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[2004] ZACC 9
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Mkontwana v Nelson Mandela Metropolitan Municipality (CCT 57/03) [2004] ZACC 9; 2005 (1) SA 530 (CC); 2005 (2) BCLR 150 (CC) (6 October 2004)
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CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 57/03
NOKUTHULA
PHYLLIS
MKONTWANA
Applicant
versus
NELSON
MANDELA
METROPOLITAN
MUNICIPALITY
First Respondent
MINISTER OF PROVINCIAL AFFAIRS
AND CONSTITUTIONAL
DEVELOPMENT
Second Respondent
Case CCT 61/03
PETER
WILLIAM
BISSETT
Applicant
ANNA MARIA
ELZA VAN DER
STRAETEN
Second Applicant
NEDCOR BANK
LIMITED
Third Applicant
versus
BUFFALO
CITY
MUNICIPALITY
First Respondent
MINISTER
FOR PROVINCIAL AND LOCAL
GOVERNMENT Second Respondent
MEMBER OF
THE EXECUTIVE COUNCIL FOR LOCAL
GOVERNMENT
AND
HOUSING
Third Respondent
Case CCT 1/04
TRANSFER
RIGHTS ACTION CAMPAIGN
AND
OTHERS
Applicants
versus
MEMBER OF
THE EXECUTIVE COUNCIL
FOR LOCAL
GOVERNMENT AND HOUSING
IN THE
PROVINCE
OF
GAUTENG
AND
OTHERS
Respondents
Together
with
KWAZULU-NATAL
LAW
SOCIETY
First Amicus Curiae
MSUNDUZI
MUNICIPALITY
Second Amicus Curiae
Heard
on
: 10-11 March
2004
Decided
on
: 6 October 2004
JUDGMENT
YACOOB J:
Introduction
[1]
One of the five objects of local government in
our Constitution is to ensure the provision of services to communities in a
sustainable
way.
[1]
Municipalities supply water
and electricity to consumers in their area subject to the payment of a
consumption charge.
In practice consumers of water and electricity are
occupiers of property. Some own property they occupy and others do
not.
These three cases concern the constitutional validity of laws that
in effect burden owners in relation to consumption charges for
water and
electricity supplied to other people who occupy their immovable property.
[2]
Section 118(1) (section
118(1)) of the Local Government: Municipal Systems Act
[2]
(the Act) is one of these provisions.
[3]
It places limits on the ownerâs
power to transfer immovable property. The registrar of deeds may not
effect transfer
of any property without a certificate issued by the
municipality to the effect that the consumption charges due during a period
of
two years before the date of issue of the certificate have been paid.
[4]
The section is being challenged
principally on the basis that it gives rise to arbitrary deprivation of
property contrary
to section 25(1) of the Constitution.
[3]
In September last year
section 118(1) was declared to be constitutionally invalid by the South Eastern
Cape Local Division of the
High Court (the High Court) in two cases before it.
[5]
The High Court held that the
section permitted arbitrary deprivation of property in conflict with section
25(1) of the Constitution
and referred the declaration of invalidity for
confirmation to this Court in terms of section 172(2) of the
Constitution.
The applicants in both these cases
[6]
have applied for confirmation of this
order. The municipalities cited in each of the two cases
[7]
as well as the Minister responsible for
Local Government opposed confirmation and appealed against the High Court
order.
[8]
[4]
There is also before
this Court an application for direct access which came to be made in the
following circumstances. In
December 2002 an application was launched in
the Witwatersrand Local Division of the High Court (the WLD application).
That
application required a consideration of the meaning and constitutionality
of national, provincial and local government legislation
including section
118(1) that burdened owners in relation to payment for water and electricity
supplied to consumers who occupied
the property. Certain consequential
relief was also sought in the application. The applicants included an
association
of persons and are jointly referred to as the WLD applicants.
[9]
Responsible government entities
[10]
as well as utility companies responsible
for the delivery of water
[11]
and electricity
[12]
were joined as respondents in these proceedings.
[5]
Legislation additional
to section 118(1) in issue in the WLD application may be briefly
summarised. Section 118(3) of the
Act is to the effect that any
consumption charge owing is a âcharge upon the property in connection with
which the amount
is owing
and enjoys preference over
any mortgage bond registered against the propertyâ. Sections 49 and 50(1
)(
a) of a Gauteng Local Government Ordinance (the Ordinance)
[13]
were also challenged. Section 49
[14]
in effect renders the owner and occupier
of premises jointly and severally liable to a municipality for the consumption
charges
for water and electricity supplied to that property. The section
empowers the municipality to sue the owner and occupier jointly
and severally
after written notice to one of them. It also confers on the owner and
occupier the right to recover from the
other the latterâs share of the
liability discharged by the former. Section 50(1
)(
a)
[15]
of the Ordinance has the same effect as
section 118(1) of the Act except that the certificate required by the Ordinance
must cover
debts due for three years before the date of the certificate.
[6]
The by-laws in issue in
the WLD application are those of the City of Johannesburg Metropolitan
Municipality. They are by-law
4(2) of the water by-laws
[16]
and by-law 36 of the electricity
by-laws.
[17]
The former makes owners and consumers jointly and severally liable in respect
of water charges
[18]
while the latter does the same for electricity charges.
[19]
[7]
In January this year
almost all the parties in the WLD application
[20]
applied for direct access to this
Court. The aim was to have all the issues in the WLD application heard
together with the
application for confirmation and the appeal.
[21]
The issues to be decided in this
appeal can be ascertained only after the fate of the application for direct
access is decided.
That application is considered first.
[8]
Before this is done however
it is convenient to mention that an attack on the constitutionality of sections
118(1) and 118(3) of
the Act was considered by the KwaZulu-Natal High Court in
the case of
Geyser
[22]
(the
Geyser
case) and dismissed some six months before the delivery
of the judgment of the High Court. It was held there that both
subsections
were not inconsistent with section 25(1) of the Constitution
because the deprivation to which they gave rise was not arbitrary.
There
were therefore two conflicting judgments in relation to the constitutionality
of section 118(1) by the time the direct access
application was heard by this
Court.
Direct
Access
[9]
Applications for direct
access are now governed by rule 18 of the rules of this Court. In
substance, the rule allows for direct
access to be granted if it is in the
interests of justice to do so.
[23]
The
interests of justice is
a broad concept and
requires a consideration of many factors.
[24]
[10]
All the parties in the
WLD application were agreed during argument before this Court that direct
access should be granted.
They submitted that it would be in the
interests of justice for this Court to hear the case before it had been
entertained by any
other court. They relied on the saving of time and
costs, the importance of the matter, and on a need to resolve the uncertainty
created by competing judgments in the High Court. The application for confirmation
and the appeal are concerned only with
section 118(1) of the Act. We were
accordingly urged not to decide the fate of this section in isolation, but to
grant direct
access and decide all the other legal issues in the light of the
more comprehensive factual matrix presented in the WLD application.
[11]
A useful point at which
to start in considering an application for direct access is to recognise the
importance of the principle
that it is ordinarily not in the interests of
justice for this Court to be a court of first and last instance.
[25]
The Constitution and the rules of
this Court do, however, provide for this Court to be the court of first and
final instance,
but only in exceptional circumstances.
[26]
The saving of time and costs, the
importance of the issue or the existence of conflicting judgments on an issue
in a case
do not, without more, constitute exceptional circumstances and justify
this Court being a court of first and last instance.
Indeed the
importance and complexity of the issues raised would weigh heavily against this
Court being a court of first and final
instance.
As a
general rule, the more important and complex the issues in a case, the more
compelling the need for this Court to be assisted
by the views of another
court.
Each of the issues in respect of which direct access is
sought must be considered separately.
[12]
It is significant that
section 118(1) is already before this Court in the application for confirmation
and leave to appeal.
There are conflicting judgments in relation to the
constitutional validity of section 118(1). It is also true that the WLD
application canvasses the factual background on a broader basis than has been
done in the
Mkontwana
and
Bissett
cases. The determination
of the application for confirmation and that for leave to appeal by this Court
will result in a
final decision as to the constitutionality of section
118(1). No delay is occasioned by hearing the applicants on section
118(1) in the light of the new evidence they present. It is therefore in
the interests of justice to grant direct access
to the WLD applicants, to
consider the evidence placed before the High Court in the WLD application, and
to decide the constitutional
validity of section 118(1) by reference to all the
arguments advanced. In the circumstances, direct access should be granted
in relation to all the issues raised concerning the interpretation and constitutionality
of section 118(1).
[13]
The position in
relation to section 118(3) is different. It has been submitted that this
Court will not be the court of first
and last instance when it comes to the
determination of the constitutionality of section 118(3). It is said that
this is
because the High Court has already considered and dismissed challenges
to the constitutional validity of section 118(3) in the
Geyser
judgment.
However very little is said in the
Geyser
judgment about the meaning and effect of section 118(3).
Nor in
that judgment is the constitutionality of section 118(3) considered separately
from the constitutionality of section
118(1). This is not surprising
because section 118(3) was not really a matter of âlive controversyâ in that
case.
The municipality had not relied upon section 118(3) and therefore
this section was not really in issue. The challenge to section
118(3) in
the
Geyser
case can rightly be said to be one bordering on the
abstract. Section 118(3) has not been used by the municipality in
relation
to any of the applicants in the WLD case either. The
construction of section 118(3) is far from straight forward and the reasoned
judgment of another court on how the section is to be interpreted is likely to be
helpful. In the circumstances, it is not
in the interests of justice for
this Court to consider the constitutional validity of section 118(3) at this
stage.
[14]
Section 49 of the
Ordinance as well as the by-laws of the City of
Johannesburg
in issue in the direct access
application can be dealt with together. They are important provisions
that raise complex questions
concerning the appropriateness of rendering owners
jointly and severally liable for payment of water and electricity not consumed
by them but by others on their property. It is not in the interests of
justice for this Court to be the court of first and
last instance on these
issues. Although the provincial legislation and by-laws are inter-related
with section 118(1), there
are sufficient differences between these provisions
to render it advisable that another court should decide the issue of the
constitutionality
of these provisions before we consider it.
[15]
It has already been
pointed out that section 50(1
)(
a) of the Ordinance is
similar to section 118(1), except that an owner wishing to sell the property
would be able to pass transfer
only after all amounts owing in respect of the
property for a period of three years before the date of the certificate have
been
paid. Arguments advanced by the parties about the interpretation and
constitutionality of section 50(1
)(
a) are virtually
the same as those directed at section 118(1). There is so little
difference between the two provisions that
a decision on the constitutional validity
of section 118(1) by this Court would directly impact on the constitutionality
of section
50(1
)(
a). Indeed, a decision that the
former is unconstitutional might lead to the conclusion that the latter is
unconstitutional
too. It is therefore in the interests of justice for the
application for direct access to be granted in relation to section
50(1
)(
a).
[16]
The application for
direct access concerning the interpretation and constitutionality of sections
118(1) and 50(1
)(
a) must therefore be granted.
The application must be refused in all other respects.
Parties before the Court
[17]
The applicants and the
respondents in the WLD application are therefore before the Court in addition
to the applicants and respondents
in the confirmation proceedings.
[27]
This Court also admitted two
parties as amici curiae on their application. Both were parties in the
Geyser
case. The first amicus,
[28]
contests the constitutionality of section 118(1) of the Act and the second
amicus
[29]
contends for its validity. There are therefore broadly two sets of
parties. The applicants in the confirmation proceedings,
the applicants
in the WLD application and the first amicus all of whom regard the burden
placed on owners of property by section
118(1) as constitutionally
objectionable. Then there are municipalities supported by a provincial
MEC, national minister
responsible for local government and the second amicus
who urge that the section is good. I will refer to the former simply
as
the applicants and to the latter as respondents.
The
factual background
[18]
All the applicants tell
us of an escalation of amounts owing in respect of electricity and water
charges without their knowledge.
In many cases, there are disputes
between the applicant and the municipality about whether the municipality acted
negligently and
whether the owner ought to have taken more steps to ensure that
amounts were in fact paid. In most cases large amounts of
money have
become due. There are allegations of illegal reconnection of water and
electricity in some of the factual situations
in the WLD application.
(a)
The High Court cases
[19]
In the
Mkontwana
case, Ms Mkontwana bought a house in
Port
Elizabeth
for R24 560.00 by an agreement that provided
for her to pay the outstanding consumption charges necessary to obtain the
section
118(1) certificate. She is not well off and was only able to buy
the house with the help of a state housing subsidy of R16
000.00. When
she first applied to the municipality for a certificate in October 2001, she
was informed that consumption charges
in excess of R10 000.00 had been incurred
by previous occupiers and had to be paid before the certificate could be
issued.
Somewhat curiously, the municipality sought payments of amounts
that had become due more than two years and up to five years before
the date of
the statement. The same municipality later issued a document saying that
the amount required to be paid was more
than R20 000.00. There followed
four statements of account, each varying in amount, and all of them unclear,
confusing, contradictory
and irreconcilable. Ultimately in September
2002, after the intervention of attorneys and considerable negotiation, the
amount
was settled at less than R2500.00.
[20]
In the
Bissett
case, applicants, co-owners of property in
Buffalo
City
sold it for R110 000.00 in July 2001. The municipality issued a document
in August 2001 requiring payment of less than R2500.00
before the certificate
could be issued. When this amount was paid a month later, the sellers
were presented with another
statement of account according to which more than
R14 000.00 remained owing for consumption charges during the relevant two year
period. This document, to the extent that it is intelligible, lacks the
necessary detail and is contradictory. An undated
statement of account
later produced by the same municipality shows that the amount owing was less
than R8000.00.
[21]
The same pattern is
evident in the dealings between the second of the applicants who also owned
property in the
Buffalo
City
municipal area which
was sold for R60 000.00. I need say no more than that R9219.93 was paid
by this applicant to obtain
a section 118(1) certificate after some negotiation
and under protest. This applicant discovered some months later that the
actual sum owing was around R2000.00 less than the sum that had actually been
paid.
(b)
The WLD application
[22]
Four of the five
applicants in the WLD application are owners of property. The fifth is an
administrator of a deceased estate
which owns the property in question.
In relation to the cases of the four applicants who own property, the factual
background,
to the extent that it needs to be recited for the purposes of this
case is very similar. Owners had let the property to tenants
in all
cases. Large sums of money had become outstanding in relation to
consumption charges. The municipalities concerned
had made unsuccessful
efforts to collect the money. In one case, the municipality had in fact
informed the owner that a substantial
sum of money had
been
owing
by the tenant and the owner had renewed the lease with the same
tenant after receipt of this information. The municipalityâs
efforts to
secure payment by the disconnection of electricity and water, resulted, in many
instances, in the unlawful reconnection
of electricity. There are
material disputes of fact on the papers relating in particular to whether the
predicament that
had ultimately eventuated was the result of inaction by the
municipality or of the lack of reasonable, responsible conduct on the
part of
the owners.
