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1988
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[1988] ZASCA 150
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Town Council of Nigel v Escom (209/86) [1988] ZASCA 150 (28 November 1988)
CASE NO 209/86
/CCC
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
In the
matter between
THE TOWN COUNCIL OF NIGEL
APPELLANT
and
ESCOM
RESPONDENT
CORAM:
CORBETT, VAN HEERDEN, GROSSKOPF, VIVIER JJA
et
NICHOLAS,
AJA
DATE HEARD
: 14 November 1988
DATE DELIVERED
: 28 November 1988
JUDGMENT
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2.
NICHOLAS AJA
:
Escom (which until the coming into operation of Act 50 of 1985 was known as
the Electricity Supply Commission) holds power line servitudes
over land within
the area of jurisdiction of the Town Council of Nigel ("the Town Council"). Such
servitudes are "rateable property"
within the definition of that term in s.l
(xxix) of the Local Authorities Rating Ordinance, 11 of 1977 (Transvaal) ("the
Ordinance").
In the servitude areas Escom has erected power lines for the
reticulation of electricity. They fall into three categories, namely,
(a)
Those which are not used
for the purpose of reticulating electricity to the inhabitants of
Nigel;
(b)
Those used solely for the purpose
of
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3.
reticulating electricity to such inhabitants;
and
(c) Those used for the dual purpose of
reticulating electricity to such inhabitants,
and to the
inhabitants of areas outside
Nigel.
The Town Council caused to be prepared a
provisional supplementary valuation roll for the f inancial year 1 July 1984 to
30 June 1985,
in which it included as rateable property Escom's power line
servitudes falling under category (c) without, it would seem, making
any
provision for exemption as provided in section l0(2)(a) of the Ordinance which
is referred to hereinafter. Escom objected to
such inclusion.
It contended that, in regard to such power line servitudes it was entitled to
exemption
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4.
from payment of any rates under s.5(l)(c) of the
Ordinance. This provides
that rateable property shall
be exempt from the payment of any rates
where
"(c) such property or portion thereof is owned by the Electricity Supply
Commission constituted in terms of the provisions of section
2 of the
Electricity Act 1958 (Act 40 of 1958), and such property or portion thereof is
used by the said Commission for the purpose
of reticulating electricity to the
inhabitants of the municipality concerned to the extent that such property or
portion thereof
is so used."
It is clear that the exemption applies to Escom. (See
s.3 of Act 50 of 1985).
The Town Council disputed Escom's
contention, and it was agreed that, in order to resolve
the dispute, Escom should apply to the Witwatersrand
Local Division for a declaration of rights. This was
duly done. The matter was heard by GOLDSTONE J, who
found in favour of Escom, and granted a declaratory
5/
5. order as prayed.
Leave to appeal to this court was granted by the learned judge, who directed
that the costs of the application for leave should be
costs in the cause of the
appeal.
In his judgment, GOLDSTONE J said
that the dispute between the parties related to the
phrase "to the extent that such propery or portion
thereof is so used", and continued:
"The applicant contends that if an area of land traversed by its power lines
conveys electricity to the inhabitants of Nigel it is
exempt from rating whether
or not that power is also carried to consumers outside the municipal area. The
respondent, in turn, contends
that the phrase 'to the extent that such property
or portion thereof is so used' relates to the quantity of power conveyed to
consumers
respectively within or outside the municipal area."
This was the issue between the
parties on appeal.
6/
6.
The first part of s.5(l)(c) is clear. In order to obtain an exemption under
s.5(l)(c), it is necessary (I omlt references to words
not germane for present
purposes) that Escom should own "rateable property", and that such property
should be used by Escom for the
purpose of reticulating electricity to the
inhabitants of the municipality concerned. There is no dispute in regard to
either of
these requirements: Escom owns the servitudes and they are used for
the purpose of reticulating electricity to the inhabitants of
Nigel. The fact
that they are also used for reticulating electricity to the inhabitants of other
areas does not detract from this.
It follows that Escom is entitled to an exemption. The guestion then is, what
is the extent of the exemption? It is the extent to
which "such property is so
used", that is, used by Escom for the
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7.
purpose of reticulating electricity to the inhabitants of Nigel Municipality.
It may be the entire extent of the property, or it may
be a part.
To interpret the phrase in the way contended for by the Town Council, (that
is, as meaning that the rateable property is exempt to
the extent that the power
lines on the property are used for the reticulation of electricity to the
inhabitants of the municipality)
would be to give it a strained and fanciful
interpretation - one which it cannot reasonably bear, and which does not fit in
with
other provisions of the Ordinance.
