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[2016] ZASCA 1
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City of Tshwane Metropolitan Municipality v Mitchell (38/2015) [2016] ZASCA 1; [2016] 2 All SA 1 (SCA); 2016 (3) SA 231 (SCA) (29 January 2016)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 38/2015
In
the matter between:
CITY
OF TSHWANE METROPOLITAN
MUNICIPALITY
APPELLANT
and
PEREGRINE
JOSEPH
MITCHELL
RESPONDENT
Neutral citation:
City of Tshwane Metropolitan Municipality v PJ Mitchell
(38/2015)
[2015] ZASCA 1
(29 January 2016)
Coram:
Mpati P, Bosielo, Saldulker and Zondi JJA and Baartman AJA
Heard:
4 November 2015
Delivered:
29 January 2016
Summary:
Local Government –
Section
118(3)
of the
Local Government: Municipal Systems Act 32 of 2000
creating charge on land (hypothec) in favour of municipality for debt
due to it for rates, taxes and services – hypothec
not
extinguished upon transfer – municipality must comply with
jurisdictional requirements
in
terms of own by-laws before pursuing owner for debt.
ORDER
On appeal from:
Gauteng Division
of the High Court, Pretoria (Fourie J sitting as court of first
instance): judgment reported
sub nom
Mitchell v City of
Tshwane Metropolitan Municipal Council
2015 (1) SA 82
(GP).
1 The appeal is upheld.
2 Paragraph 1 of the order of the court
a quo is set aside and replaced with the following:
‘1 The application is dismissed.’
3 No order is made as to the costs of
the appeal.
JUDGMENT
Baartman AJA (Mpati P,
Bosielo and Saldulker JJA concurring)
[1]
This appeal concerns the interpretation of s 118(3) of the Local
Government: Municipal Systems Act, 32 of 2000 (the Act).
The question
is whether the security provided for in s 118(3) of the Act in
favour of a municipality, for moneys owed to it
for services
delivered in respect of fixed property, is extinguished when the
property is sold at a sale in execution and subsequently
transferred
to the purchaser.
[2] On
22 February 2013 the respondent purchased a fixed property known as
Erf 296, Wonderboom Township, Gauteng (the property),
at a sale in
execution. The property is situated within the appellant’s
municipal boundaries. Clause 6.4 of the ‘CONDITIONS
OF SALE IN
EXECUTION OF IMMOVABLE PROPERTY’ provided:
‘
The
purchaser shall be responsible for payment of all costs and charges
necessary to effect transfer including conveyancing costs,
rates,
taxes and other like charges necessary to procure a rate clearance
certificate, transfer duty or VAT attracted by the sale
and any Deeds
registration office levies.’
[3]
In terms of s 118(1) of the Act, a registrar of deeds may not
register the transfer of property, except on production of
a
certificate – commonly referred to as a clearance certificate
–
confirming that all amounts due to the
municipality in respect of that property for service fees, levies,
rates and taxes for the
two years preceding the date of
application for the certificate, have been paid in full. When the
respondent applied for a
clearance certificate, the appellant issued
a ‘written statement’ reflecting an outstanding amount of
R232 828.25
in respect of municipal service fees, levies and
rates. That amount included debts older than two years preceding the
date of the
application for a clearance certificate (historical
debt).
[4]
The respondent disputed the correctness of the amount reflected in
the ‘written statement’ as being payable for
purposes of
obtaining a clearance certificate in terms of s 118(1). The
dispute was, however, settled and the appellant issued
a certificate
reflecting the outstanding amount due to it as R126 608.50,
which represented only the debt due for the two
years preceding the
date of the respondent’s application for issue of the
certificate. The respondent paid that amount, leaving
the historical
debt of R106 219.75 still outstanding, due and payable if it had
not become prescribed.
[5]
The respondent subsequently sold the property to Ms Lynette Prinsloo
(Prinsloo) who, before taking transfer, applied to the
appellant for
the supply of municipal services such as electricity, waste removal
and water to the property. A municipal official
refused to open an
account in her name and informed her that she would be held liable
for the historical debt. Prinsloo accordingly
gave instructions to
the attorney who was to deal with the transfer not to proceed with it
until the issue of the historical debt
had been resolved.
[6] The
respondent then approached the Gauteng Division of the High Court,
Pretoria, seeking, among others, an order declaring that
he, ‘or
his assigns and successors in title of the Property’, were not
liable for the historical debt owed to the appellant
by previous
owners. On 8 September 2014, the high court (Fourie J)
granted the following order in favour of the respondent:
‘
1.
It is declared that:
1.1 the
security provided by section 118(3) of Act No 32 of 2000 [the Act] in
favour of the respondent with regard to the property
known as Erf
296, Wonderboom Township, Registration Division J.R., Gauteng [the
property], was extinguished by the sale in execution
and subsequent
transfer of that property into the name of the applicant;
1.2.
the applicant (or his successor in title); is not liable for the
payment of outstanding municipal debts older than 2 years
which were
incurred by his predecessor(s) in title prior to the date of transfer
of the said property into his name;
1.3.
the respondent has no right to refuse the supply of municipal
services (such as electricity, water, sanitation and waste removal)
to the applicant (or his successor in title) with regard to the said
property only because of outstanding municipal debts older
than
2 years.
2.
There shall be no order with regard to costs.’
With
leave of the court a quo, the appellant now appeals against this
order.
[7] The relevant parts of s 118 provide as follows:
‘
(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.
. . .
(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.’
[8] In
BOE Bank Ltd v
Tshwane Metropolitan Municipality
[1]
Brand JA observed that provisions such as those contained in
s 118(1), ‘sometimes referred to as “embargo”
or “veto” provisions, can be traced back to provincial
ordinances concerning local authorities passed many years ago’.
[2]
He said, further
[3]
:
‘
Whereas
s 50(1) of the Ordinance contained an embargo or veto provision,
similar to s 118(1), s 50(2) provided for
a “charge”
similar to s 118(3), which has since been described as amounting
to a tacit statutory hypothec. . .
.’
[4]
[9]
This court has also described the principal elements of s 118 as
‘an embargo provision with a time limit (s 118(1))’
and ‘a security provision without a time limit (s 118(3))’.
