THIRD APPLICANT
DEFACTO INVESTMETNS 95
(PTY) LTD
FOURTH APPLICANT
DWELLIOR INVESTMENTS
(PTY) LTD
FIFTH APPLICANT
532 PIETERMARITZ
STREET (PTY) LTD
SIXTH APPLICANT
OCEAN SUNSET TRADING
CC
SEVENTH APPLICANT
VINTAGE EXPRESS
INVESTMENTS CC
EIGHTH APPLICANT
MAHOMED RAFFI CASSIM
AMOD
NINTH APPLICANT
YUNUS
GOGA
TENTH APPLICANT
CORPCLO 34
CC
ELEVENTH APPLICANT
THE TRUSTEES FOR THE
TIME BEING OF
THE AHMED GOGA FAMILY
TRUST
TWELFTH APPLICANT
THE TRUSTEES FOR THE
TIME BEING OF
THE M R C AMOD FAMILY
TRUST
THIRTEENTH APPLICANT
And
THE MSUNDUZI
MUNICIPALITY
FIRST RESPONDENT
THE MSUNDUZI
MUNICIPALITY
VALUATION APPEAL
BOARD
SECOND RESPONDENT
ORDER
1. If required, the
late delivery of the Applicants’ review application is hereby
condoned and an extension of the 180-day
period in terms of
s 9(1)
of
the
Promotion of Administrative Justice Act 3 of 2000
is hereby
granted.
2. The
decisions by the First and/or Second Respondents to adjust the
property values in respect of the properties
listed in Annexure A
hereto is hereby reviewed and set aside, alternatively declared to be
unconstitutional and set aside.
3. The Second
Respondent is directed to undertake the municipal valuation appeal
process in respect of each of the properties
listed in Annexure A
hereto
de novo
and to do so within 60 days of the date of this
order and in accordance with the terms of this judgment.
4. The First
Respondent is ordered to pay the costs of this application, including
the costs of two counsel where so employed.
JUDGEMENT
Mngadi J
[1] The
applicants seek an order reviewing and setting aside the respondents’
decisions evaluating their properties
for purposes of the levying of
municipal rates. The respondents oppose the application.
[2] The
first applicant is Locom Investments (Pty) Ltd a private company
incorporated and registered in terms
of the company laws of South
Africa, conducting trade as a property holding company.
The second applicant is Catwalk
Investments 295 (Pty) Ltd, a private
company incorporated and registered in terms of the company laws of
South Africa conducting
business as a property holding company under
the name and style of Catwalk Investments. The third
applicant is S A
Mather Ladysmith (Pty) Ltd a private company
incorporated and registered in terms of the company laws of South
Africa, conducting
trade as a property holding company. The
fourth applicant is Defacto Investments 95 (Pty) Ltd a private
company incorporated
and registered in terms of the company laws of
South Africa conducting trade as a property holding company under the
name and style
of Defacto Investments. The fifth applicant is
Dwellior Investments (Pty) Ltd a private company incorporated and
registered in
terms of the company laws of South Africa conducting
trade as a property holding company under the name and style of
Dwellior Investments.
The sixth applicant is 532 Pietermaritz Street
(Pty) Ltd a private company incorporated and registered in terms of
the company
laws of South Africa, conducting trade as a property
holding company under the name and style of 532 Pietermaritz Street.
The seventh applicant is Ocean Sunset Trading CC a lawfully
incorporated and registered close corporation conducting trade as a
property holding company under the name and style of Ocean Sunset
Trading. The eight applicant is Vintage Express Investments
CC
a lawfully incorporated and registered close corporation. The
ninth applicant is Mahomed Raffi Cassim an adult businessperson.
The tenth applicant is Yunus Goga an adult businessperson.
The eleventh applicant is Corpclo 34 CC a lawfully
incorporated and
registered close corporation. The twelfth applicant is the trustees
for the time being of The Ahmed Goga Family
Trust a lawfully
constituted and registered trust. The thirteenth applicant is
The trustees for the time being of The M R
C Amod Family Trust a
lawfully constituted and registered trust.
[3]
The first respondent is The Msunduzi Municipality a municipality duly
established
in terms of the
Local Government Municipal Structures Act
117 of 1998
read with
Section 2
of the
Local Government Municipal
Systems Act 32 of 2000
. The second respondent is the Msunduzi
Municipality Valuation Appeals Board (appeals board) an appeals board
established
in terms of the law for the Msunduzi Municipality.
[4]
The applicants are owners of properties within the municipal area of
the first respondent.
The impugned decisions were taken
pursuant to the second respondent’s powers under s229 of the
Constitution of the Republic
of South Africa, 1996, read with the
Local Government: Municipal Rates Act 6 of 2004(‘the Rates
Act’) . It is
common cause that the decisions constitute
administrative action as contemplated in
s1
of the
Promotion of
Administrative Justice Act 3 o
f 2000(‘PAJA’).
[5]
Municipalities’ are vested with original institutional powers
to levy rates
on property, which power is regulated by the Local
Government Municipal Property Rates Act 6 of 2004 (the Act).
Various
sections of the Act are referred to herein.
Section 11(1) provides that a rate levied by a municipality on
property must
be an amount in the Rand on the market value of the
property. It defines market value as the value of the property
determined in
accordance with s 46. Section 46 provides: ‘46
(1) subject to any other applicable provisions of this Act, the
market
value of the property is the amount the property would have
realised if sold on the date of valuation in the open market by a
willing
seller to a willing buyer.’
[6]
Section 30 provides that a municipality intending to levy a rate in a
property must
cause a general valuation to be made of all properties
and all properties valuated be included in the valuations roll. The
general
valuation must reflect the market value of properties
determined in accordance with market conditions, which applied as at
the
date of valuation. Section 45 provides that the property must be
valued in accordance with generally recognised valuations practices,
methods, and standards, physical inspections of property to be valued
is optional and comparative, analytical and other systems
as
techniques may be used, including aerial photography and computer –
assisted mass appraisal systems or techniques, (taking
into account
changes in technology and valuations systems and techniques).
In s 45(3) it is provided that if the available
market–related
data of any category of rateable property is not sufficient , such
property may be valued in accordance with
any mass valuation system
or techniques approved by the municipality concerned. The
valuation roll remains valid
for not more than four financial years
in respect of a metropolitan municipality or not more than five
financial years in respect
of a local municipality which periods may
be increased to six and seven years respectively by the MEC for local
government in the
province. The municipality levies rates
annually subject to annual increases subject to limits set by the
national
Minister responsible for local government.
[7]
The Act provides that after the valuations roll has been prepared, it
is published.
It provides that persons having interest therein
may inspect the valuations roll and lodge objections. The municipal
valuer considers
and decides on objections. He may adjust or add to
the valuation roll. A decision resulting in changing the valuations
of the property
by more than ten (10) percent must be referred for
review by the valuations appeal board, which can either confirm,
amend or revoke
the decision of the municipal valuer. The objector on
request may be furnished with reasons for the decision. The
municipal
valuer in the case of the applicants requested in order to
consider the objections to be furnished with the following; namely;
Annexure A –Tenant and Rent Information; Annexure B-Schedule of
Expenses, Annexure C –Statement of Income and Expenditure
for
the previous financial year and Annexure D- Building Sizes. The
municipal valuer in the case of the applicants generally
stated that
the market value was adjusted but information insufficient to adjust
the value to the market value claimed. Section
54 of the Act provides
that a person effected by the decision taken on objection by the
municipal valuer has a right to appeal
the decision to the appeal
board. The appeal board as its function is to hear and decide appeals
against the decision of the municipal
valuer concerning objections.
