William Frederick Gerber and Others v Member of the Executive Council of the Gauteng Provincial Government, Development Planning & Local Government and Another

The Eastern Gauteng Services Council ('the Council') imposed 'land rates' on owners of agricultural land within its jurisdiction for two rating years (1 July 1997 - 30 June 1998 and 1 July 1998 - 30 June 1999). Three notices were published: two by the Council's CEO and one by the MEC for Local Government. The rates were imposed as flat fees per erf regardless of the size or value of the land. The appellants were seven landowners affected by these rates. For example, the first appellant owned 170 hectares and was charged R660 per year, while the second appellant owned only 8.3 hectares but was also charged R660. The Council calculated the rates by dividing operating expenses by the number of erven in each area, rather than basing rates on property valuation or size. At the time, the Council was in the process of compiling a valuation roll. The appellants challenged the validity of these rates in the Transvaal High Court. The MEC did not oppose the application. The Council opposed, arguing it had authority under the Constitution, the Local Government Transition Act 209 of 1993 ('LGTA'), and Ordinance 20 of 1943. Swart J dismissed the application, finding in favour of the Council.

• Whether the Council had the power under section 229(1)(a) of the Constitution to impose a flat 'land rate' not based on property size or valuation
• Whether section 10G(6) of the LGTA applied and required property to be valued or measured before rates could be imposed
• Whether section 29(2) of Ordinance 20 of 1943 provided authority for the imposition of the rates
• Whether the rates were discriminatory and unconstitutional in that they treated unequally owners of properties of vastly different sizes
• Whether the procedural requirements for imposing the rates were properly followed
• Whether the calculation method used by the Council was lawful and rational

The appeal was upheld with costs. The orders of the High Court were set aside. The court declared that all three notices (Local Government Notice 1665 of 6 August 1997, Local Government Notice 1558 of 8 July 1998, and Notice 1120 of 3 March 1999) purporting to impose land rates were invalid and of no force and effect. The Council was ordered to pay the appellants' costs in both the High Court and the Supreme Court of Appeal.

A municipality's power under section 229(1)(a) of the Constitution to impose 'rates on property' must be exercised in accordance with the established meaning of a property rate, which requires that the rate be calculated with reference to the size or value of the property being rated. A flat fee imposed uniformly on all properties regardless of size or value does not constitute a lawful 'property rate'. Section 10G(6) of the LGTA requires that properties be valued or measured before rates can be imposed, unless it is not feasible and an alternative basis is prescribed (which did not apply in this case). A municipality cannot rely on section 29(2) of Ordinance 20 of 1943 to bypass constitutional and statutory requirements, particularly where that provision confers power on the MEC (not the municipality) and the procedural requirements were not met. Rates imposed in a manner that treats unequally landowners who are in all material respects identically situated violate constitutional principles and are invalid. Local authorities must act in accordance with the principle of legality and may only exercise powers conferred on them by law in the manner prescribed by law.

The court noted that it was not necessary to consider the general validity of provincial legislation in relation to the Constitution or to examine every legislative path open to local authorities seeking to impose rates or levies. The court expressed regret that revenue would be lost to the successor local authorities because of the Council's failure to exercise its powers lawfully, but emphasized that this setback cannot override the fundamental principles of democracy and legality that require all state institutions to respect the rule of law. The court also observed that there was significant confusion in the Council's and MEC's understanding of their respective functions and powers, as evidenced by the contradictory references to different legislative provisions and the procedural irregularities. While the Council argued that costs should be reduced because the appellants' case on appeal differed from that in the High Court, the court rejected this, noting that the appellants had consistently maintained that the rates were not determined according to law.

This case is significant in South African law for several reasons: (1) It clarifies the constitutional meaning of 'rates on property' in section 229(1)(a) of the Constitution, confirming that property rates must be calculated with reference to property size or value, not as arbitrary flat fees. (2) It reinforces the principle of legality and the rule of law, emphasizing that local authorities may only exercise powers conferred on them by law and must comply with constitutional and statutory requirements. (3) It establishes that municipalities cannot circumvent constitutional requirements for rating property by relying on outdated provincial ordinances that permit arbitrary rate-setting. (4) It demonstrates the application of the equality principle in the context of municipal rating, holding that municipalities cannot impose uniform charges that have discriminatory effects on similarly situated property owners. (5) It provides guidance on the interpretation of section 10G(6) of the LGTA and its interaction with constitutional powers. (6) The judgment affirms that the original constitutional power to rate property cannot be delegated and must be exercised in accordance with established principles of rating.