The Gauteng High Court (Pretoria) recently ruled in New Ventures Consulting and Services/Livanos and Others vs The City of Tshwane Metropolitan Municipality and Others that the practice of municipalities of holding new owners of properties liable for municipal debts older than two years under the provisions of Section 118(3) of the Local Government: Municipal Systems Act No 32 of 2000 is unconstitutional and amounts to an improper and arbitrary deprivation of a property right.
The ruling is the culmination of protracted litigation involving New Ventures Consulting and Services versus Ekurhuleni Metropolitan Municipality and the City of Tshwane in five applications since 2013. It was argued and upheld that based on the judgment in Mathabathe, the City of Tshwane had incorrectly transferred debts from old owners and tenants to the current owner.
In all the instances, the Municipalities had also disconnected the services going so far as to refusing to re-connect the services and to open a new Consumer’s Agreement for the new owner. In terms of the Constitution and their own various municipal by-laws they cannot do so anymore.
Municipalities have not however been deprived of their right to pursue recovery of the balance owed by taking the correct legal action against previous owners. If necessary, this could also mean that after obtaining a court order attaching the property, the new owner could still be forced to pay the historical debt to avoid its sale in execution.