Tshwane City v Mitchell

• Jurisdiction: South Africa
• Judge: Mpati P, Bosielo JA, Saldulker JA, Zondi JA and Baartman AJA
• Judgment Date: 29 January 2016
• Citation: 2016 (3) SA 231 (SCA)
• Docket Number: 38/2015 [2015] ZASCA 1
• Hearing Date: 04 November 2015
• Counsel: A Vorster for the appellant. J Vorster for the respondent.
• Court: Supreme Court of Appeal

Tshwane City v Mitchell
2016 (3) SA 231 (SCA)

2016 (3) SA p231

Citation	2016 (3) SA 231 (SCA)
Case No	38/2015; [2015] ZASCA 1
Court	Supreme Court of Appeal
Judge	Mpati P, Bosielo JA, Saldulker JA, Zondi JA and Baartman AJA
Heard	November 4, 2015
Judgment	January 29, 2016
Counsel	A Vorster for the appellant.; J Vorster for the respondent.

Flynote : Sleutelwoorde B

Local authority — Municipal service charges — Statutory charge on property in respect of amount due — Hypothec not extinguished by transfer of immovable property pursuant to sale in execution — Semble: Municipality must comply with own bylaws relating to liability for municipal debts before pursuing hypothec's perfection — Local Government: Municipal Systems Act 32 of 2000, s 118(3). C

Execution — Sale in execution — Immovable property — Statutory charge on property in respect of amount due to local authority — Hypothec not extinguished by transfer of immovable property pursuant to sale in execution — Local Government: Municipal Systems Act 32 of 2000, s 118(3). D

Headnote : Kopnota

The statutory hypothec that s 118(3) of the Municipal Systems Act 32 of 2000 creates over property in favour of a municipality for payment of outstanding municipal debts, is not extinguished when the property in question is transferred from one owner to another. This is so regardless of E whether the transfer was pursuant to a sale by private treaty or a sale in execution. (Paragraphs [14] – [16] at 236F – 237G.)

Semble: Before pursuing payment by perfecting its security over the property, the municipality must comply with its own bylaws relating to liability for municipal debts. (Paragraphs [25] – [26] at 241C – G.)

Cases Considered

Annotations F

Case law

Bastian Financial Services (Pty) Ltd v General Hendrik Schoeman Primary School2008 (5) SA 1 (SCA) ([2008] ZASCA 70): dictum in para [17] applied

Biowatch Trust v Registrar, Genetic Resources, and Others2009 (6) SA 232 (CC) G (2009 (10) BCLR 1014; [2009] ZACC 14): dictum in paras [21] – [22] applied

BOE Bank Ltd v Tshwane Metropolitan Municipality2005 (4) SA 336 (SCA) ([2005] ZASCA 21): applied

City of Cape Town v Real People Housing (Pty) Ltd2010 (5) SA 196 (SCA) ([2009] ZASCA 159): referred to H

City of Johannesburg v Kaplan NO and Another2006 (5) SA 10 (SCA) ([2006] ZASCA 39): dictum in para [13] applied

City of Tshwane Metropolitan Municipality v Mathabathe and Another2013 (4) SA 319 (SCA) ([2013] ZASCA 60): dictum in para [12] applied

Ex parte Nell1963 (1) SA 754 (A): referred to I

Islamic Unity Convention v Minister of Telecommunications and Others2008 (3) SA 383 (CC) ([2007] ZACC 26): dictum in para [57] applied

Jaga v Dönges NO and Another; Bhana v Dönges NO and Another1950 (4) SA 653 (A): dictum at 662G – H and 664H applied

Land- en Landboubank van Suid-Afrika v Absa Bank Bpk en Andere1996 (4) SA 543 (A) ([1996] ZASCA 76): distinguished J

2016 (3) SA p232

Manyasha v Minister of Law and Order1999 (2) SA 179 (SCA) ([1998] ZASCA 112): dictum at 185A – D applied A

Mitchell v City of Tshwane Metropolitan Municipal Council2015 (1) SA 82 (GP): reversed on appeal

Moodley and Others v Minister of Education and Culture, House of Delegates, and Another1989 (3) SA 221 (A) ([1989] ZASCA 45): dictum at 233D – F applied

Natal Joint Municipal Pension Fund v Endumeni Municipality2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13): dicta in paras [18] – [19] applied B

Ngqukumba v Minister of Safety and Security and Others2014 (5) SA 112 (CC) ([2014] ZACC 14): dictum in para [16] applied

Rabie v Rand Township Registrar 1926 TPD 286: referred to

Rademan v Moqhaka Municipality and Others2012 (2) SA 387 (SCA) ([2011] ZASCA 244): dictum in para [19] applied. C

Statutes Considered

Statutes

The Local Government: Municipal Systems Act 32 of 2000, ss 118(1) and 118(3): see Juta's Statutes of South Africa 2014/15 vol 5 at 1-868 and 1-869. D

Case Information

A Vorster for the appellant.

