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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, JOHANNESBURG
Case Number: 013170-2022
In the matter between:
In the matter between:
CHATAPROP HOLDINGS (PTY) LTD Applicant
And
CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY First Respondent
COUNCIL OF THE CITY OF JOHANNESBURG Second Respondent
METROPOLITAN MUNICIPALITY
MUNICIPAL MANAGER OF THE CITY OF JOHANNESBURG Third Respondent
METROPOLITAN MUNICIPALITY
THE EXECUTIVE MAYOR OF THE CITY OF Fourth Respondent
JOHANNESBURG METROPOLITAN MUNICIPALITY
JUDGMENT
(1) REPORTABLE: YES / NO
(2) OF INTEREST TO OTHER JUDGES: YES / NO
(3) REVISED: YES / NO
______________ _________________________
DATE SIGNATURE
2
MALINDI, J
Introduction
[1] In its amended notice of motion dated 3 November 2023, the applicant seeks
an order in the following terms:
1. Declaring that the decision taken by the municipality to reclassify the
electricity, water and sewage use of the property known as Erf 4[…]
Northcliff Extension 2 township (the property) from residential to
business as irrational, defective and invalid.
2. Reviewing and setting aside the decision in paragraph 1 above.
3. Substituting the decision in paragraph 1 above with the decision that
the classification of the electrical, water and sewage use of the
property is that of residential with consent use for a guest house
ordering the first, alternatively the second, third or fourth respondent to
repay the amount of R380 724,08 to the applicant, which amount the
applicant paid to the respondents under protest.
4. Ordering the respondent to pay the costs of this application.
5. For further and/or alternative relief.
[2] The applicants have prepared a draft order which reads similar to the
amended notice of motion.
[3] The matter was set down for 5 October 2023 but was postponed by
agreement between the parties in order to allow the applicant an opportunity
to amend its papers for the purposes of pleading alternative relief and to
amend the notice of motion.
[4] The notice of intention to amend in terms of R ule 28 of the Uniform Rules of
Court dated 3 November 2023 is set out at CaseLines 3-1, and on the same
day 3 November 2023 an amended notice of motion was delivered.
[5] The matter was set down for hearing on 16 January 2023 on an unopposed
basis.
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[6] On 29 August 2022 the respondents delivered their notice of intention to
defend.
[7] The applicant delivered heads of argument on 3 March 2023 and
supplementary heads of argument on 7 May 2024 as a result of a
postponement at the hearing of 2 October 2023 in order to address the
question whether the applicant’s claim for review had become mute due to the
fact that the subject property was transferred prior to the hearing of the matter.
[8] The respondents filed their heads of argument on 9 May 2023 and
supplementary heads of argument on 13 May 2024.
Issues for determination
[9] Two issues are for determination, that is, whether:
1) The application has become mute for the reason that the property has
been sold and transferred at the time of the hearing of the matter.
2) The respondents’ decision to reclassify the electricity, water and
sewage usage of the property from residential to business stands to be
reviewed on the grounds of rationality or defective procedure.
Background Facts
[11] The property is classified as ‘residential with the consent of the municipality it
may be used as a guest house’.
[12] In early 2022 it came to the attention of the applicant that the respondents
intended to charge for services to the property at rates applicable to
properties classified as “commercial.”
[13] The applicant contends that the decision to convert the property from rates
charged for residential to commercial property was never communicated to it
until 2022. The applicant seeks relief of the repayment of the difference
between the commercial rates it has paid so far and the “ residential rates” it
ought to pay as the property is classified residential. It states that the full
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payments at “commercial rates” were made under protest. These payments
were made in order to effect transfer to the current owner for a clearance
certificate as applicant remained liable, therefor.
[14] Section 229(1) of the Constitution1 empowers the respondent municipality and
its agents to impose rates on property and surcharges on fees for services
provided by it or on its behalf. This constitutional authority is exercised
through legislation as envisaged in subsection (5).
