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Municipal debt victory

14 May 2015

Certain municipalities from the end of 2013 have taken the law into their own hands. We launched a number of Court Applications against various municipalities, forcing them to comply with their obligations and attempt to convert the municipality from “Public Enemy” back into “Public Servants”. Recently, on one of our matters where the owners of the property instructed us to perform an audit, reduce and settle the municipalities debts;

Ekurhuleni Metropolitan Municipality has again been reminded that they cannot simply:

  1. Transfer old owners/tenants debts to current owners;
  2. Prevent the new owners from opening a consumer’s agreement until previous debts are paid;
  3. Unilaterally disconnecting innocent rate payer’s services (water and electricity) for previous unpaid debts.

In this matter, the previous owners sold commercial property which due to a number of reasons had accumulated an amount of approximately R6 million in debt over a number of years. The transferring attorneys, applied for clearance figures and the owners mandated our firm to challenge the municipality’s claims. Due to our expertise, our firm found a number of errors with the municipality’s accounts and reduced the municipality’s claim substantially to approximately R1 million. A number of errors were found, however the majority of the debt for water and electricity had prescribed.

The municipality should have written off the balance. Ekurhuleni Germiston, felt that now armed with the City of Tshwane vs Mathabatha judgment, they could go back, into the history of properties and collect debts they previously failed to collect from the previous owners, from the new owners, notwithstanding the fact that the amounts claimed were incorrect and overstated.

The municipality attempted to bully the new owners by disconnecting the electricity. The new owners begged and pleaded and attempted to reason with the municipality that their actions were illegal and unlawful, but to no avail.

The new owners launched an interim urgent interdict, against Ekurhuleni for the immediate restoration of electricity. The learned Judge naturally gave the necessary relief.

The matter was then set down to be heard and Judge Strydom granted an order for costs against Ekurhuleni and declared that the new owner is not liable for arrears or charges on accounts held by previous owners.

Ironically, at the doors of court, the municipality conceded that they were not allowed to hold the new owner liable and/or switch off the electricity.

The Judge declared that the Municipality is not entitled to terminate the supply of services to the new owner on the ground that previous owners of the property are indebted to it. The municipality attempted a counter application and this was also dismissed with costs.

It is sad that a Local Government body is wasting public funds by abusing and using bullying tactics, notwithstanding the fact that they have to respect the constitutional rights of citizens. If the municipality was not a Government institution, no doubt they would be sued for millions in damages every time.

There is no doubt, that innocent parties that have paid these extorted amounts, will have every right to claim the said amounts back from the Municipality. We will assist.

The Municipality is getting judgment after judgment against them and we cannot believe that despite the courts lambasting them time after time, they continue with these extortion like tactics as they know that each rate payer’s only relief will be the courts’ rescue. Few people have the resources to take the municipality on each and every time. Firms like ours need to always ensure that the correct debts that are due and owing to a municipality are paid.

Download the judgment of:  Stand 278 Strydom Park (Pty) Ltd and Ekurhuleni Metropolitan Municipality. Case No: 23503/2014

Another pertinent judgment that we would like to bring to your attention is the case of Motsoatsoa vs City of Tshwane Metropolitian Municipality. Case No: 39315/13 and in particular Paragraph 19 on Page 12.

Peter Livanos
New Ventures Consultancy and Services

Reader Comments: 8
Sara Scheiner 14/05/2015:

I was happy to read this article but also saddened because unfortunately there are far too many ordinary, hard working people who do not have the means with which to take on a municipality. What happens is that they sign acknowledgments of debt and/or payment plans and struggle to pay off a debt which is not theirs because they can not afford to have their services terminated nor to take the local authority to court. And the municipalities are no doubt counting on this.

Peter Livanos - New Ventures Consultancy and Services 14/05/2015:

Sara you 200% correct, it is very very sad! The Municipalities will suffer the consequences for their "bullying tactics and behavior". People that have paid the previous owners debts and/or entered into arrangements to pay the said debt off, are entitled to claim the money back! We will take on such cases, and ensure their money is returned. The public must be protected!

tienie de bruin 15/05/2015:

Thswane also in October last year attempted to bully me into paying the arrears account of the previous bankrupt estate. It took me 2 months of continuous harassment before getting them to leave my services connected.

Nick Livesey 15/05/2015:

I have a client whose block of flats had the entire electrical installation removed at the box, and Ekurhuleni refused to restore it until he signed an acknowledgement to pay the debts owed by an estate which transferred the property to the owner he bought from - all clearly prescribed and lapsed owing to it's failure to lodge a claim with the executor. I am currently proceeding against Randfontein and Ethekwini councils because they refused to reduce prescribed debts and provide Sec. 118 figures, and both insisted that they would transfer the already prescribed debts to the transferee.

How many judgments will it take before these councils comply with the law? Perhaps extortion charges should be laid against the chief financial officers and a few personal costs orders should be obtained. If it carries on the public protector might have to be involved. It is also unfortunate, given the importance of these judgments that the judges are marking them non-reportable. We need them to be reported.

Julie 21/05/2015:

What about tenants? A tenant's water was disconnected because the owner of the property was in arrears with services for some OTHER property owned by him. Not even the property in question with the tenant who was up to date with his payments.

Botha 27/05/2015:

The question is what will happen to Saldanha munisipality. They take from the tenants electricity when they buy it the owners rates and taxes are outstanding, how can this happen??? These are totally different institutions, ie Eskom and Saldanha?? This is one big court case also waiting to happen, but until somebody stops them they will also just continue with this practice. Botha Pretorius

Sandra 28/05/2015:

We are in a similar position. Our water account used to be around R450 monthly, as we used 80% borehole water. Within 3 months it jumped to R150 000.00 . We did everything to get it fixed, but they refused, saying "we got a leak". 2 Plumbers investigated and found nothing. We are now 100% on borehole water and that account still climbs. We were handed over to their collectors who have the attitude that they can see it is obviously wrong, but still they want the money. My problem is that we want to sell the house, but will not get a tax clearance certificate.

PETER LIVANOS - NEW VENTURES CONSULTANCY AND SERVICES 28/05/2015:

Sandra, I would suggest calling us to assist you... or look us up on google...

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