THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT
Reportable

Case no: 737/11

In the matter between:

JACOBUS JOHANNES LIEBENBERG NO
AND 86 OTHERS

Appellants

and

BERGRIVIER MUNICIPALITY

Respondent

Neutral citation:
JJ Liebenberg NO v Bergrivier Municipality (737/11)
[2012] ZASCA 153 (1 October 2012)

Coram:

Nugent, Lewis, Bosielo, Theron and Wallis JJA

Heard:

7 September 2012

Delivered

1 October  2012

Summary:
Rates imposed on rural landowners by the Municipality in
the years from 2002 to 2009 were lawfully imposed under s 10G(7) of the
Local Government Transition Act 209 of 1993 and under the Local
Government: Municipal Finance Management Act 56 of 2003.

ORDER

On appeal from Western Cape High Court (Cape Town) (Binns-Ward J sitting
as court of first instance):
1 The appeal is dismissed with costs, including those of two counsel, to be
paid by the appellants jointly and severally.
2 The cross appeal succeeds with costs, including those of two counsel.
Those costs and the costs of the application for leave to cross appeal in the
high court are to be paid by the appellants jointly and severally.
3 The orders of the high court are set aside. The following orders are
substituted:
‘a The imposition of rates by the applicant on the respondents in the financial
years from  2002/2003 to 2008/2009  was lawful.
b The respondents are ordered to make payment to the applicant of the
amounts set out against their names, and corresponding municipal account
numbers, on the schedule headed “Uitstaande Belastings”, deposited with the
Registrar of the Supreme Court of Appeal,  together with interest a tempore
morae, as provided in the applicant’s credit control policy.
c The defendant or defendants in each action in the magistrates’ courts are
ordered to pay to the applicant the costs of the proceedings for recovery of
the amounts owed by them in the magistrates’ courts.
d The respondents are ordered, jointly and severally, to pay the applicant’s
costs including the costs of two counsel.’

JUDGMENT

LEWIS JA (NUGENT, BOSIELO, THERON AND WALLIS JJA concurring)
[1] The appellants are rural landowners who farm within the area of the
Bergrivier Municipality, the respondent. I shall refer to them as the farm
owners. Their dispute is about rates levied by the Municipality over a number
of years in the last decade, in terms of the new Constitutional and legislative

dispensation that has brought all land in South Africa within the jurisdiction of
municipalities. The Municipality was established pursuant to the Local
Government: Municipal Structures Act 117 of 1998. This is one of the four
statutes that now regulate municipal governance throughout the country.

[2] Prior to the adoption of the interim Constitution of 1993, rural
landowners were not affected by the provincial ordinances that governed the
payment of municipal rates. They did not, therefore, pay municipal rates. That
dispensation changed with the introduction of the Local Government
Transition Act 209 of 1993 (the Transition Act),1 designed to provide
uniformity in local government throughout the Republic and to establish new
municipal structures, and with the enactment of the legislation that eventually
replaced it.

[3] The long title to the Transition Act indicated that one of its purposes
was to establish transitional rural local structures, and part VA dealt with ‘rural
local government’. Section 9D provided for a framework for rural local
government based on the principle that the whole of an area of a province
should fall within the jurisdiction of a council, of which there were a variety
including transitional councils. The very name of the Transition Act indicates
that it was intended to apply in the period between the passage of the interim
Constitution and the time when permanent municipal structures and systems
were put in place. As it happened, the Transition Act was amended on
numerous occasions and remained operative, at least in part, until 2011. I
shall deal with its application in due course.

[4] The farm owners refused to pay amounts claimed from them by the
Municipality over several years, commencing in 2001. Eventually the
Municipality brought actions against them in various magistrates’ courts in the
Western Cape for payment of arrear levies and rates. It became apparent
during the course of these proceedings that the farm owners were defending
the actions on the basis that the levies and rates were not imposed in
accordance with the strictures of the Constitution and the statutes then

1 It came into operation on 2 February 1994.

applicable. The parties thus agreed that the actions in the magistrates’ courts
would be abandoned, and instead, the Municipality would seek declaratory
orders in the high court as to the validity or otherwise of the levies and rates.

[5] In October 2010 the Municipality sought declaratory orders that the
levies and rates imposed by it in the financial years (which ran from 1 July to
30 June each year) from 2001/2002 to 2008/2009 were lawful and valid, and if
so, for an order that the farm owners pay the amounts claimed, set out in a
schedule to the notice of motion. By the time of the hearing in the high court
the farm owners had conceded that rates imposed in the 2003/2004 year
were lawfully imposed and the Municipality conceded that the levies it had
sought to impose in the 2001/2002 year were not lawfully imposed. The
Western Cape High Court, Cape Town (per Binns-Ward J) found that the
levies imposed in the 2001/2002 financial year were not lawfully imposed
although that had been conceded); that the 2002/2003 rates were not lawfully
imposed; that the rates imposed in 2004/2005 and 2005/2006 were lawfully
imposed and that the Municipality could recover the amounts payable from
the farm owners; but that the Municipality had not complied with statutory
requirements in imposing rates in the 2006/2007, 2007/2008 and 2008/2009
years and could thus not recover them. The high court granted leave to the
farm owners to appeal in respect of the 2004/2005 and 2005/2006 years, and
to the Municipality to cross appeal in respect of the other years.

