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[2023] ZAKZPHC 94
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South African Property Owners Association NPC v Ethekwini Municipality and Others (9058/2023P) [2023] ZAKZPHC 94 (15 September 2023)
FLYNOTES:
MUNICIPALITY – Rates –
Randage
for vacant land
–
Applicants
complaining of increase of 100% and disparity with other
municipalities – Claiming that it dampens property
values
and curtails development and growth – Seeking interdict
pending part B – Numerous variables that may have
contribute
to the setting of the value of the rates such as amount of vacant
land in a municipality – Whether randage
can only be
determined by reference to the whole budget – The prima
facie right claimed is subject to an unacceptable
degree of doubt
– The relief claimed in Part A is dismissed with costs.
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case
no:
9058/2023P
In
the matter between:
SOUTH
AFRICAN PROPERTY OWNERS ASSOCIATION NPC APPLICANT
and
ETHEKWINI
MUNICIPALITY
FIRST RESPONDENT
MUNICIPAL
MANAGER: ETHEKWINI MUNICIPALITY SECOND
RESPONDENT
CHIEF
FINANCIAL OFFICER/DEPUTY CITY MANAGER: THIRD
RESPONDENT
ETHEKWINI
MUNICIPALITY
Coram
:
Mossop J
Heard
:
29 August 2023
Delivered
:
15 September 2023
ORDER
The
following order is granted
:
1.
Condonation
is granted for the late delivery of the respondents’ notice of
appearance to defend and answering affidavit and
the respondents
shall pay the applicant’s costs in opposing the condonation
application jointly and severally, the one paying
the others to be
absolved.
2.
The
relief claimed in Part A of the notice of motion is dismissed with
costs, such to include the costs of two counsel where so
employed.
JUDGMENT
Mossop
J
:
[1]
The applicant is the South African Property
Owners Association, a not-for-profit company. The first respondent is
the eThekwini
Municipality and the second and third respondents are
its functionaries. At the hearing of this matter, Mr Stockwell SC
appeared,
together with Mr Wijnbeek, for the applicant and Mr
Pammenter SC, together with Ms Shazi, appeared for the three
respondents. All
counsel are thanked for the assistance that they
have rendered to the court.
[2]
The notice of motion is divided into a Part
A and a Part B. It is necessary to set out the relief claimed in both
parts. Part A
claims an interdict against the respondents in the
following terms:
‘
2.
That, pending finalisation of the relief sought under Part B, the
Respondents be interdicted
and restrained from:
2.1
Implementing the decision of the First Respondent’s Council to
fix the rate randage
payable in respect of vacant land in respect of
the 2023/2024 financial year (‘the 2023 Decision’);
2.2
Enforcement action and/or collection of unpaid rates on vacant land
within the jurisdiction
of the First Respondent, on any rates
exceeding the rates amount that was in place on 30 June 2022 in
respect of any land.
3.
The costs of this Part A of the application are reserved for
determination in
Part B of the application.’
[3]
Part B seeks an order in the following
terms:
‘
1.
Calling upon the Respondents to show cause why the order sought in
Part A of this application
must not be made final, and confirming, to
the extent necessary the order sought in Part A and/or granting any
such relief on a
final basis;
2.
To the extent that the Court in the litigation between Calgro M3
[1]
and First Respondent,
Case number D12358/22,
has not already set aside the decision of the First Respondent’s
council to increase the rate randage
in respect of vacant land from
5,8966 cents in the Rand to 11,7932 cents in the Rand (“the
2022 decision”), to review
and set aside the 2022 Decision and
to declare same to be inconsistent with the Constitution of the
Republic of South Africa, 1996,
as well as the applicable
legislation, and therefore invalid;
3.
Reviewing and setting aside the 2023 Decision and declaring same to
be inconsistent
with the Constitution of the Republic of South
Africa, 1996, as well as the applicable legislation, and therefore
invalid;
4.
Directing the Respondents, absent a complete consultative process to
allow for
a valid decision on the input Randage rates to be used for
the 2024/2025 budget process, to resort to the rates Randage for
vacant
land in eThekwini Metropolitan Municipality applied prior
[sic] the 2022-decision and to apply an increase for the years of
2022/2023
and 2023/24 in accordance with the official annual
inflation rate as published by the South African Reserve Bank;
5.
