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[2006] ZASCA 153
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Howick District Landowners Association v Umngeni Municipality and Others (423/05) [2006] ZASCA 153; [2007] 1 All SA 139 (SCA); 2007 (1) SA 206 (SCA); 69 SATC 51 (21 September 2006)
Links to summary
THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Case no: 423/05
REPORTABLE
In the appeal between:
HOWICK DISTRICT LANDOWNERS ASSOCIATION
Appellant
and
UMNGENI MUNICIPALITY
First Respondent
MEC FOR TRADITIONAL AND LOCAL GOVERNMENT AFFAIRS, KwaZulu-Natal
Second Respondent
MINISTER FOR PROVINCIAL AND LOCAL GOVERNMENT
Third Respondent
Before: Zulman JA, Cameron JA, Lewis JA, Maya JA and Theron AJA
Heard: Thursday 31 August
2006
Judgment: Thursday 21 September 2006
Local government – interpretation of municipality’s
resolutions – not to be read incoherently – legislative
instruments expressly connected to be read together – authority
municipality intended to invoke clear – no need to mention
source of authority – Municipal valuation rolls –
municipality exercising power under
Local Government Transition Act
209 of 1993
– publication procedures set out in provincial
ordinances not applicable
Neutral citation: Howick District Landowners Association v uMngeni
Municipality [2006] SCA 107 (RSA)
JUDGMENT
_______________________________________________________
CAMERON JA:
The appellant is an association of about 150 property owners (the
landowners) whose land previously fell outside any municipal
rating
jurisdiction and who hitherto have not been required to pay rates.
In the High Court in Pietermaritzburg they brought an
application to
declare invalid a rates assessment for the year 1 July 2004 to 30
June 2005. The assessment was issued by the first
respondent
municipality (the council), which the landowners cited together with
the provincial executive member charged with local
government
(second respondent) and the national Minister for Provincial and
Local Government (third respondent). (The second and
third
respondents did not participate in the proceedings.) Hugo J
dismissed the application. The landowners appeal with his leave.
1
The appellants describe themselves as ‘rural landowners’
and as ‘owners of farm properties’ with ‘farming
interests’, but the council jibs at the impression of bucolic
simplicity this evokes: it says the properties include holiday
homes, hotels, bed-and-breakfasts, restaurants, guest farms, golf
courses and sectional title developments that have escaped rating
only because of out-dated municipal boundaries. The contesting
characterisations reflect the parties’ differing positions
on
the justice of the rates the council seeks to impose.
The dispute occurs against a dense legislative setting that entwines
a pre-constitutional provincial ordinance, the legislation
straddling the transition to the Constitution, and the set of
statutes Parliament enacted between 1998 and 2004 to restructure
local government. The council is a local municipality established
under the Local Government: Municipal Structures Act 117 of
1998
(the Structures Act). It operates in terms of the Local Government:
Municipal Systems Act 32 of 2000 (the Systems Act).
Its power to
impose rates derives as a direct source of original legislative
capacity
2
from the Constitution.
3
Historically municipalities in the province derived their rating
powers from the Local Authorities Ordinance, 25 of 1974 (Natal)
(the
Ordinance). Before the present council was established, the
landowners’ properties were not rateable under the Ordinance
since they did not constitute ‘immovable property’
within a borough.
4
The comprehensive restructuring of local government initiated by
the Structures Act created inclusive municipal areas, with the
result that the landowners now fall within the council’s
jurisdiction.
During the transitional period, the council’s rating power was
sourced also in the Local Government Transition Act 209 of
1993 (the
LGTA), which was largely repealed by the Structures Act, the Systems
Act and the Local Government: Municipal Finance
Management Act 56 of
2003 (the Finance Management Act). Section 10G(7)(a)(i) of the LGTA
gave the council power to ‘levy
and recover property rates in
respect of immovable property’ within its area of jurisdiction
in terms of a ‘common
rating system’. It is the powers
under this provision that are at issue in the appeal.
