Kungwini Local Municipality v Silver Lakes Homeowners Association and Another (220/07) [2008] ZASCA 83; 2008 (6) SA 187 (SCA) ; [2008] 4 All SA 314 (SCA) (2 June 2008)

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[2008] ZASCA 83
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Kungwini Local Municipality v Silver Lakes Homeowners Association and Another (220/07) [2008] ZASCA 83; 2008 (6) SA 187 (SCA); [2008] 4 All SA 314 (SCA); 70 SATC 205 (2 June 2008)

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THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
CASE NO: 220/07
Reportable
In the matter between:
KUNGWINI LOCAL MUNICIPALITY
Appellant
and
SILVER LAKES HOME OWNERS
ASSOCIATION
First Respondent
JAN ROELOF BOOT
Second
Respondent
Coram
:
Streicher,
Mthiyane &
Van Heerden JJA et Snyders & Mhlantla AJJA
Heard: 13
May 2008
Delivered: 2
June 2008
Summary: Local
authority – rates and taxes – section 10G(7) of Local Government
Transition Act 209 of 1993 – whether local authority
substantially
complied with this section in increasing property rates – validity
of municipal council resolution and subsequent
local authority notice
Neutral
citation: This judgment may be referred to as
Kungwini
Local Municipality v Silver Lakes Homeowners Association
(220/07)
[2008] ZSCA 83
(RSA)
JUDGMENT
VAN
HEERDEN JA:
VAN HEERDEN JA
:
‘In this world,
nothing can be said to be certain, except death and taxes
’
–Benjamin Franklin.
1
Introduction
As is pointed out by Nico Steytler and Jaap de Visser in
Local
Government Law of South Africa
:
2
‘
Property
rates are perhaps the oldest sources of income for local
authorities. In England they can be traced back to a statute of
1601
that required the overseers of the poor to raise revenue from the
inhabitants and occupiers of land in a parish “to provide
material
to enable the poor to be set to work and to maintain the lame,
impotent, halt and blind”. Soon the principle was established
that
the sum due was linked to the value of the land, which was at first
the estimated annual letting value of occupied property.’
(
Footnotes omitted.)
In this matter, what we
are called upon to determine is whether, in increasing the property
rates for the 2004/2005 financial year
in respect of one of its
areas, the appellant, the Kungwini Local Municipality, exercised its
powers in a lawful manner.
The first and second respondents, Silver Lakes Home Owners
Association and Mr J R Boot, applied to the Pretoria High Court for
the following relief:
‘
1. That
the decision by [the Municipality] on 29 June 2004 to approve the
assessment rate tariff of R0.054 per Rand value for properties
in the
Bronberg area of the municipality be declared null and void and be
set aside.
2. That
the promulgation of the assessment rate tariff of R0.054 per Rand
value for properties in the Bronberg area of the [Municipality]
be
declared null and void and be set aside.
3. That
the [Municipality] be prohibited from further implementing the
assessment rate tariff of R0.054 per Rand value for properties
in the
Bronberg area from date hereof.
4. That
it be declared that the [Municipality] was not lawfully entitled to
have levied assessment rates of R0.054c per Rand value
for properties
in the Bronberg area from 1 August 2004 to date hereof;
5. That the [Municipality]
should pay the costs of this application, together with any other
respondent opposing this application.’
(I
shall henceforth refer to the
appellant
as ‘the Municipality’ and to the first and second respondents as
‘Silver Lakes’ and ‘Mr Boot’, respectively, or collectively
as ‘the applicants’.)
The court
a quo
(Legodi J) granted orders substantially in
terms of paragraphs 2, 3 and 4, which orders form the basis of the
appeal by the Municipality.
That appeal comes before us with the
leave of this Court. Legodi J refused to grant an order in terms of
paragraph 1 and confirmed
the Municipality’s decision of 29 June
2004. That confirmation is the subject of the cross-appeal by the
applicants, for which
the High Court granted leave. In respect of
costs, the learned judge ordered each party to pay their own costs,
which order also
forms part of the cross-appeal.
The two main issues on appeal are:
(a)
Whether a resolution adopted by the Municipality on 29 June 2004 to
approve an increase in the assessment rate for the Bronberg
area was
lawful, and in particular, whether or not the objections lodged
prior to the adoption of the resolution had been properly
considered
by the Municipality.
(b)
Whether a notice of 28 July 2004 advertising this increase in the
assessment rate and inviting objections in respect thereof
was
intra
vires
the empowering statutes inasmuch as –
(i)
such notice did not expressly reflect the date on which the rates
increases were to be effective; and
(ii) the increased
rates were implemented four days after publication of the notice and
before the expiry of the time period envisaged
in the notice for the
lodging of objections.
Background
In May 2004 the Municipality tabled its proposed budget for
2004/2005. This provided for an increase in the assessment rate for
the Bronberg area from R0.02 per rand value of the relevant property
to R0.088 per rand value, viz an increase of 340 per cent.
A written
objection to the budget dated 26 May 2004 by Mr Boot, the councillor
for Ward 1 (in the Bronberg area), was sent to the
Municipality. The
Executive Mayor of the Municipality responded to this objection by
letter dated 1 June 2004, under cover of which
a memorandum dated 27
May 2004 and addressed to the Executive Mayor by the Director of
Finance of the Municipality, was sent to
Mr Boot. In this
memorandum, the following was stated:
‘
National
Treasury serves as an oversight body, it is still the responsibility
of each individual Council to approve or disapprove
its budget.
