CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 119/23
In the matter between:
EKAPA MINERALS (PTY) LIMITED First Applicant
EKAPA RESOURCES (PTY) LIMITED Second Applicant
and
SOL PLAATJE LOCAL MUNICIPALITY First Respondent
MINISTER OF COOPERATIVE GOVERNANCE
AND TRADITIONAL AFFAIRS Second Respondent
MINISTER OF FINANCE Third Respondent
MEMBER OF THE EXECUTIVE COUNCIL FOR
LOCAL GOVERNMENT, NORTHERN CAPE Fourth Respondent
Neutral citation: Ekapa Minerals (Pty) Ltd and Another v Sol Plaatje Local
Municipality and Others [2025 ] ZACC 1
Coram: Zondo CJ, Maya DCJ, Bilchitz AJ, Gamble AJ, Madlanga J,
Mathopo J, Mhlantla J and Tshiqi J
Judgments : Gamble AJ (unanimous )
Heard on: 6 May 2024
Decided on: 24 March 2025
2 Summary: [municipal property rates ] — [principle of legality ] —
[section 172(1)(b) ] — [just and equitable relief ] —
[review proceedings]
ORDER
On appeal from the High Court of South Africa, Northern Cape Division, Kimberley :
1. Leave to appeal is granted .
2. The appeal is upheld.
3. The order of the High Court is set aside and substituted with the following
order :
(a) “The decisions taken by the council of the first respondent to set a
property rates ratio of 1:22 in respect of the category of “mining”
for the financial years 2015/2016; 2016/2017; 2017/2018;
2018/2019 and 2019/2020 are declared unlawful and set aside.
(b) In terms of section 172(1)(b)(i) of the Constitu tion, the order in
paragraph 3(a) will operate retrospectively with effect from
1 July 2015 onwards.
(c) The first respondent may recover from the applicants , only the
amounts of the mining property rates ratio in relation to the
residential property rates ratio calculated based on the
Local Government : Municipal Property Rates Act 6 of 2004 and
the regulations promulgated in terms thereof, less any amount in
excess of the legally permissible limit, in respect of each financial
year from 2015/2016 to 2019/2020 ; and
(d) The first respondent is to pay the applicants’ costs of suit. ”
4. The first respondent is ordered to pay the applicants’ costs of the appeal,
including the costs of two counsel where so employed.
3 5. The applicants ’ undertaking not to claim any reimbursement from the first
respondent for th e rates it voluntarily paid under the 1:3 ratio is made an
order of court.
JUDGMENT
GAMBLE AJ (Zondo CJ, Maya DCJ, Bilchitz AJ, Madlanga J, Mathopo J, Mhlantla J
and Tshiqi J concurring ):
Introduction
[1] The city of Kimberley is synonymous with the exploration of diamonds which
were d iscovered in the area in the mid -1860 s. In 1888 , De Beers Consolidated Mines
Limited (De Beers) was formed. This is a company which has dominated the
exploration and marketing of diamonds throughout the world for more than a century .1
Around 201 0, De Beers scaled back its mining operations in the Kimberley area , leavin g
behind substantial earth in the form of mine dumps . These are known in the mining
industry as “tailings” and were believed to contain residual stones which were yet to be
retrieved.
[2] In 2015 , the first and second respondents , Ekapa Minerals (Pty) Limited and
Ekapa Resources (Pty) Limited (collectively refe rred to as Ekapa) bought eight
immovable properties from De Beers in and around Kimberley (properties) for the
purpose of re -working the tailings . In terms of a written agreement of sale with
De Beers (agreement), Ekapa took up occupation of the properties and became liable to
the first respondent , Sol Plaatje Local Municipality (municipality) for the payment of
1 The Editors of Encyclopaedia Britannica “De Beers S.A.” (21 February 2025) , available at
https://www.britannica.com/money/De -Beers -SA.
GAMBLE AJ
4 rates, taxes and other charges (rates) in respect of the properties. While Ekapa had
acquired ownership of three of the properties, the transfer of the remaining five
properties was held up as the municipality refused to issue rates cle arance certificates
in respect of them . This was due to a dispute that had arisen between the municipality
and Ekapa regarding the extent of the rates payable on the remaining five properties.
[3] Eventually , Ekapa approached the High Court of South Africa, Northern Cape
Division, Kimberley (High Court) in 2021 for declaratory relief in relation to the
outstanding rates payable to secure a rates clearance certificate in respect of the
properties awaiting transfer. It was only partially successful in the High Court and after
leave to appeal to the Supreme Court of Appeal had bee n refused by that Court, Ekapa
sought leave from the Supreme Court of Appeal . When that Court refused leave to
appeal, Ekapa approached this Court for leave to appeal .
Background to t he rates dispute
[4] In terms of section 8(1) of the Local Government: Municipal Property Rates Act2
(Rates Act), a municipality may, in terms of the criteria set out in its rates policy, levy
different rates for different categories of rateable property. The manner in which such
rates are calculated is based on the market value of the property.3 All rates ratios i n
respect of the various categories of properties are calculated in relation to the
“residential property” rate which is used by the municipality as a benchmark. Each
year4 the municipal council (council) determines the rates ratio that is applicable and
the rates ’ tariffs are t hen promulgated according to those ratios.
[5] The council determined the rates tariffs for the 2014/ 2015 to 2020/ 2021 financial
years as follows:
2 6 of 2004 . Section 8(1) provides that “[s]ubject to section 19, a municipality may in terms of the criteria set out
in its rates policy levy different rates for different categories of rateable property ”.
3 Section 11(1)(a) of the Rates Act.
4 The financial year runs from 1 July to 30 June in any particular year.
GAMBLE AJ
5 Category 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21
Residential
property 0.011618 0.009315 0.009688 0.010221 0.010834 0.009752 0.010376
Vacant residential
property 0.014531 0.015331 0.016251 0.014628 0.015564
Industrial property 0.047634 0.032602 0.031000 0.032707 0.034670 0.031206 0.03320
Vacant industrial
property 0.033907 0.035773 0.037920 0.034132 0.036316
Business and
commercial property 0.034854 0.027479 0.028578 0.030254 0.032069 0.029256 0.031128
Vacant Business and
commercial property 0.033907 0.035773 0.037920 0.034132 0.036316
Agricultural property 0.002905 0.002329 0.002422 0.002555 0.002709 0.002438 0.002594
Mining property 0.191698 0.195612 0.213127 0.224858 0.238354 0.214544 0.228275
Public service
property 0.029063 0.051104 0.054171 0.043884 0.046693
Property used by
organ of state 0.067813 0.071546 0.075840 0.058512 0.046693
Public service
infrastructure 0 0 0 0 0
Public benefit
activity property 0 0 0 0 0
Place of worship 0 0 0 0 0
Land reform
beneficiary 0 0 0 0 0
Private open space 0.010221 0.010834 0.009752 0.010376
Multi -purpose
properties 0.019375
GAMBLE AJ
6 Municipal property
used for municipal
purposes 0 0 0 0 0
Independent schools 0 0 0 0 0.002438 0.002594
Guest houses 0.018630 0.019375 0.020442 0.021669
Solar farms 0.020442 0.021669 0.029256 0.031128
Sports grounds and
facilities operated for
gain 0 0 0 0
University 0 0 0.021669 0.029256 0.031128
The rates payable in respect of mining property were thus around 2 2 times greater than
those payable in respect of residential property, while, for example, the rates on propert y
used for industrial purposes were only three times more than residential propert y.