In the case of the applicants, the second respondent stated in most
cases that it found insufficient
information to deviate from the
municipal valuations or deviate more that it deviated in the cases
wherein it deviated. The
applicants with their appeals they
supplied detailed information of the local conditions and condition
of the property as factors
affecting rental income and market
value of the property, and a schedule of income and expenses for the
previous financial
year and financial statements..
[8]
Section 34 of the Act grants to the municipal valuer the primary
function to value
properties in the municipality for purposes of
preparation of the valuation roll, and to consider and decide on
objections to the
valuation roll and to attend the meetings of the
valuation appeal board when it hears appeals or reviews of the
decisions of the
municipal valuer. The municipal valuer to
enable it to carry out its duties is granted by the Act (ss41 &
42) a right
to enter and inspect any property in the municipality and
to require to be furnished with information relevant for purposes of
valuation of the property. Section 56 of the Act
regulates the establishment of the valuation appeal board. The
MEC for the local government must by notice in the Provincial Gazette
establish as many valuation appeal boards in the province
as may be
necessary but not fewer than one in each metropolitan municipality.
The MEC for local government appoints members
of the valuation appeal
board. The valuation appeal board consists of a chairperson and no
fewer than two members. The chairperson
must be a person with legal
qualifications and sufficient experience in the administration of
justice. The other members are to
be persons with sufficient
knowledge of or experience in the valuations of property of which at
least one must be a professional
registered valuer or a professional
associated valuer. Section 67 provides that an appeal board may
determine its internal procedures
to dispose of appeals and reviews
subject to any procedures that may be prescribed. Section 75
set out the powers of the
valuation appeal board as follows: ‘75(1)
An appeal board may-
(a) by notice, summon a
person to appear before it-
(i) to give evidence; or
(ii) to produce a
document available to that person and specified in the summons;
(b) call a person present
at a meeting of an appeal board, whether summoned or not-
(i) to give evidence; or
(ii) to produce a
document in that person’s custody;
(c ) administer an oath
or solemn affirmation to that person;
(d) question that person,
or have that person questioned ; or retain a document produced in
terms of paragraph (a) (ii) or (b) (ii)
for a reasonable period.
(2) A person appearing
before an appeal board, whether summoned or not, may at his or her
own expense be assisted by a legal representative.
(3) (a) A
person summoned to appear before an appeal board is entitled to
witness fees paid to state witnesses in criminal
proceedings in
court.
(b) Fees
referred to in paragraph (a) must be paid by the relevant
municipality.
(4) The law
regarding privilege applicable to a witness summoned to give evidence
in a criminal case in a court applies
to the questioning of a person
in terms of subsection (1).’
[9]
The applicants rely on the founding affidavit and a supplementary
affidavit deposed
to by Mahomed Raffi Cassim Amod (Amod). Amod
states that he is the director and member of the applicant companies
and close
corporations. He says that he is authorised by
the applicants to institute these proceedings on behalf of the
applicants,
to represent them herein and to depose to the founding
affidavit, and that the facts contained therein are both true and
correct
and except where otherwise the context indicates are within
his personal knowledge.
[10]
The applicants contend that the amounts referred in the first
respondent’s 2019-valuation
roll, as market values of their
properties are not true market values of their properties in that
they are overstated which results
in exorbitant rates levied on their
properties. They filed objections, which resulted in no changes or
minor changes, and lodged
appeals to the valuations appeal board
(appeals board) which met with a similar result.
[11]
Amod refers to the schedule, which sets out in respect of each
property; the registered owner,
the physical address, the previous
municipal market value, the municipal market value in the 2019
municipal valuation roll, the
market value after objection and the
market value determined on appeal.
Reg. Owner
Address
Previous
Value
2019 valuation Roll
Value after
objection.
Value after appeal
Locom Investments
104 Masukwana str.
R2 200 000
R4 750 00
R4 400 000
R4 300 000
Catwalk Investments
81 Masukwana str.
R1 650 000
R3 750 000
R3 380 000
R3 380 000
SA
Mather(Ladysmith
)
136-138 Masukwana str.
R2 303 000
R5 350 000
R5 350 000
R5 350 000
Defacto Investments
130 Masukwana str.
R1 100 000
R1 850 000
R1 420 000
R1 420 000
Dewellior
Investments
494 Hoosen str.
R3 500 000
R9 200 000
R8 500 000
R6 000 000
532 Pietermaritz
Street
530 Pietermaritz
R1 900 000
R3 200 000
R2 900 000
R2 900 000
Ocean Sunset
Trading
18 Wigford rd
R3 400 000
R13 000 000
R8 800 000
R8 800 000
Vintage Express
Investments
665 Greytown rd
Section 1 of SS
Village Mall, 66g Greytown rd
R150 000
R580 000
R340 000
R340 000
Section 2 of SS
Village
R210 000
R630 000
R390 000
R390 000
Section 4 of SS
Village
R180 000
R570 000
R330 000
R330 000
Section 5 of SS
Village
R170 000
R560 000
R320 000
R320 000
Section 6 of SS
Village
R180 000
R560 000
R330 000
R330 000
Section 7 of SS
Village
R170 000
R320 000
R320 000
R320 000
Section 8 of SS
Village
R170 000
R550 000
R320 000
R320 000
Section 11 of SS
Village
R170 000
R560 000
R320 000
R320 000
Section 12 of SS
Village
R170 000
R550 000
R320 000
R320 000
Mahomed Raffi
35 Shelly Crescent
R1 800 000
R4 200 000
R4 200 000
R3 800 000
Yunus Goga
482 Hoosen Haffejee
R1 600 000
R3 000 000
R2 700 000
R2 700 000
Corpclo 34 CC and
Ahmed Agoga Family
Trust
479 Hoosen Hafejee
R2 800 000
R6 750 000
R6 100 000
R4 500 000
[12]
The applicants contend that the claimed marked values as finally
determined by the second respondent
are not supported by objective
facts but were arrived at in an arbitrary fashion, the appeal board
having refused to hear or to
consider their representations. It
results in unlawful unjustified rates levies imposed on them for
their properties.
[13]
The applicants allege that their representatives during the hearings
of appeals were poorly treated
by the members of the second
respondent, were not afforded a reasonable opportunity to make
representations, the members of the
second respondent showed a
hostile and condescending attitude towards them. It resulted in the
applicants being unable to fairly
present their contentions.
[14]
The third and seventh applicants state that in respect of the appeals
relating to the properties
at 136-138 Masukwana Street and 18 Wigford
Road, the members of the second respondent refused to hold appeal
hearings, they advised
that no appeal hearings could be heard because
they had run out of time. The applicants as evidence of poor
treatment their
representatives received during the appeal hearing
they refer to extracts of the transcript recording the offending
utterances.
They claim it shows bias and a hostile attitude by
some members of the second respondent. (The transcript of the record
of the
appeal hearings is defective in that it refers to all the
speakers as ‘unknown person’, which results in one being
unable to know who said what.)
[15]
The applicants contend that the second respondent rejected during the
appeal hearings relevant
documents in the form of audited
financial statements, estate agents’ valuations, comparative
sales in the locality, information
on the condition of each property,
the prevailing conditions in the area in which the property is
located. The said information
is relevant to determine a market
value of a specific property. The applicants further contend that
market values of the properties
prior to 2019 were not considered,
and the discrepancy between those values and the 2019 market values
is unexplained. They refer
to the 18 Wigford Road property of the
seventh applicant, prior to 2019 valuation its municipal market value
was R3 400 000. In
2019 it was raised to R13 000 000. After objection
it was reduced to R8 800 000.00 and the second respondent did not
hear the appeal
relating to it claiming that it had ran out of time,
which meant the value of R8 800 000 remained. The size of the
property is
18 592m², it is a shell warehouse made of second
hand steel with no concrete slabbed floor, has no plumbing and it has
a poor
electricity supply and a portion of the property is occupied
by squatters. A comparable bigger property at 25 Buntine Place has
a
marked value at R6 850 000 although it is bigger at 22 526m²
and has a frontage road and has no squatters. The
applicants,
further, refer to the 478 and 482 Hoosen Haffejee Street properties
which were finally valued at R2 700 000 and R 4
500 00 respectively,
whereas comparable properties at 400 and 410 Hoosen Haffejee Street
were valued at R1 750 000 and R 1 400
000 respectively.
