About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2008
>>
[2008] ZAWCHC 65
|
|
Real People Housing (Pty) Limited v City of Cape Town (9692/07) [2008] ZAWCHC 65; 2010 (1) SA 411 (C) (21 November 2008)
RE
PORTABLE
IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)
Before
the Hon Mr Justice NJ Yekiso
Case No.: 9692/07
In this matter between:
REAL PEOPLE HOUSING (PTY) LIMITED
Applicant
And
THE CITY OF CAPE TOWN
Respondent
Counsel for
Applicant:
Adv
Derek Mitchell
Attorneys for App
licant:
Bowman
Gilfillan Inc
Counsel for
Respondent:
Adv
E Fagan
Attorneys for Respondent:
Fairbridges
Date of Hearing:
13
October 2008
Date of Judgment:
21
November 2008
IN THE
HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)
CASE NO
: 9692/07
In this matter between:
REAL PEOPLE HOUSING (PTY) LIMITED
Applicant
And
THE
CITY OF CAPE TOWN
Respondent
JUDGMENT DELIVERED ON 21 NOVEMBER 2008
YEKISO, J
The applicant, a limited liability company incorporated in terms of
the Company laws of the Republic of South Africa, based in
East
London, has instituted proceedings out of this Court, on Notice of
Motion, for relief, in the form of a declarator, in the
following
terms:
Declaring that the respondent is obliged, upon request from the
applicant, to furnish the applicant with full and itemised
particulars of the amounts which became due for payment in respect
of municipal service fees, surcharges on fees, property
rates and
other municipal taxes, levies and duties (and which remain unpaid)
for a period of two years prior to the date of
the request in
respect of any property owned by the applicant;
Declaring that the respondent is obliged, on receipt of payment of
such sum tendered specifically for the purposes of discharging
that
indebtedness, to issue to the applicant a certificate as
contemplated in
section 118(1)
of the
Local Government: Municipal
Systems Act, 32 of 2000
;
Declaring, more specifically, the respondent’s refusal to
issue such a certificate to the applicant in respect of erf
23548
Khayelitsha, to be unlawful.
The ancillary relief, contained in paragraphs 4 and 5 of the relief
sought, relate to such further or alternative relief that
this Court
may deem fit to grant and as well as the cost order against the
respondent in the event of the issues in dispute being
determined in
favour of the applicant.
The respondent in these proceedings is the City of Cape Town
Metropolitan Municipality, it being a Municipality established in
terms of
section 12
of the
Local Government: Municipal Structures
Act, 117 of 1998
, having its principal place of business at 12
Hertzog Boulevard, Foreshore, Cape Town.
The application was argued before me on Monday, 13 October 2008.
After hearing argument, I reserved judgment and indicated
to the
parties that I would deliver judgment shortly thereafter.
Unfortunately, preparation of this judgment was interrupted
by other
duties which included circuit work during the week commencing 27
October 2008. In the paragraphs which follow is my
judgment in the
matter.
FACTUAL BACKGROUND
The background to the relief sought, which is not in dispute in
terms of the papers, is succinctly set out in the founding affidavit
as follows: The applicant is the owner of several immovable
properties situate within the jurisdiction of the respondent.
The
applicant wishes to transfer some of these properties to the
purchasers thereof and, for this purpose, requires a certificate
contemplated in
section 118(1)
of the Local Government: Municipal
Systems Act, 32 of 2000 (“Municipal Systems Act”) issued
by the respondent.
The certificate required is what is commonly
referred to in conveyancing practice as a ‘clearance
certificate’,
it being a certificate of a kind published under
Government Notice 686 contained in Government Gazette 24886 dated 23
May 2003.
The particulars of the properties owned by the applicant are fully
set out in paragraph 17 of its founding affidavit. All
are
residential properties situate in such areas as Langa, Crossroads
and Khayelitsha, all such areas being within the metropolitan
area
of the City of Cape Town. The applicant is not, and has never
been, the occupier of the relevant properties nor, in respect
of all
such properties, a landlord in the sense of having concluded lease
agreements with persons in occupation of such premises
or received
rentals from persons in occupation thereof.
