Own Haven Housing Association NPC and Another v Buffalo City Metropolitan Municipality and Another - Review Application (1217/2019) [2023] ZAECELLC 29 (26 June 2023)

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[2023] ZAECELLC 29
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Own Haven Housing Association NPC and Another v Buffalo City Metropolitan Municipality and Another - Review Application (1217/2019) [2023] ZAECELLC 29 (26 June 2023)

IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, EAST LONDON CIRCUIT COURT)
CASE
NO.  1217/2019
NOT
REPORTABLE
In
the matter between:
OWN
HAVEN HOUSING ASSOCIATION NPC
First
Applicant
LORLES
CC
Second
Applicant
And
BUFFALO
CITY METROPOLITAN MUNICIPALITY
First
Respondent
MINISTER
OF HUMAN SETTLEMENTS,
WATER
AND SANITATION
Second
Respondent
JUDGMENT
IN REVIEW APPLICATION
HARTLE
J
Introduction:
[1]
The applicants seek an order declaring the resolution of the first

respondent’s Council on 30 May 2018 adopting its rates policy
(“the impugned resolution”), and the rates policy
itself
(“the rates policy”), to be inconsistent with the
Constitution of the Republic of South Africa, 1996 (“the

Constitution”) and accordingly invalid.
[2]
They seek a
further
order
declaring the resolution of the first respondent's Council on 30 May
2018 adopting rates on land; alternatively, adopting
a rate for the
“
industrial,
business and commercial
”
category of property and the rates themselves; alternatively, the
rate for the “
industrial,
business and commercial
”
category of property itself to be inconsistent with the Constitution
and accordingly invalid.
[1]
[3]
Both applicants contest the legality of the
impugned resolution on the ground that in adopting the rates policy
(as an integral
part of its budget for the relevant financial year),
the first respondent fell afoul of statutory requirements binding on
it by
virtue of the provisions of the Local Government : Municipal
Rates Act, No. 6 of 2004 (“The Rates Act”), the
Local Government: Municipal Systems Act, No. 32 of 2000 (“the
Systems Act”) and the Local Government: Municipal Finance
Management Act, No. 56 of 2003 (“the MFMA”) in respect
of
public participation in its decision-making.
[4]
The
first applicant in addition asserts that the rates policy failed to
meet the rationality test because the first respondent failed
in
adopting it to have regard to the prescriptive requirements of the
Social Housing Act, No.
16
of 2008 (“the SHA”)
and
the Regulations and Rules made pursuant thereto.
[2]
[5]
The claim of illegality thus goes to both the process that led to
the
adoption of the contentious rates policy and the rates policy itself
(especially
vis-à-vis
the first applicant as a social
housing institution) and the relief each seeks ultimately, apart from
the antecedent declaration
of constitutional invalidity, is to be
relieved of their liability to pay to the first respondent the rates
levied on their respective
properties for the period in contention
(2018/2019) imposed consequent to adopting the impugned resolution as
“just and equitable
relief”.
[6]
Both
applicants further seek condonation of the time taken by them to
bring the application.
[3]
As an aside, the first respondent does not stand in the way of
condonation being granted but contends that the lengthy time
it took
for the applicants to launch the present application is an entirely
relevant factor that should conduce to its favour
in
the event that this court might be inclined to grant any relief to
the applicants.  For example, the first respondents submits
that
it will have far reaching consequences if its budget or rates policy
adopted more than five years ago is set aside, whether
in whole or in
part, not only for the 2018/19 budget and rates policy, but also for
any subsequent budget and rates policies that
have come into effect
since then. However, its primary submission is that the application
is without merit and should accordingly
be dismissed
.
The
first applicant (“Own Haven”):
[7]
Important
from the first applicant’s perspective is that it is a
non-profit company accredited
[4]
and operating as a social housing institution in terms of the
provisions of section 13 of the SHA.
[8]
It further
emphasises that it is an approved “public benefit organisation”
pursuant to the provisions of section 30
(3) of the Income Tax Act,
No. 58 of 1962 (“the ITA”) and that the South African
Revenue Services (“SARS”)
recognizes its operations as
constituting “public benefit activities” within the
meaning of that Act’s terms,
no doubt on the premise
that
it is compliant with the Minister of Finance’s conditions
prescribed under the ITA by way of regulation to ensure that
its
operations and resources are and continue to be directed in
furtherance of its object as such an organisation,
whereas
the first respondent, so it complains, ignores this significant
feature of what it is and what it does (and is legally restrained

from doing for that matter as a social housing institution) for
purposes of levying rates against it despite its not-for-gain
existence and the uniquely differentiated use of its properties for
social housing.
[5]
[9]
Own Haven is the registered owner of five rateable properties in
the
first respondent’s area stymied by the categorisation of its
properties under the commercial category and the resultant
imposition
of rates for such category by the budget and rates policy under
scrutiny.  It asserts that not only has the policy
caused it to
be liable to pay rates unfavourable to its unique disposition as a
social housing institution but it has also been
precluded from
applying for any rebate by virtue of the first respondent’s
regard of it as an ordinary “for gain”
commercial entity
for rating purposes.
[10]
The only
category of property from the recognized list “created”
by first respondent in the contentious rates policy
under which Own
Haven can naturally resort (since the first respondent does not
regard it as a not for gain public benefit organisation
carrying on
specified public benefit activities which fall under the separate
differential property category made provision for
in section 8 (2)
(b) of the Rates Act), is the “Business/Commercial”
category.
[6]
[11]
Although rates relief measures provided for in the impugned rates
policy (paragraph 9 refers)
identify “public benefit
organizations and not for gain institutions” as a category of
owners as defined in the Rates
Act who are entitled to apply for
rates relief measures up to 100%, this is limited to situations where
the usage of such owners’
property falls into certain defined
scenarios, the only item that could most possibly have been of
application to Own Haven’s
differentiated use of its property
providing as follows in paragraph 9.2.2:
“
(x)
Privately owned properties used exclusively as a home catering for
persons with disabilities, a hospital,
clinic, mental institution,
frail care centre, orphanage, non-profit retirement schemes, old age
homes
or any other benevolent institutions, provided that any
profits from the use of such properties are used entirely for the
benefit
of the institution
.” (Emphasis added)
[12]
As an
aside, in an earlier iteration of the rates policy that the first
respondent put up as an annexure to its answering affidavit
(Annexure
“AS 11”) as representing the edition of its policy that
preceded the one finally adopted, before the introduction
of the
controversial addition of the definition of “business and
commercial property”, Own Haven’s properties
could have
come in for consideration for the levying of a differential rate
under the category vaguely described as “Properties
owned by
Public Benefit Organisations,” and might have been eligible for
rates relief measures as a category of property
under the mantle of
“Duly registered Public Benefit Organisations.”
[7]
[13]
Although its properties resort under a strained definition of
business or commercial, Own
Haven points out however that social
housing institutions are in a league of their own.  It explains
that each of its properties
has been improved by the construction
thereon of residential buildings (uniformly blocks of flats) for the
express purpose of providing
subsidised housing.  The properties
were acquired with the assistance of state subsidies prior to the
coming into effect of
the SHA, the two most recently developed being
from the then Social Housing Foundation.  They were developed
explicitly for
the provision of subsidised housing at the time and
are now regulated and operate under the SHA, providing rental stock
for those
qualifying for social housing at the complexes in the first
respondent’s area at which they have been built.
[14]
Its
accreditation as a social housing institution with the Social Housing
Regulatory Authority (“SHRA”) obliges it,
in accordance
with the applicable statutory and policy framework, to provide rental
housing options for low to medium income households
on an affordable
basis at the complexes, all of which require institutionalized
management and are located within “restructuring
zones”
designated by the first respondent in its area with the concurrence
of the provincial government for these specific
purposes of providing
social housing therein.
[8]
[15]
This description of who it is and what its objectives are accords
with the definitions
in section 1 of the SHA of “social
housing” and “social housing institution”
respectively.
[16]
Ironically
the first respondent put the first applicant to the proof of its
accreditation as a social housing institution.
[9]
Further, although acknowledging it as a non-profit company, it
nonetheless still views Own Haven as a “for gain” (i.e.,

ordinary commercial) entity for rating purposes.
[10]
[17]
Own Haven
has had a significantly strained interaction with the first
respondent evidently since it ceased to enjoy the benefit
of any
rebates in respect of its properties.
[11]
The first respondent however asserts that its entitlement to be
reckoned as a “public benefit organisation” for
rates
purposes fell away in 2010 already when the Minister for Provincial
and Local Government promulgated an amendment to the
Ministry’s
Regulations on the Rate Ratios between Residential and
Non-Residential Properties (“the Amended Rate Ratios

Regulation”)
[12]
which,
by definition, and from that moment on in its view, operated to
exclude it as a beneficiary of any rates largesse.
[18]
The definition contended for by the first respondent in this respect
and which appears
to have caused the consternation under play herein
is set out in the Amended Rate Ratios Regulations as follows:
“
public
benefit organisation property”
means
property owned by public benefit organisations and used for any
specified public benefit activity listed in item 1 (welfare
and
humanitarian), item 2 (health care), and item 4 (education and
development) of part 1 of the Ninth Schedule to the Income Tax
Act.”
[19]
It is
immediately evident from this exposition that
item
3
under
Part 1 of the Ninth Schedule to the ITA (entailing activities by a
public benefit organisation  in the “land and
housing”
arena under which Own Haven falls),
[13]
is not under consideration in the stated category of public benefit
organisation property as a subgenus of non-residential property

concerning which a pre-determined ratio to the rate on residential
property is not to be exceeded by a municipality in determining
its
rates policy.
[20]
The impugned rates policy itself appears to confound what kind of
public benefit organisation
is worthy of any rates largesse.
The description of the kind of property owned by public benefit
organisations and not for
gain institutions in respect of which such
owner category is entitled to apply for a rebate appears correctly to
concern itself
only with the
use
to which the property is
put.  This would make sense in the context that Own Haven
clearly participates in a public benefit
activity in the manner in
which it uses its properties, but the rates policy then undoes that
objective by limiting its reference
under the definitions to how a
public benefit organisation itself is to be construed.
[21]
In this respect that definition cobbles in the damning definition
contended for by the
first respondent in the Amended Rate Ratios
Regulations but clumsily so because an
organization
can hardly
be described as a “property,” but yet it is.  The
policy’s definition is best repeated below
for effect:
“
Public
Benefit Organization”
means
property own by public benefit organisation and used for any specific
public benefit activity listed in item 1 (Welfare and
Humanitarian),
item 2 (Health Care), and Item 4 (Education and development) of Part
1 of the Ninth Schedule of the Income Tax Act,”
(Sic)
[22]
The definition of “Specified Public Benefit Activity” in
the rates policy,
also clumsily copied over from the definition in
section 1 of the Rates Act, similarly bears repeating to demonstrate
the first
respondent’s lack of thought for its significance:
““
Specified
Public Benefit Activity”
means an activity listed in item 1 (welfare), 5 (humanitarian), 2
(health care), and 4 (education and development) of Part 1 of
the
Ninth Schedule to the Income Tax Act.”
[14]
[23]
As an aside
and by way of explaining Own Haven’s dilemma,  although
section 3 (3)(g) of the Rates act behoves a municipality
in adopting
a rates policy to have regard to the effect of rates on organisations
conducting “specified public benefit activities
and registered
in terms of the ITA for tax exemptions because of those activities,
in the case of property owned and used by such
organisations for
those activities” (which is the position as far as Own Haven is
concerned), the definition of “Specified
public benefit
activity” in section 1 of the Rates Act also excludes
activities under
item
3
of
Part 1 of the Ninth Schedule to the ITA, under which mantle its
activities obviously fall.
[15]
[24]
Be that as it may, Own Haven bemoans the fact that it is not a
commercial operation, but
rather a social housing institution
constrained by the provisions of the SHA and government policy on
social housing, in other
words, unique in both its make up as a
category of owner and in its highly differentiated usage of its
properties, yet it is paying
2.5 times more in rates for each unit in
its social housing complexes than it would pay for those units should
the complexes be
converted into sectional title schemes which would
naturally put them into the residential category.  (The first
respondent
ironically suggests that it should do exactly that, namely
change its “business model” by sectionalizing its rental

and housing stock. It disparages Own Haven as the author of its own
misfortune for not having taken independent positive steps
to have
ameliorated the complained of financial burden caused to it by it
having to manage and maintain its stock under the auspices
of the
statutory and regulatory framework of the SHA.)
[25]
Not
surprisingly, Own Haven complains that the prohibitive rate levied
against it as the owner of commercial properties pursuant
to the
offending rates policy became the proverbial “last straw”
for it, rendering the payment of rates at that level
no longer
sustainable for it as a social housing institution, a worrying
concern to any municipality that should be aligning itself
with the
objectives of providing affordable rental accommodation by such
owners under the auspices of the SHA.
[16]
[26]
Own Haven clarifies that, unlike in a commercial development, the
increasing costs cannot
be passed on to the tenants in its
complexes.  Not only would that be contrary to regulated
rentals, but the tenants simply
cannot afford more.
[27]
As a
result, on legal advice taken, it resolved to withhold payment of
rates levied on its properties for the relevant budget year

