CDA Boerdery (Edms) Bpk en Andere v Nelson Mandela Metropolitan Municipality (526/05) [2007] ZASCA 1; 2007 (4) SA 276 (SCA) (6 February 2007)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2007
>>
[2007] ZASCA 1
|

|

CDA Boerdery (Edms) Bpk en Andere v Nelson Mandela Metropolitan Municipality (526/05) [2007] ZASCA 1; 2007 (4) SA 276 (SCA); 69 SATC 177 (6 February 2007)

Links to summary

REPUBLIC OF SOUTH AFRICA
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
Case Number : 526 / 05
In the matter between
CDA BOERDERY (EDMS) BPK FIRST APPELLANT
WESTERN AREAS PROPERTY AND
RESIDENT ASSOCIATION SECOND APPELLANT
and
THE NELSON MANDELA METROPOLITAN
MUNICIPALITY FIRST RESPONDENT
THE SPEAKER OF THE NELSON MANDELA
METROPOLITAN MUNICIPALITY SECOND RESPONDENT
THE PREMIER OF THE EASTERN CAPE PROVINCE THIRD
RESPONDENT
THE MEC FOR HOUSING AND LOCAL
GOVERNMENT FOR THE EASTERN CAPE FOURTH RESPONDENT
THE DIRECTOR OF VALUATIONS FIFTH RESPONDENT
Coram
: MPATI DP, CAMERON JA, MTHIYANE JA, CONRADIE
JA
et THERON AJA
Date of hearing
: 17 NOVEMBER 2006
Date of delivery
: 6 FEBRUARY 2007
SUMMARY
Local government - rating of property by Municipality
- ambit of s 10G(6), (6A) and (7) of Local Government Transition Act
- consent
of Premier to impose property rate above two cents in the
Rand - whether this provision of Municipal Ordinance 20 of 1974
impliedly
repealed – Order in para 52
Neutral citation: This
judgment may be referred to as :
CDA Boerdery (Edms) Bpk
and Others v The Nelson Mandela Metropolitan Municipality and Others
[2007] SCA 1 (RSA)
___________________________________________________________________________
J U D G M E N T
___________________________________________________________________________
MINORITY JUDGMENT OF CONRADIE JA
[1] The first appellant is a landowner and the second an
association representing rural landowners. Each is aggrieved by the
imposition
by the local authority of assessment rates on immovable
properties that were not rateable under the old dispensation when
they fell
within the jurisdiction of the since disestablished Western
District Municipality. I shall call the first appellant and the
members
of the second appellant 'the landowners'.
[2] The first respondent is a metropolitan municipality
(the Municipality). It is the new local authority within whose
jurisdiction
the landowners now fall. The other respondents are
bodies and persons who have or were thought to have an interest in
the proceedings.
Apart from the second respondent who protested at
her joinder, they played no active part in the proceedings.
[3] The litigation started with an interim application
seeking an interdict against the Municipality to prevent it from
prosecuting
claims against the landowners for the recovery of rates
and service charges it maintained were due. Interim relief was
granted by
consent pending the disposal of an application that was to
be instituted shortly afterwards. The main application claimed,
first,
an order declaring service charges on the landowners'
properties to be unlawful. Second, an order was sought declaring the
valuation
of their properties to have been unlawful, and, finally, an
order was claimed that the landowners were not liable for rates in
respect
of the financial years 2002 - 2003 and 2003 - 2004. By the
time the application came to be heard by Froneman J in the South
Eastern
Cape Local Division, the landowners had abandoned their
objection to the service charges. On the other issues the high court
found
in favour of the Municipality, dismissed the application and
discharged the earlier interdict. It granted the landowners leave to
appeal.
[4] When the transition to democracy came, local
government had to be restructured. There were all manner of local
authorities in
existence at the time for various population groups
that had been established under the old dispensation. Since the
transformation
was to be on a unified country-wide basis, national
legislation was required to accomplish it. Over the coming years
national legislation
would gradually give local government a new
face.
[5] The validity of pre-constitutional legislation, ‘old
order legislation’ as it is called in item 2 of Schedule 6 to the
Constitution,
is declared to continue in force subject to amendment
or repeal and, naturally, consistency with the Constitution. In some
cases
the old order legislation required adaptation. One instance was
the administration of the provinces of which there were now nine
instead of four. Each of the new provinces would have to adopt, for
its own area, provincial ordinances that had formerly applied
over a
wider area. So it was that the administration of the Municipal
Ordinance 20 of 1974 was transferred to the Eastern Cape Province
by
proclamation 111 published in the Government gazette of 17 June 1994.
[6] The first statute in the series restructuring local
government was the Local Government Transition Act 209 of 1993 (the
Transition
Act). It set up transitional councils for the so-called
pre-interim and interim phases of the restructuring. For those local
government
bodies that would not in any event have been subject to
provincial legislation it made special provision in sections 15 and
16. Section
15(4) extended 'the provisions of any law applying to
local authorities in the province concerned' to any body constituted
under
the Black Local Authorities Act 102 of 1982; s 16(2) did the
same with certain transitional councils established by proclamation.
The legislative scheme is clear: existing provisions would be used
until others could be enacted.
[7] Some three years after its commencement on 2
February 1994, the Transition Act was amended by the introduction in
1996 of a Part
VIA (headed 'Interim Phase') in the statute. It
comprised the new subsecs 10B - 10N of which 10G formed the most
extensive component.
