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[2002] ZASCA 128
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Gerber and Others v Member of the Executive Council of the Gauteng Provincial Government, Development Planning & Local Government and Another (303/01) [2002] ZASCA 128; [2002] 4 All SA 518 (SCA); 2003 (2) SA 344 (SCA) (26 September 2002)
THE
SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
Case no: 303/2001
In
the matter between:
WILLIAM
FREDERICK GERBER
1
st
Appellant
JAN
ROELOF BOOT
2
nd
Appellant
SUSANNA
GERTRUIDA VAN DER MERWE
3
rd
Appellant
JACOB
COETZER
4
th
Appellant
LOUIS
CORNELIUS MEINTJIES
5
th
Appellant
JOHANNA
CATHARINA BRINK
6
th
Appellant
LUCAS
PETRUS STOLTZ
7
th
Appellant
and
MEMBER
OF THE EXECUTIVE COUNCIL
1
st
Respondent
OF
THE GAUTENG PROVINCIAL
GOVERNMENT,
DEVELOPMENT PLANNING &
LOCAL
GOVERNMENT
EASTERN
GAUTENG SERVICES COUNCIL
2
nd
Respondent
_____________________________________________________________________________________
Coram
:
Hefer
AP, Olivier, Farlam, Cameron and
Navsa JJA
Date
of hearing:
2 September 2002
Date
of delivery:
26 September 2002
Summary: Legality of 'land rate' imposed by local
authority without reference to size or valuation.
______________________________________________________________________________________________
JUDGMENT
___________________________________________________________________
NAVSA JA:
[1]
The issue in
this appeal is the legality of âland ratesâ sought to be imposed
by the second respondent, the Eastern Gauteng Services
Council ('the
Council'), on owners of agricultural land within its area of
jurisdiction, for the rating years 1 July 1997 -
30 June
1998 ('the first rating year') and 1 July 1998 to 30 June 1999 ('the
second rating year').
[2]
Notification
of the imposition of the rates in question took place by way of three
official notices. The first two notices issued
by the Chief
Executive Officer ('the CEO') of the Council in respect of the first
and second rating years, were published in the
Gauteng Provincial
Gazette on 6 August 1997 and 8 July 1998 respectively. The third
notice, issued by the first respondent who is
the Member of the
Executive Committee for Gauteng Province responsible for Local
Government and the successor to the Administrator
of the Province of
Transvaal ('the MEC'), appeared in the Provincial Gazette on the 3
March 1999 and relates to the second rating
year. The question in
this appeal is whether in imposing the rates in question the Council
and the MEC acted beyond the powers conferred
on them by law.
[3]
The
appellants who are all affected landowners applied to the Transvaal
High Court to have the relevant parts of the three notices
set aside
on the following bases: First, that the two notices by the CEO were
of no force and effect for want of authority and lack
of compliance
with the prescripts of section 29 (2) of the Ordinance for the
Transvaal Board for the Development of Peri-Urban Areas
20 of 1943
('the Ordinance'). Secondly, that the notice by the MEC purported to
impose a rate retrospectively, which was impermissible.
Thirdly,
that the rates sought to be imposed by the three notices are
discriminatory in that differing amounts are determined for
various
areas without an acceptable rationale and without reference to
objective factors such as size and value, with the result
that small
landowners are prejudiced by being required to pay the same rate as
persons who own large tracts of land. Lastly, that
the decisions to
impose the rates in question constituted administrative action, which
required the responsible authority to consult
affected landowners and
that this was not done.