[5]
It held that the effect of s 118(3) is to
create a security for payment of outstanding municipal debts in
favour of the municipality.
[6]
As to the extent of the outstanding municipal
debts, the following was said in
BOE
Bank
:
‘
.
. . For purposes of s 118(3) it therefore does not matter when
the component parts of the secured debt became due. The amounts
of
all debts arising from the stipulated causes are added up to become
one composite amount secured by a single hypothec which
ranks above
all mortgage bonds over the property.’
[7]
It
follows that in the present matter the historical debt was a charge
upon the property, as was the amount paid for purposes of
obtaining
the clearance certificate.
[8]
[10]
The court below observed that
security in the form of a tacit statutory hypothec is a limited real
right (as opposed to a personal
right) in the property of another
that secures an obligation. ‘Generally speaking’, it
said, ‘there is no reason,
whilst the principal debt is still
outstanding, why transfer in the normal course of business should
terminate this right.’
[9]
And, quoting Voet 20.1.13, the court said that
‘immovables subject to a special hypothec pass subject to their
burden, whether
they have been transferred by onerous or lucrative
title to another and whether that other is aware or unaware of the
mortgage
bond’
[10]
.
However, after referring to an exception to this ‘rule’
contained in
Voet
20.1.13
[11]
,
it concluded thus:
‘
It
therefore appears that in terms of the common law when mortgaged
properties have been sold and delivered “on the petition
of
creditors by order of a Judge” (which is another way of
referring to a sale in execution), the hypothec is extinguished
and
the new owner will be granted a clean title. This is, in my view,
still the law today.’
[12]
[11]
With regard to the application of the exception to the present matter
the court a quo reasoned that it must be accepted that
the appellant
was aware of the sale in execution prior to transfer, as it had been
requested to issue a certificate in terms of
s 118(1) of the Act
and that, whilst holding a statutory hypothec, it kept silent by not
exercising its right of preference
over the proceeds of the sale of
the property. In those circumstances, it should follow, so the court
held, that the appellant’s
statutory hypothec ‘was
extinguished by the sale in execution and subsequent transfer of the
property into the name of the
[respondent]’.
[13]
[12]
In holding that the appellant’s security over the property
(hypothec) had been extinguished by the sale in the execution
and
subsequent transfer of the property, the court a quo distinguished
the present matter from this court’s decision in
City
of Tshwane Metropolitan Municipality v Mathabathe & another,
[14]
on the basis that in that case the property was
sold, ‘not at a sale in execution, but by public auction on
behalf of the
mortgagor’.
[15]
In
Mathabathe,
the
property was sold by public auction at the request of the owner and
by agreement between him, as mortgagor, and the mortgagee.
The
municipality sought an undertaking from the owner, or transferring
attorney, that the historical debt would be paid on the
date of
transfer or soon thereafter. The municipality alleged that it needed
the undertaking because its security over the land
would be lost once
transfer took place.
[13]
In
Mathabathe
,
Ponnan JA said the following on the issue of the undertaking sought
by the municipality:
‘
Unlike
ss (1), ss (3) is not an embargo
provision – it self-evidently is a security provision. The
Municipality failed
to draw that distinction and thus confused the
two distinct remedies available to it. It, moreover, was plainly
wrong in its contention
that “upon registration [of transfer] .
. . [it] loses its rights under s 118(3) of the Act”. It
follows that
in at least those two fundamental respects the
Municipality has misconstrued the import of s 118(3). Having
misconstrued the
section, it sought, in addition to the security that
it enjoys for the historical debt to which no limit in duration
exists, the
postulated undertaking. In that it had to fail.’
[16]
[14]
This court has therefore clearly held that a transfer of property
from one owner to another does not extinguish the security
created by
ss 118(3). Counsel for the respondent did not argue that
Mathabathe
was wrongly decided, but submitted that at least in respect of sales
in execution, the statutory hypothec created in terms of s 118(3)
‘is to be enforced against the proceeds of the sale of the
property at a sale in execution’.
[15]
In my view, the distinction drawn by the court a quo between the
present matter and
Mathabathe
,
and relied on by counsel for the respondent in this court, is not
justified. The reliance on the exception in
Voet
20.1.13 is, in my opinion, misplaced. The text relied upon appears
under the main title:
The contract of
pledge and hypothec, and the agreements attached to it.
The
subheading to section 13 reads:
Immovables
specially mortgaged pass
with
burden.
And in 20.1.1 a hypothec is defined as
‘a praetorian and discretionary agreement, by which a right
in
re
is established for a creditor in
security of his credit, without transference of the possession to
that creditor’. Title
one (1) of Book 20 (Voet 20.1) deals,
therefore, with instances where the ‘hypothec’ was
created by agreement, such
as an agreement in terms of which a debt
was secured by means of a mortgage bond registered over immovable
property in favour of
a creditor, or an agreement formalised by a
praetor. In my view, the exception in Voet 20.1.13, on which the
court a quo relied,
does not apply to a hypothec created by a statute
that places no limit to its duration. There is nothing in the Act
that indicates
that any exception to the application of the
provisions of s 118(3) was contemplated where property is
purchased at a
sale in execution. On the contrary, there are
indications that the exception to the common law invoked by the court
a quo does
not apply to the statutory hypothec created by s 118(3)
of the Act.
[16]
The provisions of s 118, including s 118(3), are made
subject to
s 89
of the
Insolvency Act 24 of 1936
in the case of
the transfer of property by a trustee of an insolvent estate
(s 118(2) of the Act). Section 118(5) provides
that 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’. Clearly, then,
if a
limited duration of the hypothec created by s 118(3) was ever
contemplated in respect of property purchased at a sale
in execution,
the legislature would have made provision for it
.
(Compare
BOE Bank,
above, para 11
[17]
.)
It did not do so and the exception contained in Voet 20.1.13 cannot,
in my view, be read into s 118(3) of the Act. No distinction
can
therefore be drawn between property sold either at a sale in
execution or in a private sale when considering the question whether
the hypothec created by s 118(3) survives transfer. It follows
that the court below erred in concluding that the appellant’s
statutory hypothec had been extinguished by the sale in execution and
subsequent transfer of the property into the name of the
respondent.
