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eThekwini municipality officials are closely studying a Supreme Court of Appeal (SCA) ruling which bars it from collecting rates from the Ingonyama Trust – which owns 32 percent of all the land in KwaZulu-Natal – prior to 2005.
Every year the municipality writes off large amounts of money allegedly owed by the trust and it is not clear yet what the financial impact this court ruling will have on the city’s coffers.
The municipality took the issue to court seeking clarity on whether, under the old Rating of State Property Act, the trust was considered a state institution and was thus exempt from any rates.
King Goodwill Zwelithini is the chairman of the trust, which owns about three million hectares of traditional land including the major townships of uMlazi, KwaMashu and Inanda.
It has been previously reported that the trust has not paid any rates since 1998 and that it owes the municipality R278.3 million.
There are two types of properties on trust land: those which are owned by the trust itself and those on which there are properties “owned” by private individuals through deeds of grant or title deeds.
In February 2009, the municipality said it would take the trust to court to end the dispute after negotiations between the city and the trust official failed to yield an amicable decision.
Municipal treasurer Krish Kumar said at the time that the two parties had agreed that the only way to resolve the matter was in court as all other measures had been exhausted.
While initially the Durban High Court ruled in its favour, the trust appealed and the higher court has now found in its favour.
The Mercury is still awaiting a response from the municipality on the financial impact of this and whether or not it is appealable to the Constitutional Court.
The trust’s acting chairman, Judge Jerome Ngwenya, says the ruling does not mean that the trust and the five million people living on trust land will never be liable for rates.
“Our view was that up until July 2005 – when this act was scrapped – the trust was not liable for rates because it was state land.
“The court has now agreed with us.
“But today there is a new act in place. We say municipalities must value our land fairly and objectively and give us an opportunity to appeal.
“They must prove that the land is owned by us and is not occupied.
“If it is occupied, they must claim rates from the occupants.”
The judge said there was a “general understanding” that that there needed to be a political solution to the issue “and the solution lies with those who make the law”.
He said the trust had attempted many times to get decision-makers together to discuss these issues but nothing had happened.
“We need to sit and sort this out. My concern is that if we don’t, other ratepayers will balk at paying their rates.”