(unlawfully so, the first respondent reminds it), and has
periodically recorded disputes with the first respondent in respect
of such payments withheld by it.
[17]
[28]
Apart from
this present challenge - which was prefaced by a formal request in
terms of the provisions of the Promotion of Access
to Information
Act, No. 2 of 2000 (“PAIA”) for the first respondent to
make available copies of the relevant documents
relating to the
adoption of its budget under consideration (it is a trite principle
that the levying of rates by a local government
constitutes an
integral part of its budget process)
[18]
in order to satisfy itself as to its legality, Own Haven
emphasises  that it also submitted numerous unsuccessful
applications
for rebates in respect of its properties to the first
respondent (pointing out to an unmoved municipality in
representations made
since 2015 that the imperative for the granting
of rebates should flow logically and rationally from the Social
Housing Statutory
and Regulatory Framework and its differentiated use
of its properties under such auspices) and has lobbied, to no avail,
for an
amendment of the definition of eligible public benefit
organisations that qualify for rates exemptions to include subsidised
social
rental housing stock owned by them.
[29]
I may as
well state it here that the first respondent has firmly set itself
against any difference in its treatment of Own Haven
apart from any
other regular commercial entity operating in its area despite its
peculiar make up as a social housing institution
having a
responsibility to support and sustain social housing. It does so in
the contentious rates policy and in its answering
papers. It avers
that it is lawfully justified in not responding to its request for
differential treatment rates-wise and maintains
that it is not
deserving of any special support provided for by its rates
policy.
[19]
It has
additionally made it clear that it will not treat it as a special use
owner even if other municipalities are handling
such a category of
owner or property usage differently around the country.
[30]
In this regard, and as a further aside, it is common cause that the
Nelson Mandela Bay
Metropolitan Municipality in Gqeberha recognizes
social housing institutions as a separate category of owner for
rebate purposes.
The City of Cape Town also allegedly affords
certain recognition to and endorses a more favourable rates
dispensation towards social
housing institutions operating in its
area by making them eligible in terms of its peculiar rates policy
for rates rebates.
[31]
There are
two particular bases upon which the first respondent resists giving
in to Own Haven’s claimed entitlement even to
be equitably
considered for discretionary rebates.  The first is its
insistence that it is entitled to formulate its own policy
even with
the guiding principles of the SHA in mind (which it insists it
subscribes to as it is obliged to except for not regarding
the act’s
provisions as prescriptive of its role when it comes to meting out
any rates largesse) against encouraging the
landlord-tenant model in
its area that Own Haven adopts in its social housing projects.
Evidently it is not its case that the SHA
entails a process for its
intended beneficiaries to acquire title only, but it argues that
there has been a change in the focus
of social housing away from
rental where the original focus was. It thus advocates a modern rent
to buy model, hence its view that
Own Haven should be sectionalising
and selling off its units.
[20]
Secondly, it believes that it is constrained by the definition of
“public benefit organisation property” referred to
in the
Amended Rate Ratios Regulations (applicable since 2010) from
recognizing Own Haven as providing a specified public benefit

activity as referred to therein that qualifies it to be accorded a
differential rate for the use of its properties, or any rate
rebate
for that matter.
[21]
[32]
I will enlarge upon these reasons below but in essence Own Haven says
that the first respondent
has got it wrong on both scores.
[33]
On the issue of what the SHA and the regulatory framework provides,
Own Haven asserts that
the first respondent cannot constrain it in
the direction of selling off its rental stock, the disposition of
which is severely
proscribed thereby.  As for sectionalising its
rental stock, although it felt itself compelled in that direction to
sectionalise
the units in one of its complexes because of the first
respondent’s intransigence in accommodating social housing as a
differential
category of property for rating purposes or granting it
any rebates, this has not promoted the reach of affordable housing to
the
beneficiaries targeted by the SHA’s provisions.
Instead, it has artificially increased the valuations of the now
sectionalised
units which are no longer based on rental income but
instead on the notional amount the property would have realised if
sold in
the open market by a willing buyer to a willing seller, a
concept which is untenable giving the fact that there is no willing
buyer
or seller in these constrained circumstances.  This
exercise has therefore only served to increase the rates in respect
of
the relevant complex. In any event the modern approach contended
for by the first respondent is antithetical to the objectives of
the
SHA in achieving affordable rental accommodation and doesn’t
quite sound like any of the feasible options promoted under
the SHA’s
provisions neither has the first respondent produced any evidence
that supports its view that Own Haven is instead
misguided in how the
social housing policy is expected to be evolving.  Own Haven
argues that what the first respondent proposes
is in fact in conflict
with the provisions of the SHA, the processes and procedures and
mechanisms to be used as stipulated by
the regulatory authority and
certainly contrary to its legal obligation to be facilitative of the
social housing sector.  It
rails against been treated as a
business enterprise when in any sensible consideration of what it
does, it is not a commercial
“for gain” operation.
[34]
Most importantly it is circumscribed by what it can charge based on
the incomes of the
individuals whose interests Own Haven serves,
cannot pass on its increased rates charges to the tenants, and is
obliged to maintain
its financial sustainability in a manner that
enables it to do so effectively and viably without threat to the loss
of its accreditation
as a social housing institution. It is
constrained by the regulations promulgated under the SHA even in
respect of any decision
to opt out regarding how it must dispose of
its residential stock that was acquired with public funding.
[35]
On the second score, it points out that it makes no sense to contend
that the Amended Rate
Ratios Regulations can determine its fate for
any kind of rates largesse under the Rates Act. This is because the
intended purpose
of these regulations was merely to fix ratios that
the municipality cannot exceed for properties owned and used by
public benefit
organisations (other than those operating in the field
of land and housing) in relation to residential property.  It
remains
a public benefit organisation providing an essential service
by the use of its properties in the first respondent’s area
which is crucial to one of the fundamental rights in the
Constitution, namely section 26, which deals with the provision of
adequate
housing. It is not unrealistic, so it asserts, to expect
that it be afforded some recognition and assistance in accordance
with
the provisions of the
Social Housing Act which
constrains it
from doing what the first respondent invites it to do to avoid the
so-called inevitable burden of being regarded
as a commercial entity
instead.
The
second applicant (“Lorles”):
[36]
Lorles, a close corporation, is the registered owner of an immovable
property zoned for
industrial 1 purposes also within the area of the
first respondent.
[37]
It
has
in common with the first applicant that it has been placed in the
commercial category for the purposes of rates being levied
by the
first respondent by virtue of the impugned resolution but its
position
is obviously distinguishable from that of the first applicant as it
does not operate as a social housing institution.
[22]
[38]
Lorles has similarly declared disputes in terms of section 102
of the Systems Act
regarding its liability to the first respondent
imposed under the impugned rates policy, but its reason for having
done so and
withholding payment of its assessed rates was premised on
its belief that the adoption of the impugned rates policy (the
process)
for the relevant financial year was tainted by illegality
for want of proper public participation in the first respondent’s

decision-making.
[39]
It
has
however
joined in the application
in
seeking the relief set out in the notice of motion “to the
extent that such relief relates to it”.
[23]
[40]
It appears to be common cause that Lorles stands or falls by the
public participation process
challenge outlined below.
The
conduct which offends the principle of legality:
[41]
As aforesaid each of the Own Haven and Lorles properties have been
placed by the first
respondent in the “industrial, business and
commercial properties” category (“the commercial
category”)
for the purposes of determining the rates payable by
them in respect thereof
arising from the rates policy adopted by
it
.
[42]
Both continue to contest their liability for the rates levied by the
first respondent on
its respective properties by such legislative
fiat
with particular reference to the impugned resolution
and
rates policy
pursuant to which the offending rates became
payable.
[43]
There are two essential bases upon which the applicants contest the
legality of the impugned
resolution.
[44]
The primary challenge (concerning both applicants) is that, in
adopting the rates and the
policy itself, the first respondent failed
to comply with certain peremptory requirements binding on it by
virtue of the provisions
of the ternary collection of local
government legislation that pertains to its processes, namely the
Rates Act, the Systems Act,
and the MFMA, to which I will shortly
refer.  In essence the applicants assert a lack of compliance
with the requirements
for public participation which they claim
tainted the entire process and which renders the final impugned
resolution and the rates
policy breathed into life thereby invalid.
They take no prisoners in asking that the entire policy be set aside
on the basis of
the claimed illegality.
[45]
Own Haven in addition asserts that the first respondent in its policy
making failed to
have regard to the mandatory requirements of the SHA
and the regulations and rules made pursuant thereto.
[46]
They submit
that in adopting the impugned resolution, the first respondent acted
outside and in a manner inconsistent with its statutory
and
regulatory authority and further acted contrary to its obligations in
terms of Section 7(2), 26 (2) and section 152 (1)(c)
[24]
of the Constitution.
[47]
In the result they assert that the budget having been unlawfully
adopted, the rates policy
implicated thereby falls to be set aside to
the extent of its inconsistency with the Constitution.
The
nature of the review:
[48]
The
parties are in agreement that the present challenge concerns a
legality review. Indeed, it is fundamental to the relief sought
by
the applicants, and the opposition to such relief, that the impugned
resolution under scrutiny, according to the established
principle
enunciated in
Fedsure
Life Assurance Limited and others v Greater Johannesburg Transitional
Metropolitan Council and others
,
[25]
constitutes legislative rather than administrative action.
[49]
The
recognition that the adoption of a rates policy is quintessentially a
political decision that involves the interests of various
parties,
does not however render its passing immune from judicial review.
[26]
[50]
Whereas legislative action may be set aside on
grounds of alleged illegality, this inevitably involves a
fundamentally different
approach to the grounds upon which
administrative action may be set aside in accordance with the
relevant provisions of the Promotion
of Administrative Justice Act,
No. 3 of 2000 (“PAJA”). In
Fedsure
the Constitutional Court expressly contrasted an attack on
administrative law grounds with a “legality” challenge.

Generally, in passing legislation (such as the approval of a budget
by a local authority) it is for the members of the legislative
body,
in this instance the councillors, to judge what is relevant in the
circumstances and a court will be loath to interfere with
a municipal
council’s business of passing a budget vote.
[51]
It is only where it is established that
legislative action is in conflict with the empowering statute, or the
Constitution, that
such legislative action can be set aside.
[52]
The test in such a case is whether the relevant
council of the municipality has acted
intra
vires
in passing the budget including
the rates which form a part thereof
.
[53]
The irrationality ground relied upon by Own Haven cuts to the flawed
understanding by the
first respondent of Own Haven’s unique
position (and other social housing institutions for that matter) and
lack of appreciation
of the highly differentiated use of its
properties which has not received proper traction in the policy.
[54]
Own Haven complains that notwithstanding the first respondent’s
autonomy to write
its own rates policy it has irrationally
disregarded the legal imperative on it to factor in the provisions of
the SHA and its
legal obligation to be facilitative of the social
housing sector.
[55]
It is simply unlawful, so it contends, for the first respondent to
disregard the positive
obligations imposed upon it by both the
Constitution, the SHA, and the various provisions of the Rates Act
that pertain to the
required approach to be adopted when considering
rates and especially, insofar as it concerns Own Haven, the latter’s
entitlement
as a social housing institution to any rate exemptions.
[56]
The
rationality standard does not have a high threshold. All it requires
is that the impugned decision must be aimed at the achievement
of a
legitimate government object and a rational relationship between the
chosen method and that object.
[27]
[57]
It is
further a trite principle in this respect that both the process by
which a legislative decision is made, and the decision
itself, must
be rational.
[28]
[58]
In
National Energy Regulator of South Africa and Another v PG Group
(Pty) Ltd & Others
[29]
the court noted as follows regarding the approach to be adopted by a
court where both process rationality and substantive rationality
are
implicated:
“
[48]   I
do not believe that we can separate process rationality and
substantive rationality in the way the second judgment
purports to.
The relevant question for rationality is whether the means (including
the process of making a decision) are
linked to the purpose or ends.
To my mind, rationality necessarily, whether found in PAJA or
anywhere else, must include
some evaluation of process.  If not,
then we are simply asking whether a decision is right or wrong based
on
post hoc
reasoning.
[49]
It is a natural and inescapable denouement that the process leading
to a decision “must also
be rational in that it must be
rationally related to the achievement of the purpose for which the
power is conferred”.
[30]
As stated in
Democratic
Alliance
:
“
The means for
achieving the purpose for which the power was conferred must include
everything that is done to achieve the purpose.
Not only the
decision employed to achieve the purpose, but also everything done in
the process of taking that decision, constitutes
means towards the
attainment of the purpose for which the power was conferred.”
[50]
Additionally, in
Zuma
,
Navsa ADP stated that a rationality review also covers the process by
which the decision is made.
[31]
There is no reason why rationality under PAJA should be given a
different (more restrictive) meaning.  It follows that