[17]
Counsel for the respondent, however, submitted that s 118(3) of
the Act must be interpreted in accordance with the common
law, in
terms of which, he contended, a hypothec ‘is upon transfer of
the property extinguished and the new owner obtains
a clean title to
the ownership of the property free of security’ when mortgaged
property has been sold at a sale in execution.
In such a case,
counsel argued, the price replaces the property and is shared by the
hypothec creditors, in order of preference,
with the rest of the
creditors. In this regard, counsel relied, among others, on the
judgment of this court in
Land en
Landboubank van Suid-Afrika v Absa Bank Bpk en andere, (
519/94)
[1996] ZASCA 76
(11June
1996); 1996 (4) SA 543
(A). In that matter,
Hefer JA dealt with the interpretation and effect of s 55(2)
(c)
of the Land Bank Act 13 of 1944, as amended. The Land Bank Act
authorised the Land Bank to obtain payment of a loan, which it had
advanced and had been secured by mortgage bond, by selling the
mortgaged property by public auction without following any judicial
process and to apply the proceeds of the sale to settle the amount
due to it. Section 55(2)
(c)
provided, in summary, that the board (of the Land Bank) could
transfer the mortgaged property to the purchaser and give the latter
a legally valid title (regsgeldige titel), even though the property
may have been hypothecated or had been subject to a right of
retention or an encumbrance in favour of another.
[18]
In the course of considering the meaning of the words ‘regsgeldige
titel’, Hefer JA referred to the rights of a
mortgagee when the
property over which it had held security was sold at a sale in
execution. The learned judge of appeal said (at
550G
–
H):
‘
Word
die grond in die uitvoering van ‘n hofbevel verkoop, verloor
verbandhouers hul regte ten opsigte van die grond maar hulle
behou
hul aanspraak op voorkeer onder die
pretium
succedit in locum rei
reël.’
[18]
[19]
Hefer JA merely mentioned this (the effect of a sale in execution on
the rights of mortgagees), however, when he made the observation
that
the directions contained in s 56 of the Land Bank Act, regarding
the distribution of the proceeds of a sale of land in
terms of the
provisions of s 55, did not place holders of security in respect
of the land in a worse position than that which
obtains following a
sale in execution. This court did not deal, in that matter, with the
question whether a statutory hypothec
survived transfer, but rather
with the meaning of the words ‘regsgeldige titel’. The
question it was called upon to
answer was whether a purchaser of land
at a public auction, authorised by s 55 of the Land Bank Act,
received transfer of
such land free of any encumbrance despite the
fact that it (the land) may have been hypothecated. The reliance on
Land en Landboubank v Absa
for
the proposition that s 118(3) of the Act should be interpreted in
accordance with the common law relating to the effect of a
sale in
execution on the rights of bondholders is, therefore, misplaced.
[20]
In view of the conclusions I have reached, it becomes unnecessary to
deal in detail with counsel’s further reliance on
the
provisions of Rules 45(11)
(a)
(
i
)
[19]
and 46(5)
(a)
[20]
of the Uniform Rules of Court for the submission
that the appellant was called upon ‘to set a reserve price at
the sale in
execution of the property for the preferent claim it may
have against the judgment debtor’. The appellant’s
failure
to have exercised its rights in terms of the relevant rules,
so the argument went, prohibits it from perfecting its security over
the land pursuant to the sale in execution. This argument assumes
that a notice of the sale in execution had been served on the
appellant as required by the relevant rule.
There
was no evidence to that effect before the court a quo.
In
any event, the rules cannot be used as an aid to interpret
legislation.
[21]
Counsel’s further argument, therefore, cannot in any case be
sustained.
[21]
I proceed to deal with paragraphs 1.2 and 1.3 of the order of the
court a quo. In paragraph 1.2, the court declared that the
respondent
(applicant before it), or his successor in title, was not liable for
the historical debt. In paragraph 1.3, it declared
that the appellant
(respondent before it) had no right to refuse the supply of municipal
services with regard to the property only
because of outstanding
municipal debts older than two years
.
I am not certain that the respondent was entitled
to these orders. With regard to paragraph 1.2 of the order, it is
true that in
a letter addressed to the respondent’s attorney,
dated 22 July 2013, the appellant’s acting Legal Director:
Litigation
and Claims wrote as follows:
‘
1
Ms Briel indicated to Ms Prinsloo that in terms of Section 118(3) the
City of Tshwane has a lien over the property in terms of
the
historical debt, and also stated that in terms of the Mathabathe . .
. judgment the above lien does not fall away after transfer
of the
property and that the CoT
may
hold
the new owner liable for the historical debt;
. . .
4
The City of Tshwane is of the view that they
may
proceed against the new owner for the historical debt.’ (Own
emphasis.)
[22]
The appellant never stated that it was holding the respondent liable
for the historical debt
.
It merely expressed a belief that it could proceed
against the ‘new owner’ - which could be Ms Prinsloo who
was expecting
to take transfer of the property - for recovery of the
historical debt.
The respondent, therefore,
acted prematurely in seeking the order granted in
paragraph
1.2 of the order of the court a quo. The real issue, at that stage,
was the appellant’s refusal to conclude a contract
with Ms
Prinsloo for the provision of municipal services.
[23]
However, in view of the provisions of s 19(1)
(a)
(iii)
of the Supreme Court Act 59 of 1959
[22]
(reproduced in
s 21
of the
Superior Courts Act 10 of 2013
),
[23]
the court a quo was entitled, in the exercise of its discretion, to
deal with the issue of liability for the historical debt.
[24]
Counsel for the appellant did not argue otherwise. I agree with the
court a quo that ‘. . . in the absence of an agreement
to that
effect, the [respondent] . . . has not become a co-debtor with regard
to the principal debt . . .’.
[25]
But, as has been shown above, the sale in execution and subsequent
transfer of the property into the name of the respondent did
not
extinguish the hypothec created by s 118(3) of the Act in favour
of the appellant. This means that nothing would prevent
the appellant
from perfecting its security over the property, should it wish to do
so, to ensure payment of the historical debt.