[6] About six weeks before the hearing of the appeal the Minister for Local
Government, Environmental Affairs and Development Planning, Western
Cape sought leave to intervene as a party in the appeal, or to make
representations as an amicus curiae. The court allowed the Minister to argue
whether he had a direct interest entitling him to intervene, or to act as an
amicus. I shall deal with the application after considering the issues on
appeal.

[7] A number of issues are common to all the years under discussion. I
shall thus deal first with the general statutory framework, the continued
application of s 10G(7) of the Transition Act, the pertinent authorities on which

the parties rely and the general principles applicable. I shall then turn to
consider the lawfulness of the imposition of rates in each year under
consideration.

The legislative framework
[8] First, the Constitution itself provides for the objects (s 152) and duties
(s 153) of local government. It requires that national legislation be enacted for
the establishment of municipalities, the determination of the criteria for
distinguishing between different kinds of municipality (s 155), and lays down
the powers and functions of municipalities (s 156). In s 229 the Constitution
enables a municipality to impose rates and levies, and states that the power
to do so may be regulated by national legislation. Where national legislation is
in place, as it was throughout the relevant years, the power to levy rates is
derived from and exercised in terms of that national legislation. Initially the
relevant national legislation was the Transition Act, in particular s 10G(7).
Some of the problems arising in this case stem from the transition from the
Transition Act to the national legislation referred to in the following paragraph.

[9] The national legislation enacted pursuant to s 229 is now to be found in
four statutes. The Local Government: Municipal Structures Act 117 of 1998
(the Structures Act), in terms of which the Municipality was established, was
enacted in 1998. Then followed the Local Government: Municipal Systems
Act 32 of 2000 (the Systems Act), the Local Government: Municipal Finance
Management Act 56 of 2003 (the Finance Act) (which came into operation on
1 July 2004) and lastly the Local Government: Municipal Property Rates Act 6
of 2004 (the Rates Act) (which came into operation on 2 July 2005).

[10] The farm owners contended that the Municipality failed to comply with
a number of provisions of the Transition Act, the Systems Act, the Finance Act
and the Rates Act. They rely on the principle of legality that has formed the
backbone of several decisions of this court and the Constitutional Court in the
last decade.2 The principle is not in issue and I propose to say no more about

2 See for example Fedsure Life Assurance Ltd v Greater Johannesburg Transitional
Metropolitan Council 1999 (1) SA 374 (CC); Gerber v Member of the Executive Council for
Development Planning and Local Government, Gauteng  2003 (2) SA 344 (SCA) and

it: it is accepted that when imposing rates and levies a municipality must
comply with the provisions of the statutes that govern their powers and duties.
The Municipality argued, however, that it acted at all times in compliance with
the provisions of the statutes then in operation. In the alternative it contended
that there had been substantial compliance with the requirements of the
legislation and that any shortcomings did not invalidate the imposition of rates.

[11] There is, however, an important difference between the parties as to
whether s 10G(7) of the Transition Act survived the enactment of the Rates
Act, and thus whether the Municipality could rely on its provisions  as the
source of its power to levy rates in the years after 2 July 2005. The high court
held that s 10G(7) was repealed by the enactment of the Rates Act, and I turn
first to whether this finding was correct.

The continued application of s 10G(7) of the Transition Act
[12] The Municipality contended that the provisions of this section applied
throughout the period over which the contested rates were imposed. The
provisions pertinent to this matter read:
‘(7)(a)(i) A local council, metropolitan local council and rural council may by
resolution, levy and recover property rates in respect of immovable property in the
area of jurisdiction of the council concerned: Provided that a common rating system
as determined by the metropolitan council shall be applicable within the area of
jurisdiction of that metropolitan council: Provided further that the council concerned
shall in levying rates take into account the levy referred to in item 1(c) of Schedule 2:
. . . .
(ii) A municipality may by resolution supported by a majority of the members of the
council levy and recover levies, fees, taxes and tariffs in respect of any function or
service of the municipality.
(b) In determining property rates, levies, fees, taxes and tariffs (hereinafter referred to
as charges) under paragraph (a), a municipality may –
(i) differentiate between different categories of users or property on such grounds as
it may deem reasonable;
(ii) in respect of charges referred to in paragraph (a)(ii), from time to time by
resolution amend or withdraw such determination and determine a date, not earlier

Kungwini Local Municipality v Silver Lakes Home Owners Association 2008 (6) SA 187
(SCA).