[16]
The applicants contend that a valuer could not and would not be able
to properly value the properties,
which were the subject of the
appeals without physical inspections of the properties.
However, the municipal valuer and second
respondent rejected their
invitation to conduct physical inspections of the properties.
[17]
The applicants contend that initially the second respondent furnished
reasons for its decision
in respect of certain properties, but in the
records of the decisions additional reasons relating to all the
properties, which
are subject of the application, are given. It
shows, contend the applicants, that the additional reasons are a
product of an afterthought.
[18]
The applicants claim that the entire process was accompanied by an
illegality and irrationality.
It falls to be set aside and to start
de novo
before an independent impartial valuation appeal board
consisting of different members, and the first and second respondents
be
held liable for costs on attorney and client scale.
[19]
The respondents filed an answering affidavit deposed to by Rashid
Patel (Patel), the chairperson
of the second respondent. They
raised two points
in limine
. Firstly, that since the
applicants as part of the relief seek substitution of the members of
the second respondent, the failure
to cite or join the Member of the
Executive Committee (MEC) for local government responsible to the
appointment of members of a
valuation appeal board rendered the
application defective. Secondly, the review application has been
brought out of time, in that
it was launched more than 180 calendar
days from the date of the appeal decisions.
[20]
Patel stated that the fundamental problem with the appeals lodged by
the applicants is that they
lacked both supporting expert evidence,
for instance, a valuation report prepared by a professional
valuer or management
accounts as distinct from financial accounts and
raw information ; namely; lease agreements, rental invoices, rental
receipts,
bank statements. The said information would have
enabled the members of the second respondent themselves to reassess
the
valuation.
[21]
Patel states that the appeal board listened to the applicants’
lengthy submissions based
on appeal documents with profit and loss
statements containing crude and unsubstantiated workings unsupported
by any verifiable
information. The explanations, he says, given for
the estimates were generic and repeated in what amounted to copy and
paste exercise.
[22]
Patel states that in respect of the appeals that could not be heard
because of time constraints,
the applicants were afforded the
opportunity to make written submissions, which complies with the
requirements of
audi altercam partem.
Patel states that the
appeal proceedings were not rushed, but the appeal board had to deal
with 350 appeals and 1000 reviews. Some
of the proceedings pertained
to commercial properties with complex valuation, but despite that the
applicant were still given a
reasonable, fair and transparent
opportunity to present their case. The proceedings to save time were
spirited and inquisitorial.
In addition, the applicants’
representatives were offered an opportunity to have their matter
reconvened on other days.
[23]
Patel states that the appeal board adjusted values based on the
reasonable exercise of their
discretions, like a court faced with
unreliable evidence, the board was obliged to effectively apply
contingencies in reconsidering
the applicant’s properties
values.
[24]
Patel states that for commercial and industrial property, there are
several generally recognised
methods for determining the value
including Income Method and Discounted Cash Flow Analysis, a method
recommended by the International
Valuations Standards Council based
on the principle of nett operating income divided by capitalisation
rate. It means the present
value is the sums of future benefits which
the owner may expect to derive from that property. Nett operating
income is arrived
at by deducting from potential gross income vacancy
and bad debts and operating expenses. The capitalisation rate, often
referred
to as ‘the cap rate’ is the rate of return used
to value an investment property and positively correlated with both
the prevailing interest rate and the risk attached to investing in
the property. Factors relevant to risk interest to investing
in
property include qualitative factors applicable to broader locality
as well as the condition of the property.
[25]
Patel states that in line with the market valuation report prepared
by the municipal valuer (attached
to the record) estimates of the
typical rental per square metre and expenses ratio are available for
the various locations within
the area of the municipality. These
estimates vary by the condition of the property and reflect the
amount of rental, which the
property would most probably command in a
lease agreement. He states that the marked valuation report provides
the main guideline
for valuing the property. He states that the
original valuations by the municipal valuer would have entailed
assessing the conditions
of the properties and determined a value in
conjunction with applicable parameters set out in the market
valuation report, the
valuation date was 30 June 2019. The condition
of the area is taken into account with some commercial properties
graded average
or poor quality. However, a building of particularly
poor quality not typical of the surrounding area will not be taken
into account
as the valuation is based on the earnings potential of
the location. He states that it would be contrary to the interest of
the
municipality and the public interest generally to incentivise
property owners to leave properties in an unusually degraded state
in
the hope that this will secure lower rates valuation.
[26]
Patel concedes that the appellants can demonstrate that their
property should have a lower evaluation
by providing relevant and
reliable evidence (documentary evidence such as lease agreement,
invoices, receipts, bank statement or
a form of a valuation report
prepared by a sworn valuer).
[27] Patel
states that the appeal proceedings were conducted in a friendly but
spirited inquisitional manner. He denied
that any board member
displayed hostility to any persons. They endeavoured to maintain a
calm and collected composure on dealing
with applicants.
[28]
Patel states that Amod’s contention in relation to the nine
sections of the ninth applicant
being sold for R400 000 and therefore
should be valued at R150 000.00 to R210 000.00 per section was based
on hearsay evidence
and on vague ground. The price, Patel
contends, has no relevance in determining the market value but shows
that Amod family
speculates on property. He says that there was no
reliable relevant information on which the appeal board could rely
for a different
market value.
[29]
Patel reiterates that audited financial statements unsupported by a
sworn statement by the chartered
accountant setting out his
experience and qualifications are hearsay and constitutes an
inadmissible opinions. He says
audited financial
statements must necessarily be based as primary accounting data,
namely: invoices, receipts, bank statements,
books of primary entry
etc.
[30]
Patel states fit posed a fundamental problem to use audit financial
statements, which apply to
multiple properties, as it can be
difficult to isolate the information to any specific particular
property. He says what might
be considered a legitimate accounting
expenses in the context of a company or corporations (e.g. corporate
office overheads, including
excessive salaries or perks for members
or directors, depreciation, tax charges) would not be expenses that
are relevant to determining
the market valuation of a property.
He concludes that the relevance of financial statements was minimal,
they may potentially
have been a true reflection of the corporation’s
financial position, there was no indication that they were a true
reflection
of the profitability and thus value of the individual
properties owned by the corporation. He states that the appeal
board
had no obligation to make assumptions in favour of the
applicants, it was their responsibility to place sufficient, reliable
and
relevant evidence before the board to justify the valuation for
which they contended. Mr Variana, an appeal board member,
challenged the paucity of evidence put up by the applicants and he
made it clear to them that they needed to furnish better evidence.
The appeal board was and is entitled to be sceptical about
applicants’ assertions in the absence of adequate supporting
evidence claiming that the properties were leased to small-time
unreliable tenants. He says that there is no reasons for
foreign or low-income tenants not to conclude written lease
agreements, in any case he says, at least there had to be invoices,
receipts and bank deposits made of rentals paid by tenants. He
states that the applicants’ failure to put up adequate
supporting evidence, as evident from the annexures to the founding
affidavit and the record, gives rise to the drawing of an adverse
inference against the truth of the assertions they made in the
hearing.
