About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: High Court, Northern Cape Division, Kimberley
SAFLII
>>
Databases
>>
South Africa: High Court, Northern Cape Division, Kimberley
>>
2022
>>
[2022] ZANCHC 47
|
|
Ekapa Minerals (Pty) Ltd and Another v Sol Plaatje Local Municipality and Others (680/21) [2022] ZANCHC 47 (2 September 2022)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN THE HIGH COURT OF
SOUTH AFRICA
(NORTHERN
CAPE DIVISION, KIMBERLEY)
CASE NO:
680/21
Date heard:
07/03/2022
Date delivered:
02/09/2022
REPORTABLE: YES/NO
CIRCULATE TO JUDGES:
YES/NO
CIRCULATE TO MAGISTRATES:
YES/NO
CIRCULATE
TO REGIONAL MAGISTRATES: YES/NO
In
the matter between:
EKAPA
MINERALS (PTY)
LTD
First Applicant
EKAPA
RESOURCES (PTY)
LTD
Second Applicant
And
SOL
PLAATJE LOCAL MUNICIPALITY
First Respondent
THE
MINISTER OF CO-OPERATIVE GOVERNANCE
&
TRADITIONAL
AFFAIRS
Second Respondent
THE
NATIONAL MINISTER OF FINANCE
Third Respondent
THE
MEMBER OF EXECUTIVE COUNCIL FOR
LOCAL
GOVERNANCE, NORTHERN CAPE
Fourth Respondent
Coram:
MAMOSEBO,
J
et
RAMAEPADI,
AJ
JUDGMENT
INTRODUCTION
1.
This application concerns the legality of six decisions taken by the
Council of the Sol Plaatje
Local Municipality (‘’the
first respondent’’
)
to set a property rates ratio of 1:22 in respect of the rating
category of ‘’
mining
’’,
as defined in the first respondent’s Rates Policy, for the
financial years 2015/16; 2016/17; 2017/18; 2018/19;
2019/20; 2020/21
to 2020/21 (‘’the
impugned
decisions’
’).
2.
The
applicants (‘’
Ekapa
Minerals (Pty) Ltd’’
,
and ‘’
Ekapa
Resources’’
)
seek to have the
impugned
decisions reviewed and declared constitutionally invalid on the
grounds that the
impugned
decisions were taken in breach of the Local Government: Municipal
Property Rates Act, No. 6 of 2004 (‘’the
Rates
Act’’
),
and section 229(2)(a) of the Constitution of the Republic of South
Africa Act, 108 of 1996 (‘’the
Constitution
’’).
[1]
The applicants contend that by setting the property rates ratio
of 1:22 for properties under the category of ‘’
mining
’’,
the first respondent’s Council acted
ultra
vires
the empowering provisions and, in a manner that is unlawful,
irrational, unreasonable and offends the doctrine of legality.
[2]
3.
The application is opposed by the first
respondent only. It does so essentially on five grounds.
3.1.
First, in taking the
impugned
decisions, the first respondent’s Council was not performing an
administrative action as defined in section 1 of the Promotion
of
Administrative Justice Act, 3 of 2000 (‘’
PAJA’’
),
but was acting in its capacity as democratically elected
representatives, exercising a power that under the Constitution is a
power peculiar to elected bodies and are accordingly, not subject to
judicial review under PAJA.
[3]
3.2.
The applicants lack
locus
standi
to challenge the
impugned
decisions under PAJA.
[4]
3.3.
Non-joinder of De Beers Consolidated Mines Proprietary Limited (‘’
De
Beers
’’),
and Petra Diamonds Limited as parties to the application.
[5]
3.4.
Failure to exhaust internal remedies provided for in section 16 of
the Rates Act
before bringing the application.
[6]
3.5.
Unreasonable delay in bringing the application.
[7]
THE
APPLICATION
4.
It is important at the outset to delineate
what this application does not concern. This is particularly
important because
a bulk of the first respondent’s grounds of
opposition are not germane to the central question in the case.
4.1.
Contrary to the misconceptions promulgated in the first respondent’s
answering affidavit,
this application does not concern a review of
administrative action in terms of PAJA. The applicants have
specifically disavowed
any reliance on PAJA,
[8]
and nowhere in their founding affidavit have the applicants placed
any reliance on PAJA. Instead, the applicants have made
it
plain that the application is brought under the doctrine of
legality.
[9]
4.2.
Neither does the application concern the powers of the first
respondent to determine rates in
terms of a rates policy adopted by
the Council of the first respondent in terms whereof various
properties are rateable on a different
basis depending on the
category the property has been placed in, or the values that have
been placed on the properties for purposes
of determining rates. The
applicants have conceded, rightfully so, that the first respondent
may create different categories of
rateable property within the
framework provided for in section 19 of the Rates Act.
[10]
Rather, the application concerns the reasonableness of the
differentiation in the rates ratios and thereby the rates tariffs
that are charged by the first respondent on various categories of
non-residential properties.
BACKGROUND
5.
The background to this matter has
extensively been canvassed in the affidavits filed by the parties. It
is not necessary, therefore,
for it to be repeated in detail here.
Suffice it for present purposes to point out the following:
5.1.
On 30 November 2015 the first applicant purchased eight immovable
properties from
De Beers in terms of a Sale of Business Agreement
(‘’the
Sale
Agreement
’’).
[11]
The immovable properties involved are:
5.1.1.
The remaining Extent of the Farm Kenilworth
Estate Number 7[...], District of Kimberley, Northern Cape Province;
5.1.2.
The remaining Extent of the Farm
Dorstfontein Number 7[...], District of Kimberley, Northern Cape
Province;
5.1.3.
The Remaining extent of the Farm
Bultfontein Number 8[...], District of Kimberley, Northern Cape
Province;
5.1.4.
The remaining Extent of the Farm
Benauwdheidfontein Number 1[...], District of Kimberley, Northern
Cape Province;
5.1.5.
