Judgement against rates offers financial relief Print E-mail
News - Aktueel
Monday, 25 June 2018 12:20
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A Supreme Court of Appeal judgement on 31 May was in favour of residents who opposed the vacant land and agricultural properties rates.

In August last year we reported that a community consortium was formed to fund a legal challenge to the City of Tshwane’s rate changes, based on a category change of agriculturally zoned properties to the residential rating category.

The consortium was formed when about 250 people turned up at a meeting in Tierpoort on 3 August 2017. The meeting also approved the ongoing discussions with WeCanWin to include the claims of about 5 000 additional claimants against the city on account of the vacant lands Lombardy judgement, which was in favour of the community that set aside the 2012 supplementary valuation roll in respect of the unlawful recategorisation of residential property to vacant land with a punitive rate of six times that of residential property.

The new judgement was in favour of those who opposed the vacant land and agricultural
properties rates

On 31 May the Supreme Court of Appeal (SCA) finally rejected the City of Tshwane’s appeal against a 2016 High Court judgement by which the city’s supplementary valuation rolls of 2012 and 2013 had been set aside.

This judgement provides financial relief for residents who opposed the city when their rates were increased – in most cases by 700% – by what has now been confirmed to have been an illegal re-categorisation process as part of the 2011 and 2013 supplementary valuation roll processes.

Another consequence of this High Court judgement, which has been highlighted by the SCA in their judgement, is that it applies in favour of all property owners affected by the same illegal process and the now invalidated supplementary valuation rolls. The SCA also clarified the issue that the illegality overrides any later valuation rolls that is based on the original illegality.

According to Lex Middelberg, chairman of the Tshwane Money Matters Caucus (TMMC), the city made the wrong choice back then. At that juncture the total liability stood at just over R3,5 billion. It more than doubled in the two years since then on the back of unprecedented rates hikes, bloated property valuations and interest.

The new budget for the city was also approved on 31 May. Despite the known risk of this impending SCA judgement, the budget did not provide for the contingent liability of the appeal being decided against the city.

The budget is still based on the assumption that the illegal vacant land and agricultural properties rates will continue to be collected and there is no provision in the budget for the immediate loss of income and the liability to refund the estimated R7 billion of rates and interest that is now due to ratepayers, Lex said.

National Treasury has declared the Tshwane Metro to be in a state of financial distress.

“From our regular engagements with ratepayers we know that they are rated beyond their means, which accounts for the increased number of organised groups resisting specific rates, such as the newly introduced cleaning levy – masquerading as a tariff, but that is in fact another illegal tax,” Lex said.

As a result of the SCA judgement, the city’s newly approved budget for 2018/19 is vastly unfunded and the city will be left unable to render essential services. Lex said that the TMMC has always held the position that this issue is too big for the city to resolve on its own and that it would require an intervention by the National Treasury to resolve.

Lex Middelberg, chairman of Tshwane Money Matters Caucus

Unless the National Treasury intervenes as it is obliged to do when a city is declared to be in financial distress, the city’s only other option is to simply shift the financial burden elsewhere to be borne by other residents.

“We are therefore writing to National Treasury and the MEC for finance and local government in Gauteng to obtain clarity on how they intend to respond to resolve the issue,” Lex said.

“We are also writing to the MMC for finance to confirm that all affected residents, including affected owners of agricultural properties, will be refunded with interest. Failing an undertaking to this effect, the consortium formed last year to seek redress specifically for owners of agricultural properties, will take further legal action,” Lex said.

He said that affected residents would be well advised to calculate their credit and to withhold further payments to the city until their credit has been set-off.

For more information phone Lex Middelberg, chairman: Tshwane Money Matters Caucus, at
083-627-3713 or Henri du Toit, chairman: WeCanWin Initiative, at 082-445-0381.

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