[23]
The experience of the
administrator of the deceased estate raises issues similar to those in the High
Court. The property
had been occupied by tenants pursuant to agreements
of lease they had entered into with the deceased. The property is worth
R95 000.00 according to the estate account. The municipality required
payment of an outstanding sum slightly in excess of
R1550.00 for the issue of a
section 50(1) certificate and provided a written document to this effect.
Some months later however
the municipality indicated that the amount required
to be paid exceeded R22 000.00. Like in the other cases before the WLD,
there is a dispute about the extent of the municipalityâs tardiness in the
execution of its debt collection responsibilities.
Repeal
of section 50
[24]
The whole of section 50
was repealed exactly two weeks before the WLD application was launched.
[30]
It was contended by some of the
respondents that the application concerning the constitutionality of section
50(1
)(
a) of the Ordinance is accordingly moot and
ought not to be entertained. The applicants answer that one of the WLD
applicants
has been prejudiced by the application of the section and that the
Court should accordingly deal with it. There is in fact
a dispute on the
papers concerning the validity of the section, whether one of the applicants
was obliged to pay certain consumption
charges owing to obtain the certificate
and, if not, whether that applicant is entitled to recover the amounts
paid. A cause
of action can be moot only if its resolution will have no
practical effect.
[31]
A decision about the validity of section 50(1
)(
a) will
have practical effect. The issue is not moot.
Issues
[25]
Several matters call
for our attention. The first is whether section 118(1) and section 50(1
)(
a) can reasonably be interpreted so that they apply only
if the consumption charges are due by the owner. Secondly, if these
provisions cannot be so construed, we must decide whether they are consistent
with section 25 of the Constitution. Thirdly,
if any of these laws is
found to be unconstitutional, the appropriate remedy must be considered.
Finally, if the relevant
provisions are not struck down for their failure to
comply with the Constitution it will be necessary to evaluate contentions made
by one of the applicants in the High Court and which the High Court found
unnecessary to consider. It is submitted before
this Court that section
118(1) is inconsistent with sections 9(1), 26 and 34 of the Constitution.
Application:
further evidence
[26]
A few days before the
hearing, the municipality in the
Bissett
case tendered evidence aimed
essentially at showing the amount of consumption charges recovered by it
through the section 118(1)
procedure during a three year period. The
explanation for this late tender of evidence was that the municipality had been
alerted to the need that this additional information
be
placed before us by the submission of one of the parties. This
information had not been placed before the High Court. This
Court will
receive additional evidence on appeal only if there is compelling reason to do
so. There is none in this case.
The amount of money actually
recovered by the use of the procedure is not particularly helpful largely
because it is impossible
to tell whether the money recovered in consequence of
the use of the procedure would not in any event have been paid. More
importantly, however, the figure put up in the evidence does not relate to
consumption charges incurred by non-owner occupiers.
In the
circumstances, the materiality of the evidence is doubtful. The
application for leave to introduce further evidence
must accordingly be
refused.
Interpretation
[27]
The WLD applicants
correctly point out that we must construe a legislative provision so as to
avoid its unconstitutionality if it
is reasonably capable of being interpreted
in that way or, to put it differently, the construction is not unduly strained.
[32]
I will address this contention on
the assumption that all these laws will be unconstitutional if not interpreted
in the way
suggested by the WLD applicants. They contend that sections
118(1) of the Act and 50(1
)(
a) of the Ordinance are
reasonably capable of being so interpreted without attributing an unduly
strained meaning to the language
used.
[28]
The submission is that
each of these provisions must be interpreted as if the words âby the ownerâ or
âdue by the ownerâ
had been inserted at appropriate points in each of the
provisions so as to render it less burdensome. Each of these sections
is
set out in full below. The words added by the applicants to demonstrate
the reasonable meaning contended for are in bold.
(a)
Section 118(1) of the Act provides
âA
registrar of deeds may not register the transfer of property except on
production to that registrar of deeds of a prescribed
certificateâ
(a)
issued
by the municipality or municipalities in which
that property is situated; and
(b)
which certifies that all amounts that became due
[by the owner]
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.â
(b) Section 50(1
)(
a)
of the Ordinance reads
â(1) No
transfer of any land or of any right in land as defined in section 1 of the
Local Authorities Rating Ordinance, 1977,
within a municipality shall be
registered before any registration officer until a written statement in the
form set out in the
Third Schedule to this Ordinance and signed and certified
by the town clerk or other officer authorised thereto by the council,
shall be
produced to such registration officer, and unless such statement showsâ
(a)
that all amounts
[due by the owner]
for a period of three years
immediately preceding the date of such registration due in respect of such land
or right in land for
sanitary services or so due as basic charges for water or
as other costs for water where any water closet system on the ground concerned
has been installed or so due as basic charges for electricity in terms of the
provisions of this Ordinance or any by-law or regulation
. . . have been paid
to the council . . . .â
[29]
Interpreted in this
way, section 118(1) of the Act and section 50(1
)(
a) of
the Ordinance would require that consumption charges due only by the owner for
the relevant period must be paid as a precondition
to transfer. This
preferred construction involves an assumption that the purpose of enacting the
laws in question is limited.
The aim is to secure only those consumption
charges due by the owner. In other words the legislation does not seek to
secure
municipalities against non-payment of consumption charges due by
occupiers other than the owner.
[30]
It is highly unlikely
that the purpose was so narrow. If it was, it is inconceivable that the
text would not have said so
expressly. Each of these provisions, on its
face, is broadly worded and secures the payment of all consumption charges âin
connection withâ the property. The interpretation advanced by the WLD
applicants is unreasonable. These laws are
not reasonably capable of the
suggested interpretation.
The
constitutionality of section 118(1) and section 50(1
)(
a)
[31]
It is helpful to repeat
that section 118(1) of the Act and section 50(1)(a) of the Ordinance make
transfer of immovable property
subject to the precondition that all consumption
charges due âin connection withâ or âin respect ofâ that property by anyone
have been paid. The applicants submit that these provisions are inconsistent
with section 25(1) of the Constitution because
they amount to an arbitrary
deprivation of property. Section 25(1) provides:
âNo one
may be deprived of property except in terms of law of general application, and
no law may permit arbitrary deprivation
of property.â
[32]
Almost all the parties
accepted that these provisions do bring about a deprivation of property.
There was one submission however
that they do not, but are merely regulatory
provisions. They do not prevent transfer altogether, the
argument went, but are
measures that merely delay transfer
until a certificate has been obtained. The contention has no merit.
In
First National Bank
[33]
(the
FNB
case) this Court
held that the taking away of property is not required for a deprivation of
property to occur.
[34]
Whether
there has been a deprivation depends on the extent of the interference with or
limitation of use, enjoyment or exploitation.
It is not necessary
in this case to determine precisely what constitutes deprivation. No more
need be said than that
at the very least, substantial interference or
limitation that goes beyond the normal restrictions on property use or enjoyment
found in an open and democratic society would amount to deprivation.
[33]
Alienation of immovable
property is ordinarily completed by transfer to the new owner in the office of
the registrar of deeds.
The right to alienate property is an important
incident of its use and enjoyment. The effect of section 118(1) and
section
50(1
)(
a) of the Ordinance is that transfer can
take place only if all outstanding consumption charges have been paid. It
follows
that owners cannot transfer their properties unless consumption charges
due by people other than themselves and for which they are
not liable have been
paid. It was correctly pointed out that these laws do not literally
require the owner to pay outstanding
consumption charges. The reality is,
however, that if the person liable for the debt does not or cannot pay, the
owner who
wants to
effect
transfer must, unless the
relevant agreement provides for a party other than the owner to effect the
payment, pay all outstanding
consumption charges. The payment must be
made regardless of whether the owner is liable to pay. The provisions are
not merely procedural. They are a substantive obstacle to alienation and
constitute a deprivation of property within the meaning
of section 25(1).
Indeed, it is distinctly possible that all consumption charges for the two or
three year period might be
so high as to exceed the market value and render a
sale uneconomical. It follows that I agree with the High Court
[35]
and with the
Geyser
judgment
[36]
that section 118(1) does give rise to
deprivation of property.
Is
the deprivation arbitrary?
(a)
The nature of the section 25(1) analysis
[34]
The meaning of
arbitrary in section 25 of the Constitution was determined in the
FNB
case. After a thorough analysis
[37]
Ackermann J concluded that a deprivation of property is arbitrary within the
meaning of section 25 of the Constitution if the law
in issue either fails to
provide âsufficient reasonâ for the deprivation or is procedurally unfair.
[38]
To determine whether there is
sufficient reason for a permitted deprivation, it is necessary to evaluate the
relationship
between the purpose of the law and the deprivation effected by
that law.
[39]
A complexity of relationships must be considered in this assessment including
that between the purpose of the provision on
the one side, and the owner of the
property as well as the property itself on the other.
[40]
If the purpose of the law bears no
relation to the property and its owner, the provision is arbitrary. The
customs
law in issue in the
FNB
case fell into this category. It
permitted total deprivation of property even when the customs debt bore no
relationship either
to the owner or to the property itself.
[41]
[35]
The
FNB
judgment
also sets out the approach to be adopted if there is a connection between the
purpose of the deprivation and the property
or its owner.
[42]
In these circumstances, there must
be sufficient reason for the deprivation otherwise the deprivation is
arbitrary.
The nature of the relationship between means and ends that
must exist to satisfy the section 25(1) rationality requirement depends
on the
nature of the affected property and the extent of the deprivation. A mere
rational connection between means and ends
could be sufficient reason for a
minimal deprivation. However, the greater the extent of the deprivation
the more compelling
the purpose and the closer the relationship between means
and ends must be.
(b)
The High Court judgment on arbitrariness
[36]
The High Court was
persuaded that there was, in this case, no connection between the consumption
charge and either the property
or its owner. It was held that there were
four significant similarities between the deprivation permitted in the
FNB
case and that allowed by section 118(1).
a)
Both laws permitted
deprivation absent any connection between the relevant debt and the owner of
the property.
[43]
b)
Section 118(1)
permitted a deprivation of property when âthere would be no connection between
the owner and the property on the
one hand and the municipal debt on the otherâ
and was accordingly similar âto the position in the
FNB
case where there
was no connection between the property and the customs debtâ.
[44]
c)
The owner of the
property had in neither case induced the creditor to act to its detriment in
relation to âthe incurring of the
debtâ.
[45]
d)
The deprivation brought
about by section 118(1) and the customs law in issue in the
FNB
case
could both continue indefinitely until the debt was paid.
[46]
[37]
The High Court
concluded, on the basis of these perceived parallels, that the
FNB
judgment was âpowerful and persuasive authorityâ for the conclusion that
section 118(1) was far-reaching and therefore arbitrary.
[47]
It was in the circumstances unnecessary
for the High Court to decide whether there was sufficient reason for the
deprivation.
The applicants supported this reasoning.
[38]
The High Court saw the
purpose of section 118(1) as being the protection of municipalities and the
promotion of the collection of
debts owed to a municipality.
[48]
It is however necessary to examine
the purpose more closely. The purpose of section 118(1) is to furnish a
form of
security to municipalities for the payment of amounts due in respect of
the consumption of water and electricity (consumption charges).
The
ultimate effect of the law is that the property in connection with which the
consumption charges have been incurred provides
security for the payment of
that consumption charge. In this sense the law burdens the owners of
property. Municipalities
are obliged to provide water and electricity to
the residents in their area as a matter of public duty.
[49]
It is therefore important that the
possibility that municipal debt remains unpaid be reduced by all legitimate
means.
Section 118(1) is concerned amongst other things, with the
question whether the municipality or the owner of property should bear
the risk
when non-owner occupiers who are obliged to make these payments in the first
instance fail to do so. In more specific
terms therefore, the purpose of
the provision is to place this risk on the owner. The purpose is
important, laudable and
has the potential to encourage regular payments of
consumption charges and thereby to contribute to the effective discharge by
municipalities of their constitutionally mandated functions. It also has
the potential to encourage owners of property to
discharge their civic
responsibility by doing what they can to ensure that money payable to a
government organ for the delivery
of service is timeously paid. The
municipality also has responsibilities in this regard but this aspect is
briefly discussed
later in this judgment. It follows that the
relationship between consumption charges on the one hand and the owner of
property
and the property itself on the other must be examined.
[39]
It is convenient to
first discuss the relationship between the consumption charge and the
property. As I have already said,
the High Court in effect found that
section 118(1) permitted a deprivation of property when âthere would be no
connection between
the owner and the property on the one hand and the municipal
debt on the otherâ and was accordingly similar âto the position
in the
FNB
case where there was no connection between the property and the customs
debtâ. In my view, however, the difference between
the nature of the
connection between the property and the debt in the two cases is both
fundamental and decisive. In the
FNB
case, affected property (a
motor vehicle in that case) leased by the owner to the customs debtor could
have been sold in execution
even if the vehicle had nothing whatever to do with
the customs debt. The consequences of section 118(1) do not go that
far.
Section 118(1) does not permit the deprivation of property where
there is no connection between it and the consumption charges.
As the
High Court correctly points out the debt giving rise to deprivation is required
to have âbecome due in connection with
that propertyâ. The High Court
reasoned however that electricity and water consumed by a non-owner âwould,
generally,
benefit neither the owner nor the propertyâ, that the service was
merely being provided at the property and that the property-debt
relationship
was therefore similar to that in the
FNB
case.
[40]
It cannot be accepted
that electricity and water are merely consumed at the property. These
amenities are supplied to the
property, accessed and consumed by the occupier
on the property and are enjoyed by the occupier as part and parcel of the
enjoyment
of the occupation of the property. What is more, the supply of
electricity and water to a property ordinarily increases its
value; the
consumption of electricity and water enhances its use and enjoyment.
Indeed, the consumption of electricity and
water by the occupier is integral to
the use and enjoyment of the affected property and to its inherent worth.
There is therefore
more than just a close relationship between the property and
the consumption charge: the property and the consumption charge are
closely
interrelated.
[41]
What of the connection
between the consumption charge and the owner? The High Court concluded
that there was none, on the
basis that section 118(1) applies in the case of âa
vast array of non-ownersâ including âtenants, persons exercising rights
of
habitatio or exercising rights of usufruct or fideicommissum, squatters or
other mala fide occupiersâ.