than 30 days from the date of the resolution, on which such determination,
amendment or withdrawal shall come into operation; and
(iii) recover any charges so determined or amended, including interest on any
outstanding amount.
(c) After a resolution as contemplated in paragraph (a) has been passed, the chief
executive officer of the municipality shall forthwith cause to be conspicuously
displayed at a place installed for this purpose at the offices of the municipality as well
as at such other places within the area of jurisdiction of the municipality as may be
determined by the chief executive officer, a notice stating –
(i) the general purport of the resolution;
(ii) the date on which the determination or amendment shall come into operation;
(iii) the date on which the notice is first displayed; and
(iv) that any person who desires to object to such determination or amendment
shall do so in writing within 14 days after the date on which the notice is first
displayed.
(d)  Where –
(i) No objection is lodged within the period referred to in paragraph (c) (iv), the
determination or amendment shall come into operation as contemplated in
paragraph (b)(ii);
(ii) an objection is lodged within the period referred to in paragraph (c) (iv), the
municipality shall consider every objection and may amend or withdraw the
determination or amendment and may determine a date other than the date
contemplated in paragraph (b)(ii) on which the determination or amendment shall
come into operation, whereupon paragraph (c)(i) shall with the necessary
changes apply.’

[13] The farm owners do not dispute that these provisions were applicable
in the 2003/2004 and 2004/2005 financial years: they contend, however, that
the Municipality did not comply with the requirements of the section in the
latter year. I shall return to that argument when dealing with those years. But
they argue that when the Rates Act came into operation on 2 July 2005,
s 10G(7) of the Transition Act ceased to apply, and that the Municipality was
required to levy rates in terms of s 14 of the Rates Act. As I have said, the
high court upheld that argument.

[14] The transitional provisions of the four statutes regulating municipal
governance are complex and confusing. On analysis, however, I consider that
they show a clear purpose: to empower rating in every municipality through a
variety of mechanisms until uniform and permanent systems were put in
place.

[15] The Finance Act, in operation from 1 July 2004, dealt with the repeal of
a number of the rating provisions previously in force (the relevant provisions
here were in the Municipal Ordinance 20 of 1974 (C)), as well as s 10G(7) of
the Transition Act.  Section 179 of the Finance Act reads:
‘Repeal and amendment of legislation
(1) The legislation referred to in the second column of the Schedule [including s
10G(7)] is hereby amended or repealed to the extent indicated in the third column of
the Schedule
(2) Despite the repeal of section 10G of the Local Government Transition Act, 1993
(Act 209 of 1993), by subsection (1) of this section, the provisions contained in
subsections (6), (6A) and (7) of section 10G remain in force until the legislation
envisaged in section 229(2)(b) of the Constitution is enacted.
. . . .’

[16] The legislation envisaged by s 229(2)(b) was, of course, the Rates Act.
That Act came into operation on 2 July 2005. The farm owners argued thus
that s 10G(7) was repealed by s 179 of the Finance Act with effect from the
date of commencement of the Rates Act.  But the argument does not take into
account the transitional provisions of that Act. These provide:
‘Transitional arrangement: Valuation and rating under prior legislation
88(1)  Municipal valuations and property rating conducted before the commencement
of this Act by a municipality in an area in terms of legislation repealed by this Act,
may, despite such repeal, continue to be conducted in terms of that legislation until
the date on which the valuation roll covering that area prepared in terms of this Act
takes effect in terms of section 32(1).
. . . .’
‘Transitional arrangement: Use of existing valuation rolls and supplementary
valuation rolls
89 (1) Until it prepares a valuation roll in terms of this Act, a municipality may –

(a) continue to use a valuation roll and supplementary valuation roll that was in force
in its area before the commencement of this Act; and
(b) levy rates against property values as shown on that roll or supplementary roll.
(2) If a municipality uses valuation rolls and supplementary valuation rolls in terms of
subsection (1) that were prepared by different predecessor municipalities, the
municipality may impose different rates based on different rolls, so that the amount
payable on similarly situated properties is more or less similar.
(3) This section lapses four years from the date of commencement of this Act, and
from that date any valuation roll or supplementary valuation roll that was in force
before the commencement of the Act may not be used.’

[17] The period of four years referred to in s 89(3) was extended to six
years. The Municipality argued therefore that the provisions of s 10G(7) of the
Transition Act continued to apply until 2 July 2011. But the high court found
that when the Rates Act came into operation, s 10G(7) was repealed. Rating
provisions of the ordinances previously in force were not. This is because the
Rates Act repealed the Ordinances but did not itself repeal s 10G(7). That
section was repealed by s 179 of the Finance Act, cited above. Section 88(1)
of the Rates Act thus did not keep s 10G(7) alive. The high court found that
one should not read in a reference (in s 88(1)) to s 10G(7) unless failure to do
so resulted in an absurdity.

