Boe Bank Ltd v Tshwane Metropolitan Municipality

• Jurisdiction: South Africa

Boe Bank Ltd v Tshwane Metropolitan Municipality
2005 (4) SA 336 (SCA)

2005 (4) SA p336

Citation	2005 (4) SA 336 (SCA)
Case No	240/2003
Court	Supreme Court of Appeal
Judge	Scott JA, Mthiyane JA, Brand JA, Conradie JA and Ponnan JA
Heard	March 8, 2005
Judgment	March 29, 2005
Counsel	P G Robinson SC (with him L M du Plessis) for the appellant.; S J du Plessis SC for the respondent.

Flynote : Sleutelwoorde D

Local authority — Charge upon property in favour of municipality imposed by s 118(3) of Local Government: Municipal Systems Act 32 of 2000 — Charge expressly enjoying E 'preference over any mortgage bond registered against the property' — Argument that two-year retrospective time limit set in s 118(1) (which prohibits transfer of property in absence of certificate stating that fees that became due to municipality in two years prior to application for certificate have all been paid) should also apply to s 118(3) — Court rejecting argument on F ground that veto in s 118(1) and charge in s 118(3) two entirely different things, and that only plausible interpretation of s 118(3) that not subject to s 118(1) time limit — Preference enjoyed under s 118(3) extending also to mortgage bonds registered prior to commencement of Act — This not amounting to affording s 118(3) retroactive effect. G

Mortgage — Ranking of — As against charge upon property in favour of municipality imposed by s 118(3) of Local Government: Municipal Systems Act 32 of 2000 — Charge expressly enjoying 'preference over any mortgage bond registered against the property' — Preference so created extending also over bonds registered prior to commencement of Act. H

Headnote : Kopnota

In an appeal from a decision in a Provincial Division the only issue was the competing claims by the appellant ('the bank') and the respondent ('the municipality') to the proceeds realised from a sale in execution of immovable property. The bank's claim was based on mortgage bonds over the property while the municipality's claim was for municipal rates and for services rendered in connection with the I property. The outcome turned on the interpretation of s 118(3) of the Local Government: Municipal Systems Act 32 of 2000, read with s 118(1) of the Act. The bank's case was based on the premise that s 118(3) of the Act did not apply to mortgage bonds that were registered prior to the commencement of the Act on 1 March 2001. The application of the section to existing bonds, so the bank argued, J

2005 (4) SA p337

would amount to affording it retrospective effect which was not warranted by the A wording of the section. The Court a quo held that although s 118(3) did not have retrospective effect, it nevertheless applied to mortgage bonds that were registered before its commencement on 1 March 2001. The present appeal was inter alia against that finding. In addition, the bank sought and obtained leave to appeal on the further basis, not argued in the Court a quo, namely that s 118(3) had to be read to incorporate the time limit stipulated B in s 118(1) and that the 'charge' contemplated in ss (3) was therefore limited to debts that became due during the immediately preceding two years.

Held, that the veto in s 118(1) and the charge in s 118(3) were two different entities. They could be subject to the same time limit, but this need not be so. (Paragraph [7] at 341J - 342A.) C

Held, further, that the only plausible interpretation of s 118(3) was that it was not subject to the time limit contemplated in s 118(1). (Paragraph [11] at 343F.)

Held, as to the argument as to the retroactive application of the Act, that it was true that if s 118(3) was applied to bonds existing before 1 March 2001, it would reduce the security enjoyed D by mortgages under those bonds and in that sense interfere with existing rights. However, that in itself would not mean that the section was afforded retrospective effect. An enactment could only be described as retrospective in the true sense if it required the law to be taken as amended prior to its date of amendment. Applying this formula, on the interpretation of s 118(3) contended for by the municipality, the section required no such thing. (Paragraphs [13] and [14] at 343I/J - 344A and 344E - F.) E

Cases Considered

Annotations

Reported cases

Adampol (Pty) Ltd v Administrator, Transvaal 1989 (3) SA 800 (A): applied F

First Rand Bank Ltd v Body Corporate of Geovy Villa 2004 (3) SA 362 (SCA): referred to