[50]
It is self evident that the exact character of the relationship between the
owner and the consumption charge will vary depending
on whether the property is
occupied by the owner, a tenant, a usufructuary, a fiduciary or an unlawful
occupier. However,
there is a level at which the owner and the debt are
usually connected or related regardless of the nature of the relationship
between the owner and the occupier and of whether the property is lawfully
occupied. This is because the owner is bound to
the property by reason of
the fact of ownership which, as I will consider in more detail later, entails
certain rights and responsibilities.
Both the owner and the consumption charge
are closely related to the property and the property is always the link between
the owner
on the one hand and the consumption charge in respect of water and
electricity provided by the municipality on the other.
[42]
The applicants
correctly point out that the deprivation occurs even when there is no
contractual relationship between the owner
and the municipality that obliges
the latter to supply water and electricity to property that belongs to the
former. However,
it does not follow from the absence of a contractual
relationship that there is no relationship. In many instances, the owner
benefits from the increase in the value of the property and the enhanced use
and enjoyment of it because electricity and water
are available there. In
some instances, notably in the case of the unlawful occupier who has never had
the consent of the
owner to occupy, it is arguable that the supply of
electricity and water to the property for consumption by that occupier is of
no
benefit to that owner at all. It is however fallacious to require that
the owner must benefit from the consumption charge
before it can be said that
there is a relationship between the consumption charge and the property.
The mere fact that the
consumer of water and electricity supplied to the
property is an unlawful occupier cannot break the strong owner, property and
consumption charge chain. The High Court was also incorrect in concluding
that the subsection reveals no connection between
the consumption charge and
the owner.
[43]
The High Court wrongly
held that the consumption charge was connected neither to the property nor to
the owner. The charge
is connected to both. It becomes necessary
therefore to examine whether section 118(1) is arbitrary for want of the
appropriate
relationship between means and ends. In other words, we must
decide whether there is sufficient reason for the deprivation.
(c)
Is section 118(1) arbitrary for want of an appropriate relationship between
means and ends?
[44]
There are three
interrelated steps to this enquiry. We must determine in turn:
a)
the
nature of the property concerned
and the extent of the deprivation;
b)
the
nature of the meansâends
relationship that is required in the light of the nature and extent of the
deprivation and
c)
whether
the relationship between means and
ends accords with what is appropriate in the circumstances and whether it
constitutes sufficient
reason for the section 25(1) deprivation.
[45]
We are concerned in
this case with the deprivation of a single but important incident of ownership
in immovable property namely
the right to pass transfer of property to complete
alienation. The owner can continue to occupy the property, let it or do
anything else that ownership allows. The deprivation is moreover
temporary. The High Court was incorrect in finding
that, like the
deprivation in the
FNB
case, the deprivation in the present case âmay
continue indefinitelyâ.
[51]
The deprivation lasts for two years only. It is correct that if there are
substantial arrears for consumption charges
and all payments over an extended
period are for current consumption only and are credited to the amount first
owing, the substantial
sum may remain outstanding indefinitely and thereby
constitute an obstacle to transfer. If, however, no further obligations
are incurred to increase the existing indebtedness of the same occupier the
limit on the power of the owner to transfer the property
will last no more than
two years. Nevertheless, an owner could in the purchase and sale
agreement delay transfer for a period
of two years on appropriate
conditions. Moreover there is nothing to make the subsequent occupier
liable for the consumption
charge indebtedness of a previous occupier.
This means that the owner could, if he is able successfully to eject a
delinquent
occupier, either occupy the property or secure a reliable tenant or
other occupier for a two year period in order to terminate the
deprivation.
[46]
The extent of the
deprivation is affected by the amount of the consumption charge owing.
The larger the amount the greater the extent of the deprivation.
Indeed, transfer becomes virtually impossible for two years after the date on
which the consumption charges due exceed the
market value of the property.
It is necessary to emphasise that we are not concerned in this case with
the deprivation of
property consequent upon consumption charges incurred by and
for the benefit of the owner. All the parties agreed that the
deprivation
that would result from that situation would not be arbitrary. We are
concerned with the deprivation of property
occasioned by electricity and water
consumption on the part of non-owner occupiers only.
[47]
The basic reason for
the accumulation of consumption charges due in connection with any property
occupied by non-owners is non-payment
by those occupiers. However, it is
ordinarily possible for both the municipality and the owner to guard against an
unreasonable
accumulation of outstanding consumption charges. The
municipality has a duty to send out regular accounts, develop a culture
of
payment, disconnect the supply of electricity and water in appropriate
circumstances, and take appropriate steps for the collection
of amounts
due. The ownerâs ability to protect her own interest by ensuring that
consumption charges are kept within reasonable
limits depends to some extent on
the nature of the relationship between her and the occupier. If that occupier
is on the
property with the knowledge and consent of the owner, the latter can,
amongst other things, choose the occupier carefully and stipulate
that proof of
payment in relation to consumption charges be submitted monthly on pain of some
sanction including ejectment.
As will appear more fully later, where the
occupier is a usufructuary, the owner could compel the occupier to comply with
the obligation
to care for the property and to ensure that all amounts due for
the use and occupation of the property are paid. The position
is somewhat
different where the property was initially unlawfully occupied without the
knowledge and consent of the owner.
It has been suggested that the owner
is completely innocent and utterly powerless in this situation. That is,
however, not
the whole truth. The owner has the responsibility to take
reasonable steps to ensure that it is not unlawfully occupied and
to take
reasonable steps to evict the occupier as a matter of urgency if the
circumstances warrant this. I return to this
later.
[48]
The amount of the
consumption charges due in connection with any property at any time would
depend on a number of factors.
As the following examples show, arrear
consumption charges may accumulate in circumstances where the owner or the
municipality
alone has failed to carry out the duties appropriate to each
effectively or where both the owner and the municipality have acted
reasonably
and the arrear accumulation is due to some other circumstance which might or
might not have been appreciated by the
owner, the municipality or both.
The owner might fail to take reasonable steps to ensure that the property was
not unlawfully
occupied, fail to take reasonable steps to ensure the eviction
of the unlawful occupier and fail to inform the municipality of the
fact of the
unlawful occupation. In these circumstances, there would be no-one to
blame but the owner.
[49]
Whether and the way in
which the municipality discharges its duty to take reasonable steps to secure timeous
payment could have
a severe impact on the amount owing. The municipality
might, for example, send no statement of account, take no steps to recover
amounts owing and continue to supply water and electricity for a period as long
as two years without question in the case of a
failure of a non-owner occupier
to make payment. The municipality might have been requested by the owner
to be kept informed
on the status of the account in relation to consumption
charges due by the occupier at reasonable intervals and might have refused
to
do so. The municipality might know or might have been informed by the
owner that the occupier is on the property without
the ownerâs knowledge and
consent. The municipality might know that there are pending legal
proceedings for the ejectment
of an applicant already considerably in arrear
and might continue to supply electricity and water despite objection from the
owner.
The owner, on the other hand, might have taken all reasonable
steps required of a responsible owner, but to no avail. The
applicants
emphasise that a municipality cannot sit by and allow consumption charges to
escalate regardless and in the knowledge
that recovery will be possible
whenever the property falls to be transferred. They are right. The
municipality must
comply with its duties and take reasonable steps to collect
amounts that are due.
[50]
But this is not the
only possible scenario. The municipality might do everything reasonable
including the disconnection of
supply. Yet the occupier might (and this
is shown to have happened in the evidence before us) in effect steal
electricity
and water from the municipality without the knowledge either of the
municipality or the owner. The evidence also reveals the
possibility of
successive occupiers put in by the owner who occupy for relatively short
periods each and whose indebtedness cannot
be laid at the door of any
subsequent occupier. The owner could well be lumbered with this
indebtedness again in circumstances
where neither the owner nor the
municipality were strictly to blame.
[51]
Bearing this immediate
context in mind, I now consider the relationship between means and ends that is
appropriate to constitute
sufficient reason for the deprivation. As I
have said before, the deprivation we are concerned with here involves a single
but significant element of ownership and lasts effectively for two years.
It is not an insubstantial deprivation. The
provision in effect requires
the owner of the property to bear the risk of non-payment of consumption
charges by non-owner occupiers.
In my view, there would be sufficient
reason for the deprivation if the government purpose was both legitimate and
compelling and
if it would, in the circumstances, not be unreasonable to expect
the owner to take the risk of non-payment. To decide this
question it is
necessary to evaluate the relationship between the consumption charge and the
property relative to that between
the consumption charge and the owner.
The closer the relationship between the consumption charge and the
property, the more
tenuous the link between the consumption charge and the
owner can be. Conversely, the more tenuous the link between the
consumption
charge and the property the closer the consumption charge must be
to the owner to qualify as sufficient reason.
[52]
The importance of the
purpose of the provision has been discussed earlier.
[52]
It is emphasised that
municipalities are obliged to provide water and electricity and that it is
therefore important for
unpaid municipal debt to be reduced by all legitimate
means. It bears repeating that the purpose is laudable, has the potential
to encourage regular payments of consumption charges, contributes to the effective
discharge by municipalities of their obligations
and encourages owners of
property to fulfil their civic responsibility.
[53]
It is now necessary to
consider the position of each category of occupiers and set of circumstances by
reference to which the constitutionality
of section 118(1) was called into
question by the applicants and by the High Court.
[53]
I start with tenants. There
is a close interrelatedness between the consumption charge and the property as
well as
that between the consumption charge and the owner. It has been
pointed out that the supply of electricity and water enhance
the use,
enjoyment, and value of the property. It has an impact on the amount of
rent payable. The benefit to the owner
and the property in these
circumstances cannot be gainsaid. The relationship between the owner and
the consumption charge
is so close as to justify a reasonable expectation that
the owner would choose a responsible tenant, monitor payment by the tenant
of
consumption charges that are due and ensure that the agreement of tenancy is
appropriately crafted. An agreement could
provide, for example, that the
consumption charges must be regularly paid by the tenant, that proof of payment
is given to the
owner and that eviction or other consequences would follow if
there is non-payment. There is therefore no basis to suggest
that it
would be unreasonable for the owner to bear the risk. The provisions are
therefore not arbitrary to the extent that
they cover consumption charges due
by tenants.
[54]
The section 118(1)
certificate must also cover the consumption charges due in connection with the
property by an occupier who holds
over unlawfully after the termination of a
lease or some other legal relationship that rendered occupation lawful at the
time it
began. Here again, the relationship between the consumption
charge and the property as well as the owner are sufficiently
strong for the
owner to bear the risk. There are allegations that tenants and those who
hold over reconnect electricity and
water illegally after the municipality has
effected a disconnection consequent upon the failure by the occupier to pay
consumption
charges. The submission that it is arbitrary for the owner to
bear the risk of non-payment in these circumstances must also
be
rejected. The relationship between the owner, the property and the
consumption charge remains sufficiently close to expect
the owner to take the
risk. The owner would have chosen the tenant and would receive rental
where the occupier concerned
is a tenant or would be entitled to damages for
holding over from an unlawful occupier. The connection is sufficiently
strong.
[55]
Fiduciaries and
usufructuaries must be discussed next. It is not necessary to discuss the
usufruct and fideicommissum in detail
here. The usufruct is an
institution in which the usufructuary has the right to possess, use and enjoy
property belonging
to another in such a way that the substantial character of
the property is preserved and there is a duty to restore the property
to the
owner upon the termination of the usufruct.
[54]
A fideicommissum is a disposition
of property to a fiduciary
who
is required to pass the
property onto another beneficiary, the fideicommissary, on the happening of an
event or on a specified
date.
[55]
Both fiduciaries and usufructuaries cannot diminish, alienate or consume the
property.
[56]
Both the fiduciary and the usufructuary can let the property.
[57]
[56]
In a usufruct, the
relationship between the consumption charge and the property is as close as it
is in the case of a tenant.
It is true that in the case of a usufruct
created by will, the owner who has been given the property would have no
control over
who the usufructuary would be. Nevertheless there is some
connection between the usufructuary and the owner in the sense that
the owner
has the right to ensure that the usufructuary cares for the property, does not
burden the property unduly by the use
and enjoyment of it and provides security
for the restoration of the property to the owner in good condition. The
consumption
charge is incurred in the course of the usufructuaryâs use and
enjoyment of the property sanctioned by the very instrument that
resulted in
her becoming the owner. Indeed, the ownerâs right to alienate the
property is limited by the rights of the
usufructuary during the term of the
usufruct. The owner acquires the property subject to the usufruct.
It cannot therefore
be said that it is unreasonable to expect the owner to
carry the risk of non-payment by the usufructuary as a necessary incident
of
the condition attaching to that ownership.
[57]
In the case of a
fideicommissum, the fiduciary will be hit by the provisions of section 118(1)
because she remains the owner of
the property until and unless the condition
that would result in the property being transferred to the fideicommissary is
fulfilled.
If the occupier of property is someone other than the
fiduciary, the fiduciary will be obliged to pay the consumption charges
incurred
by that occupier before that property can be transferred to the
eventual beneficiary, the fideicommissary. When the fideicommissary
becomes the owner as a result of the fulfilment of the condition, section
118(1) will apply to her if and when she wishes to alienate
the property.
In other words, the fiduciary is in effect the owner of the property until the
condition is fulfilled and the
fideicommissary becomes the owner of the
property after the condition is fulfilled. In the circumstances, the fact
that property
is subject to a fideicommissum has no impact upon the arbitrariness
or otherwise of section 118(1).
[58]
Finally, it is
necessary to consider whether it is arbitrary for the owner to be burdened with
the risk of paying consumption charges
for water and electricity supplied to
the property and consumed by a narrow category of unlawful occupiers: occupiers
who got on
to the property without the knowledge or consent of the owner and
who remain on the property. To put the question in another
way: Is it
unreasonable to expect an owner of property to pay these charges as a
prerequisite to transfer of the property if the
municipality supplies water or
electricity to unlawful occupiers and if these occupiers do not discharge their
indebtedness to
the municipality? The enquiry involves a comparison of
the position of the municipality and the owner in relation to the property,
the
unlawfulness of the occupation and the consumption charge.
[59]
This unlawful
occupation benefits neither the property nor the owner and, in most cases, is
prejudicial to both. It is nevertheless
the duty of the owner to
safeguard the property, to take reasonable steps to ensure that it is not
unlawfully occupied and, if
it is, to take reasonable steps to ensure the
eviction of the occupier. If the owner performs these duties diligently,
unlawful
occupiers will not, in the ordinary course, remain on the property for
a long period. It is ordinarily not the municipality
but the owner who
has the power to take steps to resolve a problem arising out of the unlawful
occupation of her property.
