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[2013] ZACC 7
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eThekwini Municipality v Ingonyama Trust (CCT 80/12) [2013] ZACC 7; 2013 (5) BCLR 497 (CC); 2014 (3) SA 240 (CC) (28 March 2013)
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CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 80/12
[2013] ZACC 7
In the matter between:
eTHEKWINI MUNICIPALITY
.....................................................................
Applicant
and
INGONYAMA TRUST
.
..............................................................................
Respondent
Heard on : 12 February 2013
Decided on : 28 March 2013
JUDGMENT
JAFTA J (Mogoeng CJ, Moseneke DCJ, Froneman J, Khampepe J, Mhlantla
AJ, Nkabinde J, Skweyiya J, Van der Westhuizen J and Zondo
J
concurring):
Introduction
and legislative history
The
policy of separate development, one of the pillars of the apartheid
state of the past, was given effect to through legislation
1
that set aside 13% of the country’s land for the use and
occupation of the African majority. But for a few negligible
exceptions, Africans were not permitted to occupy or own land
outside the 13% land area reserved for them. Within that area they
were subjected to rule by proclamation under the hand, originally of
the Governor-General and later the State President, who
was imposed
as “the supreme chief” of all Africans in terms of the
Native Administration Act.
2
This Act became a potent tool used to carry out forced removals of
Africans from the 87% of land reserved for other races.
3
The
Native Trust and Land Act empowered the apartheid government to
place in trust the land reserved for use by Africans. The
land
forming the subject matter of the present litigation was part of it.
It was never transferred into private ownership. Over
the years
different entities held it in trust for the benefit of Africans.
4
Later,
the areas reserved for Africans were divided into homelands in terms
of the Promotion of Bantu Self-government Act.
5
These homelands were established on the basis of language and
ethnicity.
6
In furthering so-called self-government, the apartheid state passed
the Bantu Homelands Citizenship Act
7
in terms of which every African was stripped of South African
citizenship. In its place they were assigned citizenship of a
homeland of the ethnic group to which they belonged, irrespective of
whether there were any links between them and such homeland.
In this
way many Africans became “foreigners” in the land of
their birth.
8
The
Bantu Homelands Constitution Act
9
established a government with legislative and executive powers in
each homeland. The Legislative Assembly of the Government of
KwaZulu
was established pursuant to this Act. As its name suggests it passed
laws, the operation of which was confined to the
territorial area of
KwaZulu. By means of Proclamation R232 of 1986 the South African
Government transferred the land which forms
the subject matter of
the present dispute to the Government of KwaZulu. The latter was to
administer it for the settlement, support,
benefit and welfare of
the citizens of KwaZulu.
When
South Africa attained democracy in April 1994, all homelands,
including that of KwaZulu, were abolished. The areas over which
they
governed were reincorporated into the greater South Africa that
became a unitary state.
10
However, the laws passed by defunct homeland parliaments continued
in operation until repealed or amended by the democratic Parliament
or, where appropriate, by a provincial legislature.
11
After
the interim Constitution was passed and on the eve of it coming into
force, the legislature of KwaZulu homeland enacted
the KwaZulu
Ingonyama Trust Act
12
(Trust Act) in terms of which the present respondent, Ingonyama
Trust (Trust), was established. The purpose of the Trust Act
was to
transfer the land that was then administered by the soon to be
abolished Government of KwaZulu to the Trust. The sole
trustee was
the Ingonyama, the Zulu King. The Trust was mandated to administer
the transferred land “for the benefit, material
welfare and
social well-being of the members of the tribes and communities”
contemplated in the KwaZulu Amakhosi and Iziphakanyiswa
Act.
13
In
1997 the Trust Act was amended by Parliament which brought about
fundamental changes.
14
One of these changes was the creation of a Board of Trustees,
comprising the Zulu King and eight members appointed by the Minister
for Rural Development and Land Reform, after consulting the King,
Premier and Chairperson of the House of Traditional Leaders
of
KwaZulu-Natal. The function of the Board is to—
“
administer
the affairs of the Trust and the trust land and without detracting
from the generality of the aforegoing the Board may
decide on and
implement any encumbrance, pledge, lease, alienation or disposal of
any trust land or of any interest or real right
in such land.”
