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[2017] ZACC 31
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Jordaan and Others v City of Tshwane Metropolitan Municipality and Others; City of Tshwane Metropolitan Municipality v New Ventures Consulting and Services (Pty) Limited and Others; Ekurhuleni Metropolitan Municipality v Livanos and Others (CCT283/16, CCT293/16, CCT294/16, CCT283/16) [2017] ZACC 31; 2017 (6) SA 287 (CC); 2017 (11) BCLR 1370 (CC) (29 August 2017)

Links to summary

Heads of arguments

CONSTITUTIONAL COURT OF
SOUTH AFRICA
Case CCT 283/16, 293/16 and 294/16
CCT 283/16
In the matter between:
CHANTELLE
JORDAAN
First Applicant
NEW VENTURES CONSULTING
& SERVICES (PTY)
LIMITED
Second Applicant
CLASS OF AFFECTED MUNICIPAL SERVICE
CONSUMERS
Third Applicant
F M
KEKANA
Fourth Applicant
M R
MALEBOLOA
Fifth Applicant
S R
MALEBOLOA
Sixth Applicant
M
MAMOTSAU
Seventh
Applicant
BILLIE ANN
LIVANOS
Eighth Applicant
LEAH
HENDERSON
Ninth Applicant
CLIFTON DUNESINVESTMENTS 317 (PTY)
LIMITED
Tenth Applicant
GEMMA DIAMONDS (PTY)
LIMITED
Eleventh
Applicant
OAK PLANT RENTALS (PTY)
LIMITED
Twelfth Applicant
STEPPING THE WORLD (PTY)
LIMITED
Thirteenth Applicant
and
CITY OF TSHWANEMETROPOLITAN
MUNICIPALITY
First Respondent
EKURHULENI METROPOLITAN
MUNICIPALITY
Second Respondent
MINISTER OF COOPERATIVE
GOVERNANCE AND TRADITIONAL
AFFAIRS
Third Respondent
CCT 293/16
In the matter between:
CITY OF TSHWANE METROPOLITAN
MUNICIPALITY
Applicant
and
NEW VENTURES CONSULTING
& SERVICES (PTY)
LIMITED
First Respondent
CLASS OF AFFECTED MUNICIPAL SERVICE
CONSUMERS
Second Respondent
F M
KEKANA
Third Respondent
M R
MALEBOLOA
Fourth Respondent
S R
MALEBOLOA
Fifth Respondent
M
MAMOTSAU
Sixth Respondent
CCT 294/16
In the matter between:
EKURHULENI METROPOLITAN
MUNICIPALITY
Applicant
and
BILLIE ANN
LIVANOS
First Respondent
LEAH
HENDERSON
Second Respondent
NEW VENTURES CONSULTING &
SERVICES (PTY)
LIMITED
Third Respondent
CLIFTON DUNES INVESTMENTS 317 (PTY)
LIMITED
Fourth Respondent
GEMMA DIAMONDS (PTY)
LIMITED
Fifth Respondent
OAK PLANT RENTALS (PTY)
LIMITED
Sixth Respondent
STEPPING THE WORLD (PTY)
LIMITED
Seventh Respondent
and
TUHF
LIMITED
First Amicus Curiae
BANKING ASSOCIATION SOUTH
AFRICA
Second Amicus Curiae
eTHEKWINI METROPOLITAN
MUNICIPALITY
Third Amicus Curiae
JOHANNESBURG ATTORNEYS
ASSOCIATION
Fourth Amicus Curiae
Neutral citation:
Jordaan and Others v City of Tshwane Metropolitan Municipality and
Others
[2017] ZACC 31
Coram:
Mogoeng CJ, Nkabinde
ADCJ, Cameron J, Froneman J, Jafta J,
Khampepe J, Madlanga J, Mhlantla J, Mojapelo AJ, Pretorius
AJ and Zondo J
Judgments:
Cameron J (unanimous)
Heard on:
23 May 2017
Decided on:
29 August 2017
Summary:
Local Government: Municipal Systems Act —
meaning of section 118(3) — charge upon the property —
common law meaning
—
section
25 of the Constitution — right not to be deprived of property
arbitrarily
Limited real rights — publicity
requirement — charge does not survive transfer — section
118(3) is constitutional
ORDER
Application for confirmation of an order
of the High Court of South Africa, Gauteng Division, Pretoria and
appeals against that
order.
The following order is made:
1.
The appeals succeed.
2.
The order of invalidity is not confirmed.
3.
It is declared that, upon transfer of a property, a new owner is not
liable for debts
arising before transfer from the charge upon the
property under
section 118(3)
of the
Local Government: Municipal
Systems Act 32 of 2000
.
4.
The appellants in the appeals and the Minister are to pay the
applicants’ costs,
including the costs of two counsel.
JUDGMENT
CAMERON J
(Mogoeng CJ, Nkabinde ADCJ, Froneman J, Jafta J,
Khampepe J, Madlanga J, Mhlantla J,
Mojapelo AJ,
Pretorius AJ and Zondo J concurring)
Introduction
[1]
At issue is the meaning and constitutional validity of
section
118(3)
of the
Local Government: Municipal Systems Act (Act
).
[1]
This provides that “an amount due for municipal service fees,
surcharges on fees, property rates and other municipal
taxes, levies
and duties is a charge upon the property in connection with which the
amount is owing and enjoys preference over
any mortgage bond
registered against the property”.
[2]
The High Court of South Africa, Gauteng Division, Pretoria (High
Court) (Fourie J) declared
section 118(3)
constitutionally
invalid.
[3]
It did so “to the extent only that the security provision ‘a
charge upon the property’ survives transfer
of ownership into
the name of a new or subsequent owner who is not a debtor of the
municipality with regard to municipal debts
incurred prior to such
transfer”.
[4]
Pursuant to this, the High Court also granted declaratory
relief against the City of Tshwane Metropolitan Municipality

(Tshwane) and Ekurhuleni Metropolitan Municipality (Ekurhuleni) at
the instance of individual and corporate ratepayers.  All
were
new property owners who complained that they were being denied
services because the municipalities invoked
section 118(3).
[2]
The central issue is whether the provision permits a
municipality to reclaim, from a new owner of property, debts a
predecessor
in title incurred.  If it does, its constitutional
validity must be determined.  If it does not, then the
declaration
of invalidity was unnecessary.  But to determine the
provision’s true meaning, its language and history, as well as
its setting in the common law and under the Constitution, must be
scrutinised.
Background and ripeness
[3]
The matter comes to this Court as a confirmation application
under section 167(5) of the Constitution
[5]
plus two appeals in which Tshwane and Ekurhuleni appeal against the
High Court’s order of constitutional invalidity.
[6]
This Court consolidated the matters.  eThekwini Metropolitan
Municipality (eThekwini), which was admitted as an
amicus curiae
(friend of the court),
[7]
made common cause with the other two municipalities.  All
contended that the provision is constitutionally sound and makes
a
new owner responsible for historical debts.
[8]
So did the Minister of Cooperative Governance and Traditional Affairs
(Minister).  The Minister, though not formally
an appellant, was
perforce joined as a party in one of the matters, because of the
statutory invalidity claimed, and participated
in the proceedings in
both Courts.
[4]
The applicants are individuals and corporations owning, or
acting on behalf of owners of, property in Tshwane or Ekurhuleni.

Each of the owners is a relatively recent transferee.  Each
complained that the municipality in question suspended municipal

services or refused to conclude a consumer services agreement for
municipal services until the historical debts relating to the

property had been cleared.
[9]
[5]
The applicants’ complaints gave rise to factual
disputes.
[10]
The principal dispute was the municipalities’ claim that they
had not invoked section 118(3) when they declined to
conclude service
agreements, but had relied on their by-laws or debt collection
policies.
[11]
It was also contended that the applicants could take the
service refusals on review under the Promotion of Administrative

Justice Act.
[12]
For both these reasons, it was argued that the constitutional
challenge was premature.  The High Court decided
that the
disputes precluded neither the determination of the constitutional
challenge nor the grant of declaratory relief.
[13]
[6]
Before us, Ekurhuleni persisted that this Court should refuse
to countenance the constitutional question because the parties’

issues could be determined without reaching it.  It invoked
Mhlungu
[14]
where Kentridge AJ laid down, as a general principle, that where it
is possible to decide any case without reaching a constitutional

issue, that course should be followed.
[15]
Mhlungu
should be set in its proper perspective.  It was
decided under the interim Constitution, where this Court had solely
constitutional
jurisdiction,
[16]
and the Appellate Division of the Supreme Court, which became the
Supreme Court of Appeal, had solely non-constitutional
jurisdiction.
[17]
That bifurcation of appellate power, and the cautions and courtesies
it necessitated, has long been expunged from our constitutional

landscape.  From 4 February 1997, the Constitution
conferred constitutional jurisdiction on the Supreme Court
of
Appeal,
[18]
subject to appeal to this Court, and at the same time empowered this
Court to develop the common law.
[19]
[7]
The consequence of this was both logical and inevitable.
This Court was in due time given jurisdiction to decide
non-constitutional
matters that raise arguable points of law of
general public importance which it ought to consider.
[20]
It thus became the apex Court on all matters.
[8]
The result is that under the final Constitution the approach
Mhlungu
espoused has long since been abandoned in favour of
its opposite, namely that constitutional approaches to rights
determination
must generally enjoy primacy.
[21]
Far from avoiding constitutional issues whenever possible, this Court
has emphasised that virtually all issues – including
the
interpretation and application of legislation and the development and
application of the common law – are, ultimately,

constitutional.  This affects how to approach them from the
outset.
[9]
The constitutional dispute was large and pressing.  The
High Court’s decision to decide it despite the factual and
other
considerations the municipalities sought to strew in its path
was clearly right.  The matter was ripe for decision there, and

it is ripe for decision here.
[10]
There are further factors that show this.  The Supreme
Court of Appeal has twice pronounced on the meaning of section
118(3).
[22]
In both cases, the constitutional validity of the provision was
not in issue, and the Court expressed its view without considering

the constitutional context.
[23]
[11]
The municipalities argued that they relied on their by-laws
and debt collection policies to justify their refusal to open
consumer
agreements until historical debt was settled.  Despite
these disclaimers of Tshwane and Ekurhuleni, it is evident that
municipalities
do invoke section 118(3) to refuse new owners
municipal services if historical debts are unpaid.  Furthermore,
the High Court
rejected the municipalities’ contention that
their by-laws and rates collection policies permitted this conduct.
The
Court’s conclusion that, properly interpreted, these
by-laws and policies do not, on their own, allow that, is
unassailable.
Besides, the municipalities’ protestation
that their by-laws and policies, rather than section 118(3), justify
their
stance is tumble down logic, since a municipality’s
credit control and debt collection policy must in any event comply

with the provisions of the Act.
[24]
Disjunction would be artificial.
[12]
For all these reasons, the interests of justice require this
Court to consider the substance of the challenge to section 118(3),

and not to be diverted from it on procedural or other grounds.
[13]
Apart from eThekwini, two non-governmental organisations were
admitted as
amici curiae
.  TUHF Limited is a social
housing organisation.
[25]
The Banking Association South Africa (BASA)
[26]
is an association incorporated under the Companies Act.
[27]
It has 32 member banks, including the largest in South Africa.
Both TUHF and BASA associated themselves with the applicants
in
challenging the meaning the municipalities ascribed to
section 118(3).  They contended for either confirmation of

the order of invalidity or an interpretation that assuaged their
constitutional objections to it.  TUHF advanced arguments
about
the distinctive nature of the hypothec (or right of security over
property) that section 118(3) confers on a local authority.

