The Constitutional Court has ruled in favour of Swiss-based commodities trader Glencore in its dispute with two Mpumalanga municipalities, finding that local councils lack the legislative authority to create bylaws creating transfer embargoes on property.
The judgment goes a long way in giving certainty to property developers on the powers granted to councils in regulating the transfer of properties.
In a majority ruling the apex court found that bylaws enacted by the Govan Mbeki and eMalahleni municipalities, which impose an embargo on the registration of transfer of immovable property until the municipalities certify that their requirements have been met, are not in the purview of local government.
The majority judgment, written by acting justice Matthew Chaskalson, reads that since there is no constitutional or legislative source for the power of the municipalities to make bylaws imposing transfer embargoes as enforcement mechanisms for their town planning schemes and building approval matters, the bylaws challenged by Glencore are inconsistent with the constitution, making them unlawful and invalid.
“The superficial attraction of the municipalities’ argument that a transfer embargo should be seen as falling within the original bylaw making power conferred by the constitution flows from the fact that the municipal planning function and the national deeds registration functions are capable of being confused with one another. The constitution, however, treats the national deeds registration function separately from the municipal planning function,” reads the majority judgment, with three justices dissenting.
‘No basis’
“Once these two functions are separated, there is no basis to treat a bylaw dealing with the national function as falling within the competence to make bylaws for the effective administration of the municipal competence, simply because it is used to enforce matters relating to that municipal competence.”
Four justices concurred with Chaskalson’s interpretation of the law, giving them a majority.
The dispute between Glencore and the municipalities in coal-rich Mpumalanga arose when the two municipalities promulgated bylaws obliging a transferor of land to first obtain a certificate from the municipality confirming, among other things, that all funds due by the transferor regarding the land have been paid and that the land use and buildings constructed on the land comply with the requirements of their respective land use schemes.
Without this certificate, the transferor may not approach the registrar of deeds for the transfer of the property.
The municipalities then blocked the transfer of 55 multimillion-rand properties between Glencore and other entities after they failed to comply.
The Constitutional Court’s judgment confirms the ground-breaking 2022 judgment by the Supreme Court of Appeal, which held that some of the bylaws enforced in terms of the Spatial Planning and Land Use Management Act are invalid.
Those bylaws contain provisions that authorise local authorities to issue certificates of compliance with spatial planning regulations, and require attorneys to obtain certificates of compliance before registering the transfer of properties.
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