The Remaining Extent Erf 5[...], Kimberley,
Sol Plaatje Municipality, District of Kimberley, Northern Cape
Province;
5.1.6.
The Remaining extent Erf 5[...], Kimberley,
Sol Plaatje Municipality, District of Kimberley, Northern Cape
Province;
5.1.7.
Erf 6[...], Kimberley, Sol Plaatje
Municipality, District of Kimberley, Northern Cape Province; and
5.1.8.
The
Remaining Extent Erf 6[...], Kimberley, District of Kimberley,
Northern Cape Province.
[12]
5.2.
All
the immovable properties listed in paragraphs 5.1.1 to 5.1.8 above,
are within the Sol Plaatje Local Municipality (the first
respondent).
Though some of these properties have not yet been transferred
in the name of the first applicant, the first
applicant took
occupation of these properties and is in terms of the Sale Agreement
obliged to pay all the rates and taxes and
other charges levied by
the first respondent in respect of the properties since date of the
Sale Agreement.
[13]
In
this regard clause 12.2.16 of the Sale Agreement provides in relevant
part, that with effect from the Effective Date,
De Beers and the
purchaser agree that:
5.2.1
the Purchaser shall be liable for all rates, taxes, levies and
similar imposts levied in respect
of the Immovable Properties;
5.2.2
the Purchaser shall be entitled free of charge to the use and
enjoyment of the Immovable Properties
as if it were the owner thereof
even if transfer takes place after that date; and
5.2.3
all risk and benefit in and to the Immovable Properties shall pass to
the Purchaser.
[14]
5.3.
The
first applicant has already become the owner of the immovable
properties described in paragraphs 5.1.6 to 5.1.8 above.
[15]
This is not denied by the first respondent.
[16]
5.4.
The
first applicant is the holder of Mining Right MPT29/2010 under
Notarial Deed Number MPT27/2019 in respect of portions of the
immovable properties described in paragraphs 5.1.1 to 5.1.8
above.
[17]
5.5.
The
first applicant conducts diamond mining operations on portions of
these immovable properties. The operations entail re-working
the old
mine dumps (tailings) that exist on these properties and elsewhere
within the first respondent’s jurisdiction for
the purpose of
recovery of diamonds by using new technology, which allows the
applicants to identify and find diamonds that were
not recovered
during the original mining operations. The first applicant also
processes the ground which the second applicant
recovers through its
own mining operations in respect of three underground mines in terms
of mining licenses and permits held by
the second applicant.
[18]
5.6.
The
second applicant is the registered owner of the Farm Petra Number
2[…], District Kimberley, Northern Cape Province. The
second applicant is the holder of Mining Right MPT28/2010 under
Notarial Deed of Variation/Amendment Number MPT18/2019 in respect
of
the Farm Petra Number 2[…].
[19]
This is not denied by the first respondent.
[20]
5.7.
The
applicants commenced their mining operations after purchasing the
immovable properties from De Beers, which ceased with its
active
diamond operations.
[21]
5.8.
By virtue of their operations of these
properties, the immovable properties are
categorised
under
‘’
mining property’’
.
CALCULATION
OF RATES
6.
The applicants have
summarised
the
method of calculation of rates for different categories of
properties, and in terms of that summary,
6.1.
rates are calculated first, based on the
valuation of property, which has to be a market value;
6.2.
all rates ratios are linked back to the
rates ratio of a normal residential property which rates ratio is
determined as 1:1. All
other rateable properties are then given
a rate ratio relative to the 1:1 rates ratio of a residential
property;
6.3.
each
year the first respondent determines the rates ratio that is
applicable to all other rateable properties in comparison to that
of
a residential property. Apart from determining the rates ratio,
the rates tariff of residential properties is also determined
to then
be multiplied by the various rates ratios of different property
categories such as mining.
[22]
6.4.
Table 1 below illustrates the rates ratio
applicable to different categories of properties.
Table 1 – Rates
Ratio Table in relation to residential rate
Category
Rate Ratio in relation
to residential rate
Residential Property
1
Vacant Residential
Property
1.5
Industrial Property
3.2
Vacant Industrial
3.5
Business and
Commercial Property
3
Vacant Business and
Commercial Property
3.5
Agricultural Property
0.25
Mining Property
22
Public Service
Property
4.5
Property Used by Organ
of State
4.5
Public Service
Infrastructure
0
Private Service
Infrastructure
0
Public Benefit
Activity Property
0
Private Open Space
1
Place of Worship
0
Land Reform
Beneficiary
0
Municipal
0
Independent Schools
0.25
Solar Farms
3
Sports Fields
0
University
3
6.5.
Table 2 below reflects the tariffs that
have been applied by the first respondent since the 2014/15 financial
year.
Table 2
CATEGORY OF PROPERTY
TARIFF 2014/15
TARIFF 2015/16
TARIFF 2016/17
TARIFF 2017/18
TARIFF 2018/19
TARIFF 2019/20
TARIFF 2020/21
Residential Property
0.011618
0.009315
0.009688
0.010221
0.010834
0.009752
0.010376
Vacant
Vacant Residential
Property
0.014531
0.015331
0.016251
0.014628
0.015564
Industrial Property
0.047634
0.032602
0.031000
0.032707
0.034670
0.031206
0.033204
Vacant Industrial
0.033907
0.035773
0.037920
0.034132
0.036316
Business &
Commercial Property
0.034854
0.027479
0.028578
0.030254
0.032069
0.029256
0.031128
Vacant Business &
Commercial Property
0.033907
0.035773
0.037920
0.034132
0.036316
Agricultural Property
0.002905
0.002329
0.002422
0.002555
0.002709
0.002438
0.002594
Mining Property
0.191698
0.195612
0.213127
0.224858
0.238354
0.214544
0.228275
Public Service
Property
0.029063
0.051104
0.054171
0.043884
0.046693
Property Used by Organ
of State
0.067813
0.071546
0.075840
0.058512
0.046693
Public Service
Infrastructure
0.000000
0.000000
0.000000
0.000000
0.000000
Public Benefit
Activity Property
0.000000
0.000000
0.000000
0.000000
0.000000
Place of Worship
0.000000
0.000000
0.000000
0.000000
0.000000
Land Reform
Beneficiary
0.000000
0.000000
0.000000
0.000000
0.000000
Private Open Space
0.010221
0.010834
0.009752
0.010376
Multi-purpose
Properties
0.019375
Municipal Property
Used for Municipal Purposes
0.000000
0.000000
0.000000
0.000000
0.000000
Independent Schools
0.000000
0.000000
0.000000
0.000000
0.002438
0.002594
Guest Houses
0.018630
0.019375
0.020442
0.021669
Solar Farms
0.020442
0.021669
0.029256
0.031128
Sports Grounds and
facilities operated for gain
0.000000
0.000000
0.000000
0.000000
University
0.000000
0.000000
0.021669
0.029256
0.031128
6.6.