Furthermore there is valid reason for this high increase [in the
Bronberg rates] because at the end of the day there
should be parity
within the communities of Kungwini Local Municipality . . . Please
see attached the different rates and the respective
incomes, which
will serve as a guideline.
If we don’t
agree on 0.088c for 2004/2005 then we should have a clear plan on
how to phase in this disparity
. Finally I
don’t see any need to stop tomorrow’s meeting, 28 May 2004,
because
these rates are not final but rather
subject to consultation and agreement between parties
.’
(Emphasis added.)
On 7 June 2004 a local authority notice regarding the budget for
2004/2005 was published in the
Pretoria News
. The important
part of the notice read as follows:
‘Notice is hereby given
that the Draft 2004/2005 Budget will be open for comments/inspection
during office hours for a period of
21 days from date of publication
of this notice, at the offices of the Director Finance, Kungwini
Local Municipality . . . . Any
person who wishes to comment or wants
to make any representation, must do so within the above-mentioned
period.’
This budget provided for an increase in the Bronberg assessment rate
from R0.02 per rand value to R0.054 per rand value and reflected
the
percentage increase as being 145.45 per cent. A formal written
objection, dated 26 June 2004, was lodged with the municipality
under the hand of Mr Boot and Mr D J Pretorius, the councillor for
Ward 2 (also in the Bronberg area). Mr Boot also addressed a
letter
dated 16 June 2004 to the Director-General of Finance, in which he
set out the reasons why the Ward Committees of both Wards
1 and 2
had on that day resolved to reject the 2004/2005 draft budget. These
communications raised inter alia the following issues:
the increase of the assessment rate for the Bronberg area, and the
fact that the draft budget reflected this increase as 145.45
per
cent, whereas it was in fact 170 per cent;
the percentage
increase in the Bronberg rates was 170 per cent, whereas the
National Treasury guideline (as reflected in the 2004/2005
Budget
Circular distributed by National Treasury to all municipalities on
16 March 2004) was only seven per cent.
On 29 June 2004, at
a special council meeting of the Municipality, it was resolved that
the assessment rate tariff of R0.054 per
rand value for properties
in the Bronberg area be approved. It was further decided that a
percentage tariff increase for the Bronberg
area to the tune of
145.45 per cent for the 2004/2005 financial year be approved.
On 28 July 2004 another local authority notice was published, the
relevant part of which read as follows:
‘
NOTICE OF
APPROVAL OF THE BUDGET AND TARIFF AMENDMENTS
Notice
is hereby given that on 29 June 2004 as per Resolution SKA
180/29-6-2004 the Council resolved to adopt the Budget for the
2004/2005 financial year in accordance with
Section 10G
of the
Local
Government Transition Act 209 of 1993
(now repealed), read with
Chapter 8 of the Local Government: Municipal Systems Act, (Act 32 of
2000) and Section 229 of the Constitution
as set out in the schedule
hereunder.
Notice
is further given in accordance with the provisions of
Section 22
of
the
Local Government: Municipal Finance Management Act 56 of 2003
that the local community is invited to submit representations in
connection with the Budget set out hereunder to the Municipal
Manager,
P O Box 40, Bronkhorstspruit, 1020. Such representations
are to be made not later than 5 working days after the expiry of the
inspection
period referred to below.
Any
person who cannot write, may come during office hours to the
Municipal Offices, Muniforum 1, to the office of Mr Jordan Maja,
a
member of the Staff of this Municipality, who will assist to
translate such a person’s comments.
The
said Council Resolution is available for inspection at the Council
Offices, in Bronkhorstspruit, Muniforum 1, Shere Offices,
Ekangala
Municipal Offices, Zitho­beni Municipal Offices, during normal
office hours 07:30 to 16:00 from Monday to Friday, for
a period of 30
days as from date of publication hereof.
. .
. .
That
the assessment rate tariff of R0.0876 per Rand value be applicable
to all properties, other than Ekandustria and Bronberg,
within the
jurisdiction of Kungwini Local Municipality.
That
the assessment rate tariff of R0.054 per Rand value for properties
in the Bronberg area be approved.
.
. . .
That
the following tariff increase for the 2004/2005 Financial Year be
approved.
. . . .
d)
Assessment Rate Bronberg 146,45%
3
.
. . .
That the assessment
rate tariff of R0.044 per Rand value for properties of Pensioners in
the Bronberg area be approved.’
From 1 August 2004
the increased rates were reflected on the accounts of the residents
of the Bronberg area and soon thereafter,
the Municipality started
threatening those residents with action should they fail to pay the
increased rates.
On 31 August 2004
Mr Boot wrote a letter to the Municipality in which he stated the
following:
the council had not considered the objections to the budget received
in terms of the notice published on 7 June 2004;
the notice of 28 July 2004 contained certain errors, in particular
in that it incorrectly reflected the percentage tariff increase
in
the assessment rate for the Bronberg area as 145.45 per cent, while
the actual percentage increase was 170 per cent;
the council had, on 29 June 2004, resolved to adopt the 2004/2005
budget before the notice of 28 July 2004 was published, and before
consideration of any of the representations and/or objections
arising from either of the notices of 7 June 2004 or 28 July 2004;
that the new rates for the Bronberg area represented an increase of
170 per cent, which was contrary to the National Treasury

guidelines;
that no services
were rendered, or intended to be provided, in the Bronberg area,
4
notwithstanding the increase in the property rates.