Perfecting its security
would involve obtaining a court order, selling the property in
execution and applying the proceeds to pay
off the outstanding
historical debt. In that event, the respondent might be forced to pay
the debt in order to avoid losing his
property. It is in that sense
that the respondent, as owner of the property, could be said to be
liable for the historical debt.
It must be remembered, at this point,
that the constitutionality of s 118(3) of the Act is not in
issue in this matter.
[24]
As to paragraph 1.3, it is unclear how, and on what basis, that order
was granted. It appears, from the judgment of the court
a quo (para
17), that the submission of counsel for the appellant was that ‘the
real issue [was] not the opening of a new
account, but the question
whether the [appellant] is entitled to refuse the supply of municipal
services as long as there is a
debt outstanding with regard to this
property’. The order granted in paragraph 1.3 seems to have
been fashioned from this
submission. But the order sought in the
notice of motion, which was not amended, was not a declarator; it was
a
mandamus
directing the appellant ‘to open a Municipal account in the
name of the Applicant or his assigns and successors in title
of The
Property . . .’. In my view, however, the
mandamus
should have been sought by, or in the name of, Ms Prinsloo. The
respondent never applied for and the appellant never refused him
the
supply of municipal services to the property. Moreover, Ms Prinsloo
was not a party in the application. It is for this reason,
I think,
that the court a quo did not grant the
mandamus
sought in the notice of motion. No case was made out in the papers
for the order (
mandamus
)
sought in his name. In my view, it was not open to the court a quo to
grant paragraph 1.3 of its order, whether in the alternative,
which
was not prayed for, or under the prayer for further or alternative
relief.
[25]
In conclusion, and since the court a quo made reference to certain
by-laws when it considered the question whether the appellant
was
entitled to refuse the supply of municipal services, I wish to make
the following observations. By-law 18(1)
[26]
of the appellant’s standard electricity
by-laws provides that the consumer is liable for all electricity
supplied to his or
her premises. A ‘consumer’ is defined
in the by-laws as:
‘
The
occupier of any premises to which the Municipality has agreed to
supply or is actually supplying electricity, or if there is
no
occupier, the person who has entered into a current valid agreement
with the Municipality for the supply of electricity to the
premises,
or, if such a person does not exist or cannot be traced or has
absconded or for whatever reason is not able to pay, the
owner of the
premises.’
[26]
Counsel for the appellant conceded that before a municipality can
look to an owner for payment, it has to comply with its own
by-law:
it has to show that (1) there is no occupier on the property
concerned and (2) the person who had entered into the contract
to
receive the services cannot be traced or has absconded, is unable to
pay, or does not exist. Assuming that historical debts
include
amounts due in respect of electricity consumption – a
municipality may ‘consolidate any separate accounts of
persons
liable for payments to the municipality’
[27]
- I agree.
[27]
To sum up, the court below should not have made the orders it granted
and the respondent’s application should have been
dismissed for
the reasons set out above. It follows that the appeal must succeed.
As to costs, the court below ordered that ‘[t]here
shall be no
order with regard to costs’. Counsel were in agreement that
that order should not be altered, irrespective of
the result of the
appeal. In my view, the same should apply in this court. The case
involves vindication of constitutional rights
relating to
property.
[28]
[28] In
the result, I make the following order:
1 The
appeal is upheld.
2
Paragraph 1 of the order of the court a quo is set aside and replaced
with the following:
‘
1
The application is dismissed.’
3
No order is made as to the costs of the appeal.
______________________
E D Baartman
Acting
Judge of Appeal
Zondi
JA
(Dissenting):
[29]
I have had the benefit of reading the judgment prepared by my
colleague, Baartman AJA. Unfortunately, I find myself in respectful
disagreement with her conclusion that the security created by
s 118(3) of the Local Government: Municipal Systems Act, 32
of
2000 (the Act) survives a transfer of property from one owner to
another even in circumstances where such transfer occurs pursuant
to
a sale in execution.
[30]
The appeal concerns the interpretation of s 118(3) read with
s 118(1) of the Act and in particular whether a sale
of
immovable property in execution of a judgment, and its subsequent
transfer pursuant thereto, extinguishes the statutory hypothec
the
section creates over that property in favour of a municipality for
the payment of a municipal debt.
[31]
The background facts have been set out in detail by Baartman AJA, but
it is convenient to recount those which I regard as particularly
pertinent to the view which I take. The respondent, Mr Mitchell,
bought immovable property (the property) situated within the
appellant’s boundaries, at a sale in execution on 22 February
2013. In terms of the conditions of sale, Mr Mitchell was responsible
for payment of all costs and charges necessary to effect transfer
including conveyancing costs, rates, taxes and other like charges
necessary to procure a rates clearance certificate, transfer duty or
VAT attracted by the sale and any Deeds Office registration
levies.
In order to facilitate transfer of the property into his name, he
applied for, and obtained from the appellant, a clearance
certificate. The clearance certificate indicated that an amount of
R232 828.25 was owed to the appellant for municipal services
which included electricity, sanitation, waste removal and water. He
paid an amount of R126 608.50, which represented municipal
debts
not older than two years preceding the date of application for the
clearance certificate. Upon payment of the said sum the
clearance
certificate was issued to him. This left an amount of R106 219.75
outstanding in respect of municipal debts older
than two years
preceding the date of application for the certificate (the historical
debt). All these municipal debts were incurred
by the previous owner
of the property.
[32]
Mr Mitchell in due course sold the property to a Ms Prinsloo. Pending
transfer of the property into her name Ms Prinsloo applied
to the
appellant for the supply of municipal services to the property. Her
application was refused on the ground that a municipal
debt
(historical debt) in the amount of R106 219.75 in connection
with the property was owing. She was told that as the new
owner of
the property, she was liable for its payment and that she had to
settle it first before the municipal services could be
supplied to
the property.
[33]
When Prinsloo threatened to cancel the sale agreement, because of the
disagreement with the appellant about liability for a
historical debt
Mr Mitchell got involved in the discussion with the appellant. He
contended that the security conferred by s 118(3)
in favour of
the appellant for the payment of a historical debt terminated in this
matter as he bought the property at a sale in
execution of a judgment
against a judgment debtor.
