THE FACTS – on disconnection of services
Final notices are issued in line with the City’s Credit Control and Debt Collection Policy, which is informed by the Local Government Municipal Systems Act.
Due to constant complaints on credit control matters, the City draws residents’ attention to the following facts:
• The monthly account due date is the date when a customer’s account becomes due and payable. This date reflects on the account statement.
• The due date is determined by the Council from time to time.
• Only payments receipted through the City’s financial system on, or before, the due date is deemed to have been received.
• Payments made through third party vendors is seen as received by the City only once it has gone through its financial system. Take note of Notice 7 on the reverse side of the account statement that third party system payments must be made no later than 7 days prior to due date.
• If full payment is not made before or on the due date, the unpaid amount becomes arrears and a final demand notice (pre-termination notice) is sent. This tells the consumer that their account is in arrears and services can be cut/restricted.
• An administrative fee is charged (as per the tariff provisions) with regard to any action taken in demanding payment from the customer or reminding through a notice delivered by mail, hand or any electronic means available that the account is in arrears.
• Water and electricity supply can be cut or restricted if payment, or arrangements to pay, is not made on the due date as per the final notice. This relates to any monies owed to the City such as services, property rates and taxes. In the case of pre-paid electricity, the selling of units will be withheld until monies owed is paid, or arrangements made, by the due date on the final notice issued.
It is the customer’s responsibility to ensure their account is paid in time. To assist, in addition to monthly posted statements, the City has made alternative platforms available where you can check, and even pay your account, online through https://siyakhokha.ekurhuleni.gov.za/
Municipal Mysteries: When “actuals” aren’t “actuals”
This article canvases what a consumer can do to protect himself when a municipality is charging him according to “actual” readings for electricity or water consumption, but where the readings used by the municipality are clearly not ‘actuals’ and thus cannot be true and proper readings.
Actuals versus Estimates
There are two types of readings that a municipality can use to bill a consumer for metered consumption for electricity and water. The first is an “estimated” reading, which is where the municipality does not actually go to your property and take a reading from the meter at your property but rather uses an algorithm to guess how much electricity or water you have consumed. This is contrasted with an “actual” reading, which is used to bill a consumer when a meter reader has been to the property and has physically taken a reading from the meters at the property, or when there are “smart” meters at the property transmitting the readings to the municipality periodically.
Inaccurate Estimated Readings
If you have received an invoice with estimated readings that are wildly out of kilter with the reading as it appears on your meter, then you need to raise a billing query with the municipality concerned and ask that it verify your actual readings, and bill you accordingly.
Inaccurate “Actual” Readings
The focus of this article, however, is not to deal with scenarios where consumers are billed on estimates, but where they are billed on “actuals” that are not correct. This might have happened because the smart meter is not working properly and incorrect readings have been transmitted to the municipality, or because the meter readers have applied the incorrect readings to the meters (i.e. they have “mixed up” meters and meter readings), or because the meter reader has incorrectly recorded the actual readings from the meter.
These types of errors are difficult to fix because certain municipalities (such as Johannesburg) will often tell consumers that they are not allowed to raise a query disputing “actual” readings, because to their minds there is no query to raise – on their systems the meter reading reflects as an actual reading and is thus correct.
This is unlawful – a municipality cannot lawfully refuse to allow a consumer to log a billing query or dispute simply on the basis that what appears on the municipality’s system is correct and the consumer therefore must be wrong, because (logically) the possibility always exists that the municipality’s system is wrong and that the consumer is right.
If this happens to you, and you are not permitted to log a query with Johannesburg municipality, keep proof that you have attempted to log the query and then proceed on to the next ‘step’ in the municipality’s prescribed dispute resolution procedure, which is to deliver a written complaint to the municipality. We would advise outlining in the written complaint that you had attempted to log a query but were unable to do so due to the refusal of the municipality’s consultants to allow this to happen. It is also advisable for a person trying to log such a query, to obtain an interaction number from the municipality which will serve as proof of the attempt to log a query. The municipality will not issue you with a reference number for the query if it is not of the view that it is a valid query and so the interaction number is the next best thing that a consumer can keep as proof of the attempt in logging the query.
A deemed reading occurs where the municipality is adjusting a consumer’s account to bill the consumer for a guestimate of consumption in the situation where the meter was not working at all, or was faulty, or where there was no meter. In these kinds of situations, there is no actual and/or reliable recording of the consumption at the property, and so the municipality does an extrapolation to guess what the consumer’s consumption was. The municipality will normally install a new (functioning) meter, take three month’s readings, and then calculate the average and apply it to the period where there were no accurate/reliable readings. Deemed readings appear on invoices in Joburg as ‘actual’ readings and this makes it very confusing for consumers who can clearly see that the reading indicated on their invoice cannot possibly be correct – for example in the situation where the meter has been removed from the property but the municipal invoice indicates that it is billing the consumer on an actual reading for a period after the meter was removed.
If the problem is that the reading on your invoice is a “deemed” reading, then the first thing you need to do is ascertain from the municipality, the basis of the calculation for that deemed reading and determine whether that calculation is arithmetically correct and whether it is fair. If it turns out that there is either a calculation error or that the municipality has loaded the account with unfair charges, then the consumer can follow the standard dispute resolution process provided for by that particular municipality in taking it up with them. This would include first logging a query (but if you are not permitted to log a query because the municipality’s system says that the reading is an ‘actual’, then skip this step as advised above).
In the event that you discover that the actual (or deemed) readings on the account are not correct, and you have difficulties in resolving any billing dispute resulting from this problem with the municipality, you may need to chat to us for assistance because it can be difficult to navigate the many laws and procedures prescribed in order for resolving these kinds of disputes.
Below is all the municipality documents for submissions and City planning documents we have. We make these availble to you to asist you as far as possible. Some of the Municipality’s are City of Tshwane, Ekurhuleni, Brakpan, Kungwini, Madibeng, Nokeng, Witbank, Durban, King Sabata Dalindyebo municipality, Emalahleni Local Municipality. NOTE: We will appreiciate If you have documents from other Municipalities please send them to us.
Contact us via our contact us page. Thank you
Local Authority Documents
City of Tshwane Municipality
Town Planning Scheme 2008/04/23
City of Tshwane Town Planning scheme as on 2008
|Land use applications Fees||Land use applications Fees ANNEXURE H15.1|
Consent Use General Clause 16 June 08
|Permission TTS||PermissionTTS June 08|
|Removal of Title Cond or amendment||Removal of Title Cond or amendment- June 2008|
|Rezonig||Rezonig Section 56 – June 2008|
|Rezoning||Rezoning Section 28 June 08|
|Second dwelling||Second dwelling Permission TTS June 2008|
|Removal and rezoning||Simultaneous Removal and rezoning (3 of 1996) June 08|
|Building inspec stages||Building inspec stages|
|Building plan submission (OLD)||Building plan submission|
|Comments of another party||Comments of another party|
|Engineer appointment||Engineer appointment|
|Interpartite comment||Interpartite comment|
|Interpartite sectional title||Interpartite sectional title|
|Restriction of Access||Restriction of Access|
|Building plan submission (NEW)||RIMIXC 2 BOU PLANNE|
|Special power of attorney||Special power of attorney|
|Tshwane Town planning Scheme_infosheet||TshwaneTownplanningScheme_infosheet|
City of Johannesburg
|Building plan application||Building plan application|
|Building line relax Application||Building line relax Application|
|Engineer Appointment||Engineer Appointment|
Ethekwini Muncipality / Durban
|Plan Submission||Building plan application|
|power of attorney||power of attorney|
|UNDERTAKING AND INDEMNITY||NORTH/SOUTH CENTRAL LOCAL COUNCILS – DURBAN|
|Plan Approval Guidelines||Plan Approval Guidelines|
|REQUIREMENTS IN RESPECT OF “MINOR BUILDING WORK|
REQUIREMENTS IN RESPECT OF “MINOR BUILDING WORK” AS CONTEMPLATED IN SECTION 13 OF THE NATIONAL BUILDING
REGULATIONS AND BUILDING STANDARDS ACT NO. 103 OF 1977
|Engineer Appointment||Letter of Appointment|
Ekurhuleni Municipality / Brakpan
|Building plan scrutany check list||Check List|
Kungwini / Bronkhorstspruit Municipality
|Plan_submission||Application to approve|
|Engineer Appointment||Letter of Appointment|
Madibeng / Brits Municipality
|Plan_submission||Application to approve|
Nokeng Tsa Taemane Municipality
|Plan_submission||Application to approve|
|Engineer Appointment||Letter of Appointment|
Emalahleni Municipality / Witbank
|Building line relaxation||Building line relaxation|
|Building plan appl||Building plan appl|
|Eng appointment||Eng appointment|
King Sabata Dalindyebo Municipality
|APPLICATION FOR APPROVAL OF BUILDING PLANS||APPLICATION FOR APPROVAL OF BUILDING PLANS|
Burst water mains in Gauteng. Picture courtesy Pretoria East Record
By JANEK SZYMANOWSKI
Every time a water pipe bursts, there’s a good chance that the municipality will rake in thousands of rands from false water meter readings. This is because air passing through consumers’ water meters and water pipes gives false readings that are charged automatically on all water bills.
So if you suddenly have a higher-than-usual water account, this could be the explanation.
If you have a pre-paid meter you are even more at risk. And if you are not the owner of the property, if your landlord refuses to ask the municipality to investigate, chances are you will simply have to pay up!
Investigation by sans10400.co.za
After a personal experience (see below) and numerous queries to www.sans10400.co.za about what appeared to be inflated water accounts we decided to investigate. Scouring through social media and reading many posts and questions on various group websites, it soon became clear that the issue of inflated water bills is commonplace countrywide. At times costs seem to run into thousands of rands over the normal monthly average charge people are used to paying.
By chance, I mentioned the problem to a former management employee from the Benoni Municipality, who said that with the large number of mains supply pipes breaking and leaking in the area that had to be repaired, they had had numerous queries of extremely high water bills in the Benoni area. On investigation he discovered that the air passing through the pipes created these very high meter readings.
Some years later, having moved to the Helderberg, he experienced exactly the same occurance at his business premises after a major water pipe burst. He queried what was an outrageously high account, and the local municipality reversed the amount.
But how widespread is this problem?
Air Entering Burst Water Pipes is a Common Problem
I contacted Jacques-Louis van der Linde, senior technical specialist at Metering one of the main suppliers of water metering equipment to municipalities in South Africa. Was the chief supplier of water meters in South Africa until a few years ago when they were bought out the company. The reality is that the water meters this company put in place now utilize old, out-dated technology. Rather than measuring water as such, these meters measure all flow through the meter – including air.
A cutaway of a standard traditional water meter with the impeller clearly visible.
Van der Linde confirmed that the problem does often arise when there is a break in the water supply and air gets into the pipework. He also explained that the majority of water meters use an impeller to measure the amount of water passing through the meter (see picture below). When there is a leak in the pipes delivering water to suburban properties, municipal workers have to shut off the water supply whilst the broken section of water supply pipe is being repaired. When the mains are reopened again, there can be a large amount of air that has entered the pipework.
Because water is denser than air, the air is compressed and passes through the pipe, and subsequently through the meter, very fast, making the impeller inside the meter literally spin out of control. Depending on the amount of air involved, this can cause your meter to run up an unreal, totally false water reading – which goes hand-in-hand with very high water bills.
New Pre-Paid Meters Problematic
An even greater problem arises from the “new” pre-paid water meters. According to van der Linde, there are more than 250,000 of these pre-paid meters already installed countrywide. The problem is that consumers have absolutely no recourse, as money for the meter must be paid up front, and in spite of your constitutional rights to water, if you are cut off, you simply have to top up the meter.
Nevertheless, we may be better off in South Africa than in other African countries that practice “water rationing”.
What happens there is that the water is switched off during the day, and when it is turned back on, the air passing through the meter literally eats up all their money. The saddest part is that most of these people are in poorer African countries, and they cannot afford to keep paying for air!
Have I Been Paying for Air?
Anyone whose water bills suddenly increase for no apparent reason should note whether increased “usage” corresponds with burst water mains in the area.
While leasing a property in Somerset West several years ago, I noticed that the council water meter hadn’t been touched for months. The fact that there was an ants’ nest over the meter glass convinced me no readings had been done (see pic below). Just to cover myself I had taken photographs of the meter a few months apart, in September, November and again in February.
The average water bills per month for September, October and November were between R400 and R500. In December this increased to R965; in January to R1,181; and then in February it went up to R1,547.
After a fairly unpleasant conversation and emails with the landlord/estate agent who said that I had obviously watered the garden and filled up the swimming pool, which was not true, I approached the local council and local councillor. Nobody was interested in my problem, maintaining that the readings on the water bills were correct. Their explanation about the ants’ nest was that after each reading by the council meter reader, the ants had come back and re-established their nest. They also maintained that there could be a leaking pipe on the property. They refused to investigate further, stating that the property owner was the only person who could deal with council on this issue. He refused and wasn’t interested in doing his own investigation into possible leaking pipework.
I then cleaned the meter and shut off all the taps as well as the mains water for half a day to see if there was any usage on the meter. There was none, proving it was not a leaking pipe on the property. But in the end I was forced to pay up.
In retrospect, I realized that there had been a number of water “outages” during the periods when the water bills were so high. But unfortunately I realized this too late, and had to write the bills off to experience.
We subsequently moved to another area, in a different municipality and recently had two breaks in the water mains. I am waiting to see what the bill will be, and if it is any higher than usual, will take immediate action.
So What Should You Do?
My advice to anyone who has a break in their water supply, and notices air escaping through their taps when the water flow comes back and they turn the taps on, is make a note of the date and the time of the interruption, and if you are on a billing system (rather than a pre-paid meter), to challenge the council when you get your bill. If you have a pre-paid meter, challenge the council immediately.
SABS Assessing a New Water Meter That Won’t Register Air
The good news is that he has a new meter that is currently being assessed by the SABS. This meter can register the density of whatever is passing through the pipes, and if it is not the density of water, it will not register and push up the meter reading.
But it’s going to take a while for all the old meters to be replaced. So in the meantime, be vigilant.
Disconnection of electricity or water: Legal or illegal?
This article examines the legal issue of when a disconnection of electricity or water by a municipality will be lawful.
Dispelling the Myth
Many people think that a municipality is not entitled to disconnect one service if that service is fully paid up (but where another service is in arrears). This is not correct. A municipality is fully entitled to disconnect the supply of any service whatsoever supplied to a property, where there are undisputed arrears owing in connection with any other service billed in connection with that property.
The law provides that a municipality must give the consumer (and the owner of the property, if the consumer of the services at the property is not the owner) a minimum of 14 days written notice of termination of the supply of electricity and water. If this notice is not given to the occupants of the property (and the owner, if the owner is not the same as the occupant) at all then the disconnection is illegal.
Furthermore if less than 14 days has elapsed between the date of delivery of the pre-termination notice and the date of disconnection, then similarly the disconnection is illegal.
The purpose of giving a person 14 days is to allow that person to respond to the municipality within that time and to raise any disputes about the charges that are purportedly owing, or alternatively to allow the responsible person to make payment of the arrears or make other payment arrangements with the municipality such as by entering into an instalment payment plan. If a consumer is denied this opportunity, then this is a violation of that person’s rights in terms of our administrative law and Constitution and the disconnection is accordingly unlawful.
It is unlawful for a municipality to disconnect a consumer whilst there is a query pending in relation to that consumer’s account, provided that the quantum or value of the disputed charge equals or exceeds the amount of arrears on the account. For example, if you have lodged a query in relation to R50 000 of disputed water charges, but at present your bill is sitting at R100 000 (which include the R50 000 of disputed water charges and another R50 000 of other undisputed charges) then the query logged in relation to the disputed water charges will not protect you from disconnection because there are other arrears owing which are undisputed. You can legitimately be terminated for non-payment of undisputed arrears, even if you have raised a dispute in relation to other charges on the same account.
Payment of Current and Undisputed Charges
In terms of the bylaws of most municipalities, a query logged in relation to any municipal account will only remain valid for so long as the customer continues to pay the current and undisputed charges billed to it on a monthly basis. What this means is that if you fail to pay your current charges (or any portion of your current charges that are undisputed) you can be disconnected, even if you have an existing and unresolved query in relation to other disputed charges on your account.
In addition, some municipalities provide that where you dispute the charges billed on a monthly basis for any particular service (for example, electricity, perhaps because you are of the view that your meter is faulty or the charges are too high, being based on inflated estimated charges) you must then pay the average of the prior three month’s undisputed charges for that service (i.e. the last time that you did not dispute your electricity charges, you take the average of three months for that service, and make payment of that amount for electricity rather than the amount currently billed to you) in addition to all other undisputed charges. Failure to make payment of current and undisputed charges in terms of the relevant by-laws/policies will render you subject to credit control action, which could include disconnection or being summonsed to court to pay.
