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[2019] ZAFSHC 236
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Central University of Technology Free State v Mangaung Metropolitan Municipality (2628/2019) [2019] ZAFSHC 236 (6 December 2019)
FREE
STATE HIGH COURT, BLOEMFONTEIN
REPUBLIC
OF SOUTH AFRICA
Case
No. : 2628/2019
In
the matter between:-
Central
University of Technology Free
State Applicant
And
Mangaung
Metropolitan
Municipality Respondent
HEARD:
22
AUGUST 2019
JUDGMENT
BY:
MOLITSOANE,
J
DELIVERED:
6
DECEMBER 2019
[1]
The applicant seeks an order directing the respondent to restore the
provision of the ordinary supply of water to all premises
of the
applicant and to provide an uninterrupted supply of water at full
capacity to all the premises of the applicant except in
circumstances
where urgent maintenance requires the disconnection of water supply
to the applicant, pending the finalisation of
the dispute raised by
the applicant pertaining to the property rates charged by the
respondent. The application is opposed.
[2]
The facts surrounding this application are largely common cause and
may conveniently be summarised as follows:
1. The applicant is a
University duly established as a Higher Education Institute in terms
of the Higher Education Act, 101 of 1997.The
respondent is a
Metropolitan Municipality duly established in terms of the provisions
of s12 of the Local Government: Municipal
Structures Act, 117 of
1998.The respondent is a rate payer of the applicant in respect of
erf 26454. The applicant fell in arrears
with payment of rates in
respect of its said property. On the 20
th
March 2019 the
respondent issued a notice calling upon the Applicant to settle its
arrears in respect of its rates levied. The
notice further indicated
that if the arrears were not settled or proper arrangements made, the
supply of water to the applicant
would be disconnected.
2. On the 27
th
March 2019 the applicant lodged a dispute on what it called
rectification of the valuation of property erf 26454 and the
resultant
municipal debt of R20 310 455.81 demanded in the
letter of the respondent dated the 20
th
March 2019
mentioned above. The nub of the attack on the valuation was that the
respondent seemed to have valued the University
property as a private
business and not as a public institution.
3. On the 28
th
May 2019 the respondent dispatched a further notice similar to the
one of the 20
th
March 2019. The second notice indicated
that the arrears stood at R23 828 596.26.An account also
sent to the applicant
reveal that the respondent levied rates on the
property at R87 816.67 per month and such levy was made on the
basis that the
property rates were charged at the ‘
business
and commercial tariff’
4. On the 10
th
June 2019 the applicant, through its attorneys of record lodged a
dispute in terms of s102 (2) of the Municipal Systems Act, 32
of 2000
pertaining to the demand of the 10
th
May 2019.With the
said dispute the applicant tendered payment of the amount of
R3 000 000.00 in part payment. It is undisputed
that this
tendered amount was later paid to the respondent. The applicant also
sought confirmation that the water supply to the
applicant would not
be disconnected and further sought to seek confirmation to try and
resolve this impasse with the respondent.
When no confirmation sought
was forthcoming the applicant launched these proceedings.
[3]
In my view, there are essentially two issues for determination in
this application, namely:
1. Whether erf 26454 is a
rateable property as envisaged in the Municipal Property Rates Act,6
of 2004( the Act);
2. Whether the alleged
dispute raised in the letter of the 10
th
June 2019 by the
applicants lodged with the respondent constituted a dispute as
contemplated in s102(2) of the Municipal
Systems Act which
required resolution, failing which disconnection of the services to
the applicant would render such disconnection
unlawful.
[4]
The aim of the Act is to, inter
alia
,
regulate the power of municipalities to impose rates on the
properties in their areas.
[1]
Section
2(3) of the Act empowers a municipality to levy a rate on a property
subject to section 229 and other applicable provisions
of the
Constitution
[2]
, the Act and the
rates policy the municipality had adopted in terms of section 3 of
the Act. Such an adopted policy must be consistent
with the Act.
[5]
Section 1 of the Act defines property as, follows:
(a)
“
Immovable property registered in the name of a person,
including, in the case of a sectional title scheme, a sectional title
unit
registered in the name of a person
;”
[6]
Section 102 of the Municipal Systems Act deals with the accounts owed
to the municipalities and provides that a municipality
may:
(a) Consolidate any
separate accounts of persons liable for payments to the municipality;
(b) Credit a payment by
such a person against any account of that person;
(c) Implement any debt
collection and credit control measures provided for in Chapter 9 of
the Act in relation to any arrears on
any of the accounts of such a
person.
[7]
Section 102(2) of the Municipal Systems Act provides that the debt
collection and credit control steps envisaged in subsection
1 will
not apply where there is a dispute between the municipality and a
person referred to in that subsection concerning any specific
amount
claimed by the municipality from that person.
[8]
It is so that the respondent disputed that erf 26454 was ever
registered. In spite of the clear intention by the applicant putting
in dispute the registration of erf 26454 the respondent failed to
deal and to provide evidence of its registration. Mr Rampai attempted
to hand albeit at a late stage from the bar proof of such
registration but same was vigorously and successfully opposed. He
elected
not to seek a postponement in order to seek leave to file the
said document by way of a supplementary affidavit.