An
examination of Tables 1 and 2 above will immediately reveal that in
2015/16 the owner of a property in the industrial category
would have
paid at average 3.2602 cents per one rand on the valuation of the
property. On this calculation, a person who
owned an industrial
property valued at R1 million in 2015/16, would have paid R32,602.00
per annum or R2,716.83 per month.
[23]
6.7.
On
the other hand, the owner of a mining property during the same period
(2015/16), which had a rate ratio of 1:22 and a rates tariff
of
0.195612 would have paid 19.5612 cents per one rand on the valuation
of the property per year. On this calculation, a
person who
owned a mining property valued at R1 million in 2015/16 would have
paid R195,612.00 per year, or the equivalent of R16,301.00
per
month.
[24]
6.8.
In the 2015/16 financial year, therefore, a
person who owned mining property would have paid almost eight (8)
times more than what
an industrial property owner for the same period
(2015/16) would have paid.
6.9.
Table
2 above reveals that the rates tariff for mining property increased
from the 0.195612 cents per rand applicable in 2015/16,
to the amount
of 22.8275 cents per rand applicable in 2020/21. On this data, the
rates payable by a mining property owner in 2020/21
have increased
from the R195,612.00 per year payable in 2015/16 to R228,275.00 per
year or the equivalent of R19,022.92 per month
per million-rand
property value in 2020/21.
[25]
6.10.
An
examination of Tables 1 and 2 above will further reveal that the
rates payable by a mining property is significantly higher than
those
payable by other non-residential properties. This is the
differentiation that the applicants are complaining about
–
i.e. the differentiation in the rates ratios applicable to various
categories of non-residential properties. The
first respondent
does not deny in its answering affidavit, that in 2015/16 a mining
property would have paid 8 times what an industrial
property would
have paid or approximately 21 times what a residential property would
have paid.
[26]
THE
RELEVANT LEGISLATIVE FRAMEWORK
7.
The starting point is section 229(2) of the
Constitution. It provides in relevant part that: the power of a
municipality to impose
rates on property, surcharges on fees for
services by or on behalf of the municipality, or other taxes, levies
or duties –
(a)
may not be exercised in a way that
materially and unreasonably prejudices national economic policies,
economic activities across
municipal boundaries, or the national
mobility of goods, services, capital or
labour
,
and
(b)
may be regulated by national legislation.’’
8.
The
Rates Act is the national legislation contemplated in section
229(2)(b) of the Constitution, which has been enacted
inter
alia
,
to regulate the power of a municipality to impose rates on
property.
[27]
9.
The following provisions of the Rates Act
are relevant for purposes of this case:
9.1
Section 2(3) provides that:
‘’
A
municipality must exercise its powers to levy a rate on property
subject to –
(a)
section 229 and other applicable
provisions of the Constitution;
(b)
the provisions of this Act; and
(c)
the rates policy it must adopt in
terms of section 3.’’
9.2
Section 3 provides in relevant part that:
‘’
(1)
The council of a municipality must adopt a policy consistent with
this Act on the levying of rates on
rateable property in the
municipality.
(2)
A rates policy adopted in terms of subsection (1) takes effect on the
effective date of
the first valuation roll prepared by the
municipality in terms of this Act, and must accompany the
municipality’s budget
for the financial year concerned when the
budget is tabled in the municipal council in terms of section 16(2)
of the Municipal
Finance Management Act
(3)
A rates policy must (a) treat persons liable for rates equitably.’’
9.3
Section 4 provides in relevant part that:
‘’
(1)
Before a municipality adopts its rates policy, the municipality must
–
(a)
follow a process of community
participation in accordance with Chapter 4 of the Municipal Systems
Act; and
(b)
comply with subsection (2).
(2)
The municipal manager of the municipality must –
(a)
conspicuously display the draft
rates policy for a period of at least 30 days –
(i)
at the municipality’s head and
satellite offices and libraries; and
(ii)
if the municipality has an official
website or a website available to it as envisaged in section 21B of
the Municipal Systems Act,
on that website; and
(b)
advertise in the media a notice –
(i)
stating –
(aa)
that a draft rates policy has been prepared for submission to the
council; and
(bb)
that the draft rates policy is available at the municipality’s
head and satellite offices and
libraries for public inspection during
office hours and, if the municipality has an official website or a
website available to
it, that the draft rates policy is also
available on that website; and
(ii)
inviting the local community to
submit comments and representations to the municipality concerned
within a period specified in the
notice which may not be less than 30
days.
(3)
A municipal council must take all comments and representations made
to it or received by
it into account when it considers the draft
rates policy.’’
9.4
Section 5(1) provides:
‘’
(1)
A municipal council must annually review, and if necessary, amend its
rates policy. Any amendments
to a rates policy must accompany the
municipality’s annual budget when it is tabled in the council
in terms of section 16(2)
of the Municipal Finance Management Act.’’
9.5
Section 8(1) provides:
‘’
(1)
Subject to section 19, a municipality may in terms of the criteria
set out in its rates policy
levy different rates for different
categories of rateable property, which may include categories
determined according to the –
(a)
use of the property;
(b)
permitted use of the property; or
(c)
geographical area in which the
property is situated.’’
