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[2014] ZAGPPHC 161
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Blair Atholl Homeowners Association and Others v City of Tshwane Metropolitan Municipality (63280/11) [2014] ZAGPPHC 161 (4 April 2014)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
(NORTH
GAUTENG, PRETORIA)
CASE
NO:
63280/11
DATE:
4/4/2014
In
the matter between:
BLAIR
ATHOLL HOMEOWNERS
ASSOCIATION
...................................................
1
st
Applicant
(ASSOCIATION
INCORPORATED UNDER SECTION21)
WRAYPEX
(PTY)
LTD
...................................................................................................
2
nd
Applicant
ROBERT
SEAN
WRAY
....................................................................................................
3
rd
Applicant
and
THE
CITY OF TSHWANE
METROPOLITAN
...............................................................
Respondent
MUNICIPALITY
JUDGMENT
MURPHY
J
1.
The applicants seek an order that the decision of the City of Tshwane
Metropolitan Municipality (“the Municipality”),
the
respondent, to adopt a draft rates policy and draft by-laws be set
aside “as far as the development known as Blair
Atholl is
concerned”.
2.
The first applicant is Blair Atholl Homeowners Association (“BAHA”);
the second applicant, Wraypex (Pty) Ltd, (“the
developer”),
is the developer of the Blair Atholl Estate, a residential
estate; and the third applicant is Mr Robert
Wray (“Wray”)
a member and director of the BAHA and the developer.
3.
The Blair Atholl Estate is an upmarket residential estate with a golf
course, located about 50 kilometres west of the city of
Pretoria. The
recreational facilities in the estate include a restaurant, swimming
pool, tennis courts and a wellness centre.
The estate is over 600
hectares in size and is comprised of 329 individual stands. The
developer was responsible for the development.
It applied for
approval of the township in terms of the Town Planning and Township
Ordinance, 15 of 1986, which approval was
granted subject to
specific conditions.
4.
According to the municipality, when it was called upon to consider
the developer’s application for the establishment of
the Blair
Atholl township, the relevant area fell outside its priority areas
for the establishment of new townships and had no
available water
and sewerage services. Accordingly, the approval was granted subject
to the condition that the developer would
install all the necessary
internal and external services. To this end, the developer and the
municipality in February 2006 concluded
an “Engineering
Services Agreement” (“ESA”) in which the
developer undertook primary responsibility
for the installation of
the proposed services scheme, defined to include: “the
proposed road, street, stormwater, water,
electricity and sewerage
reticulation services scheme in and to the township consisting of all
internal and external services”.
5.
Internal services are defined in the ESA as including all the water
and sewerage networks and associated installations, stormwater
and
drainage systems and road infrastructure within the boundaries of the
township. While the external services are all road,
street,
stormwater, water and sewerage services whereto the internal
services can be connected for the provision of such services
to the
township.
6.
In accordance with the ESA, the developer developed and erected the
external and internal engineering services to the estate,
which
services are now maintained by the BAHA. The maintenance costs are
financed by way of a monthly levy from residents, which
levy is
managed and controlled by the BAHA. The estate is unusual in this
respect and its residents do not benefit directly from
the ordinary
services provided by the municipality, due primarily to the
geographical location of the estate some 50 kilometres
from the
municipality’s core residential areas.
7.
Since the completion of the development, several disputes have arisen
between the BAHA and the municipality with regard to the
use of
water, the municipal rates and payment for the installation of the
water pipeline to the estate. Some of the issues are
spelt out in
detail in the founding affidavit, but strictly speaking are not
directly relevant to the present application.
8.
As part of the conditions of approval of the township, the developer
was obliged to establish the BAHA and the purchasers of
erven within
the township are required to become members of the BAHA. The
developer is also a member of the BAHA. A number of
the erven in the
township were required to be transferred to the BAHA in order to
provide essential engineering services to the
homeowners. The BAHA is
restricted from selling the erven on which engineering services have
been erected and has full responsibility
for the functioning and
maintenance of the erven and the essential services thereon.
9.
