Central University of Technology Free State v Mangaung Metropolitan Municipality and others

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Mhlambi J and Opperman J
• Judgment Date: 24 August 2023
• Citation: 2023 JDR 3215 (FB)
• Hearing Date: 22 May 2023
• Docket Number: A12/2020
• Court: Free State Division, Bloemfontein

Mhlambi J:

[1]

The applicant sought declaratory relief and the review of the first and third respondents’ decisions relating to the valuation and levying of rates of the

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applicant’s immovable properties for the 2017/2018, 2018/2019, and 2019/2020 financial years. The immovable property is situated in the first respondent’s municipal area. The applicant contended that these decisions were subject to the doctrine of legality as they failed to comply with the statutory requirements envisaged in the Local Government: Municipal Property Rates Act, [1] (“the MPRA”), and were irrational.

[2]

The respondents opposed the application on various grounds based on the Promotion of Administrative Justice Act, (“PAJA”) [2] and the MPRA.

[3]

In its amended notice of motion, the applicant seeks relief in four parts as follows:

“Part 1

1.

The declaration as unlawful, the second respondent’s failure to serve a copy of the notice contemplated in section 49(1)(a) of the MPRA together with an extract of the valuation roll for the financial years 1 July 2017 until 30 June 2021 in terms of section 49(1)(c) of the MPRA.

2.

Orders to review and set aside; alternatively, to declare unlawful and set aside the decisions set out hereunder:

2.1

The first respondent’s decision to levy rates in respect of the applicant’s properties in terms of the market value of the properties and in terms of the categories of the properties, recorded in the valuation roll; and

2.2

The first respondent’s decision to determine the cent amount in the rand payable as rates (published in the Provincial Gazette in terms of section 14(2) of the MPRA and in accordance with copies of the relevant notices annexed as annexures “FA14”, “FA15” and “FA16” to the founding affidavit) in respect of the applicant’s properties with reference to the market value of the properties and the category of the properties as reflected in the valuation roll.

Part 2

Orders to review and set aside: alternatively, to declare unlawful and set aside the decisions set out hereunder:

1.1

The first respondent’s decision to categorise the applicant’s properties reflected in the first respondent’s valuation roll for the financial years 1 July 2017 until 30 June 2021

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as “public benefit organisation” in terms of the first respondent’s 2017/2018 property rates policy;

1.2

The first respondent’s decision to determine in its 2017/2018 property rates policy that a business rate will apply to the levying of rates in respect of the applicant’s properties;

1.3

The first respondent’s failure to determine separate and different rates, in accordance with the provisions of section 3(3)(a), 8(1),14 and 19(1)(c) of the MPRA, in terms of its 2017/2018, 2018/2019 and 2019/2020 property rates policies;

1.4

The determination by the first respondent of item 10.1(b) of its 2017/2018 property rates policy and item 11.1(b) of its 2018/2019 and 2019/2020 property rates policies as a criterium to be applied by the first respondent to levy different rates for different categories of rateable properties.

2.

The 2017/2018, 2018/2019 and 2019/2020 property rates policies be referred to the first respondent who is directed to consider and apply the provisions of sections 3(3)(a), 3(3)(b)(i) and (ii), 14(2)(b)(ii) and 19(1)(c) of the MPRA and considering such policies.

3.

An order that the first respondent makes or causes to be made a supplementary valuation and categorisation of the applicant’s properties as reflected in the valuation roll in terms of section 78 of the MPRA.

Part 3

1.1

The third respondent’s decision to categorise the applicant’s properties (specifically erf 26454) reflected in the valuation roll as “business” in accordance with the provisions of section 34 and 48(2)(b) of MPRA;

1.2

The third respondent’s decision to determine the market value of erf 26454 in the amount of R 340 million rands; and

1.3

The first respondent’s decision to levy rates on the applicant’s properties in terms of their market value and their categorisation recorded in the valuation roll.

2.

First respondent be ordered to make a supplementary valuation and categorisation of the applicant’s properties as reflected in the valuation roll in terms of section 78 of the MPRA.

3.

The time period for the institution of reviewing proceedings of part 3 of the notice of motion be extended in terms of PAJA.