Prior Owners’ Debt
A recent case in the Gauteng Local Division of the High Court in Johannesburg offers persuasive authority (but does not create legal precedent) for the principal that a municipality may not terminate a purchaser’s electricity or water supply as a result of outstanding debts incurred by the prior owner of the property. This principal has yet to be tested in court and so at the moment there is no conclusive answer to this question in law, although until another judgment settles the issue, there is at least persuasive authority to support purchasers battling with this issue.
Allocation of Payments
Although the manner in which payment is allocated to a municipal account is not directly linked to the issue of when a municipality is lawfully entitled to disconnect or not, it does impact on the legality of the disconnection indirectly. This is because if a consumer is disputing any portion of his account, and that consumer does not before making payment of any undisputed charges on that same account, notify the municipality in writing that the payment made must be allocated only to the undisputed charges, a municipality will then have the right in law to allocate that payment in any manner that it wishes.
This may (or may not) result in the consumer’s payment (which he intended to be for undisputed charges) being allocated towards a portion of, and settling a portion, the disputed charges that the consumer was not intending to pay. When this happens a consumer will be very surprised by the advice given to him by the municipality that the dispute that he logged is no longer valid (it having been settled by his payment of the disputed charges), because he would be of the view that his dispute should be valid and pending seeing that he had continued to pay his current and undisputed charges on a monthly basis.
As a result the consumer’s query will be closed (the disputed charges having been paid) and he would be liable to disconnection or other credit control action in respect of the unpaid current and undisputed charges which reflect as unpaid on the municipality’s systems.
It is imperative that consumers understand and know their right in relation to disconnections and threats of disconnections made by the municipalities in respect of purported arrears in relation to municipal accounts. This simple knowledge may be sufficient to assist you in avoiding what could be a very pleasant, time consuming, and costly exercise, when having to deal with an illegal disconnection or your electricity or water supply.
The Implications of Selling a House
Without Approved Plans
If you are selling your house, and don’t have approved plans, you could find yourself in a lot of trouble. And if you are buying a house, and don’t ask whether the seller has approved plans, you might end up inheriting some very expensive problems.
Legal Implications of Selling a House Without Approved Plans
Since the law requires everybody to have plans drawn up in a particular manner, and approved by the local authority in their area, it stands to reason that every house will have plans. But this is not always the case, and a lack of approved building plans is clearly a major problem for many people buying and selling houses and other buildings in all parts of South Africa.
Hardly a day goes by that we don’t get asked questions on this website that relate to issues concerning plans. Sometimes people only discover that there are no plans years after they have bought a property, either because they eventually want to do alterations, or because they want to sell. Other times people find at the point of sale that a house they are buying does not have plans, and they want to know whose responsibility it is to have plans drawn up retrospectively (“as built”).
The reality is that if alterations and additions have been carried out on a property without municipal (local authority) approval and the property is then sold, it can become quite a complex legal matter.
An article by STBB Smith Tabata Buchanan Boyes that we have referenced gives some clarity about the implications of selling a house without approved plans.
Are Building Plans and Building Approval Always
Required for Houses?
As STBB explain, the National Building Regulations and Building Standards Act specifies the need for building plans and approval. More specifically, it is the local authority that governs exactly what can be done in terms of its zoning regulations and the NBR. So it is they that give approval (or deny it) for all building work and renovations on ALL properties. “Minor building work” is viewed differently and most municipalities will be more lenient when it comes to minor building work.
The Act states that the municipality, at its own discretion, may be approached for a relaxation of the necessity to obtain approval of plans. But note that this must be asked for and approval received in writing.
How the Issue of “Voetstoets” Affects
Building Approval and Plans
The agreement made between two parties when a property is sold will in most instances include a voetstoets clause. Essentially this clause indicates that the purchaser accepts the risk relating to defects existing at the time of the sale, patent or latent (but not visible). The exceptions to this clause are instances where the seller deliberately and fraudulently conceals latent defects from the purchaser, that he or she was aware of at the time – in which case the seller will remain liable for these defects. But of course the purchaser will have to provide evidence that the seller knew what was wrong.
Note that the position is somewhat altered if the Consumer Protection Act applies to the agreement between the parties, e.g. where the seller is a developer.
Our law takes into account that any property with buildings erected without municipal approval is a property with a latent defect. The voetstoets clause will normally cover latent defects and a seller will not automatically attract liability if he sells a property with unauthorised building works. But if the seller knows that there are no plans and he organized and did the renovations himself, and he deliberately does not disclose this fact (with the intention to defraud the purchaser), the seller cannot hide behind the voetstoets clause.
Problems That Can Arise
The lack of approved plans could lead a municipality to refuse to allow any further renovations a purchaser might have had planned. In the worst case scenario the municipality could order that the illegally erected structure or additions be demolished.
A (latent or patent) defect that is of a significant nature, and affects the use and enjoyment of the property, does allow the purchaser certain remedies. The most far-reaching of these is cancellation of the agreement, which he is entitled to do, if the purchaser can prove that the defect is so serious that he would not have bought the property had he known this. Other courses of action include the reduction in purchase price or a claim for damages, depending on the seriousness of the defect and the specific circumstances involved.
In many cases an offer to purchase a house will be dependent on the purchaser obtaining home-loan finance from a bank or other institution. And in most instances, (though not all), the financial institution will want to see up-to-date approved plans before finance will be granted. If the plans lodged with council do not match the house as it stands, then the sale could fall through and set the seller’s plans back for quite a length of time, together with additional costs to rectify the problem.
The local authority is also entitled to levy fines on any “illegal” building work that was done without approval.
There is more on the “Voetstoets Clause” and the CPA (Consumer Protection Act)
Councils Must be Ruthless with Restricting Occupation of Unsafe Buildings
Lorna Court is situated on the corner of Twist and Wolmarans Streets in Joubert Park, Johannesburg, The building was built in the 1930s but was condemned after a fire in 2005. It’s said that it’s owners had no insurance but are not willing to sell the site.
I think it must be terrifying to be woken at 04:00 in the morning by a thunderclap that makes the whole building shudder. Then, in a confused state, you realise your bed’s still shaking and, no, it wasn’t thunder, it was the building falling down. Panic and fear – as you rush out of bed, out of a building, out into the streets. A balcony’s fallen off. . . smashed on the pavement, fragments of stone, cement and bricks block your path and cut the bare feet on which you walk.
That’s what at least one resident of the Blue Building, next to the old Junction Hotel in Salt River, experienced on Saturday night when the building started tumbling, crumbling down. Heavy rains may have contributed to its collapse – who knows.
But the authorities had condemned the building anyway and intended to demolish it sometime. The residents – the ones who crowded onto the rain-ridden streets in Cape Town’s cold – had ignored the authorities. Ignored everyone except providence. And it was only providence that protected them. At least this time.
The Blue Building had been built in 1899, next door to the Junction Hotel in Junction Road and, through a lack of maintenance and simple old age, had steadily declined until it was ready to fall. Too tired of the winds, the rain and the desertion.
It’s just one of many Cape Town buildings that have been identified as being unsafe. And yet, people kept living there – as they are living in many similar unsafe and abandoned buildings around the city and its suburbs.
The now flattened site of the Blue Building next to the vacant Junction Hotel on the right.
Needless to say, the people who were living in the Blue Building had been without sewerage, electricity or water for months, but that didn’t seem to faze them. They just used the first floor as a toilet and a rubbish dump. Eyewitness reports say the first floor was about a metre deep in rubbish and human excrement mixed with the cold rain from a roof that leaked all the time. A dilapidated building on the point of collapse and people still living there.
Perhaps this is a true measure of just how desperate the housing shortage is. People are desperate for shelter – any shelter, anywhere.
So what are the answers? It would be wonderful to wave a wand and give every Tom, Dick and Harry (and all their cousins, uncles, aunts and other hangers-on too) a nice new place in which to stay. But that’s the stuff of dreams. And, anyway, what are “they” (and their cousins, uncles and aunts) doing to solve their own housing problems?
Concience-stricken welfare workers will doubtless point to how South Africa’s is a heartless society that refuses to provide for its needy people. Maybe the welfare workers are right: maybe we are all heartless and uncaring. But I don’t think so. My concerns are based on a different premise. Anyone of those people in the Blue Building could have done something to keep their own place running or, if it had reached such an atrocious condition that it was irreparable, then they could at least have made sure that they, along with everyone else, evacuated the place before it fell down.
But these people – the residents who have a vested interest in surviving through the night – just continued, willy-nilly, living in a place that was unsafe and unfit for human habitation. In fact they contributed to keeping it unfit for any kind of habitation by adding their own excrement to the growing pile on the first floor. What we actually find, in the Blue Building, is a group of residents who are doing nothing for themselves, or for the community in which they live and, for that alone, they are culpable. So before we turn around and point an accusing finger or five at the “authorities” for not taking action, or at the “wealthy” people of Constantia and Clifton for not supporting them, consider this: the people in the Blue Building were doing nothing at all to help themselves in the first place.
Just a reminder of how unsafe buildings can be , even new buildings, this is the Tongaat Mall collapse
Here’s an interesting conundrum: if (or when) the authorities intervene and insist that people move out of a building that’s too damaged to occupy, guess what happens? They (the people who evict the residents) are, most often saddled with finding “alternative accommodation” for them. We’ve seen exactly this scenario playing out in Schubart Park in Pretoria where, for more than a year now, the Tshwane Council has been trying to force people to leave buildings that can no longer be occupied. The residents demand that Tshwane provide alternative accommodation. So now the Tshwane Council has a problem: they say that it’s not their responsibility to find alternative accommodation, but the residents say it is. A deadlock with some derision.
And the Constitution seems to side with the residents. My views – in these circumstances – are not politically correct but then I’ve always believed it’s more important to save a life than be politically correct. My premise is based on an experience I had when I was a young man and watched a woman, who’d been rescued from the surf on a Wilderness beach, being refused medical attention because she’d lost her bikini top in the surf and her breasts were exposed. Rather than let a black paramedic treat the white woman who was dying and whose breasts were exposed, the group chose not to treat her until a white doctor arrived. A white doctor never made it – and yes, she died over something so silly.
Let’s get back to the problem of illegal occupation of derelict buildings. I’m afraid that I’m on the side of the authorities and I believe it’s their responsibility to evict illegal tenants (using the notorious Red Ants if necessary) before a building falls down or is razed to the ground. If the residents – in any illegally occupied building – want alternative accommodation, I say let’s put them in those same tented refugee camps that we used to house victims of xenophobic attacks last year. Let them get on with it from there. At least their lives should be safe – or as safe as they can be in our South Africa today. I reckon it’ll just take a few weeks before each one of those people has found somewhere else to live – without trying to force a council or a Department of Human Settlements to give them a house or an apartment for nothing. At the moment we have an uncomfortable picture: the indigent are doing nothing to help themselves and the authorities are doing nothing to get them out of derelict buildings because if they do then the indigent become the council’s problem.
In our cities there are hundreds of buildings that have been condemned and yet the illegal occupancy continues unabated. Remember, just a few months ago, several people died when a condemned building caught fire in Johannesburg and the panic-stricken residents leapt to their death from the fifth floor windows. Showing a typical council response, Cape Town’s Disaster Risk Management spokesman, Wilfred Solomons-Johannes, says the council doesn’t own the building so it’s the building owner’s responsibility to find somewhere else for these people to stay.
What he’s actually saying is: “Don’t make your problems my problems” isn’t he? Whether or not the building has been abandoned, the authorities must be held accountable if they do not take action to force people to leave a condemned place. The authorities (the police perhaps) must get them out of there. So Cape Town – and all the other councils too – cannot continue hiding behind the “private property” excuse anymore. They have a responsibility to the people of this country to evict those who live in sub-human conditions in buildings that have, most often, been hijacked from the original owners. When people’s lives are threatened, immediate action is needed and if the authorities are not prepared to act then, I believe, they are culpable when a building collapses.
And if you think that Cape Town is an isolated case, then just wander through Hillbrow, Berea or Yeoville in Johannesburg. Or take a walk through the central city areas of Port Elizabeth, East London, Durban or Bloemfontein. You’ll find many more derelict buildings occupied by illegal residents who, in most cases, have stripped the building of everything that protects lives. Stripped it of the cast iron sewerage pipes, the steel banisters for the stairs or the window frames that stop someone from tumbling off the seventh floor corridor in the rain. Get these people out of these buildings. Get them into tented camps. Get them anywhere where it is safe. And get them to understand that living in places like Schubart Park, or any other derelict building for that matter, is idiotic.
I wish somebody could get the residents to understand the perils of living in an unsafe building. I certainly can’t, but maybe you can.
Town Planning Scheme, 2011
We have included this Johannesburg Town Planning Scheme document to assist you with accessing the the correct information so that you can make the right decisions when it comes to planning any construction, building and renovation or the purchase of property with developement in mind. This Town Planning Scheme applies to all properties within the municipal boundaries of the City of Johannesburg, as determined by the Municipal Demarcation Board.
This Town Planning Scheme is prepared in terms of the Town Planning and Townships Ordinance, Ordinance 15 of 1986, and is, subject to the provisions of section 3(4) of this Scheme. The Scheme relates to the area of jurisdiction of the City of Johannesburg:
a. Johannesburg Town Planning Scheme, 1979 (The clauses only )
b. Halfway House and Clayville Planning Scheme, 1976 (The clauses only)
c. Sandton Planning Scheme, 1980 (The clauses only)
d. Roodepoort Planning Scheme, 1987 (The clauses only)
e. Randburg Planning Scheme, 1976 (The clauses only)
f. Lenasia South East Planning Scheme, 1998 (The clauses only)
g. Modderfontein Planning Scheme, 1994 (The clause only)
h. Peri-urban Areas Town Planning Scheme, 1975 (The clauses only)
i. Southern Johannesburg Region Planning Scheme, 1979 (The clauses only)
j. Walkerville Planning Scheme, 1994 (The causes only)
k. Annexure F as per the Black Communities Development Act, Act 4 of 1984
l. Lethabong Planning Scheme, 1998 (The clauses only)
m. Westonaria Planning Scheme (The clauses only)
n. Alberton Planning Scheme (The clause only)
City of Cape Town Zoning Scheme Regulations
We have included this Cape Town Zoning Scheme Regulations document to assist you with accessing the the correct information so that you can make the right decisions when it comes to planning any construction, building and renovation or the purchase of property with developement in mind. This Town Planning Scheme applies to all properties within the municipal boundaries of the City of Cape Town, as determined by the Municipal Demarcation Board.
Chapter 1 contains introductory information, including the date when the zoning scheme became operative and the area to which it relates. The components of the zoning scheme and general purposes of zoning are described.
Chapter 2 deals with certain procedures and requirements relating to applications, decisions, conditions of approval, transitional provisions and methods of correcting errors on the zoning map.
Chapter 3 deals with general principles relating to the zoning and use of property, describing the difference between primary uses and consent uses. It also makes reference to uses not permitted and describes how temporary land uses should be dealt with.
The Zoning Categories covered are:
Single Residential Zones
General Residential Zones
Local Business Zones
General Business and Mixed Use Zones
Utility, Transport and National Port Zones
Open Space Zones
Agricultural, Rural and Limited Use Zones
You Don’t Need Plans for Minor Building Work … But you DO Need Permission to Build
If this little 7.5 sq m garden building is to be used as a tool shed, you won’t need plans. If it is to be used as a child’s playhouse, you will.
Anything you build on your property needs plans, unless it is defined as “minor building work”. However the Act states very clearly in Part A: General Principles and Requirements (this was previously Part A: Administration), that any structural building work that is defined as “minor building work” requires authorization by your local authority’s building control officer before you can commence with any work. As long as you have made an application and have received the necessary permission from the local authority, you DO NOT NEED PLANS. But the law is also very clear in terms of compliance with the regulations; minor building work must comply with the regulations.
Temporary buildings also need authorization by the local authority. This includes builders’ sheds, on-site toilets, and any other structure you might want to erect (or be obliged to erect) for the construction project.
The local authority will not give you permission to erect a temporary building until you provide certain information, and they are able to assess it. At very least they need to know:
- what the intended use and life of the building will be
- the area in which it is to be erected (in other words where you are planning to put it)
- the availability of suitable materials from which it may be constructed
The Definition of “minor building work” in Terms of the Law
a) the erection of:
- poultry houses (hoender hokke or chicken coups) that are no more than ten square metres in size,
- aviaries that are no bigger than 20 square metres,
- solid fuel stores (for storing wood, coal, anthracite or similar) that are no more than ten square metres in area and no higher than two metres,
- tool sheds that are smaller than ten square metres,
- childrens’ playhouses that are no more than five square metres,
- cycle sheds no more than five square metres,
- greenhouses that are a maximum 15 square metres,
- open-sided car, caravan or boat shelters or carports that do not exceed 40 square metres in size,
- any freestanding wall built with masonry, concrete, steel, aluminum, or timber or any wire fence that does not exceed 1,8 m in height at any point above ground level and does not retain soil,
- any pergola,
- private swimming pool (although most local authorities do insist on plans),
- change room at a private swimming pool not exceeding 10 sq m in area.
b) the replacement of a roof (or part of a roof) with the same or similar materials,
c) the conversion of a door into a window, or a window into a door, without increasing the width of the opening,
d) the making of an opening in a wall that doesn’t affect the structural safety of the building concerned,
e) the partitioning or enlarging of any room by the erection or demolition of an internal wall, as long as it doesn’t affect the structural safety of the building,
f) the section of any solar water heater not exceeding six square metres in area on any roof; or 12 square metres if the water heater is erected elsewhere,
g) the erection of any building that the local council doesn’t believe plans are necessary for.