The focus of the present dispute between the parties is the adoption
of the draft rates policy by the council of the municipality
on 4
May 2011.
10.
Section 229 of the Constitution governs the fiscal powers and
functions of municipalities in our country. The provision recognizes
various revenue raising measures available to municipalities,
namely: rates on property; surcharges on fees for services provided
by the municipalities; and other taxes, levies and duties authorized
by national legislation. The provisions relevant to this
matter are
sections 229(1) and 229(2) which read:
“
(1) Subject
to subsections (2), (3) and (4), a municipality may impose-
(a) rates on
property and surcharges on fees for services provided by or on behalf
of the municipality; and
(b) if authorised by
national legislation, othertaxes, levies and duties appropriate to
local government or to the category of local
government into which
that municipality falls, but no municipality may impose income tax,
value added tax, general sales tax
or customs duty.
(2) The power of a
municipality to impose rates on property, surcharges on fees for
services provided by or on behalf of the municipality,
or other
taxes, levies or duties -
(a) may not be
exercised in a way that materially and unreasonably
prejudicesnational economic policies, economic activities across
municipal boundaries, or the national mobility of goods, services,
capital or labour and
(b) may be regulated
by national legislation.”
11.
The Local Government: Municipal Property Rates Act 6 of 2004 (“the
Act”) is the relevant legislation. Section 2(1)
of the Act
provides that a metropolitan or local municipality may levy a rate
on property in its area. Section 2(3) of the Act
provides:
“
A
municipality must exercise its power to levy a rate on property
subject to -
(a) section 229 and
any other applicable provisions of the constitution;
(b) the provisions
of this Act; and
(c) the rates
policy it must adopt in terms of section 3.”
12.
The relevant provisions of section 3 of the Act read:
“
(1) The
council of a municipality must adopt a policy consistent with this
Act on the levying of rates on rateable property in
the municipality.
(2) A rates policy
adopted in terms of subsection (1) takes effect on the effective
date of the first valuation roll prepared
by the municipality in
terms of this Act, and must accompany the municipality’s budget
for the financial year concerned
when the budget is tabled in the
municipal council in terms of section 16(2) of the Municipal Finance
Management Act.
(3) A rates policy
must -
(a) treat persons
liable for rates equitably;
(b) determine the
criteria to be applied by the municipality if it -
(i) levies
different rates for different categories of properties;
(ii) exempts a
specific category of owners of properties, or owners of a specific
category of properties, from payment of a rate
on their properties;
(iii) grants to a
specific category of owners of properties, or to the owners of a
specific category of properties, a rebate
on or a reduction in the
rate payable in respect of their properties; or
(iv) increases
rates;
(c) determine, or
provide criteria for the determination of -
(i) categories of
properties for the purpose of levying different rates as
contemplated in paragraph (b)(i); and
(ii) categories of
owners of properties, or categories of properties, for the purpose
of granting exemptions, rebates and reductions
as contemplated in
paragraph (b)(ii) or (iii);
(d) determine how
the municipality’s powers in terms of section 9(1) must be
exercised in relation to properties used
for multiple purposes;
(e) identify and
quantify in terms of cost to the municipality and any benefit to
the local community-
(i) exemptions,
rebates and reductions;
(ii) exclusions
referred to in section 17(1)(a), (e), (g), (h) and (i); and
(iii) rates on
properties that must be phased in in terms of section 21;
(f) take into
account the effect of rates on the poor and include appropriate
measures to alleviate the rates burden on them;
(g) take into
account the effect of rates on organisations conducting specified
public benefit activities and registered in terms
of the Income Tax
Act for tax reductions because of those activities, in the case of
property owned and used by such organisations
for those activities;
(h) take into
account the effect of rates on public service infrastructure;
(i) allow the
municipality to promote local, social and economic development; and
(j) identify, on a
basis as may be prescribed, all rateable properties in the
municipality that are not rated in terms of section
7(2)(a).”
13.
Section 3(6) of the Act provides that no municipality may grant
relief in respect of the payment of a rate to a category of
owners
of properties or to the owners of a category of properties, other
than by way of an exemption, a rebate or a reduction
provided for in
its rates policy and granted in terms of section 15 of the Act,
which section sets out the general powers of
municipalities to grant
exemptions, reductions and rebates.
