In January 2016, the Supreme Court of Appeal (SCA) held in City of Tshwane Metropolitan Municipality v PJ Mitchell, that the current owner of a property could be held responsible for debts incurred by a previous owner with regard to municipal debts services supplied to the property prior to transfer.
This decision was made in terms of section 118(3) of the Local Government: Municipal Systems Act 32 of 2000. The SCA did mention in passing, however, that the constitutionality of section 118(3) was not before the court, but merely whether the municipality’s claim as a creditor against the property would survive transfer.
To the relief of new property owners, the Gauteng High Court in New Ventures Consulting and Services v Ekurhuleni Metropolitan Municipality and the City of Tshwane, has now had the opportunity to visit the constitutionality of this section. In its judgement dated 7 November 2016, the court ruled that the practice of municipalities holding new owners of properties liable for municipal debts older than two years under the provisions of section 118(3), is unconstitutional and amounts to an improper and arbitrary deprivation of a property right.
According to this Judgement, new property owners cannot be held liable for debt incurred by a previous owner.
If you would like any further information, please contact Michelle Fiorentinos.