[18] That interpretation fails, in my view, to give meaning to s 89: that
section specifically states that a municipality may, until it prepares a valuation
roll in terms of the Rates Act, continue to use a valuation roll in force before
the commencement of the Act, and to levy rates against property values as
shown on that roll. The clear implication of this is that the Municipality could
continue to levy rates in terms of s 10G(7) of the Transition Act and to use the
valuation roll prepared pursuant to that section. The rating provisions of the
Transition Act were thus  in force until 2 July 2005: and the Transition Act was
designed for the very purpose of bridging the period between the operation of
the provincial ordinances and the enactment of the legislation envisaged in
the Constitution. Moreover, s 10G was introduced to ensure that
municipalities conducted their affairs in an effective fashion, using the rating
provisions to ensure their financial resources, and to meet their

developmental obligations. It would be most odd if its provisions fell away in
2005 whereas those of the Ordinances remained in place. It would be
particularly odd as its effect would be to remove the legislation introduced in
part to enable rating of rural properties that had fallen outside the rating
ordinances, thereby once more excluding those properties from rating. There
is nothing to indicate that it had been decided to exclude rural properties from
rating and that this was the purpose of this provision.

[19] To hold thus that the Ordinances were operative before 2 July 2005,
and were repealed on that date by the coming into operation of the Rates Act,
but that their operation continued because of the transitional provisions,
whereas s 10G was not covered by the transitional provisions, does give rise
to an absurdity. In my view, the transitional provisions of both the Finance Act
and the Rates Act clearly kept the empowering provisions of s 10G alive until
the period referred to in s 89(3) had expired. Throughout the period in issue,
therefore, s 10G(7) empowered the Municipality to impose rates. However,
when the Finance Act came into operation it determined the procedures to be
followed in the municipal budgetary process including rating. I turn to these
now.

Application of the Finance Act
[20] Chapter 4 of the Finance Act  regulates the manner of levying of rates
from the date of its commencement – 1 July 2004. After that date the
Municipality determined the rates payable in terms of the provisions of ss 22
to 24 of the Finance Act. Section 22 makes provision for the publication of a
municipality’s annual budget, and requires a municipality to invite the ‘local
community’ to submit representations in connection with the budget
(s 22(a)(ii)). Section 23 requires a municipality to consider the views of the
local community and various bodies, such as the National Treasury. The
municipal council must give the mayor an opportunity to respond to the
submissions and to revise the budget if necessary. Section 24 requires the
municipality to consider approval of the budget at least 30 days before the
start of the budget year (1 July in each year). And the municipal council must
approve the budget before the start of the budget year.

[21] Section 25 regulates the position where a municipal council has failed
to approve a budget ‘including revenue-raising measures necessary to give
effect to the budget’. Clearly rates payable by property owners within its
jurisdiction are the chief source of revenue for any municipality. Non-
compliance with the procedures required to levy rates could thus have serious
consequences for the budget of a municipality. However, in the event of non-
compliance with a provision of chapter 4 of the Act,  s 27(4) provides that the
budget for the year is not invalidated. Mechanisms are, however, put in place
to ensure compliance. The provincial government and the national treasury
must be informed of any non-compliance by the mayor, and the provincial
executive may intervene under s 139 of the Constitution in that event.

[22] The Municipality contended that it had complied with all these
provisions in the years post 1 July 2005. It also submitted that there had been
compliance with the provisions of s 10G(7)(c) of the Transition Act. But that
section imposed requirements that are not consistent with the process
determined by the Finance Act, and to the extent that this is so, the later
provisions of the general enactment must prevail.3 This must be especially so
where the provisions of an Act are designedly interim and transitional. The
power to levy rates is thus to be found in s 10G of the Transition Act until
2011, whereas the manner of doing so was regulated by the provisions of the
Finance Act once it had come into operation. Before turning to the specific
years in issue I shall deal with compliance with s 10G(7), in force in the
financial  years 2002/2003 and 2004/ 2005.

Compliance with s 10G(7) generally
General purport
[23] One of the attacks on the process followed by the Municipality in all the
years in question (but as I have held, only relevant until the procedural
requirements of the Finance Act were introduced) was that it did not publish a
notice setting out the general purport of the rating resolution adopted by its

3 See, for example, Joseph v City of Johannesburg 2010 (4) SA 55 (CC) para 67 referring to
Government of the Republic of South Africa v Government of KwaZulu 1983 (1) SA 164 (A) at
200C-H.

council. Section 10G(7)(a)(i), set out above, provided that a municipality may
by resolution levy and recover property rates in respect of immovable property
within its jurisdiction. After such a resolution was passed a notice had to be
‘conspicuously displayed’ at the offices of the municipality as well as at other
places stating, amongst other things, the ‘general purport of the resolution’
and that any person who desired to do so could object in writing to such
‘determination’ (of the rate) within 14 days of the date on which the notice was
first displayed.

[24] The farm owners argued that the Municipality had not published a
notice setting out the general purport of the resolution. The meaning of this
phrase has been considered in two decisions of this court recently, and,
according to the high court in this matter, were, at least to some extent, in
conflict with one another. In Kungwini Local Municipality v Silver Lakes Home
Owners Association4 this court held that the object of s 10G(7)(c) – that the
notice set out the general purport of the resolution – was that ratepayers
should ‘know what rates they would have to pay, and from when those rates
would be payable’. They should also know that they could object to the rate
determination. In that case the notice had referred to two different rates, thus
providing conflicting information. It was held not to have set out the general
purport of the resolution.