BASA advanced an additional ground of unconstitutionality.  This
was that section 118(3) permitted arbitrary deprivation of
not just
the new owner’s property rights, but of real security rights
the new owner confers on any mortgagee who extends
a fresh loan on
the security of the property post-transfer.
[28]
[14]
On 25 May 2017, after the oral hearing, the Johannesburg
Attorneys Association (JAA) successfully applied to the Court for
admission
as an
amicus curiae
.
[29]
The JAA sought to respond only to the submission by eThekwini that
there is, or ought to be, a legal duty on conveyancers
to disclose
historical debts to property purchasers or transferees.  The JAA
focused on a conveyancer’s duties and ethical
position should
this Court hold that the section 118(3) right survives transfer.
In view of the conclusion this judgment
reaches, it is not necessary
to consider these submissions.
[30]
What does section 118(3) mean?
[15]
Before deciding whether section 118(3) unjustifiably limits
constitutional rights, we must determine what it means.  And to

find out we have to journey into the origins of the phrase “charge
upon the property” in South African statute law,
for that
history casts light on the provision’s meaning.
[16]
The historical antecedents of section 118(3) show that two
distinct mechanisms were imported into statute law to assist and
protect
municipalities in collecting debts due to them.  The
first was an embargo.  This put the intending transferor of
property
with unpaid municipal debts in a squeeze.  If she
wanted to transfer, she had to pay up first.  This was a
municipality-friendly
debt-collection device.  It secured
payment of municipal debts on pain of sterilising saleable property
in the defaulting
debtor’s hands.
[17]
Later enactments added a second municipality-friendly
mechanism.  This was a preferent claim, which conferred a
priority in
the debt-collecting process.  It put municipalities
ahead of other rights-holders in the queue when execution was levied
on
ratepayers’ immovable property.  Importantly, linked to
this preference was the municipality’s right to expeditiously

execute against the immovable property in settlement of historical
debts.
[18]
The third mechanism is that for which the municipalities now
contend.  It is transmissibility.  Does the municipality’s

claim to execute upon the ratepayer’s property survive beyond
transfer to a new owner?  The preceding statutory history
shows
that this never arose: no attempt was made to confer a right of
execution on municipalities that survived transfer to a new
owner.
It was solely and only the existing owner, barred from passing
transfer until municipal debts were squared, and over
whose
mortgagees the municipality enjoyed preference, who was responsible.
[19]
The legislative history illuminates all three features.
The need for statutory intervention to assist municipalities to
collect
debts became evident so far back as 1848.  A
municipality contended that, “by reason of its nature”,
“and
without any express enactment to that effect”, under
Roman and Roman Dutch law it enjoyed a preference over other
creditors
for the taxes it was empowered to levy.
[31]
The Supreme Court of the Colony of the Cape of Good Hope
rejected this argument.  It held that the municipality, as

merely a creature of the statute creating it,
[32]
enjoyed no power or privileges except as were expressly conferred.
And a preferent right over other creditors was not among
these.
[33]
This decision was consistently endorsed
[34]
and followed.
[35]
[20]
The legislative response to these Cape decisions was to
introduce a restraint on transfer until municipalities certified that
outstanding
municipal debts had been paid.
[36]
These provisions expressly empowered a municipality to
embargo
[37]
transfer of property within its jurisdiction until it furnished a
certificate that arrear rates had been paid.
[38]
This is the apparent origin of section 118(1) of the present Act,
which prohibits transfer of property without a certificate
issued by
the municipality certifying that all municipal debts due in
connection with that property during the preceding two years
of
application for the certificate “have been fully paid”.
[39]
[21]
The municipalities’ embargo power was thought, on
distinguished authority, to afford them preference over other
creditors.
[40]
But in 1926, the full court of the Transvaal Provincial Division
decisively refuted this.
[41]
It held that the municipalities’ power to prevent transfer
until arrear rates had been paid did not constitute a claim
ranking
in priority to a mortgage bond registered over the premises.
The Court held one could go no further than saying that
the result of
the provision was “in effect to create a preference” of
sorts, “something not wholly in the nature
of a lien or a
hypothec but
sui generis
”.
[42]
This conclusion flowed in part from the “extraordinary
results”
[43]
the Court considered would follow from granting municipalities
priority over all other creditors.
[44]
[22]
The phrase “charge upon the property” in the
present Act has its statutory roots in section 50
[45]
of the 1939 Transvaal Local Government Ordinance.
[46]
This imposed “a charge upon the premises” in
respect of rates and taxes owed
[47]
– though the effect of the provision was limited to the rates
due for two (later three)
[48]
years preceding the date of application for transfer.
[49]
But the Ordinance, in particular section 50, contained a second
important feature that neutralised the 1926 full court decision.
It
provided that a municipality’s claim for the amounts owing
would be “preferent to any mortgage bond passed
over such
property”.
[50]
From 1939, municipalities thus had a double-weaponed arsenal: embargo
plus preferent charge.
[23]
Section 50(3) of the 1939 Ordinance differed signally from
section 118(3).
[51]
Its operation was expressly limited to “any amount due”
under the embargo provision in section 50(1).  The
embargo and
the preferent charge were conjoined.  This had two
consequences.  First, the provision was limited to the
rates due
for a specified period (two and later three years)
[52]
preceding the date of application for transfer.  The
retrospective period of the municipalities’ claim was not
indefinite.
Second, because the embargo operated only until the
arrears were paid, there was no question that the “charge”
survived
transfer.
[53]
Only the original owner was on the line.
[24]
These features of the pre-constitutional provisions –
the time limitation and the embargo link – meant that, once the

outstanding charges had been paid to secure transfer to the new
owner, the charge lost its force.  It no longer operated.
The
effect was to vest responsibility for municipal property-related
debts in the owner at the time they were incurred, and
no one else.
[25]
Section 118(3) took effect on 1 March 2001.
[54]
Against the background of its predecessors,
[55]
its enactment appeared to signal a radical departure.  This is
because the provision, though in the same section of the statute,

evinces no express link with the embargo in the earlier
subsection.
[56]
This has the consequence, first, as the Supreme Court of Appeal
held,
[57]
that the charge in subsection (3) operates independently of the
embargo in subsection (1).  This means the charge upon the

property has no express retrospective time limit on the debts it
covers.  The two-year time limit is absent.
[58]
The charge takes effect in respect of all debts owed to the
municipality that have not prescribed.
[59]
This may embrace the total of accumulated municipal debts, including
municipal taxes going back 30 years, and other charges
for three
years.
[26]
Second, and pertinent here, delinking the two provisions
created the basis for the suggestion,
[60]
which the municipalities and the Minister have embraced, that the
charge survives transfer and, thus, can be enforced against the
new
owner.  This approach must be assessed in the light of the fact
that there is no evidence at all that before 1 March 2001
any
enactment ever sought to impose on a new owner responsibility for a
previous owner’s debts.  The sole effect of
the preceding
enactments was to embargo transfer until a municipal debt-payment
certificate was provided, and, later, to give municipalities

preference, coupled with a charge, over other creditors before
transfer.  This means that, if the subsection has the meaning

the municipalities and the Minister give it, it would have
constituted a radical innovation on the South African legal
landscape.
[27]
The question is, thus, whether the separation of subsection
(3) from subsection (1) in section 118 means that the charge
“upon
the property” survives transfer so as to burden
succeeding owners with the previous owner’s historical debts.
Common law setting
[28]
Given the statutory history, the words “charge upon the
property” must be seen in the light of the meaning they
previously
bore within the common law setting of limited real rights
of security in property for indebtedness.  This does not mean
that
we must impose upon a post-constitutional statute a
pre-constitutional meaning.  Nor does it mean that we must
resurrect archaic
concepts that may be inappropriate to our
conception of property rights under the Constitution.
[61]
It simply recognises that the phrase did not spring from nowhere.
It was lodged in the present Act imbued with a statutory
setting
against the background of a common law meaning.
[62]
This may provide helpful clues to illuminate its import.
[29]
The case law indicates that, without an express enactment
conferring preference above other holders of real rights in the
property,
the embargo over property transfers until arrear rates are
paid gives the municipality no preference above registered rights
holders
in the property.  The cases also show that, enacted on
its own, a legislatively created “charge upon the property”

means no more than that a debt may be recovered by execution upon the
property.  There is thus no magic in the word “charge”,
[63]
and no abstruse technical meaning associated with it.
[64]
The Supreme Court of Appeal has explained, illuminatingly, that the
word “charge” in section 118(3) means no
more than that
any amount due for municipal debts that have not prescribed is
secured by the property and that, after an order
of court has been
obtained, the property may be sold in execution and the proceeds
applied to pay those debts.
[65]
[30]
This points to the conclusion that a mere enactment, without
more, that a claim for a specified debt is a “charge”
upon
immovable property does not make the charge transmissible.
So it does not endure beyond transfer.  And the creditor’s

