Zafirah Investments CC and Others v Moqhaka Municipality (54/2007) [2007] ZAFSHC 93 (6 September 2007)

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[2007] ZAFSHC 93
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Zafirah Investments CC and Others v Moqhaka Municipality (54/2007) [2007] ZAFSHC 93 (6 September 2007)

IN THE HIGH COURT
OF SOUTH AFRICA
(ORANGE FREE STATE
PROVINCIAL DIVISION)
Case No.: 54/2007
In the case between:
ZAFIRAH
INVESTMENTS CC
First Applicant
WESLEY
HAVEN (PTY) LTD
Second Applicant
MARGARET
LYNETTE NORVAL
Third Applicant
METHODIST
CHURCH OF SA
Fourth Applicant
DIE
OEWER BEHEERLIGGAAM
Fifth Applicant
ANTHONY
CHARLES WHITE NORVAL
Sixth Applicant
BENJAMIN
ERROL WHITE DELL
Seventh Applicant
ERF
327 MURRAY STREET, KROONSTAD
(PTY)
LTD
Eighth Applicant
REON
ESIAS BADENHORST N.O.
(In
his capacity as authorized representative
of
the trustees of the Renhof Badenhorst
Family
Trust IT1765/200)
Ninth Applicant
MUNICIPAL
EMPLOYEES PENSION FUND
Tenth Applicant
ALLEM
BROS. (PTY) LTD
Eleventh Applicant
PREMIER
FOODS LIMITED
Twelfth Applicant
and
MOQHAKA
MUNICIPALITY
Respondent
JUDGMENT:
VAN DER MERWE, J
HEARD
ON:
23 AUGUST 2007
______________________________________________________
DELIVERED ON:
6 SEPTEMBER 2007
[1] The applicants are
the owners of several properties (“the properties”) situated
within the area of jurisdiction of the respondent,
a duly constituted
local municipality.
[2] Pursuant to a
resolution taken by the council of the respondent on 31 May 2005, the
respondent on 7 June 2005 published and therefore
imposed
inter
alia
property rates, sewerage charges and refuse removal charges for the
2005/2006 financial year. In respect of property rates this
publication contained twelve different classes of property to which
nine different rates apply. As it is in principle permitted
to do
[see
RATES
ACTION GROUP v CITY OF CAPE TOWN
2006 (1) SA 496
(SCA)], the respondent in effect also levied rates on
property as charges for sewerage services and refuse removal. For
the sake
of convenience however I will where applicable refer to
these rates as tariffs, as the parties did. The validity of these
rates
and tariffs in respect of the properties was attacked in this
application on a wide variety of factual and legal grounds. In my
judgment however it is only necessary to consider the grounds
mentioned below.
[3] Section 229(1)(a) of
the Constitution empowers a municipality to impose rates on property
and surcharges on fees for services
provided by or on behalf of the
municipality. In terms of section 160(2) of the Constitution, the
function of the imposition of
rates and other taxes, levies and
duties may not be delegated by a municipal council.
[4] The Constitutional
function of a municipality to impose rates on property is a very
important one. It requires responsible and
careful attention and
clear expression. Common sense and the public interest dictate that
if at all possible, meaning and effect
should be given to a
resolution of a municipality imposing rates. On the other hand in my
judgment, if it is not possible to give
any meaningful interpretation
to a resolution by a municipal council in the exercise of this
function, that in itself would render
the resolution and the
imposition of the rates invalid. It is also clear that the
publication or imposition of rates that were not
approved by a
municipal council, is unlawful.
[5] The relevant portion
of the resolution of the respondent’s council of 31 May 2006 reads
as follows:
g
(v) that
the tariffs for property, water electricity and other municipal
services be approved (Appendix “A” to the Budget document).
that the tariffs for property rates
as recommended under scenario 1(b) on page 20 be approved as one
common tariff based on the
combined value of each properties (sic)
to achieve the approved average 5% increase which will earn the
total rates income as depicted
in scenario no 2 page 18; and
that the above (f) (sic) be done with
a provision that a rating factor be worked out against combined
value of properties to achieve
the intended value income as depicted
scenario 2 on page 18, taking into consideration the provisions of
the Municipal Property
Rates Act No. 6 of 2004.”
