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[2009] ZACC 34
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City of Tshwane Metropolitan Municipality v Cable City (Pty) Ltd (CCT 85/09) [2009] ZACC 34; 2010 (5) BCLR 445 (CC) (3 December 2009)
CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 85/09
[2009] ZACC 34
In the matter between:
CITY OF TSHWANE
METROPOLITAN MUNICIPALITY
Applicant
and
CABLE CITY (PTY) LTD
Respondent
Decided
on : 3 December 2009
JUDGMENT
THE
COURT:
This
application for leave to appeal is about whether the applicant
municipality (the City) had power to exact an estimated
regional
service levy from the respondent levy-payer (the respondent). The
main question is whether Government Notice R340,
entitled
“Calculation and Payment of Regional Services Levy and
Regional Establishment Levy”, dated 17 February
1987 (the
Notice),
1
gave the City the power to estimate the levies due. The Minister
of Finance (the Minister) purported in the Notice to confer
on the
City the power to “estimate the amount of any levy which, in
its opinion, is probably payable” in respect
of a relevant
month or period.
2
The Minister purported to do so in terms of section 12 of the
Regional Services Councils Act 109 of 1985 (the Act). Section
12
vests power in the Minister, by notice in the Gazette, to
“determine the manner in which the regional services levy
and
the regional establishment levy shall be calculated and paid”.
3
Section 12(1A) further gives the Minister the power to “determine
how an amount upon which the regional establishment
levy is payable
shall be calculated”
4
and to “make such other provision as he deems necessary to
enable a council to impose and claim any such levy”.
5
Relying
on paragraph 11(1) of the Notice, the City estimated the amount of
the levy that in its opinion was “probably
payable” by
the respondent. It then issued summons claiming payment of the
amount. The matter went to trial before
Fabricius AJ in the
North Gauteng High Court, Pretoria (the High Court) on an agreed
statement of facts. The High Court
dismissed the City’s
claim. Relying on the judgment of Jones J
in
the Eastern Cape Division in
Algoa Regional Services v
Buchner
,
6
the High Court held that section 12 of the Act did not empower the
Minister to authorise the City, by way of the Notice, to
estimate
the amount of any levy.
The
Supreme Court of Appeal affirmed the conclusion of the High Court.
7
Maya JA, writing for a unanimous court, held that “[c]onsidering
the Act as a whole, and the wording of section 12,
the implication
appears ineluctable that the Legislature never intended councils to
have power to summarily estimate levies
and did not grant the
Minister authority to permit such exercise”.
8
The Supreme Court of Appeal therefore endorsed the finding of
Fabricius AJ as well as the reasoning in
Algoa Regional Services
v Buchner
that the provisions of paragraph 11(1) of the Notice
were beyond the powers conferred on the Minister by section 12 of
the
Act.
Regional
services councils and the levies that the Act allowed them to
impose have been abolished,
9
but municipal councils were allowed to collect outstanding levies
up to 30 June 2006 and the summons in the present matter
was issued
before that date. Hence the currency of the parties’
dispute.
The
City now seeks leave to appeal against the judgment of the Supreme
Court of Appeal. It contends that the impugned provisions
did
authorise the Minister to issue the Notice. But to that argument
it adds a further point, one it advanced for the first
time before
the Supreme Court of Appeal. This is that the Minister of Finance,
who issued the Notice, should have been joined
in the proceedings
and that in his absence it was inappropriate for the Supreme Court
of Appeal to determine the issue of the
validity of the Notice.
The
Supreme Court of Appeal rejected the City’s plea of
non-joinder. It held that the City had “misconceived the
nature and implications of the respondent’s defence”
since the respondent did “not seek a declaration of
constitutional invalidity and has not asked that paragraph 11(1) be
set aside,”
10
but merely relied on the invalidity of the Notice to resist the
claim against it. Referring to the concept of “collateral
challenge” as set out in
Oudekraal
,
11
Maya JA held that the respondent was entitled when summonsed to pay
tax to resist the claim by raising a “defensive”
or
“collateral” challenge to the validity of the Notice on
which the tax was based.
12
This meant that the respondent was able to resist paying the tax
without having to join the Minister.
Before
this Court the City challenges this conclusion, urging that
judgment on the validity of the Notice was incompetent in
the
absence of the Minister.
In
our view it is not necessary to consider the doctrine of collateral
challenge or to decide whether it permits invoking invalidity
in
the absence of the legal authority who issued the Notice from legal
proceedings. This is because, on the question of the
power
conferred by section 12 of the Act, the City’s prospects of
reversing the judgment of the Supreme Court of Appeal
are poor.
Even if the Minister were joined, it is unlikely that this Court
would reverse the finding of the Supreme Court
of Appeal that
section 12 conferred no power on the Minister to authorise a
council to estimate the liability of levy payers.
