Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others

• Jurisdiction: South Africa
• Court: Constitutional Court
• Judge: Chaskalson P, Langa DP, Ackermann J, Goldstone J, Kriegler J, Madala J, Mokgoro J, O'Regan J, Sachs J, Yacoob J
• Judgment Date: 14 October 1998
• Citation: 1999 (1) SA 374 (CC)
• Docket Number: CCT 7/98
• Counsel: DJB Osborn (with him PJ Van Blerk) for the appellants RM Wise (with him J Kentridge) for the first respondent CZ Cohen (with him M Chaskalson) for the second, third, fourth and fifth respondent

Chaskalson P, Goldstone J and O'Regan J: F

Introduction

[1] This matter arises out of the substantial increase in the general rate which, in June 1996, was levied on property and rights in property situated within the area of the Eastern Metropolitan Substructure, one of the four transitional substructures which, together with the Greater Johannesburg Transitional Metropolitan Council (the G TMC), constitute local government in the greater Johannesburg municipal area. The lawfulness of the increase was attacked by ten ratepayers in the Witwatersrand High Court.

[2] It may be helpful at the outset to sketch the political and legal context within which the present dispute has H arisen. The transformation of South Africa from a society rooted in discrimination and disparity to a constitutional democracy founded upon freedom, dignity and equality posed, and continues to pose, particularly profound challenges at local government level. It is here that acute imbalances in personal wealth, physical infrastructure I and the provision of services were and are often most patent. The greater Johannesburg region is no exception. The 13 local government bodies which formerly exercised powers and duties within this, South Africa's largest and most developed urban area, were of two sorts. Those in historically 'White' areas were characterised by developed infrastructure, thriving business districts and valuable rateable J

Chaskalson P, Goldstone J and O'Regan J

property. [1] Those in so-called 'Black', 'Coloured' and 'Indian' areas, by contrast, were plagued by A underdevelopment, poor services and vastly inferior rates bases.

[3] The interim Constitution, [2] which came into force on 27 April 1994, sought to break from this state of affairs by B establishing a new framework for local government in South Africa. It did not, however, prescribe the specific manner in which this transformation was to occur. Instead, it stipulated in s 245 that the complex restructuring of local government should take place in accordance with the Local Government Transition Act [3] (the LGTA). C

[4] The LGTA contemplates that the transformation of local government will take place in three distinct stages. During the 'pre-interim' phase, negotiating forums were established and charged with appointing temporary councils to discharge local government responsibilities. This period extended from the commencement of the D LGTA, on 2 February 1994, until the first democratic local government elections. The 'interim' phase commenced on the date of such elections and witnessed the introduction of a series of transitional local government structures. The third phase, to be initiated and regulated by new legislation, is yet to come into effect. E

[5] During the course of the pre-interim period, Premier's Proclamation 24 of 1994 (Proc 24) was enacted under s 10 of the LGTA for the purpose of unifying local government structures within the greater Johannesburg area. It dissolved the 13 existing local government bodies and created a transitional metropolitan council and seven transitional metropolitan substructures. F

[6] In terms of Proc 24 the TMC was to be the dominant local government body within the region and the engine for driving the early transformation towards democratic local government. It was vested with the powers, G functions, assets and liabilities of the dissolved authorities and charged, inter alia, with winding down these bodies, creating administrative capacities within itself and its substructures, and determining a minimum level of service delivery within the metropolitan area. [4] It also bore a duty to devolve its authority and responsibility,

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gradually and by means of negotiation, upon the substructures. [5] All finances were initially to flow through the A TMC. It was required to approve a consolidated budget, to ensure that the substructures had adequate finances, and to make provision for the reconstruction and development priorities of the entire region. [6] B

Chaskalson P, Goldstone J and O'Regan J

[7] The substructures were initially to be funded by means of inter-governmental grants, TMC contributions, and A other grants or donations. [7] As they developed and had functions delegated or assigned to them by the TMC, these sources of revenue were to be supplemented by powers to impose property rates and service charges. Before functions could be assigned or delegated to the substructures, the TMC had to be satisfied that they were B in a position to budget for themselves and to manage their own affairs. [8] The manner in which functions passed from the TMC to the substructures was to be the subject of negotiation, and mechanisms were provided for the resolution of disputes that might arise. [9] Hence Proc 24 conferred powers and functions on the TMC during the C pre-interim phase which were necessary for these purposes and which exceeded the minimum powers prescribed by Schedule 2 of the LGTA. [10]