In the alternative to prayer 5 above [sic], directing the Respondents
to apply
the rates Randage recorded in the 2021/22 budget of 0,58966
for vacant land within the First Respondent, similarly for the
financial
year of 2023/24 and to use such Randage as input to the
budget for 2024/25 pf which process commences in September 2023.
6.
Directing the Applicant’s cost of suit be paid by such of the
Respondents
as may oppose the relief sought, jointly and severally,
on the scale as between attorney and client, including the costs of
two
counsel where so employed.’
[4]
I am required only to consider the relief
claimed in Part A of the notice of motion.
[5]
But first, an observation and then a
preliminary issue. It is unfortunately necessary to record that on 20
July 2023, the learned
judge who initially dealt with this matter
when it first came before this court, determined that this
application was ‘semi-urgent’
and condoned the
non-compliance by the applicant with the provisions of the Uniform
Rules of Court regarding forms and service.
This was recorded in the
order that he granted. Despite this finding and the fact, also
recorded in his order, that the parties
had already delivered their
respective heads of argument, the learned judge did not continue and
hear the application and determine
Part A. Instead, he adjourned the
matter to my roll. It is not immediately clear to me why the
application was not heard given
the finding of semi-urgency that the
learned judge made. In my view, consequent upon the determination
made regarding urgency,
it ought to have been dealt with. The
decision of the learned judge places me in a difficult position as I
may have taken a different
stance on the question of urgency had I
been permitted to determine that issue along with the relief that I
am now required to
determine. I mention in this regard that this
application was launched on 19 June 2023, just over a year after the
decision was
taken in respect of which objection is presently made in
this application. From this it may be deduced why I have severe
reservations
about the urgency of the matter. But I am constrained by
the decision of the learned judge.
[6]
As
regards the preliminary issue to which I previously referred, the
applicant seeks to prevent the receipt by the court of the
respondents’ notice of appearance to defend and answering
affidavit, both of which were delivered outside the time limits
unilaterally imposed by the applicant by virtue of the alleged
urgency of the matter. The applicant stipulated in its notice of
motion that the appearance to defend had to be delivered by 23 June
2023 and that the answering affidavit had to be delivered by
7 July
2023. The notice of appearance to defend is dated 18 July 2023 and
the answering affidavit was delivered on 11 July 2023.
Mr Pammenter
correctly indicated that the answering affidavit had been delivered
but two days late.
[2]
The
respondents have delivered an application for condonation for the
late delivery of both documents. Notwithstanding the late
delivery of
the answering affidavit, by the time that Part A was argued before
me, the applicant had replied to it
[3]
and the replying affidavit formed part of the indexed papers.
[7]
The respondents have provided an
explanation for the late delivery of the notice of intention to
defend. The first respondent apparently
instructed its attorneys on
19 June 2023. Unfortunately, the senior partner of the firm of
attorneys instructed, Mr Maseko, had
been killed in a motor vehicle
accident on 9 June 2023. As a consequence, the senior attorneys of
the firm decamped to Eswatini
for his funeral over the week of 19 to
23 June 2023, leaving a candidate attorney to man the offices. The
candidate attorney received
the instruction to act in this matter
when it was given by the first respondent and was instructed to
deliver a notice of intention
to defend. Due to a mistake, he did not
do so. In my view, he may be forgiven for that mistake: he was,
admittedly, left unsupervised
by the absence of the senior attorneys.
[8]
Coetzee
J in
Luna
Meubel Vervaardigers (Edms) Bpk v Makin and another (t/a Makin’s
Furniture Manufacturers)
[4]
remarked
that:
‘
Urgency
involves mainly the abridgement of times prescribed by the Rules and,
secondarily, the departure from established filing
and sitting times
of the Court.’
These words are apposite
given the fact that while the respondents have given an explanation
regarding the failure to timeously
deliver the notice of intention to
defend, they have not said much about the late delivery of the
answering affidavit. Admittedly,
the times prescribed by the Uniform
Rules were abridged by the applicant, but as Coetzee J stated, this
is what happens in urgent
or semi-urgent applications. In fact,
nothing is said by the respondents on this issue other than to submit
that a litigant in
this division is not required, in terms of the
prevailing practice directives, to seek condonation for the late
filing of an affidavit
in urgent proceedings. It is so that the
practice directives do not deal specifically with this issue. But it
seems to me that
when time limits are truncated by an applicant in an
application styled as being urgent or semi-urgent, as in this case,
then it
is a bold litigant who ignores the time limits imposed by
that applicant. And it is an even bolder litigant who does not see
the
propriety, or need, to ask for condonation when the imposed time
frames are not adhered to.