claim is not enforceable against successors in title.  This does
not mean the charge is ineffective or illusory.  There
is reason
enough for its enactment even without transmissibility.  It is
this: the “charge” helps municipalities
elude the
constrictions of the Rules of Court that would otherwise need to be
complied with in order to render the property executable.
In
other words, the charge allows municipalities to by-pass at least
some debt collection enforcement procedures.  It renders
the
property immediately and expeditiously executable, subject to an
order of court.  In this way, it gives the preference
teeth.
[31]
And this conclusion is strengthened by the way in which real
rights (rights that take effect directly against property, rather
than
against the assets of an individual debtor)
[66]
have historically been conferred on creditors in our law.  Roman
law afforded many real rights in property, and many of these
granted
creditors security for repayment of debts.  From the earliest
roots of our law, both publicity and formality were
seen as pivotal
to creating a transmissible right of security against property.
[32]
It seems to have been necessary that the right the creditor
acquired be afforded some form of public expression.
[67]
From about 500 CE, criticism was levelled against real rights of
security for repayment because many were conferred without
fulfilling
a requirement that they be created with some measure of publicity, so
that other creditors could know of their existence.
[68]
[33]
In Roman Dutch law, according to Johannes Voet (1647-1713),
its most prodigious and authoritative exponent, a real right of
security
over immovable property can survive transfer to a new owner
and, thus, bind successors in title only if it has been “formally

established”
[69]
or properly constituted.
[70]
This entailed a written document, concluded with proper formalities
before a judge of the place in which the immovable property
was
situated (
coram lege loci
), with payment of an appropriate
percentage of the debt.
[71]
[34]
At common law it thus appears that the creation and continued
existence of a real right in immovable property required some formal,

public and legally recognised act (
coram lege loci
).
[72]
As early as 1840, it was settled doctrine at the Cape that—
“the
dominium
[title] or
jus in re
[real right] of immovable property can
only be conveyed by transfer made
coram lege loci
[formally
according to the law of the place concerned], and this species of
transfer is an essential to divest the seller of, and
invest the
buyer with, the
dominium
or
jus in re
of immovable
property as actual tradition [handing over or conveyance] is to
convey the
dominium
of movables.”
[73]
[35]
In the early 20
th
century, Innes CJ, relying on
Harris
, authoritatively imported into modern South African law
the rule that with rare and nominate exceptions registration is
indispensable
to create real rights in land.
[74]
He stated that “the general rule of our law is that real rights
in land can only be validly constituted by registration
coram lege
loci
”.
[75]
Innes CJ instanced prescription and acquisition of an interest in
land by marriage in community of property as two exceptions
to the
general rule.
[36]
In short, long-standing doctrine in our law is that a real
right of security over immovable property can arise only by giving
notice
of its creation to the world in general: “The law
insists that mortgages shall be effected in so open and public a
manner
that no one can afterwards complain that he had no notice of
them.”
[76]
[37]
This was the case before registration of title in central
deeds registries became common practice.
[77]
Since then,
[78]
the act of formality required for the constitution of a transmissible
real right of security in immovable property is registration
in the
deeds office.
[38]
And there is good reason for this.  Real security in
property is a limited real right with the purpose of ensuring
satisfaction
of a debt or obligation to another, usually ahead of
other, unsecured creditors.  This is important for it
illustrates the
difference between real security rights specifically
of security (which are designed to shore up debt, and are a
sub-category of
limited real rights) and limited real rights in the
broader sense.  It moves us away from asking whether a real
security right
is in principle enforceable against a third party –
which, as a sub-species of limited real rights, it must in principle
be – and towards focusing on the purpose for which the limited
right was created.  The point of the right of security
in
property is to ensure payment of a debt.  Then the question
becomes the one at issue here: if that debt could be satisfied
by
execution upon the property
before
the debtor disposes of the
property – or even later – why should it be
enforceable against innocent third parties
who are unconnected with
the debt and may not even know of its existence?
[39]
Against this background, what is notable about section 118(3)
is that the legislature did not require that the charge be either
registered or noted on the register of deeds.
[79]
Textually, there is no indication that the right given to
municipalities has third-party effect: no provision is made to
fulfil
the publicity requirement central to the functioning of limited real
rights.  It stands alone, isolated and unsupported,
without
foundation or undergirding and with no express words carrying any
suggestion that it is transmissible.
[40]
A useful contrast arises from a statute enacted soon after
section 118(3) took effect, the Land and Agricultural
Development
Bank Act.
[80]
This provides that, before the Bank makes any payment of a loan, it
must transmit in writing to the Registrar of Deeds information
about
the advance, including its amount and date.
[81]
The Registrar must then “cause a note thereof to be made in his
or her registers in respect of the property”.
This note
the statute says “has the effect of creating in favour of the
Bank a charge upon the property until the amount
of the advance
together with interest and costs has been repaid”.
[82]
[41]
This is the bullseye target section 118(3) does not even
attempt to hit.  The two provisions use the same language
(“charge
upon the property”) – but the Land and
Agricultural Development Bank Act contains the logical corollary that
secures
transmissibility, namely registration by public act in the
register of deeds.  It thus shows that, when legislation creates

a transmissible charge upon immovable property, registration in the
Deeds Registry (or some other act of publicity or formality)
is
specified.  Its absence from section 118(3) provides a telling
indication that the charge takes effect only against the
current
owner and not successors.
[83]
[42]
Were there no Constitution, one would thus conclude, on the
wording of section 118(3) alone, that the unregistered charge it
creates
is enforceable against the property only so long as the
original owner holds title.  The absence of any requirement that
the
charge be publicly formalised is a strong interpretative
indicator that the limited real right section 118(3) creates is
defeasible
on transfer of ownership.
[43]
And it is no answer to suggest that the statute itself fulfils
the publicity requirement.  In the case of the charge
contemplated
in section 118(3), the statute is evidence only of the
existence
of potential debt on the property.  There is no
indication as to the value of that debt.  Registration of the
charge
would provide that detail.  Even where a covering
mortgage bond is registered, the amount of which may fluctuate over
time,
the bond to be effective must include a fixed amount beyond
which future debts shall not be secured.
[84]
So the legislated fact of the charge, alone, does not render the
requirement of registration or formalisation redundant.
That
remains necessary to fulfil the publicity purpose by providing
details of the charge.
[85]
Constitution
[44]
But, fortunately, we live in a constitutional state.  And
that makes the Constitution supreme.  The position under the

common law provides but a useful backdrop to the process of
interpreting section 118(3) in accordance with and in the light of

the Constitution.  If there is any doubt about the meaning of
the section, that doubt must be resolved to accord best with
the
spirit, purport and objects of the Bill of Rights.
[86]
Since
Hyundai
,
[87]
all legislation must be approached through the prism of the Bill of
Rights.
[88]
And it has been “gold-plate doctrine”
[89]
in this Court that, if a meaning conformable with the Bill of Rights
can reasonably be ascribed to legislation, that meaning must
be
embraced, rather than one that offends the Constitution.  Thus
approached, the question is whether the values and rights
in the
Constitution point to the conclusion that the section 118(3) charge
on property survives transfer to a new owner.
Municipalities’ constitutional
duties to provide services
[45]
All three municipalities contended that the constitutional
setting points to the conclusion that the charge indeed survives
transfer
and thus burdens new owners.  Their contentions demand
careful consideration.
[46]
Tshwane based its argument on the constitutional duties
municipalities bear.  These oblige them to provide services to
the
whole community, and progressively to realise rights of access to
housing, water and sanitation.
[90]
This, Tshwane said, justifies concluding that the charge
survives.  Tshwane admitted a difficulty with the provision.

This is that potential purchasers do not know the extent of the
historical debt fixed to the property.  But this, it urged,

could be fixed.  The Court could infer an obligation that
municipalities have to supply information about historical debts.

This would shine a light on the murk that surrounds a prospective
owner when buying a property saddled with municipal debt.
[47]
Section 118(3), Tshwane contended, imports an implied duty on
both a municipality and previous owner to fess up to the prospective

transferee about historical debt.  This would afford ample
options (cancelling or renegotiating the deal; or shouldering the

debt).  Adding to this, Ekurhuleni invoked the Act’s
provision that gives members of the local community the right to
be
informed of decisions of the municipality affecting their rights,
property or reasonable expectations.
[91]
This provides, it urged, a statutory foundation for purchasers to
demand information from the municipality about historical
debts.
[92]
Ekurhuleni also noted that section 118(1) already obliges
municipalities to provide some information about past debts during

the transfer process – at least for the two preceding
years.
[93]
This benefits both the transferee and the bondholder.
[48]
Ekurhuleni, like Tshwane, thus urged that the special public
responsibilities of municipalities show that the legislature made a

fundamental choice: to burden the new owner with responsibility for
historical debts.
[49]
The Minister contended that there was a legitimate
governmental purpose for the survival of the charge.  This is to
create
empowered and functional municipalities that generate revenue
for service delivery.  But the Minister conceded that
section 118(3)
should be used as only a “last resort and
where the seller is nowhere to be found”.
[50]
eThekwini emphasised the shared civic duties of municipalities
and owners.  Hence, in a transformative context, the charge
survives for the collective good.
[51]
These arguments are not without force.  The notion that
owning property comes with burdens for the public good is not
outlandish.
This Court has increasingly emphasised the
constitutional limitations on private property as well as the
constitutional vision
that property utilisation must conduce to the
public good.
[94]
So the notion that a new owner may be burdened by historical debt
relating to the property should not be treated as landing
from planet
Pluto.
[52]
But the full constitutional context affords a richer picture.
This appreciably attenuates the considerations the municipalities
say
favour imposing the charge on new owners.
[53]
Start with this: as the Minister rightly noted, historical
debts exist only because municipalities have not recovered them.

