In the recent Constitutional Court Case, Ekapa Minerals (Pty) Ltd and Another v Sol Plaatjie Local Municipality and Others [2025] ZACC 1 (“Ekapa”), a unanimous judgment handed down by Gamble AJ, dealt with two important concepts.
The first being the interpretation and application of Section 172(1)(b)(i), and the second being the concept and application of “the doctrine of legality” in the examination of administrative actions. In Ekapa, the Promotion of Administrative Justice Act, 3 of 2000, was not applicable.
In essence, the dispute before the Court concerned a decision by the First Respondent (“the Municipality”) to charge rates on properties owned and to be owned by the Applicants, such properties being used for the purposes of mining business.
Exorbitant Property Rates – What’s Considered Reasonable?
The Municipality had imposed a rate 22 times greater than rates imposed in respect of residential property. During the hearing, evidence demonstrated that, generally, municipalities charged a rate of 3 times greater than the residential property rate in respect of properties used for the purpose of mining.
The High Court of South Africa, North Cape Division, Kimberley (“High Court”), held that the ratio applied by the Municipality was unconstitutional in terms of Section 172(1)(a) of the Constitution. Further, it declared that “this differentiation was unreasonable” and “inconsistent with Section 19(1)(c) of the Local Government : Municipal Property Rates Act, 6 of 2004”.
The High Court then considered the provisions of Section 172(1)(b) and concluded that while, prospectively, the rates charged by the Municipality were unlawful and thus must be set aside, such order would not apply to the (unlawful) rates charged by the Municipality retrospectively.
Accordingly, the Applicants were ordered to pay such rates charged up to the date of the order even though the Court had held that the rate of 1:22 applied was unreasonable, irrational, and thus unlawful.
In the Constitutional Court, Gamble AJ agreed with the High Court that the decision by the Municipality to charge rates against mining properties of a ratio of 22 x residential rates could not sustain an examination by the Court as to reasonableness or rationality, and held that in terms of the doctrine of legality, such decision should be set aside as irrational and unreasonable, and thus invalid.
Section 172(1)(b) Principles
Gamble AJ, however, disagreed with the exercise of the discretion by the High Court. The Constitutional Court held that when considering Section 172(1)(b) the following principles should be applied:
- in review proceedings under the principle of legality and in considering the application of Section 172(1)(b), “it is settled law that the court has a broad and flexible discretion to craft an order that prioritises substance over form”; and
- the court should pinpoint the “genuine underlying conflict between the parties”, and mandate actions that resolve the dispute in accordance with constitutional principles, due regard being had to the specific circumstances of the case; and
- the court must balance the interests of all parties and avoid the narrow focus of the interests of one side alone.
The Constitutional Court held that in the matter before it, the High Court had erred by not considering the interests of both parties in an objective and fair manner. It, accordingly, partly set aside the High Court’s order and held that the property rates ratio of 1:22 in respect of the category of mining was unlawful both retrospectively and prospectively.
It should be noted that both courts were comfortable with the notion that, in certain circumstances, administrative decisions which had been declared unlawful might anyway be supported and applied, in whole or in part, in accordance with the terms of Section 172(1).
A final aspect of interest was the issue of the jurisdiction of the Constitutional Court by way of appeal directly from the High Court. Gamble AJ had no difficulty with this challenge by the Municipality and held that the case raised “important issues concerning the manner in which courts should exercise their true discretion in relation to relief under Section 172(1)(b)”, and that, in regard as to whether leave to appeal should be granted, he considered that there were good prospects of success, which proved to be the case.