[26] On the other hand, in Nokeng Tsa Taemane Local Municipality v
Dinokeng Property Owners Association5 this court held that the phrase
‘general purport’ meant that details of the rates resolution did not have to be
set out in the notice. It stated:6
‘The adjective “general” qualifies the noun “purport”. The conjunction was not
accidental but deliberately intended to make clear that specific details are not
required. In this case the requirement was satisfied because interested parties were
advised that the resolutions were available for inspection. This accords with what

4 Kungwini Local Municipality v Silver Lakes Home Owners Association 2008 (6) SA 187
(SCA) paras 53 and 55.
5 Nokeng Tsa Taemane Local Municipality v Dinokeng Property Owners Association [2011] 2
All SA 46 (SCA).
6 Para 24.

Alexander J stated about this phrase in Rampersad v Tongaat Town Board 1990 (4)
SA 32 (D) at 37G:
“  . . . ‘general purport’ then involves an intimation that what follows broadly covers a
specific topic.”’

[27] It was enough, therefore, for the notice to state that the details could be
scrutinised elsewhere. This court thus held, in Nokeng, that where notices of a
rates resolution advised that the resolution was available for inspection at the
town council offices during normal office hours, this was sufficient to meet the
requirement of s 10G(7)(c) of the Transition Act that the general purport of the
resolution be displayed.

[28] The high court in this matter considered that the decision of Nokeng in
this regard is in conflict with Kungwini (to which it referred). But I consider
not. Kungwini turned on specific facts, where the notice contained a
contradiction. It is true that the notice also advised that the resolution was
available for inspection. But given the confusion that may have followed the
notice, I think that the notice in Kungwini is to be distinguished from one that
does not set out details of the rates resolution. It is true that the court there
said that ratepayers are entitled to know what rates they have to pay and from
when. But that they can establish from an inspection of the resolution, as
Nokeng held. In Kungwini an inspection of the resolution may not have
clarified the confusion caused by the notice. The high court in this matter thus
correctly held that where a notice did state that the resolution could be
inspected elsewhere, that was sufficient to indicate the general purport of the
resolution.

Substantial compliance
[29] The Municipality argued that in the event of any notice not being fully
compliant with s 10G(7)(c), there had at least been substantial compliance. It
relied on the decision in Nokeng in this regard as well.7 This court, referring to
Nkisimane v Santam Insurance Co Ltd,8  held that ‘mere failure to comply with
one or other administrative provision does not mean that the whole procedure

7 Para 14.
8 Nkisimane v Santam Insurance Co Ltd 1978 (2) SA 430 (A) 433H-434E.

is necessarily void’. In determining whether a failure should be ‘visited with
nullity’ one must look to whether the legislation in question contemplates that
failure strictly to comply with the requirement should result in the process
being invalidated. The court said, in this regard, that ‘[t]o nullify the revenue
stream of a local authority merely because of an administrative hiccup
appears to me to be so drastic a result that it is unlikely that the Legislature
could have intended it.’

[30] The farm owners’ argument that there had not been substantial
compliance with any of the provisions of the statutes applicable at the relevant
time must be examined in relation to each of the years under consideration. It
should be noted, however, that they have several complaints about all of the
notices, and procedures adopted, in every year.

The 2002/2003 financial year: the cross appeal by the Municipality
[31] On 13 June 2002 the Municipality’s council resolved to impose what it
termed a levy on properties, which was based on the size of the land owned:
the amount levied varied from R300 for properties of less than 75 hectares to
R4 500 for properties of more than 1000 hectares. A maximum of R4 500 was
payable by each owner, irrespective of the number of registered properties
comprising the farm.

[32] A notice setting out the sliding scale with the rates payable in respect
of different property sizes was published in terms of s 10G(7) of the Transition
Act. It called for objections within a two-week period. After considering
objections the council, on 29 July 2002, confirmed the determination but
undertook to conduct valuations in the year and to adjust the amounts
payable on the basis of the valuations. Although described as a levy, this was
clearly a rate and was not lawfully raised or levied:  Gerber v Member of the
Executive Council for Development Planning and Local Government,
Gauteng.9 The attempt, in argument, to justify it as a levy foundered on the
fact that it was not, as required by s10G(7)(a)(ii) levied ‘in respect of any
function or service of the municipality’.

9 Gerber v Member of the Executive Council for Development Planning and Local
Government, Gauteng 2003 (2) SA 344 (SCA).

[33] On 26 May 2003, before the financial year end, the council resolved to
levy a true rate of .2474 cents in the rand on the properties, plus interest on
amounts not paid by 25 June 2003, and to set off against the rate whatever
had been paid earlier in the year. In effect, then, amounts claimed pursuant to
the sliding scale were recovered only provisionally. Adjustments, based on
actual values, were made subsequently.