In the last instance, it is up to the building control officer to make this decision.
How This Affects You
We have had numerous queries on this site in terms of when and where plans are required. As you will see, there are a few exceptions, but ultimately it is up to the local authority to decide whether or not you need plans.
It also stands to reason that the structures defined as minor building work will all need to be fit for purpose. So you can’t say you are building an aviary (which can be 20 square metres in area), and then build a brick building with windows, suitable for human habitation!
How far from the boundary wall must I build?
We get a number of questions asking “How close to the boundary am I (or my neighbour) allowed to build?” The site plan above is a sample and is only a guide to the approximate building lines and distances that the Building Regulations allow a house as well as other out-buildings to be built. All the measurements on the plan are in metres and show the distance from a road at the bottom and at the top, from a public open space. You will also see that the side measurements that go on to the neighbours properties is less than that for the road and the open space.
We must point out that this is just a guide. All properties have their own characteristics and features and the boundary distances may vary. You MUST check with your local authority even before you have plans drawn up to avoid having to re-draw and re-submit the plans again and incur extra delays and costs. There are roads, public open spaces and servitudes that all have their own unique set of boundary requirements. If you want to build within the specified building lines you will have to apply for a waiver to the local planning department. They will, more than likely, require you to get your neighbours consent in writing before you can get approval .
Planning House Extensions
Whether you are building a new home or planning house extensions to an existing home, you are going to need building approval from your local authority. Even if you are simply opening up a wall or partitioning a room by erecting a new internal wall, most councils will insist on working drawings.
A self contained flatlet has been added on over an existing double garage and a patio created on the flat concrete roof over the front entrance hall.
They won’t worry about issues like matching materials or style, but they will consider all the elements that relate to building codes and building standards.
There are various ways that you can extend an existing house. For instance you can go up and create a second storey or opt for a more straightforward lateral extension. If the pitch of your roof is sufficient, you might be able to convert this into an attic room. Alternatively you could add a separate freestanding structure with a link to your existing house.
Having said that your local authority isn’t going to be bothered with style, this is an element that is essential if the extension is going to look good. Materials should also match or look as though they have been chosen carefully. This means that if yours is a facebrick dwelling, the extension should be built using the same finish facebrick. If it is plastered and painted, it is best to match the paint colour. This isn’t always as easy as it might seem, since paint colors fade and from time to time manufacturers change their specifications.
Planning for a Building Extension
Sometimes, but not always, people do plan for future extensions. This makes it a lot easier when it comes to adding on a room or converting space. As an example, where a future door is planned, building in a lintel at this point, and enclosing the door area with straight joints will make it easier to knock out the brickwork at a later stage. The fact that the bricks aren’t bonded beneath the lintel won’t be an issue, because the lintel will support those above.
Even so, you will need to be sure that the extension is correctly executed, with the correct foundations (unless of course you are going up, in which case you will need to have existing foundations that can take the weight of the new building extension), and where brick or block walls meet, these will need to be bonded, or joined in such a way that cracking will not affect the structure.
Types of House Extensions
- building a core house and then adding to it later according to existing plans
- converting a garage into extra living space
- converting an attic into habitable space
- constructing rooms in a roof where there is no existing attic
- adding or converting a cellar
- adding a conservatory, sunroom or pool room, usually with glass
In all instances it is essential to ensure that your new house extension complies with building standards.
Develop a Core House
If you are building and you don’t have the means to build the size house you believe you need, an excellent solution is to build over a period of time. Thoughtfully designed, it will never look incomplete.
In the first drawing, you can see that it is a simple, compact two-bedroomed home. Both bedrooms share a bathroom and they are both the same size. Each room has built-in cupboards and there is a laundry cupboard in the passage outside the bathroom. The living area is open plan, with a bar counter “dividing” the living space.
In the second drawing, the kitchen has been extended, in such a way that existing plumbing is used, even though the sink changes position. An exterior door is added, linking to a courtyard with a washing line, and to a double garage. One section of the garage incorporates a storeroom, adjacent to a loo with a basin, accessible from the courtyard. The main bedroom is also included in this phase, although it could, of course, be built on later, since it is at the opposite side of the house. An en suite bathroom and more substantial cupboards are also included in the new plan.
In the third drawing, an open-plan lounge-dining room has been added (blue), along with a new entrance way and a guest loo. A swimming pool has also been included on the plan, though this could also be a separate phase.
Convert a Garage
This can be a very convenient and reasonably easy way to extend a house, although local authorities are usually strict in terms of upgrading the existing finishes. For instance you may need to have a ceiling installed, and lighting and ventilation might need to be upgraded.
Add a Sunroom, Pool Room or Conservatory
There are companies that specialize in glazed structure (or one where a polycarbonate material is used) that fit this category, though you can also have something designed and custom built.
Go into the Roof
Many older homes were built with attics that were intended to be used for storage. You might need to add windows and insulate the walls and ceilings to make the space habitable.
If there isn’t an existing attic, and the roof is high pitched enough, you might consider building a room in the roof space. The basic concept is very similar to converting an attic, although structural alterations will be considerably more complex. If the pitch is not sufficient, you will have to extend the gable ends and increase the pitch of the roof.
In South Africa and other hot-climate countries, the roof space (and attic) in a house can become unbearably hot, so it is essential to pay attention to insulation.
Cellars are surprisingly uncommon in South Africa, but they are sometimes included in the design of a house, and may be added at a later stage providing the foundation walls are high enough. Generally it is easier to add a cellar where the house has been constructed on a slope.
Just remember that for a cellar to be converted into a habitable space (even if only as a playroom), it must be totally dry (there must be a damp-proof membrane between the brickwork and the soil beneath ground level) and have sufficient light and ventilation. Usually this will entail installing artificial ventilation and electric lighting.
What is an Occupancy Certificate?
An Occupancy Certificate is a document that is issued by the Building Control sub-directorate in accordance with the National Building Regulations to certify that a building has been completed in accordance with the approved building plan and all other relevant City Council requirements (for example, the installation of fire fighting equipment to the approval of the Fire Department, payment of all fees and contributions, approved water and electricity connections etc.).
Arrange with the Chief Building Inspector for your area for the issuing of an Occupancy Certificate once your building work is complete, a final inspection has been conducted by the Building Inspector, and all other Council requirements have, to the best of your knowledge, been complied with.
Occupation Certificates – who needs them?
An Occupation Certificate is compulsory for every building before occupation, as required by the National Building Regulations and Building Standards Act (1977). This is to show that all requirements have been met and to safeguard the owner.
The Occupational Certificate specifies the type of building – freestanding, terraced, cluster complex, town house complex, apartment or commercial building. The Certificate is required before water and electricity deposits can be accepted for newly built properties.
It is against the law to occupy a property without 1) a full set of approved plans / planning permission from Council and 2) an Occupation Certificate. An illegal / uninspected building is not insured, this could lead to substantial losses in the event of fire / flood etc. After a month’s grace to submit building plans – property owners can be fined up to R1000 a day for not complying with the Act.
In order to get an Occupation Certificate from Council you will need:
- Approved building plans from the Municipality, plus any documentation from Town Planning regarding rezoning, building line relaxation, consent etc., and if necessary, an approved Site Development Plan (SDP).
- Completion Certificate from a registered structural / civil engineer – this is for the foundations, concrete slabs, staircases, wooden / suspended floors, steel work, soofs, freestanding walls over 2.1m high, swimming pools and all structures built without prior planning permission.
- Certificate (Roof Truss) – your truss supplier / installer should provide you with certification, alternatively consult your engineer.
- IOPSA Certificate of Compliance (Institute of Plumbing South Africa) – this is required for all plumbing / drainage / sewerage work. It can only be issued by a registered plumber – for more information visit www.iopsa.co.za
- Glazing Certificate – your glazier will supply you with Certification.
- Electrical Certificate of Compliance – this can only be issued by a registered Electrician.
- Fire Certificate – this is required for all public buildings and buildings using flammable materials e.g. wood or thatch roofs.
To avoid delays / additional engineering fees etc. at the end of your building project – it is best to contact the Building Inspector prior to starting your building. The Building Inspector will want to conduct the following inspections:
- Trench / Foundation Inspection – prior to concrete being poured.
- Wall / Structure Inspections – at floor level, lintel height and roof level.
- Drain Inspection – before connection to the municipal water / sewerage system and prior to infilling.
- Concrete Slab inspection (if applicable) – before concrete poured.
- Roof Inspection.
Your local Municipality, Builder or Architect will provide you with your Building Inspectors contact details. It is best to call for appointments etc. before 10am whilst they are still in the office.
Once you have got your Occupation Certificate you will need to lodge copies with your bank (if the property is mortgaged) and your home / property insurance provider. This will save a lot of time in the event of a fire / flood etc.
NATIONAL BUILDING REGULATIONS AND BUILDING STANDARDS ACT NO. 103 OF 1977
14 Certificates of Occupancy in Respect of Buildings(1) A local authority shall within 14 days after the owner of a building of which the erection has been completed, or any person having an interest therein, has requested it in writing to issue a certificate of occupancy in respect of such building-
(a) issue such certificate of occupancy if it is of the opinion that such building has been erected in accordance with the provisions of this Act and the conditions on which approval was granted in terms of section 7, and if certificates issued in terms of the provisions of subsection (2) and where applicable, subsection (2A), in respect of such building have been submitted to it;
[Para. (a) substituted by s. 7 (a) of Act 62 of 1989.]
(b) in writing notify such owner or person that it refuses to issue such certificate of occupancy if it is not so satisfied or if a certificate has not been so issued and submitted to it.
(1A) The local authority may, at the request of the owner of the building or any other person having an interest therein, grant permission in writing to use the building before the issue of the certificate of occupancy referred to in subsection (1), for such period and on such conditions as may be specified in such permission, which period and conditions may be extended or altered, as the case may be, by such local authority.
[Sub-s. (1A) inserted by s. 7 (b) of Act 62 of 1989.]
(2) Any person licensed or authorized by a local authority to carry out the installation, alteration or repair of any electrical wiring connected or of which connection is desired with the electrical supply or distribution works of such local authority or any statutory body, shall, at the request of the owner of a building of which the erection has been completed or of any person having an interest therein or of the local authority, issue a certificate if he is satisfied that the electrical wiring and other electrical installations in such building are in accordance with the provisions of all applicable laws;[Sub-s. (2) substituted by s. 4 (a) of Act 49 of 1995.](2A) Upon completion of the erection or installation of-(a) the structural system; or(b) the fire protection system; or(c) the fire installation system,of any building the person appointed to design such system and to inspect the erection or installation, shall submit a certificate to the local authority indicating that such system has been designed and erected or installed in accordance with the application in respect of which approval was granted in terms of section 7.
[Sub-s. (2A) inserted by s. 7 (c) of Act 62 of 1989 and substituted by s. 4 (b) of Act 49 of 1995.]
(3) Any person who for the purposes of subsection (1)-
(a) submits a certificate contemplated in subsection (2) or (2A) which is substantially false or incorrect, knowing the same to be false or incorrect; or
(b) in a fraudulent manner issues or obtains a certificate contemplated in subsection (2) or
(2A),shall be guilty of an offence.
[Sub-s. (3) substituted by s. 4 (c) of Act 49 of 1995.]
22 of 127 NATIONAL BUILDING REGULATIONS AND BUILDING STANDARDS ACT NO. 103 OF 1977 (as amended )
permits the occupation or use of such building-
(i) unless a certificate of occupancy has been issued in terms of subsection (1)(a) in
respect of such building;
(ii) except in so far as it is essential for the erection of such building;
(iii) during any period not being the period in respect of which such local authority has granted permission in writing for the occupation or use of such building or in contravention of any condition on which such permission has been granted; or,
(iv) otherwise than in such circumstances and on such conditions as may beprescribed by national building regulation, shall be guilty of an offence.
[Para. (b) deleted by s. 7 (d) of Act 62 of 1989.]
(5) The Minister may, on such conditions and for such period as he may think fit, by notice in the Gazette suspend the application of this section in the area of jurisdiction of any local authority.
Concourt rules new homeowners not liable for debts of previous owners
The highest court in SA has found against municipalities for wanting to make people cough up for debts that aren’t theirs.
Municipalities cannot hold a new property owner liable for a previous owner’s historical municipal debt, the Constitutional Court ruled on Tuesday.
The precedent-setting ruling gives relief to home and business owners, who have been saddled with years of historical municipal debt – dating back to 20 years – and have been denied municipal services until the debt had been paid. The outstanding debt includes water, electricity, rates and taxes charges associated with a property.
In a ruling majority written by Justice Edwin Cameron, the court found that upon transfer of a property, a new owner is not liable for old municipal debt. The court upheld a ruling by the high court in Pretoria in November last year – mainly the part stipulating that the liability of the old municipal debt rests with the previous owner.
Metropolitan municipalities of Tshwane and Ekurhuleni brought an application at the Constitutional Court to appeal the Pretoria High Court ruling.
The Banking Association of South Africa, commercial property financier Tuhf and the Ethekwini Metropolitan Municipality joined the matter as friends of the court.
The metropolitan municipalities of Tshwane, Ekurhuleni and Cooperative Governance and Traditional Affairs Minister Des van Rooyen were ordered to pay costs for the appeal application.
Giving municipalities the power to claim historic debt has implications for the banking industry.
In theory, municipalities would be the first to claim the debt from the proceeds of a property sale, which could result in banks not getting their money back. This would happen when the municipal debt and the amount owed to the bank is larger than the value achieved from the property sale.
Historically, a property was not allowed to be transferred to a new buyer until a municipal certificate that cleared debt spanning over two years was issued under section 118 (1) of the Municipal Systems Act.
However, debts that surpassed the two-year cut off became the liability of the new owner. If the owner failed to pay the debt, the municipality was then permitted to attach and sell the property to settle the debt.
At the heart of the appeal is the interpretation of section 118 (1) and (3) of the act. The act includes a security provision for historical debt to be incurred by the new owner, which municipalities used in their refusal to issue a clearance certificate during the sale of a property until all debts had been paid. This section of the act was declared unconstitutional by Judge Dawie Fourie at the High Court as it unjustifiably limited the property rights of new owners under the Constitution.
In its judgement, the court assessed common law factors that could impact on how section 118 (3) of the Municipal Systems Act can be interpreted in line with the Bill of Rights. Cameron said the sections of the Act must be interpreted so that historical debt is not transferred to the new owner.
It is on this basis that the court ruled that the section 118 (3) is “well capable of being interpreted ” so that the historical debt is not transferred to a new owner of the property. The court did not confirm the ruling by the High Court that sections of the Act were unconstitutional and invalid, as Cameron said the sections can be “properly and reasonably” interpreted without Constitutional objection.
Section 118 doesn’t require a formal registration of the property’s historical municipal debt with the Deeds Registry office when it’s about to be transferred to a new owner.
“What is notable about section 118(3) is that the legislature did not require that the charge [historical debt] be either registered or noted on the register of deeds. Textually, there is no indication that the right given to municipalities has a third-party effect [to a new owner]… It [historical debt] stands alone, isolated and unsupported, without foundation or undergirding and with no express words carrying any suggestion that it [historical debt] is transmissible,” he said in the judgement.
The respondents in the matter argued that making a new owner liable for historical debt could prejudice new homeowners and promote the deprivation of property, in line with the prescripts of the Bill of Rights. Cameron held this view, saying if the debt survives the transfer to the new owner under section 118(3), “there could be a significant deprivation of property”.
Read the full judgment below:
CONSTITUTIONAL COURT OF SOUTH AFRICA
Chantelle Jordaan and Others v City of Tshwane Metropolitan Municipality and Others; City of Tshwane Metropolitan Municipality and Others v Chantelle Jordaan and Others; Billie Ann Livanos v Ekurhuleni Metropolitan Municipality
Date of Judgment: 29 August 2017
The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.
Today the Constitutional Court handed down judgment in an application for confirmation of an order by the High Court of South Africa, Gauteng Division: Pretoria (High Court) that declared section 118(3) of the Local Government: Municipal Systems Act, 2000 constitutionally invalid. This section provides that an amount due for municipal services rendered on any property is a charge upon that property and enjoys preference over any mortgage bond registered against the property.
