About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2015
>>
[2015] ZAGPJHC 79
|
|
Stand 278 Strydom Park (Pty) Ltd v Ekurhuleni Metropolitan Municipality (23503/2014) [2015] ZAGPJHC 79 (27 April 2015)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 23503/2014
DATE:
27 APRIL 2015
In
the matter between:
STAND
278 STRYDOM PARK (PTY)
LIMITED
.................................................................
Applicant
And
EKURHULENI
METROPOLITAN
MUNICIPALITY
.....................................................
Respondent
JUDGMENT
Strydom
AJ
[1]
On 26 June 2014, the applicant, the owner
of certain immovable property (“the property”) falling
within the boundaries
of the respondent’s municipality,
launched an urgent application in terms of which in Part A of the
Notice of Motion it sought
an order interdicting the respondent from
terminating the supply of municipal services to the property.
[2]
The interim relief in Part A of the
application was conceded and the agreement reached was made an order
of court on 1 July 2014.[3]
In
Part B of the Notice of Motion the applicant applied for an order
that :
3.1
It is declared that the applicant is not
liable to the respondent for arrears or charges on account held by
previous owners of the
property.
3.2
It is declared that the respondent is not
entitled to terminate the supply of services to the applicant on the
grounds that previous
owners of the property are indebted to it.
3.3
The respondent shall pay the cost of this
application.
[4]
This relief was conceded in the heads of
argument on behalf of the respondent on 4 December 2014 and the
concession was confirmed
at the hearing of this matter. The
only outstanding issue as far as Part A and Part B of the applicant’s
Notice of
Motion are concerned is the costs. The question
relating to the costs concerning Part A of the urgent application was
reserved.
[5]
I will deal with this issue upfront. The
respondent threatened to disconnect the electricity supply to the
property which threat
was in breach of a existing final order not to
disconnect the electricity obtained as far back as 2 April 2014.
[6]
I am of the view that the applicant was
entitled to bring the application on an urgent basis and considering
the concession of the
relief sought, the respondent should be held
liable for the costs of the urgent application. As far as
Part B of the
application is concerned, the respondent on 4 December
2014 conceded the relief. Consequently the respondent should be
liable
for the costs of this application incurred up to and including
4 December 2014.
[7]
Considering the concession the applicant
will be entitled to an order in terms of paragraph 1 and 2 of Part B
of the application
and to a costs order as stated above.
[8]
The respondent also brought a
counterapplication and this application was the matter that was
argued before me. I will refer
to the parties as in convention.
[9]
In this counterapplication the respondent
sought the following declaratory relief:
9.1
That it is declared that –
9.1.1
The municipal debts for property rates and
taxes and charges for the provision of municipal services of all
prior and or current
owners of erven 221, 222, 225, 226 and 900
Germiston South, constitute charges upon the said properties per
section 118(3)
of the
Local Government Municipal Systems Act 32 of
2000
.
9.1.2
Such charges upon the properties afford the
applicant a
sui generis
lien
having the effect of a tacit statutory hypothec, created by operation
of law, over the properties.
9.1.3
The properties are, upon the granting of a
monetary judgment against Prosco (Pty) Limited, Break Even 68 (Pty)
Limited or Stand
278 (Pty) Limited, or any other person legally
responsible for any such municipal debt owing to the applicant in
respect of the
properties and subject to the further order to such
effect being granted, to be considered as executable for the sum of
such judgment.
9.1.4
That the respondent pay the costs of this
counter application in the event of opposition.
[10]
The counter application was opposed and
affidavits filed.
[11]
In effect the respondent is applying for a
declarator declaring that section 118(3) of the Local Government
Municipal Systems Act
32 of 2000 (“the Systems Act”)
should be interpreted to mean as set out in its Notice of Motion.
First, the respondent
requires form this court to interpret this
section to mean that the municipal debt incurred in relation to
property rates, taxes
and charges for the provision of municipal
services pertaining to all prior owners of the property (“the
historical debt”)
constitute charges upon the property in terms
of section 118(3) of the Systems Act. Second, the
respondent asked the
court to label the statutory right involved “a
sui generis
lien
having the effect of a tacit statutory hypothec, created by operation
of law, over the property”. Thirdly, that
these
properties are, upon the granting of a monetary judgment against the
historical owners, or any other person legally responsible
for any
such municipal debt, and subject to an order to such effect being
granted, to be considered executable for the sum of such
judgment.
[12]
What the respondent is now seeking is a
declaratory that should it obtain a monetary judgment in future,
which remains unpaid, then
this court must now, at this stage, find
that execution against the applicant’s property can be
effected.
