ZETDC (Pvt) Ltd v Bindura Rural District Council & 59 Ors (HC 9485 of 2011) [2015] ZWHHC 102 (3 January 2015)

1 HH 102-15 HC 9485/11 ZIMBABWE ELECTRICITY TRAMSMISSION AND DISRIBUTION COMPANY (PVT) LTD versus BINDURA RURAL DISTRICT COUNCIL and 59 OTHERS HIGH COURT OF ZIMBABWE DUBE J HARARE, 3 October 2014, 4 Jan 2015 Opposed Application Advocate T. Mpofu, for the applicant Advocate L Mazonde, for the 13th respondent W Chagwiza, for the 56th7 & 54th respondents Adv Woods, for the 34th respondent Mr Warara, for the 1st, 6th, 8th, 9th, 11th, 28th, 31st, 41st, 45th, 46th, 47th, respondents DUBE J: This is an application for a declaratory order. The applicant is ZETDC Company (Pvt) Ltd, a corporate body whose mandate is the transmission of electricity in Zimbabwe. The respondents are the 60 rural district councils dotted across Zimbabwe. Applicant is in the business of transmission and distribution of electricity services. The applicant has various transmission lines that cut across the length and breadth of the country. It also has various substations located across the country. Some of these lines and substations are located in the areas that fall under the jurisdiction of the respondent rural district councils. The rural district councils charge applicant a ‘unit tax’ or ‘way leave tax’ and a ‘development levy’ in consequence of the applicant’s transmission lines and substations that pass through or are in the various areas of the district councils concerned. The charges range from $20 000-00 to $50 000-00. The applicant avers that the charges levied against it are unsustainable and constitute a threat to applicant’s ability to service the country and are arbitrary and have no lawful foundation. All the 60 councils have been joined in one application. The applicant submitted that it is convenient that the court hears one application rather than sit over 60 appeals or various issues arising out of the same issue from the various HH 102-15 HC 9485/11 rural district councils. It maintains that the declaration will assist the parties in the future and settle a cogent and topical issue. At the hearing of this matter, Advocate Mpofu raised concern over the taxes being levied against the applicant which include unit taxes, and way leave charges and a land development levy. He submitted that the taxes cannot be competently charged as they do not apply to the applicant. He contended that if the taxes are being charged, the question of their legality arises. He urged the court if it finds that the charging is unlawful, to grant the declaratur. Advocate Mpofu then proceeded to demonstrate that the taxes are actually being charged. He drew the court’s attention to para 6 (e) of the thirteenth respondent’s affidavit where it accepts that way leave charges are being levied by the respondent council. In para 6 (a) and 7 (a) the thirteenth respondent also accepts that it charges a development levy. The eleventh respondent in para 8 of its opposing affidavit concedes charging unit taxes for each unit of land. The forty-second respondent in para 14, accepts that it charges unit tax. In para 15 it accepts that it charges way leave charges. The thirty-fourth respondent in para 14 of its opposing affidavit concedes that the respondents charges a specified business levy which is a land development levy. In para 15 it concedes that it charges way leave charges. The fifty-sixth respondent in para 11.2 admits to charging way leave charges. Advocate Mpofu submitted that all these charges are not lawful. He submitted that unit tax can only be charged on A1 and A2 farmers as set out in s 97 A of the Rural District Councils Act [Chapter 29;13], hereinafter referred to as the Act. The applicant contended that unit tax cannot be charged on the applicant. He also submitted that way leave charges are not supported. That the Act does not give the respondent the power to charge way leave charges. Advocate Mpofu conceded that the land development tax is charged on a person carrying on a specified business or owners of rural land. He contended however that the term specified business as set out under s 95 excludes applicant’s business. That the land development levy is unlawful and cannot be levied on the applicant. The applicant contends that the levying of the taxes is unlawful and must be declared so. The terms of the order sought are as follows:- HH 102-15 HC 9485/11 TERMS OF THE ORDER SOUGHT “IT IS DECLARED THAT 1.1 The levying by the respondents on applicant of “Unit Tax” and “Way Leave charges” is outside the provisions of the Rural District Councils Act or any other law and is therefore unlawful. FURTHER THAT 1.2 Respondents can only lawfully charge such tax or levies as is set out under the provisions of the Rural District Councils Act or any other law for the time being in force in the republic and have no power to raise any charges which are not supported by any statutory provision. IT IS CONSEQUENTLY ORDERED THAT a. Any tax or levies charged by respondent and which have not been