[31]
Patel states that the appeal board is not obliged to visit the
properties. The use of satellite
images is standard practise in
valuation as stated in section 45(2) of the Act. Further, he says, it
was the responsibility of
the applicants to furnish all the evidence
required to support their appeal including expert evidence. He
says that if they
wished to tender specific detailed evidence
regarding the condition of a property, this should have been done by
tendering a detailed
valuation report by a registered professional
valuer. The market report, the appeal board relied on, was
prepared by an expert
Mr Moosa. In the absence of adequate
supporting evidence furnished by the applicant, the appeal board was
entitled to rely
on the mass valuations approach put forward by Mr
Moosa an expert and to put considerable weight on Mr Moosa’s
expert opinions.
[32]
Patel states that the applicants failed to lay sustainable foundation
for any argument in respect
of the eight applicants’
properties. He says that the appeal board entertained argument
for a while; ultimately, it
became clear that it was an exercise in
futility. Patel says that the applicants although required to
do so failed to submit
the square metereage of their properties,
failed to furnish adequate supporting evidence and failed to properly
fill out the appeal
forms.
[33]
Patel admits that a sale agreement to prove purchase price of the
property at 130 Masukwana Street
was produced, but the appeal board
attached no weight to it because the seller and buyer appeared to be
connected. Patel confirms
that the appeal board was not prepared to
put any reliance to a claim that some of the properties were zoned
incorrectly. He states
that the balance sheets lacked reliability in
the absence of expert testimony or sworn statements by accountants or
auditors responsible
for preparing them.
[34]
Patel states that use of comparative sales information was done, but
such use is not an exact
science, particularly as the valuators for
purpose of the roll pertains to a particular date. He states that the
appeal board became
frustrated with the applicants’ apparent
refusal to provide detailed evidence required by the appeal board,
but he rejects
the claim that any member of the appeal board
conducted himself in an erratic and unpredictable manner. He states
that no preference
was given to any family members of the members of
the appeal board.
[35]
Patel emphasised that the appeal board did not consider evidence of
any estate agent to be evidence
of an expert. He says that estate
agents valuation carries no weight whatsoever unless it is an estate
agent registered as professional
valuer, since any estate agent lacks
the necessary formal qualifications and lacks the required
independence. He says that to the
extent that an estate agent
valuation is based on and contains supporting evidence, which casts
doubts on the values determined
by the municipal valuer that evidence
will be taken into account.
[36]
Patel states that each appeal is considered on its merits, which in
turn depends on the quality
of the evidence that is tendered. In
the absence of reliable evidence concerning the specific income and
expenses of a particular
property, the property may be valued in
accordance with a mass valuation approach as it appears in s 45(3) of
the Act. Patel says
that the appeal board, which includes two
professional valuers, that is to say experts, exercised its judgment
in determining the
appropriate rental and expenses–to–income
ratio, with reference to the information contained in the market
report,
and taking into account the views expressed by Mr Moosa
whereas the applicants tendered no expert evidence.
[37]
Patel explains that 3% vacancy compiles one months’ vacancy
every three years, 8.3 % assumes
that the property is vacant for one
month of each year, which is unusual. The market report estimates
vacancy at 3 – 5% for
most properties, meaning that even if 8.3
% is used it would result in slight downward adjustment. Rental
income is not capitalised
at 12% across the board, as assumed by the
applicants, but it varies by location and the condition of the
property. He repeats
that there was no obligation on the appeal board
to inspect the properties and in the absence of relevant, reliable
documentary
evidence, there was nothing to justify conducting an
inspection of any of the applicants’ properties. The viewing of
aerial
photography is expressly sanctioned as being sensible for
valuation purposes in terms of s 45(2) of the Act.
[38]
Patel commenting on comparative properties values lower than the 18
Wigford Road property, states
that these were valuation decisions
reached at different hearings based on evidence presented in those
hearings. He says
that the applicants did not present
comparative property values supported by sworn valuation concerning
the valuation of their
properties. He says that the applicants
seek to rely on similar fact evidence where relevance of such
evidence is not shown.
He says that the appeal board determines
an appeal based on the strength of the evidence placed before it.
Patel states that for
commercial property the appeal board considers
hard evidence concerning the profitability of the premises more than
qualitative
factors.
[39]
Patel says that he is uncertain why the audited financial statements
submitted by the applicants
do not form part of the record, but it is
not correct that they were completely disregarded by the appeal
board. The appeal board
concluded that the financial statements
lacked sufficient probative value in themselves. He says that it is
correct that the appeal
board did not consider a valuation report by
a person who is not a registered professional valuer to have
sufficient probative
value to justify considering it, and Global
Properties whose valuations were furnished by the applicants, is not
a registered professional
valuer and those valuations the appeal
board rejected.
[40]
Patel repeats what audited financial statements of a property owning
company are not the best
evidence of the income and expenditure of
specific properties because overhead expenses are not specifically
attributed to the
property reduce the profitability of the company.
Secondly, audited financial statements may and in the applicants’
case
in fact did aggregate information pertaining to several
properties.
[41]
Patel responds that the appeal board’s reasons were prepared at
the time of the decision,
and that the applicants have not specified
which reasons were missing. Patel says that reasons for a decision
need not be detailed.
He says that the appeal board in saying,’
having already noted that the municipal valuer had already reduced
the valuation
of the property, accepted the valuer’s evidence
over that of the applicant’, is a good enough reason.
[42]
It is significant, in my view, that the property owner as affected
person is not involved in
the initial valuation of the property nor
is he invited to make an input to that valuation. He gets involved on
inspection of the
valuation roll, which shows the determined market
value of his property. He, if not satisfied, may then lodge an
objection. The
Act gives him no rights to be furnished with any
information other than the information in the valuation roll to
enable him to
make an informed objection. The objection is referred
to the municipal valuer who had determined the market value in the
valuation
roll. The municipal valuer without any engagement with the
objector considers the objection and decide the objections on facts
and adjust or add to the valuation, subject to the limitation of not
more than 10%, if more than 10% it is subject to review by
the appeal
board. The municipal valuer advises the objector of the
decision. The objector may apply for the reasons for the
decision.
The objector, if not satisfied with the decision of the municipal
valuer, appeals to the appeals board. In
Bator Star Fishing
(Pty) Ltd v Minister of
Environmental Affairs and Tourism and
Others
[2004] ZACC 15
;
2004 (4) SA 490
(CC) at para
[48]
the court observed: ‘In
treating the decisions of administrative agencies with appropriate
respect, a Court is recognising
the proper role of the Executive
within the Constitution. In doing so, a Court should be careful
not to attribute to itself
superior wisdom in relation to matters
entrusted to other branches of government. A Court should thus
give weight to findings
of fact and policy decisions made by those
with special expertise and experience in the field. The extent
to which a Court
should give weight to these considerations will
depend upon the character of the decision itself, as well as on the
identity of
the decision-maker. A decision that requires an
equilibrium to be struck between a range of competing interests or
considerations
and which is to be taken by a person or institution
with specific expertise in that area must be shown respect by the
Courts’.
[43]
The Act does not specify what need to accompany the lodging of an
appeal but stipulates that
the appeal board as its function is to
hear and decide appeals against the decision of the municipal valuer
concerning objections
to matter reflected in or omitted from the
valuation roll. The Act (s67) provides that an appeal board may
determine its internal
procedures to dispose of appeals. Patel has
not stated that any procedures for the hearing of appeals were
determined in accordance
with s 67. The minimum that would be
required is to have the determined internal procedures determined by
the appeal board, reduced
into writing, and communicated on time not
only to the objectors but to the community of the municipality. It is
irregular on
ad hoc
basis to determine internal procedures of
the appeal board in hearing the appeals.