9.6
Section 12 provides that:
‘’
(1)
When levying rates, a municipality must levy the rate for a financial
year. A rate lapses at the end
of the financial year for which it was
levied.
(2)
The levying of rates must form part of a municipality’s annual
budget process as set
out in Chapter 4 of the Municipal Finance
Management Act. A municipality must annually at the time of its
budget process review
the amount in the Rand of its current rates in
line with its annual budget for the next financial year.
(3)
A rate levied for a financial year may be increased during a
financial year only as provided
for in section 28(6) of the Municipal
Finance Management Act.’’
9.7
Section 13(1) provides:
‘’
(1)
A rate becomes payable –
(a)
as from the start of a financial
year; or
(b)
if the municipality’s annual
budget is not approved by the start of the financial year, as from
such later date when the municipality’s
annual budget,
including a resolution levying rates, is approved by the provincial
executive in terms of section 26 of the Municipal
Finance Management
Act.’’
9.8
Section 16 provides in relevant part:
‘’
(1)
In terms of section 229(2)(a) of the Constitution, a municipality may
not exercise its power to
levy rates on property in a way that would
materially and unreasonably prejudice –
(a)
national economic policies;
(b)
economic activities across its
boundaries; or
(c)
the national mobility of goods,
services, capital or labour.
(2)(a)
If a rate on a specific category of properties, or a rate on a
specific category of properties above a
specific amount in the Rand,
is materially and unreasonably prejudicing any of the matters listed
in subsection (1), the Minister,
after notifying the Minister of
Finance, must, by notice in the Gazette, give notice to the relevant
municipality or municipalities
that the rate must be limited to an
amount in the Rand specified in the notice.
(b)
A municipality affected by a notice referred to in paragraph (a) must
give effect to the notice
and, if necessary, adjust its budget for
the next financial year accordingly.
(3)(a)
Any sector of the economy, after consulting the relevant municipality
or municipalities and organised local government,
may, through its
organised structures, request the Minister to evaluate evidence to
the effect that a rate on any specific category
of properties, or a
rate on any specific category of properties above a specific amount
in the Rand, is materially and unreasonably
prejudicing any of the
matters listed in subsection (1).
(b)
If the Minister is convinced by the evidence referred to in paragraph
(a) that a rate on any specific category of properties,
or a rate on
any specific category of properties above a specific amount in the
Rand, is materially and unreasonably prejudicing
any of the matters
listed in subsection (1), the Minister must act in terms of
subsection (2).
(4)
A notice issued in terms of subsection (2) must give the reasons why
a rate on the relevant
category of properties, or a rate on the
relevant category of properties above the amount specified in the
notice, is materially
and unreasonably prejudicing a matter listed in
subsection (1).
(5)
The Minister, after consultation with the Minister of Finance, may by
notice in the Gazette
issue guidelines to assist municipalities in
the exercise of their power to levy rates consistent with subsection
(1).’’
9.9
Then, section 19 provides that:
‘’
(1)
A municipality may not levy –
(a)
different rates on residential
properties, except as provided for in sections (11(1)(b), 21 and 89;
(b)
a rate on non-residential properties
that exceeds a prescribed ratio to the rate on residential properties
determined in terms of
section 11(1)(a);
(c)
rates which unreasonably
discriminate between categories of non-residential properties; or
(d)
additional rates except as provided
for in section 22.
(2)
The ratio referred to in subsection (1)(b) may only be prescribed
with the concurrence of
the Minister of Finance.’’
10.
In
the founding affidavit, the applicants had initially challenged the
impugned
decisions based on breach of sections 16 and 19(c) of the Rates
Act.
[28]
However, in
their replying affidavit as well as the heads of argument filed on
their behalf, the applicants have jettisoned
the challenge based on
breach of section 16 of the Rates Act. Accordingly, all that is
left of the applicants’ case
is a challenge based on breach of
section 19(c) of the Rates Act.
THE
ISSUE IN THE CASE
11.
This case turns on a fine narrow point. It
turns, in particular, on the interpretation of section 19(c) of the
Rates Act.
The central question in the case is whether the
determination of a rates ratio of 22:1 between residential and mining
rates,
whilst having as the next highest ratio 3:6 in respect of
vacant industrial and vacant business and commercial properties,
unreasonably
discriminates between non-residential categories of
properties as contemplated in section 19(c) of the Rates Act?
Besides
the preliminary points that have been raised by the
first respondent, this is the crisp question for determination in
this case.
12.
In the discussion below, I deal with the
question posed in paragraph 11 above. Before doing so, it is
necessary and in good
order that I should first dispose of the
preliminary points raised by the first respondent.
IN
LIMINE
; JURISDICTION
13.
The jurisdictional point is premised on two
grounds.
13.1
First, that the
impugned
decisions are not reviewable under PAJA because in taking the
impugned
decisions, the Council of the first respondent was not performing
‘
administrative action’
as defined in section 1 of PAJA but was acting in its capacity as
democratically elected representatives exercising a power that
under
the Constitution is a power peculiar to elected legislative bodies;
and
13.2
Second, that the
impugned
decisions are not justiciable by the Court. In support of this
contention, the first respondent relies on paragraph 8 of the SCA
Judgment in
Nokeng
Tsa Taemane
.
[29]
‘’
[8]
The obligation of a municipality not materially and unreasonably to
prejudice national economic
policies by its rates is juridically of
the same kind as two other provisions on which the association
relied, namely s 152(1)(c)
and s 195(1)(b). The first provides that
an object of local government is to promote social and economic
development and the second
deals with the basic value of public
administration which requires that the efficient, economic and
effective use of resources
must be promoted. These provisions are, as
submitted by the municipality, not justiciable by courts. (I should
note that counsel
for the association did not suggest otherwise
during argument.) The same view was expressed by this court (per
Cameron JA) who
echoed the misgivings of Froneman J in (CDA Boerdery
(Edms) Bpk v Nelson Mandela Metropolitan Municipality
[2007] ZASCA 1
;
2007 (4) SA 276
(SCA) paras 45-46). These provisions concern
political and inter-governmental issues, evidently specialist areas
involving policy
issues and a consideration of a host of other issues
in respect whereof the court does not have the necessary expertise.