[6] This table shows that during the 2014/ 2015 financial year, an owner of mining
property would have paid 19.5612 cents per rand on the valuation of the property during
that year. On this calculation, the owner of a mining property valued at say R1 million
in 2014/ 2015 would have paid R195 612 per year, or the equivalent of R16 301 per
month. In comparison, during the same financial year the owner of ind ustrial property
would have paid 3.2602 cents per rand on the valuation of its property. On this
calculation, the owner of industrial property valued at an estimated R1 million in
2014/ 2015, would have paid R32 602 per annum, or the equivalent o f R2 716.8 3 per
month. Therefore, an entity which owned mining property in the 2014/ 2015 financial
year would have paid almost eight times more than the owner of industrial property.
Over the years, the annual rates for mining property valued at , for example, R1 million
increased from R195 612 in the 2014/ 2015 financial year to R228 275 in the 2020/ 2021
financial year.
[7] Ekapa’s papers do not reflect what the municipality’s ratio was for mining
property prior to the council’s decision in respect of the 2014/ 2015 year. However, it
GAMBLE AJ
7 is suggested that while De Beers operated its diamond mines over the decades in the
Kimberley area, its properties were not subjected to an individual system of rates.
Rather, it is said that De Beers appears to have been afforded so me sort of preferential
treatment and paid annual rates to the municipality in terms of an agreement arrived at
between the parties. Ekapa further says that the agreement came to an end in 2010.
[8] Ekapa says that the ratio applied by the municipality to th e five properties only
came to its attention in 2019: it does not say anything about the receipt (or not) of the
rates ’ accounts over the preceding four years. In the middle of 2019 , Ekapa rais ed an
objection with the municipality, complaining that it reg arded the ratio of 1:22 in respect
of mining property as excessive and out of kilter with the other categories of rateable
properties. There was then some debate as to how the rates’ calculation had been arrived
at.
[9] Ekapa said in its founding affidavit i n its High Court legality review application
that it conducted its own investigations into rates levied on mining properties by 10
other municipalities located over a broad geographical area . It attached a table to that
affidavit which reflected that such rates varied from between 1:1.09 to 1:3.6. Based on
these rates , Ekapa unilaterally proclaimed that a rate of 1:3 was not unreasonable in the
Kimberley area.
[10] Despite the council’s decision to increase the rates ratio to 1:22 annually for the
period 2014 /2015 to 2020/ 2021, Ekapa says it decided to pay the rates at the ratio of 1:3
throughout the period, while it attempted to negotiate with the municipality about a
lower ratio and thereafter , while it approached the High Court to have the council’s
decisions reviewed and set aside on the basis that they contravened section 19(1)(c) of
the Rates Act.5 At that time , there was an outstanding amount of approximately
R30 million due by Ekapa for rates levied by the municipality, comprising the
5 Section 19(1)(c) provides that “[a] municipality may not levy . . . rates which unreasonably discriminate between
categories of non -residential properties”.
GAMBLE AJ
8 difference between the rates that it decided to pay (at a ratio of 1:3) and the rates that
were not paid (ultimately at a ratio of 1:22).
Litigation history
High Court – review application
[11] On 8 April 2021, Ekapa brought an application in the High Court to review an d
set aside each of the decisions taken by the council for the financial years 2014/ 2015 to
2020/ 2021 to fix the ratio for rates payable on the properties at 1:22 (the impugned
decisions). Ekapa sought to have the impugned decisions declared invalid on th e basis
that they violated section 229(2 )(a)6 of the Constitution and section 19(1)(c) of the
Rates Act. It did not seek any just and equitable order under section 172(1 )(b) of the
Constitution , nor did it seek a declaratory order as to the appropriate ra tio that should
have been applied by the municipality in respect of rates payable on mining properties .
[12] Ekapa contended that the differentiation and disparity between the rates payable
by an owner of mining property and the rates payable by an owner o f other
non-residential properties (such as industrial land) within the municipal area was
unlawful, irrational, unreasonable and offended the doctrine of legality. It submitted
that when increasing the property rates, the council had acted ultra vires (beyond its
powers ) the empowering provisions in section 229(2) of the Constitution and section
19(1)(c) of the Rates Act. Ekapa also relied on section 16 of the Rates Act,7 which was
6 Section 229(2) states:
“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 wa y that materially and unreasonably prejudices national 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.”
The Rates Act is the n ational legislation enacted in terms of section 229(2)(b) of the Constitution.
7 Section 16 states that in terms of section 229(2)(a) of the Constitution, a municipality may not exercise its power
to levy rates on property in a way that would materially an d unreasonably prejudice national economic policies,
economic activities across its boundaries or the national mobility of goods, services, capital or labour. Section 16
also provides procedural mechanisms for the Minister of Cooperative Governance and Tr aditional Affairs, after
notifying the Minister of Finance, to give notice to the municipality to limit the rate and imposes obligations on
the municipality to comply with such notice.
GAMBLE AJ
9 incorporated into that Act to give effect to section 229(2) of the Constitu tion. Lastly,
Ekapa relied on a document issued in 2020 by the Department of Cooperative
Governance an d Traditional Affairs (COGTA) titled “Local Government: Municipal
Property Rates Act, No. 6 of 2004 (General Guidelines March 2020) ”.8 In that policy
document, COGTA detailed how a municipality was required to exercise its power to
levy rates in accordance with section 16 of the Rates Act and section 229(2)(a) of the
Constitution.
[13] Ekapa contended before the High Court that the rates imposed by the counci l
created an unreasonable financial burden which impacted on its profitability and argued
that the significant increase in rates would result in the loss of employment and would
have an adverse effect on the businesses of certain of Ekapa’ s service provide rs. Lastly,
Ekapa stressed that its diamond mining operations were essential to South Africa’s
export market and job creation in general.
[14] On the delay in bringing the application, Ekapa submitted that —
(a) prior to 2019, it was unaware of the rates ratio imposed by the
municipality in respect of mining; and
(b) that since 2019, it had made every attempt to engage with the municipality
to resolve the dispute. In that regard, it enclosed correspondence with the
municipality to reflect the extent of its en gagement over the years.