On 5 October 2004 a
special council meeting of the Municipality was held at which it was
decided (inter alia) that the assessment
rate percentage increase
for the Bronberg area (as reflected in both the resolution of 29
June 2004 and the notice of 28 July 2004)
was amended from 145,45
per cent to 170 per cent.
These amendments made
to the original budget, including the reference to 170 per cent (to
replace the erroneous reference to 145.45
per cent) were never
published by the Municipality.
Finally, on 14 October 2004, there was a further special council
Meeting of the Municipality, during which the council resolved:
‘
1.
That cognisance be taken that the closing date for the submission of
objections was 2 September 2004.
5
2.
That all the objections received timeously be considered.
3. That
the objections be dismissed and that the assessment rates be
implemented as published.’
The
authority of the municipality to levy property rates and taxes
In a
post-constitutional South Africa, the power of a municipality to
impose a rate on property is derived from the Constitution
itself:
6
the Constitutional Court has described it as an ‘original power’
7
and has held that the exercise of this original constitutional power
constitutes a legislative – rather than an administrative
–
act.
8
The principle of legality, an incident of the rule of law,
9
dictates that in levying, recovering and increasing property rates,
a municipality must follow the procedure prescribed by the
applicable national or provincial legislation in this regard.
Before us it was common cause that s 10G(7) of the Local Government
Transition Act 209 of 1993 (‘the LGTA’)
10
applied at the relevant time to both the resolution and the
subsequent notice. The relevant parts of s 10G(7) provide as
follows:
‘
(7)(a)(i)
A local council, metropolitan local council and rural council may by
resolution, levy and recover property rates in respect
of immovable
property in the area of jurisdiction of the council concerned . . .
.
(ii)
A municipality may by resolution supported by a majority of the
members of the council levy and recover levies, fees, taxes
and
tariffs in respect of any function or service of the municipality.
(b)
In determining property rates, levies, fees, taxes and tariffs
(hereinafter referred to as charges) under paragraph (a), a

municipality may
–
(i)
differentiate between different categories of users or property on
such grounds as it may deem reasonable;
(ii)
in respect of charges referred to in paragraph (a)(ii), from time to
time by resolution amend or withdraw such determination
and
determine a date, not earlier than 30 days from the date of the
resolution, on which such determination, amendment or withdrawal
shall come into operation;
and
(iii)
recover any charges so determined or amended, including interest on
any outstanding amount.
(c)
After a resolution as contemplated in paragraph (a) has been passed,
the chief executive officer of the municipality shall forthwith
cause to be conspicuously displayed at a place installed for this
purpose at the offices of the municipality as well as at such
other
places within the area of jurisdiction of the municipality as may be
determined by the chief executive officer, a notice
stating –
(i)
the general purport of the resolution;
(ii)
the date on which the determination or amendment shall come into
operation;
(iii)
the date on which the notice is first displayed; and
(iv)
that any person who desires to object to such determination or
amendment shall do so in writing within 14 days after the date
on
which the notice is first displayed.
(d)
Where –
(i)
no objection is lodged within the period referred to in paragraph
(c)(iv), the determination or amendment shall come into operation
as
contemplated in paragraph (b)(ii);
(ii) an
objection is lodged within the period referred to in paragraph
(c)(iv),
the municipality shall consider
every objection and may amend or withdraw the determination or
amendment and may determine a date
other
than the date contemplated in paragraph (b)(ii)
on
which the determination or amendment shall come into operation
,
whereupon paragraph (c)(i) shall with the necessary changes apply.’
(Emphasis added.)
The
resolution of 29 June 2004
The applicants
contend that the decision of the Municipality taken on 29 June 2004
11
is null and void on the grounds that there was no consideration or
discussion of the objections raised by Messrs Boot and Pretorius
in
respect of the draft budget for 2004/2005 before the decision was
taken. These contentions, which are of course vigorously disputed
by
the Municipality, form the basis of the applicants’ cross-appeal.
The Municipality
concedes that it received the letters of objection from Messrs Boot
and Pretorius dated 26 May 2004 and 26 June
2004. It alleges that
there were meetings with the Silver Lakes Board of Trustees in early
June 2004 where the draft 2004/2005
budget was discussed at length.
The applicants acknowledge that such meetings were indeed held.
Moreover, as part of the ‘public
participation process’, public
information meetings were arranged in the Bronberg area for 7 June
and 8 June 2004.
According to the Municipality:
‘
The
considerations of the budget
would
also have been discussed at length in the mayoral committee of the
municipal council and accordingly when one reaches the stage
of
putting the budget on the table at the municipal council the major
debates and negotiations have already taken place.
As
is the case in Parliament, there is limited debate on the proposed
motions in the council sitting itself
. . . .’ (Emphasis
added.)
The applicants
dispute that these meetings and that this ‘reciprocal exchange of
thoughts’ constituted proper consultation with
the community:
according to them, the notice for the public information meetings
was given only shortly before the meetings were
due to be held, and
they were not at all widely advertised. The Municipality, they say,
neither provided any further details, nor
produced any evidence in
respect of the alleged debates and negotiations and, in particular,
who were involved in these, what they
entailed, and when they were
held. No proof was placed before the court that the mayoral
committee of the municipal council did
in fact consider the
objections, or that any of the individual councillors had in fact
considered the objections, before publication
of the notice on 28
July 2004. Apart from the Executive Mayor, who deposed to the
answering affidavit on the Municipality’s behalf,
not a single
councillor confirmed this under oath. In any event, the applicants
argue,
12
it is a peremptory requirement that objections be considered,
discussed and debated
at council meetings
.
