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[2009] ZAGPPHC 59
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Initiative SA Investments 163 (Pty) Ltd v City of Tshwane Metropolitan Municipality and Another (16198/2008) [2009] ZAGPPHC 59 (15 May 2009)
/SG
IN THE HIGH COURT OF
SOUTH AFRICA
(NORTH AND SOUTH
GAUTENG HIGH COURT, PRETORIA)
DATE: 15/05/2009
CASE NO: 16198/2008
UNREPORTABLE
In
the matter between:
INITIATIVE
SA
INVESTMENTS
163 (PTY) LTD APPLICANT
And
CITY
OF TSHWANE METROPOLITAN
MUNICIPALITY 1
ST
RESPONDENT
ABSA
BANK LIMITED 2
ND
RESPONDENT
JUDGMENT
RAULINGA, J
The applicant seeks a
declarator against the first respondent declaring that the applicant
is entitled to the return of the guarantee
furnished to the first
respondent, dated 28 May 2004.
Further, that the first
respondent be ordered to forthwith return to the applicant the
guarantee annexed as “
EM13
”;
and also:
“ –
That a
declaratory order be made whereby it is declared that the Applicant
is not liable to pay any bulk contributions to the First
Respondent
for external electrical services in respect of Clubview X72 township;
–
That an order
be made that the First Respondent is not entitled to present the
aforesaid guarantee, Annexure ‘EM13’
to the founding
affidavit, to Absa Bank Ltd for payment;
–
That an order
be granted in terms of which it is declared that the guarantee,
Annexure ‘EM13’ to the founding affidavit
has lapsed in
its entirety and is no longer of any force and/or effect;
–
That
Respondents be ordered to pay the costs of the application;
”
On 28 September 1993,
the first respondent’s predecessor, the Centurion Town Council
passed a resolution in terms of which
no financial contributions for
external engineering services were required of developments taking
place in the areas designated
as priority arrears – the
resolution is annexure “
EM6
”.
Portion 528 (a portion of 526) of the farm Zwartkop 356 registration
division JR, fell within the said priority areas.
The Centurion Town
Council was disestablished in December 2000 and the City of
Tshwane Metropolitan Municipality was established
in terms of Notice
6770 of 2000 published in the provincial gazette extra ordinary of 1
October 2000 – annexure “
EM4
”.
On 6 December 2001 the
council of the City of Tshwane passed a resolution in terms of which
the tariffs of the disestablished municipalities
(including Centurion
Town Council) were purported to be withdrawn with effect from January
2002. From that day onwards the determination
of charges payable to
the council for the supply of electricity were purported to be
determined in terms of the provisions of section
10G(7)(ii) of the
Local Government Transition Act, 1993 (Act 209 of 1993) annexure
“
FC1
”.
The resolution so passed dealing with the priority areas in the now
disestablished Centurion Town Council is deemed to
have been
withdrawn.
The land upon which
Clubview X72 (a portion of 526) is situated previously belonged to an
entity known as Demef Properties Centurion
(Pty) Ltd (“
DPC
”).
DPC applied to the predecessor of the first respondent, the
Centurion Town Council to establish three townships namely
Clubview
X72, X73 and X74. The application was made in terms of the
provisions of section 96 of the Town Planning and Townships
Ordinance 15 of 1986. The application to establish the said
townships was approved on 2 April 1998 – annexure
“
EM2
”.
Subsequent to the
aforesaid approvals DPC decided to consolidate the three townships
into one which was approved by the first respondent
in terms of
section 98 of the Town Planning and Townships Ordinance. The
approval was granted on 20 September 2002.
The
proclamation appeared in the Provincial Gazette of August 2004
proclaiming Clubview X72 as a township in terms of the provisions
of
section 103 of the Town Planning and Townships Ordinance 1986 –
annexure “
EM4
”.
The land was sold to the
applicant by an entity known as Clubview Terraces (Pty) Ltd who in
turn had bought it from DPC. The applicant
bought the land in terms
of a written agreement of sale. The applicant became the owner of
the land by virtue of deed of transfer
– annexure “
EM5
”.
A dispute arose when the
first respondent wanted to require from the applicant to make a bulk
contribution in respect of external
electricity contributions. The
first respondent insisted with its demand even after a legal opinion
by its legal department went
against its wishes – “
EM9
”.
It is as a result of this dispute that in June 2004 the parties
concluded an engineering services agreement in respect
of the
township Clubview X72 – annexure “
EM10
”.
The parties inserted clause 73 which entails that the applicant
undertook to provide a guarantee for the amount of R478 512.30
pending settlement of the aforesaid dispute either by agreement
between the parties or by way of an order of a competent court.
Applicant furnished security in order to continue with the
development of Clubview X72. The first respondent refuses to release
the guarantee – annexure “
EM13
”.
Although a number of
issues were raised by both the applicant and the first respondent,
the matter may be decided based only on
a few of these issues.
The establishment of
Clubview Extension 72 – Township Portion 528 was approved in
terms of the provisions of section 98(1)
of the Town Planning and
Townships Ordinance 1986 (Ordinance 15 of 1986). This was subject to
conditions as reflected in the relevant
schedule which appears on
page 25 of the papers as part of annexure “
EM3
”.
That was on 20 September 2002. This was done after
consent was given to establish Clubview Extension 73 on
14 May 1998.
It is common cause that approval of 2 April 1998 was given
to DPC. On 6 December 2001 the
first respondent passed a
resolution whereby the tariffs of the disestablished municipalities
were withdraw with effect from 1 January
2002. This was to the
effect that the applicant was liable to pay bulk electricity charges
to the first respondent. The Resolution
is annexure “
FC1
”.
