In a recent matter in The Supreme Court of Appeal of South Africa, Greyvensteins Incorporated, acting on
behalf of a local Port Elizabeth property owner, appealed the Nelson Mandela Bay Metropolitan
Municipality Rates rates clearance certificate policy and won the case.
Rates Clearance Certificate necessary for transfer of property
The Metropole had refused to issue a rates clearance certificate to the property owner unless the rates
assessment for the entire year had been paid.
The property owner paid the full rates assessment under duress, but sort to overturn the policy and secure
a significant refund.
The SCA held that the relevant provisions of the Rates Act, the Finance Act and the Systems Act read
together, reinforced Amber Mountain’s view that the municipality was not entitled to withhold the property
rates clearance certificate until it had received payment of the property rates for the entire financial year.
The court correctly interpreted the relevant legislation that property rates became due FROM the start of
the financial year, and not AT or ON the start of the financial year.
Put differently, a portion of the debt in respect of rates becomes due from time to time.
For these reasons, the argument advanced on behalf of the municipality, that the determination of an
annual property rate is indicative of an intention that a single rate for the entire year is payable at the start
of each financial year cannot be sustained.
Future Municipal Debts not applicable
It further held that s 118{1) of the Systems Act plainly applied to municipal debts which had become due in
the two years preceding the date of application for the certificate and did not apply to future municipal
debts.
It held therefore that the municipality’s rates policy to the contrary is ultra vires the Act and therefore invalid.
The court accordingly dismissed the appeal, in favour of Amber Mountain.
The Rates Act empowers a municipality to make policy not inconsistent with the Act.
In any event, policy cannot override, amend or be in conflict with laws and legislative instruments,
otherwise the separation between legislature and executive would disappear.
To sum up: the relevant provisions of the Rates Act, the Finance Act and the Systems Act read together,
reinforce the contention of the respondent that the municipality was not entitled to withhold the property
rates clearance certificate until it had received payment of the property rates for the entire financial year.
Such property rates became payable (but not due) from the start of the financial year.
You may read or download the full judgement here.
Greyvensteins Incorporated are Property and Conveyancing Attorneys in Cape Town, Johannesburg and
Port Elizabeth.
We are experienced in every aspect of Property Law.
Related Services:
Property transfers