[15] The municipality opposed the application and submitted that the impugned
decisions were not justiciable in th at court . In this regard, the municipality relied on
the decision of the S upreme Court of Appeal in Nokeng Tsa Taemane ,9 where it was
held that the power to levy rates on property for services provided by a municipality
concern s “political and inter -governmental issues, evidently specialist areas involving
8 Local Government: Municipal Property Rates Act , No. 6 of 2004 (Genera l Guidelines March 2020).
9 Nokeng Tsa Taemane Local Municipality v Dinokeng Property Owners Association [2010] ZASCA 128; 2011
2 All SA 46 (SCA).
GAMBLE AJ
10 policy issues ” outside the expertise of courts.10 The municipality f urther opposed the
review application on the following grounds:
(a) When taking the impugned decisions, the council was not performing
administrative action, but was acting in its capacity as an elected body:
such decisions were therefore not subject to re view under the Promotion
of Administrative Justice Act11 (PAJA); and
(b) There was an unreasonable delay in bringing the application.
[16] In its answering affidavit the municipality disavowed any knowledge of a
discrete arrangement in the past between it and D e Beers relating to the payment of
rates. It pointed out that the ratio in respect of the rates on mining property had always
been in place and had steadily increased over the years – from 0.02 in 2000 to 0.034 in
2005 and from 0.14 in 2010 to 0.195 in 20 15. It went on to contend that the properties
on which Ekapa’s operations were located had previously been listed as “ agricultural ”
on the valuation roll and thus attracted a significantly lower ratio. It said that when
Ekapa began using the properties for mining operations, it was necessary to procure the
correction of the valuation roll description to “mining ”, thereby resulting in a significant
increase in the rates payable thereon.
[17] On 2 September 2022, the High Court delivered judgment in favour of Ekapa
and declared the six impugned decisions unconstitutional in terms of section 172(1)(a)
of the Constitution. In this regard, it held that there was a striking differentiation in the
rates ratio applicable to the various categories of non -residential properties and that, on
the face of it, this differentiation was unreasonable. Further, because the municipality
had not advanced any palpable explanation for the differentiation in rates nor listed any
considerations underpinning its determination, the i mpugned decisions were held to be
inconsistent with section 19(1)(c) of the Rates Act, irrational and thus unlawful.
10 Id at para 8.
11 3 of 2000.
GAMBLE AJ
11 [18] In upholding the application, the High Court rejected the municipality’s reliance
on Nokeng Tsa Taemane and held that th e case concerned t he power to levy rates on
property for services provided by a municipality which was significantly different to a
municipality’s power under section 19(1)(c) of the Rates Act to determine rates that do
not unfairly discriminate between various categories o f non -residential properties. The
High Court reasoned that the former was not justiciable by the courts whilst the latter
was.
[19] In respect of the other two grounds of opposition, the High Court held that Ekapa
brought the review challenge under the doctri ne of legality and not PAJA: the challenge
was not to impugn the municipality’s powers to determine rates , but sought only to
review and set aside the impugned decisions as being unlawful, irrational and
unreasonable. The very purpose of the challenge, the Court held, was to prevent the
municipality from recovering the outstanding rates from Ekapa.
[20] On the question of the delay in bringing the review application, the High Court
found Ekapa’s explanation to be “extremely sketchy and unsatisfactory ”. It held that
there was no explanation as to why Ekapa was unaware of the rates ratio applicable
until 2019, given that it had purchased the properties in 2015 and had been contractually
responsible for payment of rates in respect of the properties since then. Further, the
High Court assumed that Ekapa must have received monthly rates’ statements since it
had purchased the properties in 2015.
[21] The High Court held that the absence of adequate reasons for the delay in
bringing the review application rendered the delay unreasonable. It noted that the
period from 2015 to 2021 was lengthy and that the prejudice to the municipality was
clear. In this regard, the High Court found that the outstanding amount due by Ekapa
of around R30 million was what the municipality would have budgeted to collect, and
as a result, the municipality may have had to borrow money from financial institutions
to cover the shortfall. It reasoned that if the impugned decisions were set aside ,
GAMBLE AJ
12 the municipality would not be able to recover th e amount of the debt owed to it by
Ekapa and that this was real prejudice which the municipality would suffer.
[22] On remedy, the High Court held that setting aside the impugned decisions would
have a disruptive effect on the affairs of the municipality in th at it would not be able to
enforce the outstanding rates owed to it by Ekapa. In order to ameliorate the disruptive
consequences of setting aside the impugned decisions, the High Court made an order
limiting the retrospective effect of the declaration of invalidity and ordered that it should
operate with prospective effect only. In t hat way, the High Court reasoned, the
municipality would still be able to enforce payment of the debt owed to it by Ekapa,
notwithstanding the setting aside of the impugned de cisions.
[23] Consequently, the High Court granted the following order:
“52.1 The decisions taken by the Council of the [municipality] to set a property rates
ratio of 1:22 in respect of the category of “ mining ” for the financial years
[2015/16 to 2020/21] are declared unlawful and set aside.
52.2 In terms of section 172(1 )(b)(i) of the Constitution, the order in paragraph 52.1
above shall have prospective effect only.
52.3 The [municipality] shall pay the costs of the application, including the costs
consequent upon the employment of two counsel”.
[24] On 28 September 2022 , Ekapa brought an application before the High Court for
leave t o appeal only against it s order declaring the impugned decisions inva lid with
prospective effect. The municipality opposed the application. There was no
cross -appeal by the municipality in respect of the other two orders granted by the
High Court. On 13 January 2023, the High Court dismissed Ekapa’s application for
leave to appeal with costs. In doing so, the High Court re jected the contention that it
had not exercised its discretion judicially. In this regard, it held that courts cannot grant
orders with retrospective effect if they are likely to h ave deleterious consequences.
GAMBLE AJ
13 Supreme Court of Appeal
[25] Aggrieved by the Hi gh Court’s dismissal of its application for leave to appeal,
Ekapa applied for leave to the Supreme Court of Appeal, which was dismissed , with
costs, on 12 April 2023.
In this Court
Ekapa’s submissions
Jurisdiction and leave to appeal
[26] In this Court, Ekapa submits that the constitutional issue raised in this matter
relates to the constitutional discretion exercised by the High Court in terms of
section 172(1 )(b) of the Constitution. In essence, it contends that the High Court did
not exercise that discreti on judicially; that it was influenced by a wrong principle;
misdirected itself on the facts and thus failed to make a just and equ itable order. Further,
it contends that the High Court failed to apply the constitutional values embodied in the
Constitution and in particular, section 172(1 )(b).