[9]
The respondent is enjoined to levy rates on all rateable property in
its area
[3]
. It is the
contention of the applicants that because the respondents failed to
prove that erf 26454 was a registered property,
levying rates on it
was illegal.
[10]
The applicant avers that it is the ‘
owner
of the property on which the affairs of the Central University of
Technology is conducted
.’
[4]
The Act defines ‘owner’ in section 1 of the Act as
follows:
O
“ ‘
owner’-
1.
In relation to a property referred to in
paragraph (a) of the definition of property, means a person in whose
name ownership of
the property is registered”.
On
its own version the applicant is the owner of the property herein in
question. It is my considered view that in view of its admission,
the
respondent is absolved from proving that the said property is a
registered property. Ownership refers to a registered property
in
terms of s1 of the Act. It cannot be viewed otherwise that the
property is not rateable. It is not the contention of the applicants
that the said property is excluded from the levying of rates in terms
of section 17 of the Act. The applicant cannot assert that
it is the
owner of the property as envisaged in the Act and expect the
respondent to prove that such property was a rateable property.
It is
my finding that erf 26454 is a rateable property as envisaged in
section 1 of the Act.
[11]
It is not in dispute that the applicant raised a dispute through its
attorneys of record on the 10
th
May 2019. The contention
by the respondent is that the dispute raised on the 10
th
May 2019 was dealt with in March 2019. The essence of the submissions
on behalf of the respondents is that this dispute of the
10
th
May 2019 sought to ventilate the issue which was laid to rest in
March 2019. I do not agree with the contention by the respondent.
[12]
As alluded above the applicant is a university, an institute of
higher learning. The account of the respondent levies the rates
on
the said institution at the rate called ‘
business
and commercial
’
The courts have recognised that as a general rule higher rates have
historically been levied against commercial, industrial
and business
properties than those classified as residential
[5]
.There
is in my view reason to believe that such recognition of
differentiation may be applicable to institutes of learning whose
main purpose is not business and commercial. This particular aspect
of the dispute was not raised in the March 2019 dispute. It
is
therefore not correct to assert that the dispute which was raised in
May 2019 was laid to rest in March 2019. Anyway the dispute
of May
could not have been laid to rest in March when effectively it had not
been raised.
[13]
Section 3 of the Act enjoins the rates policy adopted by the
municipalities to treat persons liable for rates equitably. The
applicant contends that it must be treated equitably with the
University of the Free State as both of them are similarly situated
rate payers and both being universities as defined in the Higher
Education Act. The contention by the applicant is that on the
27
th
May 2019 this court in case number 6266/2018 (the UFS case) declared
the charging of a business rate against the properties of
the Free
State University as illegal. In the UFS case the court ordered that
the municipality to determine separate assessment
rates for each of
the different property categories (of the university) as determined
in the rates policy in accordance with the
Act.
[14]
It is against this background that the applicant contends that it
must be treated in the same way as UFS. Clearly both institutions
being situated in similarly rateable arrears and both being
institutions of higher learning tempts one to agree with the
contention
by the applicant that it was not treated equitably. The
court which however will be most suited to make that determination
will
be the court sitting in the review of the decision to impose
rates at different tariff rates. This aspect was not dealt with
by the respondent in the dispute raised on the 10
th
May
2019. It was incumbent on the respondent to have dealt with this
issue when it was raised in May. The enforcement of its debt
collection procedure which included the disconnection of the water
supply should have been suspended by the lodging of the dispute
in
terms of s102 (2) of the Municipal Systems Act. The disconnection or
intended disconnection thereof was prima facie unlawful.
[15]
The respondent, however, correctly pointed out that the court in the
UFS case did not bar the applicant from implementing its
debt
collection measures. Resolution of the dispute would go a long way
towards finalising this impasse. The applicants have always
intimated
in their papers that they wanted to review the decision of the
respondent. In my view the interest of justice require
that the court
should grant an order to stay these proceedings pending the
institution of a review application in order to resolve
this dispute
permanently. I accordingly make the following order.
ORDERS
(a)
The final determination of this application
is stayed pending the institution of a review application by the
applicant.
(b)
The review application is to be instituted
within 30 days of this order.
(c)
The costs of this application stand over
for later determination.
___________________
P.E.
MOLITSOANE, J
On
behalf of Applicant: Adv JS Rautenbach
Instructed
by:
Blair
Attorneys
BLOEMFONTEIN
On
behalf of the respondent: Mr . N Rampai
Instructed
by:
Rampai
Attorneys
BLOEMFONTEIN
[1]
See preamble to the Act
[2]
Section 229: deals with the municipal fiscal powers and functions
[3]
See s7 of the Act
[4]
See par [48] of the Founding Affidavit
[5]
See Kalil v Mangaung Municipality 2014(5) SA 123 par [23]