the subject of a judicial determination are unlawful and cannot be enforced in any court of law b. Respondents shall jointly and severally, the one paying the others to be absolved meet the costs of this application.” The following respondents defended the application, the first, eighth, ninth, eleventh, twenty-eighth, thirty-first, thirty-eighth, fortieth, forty-fifth, forty-seventh, thirteenth and thirty-forth. The first 10 respondents were represented by Mr Warara, whilst the thirteenth respondent was represented by Advocate Mazonde, Advocate Wood, represented the thirty-fourth respondent whilst Mr Chagwiza represented the fifty-sixth and fifty-fourth respondents. Mr Warara acknowledged that his client charges way leave charges. He submitted that way leave charges are not a tax and that not every charge raised by the respondent is a tax. He referred the court to s 76 of the Rural and Urban Planning Act for the proposition. He argued that s 76 is wide and does not restrict charges to taxes. That councils can impose once off charges. He contended that way leave charges are raised after a service has been rendered and that it cannot be a tax and that way leave charges are a once off charge. Mr Warara further submitted that the land development levy charged is a tax which is charged on any allottee of rural land for a specified business in terms of s 95. That the charge is raised for a permit. He submitted that the permit charge for a power station is a once off payment. He conceded that a unit tax is a charge for a specific piece of agricultural land HH 102-15 HC 9485/11 and is reserved for farmers. He contended that the applicant is not being charged unit tax by his clients and that the applicant has not shown that it is paying unit tax. Advocate Mazonde stood by his heads and adopted the submissions of Mr Warara. He briefly submitted that the hardship related to the excessiveness of the charges and taxes allegedly charged that the applicant complains about, has no place in tax law. He conceded that his client charges way leave charges as a once off payment. Mr Chagwiza representing the fifty-sixth did not make any oral submissions and elected to associate himself with the arguments of Advocate Mazonde and Mr Warara. Advocate Wood took up a number of preliminary issues. She objected to the joinder of the 60 rural district councils in one application. The respondent contended that bringing a joint action is confusing. That it is inappropriate to lump together councils with different offences and have a blanket order against them. She submitted that the thirty-fourth respondent as well as councils represented by Mr Warara deny charging unit tax. She contended that there is a dispute of fact that arises on the papers on the basis that some councils were not charging the charges or levies in issue. Counsel also submitted that there are many unit taxes such as, special unit tax, land development levy charged under s 96 and another unit tax chargeable under the third Schedule. Another tax is charged per unit and then supplementary charges under s 89 (3) (g) and 589 (4) (e). She argued that applicant has failed to tell the court why it is required to pay for these taxes which concern urban land and rural land to which different considerations apply. She called upon the court to investigate into each council, and determine what it is charging and what it is called, its nature and where the land in question is situated. She maintained that this was a misjoinder as there is no unanimity. That the more the respondents there are the more confusion. Advocate Wood’s contented that the draft order which deals with unit charges and a development charge cannot be granted without the court being satisfied that every respondent council is charging those taxes. That as some of the respondents are not charging those taxes, the court can have an order dismissing the claim against a council not charging the particular tax. That it was inappropriate to lump together councils with different offences and seek a blanket order against them. She gave an example of the thirty-fourth respondent which denies charging unit tax and councils represented by Mr Warara which denied charging unit tax. Counsel submitted that para 1 of the draft order deals with unit charges and way leave charges. Development charges come in another paragraph. She urged the court not to grant HH 102-15 HC 9485/11 the order sought without being satisfied that every other council is charging these taxes. She urged the court to dismiss the claim against a council if it is shown that it is not charging a particular tax. Advocate Wood also submitted that the applicant’s allegation that the councils’ charges are unlawful and excessive is misplaced as this is not a review. She submitted that there is no point of seeking a declaratory order when some cases that have already resolved the dispute. She contended that this application won’t overturn the orders already granted against the applicant. That is not an