The Municipality
contends that it cannot be expected of the municipal council to
consider the objections ‘word for word’ during
a municipal
council session. According to the Municipality, the councillors are
under an obligation to consider the issues on the
agenda, and the
supporting documentation furnished to them in respect thereof, prior
to the relevant council meeting, and to take
these issues up with
the ward committees and other interested parties. Items on the
agenda, including objections, are debated beforehand
by caucus
meetings of the various political parties, and each such party then
‘usually puts its viewpoint in the meeting through
one or [more]
councillors. The idea of a free-for-all debate, on each issue, by
each councillor, is far from the reality of practical
governance.’
As proof of the
fact that the submissions made and objections lodged prior
to
the council meeting held on 29 June
were
taken into
consideration by the Municipality, it states that the rates increase
of R0.088 per rand value initially proposed for
the whole of
Kungwini (excluding the industrial area of Ekandustria) was
ultimately reduced to R0.054 per rand value for the Bronberg
area
(approximately 38 per cent below the property rates for the other
non-industrial areas). This was the increase decided upon
by the
council on 29 June 2004.
The applicants, on the other hand, argue that a ‘formal’
proposal of R0.088 in respect of the Bronberg area was never tabled
or advertised; on the contrary, only the proposal of R0.054 was
tabled and subsequently advertised for comment. The objection lodged
by Messrs Boot and Pretorius on 26 June 2004 referred to the fact
that the rate had been lowered from R0.088 for Kungwini as a
whole
to R0.054 for the Bronberg area. Thus, they say, the lowering of the
rates for the Bronberg area could not have been done
in response to
the ‘official objections’ lodged after the first local authority
notice published on 7 June 2004.
It should however be noted that, in Mr Boot’s letter to the
Director-General of Finance dated 16 June 2004, sent
subsequent
to this first notice of 7 June 2004, the former stated –
‘
The
Draft Budget indicates that property assessment rates in the former
Bronberg area are increased from 2c per R of the land value
to 8.8c
in the R of the land value.
This represents an
increase of
340 [per cent].’
Furthermore, the
content of the Memorandum from the office of the Director of Finance
dated 27 May 2004
13
makes it clear that, at that stage, the proposed rates increase that
was being debated with Silver Lakes and their representatives
was
an increase to R0.088 per rand value. Between that time and the
council resolution of 29 June 2004, the draft budget as tabled
and
advertised for inspection and comment
was
amended to reduce
the proposed rate increase for the Bronberg area
to R0.054.
It was the amended budget which was put to the council on 29 June
2004. This being so, it cannot be said that the Municipality
simply
ignored or refused to consider the concerns raised and objections
made by or on behalf of the residents of the Bronberg
area in the
course of the public participation process followed
prior
to
the 29 June 2004 resolution.
In my view, the
‘scheme’ contained in s 10G(7) of the LGTA envisages that
interested parties should be given a proper opportunity
to make
submissions in respect of, inter alia, property rates levied by a
municipality and that the Municipality is obliged to
give their
submissions proper consideration. However, s 10G(7) does not appear
to necessitate the
formal
consideration of objections and
submissions at two different stages of the process, namely both
before
the relevant resolution is taken as well as
after
the publication of the notice required in terms of s 10G(7)(c). The
principle of public participation in pursuance of democratic,
accountable and effective local government is, to my mind, given
effect to by the express provision made for the lodging and
consideration
of objections after the publication of the resolution
in the s 10G(7)(c) notice.
The applicants also
argue that the increase in the property rates for the Bronberg area
did not comply with the guidelines in the
budget circular issued by
National Treasury, in terms of which the ‘guideline growth rates
for 2004/2005, 2005/2006 and 2006/2007,
are 7 per cent, 6.5 per cent
and 6 per cent, respectively’. However, as the Municipality points
out, the budget circular makes
it clear that these are only
guidelines, not prerequisites for the approval of a municipal
budget, and that they apply generally
‘to own revenue sources . .
. for both the capital and operating budgets’, not specifically to
property rates increases. According
to the Municipality, the
apparently steep increase in the Bronberg area property rates was
simply due to the fact that, historically,
the property rates
applicable to this area were exceptionally and unnaturally low. The
Bronberg area is one of the most affluent
areas in the Municipality,
yet the residents pay extremely low rates, much lower that those
applicable to the Municipality’s
less affluent areas. It points
out that, even after the increase, the Bronberg property rates are
still 38 per cent below the other
(non-industrial) property rates
for the other areas falling within the jurisdiction of the
Municipality.
In the queries
raised by National Treasury in relation to the Municipality’s
2004/2005 budget during November and December 2004
(copies of which
form part of the record), no mention is made of any problem with the
rates increases for the Bronberg area or
for any other area of
Kungwini. The queries related to other aspects of the budget and it
seems as if these queries were ultimately
dealt with by the
Municipality to the satisfaction of National Treasury. I do not
think, therefore, that it can be said conclusively,
on the papers
before us, that the increases approved by the council on 29 June
2004 ‘materially and unreasonably prejudice national
economic
policies’,
14
as was argued by the applicants.