It would
be wrong for the courts to usurp the powers of
municipalities and determine rates and taxes for them. The best
course for a court
is to show judicial deference to the decisions
taken by democratically elected municipal councils.’’
14.
Both premises are flawed precisely because,
14.1
this application does
not
concern a review of administrative action in terms of PAJA. In their
heads of argument
[30]
and in
oral argument, the applicants have made clear that the review is not
brought in terms of PAJA, but under the doctrine of
legality.
However, the fact that the
impugned
decisions are not administrative does not completely
immunise
them
from judicial scrutiny. It simply means that they may not be
impugned
under PAJA. This was made plain by the Constitutional Court in
Gijima.
[31]
Once it is
so, then it follows that the first ground advanced by the first
respondent must fail.
14.2
nor, do the applicants seek to
impugn
the first respondent’s powers to determine rates in terms of a
rates policy adopted by the Council of the first respondent
in terms
whereof various properties are rateable on a different basis
depending on the category the property has been placed in,
or the
values that have been placed on the properties for purposes of
determining rates. The applicants concede rightfully
so, that
the first respondent has the power to determine rates and that it may
create different categories of rateable properties
within the
framework provided for in section 19 of the Rates Act. It is
probably for this reason that the applicants did
not seriously press
upon this Court, in the event of it being found that the rates ratio
applicable to the category of mining is
unreasonable, to determine
the appropriate rates ratios for various categories of
non-residential properties. Instead, the
applicants only seek
an order reviewing and setting aside the
impugned
decisions as being unlawful, irrational, and unreasonable. Once
it is so, then it follows that the first respondent’s
reliance
on
Nokeng Tsa Taemane
is misplaced.
14.3
Nokeng Tsa Taemane
was not concerned with the legality and/or lawfulness of a
municipality’s decision to impose different rates between the
various categories of non-residential properties. In
Nokeng
Tsa Taemane
, the Court was concerned
with a particular power - the power of a local authority under
section 229(1)(a) of the Constitution to
impose rates on property and
surcharges on fees for services provided by or on behalf of a
municipality. The exercise of
that power – the power
under section 229(1)(a) - is subject to section 229(2)(a) which
provides,
inter alia
,
that the power may not be exercised in a way that materially and
unreasonably prejudices national economic policies. That
is the
particular power – the power to levy rates on property and
surcharges on fees for services rendered by a municipality,
which the
SCA found
not
to be justiciable by courts because it concerns political and
inter-governmental issues. An examination of section 16 of
the
Rates Act will immediately reveal that the exercise of the power
under section 229(2)(a) to levy rates on property in a way
that would
not materially and reasonably prejudice national economic policies;
or economic activities across its boundaries; or
the national
mobility of goods, services, capital or labour, indeed concern
political and inter-governmental issues.
14.3.1
In my view, the determination of whether a property rates materially
and reasonably prejudices national economic policies,
or economic
activities across municipal boundaries is a matter that falls outside
the expertise of this Court. It involves
an investigation and
eventually a determination of,
inter
alia
,
the national economic policies; the economic activities across the
municipal boundaries; and the national mobility of goods, services,
capital or
labour
.
These are matters which in the words of Justice Cameron,
involve ‘polycentric decision-making’,
[32]
which fall outside the expertise of the court to investigate and
determine.
14.3.2
Further, section 16(2) and (5) involve inter-governmental relations
between the municipality, the Minister of Cooperative
Governance and
Traditional Affairs (CoGTA), and the Minister of Finance.
14.4
The power under section 229(1)(a) of the Constitution to levy rates
on property and surcharges on fees for
services provided by or on
behalf of a municipality is significantly different from the power
under section 19(c) of the Rates
Act to determine rates that do not
unfairly discriminate between various categories of non-residential
properties. The former
is clearly not justiciable by courts
whilst the latter is.
15.
For the reasons set out above, I find that
both grounds advanced by the first respondent are unmeritorious. In
the result, the jurisdictional
point falls to be dismissed.
LOCUS
STANDI
16.
The
first respondent’s argument on the
locus
standi
point runs as follows: the relief sought pertains to the property
rates ratio that was set by the Council of the first respondent
in
respect of the properties that are registered in the name of De
Beers; in terms of section 24(1) of the Rates Act, read with
Chapter
9 of the Local Government: Municipal Systems Act, 32 of 2000 (‘’the
Systems
Act’’
)
rates levied by a municipality on a property must be paid by the
owner of the property; the terms of the Sale Agreement are
res
inter alios acta
between the applicants and the other parties to the agreement; the
applicants do not have a direct and substantial interest in
the
impugned
decisions;
consequently, the applicants do not have
locus
standi
to bring this application.
[33]
17.
The applicants on the other hand, contend
that as property owners in the Kimberley area they have a clear
interest to challenge
the legality and validity of the
impugned
decisions.
18.
It
is common cause that the first applicant is the registered owner of
the immovable properties described in paragraphs 5.1.6 to
5.1.8
above,
[34]
whereas the second
applicant is the registered owner of the Farm Petra Number 2[…]
District Kimberley, Northern Cape Province.
[35]
It is further common cause that the applicants conduct mining
operations on portions of the immovable properties described
in
paragraphs 5.1.6 to 5.1.8 above, and the Farm Petra Number 2[…].
[36]
19.
Just like the other immovable properties
described in paragraphs 5.1.1 to 5.1.5 above, the properties
described in paragraph 18
above also fall under the category of
mining and are affected by the
impugned
decisions.
20.