15
Due
to the fact that our Constitution creates wall-to-wall
municipalities, all land in this country falls under a
municipality.
16
Consequently, part of the land administered by the Trust falls
within the area of jurisdiction of the applicant, the eThekwini
Municipality (Municipality).
Relevant
legislation
The
present dispute relates to the rateability of land vested in the
Trust and falling within the area of jurisdiction of the
Municipality. The Municipality seeks an order declaring the land in
question rateable so as to pave the way for it to levy rates
for the
period starting in May 1996 and ending in June 2005. As from 2 July
2005 the Local Government: Municipal Property Rates
Act
17
(MPRA) came into force and brought about a whole new rating regime.
For
the period commencing in May 1996 and ending in June 2005 the
authority to levy rates was conferred on municipalities in the
province of KwaZulu-Natal by the Local Authorities Ordinance.
18
This Ordinance empowered municipalities to assess and levy rates
upon immovable property within their areas of jurisdiction,
once
every financial year.
19
A municipal financial year ends on 30 June every year.
In
terms of the Ordinance the assessment and levying of rates was
interlinked to estimates of revenue and expenditure made by
a
municipality for each financial year. In terms of section 105 of the
Ordinance a municipality was obliged, by no later than
30 June of a
given financial year, to frame these estimates for the following
financial year and to assess the general rate,
water rate and
sewerage rate payable by the owner of immovable property in a
municipal area. The rating was based on an existing
valuators roll
compiled in terms of the relevant legislation.
The
Ordinance laid down a complex procedure with which a municipality
was obliged to comply before the assessed rates became due
and
payable. The first step was to have a notice containing the framed
estimates published in a newspaper circulating in the
area of a
municipality. The notice had to state the amounts at which the rates
were assessed and that the estimates would be
available for
inspection at the municipal office for a period specified in the
notice. The notice had to indicate that the inspection
would
commence no less than seven days after its publication.
Following
the expiry of the period for inspection, a municipality was required
to publish a further notice in a newspaper, once
a week for two
consecutive weeks and at intervals of no less than five days. This
second notice had to specify the amounts at
which the rates had
finally been assessed and the last date for their payment in the
relevant financial year. In terms of section
167 of the Ordinance,
the rates in respect of any financial year became due and payable at
least one month after the first publication
of the second notice and
had to be paid on or before the final date of payment specified in
the notice.
In
addition, section 172 of the Ordinance required the municipality to
give every owner of rateable property a notice stating
the amount of
rates owing in respect of each property and the final date for
payment. This notice had to set out the number and
description of
the property to which it applied and its value as shown in the
valuation roll. Failure to pay the assessed rates
after the final
date attracted a penalty of 18% annually. The scheme outlined above
shows that a municipality was obliged to
issue at least four notices
before it could claim payment of rates. The scheme also indicates
that a valuation roll was crucial
to the assessment of rates.
Compiling a valuation roll itself was an involved and complex
process.
20
It is
not disputed in this case that the Trust was not given a notice
showing the amount of the rates owing during each financial
year.
Nor was it furnished with a notice stating the description of the
relevant property and its value which had to be reflected
on the
valuation roll. It is apparent that the failure to issue the
requisite notice was occasioned by, among other factors,
the fact
that the property which the Municipality seeks to be declared
rateable was not valuated and did not form part of the
valuation
roll. The record does not show why the Municipality and its
predecessors have failed to take the necessary steps during
each
relevant financial year.
In
resisting the declaration that its property was rateable, the Trust
invoked the Rating of State Property Act
21
(Rating Act). The Rating Act exempted state property under specified
circumstances from the levying of rates by municipalities.
It was
repealed by the MPRA which is the current legislation regulating
municipal rates. However, the Rating Act was in force
at the time
material to the present dispute.
Section
3(3)(a) of the Rating Act provided:
“
(3) No
rates shall by virtue of subsection (1) or otherwise be levied by a
local authority on the value of State property—
(a) held by the State in trust
for the inhabitants of the area of jurisdiction of a local authority
or of a local authority to be
established”.
