City of Cape Town and Another v Robertson and Another

• Jurisdiction: South Africa
• Judge: Langa ACJ, Moseneke J, Mokgoro J, O'Regan J, Sachs J, Skweyiya J, Van Der Westhuizen J and Yacoob J
• Judgment Date: 29 November 2004
• Citation: 2005 (2) SA 323 (CC)
• Docket Number: 19/04
• Hearing Date: 07 September 2004
• Counsel: A G Binns-Ward SC (with him A M Breitenbach) for the first applicant. W H Trengove SC (with him P Coppin) for the second applicant.
• Court: Constitutional Court

Moseneke J:

Introduction H

[1] Mrs and Mr Robertson sought and obtained declaratory and interdictory relief from the Cape High Court (High Court) restraining the City of Cape Town (the city) from levying and recovering property rates based on property valuations contained in a provisional valuation I roll. The High Court also granted a declarator to the effect that s 21 of the Local Government Laws Amendment Act of 2002 [1] (Amendment Act) is inconsistent with the Constitution and to that extent invalid. It suspended

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the orders for a year from the date of the conclusion of A proceedings in this Court to allow the competent authorities to correct the defects in the law. [2]

[2] As required by s 172(2)(a) of the Constitution, the High Court has referred its order of constitutional invalidity to this Court for confirmation. Also before us is an appeal. The city, as first appellant, and the Minister of Provincial and Local Government (Minister), as second appellant, are aggrieved by the decision of the B High Court. Their appeal against the order of constitutional invalidity lies directly to this Court in terms of s 172(2)(d) of the Constitution and Rule 16(2) of the Rules of this Court. The city appeals also against the other orders of the High Court that are not C subject to confirmation. There was, however, no objection to this procedure. It is not necessary to decide whether that appeal lies as of right to this Court in terms of s 172(2)(d). Even if we were to treat the appeal as an application for leave to appeal directly to this Court, it would clearly be in the interests of justice to grant the application, which would concern constitutional matters. D

[3] The appeal concerns the validity of the provisional valuation roll of property within the area of jurisdiction of the city, compiled and advertised for inspection and objection on 21 May 2002 and the validity of the decision of the city to levy in effect property rates on the basis of that roll as determined by its budget E resolution for the 2002/2003 municipal financial year. [3] The appeal also raises the question whether, if the city's principal grounds of appeal are resolved in its favour, it remains necessary to reach the constitutional challenge against the Amendment Act. And if so, whether the declaration of constitutional invalidity ought to be confirmed by F this Court.

[4] The city is a municipality with legal personality, constituted as such in terms of ch 2 of the provisions of the Local Government: Municipal Structures Act 117 of 1998 (Structures Act). Its power to value property and to levy property rates is under challenge. On the other hand, the Minister sponsored the enactment of the impugned G national legislation and is the member of cabinet responsible for its implementation. For that reason, his interest in the appeal is confined to the orders of the High Court that declared s 21 of the Amendment Act inconsistent with the Constitution and invalid; suspended the declaration of invalidity and directed him together with the city to H pay the costs of the application.

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Facts A

[5] The Robertsons are an elderly couple. They live in a house owned by Mrs Robertson, the first respondent, situated on erf 1829, Camps Bay. In 1969, the Robertsons purchased the erf as a vacant and unimproved lot for R7 250. Soon thereafter, they built a house on it at a cost of some R15 000. Although registered in her name, she and her husband, the second respondent, consider the house to be their B joint property.

[6] The residential area of Camps Bay, nestled on the shores of the Atlantic Ocean, has become one of the most desirable and expensive residential areas in South Africa. In the last applicable general valuation of the property, conducted in 1979, the property was valued at R52 510, comprising land value of R8 600 and improvements value of C R43 910. A little over two decades later, the city valued the property at R1,7 million. The valuation is made up of land value of R460 000 and building value of R1 240 000. Premised on this valuation, for purposes of the 2002/2003 municipal financial year, Mrs Robertson is liable for R16 321,80 in property rates for the year. This assessment D translates to R1 360,15 in property rates per month. In addition, the city has estimated her liability for a sewerage rate of R588,12 and a refuse rate of R718,56 for a year.