[44]
The form for lodging the appeal with the appeal board requires to be
accompanied by five annexures:
1. Annexure A- It is
tenant and rent Information; name of a tenant and rent, size, rental
excluding VAT, escalation of rental,
other contributions, term of
lease, and start date.
2. Annexure B-
Schedule of expenses including Municipal, Administration, Insurance,
Security etc. 3.
Annexure C – statement
of income and expenditure for previous financial year.
4. Annexure D –
Building size; building no. size m² , description of
use, and condition.
5. Annexure E is other
features of the building. In a letter advising the
interested person of the appeal hearing,
it is stated that to assist
with the appeal he must bring along any photographs of the property,
valuations from anyone else, experts
to assist him in his appeal etc.
It is clear that what the appeal board demanded from the
applicants during the appeal hearings,
in particular, a sworn
valuation by a professional valuator, was not what the applicants
were told would be required.
Patel’s averments show
that the documents that were required to accompany the form lodging
an appeal were not given any weight
on appeal. If no weight
would be given to the required documents, why were these documents
required to determine an appeal?
The applicants correctly feel
aggrieved and accuse the appeal board of shifting the goal posts.
These were the documents to form
the essence for the determination of
the appeals. The failure by the appeal board to properly consider and
give due weight to requested
documents resulted in the total
failure to consider the appeal. Secondly, the appeal board
during the hearings of the
appeal to require for the first time
affidavit with audited financial; a sworn professional
valuation report, raw information
data in the form of invoices,
receipts, bank statements etc. was effectively denying the applicants
a hearing.
[45]
The applicants lodged appeals in relation to determined market values
of specific properties.
Patel repeatedly states that the market
values disputed were determined by the municipal valuer through a
mass valuation method.
In my view, sight must not be lost of
the fact that rates are levied on each property based on its market
value. If the objector
insists that the location and condition of the
property is not properly reflected in the market value determined in
mass valuation,
it is not an answer for the appeal board to say it is
not obliged to carry out physical inspection of the property or to
source
an individual valuation report of the property if it deems not
necessary to carry out physical inspection of the property.
Factors that determine a market value of a property are generally its
location, the improvements, the age of the property, and
the market
conditions at the time. Any information relating to these
factors is relevant to determine the market value of
the property.
[46]
Patel repeatedly states that the information supplied by the
applicants was not that of the experts and
the appeal board rejected
it. He says that the appeal board assumed that the market value
determined by the municipal valuer
an expert was correct. In my
view, Patel misses the point. The municipal valuer had not
prepared a valuation report
relating to each specific property in
respect of which the appeals were lodged. It remained, particularly,
important to consider
properly information relevant for determining
the market value of each specific property. If the appeal board
members were
not prepared to consider the information supplied by the
applicants nothing stopped the appeal board from obtaining valuation
reports
from an expert professional valuer on each property of the
applicants.
[47]
Patel places an onus on the applicants to prove to the appeal board
the valuations they contended
for. There is no provision in the
Act placing an onus on the objector or a person appealing. There is
no provision in the
Act, which entitles the appeal board to assume
that the market value determined by the municipal valuer is the
correct market value.
The appeal board, therefore, has to approach
the matters with an open mind and with an understanding that its
primary function
to the best of its ability, is to determine the
market value of the property. There is no onus on the party
appealing to
show that the decision appealed is wrong. The
appeal board is an appeal administrator dealing with appeals
administratively.
It cannot assume the role of an appeal
court. The matters before it are called appeals because they
are referred to it.
It deals with those matters, taking into
account previous developments up to that stage, by revisiting the
issues afresh with an
open mind. The Act in saying the appeal
board ‘hears and determines appeals’ merely emphasis that
it hears only
matters referred to it by those not happy with the
decisions of the municipal valuer on objections submitted to him.
The
owners of the properties that lodged the appeals are
assisting the appeal board to determine the correct market values of
the properties.
In
Athol Developments v
Valuation
Appeal Board
2014 (5) SA 485
(GJ) at para 13 &14 Vally J
said:
‘
It
bears noting that the first respondent is given wide powers to deal
with the appeal or review before it. This is apparent
from the
provisions of the MPRA, which allows for the first respondent to
summon any person to appear before it to give evidence
or to produce
a document that is available to that person, to accept evidence on
oath and to question any person or allow for that
person to be
questioned. The purpose for such wide powers is to allow for
the appeal to consider the matter de novo.’
[48] Patel
states that due to lack of reliable information, the appeal board
resorted to contingencies to determine
market values of the
properties. It is not clear on what grounds contingencies
were used. Contingencies are normally
used to factor in
uncertain future events. The role of contingencies in
determining a market value of a property on
a fixed date that has
passed is unknown. The applicants appeared not to have been
told in advance that contingencies would
be used and the applicable
ranges of those contingencies. Contingencies cannot be resorted
to cover for a failure to do what
the appeal board was required to
do. The market values of properties arrived at through
arbitrary use of contingencies
are not true market values of
properties.
[49]
In the Schedule shown above, there are substantial differences or
discrepancies of valuations
in the four stages. The first respondent
did the valuations. There is no logical explanation given for the
discrepancies. These
unexplained discrepancies cause the owners
of the properties to loose trust and credibility in the valuation
process. Patel
states that due to lack of reliable evidence
from the applicants, the appeal board adjusted values based on the
reasonable exercise
of their discretion and effectively applied
contingencies in the reasonableness of the applicant’s
properties values. In
my view, it is not clear what is meant by
reasonable exercise of their discretion and the application of
contingencies. This, in
my view, indicated a degree of speculation or
arbitrariness instead of objectively determine a market value of a
property.
[50]
In my view, the appeal board is required to see the appeal process as
part of the process to
determine a market value of the property. It
is a critical part in that it is part where the owners of the
properties can take
part. The participation of the owners of the
properties must be appreciated and be valued. They are
assisting the municipality
in the process to determine market values
of their properties for the municipality to properly levy rates it
needs. It is the function
of the appeal board to determine the market
value of each property, which determines rates to be levied on the
property. There
is no onus on the property owner to
prove a market value of his property; the onus is on the municipality
to show that a true market
value of property for the correct
determination of rates to be levied had been determined. The
respondents contend that the
applicants failed to present reliable
evidence to determine market values of the properties. If there
was no reliable information
before it, then how did the second
respondent determine the market values of the properties in the
absence of evidence?
The second respondent approached the
matter on the basis that the onus was on the applicants to prove
wrong the municipal valuation,
which approach is not found on any
provision in the Act. The appeal board adopted an approach not
stipulated in the Act,
and it did not disclose in advance to the
interested persons.
[51]
The owners who lodged appeals with the appeal board are entitled to a
fair equal treatment.
The Act does not envisage the
appeal board on
ad hoc
basis setting different appeal
procedures for the same appellants. The appeal board
having determined oral appeal hearings
it could not for its
convenience deny some appeals of oral hearings. The
owners of 18 Wigford road and 136 to 138 Masukwana
Street lodged
appeals as prescribed and were invited to the appeal hearings but
their appeals due to time constraints were not
heard instead they
were invited to make written submissions followed by a decision
refusing their appeals. If the appeal board
decided on appeals with
oral hearings, it was irregular to deny oral hearing to the owners of
the said properties. A
valuation appeal board set up to
hear appeals could not be heard saying it justifiable did not hear
the appeals because it ran
out of time to hear the appeals. Patel
belatedly claimed that the applicants in respect of these three
appeals the
appeal board offered them an opportunity to hear the
appeals on rescheduled dates. Mr Christison correctly ignored
this averment.