The
text of the section shows that state property, held by the state in
trust for the benefit of the inhabitants of the municipal
area, was
exempt from rates. “State property” in turn was defined
in relevant part as—
“
immovable
property within the area of jurisdiction of a local authority the
ownership of which vests in the State or a governmental
institution
and is registered in the name or in favour of the State or the
governmental institution”.
Litigation history
In
December 2009 the Municipality instituted an application in the
KwaZulu-Natal High Court, Durban (High Court) seeking that
the
property of the Trust which falls under its area of jurisdiction be
declared rateable for the relevant period. The Trust
opposed the
application and, as stated earlier, contended that its land was
state property which was exempt from rates in terms
of section
3(3)(a) of the Rating Act.
Following
its interpretation of the relevant provisions, the High Court held
that the land in question was not state property
and declared that
it was rateable, by the predecessors of the Municipality, from May
1996 to October 1998 and, by the Municipality,
from October 1998 to
July 2005. The Trust appealed against the declaration to the Supreme
Court of Appeal.
The
Supreme Court of Appeal construed the relevant provisions
differently and held that the property in question constituted state
property which was exempted from rates. The Supreme Court of Appeal
overturned the High Court’s declaration with costs.
In this Court
The
Municipality seeks leave to appeal against the judgment and order of
the Supreme Court of Appeal. However, there are two hurdles
it must
clear before it can be granted leave. The first one is condonation.
The Supreme Court of Appeal delivered its judgment
on 1 June 2012.
The Municipality lodged its application for leave in this Court on
28 August 2012, more than two months after
the deadline for it to do
so. Consequently, it was obliged to ask for condonation of its late
lodging of the application.
The
other hurdle is that the Municipality is not only required to show
that its case raises a constitutional issue. It must also
establish
that the interests of justice warrant the granting of leave in
present circumstances. The element of the interests
of justice is a
requirement for both condonation and the granting of leave.
Therefore, there is an overlap between the two enquiries,
even
though there may be factors peculiar to each enquiry. It is because
of this overlap that I consider it convenient to undertake
a single
broad enquiry, encompassing both of them. For the Municipality will
be entitled to appeal against the order of the Supreme
Court of
Appeal only if it obtains condonation and leave from this Court.
Indeed
in
Brummer v Gorfil Brothers Investments (Pty) Ltd and Others
,
22
this Court laid down the standard that applies to the granting of
both condonation and leave. In that case the Court said:
“
I now
consider the application for condonation. It is first necessary to
consider the circumstances in which this Court will grant
applications for condonation for special leave to appeal. This Court
has held that an application for leave to appeal will be granted
if
it is in the interests of justice to do so and that the existence of
prospects of success, though an important consideration
in deciding
whether to grant leave to appeal, is not the only factor in the
determination of the interests of justice. It is appropriate
that an
application for condonation be considered on the same basis and that
such an application should be granted if it is in
the interests of
justice and refused if it is not. The interests of justice must be
determined by reference to all relevant factors,
including the nature
of the relief sought, the extent and cause of the delay, the nature
and cause of any other defect in respect
of which condonation is
sought, the effect on the administration of justice, prejudice and
the reasonableness of the applicant’s
explanation for the delay
or defect.”
23
(Footnote omitted.)
Among the relevant factors to be considered in this case are the
extent and cause of the delay together with the prospects of
success
assume prominence. But before I consider these factors it is
necessary to make a general observation on a disturbing
matter
relating to non-compliance with the Rules of this Court. In many
cases these Rules are not observed and applications for
condonation
are made as a matter of routine. Sometimes the requests for
condonation are made informally, in letters addressed
to the
Registrar, when the Rules are quite clear on what should happen in
the event of non-compliance.
