THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 451/2013

In the matter between:

RANDBURG MANAGEMENT DISTRICT                                    APPELLANT

and

WEST DUNES PROPERTIES 141 (PTY)
LIMITED

FIRST RESPONDENT
CITY OF JOHANNESBURG

SECOND RESPONDENT

Neutral citation:  Randburg Management District v West Dunes Properties
(451/2013) [2015] ZASCA 135 (30 September 2015)

Coram:
Leach, Tshiqi, Theron, Willis and Mathopo JJA

Heard:
02 September 2015

Delivered:  30 September 2015

Summary:  Local government – formation of a city improvement district under the
Gauteng City Improvement Districts Act 12 of 1997 – municipal council may not
delegate authority to approve a city improvement district to mayoral committee by
reason of s 59(2) of the Local Government: Municipal Systems Act 32 of 2000 read
with s 160(2)(c) of the Constitution – levies imposed by a city improvement district
not validly formed not recoverable – such levies in any event offending s 229 of the
Constitution as imposed by provincial and not national legislation.

___________________________________________________________________

ORDER
___________________________________________________________________

On appeal from: Gauteng Local Division, Johannesburg (Sutherland J sitting as
court of first instance):
The appeal is dismissed.
__________________________________________________________________
JUDGMENT
___________________________________________________________________

Leach JA (Tshiqi, Theron, Willis and Mathopo JJA concurring)
[1] At issue in this appeal is the legality of certain levies imposed upon the first
respondent under the Gauteng City Improvement Districts Act 12 of 1997 (the CID
Act) which provides for the imposition of levies on rateable properties1 situated
within a „city improvement district‟2 (for convenience I intend to use the acronym
CID in place of this phrase). These levies are then paid over to a management body
charged with the implementation of a „city improvement district plan‟ to finance
various services that, in terms of s 6(4) of the CID Act, „. . . must be in addition to
or an enhancement of those provided by the municipality‟.

[2] The first respondent is the owner of two immovable properties known as
erven 1768 and 1978 Ferndale.  Both properties are situated within the municipal
area of the City of Johannesburg (the City), a municipality envisaged by the CID

1 „[R]ateable property‟ is defined in the CID Act as immovable property on which a rate or rates may be levied in
accordance with the Local Authorities Rating Ordinance (Ordinance No 11 of 1977).
2 Defined in s 1 of the CID Act as meaning „a geographic district approved in terms of s 3 of this Act‟.

Act. The properties also fall within the geographical area of what is known as the
Randburg CID, purportedly established under the CID Act in or about 2004.

[3] The  appellant, an association incorporated under s 21 of the Companies Act
61 of 1973, is the „management body‟ of the Randburg CID established in
compliance with s 4(2) of the CID Act (to which further reference will be made in
due course). As such, under s 5(3) the appellant may sue for and recover unpaid
levies as a debt due to it.

[4] After the formation of the Randburg CID, levies under the CID Act were
imposed on properties within its geographical area. The first respondent refused to
pay certain of these levies imposed on its erven in Ferndale. In due course the
appellant, purporting to exercise its rights under s 5(3), instituted two separate
actions in the court a quo seeking payment of the amounts it contended the first
respondent owed. In its first action (case number 53025/09) it claimed unpaid levies
in respect of erf 1768 for the periods 1 October 2005 to 1 May 2006 and 1 July 2009
to 1 December 2009, and in respect of erf 1978 over the period 1 July 2008 to 1
December 2009. In the second action (case number 11637/2011) its claim for both
properties was calculated over the period 1 January 2010 to 1 March 2011. Both
actions were defended and were subsequently consolidated for hearing. The City
was joined as a second defendant before the trial, but declined the invitation to
appear or take part in the hearing – although counsel for the appellant informed the
court that it had cooperated with the appellant in making available witnesses and
documents. (I should mention that the City was also cited as the second respondent
in this appeal but, again, took no part in the proceedings.)