As
the Supreme Court of Appeal pointed out, the Minister’s
statutory power to “determine how an amount . . . shall
be
calculated”
13
clearly does not confer power to authorise a council to make an
estimate. Calculation, which is precise, differs from estimation,
which is approximate. Still less does the hold-all statutory
authority the Act gives the Minister (to “make such other
provision as he deems necessary to enable a council to impose and
claim any such levy”)
14
empower him to authorise a council to enforce estimates.
The
City had but meagre answer to these findings, and it appears
unlikely that there will be more to be said should the matter
be
set down for oral argument.
It
is true that this leaves the Notice lingering in a legal limbo.
The Supreme Court of Appeal has declared it invalid and
unenforceable as a means of exacting levies: but formally it has
not yet been set aside. Legally it has therefore not been
conclusively extinguished. However, this is not sufficient reason
for this Court to grant leave to appeal. As already pointed
out,
the empowering legislation (and with it the system of regional
levies) has been abolished. In the wake of the Supreme
Court of
Appeal judgment it is highly improbable that any council will in
future seek to invoke the Notice to levy payments.
The non-joinder
of the Minister and the somewhat ambiguous legal status of the
Notice are therefore not sufficient reasons
for this Court to hear
the matter.
Given
these features of the case and the paltry prospects that this Court
will reverse the conclusion of the Supreme Court of
Appeal on the
meaning of the provisions in question, it is not necessary for this
Court to enter into the question of the existence
and impact of the
doctrine of collateral challenge. It is in general imperative that
a party affected by a ruling should be
joined in those proceedings.
This is particularly so when the constitutional validity of a
ministerial act is at issue.
15
In the unusual circumstances of this case, however, where the
statute’s empowering provisions clearly fail to confer
the
authority the City seeks to extract from them, it would be
inappropriate for this Court to grant leave to appeal merely
on the
basis of the Minister’s non-joinder.
For
these reasons, the application for leave to appeal is dismissed
with costs.
Ngcobo
CJ, Moseneke DCJ, Cameron J, Froneman J, Khampepe J, Mogoeng J,
Nkabinde J, Skweyiya J and Van der Westhuizen J.
1
Published in
Government Gazette
, GG 4049 GN 10613, 17
February 1987.
2
Paragraph 11(1) of the Notice.
3
Section 12(1)(b).
4
Section 12(1A)(c).
5
Section 12(1A)(e).
6
Case No 1150/94, 5 June 1995, unreported. Jones J
held at pp 9-12:
“
[T]he
wording of subparagraph 12(1A)(e) specifically empowers the Minister
to authorize things which are
necessary
to enable the council
to impose and claim
a levy. Wide though the wording is, it
relates solely to authority, firstly, for things which are essential
to enable a council
to assess what the levy is so that it can be
imposed and, secondly, for things which are essential to enable it
to be claimed.
. . . [S]ubsection 12(1A) explicitly envisages that
the
Commissioner
may have to resort to an estimate if he is
not able to make a calculation despite the use of his powers.
Significantly, the Act
contains no similar reference to an estimate
by a council. It is the Commissioner and not a council who has the
expertise to
make an informed estimate where the circumstances
justify it. . . . The legislator could not have intended a purely
arbitrary
assessment of liability. . . . My conclusion, therefore,
is that provision in section 12 for the intervention of the
Commissioner
and the use of his powers is totally inconsistent with
an intention to allow the amount upon which the levy is imposed, and
hence
the amount of the levy itself, to be estimated by a council.
It follows that in my view the Minister of Finance acted
ultra
vires
the empowering statute when he included paragraph 11(1) in
the R340 notice. It also follows that a levy imposed in terms of
that provision in the notice is unenforceable.” (Emphasis in
original.)
7
City of Tshwane Metropolitan Municipality v Cable City (Pty) Ltd
[2009] ZASCA 87
; Case No 232/08, 10 September 2009, unreported.
8
Id at para 24.
9
See
section 59
of the
Small Business Tax Amnesty and Amendment of
Taxation Laws Act 9 of 2006
.
10
Above n 7 at para 12.
11
Oudekraal Estates (Pty) Ltd v City of Cape Town and Others
2004 (6) SA 222
(SCA) at paras 32-6.
12
Above n 7 at paras 13-6.
13
Section 12(1A)(c).
14
">
14
Section 12(1A)(e).
15
See
Mabaso v Law Society, Northern Provinces, and Another
[2004] ZACC 8
;
2005 (2) SA 117
(CC);
2005 (2) BCLR 129
(CC) at paras
13-4;
V
an der Merwe v Road Accident
Fund and Another (Women’s Legal Centre Trust as Amicus Curiae)
[2006] ZACC 4
;
2006 (4) SA 230
(CC);
2006 (6) BCLR 682
(CC) at paras
7-9.