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IN THE HIGH COURT OF SOUTH AFRICA

HIGH COURT WESTERN CAPE

CASE NO: 11938/09

In the case between:

STELLENBOSCH RATEPAYERS' Applicant

ASSOCIATION

And

STELLENBOSCH MUNICIPALITY Respondent

JUDGMENT: 18 November 2009

MEER, J

[1] This judgment is concerned with the validity of the rates and tariffs which took effect on 1 July 2009 in the Stellenbosch Municipal area. The Applicant seeks an order declaring such to be unlawful and invalid on the grounds that Respondent, in imposing the rates and tariffs, failed to comply with several peremptory statutory provisions prescribed in the applicable Municipal legislation. These are The Local Government Municipal Financial Management Act no 56 of 2003 ("the MFMA"), The Municipal Property Rates Act No 6 of 2004 ("the MPRA") and The Local Government Municipal Systems Act no 32 of 2000 ("the Systems Act"). Respondent, in opposing the application adopts the stance that there was compliance or substantial compliance with the applicable legislation.

[2] Whilst initially Applicant sought also to set aside the rates and tariffs, it no longer pursues such relief, given that the July 2009 rates and tariffs have come into effect since the inception of the application. Instead, Applicant calls for the suspension of the declaration of invalidity which it seeks, until 30 June 2010.

Preliminary Issues

[3] Respondent raises two preliminary issues. Firstly it challenges the authority of Applicant to bring these proceedings. Secondly it challenges a joinder application by Mrs Berta Hayes, a member of Applicant, to be joined as 2^nd Applicant in her capacity as a registered voter, taxpayer and resident within the area of Respondent's jurisdiction.

The Authority of Applicant to bring these proceedings

[4] As authority to launch these proceedings, Applicant relies on a resolution taken at a meeting of Applicant's members on 30 July 2009. Respondent attacks the resolution, in essence, on the basis that it was taken contrary to Applicant's constitution. According to Applicant the resolution was in two parts, firstly a ratification of Applicant's earlier decisions and secondly a decision de novo to pursue this application.

[5] It is Applicant's stance that the resolution was taken at an extraordinary general meeting convened in accordance with its constitution, and called for by twenty members of Applicant, as provided for at paragraph 6.2.3 read with paragraph 6.2.1 of its constitution. The latter clauses permit the convening of an extraordinary general meeting either by Applicant's "Sentrale Bestuur" at the request of twenty members, or by such members themselves.

[6] It is so that a meeting was requested on 30 June 2009 by twenty members of the Applicant, purporting to act in terms of clause 6.2.1 of Applicant's constitution and that the Sentrale Bestuur did not convene a meeting within 14 days. Thereafter, Applicant contends an extraordinary general meeting was convened by the twenty members themselves, as permitted by clause 6.2.3 of the constitution, which allows the members to convene a meeting should the Sentrale Bestuur not do so within 14 days of their request.

[7] Respondent argues that as the Sentrale Bestuur was not validly constituted in accordance with Applicant's constitution, it could not have received a request for a meeting in terms of clause 6.2.1 of the constitution, could not have reacted thereto and a meeting by the members themselves could not accordingly have been effected. It is common cause that the Sentrale Bestuur was at the time not validly constituted, on account of two of its wards being under represented. In terms of Clause 5.1 of Applicant's constitution, Applicant's organisational structure is based upon a number of wards, each with a ward committee, the members of which constitute the Sentrale Bestuur. Clause 5.1.1 of Applicant's constitution provides that each ward must be represented by 4 or more members. Contrary to the clause, only two "Wykskomiteelede" represented Wards 7 and 10.

[8] It is apparent that Applicant wishes to rely upon the provisions of clause 6.2.3 in order to avoid any involvement by the Sentrale Bestuur, which for present purposes it accepts was not validly constituted. The difficulty for Applicant, submitted Respondent, is that it is a necessary jurisdictional requirement for clause 6.2.3 to find application, that clause 6.2.1 must first have been complied with. Given that the Sentrale Bestuur was invalidly constituted, it could not have received a request in terms of clause 6.2.1 and could not have reacted thereto.