It offered no details of when was the
offer made and in what manner. It also contradicts the
respondents’ argument
that a fair appeal hearing did not
necessarily include an oral hearing and that these applicants were
told to make written submissions
or representations.
[52]
The respondents contend that the application should be dismissed in
that it was lodged out of
time and there is no application for
condonation. The applicants in the replying affidavit stated that, if
it is found that the
application is out of time, they apply for
condonation.
[53]
The main ground of the application is that when determining the value
of the properties, no consideration
was given to the condition of
each individual property, income generating potential of each
property and the location of each individual
property. In my view,
the appeal board has not answered or dealt with the concerns at all.
[54]
The respondents point out that the review application is directed to
the appeal decision taken
in October 2020. The review application was
lodged on 10 August 2021. Section 7 of Promotion of Administrative
Justice Act, 2000
(PAJA) provides that the review applications be
brought within a reasonable time and not more than 180 calendar days
after the
decision. In
Opposition to Urban Tolling Alliance v
South African National Roads Agency Ltd
[2013] 4 All SA 639
(SCA)
at para {26} the court held that a court cannot determine the merits
of a review application unless condonation has been
granted in the
event of non-compliance with s7(1) of PAJA. The court held:
‘
At
common law application of the undue delay rule required a two stage
enquiry. First, whether there was unreasonable delay
and,
second, if so, whether the delay should in all the circumstances be
condoned. (See e.g.
Associated
Institutions Pension Fund and others v Van Zyl and others
2005 (2) SA 302
(SCA) para 47). Up to a point, I think, s 7 (1)
of PAJA requires the same two stage approach. The difference
lies,
as I see it, in the legislature’s determination of a
delay exceeding 180 days as per se unreasonable. Before the effluxion
of 180 days, the first enquiry in applying s 7(1) is still whether
the delay (if any) was unreasonable. But after the 180
day
period the issue of unreasonableness is pre-determined by the
legislature; it is unreasonable per se. It follows that
the
court is only empowered to entertain review application if the
interest of justice dictates an extension in terms of s 9.
Absent such extension, the court has no authority to entertain the
review application at all. …. That of course does not
mean
that, after the 180-day period, an enquiry into the reasonableness of
the applicant’s conduct becomes entirely irrelevant.
Whether or not the delay was unreasonable and, if so, the extent of
that unreasonableness is still a factor to be taken into account
whether an extension should be granted or not. See
Camps
Bay Ratepayers’ and Residents’ Association v Harrison
[2010] 2 All SA 519
(SCA) para [54];
2011 (4) SA 42
(CC)).
[55]
The applicants contend that the review application was brought within
180 days from the second
respondent’s failure to furnish
reasons for a decision; it is required by the provisions of PAJA to
provide. They contend
that the second respondent’s failure to
furnish the reasons for its decision caused the delay.
[56]
Section 7 (1) of PAJA provides as follows:
‘
(1)
Any proceedings for judicial review in terms of sections 6(1) must be
instituted without unreasonable delay and not later than
180 days
after the date:-
(a)
subject to subsection (2)(c), on which any
proceedings instituted in terms of internal remedies as contemplated
in subsection (2)(a)
have been concluded; or
(b)
where no such remedies exist, on which the
person concerned was informed of the administrative action, became
aware of the action
and the reasons for it or might reasonably have
been expensed to have become aware of the action and the reasons.’
[57]
The provision stipulates that the 180-day period start to run from
the date the applicant receive
reasons for the decision. See
Aurecon v Cape Town City
2016 (2) SA 199
(SCA) para [16]
Section 5 of PAJA provides that an affected person who has not been
given reasons may within 90 days
after the date of becoming aware of
the decision request the administrator for reasons for the decision.
The administrator
must, within 90 days from date of receiving the
request, give the requested reasons. The provision in s 7(1) (b) did
not envisage
that the administrator can refuse or fail to give
reasons. In such a case, it is clear that the 180-day period will
start to run
from the date of receipt of the refusal to give reasons
or from the date of the expiry of the 90 day for the giving of
reasons.
The applicants requested reasons for the decisions on
12 November 2020. The second respondent had until 12 February
2021
to give reasons. When it failed to do so, the applicants
had to lodge the review application within six months from 12
February
2021 and did so on 10 August 2021, the last day of the
180-day period. In my view, since the applicants were entitled
to
the reasons for a decision, the review application was brought
within a reasonable time after waiting for the reasons for the
decision
they had timeously requested. Therefore, there is no need to
apply for condonation.
[58] The
respondents contend that the applicants fall under s 7(1) (a) of the
Act because the applicants are seeking
review of a decision which was
subject to internal remedies. They contend that the
decisions of the appeal board were
a culmination of exhaustive
internal remedies. Therefore, they contend, the applicants were
not entitled to the reasons for
decisions taken on appeal. They
argue that during the appeal procedure the applicants engaged with
the issues and the reasons
for the original decision appealed and
would be equipped to challenge any appeal outcome on review.
In my view,
the answer lies on what decision the applicants are
seeking to review. Is it a decision taken prior to the appeal
decisions
or is it the appeal decisions. The applicants did not
cite any other decision maker other than the second respondent.
In the amended notice of motion, the applicants seek an order in the
following terms:
1. The
valuation, objection and appeal processes in respect of the
properties referred to in paragraph 4 below are declared
to have been
unconstitutional and unlawful.
2. The second
respondent’s failure to afford an appeal hearing before it in
respect of the appeals relating to the properties
located at 18
Wigford road and 136 to 138 Masukwana Street is declared to have been
unconstitutional and unlawful.
3. The decision by the
first and/or second respondents to adjust the property values in
respect of the properties in question is
hereby reviewed and set
aside, alternatively, declared to be unconstitutional and set aside.
4. The first
respondent is directed to undertake the municipal valuation process
in respect of each of the properties in question
de novo and to do so
within 60 days of the date of this order, alternatively, such further
time period as the court deems appropriate.
5. Alternatively
to para 4 above:
5.1 The second
respondent is directed to undertake the appeal process in respect of
each of the above properties de novo and to
do so within 60 days of
the date of this order, alternatively, such further time period as
this court deems appropriate, and;
5.2 It is
directed that the valuation appeal board for purposes of the appeals
provided for in paragraph 5.1 above shall not
be constituted of the
same individuals that constituted the valuation appeal board for the
purposes of the decisions set
aside pursuant to the orders
above, and the first respondent is directed to constitute the
valuation appeal board subject to the
terms of this order
6. Pending the
final determination of the processes in paragraph 4 alternatively
paragraph 5 above, the applicants are authorised
to continue to make
payment of the rates amounts in respect of the above properties on
the basis of the valuations of those properties
prior to the new
valuations.(i.e. prior to the valuations which form the subject of
the objection and appeal processes and the
present proceedings)
7. The first
respondent and second respondents, jointly and severally, the one
paying the other to be absolved, shall pay
the costs of this
application on the attorney and client scale.
8. Further
and/or alternative relief.
The applicants in their
papers and in the heads of argument only challenged the manner the
second respondent dealt with their appeals
and the manner the members
of the second respondent conducted themselves during the appeal
hearings. The first respondent
is cited as the Municipality
interested in the valuation process within which process the impugned
decisions took place.
In my view, the focus of the relief is
the appeal decisions of the second respondent. The respondents
themselves in their
heads of argument state that: ‘the main
thrust of the review is against the Valuation Appeal Board, the
Second Respondent.’
