013 7533187 / 060 497 2512

Christo Smith Law Blog

Nelspruit CID illegal – inaccurate press release

The Nelspruit CID press release regarding its withdrawal of claims for levies, contains various inaccuracies. The press release, issued on 16 November 2017, flies in the face of a Supreme Court of Appeal ruling rendering CID’s illegal.

Property owners may be grossly misled by the CID press release and we therefore quote the irresponsible statements followed by the correct facts :

  • “The Nelspruit City Improvement District has decided to withdraw some of the cases…”

FACT:  Please, can you inform the public which cases have not been withdrawn? The NCID have paid thousands of Rands in legal costs as well as refunded trust payments. In addition, claims in excess of R300 000,00 have been abandoned or withdrawn. All pending cases have been withdrawn.

  • The Nelspruit CID and the Nelspruit CID by-law remain in operation and together with the City of Mbombela Local Municipality we are looking at ways to enable NCID to proceed with these matters in due course.”

FACTFirstly, the matters can never proceed ‘in due course’. They have been withdrawn. They are over. If anything, new actions will have to be instituted and most claims have prescribed anyway. However, for the existing claims, its game over.

Secondly, the NCID and the Municipality have to change the Constitution of the RSA if they have any hope of resuming activities legally. This is because the Constitution prohibits a municipality to cede its rates collection rights to private organisations such as the NCID.

Thirdly, even if the Constitution is amended (which is highly unlikely), the NCID and the municipality have numerous other hurdles to cross, some of which are insurmountable. Even if they do achieve the impossible, they can never legally enforce levies retrospectively. Therefore, levies raised in the past can never be legalised and past payments that were made under the illegal system, will have to be refunded because the illegality cannot be cured retrospectively.

Fourthly, it is irresponsible to advocate that an illegal By-law “remains in operation”. It is tantamount to contempt of the SCA.

  • The majority of property owners within the NCID continue to support the “improvement district”

FACT:  Whilst one cannot, without production of the NCID accounts, determine the truth of this statement, here is the problems it creates :

Some owners may be paying the levies because they are unaware of the true situation. The Lowvelder is not publicising the facts alluded to above and refuse to do so. One can only speculate as to the reasons for this.

Presently, numerous owners have instituted actions against the NCID and the Municipality for refunds of thousands of Rands in illegal levies they have paid. The summonses have been served and many more are in the pipeline. This will, due to the legal position as held by the SCA, inevitably lead to the NCID having to refund thousands if not millions of Rands.

What does this state of affairs hold for those uninformed or naive owners who are diligently paying? Their money is going to be utilised to pay those owners who claim refunds! Ultimately, this could lead to the termination of the NCID, in which case the alternative claims against the municipality will be pursued.

WHAT OWNERS NEED TO DO

  • Establish if your property is situated within one of the NCID’s.
  • Establish if you are making payments to the NCID – many owners pay by debit orders or their staff simply pay accounts as of course.
  • Reconsider your liability in light of the above and act!
  • Apart from ceasing to pay, consider claiming refunds of all payments made to date.

CONCLUSION

The CID’s are businesses established for the ostensible credible purpose of providing services to residents where local councils have failed and are forever failing due to corruption, slackness and lack of trained staff. This is another matter entirely.

The CID’s however, collect “tax” in the disguised form of levies, in addition to the rates owners pay in any event. The CID Manager refers in the press release to the “enhanced service” by the CID and uses the recent cleaning of the town after the strikers havoc as an example. Why must owners pay rates for a service the council fails to provide and then on top of that pay to clean the mess created by those very municipal employees? We realise that council grants the CID a 10% rebate on normal tax, however that (meager amount) goes back into the CID pool, not the pockets of individual owners.

Lastly, but not the least : Do owners know what the cost is of the CID-structure, its staff and management? Do we know who is earning the profits of this venture or even what are the profits, if any? Who benefits from the salaries of the staff, for surely no-one works for free. Just ask yourself why the NCID needs 7 directors! Their letterhead boasts the names of MR Schormann, J Sethole, J de Vos, P Khomalo, DD Mabuza, UM Tarwa and D Blum. Are the directors remunerated and if so, to what extent?

And here is the most intriguing question : Why is the Lowvelder not investigating and reporting on these burning questions?

Whatever the case may be, it is fair to assume that there are vast expenses involved in running a CID – a virtual city council “on the side” so to speak! This system is advocated and promoted whilst it is an undisputed fact that the Supreme Court of Appeal has ruled it illegal.

5.00 avg. rating (93% score) - 1 vote
Nelspruit CID illegal – inaccurate press release