[4]
The MEC did
not oppose the application and gave notice that he would abide the
decision of the court. He adopted the same attitude
in respect of
the appeal. The Council opposed the application. For its authority
to impose the land rate the Council relied on
a number of provisions
of the Constitution, the provisions of the Local Government
Transition Act 209 of 1993 ('the LGTA') and the
Ordinance. It
contended that since a valuation roll in respect of the affected
areas was in the process of being compiled it was
entitled in the
interim to impose a flat rate that applied to landowners in different
localities within its area of jurisdiction
(the flat rates levied by
the Council differ from locality to locality but are standard within
a locality, irrespective of the size
or value of land). The Council
contended further that collecting revenue of the kind in question was
in the public interest, as
it provided financing for the delivery of
essential services. It was submitted on behalf of the Council that
prescribed statutory
procedures were followed and in the alternative,
that there had been substantial compliance with the applicable
statutory provisions.
[5]
Swart J in
the Court below decided in favour of the Council. It is against that
decision that the appellants appeal with the leave
of this Court.
The learned judge held that the Councilâs authority to impose rates
in respect of land for which a valuation roll
had not yet been
established was to be found in s 29 (2) of the Ordinance; that the
failure of the MEC himself to publish the first
two notices in the
Provincial Gazette as required by s 29 (2) did not prejudice any
landowner, as there had been a considered and
valid decision by the
Council to impose the rates in question and that it could not be in
the public interest that rates were not
recoverable from the
appellants and others who fell in the same category.
[6]
After the
judgment in the Court below the Council was statutorily
disestablished and replaced by a number of distinct local
authorities.
During its existence the Council was a local authority
as contemplated in the Constitution and the LGTA. It was an
overarching
local authority, which had a number of representative and
rural councils operating within its area of jurisdiction. For
present
purposes it is not necessary to deal with the Councilâs
history and the legislative measures and provisions that led to its
being
established.
[7]
Before
turning to the contents of the three notices I consider it necessary
to set out the relevant particulars of each of the appellants
in
relation to the land owned by them and the rates they were required
to pay. The
first
appellant who is a member of the Bronberg
Representative Council owns land in Bronberg, 170 hectares in extent,
for which the Council
has in terms of the notices in question imposed
a land rate of R 660-00 per year for the first and second rating
years. The
second
appellant owns land in Bronberg comprising
8,3 hectares (approximately one-twentieth the size of the first
appellant's land) for
which he was also required to pay an amount of
R 660-00 per annum for the first rating year which was changed to R
64-90 per month
for the second rating year. The
third
appellant owns seven tracts of land in Bronberg, four of which are
21,4 hectares in size. The other three are respectively 29,8,
26,2
and 31,2 hectares in size. For each tract of land she is required to
pay an annual amount of R 660-00. The
fourth
appellant owns
two farms in Blesbokspruit each of which is 368 hectares in extent
and for each of which he is required by the Council
to pay an annual
amount of R 270-00. The
fifth
appellant owns a farm in
Elandsrivier, which is 21,4 hectares in extent and is required to pay
a land rate of R 270-00 per annum.
The
sixth
appellant is the
owner of two smallholdings in Eikenhof, which are 2,1413 and 2,1456
hectares in size respectively and is required
to pay an amount of
R 732-00 annually for each. These particulars illustrate the
appellants' complaints in respect of land
size and value and the
unfairness of a flat uniform rate.
[8]
I turn to
deal with the contents of the three notices. The relevant part of
the first notice appears below:
'PROVINSIALE
KOERANT, 6 AUGUSTUS 1997
No. 378
PLAASLIKE
BESTUURSKENNISGEWING 1665
OOSTELIKE
GAUTENG DIENSTERAAD
KENNISGEWING
AANGAANDE ALGEMENE EIENDOMSBELASTING, GRONDBELASTING, BASIESE EN
DIENSHEFFINGS
Kennis
word hiermee gegee ingevolge artikel 10G (7) van die Oorgangswet op
Plaaslike Bestuur (Wet No. 209 van 1993) saamgelees met
artikel 26
(2), van die Ordonnansie op Eiendomsbelasting van Plaaslike Besture
(Ordonnansie No. 11 van 1977), dat die Raad vir die
boekjaar 1 Julie
1997 tot 30 Junie 1998 die volgende gehef het:
A.
â¦
B.