This while the statute expressly obliges every municipality to
collect “all money that is due and payable to it”
[95]
and to implement a credit control and debt collection policy.
[96]
As this Court pointed out in
Mkontwana
, a 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 to collect amounts
due.
[97]
In addition, for the sake of service delivery, it is imperative that
municipalities do everything reasonable to reduce amounts
owing.
[98]
[54]
And the statute does indeed provide a full-plated panoply of
mechanisms enabling efficient debt recovery in the cause of
collecting
publicly vital revenue.  Here the parts of section
118(3) that are uncontested are integral.  These are the charge
on
the property against the existing owner, and the municipality’s
preference over registered mortgagees.  During argument
the
municipalities conceded, correctly, that the provision enables them
to enforce the charge against the existing owner up to
the moment of
transfer – and to do so above and before any registered
mortgagees.  And they were constrained to concede,
also
correctly, where there are unpaid municipal debts, that the charge
enables them to slam the legal brake on any impending transfer
by
obtaining an interdict against transfer.
[99]
[55]
Add this: section 118(1) places municipalities on notice that
a transfer within their jurisdiction is pending.  Because the

provision embargoes each and every transfer until the municipality
issues a clearance certificate for the last two years’
debt,
prospective transferors and their attorneys are obliged to notify
municipalities of every impending transfer.  Doing
so is indeed
indispensable and invariable.  This gives the municipality full
power, and full opportunity, to enforce the charge
against the
existing owner for all recoverable debt, even beyond the last two
years.
[56]
In this way, all outstanding debt can be recovered, as a
charge against the property,
before
transfer.  Neat.
This power does not improve with age.  It is no jot or tittle
better
after
transfer than before.  So why wait?  If
transfer nowise strengthens a municipality’s position, why not
act pre-transfer?
The municipalities and the Minister had no
answer.  Indeed, during oral argument, Tshwane conceded perforce
and rightly that,
should the Court find municipalities have ample
power to recover outstanding debt from current owners, there would be
little justification
for making the charge survive.
[57]
To itemise these ample powers is not to approach the
interpretive task as providing a chance to scold municipalities for
known inefficiencies.
[100]
Mkontwana
rightly cautioned against this.
[101]
Indeed, this Court gave considerable weight there to the heavy public
duties municipalities have to perform.
[102]
It is rather to consider whether, against the objective fact of a
powerful armoury of existing statutory debt collection
weapons,
there is any public interest warrant, constitutional need or fair
justification for reading the charge in section 118(3)
to survive
transfer.
Deprivation of property
[58]
Apart from the considerations the municipalities advanced as
favouring survival of the charge, we also weigh the severe
consequences
of imposing historical debts on a new owner.  The
Bill of Rights prohibits “arbitrary deprivation of
property”.
[103]
It was rightly not disputed that the new owner has a property
interest that would be affected if the charge were transmissible.

Equally, the interests of bond holders who advance loans to the
transferee would be affected
[104]
if the debts, accumulated during the previous owner’s title,
were to operate as a charge against the new owner.
[105]
[59]
This Court has summarised its jurisprudence regarding
constitutionally cognisable deprivation of property by saying that
there is
a constitutionally significant deprivation of property only
where the interference with a property right is “substantial”

– meaning that the extent of the intrusion must be extensive to
have a legally significant impact on the rights of the affected

party.
[106]
[60]
Does this happen if the charge takes effect in the hands of a
new owner to satisfy debts incurred during a preceding owner’s

title?  As the applicants compellingly contended, the new
owner’s property could be sold in execution to satisfy the

charge.  And, if the historical debts are big enough, the new
owner could be left with very little – or even, where
the debt
exceeds the value of the property, with nothing.  The
municipalities were constrained to concede that the historical
debt
could be so big as to extinguish the new owner’s entire
interest in the property.
[61]
The same applies to the bond-holder, who advances money to the
new owner to finance the transfer, but finds that its security,
carefully
calculated on the value of the property before transfer,
becomes useless afterwards.  The effect of allowing the charge
to
take effect post-transfer is thus to substantially interfere with
or limit the transferee’s ownership as well as the mortgagee’s

real right of security.
[62]
Despite these far-reaching effects, not only the
municipalities but also the Minister contended that there was no
deprivation.
This, they urged, was because the charge took
effect at the time when the debts were incurred – under the
previous owner.
[107]
This meant that the new owner, when taking transfer of the property,
acquired dominium that had already diminished in the
hands of the
previous owner.
[63]
This argument is fallacious.  Enforcement of the charge
against the owner during whose title the debts accumulate does not
amount to a deprivation of property.  The previous owner was as
property owner responsible for the debts incurred on the
property.
[108]
The charge served to enforce the debts for which the previous owner
was responsible.  It is fanciful to construe payment
of a debt
that is lawfully owing as imposing a deprivation of property on the
debtor.
[109]
The debtor’s patrimony is diminished – but this is in
consequence of lawful subtraction, through payment of a
debt for
which the debtor itself is responsible.  There is no
constitutionally cognisable deprivation.
[110]
[64]
The position is different when a debt is enforced against the
property of an owner who had no connection at all with it.  It

is then that a constitutionally cognisable deprivation occurs.
This is precisely what would happen if the charge in section 118(3)

were to take effect on new owners.
[65]
The municipalities also contended that the consumption for
which the debts were incurred, under the old owner, enhanced the
value
of the property.  This, they said, made it just to impose
the historical debt on the new owner.  For this they invoked
the
reasoning in
Mkontwana
.
[111]
This argument is also fallacious.
[66]
First, it is difficult to see how
past consumption
of
municipal services, in contradistinction to their
continuing
supply
, enhances a property’s value.
Mkontwana
was
concerned with the current enhancement of a property’s value,
in the hands of the present owner, by the continuing supply
to it and
consumption on it of municipal services.
[112]
[67]
Mkontwana
also recognised that the value of a property
was enhanced if municipal services were accessible from it.
[113]
That is clear.  A plot in the bundu, without electricity or
piped water, is in most circumstances much less valuable
than one in
town.  But the applicants astutely pointed out that any value
reflected in this way has already been factored
into the purchase
price.  The new owner paid more precisely because of the urban
location of the property, and its accessibility
to municipal
services.  To make the new owner pay for this value again by
making historical debts enforceable against the
transferee is a form
of double debit that makes it a constitutional deprivation.
[68]
We must therefore conclude that, if the charge in section
118(3) survives transfer, there could be a significant deprivation of
property.
Is the deprivation arbitrary?
[69]
Two cases have considered the constitutional sustainability of
imposing statutory liability on a property holder for the debts of

another.  They are
FNB
[114]
and
Mkontwana
.
[115]
[70]
In
FNB
, a statute permitted the revenue services to
impound and sell a vehicle belonging to a leasing company to recover
a debt owed by
the tax debtor to whom the vehicle was leased.
[116]
This Court concluded that the provision was arbitrary.  The end
the legislature sought to achieve by depriving the leasing
company of
its property was payment of a customs debt.  This, the Court
held, was “a legitimate governmental objective
of undisputed
high priority”.
[117]
Yet the lessor/property owner had no connection to the transaction
giving rise to the debt; the property seized, itself,
had no
connection with the debt; and the property owner had not placed the
debtor/taxpayer in possession of the property in a way
that could
induce reliance by the revenue authorities to act to their
detriment.
[118]
The Court struck the provision down.
[71]
In
Mkontwana
, by contrast, the companion provision to
that in issue here was upheld.  The question was whether the
embargo section 118(1)
imposed against transfer to a new owner,
against payment by the existing owner of two years’ preceding
outstanding municipal
debts, could be justified where the accumulated
debts were incurred by persons other than the owner.  This Court
held that
it was.  Even though the debts might have been
incurred by tenants, illegal occupiers, usufructuaries or other
possessors,
good faith or bad faith, there remained a close link
between the current owner, the property and the arisal of the
debt.
[119]
[72]
A crucial consideration in the Court’s reasoning was
that the imposition was limited to two years’ debts.
[120]
In section 118(3), if the municipalities’ interpretation is
correct, there is no time limit.  The only bound is

prescription.  More importantly, as one who arrives fresh and
bare of previous proprietary control over the property, the
new owner
will have had no control whatsoever over how the debt arose.
This, as counsel for BASA persuasively pointed out,
was the epitome
of arbitrariness.
[73]
The new owner’s deprivation is arbitrary in cases where
the debt is much smaller than the value of the property, and even
where it is relatively trivial.  This is because it is
intrinsically arbitrary to impose responsibility for payment of a
debt
on a property owner who has no connection with it and who had no
control at all over the property or those occupying the property
when
the debt was incurred.  Control in this sense was integral to
the reasoning in
Mkontwana
.
[74]
This case is thus close to
FNB
, but different from
Mkontwana
.  The imposition on a new owner of municipal
property of unprescribed debts without historical limit would
constitute an arbitrary
deprivation of property.
[75]
It may be useful to add that none of the parties suggested
that anything turns on how the transferee acquired title, whether at
a sale in execution or by regular deed of sale or by other
means.
[121]
[76]
As in
FNB
,
[122]
it seems unnecessary to enter the section 36 limitation analysis,
but, to the extent that it is, it would be difficult to sustain
the
municipalities’ interpretation of the provision.  In
short, if section 118(3) meant that new owners are liable,

post transfer, for a previous owner’s debts, it would be
constitutionally impermissible.
[77]
Section 39(2) enjoins us, when interpreting legislation, to
promote the spirit, purport and object of the Bill of Rights.
To avoid unjustified arbitrariness in violation of section 25(1) of
the Bill of Rights, we must thus interpret section 118(3) of
the Act
so that the charge it imposes does not survive transfer.  Far
from the provision being merely capable of this interpretation,
it is
from historical, linguistic and common law perspectives the
overwhelmingly persuasive interpretation.
[123]
[78]
It follows that, because the provision can properly and
reasonably be interpreted without constitutional objection, it is not
necessary
to confirm the High Court’s declaration of
invalidity.  This means that, purely as a matter of form, the
appeal
must succeed, though not for the reasons the appellants
advanced.  In fact, the reasons that led the High Court to
conclude
that the provision was invalid are substantially vindicated
in this judgement.  To make this clear, I would grant a
declaration
that the charge does not survive transfer.
Costs
[79]
In form, this Court must thus decline to confirm the High
Court’s declaration of constitutional invalidity and thus allow
the municipalities’ appeal.  In substance, however, the
confirmation applicants have won, because the interpretation
of the
provision that favours them (and whose opposite would render the
provision constitutionally invalid) has prevailed.
They are
therefore entitled to their costs.
[80]
I would not grant the confirmation applicants the costs of
four counsel, as sought.  They are entitled to the costs of two
counsel.
Order
[81]
The following order is made:
1.
The appeals succeed.
2.
The order of invalidity is not confirmed.
3.
It is declared that, upon transfer of a property, a new owner is not
liable for debts arising before transfer from the charge upon
the
property under
section 118(3)
of the
Local Government: Municipal
Systems Act 32 of 2000
.
4.
The appellants in the appeals and the Minister are to pay the
applicants’ costs, including the costs of two counsel.
For Jordaan and Others (applicants in
CCT 283/16 and respondents in CCT
293/16):