In order to be in a position to effect transfer of the properties it
has sold, so alleges the applicant in its founding papers,
the
applicant has since July 2005 engaged the respondent requesting the
respondent to furnish it (the applicant), in respect
of each such
properties, with full and itemised particulars of the amounts which
became due for payment in respect of the various
charges over the
period of two years preceding the date of its application for a
clearance certificate, simultaneously tendering
to pay for such
charges as against issuance, in favour of the applicant, of the
required clearance certificates. The respondent
refuses to furnish
the applicant with the particulars so requested and has steadfastly
adopted the position that it will only
provide the required
certificate once the arrears, even those older than a period of two
years preceding the date of its application,
shall have been paid in
full.
On 18 November 2005 the applicant’s attorneys addressed a
letter to the respondent requesting clearance figures in respect
of
properties owned by the applicant, a detailed breakdown in respect
of itemised charges simultaneously recording that in the
event of
the respondent refusing to provide such requested figures, to give
full reasons for such refusal. In response to this
request, the
respondent provided the applicant’s attorneys with documents
headed “Rates Clearance Schedules”
in respect of each of
the applicant’s properties. The total balances outstanding
in terms of such “Rates Clearance
Schedules” not only
included debts that became due during the two year period preceding
the issuing of such “Rates
Clearance Schedules” but also
included debts that became due more than two years prior to the
dates of the “Rates
Clearance Schedules”. The “Rates
Clearance Schedules” are dated 30 January 2006.
The attitude of the respondent as to the amount payable prior to a
clearance certificate being issued is reflected in the respondent’s
letter in response to the applicant’s attorneys’ letter
dated 18 November 2005. The relevant portion of the letter
reads:
“As to your reference to the two year limitation
it is not disputed, however, this Council has a By-Law in terms of
which
all monies received are always allocated to the oldest debt
first. Therefore, in order to pay the last two years’ debt,
all previous debts have to be settled.”
Thus, it is
evident on basis of the respondent’s letter that it (the
respondent) bases its refusal to issue a clearance
certificate on
its interpretation and the application of the provisions of section
118(1) of the Municipal Systems Act.
In what the applicant describes as a final effort to move forward in
regard to the dispute between the applicant and the respondent
regarding the amount payable and the issuing of a clearance
certificate, the applicant selected one of its properties, it being
erf 23548 Khayelitsha as a test case, In respect of this property,
and based on the “Rates Clearance Schedules”
dated 30
January 2006, the applicant extracted the balance for the two year
period preceding the date of the “Rates Clearance
Schedule”
provided by the respondent in respect of the property selected.
The extracted balance amounted to R3,673-48
which is substantially
less than the amount of R21,345-10 which the respondent contends is
due and payable before it can issue
the required clearance
certificate.
The aforementioned amount of R3,673-48 was forwarded to the
respondent under cover of a letter dated 30 May 2006. The letter
was received by the respondent on 2 June 2006. The letter
explained the basis of the payment, demanded a clearance certificate
and also requested the reasons should the respondent refuse to issue
the required clearance certificate. The relevant part
of the
letter reads:
“The above property has
reference. We refer to our earlier requests for clearance figures
for the purpose of section 118
Clearance Certificate and enclose
herewith our cheque for R3,673-48 being the amount payable in terms
of section 118(1)(b) which
limits the amount payable to two (2)
years.
Please issue the clearance certificate within three (3)
days hereof.”
The respondent banked the amount paid by the applicant but credited
it towards the oldest debt. The respondent did not provide
reasons
for refusing the issue a clearance certificate. It is under these
circumstances that the applicant contends it is faced
with the
choice of either paying more than it is required to do in terms of
section 118(1) of the Municipal Systems Act in order
to obtain the
required clearance certificate or being unable to transfer the
properties that it has sold. Once the applicant
did not get
satisfaction from the attitude adopted by the respondent, it
resorted to these proceedings, instituted out of this
Court for the
declaratory and the ancillary relief set out in the Notice of
Motion.
THE LEGAL MATRIX
The Municipal Systems Act is a sequel to the Local Government:
Municipal Systems Bill. It was piloted in both the National
Assembly and the National Council of Provinces during the 2000
Parliamentary sittings. Once enacted, it became a third piece
of
legislation to give effect to the Local Government White Paper, the
first two having been the
Local Government: Municipal Demarcation
Act, 27 of 1998
and the
Local Government: Municipal Structures Act,
117 of 1998
. While the first two pieces of legislation deal with
the institutional and jurisdictional aspects of local government,
the
Municipal Systems Act sought to establish the basic principles
and mechanisms to give effect to the collective vision of
“developmental
government”. Thus its focus is
primarily on the internal systems and administration of the
municipality
1
.
