Unlawful Rates Overturned after Lengthy Legal Battle

Court

After a decade-long struggle, more than 170 farmers from Lydenburg and surrounding areas can finally breathe a sigh of relief. The Supreme Court of Appeal (SCA) ruled that the excessive rates charged by the Thaba Chweu Local Municipality between 2009 and 2018 were unlawful and must be set aside.

  1. The Supreme Court of Appeal (SCA) ruled that the excessive rates charged by the Thaba Chweu Local Municipality between 2009 and 2018 were unlawful and must be set aside, providing relief to more than 170 affected farmers from Lydenburg and surrounding areas.
  2. In a groundbreaking decision, the municipality has been ordered to credit the accounts of farmers with the rates that were incorrectly levied, setting a precedent for future cases involving local municipalities and their agricultural communities.
  3. The court’s decision highlights the importance of transparency, public consultation, and adherence to legislation in municipal governance, serving as a wake-up call for other municipalities that have implemented unlawful rates or failed to consult the public on important decisions.

Groundbreaking Decision for Farmers

In what has been hailed as a groundbreaking decision, the municipality has been ordered to credit the accounts of farmers with the rates that were incorrectly levied. Ben Espach, valuations director at Rates Watch, notes that this is a significant departure from previous cases where municipalities were found to be unlawful but were not instructed to refund ratepayers.

The affected farmers, who cultivate maize, soya, wheat, and citrus, as well as raise 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, expressed as a ratio of 1:0.25.

Municipality Ignored Agricultural Tariff Limits

The municipality failed to adhere to the established ratio, resulting in significantly increased annual rates bills for farmers. In one example cited in the court ruling, a farmer’s rates bill rose from R1,432.08 to R149,448.60 in the 2014/15 financial year. Due to the legal uncertainty, most farmers withheld payment until the matter was resolved.

Following the court order, farmers will now only pay the maximum amount based on the legislated ratio, in addition to any interest as provided for in legislation. Furthermore, those who made payments according to the bills presented by Thaba Chweu must be credited, as mandated by the court.

Municipality’s Failure to Consult Public and Address Objections

Another element of unlawfulness in the rates regime was the municipality’s failure to consult the public and properly address objections as required. According to forum chair Eric Johnson, the farmers tried every avenue before resorting to litigation. He has records of 23 meetings with the municipality, all of which proved fruitless.

Municipality Admitted Unlawful Conduct in Court

Ironically, Thaba Chweu admitted in court that its conduct was unlawful. However, 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. The municipality argued that the impact of declaring the rates invalid and setting aside the relevant council decisions retrospectively would negatively affect its finances.

The SCA deemed the delay unreasonable but chose to hear the application in the interest of justice. The municipality’s persistence in its unlawful conduct year after year was taken into consideration by the court.

Balancing Public Interest and the Role of Farmers

The court also considered the important role of farmers in ensuring food security and the impact of the unlawful rates on their ability to do so. However, it also highlighted the public interest in not disrupting the municipality’s revenue stream.

When the farmers initially decided to pursue their court application, they were advised that it could cost them R800,000. Collectively, they raised R1 million among themselves. In the end, the cost spiked to about six times that amount, says Johnson.

Regarding costs, the judgment states that the Thaba Chweu Local Municipality must 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 municipality shall also include those in the high court and on appeal in the full court of the Mpumalanga Division of the High Court. However, Johnson notes that this will only cover part of the costs incurred by the forum.

Farmers and Municipality to Move Forward

This landmark ruling sets a precedent for future cases involving local municipalities and their agricultural communities. The decision ensures that farmers are protected against unlawful rates and that municipalities are held accountable for their actions.

While the Thaba Chweu Rural Forum can celebrate this victory, both the farmers and the municipality must now work together to move forward. Proper channels of communication and adherence to legislative guidelines will be essential to avoid similar disputes in the future.

In the wake of the court’s decision, it remains to be seen how the Thaba Chweu Local Municipality will address the financial implications of refunding and crediting the affected farmers. To minimize potential negative impacts on its finances, the municipality may need to explore alternative revenue streams or reassess its budget allocations.

Impact on Other Municipalities

The outcome of this case may serve as a wake-up call for other municipalities that have implemented unlawful rates or failed to consult the public on important decisions. It underscores the importance of transparency, public consultation, and adherence to legislation in municipal governance.

As the Thaba Chweu Rural Forum’s decade-long battle comes to an end, it is clear that perseverance, collaboration, and a commitment to justice can ultimately prevail. This outcome serves as a reminder to both municipalities and agricultural communities that the rule of law must be respected and upheld to ensure fair treatment for all parties involved.

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