The
conduct of litigants in failing to observe Rules of this Court is
unfortunate and should be brought to a halt. This term alone,
in
eight of the 13 matters set down for hearing, litigants failed to
comply with the time limits in the Rules and directions
issued by
the Chief Justice. It is unacceptable that this is the position in
spite of the warning issued by this Court in the
past. In
Van Wyk
v Unitas Hospital and Another (Open Democratic Advice Centre as
Amicus Curiae)
,
24
this Court warned litigants to stop the trend. The Court said:
“
There
is now a growing trend for litigants in this court to disregard time
limits without seeking condonation. Last term alone,
in eight out of
ten matters, litigants did not comply with the time limits or the
directions setting out the time limits. In some
cases litigants
either did not apply for condonation at all or if they did, they put
up flimsy explanations. This non-compliance
with the time limits or
the rules of court resulted in one matter being postponed and the
other being struck from the roll. This
is undesirable. This practice
must be stopped in its tracks.”
25
The
statistics referred to above illustrate that the caution was not
heeded. The Court cannot continue issuing warnings that are
disregarded by litigants. It must find a way of bringing this
unacceptable behaviour to a stop. One way that readily presents
itself is for the Court to require proper compliance with the Rules
and refuse condonation where these requirements are not met.
Compliance must be demanded even in relation to Rules regulating
applications for condonation.
As
stated earlier, two factors assume importance in determining whether
condonation should be granted in this case. They are the
explanation
furnished for the delay and prospects of success. In a proper case
these factors may tip the scale against the granting
of
condonation.
26
In a case where the delay is not a short one, the explanation given
must not only be satisfactory but must also cover the entire
period
of the delay. Thus in
Van Wyk
this Court said in this regard:
“
An
applicant for condonation must give a full explanation for the delay.
In addition, the explanation must cover the entire period
of delay.
And, what is more, the explanation given must be reasonable. The
explanation given by the applicant falls far short of
these
requirements. Her explanation for the inordinate delay is superficial
and unconvincing.”
27
The
present delay was in excess of two months and the explanation given
for it was this. The Municipal Manager thought it was
desirable to
have the municipal council’s approval before an application
for leave to appeal could be lodged. But because
the council was on
recess the approval could not be obtained. This explanation is
unsatisfactory for a number of reasons. First,
the Municipal Manager
decided to seek approval despite legal advice to the effect that he
had authority to pursue the appeal
on the Municipality’s
behalf.
Second,
his own words in the affidavit filed in support of condonation
contradict the reason given for the delay. He said:
“
Although
I am advised that my authority probably extends to authorising the
lodging of an application for leave to appeal and the
prosecution of
the appeal thereafter I felt it desirable in the circumstances that
the matter should be referred to the executive
committee of the
Municipality.”
This
statement illustrates that approval was to be sought from the
executive committee and not the council which was then on recess.
We
are not told why the Municipal Manager did not ask the Mayor to
convene a meeting of the executive committee for purposes
of
obtaining approval. These facts show plainly that council’s
recess was irrelevant to the question whether approval of
the
executive committee could be obtained because the committee could
still meet even if council was on recess. Moreover, the
conduct of
the Municipal Manager, upon being advised that prospects of success
on the merits were fairly good, is inconsistent
with his desire to
seek approval. He instructed the Municipality’s lawyers to
prepare the application for leave, which
was ready two days before
the deadline for lodging it expired. If he wanted to, he could have
lodged the application on time.
Apart
from being unsatisfactory, the explanation furnished did not cover
the entire period. Part of the delay was unexplained,
particularly
after approval had been granted on 8 August 2012. An explanation for
this period was necessary since by then the
papers were ready for
lodging, having been finalised on 20 June 2012. Consequently, the
Municipality has failed to establish
that its non-compliance with
the relevant Rule was pardonable.
Prospects of success
The
enquiry into prospects of success applies to condonation and an
application for leave and both should fail if there are no
prospects
that an applicant will succeed in the appeal. This enquiry leads us
to the interpretation of section 3(3)(a) of the
Rating Act. For if
the Trust’s land constitutes state property contemplated in
the section, the declaration sought by the
Municipality would fail,
unless the other requirements of the section are not met.
The
Rating Act defined state property as land that belonged to the state
or a governmental institution which was located within
a municipal
area. The location of the land was then important because not all
land in this country had to fall under a municipality.
But under the
Constitution, this element of the definition has less importance
because all land must fall within a municipal
area of one or the
other municipality. Furthermore, a “local authority”
under the Rating Act was defined as—
“
any
institution, council or body contemplated in section 84(1)(f) of the
Republic of South Africa Constitution Act, 1961 . . . and
any
institution, council or body established by or under any law and
authorised in terms of any law to levy rates on the value
of
immovable property within its area of jurisdiction”.
