Jordaan and Others v City of Tshwane Metropolitan Municipality and Others

The case concerned property owners in the City of Tshwane and Ekurhuleni Metropolitan Municipalities who purchased properties and were subsequently denied municipal services because the municipalities sought to recover historical debts incurred by previous owners. The municipalities relied on section 118(3) of the Local Government: Municipal Systems Act 32 of 2000, which provides that municipal debts constitute "a charge upon the property" with preference over mortgage bonds. The applicants were new owners who had no connection to the historical debts. The municipalities suspended services or refused to conclude service agreements until historical debts were paid. The High Court declared section 118(3) constitutionally invalid to the extent that the charge survived transfer to new owners who were not responsible for debts incurred prior to transfer. The municipalities appealed to the Constitutional Court.

• Whether section 118(3) of the Local Government: Municipal Systems Act 32 of 2000 creates a charge that survives transfer of property to a new owner
• Whether making a new owner liable for a previous owner's municipal debts constitutes arbitrary deprivation of property contrary to section 25(1) of the Constitution
• Whether the statutory language 'charge upon the property' should be interpreted in light of common law principles of limited real rights requiring publicity and registration
• Whether municipalities have adequate alternative mechanisms to recover historical debts without imposing liability on new owners
• Whether section 118(3) is constitutionally valid

The appeals by the municipalities succeeded in form but failed in substance. The Constitutional Court: (1) allowed the appeals; (2) declined to confirm the order of constitutional invalidity; (3) declared that upon transfer of property, a new owner is not liable for debts arising before transfer from the charge under section 118(3); and (4) ordered the appellants (municipalities) and the Minister to pay the applicants' costs, including costs of two counsel.

Section 118(3) of the Local Government: Municipal Systems Act 32 of 2000 creates a charge upon property for municipal debts that does not survive transfer to a new owner. The charge is enforceable only against the owner during whose title the debts were incurred. A limited real right of security over immovable property requires publicity (such as registration in the deeds office) to be enforceable against successors in title; where a statute creates a charge without such publicity requirements, the charge is not transmissible. Imposing liability on a new property owner for debts incurred by a previous owner, where the new owner had no connection to or control over the property when the debts arose, would constitute arbitrary deprivation of property contrary to section 25(1) of the Constitution. Legislation must be interpreted, where reasonably possible, in a manner that accords with the Constitution to avoid declarations of invalidity.

The Court made several obiter observations: (1) The principle from Mhlungu that constitutional issues should be avoided where possible has been superseded under the final Constitution, which requires constitutional approaches to enjoy primacy. (2) Municipalities have extensive statutory debt collection mechanisms, including the power under section 118(3) to enforce charges against current owners with preference over mortgagees, and the power to obtain interdicts against transfer upon receiving notice under section 118(1). (3) The argument that past consumption of services enhances property value is flawed; any such value is factored into the purchase price, and making new owners pay again through historical debt liability would constitute double debit. (4) While the Court did not need to conduct a full section 36 limitations analysis, it would be difficult to justify the municipalities' interpretation under that framework. (5) The Court noted, without deciding, concerns about the constitutionality of the preference municipalities enjoy over registered mortgage bonds under section 118(3). (6) The statutory delinking of subsection (3) from subsection (1)'s two-year limitation may make section 118(3) more of an encroachment on property rights than its predecessors in provincial ordinances.

This judgment is significant for clarifying the scope of municipal debt recovery powers and protecting property rights of purchasers. It establishes that municipalities cannot use section 118(3) to impose historical debts on new property owners, preventing arbitrary deprivation of property. The decision reinforces that limited real rights of security require publicity (typically registration) to be enforceable against successors in title. It demonstrates the Constitutional Court's approach to interpreting legislation to avoid constitutional invalidity where reasonably possible (following Hyundai). The judgment balances municipalities' constitutional duties to provide services and collect revenue against individual property rights. It emphasizes that municipalities have substantial pre-transfer powers to recover debts and must exercise those powers diligently rather than shifting responsibility to innocent purchasers. The case has practical importance for conveyancing, property transactions, mortgage lending, and municipal revenue collection throughout South Africa.