14.
Section 4 of the Act governs community participation in a
municipality’s adoption of its rates policy. It provides as
follows:
“
(1) Before
a municipality adopts its rates policy, the municipality must -
(a) follow a
process of community participation in accordance with Chapter 4 of
the Municipal Systems Act; and
(b) comply with
subsection (2).
(2) The municipal
manager of the municipality must -
(a) conspicuously
display the draft rates policy for a period of at least 30 days -
(i) at the
municipality’s head and satellite offices and libraries; and
(ii) if the
municipality has an official website or a website available to it
as envisaged in section 21B of the Municipal Systems
Act, on that
website; and
(b) advertise in
the media a notice -
(i) stating-
(aa) that a draft
rates policy has been prepared for submission to the council; and
(bb) that the draft
rates policy is available at the municipality’s head and
satellite offices and libraries for public
inspection during office
hours and, if the municipality has an official website or a website
available to it, that the draft
rates policy is also available on
that website: and
(ii) inviting the
local community to submit comments and representations to the
municipality concerned within a period specified
in the notice which
may not be less than 30 days.
(3) A municipal
council must take all comments and representations made to it or
received by it into account when it considers
the draft rates
policy.”
15.
In terms of section 5 of the Act, the council of a municipality must
annually review, and if necessary amend its rates policy,
while in
terms of section 6 it must adopt by-laws to give effect to the
implementation of its rates policy. When levying rates
a
municipality must levy rates on all rateable property in its area,
but this does not prevent a municipality from granting exemptions,
rebates or reductions in terms of section 15 (section 7(2)(b) of the
Act).
16.
On 1 April 2011, the municipality published a notice in a local
newspaper, the Pretoria News, whereby it invited the community
to
public consultation meetings on its Medium Term Revenue and
Expenditure Framework (“MTREF”), its budget, as well
as
upon its draft property rates policy. The notice informed the public
that all written comments and submissions on the draft
rates policy
had to be submitted by 30 April 2011. Comments and submissions in
relation to the MTREF had to be received by 10
April 2011. Details
for accessing the relevant documents were provided in the notice,
and a schedule of the public consultation
meetings was set out in
the notice.
17.
The applicants obtained a copy of the draft rates policy on 6 April
2011. Their representatives attended one of the public
consultation
meetings on 7 April 2011 at which they raised the issue of previous
litigation between the parties. The applicants
responded to the
draft rates policy on 29 April 2011 in a 32 page memorandum in which
they made various submissions.
18.
From the memorandum it appears that the essence of the applicants’
objection to the rates policy is that the municipality
did not take
account of the unique position of the residents of the Blair Atholl
estate. At page 16 of the memorandum it is stated:
“
The purpose
of this submission, in respect of the draft Property Rates Policy,
references to residential and vacant land categories
are relevant.
The effect of the aforegoing is that all residential properties
throughout the municipal area will attract the same
rate and all
vacant properties throughout the municipal area will attract the same
rate.”
19.
The memorandum goes on to point out that the developer (and now
presumably the BAHA) provides services to the estate which
are
normally the duty of the municipality and sets out the details of the
services, which are the extensive array of external
and internal
engineering services as provided in the ESA. The memorandum argued
that as the municipality did not provide the
usual services, it had
a duty to determine the Blair Atholl estate as a distinct category of
rateable property. Section 8(1)
of the Act provides that a
municipality may in terms of the criteria set out in its rates
policy levy different rates for different
categories of rateable
property, which may include categories determined according to the
use of the property; the permitted
use of the property; or the
geographical area in which the property is situated. Section 8(2) of
the Act extends the categories
of rateable property that may be
determined in terms of section 8(1) by identifying specific
categories, for example residential
properties; industrial
properties, and business and commercial properties. The applicants
essentially urged the municipality
to consider Blair Atholl to fall
into a category similar to that contemplated in section 8(2)(j) of
the Act, namely “private
owned towns serviced by the owner”.
