Jordaan and Others v Tshwane Metropolitan Municipality and Others

• Jurisdiction: South Africa

Jordaan and Others v Tshwane Metropolitan Municipality and Others
2017 (6) SA 287 (CC)

2017 (6) SA p287

Citation	2017 (6) SA 287 (CC)
Case No	CCT 283/16 and three other cases; [2017] ZACC 31
Court	Constitutional Court
Judge	Mogoeng CJ, Nkabinde ADCJ, Cameron J, Froneman J, Jafta J, Khampepe J, Madlanga J, Mhlantla J, Mojapelo AJ, Pretorius AJ and Zondo J
Heard	August 29, 2017
Judgment	August 29, 2017
Counsel	D Unterhalter SC (with LGF Putter SC, H Varney and S Ogunronbi) for the applicants in CCT 283/16 and the respondents in CCT 293/16 (Jordaan and Others); T Motau SC (with A Vorster, S Scott and I Phalane) for the first respondent in CCT 283/16 and the applicant in CCT 293/16 (City of Tshwane Metropolitan Municipality).; WJ Vermeulen SC (with P Sieberhagen) for the second respondent in CCT 283/16 and the applicant in CCT 294/16 (Ekurhuleni Metropolitan Municipality).; L Montsho-Moloisane SC (with L Bomela and K Bokaba) for the third respondent in CCT 283/16 (Minister of Cooperative Governance and Traditional Affairs).; I Miltz SC (with JJ Bitter) for the first amicus curiae (TUHF Ltd).; A Cockrell SC (with C Tabata) for the second amicus curiae (Banking Association South Africa).; AA Gabriel SC (with JP Broster) for the third amicus curiae (eThekwini Metropolitan Municipality).

Flynote : Sleutelwoorde

Local authority — Municipal service charges — Statutory charge on property in respect of amount due — Statutory history — Common-law meaning — Constitutionality — Charge not surviving transfer — Municipality not entitled to C reclaim from new owner of property debts predecessor in title incurred — Local Government: Municipal Systems Act 32 of 2000, S 118(3).

Headnote : Kopnota

Section 118(3) of the the Local Government: Municipal Systems Act 32 of 2000 (the Act) provides that 'an amount due for municipal service fees, D surcharges on fees, property rates and other municipal taxes, levies and duties is a charge upon the property in connection with which the amount is owing and enjoys preference over any mortgage bond registered against the property'.

The court a quo had declared s 118(3) constitutionally invalid 'to the extent only E that the security provision a charge upon the property survives transfer of ownership into the name of a new or subsequent owner who is not a debtor of the municipality with regard to municipal debts incurred prior to such transfer'. In this application for the confirmation of this order (consolidated two appeals by municipalities concerned against the order sought to be confirmed), the central issue was whether s 118(3) permitted a municipality to reclaim, from a new owner of property, debts a predecessor in title F incurred.

Held

The statutory history showed that the mechanism for which the municipalities contended — transmissibility — never arose. No attempt was made to confer a right of execution on municipalities that survived transfer to a new owner. G The phrase 'charge upon the property' in the present Act originated from a 1939 Transvaal Local Government Ordinance which imposed 'a charge upon the premises' in respect of rates and taxes owed which was 'preferent to any mortgage bond passed over such property'. This charge was linked to an embargo against transfer until rates for a certain period were paid, and so did not survive transfer — only the original owner was on the line. (Paragraphs [18] and [22] – [23].) H

Section 118(3), unlike its predecessors, however evinced no clear link to the embargo in its earlier subsection (s 118(1)). This effectively allowed the charge to operate independently of the embargo, without any retrospective time limit on the debt that it covered. The question was whether this delinking meant that the 'charge upon the property' survived transfer. I Given the statutory history, the words 'charge upon the property' must be seen in the light of the meaning they previously bore within the common-law setting of limited real rights of security in property for indebtedness. The case law pointed to the conclusion that a mere enactment, without more, that a claim for a specified debt was a 'charge' upon immovable property, did not make the charge transmissible. (Paragraphs [25] – [27].) J

2017 (6) SA p288

This A conclusion was strengthened by the way in which real rights have historically been conferred on creditors — that a real right of security over immovable property could arise only by giving notice of its creation to the world in general by the formal act of registration in the deeds office. Against this background the absence in s 118(3) of a requirement that the charge be registered or noted on the register of deeds was a strong interpretative B indicator that the limited real right s 118(3) created was defeasible on transfer of ownership. Were there no Constitution, one would thus conclude, on the wording of s 118(3) alone, that the unregistered charge it created was enforceable against the property only as long as the original owner held title. (Paragraphs [25] – [27], [31], [36], [39] and [42].)

