SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
in compliance with the law and SAFLII Policy
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 1273 /2023
In the matter between:

KWADUKUZA MUNICIPALITY APPELLANT

and

CONSOLIDATED AONE TRADE AND INVEST
6 (PTY) LTD [IN LIQUIDATION ] FIRST RESPONDENT
VAN DE N HEEVER , THEODOR WILHE LM N O SECOND RESPONDENT
NEL, EUGENE N O THIRD RESPONDENT
NKOMO, MDUDUZI CHRISTOPHER N O FOURTH RESPONDENT

Neutral c itation: Kwadukuza Municipality v Consolidated Aone Trade and Invest 6
(Pty) Ltd [in Liquidation] and Others (1273/2023) [2025] ZASCA
86 (11 June 2025)
Coram : MBATHA , HUGHES and BAARTMAN JJA and VALLY and
MOLI TSOANE AJJA
Heard: 13 March 2025
Delivered: This judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the Supreme Court of Appeal website
and released to SAFLII. The date and time for hand -down of the judgment is deemed
to be 11h00 on 11 June 2025.
Summary: Local Government : Municipal System s Act 32 of 2000 (Municipal Systems
Act) – whether the high court correctly found that payment made under protest was
recoverable – whether the municipality was entitled to retain funds paid under protest
2

in terms of s 10(3) of the Prescription Act 68 of 1969 – whether it is permissible for the
municipality to demand payment for rates beyond the period set out in s 118(1) of
Municipal System s Act – municipality failed to establish right to entitlement of funds
paid under protest.

3



ORDER


On appeal from: KwaZulu-Natal Division of the High Court , Durban (Chili J, sitting as
court of first instance ):
The appeal is dismissed with costs , including the costs of two counsel , where so
employed .


JUDGMENT


Hughes JA (Mbatha and B aartman JJA and V ally and M olitsoane AJJA
concurring ):

Introduction
[1] The crisp issue in this appeal is whether payments made under protest , of
histori cal rates and service charges , owed to the appellant, KwaDukuza Municipality
(municipality) for issuing a rates clearance certificate for transferring property sold is
recoverable , if such falls beyond the two -year period in terms of s 118(1) of the Local
Government: Mu nicipal Systems Act 32 of 2000 (MSA). And whether the payments
made to the municipality fall within the purview of s 10(3) of the Prescription Act 68 of
1969 (the Prescription Act), where payment of a prescribed debt is considered to be
settlement of a debt and irrecoverable.

Background
[2] The fact s giving rise to the dispute are common cause. The first respondent,
Consolidated Aone Trade and Invest 6 (Pty) Ltd (in liquidation) , which I will refer to as
CATI 6, was the owner of Ballito Bay Mall in KwaZulu Natal , which comprised three
immovable properties. On 19 September 2013, CATI 6 was placed under provisio nal
liquidation and finally wound up on 20 March 2015. The second to fourth respondents
were appointed as liquidators of CATI 6 (the liquidators) . On 17 May 20 17, the
liquidators sold the properties of CATI 6 , for an amount of R135 million, to Cyber Savvy
Merchan ts (Pty) Ltd (Cyber Sav vy). To affect the transfer of the pro perties to Cyber
4

Savvy, the liquidators had to apply for the prescribed certificate in terms of s 118 of the
MSA (commonly known as a rates clearance certificate) .

[3] The rates clearance certificate in terms of s 118 is issued by the municipality to
confirm that the municipal service fees, surcharges on fees, property rates and other
municipal taxes, levies and duties charge d upon the property for a period of two years
before the application has been paid in full. Thus, the properties c annot be transferred
by the Dee ds Registrar’s office without the production of th e rates clearance certificate.