[9]
But,
at the end of the day, the court has a discretion when considering
the issue of condonation.
[5]
Recognising
this discretion and given that the answering affidavit was delivered
a mere two days late and also considering the potential
consequences
of the order sought in Part A, I choose to exercise that discretion
in favour of the respondents, despite the dismal
explanation for its
lethargy in delivering its answering affidavit. I am satisfied that
no prejudice has been occasioned thereby
to the applicant. I
accordingly grant the condonation sought but the respondents will
have to pay the costs of the applicant’s
opposition to their
condonation application.
[10]
At the heart of the dispute between the
parties is a decision taken by the first respondent’s council
to increase the rate
randage in respect of vacant land within its
area of influence by one hundred percent (the impugned decision).
This decision was
taken in 2022 and initially applied to the
2022/2023 financial year. The interim relief claimed in Part A does
not relate directly
to the impugned decision: what is sought to be
interdicted is the decision relating to the rate randage imposed on
vacant land
taken in respect of the 2023/2024 financial year.
Why this is sought to be interdicted will be considered shortly. The
applicant
claims that the impugned decision was unlawful and
unconstitutional. In addition, to the extent that the first
respondent may seek
to enforce the collection of unpaid rates, the
applicant seeks the further relief that the first respondent may only
collect outstanding
rates on vacant land that did not exceed the rate
randage in place as at 30 June 2022. It seeks the relief in Part A
pending the
finalisation of Part B of this application. The
respondents deny that the impugned decision was unlawful or
unconstitutional and
oppose the granting of the interim interdict.
[11]
The requirements for an interim interdict
are well-known and need not be repeated. The requirements have been
canvassed in granular
detail in both the affidavits and heads of
argument of the respective parties.
[12]
Interdicts
are granted based upon the existence of a right or rights which are
sufficient to sustain a cause of action.
[6]
An applicant must, at the lowest level, establish a prima facie right
that may be open to doubt that is being infringed or which
it
anticipates will be infringed imminently.
The
onus of establishing the existence of the prima facie right rests
upon the party claiming the interdict.
[7]
If
the applicant cannot e
stablish
a prima facie right, the application must fail.
[8]
[13]
In
Simon
NO v Air Operations of Europe AB and others
,
[9]
the Supreme Court of Appeal set out the test for considering whether
a prima facie right has been established as follows:
‘
The
accepted test for a
prima facie
right in the context of an interim interdict is to take the facts
averred by the applicant, together with such facts set out by
the
respondent that are not or cannot be disputed and to consider
whether, having regard to the inherent probabilities, the applicant
should on those facts obtain final relief at the trial. The facts set
up in contradiction by the respondent should then be considered
and,
if serious doubt is thrown upon the case of the applicant, he cannot
succeed.’
[14]
With that test in mind, I turn now to
consider the facts alleged by the applicant.
[15]
The applicant states that its vision is to
be a nationally accepted and internationally recognised landowners’
association,
having been established in 1966, and posits itself as
the representative voice of this country’s commercial and
industrial
landowners. It claims that its membership comprises more
than 90 percent of the commercial land industry in this country. It
has
members within the first respondent’s area, who own vacant
land and who have felt the lash of the impugned decision. Rather
than
a multiplicity of owners of vacant land who are members of the
applicant each bringing an application against the respondents
for
the relief claimed in this application, the applicant brings such an
application on their behalf. It concedes, however, that
there are
owners of vacant land within the first respondent’s area who
are not its members but asserts that in bringing this
application, it
acts in their interests as well.
[16]
The applicant makes the case in its
founding affidavit that the rates payable by ratepayers are subject
to the influence of three
variables, namely the rand value ascribed
to land, the ratio at which rates are imposed and the actual cents in
the Rand imposed
in relation to the rand value of the land (the rate
randage). In addition, the applicant submits that the first
respondent must
take cognisance of the contents of the annual
Municipal Budget Circular (the circular) issued by the National
Treasury when considering
an increase in the rate randage. The
applicant specifically refers to the circular issued by the National
Treasury on 6 December
2021, which advised as follows:
‘
The
Consumer Price Index (CPI) inflation is forecast to be within the
lower limit of the 2.6 per cent target band; therefore municipalities
are required to justify all increases in excess of the projected
inflation target for 2022/23 in their budget narratives and pay
careful attention to tariff increases across all consumer groups.’