[6] From para (v) of the
resolution it appears that the council approved the rates and tariffs
set out in the document referred to
as appendix “A” to the budget
document. This document however contains more than one property rate
per class of property, specifically
in respect of domestic property,
smallholdings and farms. Scenario 1(b) on page 20 of the said
appendix “A” referred to in paragraph
(vi) of the resolution
refers, apparently by way of illustration, to a number of specific
domestic stands only. This scenario 1(b)
does contain however a rate
of 0,14708 cent in the rand on the value of land and of 0,012814 cent
in the rand on the value of improvements.
If one has to accept the
(f) in para (vii) of the resolution as a reference to para (vi) of
the resolution, it would appear that
the council intended that the
separate rates for land and improvements in scenario 1(b) be
mathematically calculated to constitute
a single rate on property.
The important point here however is that in terms of the wording of
the resolution the rates under scenario
1(b), that is in respect of
domestic property only, were “… approved as one common tariff
based on the combined value of each
properties (sic) …”. In
terms of the wording of the resolution therefore, one common property
rate is to be applied to all classes
of property. In contrast hereto
it seems very unlikely that this could have been intended by the
council, as said appendix “A”
contains separate rates for 8
different classes of property in respect of each of the scenarios
contained therein, including scenario
2 on page 18 referred to in the
resolution. The difficulty in the first place is therefore that even
on the most liberal interpretation
of the resolution, it is in my
judgment not possible to give any meaningful content thereto nor was
counsel for the respondent able
to do so. This difficulty is
exacerbated by the fact that on either possible interpretation, the
rates and tariffs cannot stand.
If the resolution means that one
property rate in respect of all classes of property was approved, the
separate rates for other
classes of property published on 7 June 2005
were not approved by the council and are therefore invalid. On the
other hand, if the
council did not apply the rates in respect of
domestic property to other classes of property, then obviously the
rates published
for the other classes of property, were also not
approved by council and are for that reason invalid. Furthermore, on
the information
before me, the respondent’s council did not approve
any tariffs for sewerage or refuse removal nor by any stretch of
imagination
did it approve nine different rates for twelve different
classes of property.
[7] I accordingly find
that the property rates, sewerage tariffs and refuse removal tariffs
imposed by the respondent for the 2005/2006
financial year, are
invalid in respect of the properties. In a counter-application the
respondent ask that in the event of this
finding, I should rule that
the respondent’s rates and applicable tariffs for the 2004/2005
financial year must be applied for
the 2005/2006 financial year but
on the valuations of the properties applicable during the 2005/2006
financial year. To my mind
this must follow on my aforesaid finding.
Counsel for the applicants was unable to indicate otherwise. The
parties are
ad
idem
that in the event of these findings, the order set out below, must
follow, save for costs.
[8] Costs must follow the
result, with the following exception. This matter was postponed by
Ebrahim J on 21 June 2007 and again
by Hattingh J on 23 August 2007.
On both occasions costs were reserved. On both occasions the
application was ripe for hearing
and the parties were in no way to
blame for the postponement. I believe that in these unfortunate
circumstances it would be unfair
to saddle the respondent with the
wasted costs of 21 June 2007 and 23 August 2007 and that each party
should bear its own costs thereof.
[9] The following order
is issued:
1. It is declared that
the municipal rates levied on the properties of the applicants
referred to in paragraphs 1(i) up to and including
paragraphs 1 -
(xi) of the founding affidavit of Anthony Charles White Norval (“the
properties”) in respect of the 2005/2006
financial year, are
unlawful.
2. It is declared that
the sewerage tariffs and refuse removal tariffs determined in respect
of the properties for the 2005/2006 financial
year, are unlawful.
3. In respect of the
2005/2006 financial year the applicants are ordered to pay rates and
sewerage and refuse removal tariffs in respect
of the properties in
accordance with the applicable rates and tariffs during the 2004/2005
financial year as same appear from the
statements of accounts
rendered to the applicants by the respondent during the 2004/2005
financial period, provided that such payments
shall be calculated on
the valuations of the properties that were applicable during the
2005/2006 financial year.
4. The respondent is
ordered to pay to the applicants such amounts, if any, as have been
paid to the respondent by the applicants
in excess of the amounts
determined in terms of paragraph 3 above.
5. The respondent is
ordered to pay the costs of the application, save for the wasted
costs of 21 June 2007 and 23 August 2007, in
respect of which no
order of costs is made.
________________________
C.H.G. VAN DER MERWE,
J
On
behalf of the applicants: Adv. B. Knoetze SC
Instructed by:
Naudes
BLOEMFONTEIN
On
behalf of respondent: Adv. J. P. Daffue
Instructed by:
Bokwa Attorneys
BLOEMFONTEIN
/em