[4] On 23 June 2017, the municipality launched pre - and post -liquidation claims
against the liquidators in the winding up proceedings of CATI 6, claiming all charges
incurred before and after the commencement of the winding up. In motion court
proceeding s on 23 August 2017 , the municipality claimed against CATI 6 and the
liquidators , an amount of approximately R13,9 million as constituting that which was
due and payable as at 14 August 2017 .The municipality provided the liquidators with
various rates clearance figures, which were disputed by the liquidators. Various court
applications were pursued by the liquidators and this culminated in issuing rates
clearance figures by the municipality on 13 July 2017 , in the amount of over
R15,6 million . The municipality demanded payment of the full amount by 31 October
2017 , failing which no rates clearance certificate would be issued by the municipality .

[5] The municipality gave notice of its intention to disconnect the services of CATI 6
on 13 November 2017 , when the liquidators disputed that it was entitled to the amount
allegedly owed . Subsequently , on 10 November 2017, the repre sentative of the
liquidators wrote to the attorneys who represented the municipality , whereby CATI 6
reminded the attorney that they had confirmed that there were unresolved queries with
the municipality and, as such, any disconnection of services on 13 November 2017
would be illegal . On 28 November 2017 , CATI 6 and the liquidators tendered a payment
in total of R3 902 583.15 without prejudice and under protest to facilitate the issuing of
the rates clearance certificate.


5

[6] Caber Savvy , the purchaser, launched an urgent applica tion in the high court
against the municipality and other parties and secured an order by consent . In th is
order by Pillay J (the consent order ) the following was agreed upon:
‘1.1 The First Respondent is directed to issue to the Seventh Respondent a statement
immediately upon the grant of this order (and by no later than close of business on
17 November 2017), setting out the computation of the municipal service fees, surcharges on
fees, property rates and other municipal taxes, levies and duties payable to the First
Respondent for the issue of the prescribed certificate envisaged in section 118( 1) of the Local
Government: Municipal Systems Act 32 of 2000 . . .commonly referred t o as a rates clearance
certificate, to effect the transfer of the immovable property situated at […] L[…] Road, Ballito,
KwaZulu -Natal on which the “Ballito Bay Mall” is situated . . .from the Second Respondent to
the Applicant, for the two (2) year period preceding the date of this Order for the issue of the
prescribed certificate envisaged in section 118(1) of the Act, commonly referred to as a rates
clearance certificate .
1.2 That the Sixth Respondent be and is hereby authorised and directed to make payment
to the First Respondent of the alleged amount due to the First Respondent in terms of
paragraph 1.1 hereof , within five (5) days of receipt of the statement referred to in paragraph
1.1 hereof.
1.3 The payment made by the Sixth Respondent in terms of paragraph 1.2 hereof shall be
without prejudice to the Second Respondent’s rights to approach this Court for a declarator as
to the actual amount due, and a refund, if any, of any amounts paid in excess of what was
legally due.
1.4 Upon payment of the amount referred to in paragraph 1.1 and 1.2 of this Order, the
First Respondent is directed to forthwith provide the Second Respondent with the prescribed
certificate envisaged in section 118(1) of the Act, commonly referred to as a rates clearance
certificate in order for the immovable property to be transferred from the Second Respondent
to the Applicant .’
Amongst others, the municipality was ordered to issue the prescribed certificate to
effect the transfer of the properties , Ballito Bay Mall, to the attorn eys Norton Rose
Fulbright South Africa Inc. (Norton Rose) , of Caber Savvy , in terms of s 118(1) of the
MSA ‘for the two (2) year period preceding the date of this Order for the issue of the
prescribed certificate envisaged…commonly referred to as a rates clearance
certificate ’.

[7] Despite the consent order, the municipality failed to co -operate. Finally, o n
19 April 2018 , the attorneys representing CATI 6 and the liquidators advised they would
6

make payment under protest and reserved their rights, of the amount persisted upon
by the municipality . They placed it on record that t his was done ‘solely for the purpose
of obtaining a rates clearance certificate contemplated in section 118(1)…for the
registration of transfer of ownership of Ballito Bay Mall to C yber Savvy…whi ch [was] to
overcome [the municipality ’s] refusal to issue a rate s clearance certificate unless the
sum of R21 165 901.22 [was] paid’. Clearly, the preceding order had not assisted . The
outstanding amount of R21 165 901.22 was paid on 26 April 2018. The
correspondence also spelt out that th e payment was made on a without prejudice basis
and reserv ed the right to raise prescriptio n in respect of such amounts.