[34] The high court found that the initial ‘levy’ was a rate: it was based on
land ownership and was not permitted by s 10G. The subsequent resolution to
levy a rate on 26 May 2003 for that year was in effect an amendment of the
earlier resolution, for which s 10G(7) did not provide. It was thus ultra vires.
Moreover, no notice was given of the later resolution, nor was there any call
for objections. There was therefore material non-compliance.

[35] The Municipality argued, however, that the valuations were done
pursuant to the objections made to the sliding scale by farm owners. The
second resolution was taken as a result of those objections. The only basis
upon which the farm owners challenged the validity of that resolution was that
it was ultra vires in terms of s 10G(7)(b)(ii). However, that section deals with
amendment or withdrawal of levies and other charges, not rates. The farm
owners cannot, on the one hand, argue that the levy was in truth a rate, and
on the other hand complain, when it was replaced by a lawful rate, that it
should have been amended as if it were a levy. That challenge must
accordingly fail.

[36] I consider that the high court accordingly erred in concluding that the
rates levied on 26 May 2003 were not validly imposed. The Municipality is
entitled to recover the amounts owed in the 2002/2003 financial year and the
cross appeal in respect of this order must be upheld.

The 2004/2005 financial year: appeal by the farm owners
[38] The high court found that the rates levied in terms of s 10G(7) of the
Transition Act were lawfully imposed and that the requirements of publication

were met. The farm owners argued that the rates were payable before the
expiry of the 14-day period for objections. Rates should be imposed
prospectively, not retrospectively. The notice of the resolution was published
in the Cape Times on 7 July 2004, and in Die Burger on 8 July. It set out the
general rate in the rand, stated that rebates were applicable and that the rates
were payable before 30 September 2004 or in monthly instalments. The notice
also stated that a summary of the budget was available for inspection at the
office of the municipal manager. The high court rejected the argument that
ratepayers were faced with a fait accompli. The notice called for objections
and it was thus clear that the resolution was subject to amendment. Any rates
accounts sent out before the final decision was made in respect of the rates
for the year would accordingly be provisional and susceptible to adjustment in
the light of the final decision as to the rates that would be payable.

[39] I do not agree with the minority judgment in Kungwini10 that the
publication of a notice advising of a draft rates resolution, and calling for
objections, amounts to a fait accompli. The resolution is obviously open to
amendment – otherwise there would be no purpose in calling for objections.

[40] The high court also found that there was no merit in the argument that
the notice was defective because it did not state (as it was required to do in
terms of ss 21(4) and 21A of the Systems Act) that persons who could not
read or write could request assistance from a staff member of the
municipality. It could not have been the intention of the legislature that this
feature of non-compliance rendered the whole rates process invalid. The high
court invoked Nkisimane11 in holding that substantial compliance was
sufficient. In that case Trollip JA said that in determining whether exact
compliance with a peremptory provision of a statute was necessary a court
must construe the provision – ‘ascertain the intention of the lawgiver’ – by
having regard to the ‘language, scope and purpose of the enactment as a
whole’. Compliance with a statutory provision might in some cases be
desirable, but not necessary to give effect to the object of the statute. In my

10 Kungwini Local Municipality v Silver Lakes Home Owners Association 2008 (6) SA 187
(SCA) para 31. The majority left open the question whether the levying of a rate before notice
was given was permissible.
11 Above, 433-434.

view, while a municipality should do all it can to ensure effective
communication with its ratepayers, an administrative omission of this kind
should not undermine the entire rates base on which its budget rests. That
cannot have been intended by the legislature.

[41] The appeal against the order that the farm owners pay the rates
imposed in this year must thus fail.

The 2005/2006 financial year: the farm owners’ appeal
[42] In this year the provisions of ss 22 to 24 of the Finance Act were
operative. On 5 May 2005 the Municipality published a notice in terms of s 22
of the Finance Act stating that the draft budget, as well as the draft reviewed
integrated development plan, were open for inspection. Dates, times and
places where these drafts would be discussed were also advertised. On 31
May 2005 the council met and resolved to approve the budget, including, of
course, the rates. On 23 June 2006 a further notice was published setting out
the rates and rebates for rural properties. The high court found that there had
been compliance with the provisions of the Finance Act.

[43] The farm owners argued that the provisions of the Finance Act dealt
not with the levying of rates and the procedures to be followed after the
resolution had been adopted, but with the ‘run-up’ to the adoption of the
budget. They submitted that s 10G(7), on the other hand, laid down the
procedures to be followed after the adoption of the resolution.  That section
required an additional notice and comment procedure after the notice of the
draft budget had been given, they argued, and this was still necessary. That
cannot be so. The Finance Act did not impose any requirement other than the
publication, in the prescribed manner, of the draft budget. Its provisions are in
this respect quite different from those of s 10G(7), which they superseded.