It is common cause that those
decisions were not subject to any internal remedies. Further,
the affected person were advised
of the decisions without any reasons
for the decisions given. It follows, therefore, that the
applicants’ review application
is regulated by the provisions
of s 7(1) (b) of PAJA. It is of no consequence that the
respondents are of the view that the
applicants did not need reasons
for the appeal decisions. The provision grants the right
to be furnished with reasons
for the decision, on request, to the
person materially affected by the decision. It has been held
that the reasons must explain
why the decision was taken. The
requirement to furnish reasons is part of the fundamentals of good
administration and an
important mechanism for making administrators
accountable. Significantly, at an early stage, it enables the
affected person to
take an informed decision on the way forward. See
Minister of Environmental
Affairs and Tourism v Phambili
Fisheries (Pty) Ltd
2003 (6) SA 407
(SCA) A at para[40];
Koyabe
v
Minister for Home Affairs
2010 (4) SA 327
(CC) at
para[62]. It makes no difference that with hindsight it
might appear that the applicants did not need the reasons
for the
decision.
[59]
In the event condonation is required, I have to consider whether I
would grant condonation.
In
Steenkamp and Others v Edcon
Limited
2019 (7) BCLR 826
(CC) at para [36] the court held: ‘It
is now trite that condonation cannot be had for the mere asking.
A party seeking
condonation must make out a case entitling it to the
court’s indulgence. It must show sufficient cause.
This
requires a party to give full explanation for the non-compliance
with the rules or courts directions. Of great significance,
the
explanation must be reasonable enough to excuse the default’.
The respondents state that it can for purposes of
condonation
application be accepted that the appeal decisions were taken on 31
October 2020. The 180-day period lapsed on
29 April 2021.
The applicants lodged the review application three and half months
out of time. The respondents point
out that the applicants
purported to apply for condonation in a replying affidavit without a
notice of motion and belatedly together
with the heads of argument
delivered a notice of motion seeking relief to condone the late
lodging of the review application.
The respondents contend that
this amounts to correcting a fatal defect in the application in a
replying affidavit,
which is not allowed.
[60]
The applicants in the replying affidavit stated that the respondents
despite their timeous request
for the reasons for their appeal
decisions did not furnish them with the reasons. They then
lodged the review application
within 180 days after the expiry of the
period within which they had to be furnished with reasons. It
may be pointed out
that the respondents do not contend that the
applicants were not entitled to be furnished with reasons, but they
contend that the
applicants did not need reasons. Mr Christison
for the respondents during the hearing could not explain why the
respondents
did not respond to the request for the reasons. The
respondents also admit that they did receive a request for reasons
on
time and they did not respond to it. It follows that the
respondents in failing to respond to a request for reasons caused
the
applicants to wait for receipt of the reasons resulting in the delay
in lodging the review application.
[61] The
respondents challenge the manner the applicants applied for
condonation. They contend that it is irregular
to apply for
condonation in a replying affidavit with no notice of motion.
They contend that the irregularity is substantial.
It deprived
them of the opportunity to respond to the grounds for the
condonation. It is correct that the applicants have
applied for
condonation in an odd manner. The practice is to include in the
founding affidavit averments relating to condonation
and as part of
the relief include a prayer seeking condonation. The applicants
applied for condonation because the respondents
in the answering
affidavit averred that the review application was out of time.
The applicant in the replying affidavit
is required to address
averments made in the answering affidavit. The grounds for
condonation were very brief and the application
for condonation was
conditional on a finding that the review application was out of
time. The respondents could have applied
for leave to file a
supplementary affidavit to deal with the averments in the replying
affidavit relating to condonation.
The manner the applicants
applied for condonation although not in accordance with the practice
caused no prejudice to the respondents.
It would have been an
unnecessary step to launch a separate condonation application
repeating averments in the papers. The applicant
sought a short
relief relating to condonation. The relief although contained
in a notice of motion served with heads of argument
is a mere
formality; form need not be put over substance. In my view, the
manner the applicants applied for condonation is
explained and it is
excusable.
[62]
The applicants lodged the review application three and half months
from the expiry of the 180
days from the date of the appeal
decisions. The court in exercising a discretion whether to
grant condonation is guided by
what is in the interest of justice.
The court considers the extent of the delay, the reasons for the
delay, prejudice caused
by the delay, , nature, extent and
implications of the impugned decision as well as the prospects of
success in the intended review
application. See
Buffalo City
Metropolitan Municipality v Asla Construction (Pty) Ltd
2019 (4)
SA 331
(CC). The above-mentioned factors are
apparent from what appears above in this judgment.
[63] It
is important for both the applicants and the respondents to know
whether the second respondent’s
approach and the manner it
dealt with the appeals is in accordance with the law. The
applicants are liable for rates levied
on their properties based on
market values determined by the second respondent for a period of
five years. The unreasonable
delay after a period beyond the
180 day is a relatively short period. The respondents have not
shown any prejudice because
of the delay. The applicants, the
party seeking condonation, has shown prospects of success in the
review application. In
my view, the applicants have shown that it
will be in the interest of justice to hear the review application and
condonation for
the late lodging of the review application, if
required, falls to be granted.
[64]
The applicants state that in the event the court grants a relief
setting aside the decision of
the second respondent and ordering that
the municipal valuation process be convened
de novo
, it should
be commenced
de novo
before different members of a valuation
appeal Board.
The respondents contend
that such a relief shall usurp the powers of the MEC. The Act (s56)
provides that on MEC for Local Government
must, by notice in the
Provincial Gazette
, establish as many valuation appeal boards
in the province as may be necessary. Section 57 provides that the
Board deals with matters
in the valuation roll of a municipality in
the area for which it was established. It follows that a relief
impacting on the composition
of a valuation appeal board is a affects
the powers of the MEC for local government. In the result, the relief
envisaged cannot
be granted when the MEC for local government has not
been joined in the proceedings. However, in my view, it is part of
the relief
that can be discounted without affecting the essence of
the relief. Mr Dickson did not persist in seeking this
relief.
In fact, it may be prudent for the first
respondent to request the MEC to consider appointing alternate
members of the second
respondent. But the essence of the matter
is not that the current members of the second respondent are unable
or disqualified
to conduct appeals relating to the applicants’
mentioned properties.
[65]
The applicants allege impropriety on the part of the members of the
appeal board in various respect.
The respondents have denied any
impropriety on their part. In my view, it is not necessary for
purposes of deciding the crux of
the relief the applicants are
seeking to go into details of the alleged impropriety. I am of the
view, as found in this judgment,
no material impropriety on the part
of the members of the second respondent has been established.
[66]
The applicants seeks a relief directing the first respondent to
undertake the valuation process
of the properties listed in the
schedule
de novo
. In my view, it is the decisions of the
second respondent that are impugned. The second
respondent correctly approaching
the matter, in my view, is able to
carry out its task properly. An order directing reconstitution of the
second respondent to reconvene
the appeal process in respect of the
mentioned appeals of the applicants’ properties shall suffice.
Mr Dickson
in his final oral argument argued for a
relief limited to the second respondent reconvening and
commencing with the valuation
appeal hearings of the applicants’
mentioned properties anew.
[67]
Lawrence Baxter
Administrative Law
(Juta 1984) at 446 says the
following:
‘
Administrative
action based on formal or procedural defects is now always invalid.
Technicality in the law is not an end in itself.
Legal validity
is concerned not with technical but also with substantial
correctness. Substance should not always be sacrificed
to form; in
special circumstances greater good might be achieved by overlooking
technical defects.’ In
All
Pay Consolidated Investment Holdings (Pty) Ltd and others vs Chief
Executive Officer, South
African
Social Security Agency and others
2013
(4) SA 557
(JCA) ([2013] ZASCA 29) para 21 held:
‘
There
will be few cases of any moment in which flaws in the process of
public procurement cannot be found, particularly, where it
is
scrutinised intensely with objective of doing so. But, a fair
process does not demand perfection, and not every flaw is
fatal.’
