Kalil NO and Others v Mangaung Metropolitan Municipality and Others

• Jurisdiction: South Africa
• Judge: Mpati P, Brand JA, Bosielo JA, Leach JA and Wallis JA
• Judgment Date: 04 June 2014
• Citation: 2014 (5) SA 123 (SCA)
• Docket Number: 210/2014 [2014] ZASCA 90
• Hearing Date: 04 June 2014
• Counsel: JY Claasen SC for the appellants. MTK Moerane SC (with TL Manye) for the respondents.
• Court: Supreme Court of Appeal

Leach JA (Mpati P, Brand JA, Bosielo JA and Wallis JA concurring): F

[1] This appeal relates to a resolution taken by the first respondent, the Mangaung Metropolitan Municipality (the municipality) at a council meeting on 30 May 2013 in which it approved municipal rates for the G budget year 2013/2014. Shortly before that meeting was scheduled to be held the appellants, who are or represent municipal ratepayers, launched urgent motion proceedings in the high court seeking an order prohibiting the municipality from adopting the resolution, as well as certain declaratory relief. In addition to the municipality, its executive mayor, municipal manager and the MEC for local government were cited as respondents but H the latter played no part in the proceedings and abided the decision of the court.

[2] The application came before Mhlambi AJ who, on 29 May 2013, dismissed it with costs. Leave to appeal to this court was subsequently granted by Naidoo J on 20 March 2014. The appeal was heard as a I matter of urgency on 4 June 2014 as the municipal budget for 2014/2015 was due to be considered by the municipality a few days later. After hearing argument we issued an order in which, save for altering the order as to costs of the court below, the appeal was dismissed for truncated reasons. In doing so we indicated that our full reasons would follow in due course. These are those reasons. J

Leach JA (Mpati P, Brand JA, Bosielo JA and Wallis JA concurring)

A [3] The resolution that the appellants sought to prohibit the municipality from adopting on 30 May 2013 (but which was in fact passed after the application was dismissed in the court below) involved the approval of an increased rate to be applied on commercial properties in the municipal area. In this court as well as in the court below, the municipality relied B upon the Constitutional Court's warning that courts are to be conscious of the 'vital limits on judicial authority and the Constitution's design to leave certain matters to other branches of government' and should not interfere 'in the processes of other branches of government unless to do so is mandated by the Constitution'. [1] I accept that principle unhesitatingly, but it is now axiomatic that the exercise of all public power must C comply with the Constitution and the doctrine of legality. [2] And where those in government, whether national, provincial or municipal, act beyond the constraints of the law a court should not hesitate to declare their actions illegal, thereby controlling and regulating public power. [3] As the decision the appellants sought to impugn was not administrative in D nature [4] it could not be assailed on the grounds of non-compliance with the Promotion of Administrative Justice Act 3 of 2000. Consequently, in seeking relief, they relied solely upon the legality principle. The matter thus turned on whether the municipality's 2013/14 budget could lawfully be adopted.

E [4] The appellants raised a three-pronged argument in contending that the adoption of the budget would be unlawful. First, they contended that since the levying of property rates was an integral part of the budgetary process in terms of the Local Government: Municipal Property Rates Act 6 of 2004 (the Rates Act), the Local Government: Municipal F Finance Management Act 56 of 2003 (the Finance Act) and the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act), the decision to increase the rates on business properties required community participation, which had not occurred. Second, they argued that the ratio between the proposed rate for commercial properties and that on residential properties exceeded the permissible ratio prescribed under G s 19(1)(b) of the Rates Act as read with the regulations promulgated thereunder. The third and final thrust of the appellants' case was that the implementation of the proposed rates would materially and unreasonably prejudice national economic policies, economic activities across

Leach JA (Mpati P, Brand JA, Bosielo JA and Wallis JA concurring)

municipal boundaries, or the national mobility of goods, services, capital A or labour, contrary to s 229 of the Constitution.

[5] The allegations relevant to this third contention were fleetingly made, and the appellants did not persist in their argument on this issue, either in the court below or in this court. Consequently, no more need be B said about it and I turn to consider the first two issues, upon which the appellants continued to rely.