20.
At pages 19-21 of the memorandum, the applicants made the following
proposal:
“
Section 8(2)
of the MPRA in determining categories of rateable property
anticipated and provided for privately owned towns serviced
by the
owner. It is not unreasonable to expect of the municipality where
such circumstances exist to create a specific category
for such
purpose as many other local authorities have done….
There are rational
reasons why there should be different categories of residential
properties and vacant land. It is contended that
the erven which were
created in the Blair Atholl development should fall within a separate
category in order to be rated at a lower
level in comparison to
conventional residential properties in the municipality’s
jurisdiction….”
The applicants
accordingly requested consideration to be given to the creation of a
category “in private developed estates,
which are similar to
the Blair Atholl development, located away from the urban areas
where no services or limited services are
provided by the
municipality”. They referred to examples in other
municipalities where this had been done and where an
additional
rebate varying from 20% to 50% is allowed to the estates.
21.
The submission concluded with a plea in relation to the residential
erven based on equity. At page 22 of the memorandum the
applicants
state:
“
The plea to
the municipality is to recognize that the services constructed by the
developer and now maintained by the Blair Atholl
Homeowners
Association include expenses which are not recognized in a convential
residential township. The Blair Atholl Homeowners
Association retains
through its contractual obligations with the municipality all
responsibilities and liabilities to essential
services where the
municipality bears the burden in the aforegoing context in convential
residential townships.
In light hereof it
is inequitable that equal rates should be payable by property owners
who did not have the expense of constructing
the services or
maintaining same.”
The applicants then
proposed a flat rate capped amount per erf of R570 with an annual
escalation equivalent to the municipal cost
index.
22.
In relation to vacant land within the estate, the applicants sought
to persuade the municipality that the “concept of
vacant land”
should be excluded within the Blair Atholl township until such time
as it is transferred by the developer
to a first time recipient, who
should also be given a two year rates holiday until the erf was
developed.
23.
On 4 May 2011, the council of the municipality adopted a resolution
approving the draft property rates policy after taking
cognizance of
the written submissions made to it by various interest groups
including the BAHA, which were analysed in a report
submitted to the
council by the Financial Services Department in support of the
recommendation that the policy be approved. The
report, Annexure
FA13 to the founding affidavit, dealt with the applicants’
submissions as follows:
“
The demand by
Blair Atholl that by the nature of its establishment, the development
is a special township that complies with the
provisions of section
8(2)(j) of the MPRA, and as such the Municipality should determine
the township as a separate category of
rateable property in its Rates
Policy.
This argument that
claims for preferential rates, has been tested on the following
grounds, and thus does not succeed in justifying
any special
consideration of a different category of rateable property that would
be eligible for the levying of a different rate
as provided for in
section 8(2)(j) of the MPRA:
Although
the MPRA has not provided the definition of “privately owned
towns serviced by the owner”, on the basis that
the Blair
Atholl development is established under the provisions of the
Town-planning and Township Ordinance No 15 of 1986, thus
disqualifies it as an exclusively privately owned town;
In
terms of understanding “privately owned town”, it must
be seen as a township with a single owner, a self-owned
township
with all developmental, social, functional and infrastructural
services self-approved such as, building plans and other
town-planning matters, similar to the mining residential townships.
Further to this, the owner must have full jurisdictional
powers over
the township as own-municipality; and
The
conditions of the Engineering Services Agreement entered into by the
Municipality and the Developer signed in February 2006
spell it out
clearly how the development must be levied, and paragraph 6.17 of
the said agreement reads as follows:
The
Applicant takes notice of the fact that assessment rates as
determined in accordance with the policies of the Municipality shall
be levied by the municipality on erven in the township as from the
date of proclamation of the township. The section 21 Company
will
become liable upon the proclamation of each separate township
(extension).
”
It
then concluded:
“
It can be
concluded that property tax is not payable upon receiving basic
services. The taxpayers do not receive direct or measurable
benefits
from the payment of property tax and the value of the benefit which
an individual derives cannot be quantified. It is
the responsibility
of an individual property owner to pay property tax irrespective of
receiving a direct benefit from making use
of collective services.