[5]   In any event, when the matter came to trial the parties agreed to separate
certain of the issues under the provisions of Uniform rule 33(4). The statement of
issues separated in terms of this rule, and which the court ordered were to be

determined separately with the remaining issues being stayed until they had been
resolved, were the following:
‘1.
Whether or not the [appellant] was duly established under and in terms of the [CID Act]
for the area which included Erf 1978 Ferndale . . . and Erf 1768 Ferndale . . . ?
2.
If question [1] is answered in favour of the plaintiff, whether or not:
2.1
the first property; and/or
2.2
the second property are “rateable property” as defined in the CID Act, as read with the
Local Authorities Rating Ordinance, 11 of 1977 . . .  and the Local Government Municipal
Property Rates Act 6 of 2004 . . . for the periods claimed in the summonses . . . . ?
3.
If questions 1 and 2 are answered in favour of the [appellant], whether or not the amounts
claimed in these actions were duly levied under and in terms of the CID Act?‟

[6] Having heard evidence and argument, the court a quo held in regard to the
first of these issues that the appellant had failed to show that it had been duly
established. Although for that reason alone, the appellant‟s claim fell to be
dismissed, the court went on to decide a number of further legal issues in order to
resolve the controversies that had been the subject of the debate. Its ultimate
conclusions relevant to the issues raised in this appeal were the following:
„77.1 It has not been proven that the Randburg CID was formed in compliance with Sections 2
and 4 of the CID Act.
77.2 It has not been proven that the imposition of increased levies, from 2004 onwards [was
valid].
77.3 The decisions of the [Randburg CID management board], from 11 September 2008 to
increase levies are ultra vires its powers and invalid, regardless of whatever status the levies
imposed prior thereto might have enjoyed.
77.4 [Erf 1978] was at all times throughout the era of the Rating Ordinance until 1 July 2008,
exempt from rates because it qualified in terms of section 5(1)(d), and accordingly, could not
lawfully have been subjected to any levy in respect of the CID.‟

[7] Pursuant to these findings, the appellant‟s claims were dismissed with costs.
The appeal to this court is with leave of the court a quo. The first respondent did not
appear on appeal.

[8] In the light of the stated case and the findings made in regard thereto, the first
issue that falls to be decided is whether the court a quo was correct in concluding
that the appellant had failed to prove that it had been duly established under the CID
Act. The appellant conceded that should the finding of the court a quo on this point
be upheld, an element essential to its claims would not have been established and its
appeal should fail.
[9] In considering this question, it is necessary to take account of the process that
has to be followed to form a CID as laid down in the CID Act and the regulations
promulgated thereunder.3 In brief:
(a)
Under s 2(1) of the CID Act, a municipal council is obliged to consider the
formation of a CID on receipt of a petition indicating the support of 25 per cent of
owners of rateable properties within the boundaries of such a proposed district.
(b)
Section 2(4) requires the petition to take the form of a CID plan „covering a
three year period . . . and must include the prescribed requirements and be in the
prescribed form‟.
(c)
Such prescribed requirements and the prescribed form are set out in the
regulations which require,  inter alia, that the CID plan is to set out the  services and
level of services being provided by the municipality and the proposed services and
levels thereof to be provided under the CID plan.
(d)
Sections 2(5) to (10) of the CID Act and regs 10-15 prescribe certain
procedures for public participation in the consideration of the approval of the CID
plan, including a public hearing, and both written and oral objections and
comments.
(e)
Under reg 11 notifications and advertisements are to be given to ratepayers
and the public and are to contain details of the date, time and place at which a public
hearing is to be held, a place at which the proposed CID plan will be available for
inspection, the location of boundaries of the proposed CID plan, the additional

3 Regulations in terms of the Gauteng City Improvement Districts Act 12 of 1997, GNR 1145, Provincial Gazette
491, 11 May 1998.

services which are proposed to be provided thereunder.  Importantly, these
advertisements and notices must detail the proposed levy to be imposed.4
(f)
Once this public meeting has been held and the associated consultative
process followed, the municipal council is called upon to take a decision on a
petition. In that regard s 3(2) provides:
„A municipal council may ─
(a)
approve the formation of a city improvement district and a city improvement district plan;
(b)  approve the formation of a city improvement district and a city improvement district plan
with amendments or conditions as the municipal council considers in the public interest; and
(c) refer the petition back to the petitioners with written reasons for not approving the formation
of a city improvement district or city improvement district plan indicating that the petition may be
resubmitted to the municipal council in the time period prescribed: provided that if the
resubmitted petition proposes an increased levy for any owner of rateable property, the petitioner
must notify such owner by registered mail.
(g)  It is only after the establishment of a CID has been approved under s 3(2) that it
and its management board may be formed. In this regard s 4 of the CID Act
provides, inter alia:
„(1) After a petition is approved in terms of section 3, the city improvement district may be
formed only after written proof in the prescribed form is provided to the municipal council by the
petitioner indicating that more than 50 (fifty) percent of the owners of rateable property who
represent more than 50 (fifty) percent of the  rate base in value of the property in the city
improvement district, approve the formation of the city improvement district and city
improvement district plan as approved by the municipal council.
(2)  After the written proof mentioned in subsection (1) is acknowledged by the municipal
council, a city improvement district management body must be formed and incorporated in terms
of section 21 of the Companies Act (Act No 61 of 1973) or as any other legal entity approved by
the MEC.‟