Mkontwana v Nelson Mandela Metropolitan Municipality and Another; Bissett and Others v Buffalo City Municipality and Others; Transfer Rights Action Campaign v MEC, Local Government and Housing, Gauteng, and Others (KwaZulu-Natal Law Society and Msunduzi Municipality as Amici Curiae) 2005 (1) SA 530 (CC): compared G

National Director of Public Prosecutions v Mohamed NO and Others 2003 (4) SA 1 (CC) (2003 (5) BCLR 476): referred to

Nel NO v Body Corporate of the Seaways Building and Another 1996 (1) SA 131 (A): referred to H

Parow Municipality v Joyce and McGregor (Pty) Ltd 1974 (1) SA 161 (C): applied

Pretoria Stadsraad v Geregsbode, Landdrosdistrik van Pretoria 1959 (1) SA 609 (T): dictum at 613E - F referred to

Rabie NO v Rand Townships Registrar 1926 TPD 286: referred to

Stadsraad van Pretoria v Letabakop Farming Operations (Pty) Ltd 1981 (4) SA 911 (T): dictum at 917C - H I referred to

Unitrans Passenger (Pty) Ltd t/a Greyhound Coach Lines v Chairman, National Transport Commission, and Others; Transnet Ltd (Autonet Division) v Chairman, National Transport Commission, and Others 1999 (4) SA 1 (SCA): applied

West v Gwynne [1911] 2 Ch 1 (CA): dictum at 11 - 12 applied J

2005 (4) SA p338

Statutes Considered

Statutes A

The Local Government: Municipal Systems Act 32 of 2000, s 118(1), (3): see Juta's Statutes of South Africa 2003 vol 5 at 1-653.

Case Information

Appeal from a decision in the Transvaal Provincial Division (Du Plessis J). The facts appear from the reasons for judgment.

P G Robinson SC (with him L M du Plessis) for the appellant. B

S J du Plessis SC for the respondent.

In addition to the authorities cited in the judgment of the Court, counsel for the parties referred to the following:

Bartman v Dempers 1952 (2) SA 577 (A)

Case and Another v Minister of Safety and Security and Others; Curtis v Minister of Safety and Security and Others 1996 (3) SA 617 (CC) C

Conshu (Pty) Ltd v Commissioner for Inland Revenue 1994 (4) SA 603 (A) at 920F - I

Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530 at 552 D

De Lange v Smuts NO and Others 1998 (7) BCLR 779 (CC) at para [85]

Ex parte Minister of Justice: In re R v Jekela 1938 AD 370 at 377 - 8

First National Bank of SA Ltd t/a Wesbank v Commissioner for the South African Revenue Service and Another; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (7) BCLR 702 (CC) E

Fundstrust (Pty) Ltd (in Liquidation) v Van Deventer 1997 (1) SA 710 (A)

Gardener v Whitaker 1994 (5) BCLR 19 (E) at 25I - 26B

Govender v Minister of Safety and Security 2001 (4) SA 273 (SCA)

Hoban v Absa Bank Ltd t/a United Bank 1999 (2) SA 1036 (SCA) at 1045B F

Jaga v Dönges NO and Another; Bhana v Dönges NO and Another 1950 (4) SA 653 (A) at 662G - H

Johannesburg Municipality v Cohen's Trustees 1909 TS 811 at 817

Kinekor Films (Pty) Ltd v Dial-A-Movie 1977 (1) SA 450 (A)

Lipschitz v Deschamps Textiles GmbH and Another 1978 (4) SA 427 (A) G

Mhlongo v MacDonald 1940 AD 299 at 310

Minister of the Interior v Machadodorp Investments (Pty) Ltd 1957 (2) SA 395 (A)

National Director of Public Prosecutions v Carolus and Others 2000 (1) SA 1127 (SCA) at para [42] H

Nel v Body Corporate of the Seaways Building 1996 (1) SA 131 (A) at 135 - 6

Ngcobo and Others v Salimba CC; Ngcobo v Van Rensburg 1999 (2) SA 1057 (SCA)

Nissan SA (Pty) Ltd v Commissioner for Inland Revenue 1998 (4) SA 860 (SCA) at 870 - 1 I

Nissan SA (Pty) Ltd v Commissioner for Inland Revenue 1998 (4) SA 860 (SCA) at 870 - 4

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