[17]
The applicant provides an analysis that
commences with the decision taken by the first respondent for the
2021/2022 financial year
regarding the rate randage applicable to
vacant land. It was fixed at the amount of 5,8966 cents in the Rand.
The first respondent’s
medium-term revenue and expenditure
framework document, referred to by the applicant in its founding
affidavit, projected the anticipated
increases in, inter alia, the
rate randage for three successive financial years. It projected that
for the 2022/2023 financial
year, the rate randage in respect of
vacant land would increase from the rate of 5,8966 cents to 6,1915
cents in the Rand and then
to 6,501 cents in the Rand during the
2023/2024 financial year.
[18]
However, that sequence of prophesised
increases did not eventuate. Contrary to the projected amounts
referred to in the first respondent’s
medium-term revenue and
expenditure framework document, when the 2022/2023 municipal budget
was approved, the impugned decision
was taken and the rate randage
payable in respect of vacant land was increased by 100 percent: it
escalated from 5,8966 cents to
11,7932 cents in the Rand. This
increase was approved by the council of the first respondent on 7
June 2022 and became effective
on 1 July 2022.
[19]
In pressing its case, the applicant alleges
that the rate randage charged in respect of vacant land by the first
respondent is significantly
higher than rates charged by other
metropolitan municipalities in South Africa. Examples are provided of
the rates charged by the
municipalities of Cape Town, Mangaung,
Tshwane, Nelson Mandela Bay and Johannesburg. Assuming a property
value of R1 million, after
the impugned decision was taken, eThekwini
would now charge rates of approximately R118 000 per annum on that
land, whereas Tshwane
would only charge approximately R39 000 per
annum and Cape Town would charge rates of approximately R13 000 per
annum, to mention
but three municipalities.
[20]
The applicant contends that this obvious
disparity is prejudicial to its members in eThekwini and is
unsustainable. Such a decision
also dampens property values and
curtails development and growth because investors will regard the
eThekwini area as being less
likely to generate acceptable returns on
investment.
[21]
The applicant sets out in the founding
affidavit the requirements contained in the
Local Government:
Municipal Finance Management Act 56 of 2003
in some detail. It also
considers what the provisions of the
Local Government: Municipal
Property Rates Act 6 of 2004
demand, and reference is made to
correspondence that it and an entity known as the KZN Growth
Coalition (KZNGC) addressed to the
first respondent over the period
August to September 2022. One of the issues that was taken up in this
correspondence was that
the doubling of the rates in respect of
vacant land had not been referenced in the 2022/2023 Integrated
Development Plan. In further
correspondence, the KZNGC also raised
the issue that there had been a failure to properly consult
landowners and consequently landowners
were unable to object to the
taking of the impugned decision or to the budget of which it formed a
part.
[22]
The applicant further submitted that:
‘…
the
draft budgets made available for public comment was not transparent,
and the substantial increase in the rate randage on vacant
properties
were not easily apparent.’
[23]
According
to the applicant, the first respondent then resolved to establish
what it called the ‘war room’, being a committee
brought
into life to engage with the applicant, KZNGC and others on the issue
of the increase. It held its first meeting on 10
February 2023. The
first respondent broadly undertook to consider the representations
made to it about the municipal budget. Further
meetings were held,
and the first respondent undertook to address the issue of the
impugned decision in the 2023/2024 budget.
[10]
It also indicated that because litigation had been commenced against
it by Calgro M3, to which reference was made earlier in this
judgment, there would be no further engagement with the applicant and
the KZNGC. Further correspondence was, however, entered into
but
produced nothing that satisfied the applicant and thus this
application was born.
[24]
To these allegations,
the respondents have initially challenged the locus standi of the
applicant to bring and move this application.
They
allege that the applicant is an organisation of landowners and not a
landowner itself and it therefore has no direct and substantial
interest in the matter. It therefore lacks any basis in terms of
common law to bring this application. The rights that are ostensibly
being protected by the bringing of the application are those of the
individual members of the applicant and are not rights that
have been
created by virtue of their membership of the applicant.