In 2004, Parliament enacted the final piece of legislation in the
set of statutes that gave effect to local government reform,
the
Local Government: Municipal Property Rates Act 6 of 2004 (the Rates
Act). The Constitution gave Parliament power to regulate
by statute
a municipality’s constitutional authority to impose property
rates.
5
It was common cause that the Rates Act is such legislation. The
statute was assented to on 11 May 2004 and was brought into
operation on 2 July 2005. It makes express provision for a category
of ‘newly rateable properties’, on which rates
were not
levied before. It requires that rates on these properties must be
phased in over three financial years (s 21(1)(a)) and
provides for
rebates for bona fide farmers on agricultural properties (s
15(2)(f)). The statute also regulates the transition
between its
commencement (with repeal of the relevant provisions of the
Ordinance) and the eventual implementation of the rating
system it
embodies (s 88ff).
The issue in this case is whether the council had the power to
impose rates on the previously unrated properties before the Rates
Act came into effect, and, if so, whether it exercised that power
properly. It was expected and indeed announced that the Rates
Act
would be brought into operation on the same day as the Finance
Management Act. But this did not happen. While most of the
provisions of the latter statute took effect on 1 July 2004, the
Rates Act was brought into effect only on 2 July 2005,
6
with application from the municipal financial year 2006/2007.
Even before the expected date of promulgation, the council acted to
rate the landowners’ properties. It issued notices,
purportedly in terms of the Ordinance, the Systems Act and the LGTA,
and at its meeting of 9 June 2004, it adopted a resolution
introducing the rates assessments. In litigation that preceded the
current joust, the landowners challenged these notices. The
matter
came before Swain J. On 7 December 2004 he declared the first
notices invalid in respect of previously unrated properties
on two
grounds: (i) there was no preceding valuation and publication; (ii)
the rates system created (which differentiated between
properties
larger than and smaller than 20 hectares, with differential caps)
was arbitrary and unjust.
The council did not contest the decision of Swain J. Instead, at a
meeting on 10 December 2004 it sought to rectify the errors
he
detected. By now, it had prepared a valuation roll. This was
finalised on 30 September 2004. The meeting proceeded to replace
the invalidated rates system with one imposing 2.3 cents in the Rand
on the land value only. The council then issued the assessments
now
contested. Hugo J held them to be valid. His conclusions are
challenged on appeal.
The landowners’ main argument was based on s 179 of the
Finance Management Act. This repealed s 10G of the LGTA, but
provided
that that section’s principal provisions would remain
in force ‘until the legislation envisaged in section 229(2)(b)
of the Constitution is enacted’.
7
Before both Swain J and Hugo J and in this court, the landowners
contended that the legislation in question (the Rates Act) was
‘enacted’ in terms of s 179 as soon as it received
assent and was published on 11 May 2004 – and not only on
the
date it was brought into operation on 2 July 2005: with the result
that when the council met in December 2004, s 10G had already
been
repealed. Both Swain J and Hugo J rejected this argument on its
premises. They held that the Rates Act was ‘enacted’
only when it was brought into operation, and that s 10G remained in
force until then.
In this court it transpired that the argument proceeded from the
mistaken premise that s 179 was in operation when the council
met in
December 2004. This was not so.
8
Most of the provisions of the Finance Management Act were brought
into operation on 1 July 2004,
9
but the repealing provision took effect only on 1 July 2005.
10
So when the council passed the resolutions now contested, s 10G was
still in force. It is therefore not necessary to decide whether
the
Rates Act was ‘enacted’ before it was brought into
operation. It remains to consider only the landowners’
subsidiary arguments.
To address the defects Swain J identified, the council adopted the
following procedure. First, it resolved to advertise the valuation
roll finalised on 30 September in respect of the previously unrated
properties. Next, it resolved on a rate of 2.3 cents in the
Rand
for the properties in question, effective from 1 January 2005. Then
it adopted a resolution that amended the earlier resolution
by
deleting and replacing two paragraphs of the notice annexed to it.
These amendments replaced in the earlier notice (a) the
reference to
s 75A(3)(b) of the Municipal Systems Act with a reference to s
10G(7) of the LGTA; and (b) the invalidated rates with
the new
rates.
