The issue herein relates to whether sections 8(1) and 8(2) confers authority on a municipality to add to the list of categories of rateable property by creating in its rates policy a category called ‘non-permitted use’ or ‘illegal use’ and levy a higher rate accordingly.
The issue arises because the Appellant has categorised the Second Respondent’s property (zoned for residential purposes) as ‘non permitted use’ and levies a higher rate on the property than it levies on properties used for the purpose permitted.
The Second Respondent leased its property to a firm of attorneys (‘the First Respondent’) for business purposes. The City, detecting that the property was being used for business purposes (as opposed to residential purposes,m which the property was zoned as) levied a non-permitted use rate on the Second Respondent’s account for which the First Respondent, in terms of the lease agreement, was liable for.
Supreme Court of Appeal
Subject to Section 19 of the Act, a municipality may levy different rates for different categories of rateable properties determined according to the actual use of the property, permitted use of the property and the geographical area in which the property is situated.
Counsel for the Respondents argued that the list of rateable property is exhaustive and that the creation by the Appellant of a category of ‘non-permitted use’ was contrary to the provisions of s8(1) and (2) of the Act and that it was unfair to levy a punitive rate on the property.
The Court however agreed with the court a quo that the list of rateable property was not exhaustive and went a step further by holding that in light of the ordinary rules of grammar and syntax, the context in which the words appear and the apparent purpose to which they are directed, it is clear that ‘use’ is wide enough to include ‘non-permitted use’ and therefore it is competent for the municipality to include in its rates policy a ‘non-permitted use’ category for the purposes of determining applicable rates.
The SCA further rejected the Respondents’ contention that the Appellant breached the audi alteram partem principle when it determined that the property’s use falls under a ‘non-permitted use’ category without any prior reference to the Respondents. The Appellant was not obliged to provide the Respondents with prior reference.
Furthermore, the SCA held that the court a quo was incorrect in its argument that a punitive rate imposed on the property as a result of it being categorised as ‘non-permitted use’ amounts to the imposition of a penalty without due process. A property owner who is aggrieved by a rate that has been levied on his or her property is not without a remedy, he or she can object within the stipulated period to the valuation and categorisation of the property (on the applicable General Valuation and Supplementary Rolls, as the case may be).
The Respondents should have used the legal mechanisms provided for in the Act if they wished to challenge the correctness of the property categorisation and the rate determined. This they failed to do.
The Appeal was upheld with costs including the costs of two counsel.
The order of the court a quo is set aside and replaced with the following: The application is dismissed with costs.
The list of rateable property is not exhaustive and the municipality is competent to add new categories including ‘non-permitted’ use or ‘illegal use’.
Ensure that your clients are not occupying a premises contrary to the provisions of the Town Planning Scheme because firstly it is an offence and secondly, they will be charged a higher property rate than for example on a “Business and Commercial” or “Residential” tariff.