However, the said resolution does not contain a clause that the
exemption for payment of bulk electricity charges for
services
priority areas is revoked. Moreover the first respondent passed the
said resolution fully knowing that it had a duty
to comply with the
provisions of section 3 and/or 4 of the
Promotion of Administrative
Justice Act 3 of 2000
.
The first respondent did
not notify the applicant or any of its predecessors of the intent to
grant the variation in terms of section
98 of the Ordinance.
No reasonable
opportunity was granted to the applicant or any of its predecessors
to make representation to the first respondent.
No opportunity was
granted to the applicant or any of its predecessors to appear in
person before the first respondent. In the
contrary the first
respondent argues that no rights arose from any agreement entered
into between the applicant’s predecessor
and the first
respondent. The first respondent further argues that the said
resolution was revoked therefore the applicant must
pay the bulk
electricity charges.
It is my view that the
disputed resolution was not withdrawn by the resolution of 6 December
2001. The disestablished Centurion
Municipality passed a resolution
which was inherited by its successor, the first respondent. When the
township was approved in
August 2004, the applicant was entitled to a
right which flowed from its predecessor from whom it bought the
property. It was
not mentioned anywhere in the resolution of
December 2002 that the applicant’s rights were curtailed.
The applicant
was therefore not bound to pay for bulk external
electricity charges. When the first respondent’s predecessor
introduced
the incentive, the idea was to attract developers. Had it
not been for the said incentive, the applicant’s predecessor
would
not have bought the property. It can also be deduced that the
applicant would not have bought the property without the incentive.
The averments of the
first respondent are paralised by the legal opinion of its own Legal
Service Department – annexure “
EM9
”.
The legal opinion on page 83 of the papers concludes as follows:
“
1. The policy
of the disestablished Centurion Town Council was not withdrawn by the
resolution of the Tshwane Council on 6 December 2001.
Only
the electricity tariffs of the said Council were withdrawn. It
follows that the tariffs and formulas pertaining to the bulk
service
contributions as contained in Part II of the tariffs, are not
applicable to the areas of the said Council.
2. Although the
resolution of 6 December 2001 of the Tshwane Council had
withdrawn the tariffs of the disestablished Centurion
Town Council
the formulas that dealt with the calculation of the bulk services
contributions is still in effect.
3. The policy of the
disestablished Centurion Town Council can only be withdrawn and
substituted by Tshwane Council after a process
of community
participation has been followed …
”
The first respondent
submits that this opinion was not implemented because other legal
opinions were sought. However, the said
legal opinions are not at
hand nor can the first respondent make them available. First
respondent also argues that the document
containing the legal opinion
is privileged. However, the applicant convincingly submitted that
the said legal opinion was in a
file which makes it a public
document. The first respondent’s argument can be rejected with
the contempt it deserves.
In
Kungwimi
Local Municipality v Silver Lakes Home Owners Association
[2008] ZASCA 83
;
2008 6 SA 187
(SCA) [14]-[15] at 194F 195A and [31] at 200B F,
the court held:
“
In a
post constitutional South Africa, the power of a municipality to
impose a rate on property is derived from the Constitution
itself:
the Constitutional Court has described it as an ‘original
power’ and has held that the exercise of this original
constitutional power constitutes a legislative – rather than an
administrative act. The principle of legality, an incident
of the
rule of law, dictates that in levying, recovering and increasing
property rates, a municipality must follow the procedure
prescribed
by the applicable national or provincial legislation in this regard.
Before us it was common cause that
s 10G(7)
of the
Local
Government Transition Act 209 of 1993
applied at the relevant time to
both the resolution and the subsequent notice.
To my mind, the object
of these provisions is to ensure that residents in the municipal area
concerned are ‘properly and optimally
informed’ of what
their obligations will be, should be published amendments (in this
where, the rates increase) take effect,
and precisely when such
obligations will become enforceable. In the absence of such
information, it would be well nigh impossible
for residents
timeously to arrange their financial affairs such that they make
allowances for any anticipated increased demand
upon their purses …
”
This also sustains the
submission by the applicant that the requirements of
section 3
and/or
4 of Act 3 of 2000 were not met.
This was clarified by
JAFTA AJ in
Walele
v City of Cape Town and Others
[2008] ZACC 11
;
2008 6 SA 129
(CC) 28 at 144F-H:
“
Regarding the
procedural aspect of the right to fairness, the applicant’s
case was based on the provisions of s 3 of
PAJA. This section
acknowledges in express terms that the required standard for
procedural fairness differs from case to case.
The facts and
circumstances of a particular case determine the content of
procedural fairness required. But the express precondition
for the
requirement to act fairly, in terms of the section is that the
administrative action must materially and adversely affect
the rights
or legitimate expectations of the aggrieved person…
The audi principle
evolved and its scope was expanded under the common law also to cover
cases where the impugned decision did not
affect rights …
”
The first respondent
raised three new points which are not reflected in the answering
affidavit; (i) That the Centurion Town Council
when it passed the
resolution of January 2001 it acted
ultra
vires
;
(ii) That the said resolution does not create any rights; and (iii)
That the applicant as the second successor has no rights flowing
from
DPC. In raising these points at such a late stage of the process,
the first respondent was clutching on straws in desperation
to find
some solace.
I am convinced that the
version of the first respondent cannot be sustained.
1. In the premises the
application is granted.
2. The first respondent
is ordered to pay the costs of the application.
T J RAULINGA
JUDGE OF THE NORTH
GAUTENG HIGH COURT
16198/2008
Heard on
:
For
the Applicant
:
Adv
Instructed
by
:
Messrs
For
the Respondents
:
Adv
Instructed
by
:
Messrs
Date
of Judgment
: