In Nelson Mandela Bay Municipality v Amber Mountain Investments (576/2016) [2017] ZASCA 36, the SCA was required to determine whether an owner is liable to pay property rates for the full financial year or only until the date upon which the property is transferred.

Amber Mountain Investments sold a property to a third party. Upon request for a rates clearance certificate, the Municipality insisted on payment for the full financial year, ending 30 June 2010. This amounted to R 2,281,014. Amber Mountain Investments made payment under protest to obtain the certificate. At the date of transfer, 25 February 2010, its actual indebtedness to the Municipality was R 1,214,482. Subsequently, it instituted legal proceedings against the Municipality to recover the overpayment.

The Municipality argued that a single property rate, for the entire financial year, was payable at the start of that financial year. It was entitled to withhold the rates clearance certificate until it had received payment of the full amount. The High Court rejected this argument and the matter was taken on appeal.

The SCA, too, rejected the above argument. It held that property rates become payable, but not due, from the start of the financial year. A municipality cannot claim payment of a single property rate at the start of each financial year. Furthermore, the legislative provisions in relation to the issuing of a rates clearance certificate must be interpreted to mean that only the municipal debts for the two years preceding the date of application for the certificate are relevant. The provisions do not apply to future municipal debts.

The appeal was dismissed with costs.