Brief Summary

Constitutional Law — Right to fair hearing — Municipal rate collection procedure — Appellant, as liquidator of a partnership, challenged the constitutionality of section 105(9) of the Durban Extended Powers Consolidated Ordinance, alleging it infringed the right to a fair hearing and access to courts as guaranteed by section 34 of the Constitution — Appellant did not receive required notices prior to the sale of property for unpaid rates — High Court dismissed the action — Appeal upheld, finding that the section 105 procedure did not afford a fair hearing, thus violating constitutional rights.

Comprehensive Summary

Summary of Judgment

1. Introduction

This matter was an appeal to the Constitutional Court against an order of the Durban and Coast High Court. The proceedings concerned a constitutional challenge to a municipal rates-collection and execution procedure authorised by section 105(9) of the Durban Extended Powers Consolidated Ordinance No. 18 of 1976 (Natal), commonly described in the judgment as “the section 105 procedure”.

The appellant, Stephanus Johannes Martinus De Beer N.O., acted in his capacity as liquidator of a partnership that owned immovable property in Clairwood, Durban. The first respondent was the North Central Local Council and the South Central Local Council (collectively referred to in the judgment as the Council). The Sheriff of the High Court who conducted the sale was joined as the second respondent but did not participate in the litigation. The third respondent, Zameer Khan, was the purchaser of the property sold in execution and opposed the appeal in person. The Umhlatuzana Civic Association was admitted as amicus curiae and advanced argument in support of constitutional invalidity on certain grounds.

The procedural history was that the Council, relying on section 105, issued prescribed notices in relation to unpaid municipal rates and thereafter obtained a summary order in terms of section 105(9) authorising sale in execution of the partnership’s property. Following the sale to Mr Khan, the appellant instituted action in the High Court seeking a declaration that section 105(9) was unconstitutional for infringing the right of access to courts and fair hearing under section 34 of the Constitution. The High Court dismissed the action, holding the procedure constitutionally compliant. The appellant then appealed to the Constitutional Court.

The general subject-matter of the dispute was whether the statutory notice and hearing framework culminating in a section 105(9) order permits a court order authorising sale of immovable property without affording affected persons a fair hearing, particularly in relation to notice of the court proceedings and certain features distinguishing the procedure from ordinary execution under the High Court Rules.

2. Material Facts

The material facts accepted by the Court were that the partnership owned immovable property in Clairwood, Durban, and that municipal rates on the property remained unpaid. In response to non-payment, the Council elected to use the section 105 procedure rather than ordinary civil process.

In accordance with section 105, the Council was required (as the Court summarised) to send three notices before approaching court under section 105(9). The statutory scheme contemplated a first notice advising of the rates owing and a final date for payment, a second notice calling for payment and warning that an application would be made to court if arrears remained unpaid within a stipulated period, and a third notice stating that the court application “is to be made”, which (on the Court’s interpretation, consistent with earlier authority) had to include when and where the application would be heard and the nature of the relief to be sought.

The Council thereafter obtained an order in the High Court under section 105(9) as part of what was described as a bulk application involving multiple properties. The order authorised the sale in execution of the property, which was subsequently sold to the third respondent, Mr Khan.

A key factual feature underpinning the constitutional challenge was that the appellant stated that he received none of the notices. The judgment treated the constitutional attack as turning not on whether the notices were actually received, but on whether the statutory mechanism—particularly its notice arrangements and the hearing contemplated by section 105(9)—was constitutionally adequate to secure a fair hearing under section 34 when applied to an “affected person” (a person against whom an order might be made without necessarily having received notice in fact).

3. Legal Issues

The central legal questions were concerned with the procedural fairness component of section 34 of the Constitution, specifically whether the section 105 procedure provides constitutionally sufficient safeguards before a court may authorise sale of immovable property for unpaid rates.

The Court identified three interrelated questions about the section 34 fair hearing right in the context of a court hearing. The first question was what section 34 requires in relation to the kind of notice that must be given to an affected person. The second was what section 34 requires of the hearing itself, insofar as the hearing must be fair in relation to notice and the court’s control over the process. The third was whether the nature and consequences of the order that may be made (authorising sale of immovable property) implicate or undermine procedural fairness.

The dispute was primarily one of law, particularly the interpretation of section 105(9) in light of section 34, and the assessment of the reasonableness of notice provisions in the context of tax/rates collection. It also concerned the application of constitutional standards to a statutory procedure, including whether section 105(9) could be interpreted to confer a judicial discretion sufficient to preserve fairness.

4. Court’s Reasoning

The Court located the right to a fair hearing under section 34 within the rule of law, emphasising that courts must ensure proceedings are fair and that legislation and procedural rules should, where reasonably possible, be interpreted to avoid constitutional inconsistency. It rejected the parties’ underlying approach that treated the Uniform Rules of the High Court as the benchmark for constitutionality. The Court held that the correct enquiry is whether section 105, properly interpreted consistently with the Constitution, infringes the fairness requirement of section 34.