The matter came before the High Court after the City of Tshwane and Ekurhuleni municipalities suspended, or refused to contract for the supply of, municipal services to the applicants’ properties. This was on the basis that the applicants, who are relatively recent transferees of municipal properties, owe the municipalities for municipal services rendered to these properties before transfer. In other words, the municipalities required these new owners to pay historical municipal debts. The applicants complained that they faced darkness, having no electricity, and many other inhumane conditions because they bought property whose previous owners failed to meet their obligations to the municipality – and against whom the municipality failed to enforce its rights in fulfilment of its constitutional obligations.
The High Court found section 118(3) constitutionally invalid, to the extent only that it has the effect of transferring to new or subsequent owners municipal debts incurred before transfer. The High Court found this to be an arbitrary deprivation of property in terms of section 25 of the Constitution. It said that new owners of property are not liable for municipal debts incurred by previous owners. Therefore municipalities may not sell the property in execution to recover the debt or refuse to supply municipal services on account of outstanding historical debts.
In considering whether to confirm the High Court’s declaration of constitutional invalidity, this Court had to determine whether the provision, properly interpreted, in fact means that, when a new owner takes transfer of a property, the property remains burdened with the debts a previous owner incurred. If the provision was capable of an interpretation that did not impose constitutionally invalid consequences, the High Court’s declaration of constitutional invalidity would be unnecessary.
Before this Court, Tshwane, Ekurhuleni and now eThekwini municipality, which was admitted as amicus curiae (a friend of the Court), contended that a proper construction of section 118(3) was that the charge survives transfer. They argued that for municipalities to properly fulfil their constitutional duties of service delivery, in the greater good, they needed extra-ordinary debt collecting measures. This meant burdening new owners with the responsibility for historical debts. Both in the High Court and in this Court, the Minister of Cooperative Governance and Traditional Affairs also presented argument in support of the municipalities’ stand.
The municipalities however conceded that nothing prevented them from enforcing their claims for historical debts against those who incurred them, namely the previous owners. The municipalities conceded further that their powers included interdicting any impending transfer to a new owner by obtaining an interdict against the old, indebted owner, until the debts were paid.
Also admitted as amici curiae were the social housing organisation, TUHF Ltd (TUHF); The Banking Association of South Africa (BASA), an association with thirty-two member banks and the Johannesburg Attorneys Association (JAA). TUHF and BASA associated themselves with the applicants in challenging the meaning the municipalities ascribed to section 118(3). They advanced further arguments including that section 118(3) permitted arbitrary deprivation of not just the new owner’s property rights, but of real security rights the new owner confers on any mortgagee who extends a fresh loan on the security of the property post-transfer. The JAA focused on a conveyancer’s duties and ethical position should this Court hold that the section 118(3) right survives transfer.
In a unanimous judgment, penned by Cameron J, this Court weighed the historical, linguistic and common law factors bearing on how the provision should be understood, plus the need to interpret it compatibly with the Bill of Rights.
The Court held that the provision is well capable of being interpreted so that the charge does not survive transfer. Indeed, it must be so interpreted. The Court held that a mere statutory provision, without more, that a claim for a specified debt is a “charge” upon immovable property does not make that charge transmissible to successors in title of the property. Public formalisation of the charge is required (e.g. registration in the Deeds Registry) so as to give notice of its creation to the world.
Section 118 does not require this public formalisation process. In any event, the Bill of Rights prohibits arbitrary deprivation of property, which would happen if debts without historical limit are imposed on a new owner of municipal property.
Therefore, to avoid unjustified arbitrariness in violation of 25(1) of the Bill of Rights, the Court held that section 118(3) must be interpreted so that the charge it imposes does not survive transfer to a new owner.
In the result, the Court held that, because section 118(3) can properly and reasonably be interpreted without constitutional objection, it is not necessary to confirm the High Court’s declaration of invalidity. For clarity, the Court, however, granted the applicants a declaration that the charge does not survive transfer.
As this represents a victory in substance for the applicants, the Court held that the municipalities and the Minister should pay the applicants’ costs, including the costs of two counsel.
Prescription of municipal debt
On 13 February 2017, in the case of Argent Industrial Investment (Pty) Ltd and Ekurhuleni Metropolitan Municipality, the court had to rule on whether the municipality’s claim for water consumption had prescribed.
The court concluded that If a consumer receives a utility bill reflecting, for the first time, charges older than three years, it cannot be held liable for such amounts, as the charges have prescribed.
It is not the duty of the consumer to read meters and determine their actual consumption. As a result, a consumer will not be considered to have acknowledged a debt when the municipality has failed to provide details.
- The Facts:
- Between September 2009 and March 2015, the applicant (Argent) was charged, and paid, for estimated water consumption. The meter installed at the applicant’s premises was not read between 21 September 2009 and 13 March 2015. After the meter was read on 13 March 2015, the applicant was billed R1 152 666.98 for the difference between its actual usage and the estimated consumption for which it had already paid, during the period September 2009 and March 2015, almost six years. The applicant then raised a dispute regarding the charges for usage that had occurred more than 3 years before that date.
- The applicant did not dispute that it had consumed the water reflected by the meter reading in March 2015. Its only contention was that its obligation to pay for any consumption more than three years before that date had already prescribed by the time the respondent (the municipality) presented the applicant with its invoice.
- The respondent did not proffer any reason, on the papers, why no meter reading was taken between September 2009 and March 2015.
- The respondent argued that the consumer is never released from its obligation to pay when the respondent has not issued an invoice or otherwise informed the consumer of the charges which it has incurred (because of several acts, notably the Local Government: Municipal Systems Act, and the Ekurhuleni Metropolitan Municipality Credit Control and Debt Collection Policy 2015/16). Further, that that monthly payments constituted an acknowledgment of debt, and an amount due and payable by a consumer is a consolidated debt, and that any payment into the account will be allocated to that consolidated debt as determined by the respondent.
- The Prescription Act, 68 of 1969 (“the Prescription Act”) provides that:
- a debt is extinguished after the lapse of three years;
- prescription starts to run as soon as the debt is due;
- prescription does not commence to run until the creditor is aware of the existence of the debt, but only if the debtor has wilfully prevented the creditor from becoming aware of the debt;
- a debt is only due when the creditor has knowledge of the identity of the debtor and the facts giving rise to the debt, but if a creditor could have acquired that knowledge by exercising reasonable care, the creditor is deemed to have that knowledge, and
- the running of prescription is interrupted by an acknowledgement of debt or by the issue of process.
- The respondent relied on section 12(3) of the Prescription Act for the contention that it was only when the meter was read and the invoice issued that the respondent, the creditor, became aware of the facts giving rise to the debt.
- The Judgment:
- The court found that the respondent had a duty to take reasonable steps to collect what was due to it. In any event, the respondent had knowledge of the relevant facts. At all times, the respondent was aware that it was supplying water to the applicant. It was aware of the applicant’s identity. It was clear from the fact that the applicant was paying an estimate each month, if from nothing else, that the respondent had not read the meter on the applicant’s property. These are the facts giving rise to the debt. The only “fact” of which the respondent did not have knowledge was the exact consumption of the applicant, and this was knowledge within the respondent’s reach, had it simply fulfilled its functions.
- On that basis, it found that the claim over three years only had prescribed, and ordered the respondent to reverse all charges (plus interest and legal fees, thereon) raised before March 2012. It also prevented the respondent from terminating services because applicant had not paid the amounts added to the applicant’s account in the invoice of 24 March 2015.
- The respondent was ordered to pay the costs of the application.
A Guide To Understanding Your Municipal Bill
Municipality bills are often a nightmare to decipher. You might not be entirely sure what you’re being charged and why – so we put together a handy guide to help you avoid any pitfalls.
The dreaded municipal bill is a key form of communication between local government and its citizens. Just how effective this communication is can be determined almost entirely by the consumer’s understanding of that municipal invoice.
Therein lies the problem. Here in South Africa, invoices just aren’t standardised, despite repeated efforts to get this rectified. Municipal bills are often:
- Barely legible;
- Barely understandable;
- Non user-friendly;
- Non customer-orientated;
- Nausea inducing, if you stare at them for too long.
There’s no shame in admitting that most of us just don’t understand these bills. We know for sure that we’re being robbed in some foul way, but we don’t know how.
This lack of understanding is dangerous, for reasons both obvious and dubious, and the previous paragraph is a prime example of why.
It breeds distrust. We don’t know if what we’re seeing is correct. We refuse to pay.
And this, coupled with large amounts of government incompetence and a 90k KFC bill, is why our municipalities are drowning in debt.
Furthermore, all the obfuscation has a negative effect on the customer’s awareness and regulation of use, and does little to reduce our energy and water footprint. Bearing in mind that no two municipalities issue identical bills, there’s almost no information on consumption, no communication on conservation and nothing is learnt.
Until these invoices improve, they will never function as intended and customers will continue to struggle in fully understanding them.
So, let’s take a look at the problem with municipal bills, and see if we can break them down.
Firstly, What Is This Bill About?
Most South Africans should know all about municipal bills. If you live in a house and have access to electricity, water and waste removal services, then you should receive a monthly bill from your local municipality, the amount payable depending on your usage.
As previously stated, no two municipalities issue identical bills, but all of the basic information should remain the same.
This information should include:
- Your name and address;
- The invoice and VAT number;
- Your account number – used as reference for when you make payment;
- Contact details for the municipality, as well as the VAT numbers for all service providers;
- The date, which indicates the month owing. You should always check this to ensure that you are paying for the correct statement;
- The total amount due, as well as the due date. If you’re being invoiced for January, for example, your due date would be before the end of January;
- A PIN, used if you would like to access the electronic version of your invoice;
Most invoices should issue you with itemised billing – meaning that the cost of each and every service is laid out clearly. Some municipalities, however, do not do this, and it’s incredibly irritating. We’ll go into this a little more below.
One of the biggest problems, as mentioned at the beginning of this article, is that consumers just don’t understand what’s happening on the invoice. You may be provided with a bunch of information, but there’s no way to decipher it. Worse yet, with the state of government as it is, it’s safe to assume that every now and then you’ll be billed incorrectly.
The Problem With Municipal Bills
High municipal bills have been irritating South Africans for some time, particularly in Cape Town with the water problems. So, it’s imperative that we understand the bill we’re receiving, and know what we’re paying for. The ordinary South African struggles to find the right information on a municipal invoice. While the basics may be there, we may find it illegible or confusing. Some info you may be searching for, but unable to find, could include:
- Amount owed from previous months;
- The date of the meter reading;
- Water usage. Yes, believe it or not, some invoices just don’t tell you how much you’ve used.
Some other elements which make the invoice confusing:
- The use of numbers without the unit, such as R or Kl – leaving the consumer to wonder if what they’re reading is an amount owed or an amount used;
- Some might not understand the difference between Litres and Kilolitres;
- The use of codes which are entirely meaningless to the customer;
- Usage of acronyms or abbreviations which nobody understands, such as w, cons, bas or char;
- Even the most educated of consumers may find it difficult to figure out the meaning of certain terms, such as remittance advice, rebate, opening balance, balance brought forward, etc.
Understanding Terminology On Municipal Bills
Something else to note is that not all municipalities will bundle water, electricity and other charges, such as refuse removal, onto one bill. Sometimes, you’ll receive more than one invoice, and just like municipal bills will differ in appearance from city to city, they also make use of different terminology. Which is senseless, but nonetheless…
Here are some of the main terms you need to understand.
- Arrears / Opening Balance – This is the amount you owe before the current month has been added. In other words, it’ the balance brought forward from a previous invoice. If you haven’t paid your last bill, the opening balance will be the amount still owed. If you have paid your bills, the opening balance should be R0.00.
- Current Amount Owed – The amount owed for the current month.
- Total Liability / Closing Balance – This is the total amount owed after all of the current month’s expenses have been tallied. It should include the arrears owed, as well as the current month. It may or may not include VAT or any other charges, so be sure to check.
- Credit – Money paid into your account, or money owed to you by the Municipality. Say for instance you over paid on your last invoice – you owed R300.00 but paid R400.00 – then that means you’ll have a credit of R100 going into the next month.
Before we get into the actual invoice, it’s also important to note that, in South Africa, we receive two types of billing on electricity. metered and pre-paid.
With the metered system, you use electricity and you’re then billed accordingly. The amount you use is counted by an electricity meter – a small box found either inside or outside your property.
Once a month, a meter reader is supposed come to your house and make a note of your electricity usage, and after that reading is uploaded into the system, you’ll receive a bill. If you’re lucky, the meter readers might actually do their jobs properly.
With the pre-paid system, you buy electricity much the same way as you would buy airtime for your phone. You can then load this into the special meter in your home. Unlike the aforementioned meter, a pre-paid meter counts downwards, to show you how many units you have left.
These units are called Kilowatt Hours (kWh) and each kWh is charged according to set rates.
Because nobody from the municipality reads this pre-paid meter, and because you’ve already paid for your electricity, you won’t receive a bill for it.
One more thing to remember is that the more electricity you use, the more you’ll pay per kWh, and pre-paid electricity is commonly more affordable than metered. Plus, you can remove human error from the equation – provided that you remember to buy your vouchers.
Municipal Bill Explained – Part 1
Below, we have the example of a municipal bill issued by the City of Johannesburg.
There are two parts
Basic information contained within this bill includes (1) the name of the property owner, the address, the size and estimated value of the property (2) and also the date of that valuation. This last part is noteworthy because basic municipal rates take the size of your property into account, as well as the area in which it is situated.
There is also the invoice number (3) – which you’ll need to query the invoice – and your municipal account number (4) – used as a reference number.
At (5) you’ll find the relevant contact information at (6) the VAT numbers of the municipal departments providing service.
The date on which the invoice was issued is found at (7).
At the bottom of the page you’ll find the EasyPay number (8), which you can use to pay your bill at special EasyPay machines in various outlets, and the municipality’s banking details (9).
The total amount due can be found in detail in the middle of the page, but also at the bottom right (10) with the due date. You’ll note that it gives you the previous amount owed, minus the amount last paid, and the current amount owed.
Finally, at (11) you’ll find a special PIN to use when accessing your account online.
Municipal Bill Explained – Part 2
Now we move on to the reverse side of this same bill, in which the services you have made use of are broken down by section – with itemised billing.
Here we have six different sections. Property Rates, Electricity, Water & Sanitation, Refuse, Sundries and Current Charges.
Property Rates (12) shows you what your basic municipal rates will be for the month, determined by the size, location and value of your property.
Electricity (13) shows how much you owe for electricity used and Water & Sanitation (14) shows how much you owe for usage and services rendered. Both of these detail how many kWh and Kl you have used, as well as the rate per unit.
Of course, Refuse Removal needs to be paid, and this can be found at (15).
Finally, at (16) you will find the total amount due for these services – and this amount should correspond to the Current Amount due on the first page.
We’ve used an invoice by the City of Johannesburg because it is one of the best. The information is precise and laid out in a clear way. Easy to understand.
Other invoices, such as those issued by the Matjhabeng, Amathole, eMalahleni or Msunduzi municipalities are often an absolute nightmare to decipher. They’re unclear, jumbled, convoluted and idiotic, with a bunch of abbreviations nobody understands.
So, it’s easy to become confused. But – if you familiarise yourself with the examples above, the others are a lot easier to comprehend. All you need is patience. A lot of patience.
WHO’S LIABLE FOR RATES OF NEWLY SUBDIVIDED LAND?
A recent case between a developer and municipality threw up – and answered – the question of who is liable for the rates of newly subdivided land.
The legal case officially pitted EM and EM Engineering (Pty) Limited (a developer and property owner) against KwaDukuza Municipality and Others.
The property owner/developer registered a general plan that subdivided the property (the mother property) into 91 subdivisions. A dispute arose between the developer and the municipality when the developer applied for a rates clearance certificate in order to transfer two subdivisions from the mother property to a third party.
The developer contended that a rates clearance certificate is required only in respect of the two subdivisions of the mother property being transferred. But the municipality argued that on the basis that the two subdivisions still formed part of the mother property, the rates and charges payable (before a rates clearance certificate could be issued) are those relevant to the mother property as a whole.
The developer submitted that if the municipality’s view was adopted, all rates and charges due in respect of the mother property should be paid on each occasion before any transfer of any individual subdivision would be allowed.
The court held that:
• there had been no change of ownership by the creation of subdivisions through the registration of the general plan over the mother property.
• that future transfers of the subdivisions from the mother property would be recorded in the Deeds Office in a dedicated register. Until such time that the subdivisions have been transferred to a new owner or a certificate of registered title has been issued in respect of the subdivisions, the subdivisions will be held by the same title deed as the mother property.
• Section 118(1) of the Act prohibits the registration of transfer of property without the production of a rates clearance certificate with regard to “that property”.
• the reference to “that property” in section 118(1) of the Act refers to the subdivision concerned and not the mother property, which has by virtue of the registration of the general plan, been sub-divided into multiple erven.
As a result, the court held that a rates clearance certificate need only be issued in respect of the subdivision/s being transferred and not the mother property as a whole
Property Zoning and Rezoning Applications in South Africa
Just about everybody has heard of zones and zoning in relation to property, but the average property buyer or owner has little – if any – clear knowledge of what the different zones are, if and when one needs to apply for any form of zoning or re-zoning, and how to go about this task.