[44] The notice complied with the provisions of ss 22 to 24 of the Finance
Act. It stated that the draft budget was open for inspection and that written
objections should be lodged with the municipal manager by 27 May 2005.
Moreover, on 31 May 2005, the mayor described the public participation

process and noted the objections. As the Municipality adhered to the
provisions of the Finance Act –and it was not suggested that it had not done
so – the rates were lawfully determined and levied.

[45] The high court correctly found, thus, that the proper procedures were
followed in imposing the rates in the 2005/2006 financial year. The appeal
against the order that the farm owners pay the rates for this year must fail.

The 2006/2007 financial year: the Municipality’s cross appeal
[46] The principal objection to the process of imposing rates in this and
subsequent financial years was that s 14(2) of the Rates Act, in force from 2
July 2005, required promulgation of the rates resolution in the provincial
gazette. Section 14(1) provides that a rate is levied by resolution passed by
the municipal council. Section 14(2) states that the resolution must be
promulgated, and s 14(3) requires that it be displayed in specified places and
advertised in the media.

[47] The Municipality did not comply with the requirement of promulgation.
Instead, it published a notice in the press on 13 April 2006 stating what the
rates resolution provided, in broad terms, where it was to be found, and that
objections could be made before 15 May 2006. (The notice also stated that
persons who could not write could request assistance from the municipal staff,
thus complying with s 21(4) of the Systems Act.) The notice was published in
terms of s 22 of the Finance Act.

[48] The high court held that promulgation was necessary and that the
Municipality, having failed to ensure promulgation in the provincial gazette,
was not entitled to claim in respect of the rates in this year. I have already
found that s10G was not repealed (save to the extent that it was incompatible
with the provisions of the Finance Act) until July 2011 (s 89(3) of the Rates
Act). It therefore continued to apply in this and subsequent years until 2 July
2011. That section, and not the Rates Act, was accordingly the source of the
power to levy rates and it was therefore unnecessary for the Municipality to
satisfy the requirements of the Rates Act in order to set a rate and levy it.

Promulgation was thus not necessary for the rates to have been validly
imposed.  The farm owners nonetheless argued that the notice had still to
comply with the provisions of s 10G(7) of the Transition Act.  In my view, for
the reasons already discussed, it did not have to.

[49] One further objection made by the farm owners was that the notice
stated that the executive mayor would consider the objections, not the council
itself.  Section 23 of the Finance Act provides that the council must consider
submissions and if necessary revise the budget. But the mayor reported to the
council and it took the final decision. There is no merit in the objection.

[50] The high court thus erred in finding that the rates were not validly
imposed, and the appeal against this order must be upheld.

The 2007/2008 and 2008/2009 financial years: the Municipality’s cross appeal
[51] The objections to the rating processes and the principles applicable to
the 2006/2007 year are the same in these years as those in the previous one.
Again, s 10G of the Transition Act (in so far as it conferred the power on the
Municipality to levy rates) and the provisions of the Finance Act dealing with
procedures applied. Notices were published under the Finance Act, the draft
budget and rates resolutions were available for inspection and objections
were called for. The council of the Municipality met representatives of the
farmers to discuss the budgets and little or no objection was made to their
substance. The council approved the respective budgets at its meetings. In
my view, the Municipality complied with the provisions of the Finance Act and
the rates were lawfully imposed.

[52] The farm owners’ challenges to the imposition of rates in these years
must also be rejected and the Municipality’s appeal against the orders for
these years upheld.

The Minister’s application for leave to intervene or to be admitted as an
amicus curiae

[53] The Minister for Local Government, Environmental Affairs and
Development Planning, Western Cape applied for leave to intervene, or to
advance submissions as an amicus curiae at the hearing of the appeal. The
farm owners opposed the application. The Municipality did not. The court
heard argument on the application, and has decided to grant leave to the
Minister to act as an amicus curiae.

[54] The essence of the argument on the right to intervene was that the
provincial government would, in the event of the Municipality not being
financially sustainable because of the farm owners’ refusal to pay the rates in
the years in question, be required to fund the Municipality itself. That
obligation arises from s 139(b) of the Constitution. The primary response of
the farm owners was that the Municipality was not in financial difficulty. It
sought to adduce evidence to this effect and the Minister responded with
other evidence. The farm owners’ response – to the effect that the
Municipality was financially sound despite their refusal and failure to pay rates
(on purely technical objections to the rating processes) – is cynical.

[55] The Minister argued also that should it be found that the rates had not
been lawfully imposed (as to which he made no argument) then the court
should grant an order in terms of s 172(1) of the Constitution on the basis that
the Municipality’s conduct was inconsistent with the Constitution, but that a
just and equitable order should be imposed rather than declaring that the
rates were not payable. That order might have had the consequence that the
rates paid by other property owners in the jurisdiction of the Municipality, in
the years under consideration, were repayable, or could be set off against
future rates imposed.