On the notice component, the Court held that fairness requires notice provisions that are reasonable in all the circumstances, evaluated contextually rather than in the abstract. The purpose of notice is to bring relevant information about the hearing to the attention of persons affected by it. The Court accepted that legislation may provide methods of notice other than those found in the Rules of Court, provided those methods are reasonable and capable of achieving the purpose of notice.

In assessing reasonableness, the Court emphasised the context of municipal rates: rates are a form of tax collection, municipalities are constitutionally empowered to impose rates, and the revenue is used to fulfil constitutional obligations relating to service delivery. The Court described a special relationship between councils and ratepayers, and considered it unreasonable to require councils to obtain more information than the Ordinance demands in order to effect service. It also noted that once valuation and objection processes are complete, rate liability becomes a matter of mechanical calculation, and section 105 is directed at collecting amounts legally due rather than litigating contractual or delictual disputes.

The Court evaluated separately the statutory methods of notice. It upheld as reasonable the provisions requiring notices to be sent by post (including registered post for later notices), observing that there was no evidence of significant postal unreliability sufficient to render the method constitutionally deficient. It accepted that permitting owners to choose an address for service is reasonable, and that, failing such a choice, posting to the property address shown on the valuation roll is fair and reasonable. The Court also endorsed the view that property owners have a civic responsibility to take reasonable steps to inform themselves of their obligations, while recognising that some may remain unaware despite diligence.

The provision allowing notice by affixing a schedule at the city hall was treated as addressing extraordinary circumstances where no postal address exists on the valuation roll and the owner has not furnished an address. The Court considered it unreasonable to expect a council to expend further resources tracing an owner in such circumstances. It held the provision reasonable, but only on the basis that judicial control exists at the hearing so that the court is not compelled to grant an order merely upon proof of technical compliance, regardless of circumstances that would render the hearing unfair.

This led to the key interpretive issue: whether section 105(9) leaves the court with a discretion. The High Court (and reasoning in earlier practice) had been read as suggesting that once the Council showed that notices “have been given” the court effectively had no choice but to grant the order. The Constitutional Court disagreed. It applied the principle of constitutional construction that where a statutory provision is capable of more than one reasonable interpretation, one leading to constitutional invalidity and the other not, a court should prefer the interpretation that avoids invalidity, provided it is not unduly strained. The Court treated the word “may” in section 105(9) as permitting a construction under which the court is empowered to refuse the order where fairness so requires.

The Court thus held that a court hearing a section 105(9) application has a discretion not to grant the order if the way notice was given renders the hearing unfair in the circumstances. It also held that, where fairness requires it, the judicial officer has the power to investigate whether more effective notice is reasonably possible and to require that it be given. In this analysis, the fairness of the hearing is preserved by the court’s obligation to ensure that affected persons have a reasonable opportunity to be heard.

The Court further stated that because section 105(9) applications are effectively ex parte, the Council bears the obligation of full disclosure of all relevant facts that might indicate the hearing has not come to the attention of the affected person. The Court described factors that could be relevant to the exercise of discretion (without purporting to provide an exhaustive list), including the nature of the address used, specific evidence that posting was unlikely to reach the owner, whether registered letters were returned unclaimed, whether post delivery ordinarily occurs in the area, and contextual indicators bearing on whether notice probably reached the owner.

On the appellant’s contention that the procedure was unfair because it permits sale of immovable property without first executing against movables and without service of a writ of execution before such sale, the Court held that this did not render the hearing procedurally unfair. It reasoned that the obligation to pay rates is a charge on immovable property and that the notices must warn that an order for sale will be sought. In the Court’s view, these contentions went to the substantive character of the relief rather than the procedural fairness of the hearing protected by section 34.

The Court similarly treated arguments about deviations from Rule 45 execution practice (including lack of consultation with the owner on conditions of sale) as not implicating the fairness of the section 105(9) hearing in the constitutional sense, while noting that consultation might be fairer.

The amicus curiae advanced additional arguments. Contentions about low sale prices and the small amounts owed were characterised as concerns about consequences not attributable to procedural fairness, and thus irrelevant to the narrow constitutional question before the Court. The amicus also argued that “summarily order” could not justify departure from ordinary service requirements; the Court rejected this as both not properly raised below and unsupported by an independent constitutional basis once section 34 fairness was addressed. Finally, an argument based on section 171 of the Constitution was held to raise a new cause of action, implicating joinder of additional parties and not properly introduced by an amicus; the Court declined to entertain it and expressed no view on its merits.

5. Outcome and Relief

The Constitutional Court dismissed the appeal, thereby leaving intact the High Court’s dismissal of the constitutional challenge. Section 105(9), interpreted in the manner adopted by the Court (including recognition of judicial discretion to ensure fairness), was held not to infringe the section 34 fair hearing right.

No order was made as to costs. The Court considered that the matter involved issues of considerable public importance and that it would not be fair to burden the unsuccessful appellant with the costs of the appeal.