rationality under PAJA includes an assessment of whether the means
(including everything done in the process of taking the decision)

links to the end.  Problems found in the process used to reach a
decision can be very useful evidence or illustration of a
faulty
rational link.  How far that evaluation of process goes depends
on the facts of a particular case.”
[59]
The primary end hoped for in this instance would have been a decision
(represented by the
adoption ultimately of the contentious rates
policy) that was, apart from meeting the legal criteria enumerated in
section 3 of
the Rates Act for its adoption and content, a product of
democratic and accountable government for local communities. In this
instance,
vis-à-vis
Own Haven especially, it is
contended that proper regard should have been had to the interests of
social housing institutions and
the beneficiaries served by them, and
the recognition by the first respondent of its own legal obligations
arising from the provisions
of the SHA to be facilitative of social
housing in its area.
[60]
Own Haven
does not challenge the absence of any reference to Item 3 in the
definition of “public benefit organisation property”

referenced in the Amended Rate Ratios Regulations but contends that
the first respondent’s failure in any event to give its
use of
the property as a social housing institution any recognition by not
levying a differential rate to make provision for who
it is and the
activities it in fact undertakes, is in conflict the objects of the
social housing legal framework, which renders
the policy unlawful.
So too for the purposes of its entitlement to be reckoned in for any
exemption from rates, it claims
that the first respondent’s
reliance on the definition as a tool to exclude it for any beneficial
purposes is illegal because
the Regulations do not prescribe that
which the first respondent believes it does.  To the contrary
the Regulations
do
not impose any negative obligation on a municipality to not recognize
organizations coming in under item 3 of Part 1 of the Ninth
Schedule
to the ITA as being entitled to claim a rebate or to absolutely not
qualify for a differential rate.
[32]
Indeed, the Amended Rate Ratios Regulations merely fixes the
rate that the municipality may not exceed in relation to residential

properties in determining rates for public benefit organizations
carrying on the activities delineated therein.
The
Statutory and Legal framework:
[61]
It is
necessary briefly to allude to the material statutory and policy
framework applicable in this instance to glean the source
of the
first respondent’s power and obligations to impose rates
including the process prescribed to levy rates as an integral
part of
a municipality’s budget process; the prevailing view of our
courts concerning the significance of an effective public

participation and consultative process in the latter respect; as well
as the expectation of the first respondent to make particular
policy
provision for social housing schemes.  Except for the last
aspect, these obligations on the part of a Category A municipality,

such as the first respondent is, are extensively and helpfully
summarized in both
SAPOA
[33]
and
Borbet
South Africa (Pty) Ltd & Others v Nelson Mandela Bay
Municipality.
[34]
The
obligation and power of the first respondent to impose rates:
[62]
Section 229 of the Constitution bestows local government with
original powers to impose
rates and taxes on immovable property.
[63]
The relevant provision directs that:
“
(1)
Subject to subsections (2), (3) and (4) a municipality may impose-
(a)
rates on property and surcharges on
fees for services provided by or
on behalf of the municipality; and
(b)
if authorised by national legislation,
other taxes, levies and duties
appropriate to local government or the category of local government
into which that municipality
falls, but no municipality may impose
income tax, value-added tax, general sales tax and customs duty.
(2)
The power of a municipality to impose rates on property, surcharges
on fees for services
provided by or on behalf of the municipality, or
other taxes, levies or duties-
(a)
May not be exercised in any way that materially and unreasonably
prejudices national economic
policies, economic activities across
municipality boundaries, or the national mobility of goods, services,
capital or labour; and
(3)
….
(4)
….
(5)
National legislation envisaged in this section may be enacted only
after organized local
government and the Financial and Fiscal
Commission have been consulted; and any recommendation of the
Commissioner have considered.”
[64]
The powers of a municipality are set out in the provisions of section
151 (3) of the Constitution
and provide that “a municipality
has the right to govern, on its own initiative, the local government
affairs of its community,
subject to national and provincial
legislation”.
[65]
The manner in which it exercises it original power to impose rates is
further made provision
for in the ternary suite of legislation
empowering it in this respect, namely the Rates Act, the Systems Act
and the MFMA.
Public
participation in the context of the Systems Act and MFMA:
[66]
The
Constitution records that the objects of local government include the
provision of democratic and accountable government for
local
communities and to encourage the involvement of communities and
community organisations in the matters of local government.
[35]
[67]
In
Borbet
the court confirmed that this obligation “extends to all facets
of the functioning of the local sphere of government”.
[36]
[68]
The nature
and extent of the constitutional obligation to encourage the
involvement of local communities
[37]
in matters of local government must be taken into account in having
regard to the particular provisions of the Systems Act and
the MFMA,
each of which give expression to the constitutional obligations of
the local sphere of government and reflects the means
by which
national government ensures the effective performance by
municipalities of the functions of local government.
[38]
[69]
Section 4
of the Systems Act, in setting out the rights and duties of municipal
councils, provides that it must exercise the municipality’s

executive and legislative authority and finance the affairs of the
municipality by
inter
alia
imposing rates on property and further provides in section 4 (2) that
it has the duty to exercise its executive and legislative
authority
in the best interests of the local community, encourage the
involvement of the local community and consult the local
community
about the level, quality, range and impact of municipal services
provided by it including, so the applicants submit,
the amount of
fees, rates and surcharges imposed to finance such services.
[39]
[70]
Members of
the local community are afforded the right “through mechanisms
and in accordance with processes and procedures
provided for in terms
of Systems Act …. to contribute to the decision-making
processes of the municipality”.
Indeed, section 5 of the
Systems Act gives expression to the participatory nature of local
democracy.
[40]
[71]
Chapter 4
of the Systems Act sets out in detail the “mechanisms …
processes and procedures” for community participation
referred
to in Section 5 (1)(a) thereof and gives rise to extensive
obligations on the part of the Municipality.
[41]
[72]
Provision
is further made for the manner in which a municipality must notify
the local community through the media when required
to do so and in
which documents that must be made public by a municipality in terms
of a requirement of the Systems Act or the
MFMA must be conveyed to
the local community.
[42]
[73]
The manner
in which municipalities must develop and adopt annual budgets, the
concomitant resolutions, and budget related policies,
is provided for
in Chapter 4 of the MFMA.
[43]
[74]
Inter alia
in terms thereof:
74.1The mayor of a
municipality must coordinate the processes for preparing the annual
budget and for reviewing the municipality’s
integrated
development plan (“IDP”)
[44]
and budget related policies to ensure that the tabled budget and any
revisions of the IDP and budget related policies are mutually

consistent and credible.
[45]
74.2The mayor must also
at least 10 months before the start of the budget year table in the
Council a time schedule outlining key
deadlines
inter
alia
for the preparation, tabling and approval of the annual budget, the
annual review of the budget related policies, the tabling and

adoption of any amendments to the budget related policies and any
consultative processes forming part thereof.
[46]
74.3The mayor must table
the annual budget at a council meeting at least 90 days before the
start of the budget year when it must
be accompanied by draft
resolutions approving the budget and imposing any municipal tax
(including rates on property), and any
proposed amendments to the
budget related policies of the municipality.
[47]
74.4Immediately after the
budget is tabled in the above manner, the accounting officer must
make it and its accompanying documents
(including the rates policy)
public in accordance with Chapter 4 of the Systems Act.
[48]
74.5The municipal council
must thereafter (and before considering approval of the annual
budget) consider any views of the local
community and give the mayor
an opportunity to respond and if necessary to revise the budget and
table amendments.
[49]
74.6The council must at
least 30 days before the start of the budget year consider approval
of the annual budget and then approve
it and any resolutions imposing
municipal tax and approving any changes to budget related policies,
before the start of the financial
year.
[50]
The
Focus of the Rates Act:
[75]
The Rates
Act, in Part 1 of Chapter 2 thereof, requires a municipality to adopt
a rates policy compliant with these stipulated requirements.
[51]
In particular, it must treat persons liable for rates
equitably; must determine or provide criteria for the determination

of categories of properties for the purpose of levying different
rates; take into account the effect of rates on the poor and include

appropriate measures to alleviate the rates burden on them and must
allow the municipality to promote local, social and economic

development.  Section 3 (3)(g) also behoves a municipality in
adopting a rates policy to take into account the effect of rates
on
organizations conducting specified public benefit activities and
registered in terms of the ITA for tax exemption because of
those
activities, in the case of property owned and used by such
organizations.  (It cannot be gainsaid in my view that Own
Haven
is such a registered entity and tax exempt at least even if its
activity resorts under Item 3 of Part 1 of the Ninth Schedule
to the
ITA which is excluded from the definition of “specified public
benefit activity” for differential rate purposes
referred to in
section 8 (2)(h) of the Rates Act.  Its case is however that
although its properties may not resort in such
category it does not
preclude a category for social housing institutions from being
created under section 8 (3) of the Rates Act,
neither should it
condemn it from being eligible for any discretionary rate rebates at
the very least.).
[76]
Before it
adopts its rates policy a municipality is obliged to follow a process
of community participation in accordance with chapter
4 of the
Systems Act
[52]
and to comply
with the further specific notification and participation processes
set forth in section 4 (2) of the Rates Act itself.
[77]
A
municipality is further obliged annually to review and, if necessary,
amend its rates policy. Any (proposed) amendments to a rates
policy
must accompany the annual budget when it is tabled in the council in
terms of section 16 (2) of the MFMA (that is 90 days
prior to the end
of the financial year in question).
[53]
[78]
The
provisions of the MFMA relating to publication of annual budgets and
consultations on tabled budgets apply also to any proposed
amendments
to a rates policy.
[54]
[79]
I need not
repeat the critical nature of the first respondent’s obligation
to encourage public involvement in the complex
process of passing its
annual budget, as well as the obligation to take comments raised by
such public processes under consideration
when it comes to Council
putting its collective mind to work in producing a rates policy for
ultimate adoption, more especially
in my view where substantive
revisions of the policy are implicated thereby and different
iterations of a policy document have
been generated, the final one
obviously redounding pointedly to the applicants’
disadvantage.
[55]
The
court in
Borbet
sets out the significance of and compunction for meaningful local
community involvement in such a process very eloquently.
[56]
Public participation in all its intended facets would be essentially
vital in the context of anticipated changes to a policy
that is
expected to have far reaching consequences for its rate payers and
the general public at large, albeit the involvement
of the local
community is not just premised upon potential prejudice or upon the
notion of legal interests. It is instead a necessary
feature of the
democratic process at local government level.
[57]
The
Social Housing Imperative:
[80]
The SHA
defines social housing as “
rental
… or co-operative housing options for low to medium income
households at a level of scale and built form which requires