[8] On 30 April 2018, the municipality in correspondence confirmed that the
calculation it had conducted in terms of paragraph 1.1 of the consent order was not
correct and amended figures were to be provided. However, this was after payment
had been made. I t confirmed that the amount for issuing the rates certificate was only
R17 423 354.82 , that an amount of R21 165 901.22 had been paid and as such, a
refund of R3 742 546.40 was due. In fact, the attorney wrote as follows , in paragraph
5.1 of the correspondence dated 30 April 2018 :
‘Given that payment has been made, our client will comply with the [issuance of the rates
clearance certificate] in terms of paragraph 1.4 of the Order .’

[9] In the high court, the C ATI 6 and the liquidator s sought to recover funds paid
under protest and were granted an order for a refund of all amounts overpaid to the
municipality . The amount claimed was considerably more than the R3 742 546.40 that
the municipality tendered to refund. Chili J in granting the order of 14 July 2023,
concluded that the municipalities reliance on s 118(1) to resist the refund payment
sought was mi splaced . It is against this order that the municipality appeals , with leave
to appeal having been granted to this Court by the high court .

The law
[10] This Court in Nelson Mand ela Bay Municipality v Amber Mountain Investments
3 (Pty) Ltd (Nelson Mandela Bay Municipality ),1 eloquently sets out the following :

1 Nelson Mandela Bay Municipality v Amber Mountain Investments 3 (Pty) Ltd (Nelson Mandela Bay )
[2017] ZASCA 36; 2017 (4) SA 272 (SCA) para 5.
7

‘Municipalities are vested with original constitutional power to levy rates on property. In terms
of s 229(1) (a) of the Constitution a municipality has authority to impose “rates on property and
surcharges on fees for services provided by or on behalf of the municipality ”. The original power
to levy rates is regulated by national legislation in the form of the Rates Act. ’

[11] This case centres around the application and interpretation of s 118(1) of the
MSA in the provision of the rates clearance certificate by the municipality , and to the
extent relevant, the subsection provides :
‘(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 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.’ (Emphasis added.)

[12] In interpreting the aforesaid section the questions which arise are: first, whether
CATI 6 has a right to recover payments made under duress and prote st, in
circumstances where the municipality demanded payment of historic debt beyond the
two-year period as stated therein ; and second, whether the payment s fall within the
realm of s 10(3) of the Prescription Act 68 of 1969 where payment of a prescribed debt
constitutes settlement of that debt.

Section 118 (1) and (3)
[13] The municipality contends that on its interpretation of s 118(1) nothing prevents
it from pursuing a claim for the balance of the full amount outstanding from a property
owner. Their view is that s 118(1) invokes the municipalities' right to withhold a rates
clearance certificate until the full outstanding amount is pai d. Until then, transfer of
property cannot be affected. It asserts that it can pursue municipal debts, which arose
prior to the two-year period stipulated in the section. In essence, the municipality claims
that s 118(1) does not extinguish earlier debts .

[14] CATI 6 ’s argument was simply this: a literal reading of s 118( 1) plainly states
that the municipality was limited to seek or claim payment of unpaid amount s which
8

accrued within a two-year period preceding the date of the request for a rates clearance
certificate. In that regard , the municipality had no right to seek payment of amount s
which fell outside th e two-year period. These include amounts which had also
prescribed in terms of the Prescription Act.

[15] The view expressed by the municipality is contrary to what th is Court stated in
Nelson Mand ela Municipality that s 118(1) ‘clearly applies to municipal debts which
have become due in the two years prece ding the date of the application for the
certificate and does not apply to future municipal debts ’.2 In that case it followed the
dicta in City of Johannesburg v Kaplan NO & Another ,3 explain ing that the express
terms in s 118(1) intended to limit the scope of the debt in terms of s 118(1) , this Court
stated:
‘No property may be transferred unless a clearance certificate is produced to the registrar of
deeds that certifies full payment of all municipal debts as described in s 118(1) which have
become due during a period of two years before the date of application for the
certificate .’4 (Emphasis added .)