appeal. She insisted that the preliminary points raised dispose of the application and urged the court to dismiss the application. On the merits, the thirty-fourth respondent denies charging unreasonable sums and contends that it is not doing what is alleged. It contends that it is levying the land development levy because council owns the land on which the substation is. Counsel criticised the applicant for failure to specify the type of land it is referring to. She contended that the respondent is entitled to charge a land development levy on land owned by the applicant. She submitted that council can charge for permits in terms of s 59 of the Communal Lands Act and by resolution in terms of s 8 of the Rural District Councils Act. She contended further that way leave charges are not taxes as applicant is given use of the land and is given a permit. She contended that the application has no merit and she .urged the court to dismiss the application. The councils that did not oppose this application are deemed to have admitted the applicant’s claim. I will deal first with the points in limine raised by Advocate Wood. PERMISSIVE JOINDER There are 60 respondent councils cited in this application. Only 15 of them opposed the application. The various councils were represented by four legal practitioners. The cause of action against them is based on the allegation that they do not have statutory authority for the charges or taxes they are levying against the applicant. Each one of the respondents charge one or more of the charges complained of. They do not all charge the same charges. The applicant seeks a declaratur pronouncing that the levying by respondents on applicant of “unit tax” and “way leave charges” is outside the provisions of the Rural District Councils Act or any other law and further that the respondents are entitled to charge only such tax or levies as is set out under the Rural District’s Act. HH 102-15 HC 9485/11 It was not disputed that all the councils do not charge all the charges complained against. For example, whilst the thirteenth respondent, is charging way leave charges and a development levy, it does not charge unit tax. The eleventh respondent charges for provision of land on which applicant has subtractions and transmission levies. It admits that it charges “unit tax” and “way leave charges.” The forty-second respondent denies charging unit tax in terms of s 97 A of the Rural District Councils Act but admits charging for each unit of land utilized by applicant but acknowledges that the tariff serves the same purpose as unit tax. It admits that it charges way leave charges. The thirty-fourth respondent admits that it charges applicant a business levy and way leave charges, and does not charge a unit tax. The fifty-sixth respondent admits charging way leave charges but disputes that it charges unit tax. Herbstein &Van Winsen The Civil Practice o f the High Courts of South Africa, ed 5 p 208 says the following of joinder of parties: “Parties are often joined for reasons of convenience and equity, to avoid oppression or a multiplicity of actions. Apart from considerations of convenience, however there are circumstances in which it is essential to join a party because of the interest that party has in the matter”. There is no law that limits the number of respondents that can be brought in an action or application. It is permissible at common law to join a number of defendants in one action or application for as long as a common question of law or fact arises with respect to all the respondents and the relief sought is dependent upon the determination of substantially the same question of law. See Amalgamated Engineering Union vMinster of Labour 1949 (3) SA 637. (A) for that proposition. Sometimes this is done out of the realisation that the party or parties so joined have an interest in the matter, See BHT Water Treatment Pty Ltd v Leslie 1993( 1) SA 47( W)for that proposition. The justification for this practice is based on convenience and equity and the need to avoid a multiplicity of actions. Our own rules record the same position under r 85 as follows, “85. Joinder of parties Subject to rule 86 two or more persons may be joined together in one action as plaintiffs or defendants whether in convention or in reconvention where— (a) if separate actions were brought by or against each of them, as the case may be, some common question of law or fact would arise in all the actions; and HH 102-15 HC 9485/11 (b) all rights to relief claimed in the action, whether they are joint, several or alternative, are in respect of or arise out of the same transaction or series of transactions.” A court may in its discretion allow joinder of two or more persons where a common question of law or fact arises. The relief sought should arise out of the same transaction or series of transactions. This is done for the convenience of the parties as it is less costly and has the result of curtailing a multiplicity of actions. The question of law required to