The most important provisions, for present
purposes, were contained in s 10G(6), (6A) and (7)(a) and (b):
'(6) A local council, metropolitan local council and rural council
shall, subject to any other law, ensure that—
(
a
) properties within its area of jurisdiction are valued or
measured at intervals prescribed by law;
(
b
) a single valuation roll of all properties so valued or
measured is compiled and is open for public inspection; and
(
c
) all procedures prescribed by law regarding the valuation
or measurement of properties are complied with:
Provided that if, in the case of any property or category of
properties, it is not feasible to value or measure such property, the
basis on which the property rates thereof shall be determined shall
be as prescribed: Provided further that the provisions of this
subsection shall be applicable to district councils in so far as such
councils are responsible for the valuation or measurement of
property
within a remaining area or within the areas of jurisdiction of
representative councils.
(6A) (
a)
Despite anything to the contrary in any other law, a
municipality must value property for purposes of imposing rates on
property
in accordance with generally recognised valuation practices,
methods and standards.
(
b
) For purposes of paragraph (
a
)—
(i) physical inspection of the property to be valued, is optional;
and
(ii) in lieu of valuation by a valuer, or in addition thereto,
comparative, analytical and other systems or techniques may be used,
including—
(
aa
) aerial photography;
(
bb
) information technology;
(
cc
) computer applications and software; and
(
dd
) computer assisted mass appraisal systems or techniques.
(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: Provided that a common rating system as determined
by
the metropolitan council shall be applicable within the area of
jurisdiction of that metropolitan council: Provided further that
the
council concerned shall in levying rates take into account the levy
referred to in item 1 (
c
) of Schedule 2: Provided further that
this subparagraph shall apply to a district council in so far as such
council is responsible
for the levying and recovery of property rates
in respect of immovable property within a remaining area or in the
area of jurisdiction
of a representative council.
(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.'
[8] Until the introduction of s 10G(6), (6A) and (7) the
Transition Act contained no rating provision. For the first three
years after
the implementation of the Transition Act local
authorities must have exercised their rating powers in terms of old
order provincial
ordinances. In the case of the Eastern Cape
Province, immovable property was rated under the authority of Part 2
of Chapter VIII
of the Municipal Ordinance. The relevant provision in
the Municipal Ordinance is s 82 which provides in subsec (1) that -
'(1) Every council shall:
(
a
) for every year make and levy on all rateable property
within its municipal area a general rate not exceeding, except with
the approval
of the Administrator, two cents per rand…'
[9] The introduction of s10G(6), (6A) and (7) by Act 97
of 1996 with effect from 1 July 1996 may have had something to do
with the
imminent commencement of the new Constitution from 4
February 1997. Section 229 of the Constitution provides that -
'(1) . . . a municipality may impose -
(
a
) rates on property . . . ; and
(
b
) if authorised by national legislation, other taxes, levies
and duties appropriate to local government or to the category of
local
government into which that municipality falls . . .
(2) The power of a municipality to impose rates on property . . . or
other taxes, levies or duties -
(
a
) . . .;
(
b
) may be regulated by national legislation.'
[10] Item 26(1)(a) of the Constitution's sixth Schedule
preserves the provisions of the Transition Act in force 'in respect
of a Municipal
Council until a Municipal Council replacing that
Council has been declared elected as the result of the first general
election of
Municipal Councils after the commencement of the new
Constitution.'
1
[11] Section 229 is an empowering and not a charging
section. National legislation was envisaged to regulate the
considerable complexities
involved in the rating of immovable
property. The broad and general power afforded by s 229 accords with
s 164 of the Constitution
which provides: 'Any matter concerning
local government not dealt with in the Constitution may be prescribed
by national legislation
or by provincial legislation within the
framework of national legislation.'
[12] Section 10G(6), (6A) and (7) on its own is,
however, far from adequate in serving as an instrument for imposing
rates. It prescribes
that valuations are to be undertaken without
stating how these are to be conducted. It states that rates on
immovable property are
to be imposed by resolution of a municipal
council; it states that differentiation between categories of
property is permissible
but it omits the detail of how properties are
to be rated or which properties are to be rated.
2
As was pointed out in
Gerber v
Member of the Executive Council for Development Planning and Local
Government, Gauteng
3
,
s 229 of the Constitution uses the expression ‘rates’ in its
ordinary sense of a tax assessed on the value of buildings and
land
and s 10(G)(7) must be taken to use the expression in the same sense.
[13] Traditionally, not all property within a
municipality was regarded as rateable, or rather, it could escape
being rated if it
complied with certain criteria and the owner
applied for an exemption from rates. There were many properties of
this kind listed
in s 81 of the Municipal Ordinance. These included
immovable properties owned by religious bodies or used for public
worship or hospitals
or sports bodies or the Boy Scouts, the list is
a long one. It was not suggested that the Municipality was not bound
to consider
exemptions in terms of s 81. The point is that s 10G(7)
was not intended as a rating mechanism that was complete in itself
and could
be applied without reference to the provisions of the
Municipal Ordinance.
[14] Section 10G(6) of the Transition Act which dealt
with valuations, acknowledged the Municipal Ordinance by providing
that a municipality
should, subject to any other law, ensure that
properties within its area were valued or measured at intervals
prescribed by law.