[34]
The appellant and Mitchell reached an impasse and in the result
Mitchell approached the Gauteng Division of the High Court,
Pretoria
seeking inter alia the following relief:
‘
1.
It is declared that the lien (
hypothec
)
over the property, better known as: Erf 296 Wonderboom Township,
Registration Division J.R., The Province of Gauteng (Herein referred
to as “
The
Property
”)
held in terms of Section 118(3) of Act 32 of 2000, upon transfer, do
not pass over to The Property’s new owner or
assigns and
successors in title.
2.
THAT the Applicant or his assigns and successors in title of The
Property is
not liable for the historical municipal debt of previous
owners.
3.
THAT the Respondent is hereby ordered to open a Municipal account in
the name
of the Applicant or his assigns and successors in title of
The Property for Municipal Services on registration of The Property
reflecting Municipal Services and costs as from date of registration.
4.
THAT the Respondent pay the cost.’
[35]
The municipality opposed the application and raised certain questions
of law in terms of Rule 6(5)(d)(iii) of the Uniform Rules
of Court.
Essentially, it contended that Mitchell was liable for the payment of
the historical debt incurred by his predecessor
in title because a
security which s 118(3) creates in favour of a municipality over
a property, for the payment of debts in
connection with that
property, survives the transfer of the property from one owner to the
other even in circumstances where such
transfer occurs pursuant to a
sale in execution of a judgment against a judgment debtor.
[36]
The court a quo upheld Mitchell’s contention and held that he
was not liable for the payment of the historical debt,
and also held
that the appellant had no right to refuse him the supply of municipal
services merely because the debts incurred
by the previous owner are
outstanding.
[37]
Regarding the nature of the right conferred by s 118(3) the
court a quo correctly described it as a real right of security
created by statute in favour of the municipality. It stated that
there is, generally speaking, no reason why transfer of the property
in the normal course of business should terminate the real right
while the principal debt is still outstanding. Relying on Voet
20.1.13 it held, however, that where the property is sold at a sale
in execution the real right of security is extinguished and
the new
owner obtains a clean title. It justified the distinction on the
basis of the reasoning that a sale in execution does not
take place
in terms of an agreement, but follows upon an order of court
whereafter the property is publicly converted into cash
to satisfy
the claims of creditors, whereas in the case of a private sale this
is not the case. It accordingly concluded
that the s 118(3)
charge does not survive the transfer of property where such transfer
takes place pursuant to a sale in execution.
[38]
With regard to the status of the historical debt it held that where
transfer is acquired pursuant to a sale in execution a
new owner
acquires a clean title free from burdens resulting from unpaid debts.
The principal obligation arising from unpaid debts
however continues
to exist and is not affected by the loss of security with the result
that the person who incurred those unpaid
debts remains liable to the
municipality for their payment. This was so, it held, because there
is a distinction between a tacit
statutory hypothec as a form of
security and the principal obligation (debt). The former is a
security for payment of the debt
and the latter is a debt. And
the extinction of the security does not affect the existence of the
underlying debt.
[39]
On the question whether the municipality may refuse the supply of
municipal services as long as there is a debt outstanding
with regard
to the property, it held that neither the Act, the applicable by-laws
nor the credit-control policy document contain
a provision, expressly
or by necessary implication, providing that the successor in title of
property with regard to which there
are historical debts outstanding,
is liable for those debts as a co-debtor, jointly and severally with
the principal debtor or
that the municipality has the right to refuse
the supply of municipal services to such a new owner of the property.
The appeal
against these findings and the order is with leave of the
court below.
[40]
The case for the appellant is this: the tacit statutory hypothec
provided for in s 118(3), being a burden on the property,
survives the transfer of the property from one owner to another
‘irrespective of whether the property was sold in execution,
or
through a sale in the normal course of business’. In developing
this argument it contended that it may, at any time perfect
its
statutory hypothec to the value of outstanding municipal debts
provided that such debts have not become prescribed by obtaining
an
appropriate court order; sell the property in execution and apply the
proceeds to settle the outstanding municipal debts notwithstanding
the fact that those debts were incurred by an erstwhile owner /
occupier prior to registration of transfer of the property into
the
name of the current owner. In support of this proposition the
appellant placed heavy reliance on
Mathabathe
[29]
(para 12) where it was held by this court:
‘
Unlike
ss (1), ss (3) is not an embargo provision ─ it self-evidently
is a security provision. The Municipality failed to
draw that
distinction and thus confused the two distinct remedies available to
it. It, moreover, was plainly wrong in its contention
that “upon
registration [of transfer] . . . [it] loses its rights under s 118(3)
of the Act”. It follows that in at
least those two fundamental
respects the Municipality has misconstrued the import of s 118(3).
Having misconstrued the section,
it sought, in addition to the
security that it enjoys for the historical debt to which no limit in
duration exists, the postulated
undertaking. In that it had to fail.’
Interpretation
of s 118 of the Act
[41]
The relevant parts of s 118 provide:
‘
(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.
.
. .
(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.’
In
interpreting s 118(3) read with s 118(1) the ‘inevitable
point of departure is the language’ of its provision
itself,
read in context and having regard to its purpose and the background
to its enactment.
[30]
In
Manyasha v
Minister of Law and Order
,
[31]
this court reiterated the ‘golden rule’
of statutory interpretation in the following terms:
‘
It
is trite that the primary rule in the construction of statutory
provisions is to ascertain the intention of the legislature;
in the
present matter it is, more pertinently, the intention of the
Rulemaker that needs to be determined. One seeks to achieve
this, in
the first instance, by giving the words of the provision under
consideration the ordinary grammatical meaning which their
context
dictates, unless to do so would lead to an absurdity so glaring that
the Rulemaker could not have contemplated it . . .
.’
In
Bastian Financial
Services
(Pty) Ltd v General Hendrik Schoeman Primary School
[32]
(para 17) this court pointed out that it is,
however, also a well-established rule of construction that words used
in a statute
must be interpreted in the light of their context. Van
Heerden JA, writing for the majority of this court, referred to
Jaga
v Dönges
NO &
another; Bhana v Dönges NO & another
1950
(4) SA 653
(A) in which Schreiner JA stated (at 662G-H and 664H) that
the ‘context’ which informs interpretation:
‘
.
