In the recent matter of Ekapa Minerals Pty v Sol Plaatjies Municipality an application was brought before The High Court of South Africa (Northern Cape Division, Kimberley).
The application concerns the legality of six decisions taken by the Council of the Sol Plaatje Local Municipality (the first respondent) to set a property rate ration of 1:22 in respect of the rating category of “mining”, as defined in the first respondent’s Rates Policy, for the financial years 2015/16; 2016/17; 2017/18; 2018/19; 2019/20; 2020/21 (“the impugned decisions”).
The applicants (Ekapa Minerals (Pty) Ltd and Ekapa Resources) seek to have the impugned decisions reviewed and declared constitutionally invalid on the grounds that the impugned decisions were taken in breach of the Local Government: Municipal Property Rates Act, No 6 of 2004 and section 229(2)(a) of the Constitution of the Republic of South Africa Act, 108 of 1996.
The applicants contend that by setting the property rates ratio of 1:22 for properties under the category of “mining”, the first respondent’s Council acted ultra vires the empowering provisions and in a manner that is unlawful, irrational, unreasonable and offends the doctrine of legality.
Furthermore, the applicants conceded rightfully that the first respondent may create different categories of rateable property within the framework provided for in section 19 of the MPRA. The reasonableness of the differentiation in the rates ratios and thereby the rates tariffs that are charged by the first respondent on various categories of non-residential properties were the concerns.
Eight immovable properties were involved and are located within the Sol Plaatje Local Municipality.
The first applicant is also the holder of the Mining Right. The applicant conducts diamond mining operations on portions of these immovable properties.
The operations entail pre-working the old mine dumps (tailings) that exist on these properties.
By virtue of their operations of the immovable properties, it is categorised as “mining properties”.
In its summary, the applicant indicated the method of calculation of rates for different categories of properties; pointing out the following:
- Rates are calculated first, based on the valuation of the property, which must be market value;
- All rates ratios are linked back to the rates ratio of the normal residential property which rates ratio is determined as 1:1. All other rateable properties are then given a rate ratio relative to the 1:1 rates ratio of a residential property;
- Apart from determining the rates ratio, the rates tariff of residential properties is also determined to then be multiplied by the various rates ratios of different property categories such as mining.
On the other hand, the first respondent’s argument, among other things, was based on the SCA judgment in Nokeng Tsa Taemane Local Municipality v Dinokeng Property Owners Association and Others (2011) 2 All SA 46(SCA) at paragraph 8:
“It would be wrong for the courts to usurp the powers of municipalities and determine rates and taxes for them. The best course for a court is to show judicial defence to the decisions taken by democratically elected municipal councils”
In the decision Acting Judge MJ Ramaepadi responded to this, stating that the applicants do not “seek to impugn the first respondent’s powers to determine rates in terms of a rates policy adopted by the Council of the first respondent in terms whereof various properties are rateable on a different basis depending on the category the property has been placed in, or the values that have been placed on the properties for purposes of determining rates.
The applicants concede rightfully so, that the first respondent has the power to determine rates and that it may create different categories of rateable properties within the framework provided for in section 19 of the Rates Act. It is probably for this reason that the applicants did not seriously press upon this Court, in the event of it being found that the rates ratio applicable to the category of mining is unreasonable, to determine the appropriate rates ratios for various categories of non-residential properties. Instead, the applicants only seek an order reviewing and setting aside the impugned decisions as being unlawful, irrational, and unreasonable. Once it is so, then it follows that the first respondent’s reliance on Nokeng Tsa Taemane is misplaced.”
It was further noted that Adv Rip SC together with Adv Viviers who appeared on behalf of the applicants made it clear that the purpose of the challenge is to recover the amounts which have been paid by the applicants to the first respondent pursuant to the impugned decisions, or to prevent the first respondent from recovering the outstanding rates and taxes from the applicants.
After considering all arguments the decision was that … “the impugned decisions are clearly unlawful. There is a striking differentiation in the rates ratios applicable to the various categories of non-residential properties. In some instances, the difference is about 8 times. On the face of it, this differentiation is unreasonable.”
Further to this and in the absence of the respondent providing any reasons or explanation for the differentiation and the margin between the rates ratios applicable to properties in mining category and other non-residential properties, the court is of the view that “in the absence of explanation, the differentiation is unreasonable and in breach of section 19(c) of the Rates Act, which prohibits a municipality from levying rates which unreasonably discriminates between categories of non-residential properties. Once it is, then it follows that the impugned decisions are unlawful”.
It was found “that the impugned decisions are unlawful, irrational and unreasonable.”
An order was made that:
- The decisions taken by the Council of the first respondent to set a property rates ratio of 1:22 in respect of the category on “mining” for the financial years 2015/2016; 2016/2017; 2017/2018; 2018/2019; 2019/2020 and 2020/2021 are declared unlawful and set aside.
- In terms of section 172(1)(b)(i) of the Constitution, the order shall have prospective effect only.
- The first respondent shall pay the cost of the application, including the costs consequent upon the employment of two counsel.