D Unterhalter SC, L G F Putter SC, H Varney and S Ogunronbi
instructed by Ross Attorneys
For City of Tshwane Metropolitan
Municipality (first
respondent in CCT 283/16 and
applicant in CCT 293/16):
T
Motau SC, A Vorster, S Scott and I Phalane instructed by
Gildenhuys Malatji Inc
For Ekurhuleni Metropolitan Municipality
(second
respondent in CCT 283/16 and applicant
in CCT 294/16):

W J Vermeulen SC and P Sieberhagen instructed by Chiba & Tourapi
Attorneys
For Minister of Cooperative Governance
and Traditional
Affairs (third respondent in CCT
283/16):

L Montsho-Moloisane SC, L Bomela and K Bokaba instructed by State
Attorney, Pretoria
For TUHF Limited (first amicus curiae):

I Miltz SC and J J Bitter instructed by Schindlers Attorneys
For Banking Association South Africa
(second amicus curiae):     A Cockrell SC and C
Tabata instructed by Cliffe
Dekker Hofmeyr
For eThekwini Metropolitan Municipality
(third amicus curiae):
A A Gabriel SC
and J P Broster instructed by
Linda Mazibuko & Associates
[1]
32 of 2000.
[2]
In full,
section 118
of the Act provides:
“Restraint
on transfer of property
(1)
A registrar of deeds may not register
the transfer of property
except on production to that registrar of deeds of a prescribed
certificate—
(a)
issued by the municipality or
municipalities in which that property
is situated; and
(b)
which certifies that all amounts that
became due in connection with
that property for municipal service fees, surcharges on fees,
property rates and other municipal
taxes, levies and duties during
the two years preceding the date of application for the certificate
have been fully paid.
(1A)
A prescribed certificate issued by a municipality in terms of
subsection (1) is
valid for a period of 60 days from the date it has
been issued.
(2)
In the case of the transfer of property
by a trustee of an insolvent
estate, the provisions of this section are subject to section 89 of
the Insolvency Act, 1936 (Act 24
of 1936).
(3)
An amount due for municipal service
fees, surcharges on fees,
property rates and other municipal taxes, levies and duties is a
charge upon the property in connection
with which the amount is
owing and enjoys preference over any mortgage bond registered
against the property.
(4)
Subsection (1) does not apply to—
(a)
a transfer from the national
government, a provincial government or
a municipality of a residential property which was financed with
funds or loans made available
by the national government, a
provincial government or a municipality; and
(b)
the vesting of ownership as a result
of a conversion of land tenure
rights into ownership in terms of Chapter 1 of the Upgrading of Land
Tenure Rights Act, 1991 (Act
112 of 1991):
Provided that
nothing in this subsection precludes the subsequent collection by a
municipality of any amounts owed to it in respect
of such a property
at the time of such transfer or conversion.
(5)
Subsection (3) does not apply to any
amount referred to in that
subsection that became due before a transfer of a residential
property or a conversion of land tenure
rights into ownership
contemplated in subsection (4) took place.”
[3]
Jordaan v City of Tshwane Metropolitan Municipality; New Ventures
Consulting & Services (Pty) Ltd v City of Tshwane Metropolitan

Municipality; Livanos v Ekurhuleni Metropolitan Municipality; Oak
Plant Rentals (Pty) Ltd v Ekurhuleni Metropolitan Municipality
2017 (2) SA 295
(GP) (High Court judgment).
[4]
The relevant part of the High Court order reads:
“The
provisions of section 118(3) of the [Act] are declared to be
constitutionally invalid to the extent only that the security

provision ‘a charge upon the property’ survives transfer
of ownership into the name of a new or subsequent owner
who is not a
debtor of the municipality with regard to municipal debts incurred
prior to such transfer.”
[5]
Section 167(5) of the Constitution provides:
“The
Constitutional Court makes the final decision whether an Act of
Parliament, a provincial Act or conduct of the President
is
constitutional, and must confirm any order of invalidity made by the
Supreme Court of Appeal, the High Court of South Africa,
or a court
of similar stature, before that order has any force.”
Section 172(2)(a) of the Constitution
is to the same effect.
[6]
Section 172(2)(d) of the Constitution provides:
“Any person
or organ of state with a sufficient interest may appeal, or apply,
directly to the Constitutional Court to confirm
or vary an order of
constitutional invalidity by a court in terms of this subsection.”
[7]
Third amicus curiae.
[8]
eThekwini originally sought either admission as an
amicus curiae
or joinder as a party.  Its admission as an
amicus curiae
enabled it to provide the Court with full written and oral
submissions on the issues.
[9]
The High Court heard the matters together, but no consolidation
order was granted.  There were five applications before
the
High Court – the first two against Tshwane and the remaining
three against Ekurhuleni.  Similar relief was sought
in four of
the applications (except that in the fourth application, additional
relief was sought, namely a declaratory order
relating to
Ekurhuleni’s alleged obligation to render municipal services
and to open a services account under circumstances
where there is a
debt outstanding in respect of the property concerned beyond the
two-year period provided for in section 118(1)
of the Act).
[10]
High Court judgment above n 3 at paras 5-6, 14-6 and 82.
[11]
Section 96 of the Act is headed “Debt collection
responsibility of municipalities”.  It provides:
“A municipality—
(a)
must collect all money that is due and payable to it, subject to

this Act and any other applicable legislation; and
(b)
for this purpose, must adopt, maintain and implement a credit

control and debt collection policy which is consistent with its
rates and tariff policies and complies with the provisions of this

Act.”
Tshwane’s Credit and Debit
Control Policy of 30 August 2012 provides that clearance
certificates in terms of section 118(1)
of the Act may be issued
only upon security being provided for full payment of outstanding
amounts – including historical
debts.
[12]
3 of 2000.
[13]
High Court judgment above n 3 at paras 14-6.
[14]
S v Mhlungu
[1995] ZACC 4
;
1995 (3) SA 867
(CC);
1995 (7)
BCLR 793
(CC) (
Mhlungu
) at para 59, approved in
Zantsi v
Council of State, Ciskei
[1995] ZACC 9
;
1995 (4) SA 615
(CC);
1995 (10) BCLR 1424
(CC) at para 3.
[15]
Mhlungu
id was also cited to the High Court, which considered
itself bound by its approach and that it was “settled
jurisprudence
that a court should not ordinarily decide a
constitutional issue unless it is necessary to do so” (High
Court judgment
above n 3 at para 15).
[16]
Section 98 of the interim Constitution.
[17]
Section 101(5) of the interim Constitution: “The Appellate
Division shall have no jurisdiction to adjudicate any matter
within
the jurisdiction of the Constitutional Court”.
[18]
Section 168 of the Constitution.
[19]
Section 173 of the Constitution provides:
“The
Constitutional Court, the Supreme Court of Appeal and the High Court
of South Africa each has the inherent power to
protect and regulate
their own process, and to develop the common law, taking into
account the interests of justice.”
[20]
The Constitutional Court was “the highest
court on all constitutional matters” before the enactment of
the
Constitution Seventeenth Amendment Act 72 of 2012
(Amendment Act)
, which gave this Court final
appellate jurisdiction in all cases.
See section 3(a)
of the Amendment Act, which came into effect on 23 August 2013.
[21]
See the minority judgment in
My Vote Counts NPC v Speaker of the
National Assembly
[2015] ZACC 31
;
2016 (1) SA 132
(CC);
2015
(12) BCLR 1407
(CC) at para 51, with which the majority judgment
expressed no disagreement.
[22]
City of Tshwane Metropolitan Municipality v Mathabathe
[2013]
ZASCA 60
;
2013 (4) SA 319
(SCA) (
Mathabathe
) at para 12,
where Ponnan JA, with Majiedt JA, Erasmus AJA, Swain AJA and Zondi
AJA concurring, held that Tshwane’s
contention, in those
proceedings, that it lost its rights under section 118(3) upon
transfer to a new owner was “plainly
wrong”; and the
majority judgment in
Tshwane City v Mitchell
[2016]
ZASCA 1
;
2016 (3) SA 231
(SCA) at para 23, where Baartman AJA, with
Mpati P, Bosielo JA and Saldulker JA concurring, reversed a
first-instance declaration
that a successor in title is not liable
under section 118(3) for the historical debt relating to the
property, instead holding
that the sale in execution and subsequent
transfer of the property into the name of the successor in title did
not extinguish
the hypothec created by section 118(3) in favour of
the municipality, with the consequence that nothing prevents the
municipality
from perfecting its security over the property to
ensure payment of the historical debt.  Zondi JA, in dissent,
held that
the real right of security under section 118(3) does
not survive transfer to a new owner after a sale in execution (para
29).  Brits
Real Security Law
(Juta & Co Ltd, Cape
Town 2016) at 404-5 suggests that the Supreme Court of Appeal’s
statement in
Mathabathe
is “ambiguous” and “not
clear at all”, in that the Court may have meant to say merely
that the municipality’s
personal claim against the original
property owner is not lost upon transfer; but this seems hard to
warrant.
[23]
See du Plessis “Observations on the (un-)constitutionality of
section 118(3) of the Local Government: Municipal Systems
Act 32 of
2000” (2006) 17
Stell LR
505 at 517.
[24]
Section 96 is set out in full above n 11.
[25]
First amicus curiae.
[26]
Second amicus curiae.
[27]
71 of 2008.
[28]
The parties’ arguments, including BASA’s, were confined
solely to the question whether the charge created in section
118(3)
survives transfer to a new owner.  The constitutional validity
of the provision that, pre-transfer, an amount due
to the
municipality “enjoys preference over any mortgage bond
registered against the property” was not debated.
City
of Johannesburg v Kaplan N.O.
[2006] ZASCA 39
;
2006 (5) SA 10
(SCA) (
Kaplan
) at para 26 explained this as meaning that, if
execution on the property is levied, municipal debts are first paid
in full: “Only
after satisfaction of such debts will the
remainder, if any, be available for payment of the debt secured by a
mortgage bond
over the property.”  The constitutionality
of the preference over mortgagees is discussed by du Plessis above n
23
at 523.
[29]
The JAA explained that it had learned of submissions affecting its
members’ interests only after oral argument.  On
26 May
2017, the Court directed the JAA to file its application.  On 1
June 2017, the JAA did so.  In the absence of
opposition it was
on 5 June 2017 admitted as fourth
amicus curiae
and directed
to file written submissions, to which the parties were invited to
respond.  On 9 June 2017, the JAA filed written
submissions.
[30]
The JAA submitted that the conveyancer may be appointed by the buyer
or the seller, but is the agent of the seller in transferring
the
property.  The conveyancer’s mandate is limited: the
conveyancer does not resolve disputes, nor is the conveyancer
the
seller’s agent in relation to disclosure of representations
made by the seller.  A conveyancer can apply for rates