[10] The appellant was thus obliged to prove that a petition relating to the
formation of the Randburg CID under s 3(2) had been properly approved in terms of

4 Regulation 11(e).

these provisions. For present purposes it can be accepted that the necessary
preliminary requirements of public consultation were fulfilled, and one would have
expected it would then have been a straightforward matter to show that the plan was
thereafter properly approved. However, despite the assistance of the City that I have
already mentioned, the appellant was unable to call any direct evidence of such
approval. The high-water mark of its case was a letter dated 18 October 2004
addressed by a Ms Tau, then an employee of the City, to Kagiso Urban
Management (the company that had lodged the petition for the establishment of the
Randburg CID and, after its alleged formation, provided management services to
the appellant). The letter reads as follows
„THE RANDBURG IMPROVEMENT DISTRICT
Your application for the establishment of a City Improvement District in the Randburg area to be
called The Randburg Improvement District was approved by the Mayoral Committee on Thursday
14 October 2004, item No 98 on the minutes of the meeting.
This letter also serves as confirmation that all the requirements in terms of the Gauteng City
Improvement District Act, 1997 (Act No 12 of 1997) has been complied with.
We further acknowledge the receipt of a schedule and copies of voting forms summarising
54.76% of number of rateable erven representing 55.36% of the rates value in favour of
establishing a City Improvement District in the abovementioned area.‟

[11] Ms Tau, when called to testify, had no real recall of the circumstances under
which she had come to write this letter, something which is understandable given
that a period of some eight years had since elapsed. However, she stated that she
assumed that the City‟s mayoral committee on whose behalf she had written had
been delegated authority by the City‟s municipal council to consider the approval of
the Randburg CID, although she could not say whether that had in fact been the
case.

[12] It is truly startling that neither the City nor the appellant was able to produce
any further direct or documentary proof relating to the approval and formation of
the Randburg CID. The learned judge in the court a quo was fully justified in
remarking that in this respect both had been „guilty of dereliction of their duty
towards the public, to safeguard and keep accessible public records, and have been
poor stewards of the trust reposed in them‟. Be that as it may, counsel for the
appellant was constrained to concede that the decision to approve the establishment
of the Randburg CID had probably been made by the mayoral committee and not by
the municipal council itself. He submitted, however, that Ms Tau‟s assumption had
been correct and that the municipal council must have duly delegated the mayoral
committee to deal with the petition. Accordingly, so the argument went, the latter‟s
approval of the petition was valid and binding.

[13] The first obstacle to this argument is, of course, that there is no proof,
documentary or otherwise, that the municipal council had in fact delegated authority
to the mayoral committee to deal with the approval of the Randburg CID petition.
But, assuming for present purposes that such a delegation did take place, a second
and insurmountable hurdle facing the appellant is that, for the reasons set out below,
that delegation was unlawful.

[14]   Section 60(1)(a) of the Local Government: Municipal Structures Act 117 of
1998 provides that if a municipal council has more than nine members, its executive
mayor may appoint a mayoral committee from amongst the municipal councillors
(in the present case one must presume that this was properly done). However,
although s 59(1)(a) of the Local Government: Municipal Systems Act 32 of 2000
(the Systems Act) provides that a municipal council may delegate certain of its
powers, s 59(2)(a) goes on to provide that any such delegation „must not conflict
with the Constitution‟. Section 160(2) of the Constitution, in turn, provides that a
municipal council may not delegate „the imposition of rates and other taxes, levies

and duties‟. Consequently the imposition of a levy is a function that the City was
not permitted to delegate to its mayoral committee. If what was imposed under the
CID Act indeed constitutes such a levy, then the delegation upon which the
appellant relies would be invalid.

[15] The appellant sought to overcome this hurdle by arguing, first, that levies
under the CID Act are not imposed by a municipality and, second, that such levies
are in any event not levies envisaged by s 160(2)(c) of the Constitution. I shall deal
with each of these contentions in turn.

