His­to­ric mu­ni­ci­pal debt jud­ge­ment a re­lief for pro­per­ty buy­ers

George Herald - - NEWS - Ju­lie Jef­fe­ry

His­to­ry was ma­de on Tu­es­day 29 Au­gust w­hen an u­na­ni­mous con­sti­tu­ti­o­nal court jud­ge­ment was de­li­ver­ed by Jud­ge Ed­win Ca­me­ron, which de­cla­red that his­to­ric mu­ni­ci­pal debt at­ta­ched to pro­per­ty can­not be col­lected from new pro­per­ty o­w­ners. The im­pact that this has on the a­vera­ge re­si­dent is e­nor­mous. Ma­ny trans­fers of pro­per­ty ha­ve sim­ply not ta­ken pla­ce and pro­specti­ve sa­les ha­ve fal­len through be­cau­se a vast a­mount is o­wed to the mu­ni­ci­pa­li­ty in ar­re­ar ra­tes and taxes. Until now, pro­per­ty could not be trans­fer­red wit­hout a ra­tes cle­a­ran­ce cer­ti­fi­ca­te being obtai­ned from the mu­ni­ci­pa­li­ty. Be­cau­se of this, mu­ni­ci­pa­li­ties ha­ve been ge­ne­ral­ly lax and tar­dy in en­for­cing the col­lecti­on of such out­stan­ding debt, as they we­re se­cu­re in the kno­w­led­ge that they would get their mo­ney w­hen the pro­per­ty was sold.

This is now no lon­ger the ca­se. Jud­ge Ca­me­ron ma­de it per­fect­ly cle­ar that mu­ni­ci­pa­li­ties ha­ve a­de­qua­te me­cha­nis­ms in pla­ce to col­lect debts due and they must do so. They need the re­ve­nue ge­ne­ra­ted to per­form their con­sti­tu­ti­o­nal­ly man­da­ted du­ty of ser­vi­ce de­li­very and, the­re­fo­re, must en­s­u­re that ar­re­ar debts are col­lected. The pro­vi­si­ons con­tai­ned in Secti­on 118(3) of the Mu­ni­ci­pal Sys­tems Act (MSA) that mu­ni­ci­pa­li­ties ha­ve till now re­lied on to col­lect his­to­ri­cal debt from new pur­cha­sers, ha­ve been de­cla­red un­con­sti­tu­ti­o­nal.

It is un­cer­tain w­hat me­a­su­res mu­ni­ci­pa­li­ties will now put in pla­ce to en­s­u­re that ar­re­ar debt is col­lected from the par­ty re­spon­si­ble for in­cur­ring it, or w­hat im­pact this will ha­ve on the bud­gets and fi­nan­ci­al po­si­ti­on of mu­ni­ci­pa­li­ties.

Debt due is re­flected as re­ve­nue that will accrue to the mu­ni­ci­pa­li­ty and im­pacts on the fi­nan­ci­al po­si­ti­on of the mu­ni­ci­pa­li­ty. Much of this may well ha­ve to be writ­ten off, as pres­crip­ti­on may ha­ve set in, or the a­mounts may sim­ply be ir­re­co­ver­a­ble.

The Ge­or­ge Mu­ni­ci­pa­li­ty was as­ked for com­ment, but at the ti­me of going to press no re­spon­se had been re­cei­ved.

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