The lesser the number of properties, subject to property rates, the
smaller becomes the tax base of the
municipality. The more exceptions
and rebates granted, the greater the tax burden becomes to the
property owners whose properties
remain subject to non-discounted
rates. Exceptions also create precedents and expectations that could
not be afforded by the remaining
tax payers.”
24.
Though it is clear that the applicants challenge both the substance
of the decision and the process followed in arriving at
it, the
grounds of review are not clearly formulated in the founding
affidavit.
25.
In argument, counsel for the applicants challenged the substance of
the decision on the grounds of non-compliance with the
constitutional
principle of legality. The decision, he submitted, was both
irrational and inequitable and hence illegal. Generally,
a
municipality is obliged to provide external services to a developer
and a ratepayer. In this instance the municipality contracted
itself
out of this obligation, does not provide any services and, so the
argument proceeded, is unfairly abusing the situation
by failing to
exempt the applicants from paying the same rates as other
ratepayers.
26.
To effectively compel the BAHA to collect levies in respect of
services and at the same time to claim rates (normally claimed
for
services which are not rendered in this case) from the residents, it
is contended, is inequitable and thus in contravention
of section
3(3) of the Act which requires a rates policy to treat ratepayers
equitably. In so far as reliance is placed on the
principle of
rationality, the submission appears to be that there is no rational
relationship between the rates policy, the purpose
of the empowering
provisions and the factual context. Rates are required in accordance
with the law for the provision of municipal
services. If no services
are provided then there is no rational justification for the levying
of rates.
27.
The imposition of rates does not constitute administrative action as
defined in section 1 of the Promotion of Administrative
Justice Act 3
of 2000 (“PAJA). The decision of the council to adopt the
rates policy is a legislative decision. It is that
decision which is
specifically attacked by prayer 1 of the notice of motion. Relief is
accordingly not sought in the form of
judicial review under PAJA.
Hence, as just mentioned, although not clearly formulated in the
papers, review is sought under the
constitutional principle of
legality on grounds of irrationality and the alleged contravention
of section 3 of the Act.
28.
There is no direct challenge in prayer 1 to any decision of the
municipality, as a corporate entity, refusing to determine
a distinct
category of rateable property and not affording an exemption or
rebate for that category. The impugned legislative
decision was one
taken by the elected members of the council who were no doubt
influenced by political considerations for which
they are
politically accountable to the electorate. As stated recently by the
SCA in
City of Tshwane v Blom
[433/12] 88 ZA SCA (31 May
2013), rates policies entail, by definition, policy choices which
lie at the core of municipal autonomy,
and as long as the rates
policy treats ratepayers equitably and is consistent with the
provisions of the Constitution and the
Act, there can be no basis for
questioning the choices it makes with regard to properties that may
be differentially rated with
respect to different categories of
property.
29.
More importantly, as submitted on behalf of the municipality, rates
are not levied with specific correlation to actual services.
The
power to levy rates is a limited original taxing power conferred on
municipalities by section 229 of the Constitution, which
draws a
clear distinction between rates and surcharges. The latter may be
imposed only in respect of fees for services provided
by a
municipality, while the former is subject to no similar constraint.
I have been referred to no provision of law, and I know
of none,
that supports the contention that property rates may be levied only
in relation to property owners who consume municipal
services. It
follows that there is no specific statutory obligation on the
municipality in the exercise of its discretion to determine
categories of property to create a special category for estates that
have contractually agreed with the municipality to erect,
install
and maintain their own external and internal services.
30.
The applicants’ claim that the levying of rates upon them is
irrational is essentially a contention that there should
be a fair
relationship between the taxed activity or object and the provision
of governmental services. It is predicated upon
the notion that
citizens should not pay for benefits which they do not receive. In
Commonwealth Edison Co v Montana
[1981] USSC 185
;
453 US 609
(1981), the
United States Supreme Court stated in relation to this kind of
reasoning:
“
A tax is not
an assessment of benefits. It is, as we have said, a means of
distributing the burden of the costs of government. The
only benefit
to which the taxpayer is constitutionally entitled is that derived
from his enjoyment of the privileges of living
in an organized
society, established and safeguarded by the devotion of taxes to
public purposes…”
31.
