In his 2023 State of the Nation Address, President Cyril Ramaphosa underscored a pressing national concern: "Too many of our municipalities, 163 out of 257, are dysfunctional or in distress due to poor governance, ineffective and sometimes corrupt financial and administrative management and poor service delivery."

In response to shortcomings in municipal service delivery, a growing trend of organised rates withholding has emerged, primarily spearheaded by ratepayers associations. Property owners withhold their rates payments, and fees for other municipal services, on the basis of underperformance and poor service delivery. When engagement with municipalities has failed, ratepayers associations have gone on to declare disputes with municipalities in terms of section 102 of the Local Government: Municipal Systems Act No 32 of 2000 ("the Systems Act"), to prevent the disconnection of services for the duration of the protest or dispute.

Section 102 of the Systems Act allows a municipality to consolidate municipal accounts (e.g. rates, electricity and water), credit payments made against any municipal account, and apply its debt collection and credit control measures against any arrears. However, in terms of section 102(2), the municipality cannot do this "where there is a dispute between the municipality and a person ... concerning any specific amount claimed by the municipality from that person."

Westville Ratepayers Association v Ethekwini Municipality [2023] ZAKZDHC 81 deals with a dispute of this nature, in particular whether section 102 of the Systems Act is a mechanism that can be utilised by ratepayers associations in these circumstances. The case concerns a dispute between the Westville Ratepayers Association ("the Association"), and eThekwini Municipality ("the Municipality") which arose as a result of dissatisfaction with the draft municipal budget for the 2023/4 financial year.

At a large-scale gathering convened by the Municipality, stakeholders were invited to offer commentary on the draft budget. The Association submitted a list of complaints, which were repeated in the submission of the dispute as the premise for the rates boycott, and included allegations that:

  • 615 million litres of water was lost daily, equating to R2 billion;
  • outstanding municipal debt had increased by R4.7 billion;
  • despite Umgeni Water's proposed tariff increase of 5%, the Municipality proposed a 15% tariff increase to ratepayers; and
  • there was a growing number of informal settlements.

Despite the complaints submitted in the meeting, the Municipality adopted the draft budget. The Association lodged a dispute in June 2023 in terms of section 102(2) of the Systems Act, based on the complaints listed above, and declared that members of the Association "will not pay for any rates and services starting from 1 July 2023 until and unless the city engages with (it)" (para 8). The Association applied to the court for an order restraining the Municipality from disconnecting municipal services to residents pending the finalisation of the dispute.

The main issue the court dealt with was whether a dispute in terms of section 102 of the Systems Act was in fact pending between the Association and the Municipality. If no such dispute existed, the relief sought by the Association could not be granted.

The court, when interpreting section 102, discussed another case dealing with similar issues, Croftdene Mall v eThekwini Municipality, which emphasised that section 102(2) requires that a dispute must relate to a specific amount claimed by a municipality, and that the objective of the section is to prevent a ratepayer from delaying payment of an account by raising a dispute in general terms.

With this in mind, the court held that the Association's dispute is one over tariff increases and municipal mismanagement, and does not concern a specific amount claimed by the Municipality. The court held that the Association was embarking on a payment boycott whilst demanding the provision of services, which is a matter falling entirely outside the application of section 102(2), and about which entirely different legal principles apply. The application was dismissed.

In light of this judgment, declaring a dispute in this manner should no longer be used by ratepayers associations as a means of preventing the termination of services to residents who withhold rates as a form of protest for a general lack of service delivery.

Though the court did not elaborate on the "different legal principles" that apply to rates withholding, guidance can be taken from earlier case law discussing the issue.

In City Council of Pretoria v Walker 1998 (3) BCLR 257, the Constitutional Court held that it is for the courts to grant appropriate relief against any public official, institution or government when there are grievances. It is not for the disgruntled individual to decide what the appropriate relief should be and to combine with others to take it upon themselves to punish the government structure by withholding payment which is due. The court also stated that:

"If every person who has a grievance about the conduct of a public official or a governmental structure were to take the law into his or her own hands or resort to self-help by withholding payment for services rendered...it carries with it the potential for chaos and anarchy and can therefore not be appropriate." (para 93)

  • Furthermore, withholding property rates alone can result in a disconnection of any municipal services, as was the case in Rademan v Moqhaka Local Municipality and Others 2013 (4) SA 225 (CC).

Ms Rademan, a member of her local ratepayers association, withheld her municipal property rates as a result of, and in protest with, the local ratepayers association, which lodged a dispute for a lack of service delivery. Ms Rademan continued to pay all of her other service charges in full. The municipality disconnected her electricity supply due to non-payment of rates, which prompted Ms Rademan to approach the court to declare the disconnection unlawful.

The Constitutional Court held that disconnection by the municipality was indeed lawful, for the following reasons:

  • section 5(2)(a) of the Systems Act places a duty on members of the local community "to pay promptly service fees, surcharges on fees, rates on property and other taxes, levies and duties imposed by the municipality". Section 5(2)(e) of the Systems Act further places a duty on members of the local community to comply with by-laws of the municipality applicable to them;
  • section 102(1) of the Systems Act allows a municipality to consolidate any separate accounts of persons liable for payments to the municipality; and implement any of the debt collection and credit control measures provided for in the Systems Act in relation to any arrears;
  • Moqhaka Local Municipality Credit Control and Debt Collection By-Law 18 makes provision for the consolidation of debt and provides that if one account is rendered for more than one municipal service provided, the amount due and payable by a customer constitutes a consolidated debt. Any payment made by a customer of an amount less than the total amount due, will be allocated in reduction of the consolidated debt; and
  • Moqhaka Local Municipality Credit Control and Debt Collection By-Law 25(1) penalises non-payment by providing that the municipality may restrict or disconnect the supply of water and electricity whenever a consumer fails to make full payment on charges that are due.

It should be noted that as regards specific services such as water, electricity, sewerage, and waste removal, citizens are not required to pay for services they have not received. The Constitutional Court confirmed that "[w]here a municipality claims payment from a resident or ratepayer for services, it is only entitled to payment of services that it has rendered.." (para 42).

Strategies aimed at boycotting or withholding rates as a means of protest against poor municipal performance are understandable, but lack legal foundation. Exploring alternative avenues of lawful protest, such as petitions, gatherings, litigation, advocacy and excising one's right to vote remain the only options that will not lead to any own goals.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.