Moreover, ‘all procedures prescribed by law
regarding the valuation or measurement of properties’ had to be
complied with. In
the case of the Eastern Cape this was the Valuation
Ordinance of 1993 or the Valuation Ordinance of 1944. There was a
dispute between
the parties as to which of these laws applied but
that is unimportant. The point is that s 10G(6) in express terms
envisaged the
incorporation of existing provincial laws into the
Transition Act in the sense that they were to be taken into account
in the rating
scheme. Section 10G(7) does not have such an express
incorporation provision. It seems to me to have been a legislative
oversight
that must be adjusted by interpretation. Valuation of
immovable property is an integral part of rating property: The
imposition of
a rate envisages a levy of so many cents in the Rand of
the value of property. Rating without valuation is impossible.
[15] The Municipality, of course, realised the practical
complexities of rating very well. The summonses to recover arrear
rates and
other charges that served as the trigger for the urgent
application to interdict the Municipality, were drawn in the
realisation
that the landowners' immovable properties could not have
been assessed on the strength of s 10G(6), (6A) and (7) alone. The
formulation
of the claims (only the rates claim is still relevant)
relied, correctly in my view, on the provisions of s 82(1)(a) of the
Municipal
Ordinance: Claim 2 demanded payment of 'arrear general
municipal rates levied in terms of sect 82 and payable in terms of
sect 87
of the Municipal Ordinance 20 of 1974 for the year 2002/2003
the plaintiff having complied with all the provisions of the said
Ordinance.'
[16] By resolution of the Municipal Council taken on 10
June 2002 the landowners' properties were assessed to tax for the
financial
year commencing 1 July 2002. The council's resolution read
as follows:
'That the Council, in terms of Section 30(2) of the Local Structures
Act No. 177 of 1998 (as amended) read with
Section 10G(7)(a)(i)
of
the
Local Government Transition Act, Second
Amendment Act No. 97 of
1996, and by resolution taken by majority of its full number, levies
the following general rate on all rateable
property within the
municipal area for the period 1 July 2002 to 30 June 2003:
Port Elizabeth Unit 5,5843 cents in the Rand
Uitenhage Unit 8,38 cents in the Rand
Despatch Unit 1,85 cents in the Rand
(c) That the Council, in terms of Section 30(2) of the Local
Government : Municipal Structures Act No.. 117 of 1998 (as amended)
read with
Section 10G(7)(b)(i)
of the
Local Government Transition
Act, Second
Amendment Act No. 97 of 1996, and
by resolution taken
by majority of its full number
, grants the following rebates for
the period 1 July 2002 to 30 June 2003: . . .
. . . .
. . . .
Erstwhile Western District Municipal areas
Properties in the erstwhile WDM areas now valued and rated for the
first time:
A rebate of 67% of the general rate on all rateable properties,
resulting in the following rates being levied on the following
categories
of properties:
All rateable properties rates being 2,3713cents in the Rand.'
[17] The Municipality's contention is that the
assessment rates of which the landowners complain were validly
imposed under the authority
conferred on it
'. . . pursuant to
Section 229(2)(a) of the Constitution and
Section 10G(6)
of the
Local
Government Transition Act No 209 of 1993
. Said charges were in all
instances lawfully raised.'
The reference to s 10G(6) of the Transition Act is
wrong. There is no reason to suppose that the proposed resolution was
adopted in
any but the terms suggested by the executive mayor, that
is to say, in terms and in reliance on s 10G(7) of the Transition
Act.
[18] At the time the rates were imposed the Municipality
had become a fully-fledged Municipality under the provisions of s 12
of the
Municipal Structures Act 117 of 1993 (the Structures Act)
which obliged the MEC for local government in a province, by notice
in
the Provincial Gazette, to establish a municipality in each
municipal area demarcated by the Demarcation Board in the province in
terms of the
Local Government: Municipal Demarcation Act 27 of 1998
.
The necessary proclamation by the MEC establishing the Municipality
was published on 2 December 2001. From that date it was, therefore,
no longer an interim structure. The provisions of the transition Act
nevertheless continued to apply to it until 2 December 2000
when the
first general municipal elections after the Constitution were held.
4
[19] Once, however, the Municipality was governed by a
council duly elected as a result of the first general election after
the Constitution,
it could no longer lawfully levy assessment rates
on landowners within its jurisdiction in terms of s 10G(7)(a)(i). The
section under
which the Municipality was now entitled to levy rates
was s 93(4) of the Structures Act
5
which reads as follows:
'(4) Despite anything to the contrary in any other law and as from
the date on which a municipal council has been declared elected
as
contemplated in item 26(1)(
a
) of Schedule 6 to the
Constitution —
(
a
)
section 10G of the Local Government Transition Act, 1993 (Act 209 of
1993), read with the necessary changes, apply to such a municipality;
and
(
b
) any regulation made under section 12 of the Local
Government Transition Act, 1993 (Act 209 of 1993), and which relates
to section
10G of that Act, read with the necessary changes, apply to
such a municipality.'
[20] Section 93(4) is framed in such a way that it
incorporates the duly modified provisions of s 10G(6), (6A) and (7)
of the Transition
Act, but it is s 93(4) of the Structures Act that
henceforth conferred the power to tax on a duly elected municipality
council. I
need say no more about it; the point was not raised on the
papers or argued before us on appeal. The point was evidently not
argued
in
Howick District Landowners
Association v uMngeni Municipality
[2006] SCA
107 (RSA) either for it is not discussed in the judgment.