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[15] In a letter dated 22 September 2009 the municipality informed the applicant of
its resolution in respect of the property as follows. With reference to the
above application this matter was considered by the City of Johannesburg
Development Planning and U rban management planning committee on 9
September 2009 when the following resolution was adopted.
"
That notwithstanding the provisions of any other law the city of
Johannesburg supports concerned in terms of clause 14 of the
Johannesburg Town Planning Scheme 1979 for the establishment of a
residential building (guest house) on Erf 4[...] Northcliff extension 2 subject
without prejudice to the general condition of the scheme to the following
conditions
.”
[16] The relevant condition to these proceedings is condition number 20 which
reads: “All relevant legislation and council by-laws shall be complied with
to the satisfaction of the council.”
[17] The resolution preserves to the respondents the exercise of its rights and
obligations under the town planning scheme and that ‘all relevant
legislation and council by-laws shall be complied with to the satisfaction of
the council.’
1 The Constitution of the Republic of South Africa.
2 See Local Government Municipal Property Rates Act of 6 of 2004 (the rates Act), Local Government
Municipal Systems Act of 32 of 2000 (MSA), Municipal Financial Management Act of 56 of 2003
(MFMA), Town Planning and Township Ordinance 15 of 1986 (TPPO), the ordinance land use
(MFMA), Town Planning and Township Ordinance 15 of 1986 (TPPO), the ordinance land use
regulations 15 of 1985, planning by-law 2016, Town Planning Scheme of 1979.
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[18] The council determined property rates tariffs for the 2021/2022 financial
year as 1:2 for residential consent use and 1:2:5 for business and
commercial. This was for the period 1 July 2021 to 30 June 2022.
[19] On 11 October 2021 the municipality advised the applicant of the tariff
change in respect of the sewer/water account, and it said at paragraph 1,
2 and 3 thereof:
“The city of Johannesburg has exercised an audit on your municipal
account that intended to ensure revenue completeness and accuracy.
The recent audit conducted revealed that the sewer/water tariff charged on
the property is not in line with the approved tariffs description as published.
“Residential purposes ” shall be deemed not to include the letting of
accommodation units for any category of hotel uses, which shall be
deemed to constitute use for commercial purposes.
This therefore serves to advise that the billing on the account will be
amended in line with the approved tariffs from 2018/2019, 2019/2020,
2020/2021 and 2021/2022.”
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[20] It appears therefore that the tariff change was a deviation from
residential use at 1:2 to business and commercial use at 1:2:5 which
was the rates set out in the 2021/2022 financial year, and perhaps a
deviation to the 2018/2019, 2019/2020 and 2020/2021 tariff rates.
[21] On 19 January 2022 the applicant was advised as follows at paragraphs
1 and 2 of annexure FA8
4 with the heading ‘Tariff change on municipal
account’.
“The City of Johannesburg h as exercised an audit on the above-mentioned
account that intended to ensure that all five services are billed on the account
3 Annexure “FA6”; CaseLines 03-20.
4 Annexure “FA8”; CaseLines 03-24.
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and are accurate. The recent audit conducted revealed that the use of property
is for a business purpose that did not correspond with the current billing.
This therefore serves to advise you that the billing on the account will be
amended in line with the by -laws and the change from a residential tariff to a
business tariff will be reflected on the next invoice.”
[22] This advice was in respect of all five services provided by the
respondents. It is correct therefore that the advice to the applicant, there
being no similar advice until 11 October 2021 and 19 January 2022, was
retrospective by a number of financial years.
[23] In respect of electricity charge correction section 9 paragraph 7 of the
electricity by-law provides as follows:
“When it appears that a consumer has not been charged or incorrectly
charged for electricity due to the application of an incorrect charge or on
any other grounds other than inaccuracy of a meter, the council shall
conduct such investigations, enquiries and tests as it deems necessary
and shall, if satisfied that a consumer should have been charged or has
been incorrectly charged, adjust the account accordingly – provided that
no such adjustment shall be made in respect of a period in excess of six
months prior to the date on which the incorrect charge was observed or
the council was notified of such incorrect charge by the consumer.