It was subsequently enacted into law and came into operation on 1
March 2001. It is a transformative piece of legislation
designed
to represent a complete break with the apartheid system of local
government
2
.
The Municipal Systems Act was enacted at the backdrop of capacity
problems of local government arising from a culture of
ungovernability
in some metropolitan areas; huge backlogs in
recovery of municipal fees and sought to introduce innovations to
service delivery
in local government which, amongst others, included
the empowerment of municipalities to implement tough and effective
credit
control and debt collection strategies; to deal with
non-payment for services while, at the same time, making sure that
proper
customer management systems are established and that the
genuinely indigent receive the targeted relief
3
Section 118(1) of the Municipal Systems Act places a temporary
restriction on the ability of an owner of property to alienate
that
property if there are outstanding charges owed to the municipality
in respect of that property
4
.
In its initial form the section provided as follows under the
heading “Restraint of transfer of property”:
“
Restraint on transfer of property
A registrar of deeds or other registration officer of
immovable property may not register the transfer of property except
on production
to that registration officer of a prescribed
certificate –
Issued by the municipality in which that property is
situated; and
Which certifies that all amounts 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.
(1A) A prescribed certificate issued by a municipality
in terms of subsection (1) is valid for a period of 120 days from the
date
it has been issued.
In the case of the transfer of immovable property by a
trustee of an insolvent estate, the provisions of this section are
subject
to section 89 of the Insolvency Act, 1936 (Act 24 of 1936).
An amount due for municipal service 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.”
Section 118 of the Municipal Systems Act was amended by the
Local
Government Laws Amendment Act, 51 of 2002
. In effect the amendment
merely adds two further subsections to the section as it appeared in
its initial form. The two subsections
provide as follows:
“
(4) Subsection (1) does not apply to –
a transfer from the national government, a provincial
government or a municipality of a residential property which was
financed
with funds or loans made available by the national
government, a provincial government or a municipality; and
the vesting of ownership as a result of a conversion
of land tenure rights into ownership in terms of Chapter 1 of the
Upgrading
of Land Tenure Rights Act, 1991 (Act 112 of 1991):
Provided that nothing in this subsection precludes the
subsequent collection by a municipality of any amounts owed to it in
respect
of such property at the time of such transfer or conversion.
(5) Subsection (3) does not apply to any amount referred
to in that subsection that became due before a transfer of a
residential
property or a conversion of land tenure rights into
ownership contemplated in subsection (4) took place.”
The amendment was assented to on 4 December 2002 and came into
operation on 5 December 2002.
The embargo provisions in section 118(1) of the Municipal Systems
Act, affording as they do a municipality a right to prevent
the
transfer of a property until its claim in respect of an outstanding
debt for the two years preceding the date of an application
for a
clearance certificate, is not without precedent. Various
provincial Ordinances contained, in the language of Lourens
du
Plessis
5
,
veto or embargo provisions similar to those provided for in section
118(1) of the Municipal Systems Act in the sense of providing
for a
restraint on transfer of properties pending payment of outstanding
municipal fees. All these provincial ordinances have,
however,
since been repealed by the
Local Government Laws Amendment Act
referred
to in paragraph [15] of this judgment. What has been
referred to in the preceding paragraphs is the legal matrix within
which
the provisions of section 118(1) of the Municipal Systems Act
has to be interpreted and applied.
MUNICIPAL BY-LAW AND DEBT COLLECTING POLICIES
To complete the picture on the legal matrix it is perhaps
convenient, at this stage, to refer to other aspects of the
Municipal
Systems Act which are referred to in the papers and in
argument before me, and as well as By-laws and debt collection
policies
promulgated by the respondent which may have a bearing on
the interpretation of and the application of the provisions of
section
118(1) of the Municipal Systems Act. These aspects relate
to sections 96 and 98 of the Municipal Systems Act which deal with
debt collection responsibility of municipalities and By-laws to give
effect to credit control and debt collecting policies respectively.
Section 96 of the Municipal Systems Act, under heading “Debt
collection responsibility of municipalities” provides:
“A
municipality –
must collect all money that is due and payable to it
subject to this Act and any other applicable legislation; and
for this purpose, must adopt, maintain and implement a
credit control and debt collection policy which is consistent with
its
rates and tariff policies and complies with the provisions of
this Act.”
