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

• Jurisdiction: South Africa
• Citation: 1991 (2) SA 772 (A)

Blue Circle Ltd v Valuation Appeal Board, Lichtenburg, and Another
1991 (2) SA 772 (A)

1991 (2) SA p772

Citation	1991 (2) SA 772 (A)
Court	Appellate Division
Judge	Joubert JA, Nestadt JA, Milne JA, Kumleben JA and Preiss AJA
Heard	February 25, 1991
Judgment	March 28, 1991

Flynote : Sleutelwoorde

Local authority — Municipality — Rates — B Assessments — Appeals — Valuation appeal board — Review of proceedings of — As there is no appeal against valuation appeal board's decision which, in C terms of s 20(1) of the Local Authorities Rating Ordinance 11 of 1977 (T), is final, review on one of recognised grounds of review the only relief available — Not sufficient that board's valuation wrong or that it made a mistake on a point of law on the merits — Where method of valuation in issue, it would have to be shown that board so misconceived D the nature of enquiry under the ordinance or its functions thereunder that it failed to apply its mind to the true issues.

Local authority — Municipality — Rates — Assessments — Mode and basis of valuation — Machinery which, in relation to land concerned, is immovable property required not to be taken into account — Local E Authorities Rating Ordinance 11 of 1977 (T), s 9(2) (c)(ii) — In valuing land and improvements, a fictional state of affairs to be assumed, namely that there is no immovable machinery on the site — Consequences thereof will depend on facts of each case — The greater the quantity of F machinery and the more integral a part of buildings and structures it is, the more effect it will have in reducing improved value of land.

Local authority — Municipality — Rates — Assessments — Mode and basis of valuation — Valuation of rateable improvements — Section 9(1) of Local Authorities Rating Ordinance 11 of 1977 (T) not providing for G cost method of valuing such — Only two valuations to be made, namely valuation of land as improved in terms of s 9(1) (a) and valuation of site in terms of s 9(1) (b) — Valuation of improvements then determined arithmetically in terms of s 9(1) (c) by subtracting latter from former — Wording of s 9(1) plain and admitting of no other method.

Local authority — H Municipality — Rates — Assessments — Appeals — Presumption in s 15(12), read with s 19(4), of Local Authorities Rating Ordinance 11 of 1977 (T) that valuation of valuation board deemed to be correct until contrary proved — Parties can in appeal against valuation of valuation board to valuation appeal board renounce their respective rights to rely on presumption — Purpose of I presumption is to give respondent a procedural advantage in that appellant bears onus of proving that valuation should be disturbed — Presumption for such party's benefit and it can be waived — Where appeal board's erroneous assumption that presumption applied results in its failure properly to exercise its function of affording parties an J unhampered re-hearing, appeal

1991 (2) SA p773

A board fails properly to apply its mind to matter — Fair hearing not afforded — Such constituting a reviewable irregularity.

Appeal — Costs of — Appellant's appeal against dismissal of its application for review of decision of municipal valuation appeal board and against granting of respondent municipality's application for review B of valuation appeal board's decision failing — Appellant nevertheless succeeding on certain major issues raised in the appeal — Only basis on which respondent held entitled to have succeeded in its review application was equally open to appellant (which however did not take the point) — Court, in all the circumstances and in exercise of its wide discretion, holding that dictates of fairness required that no C order as to costs of appeal be made.

Headnote : Kopnota

There is no appeal against the decision of a valuation appeal board in an appeal against a valuation made by a valuation board in terms of the Local Authorities Rating Ordinance 11 of 1977 (T), the decision of the D valuation appeal board being in terms of s 20(1) of the ordinance, final. A review of the proceedings of the valuation appeal board is of the second type referred to in Johannesburg Consolidated Investment Co v Johannesburg Town 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. One or more of the recognised grounds of review would accordingly have to be established. In a case E where the correctness of the method of valuation is in issue, this means showing that the valuation appeal board so misconceived the nature of the enquiry postulated by the 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.