Merits
[27] In the main, Ekapa contend s that when a decision has been declared invalid on
the basis of legality and a just and equitable order must be made, a court ought to
consider whether the relief is justified in the particular circumstances of the case before
it. Further, it argues that such a remed ial order should have regard to the interests of all
of those affected by it .
[28] Ekapa contends that the High Court did not consider the effect of its order on it.
It argues that the municipality’s contention that, although the High Court did not
specifically refer to what effect its order might have on Ekapa, this did not necessarily
mean that the High Court did not consider that aspect, is untenable and contrary to th e
tenets of our law. Ekapa argues that it must be clear and tr ansparent to all concerned
which factors were taken into account and which were not taken into account when a
GAMBLE AJ
14 court exercises a discretion such as that contemplated in section 172(1 )(b). It submits
that it is clear that the High Court failed to consider Ekapa’s position properly, or at all .
[29] Ekapa suggests that the following factors were material and ought to have been
considered by the High Court when making its just and equitable or der:
(a) That it conduct s diamond mining operation s on portions of the properties
in question by reworking the tailings , and in the process old deposits are
then reworked;
(b) Ekapa’s operations ent ail the recovery of diamonds using new technology
that allows it t o identify and find diamonds that were not recovered during
the original diamond operations, the majority of which are not very large;
(c) Ekapa processes the ground that it recovers through its own mining
operations in respect of three underground mines in te rms of the mining
licenses and permits held by it;
(d) Ekapa commenced these operations after purchasing the properties from
De Beers which had ceased its mining operations;
(e) During the Covid -19 pandemic, Ekapa had been required to reduce its
employees ’ salarie s in order to survive; and
(f) Importantly, the mining operations thus conducted constitute a marginal
diamond mining business. Continuity in its business operations is
dependent on the international rough diamond market price and the
rand/dollar exchange rat e, which are important variables.
[30] Consequently, Ekapa contends that the High Court did not consi der at all what
the impact of the unlawfully promulgated rates would constitute for the continuation of
its marginal business and the deleterious impact it wou ld have on its service providers
and employees. It stresses that the High Court only considered the interests of the
municipality.
[31] Ekapa further submits that the High Court made speculative assumptions about
the loans that the municipality might have had to make, and would not be able to repay
GAMBLE AJ
15 these, should Ekapa not pay its rates. It complains that there was no evidence to thi s
effect before the High Court. Ekapa goes on to state that it continued to pay rates
throughout the relevant period at the ratio of 1:3, which equates to the rates payable on
the category for business and commercial properties and which it demonstrated through
evidence was the average ratio paid by other mining houses in the country to their
respective lo cal authorities. Eka pa stresses that it did not refuse to pay rates per se, but
paid rates on the ratios applicable to similar business operations and, further, that it do es
not seek repayment of any of the monies already paid. It was adamant , however , that
the municipality should not be entitled to levy the unlawful rates at a ratio of 1:22.
[32] Ekapa further submits that the rates in the present matter covered six financial
years and that the sum of R30 million (the difference between the 1:3 ratio and the
1:22 ratio) amounts to approximately R5 million a ye ar over the six financial years.
This, it says, could hardly have placed the municipality in the impoverished financial
position about which the High Court speculated.
[33] Lastly, Ekapa contends that the High Court did not att empt a balancing exercise
with respect to the parties’ competing interests. It complains that an order in which a
successful litigant is still ordered to pay rates which have been found to be unlawful
manifestly does no t vindicate the rights of that litigant.
[34] For these reasons, Ekapa submits that this Court should interfere with the order
of the High Court. It expressly asks in its notice of application for leave to appeal that
this Court should delete the order contained in para graph 52.2 of the order o f the
High Court (which makes the operation of the order of invalidity prospective) and
replace it with the following order —
“That [Ekapa is] ordered to pay rates on [its] properties that are categorised ‘mining ’
at a rates ratio of 1:3 for the financial years 2015/16 up to and including 2020/ 21. The
Municipality is not entitled to collect any further rates other than the amounts set out
above .”
GAMBLE AJ
16
It should be stress ed that this is the first time in the course of this litigation that Ekapa
has asked for such declaratory relief : it did not do so in its notice of motion before the
High Court .
The municipality ’s submissions
Jurisdiction and leave to appeal
[35] The municipality contends that this Court only grants leave to appeal if , amongst
others, it is in the interests of justice to do so. It submits that it is not in the interests of
justice for the apex court to pronounce on the narrow, fact -specific question presented
by this case, namely whether on the specific facts of this case, the High Court exercised
its dis cretion correctly . It further submits that this Court is generally un willing to be
detained by fact-specific cases which are of no real relevance beyond the narrow
interests of the litigants themselves and that the issues should be of importance t o a
sufficiently large section of the public.
Merits
[36] The municipality contends that the substance of Ekapa’s complaint is that the
High Court reached the wrong conclusion: it is thus a complaint about the correctness
of the High Court’s order. The municipality contends that such correctness is not
embraced by the test on appeal where the issue is the exercise of a true discretion. It
contends that the High Court’s discretion can only be interfered with in circumstances
where it failed to exercise i ts discretion judicially, or where it exercised the discretion
on wrong principles or misdirected itself on the facts. It says that Ekapa has failed to
establish these criteria.
[37] Further, says the municipality, Ekapa’s complaint relates in the main to the
manner in which the High Court exercised its discretion on the specific facts of this
case. This, the municipality contends, demonstrates that the issues raised are factual in
nature and do not go beyond the narrow interests of the litigants.
GAMBLE AJ
17
[38] The munici pality further argues that the High Court exercised its discretion
correctly, in that it is permissible for a court, in exercising its discretion under
section 172(1 )(b), to decline to grant a retrospective remedy on the basis that doing so
would be disrup tive or result in deleterious consequences. The municipality says that
even if the High Court exercised its discretion incorrectly, or applied the wrong legal
test in the exercise of its discretion, that would not be sufficient: the misapplication of
a settled legal test does not engage this Court’s jurisdiction. It further submits that the
contention that the High Court reached an incorrect decision is not, without more, a
constitutional matter.
[39] The municipality submits that a “setting aside” order is d iscretiona ry.
Accordingly, it argues that Ekapa does not have the right to have invalid and unlawful
actions or decisions set aside. An interpretation contrary to this would be at odds with
the plain wording of section 172(1 )(b) and the established juris prudence of this Court.
[40] The municipality contends that Ekapa’s proposition that it is important for
decision -makers to give reasons for their decisions, conflates the decision of the
municipality with the High Court judgment. The question before this Cou rt is whether
Ekapa has made out a case for this Court to interfere with the High Court’s exercise of
a true discretion, a question which cannot be answered by reference to the duty of
administrators to give reasons when they exercise public power.
[41] For al l of these reasons, the municipality submits that leave to appeal must be
refused. If leave is granted, it says that the appeal should be dismissed.
