CONTACT:  BRIAN KIRCHMANN – 082-5000200 OR 011-883-0679

 
CONSTITUTIONAL COURT JUDGEMENT ON SECTION 118 OF THE LOCAL GOVERNMENT MUNICIPAL SYSTEMS ACT 2000
 

The Constitutional Court on Wednesday 6 October 2004 gave judgement on the long-awaited question concerning the constitutionality of Section 118 of the Local Government: Municipal Systems Act 2000.  That section precludes transfer of land unless “municipal services fees, …..property rates and other municipal taxes, levies and duties”

due for two years preceding the date of application for the municipal clearance certificate, have been fully paid.  The question that the Constitutional Court had to decide was whether those charges also related to debts of non-owner occupiers such as tenants, in spite of the fact that the municipality concluded services agreements, such as for electricity, directly with the consumer.  The main argument of those who objected, some of whom were funded by SAPOA, was, that section 118 allows for arbitrary deprivation of property that infringes Section 25(1) of the Constitution. The Constitutional Court held that deprivation takes place, but that it was not arbitrary, with the result that sec.118 stood the constitutional test. 

SAPOA, being the voice of commercial property, is naturally disappointed but not totally discouraged”, says CEO Brian Kirchmann and points to the following:

The judgement does not generally make landowners liable for debts of their tenants.  Sec.118 only applies when property is transferred and the Constitutional Court has now ruled that municipalities are obliged on written request, to provide owners with copies of tenants’ accounts. 
Landowners are advised to scrutinise leases and to ensure that they are covered from an administrative point of view such as sufficient deposits and that the non-payment of services results in default under the lease. 

• At present the judgement does not affect sectional title transfers, because the Sectional Titles Act has its own requirement of a clearance certificate by the body corporate.  This will, however, change when sectional title units are separately rated as provided for in the new Local Government: Municipal Rates Act 2004.
• If requested in writing, the Municipality must provide owners with copies of water and electricity accounts sent to tenants.

“We still feel it is the responsibility of local government to provide services in a responsible and sustainable manner and to collect all outstanding monies owed for those services.  Should a tenant not pay for these services then those services should cease to be offered to the tenant until all arrear amounts are paid in full.  This seems to be the case with only a few local councils and the questions is why does it work for some and not for others?” adds Kirchmann.