[21] The high court found that the requirement of
permission by the Premier was incompatible with the original powers
enjoyed by the
new order municipalities. The learned judge formulated
his reasons as follows:
'Die vereiste van toestemming kom nie in die tersaaklike bepalings
van die Grondwet of die Oorgangswet voor nie. Die begrensing van
nuwe
munisipale owerhede se belastingsbevoegdheid in die Grondwet of die
Oorgangswet sluit nie beperkings, of gegradeerde beperkings,
op die
belastingkoers self in nie. In die konteks van die vorige bedeling,
naamlik dié van gedelegeerde wetgewingsbevoegdhede van
plaaslike
regeringsinstansies, was sulke beperkings en toesig deur hoër
regeringsvlakke verstaanbaar en noodsaaklik, maar in die
nuwe
plaaslike regeringsbestel van
oorspronklike
wetgewingsbevoegdhede is daar geen grondwetlike of wetgewende
noodsaak daarvoor nie. Ek kan geen rede vind waarom die bepalings van
vorige provinsiale wetgewing in die vorm van die Munisipale
Ordonnansie voorrang moet geniet bo latere grondwetlike en nasionale
wetgewende bepalings wat op die oog af volledig met die onderwerp
handel nie.'
[22] Before us the Municipality, in supporting the
findings of the learned judge
a quo
,
argued that s 82(1) 'offends the scheme of authority sanctioned inter
alia by s 229 of the Constitution and the provisions of the
Local
Government Transition Act' and
should be treated as
pro
non scripto
or as impliedly repealed by the
later legislation.'
[23] I am unable to agree with these contentions. The
argument places greater emphasis on the concept of 'original powers'
than appears
to me to be warranted. The Constitutional Court in
Fedsure Life
Assurance Ltd v Greater
Johannesburg Transitional Metropolitan Council
6
decided no more than that a local authority in resolving
to impose rates exercised an original and not a delegated power with
the
consequence that its action was not subject to administrative law
review. It seems to me that the Municipal Ordinance read with
whatever
Valuation Ordinance was applicable, formed a coherent
construct for the imposition of rates which had stood the test of
time. This
legislation was employed for the first three years of the
transition, and it does not seem to me reasonable to suppose that the
Transition
Act intended to abolish their relevant provisions in
favour of an incomplete and therefore unworkable system of rating.
Counsel for
the Municipality did not support that outcome. What he
did contend was that once municipalities had been given
constitutionally derived
power to impose such rates as were
authorised by national legislation, the Premier no longer had the
power to decide whether rates
might exceed two cents in the Rand. It
is only this one power of the Premier that was supposed to have been
lost in the transition.
Apart from this competence the Premier had
several other powers that were necessary or desirable to the orderly
rating of properties.
It was not suggested that they should also be
treated as
pro non scripto
.
[24] It is more consonant with the gradual and sometimes
painful development of new municipal structures to regard Part 2 of
Chapter
VIII of the Municipal Ordinance, including the requirement of
the Premier's approval of a rates level above two cents in the Rand,
as complementary to the rating provisions of the Transition Act. The
alternative would be to treat the requirement of the Premier's
consent as having been impliedly repealed. Implied repeal is not
lightly inferred, and here it seems to me that the necessities of
practical administration argue strongly against it.
[25] If the Premier’s power of approval in s 82(1)(a)
of the Municipal Ordinance were indeed impliedly repealed by the
Transition
Act (read with the Constitution) it would mean that from
the date of the introduction of s 10G into the Transition Act in
1996, there
would have been no limitation on the power of a
municipality to levy property rates. This situation would have
persisted for almost
a decade until the legislature in 2005, through
the
Local Government: Municipal Property Rates Act 6 of 2004
granted
the Minister more extensive control over municipal rating powers than
s 82(a)(i) of the Municipal Ordinance had given to
the Premier, a
sure indication that municipalities were never intended to have
unrestricted rating powers.
7
The mechanism of property valuations by independent
experts is a mechanism to control a local authority's power to tax
its residents;
but if it were empowered to impose unlimited rates on
those valuations, all control would be lost. I do not subscribe to
the notion
that the lawgiver envisaged that the original power of
local authorities to levy rates was, since the introduction of s
10G(6), (6A)
and (7), untrammelled by any restrictions other than
those set out in 229(2)(a) of the Constitution.
[26] When s 10G was with effect from 1 July 2005
repealed by the
Local Government: Municipal Finance Management Act 56
of 2003
the provisions of subsecs (6), (6A) and (7) of
s 10G
(the
rating provisions) were kept in force until the legislation envisaged
by s 229(2)(b) of the Constitution would be enacted. It
is
significant that Part 2 of Chapter VIII of the Municipal Ordinance
was also not repealed at that time. These two complementary
pieces of
legislation, once they had served their purpose, were repealed
together by
s 95
of the
Local Government: Municipal Property Rates
Act 6 of 2004
which made comprehensive provision for the valuation
and rating of immovable property by municipalities.
