By Musa Mathebula, Associate, and Chantelle Gladwin-Wood, Partner
The comments that follow are made by the Municipal Law Department of Schindlers Attorneys in response to the COJ’s invitation for public comment on their rates and credit control policies during February 2019.
Prerogative of Valuer to decide Rates Category
Section 48, read with section 34, of the Local Government: Municipal Property Rates Act of 2004 (“the Rates Act”) makes it the prerogative of the municipal valuer (when compiling the roll) to determine the rating categorization of a property. This determination must be done in accordance with the prevailing Rates Policy and Rates By-laws. The law makes it the prerogative of the valuer (and not the Rates and/or Billing/Revenue department or the town planning department, or any other person for that matter) because the valuer is specially trained and qualified to make such a determination, whereas the officials in Rates and/or Billing/Revenue are not. It is accordingly unlawful for any official other than a municipal valuer (or the Valuation Appeals Board, on appeal or review) or a Court to determine the categorisation of a property for rating purposes.
Unilateral change of tariff without authorisation in law and Unauthorized Use Tariff
Moreover, it is clear from a reading of the section 8 of the Rates Act that the law requires that property owners pay the tariffs associated with the rating categorisation into which their property is placed. For example, if your property is categorised as residential, you must pay rates on the residential tariff. It is not lawful for a municipality to categorize a property for rates purposes without charging the corresponding tariff associated with such categorization. For example, it is not lawful for the municipality to categorise a property as business, but then to (nonetheless) charge the property owner rates on the residential tariff. The Revenue Department’s “tariff change applications” are accordingly unlawful, as the municipality has no authority in law to charge any tariff for rates other than the one associated with the rating category.
Flowing from the above, the municipality is not lawfully entitled to charge a consumer the penalty (unauthorized use) tariff, unless the valuations department has first utilized the procedure set out in the Rates Act in order to change the categorisation of the property to unauthorized use. Refer City of Tshwane v Blom 433/2012 [433/12] 88 ZASCA (31 May 2013) and Smit v City of Johannesburg Metropolitan Municipality (02181/2016)  ZAGPJHC 386 (28 November 2017).
COJ’s “Zoning Driven Rating Policy”
Section 8 of the Rates Act permits the category of a property to be determined according to its zoning, its use or a combination of the two. It is trite law that any subordinate legislation (including COJ’s 2018/2019 Rates Policy) must not be ultra vires or purport to authorize conduct outside of the parameters of the empowering legislation (in this case the Rates Act). Applying a literal interpretation to section 8, it appears that either or both of the factors (use and zoning) may be used to categorize a property. A rates policy that prescribes that only one must be used is therefore ultra vires, because the empowering legislation provides that either or both factors can be used to determine the categorisation.
That being said, COJ’s 2018/2019 Rates Policy is ultra vires inasmuch as it indicates that residential sectional title units built on land with an underlying zoning of anything other than residential must be categorised as sectional title business – but the owner must apply for the “residential tariff” through the “tariff change application process” referred to above. This categorisation is not permitted in terms of the Rates Act because it does not provide for the categorisation to be decided based on the use.
It further makes no sense (and is therefore irrational, and a violation of the rule of law) for the policy to provide that freehold residential properties that have an underlying zoning of special, general or undetermined (which would otherwise fall into the business/commercial category) must be categorised in accordance with their use, as residential, but then to say that the opposite applies to sectional title residential properties with the same underlying zoning (which must be categorised as sectional title business). It is further unlawful for freehold property owners in such a position to not have to make application for the “residential tariff” whereas sectional title residential units have to make that application (which is unlawful in any event).
Moreover, the COJ incorrectly looks only to the heading of the use table in the relevant town planning scheme when determining what a property’s zoning is. This makes no sense because often the heading (eg business 4) will allow for rights that are not obvious from the heading of the row in the use table. For example, there are many zonings that allow residential rights but have a heading or description of “business”. To the extent that the COJ looks only at the heading and not at the underlying rights that actually attach, the City is going to automatically mischaracterize properties that are used as residential and also have residential zoning rights, as business – and in doing so increase their rates unlawfully by 3 times – simply because the City didn’t bother looking to the actual rights that attach rather than simply referring to the label of the zoning.