[25]
Section 38 of the Constitution reads as
follows:
‘
Anyone
listed in this section has the right to approach a competent court,
alleging that a right in the Bill of Rights has been
infringed or
threatened, and the court may grant appropriate relief, including a
declaration of rights. The persons who may approach
a court are -
(a)
anyone acting in their own interest;
(b)
anyone acting on behalf of another person who cannot act in their own
name;
(c)
anyone acting as a member of, or in the interest of, a group or class
of persons;
(d)
anyone acting in the public interest; and
(e)
an association acting in the interest of its members.’
[26]
The respondents submit that it follows that
if this section is to be invoked, the right sought to be enforced by
a group or an association
must arise out of the Bill of Rights. They
submit that the rights that the applicant seeks to enforce do not
have the Bill of Rights
as their origin.
[27]
As
authority for a different point, the respondents referred me to
South
African Property Owners Association v Johannesburg Metropolitan
Municipality and others.
[11]
The matter may indirectly be of significance to the issue of locus
standi because in it, the South African Property Owners Association
(SAPOA) successfully appealed a decision of a lower court to the
Supreme Court of Appeal. The matter was not entirely dissimilar
to
the one before me, but the facts need not be considered in any detail
for present purposes. The significance of the matter is
that a
t
no stage in the reported judgment does a challenge to SAPOA’s
legal standing arise. It appears that it was not identified
as an
issue in the matter. Indeed, the Supreme Court of Appeal referenced
the fact that while the applicant represented 90 per
cent of
commercial landowners, it was not the representative of all such
owners,
[12]
much as has been
stated by the applicant in this matter. This, however, proved
no obstacle to SAPOA’s entitlement to
claim the relief that it
sought on appeal and it succeeded in that appeal.
[28]
There
is no way of knowing from the reported judgment of that case whether
the legal standing of the applicant was an issue that
had been raised
in that matter. Certainly, there is no mention of it in the judgment.
It is, I suppose, conceivable that none of
the parties considered the
point, hence the Supreme Court of Appeal made no mention of it in the
judgment. However, the respondents
in this application have
considered it. They view it as an insurmountable obstacle to ultimate
success. They may be correct in
what they assert. It does appear that
no rights emanating from the Bill of Rights arise in this matter. If
that is so, then the
applicant’s locus standi may be subject to
question. That, however, will only be decided later on in the life of
this matter.
But it is a consideration that must be weighed up when
considering whether the applicant is entitled to the relief that it
seeks
in Part A.
[29]
The
respondents then go on to address the issue of the review sought in
Part B. I again caution myself that I am not required to
determine
that issue. But the relief sought in Part B may have same relevance
to the interim relief sought in Part A. In
Economic
Freedom Fighters v Gordhan and others
,
[13]
the Constitutional Court held that:
‘…
before
a court may grant an interim interdict, it must be satisfied that the
applicant for an interdict has good prospects of success
in the main
review. The claim for review must be based on strong grounds
which are likely to succeed. This requires
the court
adjudicating the interdict application to peek into the grounds of
review raised in the main review application and assess
their
strength. It is only if a court is convinced that the review is
likely to succeed that it may appropriately grant the
interdict.
The rationale is that an interdict which prevents a functionary from
exercising public power conferred on it impacts
on the separation of
powers and should therefore only be granted in exceptional
circumstances.
’
[30]
The
applicant states in its founding affidavit that the decision to adopt
a budget and to take the impugned decision is administrative
action
and may thus be reviewed in terms of the
Promotion of Administrative
Justice Act 3 of 2000
. The respondents dispute this. In the
alternative, the applicant submits that these decisions are
reviewable in terms of the principle
of legality. However, in
argument, Mr Stockwell agreed with Mr Pammenter that the impugned
decision was not administrative action.
Thus, the relief sought in
Part B of the notice of motion could only be challenged on
the
principle of legality. In my view, that was a sensible concession.
The calculation and imposition of rates is not administrative
action.
[14]
In
South
African Property Owners Association
,
the Supreme Court of Appeal stated that:
‘
As
the imposition of rates is not administrative action, SAPOA did not
seek to review and set aside the Council’s budget or
the
decision to levy an additional 18% rate on business properties in
terms of the Promotion of Administrative Justice
Act 3 of
2000.’
[15]
(Footnote
omitted.)