The different types of zoning
For the purposes of this, we are discussing the three basic categories of zoning – residential, business and industrial – and how each category is then sub-divided further into different zones.
Looking first at residential property, there are four categories, and restrictions on the building or buildings to be constructed on the property are determined in terms of three elements known as coverage, F.A.R. (floor area, ratio) and density.
Coverage is the maximum area of land on which one is permitted to build; F.A.R. (floor area ratio); bulk is the maximum floor area allowed under a roof; and density is the number of dwellings permitted per hectare (10 000 square metres).
Residential 1 is the zoning which stipulates that properties can have a density of only one dwelling per stand or erf, that is, a house.
An example here would be as follows:
Firstly, one is allowed to build one house on the property in terms of this zoning. Coverage permitted is 40%, which means that on a 1 000-square metre stand one would be permitted to build a dwelling covering a maximum of 400 square metres, including garages and outhouses. If one is given the right to build a two or three-storeyed home, one can cover up to 400 square metres per storey. The footprint cannot be more than 400 square metres.
Residential 2 allows a density of between 10 and 20 dwellings per hectare, bearing in mind that a hectare is 10 000 square metres (or just under 2.5 acres). This is obviously the ideal zoning for cluster housing or townhouse complexes.
Residential 3 permits a density of between 21 and 40 dwellings per hectare, and is therefore usually used for smaller cluster or townhouse complexes.
For example, on a 26 000-square metre property, 40% coverage amounts to 10 400 square metres. With a density of 25 units per hectare, the developer on this site could then typically build 65 townhouses (2.6 hectares’ x 25) of 160 square metres each (that is the total coverage of 10 400 squares metres divided by the 65 units) over two floors – 100 square metres at ground level (including a double garage) and 60 square metres upstairs.
Allows for a density of between 41 and 120 dwellings per hectare, and obviously caters for the construction of blocks of flats.
Moving on to business property, once again there are four clear sub-divisions.
Business 1 is the zoning one would seek for general business in the form of shopping centres or malls. This category is mostly unrestricted, which means that the developer or owner would be allowed to have almost any type of shop on the premises.
Business 2 is a zoning for a shopping centre, but with certain restricted businesses.
Because of the location or immediate surroundings a restriction may be placed on opening a bottle store, or a pet shop.
Business 3 is a stricter zoning which will not allow a wider variety of businesses to open and operate in the centre.
Business 4 is the final zoning category for business, and does not involve shopping centres or malls at all.
It provides for office use (with or without residential use) and is typified by the growing number of office parks that one sees in South African urban centres today.
An example here:
A 4 000-square metre property with the usual 40% coverage and 0.4 floor area ratio could place a maximum of 1 600 square metres under roof. Assuming he has been allowed a maximum of two storeys, a developer of this site would typically build three double-story office blocks of 530 square metres each (1 600 square metres divided by 3). Each block could be further split into four office suites of 132 square metres each.
The final category involves industrial property, and has three sub-divisions.
Industrial 1 provides zoning for normal factories, warehouses or storage depots.
Industrial 2 is specifically for operations which can involve noxious and/or unpleasant odours and emissions, such as abattoirs, foundries or glue works.
Industrial 3 is the final zoning, and caters for specific applications such as specialist workshops or mini-factories.
For industrial zoning a 70% coverage is typically allowed, which means a 3 100-square metre property could have buildings covering a floor area of 2 170 square metres. Let us say it has also been granted a height restriction of 20 metres maximum. A developer of this site would typically build a single-storey factory warehouse unit of 2 170 square metres with a high roof for an application like a gantry crane or pallet storage.
When is zoning or rezoning necessary?
As far as residential property is concerned, usually one is looking either to rezone or to sub-divide a particular property.
Re-zoning could crop up – for example:
If one is running a business from home, and the business grows to the extent that traffic and activities reach a level which could upset and inconvenience neighbours. One would then apply for rezoning from a Residential 1 to a Business 4 category. This would generally not apply in the case of a small home business with two or three staff, one or two cars, and occasional client visits.
Sub-division, very simply, comes into play if one owns a large property (of 2 000 square metres, for example) and wishes to break it down into (say) four separate units. In this case one would apply for the property to be converted from a Residential 1 zoned property with one dwelling per stand, to a property zoned for one dwelling per 500 square metres.
In the case of residential or industrial property, obviously anyone contemplating the opening of a business or industrial undertaking will have to ensure – in looking for a suitable property – whether it is correctly zoned. If not, the prospective businessman or industrialist will have to submit the necessary application for zoning to the relevant local authority.
How do I apply for re-zoning?
No matter which option one is applying for – be it any of the subdivisions in the residential, business or industrial category – one has two options.
First of all, we are one email away form assisting you with this entire process
The advantage here is that the application is being handled by a specialist who is familiar with all aspects of the procedure, and who will follow it through to its logical conclusion both efficiently and effectively. The disadvantage, of course, is that one will have to pay a fee for this service, although one should bear in mind that any such fee may well be the cheaper option in the long run.
The alternative is to handle the entire procedure oneself, but be warned that it can be a long and laborious affair which could stretch to anything between two months and two years.
Should one choose this option, the essential first step is to arrange an appointment with the town planner of the relevant municipality. He or she is the expert, and will be able to provide you with a step-by-step guide of exactly what you have to do and what documentation you will have to obtain and complete.
Bear in mind, however, that in a less than perfect world the fact that one is armed with a detailed “to do” list does not necessarily mean smooth sailing. On the contrary, one is more than likely to encounter an ongoing series of hurdles and problems for which one has no answers.
Never feel too embarrassed to contact us with each question that crops up. It is far better to consult the expert than to take an ignorant and ill-advised stab in the dark oneself.
It is that sort of irresponsibility that will take far more of one’s time, and in the long run will cost one far more money than any fees one pays
ANALYSIS: Municipal debts are not transferred to the new owner
Johannesburg – Municipalities can claim payment for rates as old as 30 years but it is not often that a property is owned by the same person for this period. No wonder property owners across South Africa breathed a sigh of relief when the Constitutional Court ruled on 29 August 2017 that historical debts for rates and taxes do not survive transfer of ownership of a property to the new owner.
Section 118(3) of the Local Government: Municipal Systems Act, 2000, which creates a charge against a property for historical municipal debts, only applies to a property while it is owned by the person who incurred those debts. The court held that, “if section 118(3) meant that new owners are liable, post-transfer, for a previous owner’s debts, it would be constitutionally impermissible”.
Financial institutions and lenders will be equally pleased by the ruling – the Banking Association of South Africa was party to the proceedings and argued that if liability for historical debts survived transfer of ownership, the real security rights of bond holders who extend loans to new purchasers to acquire a property, would also be compromised resulting in an arbitrary deprivation of property.
Following the uncertainty created by rulings in recent cases on the same subject in our high courts, prudent purchasers were insisting on sellers providing warranties that there were no historcial debts to municipalities in respect of the property purchased.
This put sellers in a difficult position when the debts could have been accumulated by people who owned the property before them, and up to 30 years previously. Purchasers no longer have to worry about becoming liable for historical debts and new bond holders are secure in their lending.
A decision any other way would have allowed the arbitrary deprivation of property, something which is guarded against in our Bill of Rights, and would have placed security of ownership in South Africa at risk. The decision gives us further faith in the South African judiciary and enforces the secure system of land ownership in South Africa, hopefully with a positive impact on local and foreign investments into our property sector.
But what now for municipalities? They are not left out in the cold entirely, as the court held that section 118(3) does apply to a property while the person who incurred the debts is still the registered owner. This means that a municipality could interdict the transfer of a property to a purchaser where the seller is overdue on debts older than 2 years; provided that these debts were incurred by the seller.
A municipality cannot withhold a rates clearance certificate for transfer, as section 118(1) relates only to liabilities for a period of 2 years before the date of transfer. Our Deeds Registry only requires a rates clearance certificate to pass transfer.
However, the request by a conveyancer for a rates clearance certificate will notifiy a municipality of the impending transfer and jolt them into action to recover or get security for any histoical debt before the transfer takes place.
Owners should keep track of their rates and taxes accounts to ensure there is no delay to transfer caused by a municipality instituting an application to interdict the transfer of the owner’s property, until unpaid debts are settled. Purchasers should continue to get warranties so that their transactions are not interdicted without recourse.
While section 118(3) is a “charge” on a property, the existence of historical debt is not knowlege within the public domain and therefore the responsibility lies with a municipality to “publicise” the debt and enforce this charge before transfer. The Deeds Registry, the conveyancer, the existing bond holder and /or the purchaser will have no knowlegde of any historical debt of the seller.
This is significant because while the municipality’s charge enjoys preference over any other charge or real right over a property, including the liability secured by any bonds, there is no public knowledge or external mechanism to prevent transfer when there are historical liabilities, other than the municipality taking action.
The position is different with an existing bond holder, because our Deeds Registries Act does not allow transfer until any bonds registered over a property are cancelled, or the property is released from the bonds. The bond holder consents to the cancellation of, or release of the property from the bond and will only do so when their debts have been paid or secured to their satisfaction.
Despite the fact that a municipalty’s debts are preferent to those of a bond holder, if the municipality does not enforce its charge, the existing bond holder will simply recoup its full debt without any knowledge of debt owed to the municipality.
And once the transfer is registered, the charge for that particular debt of the seller falls away and the municipality will have to institute action against the seller personally, without the benefit of the a charge against the property. The effect of this and the Consitutional Court ruling should see better administration and collection of debts by municipalities in the future.
The court confirmed that “it is imperative that municipalities do everything reasonable to reduce amounts owing” to it. While municipalities have the safety of the section 118(3) charge, the onus lies with the municipality to ensure that debts are paid prior to any transfer.
R1.5 million for fictitious invoicing
The National Energy Regulator of South Africa (NERSA) has ruled against Eskom’s fictitious invoicing for a small mining company.
This comes after Eskom’s management incorrectly blamed the customer for meter tampering and meter failure, as their meter readings were lower than the utility’s estimated readings.
Eskom decided to declare the company’s meter as faulty without informing them. The utility replaced their device while adjusting the mine’s bill upwards by more than R1.5m.
Ted Blom, recently represented this mining company which, as a result of a downturn in the market, has been forced to significantly cut production and subsequently electricity consumption.
The mine, in a desperate situation because of plummeting sales, contacted Blom who within two arbitration meetings, rubbished Eskom’s claims by proving that their billing was fictitious, and an amount of over R1.5m should be refunded.
NERSA, who oversaw the arbitration, agreed and ordered Eskom to issue a refund to the mine.
Blom said it has come to his attention that there are many more instances of over-invoicing by Eskom against consumers.
“These include smaller clients and municipalities, the latter of which could amount to the bulk of the R9.6billion ‘Eskom arrears’ which is threatening to collapse South Africa’s Municipal infrastructure countrywide,” said Blom.
He highlights that more than 80% of municipalities are bankrupt solely because of outstanding debt to Eskom.
“Eskom and municipal customers need to scrutinize their monthly accounts in detail. And if Network charges or fixed charges on the monthly electricity invoice exceeded 30% of consumption charges, the consumer is in all probability being ripped off.”
SA BODY CORPORATE – BULK WATER AND ELECTRICITY MUNICIPALITY ACCOUNTS
When auditing body corporate municipal accounts some often discover that the account is still in the name of the developer. Legally speaking this is not correct, and it can cause significant prejudice to all parties concerned when this happens. This article explains why and how this happens, the potential consequences, and how it can be rectified.
Establishment of body corporate
Establishment of a sectional title scheme occurs when the scheme’s founding documents are registered in the Deeds Office. But body corporates of sectional title schemes come into existence on the date that the developer transfers the first unit in the scheme to a purchaser thereof. Normally the developer will transfer one or more units in the scheme to purchasers simultaneous to establishment of the scheme. But there are instances in law when a sectional title scheme is established, but the developer never sells the units and retains ownership of all of them. In this instance no body corporate comes into existence (until the first unit is sold to a third party).
The account holder of the water and electricity bulk utility accounts should be the entity that is consuming the services provided by the municipality, or alternatively the entity that is responsible for payment of the charges billed for the services consumed. When dealing with sectional title body corporates, this means that the body corporate (rather than the managing agent or the developer) should ideally be the account holder.
Body Corporate accounts in other entities’ names
However, it is not wrong for the managing agent or meter reader to be the account holder – but it does sometimes make it difficult when disputes arise because then the municipality might start questioning who has the power to act in terms of the account. The same sort of legal problem arises when a tenant is allowed to open an account, and either the property owner or the tenant raise a dispute with regards to the charges billed to the municipal account. This is not legally insurmountable and a good attorney will pre-empt this by obtaining consent / powers of attorney before engaging with a municipality in respect of a dispute, but regardless of this, when you get to court, the court itself or the opposition might raise arguments based on the nature of who is cited as a party to the application, and in what capacity, and why.
A case in which a property owner (a company) had two accounts with the City of Joburg (“COJ”). The COJ changed the name of the account holder without any authorisation, to reflect the name of a non-existent person. It is suspected that this happened because many years ago someone at the COJ who used to deal with the account, knew a person at the office of the property owner, with the same first name. The second name of the non-existent account holder was the same as the surname of one of the directors of the property owner. Although the property owner had applied to open the account, had been receiving and paying the account for many years, when the property owner took the COJ to court because of an unresolved dispute on the account, the COJ raised as a defence in court that the property owner was not the account holder and therefore had no legal standing to dispute the charges on the account. It is substantially prejudicial to the property owner when something like this happens, because the property owner will have to expend time and legal fees proving to the court that the account in question was or is its and that it should be entitled to approach the court for relief in respect of the account.
Sadly, we see many cases where managing agents and meter readers cease to exist (inasmuch as they are deregistered or liquidated), or they encounter problems with payment (where their funds are frozen) or even where they simply receive payment of amounts from owners for utilities, but don’t pay those amounts over to the municipality. The body corporate then discovers that its municipal accounts are in massive arrears, and tries to deal with the municipality to arrange a payment plan or stave off disconnection, and is denied this opportunity because the municipality does not recognise the body corporate’s right to act in terms of the account. The body corporate may also be prevented from gaining access to the municipal statements for its own account, because of strict privacy laws that some municipalities enforce, which allow only the account holder access to the accounts.
Unfortunately, this happens. Often. We would recommend avoiding this possibility by simply holding all body corporate municipal accounts in the name of the body corporate directly.
Developer’s liability for all units in scheme – when nobody corporate exists
Where a developer is the owner of all of the units in the scheme and he developed the scheme, then no body corporate comes into existence until the first unit is sold to a third party. This means that the developer can continue to receive services from the municipality for the units in the scheme, and can continue to be charged for these units (as well as rates and taxes) in terms of municipal accounts opened in the developer’s name.
However, because the law provides that the owner of each sectional title unit must be billed for property rates for that unit, the municipality will open a number of rates accounts in the developer’s name – one for each of the units. It is likely that the developer will continue to be billed for the water and electricity supplied to the scheme on its old account number that existed prior to the establishment of the scheme.
However, two things need to happen to ensure that the developer’s accounts will all be correct. The first is that the property description of the old account (on which it is most likely that services will be billed) must be amended, because from the date of the establishment of the scheme the underlying erf on which it was built, no longer exists (legally speaking). This is problematic for developers because municipal systems require that meters be linked to properties, and if there is no underlying erf in existence (so to speak) then they will technically not be able to link the meters to anything, and they will not be able to charge the developer. One option is to link the meters to any one of the units, and this would be 100% legally correct, but more often than not the municipality simply allows the property description to remain the same and no change is made. Although not ideal, this practical solution does alleviate the administrative burden on the developer – because if his water and electricity meters needed to be moved to another account (for example, one of the rates accounts for one of its units) then the developer might be required to sign new consumer service agreements and put down new deposits for the supply of these services. In addition the old account (which was for the underlying erf which ceased to exist, and which no longer links to the meters) would need to be closed. This is a further administrative burden for the municipality. Sadly, there is no simple solution to this problem and it is suggested that until the systems that municipalities use are updated to deal with this problem specifically, the best solution is for a developer to continue paying for bulk services on an account linked to a non-existent property.
Body Corporate uses Developer’s Account
What happens when the developer finally sells at least one of the units to a third party? A body corporate comes into being. Let’s consider what happens when a body corporate fails to open its own account in its own name with the municipality for the supply of services, and simply continues to receive services billed to the developer’s account. The municipality will continue to supply the services to the property and to bill for these services on the developer’s old account, which is linked to the underlying erf on which the scheme was built (and which erf no longer exists). Presumably the developer will forward the bills to the body corporate for payment, and the body corporate will make payment (to avoid being cut off or another form of credit control action following non-payment of the account). This will go on until there is a dispute (a) between the developer and the body corporate as to how much of the charges on the account are for the account of the respective parties; and/or (b) a dispute arises between the body corporate and the municipality, or between the developer and the municipality, regarding the charges on the account. Most often the latter kind of dispute triggers investigation into what the disputed amounts on the developer’s account consist of, and it is discovered that part of those charges relate to the period before the scheme was established, meaning that part of those charges are the developer’s liability, and the rest are the body corporate’s liability. This often leads to the former kind of dispute arising between the developer and the body corporate.
