THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 234/2020
In the matter between:
CITY OF JOHANNESBURG
METROPOLITAN MUNICIPALITY
APPELLANT

and

ZIBI YANGA
FIRST RESPONDENT

ZIBI LINDIZWE
SECOND RESPONDENT

Neutral citation: City of Johannesburg Metropolitan Municipality v Zibi and
Another (234/2020) [2021] ZASCA 97 (09 July 2021)
Coram:
SALDULKER, MBHA, and SCHIPPERS JJA and CARELSE
and POYO- DLWATI AJJA
Heard:
05 May 2021
Delivered: This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the Supreme Court of Appeal
website and release to SAFLII. The date and time for hand-down is deemed to be
have been at 10h00 on 09 July 2021.

Summary: Municipal law – Local Government: Municipal Property Rates Act 6 of
2004 – municipality within its powers to impose a penalty tariff in the instance of
illegal or unauthorised use of property within its jurisdiction – such action not ultra
vires if it is in terms of a validly adopted municipal property rates policy – appeal
upheld.

ORDER
______________________________________________________________________

On appeal from: Gauteng Division of the High Court, Johannesburg (Fourie AJ
sitting as the court of first instance):
The appeal is upheld with costs, including the costs of two counsel where so
employed.
The order of the high court is set aside in toto, and replaced with the following
order:
‘The application is dismissed with costs.’

______________________________________________________________________

JUDGMENT
______________________________________________________________________
Mbha JA (Saldulker JA and Poyo-Dlwati AJA concurring)

[1] The central issue in this appeal is whether a municipality is entitled to levy a
rate in the form of a penalty on residential property for illegal or unauthorised use,
without first changing the category of the property on its valuation roll or
supplementary roll, from ‘residential’ to ‘illegal or unauthorised’ use.

[2] The appellant, City of Johannesburg Metropolitan Municipality (the
municipality), established in terms of the Local Government: Municipal Systems
Act 32 of 2000 (the Systems Act) and other related legislation governing local
authorities, appeals against the judgment and order of the Gauteng High Court
Division, Johannesburg (per Fourie AJ) (the high court), handed down on 9 October
2019. In terms of this judgment, the municipality was ordered to apply the residential
category reflected on its valuation roll, when levying property rates against erf 671
Auckland Park 1, the property of Mr and Mrs Zibi (the property) from ‘1 October
2015 to date of implementation of a replacement valuation roll pertaining to the
property’. The municipality was also ordered to rectify, within thirty days, the
relevant municipal account for the respondents’ property and change the rating tariff
from ‘illegal or unauthorised use’ to ‘residential’, and to replace the tariff charge
with a residential category rating. This appeal is with leave of the high court.

[3] At the core of this entire dispute, is the respondents’ complaint that since
October 2015, the municipality has levied rates on the respondents’ immovable

property, in accordance with the category of ‘illegal’ or ‘unauthorised’ use of the
property. This, so the respondents contend, despite the fact that the zoning category
of the property remained ‘Residential 1’ on the municipality’s 2013 and 2018
valuation rolls.

[4] It bears mentioning that until October 2015, the municipality had levied a
property rate of R898.01 monthly on the property, which at all relevant times has
been zoned ‘Residential 1’. However, from October 2015 onwards, such rate as
reflected on the municipality’s account number 552060383, has escalated to
R3 592. 05. As appears from the tax invoice dated 23 October 2015, under the
heading ‘Property Rates’, this penalty tariff for the higher amount of R3 592. 05 was
debited, which incorporates the amount charged in respect of property rates.
Thereafter, the penalty tariff was claimed monthly as per the tariff provided for in
the appellant’s rates policy. This penalty tariff was calculated based on the market
valuation of the property, being the amount of R1 650 000.

[5] The nub of the dispute, from the municipality’s point of view, is that the
aforementioned levied rate of R3 592, 05 represents a penalty for the respondents’
unlawful or unauthorised use of the property. On the other hand, the respondents
contend that the municipality ought to have first re-categorised the property from
‘Residential 1’ to ‘illegal or unauthorised’ use on the municipality’s valuation roll,
before the municipality could impose the escalated levy.

[6] It is necessary to set out the relevant background facts, which are largely
common cause, in order to have a better understanding of the context in which the
dispute arose. The respondents took transfer of the property in their names on 24
June 2013. The property is a free-standing erf with a house consisting of 5 bedrooms,

2 bathrooms, a living room, a laundry room, a double garage, and an outside room
with a toilet. In addition to residing in the property with their two minor children,
the respondents aver that from January 2015 they started renting out 2 bedrooms to
students and young professionals, thus using the property as a commune, a
commercial concern. It is common cause that no authorisation was first sought and
obtained from the municipality for such use.

[7] On 28 October 2016, the municipality sent a letter to the respondents through
its attorneys, notifying them of their wrongful and unlawful use of the property as a
student commune, in contravention of the town planning scheme and zoning thereof
without the necessary authorisation. Importantly, the respondents were notified of
their contraventions since 2013 based on several site inspections conducted by
officials of the municipality, which resulted in a contravention notice, referred to as
a TP19 Notice, which was sent to them on 4 September 2013. This notice called
upon the respondents to terminate their unauthorised use of the property by no later
than 4 October 2013.

[8] In the same correspondence it was also stated that further site inspections were
conducted on the property on 3 August 2014, 16 November 2014, 31 January 2015,
20 June 2015 and 9 October 2016. These site inspections confirmed that the
unauthorised use of the property by the respondents continued unabated.

[9] From October 2015 to date, the municipality has levied rates on the property
in the form of a penalty for the illegal and unauthorised use of the property. It
transpired that, on 22 September 2015, the municipality’s town planning law
enforcement section instructed the property rates policy finance and compliance
division to impose a penalty tariff as contemplated in the municipality’s policy.