[16] In addition, t he wording of s 118(1) is clear and unambiguous. In my view, t he
purpose of s 118(1) is to secure payment of all consumption charges ‘in connection
with that property’, due for the period of two years before the application for a rates
certificate . As such, transfer can only take place once all outstanding consumption
charges within the two-year period have been paid. T he demand for payment beyond
the two -year period , as a requirement for the issuing of a rates clearance certificate, is
‘a substantive obstacle to alienation’, as stated by the Constitutional Court in
Mkontwana v Nelson Mandela Metropolitan Municipality .5

[17] What is peculiar to the facts of this case is the existence of the consent order of
16 November 2017 where by the municipality undertook to provide a statement ‘for the
two ( 2) year period preceding the date of this Order’ for the issuing of the s 118(1) rates
clearance certificate. The municipality is bound by this consent order and as rightfully

2 Nelson Mandela Municipality para 27 .
3 City of Johannesburg v Kaplan NO & Another [2006] ZASCA 39; 2006 (5) SA 10 (SCA); 68 SATC 286 .
4 Ibid para 26. See also Nelson Mandela Municipality para 23.
5 Mkontwana v Nelson Mandela Metropolitan Municipality [2004] ZACC 9; 2005 (1) SA 530 (CC); 2005
(2) BCLR 150 (CC) para 33.
9

pointed out by CATI 6 that it was ‘ directed to provide the applicants’ attorneys with a
breakdown of charges payable for the 24 -month period …upon payment of that amount,
to provide a certificate ’. It failed to do so.

[18] This Court stated in City of Cape Town v Real People Housing (Pty) Ltd6 that
‘[h]ad it been intended not to limit the period to two years then the words would not
have appeared at all ’.7 This was said in a case where the municipality sought to recover
a debt which extended way over the period of the two years preceding the application
for a rate clearance certificate. Thus, the assertion by the municipality that it is not
precluded from recovering charges due in the preceding period , beyond the two years
from the date of the application for a rate clearance certificate, cannot be correct .

[19] In addition , CATI 6 contends that the amounts paid, which did not fall within the
prescript of s 118 (1) had in any event prescribed as these histori cal debt amounts fell
within the prescript of s 118(3) where prescription period is three years . Section 118(3)
provides a further protection to the municipality in the following way :
‘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 registered against the
property. ’
This entails that the municipality enjoys pre ference above other claims wh en lodging
its claim with the liquidators .

[20] In City of Tshwane Metrop olitan Municipality v Mitchell ,8 this Court described
the principal elements of s 118 as an embargo provision with a time limit in terms of
s 118(1) , being the two-year period and s 118(3) being a security provision , creating
security for payment of historical outstanding municipal debts in favour of the
municipality , without a time limit.9 Further, that liability for the historical debt of the
previous owner was not extinguished and the municipality could still perfect this

6 City of Cape Town v Real People Housing (Pty) Ltd [2009] ZASCA 159; [2010] 2 All S A 305 (SCA);
2010 (5) SA 196 (SCA) .
7 Ibid para 14.
8 City of Tshwane Metropolitan Municipality v Mitchell [2016] ZASCA 1; [2016] 2 All SA 1 (SCA); 2016
(3) SA 231 (SCA) .
9 Ibid para 9.
10

security over the property to secure payment of the historical debt .10 This historical
debt, was declared , ‘. . . upon transfer o f a property, a new owner is not liable for debts
arising before transfer from the charge upon the property under s 118(3)’, as held in
Jordaan and Others v City of Tshwane Metropolitan Municipality and Others .11

[21] To sum up: s 118(1) is a powerful tool for the municipality to assist in the
collection of debts charged upon the property , limited to a stat utory period of two years .
It imposes an emb argo over the power to transfer the property in exchange for the
issuance of a rates clearance certificate. Any payment demanded under the rubric of
s 118(1) for historical debts charged on the property predating the two-year period
would not be lawful . The section accords protection also to the consumer , as the
Constitutional Court in Jordaan has declar ed that a new owner is not liable for such
debts charged upon the transfer of the property .