[9] The remedy available to Applicant in the circumstances, contends Respondent is either to ensure that the ward committees are properly constituted in accordance with its constitution, or to amend its constitution, although, in the absence of a body able validly to convene a general meeting or a special general meeting, this may prove impossible. Respondent further argues that as the Sentrale Bestuur is not properly constituted, it has the power neither to ratify previous resolutions, nor to resolve to institute legal proceedings. Previous resolutions of the Sentrale Bestuur to institute these proceedings are therefore a nullity and cannot be ratified. What is required is a decision de novo by a body competent to take such a decision.

[10] Respondent questioned also whether the resolution of 30 July 2009, adopted a new decision to institute legal proceedings. The effect of the resolution, Mr Jamie on behalf of Respondent submitted, was to ratify what had gone before.

[11] Mr Heunis on behalf of Applicant countered that clauses 6.2.1, 6.2.3 and 6.3.6 of Applicant's constitution, created a mechanism to convene a meeting in circumstances where the Sentrale Bestuur was unwilling or incapable of doing so, like in the present instance, where the Sentrale Bestuur was not validly constituted. Clause 6.2.3 in permitting the members to convene a meeting themselves, caters for a meeting in precisely such circumstances. I am inclined to agree.

[12] Clause 6.2.1 does not suggest that in the event of the Sentrale Bestuur not being properly constituted it cannot receive a request for a meeting in terms of the clause and react thereto. Nor was my attention drawn to any provision which states so elsewhere in Applicant's constitution. This is hardly surprising, for the logical consequence of Respondent's stance, would be for Applicant to be rendered paralysed and ineffectual due to the Sentrale Bestuur not being properly constituted, a defect which, as alluded to by to Applicant, could prove impossible to remedy. In those circumstances, a general meeting in terms of clause 6.2.1 could not be called by the invalidly constituted Sentrale Bestuur, the latter would not be able to pursue the remedies to regularise itself, suggested by Respondent, and Applicant would not be able to pass resolutions to take legal action or ex post facto ratify resolutions to do so.

[13] In short, the incapacity of the Sentrale Bestuur would render the entire organisation powerless to pursue its objectives, a disquieting situation for any voluntary association, and especially for one representing the interests of residents and ratepayers. The interpretation contended for by Respondent would have the effect of disqualifying such persons from litigating in the public interest. It is an interpretation unsupported by Applicant's constitution and cannot be accepted. I am of the view that the resolution of 30 July 2009 was taken at an extraordinary general meeting held in terms of clause 6.2.3 of the constitution.

[14] On the question of ratification by Applicant ex post facto, such could have occurred if Applicant's actions were capable of being validated by ratification. In Grundling v Beyers 1967 (2) SA 131 W at 139 H-140B a distinction was drawn between acts which are permitted by a constitution and lend themselves to be validated by ratification, and those which are not so permitted, accordingly ultra vires and cannot be so ratified. The following comments by Trollip J in respect of acts which the constitution of a trade union permitted it to take, are apposite:

" Now the constitution does specify certain acts which the union is required or permitted to do; it often specifies too the manner in which those acts are to be done. The former are the Union's powers, the latter its internal management (ccfMine Worker's Union v. Prinsloo, 1948 (3) S.A. 831 (A.D.). If it exceeds the former powers, that is, does an act that the constitution does not require or permit it to do, that act is ultra vires and null and void. Such an act cannot be validated by ratification or estoppel, and the Union, any outsider affected by it, or a member may, if necessary, have it set aside or declared null and void. On the other hand, if the act is within its powers, but the manner of doing it deviates from or is contrary to the constitution, it is not null and void; at most it is voidable, but it can be validated by ratification or estoppel. Any right of (a) the Union, (b) a member, and (c) an outsider to have it set aside can be defeated in the appropriate circumstances by ratification"

[15] Clause 1A.4 of Applicant's constitution authorises Applicant to institute legal proceedings. This is an act within its powers, therefore capable of being validated by ratification and can be characterised as being in the latter category of acts referred to in Grundling supra. Deficiencies in authority due to the Sentrale Bestuur not being properly constituted were capable of being cured by ratification because the taking of a resolution to institute legal proceedings is a permissible act under the constitution. As the membership had the ability to institute legal action, they were capable of ratifying the decision. See also Metrogroup Retirement Fund and another v Murphy N.O and another [2002] 9 BPLR 3821 (C) at 3828; [2002] JOL 10039 (c) at PP. 15-16.