[56] In view of the conclusions that I have reached, it is not necessary to
consider the evidence sought to be adduced. And the consequence of this
court’s decision is that the provincial government will not be the funder of last
resort. Should that not have been the case, however, it is my view that the
Minister’s submissions as to the kind of order that this court could have made

were in the public interest and of assistance to the court. Hence the decision
to admit the Minister as an amicus.

The Municipality’s schedule of debtors
[57] The Municipality attached to its notice of motion a schedule of debtors
– the farm owners who had failed to pay rates over the years in question –
reflecting the details of the owners, their municipal account numbers and the
amounts they owed. In making its orders the high court gave the parties the
opportunity to correct any errors in the schedule. The Municipality has
attached a corrected schedule in respect of all the years in question to its
heads of argument on appeal. That schedule is accepted as correct and the
order that is made on appeal refers to it.

Costs
[58] The Municipality has had complete success in this appeal. There is no
reason to deprive it of its costs either in this court or that of the high court
where it should not have been non-suited in respect of several years.

Order
[59] 1 The appeal is dismissed with costs, including those of two counsel, to
be paid by the appellants jointly and severally.
2 The cross appeal succeeds with costs, including those of two counsel.
Those costs and the costs of the application for leave to cross appeal in the
high court are to be paid by the appellants, jointly and severally.
3 The orders of the high court  are set aside. The following orders are
substituted:
‘a The imposition of rates by the applicant on the respondents in the financial
years from  2002/2003 to 2008/2009  was lawful.
b The respondents are ordered to make payment to the applicant of the
amounts set out against their names, and corresponding municipal account
numbers, on the schedule headed “Uitstaande Belastings”, deposited with the
Registrar of the Supreme Court of Appeal, together with interest a tempore
morae, as provided in the applicant’s credit control policy.

c The defendant or defendants in each action in the magistrates’ courts are
ordered to pay to the applicant the costs of the proceedings for recovery of
the amounts owed by them in the magistrates’ courts.
d The respondents are ordered, jointly and severally, to pay the applicant’s
costs including the costs of two counsel.’

_____________
C H Lewis
Judge of Appeal

APPEARANCES:

For Appellant:

A M Breitenbach SC (with him M Schreuder),

Instructed by Malan Lourens Lemmer Viljoen Inc,

Cape Town,

Webbers Attorneys,

Bloemfontein.

For Respondent:

J C Heunis (with him EF van Huysteen),

Instructed by De Klerk & van Gend,

Cape Town,

McIntyre and van der Post Attorneys,

Bloemfontein.

For the Amicus Curiae :
G Budlender SC (with him M Bishop),

Instructed by State Attorney CJ Benkenstein,

Cape Town.

SUPREME COURT OF APPEAL OF SOUTH AFRICA
PRESS RELEASE
1 October 2012
STATUS: Immediate
JJ Liebenberg NO v Bergrivier Municipality (737/11) [2012] ZASCA 153 (1 October 2012)
Please note that the media summary is intended for the benefit of the media and does not form
part of the judgment of the Supreme Court of Appeal
The Supreme Court of Appeal today dismissed an appeal against a decision of the
Western Cape High Court, Cape Town, which had held that rates had been validly
imposed by the Bergrivier Municipality on the owners of rural properties in two financial
years (2002/2003 and 2004/2005). But it upheld the cross appeal of the Municipality
against the orders of the high court that rates imposed in subsequent years, until the
2008/2009 financial year, had been unlawfully imposed. The SCA ordered the farm
owners to pay the amounts owed by them to the Municipality, together with all costs
incurred in the litigation that the Municipality had had to embark upon to recover the
arrear rates.
Rates were imposed on rural land in South Africa for the first time when the Local
Government Transition Act of 1993 brought all land in the country under the jurisdiction
of municipal councils. When the Bergrivier Municipality imposed levies and rates under
that Act in 2001/2002, and in subsequent years, the farm owners refused to pay them
on the basis that there had not been compliance with the Transition Act. The complaints
were all of a technical nature.
The Transition Act, which empowered the levying of rates, and regulated the manner of
imposition, was replaced over a number of years with four statutes which together now
regulate local government. The farm owners argued that once the Local Government:
Municipal Property Rates Act of 2004 came into operation (on 2 July 2005), the rating
provision of the Transition Act ceased to apply and that the Municipality was obliged to
follow the procedures laid down in that Act, which included promulgation in a provincial
gazette.
Transitional provisions in the Rates Act, as well as in the Local Government: Municipal
Finance Act (which came into operation in July 2004), had, however, kept alive the

provision of the Transition Act enabling the levying of rates until 2011. The Municipality
had acted in terms of that provision, and complied with the procedures laid down in the
Finance Act, in the years after 2005. The farm owners’ complaints that the requirements
of the Rates Act had not been met, and that there were minor flaws in the publication of
rates resolutions and draft budgets, were held by the SCA to be unfounded.
The Municipality had acted under the provisions of the Transition Act, and then later the
Finance Act, in levying rates and had complied with the requirements of the legislation
in the years in issue. The appeal by the farm owners was thus dismissed, but the cross
appeal by the Municipality upheld.
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