Issues
[42] The issues to be determined by this Court are :
(a) whether this Court’s jurisdiction is engaged;
(b) if this Court has jurisdiction, w hether leave to appeal should be granted;
GAMBLE AJ
18 (c) if leave to appeal is granted, w hether this C ourt should interfere with the
discretion exercised by th e High Court to grant an order under
section 172(1)(b) of the Constitution with prospective effect ; and, if so,
(d) the appropriate remedy to be granted in the circumstances .
Analysis
Jurisdiction and leave to appeal
[43] There is an argument as to whether this matter raises purely a factual issue. In
my view this is not the case as the enquiry here relates to relief that was granted in terms
of section 172(1 )(b) of the Constitution . The case raises important issues concerning
the manner in which courts should exercise their true discret ion in rela tion to relief
under that section and thus , in my view, the case raises constitutional issues. As regards
whether leave to appeal should be granted , I consider that there are good prospects of
success, particularly when regard is had to the limited attent ion that the High Court paid
to the interests of Ekapa in considering an appropriate just and equitable remedy.
Merits
Issues
[44] There is no debate between the parties that the order of invalidity granted by the
High Court under section 172(1 )(a) with respe ct to the rates ’ ratios must stand. The
crisp question is whether this C ourt should interfere with the discretion exercised by th e
High Court to grant an order under section 172(1 )(b) with prospective effect only . The
High Court’s justification in granting such an order relates to Ekapa’s unreasonable
delay in instituting proceedings, and the prejudice the municipality would suffer should
a retrospective order be issued. The order of the High Court is clear insofar as it se t its
face against the possibility that the municipality was to be deprived of the right to
recover the arrear rates. In my view, however, the delay issue should work both
ways – the municipality was equally dilatory in recovering outstanding rates in the
ordinary course from Ekapa from 2015 onwards.
GAMBLE AJ
19 Delay
[45] The High Court dealt with the issue of unreasonable delay by reviewing the
timeline and justifications put up by Ekapa. The contested decisions dated back to the
2015/2016 financial year, with the rate s ratio for immovable properties set annually by
the council. Nonetheless, Ekapa delayed significantly in challenging these rates – it
only launched its review application in April 2021.
[46] Ekapa puts up two reasons for its delay:
(a) It claims that it was unaware of the extent of the rates until 2019, and only
knew of the extent of its liability when it was required to clear the arrears
prior to taking transfer of the properties; and
(b) Since 2019, it has engaged with the municipality and had been trying to
resolve the dispute but says it was given the run -around by the
municipality.12
[47] The High Court found these explanations inadequate. It observed that, having
purchased the properties on 30 November 2015 , Ekapa was obliged under the
agreement of sale to effect payment of the rates from that point on. The High Court
suggested that Ekapa would in all likelihood have received monthly statements from
the municipality regarding such rates and taxes. The High Court further regarded it as
implausible that Ekapa was oblivious of the rates for such an extended period, given its
on-going responsibility for these payments. I find this reasoning unconvincing in the
absence of direct evidence that the rates ’ account s were indeed sent to Ekapa. It is thus
necessary to look briefly at the evidence.
[48] In Ekapa’ s founding affidavit , its CEO , Mr Hohn e, states :
12 Annexed to Ekapa’s founding affidavit are letters it wrote the municipality in July 2019 taking issue with the
property rates ratio.
GAMBLE AJ
20 “It was only after we had purchased the properties and after the value of the properties
had been altered from agricultural to mining that this issue really came to the fore .”
[49] The municipality’s reply to this allegation is found in its answering affidavit
deposed to by Mr Nel, a senior manager in its properties and taxation department. He
denied that “ the value of the propertie s” had ever been altered from agricultural to
mining, noting that they had been zoned as mining properties “ for ages ”. He explained
further that after he took up his position with the municipality in September 2015 , he
“realised that the p roperties were not correctly categorised in the valuation roll. They
appeared under the category “Agricultural ” in the valuation roll although they were
being used for mining purposes .”
[50] Mr Nel says he then took the necessary steps to rectify the position and
references the change by referring to annual rates ’ statements dated July 2021 which
record that in 2014 the properties were rated for the category “Agricultural Farms ”
while in October 2018 they were rated as “Mine Ground ”. The statements in questio n
appear to have been marked for the attention of De Beers.
[51] Ther e is thus no challenge by the municipality to Ekapa’s allegation that it did
not know of the rates payable on the properties until 2019. In fact , the documents put
up by the municipality tend to confirm this allegation. After all, De Beers was still the
registered owner of the properties in 2019 and the issue with the extent of the rates only
arose when Ekapa tried to obtain a rates clearance from the municipality so as to enable
it to take transfer of the properties. There is no evidence to suggest that the municipality
knew of the sale agreement between De Beers and Ekapa, and there is nothing to
suggest that Ekapa had been substituted for De Beers in the municipality’s books of
account or that the accounts had been sent to it. Lastly, there is no plausible explanation
as to why the municipality failed to demand payment from Ekapa of the outstanding
rates from 2015 onwards.
GAMBLE AJ
21 [52] In the result , I do not agree that Ekapa’s delay in challenging the 1:22 mining
property rates ratio was of the order of five years. In fact , the delay was really from
around November 2019 to April 2021 when Ekapa lodged its application for review –
a period of some 18 month s at most. Yet the High Court deemed the delay to have been
from 2015 to 2021, regarded this as extensive and found Ekapa’s reasons for the delay
unconvincing, thus rendering the delay unreasonable.
[53] Recognising that the enquir y did not end there, the High Court assessed whether
the unreasonable delay could be overlooked. Following Khumalo ,13 it evaluated the
unreasonableness of the delay with regard to its potential prejudice to the m unicipality
and considered the implications of se tting aside the impugned decision against that
background . The High Court noted that Ekapa owed R30 million to the municipality,
a sum likely to have been accounted for in previous budgets. Thus, the High Court held
that o verlooking the delay and setting aside the decisions with full retrospectivity would
occasion “deleterious ” consequences for the m unicipality and cause significant
financial prejudice, possibly affecting its financial stability.
[54] The High Court , however , held that the exercise of its remedial discretion in
terms of section 172(1 )(b) could ameliorate the prejudice the municipality would suffer
if the delay was overlooked and consequently, the impugned rates were set aside by
limiting the retrospective effect of the order and granting a prospective order only. This
decision was made in the context of vindicating the principle of legality, given the
municipality’s manifest deviation from the relevant statutory requirements. In coming
to this conclusion, t he High Court overlooked the dela y in an endeavour to uphold the
principle of legality, which was necessitated by the municipality ’s deviation from the
relevant statutory prescripts as an organ of state.14 The decision to limit the
retrospective effect of the order, and thus the issuing of an exclusively prospective
13 Khumalo v Member of the Executive Council for Education; KwaZulu Natal [2013] ZACC 49; 2014 (3) BCLR
333 (CC); 2014 (5) SA 579 (CC).