It is accordingly not unreasonable to expect
the owner to bear the risk.
[60]
The relationship
between the property and the consumption charge in these circumstances is
strong because the water and electricity
is supplied to and consumed on the
property in the course of its use and enjoyment. This relationship
compensates for the
somewhat attenuated connection between the owner and the
consumption charge. It is true that legal proceedings may be protracted
at times but this does not afford justification to transfer the risk from the
owner of the property to the municipality.
It may be that the
municipality ought not to have supplied the unlawful occupier with electricity
and water in the circumstances
that prevailed. This would mean simply that
the amount cannot be said to be âdueâ in connection with the property and
any
dispute in relation to this must be resolved by a court. This can be done
either before transfer or, if the owner pays
to obtain the certificate, after
transfer. Owners of property have to bear the risk in relation to many
occurrences as an
integral incident of the exercise of the right of
ownership. They for example bear the risk if the property is damaged or
destroyed or if movables are stolen. There seems to me to be little
difference in principle between the risk borne by the
owner in relation to the
theft of movable property and that borne by an owner of immovable property in
relation to consumption
charges incurred as a result of the unlawful occupation
of that property. The burden placed on the owner by section 118(1)
in
consequence of unlawful occupation does not render section 118(1) arbitrary.
[61]
The applicants
emphasised that the municipality supplied the service to the occupier and that
this local government body had rightly
been allocated the statutory duty to
ensure that all amounts due were effectively collected from the occupier.
It was also
stressed that the owner had never asked for the service, did not
directly benefit from it and had little control over consumption.
In
these circumstances, the applicants strongly resisted what they regarded as a
provision that in truth relieved the municipality
of the obligation to collect
amounts due to it and transferred them to the owner. This the applicants
said rendered the provision
arbitrary.
[62]
Section 118(1) does not
relieve the municipality of its duty. It must continue to do everything
reasonable to ensure appropriate
collection of its debt. That municipal
debt as a whole has accumulated to devastating proportions is of considerable
concern.
So too is the evidence to the effect that, in relation to many
of the applicants before this Court, large amounts due in relation
to
consumption charges have remained outstanding for a considerable period.
There is disputed evidence before us concerning
the degree of inefficiency of
the municipalities that have been cited. No more should be said about
this aspect than that
if the inefficiency of the municipality degenerates to
the extent where it can be proved to be negligence that occasioned damage
to
the owner of the property concerned, owners may have a delictual claim for
damages against the municipality. It must be
emphasised that it is
imperative for municipalities to do everything reasonable to reduce amounts
owing. Otherwise, the sustainability
of the delivery of municipal
services is likely to be in real jeopardy.
[63]
The KwaZulu-Natal Law
Society,
relied on the circumstance that there was a great
deal of confusion created by the requirements of the section and that this had
an impact on the speed with which property was transferred. Parties to
contracts did not understand the terms of the impugned
provision and the
completion of the certificate requirement also resulted in undue delays.
The fear was that this would have
a serious impact on the property
market. It has been shown in these cases that some municipalities have
been less than efficient
in the issue of certificates, that the accounts sent
by them have in many instances been unclear and that there are instances in
which amounts said to be due as a precondition for the issue of a certificate
have reduced considerably and inexplicably over time.
In the
Geyser
case in which the Society was an applicant the seller was first informed by the
municipality that the amount required to obtain
the section 118(1) certificate
was R125 934.68. By the time the matter came to be argued in court some
months later however
it became common cause that the sum required was R47 145.29.
[64]
All these are matters
of concern but they do not render the provision arbitrary. Counsel was
inclined to concede that these
difficulties could well be the result of the
fact that this was a new provision and that these negative consequences would
probably
diminish as all the affected parties gained a greater understanding of
the provision and its implications. 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.
Procedural
fairness
[65]
It was held in the
FNB
case that the law that results in a deprivation of property must, in addition
to showing an appropriate relationship between means
and ends, be procedurally
fair.
[58]
Nothing was however said in that case about what procedural fairness entailed
in the context of the determination of arbitrariness
for purposes of section
25(1) of the Constitution. It was contended that section 118(1) was not
procedurally fair principally
because it did not impose any obligation on
municipalities to keep property owners informed of the amounts owing by
occupiers at
reasonable intervals when this is requested by the property owners
in writing. This meant that owners were often taken by
surprise by the
large amounts of consumption charges owing when certificates were sought in the
process of the transfer of property.
Owners were accordingly often unable
to pay consumption charges due with the speed required by the exigencies of the
situation.
This, it was said, was unfair. This Court has held in
contexts other than a section 25(1) arbitrariness investigation that
procedural
fairness is a flexible concept and that the requirements that must be satisfied
to render an action or a law procedurally
fair depends on all the
circumstances.
[59]
This proposition applies equally to procedural fairness mandated by section
25(1).
[66]
The circumstances here
are that the municipality has, or ought to have, a running accurate record of
the amounts that are
due,
a municipality would know if
the amounts outstanding are unreasonably high and it would be theoretically
possible for the municipality
to keep the owner informed. The practical
implications of a municipality assuming a responsibility of this kind are
considerable.
Additional resources and processes need to be put in
place. The other side of this coin is that owners are, or ought to be,
in
a position to care for their property, keep in touch with occupiers and monitor
the occupation and use of their properties.
These considerations point to
a conclusion that a municipality should not be required to furnish the owner of
property with information
on a continuous basis for the law to be procedurally
fair. Owners also complain however that municipalities refuse to provide
information even if they are requested to do so. There is no basis for
this refusal. The owner has an interest to know
how much is
owing
and a municipality is obliged to provide the
information if requested to do so.
[67]
Fairness requires a
municipality to provide an owner of property with copies of all accounts if the
owner requests them. The
absence of this requirement would render the
deprivation in this case procedurally unfair. However, it is reasonably
possible
to interpret the section to mean that there is a necessary implication
that the municipality is indeed obliged to furnish accounts
to the owner upon
request where the property is not occupied by the owner. It has been
pointed out that the municipalities
in this case disputed the obligation to
furnish the information. It is important for there to be certainty in
this regard.
It is accordingly appropriate to declare that every
municipality is obliged to provide copies of monthly accounts in respect
of
amounts owing for water and electricity by occupiers of property where the
owner is not the occupier on the written request
of the owner.
Other
arguments
[68]
One of the applicants
contended that section 118(1) was unconstitutional by reason of its
inconsistency with sections 9(1), 26,
and 34 of the Constitution. Each of
these arguments must now be considered.
[69]
Section 9(1) of the
Constitution provides:
âEveryone
is equal before the law and has the right to equal protection and benefit of
the law.â
The
essence of the applicantâs argument is that an owner of property occupied by a
non-owner is in effect rendered surety for
the debt owing by the
occupier. As I understand it, the argument goes that an owner in this
category is denied equal protection
of the law because she is treated
differently from the owner who occupies the property or owns property that is
unoccupied.
The latter, so it is argued, is not burdened with any
suretyship while the former is. The complaint is that not all owners
of
property are treated alike. The argument must be rejected. The
suggestion implied by the argument that owners could
be held liable for debts
of occupiers when there are none is absurd. It is quite impossible to
hold any owner liable for
consumption charges that do not exist. There is
a fundamental and obvious difference between the position of the owner of
property who occupies it and the owner whose property is occupied by
others. A law that recognises these differences and
treats the owner in
each category differently cannot, for that reason alone, offend the equality
principle.
[70]
The argument based on
section 26 of the Constitution
[60]
is that section 118(1) impedes the right of access to adequate housing
guaranteed by subsection (1), and that it is inconsistent
with the government obligation
to take reasonable legislative and other measures to give effect to this
right in terms of
subsection (2). It is true that section 118(1)
places restrictions on the transfer of property and that the right of access
to
housing could be affected if the property in question has been bought for the
purposes of housing. But the obstacles to
transfer are not in reality
placed by the government. The reason for the difficulty is that
consumption charges due in respect
of that property have not been paid by the
previous occupiers. It could not be contended that a law which obliges
owners
to pay consumption charges owing by them to the municipality before the
property can be validly transferred would constitute a breach
of the right to
housing or is inconsistent with the stateâs obligations. The cause of the
trouble is the failure of the
owner to pay. In the same way, the cause of
the obstacle to transfer where consumption charges are due by the occupier is
the failure of the occupier to pay. This argument too, must fail.
[71]
The last argument
advanced is that the certificate requirement unjustifiably limits section 34 of
the Constitution.
[61]
This contention is based on the fact that a municipality is not obliged to go
to court to get any judgment against the owner
or occupier before the
restriction on the right to transfer becomes operative. The suggestion is
that this case is similar
to the
Lesapo
case in which the creditor was
entitled, without approaching a court, to enter into execution and receive
payment of the debt.
[62]
Lesapoâs
case is very different from this one. Here, an
aspect of the right of property is restricted. This judgment holds that
the section 118(1) restriction does not amount to a limitation of the right of
every person not to be deprived of property arbitrarily,
of the section 9
equality
right
or of the section 26 right to
housing. Nor is it apparent that the restriction involves the limitation
of any other rights
in our Bill of Rights. Section 34 does not extend so
far as to prevent the imposition of any restriction on any right without
the
order of a court having first been obtained. The section gives everyone
the right of access to a court to have justiciable
issues decided
impartially. A dispute about the amount of the consumption charge that
must be settled before a section 118(1)
certificate can be issued is a
justiciable issue. There is nothing to prevent any owner or purchaser of
property, including
any applicant in this case, from accessing a court to have
the justiciable issue resolved. The last argument has nothing to
commend
it.
Section
50(1
)(
a)
[72]
It has already been
pointed out that section 50(1
)(
a) has the same effect
as section 118(1) save in one respect. Section 50(1)(a) requires that the
certificate that must be
obtained as a necessary step precedent to transfer
must cover consumption charges that remain owing for a period of three years
before the date of issue of the certificate. It will be remembered that
the section 118(1) certificate must cover only a
two year period.
[63]
The question that must be answered
therefore is whether section 50(1
)(
a) is arbitrary by
reason of the fact that the period of three years is unacceptably long.
There was no argument to this effect.
Nor could there
be.
Section 50(1
)(
a) is accordingly not
arbitrary for the reasons advanced in this judgment in support of the same
conclusion in relation to section
118(1).
The
practicalities
[73]
This judgment holds
that the owner of property is, in effect, obliged to ensure that certain
consumption charges owing to the municipality
in connection with a property are
paid before that property can be validly transferred. The facts of the
cases before us
show that there is the possibility of a whole range of disputes
that might arise in the process of the application of both section
118(1) and
section 50(1)(a). Some of the disputes that may arise in connection with
the consumption charges alleged by the
municipality to remain owing in
connection with the property may concern the accuracy of the amount, whether
the sum relates to
consumption charges as contemplated by each of the
provisions and whether the amount alleged is limited to the relevant period of
two or three years. In the nature of things, the resolution of these
disputes can take time. The passage of more than
a reasonable time
between the sale of property and its transfer can be unduly onerous to both the
parties to the sale. The
delay could be considerable if the dispute
between the parties cannot be resolved without resorting to court
proceedings.
If municipalities keep accurate and full records and supply
information to owners, the time taken to resolve any disputes that may
arise
would be minimal in most cases. It must be pointed out however that the
owner who wishes to effect transfer of property
reasonably quickly in
circumstances where it is not possible to resolve a dispute in connection with
the amount of consumption
charges required to be paid to facilitate transfer is
not necessarily in an impossible position. It may be possible, in
appropriate
cases, for an owner to demonstrate that she has a clear right to
transfer, that there is a dispute about this and that the balance
of
convenience justifies the grant of an order compelling a municipality to issue
a certificate subject to appropriate conditions
pending the final determination
of court proceedings aimed at resolving the dispute. A municipality or
owner found, at the
end of the day, to have been wrong in the attitude taken at
the time of transfer will have to face the appropriate consequences.
It
is therefore appropriate for all owners and municipalities to negotiate meaningfully
and in good faith when disputes around
the application of section 118(1) or
section 50(1
)(
a) arise.
Costs
[74]
The parties who contend
for the invalidity of section 118(1) and section 50(1
)(
a)
have failed. However, they raised important issues and concerns about
legislative provisions that intrude upon the important
right of an owner to
transfer property. An order obliging them to pay the costs of this
application would have a chilling
effect on members of South African society who
wish to approach a court to raise important constitutional concerns. In
the
circumstances, there should be no order as to costs in relation to
proceedings in this Court or in the High Court. The WLD
proceedings have
not yet been terminated and may continue there in the light of this
judgment. It will in the circumstances
be inappropriate to make any order
in relation to the costs of the WLD proceedings. However, all the parties
in the WLD case
must pay their own costs in relation to the proceedings in this
Court.
The Order
[75]
The following order is
made:
A.
Case CCT 1/04
Transfer Rights Action Campaign and Others v
Member of the Executive Council for Local Government and Housing in the
Province
of
Gauteng
and Others
(1)
The application for direct access is
granted only to the extent that it concerns the challenge to the
constitutionality of
section 118(1)
of the
Local Government: Municipal Systems
Act 32 of 2000
and
section 50(1
)(
a) of the Provincial
Government Ordinance No 17 of 1939 (
Gauteng
).
(2)
The application for direct access is
refused in all other respects.
(3)
The application for the declaration
of the constitutional invalidity of
section 118(1)
of the
Local Government:
Municipal Systems Act 32 of 2000
and
section 50(1
)(
a)
of the Provincial Government Ordinance No 17 of 1939 (
Gauteng
) is dismissed.
B.
Case CCT 57/03
Nokuthula Phyllis Mkontwana v
Nelson
Mandela
Metropolitan
Municipality
and Another
(1)
The appeal succeeds.
(2)
The order of the South Eastern Cape
Local Division of the High Court is accordingly not confirmed.
(3)
The order of the South Eastern Cape
Local Division of the High Court is set aside and replaced by the following
order:
(a)
The application is dismissed.
(b)
There is no order as to costs.
C.
Case CCT 61/03
Peter William Bissett and Others v
Buffalo
City
Municipality
and Others
(1)
The application by the
Buffalo
City
Municipality
to introduce further evidence is refused.
(2)
The appeal succeeds.
(3)
The order of the South Eastern Cape
Local Division of the High Court is accordingly not confirmed.
(4)
The order of the South Eastern Cape
Local Division of the High Court is set aside and replaced by the following
order:
(a)
The application is dismissed.
(b)
There is no order as to costs.
D.
It is declared that a
municipality is obliged to supply copies of all monthly statements rendered to
an occupier of property for
the supply of water or electricity to that property
to an owner of the property who requests them in writing.