[13]
The effect of granting such an order would
be that if a judgment is obtained against anybody for payment of the
debt for arrear
municipal fees, rates and taxes in relation to the
properties of the applicant, and the judgment amount remains unpaid,
the applicant’s
properties may be sold in execution if the
applicant fails to pay the debt of the historical owners. Without a
doubt such order
will have far reaching consequences as the judgment
will be used to declare other properties executable should there be
unpaid
historical debt owing to municipalities.
[14]
At
the outset of the matter, Mr Miltz representing the applicant, argued
that considering that the respondent asks for declaratory
relief, and
considering that the court has a discretion in this regard, the court
should not exercise its discretion in favour
of the respondent and
should refuse to grant the order. He argued that after the
relief in Part B of the Notice of Motion
of the applicant was
conceded, there remained no actual dispute or
lis
between the parties. He argued that one of the recognised
circumstances in which a court may decline to deal with a matter
is
where there is no actual dispute in existence between the parties.
For this proposition I was referred to
Ex
Parte Nel
[1]
,
Mohamed
v Mohamed
[2]
and to
Compagnie
Interafricaine de Travaux v SA Transport Services.
[3]
It was argued that a court should decline to exercise its discretion
where the questions raised is hypothetical, abstract
and academic.
It was pointed out that it would be unlikely for a court to exercise
a discretion to make a declarator where
not all the parties having an
interest in the matter have been joined. For this proposition he
relied on
Stadsraad
van Randburg v Rudolph NO
[4]
[15]
The affidavits do not record that the
respondent has taken any steps yet to recover the historical debt
from the parties liable
therefor. Indeed, it does not appear
from the affidavits whether the historical debt remains claimable or
even if the respondent
has a valid claim therefor. On the
papers it is clear that the respondent has not obtained a judgment
against any one of
the previous owners regarding their alleged
outstanding debt. In fact, the wording of paragraph 1.3 of the notice
of motion in
the counter application makes it clear that the relief
is sought subject to the granting of a monetary judgment for
payment
of arrear municipal debt in relation to the properties of
applicant.
[16]
It was argued on behalf of the applicant
that unless and until the respondent obtains a judgment or judgments
against the parties
liable for the municipal debts, and if same is
not paid and the respondent attempts to execute its judgment against
the property,
only then if the applicant is still the owner of the
property, will there be a
lis
between the current parties which can become the subject of further
litigation.
[17]
Considering that it is the respondent’s
view that it can foreclose on the property once a monetary judgment
has been obtained,
the court must consider whether the rights of
other parties may be affected should such an order be made. In this
regard the interests
of the bond holders with registered bonds over
the properties come into the equation. Bondholders may have an
interest in
the matter as the extent of their security may be
diluted. A bondholder will have a direct and substantial interest in
any litigation
the outcome of which may have an effect on the value
of its security.
[18]
Considering that the respondent has not
obtained judgment against the debtors, the debt may be disputed by
the historical owners.
They may do so as they may still have a
monetary interest in the existence and extent of the debt as they
might have indemnified
subsequent purchasers against outstanding
municipal fees. These debts might have prescribed. Currently
the only indication
pointing to the existence of historical debt is
to be found in two documents annexed to the applicant’s
founding affidavit
marked “FA12” and “FA13”.
These documents purport to be notices of intention to disconnect
services issued
by the respondent. In these notices, which were
served on two previous owners, it is stated that the total arrear
balance
outstanding as at 6 June 2014 and 5 June 2014 amounted to
R1 119 657,13 and R4 069 251,54 respectively.
These notices would constitute no more than written demands which
were made as further steps to apply for judgments.
[19]
The reasons why the respondent is seeking
declaratory relief from this Court have been stated in the
respondent’s founding
affidavit in the following terms:
“
14.
However, in light of recent judgments of the Supreme Court of Appeal
the Municipality now intends to take steps to recover the
debts owed
to it by means of execution against the properties concerned.
15.
Vis-à-vis the matter at hand, prior to taking such steps and
specifically in light of the contents of the main application
and the
orders sought therein by Stand 278 (Pty) Limited, the municipality
requires clarity in the form of the order sought in
this counter
application in order to proceed with claims against, inter alia,
Prosco (Pty) Limited, Break Even 68 (Pty) Limited
and/or Stand 278
(Pty) Limited for the charges against the properties concerned in
this matter.
16.
To this end and in this counter application the municipality seeks
the declaratory orders as set out in the Notice of Motion
in this
counter application.”
[20]
As stated above, the relief in Part B of
the Notice of Motion has been conceded. What the respondent
also concedes in these
quoted paragraphs is that it has not started
to take steps against the previous owners that are responsible for
the historical
debts. It first wants this court to confirm the
legal position and to declare the properties of the applicant
executable.