[31]
In
Kungwini
Local Municipality v Silver Lakes Home Owners Association
,
[16]
Van
Heerden JA stated that:
‘
In
a post-constitutional South Africa, the power of a municipality to
impose a rate on property is derived from the Constitution
itself:
the Constitutional Court has described it as an “original
power” and has held that the exercise of this original
constitutional power constitutes a legislative - rather than an
administrative - act. The principle of legality, an incident
of
the rule of law, dictates that in levying, recovering and increasing
property rates, a municipality must follow the procedure
prescribed
by the applicable national or provincial legislation in this
regard
.’
[17]
(Footnotes omitted.)
[32]
The respondents
contend, furthermore, that the impugned decision forms part of the
overall adoption of the first respondent’s
annual budget in
2022 and that the applicant cannot simply seek the setting aside of a
portion of that budget. A similar argument
is advanced in respect of
the 2023/2024 budget.
That the rate
randage forms an integral part of the entire budget was acknowledged
by the Supreme Court of Appeal in
South
African Property Owners Association
,
where Southwood AJA, in the minority judgment insofar as the order to
be granted on appeal was concerned, stated that:
‘
Furthermore,
logic dictates that the approval of the budget must go hand in
hand with the determination of the rates, as the
revenue from rates
is essential to fund the budgeted expenditure. The court a quo
therefore wrongly concluded that the levying
of rates is not an
integral part of the budget process
.’
[18]
[33]
Writing for the majority in the same
matter, Navsa JA approved of the abovementioned extract from
Southwood AJA’s judgment
and further stated that:
‘
Although
counsel on behalf of SAPOA persisted in having the rate improperly
imposed set aside, he advisedly recognised the difficulties
of a
court even attempting to set aside the 2009/2010 budget two budgetary
periods thereafter. Successive budgets are based on
surpluses or
deficits from prior periods. One is built on the outcome of the
other. This, in modern language, is called a knock-on
effect. The
legality of the budgets for the successive periods has not been
challenged. Considering the knock-on effect, it must
be so that any
subsequent increase in rates would have owed its genesis to and been
premised on the rate presently sought to be
impugned
.’
[19]
[34]
In what way does the applicant
submit that the principle of legality has been offended by the first
respondent? It says very little
in this regard. It claims that the
doubling of the rates had not been referenced in the first
respondent’s Integrated Development
Plan; that the draft
budgets made available for public comment were not transparent and
the substantial increases ‘were not
easily apparent’; and
that there had been a failure to properly consult landowners and
consequently they were unable to object
to the taking of the impugned
decision or to the budget of which it formed a part of.
[35]
It does not seem to me that these
complaints demonstrate a perversion of the principle of legality. The
fact that information was
allegedly ‘not easily apparent’
does not mean that the information was not disclosed or that it
prevented submissions
being made by the applicant on that issue. This
is perhaps inadvertently accepted by the
deponent
to the applicant’s founding affidavit in correspondence that he
penned to a representative of Calgro M3 on 28 June
2022, when he
stated the following:
‘
We
made a submission to the City in January this year and informed them
of our concerns with this increase.
The
City went ahead regardless.
We
have not at this stage considered any legal action on behalf of our
members.
My
experience with these matters is that a court would very rarely
reverse a decision of this nature once budget has been approved.’
[36]
The submission
referenced in this extract was made in January 2022, which was prior
to the impugned decision being taken. The deponent
thus acknowledges
that the applicant was aware of the proposed increase and had
addressed its concerns to the first respondent.
The
fact that the first respondent did not accept that submission does
not mean the first respondent acted unlawfully: it simply
means that
it was not persuaded by the applicant to change the rate randage.
This, it appears to me, is not contrary to law nor
does it offend
against the principle of legality. That principle merely holds that
the first respondent’s
decision had to be taken in accordance with the law, failing which it
was invalid to the extent that it was inconsistent with the
law. There is no imperative that the first respondent should
engage and consult and ultimately agree with representations
received
by it.
[37]
The respondents have steadfastly asserted
that all budgetary processes had been complied with by the first
respondent and that it
has acted lawfully. The respondents assert, in
response to the applicant’s contention that the National
Treasury’s
circular has not been adhered to, that it has
complied with its terms. The circular did not prohibit above
inflation increases
but provided that where that did occur it would
have to be justified. It states that the National Treasury has
endorsed the first
respondent’s budgets for the 2022/2023 and
2023/2024 financial years as being:
‘
balanced
and fully funded.’
