Sikunye Holdings (Pty) Ltd v Municipal Manager of Govan Mbeki Local Municipality and Another In re: Sikunye Holdings (Pty) Ltd v Govan Mbeki Local Municipality (959/2022; 3763/2018) [2022] ZAMPMHC 2 (22 March 2022)

IN THE HIGH COURT OF SOUTH AFRICA

MPUMALANGA DIVISION (MIDDELBURG LOCAL SEAT)

Case No: 959/2022

REPORTABLE: NO

OF INTEREST TO OTHER JUDGES: YES

REVISED

22/03/2022

In the matter between:

SIKUNYE HOLDINGS (PTY) LTD

Applicant

(Registration No: 2002/020995/07)

and

THE MUNICIPAL MANAGER OF GOVAN MBEKI

First Respondent

LOCAL MUNICIPALITY

GOVAN MBEKI LOCAL MUNICIPALITY

Second Respondent

IN RE:

Case No: 3763/2018

GOVAN MBEKI LOCAL MUNICIPALITY

Respondent

JUDGMENT

LANGA J:

Introduction

[1] In this application for contempt of court the applicant seeks an order in the following terms as set out in the Notice of Motion:

1. That this application be heard as an urgent application in terms of Rule 6(12) of the Uniform Rules of Court and that condonation be granted for the non-compliance with the prescribed time limits, forms and service of the Uniform Rules of Court and Practice on urgent applications;

2. That the first Respondent be found to be in contempt of orders 1, 2 and 4 of the court order issued by this court on 06 August 2021 (Langa AJ) under case number 3763/2018 (‘the Court Order’);

3. That the first respondent be committed to imprisonment for contempt of court for a period of 30 days or such period as the Court deems appropriate;

4. That prayer 3 above be suspended for a period of 6 months on condition that the First Respondent as aforementioned comply with the court order, and specifically orders 1, 2 and 4 thereof within 5 days from the date of the hearing of this application and the service of this order on the First respondent, alternatively another municipal official;

5. Should the First Respondent fail to comply with the court order, that the Applicant be allowed to approach the court, with papers duly supplemented, if necessary, to implement prayer 3 above;

6. In the alternative to prayers 1-5 above that:

7. It is declared that the first and second respondents are in breach of their constitutional obligations to adhere to and take all necessary steps to give effect to the court order, specifically orders 1, 2 and 4 thereof; and

8. That the first and second respondents are directed:

8.1.1 Within five days from the service of the order to take all necessary steps to give effect to the court order, specifically orders 1, 2 and 4 thereof; and to

8.1.2 Issue clearance certificates and/or clearance figures within 5 days 3from the date of service of this order reflecting a zero outstanding balance in respect of all municipal clearances requested for the transfer of all and any erven forming part of Erf 1948 Evander Township, Registration Division I.S Province.

9. That the second respondent be ordered to pay costs of this application on an attorney and client scale; and

10. Further and/or alternative relief.

[2] Although the Notice of Motion dated 03 March 2022 required the first and second respondents to file their opposition by 08 March 2022 at 14h00, the respondents only filed their notice to oppose on 11 March 2022 at 15h22. Subsequent to that the answering affidavit was filed on 14 March 2022 and was followed by the replying affidavit filed on 15 March 2022 at 08h21 by electronic mail.

The background facts

[3] The application is predicated on the court order dated 05 August 2021 in favour of the applicant. The applicant’s unchallenged contention is that the said court order was brought to the attention of the respondents by service thereof on Mr Zwelakhe Moyo, the legal advisor of the Municipal Manager, 07 September 2021. There is therefore no dispute concerning the question whether or not the respondents were aware of the order as the respondents confirm in their papers that they were aware of the existence of the relevant court order.