Part 4

Conditionally, upon the court holding that the applicant could have resorted to internal remedies; the applicant, in the interests of justice, is exempted from the obligation to exhaust any internal remedy.

[4]

The applicant is a University duly established as a Higher Education Institution in terms of the Higher Education Act, 101 of 1997 with an address at the main

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Campus, 20 President Brand Street, Bloemfontein. [3] It performs a public function and provides higher education to a section of the public. As an organ of state, [4] its properties are owned by the state.

[5]

The first respondent is a metropolitan municipality duly established in terms of the provisions of section 12 of the Local Government: Municipal Structures Act, 117 of 1998 with its address at the Bram Fisher Building, 15 De Villiers Street, Bloemfontein. It exercises its executive and legislative authority by, amongst others, developing and adopting policies, preparing, approving and implementing its budgets [5] and must follow the procedure prescribed by the applicable national or provincial legislation when it levies, recovers or increases property rates.

[6]

The second respondent is the first respondent’s municipal manager appointed in terms of section 54A of the Local Government: Municipal Systems Act, 32 of 2000 (“the Systems Act”). The third respondent is the first respondent’s municipal valuer duly appointed in terms of the provisions of section 33 of the MPRA.

[7]

The dispute between the applicant and the first respondent has its genesis in the 2017 valuation roll which determined the categorisation and market value of the applicant’s properties; in particular, the first respondent’s decision to levy a business property rate on the applicant’s properties, especially erf 26454 since 1 July 2017. On 10 June 2019, the applicant, through its attorneys, declared a dispute in terms of section 102(2) of the Systems Act, to the rates and taxes payable by the applicant on its immovable property. The applicant disputed the amount payable on the basis that:

“4.

We dispute that this amount is due and payable by the CUT and place this amount in dispute on the following basis:

4.1

The property rates are seemingly due and payable in relation to Erf 26454, although this erf does not appear to have been registered or even created yet;

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4.2

It is our instruction that this property is known as Erf 26454 but that this Erf still needs to be created by consolidation of other erven.

4.3

The municipality’s insistence to charge property rates on a property that does not exist at this stage is illegal for want of compliance with the requirements of the Municipal Property Rates Act, 6 of 2004 (hereafter the “Rates Act”);

4.4

The rates account received from the municipality indicates that rates are charged against the properties of the CUT at a rate of R 0.037700, which rate is termed the “Business and Commercial”;

4.5

The Free State High Court declared the charging of a business rate against the properties of the Free State University as illegal and set that decision of the Mangaung Metropolitan Municipality aside on 27 May 2019;” [6]

[8]

The applicant contended that the levying of such a rate against an institution of higher education was illegal and irrational and based this contention on the court order of 27 May 2019. [7] The court order declared portions of the first respondent’s 2017/2018 property rates policy unlawful and set them aside. [8] The applicant contended that the illegalities in that policy were retained in the subsequent rates policies of the municipality and had an illegal and irrational effect on the rates payable by the applicant. The applicant held the view that the court order was relevant to the determination of the present dispute as the two universities were similarly situated rate payers, rendering the same service and the first respondent acknowledged that it was not entitled to charge a business rate for the properties of the University of the Free State. It was contended that the first respondent would, in similar fashion, be precluded from charging a business rate for the applicant’s properties. [9]

[9]

The court order of 27 May 2019 was issued by agreement between the first respondent and the University of the Free State after the latter challenged the legality of the 2017/2018 property rates policy of the first respondent. For completeness’ sake, the said court order provides as follows:

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“It is ordered that:

1.

The First Respondent’s failure to determine separate assessment rates for each of the different property categories determined in the Rates Policy 2017/2018 in accordance with the provisions of sections 3(3)(a), 14(2)(b)(ii) and (iii) and 19(1)(c) of the Local Government: Municipal Property Rates Act, 6 of 2000 is declared unlawful and set aside.

2.

The First Respondent’s decision to levy a business tariff on Applicant’s properties as provided for in paragraph 11.7 of the Rates Policy 2017/2018 is declared unlawful and set aside.

3.

The determination by the First Respondent of item 10.1(b) of its 2017/2018 Property Rates Policy as a criterium to be applied by the First Respondent to levy different rates for different categories of rateable properties is declared unlawful and set aside.

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