Pursuant to these resolutions, the council on 15 December 2004
published three notices. They were (a) a notice of preparation
of a
valuation roll in terms of s 158 of the Ordinance; (b) a notice of
assessment of rates for 2004/2005 year in terms of s 10G(7)
of the
LGTA at 2.3c in the Rand of the land value only for previously
unrated properties – this notice also withdrew the
previous
notices and invited objections; and (c) a notice of a draft rates
policy in terms of s 4(2)(b) of the Rates Act. It was
common cause
that this last notice was ineffectual since the Rates Act was not
yet in operation. The question is the effect of
the first two.
First attack: non-withdrawal of invalid notices and reference to
wrong statutory provision
The landowners relied on various flaws in the procedure the council
adopted. First, they pointed out that the council failed to
resolve
to withdraw the invalid notices. The subsequent notice as published
does withdraw them, but (they contend) this was without
express
council mandate. Second, though the resolution of 10 December
amended the earlier resolution,
11
its operative part applied only to the notice: the resolution itself
remained unamended, with its reference to s 75A(3)(b) of the
Municipal Systems Act – which does not deal with the levying
of rates at all. The resolution was therefore ineffective because
the earlier resolution invoked the wrong statute and the wrong
section. The council decision, they contended, is accordingly null
and void – and with it the notice, even though that does refer
to the correct statutory provision.
Developing this argument, counsel for the landowners argued that the
resolution of 10 December had to be granted its full importance
as a
legislative act: and the law requires such resolutions to be ‘fully
correct’. The uncorrected defect in the 9
June resolution
therefore doomed the efficacy of the later resolution. The
constitutional framework, counsel urged, requires a
municipality to
legislate correctly if it is to levy rates.
There are two difficulties with this argument. The first is the
matter of approach to what the council set about at its meeting
of
10 December. The question is what meaning can properly be gleaned
from the council’s acts on that day. The landowners’
argument treats the council’s acts as though they constitute a
jumble, each bit of which must be separately parsed, even
if that
leads to incoherence. That cannot be correct. The criterion of
intelligibility, which governs all communication, requires
that the
council’s connected acts be read cohesively, to draw fairly
from them the meaning sought to be conveyed. In particular,
it
requires that the legislative instruments interconnected by the
express terms of the council resolution – the previous
resolution and the attached notice – be read together.
By this yardstick, there is little doubt what the council set out to
do, and what it achieved. The disputed resolution expressly
amended
the previous resolution. It did so by referring to a specific
paragraph of it, and to the annexed notice that paragraph
mentions.
Though it is possible to cavil at the wording, the unmistakable
intent conveyed is that both resolution and annexure
were to be
amended. This follows from the very problem the landowners invoke –
for to read the notice as amended, without
a correlative amendment
to the resolution, introduces an incoherence that was clearly not
contemplated. That the operative part
of the amendment refers only
to the notice makes no difference when the resolution, the previous
resolution and the notice are
read together. The resolution must in
my view be read as replacing the reference to s 75A in the previous
resolution with a reference
to s 10G(7). The argument that the
council invoked the wrong provision is therefore without basis.
The argument that the invalid notices were not expressly withdrawn
has even less purchase. Swain J declared those notices invalid
only
to the extent that they dealt with previously unrated properties.
They otherwise survived. The December amendments addressed
the
invalidity. The amendments plainly entailed the withdrawal of the
previous notices to the extent of their invalidity. The
implication
was so unavoidable as to make an explicit mandate superfluous.
But the landowners’ argument faces a second obstacle. Even
if, technically, the reference to the wrong provision stood
unamended, the authority the council intended to invoke was plain.
The minutes record that the council’s chief financial
officer
informed the meeting that, in terms of the judgment of Swain J, ‘the
Municipality is entitled to levy and recover
rates in the [newly
rated] areas in terms of the Ordinance [or] the LGTA on condition
that the right process and procedures are
followed’. This
reflected the judgment. There was no mention of the Systems Act,
since by then it was clear that it had
no application.
