The City of Johannesburg Metropolitan Municipality v The Chairman of the Valuation Appeal Board for the City of Johannesburg and Connaught Properties (Pty) Ltd

The second respondent, Connaught Properties (Pty) Ltd, owned a ten-storey building called 'Park Mews' in Hillbrow, Johannesburg, situated on erven 3563 and 3564. Both erven were zoned 'Residential A' with use rights including shops and offices on the ground floor. The property comprised shops on the ground floor and residential apartments on the remaining nine floors. The City of Johannesburg's municipal valuer categorised the property as 'property used for multiple purposes' in the valuation roll that became effective on 1 July 2008, with a combined market value of R3,379,000. Under the City's rates policy (specifically clause 8), properties with multiple purposes were to be rated at the highest tariff applicable to their permitted uses. Since one permitted use was business/commercial (which attracted a higher rate than residential), the entire property value was rated at the higher business rate. The second respondent objected to the valuation roll, arguing that the market value should be apportioned between residential and business categories. The municipal valuer rejected the objection. The second respondent appealed to the Valuation Appeal Board, which upheld the appeal and directed that the property value be apportioned approximately 79.44% to residential and 20.56% to business categories. The City applied to review this decision in the High Court, which dismissed the application. The City appealed to the Supreme Court of Appeal.

• Whether section 9(2) of the Local Government: Municipal Property Rates Act 6 of 2004 requires apportionment of market value between different categories of use where property is used for multiple purposes
• Whether the determination of multiple use categories and apportionment of market value is a function of the municipal valuer or the municipal council
• Whether the municipal valuer is required to reflect apportioned categories and values on the valuation roll
• Whether clause 8 of the City's rates policy, which applied the highest tariff to the total value of properties with multiple permitted uses, was consistent with the Act
• Whether a rates policy based on permitted use (rather than actual use) is subject to the apportionment requirements in section 9(2)

The appeal was dismissed with costs. The decision of the Valuation Appeal Board directing apportionment of the property value between residential and business categories was upheld. No special order was made regarding costs for senior counsel.

Where a property is being used for multiple permitted purposes under the Local Government: Municipal Property Rates Act 6 of 2004, it is necessary for the municipal valuer compiling the valuation roll to determine and record those uses and to apportion the market value of the property between them. Section 9(2) applies to properties with multiple permitted uses (not only actual uses), and the apportionment of market value between different categories of use is a function of the independent municipal valuer, not the municipal council. The valuation roll must reflect the apportioned categories and market values. A municipality is bound to follow the prescripts of section 9(2) in cases of multiple use, even where its rates policy is based on permitted rather than actual use, and once the valuer has categorised the uses and apportioned value between them, the municipality must apply the tariffs for those categories to the apportioned values.

The court observed that clause 8 of the City's rates policy, which provided that properties used for multiple purposes shall be rated according to the highest tariff applicable to the permitted uses, appears to be inconsistent with the Act (notwithstanding the wide powers bestowed on municipalities under sections 3(3)(b)(i) and 3(3)(d)), as it effectively circumvents the apportionment requirements of section 9(2). However, the court noted it was unnecessary to reach a final decision on this point as it was extraneous to the limited issue to be decided. The court also commented on procedural matters, warning that litigants who fail to give proper notice of new arguments risk having their appeals postponed or struck from the roll, though the court was indulgent in this instance. Finally, the court clarified that there is no special 'scale of senior counsel' for costs purposes and that it is for the taxing master to determine fair and reasonable fees, though the taxing master should consider the reasonableness of senior counsel's fees in deserving cases.

This case establishes important principles regarding municipal property rates for properties with multiple uses in South African law. It clarifies that: (1) section 9(2) of the Local Government: Municipal Property Rates Act 6 of 2004 applies to properties with multiple permitted uses, not only to properties with multiple actual uses; (2) the determination of categories of use and the apportionment of market value is a function of the independent municipal valuer, not the municipal council; (3) the valuation roll must reflect the apportioned categories and values for properties with multiple uses; (4) municipal rates policies must be consistent with the Act and cannot circumvent the apportionment requirements through blanket application of the highest applicable rate; and (5) the role of the independent municipal valuer as a bulwark between municipal fiscal interests and property owners' rights is fundamental to the legislative scheme. The judgment reinforces the importance of professional, impartial valuation in the municipal rates system and protects ratepayers from arbitrary or disproportionate rates assessment where properties have multiple uses. It also provides important guidance on interpretation of municipal rates policies and the relationship between permitted use and multiple use categories.