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[2015] ZAGPJHC 25
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Young Ming Shan CC v Chagan NO and Others (26148/2013) [2015] ZAGPJHC 25; 2015 (3) SA 227 (GJ); [2015] 2 All SA 362 (GJ) (2 February 2015)
REPUBLIC
OF
SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 26148/2013
DATE:
02 FEBRUARY 2045
In
the matter between:
YOUNG
MING SHAN
CC
.......................................................................................................
Applicant
And
AJAY
CHAGAN
NO
....................................................................................................
First
Respondent
FIKILE
VUSI JELE AND 80
OTHERS
.................................................................
Second
Respondent
J
U D G M E N T
COPPIN,
J
:
[1]
This is an application to review and set aside the ruling of the
Gauteng Housing Rental Tribunal (“
the
Tribunal
”)
dated the 31
st
May 2013 in which,
inter
alia,
the levying of an electrical service charge by the applicant on its
tenants, the second respondent, was declared an “
unfair
practice
”,
as contemplated in the Gauteng Unfair Practices Regulations
[1]
,
and for an order that the second respondent (which comprises of Mr
Fikile Vuzi Jele and 80 Others and who shall henceforth also
be
referred to as “the tenants”) be ordered to pay the costs
of the application jointly and severally. The applicant
is
essentially relying on certain of the grounds of review provided in
section 6 of the Promotion of Administrative Justice Act
(“
PAJA
”)
[2]
.
[2]
The first respondent is alleged to be the Chairperson of the
Tribunal and he is cited in that capacity. Neither he nor the
Tribunal has opposed the application, but the tenants have and have
asked that the application be dismissed with costs.
[3]
The tenants are rental tenants of a building known as “Plettenberg”,
which is situated at 32 and 34 Bruce Street
in Hillbrow, Johannesburg
and that it is owned by the applicant (who, at times, shall also be
referred to as “the landlord”)
[4]
Each apartment occupied by the respective tenants has its own
electricity meter and the tenants are each liable to pay over
to the
applicant the amount charged for the electricity consumed by them.
This is in accordance with the term of the standard lease
agreement
entered into between the applicant and the individual tenants, which
provides that “
the tenant’s
liability for charges for electric current, gas and water …
shall be in accordance with separate sub-meters
which the landlord
shall be entitled to install at any time …
”.
[5]
The lease also provides that the tenant shall be liable for and
shall on demand pay to the landlord, or to the local authority,
or
body concerned, as the landlord may require, any charges (including
basic charges and service charges in respect of sub-meters,
if any)
arising directly or indirectly out of its use of electric current,
gas and water and all sanitary, sewer, refuse and rubbish
removal
fees (including basic charges) in respect of the premises or in
respect of the building and which are attributable to the
use of the
tenant.
[6]
It is not disputed that during about May 2009 the applicant started
levying an electricity service charge in the amount of
about R385,00
per month (including VAT) on each of the tenants of the building.
This was an amount in addition to the costs of
the electricity
consumed by each of the tenants. The tenants were unhappy with
this additional charge and queried it. It
is also not disputed that
the applicant’s initial justification for the charge was that
it was being charged a service charge
for the entire building by the
Johannesburg City Council, or “City Power”, the utility
service provider, which supplies
electricity to the building. It is
also common cause that this service charge by City Power was in an
amount of about R337,50 per
month for the entire building and that
the applicant charged each tenant an amount of about
R385,00,according to it, as an electricity
service charge.
[7]
It is further common cause that the tenants (i.e. ‘the
complainants’) then brought an application in the Tribunal,
established in terms of the Rental Housing Act
[3]
(“the Act”),seeking its ruling in the following terms:
“
1.
It is declared that the service charge levied against the
complainants’ electricity accounts (‘the service charge’)
for their apartments at Plettenberg 32 and 34, Bruce Street,
Hillbrow, Johannesburg (‘the property’) contravenes
Regulations
30(1)(d), (e) and (f) of the Gauteng Unfair Practices
Regulations 2001 (PGE 124 Notice 4004 of 2001), 4 July 2001;
2.
The
respondent is interdicted and restrained from levying the service
charge against the complainants’ electricity accounts
in
future;
3.
The
respondent is directed to provide to each of the complainants, on
demand, a copy of its monthly account from City Power (Pty)
Ltd in
respect of the property;
4.
The
respondent is directed to repay to the complainants all service
charges levied against the complainants since May 2009;
5.
Further
and/or alternative relief.
”
[8] In their
application to the Tribunal the tenants,
inter alia
, mentioned
that after they had queried the service charge with the applicant and
it had issued a notice giving an explanation for
the charge with
which they were not satisfied, they lodged a complainant with the
Tribunal, which scheduled a mediation in connection
with the issue
for the 29
th
February 2012; that the applicant and the
tenants reached a settlement at the mediation in terms of which they
agreed in respect
of the service charge,
inter alia
, that at
the meeting they would have with City Power, the service fee would be
queried and clarified.
[9]
On the 15
th
March 2012 the applicant’s representatives and those of the
tenants met at the offices of City Power. There it was explained,
in
essence, that City Power levies one charge in respect of the entire
building which is roughly equal to the amount the applicant
was
charging each tenant (i.e. about R337,50 per month).