The legislature would appear to have recognised in the Local Authorities Rating Ordinance 11 of 1977 (T) that the presence of (immovable) F machinery on land may enhance the improved value thereof. It did not wish rates to be paid either on the value of the machinery itself or on what may be called the indirect influence of the machinery on the value of the property. Section 9(2)(c) (ii) of the ordinance gives effect to this. The enjoiner contained in the section relates to the determination of the improved value of land in terms of s 9(1). The use of 'shall' makes it obligatory to leave out of account the value referred to in ss (c) (ii). This means it must be disregarded; no consideration or notice G can be taken of it; no attention is to be paid to it. It appears, therefore, that, in valuing the land and improvements, a fictional state of affairs must be imagined or assumed, namely that there is no (immovable) machinery on the site. Only in this way can the value accruing to the land by reason of the presence of machinery be ignored (as the section requires). There is, in other words, in the context of s 9(2), no material difference between saying 'exclude any value accruing from (the presence of) the machinery' and 'exclude (the presence of) the machinery'. It will depend on the facts of each case what the H consequences of doing this are. The greater the quantity of machinery and the more integral a part of the buildings and structures it is, the more effect will it have in reducing the improved value of the land. In a given case, it may be that an 'empty shell' (having a nil value) remains after the intellectual exercise (of assuming the absence of the machinery) has been performed. But usually a property having some improved value would, despite the notional removal of the machinery, I remain. The extent of such value will depend on the use to which the land and the rateable improvements can be put.

Section 9(1) of the Local Authorities Rating Ordinance 11 of 1977 (T), unlike the corresponding sections of the rating ordinances of the other provinces, simply does not provide for the cost method of valuing rateable improvements (ie valuing the buildings and structures on the basis of their replacement cost, making allowance for a depreciation factor). Indeed, in terms of s 9(1) they are not to be valued separately at all. Only two valuations are to be made. The one (in terms of s J 9(1)(a))

1991 (2) SA p774

A is of the land as improved. This means that land and improvements are valued as an entity. The other (in terms of s 9(1)(b)) is of the site. The value of improvements is then (in terms of s 9(1)(c)) arithmetically calculated by subtracting the latter from the former. The wording of the section is plain and admits of no other method being adopted.

A presumption is created by s 15(2), read with s 19(4), of the ordinance B whereby the valuation of the valuation board is deemed to be correct until the contrary is proved. There can, in an appeal to a valuation appeal board against the valuation of a valuation board, be no objection to the parties in effect renouncing their respective rights to rely on the presumption. The purpose of the presumption is to give the respondent in such an appeal a procedural advantage, namely that the appellant bears the onus of proving that the valuation should be disturbed. The presumption must therefore be taken to have been purely C for such party's benefit. There is ample authority that in these circumstances it can be waived.

Where, as in the instant case, the valuation appeal board's erroneous assumption that the aforesaid presumption applied and that the parties in consequence bore an onus (to prove that the valuation board's valuation was wrong) has resulted in the appeal board misconceiving the position and failing properly to exercise its function of affording the parties an unhampered re-hearing (ie instead of being truly at large and starting off with a clean slate, it circumscribed its powers by wrongly D allowing the presumption to operate), it fails properly to apply its mind to the matter. Put differently, the parties have not been afforded a fair hearing. This constitutes a reviewable irregularity.

The Court, in the instant appeals by the appellant against a decision of a Provincial Division dismissing the appellant's application for the reviewing and correcting of the proceedings of a valuation appeal board (the first respondent) but granting the application of the second E respondent (a town council) for the reviewing of the proceedings of the first respondent, dismissed the appellant's appeals. The Court found, however, that, although the second respondent had 'at first blush' been the successful party, this was in substance not so and that the appellant had had a fair measure of success. Although the matter was to be remitted to the first respondent on the second respondent's application...