[16] In regard to the first, at first blush the argument that a municipality does not
impose the levies flies in the face of s 6 of the CID Act which, inter alia, provides:
„(1) Once a city improvement district has been formed, a municipality must levy an amount on
behalf of the management body from the owners of rateable property in the city improvement
district in accordance with the approved plan.
(2) Such amount must be levied together with other amounts which the municipality may levy
from the owners of rateable property in respect of rates and taxes but the purpose  of the amount
must be indicated as a separate item from other rates and taxes levied by the municipality.
(3) The levies collected by the municipality for the city improvement district must be paid on a
monthly basis to the management body free of any deductions or set-off for the purpose of
implementing the city improvement district plan.‟
However, relying upon the decision of Kerkstreet City Improvements District v
Johnbuild Properties (Pty) Ltd & another 2005 JDR 0501 (T), the appellant argued
that the use of the word „levy‟ in ss 6(1) and (2) meant no more than the
municipality is to „collect‟ the levies as provided in s 6(3), rather than to determine
and impose them.

[17] The issue in Kerkstreet was whether it had been lawful for the municipality
concerned to have appointed an agent to collect the levies imposed under the CID
Act on its behalf. In concluding that the agency agreement was not unlawful, and

that the second respondent was doing nothing but collecting the taxes and not
levying them, the court accepted an argument that „levy‟ in ss 6(1) and (2) connoted
the collection of levies as specifically provided for in s 6(3). However it had not
been called on to decide whether or not the municipality had „levied‟ the monthly
CID levies in the sense that it had determined and imposed them.

[18] In any event, it is clear from the structure of the prescribed process that the
levies are imposed by the municipality under the CID Act. As I mentioned earlier,
s 2(4) requires the petition to take the form of a CID plan that complies with the
requirements prescribed by the regulations. Part D of the schedule to the regulations
requires details of the proposed monthly levy to be given. Moreover, Part E
prescribes that there be attached a „Schedule of Appointment of monthly Levy to
each Erf‟. Consequently, the proposed levy forms part of the CID plan that lies at
the heart of the public consultative process, that is debated at the necessary public
hearing, and is thereafter considered by a municipal council. If the plan is then
approved under s 3(2), and the necessary proof of approval by ratepayers is
thereafter given by the petitioner as required under s 4(1), the CID may be formed.
Thereafter the levy, so debated and then approved by the municipal council, will be
levied by the municipality under s 6(1) „in accordance with the approved plan‟.

[19] In these circumstances it cannot be said that the levy which a ratepayer
becomes obliged to pay under the CID Act, albeit after having  been subjected to
debate in the public participation process, was not determined and imposed by the
municipality. Even if the monthly sum is reflected on property owners‟ accounts as
a separate item from other rates and taxes, and is collected by the municipality
before being paid to the management board of a CID, it is clearly imposed by the
municipal council and is not an amount merely collected by the municipality.

[20] I turn to the appellant‟s alternative argument that, even if the monthly amount
a ratepayer becomes due to pay under the CID is to be regarded as a levy, it does
not fall within the category of „rates and other taxes, levies and duties‟ the
imposition of which, under s 160(2)(c) of the Constitution, may not be delegated by
a municipal council.

[21] The argument in this regard was that CID levies was neither intended to
provide revenue to the State nor unilaterally imposed upon property owners but
was, rather, „payable by the property owners to their own private management body
consequent upon their majority decision to form an improvement district‟.5 It was
also argued that as the persons who benefitted from the CID levies formed only a
portion of the populus of the larger municipal area, the levies could not be regarded
as being required for municipal services.

[22] Neither of these contentions can be accepted. At the outset, s 160(2)(c) of the
Constitution clearly seeks to impose a limitation upon a municipal council‟s power
to delegate so as to ensure that the council, and only the council, is responsible for
the function of raising municipal revenue. Undoubtedly, this was such a function.
The purpose of the CID Act is stated in its preamble to be:
‘To provide procedures for the formation and independent management of city improvement
districts to fund the provision of services in addition to those which a municipality ordinarily
provides in order to facilitate investment in the city improvement district; to halt further
degeneration of cities; and to promote economic growth and sustainable development within
cities; and to provide for matters connected therewith.’
Moreover ss 6(4) to (7) of the CID Act provide as follows:
„(4)
Services provided for in the city improvement district plan and financed by the levy

charged to the owners of rateable property must be in addition to or an enhancement

of those provided by the municipality.