Under the doctrine in
Latib’s
case,
12
where an empowering statute does not require that the provision in
terms of which a power is exercised be expressly specified,
the
decision-maker need not mention it. Provided moreover that the
enabling statute grants the power sought to be exercised, the
fact
that the decision-maker mentions the wrong provision does not
invalidate the legislative or administrative act.
The landowners argued that there is ‘considerable doubt’
about the validity of
Latib
in the light of the
constitutional dispensation and in particular its emphasis on the
principle of legality. As authority they
referred to the decision
of the CC in
Minister of Education v Harris
.
13
But this seems to me to misinterpret both the doctrine and the
decision.
Latib
does not license unauthorised legislative or
administrative acts. It licenses acts when authority for them
exists, and when the
failure expressly or accurately to invoke their
source is immaterial to their due exercise. As Baxter puts it:
‘
If the authority is stated incorrectly, the
action is not thereby invalidated so long as authority for the action
does
exist and the
conditions for its exercise have been observed.’
14
The principle applied in
Latib
grew from long-standing
authority. In
MacRobert v Pretoria Municipal
Council
,
15
the facts of which bear resemblance to the present case, the
municipality gave notice and issued by-laws under a provision that
did not afford the requisite power. It later re-issued the notice,
referring to both the incorrect and the correct power, but
without
re-issuing the by-laws. The court upheld the issue of the by-laws
under the first notice. The reference to the wrong
source of power
was irrelevant, since it merely reflected a mistaken opinion on the
part of the municipality:
‘
The validity of the bye-laws does not depend on
the opinion of the municipality. It does not depend upon what they
state is the law
by virtue of which the bye-law is promulgated. It
depends upon whether there exists a law which allows them to
promulgate the bye-law;
and if there is such a law, and they have
promulgated the bye-law in accordance with the law, there can be very
little doubt that
the bye-law is legal, whatever may be the opinion
of the municipality with regard to the law under which they have
acted.’
16
The doctrine does not validate action taken in deliberate reliance
on a provision that does not authorise it, even where another
provision exists that may warrant it:
Administrateur, Transvaal v
Quid Pro Quo Eiendomsmaatskappy (Edms) Bpk
.
17
Nor can an original, general power to act cure an invalid exercise
of a specific power:
Gerber v MEC for Development Planning and
Local Government, Gauteng
.
18
In
Harris
, as in
Quid Pro Quo
, there was no question
of a mere administrative error or oversight: the decision-maker
deliberately chose to act in terms of a
provision that did not
authorise what was sought to be done.
19
In dealing with an argument based on
Latib
, the CC pointed
out that its applicability ‘must depend on the particular
facts of each case, especially whether the functionary
consciously
elected to rely on the statutory provision subsequently found to be
wanting’.
20
Applying
Quid Pro Quo
, the CC held that it was not open to
the decision-maker now to rely on a different provision to validate
what had been invalidly
done under the provision invoked: the
otherwise invalid notice could not be rescued by reference to powers
the decision-maker might
possibly have had but failed to exercise.
21
I do not read
Harris
as putting
Latib
in doubt, but
as confirming the proper scope of its application.
In the present case, taking the landowners’ argument at its
strongest, the reference in the unamended resolution to s 75A(3)
of
the Systems Act was the result of a simple slip-up. The
municipality’s intent to refer to and invoke s 10G(7) of the
LGTA was incontrovertible. Section 10G(7)(a)(i) authorises a
council by resolution to levy and recover property rates in respect
of immovable property in its area of jurisdiction. The reference to
the power invoked can therefore afford the landowners no ground
for
complaint.
Second attack: late publication of valuation roll
The valuation roll was finalised after the judgment of Swain J and
published only in January. During his reply, counsel for the
landowners submitted in apparent after-thought that the roll was
invalid for want of compliance with s 105 of the Ordinance, which
by
implication requires a valuation roll prepared in terms of s 155 or
s 158 of the Ordinance to be published ‘not later
than the
thirtieth day of June’ preceding the rating year.
