Sakeliga wins court case against illegal municipal collections

19 March 2024

The court order helps to protect businesspeople and other residents from unlawful and unaffordable municipal collections in their towns.

Without the court order, an external company in Kgetlengrivier Local Municipality (Koster, Swartruggens, and surroundings) would have been able to unlawfully collect fees for municipal services, rates and taxes (excluding electricity) on behalf of the municipality in a private account of the company and deduct their costs and commissions directly from the amounts received from the public.

Sakeliga has won another court case, this time to protect businesspeople and residents from unlawful and unaffordable municipal collections practices in their towns.

The court order prohibits an external company, Ideal Prepaid (Pty) Ltd from collecting local levies and taxes in terms of an unlawful agreement concluded between it and Kgetlengrivier Local Municipality (Kgetlengrivier). The court also ordered Kgetlengrivier to only collect fees for municipal services, rates, and taxes after providing residents and taxpayers with the necessary tax invoices.

Sakeliga and local businesspeople brought the court case to prevent harm after the municipality unlawfully decided to further appoint Ideal Prepaid, a service provider that already managed the sale of electricity in the town, to collect fees for services, rates, and taxes on behalf of the municipality. However, the illegal collections would have been made without proper invoices, paid for by unaffordable commission fees on municipal taxes, and transferred into private bank accounts without proper supervision.

The Mahikeng High Court ordered that Kgetlengrivier's decision to extend their then already existing agreement with Ideal Prepaid to also include the collection of municipal service fees and taxes is declared unlawful and set aside.* Costs were granted in favour of Sakeliga. In effect, the court now made permanent the interim order that Sakeliga obtained shortly after the municipality's initial decision, meaning that none of the municipality's intended unlawful collections ever took place.

Thanks to the court order, businesspeople and residents of Koster, Swartruggens, and the greater Kgetlengrivier area can now put this episode behind them and pay attention to other problems. State failure continues to be a serious and ongoing source of risk and harm in the towns of Kgetlengrivier.

The businesspeople of other towns in South Africa also benefit from the court order, because it upholds principles to prevent similar unlawful recoveries of municipal fees. Sakeliga is in favour of solutions to municipal failure that benefit from the discipline of the private and non-state civil sectors, but for such solutions to succeed they must be implemented in a proper, transparent, and fair way.

The latest court order now brings finality and clarity, after preliminary success was already achieved in November 2019 with an interim interdict in favour of Sakeliga and the businesspeople who participated as co-applicants. Repeated unlawfulness, contempt of court, negligence, and other harmful conduct on the part of the municipality, however, delayed the case for four and a half years.

*This court order does not relate to separate agreements between Ideal Prepaid and Kgetlengrivier on the provision of prepaid electricity services.

Issued by Piet le Roux, CEO, Sakeliga, 19 March 2024