Chaskalson CJ, Langa DCJ, Madala J, Moseneke J,
Ngcobo J, Skweyiya J and Van der Westhuizen J concur in the judgment of Yacoob
J.
OâREGAN J:
[76]
I have read the
judgment written by Yacoob J. Although I concur in the order he proposes,
the reasoning by which I reach this
conclusion is somewhat different to
his. The crisp issue we need to determine is whether section 118(1) of
the Local Government:
Municipal Systems Act, 32 of 2000 (the Act) is in breach
of section 25 of the Constitution. Section 50(1
)(
a) of
the Gauteng Local Government Ordinance
[1]
is also under challenge in the case on the same grounds. It is in similar
terms to section 118(1) and will stand or fall
by the reasoning that applies to
section 118(1).
[77]
Before turning to that
question, I note that I agree with Yacoob Jâs reasoning and order concerning
the grant of direct access.
I also agree with him that the argument that
section 118(1) should be interpreted to apply only to consumption charges
incurred
by the owner is not sustainable and falls to be rejected for the
reasons he gives. The difference
between
this
judgment and his relates only to the approach that should be adopted to answer
the question whether a particular legislative
provision constitutes a
limitation of section 25(1) of the Constitution.
[78]
Section 118(1) of the
Act provides as follows:
âA
registrar of deeds may not register the transfer of property except on
production to that registrar of deeds of a prescribed
certificateâ
(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.â
The
provision requires that a registrar of deeds may not transfer property unless
he or she has received a certificate from the
relevant municipality that all
amounts owing in connection with the property in respect of rates and service
charges in the previous
two years have been paid. The issue in this case
is whether, to the extent that service charges for water and electricity
have
been incurred by consumers other than the owner of the property, it is a breach
of the ownerâs rights to hinder transfer
of the property in this way.
The
approach to section 25 of the Constitution
[79]
Determining whether a
particular statutory provision constitutes a breach of section 25(1) of the
Constitution requires a contextual
understanding of section 25 of the
Constitution which provides that:
â(1)
No one may be deprived of property except in terms of law of general
application, and no law
may permit arbitrary deprivation of property.
(2)
Property may be expropriated only in terms of law of general application â
(a)
for
a
public purpose or in the public interest; and
(b)
subject
to compensation, the amount of which and the
time and manner of payment of which have either been agreed to by those
affected or
decided or approved by a court.
(3)
The amount of the compensation and the time and manner of payment must be just
and
equitable, reflecting an equitable balance between the public interest and
the interests of those affected, having regard to all
relevant circumstances,
including â
(a)
the
current use of the property;
(b)
the
history of the acquisition and use of the property;
(c)
the
market value of the property;
(d)
the
extent of direct state investment and subsidy in
the acquisition and beneficial capital improvement of the property; and
(e)
the
purpose of the expropriation.
(4)
For the purposes of this section â
(a)
the public interest includes the nation's commitment to land reform, and to
reforms
to bring about equitable access to all South Africa's natural
resources; and
(b)
property
is not limited to land.
(5)
The state must take reasonable legislative and other measures, within its
available
resources, to foster conditions which enable citizens to gain access
to land on an equitable basis.
(6)
A person or community whose tenure of land is legally insecure as a result of
past
racially discriminatory laws or practices is entitled, to the extent
provided by an Act of Parliament, either to tenure which is
legally secure or
to comparable redress.
(7)
A person or community dispossessed of property after 19 June 1913 as a result
of past
racially discriminatory laws or practices is entitled, to the extent
provided by an Act of Parliament, either to restitution of
that property or to
equitable redress.
(8)
No provision of this section may impede the state from taking legislative and
other
measures to achieve land, water and related reform, in order to redress
the results of past racial discrimination, provided that
any departure from the
provisions of this section is in accordance with the provisions of section 36
(1).
(9)
Parliament must enact the legislation referred to in subsection (6).â
[80]
This Court considered
the approach to the interpretation of section 25 in
First National Bank of
SA Ltd t/a Wesbank v Commissioner, South African Revenue Service and Another;
First National Bank of SA Ltd
t/a Wesbank v Minister of Finance
(âthe
First
National Bank
caseâ).
[2]
In that case, the Court held that section 25 had to be understood in the light of
the overall purpose of our Constitution.
Ackermann J, for a unanimous
court, reasoned as follows:
âThe preamble to the Constitution indicates that one of the
purposes of its adoption was to establish a society based, not only
on
âdemocratic valuesâ and âfundamental human rightsâ, but also on âsocial
justiceâ. Moreover the Bill of Rights
places positive obligations on the
State in regard to various social and economic rights.
[3]
Van der Walt (1997
)
[4]
aptly explains the tensions that exist within s 25:
â[T]he meaning of s 25 has to be
determined, in each specific case, within an interpretative framework that
takes due cognisance
of the inevitable tensions which characterize the operation
of the property clause. This tension between individual rights
and social
responsibilities has to be the guiding principle in terms of which the section
is analysed, interpreted and applied
in every individual case.â
The purpose of s 25 has to be seen both as protecting
existing private property rights as well as serving the public interest, mainly
in the sphere of land reform but not limited thereto, and also as striking a
proportionate balance between these two functions.
â
[5]
[81]
The property clause
must therefore be interpreted in a manner which seeks to establish a balance
between the need to protect private
property, on the one hand, and to ensure
that property serves the public interest, on the other. This balance will
need to
be struck in the light of our history. The inclusion in section
25 of the provisions of subsections (5) to (9) emphasises
the importance, in
particular, of the need for land reform and the importance of security of
tenure on land. These provisions
highlight the inequities of land
distribution in
South Africa
,
as a result of the processes of colonial and apartheid dispossession. As
this Court has emphasised on many occasions, our
Constitution is a document
committed to social transformation.
[6]
It insists that the deep injustices of our past characterised by racial
dispossession and exclusion be addressed and reversed.
The Constitutionâs
commitment to the protection of property rights must be interpreted in a manner
consonant with that vision.
[82]
The history of
dispossession in
South
Africa
, however, has also made it sharply
apparent that property, whether land or other possessions, is important to
individuals and to
communities, not only for material reasons, but for reasons
of culture, identity and dignity. We should be careful in approaching
the
property clause, not to underestimate the importance of property in our
constitutional scheme. Property is valued, partly
at least, because we
are acutely conscious of the deep damage inflicted in the past, particularly on
black South Africans, by the
taking of their land and possessions.
Nevertheless it is also quite clear that the right to property is not an
absolute one
in our constitutional order. In approaching the property
clause we must therefore recognise the constitutional value of property,
and
the importance of protecting it, while recognising that it is not
absolute. A balance must be struck between the need
to protect property,
on the one hand, and the recognition that rights in property may be
appropriately limited to facilitate the
achievement of important social
purposes, including social transformation, on the other.
[83]
Each particular
subsection in the property clause needs to be understood in the light of this
context and these goals. In
this case, as in the
First National Bank
case,
[7]
we are concerned with the proper interpretation of section 25(1) of the
Constitution. In that case, the Court, in order to
determine whether the
relevant statutory provision constituted a limitation of section 25(1), held
that it is necessary to determine
first, whether it constitutes a âdeprivationâ
for the purposes of that section; and, secondly, whether that deprivation is
arbitrary. A third requirement is to consider whether any deprivation is
caused by a law of general application. It
is quite clear that section
118(1) does constitute a law of general application and this issue need not
trouble us further.
[8]
Does
section 118(1) constitute a deprivation of property?
[84]
The question of what
constitutes a deprivation of property was considered in the
First National
Bank
case.
[9]
In that case, the Court was concerned with a challenge to section 114 of the
Customs and Excise Act, 91 of 1964. Section
114 permitted the
Commissioner of the South African Revenue Service to detain and sell property
to meet customs debt. The
challenge in the case related to the categories
of property that the Commissioner could attach which included goods on any
premises
in the possession of or under the control of the customs debtor.
The challenge was brought by a bank that provides finance
for the leasing of
motor vehicles. Three of its motor vehicles had been attached by the
Commissioner on the premises of a
customs debtor and were to be sold by the
Commissioner.
[85]
The Court considered
the question of what constituted a deprivation for the purposes of section
25(1). It noted that the phrase
âdeprivation of propertyâ can be
misleading as it may suggest that deprivation refers to the taking away of
property in its
entirety. This understanding of the phrase was rejected
by the Court in the light of international jurisprudence. The
Court
continued as follows:
âIn a
certain sense any interference with the use, enjoyment or exploitation of
private property involves some deprivation in
respect of the person having
title or right to or in the property concerned.â
[10]
[86]
The Court did not
however conclude that âdeprivationâ in section 25(1) should have such a wide
ambit. It was not necessary
to do so for the purpose of the
First
National Bank
case. In that case, the effect of the challenged
provision was that an owner could be deprived of all rights in a corporeal
movable. Once the property had been detained by the Commissioner it could
be sold to meet the customs debt. It was
clear, therefore, that section
114 could result in a loss of ownership and consequently a loss of the ability
to use, enjoy or
exploit the property. Loss of ownership must clearly
constitute a deprivation for the purposes of section 25(1) and it was
not
necessary for the Court to consider in any great detail the precise ambit of
what would constitute a deprivation for the purposes
of section 25(1) in
circumstances where an interference with property fell short of a loss of
ownership.
[87]
In this case, an owner
is not deprived of ownership by section 118(1) of the Act, but one of the
incidents of ownership, the ability
to alienate immovable property, is
impaired. Accordingly, it is necessary to consider whether an
interference with ownership
falling short of loss of ownership will fall within
the concept of âdeprivationâ in section 25(1). Understanding what
deprivation means within section 25(1) requires an evaluation of the constitutional
purpose of that section.
[88]
It could be argued that
âdeprivationâ in section 25(1) relates only to the complete removal of
ownership or other real rights
in property and not to limitations on real
rights. Indeed, Mr Unterhalter argued that the limitation on property
rights of
owners occasioned by section 118(1) did not constitute a deprivation
for the purposes of section 25(1). In my view, section
25(1) should not
be interpreted so narrowly.
[89]
There can be no doubt
that some deprivations of property rights, although not depriving an owner of
the property in its entirety,
or depriving the holder of a real right of that
real right, could nevertheless constitute a significant impairment in the
interest
that the owner or real right holder has in the property. The
value of the property in material and non-material terms to the
owner may be
significantly harmed by a limitation of the rights of use or enjoyment of the
property. If one of the purposes
of section 25(1) is to recognise both the
material and non-material value of property to owners, it would defeat that
purpose were
âdeprivationâ to be read narrowly.
[90]
Moreover, as will be
seen later, one of the considerations relevant to determining whether a
deprivation is arbitrary or not is
the extent of the deprivation itself and the
effect on the property owner. Establishing whether a âsufficient reasonâ
exists for the deprivation will depend on the character of the
deprivation. A minor deprivation will more easily be held
to have a
âsufficient reasonâ than an invasive deprivation. âDeprivationâ in
section 25(1), therefore, should not
be given too limited a meaning. It
should be emphasised, however, that there may be limitations on property rights
which
are either so trivial or are so widely accepted as appropriate in open
and democratic societies as not to constitute âdeprivationsâ
for the purposes
of section 25(1). This is not a matter which I need to decide for the
purposes of this case, and it may
be left open for further consideration in
future.
[91]
The ability to alienate
immovable property may be considerably impaired by section 118(1). The
right to alienate property
is an important incident of ownership and
interference with that right can significantly impair the enjoyment and benefit
an owner
derives from property. The extent of the actual impairment will
in most cases depend on the quantum of the unpaid service
charges. The
higher that
quantum,
and the closer to the overall
value of the property, the greater the impairment of the right to alienate may
be. In some
of the individual cases under consideration here, the quantum
of service charges has mounted to a point where it constitutes a significant
proportion of the overall value of the property. In such circumstances,
the effect of section 118(1) may be that the right
to alienate the property
will be limited for at least a period of two years. Such an impairment of
the right to alienate
property is neither trivial, nor is there any suggestion
by the litigants that such limitations are ordinarily imposed by most open
and
democratic societies. I conclude therefore that section 118(1) does
constitute a deprivation for the purposes of section
25(1) of the Constitution.
Is
the deprivation arbitrary?
[92]
The question of what
constitutes an arbitrary deprivation was also considered in the
First
National Bank
case.
[11]
In that case, the Court identified the following considerations relevant to
determining whether a deprivation is arbitrary:
âHaving
regard to what has gone before, it is concluded that a deprivation of property
is âarbitraryâ as meant by s 25 when
the âlawâ referred to in s 25(1) does not
provide sufficient reason for the particular deprivation in question or is
procedurally
unfair. Sufficient reason is to be established as follows:
(a)
It is to be determined by evaluating the relationship between means employed,
namely
the deprivation in question and ends sought to be achieved, namely the
purpose of the law in question.
(b)
A complexity of relationships has to be considered.
(c)
In evaluating the deprivation in question, regard must be had to the
relationship
between the purpose for the deprivation and the person whose
property is affected.
(d)
In addition, regard must be had to the relationship between the purpose of the
deprivation
and the nature of the property as well as the extent of the
deprivation in respect of such property.
(e)
Generally speaking, where the property in question is ownership of land or a
corporeal
moveable, a more compelling purpose will have to be established in
order for the depriving law to constitute sufficient reason for
the deprivation
than in the case when the property is something different and the property
right something less extensive.
This judgment is not concerned at all
with incorporeal property.
(f)
Generally speaking, when the deprivation in question embraces all the incidents
of
ownership, the purpose for the deprivation will have to be more compelling
than when the deprivation embraces only some incidents
of ownership and those
incidents only partially.
(g)
Depending on such interplay between variable means and ends, the nature of the
property
in question and the extent of its deprivation, there may be
circumstances when sufficient reason is established by, in effect, no
more than
a mere rational relationship between means and ends; in others this might only
be established by a proportionality evaluation
closer to that required by s
36(1) of the Constitution.
(h)
Whether there is sufficient reason to warrant the deprivation is a matter to be
decided
on all the relevant facts of each particular case, always bearing in mind
that the enquiry is concerned with âarbitraryâ in
relation to the deprivation
of property under s 25.â
[12]
[93]
A deprivation will be
arbitrary if it is either without âsufficient reasonâ or procedurally unfair.
There can be no doubt
that the requirement of procedural fairness is an
important one in evaluating whether a deprivation is arbitrary or not. I
agree with the reasoning and conclusion of Yacoob J that section 118(1) must be
understood to require a municipality to furnish
statements of account when
requested to do so in writing by an owner. I need say no more about
procedural unfairness in this
judgment.