institutionalized management and which is provided by social housing
institutions or other delivery agents in approved projects
in
designated restructuring zones with the benefit of public funding as
contemplated in the Act”
.
[58]
[81]
In setting
out the general principles applicable to social housing
development,
[59]
the SHA
imposes obligations on the national, provincial and local spheres of
government and social housing institutions, which
in giving priority
to the needs of low- and medium-income households in respect of
social housing development, must
inter
alia
:
81.1ensure that their
respective housing programs are responsive to local housing demands
with special priority given to the needs
of women, children,
child-headed households, persons with disabilities and the elderly;
81.2support the economic
development of low to medium income communities by providing housing
close to jobs, markets and transport;
81.3afford residents the
necessary dignity and privacy by providing them with a clean, healthy
and safe environment;
81.4consult with
interested individuals, communities and financial institutions in all
phases of social housing development; and
81.5ensure the
sustainable and viable growth of affordable social housing as an
objective of housing policy.
[82]
Social
Housing entities are further obliged to promote,
inter
alia
:
[60]
82.1an environment which
is conducive to the realization of the roles, responsibilities and
obligations by all role-players entering
the social housing market;
82.2incentives to social
housing institutions and other delivery agents to enter the social
housing market;
82.3an understanding and
awareness of social housing processes;
82.4the provision of
institutional capacity to support social housing initiatives;
82.5the creation of
sustainable, viable and independent housing institutions responsible
for providing, developing, holding or managing
social housing stock;
and
82.6the use of public
funds in a manner that stimulates or facilitates private sector
investment and participation in the social
housing sector.
[83]
The SHA in
addition allocates particular roles and responsibilities to
municipalities.
[61]
A
municipality
must
,
where there is a demand for social housing within its municipal area,
as part of its process of integrated development planning,
[62]
take all reasonable and necessary steps, within the national and
provincial legislative, regulatory and policy framework
inter
alia
to:
83.1facilitate social
housing delivery in its area of jurisdiction;
83.2encourage the
development of new social housing stock and the upgrading of existing
stock or the conversion of existing non-residential
stock; and
83.3provide access to
land and buildings for social housing development in designated
restructuring zones.
[84]
The preamble to the SHA in reflecting on the factors giving rise to
the need for the enactment
thereof, pertinently refers to section 26
of the Constitution in terms of which everyone has the right to have
access to adequate
housing and obliging the State to take reasonable
legislative and other measures, within its available resources, to
achieve the
progressive realisation of this right.
[85]
The preamble further refers to the stipulation in
section 2
of the
Housing Act, 1997
, obliging all three spheres of government to give
priority to the needs of the poor and in respect of housing
development, the
fact that there is a need for social housing to be
regulated, and further that there is a dire need for affordable
rental housing
for low to medium income households which cannot
access rental housing in the open market.
[86]
The SHA evidently forms part of the reasonable legislative measures
referred to in section
26 (2) of the Constitution.
[87]
Although the SHA does not spell out in positive terms that financial
assistance is to be
provided to accredited social housing
institutions, municipalities are certainly required pursuant to the
provisions of section
5 of the SHA to be
facilitative
of
social housing in their areas of delivery.
[88]
It bears emphasizing that the Executive Summary of the 2017
State
of the Social Housing Sector Report
(“SoSR”), being a
mid-term review of the national government’s Medium Term
Strategic Framework for the period
2014 to 2019 that the applicants
put up in their founding papers, recognizes that an enabling
environment for social housing delivery
requires a holistic
intergovernmental response in order to give effect to the
constitutional right of everyone to have access to
adequate housing.
Comprehensive municipal rental housing policies (that would require
to be on the agenda of any budget process
by necessary implication)
are necessary and should establish an enabling framework for social
housing, addressing issues such as
land availability, the expedition
of planning approvals, the alignment of funding sources, the
discounting of development contributions
and the adoption of
appropriate tariff and rates policies.
[89]
In a
further information document published by the SHRA to elucidate its
objectives based on the content of the
State
of the Sector Report 2017
entitled
2017
SoSR Quick Guide 2
,
being one of five put up by the regulatory authority published on its
website, it provides a table listing the “
significant
number of instruments at a municipality’s disposal to assist
with enabling social housing delivery”
in
scenarios where non municipal entities are the enablers of such
delivery.  Municipal assistance includes the provision of
land,
reduction of various municipal charges and “
rates
exemptions or rebates to reduce the operational cost of units and
with the rental levels.”
[63]
[90]
Whilst on the subject of the nature and purpose of social housing and
in the context of
the first respondent’s refutation that it is
obliged to accommodate social housing institutions differentially
rates wise,
or by extending any rebates to them as an example of a
facilitative measure in the overall scheme of delivering on the
social housing
imperative, the applicants in reply also put up
information documents published on the SHRA’s website targeting
both potential
developers of social housing and beneficiaries, which
adopts an opposite view to the one subscribed to by the first
respondent
that at all levels of government the emphasis of social
housing is to provide ownership and title to persons qualifying for
assistance
by way of social housing, leading to its insistence that
Own Haven should be converting all its schemes to sectional title
with
a view to selling their rental stock.  The object of a
developer is plainly stated in the information documentation to
provide
quality
rental housing options
for the poor which does
not include the provision of “
rent to buy”
options.  The attraction on the opposite side for potential
beneficiaries is that social housing provides “
affordable
and well-located rental accommodation,”
and if there is any
doubt that such beneficiary may own his or her unit even in the long
term down the line, the clarification is
provided that: “
applying
to rent a social housing unit means you can never own the unit as the
law does not allow for ownership of social housing
units.  All
tenants sign a lease which is a rental agreement and this is the only
way to access social housing in South Africa.”
[91]
Whereas the first respondent contends that it is not unlawful to
promote a policy that
encourages ownership rather than rental in the
realm of social housing development and delivery, it cannot however
in my view ignore
the impact of its policy on already existing
accredited social housing institutions operating in its area under
the rigours of
the applicable social housing legal and policy
framework.
[92]
Mr.
Buchanan who appeared on behalf of the first respondent could refer
me to but one example to elucidate the so-called change
in the focus
of social housing contended for by it referenced in the strategic
framework report of the Department of Human Settlements
Water and
Sanitation mentioned above (entailing a progressive focus away from
what he emphasised was initially on  rental
accommodation) to
justify  laying down the gauntlet to Own Haven that if it wishes
to persist with the rental model in this
city, that it would then
have to live with the consequences of that.
[64]
In this regard he referenced a passage in the Executive Summary of
the State of the Sector Report which portended that: “
As
the social and economic circumstances may improve, it is proposed
that mechanisms are put in place to encourage qualifying households

to move from social housing to private rental units, especially in
mixed market rental models.  For those households seeking

ownership, the Finance Linked Individual Subsidy Programme (FLISP)
should be promoted for upward mobility in the housing market.”
[93]
The first
respondent failed to produce evidence of any recognisable
progression in this respect since the publication of the
State
of the Sector Report,
[65]
and
most significantly of any discussion or interrogation of its agenda
versus the national strategic framework plan and its own
deliverables
in the public domain, whether in preparation for the budget vote
under scrutiny, or since 2010 from when it adopted
the view that
public benefit organisations such as Own Haven delivering on social
housing in its area, obviously subject to the
law giving expression
to the stated social housing objectives, were no longer eligible for
any rates largesse from that moment
on.
[94]
Whether the first respondent’s policy of formally excluding
public benefit organisations
carrying on activities such as Own Haven
(by placing their properties in the default business or commercial
category) from any
rate rebates amounts to an irrational illegality
will be discussed below.
The
municipalities alleged non-compliance with the stipulated
requirements for public participation:
[95]
The
applicants aver, with reference to the documents put up by the first
respondent to show the processes followed by it to get
to the final
impugned resolution, that these (at least such of those as they have
referenced in their papers) yet demonstrate its
failure to have
meaningfully complied with the public participation and consultative
processes mandated against the required yardstick
of
reasonableness.
[66]
As
stated more specifically, Own Haven contends that: “
(t)here
is a paucity of information relating to any public participation
process
”
and in particular relating to a rates policy and the review
thereof”.  In fact, it goes on to allege that in
its view
such documentation does not exist.
[96]
Conversely, t
he first respondent baldly contended
that the public participation process (which it suggested this court
would naturally find reflected
in volumes 1 – 4 of the review
“record” which they put up in response to the applicants’
notice in terms
of Rule 53 (3))  amply illustrates not only that
proper and full notice was given of public meetings, but that such
meetings
took place and comments were received from the public and
considered before the final approval of the budget including the
contentious
rates policy.
[97]
The applicants however in their founding affidavit registered the
following (abiding) complaints
against the first respondent based on
a thorough assessment of the documents that were made available to
them by it.
97.1Accepting what they
know now that significant revisions and amendments were effected to
the rates policy, there is vitally no
indication of the process
followed in such respect especially with regard to public
participation.
97.2The “IDP and
budget process plan” (which they presently accept were
evidently tabled in the Council as required),
makes only passing
reference to the review of
budget
related policies
and
makes no mention of the tabling and adoption of any amendments
thereto or any consultative process forming part of the annual
review
thereof.
97.3The document “IDP
and budget roadshows 19 April - 10 May 2018” consists of no
more than a proposed schedule, and
the first respondent provided no
documentation to demonstrate that any roadshow or shows occurred and,
if so, that proposed revisions
to the rates policy were presented and
that any comments from communities were minuted in that important
respect, nor has it placed
any acceptable evidence before this court
to such effect.
97.4The minute of the
Council meeting of 28 March 2018, which as it contended in its
founding affidavit did not include the reports
to Council referred to
therein, includes a reference by the Executive Mayor to policies
which had been subjected to scrutiny in
the workshop and that
proposals at a workshop of councillors would be considered by
councillors for inclusion before being submitted
for adoption by the
Council. The Council nevertheless resolved to adopt the “revised”
policies. No mention whatsoever
was made of any public process with
regard thereto.
97.5Notice 3478 (Annexure
“AS 9” to the first respondent’s answering
affidavit) makes no mention of budget related
policies and or any
proposed amendments thereto being available for public inspection and
comment.  Additionally, it provided
no documentation or other
evidence that the documents referred to were indeed made available
for public inspection and if so whether
the proposed amended rates
policy was included therewith.
97.6The first respondent
has provided no information or documentation demonstrating that the
accounting officer took the steps required
by section 22 of the MFMA
and section 21 of the Systems Act, nor that the Council considered
any views of the local community which
may have been elicited from
the required publication or gave the Executive Mayor an opportunity
to respond to submissions or indeed
that the Council met for that
purpose at all.
97.7The minutes of the
councillor’s “IDP and Policy Workshop” reveals that
the councillors present declined to
consider a “new draft”
of the rates policy.
97.8In the report of the
Executive Mayor to the Council meeting of 30 May 2018, the process
ostensibly followed in developing the
budget is set out but the only
mention in it of policies is in relation to the councillor’s
workshops and not to any public
process; and
97.9Notwithstanding
comprehensive discussion of the budget and resolutions to be adopted
by the Council in the aforesaid meeting,
there is no mention
whatsoever of budget related policies and the extent to which they
were obviously intended to be revised and
amended as the applicants
know now with hindsight.
[98]
The separate averments may appear pedantic but at the crux of it the
applicants complain
that mere lip service was paid to the process and
that there was simply an absence of any participatory democracy when
it came
to the substantial revision of the rates policy in the
critical respects referred to above. The statutory requirements for
public
engagement with the revision and adoption of the rates policy
are however peremptory and the adoption of the revised policy without

compliance therewith, so it was submitted, renders that adoption
illegal.
The
first respondent’s answer to the claim that the process was
deficient or lacking in public participation:
[99]
An awkward tangent evolved concerning the evidential material placed
before the court upon
which it was expected to determine the “issue”
whether the first respondent complied with its statutory obligations

in regard to publication and community participation before adopting
its budget and the contentious rates policy implicated thereby.
[100]
By way of background Own Haven asserted  that
in order to consider the legality of the rates imposed on its
properties by the
first respondent for the relevant financial year
it, and the second applicant together with it, had been obliged as a
consequence
of the first respondent’s obdurate refusal to
provide it with any documents relating to the budget and process for
that year
to launch an application in this court compelling it to
comply with its request and appeal in terms of the provisions of the
PAIA
.
[101]
It submitted a comprehensive request (the summary
outlined in
SAPOA
of
a municipal budget process, repeated in
Borbet,
providing a very helpful guide of the clear processes that the first
respondent would have been expected to follow in this regard)
and
according to it, provided the first respondent with every opportunity
to deliver every document material to compliance by it
with its
statutory obligations foreshadowed by it as found wanting. In
response to such request, the first respondent ultimately
delivered a
substantial number of documents.
[102]
The applicants also in their notice of motion in
the present application, alluding to the provisions of Uniform Rule
53 (3), sought
all records pertaining to the impugned decision. In
responding, the first respondent delivered to the applicants 9 lever
arch files
containing these supposed documents. After considering
these, the applicants elected not to certify any of such documents as
constituting
the “record” as contemplated in Rule 53 (3).
[103]
There
is as a result, so the applicants assert, no review “record”
before this court. To the extent that the first respondent
purported
to refer to any other documents delivered by it, and not put up by
the applicants, they submit that it was obliged to
attach such
document to its answering affidavit,
[67]
and where such documents were offered up as proof and referenced in
its answering affidavit, it was further required of it also
to have
identified the material portions relied upon by it and obviously to
have incorporated it specifically in its formal answer.
[68]
[104]
They ultimately proceeded on the assumption that
the documents provided made up all of the material relevant to the
present challenge
and applicable to the relevant budget process and
most particularly the review of the rates policy and the concomitant
purported
public participation process. Indeed, the first respondent
conceded in its answering affidavit that the applicants were indeed
furnished with all the information “required and relevant for
the determination of this matter”, which must obviously
be
contained in the numerous lever arch files that accompany the court
file.
[105]
It follows, so they assert, that that the
inexorable conclusion is that where documentation or other admissible
evidence of any
required step or process was not provided by the
first respondent, that that step or process did not occur.
[106]
The applicants allege further that having reviewed
the documentation (most of which it seems was probably made available
to it pursuant
to their PAIA pursuit) they themselves attached those
which they considered to be material (to prove a negative) and
incorporated
the relevant provisions in their founding affidavits.
The first respondent, by contrast, did nothing more than make cursory
reference
to documents contained in volumes 1 to 4 of the assumed
record of proceedings as supposedly evidencing the public
participation
process followed by it. It further made no attempt
whatsoever in any event to identify the documents on which it wished
to rely
in any particular respect, to give it a particular context,
or to incorporate any portion of its contents thereof into its
affidavits
and this objectionable exercise formed the basis on its
own merits for an application brought by the applicants to strike out
such
inadmissible matter, and then a later similar application when
the first respondent persisted in treating the so-called “record”