In their founding papers, the landowners complained that the council
had ‘concocted its own system which does not accord
with
either the Ordinance or the LGTA’. They then alluded to the
provisions of the Ordinance governing valuation rolls,
including s
105. However, the argument about the publication of the valuation
roll was apparently not advanced before Hugo J,
who held simply that
there was no justification for the landowners’ objections, and
that their complaint that the procedures
of the Ordinance had been
disregarded had not been properly evidenced in the affidavits.
The council’s answering affidavit objected to the absence of
detail in the landowners’ complaints, but disputed in
any
event that the valuation roll was invalid. In doing so, it invoked
only the LGTA: ‘The valuation system followed by
the
Municipality meets the requirements of the LGTA. If the
Municipality imported more features into the process in favour of
the ratepayers, that cannot be a basis for complaint.’ The
council further took issue with the landowners’ general
complaint that all the provisions of the Ordinance had to be
complied with or that the Ordinance governed the valuation process,
and stated that ‘the valuation process was fair and that there
was and is sufficient opportunity for any aggrieved party
to
challenge the valuation’.
The notice assessing the rates refers only to s 10G(7)(c) of the
LGTA, and not to the Ordinance. The council therefore invoked
a
power to impose rates derived from the LGTA alone. In terms of s
10G(6) of that statute, a council must 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 the properties are complied with’.
The reason the landowners did not previously suggest that the
Ordinance governed the valuation process is because their contention
has consistently been that the Ordinance does not apply at all. As
appears from the judgment of Swain J, they contended that the
council had no power under the Ordinance to rate them, since that
power was limited to ‘immovable property within the borough’.
Swain J, however, rejected this argument, holding that the council
had power under both the LGTA and the Ordinance to impose rates
upon
the properties in question.
In my view the landowners’ contention that the rating power
under the Ordinance applies only to those properties falling
within
the jurisdiction of boroughs as defined under the Ordinance is
correct. This emerges from the definitions contained in the
Ordinance, which define a ‘borough’ as ‘a borough
within the operation of this Ordinance’. It is common
cause
that the council was not a ‘borough’ within the
Ordinance’s operation, and that before the Systems Act
created
municipal authorities with encompassing jurisdictions, the
landowners’ properties fell outside the boroughs so defined.
The landowners further maintained that their properties would become
rateable only when the Rates Act came into force. That contention
was rightly rejected by both Swain J and Hugo J: the council’s
rating power, derived from the LGTA, is self-standing and
extends to
all properties within its jurisdiction. Since the power in question
does not derive from the Ordinance, I am of the
view that the
council in exercising it is not obliged to follow the prescripts of
the Ordinance, which have no application to the
newly rateable
properties.
It follows, in my view, that the time periods prescribed in the
Ordinance were applicable only to rates assessments of properties
falling within a borough as defined ‘within the operation’
of the Ordinance, and that where the council relied on the
powers
conferred on it under the LGTA to rate newly rateable properties,
the Ordinance did not apply. As counsel for the landowners
conceded, the LGTA does not impose any specific requirement as to
when the valuation roll must be drawn up. It follows that the
complaint that the rates were imposed in the middle of the year,
with effect from the beginning of the financial year, can also
not
prevail, since nothing in the LGTA precludes this.
It follows that ‘procedures prescribed by law’ under the
LGTA did not include the time periods and prescriptions contained
in
the Ordinance, and that the complaints regarding the publication of
the valuation roll are misconceived. Although notice of
the
preparation of the valuation roll was given separately, purportedly
under s 158 of the Ordinance, the council (according to
the
affidavit of its municipal manager) regarded that as supererogatory.
This in my view was correct.
This conclusion is strengthened by s 93(9) of the Structures Act.
This provides that:
‘
Until the legislation envisaged in section 229
(2) (b) of the Constitution of the Republic of South Africa, 1996
(Act 108 of 1996),
is enacted, a municipality may use the valuations
appearing on a provisional valuation roll or an additional valuation
roll when
imposing property rates.’