clearance figures on the seller’s behalf, but cannot know
whether those figures are correct.  Further, some
municipalities
do not include details of the historical debt on
their rates clearance figures since the municipality is not required
to render
“full and final” figures at the time of
clearance.  The conveyancer cannot reveal the seller’s
historical
debt to the buyer because of the conveyancer’s duty
of confidentiality to the seller – but not revealing this may
be detrimental to the purchaser, and the conveyancer has a duty to
the buyer and seller to act in both of their best interests.

This, it said, creates a conflict for the conveyancer.
[31]
Municipality of Green Point v Powell’s Trustees
(1848)
2 Menz 380
(
Green Point
).
[32]
Ordinance No. 4 of 1839.
[33]
Green Point
above n 31, per Wylde CJ and Menzies J; Musgrave
J dissenting.
[34]
See
Municipality of Mossel Bay v Holloway’s Trustee
(1884) 3 SC 50
, where the municipality conceded that, under
Green
Point
above n 31 the rates were not preferent, but tried to
limit the decision’s impact, arguing that municipal rates are
nevertheless
“in the nature of rights
in rem
attaching
to the property”.  The municipality sought to establish,
not that its claim survived transfer, but only
that it did not have
to be proved in the land owner’s insolvency, but fell directly
due, without being ensnared in the
claims process.  For this
purpose, the municipality urged, the rates, although not preferent,
were “a burden running
with the land”.  De
Villiers CJ rejected this attempt to limit
Green Point
.
He held that: “It is clear that if there is no preference
there is no right
in rem
”.  Consequently municipal
rates were not “in the nature of
jura in rem
[real
rights] attaching to the property”.  The municipality,
therefore, had to prove its claim along with the rest
of the
creditors.
[35]
The Cape Court affirmed that, before special legislative provision
to that effect was introduced, municipalities enjoyed no “tacit

hypothecation” for rates, and could not prevent transfer of
land because rates arrears were unpaid: see the summary of
the
position before the Divisional Councils Act 40 of 1889 (Cape) was
enacted in
Smuts v Cathcart Divisional Council
(1896) 13 SC
359
at 362-3 (per de Villiers CJ).  The same decision affirmed
that a municipality cannot refuse services to a new owner who
tenders payment of rates he himself has incurred.  Nor could
councils expand the “rates due” by refusing
certification,
and thus blocking transfer, so as to claim “all
other arrear rates” (at 363).
[36]
Section 275 of the Divisional Councils Act 40 of 1889 (Cape)
provided that: “Before passing transfer of any immovable
property . . . every Registrar of Deeds shall require the production
of a receipt or other voucher showing that the rates last
due to the
council upon such property have been paid”.  Section 99
of the Rural Council Act 33 of 1909 contained a
similar provision.
See
Union Government (Minister of Lands) v Cape Rural Council
1912 CPD 857
at 859 (
Cape Rural Council
).  Maasdorp JP
observed at 863, citing
Cape Divisional Council v Marais
2
Buch AC 350
, that it was “quite clear” that until the
passing of the 1889 statute, divisional councils “had no tacit
hypothecation
in any shape or form in respect of any portion of
their rates”.  The 1889 statute, however, imposed a duty
upon the
Registrar “which operated as a security for the
payment of rates, and created a kind of statutory tacit hypothec”
in favour of the divisional council.  But, he added (at 863-4),
the “security of tacit hypothec” lasts “so
long,
and only so long” as the Registrar’s duty continues –
making plain that there was no question that the
municipality’s
claim did not survive transfer to the new owner.  See, too,
page 865, where Maasdorp JP makes
clear that calling the
municipality’s right a “tacit hypothec” was just
“an illustration” –
and that a right constituting
“something more than a mere prohibition to pass transfer,
something more than a mere duty
imposed on the Registrar” was
“certainly not vested” in the local authority, since the
right did not remain
intact once the Registrar had allowed transfer
to pass.  Maasdorp JP goes on to reject an argument akin to
that urged in
this case regarding transmissibility, pointing out
that if the contention were correct “the hypothec which under
the earlier
Act would, under ordinary circumstances, have lasted
only for twelve months, would now in respect of the rates due inside
the
municipalities endure for the period of prescription” –
that could not have been the legislature’s contemplation.
[37]
The term, which is picked up in later cases, including
BOE Bank v
City of Tshwane Metropolitan Municipality
[2005] ZASCA 21
;
2005
(4) SA 336
(SCA) at para 7, appears to have originated in the
first-instance judgment of Curlewis J in
Cohen’s Trustees v
Johannesburg Municipality
1909 TH 134
(overruled in
Johannesburg
Municipality v Cohen’s Trustees
1909 TS 811
(
Cohen’s
Trustees
)).  Curlewis J said that the effect of section 26
of Ordinance 43 of 1903 “is to give the council an embargo or
hold
on property in respect of which rates have been imposed –
something not wholly in the nature of either a lien or a hypothec

but
sui generis
, whereby the council practically obtains a
preference over other creditors”, words Greenberg J later
echoed in
Rabie N.O. v Rand Townships Registrar
1926 TPD 286
at 292.  In
Cape Rural Council
above n 36 at 867,
McGregor AJ refers to the certificate as a “statutory
voucher”.
[38]
Cohen’s Trustees
above n 37 per Innes CJ; Solomon J and
Bristowe J concurring.  Ordinance 43 of 1903 appears to be the
first local government
legislation outside the Cape that imposed an
embargo on transfer until arrears were squared.  Because the
case was about
whether “rates imposed” included
interest, the retrospective period for which the certificate had to
be issued does
not appear.  Section 26 provided:
“No transfer
or cession of any rateable property shall be passed before any
Registrar of Deeds or Registrar of Mining Rights
or other Government
official until the receipt or certificate signed by the Town Clerk
or other person authorised by the Council
shall be produced to such
official for payment of the rates imposed on such property.”
Unlike later ordinances, the 1903
Ordinance contains no separate provision limiting the retrospective
period for which arrears
had to be certified as paid.
Section 47 of Ordinance 9 of 1912
afforded municipalities a “privilege of preventing transfer”
(
Rabie N.O.
above n 37 at 291 per Greenberg J) regarding
unpaid rates arrears “for a period of two years immediately
preceding the date
of application for transfer”.  The
terms of section 47(b) of Ordinance 9 of 1912 are set out below n
41.  By
contrast with the 1903 Ordinance, the 1912 Ordinance
was the first to limit the municipal debts in respect of which a
veto could
be exercised to only the amounts that accrued during the
two years immediately preceding the date of application for a
transfer
(du Plessis above n 23 at 511).
[39]
Section 118 is set out in full above n 2.
[40]
In
Cohen’s Trustees
above n 37, Innes CJ (who at 817
calls it a “clearance certificate”) states at 817 that
the result of the provision
was “to create, in effect, a very
real and extensive preference over the proceeds of rateable property
realised in insolvency”.
Solomon J said at 821 that the
effect of the embargo provision was that “the council obtains
a species of lien upon all
rateable property and
in case of the
insolvency of the owner secures a preference over other creditors
”.
(Emphasis added.).
[41]
Rabie N.O.
above n 37 dealt with section 47(b) Ordinance 9 of
1912.  This provided: “No transfer of any premises within
a municipality
shall be passed or registered . . . until
a written statement . . . signed and certified

by the town clerk or other officer authorised . . . shall be
produced . . . nor unless such statement shows