It cannot be disputed that by virtue of
their ownership of the immovable properties described in paragraph 18
above, the applicants
are parties that are directly affected by the
impugned decisions. Once it is so, then it follows that the
applicants have
a ‘direct and substantial interest’ in
the subject matter of this litigation. For this reason, the
applicants
have
locus standi
to bring this application for the relief sought in the notice of
motion.
21.
In any event, section 38 of the
Constitution has considerably expanded the grounds of standing. It
confers standing on,
21.1
anyone acting in their own interest;
21.2
anyone acting on behalf of another person who cannot act in their own
name;
21.3
anyone acting as a member of, or in the interest of, a group or class
of persons;
21.4
anyone acting in the public interest; and
21.5
an association acting in the interest of its members.
22.
The applicants are not bringing this
application on behalf of another person; or as a member of, or in the
interest of, a group
or class of persons; or in the public interest.
Though the applicants do not explicitly say so, the allegations
by the applicants
that they are entitled to challenge the
impugned
decisions as property owners within Kimberley must mean, therefore,
that the applicants are bringing the application in their own
interest.
23.
It is trite that a broad approach is to be
taken to ‘
own interest’
standing under section 38(a) of the Constitution and that in
approaching the question of standing, the applicants’
contention
that the difference in the rates tariffs between the
various categories of non-residential properties imposed by the first
respondent
is unlawful, must be taken to be correct. If it is
correct, then some amounts for property rates that have been paid by
the
applicants to the first respondent may have to be repaid to the
applicants, if successful. In my view, the benefit accruing
to
the applicants, if successful, is more than sufficient to give them
own standing to bring this application.
24.
The first respondent’s contention
that the terms of the Sale Agreement are
res
inter alios acta
between the applicants
and the other parties to the agreement, but do not give the
applicants standing to bring this application,
overlooks two
important factors.
24.1
First, it ignores the requirement that the allegations by the parties
claiming standing must be accepted
as correct because standing is an
issue to be determined
in limine
before the merits are addressed.
24.2
Second, it requires this Court to enter upon and determine the merits
of the first respondent’s contention
about the nature of the
arrangement between the applicants and De Beers under the Sale
Agreement, and determine whether the terms
of the Sale Agreement
indeed create binding obligations on the applicants to pay rates in
respect of the immovable properties.
25.
It is not necessary for this Court to enter
the merits at this stage in order to determine the issue of the
locus
standi
of the applicants to bring this
application. The issue in this case is about the legality or
lawfulness of the
impugned
decisions. The purpose of the challenge is to recover the
amounts which have been paid by the applicants to the first
respondent
pursuant to the
impugned
decisions, or to prevent the first respondent from recovering the
outstanding rates and taxes from the applicants. This was
made
clear by Adv. Rip SC who together with Adv. Viviers appeared on
behalf of the applicants. That must provide a sufficiently
direct and substantial interest in the outcome of the litigation to
confer standing on the applicants.
26.
In any event, it is disingenuous for the
first respondent to deny that the applicants have a direct and
substantial interest in
the subject-matter of this litigation, when
the first respondent does not dispute that the applicants are the
registered owners
of some of the immovable properties on which they
conduct mining operations. The application is about the
lawfulness of the
first respondent’s decisions to levy
unreasonable rates on properties in the
mining
category
. It is, therefore,
irrelevant that some of the immovable properties are still registered
in the name of De Beers. It
is also significant that
notwithstanding the fact that some of the immovable properties
involved in this case are still registered
in the name of De Beers,
the first respondent did not consider that to be an impediment to
opening accounts for property rates
in respect of the said immovable
properties in the names of the applicants; rendered monthly
statements for rates in respect of
the immovable properties to the
applicants; and recovered amounts due and owing for rates in respect
of the immovable properties,
from the applicants.
27.
Clearly, the first respondent considered
the applicants, but not De Beers, as parties that are liable for
rates levied in respect
of the immovable properties involved in this
case. For these reasons, the first respondent’s claim
that the applicants
lack
locus standi
to bring this application is rejected. The applicants have the
necessary standing to bring this application to challenge
the
lawfulness of the rates levied by the first respondent on immovable
properties in the category of ‘’mining’’.
NON-JOINDER
28.
The considerations leading to the
conclusion that the applicants have
locus
standi
to bring this application also
lead to the conclusion that the non-joinder point is unmeritorious
and falls to be rejected.
UNREASONABLE
DELAY
29.
The
impugned
decisions date back to the 2015/2016 financial year. It is
common cause between the parties that the rates ratio that is
applicable to the immovable properties have been determined by the
Council of the first respondent on an annual basis as part of
its
budgeting process. It is further common cause that annually the
first respondent gives notice of the rates ratio and
tariffs
applicable to that year.
30.
The
applicants do not take issue with the contention that a lengthy
period has elapsed since some of the rates were levied.
[37]
In an apparent attempt to explain this delay, the applicants
give two reasons for the delay in bringing this application.
30.1.
First, that they were unaware of the imposition of the rates at the
ratio indicated prior to 2019.
30.2.
Second, that since 2019 the applicants have made every attempt to
engage with the first respondent to resolve
the dispute.
[38]
31.
It
was further common between the parties that a legality review is not
subject to the strict time frames prescribed under PAJA
but must be
brought within a reasonable period. This is a trite proposition
for which no authority is required. The
reasonableness of the
delay, however, cannot be assessed in a vacuum but must be assessed
based on the explanation given.
[39]
32.
In this case, the explanation given by the
applicants for the delay in launching this application is extremely
sketchy and unsatisfactory
in a number of respects.
32.1
there is no explanation as to why the applicants were unaware of the
rates ratio applicable to the immovable
properties until 2019, when
on the applicants’ own case, they purchased the immovable
properties on 30 November 2015
[40]
and have been responsible for payment of rates in respect of the
immovable properties since then.