The impact of this provision seems to me to be two-fold: First, it
appears to have been enacted for the express purpose of freeing
municipalities from the constraints of the provisions of the
Ordinance. Second, it seems to entail that valuation rolls in
addition
to those prepared under the Ordinance (in other words,
‘provisional’ or ‘additional’ rolls) may be
used.
This is a plain indication that, pending the enactment of the
Rates Act, the time periods specified in the Ordinance for ordinary
rolls were not intended to apply to municipalities when not
exercising powers conferred by the Ordinance.
The landowners’ other complaints were even more faintly
pressed on appeal, and rightly so. The rating system of 2.3 cents
in the Rand on the land value may create anomalies, as any rating
system must, but is not irrational; on the contrary, it appears
to
provide a just and rational basis for introducing the new rates.
The appeal must accordingly be dismissed with costs.
E CAMERON
JUDGE OF
APPEAL
CONCUR:
ZULMAN JA
LEWIS JA
MAYA JA
THERON AJA
1
Under an interim order Hugo J granted pending the appeal, the
council is levying rates in accordance with a tender it made to the
landowners during the litigation.
2
Fedsure Life Assurance Ltd v Greater
Johannesburg Transitional Metropolitan Council
1999
(1) 374 (CC) paras 31-38 (interim Constitution);
City
of Cape Town v Robertson
[2004] ZACC 21
;
2005 (2) SA
323
(CC) paras 53-60 (final Constitution);
Rates
Action Group v City of Cape Town
2006
(1) SA 496
(SCA) para 10.
3
Constitution
Section 229, ‘Municipal
fiscal powers and functions’ amongst others empowers
a
municipality subject to some of its other sub-sections to impose
‘rates on property’.
4
Local Authorities Ordinance 25 of 1974 s 148:
‘Subject to the provisions hereinafter enacted, the council
shall have power
once in every financial year to assess and levy a
general rate upon all immovable property within the Borough.’
5
Section 229(2)(b) provides that the power of a
municipality to impose rates on property ‘may be regulated by
national legislation’.
6
Government Gazette 27720 of 29 June 2005.
7
Local Government: Municipal Finance Management
Act 56 of 2003
,
s 179(2):
‘Despite the repeal of section 10G
of the Local Government Transition Act, 1993 (Act 209 of 1993), by
subsection (1) of this
section, the provisions contained in
subsections (6), (6A) and (7) of section 10G remain in force until
the legislation envisaged
in section 229(2)(b) of the Constitution
is enacted.’
8
The correct position is set out in
Rates
Action Group v City of Cape Town
2006
(1) SA 498
(SCA) para 12. The decision in the court below in that
matter contains a comprehensive exposition of the legislative scheme
of
the local government reforms:
2004 (5) SA 545
(C).
9
In terms of s 180(1) of the Finance Management
Act, the Act takes effect on a date determined by notice in the
Government Gazette.
In terms of subsection (2), ‘Different
dates may in terms of subsection (1) be determined for different
provisions of the
Act’.
10
GN 772, Government Gazette 26510, dated 25 June
2004.
11
The council minutes read that it was –
‘
RESOLVED
1. That paragraph 3 of the
resolution passed on 09 June 2004 be amended in the following
respects:
1.1 The first paragraph of
Annexure C/21 [ie, the notice annexed to the minutes of 9 June] is
deleted and replaced …;
1.2 That
para 3.1 of Annexure C/21 is deleted and replaced …’.
12
Latib v The Administrator, Transvaal
1969 (3) SA 186
(T) at 190-1.
13
2001 (4) SA 1297
(CC).
14
Lawrence Baxter
Administrative
Law
(1984) p 366.
15
1910 TS 931
at 940-1 (per de Villiers JP); at
945-6 (per Wessels J).
16
MacRobert v Pretoria Municipal Council
1910
TS 931
at 945-6 per Wessels J.
17
1977 (4) SA 829
(A) at 841A-G.
18
2003 (2) 344 (SCA) para 34.
19
2001 (4) SA 1297
(CC) paras 13-18.
20
2001 (4) SA 1297
(CC) para 17.
21
2001 (4) SA 1297
(CC) paras 18, per Sachs J on
behalf of the Court.