High Court forces Tshwane rates regime u-turn

15 Jul 2016

The High Court in Pretoria has set aside an unlawful rates regime implemented by the City of Tshwane Metropolitan Municipality, which had adversely impacted the owners of vacant property situated in an area that previously fell within the jurisdiction of the former Kungwini Local Municipality.

The unlawful property rates regime arose following the amalgamation of the former Kungwini Municipality into the City of Tshwane. Upon compiling a supplementary valuation roll in 2012, the City of Tshwane incorporated properties which previously fell within the Kungwini Municipality into its jurisdiction, but in so doing, it categorised as ‘residential’ properties those that had previously been categorised as ‘vacant’. The impact of this re-categorisation was that owners of the re-categorised properties were no longer invoiced at the considerably lower residential tariff, and were instead charge the vacant land tariff (which is some 4.5 times higher than the residential rate). To make matters worse, the increase date was applied retrospectively to July 2011, being the date upon which the properties in question were incorporated into the City of Tshwane.

The result was that certain owners who had received a monthly invoice in the amount of R843.43 in August 2012, received a rates invoice in the amount of R75 939.64 the very next month. Other owners went from paying a monthly amount of R491.16 to R4 009.33 as a result of the re-categorisation (a staggering increase of 716%).

Lombardy Development (Pty) Ltd, the developer of Lombardy Estate & Health Spa in Pretoria East, together with other property owners in the area launched a review application to set aside the City of Tshwane’s decision to re-categorise the affected properties.

Lombardy and the other applicants based their case primarily upon the City’s failure to have complied with its mandatory notice obligations in terms of the Municipal Property Rates Act, which required the City of Tshwane to have given the owners of the affected properties individual notification of the fact that their properties were to be re-categorised in terms of the supplementary valuation roll. In consequence of this failure, the Pretoria High Court declared invalid and set aside the 2012 supplementary valuation roll insofar as it re-categorised the properties in question from ‘residential’ to ‘vacant’. The Court also declared invalid and set aside the City of Tshwane’s 2013 general valuation roll and all subsequent valuation rolls which perpetuated the unlawful re-categorisation introduced by the 2012 supplementary valuation roll.

In addition, the court declared unlawful and set aside item 5.1.5(d) of the City of Tshwane’s Rates Policy on account of its absolute exclusion of any right to seek exemptions, reductions or rebates by the owners of vacant land, holding that such exclusion fails to treat the rate payers equally.

In terms of the order granted by the High Court, the City of Tshwane is prohibited from further implementing any of the decisions mentioned above to the extent that they were set aside. This means that the City can no longer issue rates in respect of the affected properties according to the vacant land rate and, instead, that it must apply the rate applicable to residential properties.

Andrew Molver of Adams & Adams, the law firm representing Lombardy and the other applicants in the matter, stated, “The outcome is a major victory for the owners in question who, without this court order, would have had no way of escaping the exorbitant rates imposed upon their respective properties,” and added, “The ruling also, again, demonstrates the faith which can be placed in the judiciary and judicial processes in invalidating unlawful and prejudicial conduct by the state”. The firm was also recently involved in the Nkandla ConCourt judgment as legal representatives of the Public Protector, Adv. Thuli Madonsela.

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)