New homeowner not liable for old electricity bill

Today’s South Gauteng High Court ruling gives property owners extra protection – Chantelle Gladwin – Schindlers Attorneys.

HANNA ZIADY:  The South Gauteng High Court today granted an order against Ekurhuleni Municipality, which covers Gauteng’s East Rand, ruling that the municipality cannot disconnect the electricity supply to a new owner’s property because of an outstanding debt owed to the municipality by a previous owner of that same property.

The judgment has been welcomed as a victory for property owners, and we are joined now by Chantelle Gladwin, who is a partner and registered tax practitioner at Schindlers Attorneys. Chantelle, it’s good to have you with us this evening, and welcome.

CHANTELLE GLADWIN:  Hi, and thanks very much.

HANNA ZIADY:  The High Court today ruled that it was actually unlawful for the Ekurhuleni Municipality to refuse to supply electricity to this particular premises on the basis that a prior owner had an outstanding electricity bill. Is this precedent-setting, Chantelle? How important is this judgment?

CHANTELLE GLADWIN:  A couple of months ago there was a judgment which everyone called the Mitchell judgment, and it created a hoo-ha in our law because it appeared to say that new property owners are liable for the debts of old property owners. Now that’s not actually what it said, but that’s what a lot of people think that it said.

The judgment that we got today makes it absolutely clear in no uncertain terms that just because you own a property that has a historical debt attached to it doesn’t necessarily mean that you can be held liable in the sense that that debt becomes your debt. It’s still the old owner’s debt and you can’t be turned off for it and you can’t have the municipality refuse to supply you for it.

What the municipality can do if it chooses to – which we’ve never seen happen –is bring an application to court to try and attach your property for the old debt which is owed and which was incurred by the old owner. But, as I say, municipalities don’t generally do that. We’ve never seen them do that.

So this goes a very long way to making absolutely clear what the law is and it gives property owners that little bit of extra protection because until now there wasn’t really anything that explained that distinction very nicely.

HANNA ZIADY:  You noted the Mitchell judgment, saying that really what people thought it said was not what it actually said, but also that this judgment today is perhaps a small step towards repairing any of the harm of that judgment and the Mathabathe judgment. Is this really just a point of clarity – that this judgment finally brings much-needed clarity to this area of law?

CHANTELLE GLADWIN:  Absolutely. Unfortunately the Mathabathe and the two Mitchell judgments have been entirely misunderstood by the greater public and many attorneys – and even the courts themselves. What’s happened is that everybody’s got caught up in the hype of this idea of a new owner being held liable for an old owner’s debt, and that’s not at all what the law contemplates.

So what’s happened is that we’ve had to, on a case-by-case basis, basically carve out a little bit of clarity in every test case that we get to make it 100% clear to municipalities and to the public at large what is okay and what is not okay.

HANNA ZIADY:  Just a quick one, Chantelle. When will more information on today’s judgment be forthcoming?

CHANTELLE GLADWIN:  You can expect an article to be published in the next week or two by my partner at Schindlers, and then a copy of the judgment will be available on our website as soon as I can get it from the court. It usually takes a couple of days, so let’s say in a week or so a copy will be available on our website.

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It was time sanity prevailed. Municipalities will also have a torrid time trying to attach property for a previous owners debt. It will cause all sorts of constitutional issues.

Surely the judge who made the original ruling should have foreseen the type of problems / confusion this would cause.

One of the most ludicrous “laws” is one that holds a new owner of a property responsible for debts owed by a previous owner. This shifts the responsibility for collection of debts from the service provider, which should have the necessary systems and staff in place to manage and collect debts it has incurred in the provision of services to its customers, to innocent home-buyers who should NOT have the responsibility of doing an audit on the seller’s accounts when buying a home. Most individuals do not have the knowledge or facilities to do this.

If there IS any responsibility for checking on debts owed to municipalities by home sellers, then that responsibility should be assigned to the Estate Agents who negotiate the sale of houses as part of THEIR duties in actually earning their fees.

What’s been happening is simply a display of the gross inefficiency of the various municipalities under the current regime – it’s desperation personified!

Absolutely agree – what has been the purpose of obtaining a Clearance Certificate from a Municipality when selling your Property if they can still have recourse to you for their mistakes or dysfunctionality.

I always thought that some sanity would prevail!

This covers electricity. But what about municipal rates and services such as water, sewage and waste disposal?

There are a number of articles floating around the Internet and Media which are unfortunately misinterpreting the Gladwin Case and other matters. These articles are misinforming the general public that new owners are not at risk for historical debt that may exist on a property from previous owners. With respect, this is simply not the case.

………..There have been a few Judgments against Ekurhuleni recently, with very similar facts. The Courts are making it quite clear that the Municipality may simply not disconnect the services to the new owner and/or tenant unilaterally. People have rights………..

Please click on the link below to read our full article on this matter:

http://municipaldebt.co.za/case-number-14497-2016-chantelle-louise-gladwin-vs-ekurhuleni-metropolitan-municipality/

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