The respondent’s Credit Control and Debt Collection By-law was
published in the Provincial Gazette No 6364 dated 15 June
2006. On
30 May 2007 the respondent adopted a Credit Control and Debt
Collection Policy. Paragraph 8 of the aforementioned
policy
document provides, under the heading “Allocation of debt”:
“
Payment of any undisputed debt, in terms of
section 7 of the City of Cape Town’s Credit Control and Debt
Collection By-law,
will firstly be allocated to the oldest debt first
divided equally amongst all amounts outstanding progressing to the
latest debt.”
It is thus within the legal matrix set out in the preceding
paragraphs that I have to determine whether the provisions of section
118(1) of the Municipal Systems Act, properly interpreted, do justify
the granting of the relief prayed for in the Notice of Motion.
THE SUBMISSIONS BY THE PARTIES
The crux of the applicant’s submissions is simply this: The
provisions of section 118(1) of the Municipal Systems Act
are clear.
The municipality is obliged to issue a clearance certificate if
the sums falling due during the two-year period
preceding the date
of an application for a clearance certificate have been paid. The
respondent’s refusal to furnish
the applicant with precise
amounts payable is, in effect, an arbitrary deprivation of one of
the incidents of ownership, namely,
the ability to alienate the
owner’s immovable property and, as it were, such refusal falls
squarely within the concept
of “deprivation” as
contemplated in section 25(1) of the Constitution of the Republic of
South Africa, 1996. In
any event, so it is further submitted on
behalf of the applicant, it is the rule of the common law that a
debtor may nominate
the debt to which his payment has to be applied,
provided he does so at the time of payment, citing Christie:
The
Law of Contracts in South Africa
, 5
th
Ed 427-431 and
Van der Merwe
et al, Contract: General Principles,
3
rd
Ed 518-519 in support of this contention.
On the other hand, the submission on behalf of the respondent is
simply this: Section 118(1) of the Municipal Systems Act deals
with a legislative restraint on the transfer of the property. It
is a restraint that is placed on registration of deeds and,
as such,
imposes no obligation of any kind on municipalities. Section
118(4) makes provision for the transfer of property owned
by any of
the three spheres of government and as well as for the vesting of
ownership as a result of the conversion of land tenure
rights into
ownership. In these instances, no clearance certificate is
required. However, there is a proviso which permits
the
municipalities to collect amounts owed to them subsequent to such
transfer. It is thus submitted on behalf of the respondent
that
the absence of a similar provision to subsection (1) is indicative
of the fact that the legislature assumed that all arrears
would be
paid prior to the transfer of any privately owned property being
effected. Lastly, the respondent argues that the interpretation
which the applicant seeks to place on the provisions of section
118(1) would undermine, to a considerable degree, the respondent’s
objectives and functions as contemplated in section 152(1) of the
Constitution.
PRINCIPLES OF INTERPRETATION
Venter v R
1907 TS 910
is regarded as the
locus classicus
insofar as the approach to interpretation of statutes by the
courts is concerned
6
.
In that judgment, the then Transvaal Supreme Court as far as the
beginning of twentieth century, stated the aim of interpretation
as
being –
“
to ascertain the intention which the legislature
meant to express from the language which it employed. By far the
most important
rule to guide courts in arriving at that intention is
to take the language of the instrument, or the relevant portion of
the instrument
as a whole; and, when the words are clear and
unambiguous, to place upon them their grammatical construction and to
give them their
ordinary effect.”
This primary rule of interpretation is subject to the following
exceptions, as stated by Innes J at p913. According to Innes
J,
these exceptions –
“
arise from the difficulty – a difficulty
inherent in the nature of language – that no matter how
carefully words are
chosen, there is a difficulty in selecting
language which, while on the face of it expressing generally the idea
of the framer
of the measure, will not, when applied under certain
circumstances, go beyond it, and, when applied under other
circumstances,
fall short of it.”
The intention of the legislature is also to be established with
reference to the context of the statute, which includes the
enactment as a whole, enactments in
pari materia
and the
mischief sought to be remedied. In
Hoban v Absa Bank Ltd t/a
United Bank & Others
7
it was held that context is the equivalent of legislative
intention:
“
There is no justification for the distinction……
between linguistic context and legislative intention. The moment
one has to analyse context in order to determine whether a meaning is
to be given which differs from the defined meaning, one is
immediately engaged in ascertaining legislative intention. One
remains so engaged until the interpretation process is concluded.