Consequences of Body Corporate using Developer’s account
In such a situation an apportionment of the liability on the account must be done by a suitably qualified person who is knowledgeable in the manner in which the municipality bills for service charges. This kind of reconciliation is often complicated by the fact that the municipality may still be charging sewer and rates and refuse charges to the account based on the assumption that the property still exists in an undeveloped form. Another common complication is where developments are completed in phases, and the municipality has not been advised as to how many units are at the property at any given point in time.
Between a rock and a hard place
But the municipality won’t adjust the developer’s account to provide that there are multiple units at the property, because it will insist on the Body Corporate opening up its own account, putting down its own deposit, and billing the Body Corporate for the services it consumes on an account opened in the name of the Body Corporate. So the parties are at an impasse – unless they can employ someone who can calculate not only what the charges on the municipal account should legitimately be, but also the split of what the Body Corporate owe as opposed to what the developer owes, the developer is unlikely to give the Body Corporate power of attorney to deal directly with the municipality in respect of the account. And this means that it is the Body Corporate that is subject to cut off for the ‘arrears’, because the account is linked to the property, even though the account is not in the Body Corporate’s name. This is despite the fact that the Sectional Titles Act expressly states that the Body Corporate may not be held liable for any debts of the developer in relation to the scheme, because in the situation we are describing, at least some of the debt on the developer’s account is actually the Body Corporate’s debt.
Is there a solution?
The facts of each case will have to be examined very carefully to determine the most effective way of resolving the problem. Ideally, the Body Corporate should have its own account and should be billed in its own name, and only for charges incurred by the Body Corporate itself after the scheme was established and after the Body Corporate came into existence.
To avoid a situation where a Body Corporate disputes its liability to the municipality, but is precluded from being able to deal with the municipality directly because the account is in the developer’s name, or the situation where a Body Corporate disputes its liability to the developer of the scheme in relation to charges billed to the service account for services consumed pre-establishment of the scheme, it is best for Body Corporates to open their own bulk service municipal accounts immediately after establishment of the scheme and further to hold that account in their own names, rather than allowing their meter readers or managing agents to hold the accounts in their own names.
Muddying the waters: COJ’s confusing “zoning driven rating policy”
City of Johannesburg Metropolitan Municipality (“COJ”) has taken the view that rating categorisations and tariffs are distinct legal concepts, and that this entitles it to change a consumer’s tariff without following the procedure prescribed in the Local Government: Municipal Property Rates Act (“the Act”), that applies to the change of a consumer’s rating categorisation. This has upset the proverbial apple cart because it has resulted in thousands of consumers receiving rates bills up to four times their normal charge, and the inconsistent and opportunistic manner in which COJ is applying its policies in relation to this issue, is leaving many of those consumers in the lurch, with little or no relief in sight.
How property rates are charged
In terms of the Act a consumer’s liability for property rates is determined by two factors, the first of which is the municipal property valuation and the second of which is the rating categorisation that the property is put into by the municipality. The rating categorisation must be one of the listed categories in the City’s rates policy, which the City amends each year. Examples of common rating categories would be residential, vacant land, business and commercial, and multiple purpose (also known as mixed use).
A tariff is another name for an amount charged by a municipality for a particular service. Technically speaking the law only refers to tariffs in relation to ‘services’ (like electricity and water) and not to rates, but the COJ (and most municipalities) publish a rates tariff each year, along with their rates policy. The tariff sets out the cost or price associated with each rating categorisation. The amount of money that a consumer is charged for property rates, is based on a simple calculation: municipal valuation (e.g. R10,000,000) x tariff applied to rating categorisation (e.g. 0.005686) = R 56,860 per annum. Divide this by 12 to get the monthly rate = R 4,738.34 per month.
A Property’s Zoning
Zoning is completely different. A property’s zoning is a list of rights that dictate what uses the property can legally be put to. A property’s zoning is determined by the applicable town planning scheme, and amendments made thereto. To find out what your zoning is, you need to get a zoning certificate or “pad” from the municipality’s offices. A property’s zoning determines how the property can be used in relation to several different things, including:
- what kind of uses (eg residential, industrial, commercial, cemeteries, schools, restaurants) the property can lawfully sustain;
- how much of the floor area of the property can be built upon (ie the size of its ‘footprint’ – known in zoning terms as the property’s ‘coverage’);
- how many square meters of floor area a building on the property can have (known as its ‘FAR’ or floor area ratio);
- how close to the boundary of the property buildings can be built (i.e. where its building lines lie); and
- how many buildings or dwellings can be on the property (its density).
You often find properties with a ‘label’ (for example, business) where those properties have zoning rights to be used in a completely different way (for example, to be used to build residential homes on). So a property’s zoning label is often misleading, as it does not describe the full extent of the use rights that the property is entitled to, and in fact, the label of the zoning might be completely different to the use rights given to that particular property. Common examples would include consent use rights to operate a crèche or guesthouse from the property, or restrictions on its use, such as a restriction that the guesthouse may not have more than 10 rooms, or that not more than 20% of the floor area of the dwellings on the property may be used to run a business from. The ‘label’ attached to a property’s zoning thus only describes its main legal use – for example, residential, business, industrial – but it does not describe all of the rights attached to the property.
Legal concepts distinguished
- The Rating Categorisation is the category that the property is put into by the COJ.
- The Tariff is the price that is ‘attached’ to that rating categorisation.
- Zoning is the set of restrictions placed on a property as to how it can be legally used.
COJ’s “Zoning-Driven” Rates Policy
COJ has declared that it has elected (as it is entitled to do in terms of the Act) to use a property’s zoning (rather than its actual use) to categorise properties for rating purposes. This means that the COJ looks to the underlying zoning label attached to the property and puts it in to a rating categorisation that corresponds as closely as possible with that zoning.
Where the zoning and the actual use of the property are the same, this does not present a problem, but as explained above, where the zoning label of the property and its actual use are not in line (for example, where you have residential use permitted on a property primarily zoned for business purposes, or vice versa) problems arise, because the owner will be charged rates that are not in line with the use of the property – even where that use is legal.
COJ’s separation of rating categorisations and tariffs
The COJ has taken a decision that the price a consumer pays for rates, is not necessarily determined by the consumer’s rating categorisation, but rather by the consumer’s tariff. The COJ is of the view that the two concepts can be divorced from each other when charging a consumer rates, such that the consumer’s rating categorisation can be ignored because it is really the consumer’s tariff that matters.
As far as the authors can tell, the COJ began enforcing this view about 6 months ago, and this is the reason that many consumers have seen their residential rates quadrupling, because the COJ has decided that (because rating categorisations don’t matter, but tariffs do) it can simply switch consumers onto different tariffs (most notably the illegal use tariff, where consumers are not using their property in accordance with their zoning or do not have proper building plan approval, and the business tariff, where residential sectional title units are built on land that was once zoned business) without telling the consumer of the pending switch, without giving the consumer any opportunity to make representations as to why he/she/it should not be switched, and in some instances without any opportunity to object or appeal the switch.
Whilst the authors cannot say for certain why the COJ has taken this view, it appears that the COJ is trying to avoid having to follow the comprehensive objection/appeal procedure determined by the Act for the change of rating categorisations, which can take anything up to 2 – 3 years to finalize in extreme cases.
The procedure set out in the Act is carefully designed precisely to ensure that no abuses of consumer’s rights occur, because the COJ is obliged to give the consumer notice of intended changes to the property value or rating categorisation, an opportunity to object, an opportunity to appeal, and a refund if the consumer turns out to be right and the COJ turns out to be wrong at the end of the day.
COJ’s introduction of tariff applications
Because the COJ is now distinguishing between rating categorisations (which in its mind, appear not to carry any weight at all) and tariffs (which it is of the view, actually determines a consumer’s rates charge), it has created tariff application forms that consumers can use to apply to be switched onto tariffs that are different from their rating categorisations. As above, the authors are of the of the view that this is not legal, because the tariff is simply the price paid by the consumer for rates, based on the rating categorisation that the consumer’s property falls into – the two are thus inextricably linked and cannot be divorced or applied in the absence of the other.
The City is using this to allow consumers who qualify to be charged based on the multiple purpose (or mixed use) rating categorisation, on the mixed use tariff – by changing the tariff and not the rating categorisation. Most people are happy with this because results in a reduction of the amount charged to the consumer on a monthly basis. However, in the author’s view this is not correct for the reasons explained above, as it is the consumer’s rating categorisation that must be changed (using the procedure set out in the Act) and not actually the tariff.
The COJ has also created tariff change applications for residential sectional title property owners who find themselves in a difficult position because the underlying zoning of the erf upon which the property is built results in them being charged rates on the business tariff (because their rating categorisation is determined by COJ to be business, following the zoning of the erf). The COJ allows such consumers to apply to switch their tariff from business to residential, which gives them some respite and allows them to be charged residential rates, even where their rating categorisation is described as business. Again, most people do not object to this because it reduces their rates, even though (in our view) this should not be allowed.
Problems with the system
The COJ’s introduction of tariff applications looks like it is working for the benefit of the public in general (which it does, to a certain degree), but because the entire system is built on a flawed premise (namely that the rating categorisation and tariff can be divorced and each applied for and changed separately), several very far reaching and very serious problems have arisen. There are too many to describe succinctly in this article, but the most serious consequences are the following:
- People are using the ‘quick fix’ tariff applications to be switched onto a different tariff. This takes about three months or so and results in a quick fix change in the consumer’s billing, which usually reduces the consumer’s charges. But the consumer does not realize that the problem is not really fixed – because tariff applications have to be renewed every year (or every few years), and if the consumer fails to renew it, it will (unbeknownst to the consumer) revert to the higher tariff and the consumer will incur rates charges at a much higher rate.
- In addition, the COJ refuses to reverse rates billed retrospectively when a tariff change application is made. This means that if the COJ switches the consumer’s tariff, and the consumer only realises this several months down the line (or even several years down the line, as might occur if the consumer, thinking the problem is with the rating categorisation rather than with the tariff, takes several years to try and have the problem corrected using the procedure set out in the Act), the consumer will not be entitled to a refund of any of the rates billed to it during that interim period when it was trying to have the rates corrected. This must be compared to the automatic refund that a consumer is entitled to in terms of the Act, when the objection/appeal process is followed.
- Consumers do not generally understand the distinction between a change of rating categorisation and a change of tariff and will often spend time relying on the incorrect advice from officials at the COJ telling them to follow one route to fix the problem, when in fact, the problem needed to be addressed following the other route.
- The public is now aware of the different mechanisms that exist, and so do not know to avail themselves of them. In addition, there are no published guidelines that the public can use to determine whether their applications should be successful or not, and/or how long these applications should take to be processed. This leaves the public generally with little or no information, and little or no certainty as to what the status of their accounts are or should be.
- The COJ sometimes refuses to change the tariff, if the consumer has already applied to change the rating categorisation. This means that the consumer who has applied to change the rating categorisation (which is actually the right way to do it) is prejudiced and cannot obtain the immediate relief of a lower monthly rate whilst the consumer who went about it the ‘wrong way’ and applied for a ‘quick fix’ gets the change, and gets an immediate reduction in rates.
- The municipality appears to be of the view that it can change a consumer’s tariff upon application, or simply for any other reason that it wants to. It does not regard itself as bound by the procedure in the Act that applies to the change of rating categorisations, and so it is (presumably) of the view that it can chop and change a consumer’s tariff at will, without notice to the consumer, or without giving the consumer any chance to object/appeal as per the Act. There may, however, be other ways that a consumer can challenge this change of tariff, such as by following the procedure set out for logging disputes and appeals in terms of the bylaws, or appeals in terms of the Local Government: Municipal Systems Act, but it is not clear at this stage whether this is the case.
- It is not clear whether the COJ regards itself as being able to ‘override’ a decision by the municipal valuer or Valuation Appeals Board as to what a consumer’s rating categorisation should be, and thereafter simply switch the consumer onto a tariff that is different form the rating categorisation decided upon by the valuer/board. This could result in consumers following one route to fix the problem (eg rating categorisation objection/appeals), only to find it popping up again, based on the other (eg tariff problems). This also means that all a consumer’s efforts to correct an incorrect rating categorisation by following the long and arduous procedure set out in the Act, will be for nothing, and that a municipality can simply ‘override’ the results of this process by changing the consumer’s tariff at will.
Wrong way round
Overall, a ‘zoning driven rating policy’ is not a bad thing, if it is administered properly. The COJ must recognise that there are times when it will not be appropriate to base the rating categorisation on the zoning, and in these cases, the COJ needs to provide for rating categorisations based on use, that alleviate the obvious prejudice that a ‘zoning driven rating policy’ causes consumers whose properties have an underlying zoning that does not match the actual use of that property. Simply switching tariffs to avoid having to follow the procedure in the Act for switching rating categorisations, is not a sustainable answer to the problem – in fact, it is no answer at all, as in our view, it is not legally competent, and results in unfair discrimination to certain consumers and prejudice that cannot be cured at all to other consumers.
The COJ appears to be attempting to avoid providing for this at the rating categorisation level, in any way whatsoever (potentially because this would amount to an admission that its decision to use zoning rather than use as the determinant for the rating categorisation is unreasonable, or potentially because it weakens the COJ’s arguments as plead in a recent case, which were focused on the principle that the COJ is entitled in all instances to base the rating categorisation on the zoning). Whatever the reason, the contrived separation of rating categorisations and tariffs is, in our view, unlawful and should not be permitted.
Where to from here?
The COJ is able to change a consumer’s tariff by changing the consumer’s rating categorisation, if need be, by following the procedure set out in the Act. The introduction of tariff applications are unlawful and should not be countenanced, even though they have the ability to provide a quick fix solution to consumers in certain instances, precisely because prejudice caused by the existence of this system (namely that the fix is not permanent, it creates too much legal and practical uncertainty as to what applies and what should apply and how to go about changing what is being applied, and the potential for abuse of the system by the COJ in switching the tariff without any notice to the consumer or recourse by the consumer) drastically outweighs the benefits.
Consumers are advised to ‘fight’ incorrect rates charges at the rating categorisation level rather than at the tariff level, and to be aware that if a decision is made to apply for a tariff change for immediate and short term relief, pending the outcome of the objection/appeal process in terms of the Act at the rating categorisation level, that this ‘fix’ will be only a temporary solution and will only address a portion of the problem, and that it should be utilized in conjunction with and not as an alternative to the objection/appeal procedure in terms of the Act to fix the problem at the rating categorisation level.
The legalities around COJ imposing the “Illegal Use Tariff”
City of Johannesburg Metropolitan Municipality (“COJ”) has taken the view that rating categorisations and tariffs are not linked to each other, and that this accordingly entitles it to change a consumer’s tariff without changing the consumer’s corresponding rating categorization as provided for in the Local Government: Municipal Property Rates Act (“the Act”). The procedure to change a rating categorization in terms of the Act (which would then result in a change of the corresponding tariff) is for the property to appear on a roll and for the municipal valuer (following an objection to that roll) or the Valuation Appeals Board (following an appeal to an objection on that roll) to amend the rating categorization as provided for in the Act.
This issue was recently canvassed and adjudicated by the Gauteng Local Division of the High Court (the Johannesburg High Court) in the unreported case of Mignon Smit v The City of Johannesburg. Before the facts and outcome of the case are discussed, it is necessary to understand the difference between a property’s zoning, categorization and the tariff that is charged in relation thereto.
How property rates are charged
In terms of the Act a consumer’s liability for property rates is determined by two factors, the first of which is the municipal property valuation and the second of which is the rating categorisation that the property is put into by the municipal valuer. The rating
categorisation must be one of the listed categories in the City’s Rates Policy, which the City amends each year. Examples of common rating categories would be residential, vacant land, business and commercial, and multiple purpose (also known as mixed use).
A tariff is another name for an amount charged by a municipality for a particular service or tax. In relation to rates tariffs, the tariff sheet (which is also amended each year by the municipality) sets out the cost or price associated with each rating categorization that appears in the City’s Rates Policy . The amount of money that a consumer is charged for property rates is based on a simple calculation: municipal valuation (e.g. R10,000,000) x tariff applied to rating categorisation (e.g. 0.005686) = R 56,860 per annum. Divide this by 12 to get the monthly rate = R 4,738.34 per month. This simple example ignores any rebates.
A Property’s Zoning
Zoning is completely different. A property’s zoning is a list of rights that dictate what uses the property can legally be put to. A property’s zoning is determined by the applicable town planning scheme, and amendments made thereto, as well as national legislation that deals with land use and management. To find out what your zoning is, you need to get a zoning certificate from the municipality’s offices.