be determined here is whether rural district councils have the right to levy the different charges complained against. Although the councils do not all charge the taxes or charges in question they are jointly interested in the common questions of law that arise. Joinder is permissible where a litigant has different causes of action against different defendants and as long as it is shown that the defendants are jointly interested in the causes of action and a question of fact or law common to all the defendants will arise in the proceedings. A defendant need not defend all the relief sought. The fact that one or more of the councils may not be charging all the rates in issue is neither here nor there. The relief sought is dependent upon the determination of substantially the same legal issue. It is convenient that all the councils be joined in this application as it makes it possible for the court to pronounce the legal position with respect to the different charges and taxes levied which are of interest to all the respondents. The court will be required to give judgment according to relief sought and proved. What makes this application suitable for joinder is that all respondents are charging one or more of the charges and taxes in issue. I have in the exercise of my discretion decided to allow the joinder. One also has to have regard to rule 87. It provides as follows:- “87. Misjoinder or nonjoinder of parties (1) No cause or matter shall be defeated by reason of the misjoinder or nonjoinder of any party and the court may in any cause or matter determine the issues or questions in dispute so far as they affect the rights and interests of the persons who are parties to the cause or matter.” The court is at liberty to proceed with the application as no cause or matter shall be defeated by reason of the misjoinder of any party. The court will proceed and determine the issue or questions in dispute in so far as they affect the rights and interests of the persons who are parties in this dispute. HH 102-15 HC 9485/11 DISPUTES OF FACT Advocate Wood submitted that there is a dispute of fact on the basis that all the councils do not charge all the taxes in issue and have denied that they do not charge all the taxes, levies and charges in issue. The resolution of the question of joinder disposes of the issue regarding the existence of disputes of fact arising on the papers. It is accepted that the different councils charge different types of taxes or levies. The court has ruled that the joinder in the circumstances of this case is permissible. There is no need for any factual resolution. This is not evidentiary application were one is required to outline the specifics of the claims or charges against the applicant. The issue remains simply whether the councils are charging the levies complained against and whether it is competent for them to do so. The dispute that exists between the parties is purely legal and relates to entitlement to charge the taxes in issue. There are no disputes of fact existing on the papers. . REMEDY SOUGHT Advocate Wood took issue with the fact that the declaratory order is being sought three years after the charges were levied. She submitted that the applicant did nothing to set down the application. She contended that the application should have been brought within a reasonable time. She contended that there was no point in bringing the application when some cases have resolved the dispute. That this application won’t overturn the orders already granted against the applicant. She argued that hypothetical issues cannot form the basis of a declaratory order. The applicant submitted that it is not concerned with those matters where default judgment was granted against it and is prepared to let due process take its course. What the applicant simply requests is resolution of a dispute where it claims that there is legal uncertainty and it is entitled to do so. This application was lodged in September 2011 and has been pending since then. The applicant is not responsible for the set down of matters. Section 14 of the High Court Act [chap 7;06]empowers this court to deal with declaraturs and provides as follows, “14 High Court may determine future or contingent rights The High Court may, in its discretion, at the instance of any interested person, inquire into and determine any existing, future or contingent right or obligation, notwithstanding that such person cannot claim any relief consequential upon such determination.” HH 102-15 HC 9485/11 This court has in its discretion decided to entertain the application. This is a proper case for a declaratur. All the parties have an interest in “an existing, future or contingent right or obligation’, See Johnsen v AFC 1995 (1)65 (H) for that approach. I agree with Advocate Mpofu that the decision in this matter will resolve a topical issue. THE MERITS The dispute is over rural land where the applicant’s substations are located and that which its power lines traverse. The papers disclose that the