14 Section 19(c) of the Rates Act.
GAMBLE AJ
22 order, was informed by this context. The Court acknowledged the practical difficulties
of setting aside municipal rates and budgets, aligning its reasoning with SAPOA .15
Just and equitable relief
[55] In review proceedings under the principle of legality and in considering the
application of section 172(1 )(b) of the Constit ution , it is settled law that a court has
broad and a flexible discretion to craft an order that prioritis es substance over form,
thereby allowing the court to pinpoint the genuine underlying conflict between the
parties and mandate actions that resolve the dispute in accordance with constitutional
principle s, due regard being had to the specific circumstances of the case. 16 The court
must balance the interests of all parties, avoiding a narrow focus on the interests of one
side alone .17
[56] In my considered view, the facts of this case bear a striking resemblance to
Thaba Chweu ,18 where the Supreme Court of Appeal held that this balancing act has to
have regard to both the interests of the municipality and the need to ensure that the
principle of legality is given effect to. That approach is equally applicable in the present
matter.
[57] The S upreme Court of Appeal confirmed in Central Energy Fund ,19 that the
discretion exercised in terms of section 172(1 )(b) of the Constitution is a true discretion,
to be exercis ed on a case -by-case basis. Therefore, it may only be interfered with on
15 South African Property Owners Association v Johannesburg Metropolitan Municipality [2012] ZASCA 157;
2013 (1) SA 420 (SCA) ; 2013 (1) BCLR 87 (SCA) at paras 74–5.
16 Head of Department: Mpumalanga Department of Education v Hoërskool Ermelo [2009] ZACC 32; 2010 (2)
SA 415 (CC) ; 2010 (3) BCLR 177 (CC) (Hoërskool Ermelo ) at para 96 –7.
17 Millennium Waste Management (Pty) Lt d v Chairperson of the Tender Board: Limpopo Province [2007]
ZASCA 165; 2008 (2) SA 481 (SCA ) (Millennium Waste ) at para 22.
18 Thaba Chweu Rural Forum v Thaba Chweu Local Municipality [2023] ZASCA 25 at para 36. The case involved
a complaint by a ratepayers’ forum that its members had not been treated fairly by the local authority when it
impose d the same property rates which were payable on urban properties on their agricultural land. They sought
just and equitable relief under section 172(1)(b) of the Constitution.
19 Central Energy Fund SOC Ltd v Venus Rays Trade (Pty) Ltd [2022] ZASCA 54; 2022 (5) SA 56 (SCA) at
para 43.
GAMBLE AJ
23 appeal , if the court of appeal is satisfied that the discretion was not exercised judicially,
or was influenced by wrong principles or based on a misdirection of fact. It follows
that the enquiry here should be whether the High Court misdirected itself on the facts
and the law.
[58] The High Court’s prospective order is cha llenged by Ekapa on two bases. First,
it is submitted that, in exercising its discretion in limiting the retrospective effect of the
order of invalidity, the High Court singularly failed to take into account the interests
and position of Ekapa: it merely took into account the interests of the municipality. It
is therefore argued that th e lack of balance by the High Court in the exercise of its
discretion constitutes a misdirection, which opens the door for this Court to interfere
with the discretion.20 Ekapa also contends that it put forward relevant facts that would
have assisted the High Court in the exercise of its discretion under section 172(1 )(b) of
the Constitution . There is no debate that it is apparent from the judgment that the
position and interests of E kapa were not considered . Counsel for the municipality
conceded as much before us.
[59] The second basis advanced by Ekapa that would justify this Court’s interference
with the High Court’s order is the latter’s failure to take into account the prejudice to
the public interest in allowing the municipality to recover rates that are set at
unreasonable levels and that were accordingly declared invalid.
[60] Regarding the first basis, t his Court has remarked that : “improper performance
of an admini strative function would implicate the Constitution and entitle the aggrieved
party to appropriate relief” (own emphasis).21 It has also distinguished between a
declaration of invalidity and a settin g aside order as was the case in Khumalo , where
this Court held that “[w]hile a court must declare conduct that it finds to be
20 Trencon Construction (Pty) L td v Industrial Development Corporation of South Africa L td [2015] ZACC 22 ;
2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC) at para 88 .
21 Steenkamp N .O. v Provincial Tender Board of the Eastern Cape [2006] ZACC 16; 2007 (3) SA 121 (CC); 2007
(3) BCLR 300 (CC) at para 29.
GAMBLE AJ
24 unconstitutional invalid, it need not set the conduct aside ”.22 A declaration of invalidity
would then engage a court’s remedial powers to grant a “just and equitable” order under
section 172(1)(b) of the Constitution.23
[61] Thus , when a co urt declares a decision of the s tate invalid and unlawful, the
default position is that the impugned decision is void ab init io (from the start) , for
example, the declaration of invalidly has retrospective e ffect – “an administrative
decision declared to have been invalid is to be retrospectively regarded as if it had never
been made .”24 However, the court has wide powers to exercise a discretion to
ameliorate the consequences of such an order .25 It follows that a court that is asked to
set aside an invalid administrative act in proceedings for judicial review has a discretion
whether to grant or to withhold the remedy : for example, notwithstanding the invali dity,
the impugned decision might not be set aside, and hence the declarat ion of invalidly
would have no retrospective effect.
[62] The rationale as to why an order of prospective invalidity is made is another
factor tha t must be considered –– the case law on this issue is trite. Accordingly, t his
Court has consistently held that an order limiting retrospectivity can be used as a
mechanism “to avoid the dislocation and inconvenience of undoing transactions,
decisions or actions taken under [the invalidated] statute”.26
[63] In light of the aforementioned, it is necessary to have regard to the facts before
the High Court when it exercised its discretion. The municipality, in its answering
affidavit in the application for leave to appeal, asserted that the rates ratio was annually
determined by the council as part of its annual budget approval process, as prescribed
22 Khumalo above n 13 at para 53 .
23 Id.
24 City of Johannesburg v AD Outpost (Pty) Ltd [2012] ZASCA 40; 2012 (4) SA 325 (SCA) at para 20 .
25 Notyawa v Makana Municipality [2019] ZACC 43; 2020 (2) BCLR 136 (CC); 2020 4 BLLR 337 (CC) ; (2020)
41 ILJ 1069 (C C) at para 50.
26 S v Zuma [1995] ZACC 1; 1995 (2) SA 642 (CC); 1995 (4) BCLR 401 (CC) at para 43.
GAMBLE AJ
25 in sections 16 and 17 of the Local Government: Municipal Finance Management Act.27
It stresse d that t hese amounts were earmarked as anticipated revenue to be collected by
the munic ipality . This is congruent with the High Court’s finding that an order of
setting aside wi th full retrospective effect would have a disruptive , if not deleterious ,
effect on the affairs of the municipality in the enforcement of the impugned outstanding
rates.
