Property Law & Conveyancing: Municipalities’ rates clearance demands reigned in

The newly published e-Deeds Bill: the dawn of modern conveyancing
April 1, 2016
Law of Succession: Johannes Steyn Botha N.O. v Master of the High Court and Two Others: Acceptance of a codicil not conforming to the Wills Act
July 12, 2017

In the recent Supreme Court of Appeal case Nelson Mandela Bay Municipality v Amber Mountain Investments the court dismissed an appeal by the Municipality, against a judgment of the Eastern Cape Local Division of the High Court, Port Elizabeth that the municipality is only entitled to demand payment of advance rates to the date of transfer of a property and not up to the end of a municipality’s financial year.

The respondent applied for a rates clearance certificate from the local municipality in order to transfer a property which it had recently sold during February of that year. The municipality’s financial year commenced on 1 July in a year and ended on 30 June the following year.

In order to issue the rates clearance the municipality required payment of rates until the end of its financial year and presented the respondent with an account for the sum of R2 281 014,68 in respect of property rates and electricity. At the time of payment, the respondent’s actual indebtedness to the municipality amounted to R1 214 482,68, but paid the amount under protest, in order to obtain the certificate. .

The respondent instituted a claim against the municiplaity for recovery of the sum of R1 066 532 as an overpayment, based on unjust enrichment.

The court a quo agreed with the respondent held that, as the respondent was no longer the owner of the property, it would be unjust for the municipality to claim rates from the respondent.

On appeal by the municipality the court held that the relevant provisions of the Rates Act, the Finance Act and the Systems Act read together, supported the respondent’s argument that the municipality was not entitled to withhold the rates clearance certificate until it had received payment of the property rates for the entire financial year. The court reasoned that such property rates became due as from the start of the financial year, and not on the start of the financial year.

It further held that s 118(1) of the Systems Act applied to municipal debts which had become due in the two preceding years and did not apply to future municipal debts.

The court accordingly found against the municipality. Read the full judgment here.

Leave a Reply

Your email address will not be published. Required fields are marked *

We use cookies to improve your experience on our website. By continuing to browse, you agree to our use of cookies. For your reference, refer to our PAIA Manual.