Constitutional Court Ruling

Constitutional Court judgment on historical municipal debt handed down on 29th August 2017

The Constitutional Court’s ruling on historical debt was well received by property owners and the banking industry. At issue was the interpretation of s118(3) of the Local Government Municipal Systems Act which states that “an amount due for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties is a charge upon the property in connection with which the account is owing and enjoys preference over any mortgage bond registered against the property”. 

Outstanding debt would therefore include rates, electricity, water, taxes and charges. 

In a unanimous decision handed down by Justice Cameron, the Court held that this “charge” is not transmissible and does not endure beyond the transfer of the property.  Accordingly, a new owner is not liable for historical municipal debt incurred by the previous owner and further,  can no longer be denied municipal services for such unpaid historical debt. 

Property Law Department - Subashnee Moodley