Payments made under duress and protests
[22] CATI 6 sought to recover the amount it deems was overpaid to the municipality ,
that is , the historical debts demanded beyond the two-year period in terms of s 118(1).
These payment s, which CATI 6 contend s were made under duress to attain the rates
clearance certificate to affect the transfer , were also paid under protest . It would be
remiss of me not to point out the legal basis upon which C ATI 6 sought t he recovery of
the amounts overpaid to the municipality . The consent order at paragraph 1.3 reads:
‘[t]he payment made . . . shall be without prejudice to the [respondents ’] rights to approach [the
court] for a declarator as to the actual amount due, and a refund, if any , of any amounts paid
in excess of what was legally due ’. (Emphasis added.) Further, CATI 6 notified the
municipality on 19 April 2018 , that it did not admit liability for the amount sought by the
municipality and that payment was to be made ‘under protest and solely for the purpo se
of obtaining a rates clearance certificate contemplated in section 118(1) . . . which is to
overcome [the municipality’s] refusal to issue a rates clearance certificate . . . ’ The
municipality was f urther notified that CATI 6 reserved its rights to raise prescription of
such amounts paid .

10 Ibid para s 22-23.
11 Jordaan and Others v City of Tshwane Metropolitan Municipality and Others; City of Tshwane
Metropolitan Municipality v New Ventures Consulting and Services (Pty) Limited and Others; Ekurhuleni
Metropolitan Municipality v Livanos and Others [2017] ZACC 31; 2017 (6) SA 287 (CC); 2017 (11) BCLR
1370 (CC) at the order of the court para 3.
11


[23] I point out that as far back as 1915 in Union Government (Minister of Finance)
v Gowar12 where the mino rity stated:
‘But if he pays under protest he is entitled to recover, for the protest is inconsistent either with
the idea of a gift or of a compromise between the parties. The other party was not bound to
acce pt money so paid, but if he accepts it he must be considered to have agreed that it should
be recoverable if not due; in the language of the Digest , the negotium between the parties is a
contractus (Donellus lib. 14, c 14, 3). As the payment in the present case was made under
protest, and the defendant had no right under the Act to exact it, I agree that the appeal must
be dismissed with costs .’

[24] This was further enunciated in Commissioner for Inland Revenue v First
National Industrial Bank Ltd ,13 which explained what a payment under protest
constituted:
‘The addition of the words ‘under protest’ when a payment is tendered can , so it seems, fulfil
one or more of several functions: (i) The phrase can serve as confirmation that, in the broad
sense, the payment was not a voluntary one or, in the narrower sense, that it was due to
duress. The failure so to stipulate could support an inference that the payment was voluntary
or that in truth there was no du ress. (ii) It can serve to anticipate or negate an inference of
acquiescence, lest it be thought that, by paying without protest, the solvens conceded the
validity or the legality of the debt, or his liability to pay it, or the correctness of the amount
claimed . The object is to reserve the right to seek to reverse the payment. The effect is not to
create a new cause of action but to preserve and protect an existing one - namely, that the
payment was an indebitum solutum which is recoverable in law, eg by means of the condictio
indebiti or in terms of s 32(1) (a) of the Stamp Duties Act, 1968. (iii) It could serve as the basis
for an agreement between the parties on what should happen if the contested issue is tested
and resolved in favour of the solvens . Such an agreement would indeed create a new and
independent cause of action .’

