Owners are not liable for the payment of outstanding municipal debts, older than two years which were incurred by former owners of the property.

The case of Perregine Joseph Mitchell v City of Tshwane Metropolitan Municipal Authority Case No. 50816/14, North Gauteng High Court, dealt with the above topic.  The facts are relatively simple.  The applicant, Mitchell, purchased a property in Gauteng in 2013 at a sale in execution which had a sum outstanding comprising historical municipal debt, including debts older than two years.  A dispute arose, and after paying the outstanding debt less than two years, a clearance certificate was issued by the Municipality, leaving an outstanding balance of historical debts which were older than two years.

The applicant then sold the property but the Municipality would not open an account for the new owner for the supply of municipal services until the outstanding debts had been fully settled.  The purchaser of the property refused to continue with the sale until this matter had been properly dealt with.

Mitchell argued that the Municipality must open municipal accounts for the purchaser for municipal services as he could not be held liable for historical municipal debts older than two years incurred by previous owners.  Mitchell further contended that the lien the Municipality has in terms of Section 118 (3) of the Local Government: Municipal Systems Act, No. 32 of 2000 ("the Act") is a charge against the property, and only enforceable over the property itself and/or the previous owner. 

The Municipality maintained that the security for non-prescribed debts referred to in Section 118 (3) of the Act is a charge on the property, are secured by the property and are enforceable against subsequent owners of the property.  The Municipality argued it was therefore entitled to withhold municipal services until the historical debts remain unpaid.

On 8 September 2014, the Court handed down the following order:

• the security provided by Section 118 (3) of the Act in favour of the Municipality  with regards to the property, was extinguished by the sale in execution and  subsequent transfer of that property into the name of Mitchell;

• Mitchell (or his successor-in-title) is not liable for the payment of outstanding municipal debt older than two years which were incurred by his predecessor(s) in title, prior to the date of transfer of the property into his name;

• the Municipality has no right to refuse the supply of municipal services such as electricity, water, sanitation and waste removal to Mitchell or his successor-in-title with regard to the property only because of outstanding municipal debts older than two years.

It is hoped that this judgement will persuade Municipalities to reconsider their interpretation of a 2013 Supreme Court of Appeal case of City of Tshwane Metropolitan Municipality v Mathabathe and Another 2013 (4) SA 319 (SCA) in requiring current owners to be liable for old historic rates, and that the equitable situation in the Mitchell case, will prevail.