â¦
C.
Grondbelasting binne die
dorpsgebiede en landbouhoewes hieronder genoem in die regsgebied van
die Verteenwoordigende Oorgangsrade
en Eikenhof Plaaslike
Gebiedskomitee
Ingevolge die bepalings
van artikel 29 (2) van Ordonnansie No. 20 van 1943, word
grondbelasting vir die boekjaar 1 Julie 1997 tot
30 Junie 1998 in die
volgende dorpe, landbouhoewes en plaasgedeeltes geleë binne die
regsgebied van die verteenwoordigende Oorgangsrade
en Eikenhof
Plaaslike Gebiedskomitee:
Bronberg: R660,00 per erf per
jaar. Pienaarsrivier: R180,00 per erf per jaar
Blesbokspruit:
R270,00 per erf per jaar. Suikerbosrandrivier: R270,00 per erf
per jaar
Elandsrivier:
R270,00 per erf per jaar. Bronberg-Olympus en
Shere-landbouhoewes:
R1 800 per erf per jaar.
Eikenhof: R720,00 per erf per jaar.
Die bedrag verskuldig vir eiendomsbelasting vir die gebiede
Blesbokspruit, Elandsrivier, Suikerbosrandrivier en Pienaarsrivier
sal
verskuldig en betaalbaar wees op 28 November 1997 (die
vasgestelde datum), maar belastingbetalers mag die bedrag verskuldig
aan belasting
in twee (2) gelyke paaiemente op 28 November 1997
en 30 April 1998 betaal met dien verstande dat die
pro rata
bedrag
gehef, ingevolge die bepalings van artikel 40 van Ordonnansie No. 11
van 1977, verskuldig en betaalbaar sal wees op die dag
soos beoog in
artikel 41 (2) van bogenoemde Ordonnansie.'
[9]
The relevant
part of the second notice is set out below and is in almost identical
terms:
'No.
504 PROVINCIAL GAZETTE, 8 JULY 1998
PLAASLIKE
BESTUURSKENNISGEWING 1558
OOSTELIKE
GAUTENG DIENSTERAAD
KENNISGEWING
AANGAANDE ALGEMENE EIENDOMSBELASTING, GRONDBELASTING, BASIESE EN
DIENSHEFFINGS
Kennis
word hiermee gegee ingevolge Artikel 10G (7) van die Oorgangswet op
Plaaslike Bestuur Tweede Wysigingswet 1996 saamgelees
met Artikel 26
(2) van die Ordonnansie op Eiendomsbelasting van Plaaslike Besture
(Ordonnansie 11 van 1997) dat die Raad vir die
boekjaar 1 Julie
1998 tot 30 Junie 1999 die volgende gehef het:
A.
â¦
B.
â¦
C.
Grondbelasting binne die Dorpsgebiede en Landbouhoewes hieronder
genoem in die Regsgebied van die Verteenwoordigende Oorgangsrade
en
Eikenhof Plaaslike Gebiedskomitee.
Bronberg: R660,00 per erf per jaar. Pienaarsrivier:
R207,00 per erf per jaar.
Blesbokspruit: R270,00 per erf per jaar. Suikerbosrandrivier:
R270,00 per erf per jaar.
Elandsrivier: R 270,00 per erf per jaar. Bronberg-Olympus en
Share-landbouhoewes:
R1 800,00 per erf per jaar.
Eikenhof: R732,00 per erf per jaar.
Die
bedrag verskuldig vir eiendomsbelasting vir die gebiede
Blesbokspruit, Elandsrivier, Suikerbosrandrivier, en Pienaarsriveir
sal
verskuldig en betaalbaar wees op 30 November 1998 (die
vasgestelde datum), maar belastingbetalers mag die bedrag verskuldig
aan belasting
in twee (2) gelyke paaiemente op 30 November 1998 en 30
April 1999 betaal met dien verstande dat die pro-rata bedrag gehef,
ingevolge
die bepalings van Artikel 40 van Ordonnansie 11 van 1977,
verskuldig en betaalbaar sal wees op die dag soos beoog in Artikel 41
(2)
van bogenoemde Ordonnansie.
