The KwaDukuza municipality has lost its bid to appeal a Durban High Court ruling that compelled it to refund millions of rand to a company that was forced to pay undue monies to it to obtain a rates clearance certificate before it could sell Ballito Bay Mall.
The legal battle started in September 2013 when Consolidated Aone Trade and Invest 6 (Pty) Ltd (CATI 6), which was the owner of the R135-million Ballito Bay Mall, was placed under provisional liquidation and was finally wound up on March 20 2015.
Rates clearance certificate
The liquidators of CATI 6 sought to sell Ballito Bay Mall to Cyber Savvy Merchants (Pty) Ltd and required a rates clearance certificate from the KwaDukuza Municipality, which then demanded payment for historical municipal rates and service charges that extended beyond the two-year period provided for in the Municipal Systems Act (MSA).
CATI 6 paid these amounts under protest for the sole purpose of obtaining the rates clearance certificate. This despite a prior consent order directing the municipality to provide a statement limited to the two-year debt period.
CATI 6 subsequently sought to recover the overpaid amounts. This was on the basis that the municipality had no legal right to claim debts older than two years. The Durban High Court agreed and ruled in favour of CATI 6.
The Supreme Court of Appeal (SCA) has since upheld the ruling. It has ordered the municipality to pay the cost of two counsel to CATI 6. The estimated cost to settle the matter is believed to be around R5-million.
Municipality demanded R25.6m
Giving a detailed background on the matter, the court said in July 2017, KwaDukuza demanded R25.6-million from CATI 6. This was the condition, or else the rate certificate would not be issued. Later in November 2017, the municipality upped the ante. It said it intended to disconnect municipal services from the mall if the money is not paid.
To avert a crisis, CATI 6 and the liquidators paid R3.9-million. That was done under protest. But it was meant to ensure that the municipality issues the certificate and services are not cut. However, the company legally registered the protest and said it still intends to fight the matter in court.
Later in April 2018, R21-million was paid, and in the correspondence. It was also spelt out that the payment was made on a without prejudice basis. And it reserved the right to raise prescription in respect of such amounts.
After the payment had been made, the municipality confirmed the correct amount. It said that the amount for issuing the rates certificate was only R17, 423 354.82. An amount of R21 165 901.22 had been paid, it said. And, as such, a refund of R3, 742 546.40 was due. The figure was disputed as well and had to be decided in court.