[38]
While the impugned decision relates
to the increase applicable for the 2022/2023 financial year, the
interdict in Part A of the
notice of motion relates to the rate
randage applicable for the 2023/2024 financial year. This appears to
be an express recognition
of the knock-on effect referred to by Navsa
JA in
South African Property Owners
Association
. The applicant wishes to
prevent the implementation of a decision regarding the rate randage
for the forthcoming financial year
because the rate randage decreed
for a past financial year was, in its opinion, excessively high. The
applicant is thus trying
to unscramble the already scrambled egg.
However, notwithstanding that preference was afforded to this matter
allowing for an early
hearing, by the time that it was argued, the
budget for the 2023/2024 financial year had become effective.
To challenge the
impugned decision, ultimately the budget for two
financial years will have to be challenged and reversed. This will be
a difficult
thing to achieve, a fact that Navsa JA acknowledged in
South African Property Owners
Association
, as did the deponent to the
applicant’s founding affidavit in his correspondence to Calgro
M3 on 28 June 2022, referenced
earlier in this judgment.
[39]
Insofar as the
comparative analysis performed by the applicant of the rate randage
charged by certain municipalities is concerned,
it is undeniable that
the
figures vary greatly between
municipalities and may initially generate a feeling of shock,
particularly amongst owners of vacant
land in eThekwini. I am,
however, not entirely certain that these comparisons are helpful. I
do not know how much vacant land exists
in any of the cities in
respect of which a comparison was drawn, let alone how much vacant
land exists in eThekwini. Some cities
may have an abundance of vacant
land and can afford to charge lower rates because of that. Others may
have less vacant land and
therefore need to maximise the revenue that
they can generate from that land. There are numerous other variables
that may have
contributed to the setting of the value of the rates by
the municipalities referred to by the applicant.
[40]
I am therefore unconvinced that the
comparisons drawn by the applicant are valid. Presented as they have
been, the comparisons drawn
are based on a single component, namely
the rate randage, being compared across various municipalities. In
drawing those comparisons,
the rate randage is viewed in isolation
and not in the context of the overall municipal budget. It is not
disputed that the rate
randage charged by a municipality is an
integral part of a much bigger budget. It follows that the rate
randage imposed on vacant
land located within the first respondent’s
area of influence may be very high but other rates or other imposts
charged by
it may be very low. Whether the rate randage charged in
respect of vacant land is excessively and unnaturally high can, in my
opinion,
only be determined by reference to the provisions of the
whole budget in its entirety. I do not have that information before
me.
[41]
After reflection, I am unpersuaded that the
applicant has established a prima facie right and it seems likely to
me that the applicant
will have difficulty in succeeding in the
forthcoming review proceedings. In my view the case made out by the
applicant is tenuous
insofar as an interim interdict is concerned:
the prima facie right claimed is subject to an unacceptable degree of
doubt. The
application cannot therefore succeed.
[42]
If I am
incorrect in finding that a prima facie right has not been
established, I briefly consider the other requirements that must
be
met for an interim interdict to be granted.
[43]
I
was advised from the bar by Mr Stockwell that the distinguishing
feature between Calgro M3 and the applicant is that the applicant’s
members have continued to pay the rates in respect of which its
members object, whereas Calgro M3 has not. The applicant’s
members have thus been compliant for over a year. It is difficult to
discern irreparable harm eventuating in such circumstances.
Irreparable harm is harm that cannot be reversed or undone.
[20]
If the review sought in Part B is ultimately successful, the
applicant’s members would notionally be entitled to claim a
refund of the amounts that they dutifully paid whilst challenging the
impugned decision.
[44]
The interim
interdict seeks to limit the ability of the first respondent to
recover amounts not paid to it in respect of the budgets
that have
been in place in respect of the 2022/2023 and 2023/2024 financial
years. This may have a significant effect on the first
respondent’s
revenue stream and its ability to function. In my view, the balance
of convenience accordingly favours the first
respondent.
[45]
Finally, the
applicant has an alternative remedy available to it in the form of
the review proceedings that it has already commenced.
It, of course,
also has the option of suing for any damages that it may have
suffered in the event of it succeeding in those review
proceedings.
[46]
After considering the facts and the
competing submissions of counsel, I conclude that the relief sought
in Part A of the notice
of motion must fail. There is no reason why
costs should not follow the result. Both parties were represented by
senior and junior
counsel and the costs order should reflect that
fact.
