Blue Circle Ltd v Valuation Appeal Board, Lichtenburg, and Another

• Jurisdiction: South Africa
• Judge: Joubert JA, Nestadt JA, Milne JA, Kumleben JA and Preiss AJA
• Judgment Date: 28 March 1991
• Hearing Date: 25 February 1991
• Court: Appellate Division

Nestadt JA:

The underlying issue raised in this appeal is whether I correct principles were applied in valuing certain rateable property under the provisions of the Local Authorities Rating Ordinance 11 of 1977 of the Transvaal.

The dispute between the parties goes back to 1985. In that year, the Town Council of Lichtenburg (the second respondent), caused a provisional valuation roll of rateable property within its municipality J to be

Nestadt JA

A prepared. In doing so it acted under s 10 of the ordinance. This section requires that there be reflected in respect of each property recorded in the roll not only the value of the site, but also that of any improvements thereon. The reason for this is that by virtue of s 4, read with s 21(3), rates may be levied not only on land but also on the value of improvements on such land. One of the properties included in the roll B was that of Blue Circle Ltd (the appellant). The property is portion 61 of the farm Lichtenburg Town and Townlands No 27, registration division IP, district Lichtenburg. The following values were reflected in respect of it:

'Improved value	R25 150 000
Site value	R 150 000
Value of improvements	R25 000 000.'

Blue Circle lodged an objection. It contended that an improved value of R13 100 000 should be substituted. The matter came before the valuation board which, after a hearing, partially upheld Blue Circle's objection. The valuation was altered to read: D

'Improved value	R17 150 000
Site value	R 150 000
Value of improvements	R17 000 000.'

This satisfied neither party. Each appealed to the valuation appeal board which, acting under s 20(1), reheard the matter. By this time there was no longer any dispute about the site value of the land. The E figure of R150 000 was accepted by Blue Circle. However, the disparity between what it alleged was the value of the improvements and the Town Council's valuation thereof, had widened. Blue Circle now contended that the improvements had a nil value; the Town Council's case was that they were worth some R60 000 000. After a lengthy trial during which a number F of expert witnesses expressed opposing views as to the value of the improvements, both appeals were dismissed. So the valuation of R17 000 000 stood. This led to the next step in the proceedings. It was an application by each side to the Transvaal Provincial Division to review and set aside the decision of the valuation appeal board (which G was cited as a respondent). The matter came before De Villiers AJ who dismissed Blue Circle's application (with costs). The learned Judge, however, granted the application of the Town Council (and ordered Blue Circle to pay the costs occasioned by its opposition). He set aside the dismissal of its appeal by the valuation appeal board. He directed that H the matter be remitted to the valuation appeal board 'met die opdrag dat hy sy plig ooreenkomstig die bepalings van die ordonnansie sal uitvoer'. The parties were given the right to adduce further evidence before the valuation appeal board. Blue Circle's appeal, which is before us with the leave of the Court a quo, is against these orders. The valuation I appeal board is the first respondent. But it does not oppose.

It will be apparent from what has been said that the broad issue before us is whether there were good grounds for the review of the proceedings of the valuation appeal board or, more specifically, whether the Court a quo's decisions in this regard were correct. Now there is no appeal against the valuation appeal board's decision which in terms of s J 20(1) is final. The

Nestadt JA

A review is of the second type referred to in Johannesburg Consolidated Investment Co v Johannesburg City Council 1903 TS 111 at 115. Relief cannot therefore be granted merely because the valuation appeal board's valuation is considered to be wrong. Nor would it suffice that it made a mistake on a point of law in relation to the merits (Goldfields B Investment Ltd and Another v City Council of Johannesburg and Another 1938 TPD 551 at 557 and 560 - 1; South African Broadcasting Corporation v Transvaal Townships Board and Others 1953 (4) SA 169 (T) at 177A - C). The principle is correctly stated by De Villiers JP in Harpur and Others v Steyn NO 1974 (1) SA 54 (O) at 56G - 56in fin. The learned Judge said:

C 'The mere fact that a quasi -judicial body comes to a wrong conclusion in regard to a question of law which it was its duty to consider in arriving at a decision on the merits of the matter before it, does not afford a ground for setting aside its decision on review. Its decision can only be set aside if the mistake is in respect of the law which prescribes its duties with the result that it failed to apply its mind to an issue which it had to consider. Thus it was said in Doyle v D Shenker & Co Ltd 1915 AD 233 at 236:

"Now a mere mistake of law in adjudicating upon a suit which the magistrate has jurisdiction to try cannot be called an irregularity in the proceedings. Otherwise a review would lie in every case in which the decision depends upon a legal issue, and the distinction between procedure by appeal and procedure by review, so carefully drawn by E statute and observed in practice, would largely disappear".'

One or more of the recognised grounds of review (in the sense indicated) would accordingly have to be established. Insofar as the facts of the present matter are concerned, this means showing that the valuation appeal board so misconceived the nature of the enquiry postulated by the F ordinance or its functions thereunder that it failed properly to apply its mind to the true issues. In this event there would have been a gross irregularity resulting in a fair trial not having taken place.

This immediately brings me to s 9 of the ordinance. It defines what has to be valued and the manner of doing this. And, as a consequence, it G determines what principles the valuation appeal board has to apply. So the importance of s 9 is self-evident. Insofar as is relevant, it provides:

'9(1)... (A) valuer shall, for the purpose of this ordinance, determine -

(a)

the improved value of land... which shall be the amount which such land... would have realised if sold on the date of valuation in the open market by a willing seller to a willing buyer; H

(b)

the site value of land... which shall be the amount arrived at in like manner to that referred to in para (a), but on the assumption that the improvements, if any, had not been made; and

(c)

the value of improvements which shall be arrived at by subtracting the site value of land... from the improved value thereof.

I (2) In determining the value referred to in ss (1), a valuer shall -

...

(c)

not take into account any value accruing to the land... by reason of the presence... on or under the land concerned of -

...

(ii)

any machinery which, in relation to the land concerned, is immovable property, excluding a lift, escalator, J air-conditioning plant, fire-

Nestadt JA

A extinguishing apparatus, water-pump installation for a swimming-pool or for irrigation or domestic purposes or any other machinery which may be prescribed.'

'Land' is defined in s 1 to include 'any improvements in, on or under such land' and 'improvements' are in turn defined as

'any building, whether movable or immovable, or any other immovable B structure in, on or under such land... excluding a structure constructed solely for the purpose of rendering the land concerned suitable for the erection of any immovable structure thereon'.

'Machinery' is not defined.

The evidence placed before the valuation appeal board can be briefly C summarised. The property in question is about 72 hectares in extent. As has been indicated, there are improvements on it. They comprise a cement factory which Blue Circle conducts on the property. The factory, which covers an area of some 18 hectares, consists of various buildings and structures. These include a number of offices, workshops, stores, a laboratory, garages and a compound for employees. In addition there is, of course, a mass of machinery. Its presence, as will be seen, is D central to the controversy between the parties.

Blue Circle's main witness was Dr P E Penny, a valuer. He explained how he set about assessing the improved value of the property. He firstly identified the machinery. He gave the word a wide meaning. He regarded it as consisting of whatever was integral to the manufacturing E process. Thus buildings and structures the sole purpose whereof was to house or support the machine contained within or attached to it were also regarded as part of the machinery itself. His reasoning was the following:

'We've already heard evidence that some of these structures would disappear if the machinery was removed away. They're actually been built F with the machinery so that they're an integral...