[4] For completeness and ease of record, paragraphs 1-5 of the said court order read as follows:

1. That the Respondent is not entitled to impose rates on the individual erven as per the township register opened in respect of the applicant’s property known as Portion 3 (a portion of Portion 2) of Erf 1948 Evander and that the respondent is only entitled, subject to compliance with the Local Government: Municipal Property Rates Act, Act 6 of 2004, (the MPRA), to value and categorise the remainder Property and to levy rates thereon;

2. That the Respondent, in issuing certificates in terms of section 118(1) of the Local Government: Municipal Systems Act, 32 of 2000 (the Systems Act), for the purpose of transfer of any individual erven referred to above, is only entitled to charge for rates on a pro rata basis calculated on the value and categorization placed on the Remainder Property, subject to compliance with the provisions of the MPRA;

3. That all municipal accounts opened in respect of the individual erven referred to above, should be closed by the Municipality and that the applicant is entitled to the repayment of all monies received by the Municipality from the applicant in respect of municipal accounts opened and invoices delivered for the individual erven referred to above and/or demands in terms of section 118 (1) of the Systems Act, which were made in respect of the individual erven referred to above;

4. That the Municipality is only entitled to levy charges for municipal water, electricity, refuse and sewerage, in respect of the individual erven as referred to above on a pro rata basis calculated on amounts due in respect of the Remainder Property in line with the City of Tshwane v Uniqon Wonings 2016 (2) SA 47 (SCA);

5. The respondent is ordered to pay the costs of the litigation on party and party scale, inclusive of the costs consequent upon the

employment of two counsel.

[5] On 08 October 2021 the Municipality ostensibly delivered an application for leave to appeal orders 3 and 5 of the above orders. No leave to appeal orders 1, 2 and 4 was sought by the respondents who indeed confirm that only orders 3 and 5 are challenged on appeal. Orders 1, 2 and 4 essentially deal with the nub of the matter in case 3763/2018, to wit, how the individual erven forming part of the Remainder Property in a township should be rated prior to their transfer from the Remainder Property to individual purchasers in line with the legal principles laid down in the City of Tshwane v Uniqon Wonings 2016 (2) SA 47 (SCA), (Uniqon Wonings case).

The applicant’s contentions

[6] The applicant correctly argues that by not appealing orders 1, 2 and 4, the respondents in effect accept the correctness of these legal principles espoused in these orders and in terms of which individual erven should be rated and the clearance figures calculated. Despite this factual position, the applicant now avers, in this application, that the Municipality is continuing to demand, contrary to the said court orders, clearance figures which are based on unlawful valuation

of individual erven as if such erven constitute separate rateable properties. The applicant alleges that exorbitant amounts are charged contrary to the orders and in violation of the principles enunciated in the Uniqon Wonings matter.

[7] These violations are said to have been committed during September to November 2021. The essence of the allegations is that instead of imposing rates and charges calculated on a pro rata basis on the value and categorization of the Remainder Property, and subject to compliance with the provisions of the MPRA, the respondents are rating the individual erven separately and individually as if not forming part of the Remainder property. The applicant contends that the clearance figures provided to it by the respondents were calculated on the basis of the market values allocated to the individual erven before the transfer thereof to individual purchasers or from the Remainder Property.

[8] The applicant maintains that these valuations, and consequent rates and taxes, were incorrect and in violation of the legal principles outlined in Uniqon Wonings matter as well as in the court order. The applicant contends therefore that this conduct by the respondents is not only unlawful but also prejudiced the applicant which has to date made payments in excess of R1.9 million to the second respondent on the basis of incorrect valuations and calculations made by the second respondent. The applicant avers that the conduct of the respondents therefore constitutes contempt of the court order of this court referred to in paragraph [3] above.

[9] After making this realization, the applicant states that on 20 January 2022 it addressed a comprehensive letter to the first respondent informing the Municipal Manager of the unlawful conduct of the second respondent and its failure to comply with the court order of 05 August 2021 referred to above. The letter gave the Municipal Manager 20 days to respond failing which the applicant would approach court for appropriate relief. Despite the letter having been served by the sheriff on the respondents, the applicant received no response.