[10] Aggrieved by the increased penalty tariff imposed by the municipality, on 11
December 2017, the respondents approached the City of Johannesburg Ombudsman
(the Ombudsman), to investigate what according to them, was the incorrect billing
on the property. On 31 January 2018, the Ombudsman responded and informed the
respondents that the municipality’s records indicated that the respondents were
advised that the increase in their account was a result of the implementation of a
penalty tariff in terms of the municipality’s policy. The said penalty, the
Ombudsman explained further, was imposed due to the fact that the property was
being used in contradiction to its zoning.

[11] On 10 October 2018, the municipality obtained an order in the Johannesburg
High Court, per Meyer J, interdicting the respondents from using the property in
contravention to its residential zoning within 30 days of the date of the order.
Significantly, no appeal has been made against Meyer J’s order, and it remains in
force. On 26 November 2018, the respondents launched an application challenging
the municipality’s penalty tariff, which forms the subject matter of this appeal.

[12] In finding in favour of the respondents, the high court relied on the decision
in Smit v The City of Johannesburg Metropolitan Municipality1 and reasoned that
the municipality was constrained to levy a penalty rate without first re-classifying
the property as an ‘unauthorised category’. Its failure to follow this prescribed
procedure, the high court held further, amounted to a contravention of its rates policy
which in turn contravened s 3 of the Local Government: Municipal Property Rates
Act 6 of 2004 (the MPRA).

1 Smit v The City of Johannesburg Metropolitan Municipality [2017] ZAGPJHC 386.

[13] The high court concluded that the municipality was only authorised to levy
rates on the property based on the categorisation thereof namely, in accordance with
its ‘Residential 1’ zoning. If the municipality wished to charge the punitive rate, the
high court reasoned, it was required to first amend the valuation roll or issue a
supplementary roll, and comply with the relevant legislative requirements that are
designed to ensure compliance with the audi alteram principle, in order to protect
ratepayers like the respondents, against arbitrary increases before imposing any
penalty rates. Accordingly, the high court held that the municipality’s failure to do
so, rendered its conduct invalid.

[14] It is necessary to examine the legislative provisions governing the powers and
ability of municipalities to impose rates and tariffs. The municipalities’ power to
levy rates on properties within their jurisdiction is an original power conferred in
terms of s 229 (1)(a).of the Constitution of the Republic of South Africa (the
Constitution).2 The MPRA3 is the national legislation envisaged in s 229 (2)(b)4 of

2 The Constitution of the Republic of South Africa, 1996. Section 229(1)(a) of the Constitution provides:
‘(1) Subject to sections (2), (3) and (4), a municipality may impose –
(a).
rates on property and surcharges on fees for services provided by or on behalf of the municipality.’

3 Sections 2 and 3 of the MPRA read in relevant parts as follows:
‘2 Power to levy rates
(1) A metropolitan local municipality may levy a rate on a property in its area.
3 Adoption and contents of rates policy
(1) The council of a municipality must adopt a policy consistent with this Act on the levying of rates on rateable
property in the municipality.
(2) A rates policy adopted in terms of subsection (1) takes effect on the effective date of the first valuation roll prepared
by the municipality in terms of this Act, and must accompany the municipality’s budget for the financial year
concerned when the budget is tabled in the municipal council in terms of section 16(2) of the Municipal Finance
Management Act.
(3) A rates policy must -
(a)
treat persons liable for rates equitably;
(b)
determine the criteria to be applied by the municipality if it –
(i) levies different rates for different categories of properties determined in terms of section 8;
(ii) exempt a specific category of owners of properties, or the owners of a specific category of properties,
from payment of a rate on their properties;
(iii) grant to a specific category of owners of properties, or to the owners of a specific category of properties,
a rebate on or a reduction in the rate payable in respect of their properties; or
(iv) increases or decreases rates;
(c)
determine, or provide criteria for the determination of
(i) categories of properties for the purpose of levying different rates as contemplated in paragraph (b) (i); and
(ii) . . . .’
4 Section 229(2)(b) of the Constitution provides:

the Constitution, enacted to regulate the imposition of rates by municipalities. This
legislation, read together with the Systems Act, and the Local Government:
Municipal Finance Management Act 56 of 2003 (the Finance Act), form part of a
suite of legislation that gives effect to the new system of local government
established in terms of the Constitution.

[15] Section 2 of the Systems Act provides that a municipality is an organ of state
with a separate legal personality, whilst s 4(1)(b) provides that ‘the council of a
municipality has the right to govern on its own initiative the local government affairs
of the local community’. The object of the Finance Act is to secure sound and
sustainable management of the financial affairs of municipalities by establishing
norms and standards for, inter alia, ensuring accountability and appropriate lines of
responsibility in the financial affairs of municipalities, budgeting and financial
planning processes.

[16] The power of a municipality to raise a surcharge over and above a rate it levies
in respect of a property, is guaranteed by s 156(5) of the Constitution, which
provides that ‘[a] municipality has the right to exercise any power concerning a
matter reasonably necessary for, or incidental to, the effective performance of its
functions’. It immediately becomes evident that the consequence of having an
original power is that a municipality’s power to levy rates is not dependant on
enabling national legislation as it is derived directly from the Constitution.5 It
follows therefore that the imposition of a penalty against property owners, as has
happened in this case, is necessary and incidental to the effective performance of the
municipality’s functions and services.

‘(2) The power of a municipality to impose rates on property, surcharges on fees for services provided by or on behalf
of the municipality, or other taxes, levies or duties –
(a)
. . .
(b)
may be regulated by national legislation.’
5 City of Cape Town and Another v Robertson and Another 2005 (3) BCLR 199 (CC); 2005 (2) SA 323 (CC) para 60.

[17] Nonetheless, s 75A(1)(a) of the Systems Act bestows a general power upon a
municipality to ‘levy and recover fees, charges and tariffs in respect of any function
or service of the municipality’. In terms of s 75A(2) the fees, charges or tariffs are
levied by a municipality by a resolution passed by the municipal council, with a
supporting vote of a majority of its members.

