Municipality’s rates policy in respect of future rates

In the recent ruling of Nelson Mandela Bay Municipality v Amber Mountain Investments, the Supreme Court of Appeal (“SCA”) addressed the question of whether the seller of immovable property could be held liable for the advance payment of the full annual property rate, or only for the payment of rates calculated until transfer takes place. This SCA decision was handed down on 29 March 2017. In accordance with the municipality’s rates policy, it required payments of the rates until the end of the financial year in which the transfer took place before issuing a rates clearance certificate in terms of the Local Government: Municipal Systems Act No. 32 of 2000 (hereinafter “the Act”).

The Respondent in the Appeal Court, Amber Mountain Investments 3 (Pty) Ltd (hereinafter “AMI”), was the seller of the property situated within the Nelson Mandela Bay municipality (the “Municipality”). Before transfer took place, AMI applied for a rates clearance certificate, however, the Municipality required that the rates be paid until 30 June 2010, being the financial year end.

At that stage, the rates until the end of the financial year, were nearly double the rates payable until date of transfer. AMI decided to pay the amount (R 2 281 014.68) in protest, in order for transfer to take place. AMI then approached the High Court saying that this constituted an overpayment of its obligations to the Municipality, and successfully claimed reimbursement of the amount by which it overpaid. The Municipality then appealed to the SCA…

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