Die
bedrag verskuldig vir eiendomsbelasting in Bronberg en Eikenhof
Plaaslike Gebiedskomitee sal in twaalf (12) gelyke paaiemente
gehef
word en sal verskuldig en betaalbaar wees op die volgende datums:
1998-07-31, 1998-08-31, 1998-09-30, 1998-10-30, 1998-11-30,
1998-12-31, 1999-01-29, 1999-02-26, 1999-03-31, 1999-04-30,
1999-05-31 en 1999-06-30, met dien verstande dat die pro-rata bedrag
gehef word ingevolge die bepalings van Artikel 40 van Ordonnansie 11
van 1977 in soveel paaiemente as wat oorbly in die boekjaar
na die
dag soos beoog in Artikel 41 (2) van bogenoemde Ordonnansie.'
Section 50 (1) of
Ordinance 11 of 1977 referred to in the second sentence of the notice
introduced s 29 (2) of the Ordinance in its
present form. The
reference is therefore in fact to s 29 (2) of the Ordinance.
[10]
The
third notice reads as follows:
[11]
In
addition to the three notices the facts against which this appeal is
to be decided are set out in brief in this and the following
four
paragraphs. Before the first two notices, and preceding a formal
resolution in this regard, members of the Council discussed
the
imposition of a land rate in the representative and rural council
areas within the Council's area of jurisdiction. The Council
approved budgets for the two rating years from the rural and
representative councils within its area of jurisdiction, which
included
the land rates in question.
[12]
The
Council determined the amounts of the rates by considering the
operating expenses for each subordinate council within its area
of
jurisdiction and then calculated a rate per property in each area in
order to meet those expenses. In other words it divided
the
operating expenses by the number of erven in each area and thus
arrived at a land rate per erf. In his affidavit opposing the
application the CEO states that the rates were thus calculated in the
'best available, objective and reasonable manner'.
[13]
In
each of the two rating years the Council wrote to the MEC, seeking
approval from him for the imposition of the land rate, stating
that
the approval was being sought in terms of s 29 (2) of the Ordinance.
In each year the MEC granted written approval, stating
however in the
authorising letter that the Council was being authorized to impose
rates in terms of s 29 (8) of the Ordinance.
In response
to correspondence from the appellants' attorney the Council wrote to
the MEC during the last quarter of 1998 bringing
it to his attention
that his authorizing letter for the second rating year wrongly
referred to s 29 (8) of the Ordinance. The latter
provision applies
only when properties have been valued. This led to the third notice,
which was an attempt to put right what the
Council submits is merely
a typographical error.
[14]
At
the time of the application in the Court below the Council was in the
process of compiling a valuation roll and anticipated that
it would
be in a position to impose rates based on valuation of properties
during the 2000/2001 rating year.
[15]
In
each of the two rating years the Council posted notices at its
various offices informing the public about the rate and stating
that
the rate was being imposed in terms of s 29 (2) of the Ordinance. At
about the same time each year, corresponding notices in
the form in
which the first two notices appeared in the Provincial Gazette were
published in the
Citizen
and
Beeld
newspapers.
[16]
Before
us the case for the Council was argued within the following confines.