[18] A municipality is obliged in terms of s 74 of the Systems Act, to ‘adopt and
implement a tariff policy on the levying of fees for municipal services provided by
the municipality itself or by way of service delivery agreements, and which complies
with the provisions of this Act . . . and any other applicable legislation.’ This
provision must be read together with subsecs 3(1) and (2) of the MPRA, which
obliges a municipality to adopt a rates policy on the levying of rates on rateable
property which takes effect on the effective date of the first valuation roll prepared
by the municipality, and which must accompany the municipality’s budget for the
financial year concerned.

[19] In Kungwini Local Municipality v Silver Lakes Homeowners Association and
Another,6 this Court held that the adoption of a rates policy and the levying,
recovering and increasing of property rates is a legislative rather than an
administrative act. The effect being that a municipality’s action in this regard can
only be challenged on the principle of legality, an incidence of the rule of law.

[20] Based on the various legislative provisions and established principles I have
referred to above, it is beyond any doubt that a municipality’s powers to levy a

6 Kungwini Local Municipality v Silver Lakes Home Owners Association [2008] ZASCA 83; [2008] 4 All SA 314
(SCA); 2008 (6) SA 187 (SCA) para 14.

penalty in respect of the use of any property within its jurisdiction, is not ultra vires
its powers, provided it does so as part of a validly adopted property rates policy. It
is common cause that, in casu, the respondents did not impugn the validity of the
relevant municipality’s property rates policy, but its application. The respondents’
attack is only directed at the validity of the impugned tariff. Neither did the high
court assail the validity of the property rates policy in question in any manner
whatsoever.

[21] In developing their case, the respondents submitted that in terms of the MPRA
and the rates policy, the rating of the property is done in accordance with the
category of the property as set out in the municipality’s valuation roll. It therefore
followed, the respondents argued further, that before an illegal or unauthorised tariff
can be levied, the municipality was obliged to first update the category of the
property on its valuation roll. To the contrary, the municipality contended that the
property rates policy was properly applied and there was no requirement that there
should first be a re-categorisation before the application for a penalty tariff.

[22] The municipality in this matter validly adopted and implemented a property
rates policy in accordance with the provisions of subsecs 8(1) to (3) of the MPRA.
Applying that policy, the municipality then levied different rates for different
properties for the relevant period of 2015-2016. Clause 5 of the policy reads as
follows:
‘5. CATEGORIES OF PROPERTY FOR LEVYING OF DIFFERENTIAL RATES
(1)
The Council levies different rates for different categories of rateable property in terms of
section 8 of the Act. All rateable property will be classified in a category and will be rated
based on the category of the property from the valuation roll which is based on the primary
permitted use of the property, unless otherwise stated. For purposes of levying differential

rates in terms of section 8, the following categories of property are determined, in terms of
sections 3(3)(b) and 3(3)(c) of the Act. . . .’
The above clause is repeated in the municipality’s 2016/2017, 2017/2018 and
2018/2019 property rates policies.

[23] Clause 5(2) of the policy contains a list of the various categories of rateable
property in respect of which different rates are levied. Twenty-three different
categories are listed based on the primary permitted use of the property, unless,
otherwise stated. For example (a) is for business and commercial property, (b) is for
sectional title business and (i) is for farming and so forth. The last item on the list
under (w) is for ‘illegal use’, with which we are concerned in this case. The
municipality’s 2016/2017 property rates policy has the same number of categories,
save that under item (w), it has listed ‘unauthorised use’ in contrast to ‘illegal use’
that is found in the 2015/2016 rates policy.

[24] The municipality’s property rates policy, for 2015/2016, explains, inter alia,
under Clause 6 bearing the heading ‘6 Clarification of Categories of Property’, the
primary permitted use of the rateable property, the reasons for the zoning of the
specific property and how each particular category of property would be rated. The
clarification given in respect of the ‘Illegal use’, in Clause 6.1, is particularly
important. It reads as follows:
‘6.1 Illegal use
(i) This category comprises all properties that are used for a purpose (land use) not permitted by
the zoning thereof in terms of any applicable Town Planning Scheme or Land Use Scheme;
abandoned properties and any properties used in contravention of any of the Council’s By-laws
and regulations. . .
(ii) The rate applicable to this category will be determined by the City on an annual basis. The
City reserves the right to increase this penalty tariff higher than any other tariffs’. (My emphasis.)

It bears mentioning that the ‘unauthorised use’ category is explained in similar terms
in the municipality’s 2017/2018 and 2018/2019 property rates policies. This is
clearly not without significance.

[25] The approach to the interpretation of any legal document, be it legislation, any
statutory instrument or contract, is now trite and has been affirmed in various
judgments of this Court and the Constitutional Court. In Natal Joint Municipal
Pension Fund v Endumeni Municipality,7 this Court outlined the approach to the
judicial interpretive exercise as the process of attributing meaning to the words used
in legal documents, taking into account the context in which they were used by
reading the particular provision or provisions in the light of the document as a whole
and the circumstances attendant upon its coming into existence.8

[26] A simple reading of the penalty tariff in Clause 6, read together with the rest
of the municipality’s property and rates policy, reveals that it is plainly not applied
as a ‘category’, although it is listed under the heading ‘Categories of Property for
levying of Differential Rates’. From a mere interpretation of the MRPA, read with
the policy, it is clear that the penalty charges levied under ‘illegal use’ or
‘unauthorised use’ are directed against a landowner’s illegal conduct, and not the
property.