[27] The position taken by the appellants in
Howick
District Landowners Association v uMngeni Municipality
8
was that the Local Authorities Ordinance (Natal) 25 of
1974 did not apply to the immovable properties sought to be rated
since they
were not located within a ‘borough’. This court found
that the contention was correct and that the Ordinance did not apply.
Although
the court
a quo
in
that matter seems to have held that rating could proceed under the
Natal Ordinance and under the Transition Act - that the two
measures
were, in other words, complementary - this finding was not open to
the court on appeal. It therefore held that the properties
could have
been rated under s 10G(7)(a)(i) of the Transition Act without
reference to the Ordinance but did not say how this might
have been
done.
[28] In the present case the appellants argue the
contrary, namely that all the provisions of Part 2 of Chapter VIII of
the Municipal
Ordinance 20 found application. As has been noted
above, the counter-argument by the Municipality is that although the
rating provisions
of the Municipal Ordinance did find application,
the Premier no longer had any say over the level of rates imposed.
Although, from
a theoretical perspective, there may be something to
be said for this argument, I think that the practical effects of it
would be
so unpalatable that they could not have been intended by the
legislature. The legislature must be taken to have incorporated all
the rating provisions of the Municipal Ordinance in s 10G(7) of the
Transition Act (as indeed it did in s 10G(6)) so as to establish
a
workable interim rating system.
[29] It is trite law that statutes imposing a burden on
the subject are construed in such a way that the subject is least
burdened.
Revenue statutes fall into this category. The rating
provisions in the Transition Act were revenue measures. If there is
the least
doubt about their interpretation, it should be resolved by
holding that the Premier's consent to the imposition of a rate
greater
than two cents in the Rand on the ratepayers' properties
ought to have been sought by the Municipality.
[30] Since preparing this judgment I have had the
benefit of considering the views of Cameron JA. I agree with most of
what he says.
The left-over provision in the Municipal Ordinance for
obtaining the Premier's consent did not fit tidily into the new local
government
structure. However, I shrink from the boldness of the leap
from untidiness to implied repeal. I would prefer to find the
legislative
intention in what the legislature decrees. I do not
consider that a statutory provision loses its force simply because
its derivation
can be said to be suspect. Our disagreement, it seems
to me, involves no more than this: In the process of constructing the
new edifice
and before it could stand on its own, some of the
essential transition measures (among them the Premier's consent
provision) were
legislatively imperfect. They were makeshifts,
intended to remain in force, messy as they were, until they were
repealed by the Act
that completed the design of the new structure,
the
Local Government: Municipal Property Rates Act. But
before the
structure was finished, all the provinces in the new South Africa
were, temporarily, intended to make do with what they
had inherited
from the provinces in the old South Africa. The enhanced status of
municipalities in the new dispensation was not accompanied
by an
advance in administrative or financial acumen that might lead one to
think that the Premier's control over the rating powers
of
municipalities was considered not to be necessary for the transition
period. In view of this I am inclined to think that the omission
of a
limiting provision in
s 10G(7)
signifies no more than that the
lawgiver felt secure in the knowledge that the Municipal Ordinance
(which, we must not forget, was
specifically introduced into the laws
of the Eastern Cape) took care of the situation.
[31] In view of my conclusion, it is not necessary to
consider the appellants' other objections to the rates. The order I
would suggest
is that the appeal be upheld with costs and the
judgment of the high court altered accordingly.
J H CONRADIE
JUDGE OF APPEAL
MAJORITY JUDGMENT OF CAMERON JA
:
[32] I am indebted to my colleague Conradie JA for his
judgment which sets out the main statutory provisions and the
parties' contentions;
but I am unable to agree with his conclusion
that the appellant landowners' appeal must succeed. Our main point of
difference is
whether the Cape Municipal Ordinance 20 of 1974 obliged
the respondent municipality to obtain the Premier's approval for the
new
rates it sought to impose on the landowners. Conradie JA
considers that it did. I respectfully differ. I endorse the reasoning
and
conclusion of Froneman J in the court below. The old-order
subordination of the local authority's power to levy rates of more
than
2 cents in the Rand to the Administrator's
9
[Premier’s] approval was impliedly repealed when the
Constitution took effect. It did not survive the transition. The
municipality
was therefore free of any obligation to obtain that
approval, and the rates are valid.
[33] In my respectful view my colleague's approach does
not afford sufficient credence to the independent status and power
the new
constitutional order accorded to municipalities. Under the
pre-constitutional dispensation, municipalities owed their existence
to
and derived their powers from provincial ordinances.
10
Those ordinances were passed by provincial legislatures
which themselves had limited law-making authority, conferred on them
and circumscribed
by Parliamentary legislation. Parliament's
law-making power was untrammelled,
11
and it could determine how much legislative power
provinces exercised. The provinces in turn could largely determine
the powers and
capacities of local authorities.
12
Municipalities were therefore at the bottom of a
hierarchy of law-making power: constitutionally unrecognised and
unprotected, they
were by their very nature 'subordinate members of
the government vested with prescribed, controlled governmental
powers'.
13
[34] The requirement to which Conradie JA would subject
the municipality's rating power emanated from this general conception
of municipal
power. And the Administrator's role in approving or
disapproving rates must be understood in that specific
pre-constitutional setting.
The Administrator was the
presidentially-appointed chief governmental executive in the
province.
14
He (and it was always a he) convened and prorogued the
provincial council and participated in its proceedings.
