Kwadukuza Municipality v Consolidated Aone Trade and Invest 6 (Pty) Ltd (in Liquidation) and Others

Consolidated Aone Trade and Invest 6 (Pty) Ltd (CATI 6), the owner of Ballito Bay Mall, was placed in liquidation. Its liquidators sold the property to a purchaser and required a rates clearance certificate under s 118(1) of the Local Government: Municipal Systems Act 32 of 2000 to effect transfer. KwaDukuza Municipality demanded payment of municipal rates and service charges far exceeding the two-year period prescribed by s 118(1), threatening refusal of the clearance certificate and disconnection of services. Despite a High Court consent order limiting the municipality to a two-year calculation, the municipality insisted on payment of historical debts. To secure transfer, the liquidators paid approximately R21 million under protest and without prejudice, expressly reserving their rights. The municipality later conceded that a lesser amount was actually due. The liquidators approached the High Court for recovery of amounts paid beyond what was legally due, and the High Court ordered a refund. The municipality appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel. The High Court order directing the municipality to refund amounts paid in excess of what was legally due was confirmed.

The case reaffirms and clarifies the strict limitation imposed by s 118(1) of the Municipal Systems Act on municipal demands for payment as a condition for property transfer. It confirms that municipalities may not leverage rates clearance certificates to extract payment of historical or prescribed debts. The judgment also strengthens the principle that payments made under protest and duress to secure statutory compliance remain recoverable, and it underscores the protection of insolvent estates against unlawful preferential payments.