Kouga Local Municipality v St Francis Bay (Ward 12) Concerned Residents’ Association and Others

Kouga Local Municipality adopted an amended rates policy and a new by-law in December 2017 to provide a framework for establishing Special Rating Areas (SRAs) under s 22 of the Local Government: Municipal Property Rates Act 6 of 2004 (PRA). In February 2018, the St Francis Bay Property Owners Association applied for the establishment of an SRA in part of Ward 12, St Francis Bay, supported by a majority of affected ratepayers. The purpose was to fund coastal protection works, enhanced road maintenance, and security services through an additional property rate. The municipality approved the SRA on 23 May 2018 and levied a 25% surcharge from 1 July 2018. The St Francis Bay (Ward 12) Concerned Residents’ Association challenged the legality of the rates policy, by-law, and council decision, alleging unlawful delegation of municipal powers to private bodies and inconsistency with s 22 of the PRA. The High Court set aside the policy and the SRA decision, and the municipality appealed to the Supreme Court of Appeal.

The appeal was upheld. The High Court’s order was set aside and replaced with an order dismissing the application, with no order as to costs.

The case clarifies the interpretation of s 22 of the Municipal Property Rates Act and confirms that municipalities may lawfully allow affected ratepayers to initiate and participate in the establishment of Special Rating Areas, provided the municipality retains ultimate decision-making authority. It affirms a cooperative model of local governance and provides important guidance for municipalities across South Africa on the validity of SRA frameworks.