Case CCT 07/24
[2024] ZACC 32
Ordered Date: 17 September 2024
Judgement Date: 20 December 2024
Post Judgment Media Summary
The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.
On the Constitutional Court handed down judgment in an application for confirmation of an order of constitutional invalidity granted by the High Court, Limpopo Division, Polokwane (High Court). The applicants also sought leave to appeal directly to this Court against the High Court’s order which directed each party to pay their own costs. The applicants, save for the twelfth applicant, are members of various communities under different traditional councils within the Limpopo Province. The twelfth applicant is a non-profit company. The first, second and third respondents are the Minister of Co-operative Governance and Traditional Affairs, the Premier, Limpopo Province, and the Member of the Executive Council, Co-operative Governance, Human Settlements and Traditional Affairs, respectively. The fourth to tenth respondents are the Muhomi, Mavambe, Modjadji, Matlala, Moletjie, Mogoboya, and Machaka Traditional councils, respectively. The eleventh respondent is the Limpopo Provincial House of Traditional Leaders.
This case emanated from the imposition of levies by traditional councils in the Limpopo Province. The applicants brought an application before the High Court challenging section 25 of the Limpopo Traditional Leadership and Institutions Act (Limpopo Act). Section 25 provides for traditional councils to “levy a traditional council rate upon every taxpayer of the traditional area concerned”. That rate must be approved by the Premier and gazetted in the Provincial Gazette, and if the rate is not paid, a taxpayer can be “dealt with in accordance with the customary laws of the traditional community concerned”.
Before this Court, the applicants sought an order condoning the late filing of this application. They submitted that their junior counsel was acting as a judge of the Western Cape Division for the fourth term of 2023. His term ended on 1 December 2023 and thus he was unable to consider the matter before the date this application should have been filed in this Court, being 22 November 2023.
On the merits the applicants submitted that Section 25 of the Limpopo Act permits the imposition of a tax. They submitted that this provision is unconstitutional because the Constitution bestows the power to impose taxes upon elected bodies in the three spheres of government – Parliament, Provincial Legislatures and Municipal Councils. Further, they submitted that the Constitution does not grant the power to impose taxes to either Premiers or traditional councils. The respondents did not oppose the confirmation application.
In the application for leave to appeal directly to this Court against the High Court’s costs order, the applicants contended that the High Court erred as it did not apply the principle in Biowatch that the State should bear the costs of litigants who have been successful against it, and that the High Court did not provide “particularly powerful reasons” to justify departing from the ordinary rule that a successful party in constitutional litigation against the State is entitled to costs.
The State respondents submitted that the applicants were not successful against the first, second and third respondents as outlined in Biowatch and the direct appeal should be dismissed with costs.
In a unanimous judgment penned by Theron J (Madlanga ADCJ, Kollapen J, Majiedt J, Mathopo J, Rogers J, Seegobin AJ, Tolmay AJ and Tshiqi J concurring), the Constitutional Court held that the Constitution carefully regulates who can impose taxes, and how that power must be exercised. It expressly confers and circumscribes taxation powers on provincial legislatures and municipal councils. The Constitution also contains restrictions on the powers of provinces and municipalities to impose taxes – neither can impose a tax that “materially and unreasonably prejudices national economic policies, economic activities across provincial boundaries, or the national mobility of goods, services, capital or labour”.
This Court further held that to the extent that section 25 delegates a taxing power to the Premier, it falls foul of the Constitution. The Provincial Legislature cannot delegate its power to impose taxes to the Premier. The Constitution does not confer a power to impose taxes on traditional leaders, and does not allow that power to be delegated to them. Under the Constitution, traditional leaders are not democratically elected legislative bodies, and therefore cannot impose taxes. Neither can they impose taxes under customary law.
This Court concluded that the rates and levies imposed by traditional councils in terms of section 25 of the Limpopo Act have the characteristics of traditional taxes – they are compulsory charges, uniformly imposed, paid into a general fund, for the public good or the provision of services.
For these reasons, the Court found that the High Court was correct in declaring section 25 of the Limpopo Act unconstitutional and invalid. That order of invalidity must be confirmed.
In the application for leave to appeal directly to this Court, this Court held that to the extent that the costs issue relates to the challenge to section 25 of the Limpopo Act, this Court has jurisdiction to entertain that application under its confirmation jurisdiction. This Court has the power to adjudicate ancillary orders made by the High Court, flowing from its declaration of invalidity.
This Court held that the applicants were overwhelmingly successful in the High Court. They successfully opposed the respondents’ multiple in limine (preliminary) objections. They sought and were granted an order that section 25 of the Limpopo Act was unconstitutional and invalid. They sought and were granted a declaratory order that customary law permits traditional leadership structures to impose voluntary levies, and only after consultation with the community about the need for, amount and purpose of the levy. They were also granted ancillary relief.
The Court held that the High Court provided no reasons for the costs order it made. It clearly did not exercise its discretion in making the order it did. In these circumstances, this Court can interfere with the costs order.
Lastly, after the hearing of this matter, the Court issued directions calling on the first, second, third and eleventh respondents to file written submissions in light of the fact that they only opposed costs in this Court and their written submissions filed in this Court comprise ten pages but four counsel were briefed including two Senior Counsel. In their response to these directions, it was submitted that the two Senior Counsel did not contemplate withdrawing from the matter or asking their juniors to withdraw. They further contended that it “would not be simple for Senior Counsel to appear in the Constitutional Court alone to the exclusion of juniors or send juniors alone to the exclusion of seniors”.
This Court held that there can be no good reason, and none was offered by the State respondents, as to why it was necessary to brief four counsel, including two Senior Counsel, in this matter. State respondents must be cognisant of the fact that when they engage in litigation, they do so at the expense of the public purse. Briefing four counsel for purposes of opposing a costs order was not justified. The senior advocates, more so than junior counsel, should have been aware that four advocates appearing in this matter, was not warranted and taken the lead in remedying the situation.
In conclusion, the Court noted that the time may have come to do more than simply impose adverse ad hoc costs orders in matters where legal costs could and should have been curbed. There should be an ethical duty on legal representatives to consider the most effective reasonable use of resources before the costs are incurred. This issue is raised for the attention of the organised profession to consider and implement. A set of rules and principles may need to be developed to deal with circumstances such as these in the future. A copy of this judgment should be forwarded to the Legal Practice Council, the General Council of the Bar of South Africa and the Pan African Bar Association of South Africa.
The Full judgment here