[94]
The other issue
is whether there is sufficient reason for the deprivation. The approach
established in the
First National Bank
case requires a court to consider
the extent of the deprivation, on the one hand, and evaluate it in the light of
the purpose of
the legislation that occasions the deprivation. What will
constitute sufficient reason will depend, as we said in the
First National
Bank
case, on the extent of the deprivation,
[13]
the nature of the property concerned
[14]
and all the relevant facts of the particular
case,
[15]
one of which would be the relationship between the purpose for the deprivation
and the person whose property has been affected.
[16]
In my view, the test established
by
First National Bank
is one of âsufficient reasonâ in each case which
must be determined in the light of all the facts of the case. I turn
now
to consider first the extent of the deprivation caused by section 118(1) and
then to evaluate that deprivation in the light
of the purpose of section
118(1).
The
extent of the deprivation
[95]
In this case, section
118(1) provides that a registrar of deeds may not transfer immovable property
unless he or she has received
a certificate from the relevant municipality
stating that all rates and service charges incurred in respect of that property
for
the two years prior to the issue of the certificate have been paid.
If that certificate is not forthcoming, the immovable
property may not be
transferred. An owner who wishes to alienate the property will not be
able to do so unless the necessary
certificate is acquired.
[96]
Payments made to a
municipality, however, may be allocated to old debt rather than to current
charges. If payments made to
meet current charges are in fact allocated
to old debts, current charges will remain unpaid and the limitation on the
right to
transfer may last longer than two years. Whether an owner may
stipulate the purpose for which payments are made and require
a municipality to
reflect the payments against current debts may depend on the terms of the
service contract between the consumer
and the municipality and on other
legislation. It is not an issue we can determine in this case. We
must accept therefore
that the period for which the limitation may last may be
longer than two years and will depend on the circumstances of each case.
[97]
An important factor
relevant to determining the extent of the limitation on the property right in
any particular case will be the
extent of indebtedness. Ordinarily, a
municipality should require consumption charges to be paid, and legislation
affords
municipalities a range of tools to ensure that charges are paid.
[17]
However, as the facts of several
of the cases before us illustrate, municipalities have permitted consumption
charges to
accumulate to inordinate amounts. So, for example, Ms
Mkontwana
[18]
who has purchased a home for R24 560 was initially informed that an amount of
R10 728
,08
needed to be paid in order for a
certificate to be issued. This amount was revised on several occasions by
the Council and
she was finally informed that an amount of R2 504
,61
needed to be paid. When Mr Bissett and Mrs van der
Straeten
[19]
sought to transfer their property in East London, having sold it for R110 000,
they were informed that an amount of R14 479,06
needed to be paid before a
certificate could be issued. Treknet CC
[20]
sold a property for R3
,7
million and then found that R137 355,64 needed to be paid before a section
118(1) certificate could be issued. In each of
these cases, the amount of
indebtedness construed in the context of the value of the property concerned
was significant.
[98]
Where no adequate
security exists to meet the outstanding consumption charges, the effect of
section 118(1) is that an owner who
wishes to transfer property to a purchaser
will have either to pay the charges owing or suspend transfer for a period of
two years
and install a new tenant or occupier in the property who must pay all
consumption charges. In practice, the greater the amount
of consumption
charges owing, the greater the potential deprivation of the rights of an
owner. Where only a trivial amount
of money
is owing
,
an owner would be able to pay the outstanding amounts and obtain
transfer. If the amounts owing are trivial, particularly
when viewed in
the light of the market value of the property, the infringement of the ownerâs
enjoyment of the property will
not be oppressive. However, where the
amounts owing are substantial, the effect may be a material limitation on the
ownerâs
rights.
[99]
In the High Court,
Kroon and Leach JJ concluded that section 118(1) infringed section 25(1).
[21]
A key reason for this conclusion
was the fact that section 118(1) operated even where the consumer of the
relevant municipal
services was not the owner of the property concerned.
The High Court mentioned tenants, persons exercising rights of habitatio,
usufructuaries, fiduciaries who hold the property subject to a fideicommissum,
squatters and mala fide occupiers and concluded
that there was no necessary
relationship between these classes of consumer of municipal services and the
owner, nor did the owner
necessarily benefit from the consumption of service
charges by these classes of occupier.
[22]
I shall return to this reasoning later. However, what needs to be noted
in the context of determining the scope of
the deprivation is that owners are
in a position to minimise the deprivation in relation to all these classes of
occupier.
[100]
First, in relation to
tenants, landowners can limit the potential effect of section 118(1) in several
ways through the contractual
arrangements they reach with tenants. They
could include a provision within the lease agreement in terms of which tenants
must pay consumption charges, and keep landowners informed of such
payments. In this case, most of the lease agreements in
question did
contain provisions requiring tenants to pay municipal service charges, though
none of these agreements expressly stipulated
that tenants should keep lessors
informed of these payments. Alternatively, the same effect could be
achieved by drafting
the lease agreement in such a manner that lessors pay
consumption charges and those charges must then be paid to lessors by tenants.
[101]
Landowners can also
reduce their risk in relation to the consumption of services by tenants and
other occupiers (including usufructuaries,
and unlawful tenants) by requesting
municipalities to furnish them with regular statements of account.
Although some of the
municipalities, in written argument, suggested that they
would not be obliged to furnish such written statements to landowners,
this
argument was expressly abandoned in oral argument before the Court. I
agree with Yacoob J that municipalities would
be obliged to furnish landowners
with statements of account in relation to consumption charges due in respect of
their properties.
[23]
By keeping a close eye on the extent of the outstanding service charges, owners
can take timely steps to ensure that indebtedness
does not get out of
hand. In relation to unlawful occupiers, they can take steps to evict the
unlawful occupier and put municipalities
on notice that the occupiers are
unlawful.
[102]
A further method
whereby landowners could restrict the effect of section 118(1) would be to
install pre-paid electricity meters
on the property and require occupiers,
which would include not only tenants, but usufructuaries, and also other
occupiers, only
to consume electricity on a pre-paid basis.
[24]
Should owners do so, the
possibility of incurring significant consumer charges in relation to
electricity would be avoided.
It is clear therefore that there are
various steps which landowners may take to limit the risk of the limitation of
their right
to transfer their property.
[103]
Nevertheless, despite
the fact that there are steps that may be taken by responsible landowners to
minimise the risk of harm, it
must be concluded that section 118(1) has the
potential to constitute a significant deprivation of the rights of an owner of
property.
The fact that it is possible for this risk to be reduced by
responsible action on the part of the landowner reduces the scope of
the
deprivation, but does not eliminate it.
The
purpose of the deprivation
[104]
I turn now to consider
the purpose of the deprivation. It is clear from its provisions that the
purpose of section 118(1)
is to encourage the payment of municipal rates and
service charges. It achieves this purpose by limiting the rights of
owners
to transfer property in circumstances where there are outstanding debts
incurred in connection with that property. This limitation,
in turn, has
the purpose of encouraging responsible owners to take steps to ensure that
substantial municipal debts are not incurred
by occupiers of their property.
[105]
This
purpose needs to be understood in
the light of the constitutional role of municipalities under our new
constitutional order, a
role of great importance. Section 152 of the
Constitution provides that:
â(1)
The
objects of local government areâ
(a)
to
provide
democratic and accountable government for local communities;
(b)
to
ensure the
provision of services to communities in a sustainable manner;
(c)
to
promote
social and economic development;
(d)
to
promote a
safe and healthy environment; and
(e)
to
encourage the
involvement of communities and community organisations in the matters of local
government.
(2)
A
municipality must strive, within its financial and
administrative capacity, to achieve the objects set out in subsection (1).â
Local
government thus bears the important responsibility of providing services in a
sustainable manner to their communities.
This task is particularly
important given the deep divisions in our towns, the scars of spatial apartheid
which still exist and
the fact that many poor communities are still without
access to basic facilities such as water, adequate sewerage systems, refuse
collection, electricity and paved roads. The ability of local government
to carry out its constitutional mandate depends
on its financial stability.
[106]
It
is clear from the record before us
that expanding municipal debt is a significant nation-wide problem.
According to one of
the deponents, the current national debt in respect of
municipal fees for electricity, water, refuse and sewerage charges is estimated
at R22 billion. The City of
Johannesburg
[25]
has an outstanding debt in respect of
assessment rates, electricity, water, refuse and sewerage charges of R5
,9
billion. Government at national, provincial and
local levels have taken a variety of steps to address this problem, of which
section 118(1) is an example.
[107]
The
problem of the scale of national
municipal debt is an important consideration in evaluating the purpose of
section 118(1).
I agree with Kondile J who, when considering the
constitutionality of section 118(1) in
Geyser and Another v
Msunduzi
Municipality
and Others
,
held
that:
âOutstanding
debts of this magnitude seriously threaten the continued supply of basic
municipal services and demonstrate a need
for effective security being put in
place in respect of such service. This is a legitimate and important
legislative purpose,
which is essential for the economic viability and
sustainability of municipalities in the country and in the interest of all the
inhabitants.â
[26]
Kondile
J is quite correct that the operation of municipalities and the performance of
their constitutional obligations will be
severely compromised if they are not
financially viable.
[108]
Another
aspect of the purpose of section
118(1) is that it will encourage owners of property to take steps to avoid the
accumulation of
substantial debts for municipal services provided to their
properties. Owners are ordinarily in a better position than
municipalities
to take steps to avoid the accumulation of such debt in respect
of their own properties. Because municipalities are required
to provide
services to all occupiers who request services, and because of the sheer number
of consumers to whom they provide services,
they may be less able to take
precautionary steps to avoid municipal debt mounting in individual cases.
[109]
Owners have a variety
of steps they can take to limit the potential for municipal debt in respect of
their properties, and therefore
have some power to limit the potential
deprivation of their rights to transfer their property. First, owners can
select tenants
carefully with an eye to ensuring that they meet their financial
responsibilities. Second, owners can include provisions in
lease
agreements which will promote the payment of municipal charges. Third,
owners can install pre-paid electricity meters
on their premises and require
occupiers to pay for the use of electricity in advance, thus obviating municipal
debt. Fourth,
owners can take steps to evict unlawful occupiers who are
consuming municipal services.
[110]
The
purpose of section 118(1) is thus
an important one which serves to assist the recovery of local government
charges and to promote
the creation of a culture of payment of charges.
[111]
At the hearing of the
matter, those arguing that section 118(1) was unconstitutional argued that its
effect was minimal because
the amount of money actually recovered as a result
of section 118(1) was insignificant in the light of the quantum of overall
service
charges paid. Although the money actually paid pursuant to
requests for section 118(1) certificates is a possible measure
of the
effectiveness of section 118(1), it does not seem to me to be a reliable
measure of its effectiveness. Section 118(1)
will have a direct effect of
requiring moneys to be paid in order that transfers of property can be
effected
. Moneys paid pursuant to section 118(1) will
measure this direct effect. However, more importantly, section 118(1)
will have an indirect effect in terms of which moneys will be paid by tenants
or occupiers as they become due because landowners
will monitor and require
such payments to avoid the consequences of section 118(1). It is far more
difficult to measure this
indirect effect of section 118(1) than its direct
effect. I am not persuaded therefore that evidence of amounts actually
paid pursuant to section 118(1) is a reliable measure of the actual impact of
its provisions.
Is
there sufficient reason for the deprivation?
[112]
It
is now necessary to consider
whether the purpose of section 118(1) constitutes sufficient reason for the
deprivation it occasions.
There can be no doubt that, to the extent that
the certificate relates to rates and to charges for services consumed by the
owner,
there is sufficient reason for the deprivation of the property
right. In such circumstances, section 118(1) merely constitutes
a form of
security for charges incurred by owner occupiers.
[113]
The key question argued
in this case is whether section 118(1) is arbitrary in that it deprives owners
of the right to alienate
property where tenants have consumed municipal
services but have failed to pay consumption charges. In considering this,
we must bear in mind that owners are deprived of only one aspect of their
rights in property, and that is the right to alienate
the property; secondly,
that it is not a permanent deprivation, but a deprivation which is limited in
time in that it only relates
to charges for the two years preceding the
certificate; and thirdly, that landowners can regulate their own relationship
with occupiers
to minimise the scope of the deprivation in a variety of
ways. The deprivation in this case is therefore not extensive or
drastic.
On the other hand, the purpose of section 118(1) is an important one in our
current socio-economic context.
It provides a form of security to
municipalities to recover charges for services actually provided and it
encourages landowners
to take steps to regulate their affairs in a manner which
will induce the payment of service charges by tenants and other
occupiers.
I conclude that in relation to tenants the provisions of
section 118(1) are not arbitrary within the meaning of section 25(1) of
the
Constitution.
[114]
I have concluded that
there is a sufficient reason for the deprivation caused by section 118(1) to
the extent that the consumption
charges are incurred by tenants. The
further question that needs consideration is whether the High Court was correct
in concluding
that there was not a sufficient reason in relation to the other
classes of consumer, and in particular usufructuaries, fiduciaries
and unlawful
occupiers. In my view, the question to be considered is whether there is
a sufficient reason for the deprivation
occasioned by section 25(1). The
question of usufructuaries, fiduciaries and unlawful occupiers was not
thoroughly canvassed
in argument before this Court but given the reasoning of
the High Court, I consider it necessary briefly to consider the position
of
such occupiers.
[115]
In
considering these arguments, it is
important to bear in mind that it would be difficult to narrow the scope of
section 118(1).
Section 118(1) is a simple procedure which requires that
in all cases a registrar of deeds may not
effect
the
transfer of immovable property without a certificate from the municipality
confirming that all consumption charges and rates
incurred in respect of that
property in the preceding two years have been paid. It is accordingly the
municipality that issues
the certificate. It will not always be clear to
a municipality, from
its records, who has
actually
consumed the services on that property for the previous two years, nor will it
be clear whether that person is the owner
or a tenant or an unlawful
occupier. Limiting the terms of the certificate to consumption charges
incurred by only particular
classes of occupier may create substantial
difficulties for the efficient conveyancing of the property, as the
municipality may
not be in a position to determine the class of occupier that
in fact incurred the consumption charges. This practical difficulty
needs
to be borne in mind in determining the sufficiency of the reason for the
purposes of section 25(1).
[116]
A further consideration
to bear in mind is that the purpose and effect of section 118(1) is to
encourage owners to ensure that those
persons who occupy their property pay the
consumption charges they incur.
Were section
118(1) to be more narrowly framed, that inducement would fall away. An
owner would no longer seek to ensure that consumption
charges were paid in
order to avoid the consequences of section 118(1). The municipality would
also have no form of security
for the payment of consumption charges and yet it
may have no knowledge that the security is not available because its records
may not disclose that fact.