As regards the complaint that the rates policy treats the applicants
and the residents of the estate inequitably, similar considerations
apply, which are reinforced by the peculiar context in which the
liability for rates has arisen. A statutory duty to treat people
liable to pay rates equitably imposes an obligation on the
municipality to act fairly. In deciding whether a body has acted
fairly
it is necessary to take into account all relevant matters
surrounding the particular case and to evaluate and weigh them in a
broader policy framework.
32.
In the present case, the municipality and the developer entered into
a contract on the premise that the township fell “totally
outside a priority area with no water and sewerage services
available” and as a consequence the municipality was willing
to approve the township subject to the services being installed and
maintained in a particular way. Clause 6 of the ESA sets
out in
detail the obligation of the developer to establish the BAHA and the
functions of the BAHA in relation to the maintenance
of services.
Clause 6.12 stipulates that it will be the ongoing responsibility of
the BAHA to operate and maintain the services
“at the cost of
every owner”. In recognition of the acceptance of
responsibility by the BAHA of the duties normally
performed by the
municipality, Clause 16.16 provides that the municipality will
supply water to the BAHA at the normal rate and
will not raise a
sewerage charge. No similar concessions were made in relation to
property rates. On the contrary, as the Financial
Services
Department emphasised in its report to the council, clause 6.17 of
the ESA expressly states that rates will be levied
on erven in the
township as from the date of proclamation of the township.
33.
There is accordingly no basis for any supposition on the part of the
applicants supporting an equitable claim to exemption
from rates in
exchange for the provision of services by them. The municipality
approved the township on the understanding that
it would not be
burdened by the increased demand for services while retaining its
right to levy rates on the residents of the
estate.
34.
In the result, there is no merit in the ground of review that the
municipality acted irrationally, inequitably and hence illegally
in
adopting the rates policy.
35.
The applicants impugn the decision to adopt the rates policy also on
the ground that the municipality did not follow the required
process
of community participation as contemplated in section 4 of the Act.
The complaint,
inter alia
, is that there has not been
compliance with section 4(2)(b)(ii) of the Act which provides that
the municipal manager must advertise
in the media a notice inviting
the local community to submit comments and representations to the
municipality concerned within
a period specified in the notice which
may not be less than 30 days. The notice published in the Pretoria
News on 1 April 2011
required submissions on the rates policy to be
submitted by 30 April 2011. That meant the notice gave only 29 days
to make submissions.
It accordingly did not comply with the
requirements of section 4. Although the applicants have complained
about being placed under
time pressure, they nonetheless were able
to submit comprehensive, well- reasoned submissions in the memorandum
they delivered
on 29 April 2011. Their founding affidavit added
little of additional substance to the argument made in the
memorandum. Hence,
it cannot be said that they were prejudiced by
any illegality tainting the notice.
36.
Even though the notice might have been invalid for want of compliance
with the time period, such procedural invalidity, in
the face of
substantial compliance and no notable prejudice, does not justify a
declaration of invalidity with retrospective
effect. Illegal acts can
have factual consequences which in all other respects are lawful and
have no ongoing or prospective
illegal effect. Sometimes invalid
administrative action, in this case the non-compliance with a
statutory procedure, must be
allowed to stand in the interests of
finality, pragmatism and practicality, especially when
non-compliance is not material or
prejudicial -
Chairperson,
Standing Tender Committee v JFE Sapela Electronics
2008 (2) SA
638
(SCA) para 28. In such circumstances, a court in its discretion
may decline to set aside the invalid action, as I do in this case.
I
am also satisfied that the scheduled meetings which BAHA attended
and the submission of representations to the council, which
although
submitted late were accepted and placed before the council,
constituted sufficient compliance with the required process
of
community participation.
37.
When the applicants filed their supplementary founding affidavit they
also filed an amended notice of motion seeking additional
relief
which they believe will be justified on the basis of information
they acquired subsequent to launching the application.