Where such consumer is found to have been incorrectly charged the
consumer shall be charged the cost of conducting such investigations,
enquiries and tests.”
Discussions
[24] First, the late filing of the supplementary affidavits was by agreement
when the hearing was postponed at the hearing on 5 October 2023.
There was therefore no need for leave to be sought and to show good
cause, therefor.
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[25] The applicant’s contention that the respondents ’ classification of the
charges in respect of the property from residential to commercial is
irrational is incorrect. The legal framework followed by the respondents is
that of charging business rates for a consent use property to business
and commercial use regardless of the property remaining a residential
property. In other words, a residential property that has obtained
consent use as a business will be charged business rates for the services
provided by the municipality . The applicant’s contention that the
respondent’s reclassification of the charges in respect of the property
from residential to commercial is irrational is incorrect. The legal
framework followed by the respondents is that of charging business rates
for a consent use property to business and commercial use regardless of
the property remaining a residential property. In other words, a
residential property that has obtained consent use as a business will be
charged business rates for the services provided by the municipality.
[26] This makes administrative sense as the property may cease to be used
as a business . Furthermore, it is a residential property in a residential
zone, not a business or commercial zone. It merely obtained rights to be
used as a business in a residential zoning. It is common cause that
neither the zoning nor the category use of the property was changed.
[27] Secondly, the advises of tariff changes are in terms of the legal
framework for effecting such changes. Should there be inaccuracies in
calculations, the applicant is advised of the process to be followed as
provided in such advi ce. The contested amount is levied in terms of
section 118 of the Systems Act but subject to revision. It therefore does
not become unlawful and subject to review. It is subject to revision to the
extent necessary even after being paid. For example, should the
applicant be of the view that electricity was charged inaccurately, it may
applicant be of the view that electricity was charged inaccurately, it may
challenge the calculation especially if the retrospectivity is for longer than
six months as provided in section 9 paragraph 7 of the Electricity
Guidelines.
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[28] Thirdly, if there is a discrepancy between ‘commercial’ and ‘consent use’
the applicant will be entitled to such revision by lodging a dispute.
[30] Section 74 of the Systems Act empowers the respondents to impose
tariffs on the basis of an adopted tariff policy. There is no suggestion that
the tariff policies relied upon by the respondents do not comply with this
section.
[31] As stated above, the issue of how much the applicant should have paid in
terms of section 118 of the Systems Act remains a live issue and the
issue. It is not mute.
[32] The applicant may succeed at the review of the amount paid and have
that amount reduced either by reversing the electricity charged
retrospectively by longer than six months and/or all rates charges being
revised by what ratios were applicable in the financial years preceding
2021/2022.
[33] This matter is capable of being finalised without scrutinising whether
there was compliance with the Promotion of Administrative Justice Act
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(PAJA). The applicant has failed to make out a case as claimed. It is
common cause that the property has not been rezoned and therefore the
dispute remains one of discrepancies of charging business or commercial
rates instead of consent use rates.
Costs
[34] The respondents enjoy a substantial success. There is no reason why
costs should not be awarded in their favour fully.
Conclusion
[35] In conclusion, the following order is made:
1. The review application is dismissed.
5 3 of 2000.
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2. The applicant is to pay the costs of the application including the
cost of counsel at the B Scale.
_______________________________
G MALINDI
Judge of the High Court,
Johannesburg
Appearances
For the Applicant: Neels Engelbrecht
Instructed by: Neels Engelbrecht Attorneys
For the Respondent: Adv Nathi Emmanuel Sithole
Instructed by: Mojela Hlazo Attorneys
Date of Hearing: 14 May 2024
Date of ex tempore judgment judgment: 10 November 2024
Date of written judgment: 16 March 2026