15
Most pertinently, in terms of various provincial
ordinances in the Cape and other provinces he had 'wide-ranging
powers' over local
authorities,
16
including powers of control, investigation and
intervention over local government administration.
17
To a significant extent, he policed the municipalities
and functioned as their overseer.
[35] The provision, embedded as it was in a 1974
Ordinance, when the 1961 Constitution was in force, thus subjected
rates assessments
over two cents in the Rand to the province's chief
executive official, who functioned in a legislature from which the
local authority
derived its powers, and to which it was entirely
subordinate. The approval requirement was a specific product of the
old-order constitutional
scheme, tailored to its hierarchy and
matched to the Administrator's supervisory control over
municipalities and his executive role
in relation to them.
[36] None of this, or barely any of it, accords with the
new constitutional dispensation. It is correct, as the landowners
emphasised
in argument, that the new Constitution gives provincial
government powers in relation to local government. Provincial
legislation
must determine the different types of municipality to be
established in the province, and it is the responsibility of each
provincial
government to establish municipalities in accordance with
national legislation.
18
Provincial government must also, by legislative or other
measures, provide 'for the monitoring and support of local government
in
the province'.
19
Subject to the obligation of national and provincial
government not to compromise or impede a municipality's ability or
right to exercise
its powers or perform its functions,
20
a municipal by-law that conflicts with national or
provincial legislation is invalid.
21
And where a municipality cannot or does not fulfil an
executive obligation in terms of the Constitution or legislation, a
provincial
executive may take appropriate steps to intervene.
22
[37] But these provisions do not change the fact that
the new constitutional order conferred a radically enhanced status on
municipalities.
Under the interim Constitution, each level of
government (national, provincial and local) derived its powers direct
from the Constitution
(though local government's powers were subject
to definition and regulation by either the national or provincial
governments). The
constitutional status of local government was
therefore 'materially different' from the pre-constitutional era.
23
[38] The advent of the final Constitution has taken us
even further from the constitutional structure in which the Ordinance
was embedded.
The new Constitution has enhanced, rather than
diminished, the status of local government. As under the interim
Constitution, municipalities
are no longer merely creatures of
statute that enjoy only delegated or subordinate legislative power
derived exclusively from ordinances
or parliamentary legislation. The
Constitution has moved away from a hierarchical division of
governmental power in favour of a new
vision, in which local
government is interdependent, and (subject to permissible
constitutional constraints) inviolable and has latitude
to define and
express its unique character.
24
[39] Can the Ordinance's requirement that the
Administrator (now the Premier) must approve rates over 2 cents in
the Rand survive
this radically different and enhanced realisation of
local government powers? In my view, the answer must be No. Under the
old dispensation,
it was both natural and appropriate that central
government’s superior position over municipalities, and the
province's role as
the source of local government's power, should
find expression in the power of government's chief provincial
executive official,
the Administrator, to approve rates.
[40] Under the Constitution both the province generally
and the Premier specifically have an entirely different role in
relation to
local authorities. Though provincial government has
important functions in relation to municipalities, its role is
constitutionally
described and circumscribed. Nothing in the
Constitution suggests that the Premier of a province enjoys special
supervisory powers
over the exercise of local government functions,
or special duties in relation to the determination of rates.
[41] This case does not require us to decide whether a
statute of Parliament, enacted under power expressly conferred by the
Constitution,
25
can permissibly require that the Premier should approve
municipal rates. And the conclusion that the obligation under the
Ordinance
to obtain the Administrator’s approval was impliedly
repealed does not pre-judge the different question whether the
enactment of
such a requirement within the new constitutional
framework would be constitutionally valid. The question before us is
much narrower:
it is whether a requirement to approve rates that was
embedded in a dispensation fundamentally different in the position
and powers
it accorded local authorities has survived the
constitutional transition. It is in answering that narrow question
that the conspicuous
absence of any special supervisory role for the
Premier under the new Constitution takes on a special significance.
26
[42] It is also telling that the curbs on
municipalities' rating powers that Parliament has enacted in the
Local Government: Municipal Property Rates Act
27
bear
no relation at all to the Ordinance's requirement
that the Administrator must approve that is sought to be enforced in
this case.
[43] A further indication that the approval requirement
in s 82(1)(a) of the Ordinance was impliedly repealed is that
s
10G(6)
of the
Local Government Transition Act 209 of 1993
(the
LGTA) requires that municipalities perform valuations of properties
‘subject to any other law’.
28
By contrast,
s 10G(7)
, which empowers municipalities to
levy and recover property rates, has no parallel allusion to ‘any
other law’. This suggests
that
s 10G(7)
confers a free-standing
rate-levying competence on municipalities. I therefore respectfully
differ from the suggestion in the judgment
of my colleague Conradie
JA (para 14) that the omission in
s 10G(7)
to subordinate the
rate-levying power to requirements in ‘any other law’ is a
legislative oversight that we must adjust by interpretation.
In my
view, it is doubtful whether the Ordinance is applicable to s 10G(7)
at all, and this strengthens the conclusion that that
portion of the
Ordinance was impliedly repealed when the constitutional order was
established. (As Conradie JA points out in para
17 of his judgment,
nothing turns on the municipality's incorrect allusion in its
affidavits to s 10G(6) of the LGTA – the provision
it invoked in
approving the rates was in fact s 10G(7).)