[47]
I accordingly grant the following order:
1.
Condonation is granted for the late
delivery of the respondents’ notice of appearance to defend and
answering affidavit and
the respondents shall pay the applicant’s
costs in opposing the condonation application jointly and severally,
the one paying
the others to be absolved.
2.
The relief claimed in Part A of the notice
of motion is dismissed with costs, such to include the costs of two
counsel where so
employed.
_______________________
MOSSOP
J
APPEARANCES
Counsel
for the applicant :Mr R Stockwell SC with
Mr
D H Wijnbeek
Instructed
by : Ben Groot Attorneys Incorporated
Trading
as GVS Law
Locally
represented by:
Talbot
Attorneys
2
Shackleford Road
Pelham
Pietermaritzburg
Counsel
for the respondent:Mr C J Pammenter SC with
Ms
K Shazi
Instructed
by : Maseko Mbatha Incorporated
313
Pietermaritz Street
Pietermaritzburg
Date
of argument :
29 August 2023
Date
of Judgment: 15
September 2023
[1]
An
entity known as
Calgro
M3 has instituted application proceedings against the first
respondent on largely the same grounds as are raised in this
application and apparently also seeks the setting aside of the 2022
decision. Calgro M3’s matter bears case number 12358/2022
and
is still pending. Thus, the decision to increase the rate randage by
one hundred percent, as referred to in Part B of the
notice of
motion, has not been changed as a consequence of any decision taken
in the Calgro M3 matter. The Calgro M3 matter is
a persistent
presence in this application.
[2]
7
July 2023 was a Friday and consequently
8
and 9 July 2023 were a Saturday and a Sunday respectively. The
affidavit was, thus, delivered two court days out of time.
[3]
On
17 July 2023.
[4]
Luna Meubel Vervaardigers (Edms) Bpk v Makin and another (t/a
Makin’s Furniture Manufacturers)
1977
(4) SA 135
(W) at 136H. See also the comments made by Sutherland J
South
African Airways SOC v BDFM Publishers (Pty) Ltd and others
2016
(2) SA 561
(GJ).
[5]
South
African Breweries Ltd v Rygerpark Props (Pty) Ltd and others
1992
(3) SA 829 (W).
[6]
Albert
v Windsor Hotel (East London) (Pty) Ltd (in liquidation)
1963
(2) SA 237
(E) at 240E-241G
.
[7]
Molteno
Brothers and others v South African Railways and others
1936 AD 321
at 333.
[8]
Horn
v Great Force Investments 25 (Pty) Ltd and another
[2015]
ZANCHC 7
para 20.
[9]
Simon
NO v Air Operations of Europe AB and Others
[1998] ZASCA 79
;
1999
(1) SA 217
(SCA) at 228G-H.
[10]
This
appears to have been done. The draft budget for the 2023/2024
financial year proposed that the rate randage for vacant land
be
reduced by 15 percent from 11.7932 cents in the Rand to 10.0242
cents in the Rand. After public hearings, it was reduced by
a
further 15 percent to 8.3355 cents in the Rand.
[11]
South
African Property Owners Association v Johannesburg Metropolitan
Municipality and others
[2012] ZASCA 157; 2013 (1) SA 420 (SCA); 2013 (1) BCLR 87 (SCA);
[2013] 1 All SA 151 (SCA) (hereafter referred to as
South
African Property Owners Association
).
[12]
Ibid
para 70.
[13]
Economic
Freedom Fighters v Gordhan and others
[2020]
ZACC 10
;
2020 (6) SA 325
(CC) para 42.
[14]
Fedsure
Life Assurance Ltd and others v Greater Johannesburg Transitional
Metropolitan Council and others
[1998]
ZACC 17
;
[1998] ZACC 17
;
1999
(1) SA 374
(CC)
para 45.
[15]
South
African Property Owners Association
para
5.
[16]
Kungwini
Local Municipality v Silver Lakes Home Owners Association and
another
[2008]
ZASCA 83; 2008 (6) SA 187 (SCA); [2008] 4 All SA 314 (SCA).
[17]
Ibid
para 14.
[18]
South
African Property Owners Association
para
32.
[19]
Ibid para 71.
[20]
Tshwane
City v Afriforum and another
[2016]
ZACC 19
;
2016 (6) SA 279
(CC) para 55.