In the matter of Lake Eland Game Reserve CC v Ray Nkonyeni Municipality, the High Court had to determine, amongst other things, whether it is justified to categorise an entire property as “commercial” where the property is used extensively for business purposes.
The background facts of the matter are briefly as follows:
- The respondent (Ray Nkonyeni Municipality) was born out of the merger of two entities namely the Ezinqoleni Municipality and the Hibiscus Municipality. The effective date of establishment of the respondent was 3 August 2016.
- The case of the applicant is that its property spanning over 9 049 030 square meters, comprising of seven properties, is used for multiple purposes including a restaurant, sporting activities, self-catering accommodation, a campsite, residential houses, community outreach, agricultural programs, farming and ecotourism. According to the applicant, much of its land is cliff face, and is not usable save for the zip-line sporting activities which are conducted over the cliff.
- Up until the time of the formation of the respondent, the applicant’s property fell under the jurisdiction of the Ezinqoleni Municipality and its property had been rated in the category of “hospitality and tourism” (with a rebate). In April 2017 the applicant received its first rates account from the respondent at R 4077.19. However, in June 2017, the amount was R 18 495.
- Upon enquiring about the increase in rates, the applicant was advised that this had been brought about by the categorisation of the applicant’s properties as “commercial” without a rebate.
- The applicant launched review proceedings in terms of section 78(5) of the MPRA. Various letters of correspondence followed.
- The applicant’s argument that the respondent failed to comply with certain peremptory provisions of the MPRA (sections 30 and 49) is dealt with in the judgment.
The court stated that:
“There is no doubt in my mind that the property of the applicant is extensively used for business purposes for which varying prices are charged for the many different offerings. The question then is, does this observation justify the categorisation of the entire property of the applicant as being a commercial property?” The respondent has, in my view, not provided conclusive evidence to show that such categorisation is justified just by the mere business activities, which are extensive in nature in the applicant’s property.”
It was found that due to the vastness of the applicant’s property, it became incumbent on the respondent to investigate the submissions made by the applicant on the issue of various usages of its property.
The fact that the respondent has provided proof of the extent of the business activities at the applicant’s property, does not exonerate it from investigating the other usages of the applicant’s property as alleged by the applicant and having done so, and based on a thorough investigation decide whether the dominance of the business usage of the applicant’s property allows it to categorise the property as being commercial in nature or the other usages would qualify the property to fall under the multiple-purpose category.
The following order was made (most relevant parts included below):
- The respondent’s categorisation of the applicant’s property as commercial property is hereby reviewed and set aside in terms of section 6(2)(iii) of PAJA.
- The imposition of the assessment of rates applicable to commercial property on the applicant’s properties is reviewed and is set aside.
- The respondent’s General Valuation Roll for the period 01/07/2017 to 30/06/2022 is declared to be invalid and set aside to the extent that it categories as “commercial” the applicant’s properties.
- Unless and until the applicant’s properties are correctly re-categorised, the respondent is to levy rates in accordance with the Ezinqoleni Local Municipality’s valuation roll, rates policy and with the transitional arrangements set out in Notice No 134 published in the KwaZulu-Natal Provincial Gazette No 1594.
- The decision to implement the respondent’s General Valuation Roll for the period 01/07/2017 to 30/06/2022 is remitted to the respondent to consider afresh the appropriate categorisation (based on the different uses) of the applicant’s properties and the rate which should be levied upon the said properties, regard being had to the provisions of the MPRA.