The respondent’s contentions

[10] In its answering affidavit the respondents first challenge the application on the basis that it lacks the urgency and amounts to abuse of powers. The respondents further challenge the short notice and time frames in the urgent. The respondents contend that since the court order was made on 05 August 2021, there has been substantial engagement between the parties in order to comply with the said court order. The respondent however further allege that the applicant does not explain why it failed to launch this application despite having been aware of the existence thereof since 05 August 2021. They furthermore allege that the applicant fails to explain why after its letter of 20 January 2022 it failed to bring the court application as it threatened to do so 20 days after the receipt of the letter. The respondents consequently contend in this regard that there was a delay which warranted some explanation from the applicant and which the applicant failed to do. It is on this basis mainly that the respondents contend that the application should be dismissed wit costs due to lack of urgency.

[11] On the merits, the respondents seem to be arguing that the application was also malicious in bringing this application as the parties had already agreed to meet on 28 March 2022 at 10h00 to address, amongst others, the issues raised in this application. The respondents submit in this regard that the application is consequently pre-mature. They contend further that if it was urgent, the application should have been brought long before the agreement to meet was made.

[12] The respondents’ further criticism of the application is that it is pre-mature to conclude at this stage that the amounts charged are exorbitant and that the respondent therefore acted unlawfully and contrary to the principles for transfer of individual erven. The respondents, however, in the same breath maintain that the second respondent has substantially complied with the court order and that, in any event, the matter was still to be discussed and resolved amicably between the parties on 28 March 2022. The respondents contend that although there is an appeal pending in respect of the court order, there has however been substantial compliance with it and therefore reject the suggestion that they failed to comply with the court order in question.

[13] Furthermore the respondents aver that there is no factual basis for the conclusion that the second respondent is in violation of the legal principles involved as alleged by the applicant. They contend that there is no evidence to support the averment that they violated the legal principles and that the allegations of financial loss cannot be sustained as the amounts

alleged by the applicant have not been quantified. If the applicant did suffer financial loss as a result of the applicant’s

conduct, it is further contended, it must quantify the loss or damages in order to prove the case. It is further averred that the

applicant has failed to make out a case for prejudice resulting from financial loss due to the alleged unlawful conduct of the respondents and that if the applicant suffered financial loss, this cannot be resolved by way of an urgent application.

[14] Concerning the alleged non-compliance with the order, the respondent maintains that it has complied with the order, albeit partially, as it has launched an application for leave to appeal in respect of the balance of the orders, namely orders 3 and 5 of the judgment. The respondents also note that although there has been compliance, in their view, such compliance appears not to have been in accord with the method that the applicant believes should have been used. The respondents suggest that the envisaged meeting of the 28 March 2022 was aimed at resolving the misunderstanding on the calculation of the amounts involved. They, however, also strongly argue that since the applicant concedes in that the clearance certificates were indeed issued, albeit incorrect, it cannot therefore be argued that there was non-compliance with the order. The respondents therefore maintain that they were aware of the order, they complied therewith partially and that the applicant therefore failed to prove that there was

wilful and mala fide non-compliance with the order.

The issues for determination

[15] The crisp issue for determination is whether the applicant has proved beyond reasonable doubt that the respondents are in contempt of the court order as alleged by the applicant

The Legal principles

[16] In Fakie NO v CCII Systems (Pty) Ltd [2006] ZASCA 52; 2006 (4) SA 326 (SCA) the SCA held that civil contempt is an important tool to secure compliance with a court order and that wilful disobedience of a court order made in civil proceedings is a criminal offence. The court held further that the applicant in such motion proceedings must prove that an order was made by court, served (or notice given) on the respondent, that it was not complied with by the respondent and that the non-compliance was mala fide. It is only after these requirements have been proven that the respondent bears the onus to prove reasonable doubt that the non-compliance was not due to wilfulness or mala fides on its part. The court held further that a respondent can however still escape liability if the wilful disobedience was a result of his mistaken, but reasonable belief, that he was entitled to commit the act in question.

[17] In Matjhabeng Local Municipality v Eskom Holdings Ltd and Others 2018 (1) SA 1 (CC) the Constitutional Court referred with approval to Fakie supra, and stated the following:

[50] “It is important to note that it “is a crime unlawfully and intentionally to disobey a court order”. See also S v Beyers 1968 (3) SA 70 (A). The crime of contempt of court is said to be a “blunt instrument”. Meadow Glen Home Owners Association v City of Tshwane Metropolitan Municipality [2014] ZASCA 209; 2015 (2) SA 413 (SCA) (Meadow Glen) at paragraph 35. Because of this, “[w]ilful disobedience of an order made in civil proceedings is both contemptuous and a criminal offence”.

