The appellants were rural landowners farming within the jurisdiction of the Bergrivier Municipality. Historically, rural landowners had not been subject to municipal rates. Following the post-1994 constitutional and legislative reforms, municipalities were empowered to levy rates on all land, including rural property. Between the financial years 2002/2003 and 2008/2009, the Municipality imposed rates on the appellants’ properties. The appellants refused to pay, contending that the rates were not lawfully imposed in accordance with the Constitution and applicable legislation. The Municipality instituted actions in various magistrates’ courts for recovery of the arrear rates, but by agreement these proceedings were abandoned and replaced with an application in the Western Cape High Court for declaratory relief as to the lawfulness of the rates. The High Court held that rates for some years were lawful and others unlawful. Both parties appealed to the Supreme Court of Appeal.
The appeal by the farm owners was dismissed with costs, including the costs of two counsel. The Municipality’s cross-appeal succeeded with costs. The orders of the High Court were set aside and replaced with an order declaring that the imposition of rates for the financial years 2002/2003 to 2008/2009 was lawful, directing the appellants to pay the outstanding amounts with interest, and ordering them to pay the Municipality’s costs, jointly and severally.
This case is significant for clarifying the operation of transitional municipal legislation and confirming that section 10G(7) of the Local Government Transition Act continued to empower municipalities to levy rates during the transitional period. It affirms that municipalities’ revenue-raising powers should not be undermined by overly technical procedural challenges and emphasises the importance of substantial compliance in municipal finance. The judgment provides authoritative guidance on the interaction between the Transition Act, the Municipal Finance Management Act and the Property Rates Act.