City of Tshwane Metropolitan Municipality v Malvigenix NPC t/a Wecanwin and Others

The City of Tshwane Metropolitan Municipality (the City) published 2012 supplementary and 2013 general valuation rolls that recategorised properties in Lombardy Estate from "residential" to "vacant", resulting in property rates increasing by as much as 700%. In Lombardy Development (Pty) Ltd v City of Tshwane (2016), the High Court declared these valuation rolls invalid and set them aside for failing to comply with the public consultation process under s 49 of the Municipal Property Rates Act 6 of 2004. This was confirmed on appeal by the Supreme Court of Appeal in City of Tshwane v Lombardy Development [2018] ZASCA 77, which held that the judgment was one in rem (binding on all persons, not just the parties). Wecanwin, representing current and former property owners in Lombardy Estate who were not parties to the original Lombardy litigation, demanded that the City refund overcharged rates and treat them the same as the original applicants. When the City refused, arguing the judgment only applied to the original applicants, Wecanwin approached the High Court seeking a declaratory order that the City's refusal was unlawful. The High Court (Potterill J) granted the relief. The City appealed to the Supreme Court of Appeal.

• Whether the invalidation of the City's valuation rolls, as a judgment in rem, required the City to reverse property rates imposed on all affected properties in Lombardy Estate, not just those belonging to the original applicants
• Whether Wecanwin members were required to institute separate review proceedings to obtain the same relief as the original Lombardy applicants
• Whether the Oudekraal principle applied to require the City's imposed rates to stand until set aside by court order
• What is the duty of a municipality when a court declares its conduct unlawful

The appeal was dismissed with costs, including costs of two counsel.

The binding legal principles established are: (1) Where a court declares a valuation roll invalid and sets it aside as a judgment in rem, the declaration affects all properties subject to that valuation roll, not merely those owned by parties to the litigation. (2) When a first administrative act is declared invalid and set aside, consequent acts that depend for their validity on the first act also become invalid and are set aside, without the need for separate review proceedings (proper application of Oudekraal as clarified in Seale and Corruption Watch). (3) State functionaries, including municipalities, have a constitutional duty derived from s 195 of the Constitution and the rule of law to proactively investigate and correct unlawful conduct, rather than requiring affected persons to institute proceedings. (4) A municipality must treat persons liable for rates equitably under s 3 of the Municipal Property Rates Act, which invokes the constitutional right to equality under s 9 of the Constitution.

The Court made critical observations about the City's conduct: (1) At para 21, the Court cited with approval the observation from City of Tshwane that "It cannot plausibly be so that the City proceeded to arrange its affairs in the confident expectation that ratepayers would not challenge its conduct." (2) At para 26, the Court deprecated the City's conduct in declining to correct its unlawful acts and their consequences. (3) The Court observed that there is a "growing trend by some parties in litigation, to irresistibly seek refuge in the Oudekraal principle, and in the process distort the court's reasoning in that seminal judgment" (para 18). (4) The Court noted that the City had a "misconceived notion of its duty and role as a sphere of local government" in assuming that "the duty to correct its unlawful conduct lies with those adversely affected by that conduct" rather than with the City itself (para 23). (5) The Court emphasized that Wecanwin had to "unnecessarily incur the costs of litigation" due to the City's failure to proactively correct its unlawful conduct (para 27).

This case is significant in South African law for several reasons: (1) It clarifies the application and consequences of judgments in rem in administrative law, particularly that such judgments bind the whole world and affect all persons in the same situation, not just parties to the litigation. (2) It provides important guidance on the proper application of the Oudekraal principle, clarifying that when an initial act is set aside (not merely declared invalid), consequent acts dependent on it also become invalid without need for separate proceedings. (3) It reinforces the constitutional duty of state organs, particularly municipalities, to proactively correct their unlawful conduct rather than waiting to be challenged, as derived from s 195 of the Constitution and the rule of law. (4) It emphasizes the principle of equity in municipal rating under the Municipal Property Rates Act, linking it to constitutional equality rights under s 9. (5) The judgment demonstrates judicial intolerance for local government entities that fail to take corrective action when courts declare their conduct unlawful, and reinforces accountability and the rule of law in local government administration.