In
particular, they maintain that the council did not consider their
comments and recommendations in respect of the rates policy
which
served before it on 4 May 2011. They rely in this regard upon a
verbatim transcript of the council’s meeting. On
the
assumption that the council did not consider their submissions, the
applicants submitted that they are entitled to an order
that the
owners of the erven are liable to pay rates in the sum of R500 per
month from 1 July 2011 until the municipality has
created or duly
considered the creation of a special category of rateable properties
for privately owned townships serviced by
the BAHA and the
developer. To understand this claim it is necessary to refer to the
history of the dispute between the parties.
38.
During 2008, the BAHA launched two applications in respect of the
properties, one of which sought review of the municipality’s
2008 rates policy decision. At some point the municipality
acknowledged that it had failed to comply with section 4(3) of the
Act by not then taking account of the representations made to it
when it considered that draft rates policy. On 19 April 2010,
Tuchten J handed down an order in the following terms:
“
That all the
owners of all properties in the Blair Atholl Township known as Blair
Atholl Extensions 1, 2, 3 and 4 are liable to
pay property rates in
the sum of R500.00 (Five Hundred Rand) per erf per month from 1 July
2008 until the date on which the Applicant’s
representations
(Annexure “E19” to the founding affidavit) and any
further written representations which the Applicants
wish to make,
have been duly and lawfully considered by the Respondent in terms of
the
Local Government: Municipal Property Rates Act 6 of 2004
. It is
recorded that the Respondent would not be entitled to charge interest
and penalties on the amount of R500.00 per month during
the period 1
July 2008 to date of receipt of correct invoices from the Respondent.
The applicants
reason that because their representations were allegedly again not
considered by the council on 4 May 2011 this
order remains effective
and they want a declaration to that effect, but one which extends
its operation until such time as their
desired category of rateable
property has been created.
39.
The applicants maintain that the record shows that when the council
took its decision on 4 May 2014 not all the members had
copies of its
representations before them, which they believe indicates non-
compliance with the duty of a municipal council to
take their
representations into account.
40.
The applicants’ allegation based on the transcript of the
meeting, that not all the members of the council had full
documentation before them when passing the resolution is problematic
in more than one respect. Firstly, there is no affidavit
certifying
the transcript as a complete and accurate reflection of the
proceedings. Secondly, while the transcript makes mention
that
another 100 copies of certain reports were required, the reports in
question are not identified. Thirdly, the speaker adjourned
the
meeting to afford the members 45 minutes to look at the documents.
The meeting was re-convened and appears to have proceeded
with
acceptance that the problem regarding documentation had been
resolved. And finally, perhaps most importantly, the allegation
made
by the municipality in paragraph 55.6 of its answering affidavit
that “a memorandum by the mayoral committee was submitted
to
respondents council together with all of the public representations
received and considered in finalising the memorandum ……
served before council on 4 May 2011” has not been challenged
in the replying affidavit. That memorandum is Annexure FA13
to the
founding affidavit, being the document prepared by the Financial
Services Department to which I referred earlier. It contains
within
it a clear, succinct and accurate summary and account of the BAHA’s
submission and the response as set out above.
The undisputed fact
that this document served before the council leaves no doubt that
the representations of the BAHA were taken
into account to the
extent required by section 4(3) of the Act. The council was properly
apprised of the BAHA’s representations
even if not all members
initially had a copy of them.
41.
In the premises there is no legal basis to grant the relief sought by
the applicants in prayer 6 of the notice of motion in
the form of a
declaration limiting the rates of the individual owners to R500 per
month until a special category of rateable
property is created for
them. Their representations were lawfully considered by the
municipality as envisaged in the order of
Tuchten J. Their
entitlement to the special dispensation provided in the court order
ended at that time.
42.