You often find properties with a zoning ‘label’ (for example,”business”) where those properties have zoning rights to be used in a completely different way (for example, to be used to build residential homes on). So a property’s zoning label can often be misleading, as it does not describe the full extent of the use rights that the property is entitled to, and in fact, the label of the zoning might be completely different to the use rights given to that particular property. The ‘label’ attached to a property’s zoning thus only describes its main legal use – for example, residential, business, industrial – but it does not describe all of the rights attached to the property. This is why it is very important to look not only at the zoning ‘label’ but also the rights given to that property in terms of all relevant laws and schemes.
The Smit Case
In this case, the Applicant had purchased a residential property with the view of using same as a commune and accordingly made application to the City for consent to use to property as a residential boarding house (which would entitle her to make use of the property for these purposes). The consent sought by the Applicant in this regard was to ensure that her zoning was appropriate for the use that she had put the property to.
The Applicant’s initial consent use application (to be allowed to have a commune) was dismissed by the City due to a technicality. The Applicant thus made a second application for the appropriate zoning rights, this time asking for permission to change the zoning of the property from Residential 1 to Residential 4, to accommodate the commune. The City took almost 3 years to come to a decision with regard to the re-zoning of the property, due to its implementation of the “Corridors of Freedom project” which allegedly delayed its ability to make a decision in relation to the rezoning application submitted. During this time, the Applicant started using the property for the purposes for which it had been purchased – namely as a commune (which technically speaking was not legally permissible because the zoning was not appropriate for that kind of use at that particular time, because the rezoning application submitted had not yet been approved).
Due to the fact that the Applicant was making use of the property without the necessary zoning application having been approved, the City’s Rates Department classified the property as being an “illegal use” property. “Illegal Use” is one of the categories that appears in the City’s Rates Policy, and so the Rates Department believed that it was entitled to change the Applicant’s tariff (ie the price that she paid for her rates each month) from residential to “Illegal Use” which increased her monthly rates bill by a factor of almost 5.
The City did this because it is of the view that it is lawfully entitled to unilaterally change a consumer’s tariff without following the procedure set out in the Rates Act to change the categorization that the tariff is meant to be connected to – in other words, the City is of the view that the tariff and rating categorization can be “delinked” whenever convenient to the City so that it can change the tariff and charge the consumer whatever it feels is appropriate for rates, even if the municipal valuer (who is tasked in law with deciding what the categorization should be) does not hold the same view.
The Applicant took the City to court because the City had charged her rates on the “illegal use tariff’ for some time, and she was of the view that this was unlawful, because it was not lawfully permissible for the City to simply unilaterally amend her tariff without first amending the rating categorization on the property roll. She brought a court application to ask the court to declare that the City could not hold her liable for the rates based on the “illegal use tariff” and needed to reverse these incorrect charges.
It was argued that in terms of section 8 of the Act, as well as the City’s own Rates Policy, a tariff is directly linked to the categorization of a property. Moreover, it was argued, that in terms of section 78 of the Act, the only way in which the City is legally entitled to change the categorization of a property, is to place same onto a Valuation Roll (either a General Valuation Roll or any of the subsequent Supplementary Rolls) and to afford a consumer the opportunity to object to the change of the categorization of its property. Thereafter the outcome of the objection (or ultimately of an appeal, if it follows the objection) will determine the rating categorization of the property concerned.
It was thus argued that as the City had unilaterally and of its own accord changed the tariff of the Applicant without following the procedure set out in the Act (ie putting the property onto a roll and following the objection/appeal procedure to obtain a change of rating category, which would then lead to a change in tariff to “illegal use”) and that same was not in accordance with the Act and its own Rates Policy and was thus unlawful.
The Court, while scathing of the Applicant’s illegal use of the Property as a commune for the period before the rezoning application giving her those zoning rights was granted, agreed that the City was not legally entitled to change the tariff of a property without first changing the category of the property in one of its Valuation Rolls and in doing so providing the consumer with an opportunity to make an objection thereto if the consumer so wished.
The City was accordingly ordered to write off the charges billed to the Applicant’s account based on the “illegal use” tariff and to rebill the Applicant in accordance with the categorization of the property, as determined by the prior general valuation roll. Accordingly the Court confirmed that a unilateral tariff change by the City, without first changing the categorization of the property in the manner that has been prescribed by the City’s own policy and the Act, is unlawful.
It is imperative for property owners to be aware of the categorizations of their properties, the zoning of their property, as well as the tariff that they are being charged on, as all three factors can affect the amounts that they pay to the municipality (even though only the categorization should determine this). The authors are thus of the view that, the City has interpreted the law incorrectly with regards to its contention that it can unilaterally amend a tariff without first changing the linked rating categorization by following the procedure set out in the Act. Consumers facing the same problem can use this judgment as a precedent to assist them in court, should this be necessary.
How to fix incorrect valuations/categorisations of properties “in between” property rolls
It often happens that property owners miss the deadline for objection to incorrect details on a property roll. If municipal staff advise you that there is nothing you can do after the fact to fix the problem, they are wrong. This article describes the steps that a property owner can take to compel the municipality to investigate and correct an error on a valuation roll outside of the prescribed time periods for objection to that roll.
Window period for submission of objections
The Local Government: Municipal Property Rates Act 6 of 2004 (“the Act”) governs municipal property valuations. The municipality is legally obliged to advertise every roll for public inspection/objection, for a minimum period of 30 days (although most municipalities leave the roll open for inspection for longer than this). This is referred to as the objection ‘window period’. The municipality is also legally obliged to post notices to property owners to warn them that their property is being placed on a roll for valuation.
During this inspection/objection period it is the property owner’s responsibility to examine the roll and determine if his/her property is on it, and if the owner is dissatisfied with the municipal property valuation/categorisation attributed to such property, to take the necessary steps to submit an objection within the prescribed ‘window period’. Ordinarily, a municipality will not permit the late filing of objections, although in exceptional circumstances some municipalities will make an exception and allow same.
Re-valuation/re-categorisation of property outside of “window period”
Apart from the situation where a property owner missed the deadline to file an objection, there are other good reasons for the Act to provide that municipalities can re-investigate and re-value/re-categorise properties after the roll concerned has “closed” for inspection/objection.
Consider the situation where a vacant piece of land has been developed into a luxury home. Not only will the valuation be too low (as a result of which the municipality will lose rates revenue) but the categorisation will also be incorrect – it must be amended to residential from vacant lest the poor property owner end up paying rates on the improved value of the land at around 4 times what he should. This is why the legislature created a mechanism for the re-valuation/re-categorisation of properties in section 78 of the Act.
Section 78 of the Act
Section 78 of the Act provides that a supplementary roll must be published at least once every year (following on from the publication of a GV) for each year of the duration of the GV. Section 78 contains a closed list of reasons for the inclusion of a property on a supplementary roll. These reasons essentially relate to properties that either did not exist (or did not exist in their present form) at the date of the publication of the GV, alternatively properties that need to be re-valued because their value has changed substantially or re-categorised for whatever reason.
An example of a property in the first category might be a property that has been subdivided, and an example in the second category would be of a vacant stand that has, since the GV, been developed.
Section 78 also includes a category to the effect that a property that has been “substantially incorrectly valued during the last general valuation” can be included on a supplementary roll. It is this section of the Act that allows owners of property to approach the municipality and request a re-valuation/re-categorisation even though the property was valued on a GV or supplementary roll and even where the owner failed to object. This process is known as “submitting a section 78 query”.
Most municipalities appreciate that a request to re-value/re-categorise a property triggers an obligation on their part to put the property onto the next supplementary roll (as COJ does, as set out in its 2018 General Valuation Roll Handbook on page 5).
Submitting a Section 78 enquiry
A Section 78 enquiry is essentially a submission made to the municipality that a property has been incorrectly valued or categorised, coupled with a request that the municipality re-consider the valuation/re-categorisation of such property and put the property onto the next supplementary roll, such that when the roll opens the property owner can formally object to the incorrect information in order to have it corrected.
Once a Section 78 enquiry has been submitted, the property should then appear on the next supplementary roll, and the property owner can then object formally to the valuation. Even if the property is omitted from the roll the owner can still lodge his objection, but it is then known as an “omission” objection because the property owner is objecting to the omission from the roll as well as the incorrect details on the prior roll.
Backdating of outcome of section 78 objection
- If the valuation is ultimately reduced, then the property valuation should be reduced with retrospective effect to the date of commencement of the GV or the date that the change in valuation occurred, whichever is earlier, which will mean that the property rates charged to the owner will be reduced by the passing of a credit to the tune of the amount by which the inflated property valuation caused inflated rates to be billed.
- The same applies to categorisation changes – they can be backdated to the commencement of the GV or the date when the change actually occurred, whichever is earlier.
- If, however, the property value increases as a result of an objection filed to a roll pursuant to a section 78 enquiry, the increased valuation will only be effective from the date of the commencement of the supplementary roll on which the property appeared (or if the property was omitted from that roll, the roll to which the owner filed the omission objection).
Section 78(5) “reviews”
The above (relating to retrospectivity of outcome) does not apply to section 78(5) “reviews”. This happens where the municipality, between rolls, sends the property owner a notice stating that it plans to recategorize or re-value the property on the next supplementary roll and giving the owner an opportunity to make representations to the municipality about whether this should be done or not.
The municipality must then “review” the representations.
- If it decides to abandon the re-valuation/re-categorisation, it must reverse any increased rates it has already billed based on its proposal to re-value/re-categorise.
- If it decides to continue with the re-valuation or re-categorisation, it must put the property onto the next supplementary valuation roll at which point the owner (if he is unhappy) can formally object and have his say in relation to the issue.
Unfortunately for property owners, the municipality can start charging rates on the proposed re-categorisation or proposed re-valuation in terms of section 78(5) a few days after the notices advising of same are sent out. The municipality does not have to wait until the roll has been published or any objection submitted been dealt with on the supplementary roll in order to implement the change on the invoices. However, any incorrect valuation or categorisation brought about in terms of section 78(5) later overturned will be backdated to the time when it was first incorrectly billed by the municipality.
Reversal/write off after successful objection/appeal
The Act obliges the municipal manager to ensure that after a property valuation has been reduced on objection/appeal, a reversal/write off is effected to adjust the account accordingly. If this does not take place within a reasonable time after notification of the outcome has been released, then you may need to seek legal assistance, because this is dealt with by the municipality’s billing department and is not a function of the valuations department.
It is important to note, however, that disputes in relation to changes to be effected to an invoice as a result of a revaluation or recategorization are dealt with in law as account queries/disputes with the revenue/finance department, and not through the Act with the valuations department.
City of Joburg’s Silly Sewer Tariffs
This article explains why some customers of the City of Johannesburg Metropolitan Municipality (“COJ”) refer to the COJ’s mixed use sewer tariffs as being “silly”. Others refer to them as discriminatory, and others still as unfair.
WHAT US “MIXED USE” WHEN IT COMES TO SEWERS?
Mixed use or multipurpose is a term used to describe a building or property that has one bulk water supply and sewer supply, but which building/property is used for more than one purpose (typical examples might include residential, business and commercial, or industrial). Typically, a mixed use building would have one or two floors of commercial, business or retail space on the ground and lower floors, and everything above that would be residential apartments. These buildings do not have a “split supply” meaning that they have one bulk water/sewer supply for the entire building, which services all of the uses.
There are many reasons why a property owner might not have a split supply for different uses at a property, including that the building is old and was simply built that way, or that there are issues with reticulating the supply internally, or that it might be exorbitantly expensive (costing hundreds of thousands or even millions of rands) to change the bulk supply into a split supply.
In order to understand why COJ is criticized for its mixed use sewer tariff, we first need to understand how COJ’s mixed use water tariff works (because the two work in contradictory and antagonizing ways).
COJ’S MIXED WATER TARIFF
In terms of the structure of the COJ’s mixed use water tariffs (which have remained relatively constant from around 2014 until present) the COJ charges a building that has a mixed use for water consumed on the “mixed use” tariff, which is
charged at a scale similar to that of the residential scale, provided that the building/property is predominantly residential in nature. To determine this, you look to the floor area of the building. If the floor area of the building in question is mostly (50% + 1%) residential in nature then ordinarily the “mixed use” tariff will apply.
COJ should then also, in terms of its tariffs, be obliged to take into account the number of residential dwelling units at the property when calculating the water charges on the mixed use tariff because the COJ’s mixed use tariff requires the City to aggregate the charges amongst the number of dwelling units at the property.
It is critical for tenants in mixed use buildings to be charged based on the mixed use tariff because it is very similar to the residential tariff (which is much cheaper than the business tariff that would otherwise apply), and for residential tenants, having to pay for sewer based on a business rate would make living in that building unaffordable. This is also critical to the landlord of such a tenant because the landlord is inevitably invoiced by the municipality for water and sewer consumption and passes the charge on to the tenant. If the landlord were billed by the COJ for all water and sewer consumption at a business rate (and the landlord passed that charge onto the tenant) the landlord would not be able to place tenants in the property because no tenant would go into a lease in a property where they had to pay much more for their water and sewer than if they simply rented in another building that was billed for water and sewer at a residential rate.
Now that we understand how the COJ’s mixed use water tariff works (in terms of which the COJ essentially bills the landlord of a mixed use building for water consumption on residential rates, allowing the landlord to rent it out to residential tenants and pass the residential charge onto its residential tenants) we can look at how the COJ’s mixed use sewer tariff works.
COJ’S MIXED SEWER TARIFF
It would be logical for COJ to mirror the requirements of its mixed use water tariff in relation to sewer, such that if a building/property is more than 50% plus 1% residential in nature by floor area, it would be charged the residential rate for sewer as well as water. Sadly, this is not so in COJ.
Alarmingly, although COJ recognizes the need to charge mixed use buildings for water consumption on the residential rate taking into account the number of residential units at the building and applying residential charges, it does not recognize the same in respect of sewer. COJ has, since 2014, charged “residential heavy” mixed use buildings for sewer based on a business rate. The result of this is that in many (but not all) cases the benefit obtained by the tenant (and the landlord) in respect of the residential rate being applied for the water charges is entirely undone by the City charging the landlord sewer charges for the mixed use building at business rates. In fact, because sewer charges on at the business rate can be so expensive (the charge will obviously vary from one building to a next depending on a number of factors) in some cases it renders the entire project of renting out the residential component of a mixed use building nugatory because the amount that a landlord would need to pay to the municipality each month to service the charges essentially eats away all of the landlord’s profits made by the residential letting.
In the same vein, if the landlord passes the charge onto the tenant, chances are it wouldn’t find any tenants when they could chose between living in a building in which they pay for sewer at the residential rate, rather than living in the building in question and paying for sewer at the more expensive business rate.
LAWFULNESS OF THE SILLY SEWER TARIFF
Bear in mind that the buildings we are talking about here (mixed use buildings within the jurisdiction of the COJ) will face this problem even if they are fully compliant with all zoning, building, environmental and all other property laws. This is not a penalty tariff; this is just the COJ’s way of charging mixed use buildings. You win on the water but lose on the sewer. But is this lawful? It is a municipality’s prerogative to design and price it’s tariffs any way it wants to, provided that this does not violate any other laws. One of the laws that a municipality should not violate when designing and pricing a tariff is that of the rule of law, which is protected by our Constitution and which is expressed in many principals, one of which is that laws made must be rational and reasonable. To the extent that they fail the rationality and reason-ability
test, they would be considered unlawful. We submit that the manner in which the COJ is charging residential units for sewer on the mixed use tariff, is neither rational nor reasonable for the reasons explained above. This particular problem only applies to mixed use buildings within the COJ. One must ask whether there is a lawful reason for charging tenants who live in residential units on properties that are lawfully zoned, built in accordance with law and occupied according to same, business rates for sewer charges.
Another relevant constitutional principle that might find application is that of unfair discrimination. It is questionable as to why the only category of residential tenants in COJ that have to suffer being billed for sewer charges on the business rate, are those in mixed use buildings. We have not yet come across a rational and reasonable explanation for the above and we call upon COJ to provide one to the public and more particularly the tenants affected.
We are of the view that there is a strong case to be made that in the manner in which COJ charges for sewer supplied to residential heavy mixed use buildings (in relation to the residential component of those buildings) is unlawful for lack of rationality / reasonableness, and unfairly discriminatory, and could be set aside by a court. However, until such time as a court draws this conclusion the current tariffs will remain in place and the municipality will be able to compel compliance therewith.
Anyone who wants to challenge this can also comment on the tariffs when they are published by the municipality each year before they come into operation.
What Counts as a “Dispute” with a Municipality?
This is part 1 of an “idiots guide” to logging queries, disputes and complaints with the City of Johannesburg Metropolitan Municipality (“COJ”). Although one might question why it is necessary to write an article explaining what appears to be such a simple concept, we regularly receive reports of customers not being able to take their matters forward as a result of not having been able to log a dispute, logging the wrong type of dispute, or not having proof of the dispute logged. What will become clear from the contents hereof is that logging a dispute is much more complicated than you might imagine at first blush.