[27] The municipality’s property rates policy states unequivocally, that the ‘illegal
use’ or ‘unauthorised use’ tariff will be imposed in respect of all properties that are
used for a purpose (land use) not permitted by the zoning thereof. The ‘illegal use’

7 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012
(4) SA 593 (SCA) para 18.
8Bothma-Batho Transport (edms) Bpk v S Bothma & Seun Transport [2013] ZASCA 176, [2014] 1 All SA 517 (SCA);
2014 (2) 494 (SCA) para 12; Airports Company South Africa v Big Five Duty Free (Pty) Ltd and Others [2018] ZACC
33;2019 (2) BCLR 165 (CC); 2019 (5) SA 1 (CC) para 29.

or ‘unauthorised use’ category is thus clearly defined with reference to the zoning
categories, and not the categories as contemplated in the valuation roll.

[28] The respondents’ reliance on the fact that the penalty tariff is referred under
the heading of ‘Categories’ in Clauses 5, is misconceived. The penalty tariff and
how it is applied forms part of the concept of the tariff and charges against the
property as informed by the municipality’s validly adopted property rates policy. A
reading of this policy reveals a clear distinction between the general property rate
for lawful use and a charge for the penalty tariff which is founded on illegal conduct.

[29] I have already alluded to the various enabling legislative provisions in terms
of which the municipality validly adopted and implemented a property rates policy.
Clearly, the municipality validly reserved to itself the right to claim a higher charge
and tariff against landowners who deliberately refuse to bind themselves to the
municipality’s land use scheme, as set out in its municipal property rates policy. This
is in my view, the only sensible conclusion that can be reached if the penalty
provisions, tariffs and charges referred to in the policy, are interpreted in the context
in which they appear therein, taken together with the purpose to which the policy is
directed, and the object of the enabling suite of legislation referred to earlier.

[30] The respondents’ argument that the municipality must first update the
valuation roll whenever it wishes to charge an ‘illegal use’ or ‘unauthorised use’
tariff is based on the fallacy that such a valuation roll or supplementary roll must
always reflect actual use. This argument completely misconstrues the lawful purpose
of a valuation roll, which is to determine the value of the property in a specified
category. As a matter of common sense, it follows that unauthorised use or a use for
a non-permitted purpose can therefore only reflect the permitted use of the property.

[31] Section 77 of the MPRA obliges the municipality to update the valuation roll
annually, either through a supplementary valuation roll under s 78, or an amendment
of the valuation roll under s 79. The object of updating the valuation roll is merely
to correct objective errors in the category which is indicated in the roll, for example,
errors or omissions in relation to rateable property.

[32] Sections 77 to 79, read simply, do not deal with the changes or variation to
rates. In casu, no such error or omission in respect of the value of the respondents’
property exists. It is common cause that the permitted use of their property was
always residential. It accordingly follows that no amendment or supplementary
valuation roll is required as the respondents suggest.

[33] In the light of what I have stated above, I am in agreement with the
municipality that the imposition of a higher tariff regarding rates payable on
residential property, which is used for a purpose other than its authorised purpose,
as has happened in this case, does not require a re-categorisation. The penalty or
higher tariff the municipality validly imposed in respect of the respondents’
property, only seeks to address the current situation to the extent and for the duration
of the illegal land use in operation. Clearly, the high court failed to appreciate the
unreasonable administrative burden that would be placed on the municipality if a
supplementary valuation roll had to be published in respect of every unlawful use of
a property.

[34] The high court however acknowledged, rightly in my view, that the
respondents were acting in contravention of the appellant’s land use scheme and
importantly, that they were acting in contempt of the order by Meyer J issued on 18

October 2018, interdicting them from using the property as an accommodation
establishment as long as the property remained zoned as ‘Residential 1’. In my view,
the respondents’ aforesaid unlawful conduct are clear jurisdictional facts for the
application of the municipality’s policy of the penalty tariff. Furthermore, the
application of the penalty tariff and charge to the respondents’ property is competent
in terms of the policy.

[35] As I have stated earlier, the policy was validly adopted and applied. It,
together with the relevant valuation rolls, were published and subjected to a normal
public participation process. It follows that the complaint of an alleged breach of the
respondents’ right to the audi alteram procedure cannot be sustained. Clearly the
high court erred in this respect. I must also point out that the respondents’ reliance
on the Blom9 case is misconceived. That case concerned a municipality’s power to
add categories of rateable property in terms of s 8 of the MPRA. Blom accordingly
concerned a totally different issue.

[36] In light of what has been stated above, I find that the high court misdirected
itself in various manners already described above, and its order falls to be set aside.
It has not been demonstrated why the costs order should not follow the result.

[37] In the circumstances, I make the following order:
The appeal is upheld with costs, including the costs of two counsel where so
employed.
The order of the high court is set aside in toto, and replaced with the following
order:

9 City of Tshwane v Marius Blom & GC Germishuizen Inc. and Another [2013] ZASCA 88; 2014 (1) SA 341 (SCA);
[2013] 3 All SA 481 (SCA).

‘The application is dismissed with costs.’

_________________

B.H MBHA

JUDGE OF APPEAL

Schippers JA (Carelse AJA concurring):

[38] I am grateful to my colleague, Mbha JA, for setting out the circumstances in
which the municipality’s claim to payment of a penalty tariff or higher rates arose.
Unfortunately, however, I find myself in disagreement with the majority on the
outcome of the appeal. In my respectful opinion, the municipality was not
empowered under s 8 of the Local Government: Municipal Property Rates Act 6
of 2004 (the Rates Act) to determine ‘illegal use’ as a category of rateable property,
nor to include such category in its rates policies.

[39] The respondents’ use of their property for an illegal or unauthorised purpose
is beyond question, hence the order issued by Meyer J in the Gauteng Division of
the High Court, Johannesburg (high court) on 10 October 2018. In terms of that order
the respondents were directed to cease using the property or permitting it to be used
as an accommodation establishment, or for any purpose other than a dwelling house
in conformity with the ‘Residential 1’ zoning of the property in terms of the
Johannesburg Town Planning Scheme, 1979. However, the sanction for the
respondents’ illegal use of their property must be sought elsewhere: it cannot be
sourced in the Rates Act.