For the above
reasons, I am of the view that the court a quo was correct in its
conclusion that the resolution of 29 June 2004 was
intra vires
the enabling legislation and did not fall foul of the principle
of legality. It follows that the cross-appeal by the applicants in
this regard falls to be dismissed.
The notice of 28 July 2004
As regards the
local government notice published by the Municipality on 28 July
2008,
15
the
applicants point out that this notice referred to the LGTA as being
‘now repealed’ and purported to comply with the provisions
of s
22 of the Local Government: Municipal Financial Management Act 56 of
2003 (‘the MFMA’). Before us it was common cause
that the notice
was incorrect in that, at that stage, s 10G(7) was still of full
force and effect.
16
The Municipality argued, however, that there had been substantial
compliance with the requirements of s 10G(7).
17
Legodi J disagreed, hence the present appeal.
As indicated above,
the notice of 28 July 2004 invited ‘the local community’ to
submit representations in connection with the
budget set out in such
notice ‘not later than 5 working days after the expiry of the
[stipulated] inspection period’. The inspection
period provided
for by the notice was 30 days from the date of publication thereof.
However, the increased rates in fact came into
operation and were
claimed by the Municipality from 1 August 2004, viz only four days
after the publication of the notice.
Section
10G(7)(c)(iv) requires that the notice of a council resolution
whereby rates or service charges are determined or amended
must
provide for a period of 14 days within which any objections to such
determination or amendment must be lodged. In terms of
s
10G(7)(c)(ii), the notice must stipulate the date on which the
determination or amendment will come into operation.
To my mind, the
object of these provisions is to ensure that residents in the
municipal area concerned are ‘properly and optimally
informed’
18
of
what their financial obligations will be, should the published
amendments (in this case, the rates increases) take effect, and
precisely when such obligations will become enforceable. In the
absence of such information, it would be well-nigh impossible for
residents timeously to arrange their financial affairs such that
they make allowances for any anticipated increased demand upon
their
purses. Just as financial discipline and advance planning is
legitimately required of a municipality, so too can it be expected
of ratepayers. For this reason, I agree with the applicants’
contention that a procedure whereby residents are in effect
presented
with a
fait accompli
, in that the rates increases
are implemented and enforced prior to the expiry of the period
allowed for the lodging of objections
to such increases, does not
‘encourage the involvement of communities and community
organisations in matters of local government’,
as required by
s 152(1)(e) of the Constitution. Nor does it constitute
‘democratic and accountable government for local
communities’ –
one of the objects of local government in terms of s 152(1)(a)
of the Constitution. The stance of the Municipality
in this regard –
which amounts to ‘pay now and argue later’ – can hardly be
said to comply with the statutory injunction
that ‘[a]
municipality must in the exercise of its executive and legislative
authority respect the rights of citizens and those
of other persons
protected by the Bill of Rights’.
19
It was suggested
that the reference in the notice to the tariff increase being ‘for
the 2004/2005 financial year’ was sufficient
compliance with the
requirement that ‘the date on which determination or amendment
shall come into operation’ be stated in
the notice. In this
regard, it was pointed out that ‘financial year’ is defined in s
1 of the MFMA as meaning ‘a year ending
on 30 June’.
20
Thus, so it was contended, the reference in the notice to the
2004/2005 financial year meant that the rates increases would take
effect on 1 July 2004 and that the notice must thus be construed as
reflecting the date on which the property rates increases would
come
into operation.
I cannot agree with
this interpretation. The notice was only published 28 days
after
the start of the 2004/2005 financial year. If one were to understand
the reference to the financial year as necessarily meaning
that the
rates increases came into operation on 1 July 2004 – which was not
the Municipality’s case on the papers – then
this would mean
that, by the time the notice was published, the ratepayers in the
Bronberg area were
already
obliged to pay the increased rates
and that, from the very outset, the invitation to lodge objections
to the increases within the
specified period was an entirely
meaningless gesture. It surely cannot be suggested that the object
of inviting objections is to
place some kind of onus on the
ratepayers concerned to persuade the Municipality,
ex post facto
,
to reduce rates that have already been charged and in respect of
which the ratepayers are thus already in arrears?
The Municipality insisted that the objections were also dealt with
at the special council meeting held on 14 October 2004. It annexed
to its answering affidavit an extract from the transcript of the
proceedings at the special council meeting held on 14 October
2004.
From the transcript it appears that reference was made to the
alleged consideration of the objections having already been
finalised at the council meeting on 29 June 2004. The Municipality
did not, however, produce any evidence to show that, at the
council
meeting held on 29 June 2004, the objections were in fact discussed
at all. Messrs Boot and Pretorius, both of whom were
present at this
meeting, stated under oath that the objections were not discussed or
considered then.
The applicants described the procedure followed by the council at
the meeting held on 14 October 2004 as paying mere lip service
to
any alleged consideration of the objections lodged. Plainly, when
one has regard to the tenor of that resolution,
21
as well as the duration of that meeting,
22
their contention in this regard appears not to be without substance.
However, in view of my conclusion in respect of the validity
of the
notice itself, this point need not be decided one way or the other.
The practical
effect of what the Municipality thus achieved was to levy rates with
retrospective effect. That indubitably was not
authorised by the
legislation. It moreover rendered nugatory the process prescribed by
s 10G(7)(d)(ii) which envisaged a fresh
determination or
amendment and a new implementation date should an objection be held
to have merit. In those circumstances the
notice could hardly have
constituted substantial compliance with the legislation as was
contended by the Municipality. It bears
noting that the timeframes
envisaged in the section after publication of the notice required by
s 10G(7)(c) are intended for the
benefit of the Municipality as
well, particularly as new accounting formulae have to be implemented
by their billing section to
give effect to the resolution.