(b) that all charges, if any, for a period of two years immediately
preceding the date of application for transfer due in respect
of
such premises on account of rates . . . have
been paid to the council”.
Greenberg J, in giving the judgment of
the Court (Curlewis JP and Gey van Pittius J concurring), says at
289 this was “similar
to” the provision in
Cohen’s
Trustees
.  At 290 he distinguishes
Cohen’s
Trustees
as dealing with interest and illustrating “only”
the practical result of the provision; the decision did not show
“that the section creates a lien in the strict legal sense”.
It was argued that the right enabled the municipality
to prevent the
owner from “exercising one of the privileges of dominium”
viz the right to transfer” (and thus
that it had to be
preferent; and like a
jus retentionis
) (at 290).
[42]
Id per Greenberg J at 292.  The difficulty in conceptualising
and tagging the right the statute conferred on a municipality
was
further explored in
Bloemfontein Town Council v Estate Holtzman
1936 OPD 134
(
Holtzman
), where Fischer J expressed at 141
“an obvious difficulty in affixing a label to or defining
them”, noting that they
“have been described as being in
the nature of a lien and as securing a preference on insolvency”
(he calls it at 140
“the restraint on transfer
section”).
Holtzman
held at 142 that the
provision in issue there did create a preference in favour of the
municipality.
[43]
Rabie
N.O.
above n 37 at 290-1 (“No matter how small the
claim for rates or how valuable the property, as long as the rates
were unpaid
there could be no execution” by another
creditor).  Other provincial statutes expressly conferred a
preferent right
on municipalities.  An instance is article 6 of
Chapter 87 of the Law Book of the Orange Free State, which provided
that
“
verschuldigde erfpacht en dorpsbelastingen zyn
preferent voor alle andere vorderingen of verbanden op de gronden of
erven en daaropstaande
gebouwen
” (as quoted by Fischer J
in
Holtzman
above n 42 at 139).  Counsel’s
argument in
Holtzman
asserted that the “Transvaal has
no legislation” like article 6 of Chapter 87.
[44]
The cases are discussed in Brits above n 22 at 397-8.
[45]
Id at 399.
[46]
Ordinance 17 of 1939, which came into effect on 1 December 1939: see
Pretoria Stadsraad v Geregsbode, Landdrosdistrik van Pretoria
1959 (1) SA 609
(T) at 613C-D (
Pretoria Stadsraad
).
The
Pretoria Stadsraad
decision, as well as
Stadsraad van
Pretoria v Letabakop Farming Operations (Pty) Ltd
1981 (4) SA
911
(T), gave effect to the preference the 1939 Ordinance enacted.
Ackermann J in the latter case (O’Donovan J concurring)
at
918C noted the “far-reaching effects” (
verreikende
gevolge
) of the enactment of the Ordinance on the rights of
registered mortgagees, whose claims had to bow before the
municipality’s,
because it had the power to embargo transfer.
[47]
Section 50(2)(a) of the Ordinance.
[48]
The Ordinance was amended by section 47 of Ordinance 11 of 1977.
This extended the period from two to three years.
It also
changed the text of the charge provision from “charge upon the
premises” to “charge upon the land”.
The new
section 50(3) read:
“Any amount
due in terms of paragraph (a), (b), (c) or (d) of subsection (1)
shall be a charge upon the land or right in
land in respect of which
such amount is owing and shall, subject to the provisions of section
142(6), be preferent to any mortgage
bond registered against such
land or right in land subsequent to the coming into operation of
this Ordinance.”
[49]
Du Plessis above n 23 at 570 calls section 50(1) of the 1939
Ordinance “the normative
fons et origo
” of the
veto.
[50]
The imposition of the preference was not retrospective: the
provision operated only “subsequent to the coming into
operation
of this Ordinance”.
[51]
Brits “Why the security provision in
section 118(3)
of the
Local Government: Municipal Systems Act 32 of 2000
is not
enforceable against successors in title” (2017) 28
Stell LR
47 at 50 points to the differences between
section 118(3)
and its
predecessors.
[52]
When enacted,
section 50(1)(b)
of Ordinance 17 of 1939 required that
the certificate cover “all charges, if any, for a period of
two years immediately
preceding the date of application for
transfer”.  Section 47 of Ordinance 11 of 1977 later
amended the period to read
“three years”.  See
above n 48.
[53]
Section 168 of the Natal Local Authorities Ordinance 25 of 1974 was
similarly circumscribed in its effect.  It provided
that rates
“shall be a charge upon the property the subject thereof
and
shall be payable by the owner
of such property”. (Emphasis
added.).  Section 175 of the same Ordinance conferred a power
of embargo on local authorities.
The Natal Ordinance was
repealed by section 95 of Act 6 of 2004, which repealed Part 6
(sections 148-75) of Chapter X of
the Ordinance.
Section 119 of the Orange Free State
Local Government Ordinance 8 of 1962 provided only an embargo or
veto power, but no hypothec.
See, too, sections 88 and 96 of
the Cape Municipal Ordinance.  (Du Plessis above n 23 at 511.)
[54]
The history of the provision is set out in du Plessis above n 23 at
509-12.
[55]
The statutory predecessors of section 118 are set out in
Kaplan
above n 28 at paras 14-22.
[56]
The Supreme Court of Appeal rebuffed attempts to create a link
between subsections (1) and (2) by importing a two-year limit
into
section 118(3) in both
BOE Bank
above n 37 and
Kaplan
above n 28.
[57]
BOE Bank
above n 37 at para 7.
[58]
Instancing the omission of the two-year time limit in section
118(3), du Plessis above n 23 at 528 considers section 118, though

“substantially similar to most of its predecessors in
apartheid era provincial ordinances”, to be “actually
.
. . more of an encroachment on property rights than most of its
predecessors”.
[59]
This is thirty years for “any debt
in respect of any taxation imposed or levied by or under any law”
(section 11(a)(iii)
of the
Prescription Act 68 of 1969
), which
appears to include municipal rates and, possibly, sewer and refuse
charges (see
Alberts
v Roodepoort Maraisburg Municipality
1921
TPD 133
;
City of
Johannesburg v
Renzon
and
Sons
(Pty) Ltd
2010
(
1
)
SA
216 (
W
))
and three years in respect of electricity and water charges
(section
11(d)
of that Act).
[60]
Discussed but rejected by Brits, “The statutory security right
in
section 118(3)
of the
Local Government: Municipal Systems Act 32
of 2000
– does it survive transfer of the land?” (2014)
25
Stell LR
536 at 542-3.
[61]
It has been said, rightly, that the decisions of this Court indicate
that the Constitution “requires a fundamental shift
from
abstract, rights-based, to contextual, non-hierarchical thinking
about property rights”: Van der Walt
Constitutional
Property Law
, 3 ed (Juta & Co Ltd, Cape Town 2011) at 521.
See, most recently,
Daniels v Scribante
[2017] ZACC 13, 2017
(4) SA 341 (CC); 2017 (8) BCLR 949 (CC).
[62]
When a statute employs concepts and phrases familiar to the common
law or previous statutes, the presumption that legislation
is
enacted against the background of the common law setting in which it
takes effect (expressed as “the legislator is presumed
to know
the common law”) operates.  Du Plessis and de Ville,
Constitutional and Statutory Interpretation
(Interdoc
Consultants, Johannesburg 2000) is a useful practical aid to
meaning.
[63]
Nor is there any magic in calling the charge a “hypothec”.
Both words convey a right of security realisable
against property,
as opposed to a personal claim only against the debtor.  Sohm
in
Sohm’s Institutes of Roman Law
3 ed (OUP, Cape Town,
1907) at 354 claims that the hypothec or real right of security “was
borrowed, both in name and in
substance, from Greek law”, but
Thomas in
Textbook of Roman Law
(North-Holland Publishing
Company, Amsterdam/New York/Oxford, 1976) at 332 bluntly asserts the
opposite: the institution, “despite
its Greek name, was of
Roman origin”.
[64]
See
Irwin v Davies
1937 CPD 442
at 447.  There, Davis J
held that a “first charge” meant that assets were so
bound that the debt owed “is
to come out of them in priority
to any other debts”, and quoted
Sweet’s Law
Dictionary
to the effect that a charge on property signifies
that the property is security for the payment of a debt or the
performance
of an obligation.
[65]
Kaplan
above n 28 at para 26.
[66]
Joubert et al (eds)
LAWSA
vol 7 at 198.
[67]
According to Thomas above n 63 at 333:
“Each
successive creditor had to be informed of the number and value of
the charge incurred before his own or the debtor
would be guilty of
the criminal offence of
stellionatus
, swindling.  If
encumbrances exceeded the value of the thing, when it became
necessary to realise, then, apart from privileged
hypothecs and, in
later law, those registered with the authorities or effected before
three witnesses, the rule was the earlier
in time prevailed:
qui
prior est in tempore potior est iure
.”
[68]
See Van der Merwe
Sakereg
(Butterworths, 1989) at 609.
[69]
Voet
Commentary on the Pandects
Book 20, Title 1, Section 13
(Gane’s translation, Butterworth & Co. (Africa) Ltd,
Durban 1956) page 488.
[70]
The Latin is “
effectus hypothecae specialis in immobilibus
solemniter secundum modum superius descriptum constitutae in eo
consistit, quod res
ipsas afficiat, deinceps transituras cum suo
onere in quemvis possessorem
” (the effect of a special
hypothec constituted over immovables with the proper and necessary
formalities [
solemniter
] in accordance with the process
described above lies in this, that it will impress upon the very
things themselves, so that thereafter
they will pass to any
possessor with their very own burden).
[71]
See Voet 20.1.9-12.  The requirement of formality was cemented
a century and a half before Voet wrote, in a
Placaet
the
Emperor Charles V issued on 15 May 1529.  This required that
every sale or hypothecation (grant of right of security)
of land,
houses or other immovable property had to take place before a
judge.  See Jones
Conveyancing in South Africa
, 4 ed
(Juta & Company Limited, Cape Town 1991) at 3.
[72]
See the discussion in Voet 20.1.10ff.
[73]
Harris
v Trustee of Buissine
(1828-1849) 2 Menz 105
at 107-8.
[74]
Lucas’s Trustee v Ismail and Ayob
1905 TS 239.
[75]
Id at 242.
[76]
Maasdorp “The law of mortgage” (1901) 18
SALJ
233
at 240.
[77]
Jones above n 71 at 3-13; Carey Miller and Pope
Land Title in
South Africa
(Juta & Co Ltd, Kenwyn 2000) at 45-8.
Jones explains (at page 3) that: “The history of colonization
and expansion
northwards determined the underlying principles of our
system of registration”, which originated with the
Placaet
of 1529.
[78]
Seemingly from 1882, when formal land registers began to be
maintained in the Cape: Jones above n 71 at 3-4.
[79]
Under the
Deeds Registries Act 47 of 1937
, which, for the first
time, formalised and systematised the national system of
registration of title: see Carey Miller above
n 77 at 47 and Jones
above n 71 at 6 and 14-31.
[80]
15 of 2002.
[81]
Section 31(2).
[82]
Section 31(3).
[83]
In this way, the issues create an illuminating perspective on
Municipality of Mossel Bay v Holloway’s Trustee
(1884-1885) 3 SC 50.
There, the municipality contended that
its claim for rates, although not preferent, was “a burden
running with the
land”.  The Court there held that “if
there is no preference there is no right
in rem
”.
We hold here that conferment of a statutory preference upon a
creditor is not, in itself, to burden the land.
Registration
or its equivalent is, in addition, required.
[84]
See
section 50(4)
read with
section 51(1)
of the
Deeds Registries
Act above
n 79.
[85]
Sonnekus and Schlemmer “Covering bonds, the accessorial
principle and remedies founded in equity – not self-evident