[117]
The first category of
occupier to consider is unlawful occupiers, which includes two separate classes
of occupier â those who
originally had permission to occupy, but either because
of the termination of the lease or withdrawal of consent by the owner, no
longer have permission to occupy, as well as the class of unlawful occupiers
who have never had permission to occupy the property.
In relation to the
first class of occupier,
those whose
permission to
occupy has been withdrawn, as the owner gave permission to the occupiers to be
there initially, the owner had a direct
connection with the unlawful
occupiers. Moreover, the owner will be aware of the identity of the
occupier and of the fact
that the person is now occupying the property without
permission and will be able to take steps to evict the occupier. In
my
view, given the important purpose of the provision, the difficulty of framing
it more narrowly and the fact that owners will
be in a position to take steps
to limit the potential deprivation under the section, section 118(1) is not an
arbitrary deprivation
of the ownerâs property in relation to this class of
occupier.
[118]
The
circumstances are somewhat
different in relation to unlawful occupiers of property who have occupied the
property without the consent
of the owner. In that case, the owner will
not have selected or permitted the occupier to move into the property at any
stage.
Nevertheless in such circumstances, it is only the owner that can
take the necessary steps to prevent the unlawful occupation of
his or her
premises before it happens. A municipality has no power to do so.
An owner may also immediately take steps
to evict the unlawful occupiers.
A municipality has more limited rights of eviction.
[27]
Moreover, a municipality cannot
know that the occupation is unlawful unless it is informed by the owner.
These considerations
might not have been sufficient reason were it not for the
difficulty of achieving a narrower scope for section 118(1) without losing
its
overall effectiveness and purpose. The value of section 118(1) lies in
its simplicity and straightforward application.
Those qualities would be
substantially impaired were the certificate not to be required where the
charges had been incurred by
unlawful occupiers. Such a situation might
lead to significant disputes of fact which would be counter-productive. I
conclude then that section 118(1) does not constitute an arbitrary deprivation
in relation to the consumption charges incurred
by unlawful occupiers.
[119]
I turn now to consider
the question of usufructuaries. Occupiers of this sort enjoy a limited
real right to the occupation
of the property but the right of ownership vests
in another person who will obtain (or recover) the right of occupation upon the
termination of the usufruct. The effect of a usufruct on the property also
reduces the rights of ownership of the owner who
has no rights of occupation or
use during the period of the usufruct. Moreover, the rights of an owner
to alienate the property
are diminished. The bare ownership of the
property may not be transferred without the consent of the usufructuary.
[28]
[120]
In considering the
deprivation of property caused by section 118(1) to the rights of an owner of
property over which there is a
usufruct, one must take into account the fact
that the rights of such owners to alienate the property are already diminished
as
the property may not be alienated without the permission of the
usufructuary. One should also take into account the fact that
a
usufructuary has an obligation to restore the property and may not consume it,
destroy it, or impair its value and the fact that
an owner may require a
usufructuary to provide him or her with security that the property will be
restored in proper condition.
Given that the accumulation of substantial
municipal debt will effectively limit the rights of the owner, it may well be
that an
owner would be entitled to seek security to avoid this risk. In the
circumstances, I am satisfied that section 118(1) does not constitute
arbitrary
deprivation of property in relation to this class of occupier either.
[121]
Persons who occupy
under a right of habitatio, are not in an identical situation to
usufructuaries.
[29]
Nevertheless, habitation constitutes a personal servitude which, if registered,
[30]
limits the real rights of the
owner. Given the limited rights of the owner, the scope of the
deprivation occasioned by section
118(1), as in the case of usufruct, is less
significant because the ownerâs real rights are already diminished by the
personal
servitude. Moreover, the owner of the property is still entitled
to take steps to minimise the accumulation of debts by requesting
accounts from
the Council and also requiring the use of pre-paid electricity. In the
circumstances, and given the difficulty
of narrowing the purpose of section
118(1) to cater for rights of habitatio, I am satisfied that section 118(1) is
not arbitrary
in this respect.
[122]
In relation to
fiduciaries within the context of a fideicommissum, it is not clear to me, nor
did we have argument upon it, as to
how the provisions of section 118(1) would
operate. A fiduciary takes ownership of property subject to a provision
that if
a certain condition is fulfilled the property will be transferred to a
further beneficiary (the fideicommissary).
[31]
A fiduciary
who
is residing on the property and incurring consumption charges will be obliged
to pay them. The fideicommissary is not the
owner of the property and
will not become the owner of the property unless the stipulated condition is
fulfilled at which stage
the rights of the fiduciary to occupy the property
will ordinarily be terminated. In the circumstances, it does not seem to
me that section 118(1) constitutes an arbitrary deprivation of property of
either the fiduciary or the fideicommissary.
[123]
For
these reasons, I conclude that
section 118(1) does not constitute âarbitrary deprivation of propertyâ within
the meaning of
section 25(1) of the Constitution. In reaching this
conclusion, I have taken note of the warning sounded by Kroon and Leach
JJ that
a court must take care not to âsacrifice the constitutional rights of
landowners on the altar of expediencyâ.
[32]
In this case the rights of owners are not drastically impaired. One
aspect of their right of ownership is limited with
the purpose and effect of
encouraging owners to take steps to avoid the accumulation of substantial
municipal debt in connection
with their property. I have no doubt that
this is a deprivation of property rights. The purpose of the deprivation
is important and legitimate. The scope of the deprivation itself may be
limited by owners themselves taking reasonable but
not onerous precautions to
prevent the accretion of significant municipal debt by occupiers of their
property. The very steps
that owners take to prevent such accretion will
achieve the legitimate government purpose identified. In such
circumstances,
I do not think it can be said that the interests of owners have
been âsacrificed on the altar of expediencyâ. Rather,
owners are required
to act responsibly in their own interest in a manner which will contribute to
the overall benefit of our community.
[124]
One
further comment need be made.
There can be no doubt that municipalities bear an important constitutional
obligation and a
statutory responsibility to take appropriate steps to ensure
the efficient recovery of debt. The facts of some of the cases
before
this Court raise concern as to the efficiency with which municipalities are
carrying out these duties. It does not
seem to me, however, that the
question of whether municipalities carry out their constitutional duties with
due diligence or not
can have any direct bearing on the question of the
constitutionality of section 118(1). Its constitutionality must be
determined
objectively in the light of its terms and the provisions of the Constitution.
[33]
Should a municipality not perform
its statutory or constitutional obligations properly, appropriate relief should
be sought.
[125]
As I have concluded
that section 118(1) is not arbitrary in this case, it is not necessary to
consider the question, left open in
the
First National Bank
case as to
whether a deprivation which is arbitrary may nevertheless be justified in terms
of section 36 of the Constitution.
That question can be left for another
day.
[126]
I agree with the
reasoning and conclusions of Yacoob J in relation to the challenges based on
sections 9(1), 26 and 34 of the Constitution.
For these reasons I concur
in the order proposed by Yacoob J.
Mokgoro
J concurs in the judgment of OâRegan J.
SACHS J
[127]
I concur in the
judgment of Yacoob J. The judgment of OâRegan J applies the same basic
test for arbitrariness, namely, viewed
in its specific context is there
sufficient reason for the particular deprivation in question? The one
difference of note
is that in applying the test, Yacoob J places special
emphasis on the fact that there is sufficient connection between the
deprivation
and ownership not to make it arbitrary. OâRegan J, on the
other hand, looks at the matter more broadly. Evaluating
the relationship
between the means employed, namely, the deprivation in question, and the ends
sought to be achieved, namely, the
purpose of the law being examined, she finds
that the deprivation is not arbitrary. In my view, the latter approach
subsumes
the former. It does so in a conceptually helpful manner, and
facilitates the context-specific balancing that the notion of
arbitrariness implies.
I support the jurisprudential gloss it adds to the judgment of Yacoob J, and
concur in it as well.
Mkontwana
CCT 57/03
For the
applicant:
A Beyleveld and R B Laher
instructed
by Watson & Tucker.
For the first respondent:
R G Buchanan SC instructed by McWilliams & Elliot.
For the second and third
respondents: R G
Buchanan
SC
and V Notshe instructed by the State Attorney, Port Elizabeth.
For the first amicus
curiae:
A J
Dickson
SC
and A
A
Gabriel
instructed by Ganie & Co.
For the second amicus
curiae:
P
A
Koen SC instructed by Bhamjee Attorneys.
Bissett
CCT 61/03
For the first to third applicants:
J T
Whitehead
SC
and T J M Paterson instructed by Bate
Chubb & Dickson Inc.
For the first
respondent:
R P
Quinn
SC
and H J de Waal instructed by Smith Tabata Inc.
For the second and third
respondents: R G
Buchanan
SC
and V Notshe instructed by the State Attorney, Port Elizabeth.
Transfer
Rights Action Campaign CCT 01/04
(Parties
are described as represented in the application before the WLD.)
For the first to fourth
applicants:
P
Kennedy
SC
and A Dodson instructed by Robert J Martindale Attorneys.
For the first and second
respondents G Marcus SC
and A Cockrell instructed
and
the seventh and eighth
respondents: by Moodie & Robertson Attorneys.
For the third and fourth
respondents: D
Unterhalter
SC
and G G
Seleka instructed by the State Attorney,
Johannesburg
.
[1]
Section 152(1
)(
b).
[2]
Act 32 of 2000.
[3]
The
section is set out in full in para 27(a) of the judgment. Insertions
indicate applicantsâ preferred interpretation.
[4]
Subsection (1A) provides that
the certificate is valid for 120 days.
[5]
Nokuthula Phyllis
Mkontwana v Nelson Mandela Municipality and Others
(SECLD)
Case No
1238/02 and
Peter William Bissett and Others v
Buffalo City Municipality and Others
(SECLD) Case No 903/2002, 13 September
2003, as yet unreported.
[6]
Id, Nokuthula Phyllis
Mkontwana in the
Mkontwana
case, and Peter William Bissett, Anna Marie
Elza van der Straeten and NEDCOR Bank Ltd in the
Bissett
case.
[7]
Nelson
Mandela
Metropolitan
Municipality
in the
Mkontwana
case and
Buffalo
City
Municipality
in the
Bissett
case.
[8]
All this happened during
October 2003.
[9]
Transfer Rights Action
Campaign, TREKNET Properties CC, Marion Cameron NO and Dianna Jennifer Parnell.
[10]
City of Johannesburg Metropolitan
Municipality, Ekurhuleni Metropolitan Municipality, Member of the Executive
Council for Local
Government and Housing in the Province of Gauteng, Minister
for Provincial and Local Government, Minister of Justice and Constitutional
Development, The South African Local Government Association and The Registrar
of Deeds, Johannesburg.
[11]
Johannesburg
Water (Pty) Ltd.
[12]
City Power (Pty) Ltd.
[13]
No 17 of 1939, which is also
applicable in the provinces of Mpumulanga, Limpopo and
North West
.
[14]
Section 49(1) and (2) provide:
â(1)
All moneys due for sanitary services, all moneys due as basic charges for water
made in terms of section 81(1), all other
moneys due for water where any water
closet system on such premises has been installed, and all moneys due as basic
charges for
electricity made in terms of section 83(1), shall be recoverable
from the owner and occupier jointly and severally of the premises
in respect of
which the services were rendered; provided that the owner shall in the absence
of any agreement to the contrary,
be entitled to recover from the occupier of
the said premises for the time being any such charges paid by him in respect of
the
occupation of such occupier.
(2)
If any charges due in respect of any premises for sanitary services, or if
basic charges due for water made in terms of section
81(1), or if other charges
due in respect of any premises for water where any water closet system on such
premises has been installed,
or if basic charges due for electricity made in
terms of section 83(1), shall remain unpaid for a period of six weeks after the
date on which written notice shall have been given by the council to the owner
or occupier of his indebtedness, the council may
proceed jointly and severally
against the owner and occupier for the time being of such premises for the
amount of such charges
or any part thereof, and may recover the same from such
owner or occupier; provided that every such occupier shall be entitled to
deduct from any rent or other amount payable by him to the owner of the
premises any portion of such charges paid by or recovered
from him under this
sub-section which the owner could not lawfully have required him to pay and the
production of the receipts
for such portion of such charges so paid or
recovered from such occupier shall be a good and sufficient discharge for the
amount
so paid or recovered as payment of rent or other amount.â
[15]
Quoted
in full in para 27(b). Insertions indicate applicantsâ preferred
interpretation.
[16]
Standard Water Supply By-laws
published in Administratorâs Notice 21 of 5 January 1977.
[17]
Greater Johannesburg Metropolitan
Councilâs Electricity By-laws published in the Provincial Gazette No 16 of 17
March 1999.
[18]
Section
4(2) of the water by-laws provides: âThe owner and consumer shall be jointly
and severally liable for compliance with
every financial obligation and other
requirement imposed upon either of them in terms of these by-laws.â
[19]
Section
36 of the electricity by-laws provides that: âThe owner and the consumer shall
be jointly and severally liable for compliance
with any financial obligation or
other requirement imposed upon them by these by-laws.â
[20]
Except for the
MEC for Local Government and Housing in the
Province
of
Gauteng
, The Minister for
Provincial and Local Government, Minister of Justice and Constitutional
Development, The South African Local
Government Association and the Registrar
of Deeds,
Johannesburg
.
[21]
The application for confirmation
and appeal had by this stage been set down for hearing.
[22]
Geyser and
Another
v Msunduzi Municipality and Others
2003 (5) SA 18 (N); 2003 (3) BCLR 235 (N).
[23]
Rule 18(2
)(
a).
[24]
Bruce and Another v Fleecytex
Johannesburg CC and Others
[1998] ZACC 3
;
1998 (2) SA 1143
(CC);
1998 (4) BCLR 415
(CC) para 8;
S v Dlamini; S
v Dladla and Others; S v Joubert; S v Schietekat
[1999] ZACC 8
;
1999 (4) SA 623
(CC);
1999
(7) BCLR 771
(CC) para 35;
Moseneke and Others v The Master and Another
[2000] ZACC 27
;
2001 (2) SA 18
(CC);
2001 (2) BCLR 103
(CC) para 19.
