Unlawful rates set aside after decade-long battle

More than 170 farmers from Lydenburg and the surrounding areas have been able to let out a sigh of relief after the Supreme Court of Appeal (SCA) ruled the excessive rates charged by the Thaba Chweu Local Municipality between 2009 and 2018 unlawful and set aside.

“This is a groundbreaking decision in the sense that the municipality is ordered to credit the accounts with the rates that were incorrectly levied,” says Ben Espach, valuations director at Rates Watch.

“In previous cases the actions of municipalities were found to be unlawful, but they were not instructed to refund ratepayers.”

Read: Don’t panic about 12% increase in Joburg property rates – Rates Watch

The farmers, who cultivate maize, soya, wheat and citrus, and farm cattle for meat, joined forces as the Thaba Chweu Rural Forum. They based their objections on legislative prescripts that limit the tariff charged for land used for agricultural purposes to 25% of that applicable to land used for residential purposes. This is expressed as a ratio of 1:0.25.

The municipality did not adhere to that, and in one example used in the court ruling a farmer’s annual rates bill increased from R1 432.08 to R149 448.60 in 2014/15.

The forum reached an agreement with the municipality in terms of which the latter would not embark on debt collection while the litigation was pending.

As a result most of the farmers withheld payment until there was legal certainty.

Per the court order, they will now only pay the maximum amount based on the legislated ratio as well as interest as provided for in legislation.

Those who did make payments according to the bills presented by Thaba Chweu must be credited, the court ordered.

Lack of consultation 

The excessive tariffs were however not the only elements of the rates regime that was unlawful. The municipality also failed to consult the public and deal with objections properly as required.

The ruling is a big relief, according to forum chair Eric Johnson.

“We don’t mind paying what is fair,” he says.

He notes that the farmers tried every avenue before reverting to litigation. He has records of 23 meetings with the municipality, all of which were held to no avail.

Read: Court intervenes to protect schools against Joburg rates shock

Irony

The irony is that Thaba Chweu admitted in court that its conduct was unlawful.

It opposed the action due to the delay before the forum brought its application – a delay caused by the municipality’s efforts to settle the matter without going to court.

It argued that the impact of a declaration of invalidity and setting aside the relevant council decisions retrospectively would negatively impact the municipality’s finances.

One “cannot turn back the clock,” it stated in court.

The SCA ruled the delay unreasonable, but decided to hear the application nevertheless, in the interest of justice. The fact that the municipality persisted with its unlawful conduct year after year was taken into consideration.

The court also took into account the important role of farmers in ensuring food security and the impact of the unlawful rates to do that, but also pointed out that it is in the public interest not to disrupt the revenue stream of the municipality.

Johnson says consecutive municipal managers, on the advice of their legal representatives, brought spurious applications and delayed the finalisation of the legal process. This dramatically increased the legal costs.

When the farmers first decided to go ahead with their court application, they were advised that it could cost them R800 000. They collected R1 million among themselves.

In the end the cost spiked to about six times that, says Johnson.

“No single farmer would have been able to fund that [individually].”

On the matter of costs the judgment reads: “The first respondent [Thaba Chweu Local Municipality] is ordered to pay the appellants the costs of the appeal, including costs of two counsel, but excluding the costs of delivering the heads of argument after the hearing of the appeal. The costs against the first respondent shall include the costs in the high court and those on appeal in the full court of the Mpumalanga Division of the High Court.”

Johnson says this will however only cover part of the costs incurred by the forum.