South African Property Owners Association v The Council of the City of Johannesburg Metropolitan Municipality and Others

The City of Johannesburg Metropolitan Municipality initially resolved in March 2009 to increase property rates generally by 10% for the 2009/2010 financial year and tabled and advertised its proposed budget accordingly for public comment. Subsequently, on 21 May 2009, the Council decided to impose an additional 18% increase on business, commercial and industrial properties, resulting in a rate of 1.54 cents in the rand instead of the advertised 1.32 cents. This increased rate was adopted without further public consultation. The South African Property Owners Association (SAPOA), representing owners of business properties, challenged the validity of the decision and the budget on the basis that the increased rates were adopted without complying with statutory requirements for community participation and legality under the relevant municipal legislation.

The appeal was upheld with costs, including the costs of two counsel. The order of the High Court was set aside and replaced with a declaration that the City failed to comply with prescribed statutory requirements when imposing the increased rate on 21 May 2009. The court further declared that the City is obliged in future to comply with the Systems Act, the Municipal Finance Management Act and the Property Rates Act when materially amending a proposed budget after tabling and advertisement, and ordered the respondents to pay SAPOA’s costs.

This case confirms that municipal property rates are an integral component of the budget process and that material amendments to proposed rates trigger renewed duties of community participation. It reinforces the constitutional principle of legality in the exercise of municipal fiscal powers and underscores the centrality of participatory governance in local government decision-making.