It was contended that s 229 (1)(a) of the Constitution,
which grants
local authorities the power to impose rates on property, was the
primary source of its power to impose the rates in
question. The
Council disavowed any reliance on s 229 (1)(b) of the Constitution,
which permits local authorities to impose âother
taxes, levies, and
duties appropriate to local governmentâ if authorised thereto by
national legislation. It was submitted that
s 10 G (6)
of the LGTA (dealt with in detail later in this judgment), which sets
conditions for the imposition of
a property rate, did not apply as
the jurisdictional facts for its operation were absent, namely,
valuation and measurement. It
was submitted, however, that in any
event, the introductory words of s 10 G (6) of the
LGTA made it clear that the
provisions of that subsection were
âsubject to any other lawâ and that this meant that the Council
could rely on s 29 (2) of
the Ordinance. It was contended further
that the Council had the power to impose the land rate as envisaged
in s 29 (2) of the Ordinance
and that, having regard to s 229 (1)(a)
of the Constitution, it was strictly speaking not necessary for the
MEC to grant approval
or publish the first two notices, as required
by this provision of the Ordinance, and that the MEC should be seen
as merely having
been a rubber stamp for the decision properly made
by the Council.
[17]
The
appellants on the other hand submitted that the provisions of the
Constitution and the LGTA were binding on the Council and that
the
rate had to be determined with reference to size or value of property
and in such a manner as does not result in unequal treatment
of
property owners. It was contended that it was abundantly clear that
the Council failed to appreciate the nature of its functions
and
powers.
[18]
It
is necessary at this stage to examine section 229 (1)(a) of the
Constitution, section 10 G (6) of the LGTA and s 29 (2) of the
Ordinance and then to consider whether the rates were determined in
accordance with constitutional and statutory prescripts.
[19]
Section
229 (1)(a) of the Constitution entitled
Municipal fiscal powers
and functions
provides:
'Subject to subsections (2), (3) and (4), a municipality
may impose â
(a) rates on property and surcharges on fees for
services provided by or on behalf of the municipality;'
The
Council relies on this provision as the source of its authority to
impose the rates in question. I pause at this point to note
that in
terms of section 160 (2) of the Constitution a local authority
may not delegate its function of imposing rates.
[20]
Item
26 of Schedule 6 of the Constitution provides that the provisions of
the LGTA remain in force in respect of a municipal council
until a
municipal council replacing that council has been declared elected as
a result of the first municipal election of municipal
councils after
the commencement of the Constitution. It is not disputed that the
LGTA was in force at material times.
[21]
The
LGTA, as its preamble declares, is an enactment that provided interim
measures to promote the restructuring of local government.
[22]
Section
10 G (6) of the LGTA provides:
'A local council, metropolitan local council and rural
council shall, subject to any other law, ensure that â
(a) properties within its area of jurisdiction are
valued or measured at intervals prescribed by law;
(b) a single valuation roll of all properties so valued
or measured is compiled and is open for public inspection; and
(c) all procedures prescribed by law regarding the
valuation or measurement of properties are complied with:
Provided that if, in the case of any property or
category of properties, it is not feasible to value or measure such
property, the
basis on which the property rates shall be determined
shall be as
prescribed
: Provided further
that the provisions of this subsection shall be applicable to
district councils in so far as such councils are
responsible for the
valuation or measurement of property within a remaining area or
within the areas of jurisdiction of representative
councils.'
(Emphasis added).
In
terms of section 10B of the LGTA 'prescribed' means prescribed by
regulation under that Act. It is common cause that property
rates
were not prescribed in terms of the proviso to this subsection.
[23]
It
has not been suggested that s 10G (6) of the LGTA is
unconstitutional. Read with s 10G (7) it provides a mechanism
historically
accepted as a proper basis for the 'rating' of property
by local authorities, namely measurement or valuation. This was the
position
in the pre-constitutional era and no reason has been
suggested why this should not be so. The original power granted to
municipalities
in terms of section 229 (1)(a) of the Constitution is
to impose a 'property rate'. The ordinary meaning of 'rate' is well
established.
The
Concise Oxford Dictionary
(7
th
ed) defines it as follows:
'â¦stated value of numerical proportion prevailing or
to prevail between two sets of things ⦠amount etc. mentioned for
application
to all comparable cases; standard or way of reckoning;
(measure of) value, tariff charge, (
rate of exchange, of
interest
); speed (
travelling at a great rate; prices
increasing at a dreadful rate
); â¦
2.