[64] On the same score, it is also correct that the High Court did not consider that
Ekapa had paid rates throughout the relevant period at a ratio of 1:3, in line with the
rates charged by the municipality on the category of busine ss and commercial
prope rties, and claimed to pay rates on the ratio applicable to similar mining operations
elsewhere in the country . The shortfall on the municipality ’s budget projections over
several financial years amounted to around R30 million (representing the difference
between the 1:3 ratio and the 1:22 ratio), arguably resulting in an approximate annual
deficit of R5 million over six years . Advancing this assumption , I regard it as unlikely
that an annual shortfall of such a relatively limited amount would have necessi tated
having to borrow money from the bank. The High Court clearly did not consider this
factor.
[65] In examining the second basis and the municipality’s argument before this Court
that the High Court correctly exercised its remedial discretion in terms of the
prospective order , the submission impli es that the effect of the order accords with the
norms o f justice and equity. That is, the m unicipality is still able to exact payment of
this amount even though the High Court has held that the decisions that ga ve rise to that
indebtedness were unconstitutional. Should matters be left as they are, the municipality
stands to unjustifiably claim the unlawfully imposed excessive portion of the municipal
rates levied on Ekapa that were charged on the basis of an inc orrect and unlawful tariff.
As the Court in Thaba Chweu held, the municipality cannot seriously argue that it is
27 56 of 2003 .
GAMBLE AJ
26 entitled to claim the spoils of unlawfully overcharging ratepayers going forward .28 If
so, it should be asked : why should the municipality benefit from payment of the
unlawful arrear rates?
[66] Furthermore, the High Court ’s judgment did not address the objections lodged
by Ekapa regarding unfairness of the rates since 2019, nor did it acknowledge its
attempts to engage the municipality in discussio ns regarding these objections. A year
later the municipality indicated to Ekapa that its submissions would be considered in
future budget and tariff drafts, but these did not materialise. Subsequ ently, a slew of
correspondence between 2020 and 2021 highlights the municipality’s awareness of the
objections to its tariff decisions and its intransigence in dealing therewith.
[67] I am of the view, therefore, that the High Court confined itself to the fiscal
interests of the municipality without due regard f or the impact of the principle of legality
and Ekapa’s rights and substantial prejudice in having to pay more than R30 million in
unlawful rates. Accordingly, in exercising its remedial discretion , the High Court
misdirected itself and failed to adhere to the mandated approach .
Remedy
[68] This Court held in Hoërskool Ermelo29 that what constitutes an appropriate order
under section 172(1)(b) will be determined by the particular facts of the case .
Furthermore, the relief granted by this Court must reflect that proceedings “against the
state assume a public character which necessarily widens the reach of orders issued to
cover persons who were not privy to particular litigation ”.30 In carving out appropriate
just and equitable relief, the approach in Millennium Waste and, more pertinently,
Lombardy ,31 (which, like Thaba Ch weu is on all fours with this matter) , should find
28 Thaba Chweu above n 18 at para 34.
29Hoërskool Ermelo above n 16 at para 96.
30 Mukaddam v Pioneer Foods (Pty) Ltd [2013] ZACC 23; 2013 (5) SA 89 (CC); 2013 (10) BCLR 1135 (CC) at
para 40.
31 City of Tshwane Metropolitan Municipality v Lombardy Development (Pty) Ltd [2018] ZASCA 77; [ 2018] 3
All SA 605 (SCA).
GAMBLE AJ
27 application: this Court has to weigh the consequences of retrospectively invalidating the
impu gned municipality rates against the imperative to vindicate the principle of legality.
[69] In this case , there are several competing interests that are required to be taken
into account in considering the exercise of the discretion under section 172(1)(b) . In
doing so , it must be borne in mind that the very inequity is this: if the prospective order
of the High Court stands, the municipality will be entitled to sue and recover the unpaid
portion of the rates , despite t he decisions levying the rates having been found to be
unlawful and having been set aside. I leave aside for present purposes the defence of
prescription which might be raised by Ekapa in the event that the municipality proceeds
to recover the arrears.
[70] I have set out the consequences should th e status quo be permitted to persist . On
the other hand, the municipality claims prejudice in that these funds were earmarked as
anticipated revenue. What of the burden of proof when an order limiting a declaration
of invalidity is sought? Previous juri sprudence establishes that the burden of proof that
a retrospective order is not just and equitable rests on the party seeking its limitation.
The Supreme Court of Appeal approached the matter as follows in Lombardy :
“The procedures set out in the MPRA f or the compilation of a valuation roll are a
jurisdictional prerequisite for the exercise by the City of its power to collect rates. The
reference in any law to any action or conduct is presumed to be a reference to a lawful
or valid action or conduct. If, as here, those procedures were not followed, the result
is that the consequent collection of rates by the City premised on the valuation roll is
invalid. The High Court’s declaration of invalidity of the 2012 roll is thus unassailable.
And, as it was put in City of Johannesburg v AD Outpost 2012 (4) SA 325 (SCA)
para 20 ‘an administrative decision declared to have been invalid is to be
retrospectively regarded as if it had never been made.’ The City contends however that
the roll should not have been set aside or that some other just and equitable order short
of setting aside the roll should have been made. In that regard it is important to
emphasise that a litigant seeking a just and equitable remedy limiting the impact of the
mandatory remedy of a declaration of invalidity must make out such a case. In
particular, facts should be adduced as to the deleterious consequences for the public
GAMBLE AJ
28 interest of setting aside a decision that has been declared invalid. This is to enable the
Court to weigh up tho se consequences against the imperative to vindicate the principle
of legality. No such case has been made out by the City in its papers. If anything, the
City has been aware of the vociferous objections by its residents since it first
implemented the mas sive rates increases in July 2012. It could thus hardly be said that
the delay between July 2012 and June 2013 has caused any prejudice to it, in the sense
that relevant evidence has been forgotten or proof destroyed. It cannot plausibly be so
that the C ity proceeded to arrange its affairs in the confident expectation that ratepayers
would not challenge its conduct. Indeed, the City does not even attempt to suggest
what other remedy might be preferable from the standpoint of justice and equity other
than that the court should decline to set aside the 2012 valuation ro ll.”32 (Footnotes
omitted .)
[71] It follows that the m unicipality b ears the burden of pro ving that a fully
retrospective order is not just and equitable in the circumstances of this matter . But, its
case before this Court was relatively constrained on this point. It is worth repeating that
the High Court engaged in speculative reasoning regarding the municipality’s potential
need to secure loans to cover the shortfall. This speculation lacked a ny evidential basis,
and the mu nicipality readily conceded the point in this Court.