. . is not limited to the language of the rest of the statute
regarded as throwing light of a dictionary kind on the part to be
interpreted. Often of more importance is the matter of the statute,
its apparent scope and purpose, and, within limits, its background.
.
. .
(T)he
legitimate field of interpretation should not be restricted as a
result of an excessive peering at the language to be interpreted
without sufficient attention to the contextual scene.’
This
court observed in
Natal Joint Municipal
Pension Fund v Endumeni Municipality
,
[33]
that this approach is consistent with the emerging
trend in statutory construction and is the approach that courts in
South Africa
should follow.
[42]
Municipalities are obliged by the Act (s 96) to collect moneys that
become payable to them for property rates and taxes and
for the
provision of municipal services in order to ensure that municipal
services are provided to the local community in a financially
and
environmentally sustainable manner. To that end they are required to
adopt, maintain and implement a credit-control and debt-collection
policy and adopt by-laws that give effect to such policy and its
implementation and enforcement.
[34]
[43]
It is common cause that as enjoined by s 96 of the Act read with its
Credit Control By-Laws,
[35]
the appellant has adopted a Collection Policy:
Arrear Debtor Accounts, which specifies its credit-control and
debt-collection mechanisms.
It has also adopted various by-laws such
as the previously mentioned Credit Control By-Laws, as well as Water
Supply By-Laws
[36]
and Standard Electricity By-Laws
[37]
regulating inter alia the supply of municipal
services, payment for such services and termination of supply of
municipal services.
[44]
Section 118 of the Act is another statutory instrument that was
enacted in order to assist municipalities in collecting moneys
due to
them. It does so by providing them with two distinct remedies which
are contained in subsecs (1) and (3). In
BOE
Bank Ltd v Tshwane Metropolitan Municipality
,
[38]
this court pointed out that the s 118(1)
remedy is a ‘veto’ or ‘embargo’ provision,
affording a municipality
a right to refuse to issue a clearance
certificate unless all municipal debts for the preceding two years
have been settled in
full. If the certificate is not issued, the
Registrar of Deeds may not register the transfer of the property. The
veto provision
does not, however, automatically render a
municipality’s claim preferent to that of an existing mortgagee
in the case of
sale in execution.
[39]
[45]
The s 118(3) remedy, a tacit statutory hypothec, caters for this
eventuality. It creates in favour of a municipality a security
for
the payment of the prescribed municipal debts so that a municipality
enjoys preference over a registered mortgage bond on the
proceeds of
property.
[40]
[46]
Sections 118(1) and (3) are not novel. They can be traced back to the
pre-1994 provincial ordinances. For instance s 50 of
the Transvaal
Local Government Ordinance 17 of 1939 provided for both a veto and a
hypothec akin to those in ss 118(1) and
(3) respectively.
Section 50(1) of the Ordinance
[41]
was a veto provision and s 50(3)
[42]
equated municipal debts recoverable by invoking
the veto as remedy and debts as constituting a hypothec. But unlike
the provision
of s 118(1) of the Act, which has a two year period
limit the s 50(1) amounts were required to have occurred over a
three-year
period prior to the registration of the property in
respect of which the clearance certificate was required. The s 50(3)
amounts
were subject to the same time restriction. The s 118(3)
amounts are not subject to a time limit.
[47]
This court in
City of Johannesburg v Kaplan
(para 26.2)
summarised the operation of s 118(3) in situations where the
municipal debtor is not subject to a sequestration or liquidation
order as follows:
‘
Any
amount due for municipal debts (ie not limited by the aforesaid
period of two years) that have not prescribed is secured by
the
property and, if not paid and an appropriate order of court is
obtained, the property may be sold in execution and the proceeds
applied in payment of the debts. In such event, the proceeds will be
applied to payment of the municipal debts in full. Only after
satisfaction of such debts will the remainder, if any, be available
for payment of the debt secured by a mortgage bond over the
property.’
[48]
Section 118(3) does not state what happens to the security when the
property over which it was created is sold in execution
of a judgment
against the judgment debtor at the instance of an execution creditor.
Does it survive transfer or does it terminate?
At first glance the
wording of s 118(3) appears to be sufficiently broad and general to
cover such a situation but on its proper
analysis it becomes clear
that the subsection does not protect the security once the property
over which it was created is sold
in execution. It is the proceeds of
sale that secures the payment of outstanding municipal debts,
and the municipality must be paid in full before
any mortgagee is paid because its debts, provided that they have not
become prescribed,
enjoy preference over any mortgage bond.
[49]
In my view this construction is consistent with the common law.
According to Voet 20.1.13,
[43]
immovables subject to a special hypothec generally
pass subject to their burden, ‘whether they have been
transferred by onerous
or lucrative title to another and whether that
other is aware or unaware of the burden on the property’.
However, according
to him there were exceptions to this general rule
and one of them was:
‘
.
. . when mortgaged properties have been sold and delivered on the
petition of creditors by order of a judge with employment of
the
formalities of the spear, and creditors holding a hypothec have kept
silent. Nevertheless by our customs in such a case the
price takes
the place of the thing, and a hypothecary creditor is permitted to
contest with the rest of the creditors the privilege
of preference
over the price of the mortgaged property.’
[44]
(footnote
omitted.)
[50]
It therefore seems to me that under the common law the burden on a
property does not survive the transfer of the property from
one
person to another where such transfer takes place pursuant to a sale
in execution and the creditors holding a hypothec
‘have
kept silent’. In other words, purchasers who obtained transfer
of the burdened property pursuant to a sale in
execution obtained a
free title.
Mathabathe
did not concern a sale in execution. It dealt with the transfer of
immovable property pursuant to a private sale and therefore
what is
stated in para 12 of that judgment must be understood in that
context, and cannot provide support for the contention that
the
burden on the property survives the transfer irrespective of the
nature of the sale giving rise to that transfer.
[51]
In my view the roots of s 118(3) are firmly attached to the common
law and should for that reason be interpreted in a manner
that is
harmonious with the common law if possible. And it is possible to do
so, and there are no indications that it was plainly
intended to
alter the common law.