ââ
assessment
levied by local authorities for local purposes at so much per pound
of assessed value of buildings and land owned
; (in
pl.
)
amount thus paid by householder etc â¦'
(Emphasis added).
[24]
This
meaning which I have emphasised accords with the tried and trusted
practice of calculating property rates in relation to size
or value
of properties. There is nothing to suggest that the power given by s
229 (1)(a) of the Constitution to local authorities
to impose
property rates was a power to depart from this established meaning.
Certainly the scheme for imposing a property rate
set out in s 10G
(6) of the LGTA is consistent with the way in which the words
âproperty rateâ have always been understood and
thus accords well
with its usage in the Constitution.
[25]
The
proviso in section 10G (6) states in peremptory terms that in the
event of its not being feasible to value or measure property,
rates
are to be determined 'as prescribed'. It was not part of the
Councilâs case that it was not feasible to value or measure
the
properties in question. The respondent sought to impose the rate in
the interim whilst it was in the process of valuing properties
within
its area of jurisdiction. However, the appellants all supplied
measurements of their properties. Furthermore, there is no
reason to
assume that the measurements of erven within the Council's area of
jurisdiction were not available on a general plan and
that the deeds
registry could not have provided the necessary data to impose a rate
relative to the size of properties.
[26]
The
basis of calculation used by the Council as set out in paragraph [12]
of this judgment was not to determine a rate as a percentage
of or in
proportion to value or size of property or indeed in accordance with
any tariff but rather to determine each sub-local authorityâs
expenses and then to divide it by the number of erven in the area.
That there is no correlation between the size of the property
and the
rate is clearly illustrated in paragraph [7] of this judgment.
[27]
In
Pretoria City Council v Walker
1998(2) SA 363 (CC)
the
Constitutional Court dealt with a local authorityâs power to levy a
tariff for services rendered. In that case the power was
based on s
178 (2) of the interim Constitution, which provided that within each
local government tariffs and property rates shall
be based on a
uniform structure for its area of jurisdiction. The following
at
397 H - 398 B is instructive:
'In my view, this requirement compels local governments
to have a clear set of tariffs applicable to users within their
areas. The
tariffs themselves may vary from user to user, depending
on the type of user and the quality of service provided. As long as
there
is a clear structure established, and differentiation within
that structure is rationally related to the quality of service and
type
or circumstances of the user, the obligation imposed by s 178(2)
will have been met. If the differentiation is alleged to be
discriminatory the remedy of aggrieved persons is to challenge the
validity of the tariff under s 8(2) of the interim Constitution.
As
the High Court held in its judgment, there was no challenge to the
tariff in the present case and its validity must be assumed.'
[28]
The
rates imposed in the present case had the effect of treating
unequally landowners who in all material respects were identically
situated. This is not countenanced by the Constitution. Owners of a
smaller piece of land were paying as much as people who owned
large
tracts of land within the same area. The rationale for drawing a
distinction between residents of Atteridgeville and Mamelodi
on the
one hand and residents of what was described as 'Old Pretoria' in the
Walker
case does not apply in the present
circumstances. The Councilâs reliance on section 229 (1)(a)
of the Constitution is
thus misplaced. By determining the rate on the
basis referred to earlier in this judgment the Council was not
exercising its power
to determine a property rate. It was in fact
imposing a levy on property, which it is entitled to do only in terms
of s 229 (1)(b)
of the Constitution. It did not however act within
the terms of that section of the Constitution. The levy sought to be
imposed
was not, as described by the CEO, the most reasonable and
objective manner of determining a property rate. On the contrary,
the
basis of calculation is irrational and unfair.
