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 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 s97A
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:-
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 s76 of the Rural
and Urban Planning Act for the proposition. He argued that s76 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 s95. 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 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 s96 and another unit tax
chargeable under the third Schedule. Another tax is charged per unit
and then supplementary charges under s89(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 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 s59 of the Communal Lands Act and by
resolution in terms of s8 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.
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 substations 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 s97A 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 v
Minster
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 rule 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
(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.
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.”
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 s76(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;
(b)
fix rents and other charges payable in respect of property let by the
council;
(c)
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—
(d)
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;
(e)
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 s76. 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 s76.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 as way leave
charges, does not defeat the charge. I find that the respondents are
entitled to charge way leave charges in terms of s 76.
THE
UNIT TAX
This
tax is levied in terms of s97A. 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 s96. 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 s96 (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—
(a)
owners of rural land within the council area:
Provided
that —
(i).....................
(ii)..................
or
(b)...............or
(c)
licensed dealers who carry on the business in respect of which their
licences are issued on rural land within the council area; or
(d)
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
(e)
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:
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
(f)
holders of permits issued in terms of section 9 of the Communal Land
Act [Chapter
20:04],
authorising the occupation and use of any portion of rural land
within a communal ward of the council.”
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 s96 but may only be
required to pay the levy if it carries on a ''specified
business'' in terms of s96(1)(e). “Specified business” is
defined in s95 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 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