[25]
Brink v Kitshoff NO
[1996] ZACC 9
;
1996 (4) SA 197
(CC);
1996 (6) BCLR 752
(CC) para 14;
Transvaal
Agricultural Union v Minister of Land Affairs and Another
[1996] ZACC 22
;
1997 (2) SA 621
(CC);
1996 (12) BCLR 1573
(CC) para 18;
Bruce and Another v Fleecytex
above n 24;
Member of the Executive Council for Development Planning and
Local Government, Gauteng v Democratic Party and Others
1998 (4) SA 1157
(CC); 1998 (7) BCLR (CC) 855 para 32;
Christian Education South Africa v The
Minister of Education
1999 (2) SA 83
(CC);
1998 (12) BCLR 1449
(CC) para
12;
Van Der Spuy v General Council of the Bar of South Africa (Minister of
Justice and Constitutional Development, Advocates for Transformation
and Law
Society of South Africa Intervening)
[2002] ZACC 17
;
2002 (5) SA 392
(CC) para 19;
2002
(10) BCLR 1092
(CC) para 18;
National Gambling Board v Premier,
KwaZulu-Natal, and Others
[2001] ZACC 8
;
2002 (2) SA 715
(CC);
2002 (2) BCLR 156
(CC)
paras 29 and 38;
Satchwell v President of the Republic of South Africa and
Another
[2003] ZACC 2
;
2003 (4) SA 266
(CC);
2004 (1) BCLR 1
(CC) para 6.
[26]
S v Makwanyane and Another
[1995] ZACC 3
;
1995 (3) SA 391
(CC);
1995 (6) BCLR 665
(CC) paras 4 and 6;
Dlamini
above n 24;
Moseneke
above n 24;
Minister of Home Affairs
v National Institute for Crime Prevention and the Re-integration of Offenders
(NICRO) and Others
[2004] ZACC 10
;
2004 (5) BCLR 445
(CC) paras 7-8.
[27]
The respondents in the confirmation
application also appeal against the order.
[28]
The
KwaZulu-Natal
Law
Society.
[29]
The
Msunduzi
Municipality
.
[30]
It was repealed by the
Local
Government Laws Amendment Act 51 of 2002
on 5 December 2002. The
application was launched on 19 December 2002.
[31]
President,
Ordinary Court Martial, and Others v Freedom of Expression Institute and Others
[1999] ZACC 10
;
1999 (4) SA 682
(CC);
1999 (11) BCLR 1219
(CC) para 8.
See also
JT Publishing (Pty) Ltd and Another v Minister of
Safety and Security and Others
[1996] ZACC 23
;
1997 (3) SA 514
(CC);
1996 (12) BCLR 1599
(CC) para 15;
National Coalition for Gay and Lesbian Equality and Others v
Minister of Home Affairs and Others
[1999] ZACC 17
;
2000 (2) SA 1
(CC);
2000 (1) BCLR 39
(CC) n 18;
Independent Electoral Commission v Langeberg Municipality
[2001] ZACC 23
;
2001 (3) SA 925
(CC);
2001 (9) BCLR 883
(CC) para 9;
Khosa and Others v
Minister of Social Development and Others; Mahlaule and Another v Minister of Social
Development and Others
[2004] ZACC 11
;
2004 (6) BCLR 569
(CC) para 92.
[32]
Bernstein and Others v
Bester and Others NNO
[1996] ZACC 2
;
1996 (2) SA 751
(CC);
1996
(4) BCLR 449
(CC) para 59 and the authorities referred to in n 87 thereof;
Nel
v Le Roux NO and Others
[1996] ZACC 6
;
1996 (3) SA 562
(CC);
1996 (4) BCLR 592
(CC) para
18;
De Lange v Smuts
NO
and Others
[1998] ZACC 6
;
1998 (3) SA 785
(CC);
1998 (7) BCLR 779
(CC) para 85;
Investigating Directorate: Serious Economic
Offences and Others v
Hyundai Motor Distributors (Pty) Ltd and Others:
In re Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others
[2000] ZACC 12
;
2001 (1) SA 545
(CC);
2000 (10) BCLR 1079
(CC) paras 22-26
;
De Beer NO v North-Central Local Council and
South-Central Local Council and Others (Umhlatuzana Civic Association
Intervening)
[2001] ZACC 9
;
2002 (1) SA 429
(CC);
2001 (11) BCLR 1109
(CC) paras 24.
[33]
First National Bank of SA Ltd t/a Wesbank v Commissioner, South
African Revenue Service and Another; First National Bank of SA Ltd
t/a Wesbank
v Minister of Finance
[2002] ZACC 5
;
2002 (4) SA 768
(CC);
2002 (7) BCLR 702
(CC).
[34]
Id para 57.
[35]
Above n 5 para 44.
[36]
Above n 22 at
2003 (5) SA 18
(N) at 37C-D;
2003 (3) BCLR 235
(N) at 250B-C.
[37]
FNB
above n 33 paras 61-99.
[38]
Id para 100.
[39]
Id para 100(a).
[40]
Id paras 100(b),
(c) and (d).
[41]
Id para 108(a)
and (b).
[42]
Id paras 100(d),
(e), (f) and (g).
[43]
Above n 5 para 50(a).
[44]
Id para 50(b).
[45]
Id para 50(c).
[46]
Id para 50(d).
[47]
Id para 51.
[48]
Id paras 34, 58 and 64
.
[49]
Section 27(1
)(
b)
of the Constitution provides:
âEveryone
has the right to have access toâ
. . .
sufficient
food and waterâ.
The
relevant parts of section 152 of the Constitution provide:
â(1)
âThe objects of local government areâ
(a) . . .
(b)
to
ensure the provision of services to communities in
a sustainable manner;
(c)
to
promote social and economic development;
(d)
to
promote a safe and healthy environment; . . .
(2)
A
municipality must strive, within its financial and
administrative capacity, to achieve the objects set out in subsection (1).â
Section
153 of the Constitution provides:
âA
municipality mustâ
(a)
structure and manage its administration and budgeting and planning
processes to
give priority to the basic needs of the community, and to promote the social
and economic development of the community;
and . . . .â
Section
73(1)
of the
Local Government: Municipal Systems Act 32 of 2000
provides:
â(1)
A municipality must give effect to the provisions of the Constitution
andâ
(a)
give
priority to the basic needs of the local
community;
(b)
promote
the development of the local community; and
(c)
ensure
that all members of the local community have
access to at least the minimum level of basic municipal services.â
[50]
Above n 5 para 50(a).
[51]
Id para 50(d).
[52]
Above para 38.
[53]
See above n 50.
[54]
Corbett, Hofmeyr, Kahn
The Law
of Succession in South Africa
2
ed
(Juta Law,
Lansdowne 2001) at 366.
[55]
Id at 260.
[56]
Id at 297 and
380.
[57]
Id at 300 and
381.
[58]
Above n 38.
[59]
Premier, Mpumalanga, and
Another v Executive Committee, Association of State-Aided Schools, Eastern
Transvaal
[1998] ZACC 20
;
1999 (2) SA 91
(CC);
1999 (2) BCLR 151
(CC) para 39;
President of the Republic of South Africa and Others v South
African Rugby Football Union and Others
2000 (1) SA 1
(CC);
1999 (10) BCLR
1059
para 216;
Janse Van Rensburg NO and Another v Minister of Trade and
Industry and Another NNO
2001 (1) SA 29
(CC);
2000 (11) BCLR 1235
(CC) para
24;
Permanent Secretary, Department of Education and Welfare, Eastern Cape,
and Another v ED-U-College (PE) (Section 21) Inc
[2000] ZACC 23
;
2001 (2) SA 1
(CC);
2001
(2) BCLR 118
(CC) para 19;
Minister of Public Works and Others v Kyalami
Ridge Environmental Association
and Another
(Mukhwevho
Intervening)
[2001] ZACC 19
;
2001 (3) SA 1151
(CC);
2001 (7) BCLR 652
(CC) para 101.
[60]
Section 26 provides:
â(1)
Everyone
has the right
to have access to adequate housing.
(2) The state must take reasonable legislative and
other measures, within its available resources, to achieve the progressive
realisation
of this right.
(3) No one may be evicted from their home, or have
their home demolished, without an order of court made after considering all the
relevant circumstances. No legislation may permit arbitrary evictions.â
[61]
The section
provides:
âEveryone has the right to have any dispute that can
be resolved by the application of law decided in a fair public hearing before
a
court or, where appropriate, another independent and impartial tribunal or
forum.â
[62]
Chief
Lesapo v North West Agricultural Bank and Another
[1999] ZACC 16
;
2000 (1) SA 409
(CC);
1999 (12) BCLR 1420
(CC) para 20.
[63]
There is no issue between national and
provincial governments about which law prevails and this judgment must
therefore be understood
as not being concerned with that issue.
[1]
Section 50(1)(a) of the Gauteng Local
Government Ordinance, 17 of 1939, which has now been repealed is in similar
terms to section
118(1), save for providing for a period of three years rather
than two years. Its terms are as follows:
â(1) No transfer of any land or of any right in
land as defined in section 1 of the Local Authorities Rating Ordinance, 1977,
within a municipality shall be registered before any registration officer until
a written statement in the form set out in the Third
Schedule to this Ordinance
and signed and certified by the town clerk or other officer authorised thereto
by the council, shall
be produced to such registration officer, and unless such
statement showsâ
(a)
that all amounts for a period of three years immediately preceding
the date of
such registration due in respect of such land or right in land for sanitary
services or so due as basic charges for
water or as other costs for water where
any water-closet system on the ground concerned has been installed or so due as
basic charges
for electricity in terms of the provisions of this Ordinance or
any by-law or regulation . . . have been paid to the council.â
[2]
2002 (4) SA 768 (CC); 2002 (7) BCLR 702 (CC).
[3]
See, for example, sections 24 (in regard to the
environment), 26 (housing), 27 (health care, food, water and social security)
and
29 (education).
[6]
The original reference is to
Van der Walt
The
Constitutional Property
Clause: A Comparative Analysis of Section 25 of the South African Constitution
of 1996
(Juta, 1997) at 15-16.
[5]
Above n 2 at para 50.
[6]
See, for example, the comments of
Mahomed J in
S v Makwanyane
and Another
[1995] ZACC 3
;
1995 (3) SA 391
(CC);
1995 (6) BCLR 665
(CC) at para 262; Chaskalson P in
Soobramoney v Minister
of Health, KwaZulu-Natal
[1997] ZACC 17
;
1998 (1) SA 765
(CC);
1997 (12) BCLR 1696
(CC) at
para 8; Chaskalson CJ in
Van Rooyen and Others v The State and Others
(General Council of the Bar of South Africa Intervening)
[2002] ZACC 8
;
2002 (5) SA 246
(CC);
2002 (8) BCLR 810
(CC) at para 50; Ngcobo J in
Bato Star Fishing (Pty)
Ltd v Minister of Environmental Affairs and Others
[2004] ZACC 15
;
2004 (4) SA 490
(CC);
2004 (7) BCLR 687
(CC) at para 73 and Moseneke J in
Minister of Finance and
Another v Van Heerden
CCT 63/03, 29 July 2004, as yet unreported at paras
22-23.
[7]
Above n 2.
[8]
Section 118(1) is a provision in an Act of
Parliament which governs all municipalities in
South Africa
. It is clearly a
law of general application as contemplated by section 36 of the Constitution.
[9]
Above n 2.
[10]
Id at para 57.
[11]
Above n 2.
[12]
Id at para 100.
[13]
Id at para
100(f).
[14]
Id at para 100(d)
and (e).
Para 100(e) states that âwhere the property in question is
ownership of land or a corporeal movable, a more compelling purpose
will have
to be establishedâ.
[15]
Id at para 100(b)
and (h).
[16]
Id at para
100(c).
[
17
]
Chapter 9 of the
Local Government: Municipal
Systems Act, 32 of 2000
provides the mechanisms which a municipality may use to
recover debt.
[18]
The applicant in
Mkontwana v
Nelson
Mandela
Metropolitan
Municipality
and Others,
the first of the three applications being considered together
in this matter.
[19]
The first and
second applicants respectively in
Bissett and Others v
Buffalo
City
Municipality
and Others
,
the second of the three applications in this matter.
[20]
The second
applicant in
Transfer Rights Action Campaign and Others v City of
Johannesburg Metropolitan Municipality
and Others
, the third application under consideration.
[21]
Nokuthula Phyllis
Mkontwana v Nelson Mandela Municipality and Others
(SECLD)
Case No
1238/02 and
Peter William Bissett and Others v
Buffalo City Municipality and Others
(SECLD) Case No 903/2002, 13 September
2003, as yet unreported.
[22]
Id at para 50.
[23]
See para 66 of
the judgment of Yacoob J.
[24]
The question of whether pre-paid
meters for water are available is not an issue resolved on the papers before
us.
[25]
The fifth
applicant in
Transfer Rights Action Campaign and Others v MEC for Local
Government and Housing,
Gauteng
and Others.
[26]
2003 (5) SA 18
(N) at 37H-I;
2003 (3) BCLR 235
(N) at 250 G-H.
[27]
See
section 6(1)(a)
and (b) of the
Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, 19 of
1998 which requires municipalities
who seek eviction to show that buildings
have been erected on the land without their necessary permission or that the
eviction
would otherwise be in the âpublic interestâ. The question of
whether these requirements were disjunctive or conjunctive
was left open in the
decision of this Court in
Port
Elizabeth
Municipality
v Various Occupiers
CCT 53/03, 1 October 2004, as yet unreported. See
also the discussion of the provisions of that Act in the judgment.
[28]
See
LAWSA
volume
24 at paras 422ff.
[29]
Id at para 446.
See also Van der Merwe
Sakereg
2
ed
(Butterworths, 1989) at 524.
[30]
Felix en ân Ander v Nortier
NO en Andere (1)
1994 (4) SA 498
(SE) at 500.
[31]
See Corbett, Hahlo and Hofmeyr
The
Law of Succession
2
ed
(Juta Law, 2001) at 257ff;
LAWSA
volume 31 at paras 319ff.
[32]
Above n 21 at
para 53.
[33]
Ferreira v Levin NO and
Others; Vryenhoek and Others v Powell NO and Others
1996 (1) SA 984
(CC);
1996 (1) BCLR 1
(CC) at paras 26-28;
National Coalition for Gay and Lesbian Equality and Others v Minister of Home
Affairs and Others
[1999] ZACC 17
;
2000 (2) SA 1
(CC);
2000 (1) BCLR 39
(CC) at para 29;
De
Reuck v Director of Public Prosecutions, Witwatersrand Local Division, and
Othesr
[2003] ZACC 19
;
2004 (1) SA 406
(CC);
2003 (12) BCLR 1333
(CC) at para
85. See also
Bernstein and Others v Bester and Others NNO
[1996] ZACC 2
;
1996 (2)
SA 751
(CC);
1996 (4) BCLR 449
(CC) at para 52.