5 I quote from counsel for the appellant‟s heads of argument.

(5)
Any increase in applicable services provided by municipalities throughout its area of

jurisdiction must be matched with increases in such services within the city

improvement district.
(6)
The municipality must notify the management body in writing of any reduction or

substantial change to services provided by the municipality in the city improvement

district.
(7)
If the level of services provided by the municipality in the city improvement district is

reduced by the municipality without a corresponding reduction of services throughout

the municipality‟s area of jurisdiction, the management body may, by written notice,

notify the municipality and require the municipality to reinstate such services within a

period of 30 (thirty) days from such notice.‟

[23] Significantly in the present case, the CID plan prepared by Kagiso in
February 2004 (and ultimately approved by the mayoral committee) recorded the
results of a perception survey of ratepayers in the proposed CID carried out in
March 2003. This indicated that, in order of importance, the following issues need
to be addressed: safety and security, public environment (including maintenance of
public facilities), litter, cleaning of grime, public transport and traffic flow,
marketing, street lighting, mini-bus taxis and parking, and social issues. It further
went on to state:
„The perception survey indicates that the majority of respondents regard litter in the public
environment to be an area of concern, and there are a number of interventions that the CID must
therefore undertake. The CID manager will have to liaise closely with a number of council
departments to ensure that the CID is able to undertake certain actions to ensure a high quality of
environmental maintenance. The CID manager will have to negotiate and monitor a performance
level contract with Pikitup, the council refuse collection agency.‟

[24]   From this it appears that the whole purpose of the CID is for it, through its
management board, to work in conjunction with the municipality to provide services
falling within the sphere of municipal government but not at the time being
adequately provided by the municipality. Consequently the services funded by the

CID levies, while an adjunct to those being provided by the municipality itself, are
of a municipal nature and are designed to supplement and enhance those which the
municipality is able to deliver.

[25] Not only are a CID‟s services municipal in nature but, despite the appellant‟s
protestations to the contrary, the amounts payable by landowners under the CID Act
constitute a revenue charge of the nature of a tax or other levy. In South African
Reserve Bank & another v Shuttleworth & another 2015 (5) SA 146 (CC); (CCT
194/14, CCT 199/14 [2015] ZACC 17 (18 June 2015) the court was called upon to
decide whether a particular amount charged by the Reserve Bank as an exit charge
upon a resident transferring capital out of this country was a tax or a regulatory
charge. In the majority judgment Moseneke DCJ, in holding that the exit charge was
not calculated to raise revenue but was directed at curbing or discouraging the
export of capital, said:6
„So, aside from mere labels, the seminal test is whether the primary or dominant purpose of a
statute is to raise revenue or to regulate conduct. If regulation is the primary purpose of the
revenue raised under the statute, it would be considered a fee or a charge rather than a tax. The
opposite is also true. If the dominant purpose is to raise revenue then the charge would ordinarily
be a tax. There are no bright lines between the two. Of course, all regulatory charges raise
revenue. Similarly, “every tax is in some measure regulatory”. That explains the need to consider
carefully the dominant purpose of a statute imposing a fee or a charge or a tax. In support of this
basic distinguishing device, judicial authorities have listed non-exhaustive factors that will tend to
illustrate what the primary purpose is.‟
[26] The authorities to which the learned Deputy Chief Justice went on to
mention7 include Permanent Estate and Finance Co Ltd v Johannesburg City
Council 1952 (4) SA 249 (W) and Maize Board v Epol (Pty) Ltd 2009 (3) SA 110
(D), both of which were referred to by the appellant in argument before this court.
In Permanent Estate and Finance the court was called upon to decide whether a

6 Paragraph 48.
7 Paragraphs 49-51.

condition obliging the developer of a township to pay as an endowment to the local
authority a percentage of the land value of all erven sold constituted a tax. The
endowment had as its objective placing the municipality in funds to enable it to
make available the services such as sanitation, water and lights, and roads that the
township would require. The court concluded that the imposition of the obligation
to pay such an endowment was not the imposition of a tax as:
„To require any person who carries on business or who owns a dog or a motor-car to pay a
prescribed fee is, I think, to impose a tax. The money paid is taken into general revenue and is
used for general purposes; the person who pays receives no specific service in return for his
payment. Endowment money paid by a township owner is quite a different thing; it is an agreed
payment for services which are to be performed for the improvement of the township and from
which the township owner will derive financial benefit. To require the township owner himself as
a condition for the grant of permission to establish a township to make the township habitable by
an urban community would not be to impose a tax upon him, and where that work is to be
performed by a local authority, to require him to pay for, or to contribute towards the cost of, the
work is likewise not to impose a tax.‟8