bedfellows”
2015
SALJ
340
at 353:
“The only
justification for the preferential position enjoyed by a secured
creditor is to be found in the fact that not
only the amount
involved in the existing debt secured by the bond is published to
enable all potential creditors to calculate
the creditworthiness of
the debtor as potential credit seeker after deducting the
potentially existing liabilities from the known
assets, but the
specific immovable asset encumbered for this liability is also
identified.”
[86]
Section 39(2) of the Constitution provides:
“When
interpreting any legislation, and when developing the common law or
customary law, every court, tribunal or forum
must promote the
spirit, purport and objects of the Bill of Rights.”
[87]
Investigating Directorate: Serious Economic Offences v Hyundai
Motor Distributors (Pty) Ltd
[2000] ZACC 12
;
2001 (1) SA 545
(CC);
2000 (10) BCLR 1079
(CC) (
Hyundai
) at paras 21-4 and
Chagi v Special Investigating Unit
[2008] ZACC 22
;
2009 (2)
SA 1
(CC);
2009 (3) BCLR 227
(CC) at para 14.
[88]
Hyundai
id at para 21.
[89]
See
University of Stellenbosch Legal Aid Clinic v Minister of
Justice and Correctional Services; Association of Debt Recovery
Agents
NPC v University of Stellenbosch Legal Aid Clinic; Mavava
Trading 279 (Pty) Ltd v University of Stellenbosch Legal Aid Clinic
[2016] ZACC 32
;
2016 (6) SA 596
(CC);
2016 (12) BCLR 1535
(CC) at
para 135 where Cameron J said:
“Since
Hyundai
, it has been gold-plate doctrine in this Court that
judges must embrace interpretations of legislation that fall within
constitutional
bounds over those that do not, provided that the
interpretation can be reasonably ascribed to the section.
Where a legislative
provision is reasonably capable of a meaning
that places it within constitutional bounds, it should be
preserved.”
[90]
Section 27 of the Constitution.  Section 73(1) of the Act
provides:
“
A
municipality must give effect to the provisions of the Constitution
and
—
(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.”
[91]
Section 5(1)(c) and (d) of the Act provide:
“Members of
the local community have the right
—
. . .
(c)
to be informed of decisions of the municipal council, or another
political structure or any
political office bearer of the
municipality, affecting their rights, property and reasonable
expectations; and
(d)
to
regular disclosure of the state of affairs
of the municipality, including its finances.”
[92]
Compare
Mkontwana v Nelson Mandela Metropolitan Municipality
[2004] ZACC 9
;
2005 (1) SA 530
(CC);
2005 (2) BCLR 150
(CC)
(
Mkontwana
) at para 67 (municipalities’ duty under
section 118(1) to provide accounts to owner where others occupy the
property).
[93]
The Supreme Court of Appeal held in
City of Cape Town v Real
People Housing (Pty) Ltd
[2009] ZASCA 159
;
[2010] 2 All SA 305
(SCA);
2010 (5) SA 196
(SCA) at paras 10-4, applying
Mkontwana
id at para 45, that section 118(1) does not empower a municipality
to refuse clearance until all historical debts are paid –
but
only those arising in the preceding two years.
[94]
City of Johannesburg Metropolitan Municipality v Blue Moonlight
Properties 39 (Pty) Ltd
[2011] ZACC 33
;
2012 (2) SA 104
(CC);
2012 (2) BCLR 150
(CC);
City of Tshwane Metropolitan Municipality
v Link Africa (Pty) Ltd
[2015] ZACC 29
;
2015 (6) SA 440
(CC);
2015 (11) BCLR 1265
(CC) and
Daniels
above n 61.
[95]
Section 96(a) of the Act.
[96]
Section 96(b) of the Act.  Section 102(1)(c) likewise empowers
a municipality to “implement any of the debt collection
and
credit control measures provided for in this Chapter in relation to
any arrears on any of the accounts” of persons
liable for
payments to the Municipality.
The Chapter of the statute to which
section 102(1)(c) refers is Chapter 9, titled “Credit Control
and Debt Collection”,
in which section 96 also falls.
Section 118 by contrast falls in Chapter 11, “Legal Matters”.
[97]
Mkontwana
above n 92 at para 47.
[98]
Id at para 62.
[99]
Yekiso J would therefore appear to have been correct at first
instance in
Real People Housing (Pty) Ltd v City of Cape Town
2010 (1) SA 411
(C) at para 34 when he said:
“The
municipality still retains a right [post-transfer] to proceed
against the previous owner by way of an action to recover
the
balance outstanding, and may even take appropriate steps to attach
the proceeds of sale of the property as security for payment
of the
balance outstanding, to be paid once the process of alienating shall
have been completed.”
[100]
O’Regan J noted in
Mkontwana
above n 92 at para 106,
more than a dozen years ago, that “[i]t is clear from the
record before us that expanding municipal
debt is a significant
nation-wide problem”.  It takes no stretch of judicial
notice to know that things have got worse
since then.  Delport
“The implications of
section 118(3)
of the
Local Government:
Municipal Systems Act 32 of 2000
for purchasers of immovable
property”
(2015) 78
THRHR
219
at 220 records that in
September 2014 the Department of Cooperative Governance and
Traditional Affairs reported to a parliamentary
portfolio committee
that by the end of June 2014 municipalities were collectively owed
R94.02 billion for arrear rates and municipal
services fees –
up R7 billion from one year before.
The argument about inefficiency is not
new.  So far back as
Cohen’s Trustees
above n 37
at 818-9, where the question was whether “rates”
included interest, Innes CJ recorded that it was argued
“that
the machinery created by this section afforded an inducement to the
council not to collect its rates”.
[101]
Mkontwana
above n 92 at para 124 (whether municipalities
carry out their constitutional obligations with due diligence cannot
“have
any direct bearing” on the question of
constitutionality).
[102]
Mkontwana
above n 92 at para 38 (regular payments of
consumption charges “contribute to the effective discharge by
municipalities
of their constitutionally mandated functions”).
Van der Walt “Retreating from the FNB arbitrariness test
already?”
2005
SALJ
75
at 82 pithily says, discussing
Mkontwana
that the decision licensed “deprivation for
fiscal efficiency purposes”.
[103]
Section 25(1) of the Constitution.
[104]
On the position of mortgagees, see
Stadsraad van Pretoria v
Letabakop Farming Operations (Pty) Ltd
1981 (4) SA 911
(T), du
Plessis above n 23 at 523, Brits, above n 51 at 64-6.
[105]
BASA’s arguments were confined to the interests of the new
owner’s mortgagees, and did not cover the interests of
the old
owner’s bond-holders.
[106]
South African Diamond Producers Organisation v Minister of
Minerals and Energy and others
[2017] ZACC 26
(
Diamond
Producers
) at para 47, applying
First National Bank of South
Africa Ltd t/a Wesbank v Commissioner, South African Revenue
Services
[2002] ZACC 5
;
2002 (4) SA 768
(CC);
2002 (7) BCLR 702
(CC) (
FNB
) at para 57;
Mkontwana
above n 92 at para
32;
Offit Enterprises (Pty) Ltd v Coega Development Corporation
(Pty) Ltd
[2010] ZACC 20
;
2011 (1) SA 293
(CC);
2011 (2) BCLR
189
(CC) (
Offit
) at paras 41-4;
Shoprite Checkers (Pty)
Ltd v MEC for Economic Development, Eastern Cape
[2015] ZACC 23
;
2015 (6) SA 125
(CC);
2015 (9) BCLR 1052
(CC) at para 73.
Compare
Reflect-All 1025 CC v MEC for Public Transport, Roads and
Works, Gauteng Provincial Government
[2009] ZACC 24
;
2009 (6) SA
391
(CC);
2010 (1) BCLR 61
(CC) (applying the “substantial
interference” test).
[107]
The parties at times spoke of “subtraction” and at times
of “deprivation”.  These are not equivalent.

See
Diamond Producers
above n 106 at para 49.
[108]
Mkontwana
above n 92 restricted responsibility for debts
incurred by others on the property to the two years preceding
application for transfer.
The present point is that the debts
lawfully due from the previous owner did not constitute a
subtraction of ownership.
[109]
It is in any event unjust to construe the deprivation or subtraction
or attenuation of dominium as occurring before the sale
transaction
because the purchaser buys what is visible on either the land itself
or its title as registered in the deeds office
and is ignorant of,
with no means of knowing about, historical debt.  So, to say
that debts subtracted from that title are
known to the transferee is
plainly unjust.
[110]
In any event, to argue that the new owner does not receive the
property free of any encumbrances, as the municipalities and the

Minister did, begs the question whether the debt survives transfer.
It is to this question that the consideration whether
deprivation is
just is directed.
[111]
Mkontwana
above n 92 at para 40.
[112]
Yacoob J in
Mkontwana
above n 92 at para 40, said:
“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.”
[113]
Yacoob J in
Mkontwana
above n 92 at para 40, continued:
“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.”
[114]
FNB
above n 106.
[115]
Mkontwana
above n 92.
[116]
FNB
above n 106 at para 4 succinctly summarises the statutory
powers at issue.
[117]
Id at para 31.  Compare
Mkontwana
above n 92 at para 38
(the purpose of placing the risk of non-payment of municipal
consumption charges on the owner of property
is “important,
laudable and has the potential to encourage regular payments of
consumption charges”).
[118]
FNB
above n 106 at paras 107-8.
[119]
Mkontwana
above n 92 at paras 38-43, 45, 51-60 and 99.
[120]
Id at para 45: “The deprivation lasts for two years only”.
[121]
Compare
Tshwane City v Mitchell
[2016] ZASCA 1
;
2016 (3) SA
231
(SCA), where a sale in execution was in issue; the dissenting
judgment of Zondi JA found that in those circumstances the charge

did not survive transfer.
[122]
FNB
above n 106 at para 110.
[123]
See Brits above n 51 at 410-3 (contending for an interpretive
resolution of the constitutionally offensive impact of
transmissibility).