The Ingonyama Trust (“the Trust“) took over ownership of various land that had been held, prior to 1994, by the Government of KwaZulu Natal “for the benefit, material welfare and social-well-being of the [designated] tribes and communities“.  The question before the Constitutional Court is whether the Rating of State Property Act 79 of 1984 (“the Rating Act“), which exempts “State property…held by the State in trust for inhabitants of the area of jurisdiction of a local municipality” from paying rates to any local authority, applies to this land.  In other words, whether the Ingonyama Trust can be considered “the State” for the purposes of the Ratings Act.

As a preliminary point though, the Constitutional Court considered the lateness of the eThekwini Municipality’s (“the Municipality’s“) application for leave to appeal.  The SCA delivered its judgment on 1 June 2012, but the Municipality’s application for leave to appeal was lodged on 28 August 2012, more than two months late.

The Constitutional Court, in a unanimous judgment authored by Justice Jafta, considered the application primarily as a procedural one.  The Constitutional Court decided whether it should accept the Municipality’s application for condonation of the late filing.  It did so considering two elements, first whether there was an acceptable justification put forward for the late filing; and second, whether it was in the interests of justice in the circumstances to grant condonation.

On the first ground the Constitutional Court took a hard line toward compliance, particularly in view of the large number of litigants who are apparently not complying with its rules, and stated:

The conduct of litigants in failing to observe Rules of this Court is unfortunate and should be brought to a halt. This term alone, in eight of the 13 matters set down for hearing, litigants failed to comply with the time limits in the Rules and directions issued by the Chief Justice. It is unacceptable that this is the position in spite of the warning issued by this Court in the past.

The statistics referred to above illustrate that the caution was not heeded. The Court cannot continue issuing warnings that are disregarded by litigants. It must find a way of bringing this unacceptable behaviour to a stop. One way that readily presents itself is for the Court to require proper compliance with the Rules and refuse condonation where these requirements are not met. Compliance must be demanded even in relation to Rules regulating applications for condonation.

The Constitutional Court then considered the reason put forward by the Municipality for the delay and found it unsatisfactory.  The reason put forward by the Municipal Manager was that the he had decided to seek approval from the Municipal Council to lodge the application for leave, but the Municipal Council was in recess. However, in the Municipal Mananger’s own affidavit, he contradicted this version stating he had decided to get the approval (even though he had legal advice that he did not require approval) from the Executive Committee of the Municipality, and thus the recess of the Municipal Council was irrelevant. In addition, the Constitutional Court noted that approval was granted on 8 August 2012 by the Council but there was no explanation of the further delay until 28 August 2012. 

On this ground alone, the Constitutional Court found the Municipality had failed to justify its non-compliance with the time limits.

Nevertheless, the Constitutional Court went on to consider the second leg of the test for condonation, which the Court mentioned is also necessary to grant an application for leave to appeal, and that is whether there are prospects of success in the main application.

At this point, the Court considered the argument that the main aspect of the case before the SCA was whether the Trust was effectively “the State” under the Rating Act, and hence land held by it was not rateable.

The SCA noted that “The State as a concept does not have a universal meaning. Its precise meaning always depends on the context within it is used.” (Holeni v Land and Agricultural Development Bank of South Africa 2009 (4) SA 437 (SCA) at para 11).  It went on to endorse the statement in Greater Johannesburg Metropolitan Council v Eskom 2000 (1) SA 866 (SCA) at para 15 that “In its ordinary meaning for the purposes of domestic law the word [the State] is frequently used to include all institutions which are collectively concerned with the management of public affairs unless the contrary intention appears.

The SCA considered the statutes that establish the Trust (the KwaZulu Ingonyama Trust Act 3KZ of 1994, as amended by the KwaZulu Ingonyama Trust Amendment Act 9 of 1997, collectively “the Trust Act“) to determine whether the Ingonyama Trust met this definition.  The Trust Act provides that eight of the nine trustees were appointed by a Minister, and the Department of Land Affairs is required to bear of the cost of the administration of the Trust’s board.  The Minister may also make regulations regarding various matters relating to the functioning of the Board, and the Minister did so, requiring amongst other things that the financial records of the Trust must be audited by the Auditor-General, and that the accounting authority of the Trust must report to the Minister annually.  In addition, the Trust Act provided that Trust land would be subject to any national land reform programme, and that land had been transferred from the Government of KwaZulu to the Trust without any transfers duties or other fees or charges.

The Constitutional Court, in essence, agreed with the SCA, finding simply that Municipality “exercises power and performs functions in terms of legislation“, and therefore meets the definition of organ of state in section 239 of the Constitution. In addition, the Constitutional Court held the land in question was indeed held for the benefit of inhabitants of the Municipality and that the SCA was correct in finding that the land was not rateable.=

On this basis the Court found the Municipality had no prospects of success in the application for leave to appeal.

Finally, the Constitutional Court commented that it “would not ordinarily be in the interests of justice for a municipality to be allowed to levy rates on immovable property, dating back eight to 17 years, without any explanation for its failure to do so within the relevant financial years.”

The Municipality’s applications for condonation and leave to appeal were therefore dismissed.

Download the judgment here.