[27] Relying on this, the appellant argued that the levies were not of the nature of
a tax as they are not to be paid into the municipality‟s general revenue fund for
general public use but, after collection by the City, are to be paid to the management
board for the specific services rendered in terms of the CID plan. That may well be
so, but an endowment which was in effect to be used as payment to a municipality
for its costs in establishing the infrastructure of a township is a far cry from monthly
levies being imposed to enable what in effect amounts to the on-going provision of
municipal services. The endowment related to a reimbursement of cost on municipal
services. Monthly CID levies, on the other hand, are akin to rates: they are levied on
the value of an owner‟s land and give rise to an on-going obligation to pay a
monthly contribution to enable services of a municipal nature to be provided.

8 At 259A-C.

[28] The decision in Permanent Estate and Finance thus does not advance the
appellant‟s case. Neither does the decision in Maize Board. In that matter the Maize
Board sought to recover various levies imposed under the Marketing Act 59 of 1968
as well as a maize marketing scheme. The structure of the Act was to regulate the
production and sale of agricultural products with a view to ensuring stability in the
market. It was argued that the levies were imposed for the purpose of benefitting the
general public who would then enjoy an orderly market system, and was thus a tax.
The court concluded otherwise. It held that the levies were not imposed upon the
public as a whole or on a substantial sector thereof; were restricted in terms of the
products to which they were related; were not utilised for public benefit as only a
few members of the public were to benefit; were not intended to raise public
revenue since they were not used to support government activities in general; and
therefore did not constitute a tax.9

[29] For present purposes it is not necessary to decide whether the CID levies are,
strictly speaking, a „tax‟ or merely a „levy‟ as envisaged in s 160(2)(c) of the
Constitution. Whether a charge is a tax or a levy may well at times be difficult to
determine with precision. But in either event, CID levies clearly have as their
purpose the raising of revenue to fund the provision of services to enhance those
actually rendered by a municipality. They are compulsory and not optional. They
are imposed by a municipality on a substantial sector of the public, namely those
who own land within the CID. And the revenue derived therefrom is utilised to
provide services of a municipal nature in the general interest of those members of
the public in the CID. The dominant object of the CID levies is therefore „to raise
revenue to fund the State and its public operations‟.10 The decision in Maize Board
is thus clearly distinguishable. Indeed, if anything, it shows that the levies presently
under consideration are in the nature of a tax.

9 Paragraphs 27 and 28.
10 S A Reserve Bank v Shuttleworth para 52.

[30] For these reasons, I conclude that the imposition of CID levies amounts to
„the imposition of rates and other taxes, levies and duties‟ as envisaged by
s 160(2)(c) of the Constitution. As the imposition of such levies is therefore a
function which could not be delegated by a municipal council, any delegation to the
mayoral committee to decide upon the approval of a CID plan under s 3 of the CID
Act is invalid; and consequently a decision of the mayoral committee to approve
such a plan lacks legality.
[31] The appellant‟s entire case hinged upon an acceptance that the mayoral
committee had been entitled to take the decision to approve the Randburg CID. For
the reasons I have given, it was not and, as a result, the court a quo‟s finding that the
appellant had not discharged the onus it bore in proving that the CID had been
properly formed must be upheld. The appellant conceded, correctly, that if this court
should find this to be the case, it had failed to show that the CID was lawfully
established; that its claim for levies was therefore unenforceable; that the claims of
the appellant were correctly dismissed by the court a quo; and that the appeal must
fail.
[32] Strictly speaking, this renders the various other issues debated in this court
unnecessary to decide. However, like the court a quo, it may be of assistance in
local government circles if this court, albeit briefly, deals with certain of these
issues.
[33] First, a further problem facing the appellant is to be found in s 229(1) of the
Constitution which provides that a municipality may impose:
„(a)
rates on property and surcharges on fees for services provided by or on behalf of the

municipality; and
(b)
if authorised by national legislation, other taxes, levies and duties appropriate to local

government or to the category of local government into which that  municipality falls, but

no municipality may impose income tax, value-added tax, general sales tax or customs

duty.‟ (My emphasis.)
CID levies, which for the reasons already set out are embraced by „other taxes,
levies and duties‟ envisaged in s 160(2)(c) of the Constitution, must fall within the
compass of „other taxes, levies and duties appropriate to local government or to the
category of local government into which that municipality falls‟ as envisaged by
this section. However, as is spelled out in s 229(1)(b), such levies can only be
imposed „if authorised by national legislation‟. CID levies are not authorised by
national legislation. They are authorised by legislation passed by the Gauteng
Provincial Legislature. On this basis, too, the levy imposition of CID levies offends
the Constitution and therefore lacks legality.