[16] Whatever decision was taken at the meeting of 30 July 2009, be it a decision de novo or a decision to ratify, and it would seem both may well have been taken, Applicant's constitution permitted the decision, and

Applicant was thus authorised to take it. The effect of the decision was to validate the legal proceedings.

[17] I note that whilst Respondent was of course entitled to attack the validity of Applicant's decision to launch these proceedings, and thereby attempt to prevent the merits of the application from being considered, its stance was formalistic, perhaps unnecessarily so. Such is contrary to the tenets of democratic and accountable municipal government, community involvement and civic intervention, tenets which resonate in the applicable municipal legislation, as appears from a consideration of the legal framework below. It ill behoves a Municipality in an era of participatory democracy characterised by increased standing especially in public interest litigation, to lightly challenge the standing of a ratepayer's association.

[18] As was said in Dalrymple and Others v Colonial Treasurer 1910 TS 372:

"Personally, I think that when an Act of Parliament creates a corporate council, provides for its election by the ratepayers, empowers it to raise monies in certain ways from the ratepayers, and to expend at only in certain channels and always for their benefit, then the council stands in a fiduciary relationship to the ratepayers, and the latter have an interest sufficiently direct to enable them to intervene when the statute has been violated."

[19] In Motaung v Mukubela and Another NNO: Motaung v Mothiba NO, 1975 (1) SA 618 (O) at 626 J-627 D Steyn J said:

"In considering whether there has been a material breach of the constitutional provisions of a voluntary association, a Court of law should not, however, view the matter as if under a strong magnifying glass and should not carpingly ferret out and unduly enlarge every minor deviation from the strict letter of the constitutional provision being examined. Much rather should it adopt a practical, commonsense approach to the matter, constantly bearing in mind that the persons called upon to administer such a constitution are usually laymen who are unversed in the ways of the law."

[20] The following remarks of Price, J. in Garment Workers' Union v De Vries and Others, 1949 (1) SA 1110 (W) at 1129 are also apposite:

'In considering questions concerning the administration of a lay society governed by rules, it seems to me that a Court must look at the matter broadly and benevolently and not in a carping, critical and narrow way. A Court should not lay down a standard of observance that would make it always unnecessarily difficult and sometimes impossible to carry out the constitution. I think that one should approach such enquiries as the present in a reasonable commonsense way, and not in the fault-finding spirit that would seek to exact the uttermost farthing of meticulous compliance with every trifling detail, however unimportant and unnecessary, of the constitution. If such a narrow and close attention to the rules of the constitution is demanded, a very large number of administrative acts done by lay bodies could be upset by the Courts. Such a state of affairs would be in the highest degree calamitous..

[21] In persisting with its attack on the constitutional validity of Applicant's decision to bring these proceedings, the Respondent, it could be said, carpingly ferreted out minor deviations in aiming at an interpretation that would render it impossible to carry out the Applicant's constitution. The attack has not succeeded. In view of all of the above I find that the Applicant had the requisite authority to bring these proceedings.

The Joinder Application

[22] Respondent opposes the application of Mrs Berta Hayes to be joined as Second Applicant in her capacity as a registered voter, taxpayer and resident within the area of jurisdiction of Applicant. It does so on the grounds that she cannot be joined in an application which is a nullity. Given my rejection of Respondent's argument that the proceedings were not properly authorised, her application for joinder must succeed.