[44] I therefore conclude that the pre-constitutional
requirement that the Administrator approve rates above 2 cents in the
Rand was
impliedly repealed when the constitutional order was
established and that it was thus inoperative when s 10G of the LGTA
was enacted
after the interim Constitution took effect (and when s
10G was re-enacted after the Constitution took effect).
29
There is in my respectful view a clear repugnancy
between the scheme of the pre-constitutional distribution of power,
which gave rise
to the requirement of the Administrator’s approval,
and the scheme under the Constitution. That repugnancy must lead to
the conclusion
that the requirement was abolished when the relevant
provisions of the LGTA were inserted in 1996.
30
The landowners’ other challenges to the new rates
[45] The landowners complained that the rates sought to
be levied violated s 229(2)(a) of the Constitution, which prohibits
the exercise
of the municipal rating power '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'. Froneman J
31
expressed reservations about whether this requirement
was justiciable: first, because the primary remedy for any alleged
breach of
s 229(2)(a) lay in the hands of national and provincial
government, and not in aggrieved litigants taking direct recourse to
the
courts; and, second, because the courts are not best placed to
decide the questions of economic policy at issue in the provision.
But he found in any event that the court could not decide the issue
because the landowners had failed to join the relevant organs
of
national government as parties to the litigation. He also observed
that the landowners had failed to specify which of their rights
the
alleged breach of s 229(2)(a) had violated.
[46] In the papers the landowners made some allusion in
this context to arbitrary deprivation of property in violation of s
25 of
the Bill of Rights. But in argument before us, counsel for the
landowners expressly abandoned reliance on this alleged violation.
Instead, the landowners claimed that the expert evidence they
included in their affidavits – which the municipality did not
counter
with opposing expertise – established that the rates sought
to be imposed violated s 229(2)(a) and that this entitled them to
impugn
the rates. I share Froneman J's reservations about the
justiciability of s 229(2)(a), but like him I find it unnecessary to
express
any final view on this issue. This is because of the palpable
non-joinder. It would be quite wrong to decide that municipal rates
'materially and unreasonably' prejudice 'national economic policies,
economic activities across municipal boundaries, or the national
mobility of goods, services, capital or labour' without hearing
national government’s view on the issue. That alone makes it
impossible
in this litigation to uphold the landowners' complaint.
[47] The landowners objected also that the rates, as
sought to be imposed, were arbitrary because the Municipality stated
that it
arrived at the general rate by ascertaining the total funds
required, then dividing this figure by the total valuation of
properties
within all areas sought to be rated ([total funds
required] ÷ [total valuation] = [general rate]). But, the landowners
say, what
the Municipality in fact did was to levy rates of 7% and
higher in their areas, while in others the rates were much lower. In
some
areas, for instance, only the land valuations were taken into
account – without improvements – thus resulting in much lower
rates,
of between 2.096% and 3.666%. This, they contended,
constituted arbitrary conduct.
[48] The Municipality however explained that it
inherited a differential system of rates from its previous local
authority components,
and that, in introducing the rates for the
first time, it was constrained to make use of previous interim
valuations. The rates admittedly
do differentiate between landowners,
to the benefit of some. But the municipality’s explanation in my
view establishes that the
new rates are not arbitrary. On the
contrary, despite the benefit some landowners reap from the
continuing use of old interim valuations,
it was perfectly rational
for the municipality to use those valuations in introducing the
rates.
[49] And as Froneman J pointed out, s 10G(7)(b)(i) of
the LGTA licenses differentiation between different categories of
property on
such grounds as a municipality may deem reasonable. In my
view it is impossible to conclude that the municipality’s approach,
which
for the reasons proffered gave some landowners temporary relief
from the full 7c rate, while exacting it of the appellants, was not
reasonable.
[50] Froneman J also found that the complaint of
discrimination was insufficiently evidenced in the landowners'
founding papers since
the probability existed that the properties the
landowners were comparing in fact had different uses. These
conclusions seem to me
to be clearly correct. In my view the
complaint of arbitrary and discriminatory conduct on the part of the
Municipality cannot be
sustained.
[51] Finally, the landowners complained that, in
conflict with the notification requirements set out in the Valuation
Ordinance 26
of 1944 the Municipality had failed to inform them of
the rates change. But the Municipality asserted in its answering
affidavit
that it had validly despatched notices to all affected
ratepayers, and undertaken publication in accordance with all
requirements.
In argument counsel for the landowners conceded that
only CDA Boerdery, the first appellant, had established that it had
not received
proper notice. I agree with counsel for the municipality
that the purpose of section 56 of the Valuation Ordinance 26 of 1944
–
which sets out the notice requirements – was to ensure that
persons affected by a valuation and possible rates assessment are
afforded
adequate opportunity to object to such valuation and to have
such objection adjudicated by the valuation court. It is common cause
that all the appellants, including CDA Boerdery, availed themselves
of this opportunity and indeed appeared at the Valuation Court.
There
is no suggestion on the papers that CDA Boerdery was not aware of the
new valuations and rates assessments. The proviso to
s 56 (inserted
by s 4 of Ordinance 13 of 1945) in any event states that 'non-receipt
of such a notice shall not invalidate the valuation
roll or the
proceedings of the valuation court.' It was not in dispute before us
that CDA Boerdery participated in the proceedings
of the valuation
court. In my view its non-receipt of the required notice did not
invalidate the new valuation requirement in respect
of it.