[40] It is common ground that for the purpose of levying rates, the property has
been categorised as a residential property in terms of s 8(2) of the Rates Act and
valued at R 1 650 000. Based on this value the rates levied on the property for the
2015/2016 year was R898 per month. For the same period the municipality imposed
a penalty tariff founded on an ‘illegal use’ category of rateable property, contained
in the City of Johannesburg Property Rates Policy 2015/2016 (the Rates Policy).
This category includes the use of property contrary to its zoning as defined in the

relevant town planning scheme. The rate levied for the illegal use of the property
was R3592 – four times higher than the monthly rates (the penalty tariff). Both
tariffs used in the calculation of residential rates and the penalty were incorporated
in the Rates Policy, following a public participation process before the Policy was
adopted.

[41] In 2018 the appellants applied to the high court for an order that the
municipality: (1) apply the residential category reflected on its valuation roll in
levying property rates on the property from 1 October 2015 to date of
implementation of a replacement valuation roll; and (2) that it rectify the relevant
municipal account within 30 days of the order to reflect that the rates levied on the
property, based on an illegal or unauthorised use category since October 2015, have
been replaced by property rates based on the residential category.

[42] The grounds for the relief sought were these. The municipality had levied
penalty tariffs for the illegal use of the property despite the fact that it remained
categorised as a residential property on the municipality’s 2013 and 2018 valuation
rolls. The municipality failed to comply with the Rates Act in that it ‘did not cause
a supplementary valuation roll to be issued in relation to the property before it
commenced levying illegal/unauthorised use rates tariffs on the property’, and did
not change the category of the property when it published its 2018 valuation roll.

[43] The answering affidavit states the ‘central issue’ in the case involves the
interpretation and application of s 8(1) and (2) of the Rates Act. The municipality
claimed that in terms of s8 (1) it was authorised to levy different rates for different
categories of rateable property according to specified criteria set out in s 8(2) of the
Rates Act. Then it referred to s 156(2) of the Constitution which empowers

municipalities to make and administer by-laws to give effect to the functional areas
in which they are authorised to govern, and s 156(5) which grants a municipality
incidental powers for the effective performance of its functions.10 The municipality
also cited s 229(1)(a) of the Constitution, which expressly authorises a municipality
to impose ‘rates on property and surcharges on fees for services provided by or on
behalf of the municipality’. Next, the municipality referred to s 3 of the Rates Act
which enjoins the council of a municipality to adopt a policy consistent with the Act,
for the levying of rates on rateable property in the municipality; and prescribes the
contents of a rates policy.

[44] Ultimately the municipality contended that its rates policies contained an
express provision for an unauthorised, alternatively, illegal use category of
rateable property. This category, so it was contended, comprised all properties used
for a purpose (land use) not permitted by their zoning in terms of the applicable town
planning scheme. The rate applicable to this category was determined by the
municipality on an annual basis. Thus, the empowering provisions upon which the
municipality relied for the imposition of the penalty tariff were s 8(1) and (2) of the
Rates Act and the Rates Policy.

[45] The relevant provisions of the Rates Policy are the following:
‘5. CATEGORIES OF PROPERTY FOR LEVYING OF DIFFERENTIAL RATES
(1)
The Council levies different rates for different categories of rateable property in terms of
section 8 of the Act. All rateable property will be classified in a category and will be rated based
on the category of the property from the valuation roll which is based on the primary permitted

10 Section 156(5) of the Constitution provides:
‘ Powers and functions of municipalities . . .
(5) A municipality has the right to exercise any power concerning a matter reasonably necessary for, or incidental to,
the effective performance of its functions.’

use of the property, unless otherwise stated. For purposes of levying differential rates in terms of
section 8, the following categories of property are determined in terms of sections 3(3)(b) and
3(3)(c) of the Act:
(2)
The categories are as follows:
. . .
(e)
Residential Property
. . .
(w)
Illegal use
. . .
6.1
Illegal use
(i)
This category comprises all properties that are used for a purpose (land use) not permitted
by the zoning thereof in terms of any applicable Town Planning Scheme or Land Use Scheme,
abandoned properties and properties used in contravention of the Council’s By-laws and
regulations, which include the National Building Regulations and Building Standards Rates Act,
103 of 1977, and any Regulations made in terms thereof.
(ii)
The rate applicable to this category will be determined by the City on an annual basis. The
city reserves the right to increase this penalty tariff higher than other tariffs.’

[46] The high court (Fourie AJ) followed Smit v City of Johannesburg,11 a similar
case in which De Villiers AJ held that the municipality could not apply an illegal use
tariff to property used in contravention of a town planning scheme. The court in Smit
held that the municipality had levied the illegal use tariff in breach of its rates policy,
contrary to the provisions of s 2(3) of the Rates Act.12 The high court concluded that
the municipality was only authorised to levy rates on the property based on its
categorisation, ie residential property. If it wished to levy the punitive rate, it was
required to amend the valuation roll or issue a supplementary one, and comply with
the relevant legislative requirements, which included the audi principle to protect
ratepayers against arbitrary increases.

11 Smit v City of Johannesburg Metropolitan Municipality [2017] ZAGPJHC 386.
12 Smit fn 11 paras 11-14.

[47] Consequently, the high court made an order directing the municipality to
apply the residential category reflected on its valuation roll for the applicable period
in levying property rates on the property, for the period 1 October 2015 to the date
of implementation of the replacement valuation roll relating to the property. The
municipality was also ordered to rectify the relevant municipal account within 30
days of the date of the order, to reflect that the rates levied on the property under the
illegal or unauthorised use category since October 2015, had been replaced with
rates levied based on the residential category. The parties were ordered to pay their
own costs. Although the penalty tariffs were imposed for the period 2015 to 2019,
the high court’s order dealt only with the 2015/2016 Rates Policy and the October
2015 account in respect of the property.