[29]
Section
29 (2) of the Ordinance, on which reliance was placed by the Court
below, provides as follows:
'The Administrator may from time to time by notice in
the Provincial Gazette declare that, for a period of not less than
one financial
year, the provisions of the Local Authorities Rating
Ordinance, 1977, shall not apply in such portion of the area under
the jurisdiction
of the board as the Administrator may by like notice
specify, and that for the period and in the portion aforesaid, there
shall be
levied and collected in respect of every erf or other
division of land shown on a general plan as defined in
section 102
of
the
Deeds Registries Act, 1937
, a rate (hereinafter referred to as a
land rate) in accordance with a tariff approved by the
Administrator.'
For
reasons that follow Swart J's reliance on this section of the
Ordinance was misplaced.
[30]
It
was submitted on behalf of the Council that the words 'subject to any
other law', in the introductory part of s 10G (6) of the
LGTA,
enabled it to rely on the provisions of s 29 (2) of the Ordinance for
the imposition of the land rate. The provisions of s
10G (6) of the
LGTA are consistent with the Constitutional scheme and provide a
basis on which the original power, which is not delegable,
may be
exercised. It clearly applies to the imposition of a property rate
by a local authority. On the facts of the present case
there is no
reason why these provisions should not have applied.
[31]
Even
the assumption that the words âsubject to any other lawâ may be
read to refer to s 29 (2) of the Ordinance would not assist
the
Council. The Ordinance authorizes the Administrator
not
the Council to approve a land rate. This is not the Councilâs
original power set out in s 229 (1)(a) of the Constitution being
exercised. The first respondent did not file an affidavit stating on
what basis and information he purported to approve the rate.
He did
not explain why the Local Authorities Rating Ordinance 11 of 1977
(referred to in s 29 (2) of the Ordinance) should not apply.
The
rate submitted to him, which he approved, was the rate decided on by
the Council and was based on a calculation neither sanctioned
by law
nor grounded on any recognised basis of rating property. In fact it
flies in the face of the meaning of a 'property rate',
as the
property being rated did not serve as the basis of the calculation of
the rate.
[32]
It will be recalled that the Council
contended that it made the decision to impose the rate and that the
MEC merely served as a rubber
stamp. This appears to be borne out by
the MEC's responses to the Councilâs requests in respect of the
rates and the related notices.
The Councilâs decision determining
the rates is flawed as set out in the preceding paragraphs. It
cannot be cured by a process
that purported to be but was not in fact
in line with s 29 (2) of the Ordinance. The Council's reliance on
s 29 (2) of
the Ordinance is therefore misplaced. It is
the MEC who, in terms of s 29 (2), is required to bring
his
mind to bear on the question of a land rate. It is clear that he
must consider why his power should be exercised and should do so
on
an informed basis. The MEC did not depose to an affidavit setting
out why he exercised his power as set out in s 29 (2) and explain
why
the Local Ratings Ordinance 11 of 1977 should not apply. It is thus
not possible to conclude that he applied his mind properly
to the
issues.
[33]
Furthermore,
the first and second notices ought in terms of s 29 (2) of the
Ordinance to have been issued by the MEC before the Council
introduced the rates. This was not done. The approvals followed
after the rates were introduced. The third notice was issued by
the
MEC within the second rating year but given the fallacious underlying
premise (set out in the preceding paragraphs) none of the
three
notices can be sustained. The convoluted legislative path that the
Council chose in an attempt to validate its actions can
thus be seen
to lead to a
cul-de âsac
.
[34]
It
is abundantly clear from:
(a) the introductory words to the notices in question,
referring interchangeably to s 10G(6) and s 29(2) of the Ordinance:
(b) the correspondence between the MEC and the Council
in which there is reference to s 29(8) of the Ordinance;
(c) the failure by the first respondent himself to
publish the first two notices;
(d) the request by the Council to the first respondent
to correct this by issuing a third notice;
(e) the failure by the first respondent to approve the
rates before they were introduced;
(f) the issuing of the third notice;
(g) the Councilâs present insistence that it was
acting in terms of s 229(1)(a) of the Constitution ; and
(h) its fall-back reliance on s 29(2) of the Ordinance
that
the Council and the MEC failed to properly appreciate their functions
and powers. The Council cannot be heard to say that the
wrong
reference to legislation is cured by the fact that it has original
powers to impose property rates. The question is whether
it had the
power to act in the manner complained of and to impose the rates in
question. See
Administrateur
,
Transvaal v Quid
Pro Quo Eiendoms Bpk.