Order
[52] The appeal is therefore dismissed with costs.
E CAMERON
JUDGE OF APPEAL
CONCUR:
MPATI DP
MTHIYANE JA
THERON AJA
1
The
first general municipal elections after the commencement of the
Constitution were held on 5 December 2000.
2
It
for example does not provide which properties are not rateable. It
does not state which properties are exempt from rates. Section
82(1)(a) of the Municipal Ordinance provides that rates are to be
levied on rateable properties. The Municipality, by resolution
imposed property rates on 'rateable property', a concept which is
not employed by the Transition Act. It must have had regard to
s
82(1)(a) of the Municipal Ordinance.
3
2003
(2) SA 344
(SCA) para 23.
4
Item
26(1)(a) of the Constitution provides that the provisions of the
Transition Act would remain in force until the first election
of a
municipal council after the commencement of the Constitution.
5
The
Structures Act came into force on 1 February 1999.
6
1999
(1) SA 374 (CC).
7
The
Local Government: Municipal Property Rates Act 6 of 2004
was brought
into force on 2 July 2005.
8
[2006]
SCA 107 (RSA).
9
Municipal
Ordinance 20 of 1974 (Cape) s 82(1): 'Every council shall – (a)
for every financial year make and levy on all rateable
property
within its municipal area a general rate not exceeding, except with
the approval of the Administrator, two cents per rand
…'.
10
The
South Africa Act of 1909 (a statute of the British Parliament, 9 Edw
c 9), which created the Union of South Africa, entrusted
‘municipal
institutions, divisional councils and other local institutions of
similar nature’ to provincial councils: see Johan
Meyer 'Local
Government' in the first edition of WA Joubert (ed)
The
Law of South Africa
(1981) (LAWSA) vol
15 para 301.
11
Subject
only to extremely limited 'entrenched provisions' that are not
relevant here.
12
Section
84(1)(f)(i) of the Republic of South Africa
Constitution Act 32 of 1961 in terms similar to the South Africa Act
gave provincial
councils power to make ordinances in relation to
'municipal institutions, divisional councils and other local
institutions of a
similar nature'.
13
LAWSA
(1 ed, 1981) vol 15 para 303.
14
Republic
of South Africa Constitution Act 32 of 1961, s 66.
15
See
Republic of South Africa Constitution Act 32 of 1961, sections 72
and 78.
16
G
Carpenter 'Provincial Government'
LAWSA
vol 21 para 249 and para 252(d), (f) and (i).
17
LAWSA
vol 15 paras 514-518.
18
Constitution
s 155(5).
19
Constitution
s 155(6)(a).
20
Constitution
s 151(4).
21
Constitution
s 156(3).
22
Constitution
s 139(1).
23
Fedsure
Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan
Council
[1998] ZACC 17
;
1999 (1) SA 374
(CC) paras
35-38.
24
City
of Cape Town v Robertson
[2004] ZACC 21
;
2005 (2) SA
323
(CC) paras 58-60, endorsing the coordinate statements in
Fedsure
.
25
Constitution
s 229(2)(b) – the power of a municipality to impose rates on
property 'may be regulated by national legislation'.
26
An
absence n
oted by Froneman J in para 11 of the
judgment appealed from, and quoted by Conradie JA in par 21 of his
judgment.
27
Act
6 of 2004, s 16 (which confers limited and
carefully defined powers of supervision and limitation regarding
rates on the Cabinet
member responsible for local government).
28
Section
10G(6) was at issue in
Howick District Landowners Association v
uMngeni Municipality
[2006] SCA 107 (RSA) and in
City of Cape
Town v Robertson
[2004] ZACC 21
;
2005 (2) SA 323
(CC). As Conradie JA points out
in para 27 of his judgment, the appellant landowners in
Howick
expressly contended that the Natal Ordinance there in issue did not
apply at all. In the light of the particular definitions in
the
Natal Ordinance (which defined rateable property as being property
within a 'borough', whereas the newly rated properties were
by
common cause outside any 'borough'), this Court held that the
landowners' contention was correct and that the Natal Ordinance
was
entirely inapplicable. Contrast the position in
City of Cape Town
v Robertson
[2004] ZACC 21
;
2005 (2) SA 323
(CC) para 44, where the
Constitutional Court held that in the legislative setting of the
Western Cape province a 1993 valuation
ordinance constituted 'any
other law' subject to which valuations had to be performed. In
contrast to
Howick
, the municipality here makes common cause
with the landowners that the Cape Ordinance does in general apply,
though it contends
that the approval requirement in s 82(1)(a) has
suffered implied repeal.
29
The
statutory genesis is set out in paras 7 and 19-20 of the judgment of
Conradie JA, though I cannot endorse the significance he
attaches in
paras 19-20 to the re-enactment of s 10G of the LGTA in s 93(4) of
the Structures Act: in my view s 93(4) extended
the life and force
of s 10G, without substituting itself for that provision.
30
Only
the approval requirement in s 82(1)(a) of the Ordinance was in issue
before us, and I consider it unnecessary (in contrast
to Conradie JA
in para 23 of his judgment) to express any view on any other
provisions of the Ordinance relating to the Premier.
31
Judgment
a quo para 12.