[48] Before us the argument by counsel for the municipality, in summary, was this.
The municipality was entitled to impose the penalty tariff in terms of the Rates
Policy, which had been included in the Policy in order to deter landowners from
contravening the municipality’s land use scheme. The penalty tariff is also
authorised under ss 156(2), 156(5) and 229(1)(a) of the Constitution. Further, in
terms of the s 75A of the Local Government: Municipal Systems Act 32 of 2000 (the
Systems Act) the municipality is given a general power ‘to levy and recover fees,
charges or tariffs in respect of any function or service of the municipality’.

[49] An analysis of these constitutional and statutory provisions however reveals
that the argument does not bear scrutiny. At the outset it should be noted that s 75A
of the Systems Act is inapplicable for the simple reason that the municipality did not
act under that provision when it determined the illegal use category and imposed the
penalty tariff. Instead, and as is clear from the provisions of the Rates Policy quoted
above, the municipality purported to act in terms of ss 3 and 8 of the Rates Act. A

decision deliberately and consciously taken under the wrong statutory provision
cannot be validated by the existence of another statutory provision authorising that
action.13

[50] The starting point therefore, is whether the municipality was authorised to
determine ‘illegal use’ as a category of rateable property in terms of s 8(1) of the
Rates Act, as it purported to do. Sections 8(1) to 8(3) read:
‘Differential rates-
(1)
Subject to section 19, a municipality may, in terms of the criteria set out in its rates policy,
levy different rates for different categories of rateable property, determined in subsections (2)
and (3), which must be determined according to the–
(a)
use of the property;
(b)
permitted use of the property; or
(c)
a combination of (a) and (b).
(2)
A municipality must determine the following categories of rateable property in terms of
subsection (1): Provided such property category exists within the municipal jurisdiction:
(a)
Residential properties;
(b)
industrial properties;
(c)
business and commercial properties;
(d)
agricultural properties;
(e)
mining properties;
(f)
properties owned by an organ of state and used for public service purposes;
(g)
public service infrastructure properties;
(h)
properties owned by public benefit organisations and used for specified public benefit
activities;
(i)
properties used for multiple purposes, subject to section 9; or
(j)
any other category of property as may be determined by the Minister, with the concurrence
of the Minister of Finance, by notice in the Gazette.

13 Minister of Education v Harris [2001] ZACC 25; 2001 (4) SA 1297 (CC) paras 16-18; Howick District Landowners’
Association v Umgeni Municipality and Others [2006] ZASCA 153; 2007 (1) SA 206 (SCA) paras 21-22.

(3)
In addition to the categories of rateable property determined in terms of subsection (2), a
municipality may determine additional categories of rateable property, including vacant land:
Provided that, with the exception of vacant land, the determination of such property categories
does not circumvent the categories of rateable property that must be determined in terms of
subsection (2).’

[51] Section 8(1) requires rates to be determined according to the ‘use of the
property’ ie the actual use, ‘the permitted use of the property’ (the limited purposes
for which the property may be used)14 or a combination of actual and permitted use.
A category of ‘vacant land’ is acceptable because it is based on actual use and the
value determined is the undeveloped land value given the uses to which it could be
put if developed. Mixed uses are the same.

[52] In my opinion, the Rates Act does not permit ‘illegal use’ as a category of
rateable property, for a number of reasons. First, ‘illegal use’, is not a use as such.
This so-called category is not determined according to the use of the property.
Instead, the category is determined, and the penalty tariff imposed, on the basis of
the conduct of property owners who use their properties contrary to town planning
or land use schemes, or contravene by-laws and regulations. Even owners who
abandon their properties, or erect a building or structure in contravention of the
National Building Regulations and Building Standards Act 103 of 1977
(the Building Standards Act), are subject to the penalty tariff. Indeed, it was
submitted on behalf of the municipality that ‘the charge for the penalty is founded

14 The Local Government: Municipal Property Rates Act 6 Of 2004 (Rates Act) defines ‘permitted use’ as follows:
‘ “permitted use” in relation to a property, means the limited purposes for which the property may be used in terms
of–
(a)
any restrictions imposed by–
(i)
a condition of title;
(ii)
provision of a town planning or land use scheme; or
(iii)
any legislation applicable to any specific property or properties; or
(b)
any alleviation of any such restrictions.’

on illegal conduct.’ It is the use itself, not the lawfulness of the use that determines
the category of rateable property in s 8(1) of the Rates Act.

[53] Second, the uses of property in s 8(1) plainly constitute lawful uses. This is
buttressed by the immediate context – all the categories of rateable property listed
in s 8(2) are lawful uses of property. Illegal, unauthorised or non-permitted uses of
property cannot be categorised for the purpose of levying rates in terms of the
Rates Act. In my view, a municipality cannot grant its imprimatur to the illegal use
of property by levying a rate on such property. This, when in terms of the Rates Act,
rates levied by a municipality on a property must be paid by the owner of that
property.15 It seems to me that an interpretation that the Rates Act permits the
determination of ‘illegal use’ as a category of rateable property, produces a manifest
absurdity.16

[54] Third, it is impossible to determine a value for illegal use. The procedure set
out in the Rates Act for the preparation of a valuation roll is a jurisdictional
prerequisite for the exercise by a municipality of its power to collect rates.17 One
cannot, for example, value a property or part of a property built in contravention of
the Building Standards Act, in order to levy a rate on it. Neither can a property be
valued on the basis of an owner’s non-compliance with a by-law or
town planning scheme. It was rightly conceded by counsel for the municipality that
‘a property cannot be categorised on the basis of a non-permitted or illegal use’, and
that a valuer could therefore not create such a category. Thus, the failure to prepare

15 Section 24(1) of the Rates Act.
16  Shenker v The Master and Another 1936 AD 136 at 142-143.
17 City of Tshwane Metropolitan Municipality v Lombardy Development (Pty) Ltd and Others [2018] ZASCA 77;
[2018] 3 All SA 605 (SCA) para 21.

a valuation roll as required by the Rates Act, ‘without first reclassifying the property
as unauthorised use’, as the high court found, does not even arise.