Simply put, all contempt of court, even civil contempt, may be punishable as a crime. The clarification is important because it

dispels any notion that the distinction between civil and criminal contempt of court is that the latter is a crime, and the former is not.

[51] In summation, the majority affirmed the availability of civil contempt, and that it passes constitutional muster in the form of a motion court application adapted to constitutional requirements. It stated that the respondent is not an accused person, but is entitled to analogous protections as are appropriate to motion proceedings. The majority held that an applicant in contempt proceedings must prove all the requisites of contempt beyond reasonable doubt. However, it stated that, “once the applicant has proved the order, service or notice, and non-compliance, the respondent bears an evidential burden in relation to wilfulness and mala fides”. See also S v Beyers 1968 (3) SA 70 (A); Meadow Glen Home Owners Association v City of Tshwane Metropolitan Municipality [2014] ZASCA 209; 2015 (2) SA 413 (SCA).

Discussion and evaluation

[18] Civil contempt is an important tool to secure compliance with a court order and that wilful disobedience of a court order made in civil proceedings is a criminal offence. Fakie NO v CCII Systems (Pty) Ltd. Contempt of court or wilful disobedience of a court order is a crime which violates the dignity of the court and that the objectives of the contempt proceedings are to vindicate the authority of court and to force the litigants to comply with court orders.

[19] While contempt of court is not an issue inter partes but an issue between the court and the party who failed to comply, it is, however, trite that for the first respondent to be held criminally liable it must be proven that it was aware of the order and failed to comply with the order. The applicant in this case is therefore required to prove that the respondents have made unlawful and incorrect calculation of the rates and charges on the property in question in violation of the court order. It is clear from the established principles that the required standard for contempt of court is proof beyond reasonable doubt. As stated above, the respondents are not challenging the existence of the order, or that they were aware thereof. The respondents, however, still deny the contravention of the order.

Violation of court order

[20] The objective of the contempt order is the vindication of the court’s honour resulting from the disregard of its order and most importantly to compel performance by the guilty party with the order. The applicant avers that since the court order was granted, the Municipality Manager has blatantly failed or refused to adhere thereto and the applicant is as a result unable to perform its duties in respect of the sale agreement entered into it between it and the prospective purchasers. It further points out that should the said agreements be cancelled; the applicant will be liable for estate agent’s commissions as well as damages that may be suffered by the purchasers as a result of the respondents conduct or failure to perform.

[21] The applicant avers that during September to November 2021 it requested the respondents, as it is entitled to in terms of section 118 (1) of the Local Government: Municipal Systems Act, 32 of 2000, to provide it with clearance figures in respect of specific portions (Portions 35, 55, 117, 98 and 144) forming part of the Remainder

Property. The Municipality provided the requested clearance figures in respect of the said portions as appears from annexures A6, A7, A8, A9 and A10 of the applicant’s founding affidavit in this application.

[22] The applicant contends that it is evident from these attachments that the respondents have still not complied with the court order, in particular order 2 and 4, in the calculation of the rates and charges to be imposed. It contends that the Municipality failed to impose the rates and other charges on a pro rata basis on the value and categorization placed on the Remainder Property and also in line with the Municipal Property Rates Act, Act 6 of 2004. The applicant’s contention is supported by the respondent’s clearance certificates provided to the applicant. For instance, the clearance in respect of Portion 35 shows that this erf was rated as individually and not as a pro rata portion due in respect of the Remainder Property. The clearance amount charged for this portion is R523 056.41 despite the fact that the Portion itself, measuring 104 square meters, was put up for sale for R272 368. 42. This clearance amount provided by the respondent in respect of Portion 35 is almost double the amount of the purchase price and cannot be correct particularly when the principles laid down in Uniqon Wonings matter are taken into account. The rest of the clearances also show a similar trend followed by the respondents in the calculation of taxes and charges.