On the respondent’s own version, the Supreme
Court of Appeal delivered judgments to the effect that execution can
be effected
against the properties in relation to which the debts
were incurred. If this is the respondent’s contention, it
remains
unclear why it requires from this Court to re-state the law.
I am of the view that to require from this Court to declare the
properties of the applicant executable to recoup historical debt
without any judgment that such debt is outstanding and payable
is
untenable.
[21]
In
the ordinary course the sequence of events before a property is
declared executable will be to obtain a monetary judgment and
thereafter to declare the property held in security executable.
It has definitively been found in various cases that section
118(3)
provides security for a municipal debt and do not give rise to a
cause of action.
[5]
[22]
The order which the respondent is seeking
is for a declaration declaring the properties executable should it in
future obtain a
monetary judgment. That it will obtain such a
judgment in relation to the properties of the applicant is not a
fait
accompli.
The possibility exist that
the respondent can fail to obtain a judgment or even that if it
obtains such a judgment the previous
owners might pay outstanding the
outstanding debt. The debt might have prescribed. In such
circumstances the declaration in terms
of which the properties of the
applicant were declared to be executable would have been totally
unnecessary and will have no practical
effect.
[23]
I am of the view that before a court can
declare property executable, the principle obligation, i.e. the
principal debt must be
established and a judgment obtained.
This will not necessarily be the position in liquidation proceedings
but this is not
what we are dealing with in this matter. Once a
judgment is obtained relating to the principal debt, a party can
proceed
to obtain an order to declare the security in relation to
that debt to be executable. Without the debt being determined,
there is no dispute or
lis
that exists between the applicant and the respondent. The
relief that the respondent conceded which the applicant sought
in
Part B of its application made it clear that the applicant is not
liable to the respondent for arrears or charges on accounts
held by
previous owners of the properties. Whether the respondent can execute
against the property of the applicant to obtain payment
of historical
debts is another matter.
[24]
I
am not convinced of the correctness of the argument advanced on
behalf of the respondent to the effect that a municipality, pursuant
to the terms of section 118(3), can execute against properties of a
current owner in relation to previous owners’ historical
debt
outside the ambit of a transfer of the property where a preference is
provided over any mortgage bond registered against the
property.
I do not intend to decide this issue as it is my view that without a
dispute or
lis
between the parties in this matter I should not exercise my
discretion in favour of the respondent to grant declaratory relief.
I am in agreement with the argument and cases referred to by counsel
for the applicant that where no
lis
exist
between litigation parties a court should not exercise its discretion
in favour of ordering declaratory relief.
[6]
The
relief that the respondent is seeking is sought in a vacuum as there
exists no judgment debt to be enforced against the applicant’s
property. Once such judgment is obtained and the extent of the
liability is established, the respondent can approach a competent
court for a declarator in terms of which the properties are to be
declared executable. Whether such a court will grant such an
order
will depend on its interpretation of section 118(3) of the Act.
[25]
Accordingly the counter application should
be dismissed.
[26]
I make the following order:
26.1
It is declared that the applicant is not
liable to the respondent for arrears or charges on accounts held by
previous owners of
the property situated at the corner of Webber and
Angus Streets, Germiston (“the property”).
26.2
It is declared that the respondent is not
entitled to terminate the supply of services to the applicant on the
ground that previous
owners of the property are indebted to it.
26.3
The respondent is ordered to pay the
reserved costs of the A part of the urgent application.
26.4
The respondent is ordered to pay the costs
incurred up until 4 December 2012 in relation to the B part of the
urgent application.
26.5
The counter application is dismissed with
costs, including the costs of senior counsel.
Strydom
AJ
Date
of Hearing: 11 March 2015
Date
of Judgment: 27 April 2015
Counsel
for Applicant: I Miltz SC
Instructed
by: Avi Gluch Attorneys
011485
7445
Counsel
for Respondent: N Felgate
Instructed
by: KM Mmuoe Attorneys
011484
0945
[1]
1963
(1) SA 754
(A) at 760B
[2]
1976
(3) SA 151
(T) at 154 D-G
[3]
[1991] ZASCA 16
;
1991
(4) SA 217
(A) at 230
[4]
1984
(3) SA 469
(W)
[5]
State
v Tshwane Metropolitan Municipality v Mathabathe & Another
2013 (4) SA 319
(SCA) at paras [1] and [9] at 320I – 321C and
324B, C-D;
Mitchell
v City of Tshwane
2015 (1) SA 82
at [9] 86 B-F
[6]
Nell
supra at 760B; Dempa Investments v Body Corporate Los Angeles
2010
(2) SA 69
WLD at 76 A-C