In prayers 7 and 8 of the amended notice of motion the applicants
seek an order compelling the municipality to create a category
of
rateable properties in privately owned townships serviced by the
BAHA and the developer and a further order compelling the
municipality to levy differential rates for the properties in the
category in the amount of R500 per erf per month, which amount
will
escalate annually in accordance with the percentage as determined by
the Consumer Price Index. The only foundation set out
in the
supplementary affidavit for this far-reaching relief is the
applicants’ belief that the municipality is acting
unfairly
by refusing to give them a special dispensation on account of their
providing the internal and external services under
the ESA. The
argument flounders for the same reason as the more general
proposition that taxpayers are entitled to a fair relationship
between the taxed activity and the provision of services, but more
particularly because it invites the court inappropriately
to assume
the legislative function of the council solely on the ground that the
elected members of the council have imposed a
tax, in keeping with
the original conditions of the approval of the township, but which
the applicants do not like.
43.
It is important to note that no case is made out on the papers that
the proposed imposition of rates constitutes a disproportional
infringement of the applicants’ constitutional rights of
equality or property. As I have explained, the poorly formulated
grounds of review relied upon are the alleged contravention of the
principle of legality (rationality) and the statutory duty
to treat
ratepayers equitably. There is no cogent evidence that the rates
will unduly penalize the applicants or impose an unconscionable
financial burden in violation of any of the provisions of the Bill of
Rights.
44.
The municipality’s response to the proposal that the court
create a new category of rateable property, and impose favourable
differential rates in respect of it, is as predictable as it is
compelling. The creation of categories of rateable property and
the
rate or amount of the tax is a legislative power vesting in the
council. The exercise of such powers are reviewable on restricted
grounds. Courts should not readily assume that disputes
regarding their exercise are justiciable. Our Constitution provides
a clear indication, a textually demonstrable commitment, of an
intention to leave the determination of the incident and rates
of
municipal taxation to municipal councils. Absent unjustifiable
discrimination on proscribed grounds, these matters are inherently
political and non-justiciable questions, ordinarily unamenable to
resolution by adjudication, practically on account of their
attendant
polycentric consequences, and doctrinally because of their
constitutional allocation to the political organs of state.
For those
reasons, I decline to grant the relief sought in prayer 7 and 8 of
the amended notice of motion.
45.
Finally, in prayer 5 of the amended notice of motion the applicants
seek an interdict prohibiting and restraining the municipality
from
claiming property rates, as provided for in the Local Authority
Rating Ordinance of 1977, from the owners of erven in the
Blair
Atholl townships for the period prior to 1 July 2008. The dispute
relates to whether the individual owners’ properties
were
properly included on a valuation roll for the relevant period
between April 2006 and 2008. The issue concerns amounts possibly
owing as arrear rates by individual owners in terms of their rates
accounts. The liability to pay rates lies with the individual
owners. The applicants have no
locus standi
to intervene in
the tax relationship between the individual owners and the
municipality. Nor have they produced evidence of any
authority to act
on their behalf in this regard. To the extent that the developer is
itself an individual owner and ratepayer,
it has not furnished any
evidence of the amount in which it has been levied for this period
and why an interdict is necessary
to protect it from anticipated
harm. Any claim by the municipality for rates allegedly owing by the
developer can be dealt with
on an individualised basis and if need
be opposed on legitimate legal grounds. The facts do not justify the
grant of a general
prohibitory interdict.
46.
The municipality has asked for a costs order on a punitive scale. The
applicants’ pursuit of the matter was not entirely
unreasonable. Their position is an unusual one. Their challenge to
the equities of the situation was legitimate and worthy of
judicial
consideration. In the circumstances their conduct was not
unreasonable or vexatious such as to warrant a punitive costs
order.
The complexity of the matter did however justify the employment of
two counsel.
47.
In the result the following order is made:
The application in
its entirety is dismissed with costs, including the costs of two
counsel.
JR
MURPHY
JUDGE
OF THE HIGH COURT
Representation
for the 1
st
to 3
rd
‘Applicants
Counsel:
Adv S van Nieuwenhuizen SC
Adv
LGF Putter
Instructed
by Attorneys: Schwartz-North Incorporated
Representation
for Respondent:
Counsel:
Adv T Strydom SC
Adv
T Mkhwanazi
Instructed
by Attorneys: Hugo & Ngwenya