Such interpretation would have the result, not that any part of the "rateable
property" was exempt from the payment of rates, but
that a part of the rates
should not be payable, ie the proportion represented by the fraction x/y where x
is the quantity
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8.
of electricity supplied to the municipallty, and y is
the total quantity
of electricity transmitted through
the power line. In other words, there
would be not an
exemption of rateable property from payment of any
rate;
but a rebate on the rates. The word "exemption" when it
is used
without qualification, connotes immunity, and
s.5(l) provides that "rateable property shall be exempt
from the payment of
any
rate". (The word "any" in its
natural and ordinary sense is - unless restricted by the
context - an indefinite term which includes all of the
things to which it relates. (
Hayne & Co vs Kaffrarian
Steam Mill Co Ltd
1914 AD 363
at 371)).
Phrases similar to that under
consideration are contained in paras (a), (b) and (d) of
s.5(l), which read as follows (the underlining is mine):
(a) such property or portion thereof is land subject to mining title and is
held, occupied or used exclusively for the exercise of
any rlght conferred by
such
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9.
mining title or for any purpose incidental to such right
to the extent that
such property or any portion thereof is so held, occupied or used
: Provided
that the exclusive use of such land or portion thereof shall be deemed not to be
affected by the use thereof for any other
purpose if the Administrator consents
to such use;
(b) such property or portion thereof is let or used as contemplated in section
19 of the Financial Relations Act, 1976 (Act 65 of
1976),
to the extent that
such property or portion thereof is so let or used
, whether or not the
lessee or user of such property sublets it or any portion thereof to, or permits
the use thereof by any other
person for any purpose whatsoever;
(d) such property or portion thereof is land used exclusively for the purpose of
and
to the extent that such property or portion thereof is so used
for
(Various purposes are then set out, including public worship, a welfare
organisation, a hospital, higher education and a private
school).
In each of
paragraphs (a), (b) and
(d), it is plain, the phrase is used with reference to
the physical extent
of the property held, occupied, used
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10.
or let. No other interpretation is possible - see also
s.5(2):
"5(2) The provisions of subsection (1) exempting rateable property from the
payment of rates shall not apply -
(a) to land or any portion thereof contemplated in paragraph (a) of that
subsection
to the extent that such land
-
(i)
is used for residential purposes
or for purposes not incidental to mining
operations ..."
(My underlining). It is in the highest degree
improbable that the legislature could have intended
that, when used in paragraph (c), the phrase should have
a different reference.
Under ss(l) of s.10, the local
authority is required to cause a provisional valuation
roll to be prepared by the valuer in which shall be
recorded all rateable property valued in terms of s.9
and which shall reflect in respect of each such property
as at the date of valuation, the particulars set out,
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11.
including -
"(b) in the case of land or a right in land, the extent of the land
concerned;"
and
"(d) the site value;"
and under ss (2), where a
portion of the land concerned
referred to in subsection l(b) is exempt from
payment of
any rate in terms of s.5(l), the provisional roll shall
also reflect
"(a) the extent of the portion so exempt and
of the portion not so
exempt;
(b) "
This clearly contemplates an
exempt portion of the land,
and a non-exempt portion. On the Town Council's
interpretation, there could not, in a case referred to
in s.5(l)(c), be such portions.
S.21(l) provides that a local
authority may levy a rate or rates (to be known as a
general rate) on rateable property recorded in the
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12.
valuation roll for a financial year to which such roll is applicable. Under
s.21(3), a general rate levied shall be an amount in the
rand determined by the
local authority, in the first instance on the site value of land or on the site
value of a right in land.
Thus, the amount payable in respect of rates is a
matter for simple arithmetical calculation: it is the product of the site value
in rand as reflected in the valuation roll and the rate as determined by the
local authority. The Ordinance gives no indication of
how Escom's liability for
rates would be calculated if the Town Council's interpretation is correct. Who
is to furnish the values
of x and y in the fraction referred to above? As at
what date or dates and in what manner are they to be ascertained? The fact that
it does not do so shows that the legislature could not have intended the phrase
in question to bear that interpretation.
13/
13.
It was submitted on behalf of the Town Council that GOLDSTONE
J failed to construe s.5(l)(c) in its proper context: section 5(1)(c)
"constltutes an exemption of rateable property from the payment of rates and
falls to be construed within the context of the actual
rating clause, being
section 9(5)(a) which would otherwise apply to Escom".
S.9 of the Ordinance deals with the duty of the valuer to determine values of
rateable property. That duty generally is set out in
ss(l). However, ss.(5) and
(6) provide as follows:
"(5) Rateable property which is -
(a)
land or a right in land
held by a power undertaking under any title and traversed by power lines,
cables, water, air and gas pipes
and railway sidings;
or
(b)
a surface right permit held by a power
undertaking for residential purposes or for any purpose other than a purpose
contemplated in
paragraph (a),
shall
not be valued in terms of subsection (1)
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14.
but shall be deemed to have a site value of
one rand per square metre or
such lesser value
as the local authority may from time to
time
determine.
