The Thaba Chweu Rural Forum & Others v The Thaba Chweu Local Municipality and others

The Thaba Chweu Rural Forum, representing farm owners in the Lydenburg/Mashishing area of Mpumalanga, challenged municipal property rates levied by the Thaba Chweu Local Municipality between July 2009 and June 2017. Prior to 1994, farms were excluded from municipal jurisdictions and owners paid no municipal rates. After the Constitution, section 151(1) provided that municipalities must be established for the entire Republic, bringing farms under municipal jurisdiction for the first time. The municipality repeatedly failed to comply with the Local Government: Municipal Property Rates Act 6 of 2004 (the Rates Act) and associated Regulations. Regulations prescribed that rates on agricultural properties conducting crop/animal farming could not exceed 25% of rates on residential properties. The municipality failed to conduct proper public consultation, failed to comply with objection procedures under section 49, and levied excessive rates far above the 25% ratio. Some farm properties experienced massive valuation increases (e.g., Moon Cloud 25 (Pty) Ltd's property increased from R1,170,000 to R12,180,000, causing rates to jump from R1,432.08 to R149,448.60). Records for the 2014/2015 second valuation roll went missing. The appellants made objections from 2009 onwards but the municipality failed to respond meaningfully. Litigation was commenced in 2017. The municipality conceded the unlawfulness but opposed setting aside the rates on grounds of delay and budgetary prejudice.

• Whether the municipal property rates notices and resolutions should be declared unlawful and invalid for non-compliance with the Local Government: Municipal Property Rates Act 6 of 2004 and Regulations
• Whether the court should make a just and equitable order under section 172(1)(b) of the Constitution despite the delay in instituting proceedings
• Whether the delay of approximately 7 years in instituting litigation was reasonable or should be overlooked in the interests of justice
• What appropriate relief should be granted to vindicate the principle of legality while balancing the municipality's budgetary concerns
• Whether retrospective invalidation of rates would have an impermissible 'knock-on effect' on successive municipal budgets

1. The appeal succeeded. 2. The Full Court order was set aside and replaced with: 2.1 A declaration that rate notices published in the Mpumalanga Provincial Gazette from 2009-2018 and related municipal council resolutions are unlawful and invalid to the extent they relate to agricultural properties used for crop/animal farming. 2.2 The municipality may only recover agricultural property rates calculated in accordance with the Rates Act and Regulations, less any amounts exceeding the legally permissible limit, for each financial year 2009-2018. 2.3 The municipality must credit accounts of appellants' members who paid rates, to the extent of amounts paid in excess of the legally permissible limit for 2009-2018. 2.4 On recovery of arrear rates, the municipality may charge interest as published under sections 96 and 97(1)(e) of the Local Government: Municipal Systems Act 32 of 2000. 3. The municipality was interdicted from levying property rates on agricultural properties at rates exceeding those legally prescribed, and rates must be determined according to prescribed procedures. 4. The first respondent was ordered to pay costs including costs of two counsel in the appeal, high court and full court, but excluding costs of supplementary heads of argument delivered after the hearing.

The binding legal principles established are: (1) Where a municipality repeatedly acts unlawfully over successive years despite clear statutory requirements and objections from affected parties, a court may overlook unreasonable delay in instituting review proceedings if required by the interests of justice. (2) Under section 172(1)(b) of the Constitution, courts have wide remedial powers to make any order that is just and equitable when declaring conduct constitutionally invalid, bounded only by considerations of justice and equity. (3) In fashioning appropriate relief, courts must weigh the consequences of retrospective invalidation against the imperative to vindicate the principle of legality. (4) A municipality cannot claim the benefit of rates levied in excess of statutory limits, even where ratepayers delayed in challenging such rates. (5) Where a municipality has yet to recover unlawfully excessive rates from some ratepayers, and has collected excessive amounts from others, a just and equitable remedy is to limit recovery to lawful rates and require crediting of overpayments, thereby balancing both parties' interests. (6) The 'knock-on effect' on successive municipal budgets does not automatically preclude retrospective relief where such relief can be fashioned to vindicate legality while protecting municipal revenue streams. (7) Municipalities, as spheres of government, are expected to be conversant with applicable law and conduct their affairs within legal confines; courts should not allow precedents where municipalities face no consequences for acting outside legal parameters.

The Court made several non-binding observations: (1) The Court noted that the favorable municipal rate for agricultural properties serves the public interest by ensuring continuous food supply and food security for the nation. (2) The Court observed that parties may agree to arrange reciprocal payments over a reasonable period concurrent with current rates to mitigate the impact of recovery and crediting. (3) The Court commented that whatever motive caused the appellants' initial resolve not to pay rates does not justify or confer authority on the municipality to levy rates in excess of legal limits as retribution. (4) The Court admonished that a trend should not develop where there are no consequences when municipalities function outside legal parameters. (5) The Court expressed disapproval of the supplementary heads of argument filed after hearing, noting they were scant, unhelpful, and merely rehashed previous arguments, warranting exclusion from costs. (6) The Court noted that some appellants' members did not conduct agricultural farming in crops/animals and fell under different property categories (game-farming, hospitality, residence), and therefore did not qualify for the agricultural rates under review. (7) The Court observed that in Gijima, as in this case, the affected party had been vociferous in consistently questioning the illegality but warnings were ignored.

This judgment is significant for several reasons: (1) It clarifies the approach to delay in legality reviews, applying and developing the Buffalo City test to circumstances involving repeated unlawful conduct over successive years. (2) It demonstrates the broad remedial powers of courts under section 172(1)(b) of the Constitution to fashion just and equitable relief that vindicates the principle of legality while balancing practical concerns. (3) It establishes that municipalities cannot benefit from their own unlawful conduct and that courts will intervene to prevent unjust enrichment from ultra vires rates. (4) It distinguishes between challenges to budgets themselves (SAPOA) and challenges to rates that form part of budgets, showing that the 'knock-on effect' concern does not automatically preclude relief. (5) It reinforces that municipalities, as spheres of government, are subject to the rule of law and must comply with clear statutory requirements, particularly regarding public participation in rate-setting. (6) It provides practical guidance on remedies that can balance retrospective relief with ongoing municipal operations, allowing recovery/crediting to occur concurrently with current rates. (7) It confirms that ratepayers' initial motives or conduct in refusing to pay do not justify municipalities levying unlawful rates. (8) The case affirms that the favorable treatment of agricultural properties under the Rates Act serves public interest in food security.