J Vorster for the respondent.

E An appeal from the Gauteng Division of the High Court, Pretoria (Fourie J) [*] The order is at [28].

Order

1.

The appeal is upheld.

2.

Paragraph 1 of the order of the court a quo is set aside and replaced F with the following:

'1.

The application is dismissed.'

3.

No order is made as to the costs of the appeal.

Judgment

Baartman AJA (Mpati P, Bosielo JA and Saldulker JA concurring):

G [1] This appeal concerns the interpretation of s 118(3) of the Local Government: Municipal Systems Act 32 of 2000 (the Act). The question is whether the security provided for in s 118(3) of the Act in favour of a municipality, for moneys owed to it for services delivered in respect of fixed property, is extinguished when the property is sold at a sale in H execution and subsequently transferred to the purchaser.

[2] On 22 February 2013 the respondent purchased a fixed property known as erf 296, Wonderboom Township, Gauteng (the property), at a sale in execution. The property is situated within the appellant's municipal boundaries. Clause 6.4 of the 'Conditions of sale in execution I of immovable property' provided:

'The purchaser shall be responsible for payment of all costs and charges necessary to effect transfer including conveyancing costs, rates, taxes

2016 (3) SA p233

Baartman AJA (Mpati P, Bosielo JA and Saldulker JA concurring)

and other like charges necessary to procure a rate clearance certificate, A transfer duty or VAT attracted by the sale and any Deeds registration office levies.'

[3] In terms of s 118(1) of the Act a registrar of deeds may not register the transfer of property except on production of a certificate — commonly referred to as a clearance certificate — confirming that all amounts due to B the municipality in respect of that property, for service fees, levies, rates and taxes for the two years preceding the date of application for the certificate, have been paid in full. When the respondent applied for a clearance certificate, the appellant issued a 'written statement' reflecting an outstanding amount of R232 828,25 in respect of municipal service fees, levies and rates. That amount included debts older than two years C preceding the date of the application for a clearance certificate (historical debt).

[4] The respondent disputed the correctness of the amount reflected in the 'written statement' as being payable for purposes of obtaining a clearance certificate in terms of s 118(1). The dispute was, however, D settled and the appellant issued a certificate reflecting the outstanding amount due to it as R126 608,50, which represented only the debt due for the two years preceding the date of the respondent's application for issue of the certificate. The respondent paid that amount, leaving the historical debt of R106 219,75 still outstanding, due and payable if it had not become prescribed. E

[5] The respondent subsequently sold the property to Ms Lynette Prinsloo (Prinsloo) who, before taking transfer, applied to the appellant for the supply of municipal services such as electricity, waste removal and water to the property. A municipal official refused to open an F account in her name and informed her that she would be held liable for the historical debt. Prinsloo accordingly gave instructions to the attorney who was to deal with the transfer not to proceed with it until the issue of the historical debt had been resolved.

[6] The respondent then approached the Gauteng Division of the High Court, G Pretoria, seeking, among others, an order declaring that he, 'or his assigns and successors in title of the Property', were not liable for the historical debt owed to the appellant by previous owners. On 8 September 2014 the High Court (Fourie J) granted the following order in favour of the respondent:

'1.

It is declared that: H

1.1

the security provided by s 118(3) of Act 32 of 2000 [the Act] in favour of the respondent with regard to the property known as erf 296, Wonderboom Township, Registration Division JR, Gauteng [the property], was extinguished by the sale in execution and subsequent transfer of that property into the name of the applicant; I

1.2

the applicant (or his successor in title) is not liable for the payment of outstanding municipal debts older than 2 years which were incurred by his predecessor(s) in title prior to the date of transfer of the said property into his name;

1.3

the respondent has no right to refuse the supply of municipal services (such as electricity, water, sanitation and waste J

2016 (3) SA p234

Baartman AJA (Mpati P, Bosielo JA and Saldulker JA concurring)

A removal) to the applicant (or his successor in title) with regard to the said property only because of outstanding municipal debts older than 2 years.

2.

There shall be no order with regard to costs.'

With leave of the court a quo, the appellant now appeals against this B order.

[7] The relevant parts of s 118 provide as follows:

'(1) A registrar of deeds may not register the transfer of property except on production to that registrar of deeds of a prescribed certificate —

(a)

issued by the municipality or municipalities in which that property C is situated; and

(b)

which certifies that all amounts that became due in connection with that property for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties during the two years preceding the date of application for the certificate have been fully paid.

D . . .

(3) An amount due for municipal service fees, 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...