[55] Fourth, the penalty tariff is not a ‘rate’. The Rates Act defines ‘rate’ as
follows: ‘a municipal rate on property envisaged in s 229(1)(a) of the Constitution’.
The latter provision authorises a municipality to impose rates on property. In
Gerber,18 Navsa JA said that the ordinary meaning of ‘rate’ is well established and
referred to the Concise Oxford Dictionary meaning of the term which includes, an
‘assessment levied by local authorities for local purposes at so much per pound of
assessed value of buildings and land owned’. Navsa JA went on to say that this
meaning ‘accords with the tried and trusted practice of calculating property rates in
relation to size or value of properties’, and that ‘there is nothing to suggest that the
power given by s 229(1)(a) of the Constitution to local authorities to impose
property rates was a power to depart from this established meaning’.19

[56] In this case the municipality determined the category of the property as
‘Residential’ as contemplated in s 8(2)(a) of the Rates Act, and calculated the
municipal rate according to the value of the property. In terms of the Rates Policy,
the tariff for 2015/2016 for the residential category was 0.006531 cents in the Rand
and the penalty tariff for illegal use, 0.026124 cents in the Rand. And as is evident
from the Rates Policy, the penalty tariff is four times higher than the amount levied
for rates. However, the penalty tariff is neither a ‘rate’ as defined in the Rates Act
nor does it conform to the established meaning of that term.

18 Gerber and Others v Member of the Executive Council for Development Planning and Local Government, Gauteng,
and Another [2002] ZASCA 128; 2003 (2) SA 344 (SCA) para 23.
19 Gerber fn 18 para 24.

[57] The penalty tariff is not a municipal charge but a sanction directed solely at
the conduct of property owners. It is trite that the words of a statute ‘should be read
in the light of the subject-matter with which they are concerned . . . and it is only
when that is done that one can arrive at the true intention of the legislature’.20 There
is nothing in the Rates Act which authorises a municipality to levy a rate to deter
landowners from contravening a statute, by-law, or land use scheme; or to impose a
penalty tariff ‘for as long as the property does not conform with the town planning
scheme’, as stated in the answering affidavit. This is a case of using a power – the
power to levy rates – as a means of punishment of those who use their properties
unlawfully. It is impermissible.21 And it is directly at odds with the purpose in the
long title of the Rates Act – to regulate the power of a municipality to impose rates
on property, and ‘its power to levy a rate on property’ in s 2(3) thereof.22

[58] Fifth, the illegal use category cannot be applied equitably. Section 3(3)(a) of
the Rates Act provides that a rates policy ‘must treat persons liable for rates
equitably’. In this case the property is not being rated on the same basis as other
properties used for the same purpose ie ‘accommodation establishments’. If it were
and it was rated on that basis, there could be no complaint because the respondents
would be treated the same as all other operators of such establishments. The
municipality recognised the inequity. It submitted that the ‘category remains

20 University of Cape Town v Cape Bar Council and Another 1986 (4) SA 903 (A) at 914D-E, affirmed in Bato Star
Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others [2004] ZACC 15; 2004 (4) SA 490
(CC) para 90 and Democratic Alliance v Speaker, National Assembly and Others [2016] ZACC 8; 2016 (3) SA 487
(CC) para 28.
21 Van Eck, N O, and Van Rensburg, N O v Etna Stores 1947 (2) SA 984 (A) at 997.
22 Section 2(3) of the Rates Act reads:
‘A municipality must exercise its power to levy a rate on property subject to–
(a)
section 229 and any other applicable provisions of the Constitution;
(b)
the provisions of this Act; and
(c)
the rates policy it must adopt in terms of section 3.’

Residential for all purposes except in circumstances where a penalty tariff is
imposed, as in this instance’.

[59] Finally, in determining the illegal use category and imposing the
penalty tariff, the municipality acted contrary to the prohibition in s 19(1) of the
Rates Act, to which s 8(1) is expressly rendered subject. Section 19(1) reads:
‘Impermissible differentiation

(1)
a municipality may not levy-
(a)
different rates on residential properties, except as provided for in sections 11 (2), 21 and
89A: Provided that this paragraph does not apply to residential property which is vacant;
. . .
(d)  additional rates except as provided for in section 22.’

[60] Sections 11(2), 21 and 89A do not apply in this case.23 As already stated, in
respect of the residential category the municipality levied rates of 0.006531 cents in
the Rand on the property, as well as 0.026124 cents in the Rand as a penalty tariff in
the illegal use category, calculated on the basis of four times the amount of the rates
levied in the residential category. The penalty tariff is inextricably linked to the rates
levied in the residential category. For this reason, the submission on behalf of the
municipality that it ‘did not rely on a category of “unauthorised use” or “illegal” use
for its imposition of a penalty tariff’ and that the ‘penalty tariff is independent of the
general property rate for lawful uses’, is wrong. On the plain wording of s 19(1) of
the Rates Act, the levying of residential rates by the municipality, together with the
penalty tariff founded on the illegal use category, is prohibited.

23 In terms of s 11(2), a ‘rate levied by a municipality on residential properties with a market value below a prescribed
valuation level may, instead of a rate determined in terms of subsection (1), be a uniform fixed amount per property’.
Section 21 deals with the compulsory phasing-in of certain rates in relation to newly rateable property. Section 89A
concerns transitional arrangements relating to the redetermination of municipal boundaries.

[61] The penalty tariff further does not constitute an additional rate within the
meaning of s 19(1)(d) read with s 22(1) of the Rates Act, for two reasons. It is firstly,
not an additional rate on property levied for the purpose of raising funds for
improving or upgrading an area determined as a special rating area.24 Secondly, the
municipality did not act in terms of s 22(1) of the Rates Act.