various councils charge the following charges, way leave charges, unit tax on land, business development levy or land development levies. The issue that this court is being called upon to determine is whether the applicant is required in terms of the law, to pay the taxes or levies or charges in issue. Whether the applicants pay these amounts annually or periodically is not the issue. WAY LEAVE CHARGES A number of rural district councils concerned stated that they charge way leave charges. This charge is usually charged as a once off payment. They averred that these charges are in respect of power lines in the rural district area and substations erected in their respective areas. They contended that this is a practice that has been in existence over time and has been accepted by both the councils and the applicant. Other councils argued that councils are entitled to charge a land levy in respect of its land occupied by the applicant and for services rendered and do so by charging this levy or charge. They contended that councils are entitled to grant authority for the establishment of the electricity transmission lines and that this constitutes a service as contemplated by s 76 (1) of the act. That the issue is not about the name or label attached to a particular levy or charge but rather whether the respondent councils are entitled to levy the applicant in a particular instance. Section 76 (1) only permits the fixing of charges, levies or taxes by resolution where it is empowered in terms of the Act to do so. Section 76 (1) reads as follows; “-Charges, rents and deposits by resolution (1) A council may, by resolution passed by a majority of the total membership of the council— (a) fix charges and tariffs of charges payable in respect of certificates, licences or permits issued, inspections carried out, services rendered or any act, matter or thing done by the council in terms of this Act; HH 102-15 HC 9485/11 (b) (c) (d) (e) fix rents and other charges payable in respect of property let by the council; fix deposits payable in connection with any services provided by the council in terms of this Act: Provided that, in any specified area or in such other part of the council area as may be prescribed or as may be notified to the council by the Minister— no charges, rents or deposits of any kind, other than those in connection with the supply of electricity, may be fixed by a council in respect of residential accommodation or services provided specifically to or in connection with such accommodation, otherwise than by by-laws made or in force in terms of this Act; a council may, subject to the approval of the Minister, fix in any lease or agreement entered into by it the charges, rents or deposits which shall be payable by the lessee in respect of the occupation of any premises.” Where a rural district council has issued a certificate, licence, permit, carried out inspections, rendered services, or let out a property, it is entitled to raise a charge or tariff in respect thereof in terms of s 76. This section empowers council by way of resolutions to fix charges or tariffs of charges payable in terms of the Act. It is common cause that the applicant is in occupation of parts of rural land in the different district councils through occupation of its substations and transmission lines that cut across the different council areas. There were suggestions that the applicant had entered into agreements or been given permits by the various councils for the erection of the power lines and substations. In any case where a rural district council has let its property, fixed a rental on it, issued a licence, certificate, permit or inspected or rendered any services on such land, it is entitled to levy or charge the holder of such rights in terms of s 76. The respondents is entitled to do so as long as there is a contract to use or pass through their areas. The respondents have been levying the applicant for services rendered and where they have granted the applicant a permit to use its land . The charge which they levy under s 76 is understood as a way leave charge . The English Collins Dictionary defines “way leave” as ‘Access to property granted by a landowner for payment’ There is no mystery over this charge. What the respondents are charging for is the right of way over their land or property. They do so by charging way leave charges. . The fact remains that they are entitled to charge for such rights or access in terms of the Act. They are charging for a right of way over their property in respect of the power lines. In the case of substations the respondents are entitled to charge if they can show that the landowner has been granted access to their property. The fact that they have labelled charges they levy in terms of s76 a way leave charges, does not defeat the charge. I find that the respondents are entitled to charge way leave charges in terms HH 102-15 HC 9485/11 of s 76. THE UNIT TAX This tax is levied in terms of s 97 A. The section reads as follows, 