Mkontwana v Nelson Mandela Metropolitan Municipality; Bissett v Buffalo City Municipality; Transfer Rights Action Campaign v MEC for Local Government and Housing, Gauteng

The Constitutional Court considered three consolidated matters concerning the constitutionality of statutory provisions that burden property owners with unpaid municipal service charges incurred by occupiers of their property. Section 118(1) of the Local Government: Municipal Systems Act 32 of 2000 and section 50(1)(a) of a Gauteng local government ordinance required that all municipal service charges for a specified period be paid before a clearance certificate could be issued to allow transfer of property. The applicants were property owners (or an administrator of a deceased estate) who sought to transfer property but were required to pay substantial arrears for water and electricity consumed by tenants or previous occupiers, often without their knowledge. They challenged these provisions as resulting in arbitrary deprivation of property under section 25(1) of the Constitution. Conflicting High Court decisions existed on the validity of section 118(1), prompting confirmation proceedings, appeals, and an application for direct access.

The declaration of constitutional invalidity made by the South Eastern Cape High Court was not confirmed. The appeals by the municipalities and the Minister were upheld. Section 118(1) of the Municipal Systems Act and section 50(1)(a) of the Gauteng Ordinance were held to be constitutionally valid.

This case is a leading authority on municipal debt, property transfer, and section 25(1) of the Constitution. It clarified that statutory limitations on the transfer of property to secure payment of municipal service charges do not necessarily constitute arbitrary deprivation. The judgment affirms the importance of municipal financial sustainability and confirms the constitutionality of the widely used clearance certificate system, with far-reaching practical implications for property transactions in South Africa.