[41]
32.2
the applicants have been receiving monthly statements for rates and
taxes payable in respect of the immovable
properties I would assume,
since the applicants purchased the properties from De Beers. Even
if it could be argued that the
first applicant did not receive
monthly statements for rates and taxes in respect of the properties
described in paragraphs 5.1.1
to 5.1.5 above, the applicants would
certainly have received monthly statements for rates and taxes in
respect of the immovable
properties described in paragraphs 5.1.6 to
5.1.8 above, which on the applicants’ own version, are
registered in the name
of the first applicant. The same would
apply to the second applicant in respect of the Farm Petra 2[…],
which is registered
in the name of the second applicant.
33.
I find it astonishing why the applicants
would not have become aware of the rates ratio applicable to the
immovable properties for
such a lengthy period, especially
considering that the applicants have for all that period been
responsible for payment of the
rates and taxes levied on the
immovable properties.
34.
The
period from 2015 to 2021 when this application was launched is
extensive. The absence of cogent reasons to account for
the
delay in launching this application renders the delay unreasonable.
However, a finding that the delay is unreasonable
does not
signal the end of the matter. The Court must still consider
whether to overlook the delay and nevertheless entertain
the
application.
[42]
35.
The
approach to overlooking delay in a legality review was explained by
the Constitutional Court in
Tasima.
[43]
‘’
[170]
But what is the prejudice suffered by Tasima in overlooking the
delay? Condoning the delay does not prevent them from
enforcing the
Court orders that have been granted in their favour. In addition, the
contract extension itself has already expired.
Setting aside the
extension at this point should not, therefore, impact negatively on
Tasima going forward. It is also a factor
that this Court may rely on
its section 172(1)(b) powers to ameliorate the prejudice suffered is
minimal, particularly in comparison
to the prejudice to be suffered
by the Department and the Corporation if the counter-application is
not condoned. This is consonant
with the dicta in Khumalo that,
‘’consequences and potential prejudice…ought not
in general, to favour the Court
non-suiting an applicant in the face
of the delay.’’
36.
In this case, the prejudice to the first
respondent is clear. On the applicants’ own version, as
at the time of launching
this application the applicants owed an
amount of R30 million to the first respondent for rates levied in
respect of the immovable
properties. This is the money which
the first respondent would have budgeted to collect in the previous
financial years.
It is not far-fetched to assume that the first
respondent may even have borrowed money from financial institutions
with the
hope of paying off the loans on receipt of the money owed to
it by the applicants. This is part of everyday business life.
37.
Should the
impugned
decisions be set aside, the first respondent would, therefore, not be
able to recover the amount of the debt owed to it by the
applicants.
This is a real prejudice which the first respondent is likely
to suffer if the Court overlooks the delay and
entertains the
application.
38.
However, prejudice alone is not a factor
that should prevent this Court from interfering with a clear unlawful
decision. Section
172(1)(a) of the Constitution requires this
when deciding a constitutional matter within its powers, to declare
any law or conduct
that is inconsistent with the Constitution in
valid to the extent of its inconsistency. This is a
constitutional injunction
which the Court is obliged to give effect
to once it comes to the conclusion that the impugned decisions are
unlawful.
39.
Mindful of the prejudice which may result
from a declaration of invalidity, section 172(1)(b) of the
Constitution has given the
Court wide remedial powers when deciding a
constitutional matter. It is empowered to make any order that
is just and equitable
in the circumstances of the case. Such
order may include, an order limiting the retrospective effect of the
declaration of
invalidity, in order to ameliorate any potential
prejudice resulting from the declaration of invalidity.
40.
It is now well-established that a review
under the doctrine of legality is a constitutional matter. Thus,
once the Court concludes
that the impugned decisions are unlawful,
then the Court will be entitled to invoke its section 172(1)(b)
powers to ameliorate
any potential prejudice resulting from the
declaration of unlawfulness.
41.
For reasons which shall become apparent
from what I set out below, the
impugned
decisions are clearly unlawful. There
is a striking differentiation in the rates ratios applicable to the
various categories
of non-residential properties. In some
instances, the difference is about 8 times. On the face of it,
this differentiation
is unreasonable. Moreover, the first
respondent has not provided any explanation for the differentiation
and the margin between
the rates ratios applicable to properties in
the mining category and other non-residential properties. In my
view, in the
absence of explanation, the differentiation is
unreasonable and in breach of section 19(c) of the Rates Act, which
prohibits a
municipality from levying rates which unreasonably
discriminates between categories of non-residential properties. Once
it
is, then it follows that the
impugned
decisions are unlawful.
THE
CENTRAL QUESTION IN THE CASE
42.
Returning to the essential question in the
case, I have already delineated what the central question in the case
is – it is
whether the difference in the rates ratios between
the various categories of non-residential properties is in breach of
section
19(c) of the Rates Act.
43.
The applicants concede that the first
respondent is entitled to levy rates on a different basis depending
on the category the property
has been placed in. This
differentiation is specifically provided for in section 8(1) of the
Rates Act which provides that:
‘’
Subject
to section 19, a municipality may, in terms of the criteria set out
in its rates policy, levy different rates for different
categories of
rateable property, which may include categories determined according
to the use of the property; or permitted use
of the property; or
geographical area in which the property is situated.’’
44.
As correctly pointed out by the applicants
in their heads of argument, the fact that a municipality may create
different categories
of rateable property is subject to the proviso
contained in section 19(c) of the Rates Act, which provides that
rates may
not
unreasonably
discriminate between categories of non-residential properties.
45.
The applicants’ case is that in
imposing a ratio difference of 22:1 between residential rates and
mining rates whilst having
as the next highest ratio 3:6 in respect
of vacant industrial and vacant business and commercial properties,
the first respondent
has acted in breach of the prohibition contained
in section 19(c). They contend that having regard to the rates
ratios applicable
to other categories of non-residential properties,
the difference between mining and other categories of non-residential
properties
is significantly higher. Based on this, the
applicants then contend that the differentiation is unreasonable. I
agree
with the applicants. In the absence of explanation for
the difference in the applicable rates ratios, the high margin in the
differentiation between mining category, and other non-residential
properties renders the
impugned
decisions
prima facie
unreasonable, in breach of section 19(c) of the Rates Act, and
consequently, unlawful.