[45]
[52]
The legislature must be taken to have been aware of the position
under the common law regarding the fate of security over property
when such property is transferred pursuant to a sale in execution. If
it had been intended that the security created by s 118(3)
in favour
of the municipality for the payment of its historical debt should
continue to exist even beyond its sale in execution
one would have
expected the legislature to have used precise and definite language
to give effect to that intention. And the fact
that no such language
occurs in s 118(3) is a strong argument in favour of the view that
the common law rights of the owners –
to obtain a clean title –
who obtain transfer of the burdened property through a sale in
execution were not taken away. In
my view this is a sensible meaning
of s 118(3). It does not undermine the purpose for which the
subsection was enacted, namely
to provide a mechanism for
municipalities which assists them in collecting historical debts that
become payable to them, which
is one of the obligations imposed upon
them by the Act.
[53]
It is clear from s 118(3) and other statutory provisions which
pre-date it that their purpose is to create in favour of a
municipality a security over immovable property for the payment of
the historical debt owing to it in connection with that property,
and
to ensure in the case of a sale in execution that it enjoys
preference over a registered mortgage bond on the proceeds of the
property.
[54]
Rule 46(5)(a) of the Uniform Rules of Court,
[46]
the statutory provision governing sales in
execution of immovable property imposes an obligation on the
execution creditor intending
to sell the property in execution to
notify the municipality, in whose area the property concerned is
located, of the intended
sale and to call upon it to stipulate within
the prescribed period before the date of sale a reasonable reserve
price or to agree
in writing to a sale without reserve. The rule also
requires the sheriff to be provided with proof before proceeding with
the sale
that the municipality has stipulated a reserve price or
agreed to a sale without reserve. It therefore provides sufficient
and
adequate protection to a municipality in the event that a
property in connection with which historical debts are owing, is sold
in execution. The rule in effect obliges a municipality to ensure
that it recovers from the proceeds of sale all historical debts
owing
to it in connection with a property before that property is
transferred so that a purchaser would, upon its transfer to him
or
her, receive a clean title.
[55]
In my view, looking at the provisions of s 118 as a whole, and having
regard to the provisions of the common law, I come to
the conclusion
that the legislature in enacting s 118(3) did not intend the
duration of the security it confers on a municipality
over a property
for the payment of historical debts in connection with that property
to extend beyond transfer of such property
where such transfer occurs
pursuant to a sale in execution.
[56]
I conclude therefore that the burden on the property terminates when
the property is transferred to the new owner pursuant
to a sale in
execution. In the light of the conclusion I have reached on the
construction of s 118(3) it becomes unnecessary to
consider whether
the appellant’s by-laws entitle it to refuse to provide
municipal services to the new owner who takes transfer
of property
pursuant to a sale in execution only because of an outstanding
historical debt.
[57]
It follows that, in my view, the appeal should fail. With regards to
costs, for the reasons set out in paragraph [27] of the
judgment, I
agree that there should be no order as to costs.
[58]
In the result I would dismiss the appeal with no order as to costs.
_________________
D H Zondi
Judge
of Appeal
APPEARANCES:
For the
Appellant:
A Vorster
Instructed by:
Malebye, Motaung, Mtembu Inc, Pretoria
Mphafi Khang Inc, Bloemfontein
For the
Respondent:
J Vorster
Instructed by:
M D Mitchell Attorneys, Pretoria
Webbers Attorneys, Bloemfontein
[1]
BOE Bank Ltd v Tshwane Metropolitan
Municipality
(240/2003)
[2005] ZASCA
21
(29 March
2005); 2005 (4) SA 336
(SCA).
[2]
Para 7. Brand JA was referring to s 50(1) of
Transvaal Local Government Ordinance 17 of 1939, the wording of
which was similar
to that of s 118(1) of the Act.
[3]
Para 7.
[4]
Section 50(2), which later became s 50(3) of the
Transvaal Local Government Ordinance contained wording similar to s
118(3) of
the Act.
[5]
City of Johannesburg v Kaplan N.O. &
another
(111/05)
[2006] ZASCA 39
(29
March
2006); 2006 (5) SA 10
(SCA) para 13.
[6]
Paras 15 and 16.
[7]
Para 10.
[8]
Although in his heads of argument counsel for the
respondent submitted that the historical debt has become prescribed
and that
the issue had become moot, that argument was not persisted
with before us.
[9]
Para 9.
[10]
Para 12.
[11]
The exception reads;
‘
Another
exception is when mortgaged properties have been sold and delivered
on the petition of creditors by order of a Judge with
employment of
the formalities of the spear, and creditors holding a hypothec have
kept silent. Nevertheless, by our customs in
such a case the price
takes the place of the thing, and a hypothecary creditor is
permitted to contest with the rest of the creditors
the privilege of
preference over the price of the mortgaged property.’
(Percival Gane’s Translation, 1956 at 488-489).
[12]
Para 13.
[13]
Para 14 of the judgment.
[14]
City of Tshwane Metropolitan Municipality v
Mathabathe
& another
(502/12)
[2013] ZASCA 60
(22 May 2013); 2013 (4) SA 319 (SCA).
[15]
Para 11.
[16]
Para 12.
[17]
‘
[11] Conversely, if the Legislature really
intended to render s 118(3) subject to the same two-year time limit
contemplated in
s 118(1), it could have done so in a number of ways.
It could, for instance, have repeated the wording of s 118(1). Or,
it could
have followed the precedent of the 1939 Transvaal Ordinance
by simply referring to “any amounts due in terms of s 118(1).”
This would have the added advantage of avoiding repetition of the
cumbersome language enumerating the different causes from which
the
debts may arise. The inference is clear. If the Legislature intended
to introduce a time limit into s 118(3), it would not
have done so
in the convoluted way suggested by the bank.’
[18]
Loosely translated, the court said: ‘Where
land is sold in execution of a court order the bondholders lose
their rights
in respect thereof [ie, they lose their security over
the land], but retain their claim for preference under the rule
pretium succedit in locum rei
.’
[19]
‘
Subject to any hypothec existing prior to
the attachment, all writs of execution lodged with any sheriff
appointed for a particular
area or any other sheriff before or on
the day of the sale in execution shall rank pro rata in the
distribution of the proceeds
of the goods sold, in the order of
preference referred to in paragraph (c) of subrule (14) of rule 46.’