Basis for application and legislative framework

[23] As aforementioned, the application is based on the alleged failure of the Respondent to comply with the peremptory provisions of three pieces of Municipal legislation, namely, The Local Government Municipal Financial Management Act No 56 of 2003 ("the MFMA"); the Local Government Municipal Systems Act No 32 of 2000 ("the Systems Act") and the Municipal Property Rates Act, no 6 of 2004 ("the MPRA").

[24] The central theme of these statutes is to ensure that municipalities exercise their powers to impose rates in a transparent and accountable way, taking into account the interests expressed by the local community. In so doing they track the constitutional imperatives as contained in Section 152 of the Constitution, which provides as follows:

"152 Objects of local government

(1) The objects of local government are-

(a) to provide democratic and accountable government for local communities;

(b) to ensure the provision of services to communities in a sustainable manner;

(c) to promote social and economic development;

(d) to promote a safe and healthy environment; and

(e)to encourage the involvement of communities and community organisations in the matters of local government.

(2) A municipality must strive, within its financial and administrative capacity, to achieve the object set out in subsection (1)."

[25] Section 2 of the MFMA provides as follows:

"Object of Act - The object of this Act is to secure sound and sustainable management of the fiscal and financial affairs of municipalities and municipal entities by establishing norms and standards and other requirements for-

(a) ensuring transparency, accountability and appropriate lines of responsibility in the fiscal and financial affairs of municipalities and municipal entities;

(b) the management of their revenues, expenditures, assets and liabilities and the handling of their financial dealings;..."

[26] The preamble of the MPRA states inter alia:

.................................

"AND WHEREAS it is essential the municipalities exercise their power to impose rates within a statutory framework that not only enhances certainty, uniformity and simplicity across the nation, but also takes into account historical imbalances and the rates burden on the poor." .

[27] Section 4 of the Systems Act provides as follows:

"4. Rights and duties of municipal councils

(1) ...

(2) The council of a municipality, within the municipality's financial and administrative capacity and having regard to practical considerations, has the duty to-

(a) exercise the municipality's executive and legislative authority and use the resources of the municipality in the best interests of the local community;

(b) provide, without favour or prejudice, democratic and accountable government;

(3) A municipality must in the exercise of its executive and legislative authority respect the rights of citizens and those of other persons protected by the Bill of

Rights."

[28] Applicant submits that Respondent failed to comply with a number of provisions of the abovementioned three Acts as follows:

28.1 The Respondent failed to adopt a draft resolution on the proposed rates and taxes at the tabling of the draft budget, 90 days before the start of the financial year, as required by section 17 (3) (a) (ii) of the Local Government Municipal Financial Management Act No 56 of 2003 ("the

MFMA");

28.2. The Respondent failed to advertise and invite representations on any draft resolution on the proposed rates and taxes on its website and public libraries, as required by Section 22 of the MFMA and Section 21 A of the Systems Act;

28.3. It did not advertise the adopted rates in the media as required by Section 14 (3) (b) of the MPRA;

28.4. Respondent failed to advertise the adopted tariffs in a newspaper of general circulation as required by Section 75 A (3) (b) of the Systems

Act;

28.5 Respondent did not comply with the requirements for public participation when adopting the rates and tariffs, as required by Sections 22 and 23 of the MFMA. In particular it failed to provide the first Applicant with information which was required to table the draft budget in terms of Section 17 of the MFMA and Section 75 of the MFMA.

I proceed to consider each of these allegations.

Respondent's alleged failure to adopt a draft resolution on proposed rates and taxes and to advertise and invite representations thereon.

[29] Section 17 (3) (a) (ii) of the MFMA provides as follows:

'(3) When an annual budget is tabled in terms of section 16(2), it must be accompanied by the following documents:

(a) Draft resolutions -

have been satisfactory in all respects and was criticised, especially in relation to the formulation of the draft resolution on the proposed rates, and advertisement thereof. Neither party therefore achieved outright success. In the circumstances, I am of the view that it would be just and equitable in the exercise of my discretion to make no order as to costs. I grant the following order

1. The Application is dismissed

2. There is no order as to costs

MEER, J

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