It is only concluded when legislative intention is established. As
remarked by E Cameron ‘… context does no more
than
reflect legislative meaning which in turn is capable of being
expressed only through words in context’.”
8
With these rules of interpretation in mind, I shall now proceed with
the analysis and the interpretation of what the provisions
of section
118(1) of the Municipal Systems Act were meant to convey.
THE INTERPRETATION OF SECTION 118(1)
A matter of interpretation of section 118(1)(b) of the Municipal
Systems Act came before Kondile J in
Geyser & Another v
Msunduzi Municipality
2003(3) BCLR 235(N). In that case a
property owner had been indebted to the municipality in an amount of
R 37,835-75 from February
1998 and a further amount of R88,098-93 by
the time the tenants had left the property on 7 April 2002. In
that matter, as is
the case in respect of this matter before me, the
applicant contended that her liability to the municipality, for
purposes of
issuing of a clearance certificate, was limited to a
period of two years preceding the date of application for a
clearance certificate.
It appears that, in the instance of that
matter, the municipality agreed with the contention of the property
owner, that the
liability for purposes of issuing the property owner
with the clearance certificate was restricted to a period of two
years preceding
the date of application and also with the exact
amount of liability incurred during that period. Consequently,
Kondile J was
not required to rule on the declarator sought by the
applicant as it was unnecessary for him to make a declaratory order
in respect
of non-issue (at 245 C-E).
In
BoE Bank Ltd v Tshwane Metropolitan Municipality
9
the provisions of section 118(1) and the interpretation thereof
was not one of the issues in contention. In that case NBS Bank
took judgment against the owner of the property for money lent and
advanced under the mortgage bonds. In terms of the judgment,
the
property was declared executable. Judgment was taken during June
2001. Towards the end of October 2001, the attorneys
appointed to
attend to the transfer of the property pursuant to a sale in
execution applied to the municipality for the clearance
certificate
contemplated in section 118(1) of the Municipal Systems Act. The
certificate issued by the municipality showed
an amount of R
287,900-29 owing in respect of municipal rates and services for the
two years preceding the date of application
for the certificate, ie,
since October 1999. The same certificate, however, also reflected
a further balance outstanding in
an amount of R655,273-83 in respect
of municipal debts that became due prior to October 1999, ie before
the commencement of a
two year period preceding the date of the
application. In terms of the condition of sale the purchaser
undertook pay various
amounts apart from the purchase price,
including any charges necessary to effect transfer of the property.
In respect of this
matter, it was accepted as common cause that the
purchaser was liable to pay an amount of R 287,900-29 certified to
be owing
in respect of the two year period since October 1999.
There consequently was no dispute about the latter amount, the
dispute
having been confined to the historical debt
10
.
In
City of Johannesburg v Kaplan NO & Another
11
Heher JA made the following observation in summarising the
operation of section 118(1) and (3) of the Municipal Systems Act in
instances where the municipal debtor is not subject to a
sequestration or liquidation order:
“
When such a debtor is not subject to such an
order –
No property may be transferred unless a certificate is
produced to the registrar of deeds that certifies full payment of
all
municipal debts as described in section 118(1) which have
become due during a period of two years before the date of
application
for the certificate.
Any amount due for municipal debts (ie not limited by
the aforesaid period of two years) that have not prescribed is
secured
by the property and, if not paid and an appropriate order
of court is obtained, the property may be sold in execution and the
proceeds applied in payment of the debts.”
12
Heher JA thus clearly distinguishes between the amount that became
due and payable during the two year period preceding the date
of
application for a clearance certificate and an amount falling outside
the period of two years which, in the instance of the
matter before
him, was to be secured by the property.
He concludes by making an observation that:
“
(i)n such event, the proceeds will be applied to
payment of the municipal debts in full. Only after satisfaction of
such debts
will the remainder, if any, be available for payment of
debt secured by a mortgage bond over the property.”
13
What was at issue before the Constitution Court in
Mkontwana v
Nelson Mandela Metropolitan Municipality
14
was the interpretation of the phrase “in connection with
that property” in section 118(1)(b) and the constitutional
validity of section 118(1) of the Municipal Systems Act. The
challenge was based on the contention that the effect of the
challenged provisions was to deprive the owner of an immovable
property of the right to pass transfer of property to complete
the
process of alienation and that, therefore, the challenged provisions
constitute a deprivation of property as contemplated
in section
25(1) of the Constitution of the Republic of South Africa.