In my view, the
least that could be expected of the Municipality was to make it
clear to the residents within its area of jurisdiction
how and
when
the increased property rates would come into operation, with
reference to any objections that may be lodged during the specified
period and to ensure that the published date of operation was such
as to allow the proper consideration of any objections lodged
within
the time period allowed for such objections. This it did not do. On
the contrary, the notice published did
not
, as was required,
stipulate any date as that on which the increased rates would come
into operation. The Municipality’s failure
in this regard leads me
to the conclusion that the notice of 28 July 2004 did not
substantially comply with the requirements of
s 10G(7) of the
LGTA and that its appeal therefore falls to be dismissed.
I have read the
judgment of my colleague Streicher JA and, for the reasons set out
by him in para 55 below, I agree with his conclusion
that the notice
of 28 July 2004 also did not comply with the requirements of
s 10G(7)(c) in that it conveyed two contradictory
approvals for
the Bronberg area.
As indicated above,
the applicants also cross-appealed against the costs order made by
the court below (viz that each party should
pay their own costs).
They contended that, as they were substantially successful in their
application to the High Court, the Municipality
should have been
ordered to pay their costs in that court. Costs are, however, in the
discretion of the court making the costs
order and, as I am not
satisfied that the court below failed to exercise its discretion in
this regard in a judicial manner, I
see no reason to interfere with
the costs order made by it.
Conclusion
For the above
reasons, I would dismiss both the appeal and the cross appeal. As to
the costs of this appeal, because neither side
was successful before
us, it would be appropriate to make no order as to costs.
B J VAN HEERDEN
JUDGE OF APPEAL
Concur
:
SNYDERS
AJA
STREICHER JA
:
I agree that both
the appeal and the cross appeal should be dismissed. However, as I
do so for somewhat different reasons and do
not consider it
necessary to deal with some of the issues dealt with in the main
judgment I shall state my reasons for agreeing
with the result.
In terms of
s 10G(7)(a)(i) the appellant (‘the Municipality’) had the
power, by resolution, to recover rates in respect
of immovable
property in its area of jurisdiction. It also, in terms of subpara
(ii), had the power, by resolution, to levy and
recover levies,
fees, taxes and tariffs (‘levies’). As stated in the main
judgment the imposition of rates and levies in terms
of this power
is a legislative rather than an administrative act. In determining
the rates a municipality may differentiate between
different
categories of users or property on such grounds as it may deem
reasonable (para (b)(i)).
The procedure to be followed in respect of the imposition and
recovery of such rates and charges is set out in the section. It
is
not suggested that this procedure is in conflict with the
Constitution or other legislation. In terms of subsection (7)(a) a
resolution is to be passed to levy and recover property rates and/or
levies. Subsection (b) then provides that:
‘
In
determining property rates, levies, fees, taxes and tariffs
(hereinafter referred to as charges) under paragraph (a) a
municipality
may –
(i) .
. . .
(ii) in
respect of charges referred to in paragraph (a)(ii), from time to
time by resolution amend or withdraw such determination
and
determine a date, not earlier than 30 days from the date of the
resolution, on which such determination, amendment or withdrawal
shall come into operation; and
(iii) recover
any charges so determined or amended, including interest on any
outstanding amount’.
In terms of
subsection (7)(c) the chief executive officer of the municipality
shall after the resolution has been passed forthwith
cause to be
conspicuously displayed a notice stating the general purport of the
resolution, the date upon which the determination
shall come into
operation, the date on which the notice is first displayed and that
any person who desires to object to such determination
or amendment
shall do so in writing within 14 days after the date on which the
notice is first displayed. Paragraph (d)(i)
provides that where
no objection is lodged within the period referred to in
para (c)(vi), the determination shall come into
operation as
contemplated in para (b)(ii). Paragraph (d)(ii) provides that
if an objection is lodged within that period, the
municipality
should consider every objection and may amend or withdraw the
determination and may determine a date other than the
date
contemplated in para (b)(ii) on which the determination shall come
into operation, whereupon para (c)(i) shall with the necessary
changes apply.
The statement in
para d(i) that ‘the determination . . . shall come into
operation as contemplated in paragraph (b)(ii)’
and also the
statement in para (d)(ii) that a date ‘other than the date
contemplated in paragraph (b)(ii)’ may be determined,
upon a
literal construction of the paragraphs, indicate that the date
referred to in para (b)(ii) relates to determinations in
respect of
rates as well as levies. However, the requirement in para (b)(ii)
that a date has to be determined ‘not earlier than
30 days from
the date of the resolution, on which such determination . . . shall
come into operation’, is prefaced by the phrase
‘in respect of
charges referred to in paragraph (a)(ii)’ whereas those charges do
not include rates. In the result, either
the second part of
paragraph (b)(ii), requiring the determination of a date, was,
contrary to the express wording thereof, intended
to relate to rates
as well as levies or para (d), in so far as it relates to the date
upon which the determination or amended determination
would come
into operation, was, contrary to the express wording thereof, not
intended to relate to rates. In the light of the fact
that rates are
traditionally imposed in respect of the financial year
23
of a municipality and the fact that para (d)(ii) provides for the
determination of a new date after an objection has been received,
the latter interpretation was probably the one that was intended by
the legislature. Paragraph (b)(ii), therefore, does not
require
the determination of a date, 30 days from the date of the relevant
resolution, upon which a determination of assessment
rates would
come into operation. Paragraph (c) nevertheless requires that
the date upon which the determination in respect
of rates would come
into operation should be stated in the notice to be displayed in
terms of the paragraph.