as purported evidence in a further affidavit filed to deal with the
applicant’s first request to strike out inadmissible
evidence.
[107]
The applicants maintain that the documents
contained in the 9 volumes purporting to be the “record”
as contended for
by the first respondent, as well as the references
to any reliance thereon by it in the answering affidavit, are
inadmissible and
fall to be left out of account as evidential
material in support of the first respondent’s broad sweeping
averment that a
proper public participation process preceded its
decision to adopt the contentious rates policy.
[108]
For their part the applicants explain that they
had (before the launch of the review application) extracted from the
9 volumes provided
to it that which they contended in their founding
papers “
comprehensively
demonstrates the failure of the
(first
respondent)
to (have complied) with the
public participation and consultative process required”
,
as outlined above.
[109]
In
support of the applicants’ stance in this respect. Mr. Ford
acting on their behalf, referred me to the
dictum
in
Venmop
275 (Pty) Ltd & Another v Cleverlad Projects (Pty) Ltd &
Another
[69]
that clearly sets out the expectation of parties concerning the
production of a record in a review application launched in terms
of
the provisions of Rule 53 as follows:
“
Rule
53 of the uniform rules of court provides a mechanism for an
applicant, in review proceedings, to obtain a record of the
proceedings
and to facilitate the presentation of the applicant’s
case in the review.  Rule 53(1) provides for the notice of
motion
to call for the dispatch of the record of such proceedings to
the registrar.  Rule 53(4) provides the applicant with an
opportunity,
after having inspected the record, to vary the terms of
the notice of motion and supplement the supporting affidavit.
The
provisions of rule 53(3) are quite clear.  They require the
applicant to “cause copies of such portions of the record
as
may be necessary for the purpose of the review” to be made.
The purpose of the rule is equally clear.  It is
to provide an
aggrieved applicant, who might not necessarily have all the evidence
at his or her disposal, the opportunity to supplement
the case made
in the application by providing potential evidence in the full record
of the review proceedings.  Having been
given such opportunity,
it is the duty of the applicant to select what is relevant from the
record to serve as evidence for the
purpose of the review
application.  It is only what is selected by the applicant in
terms of rule 53(3) that serves as evidence.
Should there be
documents forming part of the record omitted, which in the view of
the respondent are relevant, these can be introduced
into evidence as
annexures to the answering affidavit.  Any other part of the
record omitted which is necessary to rebut what
is said in answer
might similarly be introduced as an annexure to the replying
affidavit.”
[110]
Contrariwise, Mr. Buchanan criticised the
applicants who, once having utilised the machinery of the provisions
of Rule 53 to obtain
the necessary documentation bearing upon the
making of the impugned resolution and having elicited from it the
numerous documents
in response which were collated, indexed and
paginated by them as evidencing the required record, thereupon
prevailed upon the
court to treat the body of documentation as
constituting inadmissible evidence.  He also made much of the
applicants’
unequivocal election in the process not to
supplement their founding papers concerning their existence and
obvious purport which
the first respondent says supports its case,
quite tersely made, that there was due compliance with the necessary
public participation
consultative process.
[111]
In
this respect Mr. Buchanan referenced the trite principle that it is
for the applicants to have made out their case in their founding

papers
[70]
and of the further
rule that an applicant is generally not allowed to supplement his/her
founding affidavit by adducing supporting
facts in a replying
affidavit.
[112]
He contended that these trite principles are
particularly relevant in the present case especially because of the
“generalised”
allegations of a lack of public
participation raised by the applicants in the founding affidavit and
the obvious lack of any supplementation
thereafter especially since,
after having had access to all the relevant documents provided by the
first respondent in response
to their notice in terms of Rule 53 (3),
they made a conscious election not to supplement their founding
papers.
[113]
A spat about onus also emerged.  The first
respondent decried the implication by the applicant’s approach
that there
was some sort of onus on it to establish adequate public
participation. Rather, so it was contended on its behalf, the onus
fell
to the applicants to establish and prove their allegation of a
lack of adequate public participation yet had done so in a very broad

and generalised manner relying on particularly unspecified
allegations in this regard.  Having additionally pertinently
invited
the applicants to particularise the alleged deficiencies in
the public participation process in reply, an invitation which they

brazenly ignored, Mr. Buchanan made capital of the fact that they had
not availed themselves of such an opportunity to their own
detriment.
[114]
In
the result, so he concluded, the substance of the dispute fell to be
decided according to the usual approach adopted where there
are
factual disputes in proceedings of this kind as set out in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints
,
[71]
which is essentially to accept the correctness of the respondent’s
version with regard to the areas of dispute.
[115]
Although the issue of the record and the applications to strike out
loomed large and took up a lot of the court’s
time, at the end
of the day neither party expected me to have regard to the several
volumes constituting the “record”,
and Mr. Ford seemed to
take comfort in the suggestion that I would naturally determine what
was properly before me, eschewing the
reading in of copious
unreferenced documents or accepting any hearsay evidence or
assertions unsupported by proper evidence.
[116]
It is so that the applicants having pleaded a breach by the first
respondent of its obligations to have followed
a public consultative
process, they bore the onus to allege and prove such breach but the
applicants were in this instance seeking
to prove a negative.
The answer to their case lay particularly within the knowledge of the
first respondent and, if it existed,
in the documentation under its
control.  I am not in agreement with Mr. Buchanan that the
applicants made general unspecified
accusations of any shortcomings
in this respect.  To the contrary I have already remarked above
upon the pedantry nature of
their complaint having apprised
themselves of the import of all the documentation made available to
them by the first respondent.
[117]
I add too
that far from providing an answer that would satisfy the dictates of
reasonableness by demonstrating that the first respondent
had
meaningfully invited the local community to participate (especially
with regard to the substantive amendments that were implicated
in
adopting the rates policy) and had taken Own Haven’s already
known concerns into consideration,
[72]
the first respondent made a belated attempt in October 2022, in a
“further affidavit” filed in response to the applicants’

application to strike out and to co-incidentally condone its delay in
having filed its answering affidavit timeously in the first
place, to
excuse why prior consultations had not been had with the relevant
officials and councillors of the first respondent who
were
purportedly involved in the approval of the IDP, the budget and
budget related policies.  This is in itself was in my
view a
concession that questions raised by the applicant at the outset
concerning what steps the first respondent had undertaken
(especially
concerning any discussion around the revised rates policy of
substantial for social housing institutions) had been
left begging
and that the applicants were therefore not being unrealistic in their
estimate of things that the first respondent
had failed to make any
particular effort to allay their concern of a lack of proper public
participation.
[118]
Even the belated account given by the deponent on behalf of the first
respondent in dealing with the shortcomings
highlighted by the
applicants were elliptical, if not in my view evasive, and raise no
real dispute of fact. There is indeed merit
in Mr Ford’s
submission that one would search in vain in any of the documents put
up by the first respondent for a public
participation focused on what
is required in terms of the Rates Act with regard to the rates
policy, the provisions of which a
municipality properly focused on
the participatory nature of local democracy and the interests of the
people it serves, should
be acutely aware of.
[119]
The
applicants readily conceded what aspects of the rates adoption
process were properly undertaken (there were at first additional

manner and form complaints raised by them in respect of the budget
process that they conceded along the way were compliant with
the
expected processes) but some gaps starkly remain, leaving one to
conclude inexorably that a meaningful public participation
process
was lacking. There was also the surprise belated admission by the
first respondent of massive amendments to the policy
that had been
introduced, yet in a letter put up by them to Own Haven amongst its
annexures to the “further affidavit”
[73]
dated 16 October 2019 it resolutely disavowed any amendments made to
its policy.  Instead, it is stated in the letter (expressly
with
regard to the issue of community participation in amendments to the
policy. that: “
(t)he
policy was reviewed during the 2018/19 financial year however, there
were no amendments made and the policy was noted by Council
as per
minute number BCMC256/19 dated 29 May 2019.”
[120]
As for the supposed views that the first respondent claims to have
elicited by the participation process it contended
for it does not
say what those were or how each view was treated in relation to the
amendments to the rates policy and the budget
that were rendered
essential thereby.
[121]
The first respondent claims that the issue of the social housing
institutions was addressed when comments were
made in relation to the
rates policy (Own Haven assumes with reference to the concept of
public benefit organizations), but in
this respect put up nothing
more than a copy of a slide presentation that does not even begin to
suggest the complexity of the
problem by sidelining social housing
institutions in the position of Own Haven, how the community
perceived the problem, or what
recognition it gave to the issue. In
any event it has plainly stated its bias against social housing
institutions with reference
to its supposed mandate to leave out
public benefit organisations such as Own Haven, courtesy of the
Amended Rate Ratios Regulations,
as well as by pressing its view (not
supported in the evidence, leave alone any empirical data to sustain
it) that it has no obligation,
legal or otherwise, to  support a
social hosing institution that wishes to persist with a dated rental
model that does not
align itself with its own ideas on what social
housing is about.
[122]
The first
respondent claims to have no knowledge of the policies of other
cities regarding social housing, but this is certainly
an issue that
would have been required to be raised in the budgetary process for
comparisons to be made in the interest of social
housing institutions
inter
alia
.
[74]
[123]
In the premises the so-called dispute of fact is nothing but a bald
assertion of supposed compliance without any
flesh to its tentative
bones.
[124]
In
conclusion I am satisfied that the impugned resolution fell afoul of
the peremptory requirements for public participation, rendering
the
policy implicated thereby invalid to the extent of such inconsistency
and falls to be set aside in its entirety.
[75]
This obviously redounds to the benefit of the second applicant who
has come along for the ride so to speak, but I emphasize that
its
legal interests or offence to it by the impugned rates policy have
hardly been at the forefront of this court’s focus
or decision.
The issue of the reasonableness of the public participation process
in relation to Own Haven’s interests have
especially influenced
my determination.
[76]
Is
the first respondent’s exclusion of Own Haven from any
entitlement to a rates rebate, or conversely its regard for it as
an
ordinary commercial entity, in the rates policy itself illegal on any
of the bases contended for by Own Haven?
[125]
Having found that the process whereby the policy was adopted is
tainted with illegality for want of reasonable
engagement with the
local community, more especially Own Haven, and falls to be set aside
in its entirety, it is strictly unnecessary
to flog a dead horse, but
perhaps some observations will be of assistance going forward.
[126]
The complaint by Own Haven is that there should be different category
provided for it and social housing institutions
in the first
respondent’s rates policy, alternatively a special rebate. The
commercial category is not a natural fit for
it under the
subgenera
of non-residential property.  In my view it is plain that it is
not and that it should be recognized for what it is (with
reference
to its registration both as a public benefit organisation and as an
accredited social housing institution subject to
very stringent
criteria to maintain its existence as such).  It should
especially be recognized as an entity not for gain,
which sets it
apart from ordinary commercial entities. Social housing institutions
should also be recognized for what they bring
in service to the
community, in comity really with a municipality, contributing to the
delivery of an important developmental need
that also promotes the
realisation of a significant constitutional right of access to
housing. The first respondent’s strained
concept of what a
social housing institution is and where it fits it cannot be
rationally sustained.
[127]
More significantly, the first respondent’s interpretation of
the Amended Rate Ratios Regulation to mean
that social housing
institutions do not qualify as public benefit organisations
per se
for any kind of rates largesse is also plainly unsustainable and
irrational.
[128]
Whether it was deliberate or due to an oversight that public benefit
organisations conducting social housing activities
are excluded from
the definition of specific public benefit activities referred to in
the Rates Act (which I emphasise does not
constrain the first
respondent from excluding social housing institutions from any rates
largesse otherwise provided for in section
15 thereof) should perhaps
be properly interrogated, given the significance of land and housing
activities undertaking by social
housing institutions in pursuit of
the meaningful realisation of the constitutional right of access to
housing, but that is not
for this court to decide. Certainly,
however, this distinction seems to have been responsible for the
disadvantage that has redounded
to Own Haven and infuses the first
respondent’s thinking when it comes to its decision making in
this respect.
[129]
The first respondents submits that it is not in conflict with the
provisions of the SHA or social housing when
arguing for a
progressive evolvement of the policy in the direction of rent to buy.
It maintains that even within the context of
the State of the Sector
Report, rental is but one possibility, but that obtaining title is a
different and hopefully better policy
which can be applied and is
perfectly consistent with the SHA. It does not disregard the
provisions of the SHA, but simply takes
a different view from the
applicants.
[130]
It is not restrained from being entitled to give expression to the
ideal it entertains because notionally the
strategic plan envisages
short- and long-term goals in the social housing sector, but it is
certainly illogical in my view to disregard
the fact that there are
existing social housing institutions that have been inherited which
are constrained to act within the law
as their registration and
accreditation dictates.
[131]
The first respondent contends that there is nothing in the SHA that
places a positive obligation on it to show
social housing
institutions any rates largesse.  Ironically though, it claims
to have already done so in more than one respect,
having granted it a
commercial rebate for new developments and also by way of having
afforded it a reduction, this evidenced by
it having valued its
properties on the basis of rental income rather than on the premise
of their market values. Inasmuch as it
has already explored options
to show it a favourable disposition, that objective should be
revisited with every revision of the
rates policy.
[132]
As for the
applicants’ allegation that the first respondent acts illegally
by disregarding the mandatory provisions of the
SHA, the act does not
in my view order it to facilitate social housing delivery in actual
fiscal currency. The chief funding under
the act in the form of
subsidies and grants appears to emanate from national and provincial
coffers. Though it might have been
envisaged that fiscal support
could come from municipalities in the form or discounts and rate
rebates (not exemptions), it cannot
be argued that a municipality
contravenes any provision of the SHA when it does not offer such
largesse in fact when adopting its
rates policy.
[77]
[133]
Where it may fail is in taking the reasonable and necessary steps,
within the national and provincial legislative,
regulatory and policy
framework, as are delineated in section 5 of the SHA, facilitation
however not prescribing that municipal
rates should
not
be
imposed in respect of social housing.  To the contrary the first
respondent is legally obligated to
levy
a rate on property in its area. Section 2 (2) of the Rates Act indeed
provides that a municipality must exercise its power
to levy a rate
on property subject to section 229 and any other applicable
provisions of the Constitution; the provisions
of the Rates Act;
and the rates policy it must adopt in terms of section 3
thereof.
[134]
National government is required by section 3 (1)(j) of the SHA to
determine norms and standard to be adhered to
by provinces and
municipalities for the effective delivery and management of social
housing, which is essentially the object of
the SHA, namely, to
establish and promote a sustainable housing environment.   The
act seems not to concern itself with
parochial issues of a social
housing institution’s liability for rates.  I should
mention however that Own Haven puts
its accreditation dangerously in
jeopardy when it complains that its operations are not financially
sustainable.
[135]
The primary legal instrument which by a municipality determines its
rates policy is the Rates Act according to
which it is not obliged to
create any special dispensations.  The Rates Act does provide
for rebates depending on which categories
a municipality creates in
line with those proposed in section 8 (2) of the Rates Act. New and
additional categories can be created,
but require the approval of the
relevant Minister, something which Mr. Buchanan suggested was already
the subject matter of litigation
in the Makhanda High Court. The fact
that such an extra curial option exists confirms to my mind that a
court should be slow to
interfere when a municipality interprets
these prescripts differently for its unique circumstances, subject of
course to my suggestion
above that the first respondent should be
alive to the fact that the properties of social housing institutions
do not comfortably
resort under the definition of business or
commercial property.
[136]
No
ratepayer can demand a rebate which is discretionary and depends on
the resources of a particular municipality. In deciding who
may
qualify the first respondent exercises a legislative choice and the
scope to question those by way of a legality review are
limited.
Section 15 (1)(b) of the Rates Act however provides that a
municipality
may
in terms of criteria set out in its rates policy grant to a specific
category of owners of properties, or to the owners of a specific