The court, in
Mkontwana,
held that the challenged provisions
did pass constitutional muster, Yacoob J noting that the deprivation
is temporary and that
it lasts two years only. Yacoob J
15
further makes an observation that whilst it is correct that if there
are substantial arrears in respect of outstanding charges
and all
payments over an extended period are for current charges only (ie,
debts incurred subsequent to an application date)
and are credited
to the amount first owing, the substantial sum may remain
outstanding indefinitely and thereby constitute an
obstacle to
transfer. But, Yacoob J qualifies this observation by stating
that if, however, no further obligations are incurred
to increase
the current indebtedness (ie, indebtedness for a period of two years
preceding the application date) of the occupier
the limit on the
power of the owner to transfer the property will last no more than
two years. The remarks of O’Regan
J, in a separate but
concurring judgment, at p570 paragraph [96], should be read in the
context of the observation by Yacoob
J above.
The legal writers and commentators seem to accept that the
indebtedness that the owner of the property has to discharge for
purposes of being issued with a clearance certificate is limited to
a period of two years preceding the date of application for
the
required certificate. Steytler & De Visser
16
note that the Municipal Systems Act places a temporary restriction
on the ability of an owner of immovable property to alienate
that
property if there are outstanding charges owed to the municipality.
The authors go on to restate that a registrar of deeds
may not
register the transfer of property unless the certificate issued by
the municipality in which the property is situated
stating 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 the application for the certificate
have been fully
paid. So also does Du Plessis
17
citing the remarks by Kondile J in
Geyser
18
that the two year limitation in section 118 of the Act also
reflects reasonableness. It therefore appears to me that all the
authorities cited above seem to accept that the amount of
indebtedness of the property owner is limited to a two year period
preceding the date of application for such a certificate. I have
no reason to doubt the correctness of the position as stated
in
authorities cited above. I accordingly conclude that the amount
which the applicant has to pay in discharging its indebtedness
to
the respondent in order to be issued with a clearance certificate is
limited to a period of two years preceding the date of
an
application for the required certificate. This conclusion is
fortified by the remarks of Yacoob in
Mkontwana
where he
remarked in paragraph [19] and in response to the initial insistence
by the municipality that all outstanding charges
had to be paid in
full:
“Somewhat curiously, the municipality
sought payments of amounts that had become due more that two years
and up to five
years before the date of the statement.”
For
the record, the date of application for the required clearance
certificate is 30 January 2006.
I am perfectly in agreement with
Mr Mitchell SC,
in his
submissions and amplified in oral argument in Court that the words
of the statute in point, in the context of its interpretation
and
application, are clear. A clearance certificate must be issued if
the sums falling due in the two year period are paid.
Any sums
which fell due prior to the commencement of the two year period need
not be paid as a condition precedent to the
issue of the required
clearance certificate. This is much more apparent if one has such
authorities as
BoE Bank Ltd v Tshwane Metropolitan Municipality
19
and
City of Johannesburg v Kaplan NO
20
in mind. The next question that needs to be determined is the
question of whether the provisions of section 118(1) of the
Municipal Systems Act impose an obligation on a municipality to
issue a clearance certificate when applied for and payment for
the
two year period preceding the application date is tendered..
SECTION 118(1): OBLIGATION ON MUNICIPALITIES
Mr Fagan,
who appeared for the respondent when the matter
was argued before me, raises a pertinent issue in his submissions
and this is
whether, on a proper interpretation of the provisions of
section 118(1) of the Municipal Systems Act, a municipality is
obliged
to issue a clearance certificate if the following two
factual conditions are met: one, the applicant for a certificate
pays or
tenders to pay all municipal fees owing in respect of the
two year period preceding the date of application for such a
certificate;
and two, after such payment has been made, there are
still municipal fees owing in respect of an earlier period.
Mr
Fagan
then goes on to submit that section 118(1) deals with a
legislative restraint on the transfer of property; that it is a
restraint
that is placed on registrars of deeds; and that the
relevant provisions impose no obligation of any kind on
municipalities.
I do not entirely agree.
Whilst it is correct that section 118(1) deals with a legislative
restraint on the transfer of property and that it is a restraint
that is placed on registrars of deeds, I do not accept that the
relevant provision imposes no obligation on municipalities.