[68]
The principle in the above-mentioned authority although mentioned in
the context of public procurement
applies equally in reviewing a
decision of the valuation appeal board. If the flaw substantially
influenced the decisions in question,
it is material and it vitiates
the decision.
[69]
Section 6 of PAJA provides:
‘
6
Judicial review of administrative
action
- (1) Any person may institute
proceedings in a court or tribunal for the judicial review of an
administrative action.
(2) A court or tribunal
has the power to judicially review an administrative action if –
(a)
The administrator who took it –
(i)
was not authorised to do so by the
empowering provisions;
(ii)
acted under a delegation of power which was
not authorised by the empowering provision; or
(iii)
was biased or reasonably suspected of bias;
(b)
If mandatory and material procedures or
conditions prescribed by an empowering provision was not complied
with;
(c)
The action was procedurally unfair;
(d)
The action was materially influenced by an
error of Law;
(e)
The action was taken-
(i)
for a reason not authorised by the
empowering provision;
(ii)
for an ulterior purpose or motive;
(iii)
because irrelevant consideration were taken
who account or relevant considerations was not considered.
(iv)
because of the unauthorised or unwarranted
dictates of another person or body;
(v)
In bad faith;
(vi)
arbitrary or capriciously;
(f)
the action concerned consists of a failure to take a decision;
(h)
the exercise of the power or the performance of the function
authorised by the empowering provision, in pursuance of which
the
administrative action was purportedly taken , is so unreasonable that
no reasonable person could have so exercised the power
or performed
the function;
or
(i)
the action is otherwise unconstitutional or unlawful.
[70]
The second respondent due to its flawed approach failed to receive
and/or give proper consideration
to the evidence of material
presented by the applicants. It failed to timeously in advance
advise the applicants of the documents
and evidence it deemed
necessary for the proper consideration of appeals. It failed
when it transpired during the appeal
hearings that it required
certain evidence and documents to afford the applicants an
opportunity to provide that evidence and documents.
It failed
to appreciate its primary role or functions, which is to determine
the market value based on all available relevant material.
It
determined the appeals placing an onus on the applicants, which was
improper; it determined the market values of properties,
which were
the subject of the appeals, in an arbitrary fashion; it failed to
conduct appeal hearings in respect of three properties
because of its
failure to provide time for the hearings of those appeals. It
conducted appeal hearings in a rushed unsettling
manner. If an
administrator misconstrues its functions, it does something not
authorised by the empowering provision, it
commits an error of law
and it bases its decision on an ill-conceived irrelevant
consideration. A decision taken not having followed
the required
process is not a decision. The second respondent took the
municipal valuations as the given. It thus failed
to carry out its
core function to determine the market value of the properties of the
applicants in a fair and transparent manner
without prejudging the
issue.
[71]
The applicants make much store in the manner the members of the
second respondent allegedly conducted
the proceedings and conducted
themselves. The applicants based on these averments claim relief in
broad terms and claim costs of
the application on a punitive scale.
I have not in the judgment, except averments relating to the
forensic conduct of the
second respondent, traversed these averments
and counter averments. The applicants are mainly juristic persons and
professional
persons in the appeal hearings represented them.
It is not shown that the representatives of the applicants were
intimidated
and it resulted in them being unable to make
representations. However, there is substance to the claim that
the appeal hearings
were rushed and in the process members of the
second respondent displayed impatience with the representatives of
the applicants.
The second respondent scheduled the appeal
hearings taking into account the volume of appeals to be dealt with.
It cannot
blame the applicants for its failure to spread the appeal
hearings properly. It failed to reschedule appeal hearings for
the three properties. There is a factual dispute regarding the manner
the appeal hearings were conducted and the conduct of the
members of
the second respondent during the appeal hearings. The
transcript of the record of the appeal hearings is defective.
Nevertheless, in my view, it is not necessary to resolve the
factual dispute. Likewise, in my view, it is not necessary
to
deal with the alleged bias based on these averments except forensic
bias in the sense its flawed approach to the issue. I
am also
of the view that the applicants have not established a case to award
costs on a punitive scale. Mr Dickson for the
applicants,
correctly in my view, did not persists with a prayer for costs in a
punitive scale.
[72]
In the result, the application is granted and the following order is
made.
1. If required, the
late delivery of the Applicants’ review application is hereby
condoned and an extension of the 180-day
period in terms of
s 9(1)
of
the
Promotion of Administrative Justice Act 3 of 20
00 is hereby
granted.
2. The
decisions by the First and/or Second Respondents to adjust the
property values in respect of the properties
listed in Annexure A
hereto is hereby reviewed and set aside, alternatively declared to be
unconstitutional and set aside.
3. The Second
Respondent is directed to undertake the municipal valuation appeal
process in respect of each of the properties
listed in Annexure A
hereto
de novo
and to do so within 60 days of the date of this
order and according to the terms of this judgment.
4. The First
Respondent is ordered to pay the costs of this application, including
the costs of two counsel where so employed.
Mngadi J
ANNEXURE A
Reg. Owner
Address
Previous
Value
2019 valuation Roll
Value after
objection.
Value after appeal
Locom Investments
104 Masukwana str.
R2 200 000
R4 750 00
R4 400 000
R4 300 000
Catwalk Investments
81 Masukwana str.
R1 650 000
R3 750 000
R3 380 000
R3 380 000
SA
Mather(Ladysmith
)
136-138 Masukwana str.
R2 303 000
R5 350 000
R5 350 000
R5 350 000
Defacto Investments
130 Masukwana str.
R1 100 000
R1 850 000
R1 420 000
R1 420 000
Dewellior
Investments
494 Hoosen str.
R3 500 000
R9 200 000
R8 500 000
R6 000 000
532 Pietermaritz
Street
530 Pietermaritz
R1 900 000
R3 200 000
R2 900 000
R2 900 000
Ocean Sunset
Trading
18 Wigford rd
R3 400 000
R13 000 000
R8 800 000
R8 800 000
Vintage Express
Investments
665 Greytown rd
Section 1
of SS
Village Mall, 66g Greytown rd
R150 000
R580 000
R340 000
R340 000
Section 2
of SS
Village
R210 000
R630 000
R390 000
R390 000
Section 4
of SS
Village
R180 000
R570 000
R330 000
R330 000
Section 5
of SS
Village
R170 000
R560 000
R320 000
R320 000
Section 6
of SS
Village
R180 000
R560 000
R330 000
R330 000
Section 7
of SS
Village
R170 000
R320 000
R320 000
R320 000
Section 8
of SS
Village
R170 000
R550 000
R320 000
R320 000
Section 11
of SS
Village
R170 000
R560 000
R320 000
R320 000
Section 12
of SS
Village
R170 000
R550 000
R320 000
R320 000
Mahomed Raffi
35 Shelly Crescent
R1 800 000
R4 200 000
R4 200 000
R3 800 000
Yunus Goga
482 Hoosen Haffejee
R1 600 000
R3 000 000
R2 700 000
R2 700 000
Corpclo 34 CC and
Ahmed Agoga Family
Trust
479 Hoosen Hafejee
R2 800 000
R6 750 000
R6 100 000
R4 500 000
APPEARANCES
Case
Number
:
5959/21P
Applicants
represented by
:Dickson
SC
Instructed
by
:
M Bhyat Attorneys.
:
PIETERMARITZBURG
Respondents
represented by
:
A.L. Christison
Instructed
by
:Mathew
Francis Inc
MONTROSE
Date of Hearing
: 10 March 2023
Date of Judgment :15
March 2023