Historic debts back on table
Johannesburg - Property owners can stop celebrating their recent victory in the high court in Pretoria, which found that they are not bound by previous owners’ municipal debts.
In a shock move, the City of Tshwane has announced that it is appealing against the ruling in the Constitution Court, which, in effect, means that until a ruling is handed down by this court, the municipality can continue and resume billing new owners for old debt.
The council will not explain the reason for the appeal, saying only that a decision had been taken by the council to appeal.
Last month, residential and business property owners, estate agents, conveyancers and developers were overjoyed when this groundbreaking ruling was made, saying it would have far-reaching consequences for millions of owners and for the development of property around the country’s cities.
City of Tshwane spokesperson Selby Bokaba would not comment further on the matter, saying only that it was a council decision.
Municipal debt specialist Peter Livanos said he was shocked and disappointed that the new DA-led council was not being sympathetic to property owners.
“Not even speaking politically, but as human beings, how would these councillors feel if their mothers came to them saying that after having purchased a house five years ago, the city is now demanding R100000 in arrears owed by an owner 20 years ago?
“I am very disappointed that we are back to square one and, until the Constitutional Court hearing, the municipalities across the country will continue charging honest property owners old debt,” he said.
Attorney Chantelle Gladwin said although disappointed, she was happy that the municipality had gone straight to the Constitutional Court and not through other courts. “At least there will be a quicker finalisation of this matter,” she said.
Another attorney, who did not want to be named, said: “It’s a really odd move for a DA-led council to take, supposedly acting in the interests of its ratepayers. These shenanigans were carried out by the former ANC-led council - one would have thought the DA would have wanted to protect homeowners and make a break from such predatory practices.”
Last month, Judge Dawie Fourie declared the provisions of section 118(3) of the Local Government Municipal Systems Act, which provides for this, 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.
As a result, the Tshwane and Ekurhuleni municipalities were ordered to render municipal services where no debt exists in respect of municipal services between the municipalities and the new owners.
The municipalities were restrained from claiming payment of outstanding amounts from new owners where they have no debt relationship with the municipality concerned in respect of municipal rates, taxes and charges, he said.
In January, in another shock move, the Supreme Court of Appeal (SCA) ruled that new property owners could, in fact, be held liable for historic debts dating back 30 years.
But the judge stated that he had ruled only on the legality of S189 and not on the constitutional implications of the by-law. This finding was based on the court’s interpretation of section 118 as interpreted against the backdrop of the common law relating to hypothecs, he said.