category of properties a rebate on or a reduction in the rates
payable in respect of their properties and
may
when doing so determine such categories in accordance with section
8 (2) of the Rates Act. There is no obligation
on it to
rigorously follow such category determinations however, when it comes
to deciding what rebates or reductions it may grant.
Indeed, the fact
that the first respondents admits that it has granted reductions to
Own Haven before suggests that it has and
can come to its assistance
under the provisions of section 15 of the Rates Act by having regard
to it as a duly registered public
benefit organisation carrying on
the activity which it does that enables SARS to exempt it from the
payment of tax.
[78]
It
therefore appears to be a fair statement that its exclusion of Own
Haven from any entitlement to rebates at all because it is
excluded
from the category envisaged in section 8 (2)(a) is irrational.
It is even more unstainable in my view for the first
respondent to
suggest that the Amended Rates Ratio Regulations has sealed Own
Haven’s fate as it were from being considered
for a rebate,
ever.
[137]
The point is well taken by Mr. Ford that it is absolutely irrational
for the first respondent to have adopted
the stance that the Amended
Rate Ratios Regulations have put Own Haven forever beyond the reach
of any entitlement to be considered
for a rebate under the provisions
of section 15 of the Rates Act.  They simply do not dictate the
prohibition contended for.
Remedy
:
[138]
This court’s conclusion that the impugned
resolution infringes the principle of legality and accordingly
that the relief
in prayers 2 and 3 of the notice of motion fall to be
granted (it is sufficient if prayer 2 prevails in my view)
constitutes a
decision as contemplated in Section 172 (1)(a) of the
Constitution that empowers it to make “any order that is just
and equitable”
including an order limiting the retrospective
effect of the declaration of invalidity, and an order suspending the
declaration
of invalidity to allow the competent authority to correct
the defect.
[139]
The parties are in accord that the latter option
would not be of any practical effect given that the financial year in
question
has long since passed and the budget already implemented.
[140]
Faced
with similar situations where municipal councils have adopted rates
policies illegally, our courts have recognised that they
are
obligated by the provisions of section 172 (1)(a) of the Constitution
to declare the resolution adopting the rates in question
to be
invalid but have nevertheless been reluctant to apply such
declaration of invalidity retrospectively in circumstances where
the
rates policies in question have been applied and in large part
collected.
[79]
[141]
Mr.
Ford however submitted that the circumstances in this matter differ
from those in the cited cases gone before and that this
court should
in the exercise of its discretion to craft just and equitable relief
do more than simply issue a declarator such as
in
Borbet
to the effect that the first respondent failed to comply with its
constitutional and statutory obligations to ensure meaningful
public
participation in the preparation and adoption of its budget under
scrutiny introducing massive amendments to its rates policy
and
ordering compliance with its obligations in this respect concerning
future budgets.  He pointed to the fact that after
the adoption
of the illegal rates policy in question, the applicants in this
instance declared a dispute and withheld payment of
the rates claimed
by first respondent. He noted that whilst the first respondent had
had the opportunity to press its claims against
both by the
institution of action, it chose not to do so and in fact took no
steps with regard to the disputes so declared.
[80]
Further,
so he submitted, it was obstructive in the face of the applicants’
constitutional right to access to information
in getting to the
bottom of whether it had legally adopted the amended policy in the
first place.
He noted that
a
declaration of the first respondent's resolution adopting the
applicable rate to be invalid would also remove its
causa
for recovery of the rates withheld by each of the applicants.
[142]
He submitted that an order generally limiting the
retrospective effect of a declaration of invalidity would have the
effect of rendering
nugatory the applicants’ reliance on their
statutory right to declare disputes and ultimately to have their
disputes resolved
in a fair public hearing in terms of section 34 of
the Constitution.
It would also
effectively
reinstate claims on the part of the first respondent for payment of
the rates withheld by the applicants in circumstances
where this
court has found that it acted illegally in imposing such rates in the
first place, and that it will in such circumstances
be unjustly
enriched
.
[143]
In
Allpay
Consolidated Investments Holding Pty Limited and Others v Chief
Executive Officer, South African Social Security Agency and

Others
[81]
the
Constitutional Court emphasised the importance of an appropriate
order in terms of section 172 (1)(b) in order to account for
any
unjust or impractical consequences of a declaration of invalidity. In
that matter the circumstances allowed for an order suspending
the
invalidity to allow the defect to be corrected, by ordering a “rerun”
of an impugned tender process, allowing the
invalid contract to
continue essentially by judicial warrant in the interim.
[144]
In this regard, in crafting the order made by it
in
Allpay
,
the Constitutional Court albeit in a different context made reference
to the respective constitutional obligations which arise
when a
service provider assumes the obligations of the state under a
contract awarded to it.
[145]
In this instance, Own Haven, by registering as a
social housing institution has assumed, to the extent provided for in
the SHA and
together with other social housing institutions, the
responsibility of the State to fulfil the right in section 26 (1) of
the Constitution.
Whilst it also has an obligation to pay rates, it
is entitled to require that such rates are not imposed in a manner
which detracts
from its primary obligations or that fails to
recognize the role played by it in meaningfully promoting the
constitutional pursuit
of the delivery of social housing to the
targeted beneficiaries it serves by its housing projects.
[146]
Should this court simply follow the approach in
SAPOA,
and
Borbet
, on
the basis that “the egg could not be unscrambled” and not
order the repayment of rates that were not validly imposed
without
making the further orders as prayed for in paragraph 4 to 6 of the
notice of motion, so Mr. Ford contended, that would
result in the
extensive adverse consequences to the ability of Own Haven at least
to deliver on the constitutional mandate assumed
by it.
[147]
There is I believe merit in the argument advanced
at least on behalf of Own Haven that it would be just and equitable
for this court
to limit the retrospective effect of the declaration
of invalidity to the date of this order, save to the extent that it
has withheld
payment of rates to the first respondent for the
relevant financial year pursuant to its declarations of dispute given
the import
of the illegality that tainted the adoption of the rates
policy implicating amendments thereto that have been severely
prejudicial,
to it and in respect of which it has constantly sought
to defends its position.
[148]
I do not however consider the position of Lorles to be on a par with
that of Own Haven for the reasons which I
have already stated above.
[149]
In the circumstances I am inclined to exercise my
discretion in terms of section 172 (1)(b) of the Constitution by
granting the
ancillary relief sought by Own Haven
at
least.
[150]
To the extent that both applicants have achieved substantial success
(the second applicant quite by default),
there is no question that
they are entitled to their costs which Mr. Buchanan fairly conceded
should include the costs of second
counsel.
Order:
[151]
In the result I issue the following order:
1.
The
delay in the time taken by the applicants to bring this application
is condoned.
2.
The
resolution of the first respondent’s Council on 30 May 2018
adopting its rates policy and the rates policy implicated
thereby is
declared inconsistent with the Constitution and accordingly invalid.
3.
The
order in paragraphs 2 shall be effective as from the date of this
order, save with respect to the rates withheld by the first
applicant
pursuant to the declaration by it of its disputes with regard to its
liability therefor.
4.
The
first applicant is relieved of its liability to pay to the first
respondent the rates levied for the social housing schemes
on erven
53726, 4995, 53722, 67843 and 61213 Buffalo City withheld by it for
the 2018/2019 financial year.
5.
No
relief is granted to the second applicant pursuant to this court’s
order of constitutional invalidity referred to paragraph
2 above.
6.
The
first respondent is directed to pay the costs of the application,
such costs to including the costs attendant upon the use of
two
counsel.
B
HARTLE
JUDGE
OF THE HIGH COURT
DATE
OF HEARING
8 &
9 September 2022
DATE
OF JUDGMENT
26
June 2023
Appearances:
For
the applicants:
Mr.
E A S Ford SC together with Mr. J Richards instructed by Bax
Kaplan Russell Inc., East London (ref. Mr. S Clarke).
For
the respondents:
Mr.
R Buchanan SC together with Mr. L X Mpiti instructed by Makhanya
Attorneys, East London (ref. Mr. Makhanya).
[1]
The rate adopted by the first respondent’s Council for the
2018/2019 financial year for the commercial category of properties