The question whether the Constitution pointed to the conclusion that the C s 118(3) charge on property survived transfer had to be considered against the objective fact of the powerful armoury of existing statutory debt collection weapons. All outstanding debt could be recovered, as a charge against the property, before transfer. Historical debts existed only because municipalities had not recovered them even though they were by statute expressly obliged to collect 'all money that is due and payable to [them]' D and to implement a credit-control and debt-collection system. In addition, for the sake of service delivery, it was imperative that municipalities did everything reasonable to reduce amounts owing. (Paragraphs [53] and [56] – [57].)

Against the municipalities' arguments in favour of the survival of the charge (see [45] – [51]) had to be weighed the severe consequences of imposing E historical debts on a new owner. Allowing the charge to take effect post-transfer would cause substantial interference with or limitation of the transferee's ownership as well as the mortgagee's real right of security. If a debt were enforced against the property of an owner who had no connection with it at all, a constitutionally cognisable deprivation would occur. This was precisely what would happen if the charge in s 118(3) were to take F effect on new owners. The new owner paid more precisely because of the urban location of the property, and its accessibility to municipal services. To make a new owner pay for this value again by making historical debts enforceable against them, was a form of double debit that made it a constitutional deprivation. If the charge in s 118(3) survived transfer, there could be a significant deprivation of property. The imposition on a new G owner of municipal property of unprescribed debts without historical limit would constitute an arbitrary deprivation of property. (Paragraphs [58], [61], [67] – [68] and [74].)

It followed that, because the provision could properly and reasonably be interpreted without constitutional objection, it was not necessary to confirm the High Court's declaration of invalidity. This meant that the appeal H succeeded (though not for the reasons advanced by the appellants). (Paragraph [78].)

Cases cited

Alberts v Roodepoort-Maraisburg Municipality 1921 TPD 133: referred to

Bloemfontein Town Council v Estate Holzman 1936 OPD 134: discussed

BOE I Bank Ltd v Tshwane Metropolitan Municipality 2005 (4) SA 336 (SCA) ([2005] ZASCA 21): referred to

Cape Divisional Council v Marais 2 Buch AC 350: discussed

Chagi and Others v Special Investigating Unit 2009 (2) SA 1 (CC) (2009 (3) BCLR 227; [2008] ZACC 22): referred to

City of Cape Town v Real People Housing (Pty) Ltd 2010 (5) SA 196 (SCA) J ([2010] 2 All SA 305; [2009] ZASCA 159): discussed

2017 (6) SA p289

City of Johannesburg v Kaplan NO and Another 2006 (5) SA 10 (SCA) A ([2006] ZASCA 39): discussed

City of Johannesburg Metropolitan Municipality v Blue Moonlight Properties 39 (Pty) Ltd 2012 (2) SA 104 (CC) (2012 (2) BCLR 150; [2011] ZACC 33): referred to

City of Johannesburg v Renzon andSons (Pty) Ltd 2010 (1) SA 206 (W): referred to B

City of Tshwane Metropolitan Municipality v Mathabathe and Another 2013 (4) SA 319 (SCA) ([2013] ZASCA 60): considered

Cohen's Trustees v Johannesburg Municipality 1909 TH 134: referred to

Daniels v Scribante and Another 2017 (4) SA 341 (CC) (2017 (8) BCLR 949; [2017] ZACC 13): referred to C

First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service and Another; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) (2002 (7) BCLR 702; [2002] ZACC 5): referred to

Harris v Trustee of Buissinne (1840) 2 Menz 105: discussed

Investigating Directorate: Serious Economic Offences and Others v Hyundai D Motor Distributors (Pty) Ltd and Others: In re Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others 2001 (1) SA 545 (CC) (2000 (2) SACR 349; 2000 (10) BCLR 1079; [2000] ZACC 12): referred to

Irwin v Davies 1937 CPD 442: discussed

Johannesburg Municipality v Cohen's Trustees 1909 TS 811: discussed E

Jordaan and Another v Tshwane City and Another, and Four Similar Cases 2017 (2) SA 295 (GP): reversed on appeal

Lucas' Trustee v Ismail and Amod 1905 TS 239: discussed

Mkontwana v Nelson Mandela Metropolitan Municipality and Another; Bisset and Others v Buffalo City Municipality and Others; Transfer Rights Action Campaign and Others v MEC, Local Government and Housing, Gauteng, F and Others (Kwazulu-Natal Law Society and Msunduzi Municipality as Amici Curiae) 2005 (1) SA 530 (CC) (2005 (2) BCLR 150; [2004] ZACC 9): applied

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