[20]
‘
No immovable property which is subject to
any claim preferent to that of the execution creditor shall be sold
in execution unless-
(
a
)
the execution creditor has caused notice, in writing, of the
intended sale to be served by registered post upon the preferent
creditor, if his address is known and, if the property is rateable,
upon the local authority concerned calling upon them to stipulate
within ten days of a date to be stated a reasonable reserve price or
to agree in writing to a sale without reserve; and has provided
proof to the sheriff that the preferent creditor has so stipulated
or agreed,. . .’
[21]
See
Moodley v
Minister of Education & Culture, House of Delegates
(539/87)
[1989] ZASCA 45
(31 March
1989);1989 (3) SA 221
(A) at 233
D
–
F and
Islamic
Unity Convention v Minister of Telecommunications
(CCT 33/07)
[2007] ZACC 26(7 December 2007)
;
2008 (3) SA 383
(CC),
para 57.
[22]
It provided that a provincial or local division
of the Supreme Court shall, in addition to any powers or
jurisdiction which may
be vested in it by law, have power-
‘
in
its discretion, and at the instance of any interested person, to
enquire into and determine any existing, future or contingent
right
or obligation, notwithstanding that such person cannot claim any
relief consequential upon the determination.’
[23]
The papers were issued on 7August 2013, before
Act 10 of 2013 came into operation.
[24]
See
Ex Parte Nell
1963 (1) SA 754
(A) at 758E-760C and the relevant cases cited there.
[25]
Para 16 of the judgment.
[26]
‘
City of Tshwane Metropolitan Municipality
Standard Electricity Supply By-Laws, LAN 1076,
Gauteng
Provincial Gazette 227,
7 August
2013.'
[27]
Rademan v Moqhaka Municipality & others
(173/11)
[2011] ZASCA 244
(1 December
2011); 2012 (2) SA 387
(SCA),
para 19.
[28]
Biowatch Trust v Registrar, Genetic Resources,
& others
(CCT 80/08)
[2009] ZACC
14
(3 June
2009); 2009 (6) SA 232
(CC) paras 21 - 22
[29]
City of Tshwane Metropolitan Municipality v
Mathabathe & another
(502/12)
[2013] ZASCA 60
(22 May 2013); 2013 (4) SA 319 (SCA).
[30]
Natal Joint Municipal Pension Fund v Endumeni
Municipality
(920/2010)
[2012] ZASCA
13
(16 March
2012); 2012 (4) SA 593
(SCA) para 19.
[31]
Manyasha v Minister of Law and Order
(113/97)
[1998] ZASCA 112
(27 November
1998);
1999 (2) SA 179
(SCA) at 185A-D.
[32]
Bastian Financial Services (Pty) Ltd v General
Hendrik Schoeman Primary School
(207/07)
[2008] ZASCA 70
(30 May 2008); 2008 (5) SA 1 (SCA).
[33]
Natal Joint Municipal Pension Fund v
Endumeni Municipality
(920/2010)
[2012] ZASCA 13
(16 March 2012); 2012 (4) SA 593 (SCA).
[34]
City of Cape Town v Real People Housing (Pty)
Ltd
(77/09)
[2009] ZASCA 159
(30
November
2009); 2010 (5) SA 196
(SCA) para 1.
[35]
Credit Control By-Laws, Local Authority Notice
226,
Gauteng Provincial Gazette
44, 27 February 2002.
[36]
Water Supply By-Laws, Local Authority Notice
2267,
Gauteng Provincial Gazette
801, 5 November 2003.
[37]
Standard Electricity By-Laws, Local
Authority Notice 1132,
Gauteng
Provincial Gazette Extraordinary
234,
25 June 2003.
[38]
BOE Bank Ltd v Tshwane Metropolitan
Municipality
(240/2003)
[2005] ZASCA
21
(29 March 2005); 2005 (4) SA 336 (SCA).
[39]
BOE Bank v Tshwane
para
7, relying on inter alia
Rabie v Rand
Township Registrar
1926 TPD 286
at
290.
[40]
City of Johannesburg v Kaplan NO & another
(111/05)
[2006] ZASCA 39
(29 March
2006); 2006 (5) SA 10
(SCA);
City
of Tshwane Metropolitan Municipality v Mathabathe & another
(502/12)
[2013] ZASCA 60
(22 May
2013); 2013 (4) SA 319
(SCA) para 10.
[41]
Section 50(1) provided:
‘
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 authorized thereto by the council, shall
be produced
to such registration officer, and unless such statement shows-
(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 is 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 regulations;
(b)
that all amounts, if any, for a period
of three years immediately preceding the date of such registration
due in respect of such
land or right in land for rates levied in
terms of the provisions of the Local Authorities Rating Ordinance,
1977, or in terms
of the provisions of any prior Ordinance;
. . .
have been
paid to the council: Provided that, in the case of the transfer of
immovable property by a trustee of an insolvent estate,
the
provisions of this section shall be applied subject to the
provisions of section 89 of the Insolvency Act, 1936 (Act 24 of
1936) . . .’
[42]
Section 50(3) provided:
‘
Any
amount due in terms of paragraph
(a)
,
(b)
. . .
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.’
[43]
Voet 20.1.13 (Translated by Percival Gane, 1956)
at 488-489.
[44]
Ibid.
[45]
Ngqukumba v Minister of Safety and Security &
others
(CCT 87/13)
[2014] ZACC 14
(15
May
2014); 2014 (5) SA 112
(CC) para 16.
[46]
Rule 46(5)(a) provides:
(5) No
immovable property which is subject to any claim preferent to that
of the execution creditor shall be sold in execution
unless ─
(a)
the execution creditor has caused notice, in writing, of the
intended sale to be
served by registered post upon the preferent
creditor, if his address is known and, if the property is rateable,
upon the local
authority concerned calling upon them to stipulate
within ten days of a date to be stated a reasonable reserve price or
to agree
in writing to a sale without reserve; and has provided
proof to the sheriff that the preferent creditor has so stipulated
or
agreed; or . . . .’