[25] The municipality contends that in a case where a payment is made under protest
it is for CATI 6 to make out a case that the amount paid was not actually owing and
that it should be repaid. In this case , CATI 6 demonstrated in their correspondence of
19 April 2018 that it made payment under protest sole ly to obtain the rates clearance

12 Union Government (Minister of Finance) v Gowar 1915 AD 426 at 446.
13 Commissioner for Inland Revenue v First National Industrial Bank Ltd [1990] ZASCA 49; 1990 (3) SA
641 AD ; [1990] 2 All SA 327 (A) at 649G -J.
12

certificate , which was needed for the transfer of the properties . CATI 6 ’s attorney
correspondence categorically stated that ‘[p]ayment is made without prej udice to our
clients’ rights to claim repayment of all amounts which are not legally due and payable
to your client ’. (Emphasis add ed.)

[26] The authorities cited above make clear that the recipient of a payment made
under protest is not bound to receive such payment. However, if the recipient does, the
payer retains the right to seek recovery. Hence , CATI 6 ’s claim for the amount it paid
under p rotest.

Is the Municipality protected by s 10(3) of the Prescription Act?
[27] The municipality contended that the payments were valid and sought the
protection of s 10(3) of the Prescription Act 68 of 1969. Simply put the section states
that payments of a prescribed debt constitute settlement of such debt. For e asy
reference s 10(3) of the Prescription Act reads as follows:
‘Notwithstanding the provisions of subsection s (1) and (2), payment by the debtor of a debt
after it has been extinguished by prescription in terms of either of the said subsections, shall
be regarded as payment of a debt.’

[28] It is common cause that the prescription period is three years, but the
municipality contends t hat where payments of prescribed amounts ha ve been made,
in terms of s 10(3) that payment is deemed to have been discharged and thus is
irrecoverable. I will deal with that which I regard as sound in law and importan t in this
case, these are twofold : first, the consent order created an agreement between the
municipality and CATI 6 , the municipal ity waived its rights under s 10 (3) ; second , when
the payment was made CATI 6 was in liquidation . A concursus creditorium was in
operation as a result , the payment for historic debt preferred the municipality above
other creditors. This occurred despite the fact that the municipality had a preferent
claim in CATI 6, in terms of s 118(3). The liquidators have a valid right to claim for the
unlawful payment and cannot be deprived a valid defence to claim . See Walker v Syfret
NO:14

14 Walker v Syfret NO 1911 AD 141 at 166. See also Commissioner for the South African Revenue
Service v Pieters and Others [2018] ZASCA 128; 2020 (1) SA 22 (SCA); 82 SATC 12 para 10.
13

‘. . . The object of the Insolven t Ordinance is to ensure a due distribution of assets among
creditors in the order of their preference. And with this object all the debtor a rights are vested
in the Master or the trustee from the moment insolvency commences. The sequestration order
crystallises the insolvent’s pos ition; the hand of the law is laid upon the estate, and at once the
rights of the general body of creditors have to be taken into consideration. No transaction can
thereafter be entered into with regard to estate matters by a single creditor to the prejudi ce of
the general body. The claim of each creditor must be dealt with as it existed at the issue of the
order. Now, to deprive the estate of a valid defence to a claim against it is as prejudicial to the
creditors as to take from it the most tangible asset of corresponding amount. ’

[29] Last, as advanced by CATI 6, in respect of the mora interest to be paid from the
date of 26 April 2018, being the date of payment made under duress, I do not agree
with this submission . First, no such interest was claimed in the notice of motion and,
second, the order of the high court did not grant interest , as no interest was claimed.
For the reason s set out above , it follows that I find no reason to interfere with the order
of Chili J in the high court.

[30] In the result , I make the following order:
The appeal is dismissed with costs, including the costs consequent to the employment
of two counsel , where so employed .




___________________
W HUGHES
JUDGE OF APPEAL

14

Appearances

For the appellant: S R Mullins SC
Instructed by: Anand -Nepaul Attorneys, Durban
Honey & Partners Incorporated , Bloemfontein

For the respondent: J R Peter S C
Instructed by: KG Tserkezis Incorporated , Sandton
Claude Reid Att orneys , Bloemfont ein.