Appeal court finds Joburg business rates increase unlawful, irrational

Posted On Sunday, 11 November 2012 19:45 Published by eProp@News
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THE City of Johannesburg unlawfully increased rates on business, commercial and industrial properties in 2009-10, the Supreme Court of Appeal (SCA) ruled on Thursday.

It delivered judgment in an appeal by the South African Property Owners’ Association (Sapoa) against an earlier finding for the municipality.

The SCA found the Johannesburg council and mayor had not complied with the relevant provisions of the local government’s Municipal Systems Act; its Municipal Finance Management Act; and its Municipal Property Rates Act.

All three acts make provision for community participation.

At the time, the municipality decided to increase the rates on business, commercial and industrial properties by 28%. This came after its budget, providing for an increase of 10%, had been tabled and advertised for public comment.

The high court in Johannesburg found for the city, and held that the levying of property rates was not an integral part of the budget process.

The high court found granting the relief sought by Sapoa was not in the public interest, because it would probably bankrupt the city, leaving it unable to perform its constitutional duties. The association’s application was dismissed with costs.

The SCA held that the decision to impose the additional 18% was irrational and unfairly discriminated against property owners. It upheld the association’s appeal against the high court order.

However, a majority judgment of the SCA decided the problem created by the unlawfully levied rates could not be solved by a court order. This decision was in terms of the constitution, which required that the SCA make a just and equitable order.

The SCA declared the council had acted unlawfully in imposing the contentious rate, and stated how such a problem had to be dealt with in future.

The judgment declared the council had to comply with the relevant provisions of the Acts when it wanted to adopt a budget with rates materially different from those in the tabled budget.

Source: BDL


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