The Municipality's land use scheme requires residents to use their property lawfully. Recently, the City of Johannesburg won the case brought against the City by a certain Mr and Mrs Zibi ("Zibis").
The City obtained an interdict in 2018 to prohibit the Zibis from using their property as an accommodation establishment for the purposes of letting and rentals. The Court further ordered the Zibis to use the property as a dwelling house, which is permitted in terms of the City's Town Planning Scheme.
Despite the Court order retraining the unlawful use, the contravention continued beyond April 2019, when the Zibis applied for consent use in terms of the Municipality's planning By-laws to operate a commune on the property.
The Zibis court case, which has now been disposed of by the Constitutional Court, was first initiated in the Johannesburg High Court under case no: 4193/2018 in 2018. The case came about from the contentions by the Zibis that the amounts reflected as the "property rates" levied in their municipal account and based on an illegal/unauthorized use category should have been based on the residential category.
Until October 2015, the Municipality had levied a property rate of R898,01 monthly on the property, which had been zoned "Residential 1" at all relevant times. However, from October 2015 onwards, the rate escalated to R3 592,05. The increased amount was a penalty tariff for the Zibi's unlawful or unauthorized use of their property.
The Zibis initially approached the High Court, where they obtained an order directing the City to apply the residential category reflected on its valuation roll when levying property rates against the Zibis' property.
1. The dispute, therefore, relates to the power of the City to apply a "penalty tariff" for the "illegal/unauthorized use" of "residential" property.
2. The City's Property Rates Policy, under the heading "illegal use" or "unauthorized use", prescribes that a "penalty tariff" shall apply to:
"… 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."
The City applied the penalty tariff to the Zibis' property to subsume the ordinary tariff applicable under the "residential tariff" and replace it with the penalty tariff.
Before the Courts, the Zibis argued that property may only attract the tariff applicable to a property category on the valuation roll, hence the need for property recategorization on the valuation roll before the application of the "penalty tariff". The Zibis rely on clause 5 of the City's Property Rates Policy 2015/2016, which provides that:
".... All rateable property will be classified in a category and will be rated based on the category of the property from the valuation roll."
The City's position was that the "penalty tariff" is not a punishment for a criminal offence, but an administrative non-compliance charge does not constitute an additional rate within the meaning of s 19(1)(d) read with s 22(1) of the Rates Act.
The City successfully argued in the Supreme Court of Appeal that the penalty tariff, which is inclusive of the rates applicable to all categories of property determined in accordance with s 8(2) of the Rates Act, has been enacted and applied to such owners, in terms of sections 4(1)(c), 8(2), 11(3)(i), 74, 75 and 75A of the Systems Act.
Contrary to the argument of the Zibis, the City further contended that its powers in terms of sections 4(1)(c), 8(2), 11(3)(i), 74, 75 and 75A of the Systems Act to determine a "penalty tariff" are not constrained by ss 3 and 8 of the Rates Act. The City's position was that the "penalty tariff" has not been done in terms of either sections 3 and 8 of the Rates Act.
Further, the Zibis contend that the City is obliged to cause a change to the applicable valuation roll on the basis of ss 48(2)(b) read with sections 78(1)(g) and 79 of the Rates Act before applying the penalty tariff. In this argument, an objection in terms of section 50(1)(c) of the Rates Act ought to have been lodged with the Municipal Valuer in respect of the omission of the desired category. The Zibis failed to do this.
The SCA held in its judgment that the City was correct in not including "illegal use" or "unauthorized use" on its valuation roll.
In summary, the SCA granted judgment in favour of the City and held that the imposition of penalty against property owners is necessary and incidental to the effective performance of the Municipality's functions and services, and is therefore not beyond (ultra vires) its powers, provided it does so as part of a validly adopted property rates policy.
The appeal against the decision of the SCA by the Zibis was dismissed on 09 May 2022 by the Constitutional Court. In effect, the Constitutional Court affirmed the City's power to impose a penalty tariff for unlawful and unauthorized land use.
ENDS
Issued by the MMC Finance, Cllr Julie Suddaby
For more information, or an interview with MMC Suddaby, please contact:
Michelle Ashburner
Deputy Director: Communications and Stakeholder Management
MichelleA@joburg.org.za | 071 222 0977
23/06/2022
