ConCourt rules municipalities can't simply charge what they want for rates

Image source: Karel Miragaya – 123RF.com

The case at a glance

When Ekapa bought several properties from De Beers in Kimberley, it became liable to Sol Plaatje Municipality for property rates. The municipality refused to issue clearance certificates because of R30m in unpaid rates, thereby blocking the transfer of five properties.

The dispute arose from the municipality’s decision to charge mining properties at 22 times (1:22) the rate applied to residential properties. By contrast, industrial properties were charged only three times (1:3) the residential rate.

In practice this meant a mining property valued at R1m paid R288,275 per year, while an industrial property of equal value paid R38,045.

Ekapa objected, arguing the mining rate was excessive and discriminatory. It continued paying at a 1:3 ratio (consistent with other municipalities), while trying to negotiate a resolution. When that failed, it went to court.

The case before court

Ekapa’s position

Ekapa argued that the municipality’s policy was unlawful and irrational, violating both the Constitution and the Municipal Property Rates Act. The 1:22 ratio created an unreasonable financial burden that threatened jobs, suppliers, and the sustainability of its mining operations.

It also maintained that it had only discovered the excessive ratio in 2019 and had since made good-faith efforts to resolve the dispute.

The municipality’s defence

Sol Plaatje Municipality argued that:

• Its decisions on rates were policy-based, not administrative, and therefore not reviewable by a court.
• The rates were set lawfully by the Municipal Council within its constitutional powers.
• Ekapa’s court application was unreasonably delayed.
• The higher rates reflected the change in land use from agricultural to mining.

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The High Court’s ruling

The Northern Cape High Court partially agreed with Ekapa. It found that:

• The 1:22 ratio was irrational and unconstitutional, as the municipality failed to justify why mining properties were rated so differently from other non-residential categories.
• The municipality had exceeded its powers under the Rates Act.
• The court had jurisdiction to intervene when municipal powers were exercised unfairly.

However, the High Court limited the impact of its decision by ordering that the invalidity of the rates would only apply going forward (prospectively). This meant that although the rates were unlawful, Ekapa was still required to pay the R30m already due under the previous rates.

Ekapa sought leave to appeal this limited relief, but both the High Court and the Supreme Court of Appeal refused. It then approached the Constitutional Court.

Ntando Makuyana, co-founder and Director at DBM Attorneys

The Constitutional Court’s ruling

The Constitutional Court found that the High Court had failed to properly exercise its discretion in crafting a “just and equitable” remedy. While the High Court had been right to declare the rates invalid, it had considered only the municipality’s financial interests, ignoring the serious prejudice to Ekapa, which had been paying under protest.

The Constitutional Court held that:

• The delay in bringing the application was not solely Ekapa’s fault; both parties shared responsibility.
• The municipality knew its rates were being challenged and could not claim surprise or financial prejudice.
• The burden rested on the municipality to show why the invalidity should not have retrospective effect, a burden it failed to discharge.
• The municipality’s claim of financial disruption lacked evidence.

Accordingly, the court ruled that:

• The rates were invalid and unlawful, both retrospectively and prospectively.
• Ekapa was not liable for the R30m in unpaid levies.
• Ekapa’s voluntary undertaking not to reclaim rates already paid at the 1:3 ratio would stand.
• The court made no finding on whether the 1:3 ratio was reasonable. That remains for the municipality to determine within the law.

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Legal implications

This decision reinforces the principle that municipal power is not absolute. Even though municipalities have wide discretion to set property rates, their decisions must:

• Comply with constitutional principles of legality, rationality, and fairness.
• Be supported by transparent policies and evidence-based reasoning.
• Avoid arbitrary or excessive differentiation between property categories.

Courts can and will intervene where municipalities abuse their powers or impose disproportionate burdens on property owners. 

Practical implications

For municipalities, this case underscores the need for well-documented and rational decision-making. Councils must be able to justify how rates are set, especially when there are wide gaps between categories.

For property owners, especially large commercial or industrial investors, the ruling provides reassurance that municipalities cannot impose unreasonable rates or rely on vague policy justifications to do so.

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Key takeaways

For business owners

• Challenge unfair rates: Property owners can review and, if necessary, challenge municipal rates that are unreasonable, discriminatory, or lack justification.
• Stay informed: Regularly review municipal valuation rolls and published tariffs — excessive or inconsistent categories can indicate grounds for objection.
• Act promptly: While courts may overlook some delays, timely objections strengthen your case.
• Know your rights: Municipalities must base rate decisions on clear policy criteria and cannot use property taxation to target certain industries unfairly.

For municipalities

• Ensure legal compliance: Rates policies must align with the Constitution and the Rates Act. Arbitrary ratios between categories will not withstand scrutiny.
• Keep records and rationale: Councils should document the reasons for any rate differentiation and publish transparent policies.
• Avoid financial overreach: Budgeting based on potentially unlawful rates can expose municipalities to financial and reputational risk.
• Engage constructively: Early engagement and negotiation with ratepayers can prevent disputes escalating to costly litigation.

The Constitutional Court’s decision in Ekapa Minerals and Another v Sol Plaatje Municipality and Others [2025] is a powerful reminder that while municipalities may set rates, they must do so within the bounds of fairness, rationality, and the law.