My
disagreement arises out of the values and principles set out in
Chapter Three of the Constitution of the Republic of South
Africa
which sets out principles designed to promote co-ordination rather
than competition between the various spheres of government
and
organs of state. Sections 40 and 41 of the Constitution require
that different spheres of government and different organs
of state
should foster co-operative relations with one another. The
fostering of co-operative relations would, amongst other
things,
entail an obligation not to create obstacles to those who need to
comply with the law and not to adopt measures that
are obstructive,
such as those provisions currently contained in paragraph 8 of the
respondent’s Credit Control and Debt
Collection Policy, to
those who need to comply with the law. Paragraph 8 of the
respondent’s Credit Control and Debt
Collection Policy should
thus be aligned to the obligation on municipalities set out in this
paragraph, and which alignment should
not be inconsistent with those
values and principles set out in sections 40 and 41 of the
Constitution.
Section 118(1) of the Municipal Systems Act requires of the
registrar of deeds not to register the transfer of property except
on production of a certificate which certifies that all municipal
fees due during the two year period preceding the date of
application shall have been paid in full. It may very well be so
that after payment of municipal fees due in respect of the
two year
period preceding the date of application for a certificate there may
still be municipal fees due in respect of the earlier
period such as
was the case in
Geyser
21
,
Kaplan
22
and
BoE Bank Ltd
23
.
The municipality is not without a remedy should it issue a
clearance certificate under such circumstances. Payment by a
property
owner of indebtedness in an amount contemplated in section
118(1)(b) does not relieve the property owner of any liability of an
amount due in respect of an earlier period. The municipality
still retains a right to proceed against the previous owner by
way
of an action to recover the balance outstanding and may even take
appropriate steps to attach the proceeds of sale of the
property as
security for payment of the balance outstanding to be paid once the
process of alienating shall have been completed.
The obligation on
the municipalities arises out of a need not to create obstacles to
those who need to comply with the law,
such as compliance with the
provisions of section 118(1) of the Municipal Services Act and to
foster co-operative relations with
other organs of state such as the
registration of deeds. There is nothing in the approach I adopt in
this paragraph has an
effect of compromising the institutional and
functional integrity of the respondent nor of compromising those
objectives set
out in section 152 of the Constitution of the
Republic of South Africa.
PROVISO IN SECTION 118(4)
In paragraph [16] of this judgment I cite a proviso to subsection
(4) in section 118 of the Municipal Systems Act which makes
provision for the transfer of property owned by any of the three
spheres of government and as well as for the vesting of ownership
which comes about as a result of the conversion of land tenure
rights into ownership. In such instances, no clearance certificate
is required but the proviso permits municipalities to recover the
amount owed from the previous owner. There is no similar
proviso
to subsection 118(1).
Mr Fagan
makes a point that the
absence of a similar proviso to subsection (1) is indicative of the
fact that the legislature assumed that
all arrears would be paid
prior to the transfer of any privately-owned property being
effected. I similarly do not agree.
I say so because payment of
an amount due in respect of the two year period does not
automatically relieve the transferring
owner of his indebtedness to
the municipality in respect of an earlier period as was the case in
City of Johannesburg v Kaplan
,
supra,
where the
municipality sought to recover an amount due in respect of an
earlier period. In
Kaplan, supra,
the municipality adopted
this course of action because there is nothing in the provisions of
section 118(1) which justifies a
construction in terms of which the
transferring owner would be relieved of a liability in respect of an
earlier debt once municipal
fees in respect of the two year period
have been paid. The proviso to subsection (4) was inserted in
order to facilitate legitimate
State land distribution and
development programs as opposed to transactions of a pure commercial
nature. Once again, I am in
perfect agreement with
Mr Mitchell
that the proviso to section 118(4) takes the matter no further.
Nothing can be read in this subsection as taking the right of
the
municipality to recover unpaid sums from the pervious owner or from
adopting measures to secure payment of any amount outstanding
once
the process of alienation shall have been completed.
COMPUTER PROGRAM & LACK OF RESOURCES
In paragraph [8] of this judgment I refer to a letter of 18 November
2005 addressed by the applicant’s attorneys to the
respondent
requesting, amongst other things, a detailed breakdown of itemised
charges of the amounts that became due during the
two years
preceding the date of the application for a clearance certificate.
