It has taken four years and R3m for the Greater Kokstad Municipality ratepayers and local businesses to win a court battle over the ‘ridiculous’ rates increase imposed in 2019/2020.

The Pietermaritzburg High Court on Thursday handed down a judgment declaring the municipality’s rates increase for that particular financial year unlawful.

The ratepayers and businesses approached the courts seeking an order to set aside the decision of the municipality to approve the municipal budget for 2019/2020 with effect from July 1, 2019.

The order sought was based on procedural and substantive irrationality in that the municipality failed to comply with its constitutional and statutory obligations in relations to its consideration and adoption of its 2019/2020 budget.

Court finds budget unlawful

The ratepayers also applied for the declarations of unlawfulness of the budget, and the suspension of the declarations of unlawfulness for a period of three months to enable the municipality to comply with its constitutional and statutory obligations in relation to an amendment to the budget.

According to the judgment, the municipality introduced a new valuation roll with effect from July 1, 2018, thus increasing the total value of properties in the Kokstad municipal area by almost 173%, from R4,2b to R11,5b.

This resulted in ‘dramatic increases in rates and taxes’ payable by property owners.

Ridiculous rates

Despite the municipality adjusting the rates payable by ratepayers, the net amount payable by each ratepayer was above the projected inflation rate of 5,6% per annum.

This rate shock was not addressed in the 2018/2019 budget.

The adjusted rates had a dramatic increase from R94m to about R140m, which translates to an increase of almost 50%.

The attempts to ameliorate the rates shock extended to the inclusion of the relevant local government stakeholders.

The parties held meetings on May 20 and 21, 2019, where the municipal CFO promised that the rates issue would be addressed by reducing the projected rates income to about six percent, with projected increases of six percent annually for subsequent years.

The ratepayers accepted the adjustments but, on May 29, of the same year the municipality approved a budget with a further increase in rates income for the year 2019/2020.

This was accompanied with extended early payment discounts of 10% and 15%.

Court proceedings

The legal team for the ratepayers argued that the municipality’s decision was irrational and has resulted in the Kokstad ratepayers paying exorbitant and unjustifiably high rates on an unjustifiably and irrationally differentiating basis.

Commercial properties saw rates increases ranging from 100% to 400%.

The court ordered the municipality to comply with its constitutional obligations in future budget determination.

The court further declared the 2019/2020 adopted budget unlawful.

The municipality was directed to file a report in three months, detailing the amounts that it budgeted to recover and managed to recover from the ratepayers in the 2018/2019 and 2019/2020 financial years.

It must also detail the amounts it over-collected during the same financial years.

Once these are filed at the court, the ratepayers may file their responding affidavits within 20 days of the municipal report being filed.

The parties may set the matter down for further hearing or directives once the report and responding papers have been filed.

Traumatic experience for residents

Spokesperson for the ratepayers, Rudolf Erasmus, says this has been a traumatic experience for Kokstad residents.

He says the judgment is a victory for all ratepayers and businesses in the country.

The legacy of the previous mayor and his management team will be that of the biggest rates crises in the history of Kokstad, as well as hindering development, growth and job creation.
The Kokstad Chamber of Commerce, Kokstad Farmers Association, Franklin Farmers Association and the Kokstad Ratepayers Association have just been ignored (on numerous occasions) in all their attempts to try and normalise the situation.

He says the 2019/20 budget was approved without all the objections raised by the community tabled to council being attended to.

Kokstad municipal manager Sipho Zwane and mayor Lwanda Madikizela could not be reached for comment.