Why Should I Care About This Question? Section 102 of the Local Government: Municipal Systems Act 32 of 2000 (“the Systems Act”) provides as follows:
- (l) A municipality may-—
- consolidate any separate accounts of persons liable for payments to the municipality;
- credit a payment by such a person against any account of that person; and
- implement any of the debt collection and credit control measures provided for in this Chapter in relation to any arrears on any of the accounts of such a
- (2) Subsection (1) does not apply where there is a dispute between the municipality and a person referred to in that subsection concerning any specific amount claimed by the municipality from that person.
A customer that raises a ‘dispute’ that ‘concerns any specific amount claimed by the municipality from that person’ is thus insulated from “credit control action” (which could include the termination of services, or the issuing of summons) for so long as that ‘dispute’ exists. In the absence of such a ‘dispute’ however the municipality is free to take whatever lawful form of credit control action it might see fit against the consumer.
What is a ‘Dispute’ for Section 102?
This is a complicated question. There is no definition of ‘dispute’ in the Systems Act which governs the relationship between municipalities and customers. Section 102(2) however indicates that such a ‘dispute’ must be “concerning any specific amount claimed”.
Importantly, this means that the customer needs to point to the amount claimed in a specific invoice in order for the query to be “valid” for the purposes of section 102. It does not mean (as some municipalities incorrectly contend) that the customer needs to advise the municipality how much of the total bill the customer thinks he does not owe in rands and cents terms – as this would be impossible for the great majority of customers who do not know how to calculate municipal charges or where the customer does not have the information necessary to do those complex calculations. It is sufficient for a customer to point to the “total amount” owed in any particular invoice and dispute that amount, or to point to the amount owed for a specific section of the invoice (such as rates, electricity, sewerage, etc) – provided that the amount in the invoice is identified.
A “True” or “Bona Fide” Query
If one looks to the decisions of courts made in the context of what a ‘dispute’ is for the purpose of sectional title management, we find that a pure refusal or failure to pay levies does not count as a dispute. Applying this reasoning in the municipal context makes sense, because it would be unjust if a customer were able to avoid payment of a “disputed” amount or credit control action being taken against him in relation to a “disputed” amount purely because the consumer raises a “query” or “dispute” that is not connected to the amount owing – such as the incorrect billing address, not receiving invoices or an incorrect property description or size.
Furthermore a query logged to the extent that the charges are “too high” would not qualify as a bona fide query unless the reason for them being too high was disclosed. To simply say that you “dispute” a charge without disclosing a reason therefore, is not a bona fide dispute.
In Herbst and Another v City of Tshwane the Court held that the customer had not raised a ‘dispute’ because it’s ‘problem’ was that the municipality was charging it for rates based on a categorisation of non-permitted use when the permitted use did, at the time, prevent that particular use. The defence raised was that the customer had applied for a rezoning, which had not yet been granted. The court found that there was no ‘dispute’ as the application for rezoning had not yet been granted and the customer admitted that it was actually using the property in contravention of its permitted use.
Moreover, a “general dissatisfaction” with the municipality’s service delivery or response rate, does not qualify in law as a ‘dispute’ that will entitle a person to withhold the payment of rates/service charges, nor will a “civil protest” (as confirmed by our Constitutional Court in Rademan.  )
COJ’s Own By-laws and Policies
If life were simple and COJ operated based on clear and logical documents, we would probably not be writing this article. Sadly COJ’s various documents use various terms such as ‘compliant’, ‘query’ and ‘dispute’ seemingly interchangeably in a number of instances and do not contain definitions. This makes their interpretation rather complex. It must be understood, however, that COJ is only lawfully empowered to create its own rules/laws insofar as they comply with national laws (such as the Systems Act). To the extent that there is a conflict, the municipality’s rules/laws would be unenforceable in law.
In terms of the COJ’s Credit Control By-laws (“by-laws”) a dispute is couched as a ‘query’ or ‘complaint’ in relation to the accuracy of any amount due and payable in terms of any invoice rendered. This is a very narrow concept of query, which doesn’t include reference to faulty infrastructure (such as meters, street lights or pot holes), amounts not billed to an invoice, not receiving invoices or invoices not being available, incorrect addressee or contact information or anything relating to a property’s size, description, valuation or categorisation. There are no actual definitions of ‘query’ or ‘dispute’ in this document that might guide us further. It might be argued by the municipality that the words ‘query’ and ‘complaint’ were specially utilized in order to refer to ‘problems’ that are not ‘disputes’ within the true meaning of the term. If this is the case, then it would mean that ‘problems’ that are not ‘disputes’ must be raised and dealt with in terms of these by-laws, whereas ‘disputes’ must be dealt with in terms of the policy referred to below. It is more likely, however, that the drafters of the by-laws simply used loose language and that queries and complaints are meant to count as disputes.
In COJ’s 2015 Credit Control and Debt Collection Policy (“policy”) COJ seems to distinguish between a ‘query’, which is logged initially through the Call Centre, and a ‘dispute’, which is logged in writing with the City if the ‘query’ is not resolved in 21 days. The words query/dispute are mostly used interchangeably to refer ‘the correctness of an account or any entry thereon’. Again, this is a very limited concept and excludes several crucial issues that a consumer might want to take issue with.
It is likely that COJ only refers to disputes/queries/complaints which relate to the amount owed in terms of a specific invoice because section 102(2) which provides that liability for payment of an amount is only deferred if a “dispute” in relation to “any specific amount” owing has been raised. This is rather short sighted, however, because the purpose of allowing consumers to raise a dispute is not simply to protect them from credit control taken for non-payment until the dispute is determined. The purpose is to give the municipality notice of something that is incorrect such that it can be corrected. If a municipality only deals with or recognises queries that relate to amounts owed, and does not address or recognise others such as those dealing with incorrect billing data, addresses, property descriptions, etc, this is going to result in a situation where the municipality’s billing data has little integrity, invoices might not be delivered to the right place or at all, and customers become dissatisfied with the municipality’s ability to render them a proper invoice. This may lead to a reduction in collections for the municipality because the correlation between the diminution in a trust relationship and the diminution of the regularity and extent of payments made in terms of that relationship is well documented.
The Form of the Dispute
Note further that the form in which the law allows the dispute to be raised is just as critical as its content. If the law provides that the dispute must be raised in writing, then raising it telephonically will not assist the customer in arguing that it is entitled to withhold payment in terms of section 102. In this regard it is worth noting that COJ allows a customer to ‘log a query’ on its website – but that its by-laws and credit control policy do not provide for this, and the policy requires “disputes” to be lodged in writing, meaning that it is possible that COJ could argue that a “query” or “dispute” lodged through the website or over the phone does not defer payment of the disputed amount.
Payment of the Undisputed Charges
Note lastly that in terms of COJ’s by-laws a “query” or “complaint” must be accompanied by payment of certain amounts (i.e. the undisputed charges for services not in issue, and the undisputed average over a particular period for the service in issue). However, one must question whether this is lawful because this requires payment of an average amount towards the service disputed each month, where section 102 does not provide for same. A full discussion of this issue, however, is beyond the scope of this article. It is recommended that a customer disputing any particular charge should make payment of a reasonable amount for that charge – if appropriate calculated based on an average of prior periods – because not doing so could land the customer with a very large bill at the end of the day which he is liable to settle and might have difficulty doing so for cash flow purposes. This however is just a practical recommendation and not an endorsement by the authors that the amounts set out in section 11 of the by-laws are lawfully due and payable when a query or complaint (which actually constitutes a dispute) is logged. Please take legal advice from your attorney in this regard on the facts of each case.
In order to qualify as a dispute for the purposes of delaying payment, the customer must:
- raise his/her/its ‘problem’ with the municipality
- in the prescribed form
- by specifying which amount in which invoice is disputed,
- and for what bona fide
- That reason must explain why the amount charged is wrong.
- Civil protest or general dissatisfaction or a claim that the charges are “too high” are inadequate.
- Payment of the ‘average’ in terms of section 11 of the COJ’s by-laws might be payable in order to ‘preserve’ the effect of the dispute/query/complaint.
- A query logged telephonically with the COJ in terms of section 16 of its policy does not appear to suspend payment, because it is not a dispute. Only when a dispute is lodged, will the protection contained in section 102 of the Systems Act kick in.
- For safety’s sake and to avoid the chance that COJ might argue that you have lodged a query or complaint rather than a dispute, specifically refer to a “dispute” in terms of the policy when raising same.
The Great Escape Clause – Section 110 of the Systems Act
This article examines the legal effect of section 110 of the Local Government: Municipal Systems Act (“the Systems Act”) in relation to a municipality’s burden of proof during litigation. The (very alarming) section reads as follows:
Certain certificates to be evidence
- In legal proceedings against a municipality, a certificate which purports to be signed by a staff member of the municipality and which claims that the municipality used the best known, or the only, or the most practicable and available methods in exercising any of its powers or performing any of its functions, must on its mere production by any person be accepted by the court as evidence of that fact.
This section allows a municipality to produce a document that it describes as a certificate, which is ‘purportedly’ signed by any staff member of the municipality, which claims that the municipality did its best in performing any of its powers or functions, and this ‘certificate’ must, “on its mere production” be accepted by the Court as evidence of this fact.
In essence, it allows a municipality to simply produce a piece of paper signed by anyone who works there saying that it did its best, and that must be accepted by the court as evidence of this fact. Taken at face value it allows a municipality to escape liability for any alleged wrong doing, simply by producing a piece of paper that says it did its best, or used the best known or only known method to carry out its functions. If this were accepted as conclusive proof by the court, this would destroy any claim by any person for damages based on the municipality’s failure to comply with any of its obligations in law, because the municipality could simply ‘prove’ that it did comply (or rather that it did its best to comply) by producing this document.
Proof v Evidence
Before we go any further, it is worth noting that the section does not say that this document must be accepted as conclusive proof of the fact, but rather that it must be accepted as evidence of the fact. This means that it is open to the municipality to produce other evidence alongside it, to prove that it complied with its obligations. It also means that it is open to the person suing the municipality (or otherwise attempting to prove that the municipality failed to comply with its obligations) to produce evidence that counters this document and proves that the person who signed the document was wrong inasmuch as the municipality did not do its best, or comply, or use the best or only known method of complying.
For a court to understand or interpret the section such that the mere provision of the ‘certificate’ constitutes proof of the fact in question, would completely destroy the ability of any litigant to succeed in any claim against a municipality where the claim turns on the municipality’s failure to comply with its obligations, and that would fly in the face of our common law, legislation that expressly holds municipalities liable for their failures, as well several other established principles that form the basis of our law, such as natural justice, unjust enrichment and most importantly the rule of law.
Municipalities and Internal Remedies
This article discusses what type of “internal remedies” might apply in relation to a consumer’s dispute with the municipality about municipal debt, and how and when these internal remedies need to be exercised before approaching a court for assistance in resolving the dispute.
What are Internal Remedies?
In most municipal jurisdictions, the municipality has created bylaws and/or policies pertaining to the manner in which it collects debt and manages its debtors. In these policy documents you will ordinarily find a section (or sometimes several sections) setting out how disputes arising between a municipality and a consumer need to be handled.
What is the Purpose of Internal Remedies?
The idea is to provide mechanisms for the resolution of the dispute/query in an amicable manner, so that the courts aren’t flooded with litigation.
Typical Internal Remedies
The typical dispute resolution process prescribed by a municipality will start off with the consumer lodging some sort of query or dispute, and giving the municipality a limited period to investigate and resolve this dispute. If that fails, a consumer is normally permitted to appeal the municipalities decision during the query/dispute process, In many cases a consumer is also permitted to appeal the municipality’s failure to have investigated or resolved the dispute/complaint. After an appeal process has been finalized, there is normally provision for the consumer to approach a court or the Ombud (where there is a Ombud for that particular municipality).
Appeal in Terms of the Section 62 of the Local Government: Municipal System Act 2000
Quite apart from anything prescribed in any municipal bylaws or policies in relation to the resolution of disputes, there is a section in the Local Government: Municipal System Act, Section (62)(1) which provides that a consumer can appeal a municipality’s decision, or a municipality’s failure to have taken any decision, to the municipal manager, who will then be responsible for providing the consumer with an outcome in relation to the appeal filed.
What this means is that even where a municipality’s policies or bylaws themselves do not contain any internal remedies, a consumer who is unhappy with the decision of the municipality (or the failure of the municipality to take a decision) in relation to any query/dispute must first file an appeal with the municipal manager in terms of section 62 and let this appeal run its course before approaching court to resolve the dispute.
How does PAJA Affect the Situation?
The Promotion of Administrative Justice Act 3 of 2000 (“PAJA”) is a piece of legislation enacted to create a framework for parties affected by decisions taken by government (and certain limited private organisations or individuals) to review the decisions in court.
One of the requirements of this act is that a consumer must have exhausted any prescribed internal remedies before approaching a court for assistance in reviewing the decision.
What this means for the consumer in relation to municipal debt, is that where a municipality has prescribed dispute resolution mechanisms, these (and the appeal procedure provided for in section 62 of the Local Government: Municipal Systems Act) must be followed before a court will be permitted to grant the consumer any relief.
However, section 7(2)(c) of PAJA provides a mechanism for a consumer who has not followed a prescribed dispute resolution mechanism to apply to the court for condonation of its failure to have done so. The court has a wide discretion to grant this kind of condonation but will not normally do so unless the consumer has good reason for having failed to exhaust internal remedies.
So, is it Mandatory to use Internal Remedies?
The answer to this depends on what the consumer is trying to achieve. If the consumer wants to ensure that ultimately he/she/it will be entitled to approach a court for assistance and to obtain relief from that court in relation to the dispute, then the answer is yes – it is mandatory for a consumer to first make use of the internal remedies to attempt to resolve the dispute before approaching court for assistance.
However, if the consumer merely wants to liaise with the municipality in relation to the dispute (and has no intention of taking the matter to court or to the Ombud) then although it is recommended that a consumer follow the prescribed dispute resolution procedures in order to ensure that the dispute is formally recognised and attended to by the municipality, it is not absolutely mandatory to follow the prescribed process.
For instance, a consumer who a billing dispute might not want to log a query and then wait 21 days for the City to investigate and resolve the query, and then file an appeal 21 days thereafter if nothing has happened. That consumer might chose to rather set up a meeting with the appropriate person at the municipality’s offices, or send emails to the municipality’s customer service address, or speak to the ward councillor about the issue.
Although one would expect all municipal staff members to know the prescribed procedures for dispute resolution and stick to them, and to advise consumers who are acting outside of those procedures of the ‘proper channels’, none of these ‘outside attempts’ to resolve the billing issue are ‘wrong’ or irrelevant – every attempt may result in a resolution of the dispute. It’s just that you cannot rely on them in court if you have not also followed the prescribed dispute resolution process (ie if you have not exhausted internal remedies).
The Ferox Case
In an unreported judgement of the Johannesburg High Court (Gauteng Local Division) the court decided that a consumer was not entitled to the relief sought (which in this particular case happened to be a reconciliation of the municipal account) because the consumer had not followed the prescribed dispute resolution mechanisms (“internal remedies”) set out by that particular municipality.
This is a particularly interesting decision because the court was not asked to review the decision of the municipality in terms of PAJA, but was rather asked to order the municipality to reconcile the municipal account based on the common law remedy of statement and debatement. Statement and debatement is basically a process in terms of which the creditor and debtor sit down and go through the invoice in question and ‘debate’ their issues in relation to it. This remedy has, up until now, been used often to compel municipalities to investigate and resolve problems with municipal billing.
Because there is no requirement in terms of our common law for internal remedies to be exhausted before statement and debatement can be ordered by the court, the court appears to have set a precedent to the affect that the common law remedy to statement and debatement is only available after the consumer has exhausted internal remedies.
There is room, however, for an alternative interpretation of the judgement. The court explained that the application before it was for statement and debatement in terms of the common law but that in this case, the relationship between the consumer and the municipality was governed not only by common law but also by specific legislation. Part of that legislation (ie the bylaws/policies providing for dispute resolution and section 62 of the Local Government: Municipal Systems Act) specifically provided for mechanisms to be used by a consumer when raising and resolving a dispute with the municipality.
It is thus also possible to interpret the judgement as holding that where a consumer in relation to municipal debts specifically applies to the court based on the prevailing legislation for a reconciliation of the account (i.e. statement and debatement), that the consumer must first have exhausted all applicable internal remedies before approaching the court for relief. The later interpretation is the more favourable one seeing that it does not make inroads into the rights of the common law remedy of statement and debatement.
The authors would like to thank Bertus Boshoff of Vining & Camerer Inc. for bringing this judgment to their attention and for his contributions in developing the law in this case.
However this judgement is interpreted, its impact is essentially the same – that a consumer needs to follow the prescribed dispute resolution mechanisms before approaching a court for assistance in relation to disputes pertaining to municipal debt, or must apply to the court for condonation for not having done so. Failure to follow internal remedies or ask for condonation for not having done so may result in the case being dismissed.