[7] The total rates liability of the Robertsons appears to have more than doubled. Before 1 July 2002, their rates bill was R8 203,44 E over a year and R683,62 every month. The Robertsons are unhappy. They say they cannot afford the increased rates, which they describe as exorbitant in relation to their overall budget. They seek relief from what they regard as unfair and onerous property rates. This they hope to do by impugning the legal validity of the property valuation roll and the resultant property rates. F

[8] It is now convenient to turn to a brief account of the background events which gave rise to the predicament of the Robertsons over escalated property valuation and rates. These facts are, by and large, common cause between the parties and are most helpfully rendered G in the judgment of the High Court. [4] Accordingly, a brief sketch of the events should suffice.

Local government transition H

[9] On 5 December 2000, the city was established as a municipality in terms of the provisions of ss 12, [5] 14 [6] and 16 [7] of the Structures Act. This I

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In the printed publication of the South African Law Reports this page was taken up entirely by footnotes

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In the printed publication of the South African Law Reports this page was taken up entirely by footnotes

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event marked the final phase in the long and intricate process of A transforming racially based municipalities into democratically determined local government in the Cape Metropolitan Area (CMA). The process entailed the integration of 60 local authorities into a single municipality - the City of Cape Town. [8]

[10] Preceding the final phase, there were two earlier stages of transition governed by the Local Government Transition Act 209 of 1993 B (Transition Act). [9] The terms of this legislation were negotiated as part of the political and constitutional settlement ahead of the commencement of the interim Constitution in April 1994. The text of the Transition Act had been agreed upon and adopted on 18 November 1993. [10] The legislation commenced on 2 February 1994. That signalled the start of the first phase known as the pre-interim C phase, [11] which ran until the first democratic local government elections held for all municipalities on 29 May 1996. The second phase, known as the interim phase, [12] started D

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from the local government elections until 5 December 2000, when the Structures A Act took effect in respect of municipal areas determined under the Local Government: Municipal Demarcation Act 27 of 1998 (Demarcation Act).

[11] Ahead of the inception of the final phase and by mid-1999, municipalities in the CMA namely, the Cape Metropolitan Council (CMC) and the 6 metropolitan transitional local councils found B it pressing to compile a metropolitan-wide general valuation of property. Until then, local authorities within the CMA had been saddled with different valuation rolls and divergent base dates. Some valuation rolls were outdated and even more than 20 years old. There were discrepancies between 'rates values' and actual values of property. C Moreover, in some metropolitan transitional local councils, across the board uniform property rates increases were imposed. This did not help matters. These increases led to complaints of an unfair distribution of the rates burden and a perception and complaint, in some quarters, of unfair discrimination. [13] D

[12] An additional and not insignificant integration challenge for the CMA was that value based property rates could not be charged in black residential areas previously administered under the Black Local Authorities Act of 1982. [14] There had been no valuation of property in these segregated neighbourhoods. E

[13] In 1997, the Council of the previous City of Cape Town completed, but did not implement, a new valuation roll on a 'land only' basis. The Council abandoned this plan because, in 1998, s 159(1) [15] of the Constitution was amended by extending the term of the municipal councils from four to F five years. In the same year, the Structures Act was enacted and provided, in effect, for the establishment of a single metropolitan municipality to replace the 6 metropolitan local councils in the CMA and the CMC. It became clear that a common valuation methodology based on land and improvements had to be followed in the CMA and that national legislation [16] would impose a requirement of a single valuation roll for all property. G

[14] These cumulative considerations impelled the CMA towards a H

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uniform and metropolitan wide valuation of property and ad valorem property rates, being assessment rates based on the value A of the property within a municipal area. [17] The practical purpose and effect of this approach is to create a single tax base and to require those with greater means, measured by the value of their immovable property, to make a proportionately larger contribution to the municipal purse. It is clear from the depositions of the city and applicable legislation [18] that the B principle of one tax base is integral to the effective transformation towards non-racial local governance. Otherwise, very prolonged material neglect and exclusion of certain areas of the city would simply persist, if not be entrenched. [19] C

[15] Between June 1999 and March 2000, individual metropolitan transitional local...