[6] Sections 152(1)(b) and (2) of the Constitution oblige municipalities to provide services to their communities in a sustainable manner. In order to do so, a municipality is empowered by s 229 of the Constitution C to raise funds by imposing rates on property in a process regulated by national legislation — the applicable legislation being the Systems Act, the Finance Act and the Rates Act. The preamble to the latter records that local government should have a 'sufficient and buoyant source of revenue necessary to fulfil its development responsibilities' and that D income 'from property rates is a critical source of revenue for municipalities to achieve their constitutional objectives'.

[7] In South African Property Owners Association v Johannesburg Metropolitan Municipality [5] (a decision now commonly known as SAPOA) this E court held that the process of levying rates was an integral part of a municipality's budgetary process. The statutory matrix applicable to the assessment of rates and the approval of a municipality's budget was exhaustively set out and analysed in SAPOA and it would be superfluous to repeat that exercise here. [6] Suffice it to mention for present purposes F that s 16(1)(a)(iv) of the Rates Act requires a municipality to 'encourage, and create conditions for, the local community to participate in . . . the preparation of its budget' and that, when the annual municipal budget is tabled, the municipal council is obliged under s 23(1) of the Finance Act to consider the views of the local community. In order to facilitate that process, ch 4 of the Systems Act provides in detail for G community participation and the necessity for the community to be effectively informed of all matters requiring its participation. Inter alia, s 21A(1) of the Systems Act requires all documents which must be 'made public' by a municipality to be conveyed to the local community:

'(a)

by displaying the documents at the municipality's head and H satellite offices and libraries;

(b)

by displaying the documents on the municipality's official website, if the municipality has a website . . . ; and

(c)

by notifying the local community . . . of the place, including the website address, where detailed particulars concerning the documents can be obtained.' I

Leach JA (Mpati P, Brand JA, Bosielo JA and Wallis JA concurring)

A [8] Section 17(3) of the Finance Act details numerous documents that are to accompany an annual budget when it is tabled, [7] including draft resolutions approving the budget and imposing any municipal tax, and a projection of cash flow by revenue source. Under s 22 of the Finance Act, after the annual budget is tabled in a municipal council the B accounting officer must 'make public' the budget and the documents referred to in s 17(3) which must therefore be conveyed to the local community in the manner required by s 21A of the Systems Act.

[9] Whether the municipality complied with its statutory obligations in regard to publication and community participation before adopting its C budget was a matter of dispute in the court below. As held by this court in Democratic Alliance v Ethekwini Minicipality, [8] whether a municipality has satisfied the requirement of public participation is an issue to be determined by the yardstick of reasonableness in the given circumstances of each particular case. I turn thus to the relevant facts.

D [10] The appellants' founding affidavit was deposed to by the second appellant, Mr Paul Kalil, a trustee of a trust which owns a number of immovable properties within the municipal area. The material facts upon which he relied are, unfortunately, somewhat tersely set out, probably as a result of the urgent situation in which the appellants' papers were prepared. In any event, he alleged that at some stage E municipal officials were asked to provide the formula which the municipality intended to use to calculate rates in the 2013/2014 budget. Who these persons were and when, in what manner and terms they were requested to provide the information the appellants sought, does not appear from the record. Be that as it may, Mr Kalil alleged that although F it was mentioned that the ratio of residential to commercial properties for purposes of rates would be 1:3,8 (ie that the rates payable on a commercial property would be 3,8 times more than a residential property of the same value) no reliable information was forthcoming and led to the appellants seeking an urgent meeting with the mayor. According to Mr Kalil, it took a month, until 23 May 2013, before the G appellants were able to meet with the executive mayor, municipal manager and other officials of the municipality. He further alleged that the appellants' concern regarding the formula to be applied to calculate the rates on commercial property was discussed at this meeting, and the proposal that the ratio be increased to 1:3,8 was confirmed. At the H request of the mayor and his officials, the appellants placed their submissions in regard to the proposed increase in rates in writing, their letter having been delivered to the municipality on 27 May 2013.

[11] The legality of the municipality's conduct was impugned not upon a failure to take note of the appellants' representations but, pertinently, I upon its alleged failure to properly publish the...