05/12/2025
SAPOA Case – Day 3
Thursday 4th December 2025
Summary by CTCRA Vice chair Bouwe van der Eems of the final day of the SAPOA/Afriforum high court case. The ruling will take quite some time, possibly until February 2026.
Day 3 focused on presentations from COGTA and the City of Cape Town (CoCT) relating to the City’s counter-application.
*COGTA Reply to the Counter-Application*
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The day opened with the response of the Department of Cooperative Governance and Traditional Affairs (COGTA), represented by Adv. Nacerodien.
COGTA indicated that, while it maintains a constructive relationship with the City and does not take sides in the main application, it must defend the legislation it administers.
COGTA argued that the court should not entertain the counter-application for several reasons:
1. Misalignment with the main dispute:The main application concerns section 74 of the MSA, while the counter-application asserts that section 75A is the problem. This disconnect makes the counter-application procedurally unsound.
2. The constitutional challenge is unclear:The City claims the MSA is unconstitutional but does not clearly set out the constitutional defect. The counter-application merely refers back to arguments in the City’s reply on the main application—yet those arguments do not clearly identify any constitutional inconsistency.
3. The challenge is based on a hypothetical interpretation: The City asks the court to amend the law based on a possible interpretation the court might adopt. Without knowing the court’s interpretation, the counter-application is impossible to evaluate.
4. Other implicated parties are not before the court: The City’s counter-application implicates the Ministers of Finance and Water & Sanitation, yet they are not participants in the case.
5. Municipal fiscal powers are governed by four interrelated Acts : Challenging one Act (the MSA) in isolation creates incoherence because municipal fiscal powers form a single regulatory framework.
COGTA warned that if municipalities are allowed to delink service charges from the services, charges become arbitrary and deregulate the entire sector, undermining national fiscal policy.
COGTA also noted that the City did not argue that it fails to receive its equitable share for developmental obligations.
If the counter-application were granted, rectifying the legislation could take up to three years—during which tariff policy would be suspended. A retrospective amendment could cause severe national disruption.
Judge Savage again asked whether municipalities are legally required to implement austerity measures to manage budget shortfalls. It appears there is no such obligation.
*City of Cape Town Reply to All Parties*
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Adv. Pillay and Adv. Bawa presented the City’s reply.
The City objected to the characterisation that it finds compliance with the MSA “cumbersome.” It argued instead that the limitations on its powers are unconstitutional.
The City also rejected the claim that it challenges only section 75A; it argues that sections 75A and 74, read together, limit its constitutional powers.
The City then made several assertions:
1. The boundary between rates and services is already blurred
The City argued:
• Applicants say property-value-based fixed charges are disguised rates.
• The City counters that using rates to fund services is itself a disguised service tariff.
• If funding services through rates is viewed as a tariff, SARS may treat the revenue as VAT-liable disguised service fees.
2. Property-value bands are long-established
The City stated that property-value bands have long been used to determine indigent relief. The same methodology is now being used to determine wealthier households, and the City argued it has no alternative, as it does not have access to SARS income data.
3. Alternatives proposed by applicants are not feasible
The City argued that the alternative revenue measures proposed by applicants cannot practically or legally fund the shortfall.
The City also argued that grant funding requires strict ring-fencing between rates and service charges. Without ring-fencing, it risks losing equitable-share transfers.
4. Contradictions exposed during questioning
Judge Savage asked whether infrastructure for service delivery could be funded through rates. Adv. Bawa initially claimed this was impossible.
However, in response to Judge La Grange, she acknowledged that rates are used to pay interest on infrastructure loans. If rates pay the interest on borrowed funds used for infrastructure, then rates do in fact fund infrastructure indirectly, contradicting her earlier statement.
Adv. Bawa also claimed that the Public Service Act prevents the City from implementing austerity measures. This was notable: the City aggressively challenges the MSA when it restricts its ability to raise revenue, yet does not challenge laws that restrict cost-cutting measures.
*Closing*
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The Judge President closed proceedings by confirming that judgment is reserved. Three judges were assigned because of the complexity of the matter, and time will be required to prepare a well-reasoned judgment.
Legal representatives anticipate judgment around February, one month before public participation begins for the 2025/26 budget.
Regardless of the outcome, the City will face intense scrutiny during the upcoming public-participation process. As SA First argued, the City has failed to meaningfully engage residents—and its legal counsel’s statements that the City requires unbridled powers to set charges for developmental purposes are unlikely to be well-received.
Court adjourned at 12:00.
(CIBRA, as a member of CTCRA contributed financially to this case)
