‘The public participation process was undoubtedly a sham process’ – high court.
The City of Johannesburg (CoJ) municipal property rates by-law and property rates policy for 2023/24 have been declared unconstitutional and invalid regarding the rating and categorisation of all educational institutions.
In a judgment handed down in the High Court in Johannesburg, Judge Phanuel Mudau said the steps taken by the CoJ did not meet the requirements for effective public participation in the budget process.
“The public participation process was undoubtedly a sham process.
“To this end, the city is guilty of dereliction of their duty towards the public and have been poor stewards of the trust reposed in them,” he said.
Mudau’s judgment applies to all educational institutions, whether public or private, including schools, pre-schools, early childhood development centres, further education and training colleges, and universities.
It follows four separate applications lodged to review the policy, which were consolidated for the purpose of a joint hearing by the court.
The review applications were brought by JSE-listed ADvTech and Curro Holdings, the Independent Institute of Education (Pty) Ltd, the Independent Schools Association of Southern Africa (Isasa), the trustees for the time being of the Sparrow Schools Educational Trust, Bellavista School, City Kidz Pre & Primary School, and AfriForum.
The applications cited a number of respondents, but only the CoJ opposed the applications.
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Rates policy change
The policy, adopted by the CoJ on 14 June 2024, would have resulted in astronomical rate increases for educational institutions, particularly privately owned ones.
Moneyweb reported in June 2022 that CoJ approved a change in its rates policy to remove the “education” category, which is taxed at 0.25% of the rate for residential properties.
This meant public schools would be taxed as “Public Service Purpose” properties and have to pay 1.5 times the amounts paid by residential property owners, while private schools would be rated as businesses at 2.5 times the residential rate.
It was reported at the time that a private school valued at about R70.5 million that had been paying about R12 000 per month in the previous financial year would have to pay more than R126 000 per month when classified as a business.
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What the judge ordered
Judge Mudau set aside the rating and categorisation of all educational institutions and the phasing in of the property rates over four years from 2023/24 to 2026/27.
He further ordered the CoJ to comply with the provisions of the Municipal Systems Act, Municipal Finance Management Act, and Municipal Property Rates Act (MPRA), with specific regard to community participation, before tabling, adopting, and promulgating a new or amended rates policy and property rates by-law addressing the future categorisation of public and independent schools.
In addition, the CoJ must request input and/or comments from the applicants, the respondents in all these cases, and all affected independent schools providing basic education in the CoJ’s local community before adopting and promulgating the amended rates policy and property rates by-law concerning the future categorisation of public and independent schools.
Mudau also directed the CoJ to levy the tariff ratio and rate tariff applicable to properties included in the “education” category of rateable property prescribed in the 2023/24 municipal rates policy and by-law according to the annual inflationary increases applied in the 2022/23 financial year (4.85%) and in the 2023/24 financial year (2%).
He ordered the costs of all the applications to be paid by the CoJ.
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‘CoJ is wrong’
The CoJ claimed the review of the 2023/24 rates policy has been rendered moot by its rates policy that came into effect on 1 July 2024, adding the rates policy is part of the city’s budget that lasts for one financial year.
Judge Mudau said the CoJ is wrong, adding it is not correct that there is no longer a live controversy between the parties, nor is it correct that the constitutionality of the city’s 2023/24 rates policy has been rendered academic or hypothetical and of no direct, practical effect on the parties.
He said the applicants pointed out the city has charged and collected rates from its ratepayers based on what they allege is its unconstitutional and unlawful rates policy.
“In the event of a declaration in the applicants’ favour, this is an ongoing wrong which continues to exist even after the lapse of the city’s financial year,” he said.
“Significantly, the city’s 2023/2024 rates policy clearly provides that the property rates on properties zoned and used for educational purposes but privately owned under the category of ‘Business and Commercial’ will be phased in over a period of four years.”
The Independent Institute of Education claimed that the nature or identity of the property owner is not a lawful criterion that the city may use to categorise properties or differentiate between categories of properties.
By adding the criteria of “but privately owned”, the city has unlawfully levied rates against the person or identity of the applicants as profit companies rather than against their property and the use to which such property is put, which is contrary to the MPRA, it said.
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City should have considered the best interests of learners
Judge Mudau accepted that the city, during the budget preparation process, took steps to facilitate public meetings during which the Integrated Development Plan review and budget were considered.
However, he said it is “a matter of great concern” that the city hardly set out any relevant facts relating to its conduct on such an important matter with constitutional ramifications, such as the best interests of children.
Mudau said it was incumbent upon the city to consider what would be in the best interests of learners at independent schools and ensure the parents and learners were particularly heard before the city recategorised private educational properties as “business and commercial”.
He said the applicants who attended the meetings were effectively ignored as their questions were deferred.
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“Further, the opportunity for adequate public participation in this instance was unreasonable consideration being had to objective facts … given the intensity of the impact on the public by the changes, particularly from poor communities in the inner city.
“This against the background that the state has not opened a new public school in the Johannesburg CBD in the last 30 years or so, despite the substantial increase in the inner-city population,” he said.
Mudau said the unaffordability of fees on account of the increased rates following the new categorisation of private educational properties is bound to have a negative impact on access to basic education, given the notoriously constrained capacity of public schools across the city.
He said the city failed to consider the best interests of the children attending independent schools when it decided to recategorise private educational properties and consequently breached the Constitution, which guarantees everyone the right to basic education.
The Constitution further obliges the state, including the city, to take reasonable measures to make further education progressively available and accessible, he said.
This article was republished from Moneyweb. Read the original here.