The respondent failed to supply the required details
the reasons
being, first, that its computer program is not programmed to extract
the information requested and, secondly, since
its computer program
is not programmed to extract the required information, such
information will have to be extracted manually
from the records of
the respondent and that the respondent does not have the resources
to undertake such task manually. This
is not acceptable.
The respondent, as a local sphere of government and an organ of
state, renders a service to the public. It is subject to those
basic values and principles governing public administration
including, amongst other things, a high standard of professional
ethics, efficient, economic and effective use of resources as set
out in section 195 of the Constitution. To drive this point
home I
can do no more than to cite the remarks by Yacoob J in
Mkontwana
paragraph [64] where the learned Justice warned municipalities
that:
“
It is necessary for all municipalities to ensure
that they have reasonably accurate records and that they are able to
provide complete,
credible, comprehensible and reasonably detailed
information in relation to consumption charges that are owing within
a reasonable
time of being requested to furnish it. Without this,
the transfer process is likely to be unduly slowed down. It must be
understood
by all concerned that municipalities have the obligation
to furnish this information to all owners intent upon selling their
property.
It must also be understood that they can be compelled to
provide that information by court proceedings if this should turn out
to be necessary.”
The respondent has a constitutional duty to discharge and execute its
mandate to the public efficiently. It cannot be heard to
be lacking
to fulfil its mandate due to incomplete computer program or want of
resources.
I thus conclude that the respondent is obliged, on request, to
furnish the applicant with such itemised particulars as would
enable
it to determine the amount due in respect of municipal fees due for
payment during the two year period preceding the date
of application
for the required certificate and to issue the applicant with the
required clearance certificate once the amount
due has been paid.
To the extent that the respondent refuses to supply the applicant
with the requested itemised particulars,
I record that such refusal
is unlawful.
It therefore follows, in my view, that the applicant has made out a
proper case for the relief sought in the Notice of Motion.
In the
event, I make the following order:
It is hereby declared that the respondent is obliged, upon receipt
of a request from the applicant, to furnish the applicant
with full
itemised particulars of the amounts which became due for payment in
respect of municipal service fees, surcharges
on fees, property
rates and other municipal taxes, levies and duties (and which
remain unpaid) for a period of two years prior
to the date of the
request in respect of any property owned by the applicant;
It is hereby declared that the respondent is obliged, on receipt of
payment of such sum tendered specifically for the purpose
of
discharging that indebtedness, to issue to the Applicant a
certificate as contemplated by
section 118(1)
of the
Local
Government: Municipal Systems Act, 32 of 2000
;
Further, it is hereby declared that the respondent’s refusal
to issue such a certificate to the applicant in respect
of erf
23548 Khayelitsha, is unlawful.
The respondent is ordered to pay applicant’s costs as between
party and party, duly taxed or as agreed.
……………………………..
N J Yekiso, J
1
Memorandum on the objects of
the Local Government: Municipal Systems Bill, 2000
2
Lourens du Plessis:
Observations on the (un)constitutionality of
section 118(3)
of the
Local Government: Municipal Systems Act, 32 of 2000
. Stellenbosch
Law review 2006 3 p505.
3
Memorandum on the
objects of the Local Government: Municipal Systems Bill, 2000.
4
Steytler, Nico & de Visser,
Jaap: Local Government Law of South Africa p9-54.
5
Op cit
at p509
6
JR de Ville: Constitutional &
Statutory Interpretation p51.
7
1999(2) SA 1036 (SCA) 1044-1045.
8
JR de Ville
op
cit
p52.
9
2005(5) SA 10 (SCA)
10
BoE Bank Ltd v Tshwane
Metropolitan Municipality
supra
at 340 para [3] and
[4].
11
2006(5) SA 10 (SCA)
12
City of Johannesburg v Kaplan
NO & Another,
supra,
18 paragraphs [25]
and [26].
13
At p18 para [26].
14
2005(1) SA 530 (CC)
15
At p551 paragraph 44.
16
See footnote 3 above and at
p9-54 to p9-55,
17
See footnote 2 above and at
p514.
18
2003(3) BCLR 235(N) at 251
19
2005(4) SA 336 (SCA)
20
2006(5) SA 10 (SCA)
21
2003(3) BCLR 235 (N).
22
2006(5) SA 10 (SCA).
23
2005(4) SA 336 (SCA).