was .026649 cents for each R1.00 of property value.  In a
“Further Affidavit” filed late in the proceedings
on 19
August 2022 the first respondent agreed that “massive
amendments” were made to the rates policy of 2017. A
further
significant change was introduced by the addition of a definition of
a business and commercial property whereas it had
not been defined
in the “last” rates policy preceding it, this according
to the “2018/19 Property Rates Policy
Review “put up by
the first respondent as one of the annexures to its answering
affidavit at pages 439-40 of the indexed
papers. (See fn 6 below.)
By the first respondent’s own admission that it refuses to
recognize the first applicant as a
public benefit organisation for
rating or exemption purposes (a refusal that took root in 2010
already), this would have meant
that its fate fell to be determined
under the contentious new rates policy with reference to the
definition of business and commercial
property latterly added to it.
For this reason, the revision of the rates policy, not just as
represented in a rands and cents
impact to the first applicant, but
by necessary implication putting an owner such as itself, carrying
on a specified public benefit
as a social housing institution into a
commercial category, would have entailed a change of significant
import to it.
[2]
The
Social Housing Regulations, GNR. 51 dated 26 January 2012 (“the
Social Housing Regulations”); See also the Rules
on the
transfer or disposal of social housing stock funded with public
funds (GN 64 dated 21 January 2015), which the first applicant

relied on to make the point that it cannot simply be expected to
change its “business model” and sectionalize its
rental
housing stock. This has been suggested by the first respondent as a
fix to the dilemma posed by the commercial characterisation
of it
for rating purposes given the onerous obligations on it as a social
housing institution imposed by law.  Also, of
relevance to the
first applicant’s institutional integrity and official status
(as a not for gain public benefit entity)
are the “Rules on
long-term accreditation of social housing institutions”
promulgated per GN 624 of 2016 (“the
accreditation
regulations”), which stipulate, for example, the requirements
for social housing institutions going to appropriate
legal form,
namely that they are not for profit entities, practice “good
governance,” and maintain financial sustainability.
[3]
The application was issued on 25 October 2019.
[4]
See footnote 2 regarding the stringent criteria for accreditation by
the SHRA of social housing institutions especially under
the
accreditation regulations.
[5]
A
“public benefit activity” is defined in section 30 of
the ITA as one listed in part 1 of the Ninth schedule to the
ITA
which, under item 3 thereof relative to “Land and Housing”,
under paragraph (a), refers to the “development”,

construction, upgrading, conversion or procurement of housing units
for the benefit of persons whose monthly household income
is equal
to or less than
R15 000.00”
(probably now R22 000.00 since the second respondent has
increased this threshold of the secondary market’s household

income limit per GN. 2009 of 8 April 2022, in order to align it with
the National Housing Programme commonly known as the Financed-Linked

Individual Subsidy Programme (“FLISP”)).  A “public
benefit organisation” is further, in turn, defined
in section
30 (1) of the ITA under sub-paragraph  (a), as any organisation
which is a non-profit company as defined in section
1 of the
Companies Act formed or established in the Republic and (b) which
has as its sole or principal object, the carrying
on of one or more
public benefit activities, where (i) all such acts are carried on in
a non-profit manner and with an altruistic
or philanthropic intent;
(ii) no such activity is intended to directly or indirectly promote
the economic self-interest of any
fiduciary or employee of the
organisation, otherwise than by way of reasonable remuneration
payable to that fiduciary or employee;
and where each such activity
carried on by that organisation is for the benefit of, or is widely
accessible to the general public
at large, including any sector
thereof.
[6]
Under the impugned rates policy’s definitions, “
Business
and Commercial Property”
refers to property on which the activity of buying, selling or
trading of goods/or services and any other commercial activity

occurs and a property used for the purposes of eco-tourism or for
the trading in or hunting game.  Commercial property includes

any office or other accommodation, the use of which is incidental to
the business.  This includes hostels, flats, communes,
old age
homes, self-catering/holiday flats, bed and breakfast (regardless of
number of rooms)
and
any property used for a purpose which does not fall within any other
category defined in this policy
.”
(Emphasis added) Own Haven does not resort under the category of a
public benefit organisation according to the first
respondent’s
perception of it as a “for gain” entity, hence it can
only be placed in the commercial category.
[7]
I say “might” because the iteration was also not without
obvious typos and poor syntax.
It
is significant on its own though that so bold a change was effected
to the draft policy on the applicants’ case without
any
consultative process preceding the final version of the policy that
was adopted.  Own Haven was prejudicially implicated
in two
ways twixt cup and lip, so to speak, both in the loss of its
recognition as a duly registered public benefit organisation
and its
reversion, by default and because of the significant definition
added to the final draft version of the rates policy,
to that of a
“for gain”, ordinary commercial entity. The latter
result of course had as a further consequence that
it was hit with
prohibitive commercial rates in respect of all of its properties
which, for the relevant budget year under scrutiny,
were quite
substantial.
[8]
The first respondent mused in its answering affidavit that it was
“not clear” what Own Haven intended to mean by
its
reference to the “concurrence of the provincial government”,
but the answer surely suggests itself from the definition
in section
1 of the SHA of a “restructuring zone”. This means “a
geographic area which has been – (a)
identified by the
municipality with the concurrence of the provincial government, for
purposes of social housing; and (b) designated
by the Minister (the
second respondent) in the
Gazette
for approved projects.” Its appears from such a Gazette that
Buffalo City is one of those areas. Own Haven’s status
as a
housing institution in the zone is therefore not a random
coincidence.
[9]
It is almost inconceivable that the first respondent should not
acknowledge Own Haven’s existence and status as an accredited

social housing institution and not-for-profit organisation.  It
should also be aware of Own Haven’s tax-exempt status
with
SARS.  Both of these critical certification documents appear to
have been been furnished to the first respondent together
with Own
Haven’s several applications for rates rebates and other
representations made to be rated as a public benefit
organization in
respect of the use of its five properties.
[10]
This is also unfortunate and loses sight of the significant
accreditation criteria for a non-profit organisation that the SHA

imposes on companies seeking to be recognized as accredited
institutions to engage in the sector as social housing institutions.

One would expect a municipality to have a sufficient working
knowledge of, and interest in, the provisions of the SHA and the

impact of its provisions on existing social housing institutions
including those inherited under earlier dispensations or social

housing initiatives.
[11]
It appears that this troubled history preceded the significant
amendment to the first respondent’s rates policy voted into

law for the 2018/2019 financial year.  Own Haven does not
however say when it obtained its properties or provide any details

of its early entry into the social housing sector which ought to
have brought it into a particular relationship with the first

respondent as a social housing institution and its challenges
thereby.  It seems to be common cause though that it enjoyed

the benefit of a phased in rebate over a five-year period applicable
to all newly developed commercial or industrial properties.
This
may have placated it at the time. The first respondent also pleaded
that its valuer has valued Own Haven’s properties
on the basis
of its actual rental income rather than on their market values, so
this favourable variable may also have kept it
from judicially
reviewing the first respondent’s regard of it as a business
rather than as a social housing institution
per
se
.
Given the first respondent’s allegation that this has resulted
in Own Haven’s property being valued at a lower rate
than
other commercial properties, this may have amounted to a “reduction”
within the meaning of the Rates Act, but
neither party dwelt on this
aspect in presenting their respective cases.
“(R)eduction”
in relation to a rate payable on a property, means, in section 1 of
the Rates Act: “…the
lowering in terms of section
15 of the amount for which the property was valued and the
rating of the property at that
lower amount.”
[12]
The original rate ratios regulations were promulgated per
GNR.
363 of 27 March 2009, and amended by R 195 of 12 March 2010
(effective from 1 July 2010).  It is referred to as the

“Amended Municipal Property Rates Regulations on the Rate
Ratios between Residential and Non-Residential Properties”

(“Amended Rate Ratios Regulations”).  It is
apparent from
Kalil
N.O. & Others v Mangaung Metropolitan Municipality & Others
2014 (5) SA 123
(SCA) at para [18] that the
only
difference introduced by the amending regulation was the addition of
the category of “Public Benefit Organizations
Property”
in the schedule that had not been there before.  The definition
of a “specified public benefit activity”
within the
meaning of the Rates Act that excludes housing activities has
however been there since the commencement of the Rates
Act so it is
uncertain why the Amended Rate Ratios Regulations should have had
anything to do with a change in approach or regard
for Own Haven in
2010.
[13]
See
fn 5.
[14]
The
reference to “5” is an obvious mistake, which
demonstrates the lack of attention to detail.
[15]
The
reason for the exclusion of item 3 from this definition (repeated in
the Amended Rate Ratios Regulations) is unclear.
It may have
been deliberate, which is the puzzle for me, but it was clarified by
counsel that this was not an issue that this
court was required to
decide.  The second respondent was only cited for her interest
in the application but her thoughts
on the matter may have been of
some assistance in gleaning the reason for the differentiation (in
existence sine the commencement
of the Rates Act) between public
benefit organisations conducting public benefit activities listed in
item 3 of Part 1 to the
Ninth Schedule to the ITA versus those under
items 1, 2 and 4 under Part 1 listed therein.
[16]
Own Haven’s professed dilemma also raises a threat to the
security of tenure of the relevant tenants and the first applicant’s

very existence as an accredited SHI, because financial
sustainability of any entity undertaking business as a social
housing
institution is key to its continued accreditation according
to the accreditation regulations.
[17]
The disputes, which are numerous, have been recorded pursuant to the
provisions of section 102 of the Systems Act.
[18]
South
African Property Owners Association (“SAPOA”) v Council
of the City of Johannesburg Metropolitan Municipality
& Others
2013 (1) SA 42 (SCA).
[19]
The first respondent asserts that Own Haven has misinterpreted the
relevant provisions of the SHA and the policy and guidelines
which
have been issued pursuant to such statute and that it is especially
misguided in its approach as to what social housing
is about. In
summary its beliefs in this respect, which have no doubt infused its
rates policy, are summarised below:
1.
Regard being had to the general principles to social housing in
terms of
section 2
of the
Social Housing Act, all
levels of
government are ultimately expected to provide ownership and title to
persons qualifying for assistance to social housing.
2.
It is accordingly not desirable, nor compatible with the long-term
object of social housing in
South Africa, for persons occupying such
housing, to continue to pay rent indefinitely without ever obtaining
any right to such
property or title thereto.
3.
Own Haven’s present business model does not give effect to
these underlying principles.
4.
It has encouraged entities, such as Own Haven especially, to refocus
their social housing involvement
in order to encourage the
conversion of existing buildings and developments into sectional
title or other individual title in
order to enable the occupants of
such social housing to obtain permanent title and transfer of the
housing occupied by them.
5.
It is Own Haven’s own misfortune that it has failed to head
the calls by it to have allowed
the occupants of its complexes to
ultimately obtain permanent titles and having such properties
transferred to them.
6.
Notwithstanding requests and suggestions by the first respondent,
that the relevant properties
be sectionalized, there has been an
insistence that the landlord and tenant model is to be pursued by
Own Haven.
7.
That model inevitably gives rise to the application of commercial or
business rates and service
charge liabilities which is its own
choice.
8.
A number of Own Haven’s “competitors” (Sic)
within its area have indeed proceeded to sectionalize their
properties
and accordingly those competitors do not face the same
financial difficulties.
[20]
See
Fn 19.
[21]
There
is no contest that Own Haven’s properties do not resort under
section 8 (2) (a) of the Rates Act as a fixed category
already
existing based on their use or permitted use that a municipality is
obliged to determine for purposes of levying different
rates in
terms of section 8 (1). It argues however that the first respondent
may and should, because it is entitled to differentiate,
determine
an additional category of rateable property in respect of social
housing institutions, and that such entities should
not by default
as a result be excluded for consideration for a rate rebate.
[22]
As can be gleaned from correspondence exchanged on behalf of Lorles
with the first respondent on the issue of its liability for
rates,
its challenge seems to have been confined to the issue of the
valuation of its property asserting that:
“
In adopting its
2018/2019 municipal budget, BCM approved a rate for the commercial
category, which, in conjunction with the valuation
of (its) property
determined pursuant to a supplementary valuation and a consequent
supplementary valuation roll, has rendered
the property rates levied
in accordance therewith unaffordable and unreasonable and excessive,
given the total lack of services
to (its) property (save for
sporadic refuse services), the area has become a high crime area
which has lowered market appeal,
it is in close proximity to
informal settlements which has decreased the desirability of the
property and attempted “land
grabs” in the area have
created uncertainty and loss of confidence in the area.”
[23]
Both
claim that the right to the relief they seek depends upon the
determination of substantially the same questions of law and
the
same body of fact which if separate applications had been
instituted, would arise in each of them.
[24]
This
subsection focuses on the object of local government “to
promote social and economic development”.
[25]
[1998] ZACC 17
;
1999
(1) SA 374
(CC) at para
[45]
.
[26]
See
SAPOA
Supra
at [5] with reference to the legal position that the Constitution
entrenches the principle of legality and provides the foundation
for
the control of public power as was endorsed in
Affordable
Medicines Trust & Others v Minister of Health & Others
[2005] ZACC 3
;
2006 (3) SA 247
(CC) at paras 48 – 49.  See also the
approach adopted by the Supreme Court of Appeal in
Kalil
N.O. Supra
at para [3];
Blair
Atholl Homeowners Association & Others v Tshwane City
2016 (2) SA 167
at para [23]; and Hoexter’s
Administrative
Law in South Africa
,
3
rd
Edition, at 228
et
seq
.
[27]
Democratic
Alliance v Ethekiwini Municipality Supra
at [37].
[28]
Democratic
Alliance v President of the Republic of South Africa
2013
(1) SA 248
(CC) at [33] and [34];
Albutt
v Centre for the Study of Violence and Reconciliation & Others
2010 (3) SA 293
(CC);
Zuma
v Democratic Alliance & Others; Acting National Director of
Public Prosecutions & Another v Democratic Alliance &
Others
2018 (1) SA 200
(SCA) at [82].
[29]
2020
(1) SA 450 (CC).
[30]
Democratic
Alliance v President of the Republic of South Africa, Supra
at
para 36.
[31]
Zuma v
Democratic Alliance Supra
at
para [82].
[32]
Own Haven would be content it seems if it were able to apply as a
social housing institution in terms of policy, because of its