1977 (4) SA 829 (A)
at
841 A -
G
and
Minister of Education v Harris
2001 (4) SA
1297
(CC)
at
1307 E - 1308 A
(para [17]).
[35]
The Republic of South Africa is a Constitutional state. Local
authorities and other state institutions may act only in accordance
with powers conferred on them by law. This is the principle of
legality, an incident of the rule of law. See
Fedsure Life
Assurance v Greater Johannesburg Transitional Metropolitan Council
and Others
1999 (1) 374 (CC)
at
399 D - E
(para
[56]) and
400 D â E
(para [58]). See also
Pharmaceutical
Manufacturers of South Africa: In Re ex parte President of the
Republic of South Africa
[2000] ZACC 1
;
2000 (2) SA 674
(CC)
at
687
D â E
(para [17]).
[36]
In
my view, it is abundantly clear that the rates in question were not
imposed as required by law. The classification of the land
rate as a
'flat rate' is a misnomer especially when it is suggested, as the
Council does in the present appeal, that it is a uniform
rate fair
and consistent in its application. As demonstrated earlier the rates
are unfair and discriminatory. It is clear that
there is no
constitutional or statutory warrant for the rates sought to be
imposed. On the contrary, the rates have been imposed
in conflict
with statutory prescripts and have to be set aside.
[37]
It
is not necessary for present purposes to consider the general
validity of provincial legislation in relation to the Constitution
or
to examine every legislative path open to local authorities seeking
to impose rates or other levies on residents within their
area of
jurisdiction. It is regrettable that revenue will be lost because of
the Council's failure to exercise its powers and functions
within the
law. It is clear that this will be a setback to the now distinct
local authorities that succeeded the Council. However,
we must not
lose sight of principles that underlie our democracy. All, especially
institutions of State, must respect the principle
of legality. It is
clear that the process and reasoning resorted to by the Council was
fundamentally flawed and that it acted outside
its powers and
functions. In line with this conclusion the appeal must succeed.
[38]
It was submitted on behalf of the
Council that because the appellants' case as formulated on appeal
differed from the basis on which
it was argued in the Court below
they should, in the event of being successful, be deprived of part of
their costs. The appellants
maintained consistently during the
course of litigation and in preceding correspondence that the rates
in question were not determined
according to law. There is, in my
view, no reason why the usual costs order should not follow success
in the appeal.
[39]
In
light of the foregoing conclusions the following order is made:
1. The
appeal is upheld with costs;
2. The orders made by the Court below are set aside and
replaced by the following:
'1. It is declared that:
1.1 paragraph C of Local Government Notice 1665 issued
by the Chief Executive Officer of the second respondent, published in
Provincial
Gazette no. 378 of 6 August 1997, purporting to impose a
rate on land in areas referred to therein for the period 1 July 1997
to
30 June 1998, is invalid and of no force and effect;
1.2 paragraph C of Local Government Notice 1558 issued
by the Chief Executive Officer of the second respondent, published in
Provincial
Gazette no. 504 of 8 July 1998, purporting to impose a
rate on land in areas referred to therein for the period 1 July 1998
to 30
June 1999 is invalid and of no force and effect;
1.3 Notice 1120 of 1999 issued by the first respondent
and published in the Provincial Gazette no. 13 of 3 March 1999
purporting to
impose a rate in areas referred to therein 1 July 1998
to 30 June 1999 is invalid and of no force and effect;
2. The second respondent is ordered to pay the
applicants' costs.'
___________________
MS NAVSA
JUDGE OF APPEAL
CONCUR:
Hefer AP
Olivier JA
Farlam JA
Cameron JA