Cases Cited

Tooze and Another v City Council of Durban and Others [1996] 3 All SA 229 (D).

De Beer NO v The North Central Local Council and the South Central Local Council and Others (D) Case No 8959/99, 28 July 2000, unreported.

De Lange v Smuts NO and Others [1998] ZACC 6; 1998 (3) SA 785 (CC); 1998 (7) BCLR 779 (CC).

Chief Lesapo v North West Agricultural Bank and Another [1999] ZACC 16; 2000 (1) SA 409 (CC); 1999 (12) BCLR 1420 (CC).

First National Bank of South Africa Ltd v Land and Agricultural Bank of South Africa and Others; Sheard v Land and Agricultural Bank of South Africa and Another [2000] ZACC 9; 2000 (3) SA 626 (CC); 2000 (8) BCLR 876 (CC).

Metcash Trading Ltd v Commissioner, South African Revenue Service, and Another 2001 (1) SA 1109 (CC); 2001 (1) BCLR 1 (CC).

S v Dzukuda and Others; S v Tshilo 2000 (4) SA 1078 (CC); 2000 (11) BCLR 1252 (CC).

Bernstein and Others v Bester NO and Others [1996] ZACC 2; 1996 (2) SA 751 (CC); 1996 (4) BCLR 449 (CC).

Nel v Le Roux NO and Others [1996] ZACC 6; 1996 (3) SA 562 (CC); 1996 (4) BCLR 592 (CC).

Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others: In re: Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others [2000] ZACC 12; 2001 (1) SA 545 (CC); 2000 (10) BCLR 1079 (CC).

In Re Pennington Health Committee 1980 (4) SA 243 (N).

Germishuizen v Kingsburgh Town Council and Others 1993 (1) SA 757 (D).

Legislation Cited

Constitution of the Republic of South Africa, 1996, sections 25, 34, 152(1)(b), 153, 156, 171, and 229(1)(a).

Durban Extended Powers Consolidated Ordinance No. 18 of 1976 (Natal), section 105.

Ordinance No. 25 of 1974 (Natal), sections 166, 167, 175, 241, 243, and 251 (as referenced within section 105 of the Durban Extended Powers Consolidated Ordinance No. 18 of 1976 (Natal)).

Rules of Court Cited

Rules 45(1) and 46(3) of the Rules of the High Court.

Rule 9 of the Rules of the Constitutional Court (as referenced in relation to the amicus curiae and the raising of new issues).

Held

Section 105(9) of the Durban Extended Powers Consolidated Ordinance No. 18 of 1976 (Natal), read in the context of its notice provisions, was held not to infringe section 34 of the Constitution. The Court held that the statutory notice mechanisms were, in context, capable of being reasonable, and that the constitutionality of the procedure depended materially on the existence of judicial discretion at the section 105(9) hearing to refuse the order or require further steps where fairness so demands.

The Court held that the hearing contemplated by section 105(9) is constitutionally fair because the court is not bound to grant an order merely upon proof that notices were sent or displayed; rather, the court must retain control to ensure fairness, including the ability to consider whether notice was likely to have come to the attention of the affected person and to require additional notice where reasonably possible.

The appeal was dismissed and no costs order was made.

LEGAL PRINCIPLES

Section 34 of the Constitution requires that court proceedings culminating in orders against persons must be fair, which includes notice provisions that are reasonable in all the circumstances and capable of bringing the hearing to the attention of those affected. The reasonableness of notice is context-dependent and must be assessed with regard to the purpose of notice and the surrounding circumstances of the statutory scheme.

The Rules of Court are not an exclusive constitutional standard for notice. Legislation may provide alternative mechanisms for giving notice, and such mechanisms comply with section 34 if they are reasonable and if courts retain the necessary powers to ensure fairness in the particular case.

Where a statutory provision is reasonably capable of more than one interpretation, and one interpretation would lead to constitutional invalidity while another would avoid it, a court should prefer the interpretation that avoids constitutional invalidity, provided the interpretation is not unduly strained.

A court hearing a statutory application that may proceed without opposition must retain a discretion to ensure procedural fairness, including the ability to refuse relief or require additional steps where the prescribed notice process appears insufficient in the circumstances. In that context, applicants bear duties of full disclosure of relevant facts that bear on whether the affected party is likely to have received effective notice.

Arguments directed at the desirability or harshness of substantive outcomes (such as the sale of property without prior execution against movables, or the adequacy of sale price) do not necessarily determine whether the hearing was procedurally fair for purposes of section 34, where the complaint concerns process rather than the substantive lawfulness or wisdom of the remedy.

An amicus curiae is not entitled to introduce a new cause of action on appeal without proper procedural steps and without regard to prejudice and the potential need for joinder of additional parties; issues not properly raised may be declined without determination on the merits.

De Beer NO v North-Central Local Council and South-Central Local Council and Others (Umhlatuzana Civic Association Intervening) (CCT 59/00) [2001] ZACC 9; 2002 (1) SA 429 (CC); 2001 (11) BCLR 1109 (26 September 2001)