46.
The first respondent has not seen it fit in
its answering papers to explain to the Court the considerations that
led to the imposition
of a rates ratio of 22:1 in respect of
immovable properties in the mining category, which is significantly
higher than other immovable
properties in the non-residential
category. This is a weakness in the first respondent’s
case. The first respondent
should have explained in its
answering affidavit why a rates ratio of 22:1 was imposed on the
mining category, whilst business
and commercial property is rated at
3:1, and the considerations underpinning such determination.
47.
Since there is no explanation by the first
respondent for the huge difference between the rates for mining
category, and that of
other non-residential categories, the inference
becomes irresistible that the differentiation is irrational. If
there was
a good and rational explanation for the differentiation,
one would have expected the first respondent to provide that. Such
explanation may even have explained why it was necessary in
Kimberley, for instance, to impose a rates ratio of 22:1.
48.
Unfortunately, that explanation is not
before the Court. The Court is left in the dark as to why the
first respondent imposed
such a huge ratio difference between the
mining category, and other non-residential categories.
49.
In the result, I find that the
impugned
decisions are unlawful, irrational, and unreasonable. Section
172(1)(a) of the Constitution imposes an obligation on the
Court when
deciding a constitutional matter to declare any law or conduct that
is inconsistent with the Constitution invalid to
the extent of its
inconsistency. As I have demonstrated above, the
impugned
decisions are in breach of section 19(c) of the Rates Act. The
impugned
decisions
are therefore unlawful. Once it is so, then it follows that the
impugned
decisions must be declared unlawful and set aside.
REMEDY
50.
For the reasons already advanced above,
setting aside the
impugned
decisions will have a potentially disruptive effect on the affairs of
the first respondent in that the first respondent will not
be able to
enforce the outstanding rates owed by the applicants.
51.
In order to ameliorate the potentially
disruptive consequences of setting aside the
impugned
decisions, the Court makes an order in terms of section 172(1)((b)(i)
of the Constitution by limiting the retrospective effect
of the
declaration of invalidity and giving the order prospective effect
only. That way, the first respondent will still
be able to
enforce payment of the debt owed by the applicants in respect of
outstanding rates and taxes, notwithstanding the setting
aside of the
impugned
decisions.
CONCLUSION
52.
In the result I make the following orders:
52.1
The decisions taken by the Council of the first respondent to set a
property rates ratio of 1:22 in respect
of the category of ‘’
mining’
’
for the financial years 2015/2016; 2016/2017; 2017/2018; 2018/2019;
2019/2020; and 2020/2021 are declared unlawful and set
aside.
52.2
In terms of section 172(1)(b)(i) of the Constitution, the order in
paragraph 52.1 above shall have prospective
effect only.
52.3
The first respondent shall pay the costs of the application,
including the costs consequent upon the employment
of two counsel.
RAMAEPADI, MJ
ACTING JUDGE
NORTHERN CAPE HIGH
COURT
I concur.
MAMOSEBO, MC
JUDGE
NORTHERN
CAPE HIGH COURT
Obo
Applicants:
Adv. M.M. Rip SC & Adv A.M. Viviers
(oio
Duncan & Rothman Inc.)
Obo
1
st
Respondent:
Adv.
B. Knoetze SC
(oio
Van de Wall Inc.)
[1]
FA
p19 para 11.14
[2]
FA
p26 para 15.6
[3]
AA
p196 paras 7-8
[4]
AA
p197-198 paras 16-17
[5]
AA
p198 paras 20-21
[6]
AA
p200 paras 27-28
[7]
AA
p201 para 35
[8]
Ra
p267 para 7
[9]
FA
p19 para 11.15; RA p267 para 6
[10]
Applicants’
heads of argument p6 para 7.1 and p8 para 7.4
[11]
FA
(Annexure ‘’JH1’’) p39-117
[12]
FA
p11-12 paras 9.1.1-9.1.8
[13]
FA
p13 para 9.3.4
[14]
FA
(annexure ‘’JH1’’) p75 paras
12.2.16.1-12.2.16.3
[15]
FA
p13 para 9.4
[16]
AA
p203 para 43
[17]
FA
p13 para 9.5
[18]
FA
p20 paras 12.2-12.3
[19]
FA
p13 paras 10.1-10.2
[20]
AA
p203 para 43
[21]
FA
p20 para 12.4
[22]
FA
p22 para 13.2
[23]
FA
p24 para 15.2
[24]
FA
p25 para 15.3
[25]
FA
p225-26 paras 15.4-15.5
[26]
FA
p25 para 15.3; AA p205 para 54
[27]
The
long title of the Rates Act
[28]
FA p14-15 paras 11.4-11.6
[29]
Nokeng
Tsa Taemane Local Municipality v Dinokeng Property Owners
Association and Others
[2011] 2 All SA 46
(SCA) at para 8
[30]
Applicants’
heads of argument p2 para 2. This was also emphasised in p267 para 7
of the applicants’ replying affidavit.
[31]
State
Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd
2018 (2) SA 23
(CC) at para 38
[32]
Logro
Properties CC v Bedderson NO and Others
[2003] 1 All SA 424
(SCA) at
para 20
[33]
AA
p197-198 paras 12-17; First respondent’s heads of argument
p4-5 paras 8-14
[34]
FA
p13 para 9.4; AA p203 para 43
[35]
FA
p13 para 10.1; AA p203 para 43
[36]
FA
p19 para 12.1; AA p204 para 49
[37]
FA
p32 para 18.1
[38]
FA
p31 para 17.5
[39]
Buffalo
City Metropolitan Municipality v Asla Construction (Pty) Ltd
2019
(4) SA 331
(CC) at para 48
[40]
FA
p 11 para 9.1
[41]
FA
p13 para 9.3.4
[42]
Buffalo
City Metropolitan Municipality (supra) at para 8
[43]
Department
of Transport and Others v Tasima (Pty) Limited
2017 (2) SA 622
(CC)
at para 170