[34] Secondly, even if the Randburg CID had been properly formed and the
imposition of its levies for the three years after its formation was lawful, the
appellant faces yet a further difficulty in regard to establishing the extent of the first
respondent‟s liability. The entire scheme envisaged by the CID Act is that a CID is
to be established for a period of no more than three years in order to enhance the
services being delivered by the municipality during that period. That is clear from s
2(4) of the CID Act which states that the petition „must take the form of a city
improvement district plan, covering a three year period taking into account the
requirements of this Act, and must include the prescribed requirements and be in the
prescribed form‟. The prescribed form set out in the regulations defines a „city
improvement district plan‟ as meaning „a business plan for the operation of a city
improvement district covering a three year period from the anticipated date of
approval of the district‟. Under Part D of the schedule to the regulations, particulars
have to be given of the CID budget in respect of the three year period of the plan.
All of this shows that the life of a CID may be no more than three years.

[35]   Despite this, it was argued on behalf of the appellant that there is no
indication in either the CID Act or the regulations of an intention on the part of the
legislature to limit the lifespan of a CID to three years; and that the three year period
referred to in s 2(4) merely prescribes the length of time which the CID plan should
cover in the context of the petition submitted to the municipality. This was
presumably, so the argument went, that such period was considered to be sufficient
to enable the municipality (and other interested parties) to properly assess the merits
or demerits of the proposed CID plan; and that once a petition is approved and a
CID formed, the relevance of the three year period falls away.

[36]   There is no merit in this argument. The CID Act and its regulations simply
just do not provide for the suggested scheme of details being given in the petition
for the initial three year period merely to illustrate the advantages of approving a
CID plan. On the contrary, it is quite clear from the legislative provisions I have
mentioned that the CID Act intended a CID plan to endure for no longer than three
years from the date of its approval.

[37] This conclusion is relevant to the amounts the Randburg CID could have
recovered even if it had been validly formed (which it was not). The precise date on
which it came into existence is not clear but it can be accepted that the initial three
year period after its formation probably lapsed in 2007 (the court a quo found it was
probably „sometime in 2007 or 2008‟). But, importantly, it is common cause that at
no time thereafter was the original CID plan amended by an extension (for which a
procedure is prescribed11) nor was a fresh plan ever approved by the municipal
council. Despite that, the appellant and its agent, Kagiso, continued to do business
not only as if the original plan remained in force, but by collecting levies which it,
without the approval of the municipal council, had increased and imposed from time
to time in clear contravention of both the CID Act and the Constitution.

11 Section 7 of the CID Act.

[38] As appears from the details of the appellant‟s claims set out in para 4 above,
all the levies claimed by the appellant in Case No 11637/2011 and, probably, the
majority of those claimed in Case No 53025/09, relate to periods more than three
years after the CID was approved. That being so, the levies claimed were not
recoverable as they were determined by the appellant without lawful authority to do
so.

[39] In view of what is set out above, the issue whether the first respondent‟s two
properties were „rateable property‟ as set out in para 2 in the statement of issues
becomes moot in the light of the conclusion that the CID was not lawfully formed.
It is an issue which is, in any event, fact sensitive and in which the general public
have no interest. In the result, although it was an issue of considerable debate and
formed the subject of a finding in the court a quo attacked by the appellant in this
court, it is unnecessary to deal therewith.

[40] On the other hand, it is necessary to record that the appellant argued that, in
the event of this court concluding that the Randburg CID had not been legitimately
formed, it would be just and equitable for an order to be issued under s 172(1)(b) of
the Constitution limiting the retrospective effect of a declaration of invalidity to
enable the appellant and the City to remedy the situation. I see no reason to do so. In
reaching its conclusion this court has not determined that any statute or legislation is
unconstitutional. The underlying ratio of this decision is that the City‟s mayoral
committee took a decision which, in terms of the Systems Act, only the municipal
council was lawfully entitled to take, and there is no reason to in effect declare that
which was unlawful to be lawful.