28
This
illustrates that the type of municipality envisaged in the Rating
Act is different from the current categories of municipalities.
This
is so because the Rating Act was intended to apply to municipal
structures established under the apartheid order, hence
the
reference to the constitution of the apartheid government. But
because the Rating Act continued to operate under the current
democratic dispensation until it was repealed, it must be read
consistently with the Constitution.
29
The
Constitution is the starting point in an enquiry involving the
determination of what the Rating Act means when it refers to
state
and state property. Of course one has to consider the language
employed by the Rating Act to define these concepts and
read it in
the context of the Constitution. The Rating Act defined the state as
an entity that included the Department of Posts
and
Telecommunications and a provincial administration. The Department
referred to is no longer in existence.
30
Under the Constitution both the Department and a provincial
administration would constitute organs of state. In other words,
by
referring to these institutions in defining the state, the Rating
Act contemplated what would be regarded as organs of state
under the
current Constitution. Accordingly, the object of the present enquiry
must be to determine whether the Trust also is
an organ of state.
In
terms of the Constitution “organ of state” means any
department of state or administration in the national, provincial
or
local sphere of government or any functionary that exercises a power
or performs a public function in terms of the Constitution
or any
legislation.
31
There can be little doubt that the Trust exercises public power and
performs functions in terms of legislation. Therefore, it
constitutes an organ of state.
But
counsel for the Municipality argued that the provision that required
the property to be held in trust for the inhabitants
of the area of
jurisdiction of a municipality was not met. He contended that
section 3(3)(a) of the Rating Act required that
the property be held
in trust on behalf of all of the inhabitants of a municipality.
Because section 2(2) of the Trust Act proclaims
that the Trust land
be administered for the benefit of certain tribes, communities and
residents of districts defined in the
Schedule to the Trust Act, it
was further submitted that the Trust Act does not refer to all
inhabitants of the Municipality.
Accordingly, the argument
concluded, the two statutes do not refer to the same group of
people.
The
argument has no merit. When parts of the Trust’s land were
incorporated into the area of the Municipality, the residents
of the
incorporated parts became the inhabitants of the Municipality. The
fact that the Trust Act does not refer to all the inhabitants
of the
Municipality does not mean that the land in question is not held in
trust for the inhabitants of the Municipality. Section
3(3)(a) of
the Rating Act does not require that before it can be invoked the
state must hold the property in trust for all the
inhabitants of a
municipality.
It is
clear from the language of its empowering legislation that the Trust
administers the land in question for the benefit of
members of
communities contemplated in the KwaZulu Amakhosi and Iziphakanyiswa
Act and the residents of the district within which
a municipality
falls.
32
There are similarities between section 2 of the Trust Act and
section 3(3)(a) of the Rating Act. Both speak of state land,
held by
an organ of state for the benefit of residents of a municipal area.
The fact that the Trust administers the land in question
for the
benefit of the local residents means that the other requirement of
section 3(3)(a) is met. The Supreme Court of Appeal
was right in
holding that the requirements of section 3(3)(a) of the Rating Act
were satisfied and that the Trust land could
not be declared
rateable. Consequently, there are no prospects of success in the
appeal.
Furthermore,
it would not ordinarily be in the interests of justice for a
municipality to be allowed to levy rates on immovable
property,
dating back eight to 17 years, without any explanation for its
failure to do so within the relevant financial years.
An underlying
principle regarding the levying of rates is that they must be levied
within the financial year in respect of which
the rates are charged.
This is required for good reason. Rates are based on the value of
properties in each financial year. This
value is fixed by a
municipality on properties that must be on a valuation roll. The
property owners have a right to dispute
the value placed on their
properties. The exercise of this right may, in an appropriate case,
be undermined if a municipality
is allowed to assess rates years
after the relevant period. Moreover, the percentage at which the
rates were increased was bound
up with expenditure and revenue
estimates, hence the notices issued had to contain information about
both expenditure estimates
and the rates to be levied.