[23] The approach followed by the Municipality is not in conformity with the principles laid down in Uniqon Wonings above and accordingly not in compliance with the court order. The respondents have failed to discharge the onus to prove beyond reasonable doubt that the non-compliance was not due to wilfulness or mala fides on its part. Despite stating that a meeting to resolve the issues was in the pipeline, the respondent has not established that disobedience of the court order was a result of a mistaken, but reasonable belief, that it was entitled to calculate the rates and other charges as it did. The respondents cannot therefore escape liability and censure.

[24] The Municipality’s conduct is therefore found to be unlawful. In terms of the established legal principles, once a township register is opened, as is the case in this instance, the property as a whole should be considered and each and every individual erf transferred out of the Remainder Property should pay pro rata on the basis of the value and category of the Remainder as determined by the relevant general valuation roll of supplementary roll

applicable.

[25] It is evident that in this case the respondents, in determining the clearance figures, regarded and dealt with the individual erven still forming part of the Remainder as separate properties whereas in terms of the Municipal Property Rates Act, Act 6 of 2004, they were not to be valued and categorized as separate properties until they have been transferred out of the Remainder. The Municipality also opened Municipal accounts in the names of the applicant in respect of these individual erven while the applicant was the owner of the Remainder property and not individual erven. This resulted in the incorrect rates which were calculated on the basis of incorrect valuations done on individual properties. The clearance figures provided were also

inevitably incorrect as they too were based on incorrect valuations.

[26] The conduct of the Municipality resulted in the applicant being excessively charged with the valuations reflected on the general valuation roll being higher than the Remainder Property itself. From the proven and accepted facts, the court has to find in favour of the applicant that by ignoring the court order, the Municipality’s conduct is in contempt of the court order and therefore unlawful. The court order was in the first place meant to remedy this same malady the respondents are guilty of. The respondent’s conduct warrants censure by the court in order to enforce compliance with the

court order and also to vindicate its respect and integrity as stated in the Fakie NO v CCII Systems (Pty) Ltd case above.

[27] Regarding costs, the applicant having being successful, the second respondent should bear the costs of the application. The court having found that the respondents were indeed in contempt of court, I am of the therefore of the considered view that a costs order on an attorney and client scale is appropriate in this matter.

Order

[28] In the light of the above I make the following order:

1. The first respondent is found to be in contempt of orders 1, 2 and 4 of the court order made by this court on 05 August 2021 under case number 3763/2018;

2. The first respondent is committed to imprisonment for contempt of Court for a period of 30 days;

3. The order in paragraph 3 above is suspended for a period of 6 months on condition that the first respondent complies with the court order mentioned in paragraph 1 above, specifically paragraphs 1, 2 and 4 thereof within a period of 5 days from the date of this order and service thereof on the first respondent, or another municipal official, by the issuing of the clearance certificates and/or figure’s reflecting a zero outstanding balance in respect of all municipal clearances requested for the transfer of all and any erven forming part of Portion 3 of ERF 1948 Evander Township, Registration Division I.S Province up until such time as the respondents have complied with the provisions of the Municipal Property Rates Act, Act 6 of 2004, read together with the principles enunciated in the City of Tshwane v Uniqon Wonings 2016 (2) SA 47 (SCA);

4. Should the first respondent fail to comply with the court order, the applicant is allowed to approach this court, with papaers duly supplemented, if necessary, to implement prayer 3 above;

5. The second respondnet is ordered to pay the costs of this application on an attorney and client scale, including the costs consequent upon the employment of two counsel.

MBG LANGA

JUDGE OF THE HIGH COURT

Appearances:

Counsel for the Applicant: Advocate T Strydom SC, with Advocate L Kotze

Instructed by:

Jaques Classen Attorneys, Lynwood, Pretoria.

Counsel for the Respondent: Advocate SS Masina

Instructed by:

JL Raphiri Attorneys Incorporated, Brooklyn, Pretoria.

Dates heard:

15 March 2022

Date of Judgment:

22 March 2022

This judgment was handed down electronically by circulation to the parties’ representatives by email. The date for hand-down is deemed to be the 22 March 2022 at 10h00.