97A (2) “Every council shall impose a special unit tax which all persons who on or after the 1st of January 2011, are or become owners of farms or leases or holders of after letters or land settlement permits.” This tax is capable of being levied in respect of owners of farms or leases or holders of offer letters or land settlement permits. The applicant is not a farmer nor does it hold an offer letter, lease agreement or settlement permit. A unit tax cannot be levied against the applicant in the circumstances of this case. LAND DEVELOPMENT LEVY. This levy is provided for in s 96. It is a levy that is levied on persons who are owners of rural land within council area or licensed dealers who carry on a specified business on rural land within council area in terms of s 96 (e). Section 96 reads as follows. “96 Levies in rural areas (1) Subject to this Part, a council may impose a land development levy upon all persons who, on the fixed date, are or who, at any time during the period of twelve months next following the fixed date, become— owners of rural land within the council area: (a) Provided that— (i)..................... (ii).................. or ............... (b) or (c) (d) (e) licensed dealers who carry on the business in respect of which their licences are issued on rural land within the council area; or owners of land which is deemed to be rural land by virtue of a resolution of the council in terms of section one hundred and two; or either persons who carry on a specified business on rural land within the council area or the owners of rural land within the council area on which a specified business is carried on: HH 102-15 HC 9485/11 Provided that a land development levy may be imposed in respect of any particular specified business upon either the owner of the rural land concerned or upon the person who carries on the specified business but not upon both such owner and such person; or holders of permits issued in terms of section 9 of the the Communal Land Act [Chapter 20:04], authorising occupation and use of any portion of rural land within a communal ward of the council.” (f) This section permits the levying of charges on operators of specified businesses or owners of rural land. The applicant is not an owner of rural land within council area as envisaged by s 96 but may only be required to pay the levy if it carries on a ‘’specified business’’ in terms of s 96 (1) (e). “Specified business” is defined in s 95 as follows, “Specified business” means the business of— (a) extracting sand; or (b) extracting gravel; or (c) extracting clay or making bricks or clay products or some or all of them; or (d) extracting and additionally, or alternatively, crushing stone; or (e) operating a saw-mill; whether carried on as a principal business or incidentally to or in connection with any other business: Provided that the carrying on of any such business by— (a) the owner of a mining location for the purpose of using all of the products of such business on his mining location; or (b) a farmer for the purpose of using all of the products of such business on any farm on which he conducts farming operations; shall not be regarded as the carrying on of a specified business;” The applicant does not carry out any of the specified activities falling under the definition of “specified business.”It business is not specified in terms of the Act. It is not competent to levy on the applicant a land development levy. The fact that council may have passed a resolution authorising the levying of charges does not imply that the applicant is required to pay such levy because it is not empowered to do so in terms of the Act. The applicant is partly entitled to the declaratur sought. I am unable to accede to the request to bar the respondents from levying any other charge or levy which was not the subject of this judicial determination. Paragraph 1.2 of the draft is superfluous. I do not consider it necessary to deal with the applicant’s argument that the charges are too excessive as not sufficient detail was made available for me to make an informed decision. As regards costs, I have considered that the applicant has been partially successful in this matter. I do not view that the HH 102-15 HC 9485/11 respondent councils have been unreasonable in their stance in this matter. None of the councils insisted that the unit tax is legitimate. There shall be no order as to costs. In the result it is declared as follows, 1. The levying by the respondents on applicant of “Unit Tax” is outside the provisions of the Rural District Councils Act [Chapter 29:13] or any other law and is therefore unlawful. 2. The levying by the respondents on applicant of “Way leave charges” under s76 of the Rural District Councils Act [Chapter 29:13] is intra vires the Act and is lawful. 3. No order as to costs. Messrs Muza & Nyapadi, applicant’s legal practitioners Calderwood, Bryce Hendrie & Partners, first respondent’s legal practitioners Matizanadzo & Warhurst, 34th respondent’s legal practitioners