self-limiting status and how it is expected to carry on its
activities under the auspices of the SHA, to benefit by way of a

rate rebate.  This recognition should, it says, lawfully be
extended to it.
[33]
Supra
at
para [7] - [15]
[34]
2014
(5) SA 256
ECP at paras [8] - [20] concerning a municipality’s
obligation to encourage public involvement in matters of local
government,
and [21] - [33] regarding the procedures for the
adoption of a municipal budget.
[35]
Section
152 of the Constitution.
[36]
At
para [9].
[37]
In both the Rates and Systems Acts,
“local
community”, in relation to a municipality is defined to
mean: “that body of persons comprising of
(a)—
(i)
the residents of the municipality;
(ii)
the ratepayers of the municipality;
(iii)
any civic organisations and
non-governmental, private sector or labour organisations or bodies
which are involved in local affairs
within the municipality; and
(iv)
visitors and other people residing
outside the municipality who, because of their presence in the
municipality, make use of services
or facilities provided by the
municipality; and
(
b
)
includes, more specifically, the poor and other disadvantaged
sections of such body of persons.”
[38]
Borbet,
Supra
,
at para [10].
[39]
Sections
4 (1) and (2) of the Systems Act.  Also see
Borbet
Supra
at [11].
[40]
Borbet
Supra
at [13].
[41]
Borbet
Supra
at [15] with reference in particular to sections 16 and 17 of the
Systems Act.
[42]
Sections
21, 21A and 21B of the Systems Act.
[43]
“Budget-related policy” is defined as a policy of a
municipality affected by the annual budget of the municipality
and
pertinently includes the rates policy which the municipality must
adopt in terms of the Rates Act.
[44]
Section 25 of the Systems Act (and section 26 for that matter)
describes what such a plan entails.  This plan would no doubt

encompass the second respondent’s and the provincial
department’s plans and planning requirements binding on the

first respondent in terms of legislation including the SHA. Indeed
section 2
(1)(c)(iii) of the
Housing Act, no 107 of 1997
, mandates
all spheres of government to ensure that housing development is
based on integrated development planning and in terms
of
section 9
,
as part of its integrated development planning, to take all
reasonable and necessary steps within the framework of national
and
provincial housing legislation and policy to achieve its housing
delivery objectives.  Local policy should by obvious

implication therefore be consistent with and speak credibly to
national and provincial policy concerning the provisioning of
social
housing. The whole Chapter 5 dealing with integrated development
planning is of particular relevance to the Social Housing
Sector and
should be amongst a municipality’s most critical developmental
needs.  It is inconceivable that the interests
of social
housing institutions would not firmly be on the radar in the first
respondent’s planning for the city periodically
coming up for
reflection and discussion in an annual budget vote, but more
especially so in the context of a review of its rates
policy where
the intention is to lump public benefit organisations providing such
a service under a commercial category.
[45]
Section
21
(1)(a) of the MFMA.
[46]
Section
21
(1)(b) of the MFMA.
[47]
Section
16
(2) of the MFMA.
[48]
Section
22
(a) of the MFMA.
[49]
Section
23
of the MFMA.
[50]
Section
24
(1) of the MFMA.
[51]
Section
3 (3) of the Rates Act.
[52]
Section
4 (1) of the Rates Act.
[53]
Sections
5 (1) and (2) of the Rates Act.
[54]
Section
5 (2) of the Rates Act.  Sections 22 and 23 of the MFMA.
[55]
Section
5 (1)(a)(ii) of the Systems Act also confirms the right of members
of the local community to “submit written or
oral
recommendations, representations and complainants to the municipal
council…or the administration of the municipality”

which would then be a matter of public record in my view.  The
constant refrain of the first respondent in these proceedings
is
that the applicants did not participate in the public participation
process that it contends for, yet the objections (and

representations) of both applicants have been repeatedly voiced to
it.
[56]
Borbet
,
Supra
,
at paras [8] - [33]. See also paras [57] - [74] in which the court
summarises the principles applicable in deciding when a municipality

such as the first respondent can be regarded as having complied with
its constitutional and statutory obligations relating to
public
participation with reference to the leading case law in this respect
against a yardstick of reasonableness and sensitive
especially to
the nature and the importance of the legislation and the intensity
of its impact on the public. The more discreet
and identifiable the
potentially affected section of the population (read the social
housing sector) and the more intense the
possible effect on the
interests, the more reasonable it would be to expect the legislature
(read municipality adopting a rates
policy) to be astute to ensure
that the potentially affected section of the population is given a
reasonable opportunity to have
a say. In addition, in evaluating the
reasonableness of the conduct of the law maker, the court will have
regard to what it considered
to be appropriate in fulfilling the
obligation to facilitate public participation in the light of the
content, importance and
urgency of the legislation.  (See
Matatiele
Municipality v President of the Republic of South Africa (No 2)
[2006] ZACC 12
;
2007 (6) SA 477
(CC) at
[68]
)
[57]
See
Borbet
Supra
at [78].
[58]
Section
1 of the SHA.
[59]
Section 2 of the SHA.
[60]
Section
2 (1)(i) of the SHA.
[61]
Section
5 of the SHA.
[62]
It
can hardly be envisaged that there is not a demand for social
housing in the first respondent’s area or, as indicated
in
footnote 44 above, that there is not an IDP in place concerning the
first respondent’s recognizable role required to
be played in
the social housing sector in the context of the complexes which it
operates. As I have also highlighted elsewhere,
it is no random
coincidence that Own Haven operates as a social housing institution
in the first respondent’s area in restructuring
zones or in
respect of specified projects that have been proclaimed, and its
projects must form part of the integrated development
planning of
the city.
[63]
An
early policy document available in the public domain entitled
A
Social Housing Policy for South Africa: Towards an Enabling
Environment for Social Housing Development
,
Revised Draft, June 2003, suggests that local government would have
been expected to “provide access to municipal infrastructure

and services for social housing projects and where appropriate,
…fiscal benefits (e.g., through rebates on municipal rates

and service charges)”.  In a later public document issued
by the Department of Human Settlements (Circa 2009) entitled
The
National Housing Code, Social and Rental Interventions
,
Table 2 listing a Summary of the Roles and Responsibilities of the
Sector Stakeholder’s expectations, it records that
local
government “will provide local fiscal benefits (e.g. through
rebates on municipal rates and service charges)”,
and under
paragraph 9.5 thereof dealing with tax incentives for social housing
institutions, that “(p)rovincial and/or
local governments may
decide on local tax benefits for social housing institutions within
their jurisdiction (e.g. municipal
rates rebates)”.  This
expectation that the role of the local government would be measured
in any fiscal currency
so to speak, has certainly not been recorded
in section 5 of the SHA amongst the legal obligations of the
Municipality, neither
was such an expectation carried forward as a
legal obligation in the Bill preceding the promulgation of the SHA.
Although
direct funding by local government is not demanded in the
SHA municipalities cannot however in my view adopt a hands-off
approach
concerning the impact of their rates policies on social
housing institutions. This is a matter that does require certain
reflection
and review through a democratic process in the first
respondent’s decision making.
[64]
The
inevitable consequence of Own Haven not sectionalising its rental
stock is that its properties will resort under the category
of
commercial or business, this because the first respondent maintains
that it can write it off as a public benefit organisation
using its
properties for specified public benefit activities
as
defined in the Amended Rate Ratios Regulations
(as it sees it).
[65]
The
input of the second respondent would have been helpful in this
respect as well.
[66]
Democratic
Alliance v Ethekwini Municipality
2012 (2) SA 151
SCA at para 24:
Borbet
Supra
at [68] - [73].
[67]
The
applicant’s attorneys heralded unequivocally in correspondence
addressed to the first respondent’s attorneys that
this was
the approach that would be adopted by them, warning at the same time
that if it considered any other documentation to
be relevant that it
should introduce it into evidence as annexures to its answering
affidavit.
[68]
Swissborough
Diamond Mines (Pty) Ltd v Government of the Republic of South
Africa
1999 (2) SA 279
(T) at 324;
Minister
of Land Affairs and Agriculture v D & F Wevell Trust
2008 (2) SA 185
(SCA) at 200.
[69]
2016
(1) SA 78
(GJ) at para [17].
[70]
This is of course not strictly applicable here because when an
applicant in review proceedings files its supplementary affidavit,

after having sight of the record, it is in effect fully stating its
case for the first time.  See
Minister
of Co-Operative Governance and Traditional Affairs v De Beer and
Others
[2021] ZASCA 95
(1 July 2021) at [93], citing
City
of Cape Town v South African National Roads Agency & Others
2015 (3) SA 386
(SCA) at [36].  However, in this instance the
applicants were clear that they did not intend to say anything more
than they
had, having already had sight before the review
proceedings were instituted of such documents as the first
respondent contended
were the essential and relevant documents upon
which they then predicated their case.
[71]
[1984] ZASCA 51
;
1984
(3) SA 623
(AD) at 634.  See also
Herbstein
and Van Winsen: The Civil Practice Of The High Courts Of South
Africa
,
5th edition, volume 1 at 468-469.
[72]
I
have mentioned elsewhere that Own Haven’s objections that
would certainly have had a bearing on the critical revisions
to the
rates policy were already on record. The first respondent referenced
these in an index to the assumed “record”,
but adduced
no evidence to support how the objections were received, their
import, what was discussed in relation thereto, or
why the proposed
revisions would still be implemented by the Council notwithstanding
the clear concerns raised by Own Haven.
[73]
At
pages 619-620 of the indexed papers, although not identified or
given any context in the affidavit to which it was attached.
[74]
It does not only concern Own Haven but other social housing
institutions operating in the first respondent’s area as well.
[75]
See
Allpay
Consolidated Investments Holding Pty Limited and Others v Chief
Executive Officer, South African Social Security Agency
and Others
2014
(1) SA 604
(CC);
2014 (1) BCLR 1
(CC);
State
Information Technology Agency SOC Limited v Gijima Holdings (Pty)
Limited
2018
(2) SA 23 (CC).
[76]
It
would be exhausting if on the ticket only of being a ratepayer the
process of the adoption by a municipality of a rates policy
were
routinely challenged in legality reviews to confirm that every “i”
was dotted and every “t” crossed.
I am certain
that not every municipality would achieve a scorecard of absolute
perfection but against the yardstick of reasonableness,
Own Haven’s
interests prevail and the obvious import of that is that the policy
as a whole falls to be declared invalid.
[77]
This
appears mostly to have been expressed in wishful language.
[78]
See
the definition of “reduction” in the Rates Act which
takes on a peculiar meaning: “
“
reduction”,
in
relation to a rate payable on a property, means the lowering in
terms of section 15 of the amount for which the property

was valued and the rating of the property at that lower amount.”
[79]
See
in this regard
SAPOA
Supra
at [70] - [71],
Borbet
Supra
at [104] - [110], and
Kalil
N.O Supra
at [14] where the court observed metaphorically that “a great
deal of water has flowed under the bridge” with reference
to a
year having passed between an impugned budget resolution and the
date of the court’s order setting it aside in circumstances

where the municipality was already considering its next annual
budget.
[80]
Mr.
Buchanan pointed out the converse, which is also true, that the
first respondent has been precluding from recovering its assessed

rates because of the invocation by the applicants of the provisions
of section 102 of the Systems Act.
[81]
Supra
.