The Gauteng High Court has ruled against the City of Johannesburg's 2023/2024 Rates Policy, declaring the classification of privately-owned educational properties as "business and commercial" unconstitutional.
The court found that the City's new categorisation system removed the independent "education" category previously enjoyed by educational properties, resulting in devastating financial consequences. Some institutions reported facing up to 300% increases in their annual municipal rates, threatening their financial sustainability and potentially forcing significant fee increases for parents.
Judge J Mudau determined that the municipality had conducted a "sham process" leading to the decision, thereby failing in its constitutional obligations. "Public participation should not be merely formalistic; it necessitates genuine engagement," he remarked in the ruling.
The court articulated that Section 28 of the Constitution, which mandates that a child's best interests be of paramount importance, had been neglected in the decision-making process. In assessing the public participation process, Judge Mudau noted that the City had neglected essential community involvement and failed to provide adequate responses to queries raised by stakeholders.
The legal challenge
The High Court's ruling stemmed from the consolidation of four separate applications challenging the City's recently implemented Rates Policy. Notable applicants included The Independent Institute of Education (Pty) Ltd and Advtech Ltd, who brought the application in their own interest, in the interest of children enrolled at their schools, and in the public interest.
AfriForum NPC brought its application in its own interest, the interests of its members, and the public interest, while Curro Holdings, a public company with limited liability duly registered in South Africa, The Independent Schools Association Southern Africa NPC (ISASA), the oldest and largest association of independent schools in Southern Africa, representing 847 member schools in South Africa, was also part of the case.
Additional applicants in the ISASA application included Sparrow Schools Educational Trust (a non-profit independent school serving learners with special educational needs from economically disadvantaged communities), Bellavista School NPC (an independent remedial school serving 270 learners with special needs), and Citykidz Pre and Primary School (a non-profit independent state-subsidised school serving lower-income families in the Johannesburg CBD).
Different legal approaches
Three of the applicants (except Curro) contended that the City was entitled to create a specific "education" category in which their properties must be allocated, and that the City's failure to do so tainted the whole process with irrationality.
Curro took a slightly different approach, arguing that meaningful engagement with stakeholders was needed to address the question of categorisation of independent schools and the rates to be levied, which did not materialise. Curro sought a review of the impugned decisions as irrational, arbitrary and unreasonable, and requested an order directing the City to consult and undertake the necessary public participation process before categorising independent schools.
Curro also sought an order declaring the differentiation between public and independent schools for the purpose of levying property rates an impermissible differentiation under section 19(1)(c) of the Local Government: Municipal Property Rates Act ("MPRA").
The City's defence rejected
The City of Johannesburg contended that the reviews were rendered moot as the new Rates Policy took effect on July 1, 2023. However, the court dismissed this argument, stating that concerns regarding the legality of the 2023/2024 policy remained live and required immediate judicial consideration to prevent ongoing financial and organisational harm to educational institutions.
The court ordered the City to repeal the impugned provisions of the Rates By-Law and Policy that pertained to all educational institutions. Furthermore, it mandated that the municipality revisit its procedures, ensure genuine community involvement, and consider inputs from affected institutions before adopting any revised policy.
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