(6) The extent of the land contemplated in
subsection (5) held by a power
undertaking
shall be determined as follows:
(a) in respect of land or a right in
land held or used for any
purpose
referred to in subsection (5)(a)
(i) the width of -
(aa) overhead lattice power pole lines shall be deemed to be 30 metres;
(bb) overhead power lines with single or double poles shall be deemed to be
20 metres;
(cc) underground cables and water, air and gas pipes in the same trench,
shall be deemed to be 1 metre;
(dd) cables and water, air and gas pipes in separate trenches shall be deemed
to be 1 metre for each trench; and
(ee) railway sidings shall be deemed to be 4,5 metres; and
(ii) the length of lines, cables
and sidings referred to in
the
said subsection shall be the
actual length traversed thereby;
and
(b) in respect of land or a right in
land referred to in subsection
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15.
(5)(b), the extent of the land which is the subject of such
surface right permit shall be the actual extent thereof." In my opinion
ss.9(5)(a) is not "the
actual rating clause" and it does not provide a context
for the
interpretation of s.5(l)(c). There is no
connection between the two
provisions, which deal with
different subject-matters; s.5(l)(c) relates to
the
exemption of rateable property from the payment of
rates, whereas section 9(5)(a) deals with the
determination of the value
of certain kinds of rateable
property. S.5(l)(c) relates solely to Escom, and the
use of property for the purpose of reticulating
electricity; whereas s.9(5)(a) relates to a "power
undertaking" (which by definition means "any person
whose business includes the sale or supply of
electricity or gas whether in bulk or otherwise" and
thus includes Escom), and land or a right in land
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16.
traversed not only by power lines, but also "cables, water, air and gas pipes
and railway sidings".
Ss. (6) lays down the way in which the extent of the
land contemplated in ss.(5) shall be determined. The purpose of the
determination
is to provide data for the ascertainment of site value under
ss.(5). It does not provide the answer to the question of the extent
to which
the property is "so used" for the purpose of s.5(l)(c). One can illustrate from
an example given in Escom's founding affidavit.
A power line may for part of its
length carry electricity for delivery both to "inside" and "outside" users, and
then from a certain
point A carry electricity for delivery only to outside
users. It is only up to point A that the servitude is "so used" as contemplated
in the last part of s.5(l)(c); beyond point A it is not so used. Subsections (5)
and (6) of s.9 have no bearing on the extent of
the use.
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17.
Another submission made on behalf of the Town Council was
based on the legislative history of s.5(l)(c).
The predecessor of Ordinance 11 of
1977(T) was the Local Authorlties
Rating Ordinance, 20
of 1933(T). S.4 of the latter Ordinance defined
"rateable property" as including "every interest in land
as hereinbefore
defined with the following exceptions
...." "Interest in land" was defined as meaning and
including
inter alia
"the dominium in land ..." and "any
servitude over land". There was originally no
exception relating to the Electricity Supply Commission.
By s.l of the Local Authorities Rating Amendment
Ordinance, 1962(T), however, the following exception was
added to those set out in the original definitlon of
"rateable property":
"(g) any interest in land held by the Electricity Supply
Commission
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established under section one of the Electricity Act, 1922 (Act No. 42 of
1922), and used by the said Commission for the purpose of
reticulating
electricity to inhabitants within the area of the local authority
concerned."
This exception remained unchanged until the enactment of
s.5(l)(c) in the
Ordinance in 1977 (which was a
consolidating ordinance).
It was argued by counsel f or the Town
Council that the reason for the addition to s.5(l)(c) of
the words "to the extent that such property or portlon
thereof is so used" was this. It was understandable
that Escom should be exempted in so far as it was
supplying electricity to local inhabitants, because
without an exemption electricity delivered to "inside"
users would cost more. But there was no reason why
"outside" users should benefit from the exemption.
Accordingly, it was intended by s.5(l)(c) to provide
that there should be exemption only to the extent that
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19.
the property was used to provide electricity to the local
inhabitants. It could be the position that the property was used to supply
a
minuscule quantity of electricity to the municipality, while the bulk was
delivered elsewhere. This was something which the legislature
could not have
contemplated.
The reason suggested for the change in the wording of the
exception contained in s.5(l)(c) is pure speculation for which counsel offered
nothing in support. It may well be that the purpose of the phrase was simply to
narrow the field of the exemption, as was done in
the other paragraphs of s.5(l)
which are set out above.
In my opinion therefore GOLDSTONE J's decision was clearly right.
20/
20.
The appeal is dismissed with costs, including the costs of
two counsel.
NICHOLAS, AJA
CORBETT JA )
VAN HEERDEN JA ) CONCUR
GROSSKOPF JA )
VIVIER JA )