IMPOSITION OF MUNICIPAL RATES – PROCEDURE
Kungwini Local Municipality v Silver Lakes Home Owners
Association and another
2008 (6) SA 187 (SCA)
FACTS: The Kungwini Municipality’s 2004/5 budget dated
May 2004 proposed an increase in the assessment rate for the
Bronberg area from R0.02 per rand value of the relevant property
to R0.088, an increase of 340%. A later published draft budget
dated 7 June 2004 provided for an increase to R0.054, refl ected
as 145,45% while it was in fact 170%. On 29 June 2004 a
special council resolved that R0.054 for Bronberg be approved
and a percentage tariff increase of 145,45% be approved. On
28 July 2004 a local authority notice was published, setting out
these decisions. On 1 August 2004 the increased rates were
refl ected on the accounts of Bronberg residents. On 31 August
the councillor for Ward 1 in the Bronberg area, per letter, noted
to the council that it had not considered the objections to the
budget it had received after publishing the draft budget on
7 June; that the actual percentage increase was 170%; that the
council resolved on 29 June 2004 to adopt the budget before
the notice of 28 July 2004 was published and before any
representations or objections were considered; and that the
170% increase was contrary to National Treasury guidelines.
The municipality then held a special council meeting on
5 October 2004 where it amended the percentage increase to
170%. It did not publish the amendments to the budget or the
percentage increase. On 14 October 2004, at a further special
council meeting, the council resolved that all objections
received timeously be considered; that all objections be
dismissed; and that the assessment rates be implemented. The
Supreme Court of Appeal was called upon to decide if the
29 June meeting was lawful and whether the 28 July notice
was within the powers granted by the empowering statute in
that the notice did not expressly set out the date on which the
rates increases were to be effective and the increased rates
were implemented four days after publication of the notice and
before the expiry of the time period for lodging of objections.
HELD: The Constitution itself grants the power to a municipality
to impose a rate on property. This is an original power
and constitutes a legislative, not an administrative, act. The
principle of legality enshrined in the Constitution demands
that a municipality must follow the procedure prescribed by
the applicable national or provincial legislation in levying,
recovering and increasing property rates. The relevant
legislation for the relevant period was s10G(7) of the Local
Government Transition Act, 1993. This section envisages that
interested parties should be given a proper opportunity to
make submissions on property rates and that the municipality
must give these submissions proper consideration. The section
does not demand the formal consideration of submissions
both before the resolution is taken and after the required
notice is published. National Treasury budget guidelines
are not prerequisites for the approval of a municipal budget
and they apply generally to own revenue sources for capital
and operating budgets, not specifically to property rates
increases. The increases did not “materially and unreasonably
prejudice national economic policies” as set out in s229(2)(a)
of the Constitution. Historically, the property rates in the
Bronberg area were exceptionally and unnaturally low, while
the area is at the same time one of the most affl uent areas in
the municipality. On the other hand, a procedure whereby
residents are presented with an accomplished fact, does not
encourage the involvement of communities in matters of local
government, as required in s152(1)(e) of the Constitution.
Practically, the municipality levied rates with retrospective
effect. The relevant legislation did not authorise this. The
least the municipality should have done was to make clear
to residents how and when the increased rates would come
into operation, with reference to any objections that might be
lodged during the specifi ed period and to ensure that suffi cient
time was allowed to properly consider any timeous objections.
The court declared that the municipality was therefore not
entitled to levy the increased rates.