Fedbond Participation Mortgage Bond Managers (Pty) Ltd and Another v Steve Tshwete Local Municipality (45407/2011) [2012] ZAGPPHC 49 (30 March 2012)

Fedbond Participation Mortgage Bond Managers (Pty) Ltd and Another v Steve Tshwete Local Municipality (45407/2011) [2012] ZAGPPHC 49 (30 March 2012)

The court held that the relevant period for calculating municipal rates payable to obtain a clearance certificate in the context of liquidation is the two-year period preceding the application for the certificate, as stipulated in section 118(1) of the Municipal Systems Act. This interpretation is supported by the...

Source-derived case information.

Citation
[2012] ZAGPPHC 49
Parties
Applicant: Fedbond Participation Mortgage Bond Managers (Pty) Ltd; Applicant: Fedbond Nominees (Pty) Ltd; Respondent: Steve Tshwete Local Municipality
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
30 March 2012
Case Number
45407/2011
Procedural Posture
Review Application / Final Judgment After Opposed Application and Counter Application
Outcome
Application granted in favour of the applicants; declaratory relief and refund ordered. Respondent's counter-application dismissed with costs.
Judges
W R C Prinsloo
Legal Topics
Municipal Rates Clearance, Interpretation of Statutes, Insolvency Priority, Local Government Liabilities
Administrative Law Land and Property Municipal Rates Clearance Interpretation of Statutes Insolvency Priority Local Government Liabilities

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Parties

Fedbond Participation Mortgage Bond Managers (Pty) Ltd

Applicant

Fedbond Nominees (Pty) Ltd

Applicant

Steve Tshwete Local Municipality

Respondent

Procedural Posture

Review Application / Final Judgment After Opposed Application and Counter Application

Legal Issues

  1. 1 What is the correct period for calculating municipal rates payable to obtain a clearance certificate in the context of liquidation: the two-year period under section 118(1) of the Municipal Systems Act or the longer period under section 89 of the Insolvency Act.
  2. 2 Is interest payable on outstanding municipal rates required for clearance certificates under section 118(1) of the Municipal Systems Act.
  3. 3 Does the respondent municipality's counter-application for additional payment based on a longer calculation period have merit.

Ratio Decidendi

The court held that the relevant period for calculating municipal rates payable to obtain a clearance certificate in the context of liquidation is the two-year period preceding the application for the certificate, as stipulated in section 118(1) of the Municipal Systems Act. This interpretation is supported by the Supreme Court of Appeal in Kaplan, which clarified that section 118(1) is not overridden by section 89(1) of the Insolvency Act when the former prescribes a shorter period. The court found no logical or justifiable reason to require insolvent entities to pay more than solvent ones for clearance certificates. Regarding interest, the court determined that interest on arrear rates...

Court Disposition

Application granted in favour of the applicants; declaratory relief and refund ordered. Respondent's counter-application dismissed with costs.

Orders

  • It is declared that the relevant period for which rates were payable to oblige the respondent to issue clearance certificates is the period referred to in section 118(1) of the Local Government: Municipal Systems Act 32 of 2000.
  • The respondent is ordered to pay the applicants the amount of R766,511.76 together with interest thereon at the rate of 15.5% per annum calculated from 25 February 2011 to date of payment.