[72] The municipality’s submissions regarding the disruptive consequences of a full y
retrospective order in the High Court, although terse, were intended to demonstrate that
the rates payable by Ekapa were anticipated revenue and that such an order would result
in disruptive budgetary consequences for the municipality . However, i n my view, the
municipality overemphasised the consequences of a retrospective order , and those
flawed submissions informed the Hi gh Court’s reasoning in limiting retrospectivity
and, consequently, in formulating its order.
[73] The delay taken by Ekapa in challeng ing the decision of the municipality after a
number of financial years had elapse d, albeit that they had lodged their objections
during that period, must be considered as part of the balancing exercise that
32 Lombardy above n 31 at para 21.
GAMBLE AJ
29 section 172(1)(b) contemplates . Certainly , it could be argued that the impact on the
municipality would have been softened if Eka pa had acted more speedily. On the other
hand , the municipality knew that Ekapa had only paid its rates in terms of the 1:3 rat io
and did not institute action to claim the outstanding amount due in terms of the 1:22
ratio. Moreover, it was also cognisant of the fact that Ekapa had lodged objections to
the said rates. It is thus improbable that the municipality laboured under the
misconception that its actions would not be challenged b y Ekapa.
[74] In the result, t he municipality has not discharged the eviden tial burden of
showing that it was unable to balance the books during the disputed time frame spanning
2015 to 2021 without access to the unpaid R30 million.
[75] The following conundrum thus arise s: Ekapa is more than satisfied with paying
the rates at a 1:3 ratio, as it has been doing, while the municipality is equally content
with the prospective order issued by the High Court. But I have found that the
municipality ’s stance is not acceptable for the reasons articulated above. On the other
hand, the remedy now belatedly sought by Ekapa is problematic for two reasons.
Firstly, the stance effectively asks this Court to determine the rates for the past six years ,
an approach that can be considered as infringing on the separation o f powers by
encroaching on the municipality’s domain . Secondly, and most importantly, the issue
was never traversed in the papers or debated before the High Court.
[76] Unfortunately, neither counsel for Ekapa nor the municipality could come up
with any meani ngful alternatives when these issues were raised in argument. This Court
must then do the best that it can in the circumstances: the fact that no specific relief was
sought before the High Court is not a bar to this Court exercising the correct discretion
under section 172(1 )(b).
[77] As I have observed , the municipality would have been aware of the non -payment
of rates on the properties with effect from the 2015 financial year onwards . Yet, on the
evidence before us, it took no legal steps to recover any amo unts from Ekapa. Rather,
GAMBLE AJ
30 it appears that it sat on its hands and only sought to recover the rates (which I have
found were unlawfully imposed ) when Ekapa asked for a rates clearance certificate in
order to take transfer of its properties. Further more , there is no evidence that the
municipality took any steps to recover from Ekapa the full amount allegedly due by it
after it unilaterally elected to pay less than what was said to be due by it after 2019.
[78] On the other hand, Ekapa was seemingly oblivious of the extent of its
indebtedness until it sought the rates clearance certificate and, when it did become
aware of the extent thereof , it actively engaged with the municipality in an endeavour
to address the impasse . In so doing, it made part payment in the interim so that the
municipality was not entirely out of pocket . Without commenting on the reasonableness
of the amount so paid by Ekapa, it is apparent that Ekapa has not entirely shirked its
responsibility towards the municipality to pay rates on it s properties. Furthermore,
Ekapa has undertaken not to seek to recover any of the amounts paid by it in the event
that this Court declares the conduct of the municipality to be unlawful.
[79] In assessing the constitutional delinquency of the municipality’s conduct vis—
à—vis (with regard to) that of Ekapa, I refer to what th e Supreme Court of Appeal said
in Thaba Ch weu.
“It is important to bear in mind that in the fabric of our Constitution, the first respondent
is a sphere of government and the second and third respondents are organs of state.
Our constitutional democracy is based on the rule of law. As stated by this C ourt in
Kalil N.O. and Others v Mangaung Metropolitan Municipality and Others : ‘. . . the
function of public servants . . . is to serve the public, and the community at large has
the right to insist upon them to act lawfully and within the bounds of their authority . . .‘
The municipalities are thus expected not only to be conversant with the law applicable
to their sphere of government, but also to conduct their affairs within the confines of
the law. Should they fail to do so, the courts should not be i mpeded from considering
and granting an appropriate order that would have the effect of vindicating the principle
of legality. A trend should not develop, or precedent established, where there would
be no consequences when municipalities function outside the parameters of the law. In
GAMBLE AJ
31 Lombardy , this Court cautioned against the implications of such practice .”33 (Emphasis
added .)
[80] I conclude that the interests of justice will be met in this case if the order of
invalidity is made fully retrospective while Ekapa is held to its undertaking given in this
Court and is precluded from recovering any amounts already paid under the 1:3 ratio.
In holding Ekapa to this undertaking, I stress again that this Court makes no
pronouncement on the reasonableness of the amount actually paid by Ekapa or of the
rates ratio applicable in respect of mining property.
Order
[81] The following order is made:
1. Leave to appeal is granted .
2. The appeal is upheld.
3. The order o f the High Court is set aside and substituted with the following
order :
(a) “The decisions taken by the council of the first respondent to set a
property rates ratio of 1:22 in respect of the category of “mining ”
for the financial years 2015/2016; 2016/201 7; 2017/2018;
2018/2019 and 2019/2020 are declared unlawful and are hereby
set aside .
(b) In terms of section 172(1)(b)(i) of the Constitu tion, the order in
paragraph 3(a) will operate retrospectively with effect from
1 July 2015 onwards.
(c) The first respondent may recover from the applicants, only the
amounts of the mining property rates ratio in relation to the
residential property rates ratio calculated based on the
Local Government: Municipal Property Rates Act 6 of 2004 and
the regulations promulg ated in terms thereof, less any amount in
33 Thaba Chweu above n 18 at para 37.
GAMBLE AJ
32 excess of the legally permissible limit, in respect of each financial
year from 2015/2016 to 2019/2020; and
(d) The first respondent is to pay the applicants ’ costs of suit .”
4. The first respondent is ordered to pay the applicants’ costs of the appeal ,
including the costs of two counsel where so employed .
5. The applicant s’ undertaking not to claim any reimbursement from the first
respondent for the rates it voluntarily paid under the 1:3 ratio is made an
order of court.
For the Applicants:
For the First Respondent :
M M Rip SC, A M Viviers and
S G Webster instructed by Duncan
Rothman Attorneys .
K W Lüderitz SC, S Quinn and
B Ramela instructed by Van De Wall
Incorporated .