In the present case the Municipality, on 29 June 2004, adopted a
resolution, which in so far as it relates to property rates, reads
as follows:
‘
6 That
the assessment rates tariff of R0.054 per Rand value for properties
in the Bronberg area be approved.’
‘
8 That
the following tariff increase for the 2004/2005 Financial Year be
approved:
. .
. .
d) Assessment Rate Bronberg
145.45%.’
The respondents, in
their founding papers and before us, contended that the assessment
rate tariff had been approved in an amount
of R0.054 per rand value
of the properties but that the resolution reflects an arithmetical
error in that the increase in fact
amounted to an increase of 170%
and not 145,45%. That interpretation is clearly based on personal
knowledge as to how the increase
in rates was determined, as the
error, if an error was made, may have been made in the calculation
of the rate per rand value or
there may not have been an error at
all. Without such knowledge or the assistance of other
circumstantial evidence in interpreting
the resolution, para 6 of
the resolution is contradicted by para 8 of the resolution. However,
as is stated in the main judgment,
the respondents attacked the
validity of the resolution on other bases which, for reasons that I
agree with, are rejected in the
main judgment.
The respondents
contended that the notice dated 28 July 2004 does not comply with
the provisions of subsection (7)(c) in that –
it purported to be given in accordance with s 22 of the Local
Government Municipal Finance Act 56 of 2003 and not in terms of
subsection (7)(c);
incorrect facts were stated in the notice;
it did not contain the date on which the property rates would come
into operation;
it did not indicate the date on which the notice was first
displayed; and
it did not require
that objections be lodged within 14 days of the date upon which the
notice was first displayed but invited representations
to be made
not later than five days after the expiry of the inspection period
in terms of the notice, ie not later than 30 days
after 28 July
2004.
24
As regards the
contention in para (e), above the respondents contended that what
the notice was intended to achieve was that only
after objections
had been lodged and considered the newly determined rates would come
into force, ie objections had to be considered
before the final
determination came into operation.
Subsection (7)(c)
provides that the notice of the determination has to be displayed
forthwith and that objections have to be lodged
within 14 days.
However, it is not expressly stated that the consideration of the
objections have to take place before the date
determined as the day
on which the new rates would come into operation. Whether such a
requirement is to be inferred need not,
in the light of the
conclusion to which I have come, be decided.
As stated in the
main judgement s 10G(7) was still of full force and effect at the
time when the notice was published. The notice
was, therefore,
defective in so far as it purported to be a notice in terms of s 22
of the Local Government Municipal Finance Act
56 of 2003 and in so
far as it stated that s 10G, in terms of which the resolution had
been passed, had been repealed. It is not
a requirement of para (c)
that the section in terms of which the resolution is displayed
should be mentioned in the notice and
the notice at least correctly
stated that the resolution had been adopted in terms of s 10G. It
was not suggested by the respondents
that these errors were
material.
The Municipality submitted that the notice substantially complied
with the requirements of subsection (7)(c). In this regard it
relied
on
Unlawful Occupiers, School Site v City of Johannesburg
2005 (4) SA 199
(SCA) where Brand JA said at 209G-I (para 22):
‘
[I]t
is clear from the authorities that even where the formalities
required by statute are peremptory it is not every deviation
from
the literal prescription that is fatal. Even in that event, the
question remains whether, in spite of the defects, the object
of the
statutory provision had been achieved (see eg Nkisimane and Others v
Santam Insurance Co Ltd
1978 (2) SA 430
(A) at 433H-434B; Weenen
Transitional Local Council v Van Dyk
2002 (4) SA 653
(SCA) in para
[13]).’
The object of the
subsection is in my view that ratepayers should have knowledge of
the purport of the resolution, ie they should
know what rates they
would have to pay, and from when those rates would be payable. They
should also know that they may object
and within what period they
may object. The fact that the notice is required to be published
forthwith after the resolution had
been passed and that a relatively
short period is allowed for objections indicates that the object is
also that objections be dealt
with relatively expeditiously
although, possibly, as stated above, not necessarily before the date
upon which the new rates would
come into operation.
The court a quo
held that the date upon which the increased rates were to come into
operation was omitted from the notice and that
this omission
rendered the notice materially defective. I do not agree with this
finding. A reading of the notice makes it quite
clear that it
relates to the budget for the 2004/2005 financial year of the
Municipality and that the rates determined relate to
that budget and
thus to that financial year. In terms of s 10G(2)(d)(i) the
financial year of all municipalities is from 1 July
each year to 30
June of the next year. Notice was therefore given that the
determination would come into operation on 1 July 2004.
The
increased rates were only claimed by the Municipality from 1 August
2004 but that cannot detract from the fact that according
to the
notice the newly determined rates were for the 2004/2005 financial
year. Significantly the respondents never pertinently
contended that
the Municipality had not complied with the requirement that the date
when the increased rates would come into operation
had to be stated
in the notice. The object of para (c) that ratepayers should know as
from when the increased rates would be payable
was therefore
achieved.