In
addition, as I see it, it is unlikely that the Municipality could be
permitted to unscramble the egg and undertake all preliminary
steps
it was obliged to take under the Local Authorities Ordinance which
was then applicable. But more importantly, it may not
be able to
compile a supplementary valuation roll, including the Trust’s
property, as a step leading up to assessing rates.
The Ordinance, in
terms of which it had the power to compile valuation rolls, was
repealed on 2 July 2005 by the MPRA. This Act
permitted the
continued use of existing valuation rolls and supplementary
valuation rolls until 2 July 2011 on which date its
transitional
provisions lapsed.
33
Even if the Trust’s property was already on the valuation
roll, it may not be legally possible for the Municipality to
use
that valuation roll after 2 July 2011. Accordingly, the rates for
the relevant period are unlikely to be made exigible in
favour of
the Municipality.
For
all these reasons the applications for condonation and leave to
appeal must fail.
Costs
As
the litigants in this matter are organs of state, the award of costs
is unlikely to have a chilling effect on the pursuit of
constitutional issues. There is nothing on the record indicating why
the Municipality did not seek to recover the rates on the
property
in question during the relevant financial years. No explanation is
given for this long delay. And there was no reason
advanced why the
costs should not follow the event. Therefore, it is fair in the
present circumstances, to order the Municipality
to pay the Trust’s
costs.
Order
[45]
The following order is made:
The applications for condonation and leave to
appeal are dismissed with costs, including costs of two counsel where
two were employed.
For
the Applicant: Advocate D J Shaw QC and Advocate H S Gani instructed
by Linda Mazibuko & Associates.
For
the Respondent: Advocate A J Dickson SC instructed by Mason
Incorporated.
1
The
Natives Land Act 27 of 1913 and the Native Trust and Land Act 18 of
1936.
2
38
of 1927.
3
Western
Cape Provincial Government and Others: In re DVB Behuising (Pty) Ltd
v North West Provincial Government and Another
[2000] ZACC 2
;
2001 (1) SA 500
(CC);
2000 (4) BCLR 347
(CC).
4
Msunduzi
Municipality v MEC for Housing, KwaZulu-Natal and Others
2004
(6) SA 1
(SCA) at para 6.
5
46
of 1959.
6
They
were Bophuthatswana, Ciskei, Gazankulu, KaNgwane, KwaNdebele,
KwaZulu, Lebowa, QwaQwa, Transkei and Venda.
7
26
of 1970.
8
See
Ex parte Moseneke
1979 (4) SA 884
(TPD).
9
21
of 1971.
10
Schedule
1 of the interim Constitution Act 200 of 1993.
11
Id
section 229.
12
3
of 1994 which came into force on 25 April 1994.
13
9
of 1990.
14
KwaZulu-Natal
Ingonyama Trust Amendment Act 9 of 1997 (Amendment Act).
15
Id
Section 2.
16
Section
151(1) of the Constitution.
17
6
of 2004.
18
25
of 1974 (Ordinance).
19
Id
Sections 148-150.
20
Id
sections 155-158.
21
79
of 1984.
22
[2000]
ZACC 3
;
2000 (2) SA 837
(CC);
2000 (5) BCLR 465
(CC).
23
Id
at para 3.
24
[2007]
ZACC 24
;
2008 (2) SA 472
(CC);
2008 (4) BCLR 442
(CC).
25
Id
at para 33.
26
S
v Mercer
[2003] ZACC 22
;
2004 (2) SA 598
(CC);
2004 (2) BCLR 109
(CC) at para 4.
27
Van
Wyk
above n 24 at para 22.
28
Section
1 of the Rating Act.
29
Items
2-3 of Schedule 6 of the Constitution.
30
Presently
there is the Department of Communications.
31
Section
239 of the Constitution states that an organ of state means—
“
(a) any department of state
or administration in the national, provincial or local sphere of
government; or
(b) any other functionary or institution—
(i) exercising a power or performing a function in
terms of the Constitution or a provincial constitution; or
(ii) exercising a public power or performing a public
function in terms of any legislation,
but does not include a court or a judicial officer”.
32
Section
2 of the Trust Act.
33
Section
89(3) of the MPRA.