[41] Moreover, there must be considerable doubt whether it is possible to lawfully
validate the imposition of levies under the CID Act. The decision in this case has

been reached on the assumption that the CID Act is valid. But in the light of the
provisions of s 229 of the Constitution already mentioned, and its directive that
levies can only be imposed if authorised by national legislation, I have grave
reservations as to whether the CID Act, being provincial legislation under which a
municipality imposes levies on owners of immovable property, can pass
constitutional muster. As the necessary interested parties to a decision on the
constitutional validity of the CID Act were not joined and the issue was not properly
ventilated either in the papers or in argument before this court, it would be
inappropriate to deal any further with it.

[42] As neither of the respondents appeared, there is no necessity to make any
order as to costs.

[43] The appeal is dismissed.

_______________________
L E Leach
Judge of Appeal

Appearances:

For the Appellant:

A G Amiradakis

Instructed by:

Moodie & Robertson, Braamfontein

Claude Reid Inc, Bloemfontein

For the Respondent:

None

THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:  The Registrar, Supreme Court of Appeal
Date:  30 September 2015
Status:  Immediate

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

Neutral citation:
Randburg Management District v West Dunes Properties
(451/2013) [2015] ZASCA 135 (30 September 2015)

The Supreme Court of Appeal today delivered a judgment dealing with the legality of
levies imposed under the Gauteng City Improvement Districts Act 12 of 1997 (the
CID Act) which provides for the imposition of levies on rateable immovable
properties situated within a city improvement district.
The first respondent is the owner of two immovable properties situated within the
municipal area of Johannesburg and what is known as the Randburg City
Improvement District, the latter having purportedly being established under the
provisions of the CID Act in 2004. It was thereafter managed by the appellant, the
Randburg Management District.
The appellant instituted action for levies imposed on the first respondent in respect
of its immovable properties under the provisions of the CID Act. Its claim related to
various periods from 2005 to 2011. The matter came before the Johannesburg High
Court which had concluded that the appellant had not proved that the Randburg CID
had been properly formed in compliance with ss 2 and 4 of the CID Act, that the
imposition of levies under the CID Act from 2004 onwards was valid, that the
decisions of the appellant from 11 September 2008 to increase levies were ultra
vires its powers and invalid. Pursuant to these findings, the appellant’s claims were
dismissed. The appellant then appealed to the Supreme Court of Appeal.
The appeal was today dismissed. In doing so, it found that the high-water mark of
the appellant’s case was that the Randburg CID had been approved by a mayoral
committee and not by a municipal council, that the delegation by the municipal
council to the mayoral committee was not lawful by reason of the provisions of the
Local Government: Municipal Structures Act 117 of 1998 as read with s 160(2)(c) of
the Constitution. In reaching this conclusion it dismissed arguments that the
municipality had only collected levies under the CID Act and did not impose them
and that CID levies were in any event not ‘levies’ as envisaged by s 160(2)(c) of the
Constitution. Consequently the court held that the Randburg CID had never been

validly established, that its claims for levies were therefore unenforceable and that
the claim of the appellant had been correctly dismissed by the court a quo.
Although on this basis alone, the appeal had to be dismissed, the court found further
that the levies offended s 229(1) of the Constitution which provides that a
municipality may only impose levies if authorised by national legislation, and that the
CID Act was provincial and not national legislation. Moreover, the entire scheme
envisaged by the CID Act is for the city improvement district to be established for a
period of no more than three years. That period had elapsed without a fresh CID
plan having been approved or the original CID plan having been amended. And
instead of the municipality determining the CID levies, the appellant had thereafter
merely done so without there being any statutory or constitutional authority for it to
do so. On this further basis most of the levies claimed were not recoverable as they
had been determined by the appellant without lawful authority to do so.
Finally the court observed that it had assumed that the CID Act was valid. But in the
light of the provisions of s 229 of the Constitution and the directive therein contained,
that levies can only be imposed or authorised by national legislation, it expressed its
grave reservations as to whether the CID Act, being provincial legislation under
which a municipality imposes levies on immovable property, could pass
constitutional muster. However as the necessary interested parties had not been
joined and the issue not properly ventilated either in the papers or in argument, the
court felt it would be inappropriate to deal any further with the issue.
---ends---