The court a quo
also found that those invited to object may ‘have been influenced
by the percentage increase rather than the increase
in rands in
deciding whether to lodge objections’. I agree. As stated above,
one of the objects of para (c) is that ratepayers
should know what
rates they would have to pay. The notice could not achieve that
object in that, to the general body of ratepayers,
the notice would
have conveyed two contradictory approvals for the Bronberg area,
namely an approval of a rate of R0.054 per rand
value and also an
approval of a rate of R0.049 (a 146,45% increase)
25
per rand value. Not having achieved what is probably the most
important object of para (c) the notice did not comply with the

provisions of para (c) and was correctly held by the court a quo to
have been invalid.
For these reasons I
agree that the appeal and the cross appeal should be dismissed and
that no order as to costs should be made.
_____________________
P E STREICHER
JUDGE OF APPEAL
Concur:
MTHIYANE
JA
MHLANTLA
AJA
1
Letter to Jean-Baptiste Leroy, 29 November 1766.
2
LexisNexis Butterworths 2007 (loose-leaf issue 1), para 1.1.
3
It is common cause that the reference to 14
6
.45 per cent was
an error – the assessment rate should clearly have been reflected
as 14
5
.45 per cent, as resolved by the council on 29 June.
Nothing turns on this, however.
4
It is not disputed that the Municipality does not provide water or
sewerage services to the Silver Lakes development; it has not
provided street lights and it does not maintain the roads in the
development. The members of Silver Lakes have had to make their
own
arrangements in this regard. On the other hand, they are not charged
anything by the Municipality for the services rendered
to them by
other service providers.
5
This was the expiry date for the submission of the ‘representations’
invited in terms of the notice of 28 July 2004.
6
City of Cape Town v Robertson
[2004] ZACC 21
;
2005 (2) SA 323
(CC) para 62,
referring to s  229(1) of the Constitution.
7
Id para 56.
8
Fedsure Life Assurance Ltd v Greater Johannesburg Transitional
Metropolitan Council
[1998] ZACC 17
;
1999 (1) SA 374
(CC) paras 44-45.
9
In
Fedsure
the Constitutional Court emphasised that local
governments are bound by the principle of legality, which it
described as ‘a fundamental
principle of constitutional law’
–‘[i]t is a fundamental principle of the rule of law, recognised
widely, that the exercise
of public power is only legitimate where
lawful’ (para 56). See also paras 57-59 and
Gerber v MEC for
Development Planning & Local Government, Gauteng
2003 (2) SA
344
(SCA) para 35.
10
For a summary of the ‘somewhat unusual history’ of the LGTA, see
Rates Action Group v City of Cape Town
2004 (5) SA 545
(C)
paras 25-29 (per Budlender AJ).
11
See para 8 above.
12
With reference to s 160(2)(c) of the Constitution and s
10G(7)(d)(ii) of the LGTA.
13
Referred to in para 5 above.
14
In terms of s 229(2)(a) of the Constitution.
15
The relevant part of which is quoted in para 9
above.
16
In terms of s 179(1) of the MFMA, s 10G of the LGTA was repealed,
but s 179(2) stipulated that despite such repeal ss 10G(6), (6A)
and
(7) of the LGTA were to ‘remain in force until the legislation
envisaged in section 229(2)(b) of the Constitution is enacted’.
Government Notice No. 772, published on 25 June 2004 in
Government
Gazette
No. 26510, provided that s 179 of the LGTA would
take effect on 1 July 2005. The same notice provided that most of
the other
provisions of the MFMA (including s 22 which deals with
the publication of annual budgets) would take effect on 1 July 2004.
However,
in terms of Government Notice No. 773, published on 1 July
2004 in
Government Gazette
No. 26511, medium capacity
municipalities (including the Kungwini Local Municipality) were
exempted from the provisions of, inter
alia, s 22 of the MFMA in
respect of their annual budgets for the 2004/2005 financial year.
17
The mere fact that the notice incorrectly referred to s 10G of the
LGTA as having been repealed and purported to have been issued
in
compliance with the provisions of s 22 of the MFMA does not
per
se
invalidate the notice: see, eg,
Howick District Landowners
Association v Umngeni Municipality
2007 (1) SA 206
(SCA) paras
18-22.
18
See
Weenen Transitional Local Council v Van Dyk
2002 (4) SA
653
(SCA) para 16.
19
Section 4(3)
of the
Local Government: Municipal
Systems Act 32 of 2000
.
20
See also
s 10G(2)(d)(i)
of the LGTA which provides that
‘notwithstanding anything to the contrary in any law contained,
the financial year of all municipalities
shall end on 30 June in
each year’.
21
See para 13 above.
22
According to the minutes of this meeting, it commenced at 10h14 and
finished 15 minutes later at 10h29.
23
See Section 18 of the Local Authorities Rating Ordinance 20 of 1933
(Transvaal); Section 91 of the Municipal Ordinance 19 of 1951
(Cape); Section 105 of the Local Government Ordinance 21 of 1942
(Natal); and s 114 of the Local Government Ordinance 8 of 1962
(Orange Free State).
24
The notice is dated 28 July 2004, the date upon which it was
published, but does not itself indicate when it was first displayed.
According to the notice an inspection period of 30 days as from the
date of the notice is allowed.
25
Noting was made of the fact that according to the
notice the percentage increase was 146,45% and not 145,45% as per
the resolution.