NATIONAL ASSEMBLY - PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE

in re:

LOCAL GOVERNMENT LAWS AMENDMENT BILL, 2002 ("THE BILL")

BY: MICHAEL EVANS OF MALLINICKS INC. ON BEHALF OF THE CITY OF CAPE TOWN

DATE :15 OCTOBER 2002

ORAL SUBMISSIONS

1
INTRODUCTION

Thank you very much for this opportunity to address your Committee on behalf of the City of Cape Town. I have been mandated to speak only on clause 23 of the Bill which amends section 93 of the Local Government: Municipal Structures Act, 1998 ("the Structures Act"), and which deals exclusively with the valuation of properties.

I intend being very brief in my submissions and will deal only with four preliminary points and three more substantive recommendations.

2. PRELIMINARY POINTS

2.1 This Portfolio Committee and the National Assembly have already committed themselves to amending the Structures Act on the basis set out in clause 23 of the Bill. In this regard the City of Cape Town is extremely grateful for the constructive and expeditious manner in which this Committee has dealt with the issues raised by the City over the course of the past few months.

2.2
I must also stress that, notwithstanding the changes that are happening in the City as far as political control is concerned, l have been mandated by a committee within the City of Cape Town on which all parties have been represented. My representations over the past few months, and my submissions today, accordingly have the support of all the major political parties represented on the Council of the City.

2.3
Although clause 23 of the Bill deals with highly technical and complex matters relating to the valuation of properties, the significance of the proposed amendments cannot be overstated. In particular, if the proposed new section 93(7) is not passed, all valuations carried out in the Western Cape, the Northern Cape and the Eastern Cape (excluding the old Transkei and Ciskei) in the period since mid-1994, will be invalid. Such a situation would have dramatic consequences for municipalities in all three Provinces. In effect every ratepayer would have an unanswerable legal basis to challenge the valuation of his/her property. The financial consequences of this for all municipalities hardly need to be spelt out.

2.4
At the meeting of this Portfolio Committee on 25 September 2002, when the draft Bill was introduced, a representative of the Rates Action Group indicated that the City had been aware of the problems for well over a year, and had done nothing to address them. This contention requires a response:-

(a) The major problem which clause 23 seeks to address concerns the fact that the Property Valuation Ordinance, 1993 (Cape), did not continue in force upon the commencement of the Interim Constitution on 27 April 1994. This problem was first detected by the provincial government of the Western Cape in late May of this year. The provincial government immediately contacted the City of Cape Town and at that stage I was briefed to deal with the issue. There is no indication of any other person having been aware of the problem at that stage; indeed, in the court application lodged by the Rates Action Group on 27 May 2002, the issue was neither raised nor alluded to.

The first time that this fundamental concern entered the public arena was when I appeared before this Committee on 19 June 2002, accompanied by Councillor Saleem Mowzer and Alderman Maatjie

ElIman, and addressed this Committee on the problems which have now been dealt with in clause 23. In the three weeks prior thereto, the City of Cape Town formally raised their concerns with the Minister of Provincial and Local Government and the Chairperson of this Committee, and in addition prepared and submitted two memoranda, the second of which was distributed at the meeting on 19 June 2002.

To suggest that the City has been tardy is disingenuous. Since becoming aware of the problem the City has done everything in its power to ensure that the problems detected by it in discussions with the Province are properly addressed.

(b) It is correct that the other matter addressed by clause 23 of the Bill concerning the naming of municipalities [the proposed new section 93(8)] has been publicly aired for a period of more than a year, having first been raised by counsel briefed by the City when they were asked to conduct a legal audit of the general valuation process undertaken by the City. The delay in dealing with this more minor issue is, however, not the consequence of any tardiness on the part of the City. Rather, it resulted largely from the fact that there was for a period of time extensive debate between the national and provincial spheres of government as to which sphere had the necessary legal authority to address the issue.

3. SUBSTANTIVE ISSUES

The City of Cape Town fully supports this Committee's endeavours reflected in clause 23 of the Bill. However, having considered the wording and having discussed the draft with senior and junior counsel representing the City in proceedings launched both by the Rates Action Group and by two ratepayers, Anita and Guy Robertson, the City respectfully makes the following suggestions:-

3.1
In order to leave no room for doubt, it is suggested that express provision be made in the Bill to the effect that it applies to pending litigation. There is authority from the highest Courts in this country and from other jurisdictions such as India, Canada and the United States of America, that retrospective legislation can validly impact on pending litigation.

I have given the Department of Provincial and Local Government the necessary references to judgements handed down in the Cape High Court, the Supreme Court of Appeal and in foreign jurisdictions, all of which unanimously confirm that, except in certain instances in the case of criminal laws, it is permissible to pass retrospective legislation impacting on pending litigation.

In my view, and in the view of senior and junior counsel, a provision in clause 23 specifying that it applies to pending litigation will not be open to constitutional challenge for three reasons:-

(a) the mischief which clause 23 addresses is a highly technical deficiency arising from the wording and effect of the transitional provisions of the Interim Constitution;

(b) as I have already pointed out, no one knew about the deficiency in the legislation until late May of this year when it was detected by the provincial government, and no member of the public appears to have been aware of it until I addressed this Committee on 19 June of this year;

(c) neither the litigants in court applications against the City (the Rates Action Group and the Robertsons) nor anyone else can claim to have conformed their conduct in accordance with the inapplicability of the Property Valuation Ordinance arising from the deficiency. In other words, they all conducted themselves on the understandable assumption that the Ordinance was valid.

3.2
Secondly, and concerning the proposed new section 93(8) of the Structures Act, the City of Cape Town has suggested certain amendments to the wording. I understand that your Committee will be considering the wording of the Bill on a clause-by-clause basis over the next few days, so I do not intend to set out at this stage the City's proposals in detail. I will, however, make available to the Department both the City's suggested amendments and the motivation therefor.

3.3
Thirdly, the City suggests that a new paragraph be added to clause 23 which expressly provides for municipalities, when imposing property rates, to use the valuations appearing on a provisional valuation roll or an additional valuation roll. The reasons for this are based largely on the inapplicability to final phase municipalities of certain provisions of the Municipal Ordinance (Cape), 1974, an old order provincial ordinance which once again impacts on all municipalities in the Northern Cape, the Western Cape and most of the Eastern Cape. Once again, the motivation for this proposal will be made available to the Department for discussion by your Committee over the next few days.
4 CONCLUSION

The City thanks you once again for the manner in which you have dealt with its concerns. If in the course of your further deliberations you require any further input from the City or from me, I am naturally willing to be of assistance and, if necessary, to attend any further meetings at short notice.