[8] Premier's Proclamation 35 of 1995 (Proc 35) was promulgated on 4 August 1995. It was to come into effect D on the date of the first democratic local government elections. Its express purpose was to set out the powers and duties which the TMC and its substructures would have during the interim phase of local government transformation. Annexure A of the proclamation defined the 'powers and duties' of the TMC. These were, in effect, those specified in Schedule 2 of the LGTA [11] as being the minimum powers required to be vested in the E transitional metropolitan councils during the pre-interim and interim phases. [12] The powers were:

'1.

Bulk supply of water.

2.

Bulk supply of electricity.

3.

Bulk sewerage purification works and main sewerage disposal pipelines for the metropolitan area. F

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4.

Metropolitan co-ordination, land usage and transport planning. A

5.

Arterial metropolitan roads and stormwater drainage.

6.

Passenger transport services.

7.

Traffic matters.

8.

Abattoirs.

9.

Fresh produce markets.

10.

Refuse dumps. B

11.

Cemeteries and crematoriums.

12.

Ambulance and fire brigade services.

13.

Hospital services.

14.

Airports.

15.

Civil defence. C

16.

Metropolitan libraries.

17.

Metropolitan museums.

18.

Metropolitan recreation facilities.

19.

Metropolitan environment conservation.

20.

Metropolitan promotion of tourism.

21.

Metropolitan promotion of economic development and job creation.

22.

The establishment, improvement and maintenance of other metropolitan infrastructural services and facilities. D

23.

The power to levy and claim -

(a)

the regional services levy and the regional establishment levy referred to in s 12(1)(a) of the Regional Services Councils Act 109 of 1985;

(b)

levies or tariffs from any transitional metropolitan substructure in respect of any function or service referred E to in items 1-22; and

(c)

an equitable contribution from any transitional metropolitan substructure based on the gross [or] rates income of such transitional metropolitan substructure.

24.

The receipt, allocation and distribution of intergovernmental grants.

25.

The power to borrow or lend money, with the prior approval of the Premier, for the purposes of or in connection F with the exercise or performance of any power or duty.'

[9] Annexure B of the same proclamation set out the powers and duties of the transitional metropolitan substructures in the following terms:

'The powers and duties pertaining to local government, excluding local government powers and duties to be executed by Transitional Metropolitan Councils.' G

[10] On 1 September 1995 a further proclamation, Premier's Proclamation 42 of 1995 (Proc 42), was issued by the Premier. In terms of its date of commencement, it was stipulated that:

'(Proclamation 42) shall for the purposes of the Local Government Elections come into operation on the date of the local H government elections determined in terms of s 9(1) of the Local Government Transition Act, 1993, and for all other purposes on the day thereafter.'

Proclamation 42 reduced the number of transitional metropolitan substructures from seven to four and repealed several provisions of Proc 24, including ss 15 and 20. This effectively narrowed the functions, powers and duties I conferred on the TMC by Proc 24 during the pre-interim phase.

[11] The four substructures are the Eastern Metropolitan Substructure (the EMS) which is the second respondent, the Northern Metropolitan Substructure (the NMS) which is the third respondent, the Western J

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Metropolitan Substructure (the WMS) which is the fourth respondent, and the Southern Metropolitan Substructure A (the SMS), which is the fifth respondent. The combined areas of the four substructures coincide with the area of the TMC.

[12] The rates which are attacked in these proceedings were levied in consequence of the budgets for the B financial year from 1 July 1996 to 30 June 1997 of each of the five respondents. Those budgets were approved by their respective councils during June 1996.

[13] The five budgets were the consequence of a policy determined and calculations made jointly by the TMC and C the four substructures. According to that policy the expenditure of the TMC and each of the four substructures was determined and agreed to jointly, taking into account the requirements of each of the entities concerned. These requirements were trimmed and prioritised so as to ensure that the expenditure represented an increase of no more than 10% over the expenditure which had been incurred during the previous...