CDA Boerdery (Edms) Bpk and Another v The Nelson Mandela Metropolitan Municipality and Others

The first appellant was a landowner and the second was an association representing rural landowners aggrieved by the imposition of assessment rates on their properties by the Nelson Mandela Metropolitan Municipality. Their properties were previously not rateable under the old dispensation when they fell within the jurisdiction of the since disestablished Western District Municipality. The Municipality passed a resolution on 10 June 2002 levying general rates on all rateable property for the 2002-2003 financial year in reliance on s 10G(7)(a)(i) of the Local Government Transition Act 209 of 1993 (LGTA), read with s 30(2) of the Local Government Municipal Structures Act 117 of 1998. The landowners challenged the rates on several grounds, including that the Municipality failed to obtain the Premier's approval for rates exceeding two cents in the Rand as required by s 82(1)(a) of the Cape Municipal Ordinance 20 of 1974, and that the valuations and rates were discriminatory and arbitrary. The high court dismissed their application, finding in favour of the Municipality.

• Whether the requirement in s 82(1)(a) of the Municipal Ordinance 20 of 1974 for the Premier's approval of rates exceeding two cents in the Rand was impliedly repealed by the Constitution and the Local Government Transition Act
• Whether the rating provisions of the old-order Municipal Ordinance were complementary to s 10G(6), (6A) and (7) of the LGTA or had been superseded
• Whether the rates imposed violated s 229(2)(a) of the Constitution by materially and unreasonably prejudicing national economic policies
• Whether the rates were arbitrary and discriminatory in their application to different categories of property
• Whether the Municipality complied with notification requirements under the Valuation Ordinance

The appeal was dismissed with costs.

A pre-constitutional requirement that the provincial Administrator (later Premier) must approve municipal rates exceeding two cents in the Rand, contained in s 82(1)(a) of the Cape Municipal Ordinance 20 of 1974, was impliedly repealed when the constitutional order was established. There is a clear repugnancy between the pre-constitutional scheme, which subjected municipalities to provincial supervisory control as subordinate entities deriving delegated powers from provincial ordinances, and the constitutional scheme which grants municipalities independent constitutional status and original powers to levy rates under s 229 of the Constitution as regulated by national legislation. The absence of any reference to 'any other law' in s 10G(7) of the LGTA (the rate-levying provision), in contrast to s 10G(6) (the valuation provision), indicates that s 10G(7) confers a free-standing rate-levying competence on municipalities. The old-order approval requirement, which was a specific product of and tailored to the hierarchical pre-constitutional structure and the Administrator's supervisory role, cannot survive in a constitutional framework that affords municipalities enhanced independent status without any special supervisory role for the Premier over rate determinations.

Cameron JA noted reservations (shared with the court below) about the justiciability of s 229(2)(a) of the Constitution, which prohibits municipalities from exercising rating powers in a way that materially and unreasonably prejudices national economic policies. First, the primary remedy for alleged breaches may lie with national and provincial government rather than aggrieved litigants taking direct recourse to courts. Second, courts may not be best placed to decide questions of economic policy at issue in the provision. However, the court found it unnecessary to express a final view on justiciability. The case does not decide whether a statute of Parliament, enacted under the express constitutional power in s 229(2)(b), could permissibly require Premier approval of municipal rates - the narrower question was only whether the old-order requirement survived the transition. Cameron JA also observed that the curbs on municipal rating powers enacted in the Local Government: Municipal Property Rates Act 6 of 2004 bear no relation to the Ordinance's approval requirement. Conradie JA in his minority judgment expressed the view that s 10G(6), (6A) and (7) of the LGTA was not adequate as a complete rating mechanism and required reference to the Municipal Ordinance provisions for practical workability, noting that rating without valuation is impossible and that the legislature must be taken to have incorporated rating provisions of the Municipal Ordinance into s 10G(7).

This case is significant in South African local government law as it clarifies the constitutional status of municipalities in the post-1996 constitutional dispensation and the extent to which old-order provincial controls over municipal rating powers survived the transition. The majority judgment affirms that municipalities derive their rating powers directly from the Constitution (s 229) as regulated by national legislation, not from provincial ordinances, and that they exercise original rather than delegated powers. The case demonstrates the application of the doctrine of implied repeal where old-order provisions are fundamentally incompatible with the new constitutional scheme. It illustrates the enhanced status of local government as a sphere (not tier) of government with independent constitutional recognition, moving away from the hierarchical pre-constitutional model where municipalities were subordinate creatures of provincial legislation. The judgment also addresses the justiciability of s 229(2)(a) and the permissible differentiation in rates under transitional local government legislation.