Thabo Mofutsanyana District Municipality v Steyn-Enslin & Vennote

The appellant, Thabo Mofutsanyana District Municipality, instituted proceedings against three respondents who were registered regional services levypayers. The municipality sought an order requiring the respondents to submit a true and proper statement of account, the debatement thereof, and other substantiating documents relating to regional services levy liabilities from March 2000 onwards. The respondents excepted to the particulars of claim on the basis that the facts pleaded did not sustain a valid cause of action, arguing that the municipality was not vested with powers to estimate levies or demand accounts and debatement from defaulting levypayers - such power resided with the Commissioner of the South African Revenue Service. The Free State High Court (Mocumie J) upheld the exception. The municipality appealed, arguing that if it had no such powers, the common law ought to be developed under section 39(2) of the Constitution to vest them with such powers.

• Whether a municipality is entitled to demand a statement of account, debatement or other substantiating documents from a defaulting regional services levypayer
• Whether regulation 13(1) of GN R340/1987 prohibits municipal councils from requiring levypayers to produce books, records, accounts or documents or to substantiate returns
• Whether the common law should be developed under section 39(2) of the Constitution to vest municipal councils with powers to demand accounts and debatement from levypayers
• Whether the municipality's particulars of claim disclosed a valid cause of action

The appeal was dismissed with costs. The appellant municipality was granted leave, if so advised, to give notice of intention to amend its particulars of claim within 30 days.

A municipal council is not empowered by regulation 13(1) of GN R340/1987 to require levypayers to produce books, records, accounts or other documents in relation to regional services levies, nor to require levypayers to substantiate returns submitted in connection with such levies. The proper procedure for assessment of levies is through the Commissioner as provided in regulation 13. The common law should not be developed under section 39(2) of the Constitution to grant municipal councils such powers when the existing legislative scheme is clear and provides adequate remedies through the Commissioner. Particulars of claim that seek relief prohibited by clear statutory provisions do not disclose a valid cause of action and are liable to exception.

The Court noted that regulation 11(1), which previously empowered councils to estimate unpaid levies, had been struck down as invalid for inconsistency with empowering provisions in City of Tshwane Metropolitan Municipality v Cable City (Pty) Ltd 2010 (3) SA 589 (SCA). The Court observed that while the municipality was entitled to a 'return' under regulation 9(4) and could seek a mandamus for its production, this would not necessarily solve the municipality's difficulties in determining the amount owed, given that it no longer had power to estimate levies. The Court emphasized the warning in Carmichele v Minister of Safety and Security 2001 (4) SA 938 (CC) para 55 against overzealous judicial reform, applying this principle to restrain development of the common law where the statutory scheme is adequate.

This case clarifies the limits of municipal power in relation to the collection of regional services levies under the Regional Services Council Act 109 of 1985 and its regulations. It confirms that municipal councils do not have power to demand production of books, records, accounts or substantiating documents from levypayers, or to assess levies owed - such powers reside exclusively with the Commissioner of SARS. The judgment establishes important boundaries between municipal administrative powers and revenue collection powers. It also demonstrates judicial restraint in developing the common law under section 39(2) of the Constitution, reinforcing that courts should not develop the law where existing legislation provides clear and sufficient remedies, and warning against overzealous judicial reform. The case is significant for administrative law practitioners dealing with municipal revenue collection and the interpretation of regulatory schemes that allocate powers between different organs of state.