[62] In Fedsure,25 the Constitutional Court stated that the principle of legality, an
aspect of the rule of law, requires that a body exercising a public power (in that case
a municipality exercising original legislative power in the form of budgetary
resolutions) must act within the powers lawfully conferred on it. In Pharmaceutical
Manufacturers Association,26 the principle required that the exercise of public power
should not be arbitrary or irrational. Chaskalson P said:
‘It is a requirement of the rule of law that the exercise of public power by the executive and other
functionaries should not be arbitrary. Decisions must be rationally related to the purpose for which
the power was given, otherwise they are in effect arbitrary and inconsistent with this requirement.
It follows that in order to pass constitutional scrutiny the exercise of public power by the executive
and other functionaries must, at least, comply with this requirement. If it does not, it falls short of
the standards demanded by our Constitution for such action.’

[63] In my view, the action by the municipality in determining an illegal use
category of rateable property and imposing the penalty tariff, ostensibly in terms of
ss 3 and 8 of the Rates Act, violates the principle of legality in both respects. The

24 Section 22(1) of the Rates Act provides:
‘Special rating areas
(1)
a municipality may by resolution of its council–
(a)
determine an area within that municipality as a special rating area;
(b)
levy an additional rate on property in that area for the purpose of raising funds for improving or upgrading
that area; and
(c)
differentiate between categories of properties when levying an additional rate referred to in paragraph (b).’
25 Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council and Others 1999 (1) SA
374 (CC) paras 56 and 58.
26 Pharmaceutical Manufacturers Association of South Africa and Another: In re Ex parte President of the Republic
of South Africa and Others 2000 (2) SA 674 (CC) para 85.

action is beyond the powers conferred on the municipality. It is also arbitrary
because it is not rationally related to the purpose for which the power to levy rates
was given.

[64] Finally, I should point out that the decision of this Court in Blom,27 is to the
contrary. The issue in that case was whether, in terms of the Rates Act, the relevant
municipality could determine ‘illegal use’ or ‘non-permitted use’ as a category of
rateable property under the Rates Act, in order to levy a higher rate on property than
it levied on properties used for the purpose permitted. The property had been zoned
for use as ‘residential’ and was being used as attorneys’ offices, contrary to the
appellant’s town planning scheme.28 The high court decided that the power to create
additional categories of rateable property was not unfettered; that it was confined to
lawful categories since all the categories listed in s 8(2) of the Rates Act are lawful;
and that the levying of a higher rate than the normal rate on a property because it
was being used for non-permitted purposes amounted to the imposition of a penalty
without due process.29

[65] The decision was reversed on appeal. It was held that when the words ‘use of
the property’ and ‘permitted use of property’ in s 8(1) of the Rates Act were
considered in the light of the ordinary rules of grammar and syntax, the context in
which they appear and the apparent purpose to which they are directed, the word
‘use’ was ‘wide enough to include “non-permitted use”’. The Court concluded that
it was ‘competent for the municipality to include in its rates policy a ‘non-permitted
use category for the purposes of determining applicable rates’30 and that ‘once the

27 City of Tshwane v Marius Blom & GC Germishuizen Inc and Another [2013] ZASCA 88; 2014 (1) SA 341 (SCA);
[2013] 3 All SA 481 (SCA) para 17.
28 Blom fn 27 paras 1 and 5.
29 Blom fn 27 para 4.
30 Blom fn 27 para 17.

determination of different categories of rateable property in terms of s 8 is completed
the valuation process begins’.31 In my respectful opinion, the correctness of these
findings is doubtful, for the reasons advanced above.

[66] I would dismiss the appeal with costs.

__________________

A SCHIPPERS

JUDGE OF APPEAL

31 Blom fn 27 para 21.

Appearances:

For appellant:

L G F Putter SC with C Makgato and S Ogunronbi
Instructed by:

Prince Mudau & Associates, Midrand

Webbers Attorneys, Bloemfontein

For respondent:

C N Engelbrecht
Instructed by:

Neels Engelbrecht Attorneys, Johannesburg

McIntyre van der Post, Bloemfontein.
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:

09 July 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form part of
the judgments of the Supreme Court of Appeal
City of Johannesburg Metropolitan Municipality v Zibi and Another (234/2020) [2021] ZASCA
97 (09 July 2021)
Today the Supreme Court of Appeal (SCA) handed down judgment upholding the appeal against the
order of the Gauteng Division of the High Court, Johannesburg (the high court).
The issue before the SCA was whether a municipality is entitled to levy a rate in the form of a penalty
on residential property for illegal or unauthorised use, without first changing the category of the property
on its valuation roll or supplementary roll, from ‘residential’ to ‘illegal or unauthorised’ use.
The respondents, Mr and Mrs Zibi, took transfer of erf 671 Auckland Park 1 (the property) in their names
on 24 June 2013. In addition to residing in the property with their two minor children, the respondents
aver that from January 2015 they started renting out 2 bedrooms to students and young professionals,
thus using the property as a commune, a commercial concern. It is common cause that no authorisation
was first sought and obtained from the municipality for such use. As a result, since October 2015, the
municipality levied rates on the respondents’ property, in accordance with the category of ‘illegal’ or
‘unauthorised’ use of the property despite the fact that the zoning category of the property remained
‘Residential 1’ on the municipality’s 2013 and 2018 valuation rolls.
The SCA held that the imposition of a higher tariff regarding rates payable on residential property, which
was used for a purpose other than its authorised purpose does not require a re-categorisation. The
penalty or higher tariff the municipality validly imposed in respect of the respondents’ property, only
sought to address the current situation to the extent and for the duration of the illegal land use in
operation. The SCA held further that the high court failed to appreciate the unreasonable administrative
burden that would be placed on the municipality if a supplementary valuation roll had to be published
in respect of every unlawful use of a property. The SCA therefore upheld the appeal.

~~~~ends~~~~