[10]
In the founding affidavit of their application before the Tribunal,
the tenants complained about the fact that the applicant
was not
merely charging each tenant an equitable portion of the service fee
that it was being charged by City Power for the entire
building, but
was charging each tenant the full amount, thus generating about R27
000,00, whereas it was only paying over about
R337,50 to City Power.
According to the tenants, at the meeting of the 15
th
of March 2012, held at the offices of City Power, a representative of
that body accused the applicant of “
robbing
”
the tenants and demanded that it should stop levying such charges and
repay to the tenants those monies that had been paid
by them in
respect of such charges.
[11]
In its answering affidavit the applicant (which was the respondent
in the proceedings before the Tribunal) admitted being
accused, at
the meeting held at the offices of City Power, of robbing the tenants
and being told to repay the money in respect
of such charges, but
went on to justify the amount that it was charging each tenant as a
service charge (i.e. over and above the
consumption charge). It
denied that it was robbing the tenants or otherwise acting
unlawfully.
[12]
The applicant,
inter alia,
averred in its answering papers before the Tribunal that it recovered
approximately R27 000,00 from the tenants in respect of service
charges, but denied that it was making a profit, or “
keeping
the difference
” between the
amount it was charged by City Power (namely the R337,50) and the R27
000,00. The applicant,
inter alia,
averred that it was permitted in terms of the Greater Johannesburg
Metropolitan Council bylaws and the regulations to levy the
said
service charges in respect of each tenant; furthermore, that it uses
“
the profit
”
it makes in that regard “
to
subsidise the work on water and other services which it supplies
”;
that it re-invested the money into the electricity business or
utilised it elsewhere, for example in the maintenance of
the building
where there was an under-recovery from the tenants.
[13]
According to Mr Jason Tsai, the deponent to the applicant’s
answering affidavit in those proceedings, “
where
re-sellers do make profits it can be viewed as a direct reward for
their business effort and the risk taken
”.
Furthermore, he averred that the applicant “
is
quite entitled to use profits of the service charges to cover the
undercharging in other respects
”;
that the applicant was charging tenants a lower consumption rate than
what City Power was charging it; that it was operating
in the ambit
of the law and that it was not charging more than what City Power
would have charged if it supplied each of the tenants
directly with
electricity.
[14]
Mr Tsai then related how the applicant incurred extra costs because
of late payers. He pointed out that it was unrealistic
to expect the
applicant to only charge each tenant a portion of the R337,50 that it
was being charged by City Power. The
applicant, in essence, in
justification for its charges, averred and believed that it was a
reseller of electricity and relied
on the benefits such resellers
received, as encapsulated in a concept paper of the National Energy
Regulator of South Africa (“
NERSA
”)
on the resale of electricity in South Africa. The applicant on that
basis requested the Tribunal to dismiss the application,
averring
that it was “
baseless
”
and that a costs order against the complainants, which included some
or all of the tenants, was warranted. The applicant
also brought a
counter-application, relying on its averments in the answering
affidavit, to declare that it was “
entitled
to levy a monthly service charge to each of the complainants’
electricity accounts
”. It
also sought an order directing the complainants to pay all
outstanding service charges levied by it within seven
days of the
order and that the complainants pay the costs of the
counter-application jointly and severally.
[15]
Subsequently the complainants in the Tribunal filed their replying
papers in which they essentially denied the applicant’s
legal
entitlement to levy the service charge, opposed the
counter-application and persisted with the case they made out in
their
founding papers. The matter was eventually heard by the
Tribunal and decided on the basis of the affidavits that had been
filed as well as written and oral argument that has been presented
before it by the parties.
[16]
On the 31
st
of May 2013 the Tribunal handed down its written ruling with reasons
(the applicant is referred to in this ruling as “
the
respondent
”). The ruling
was that:
“
82.
The service charge levied against the complainants’
electricity accounts (‘the service charge’) for their
apartments at Plettenberg 32 and 33, Bruce Street, Hillbrow,
Johannesburg (‘the property’) contravenes Regulations
13(1)(d), (e) and (f) of the Gauteng Unfair Practice Regulations 2001
(PGE 124 Notice 4004 of 2001), 4 July 2001;
83.
The
respondent is interdicted and restrained from levying the service
charge against the complainants’ electricity accounts
in
future;
84.
The
respondent is directed to provide to each of the complainants, on
demand, a copy of its monthly account from City Power (Pty)
Ltd in
respect of the property;
85.
The
respondent is directed to repay to the complainants all service
charges levied against the complainants since May 2009;
86.
Payment
in terms of paragraph 85 above must be made within 120 days of date
of this ruling and shall not include any amounts which
had prescribed
prior to the institution of these proceedings.
”
THE
COMPLAINANTS’ ARGUMENT BEFORE THE TRIBUNAL
[17]
The arguments of the complainants (which included the tenants) in
the Tribunal were briefly the following: the service
charge was
not provided for in the leases which they had entered into with the
applicant; The amount in excess of R385,00,
which the landlord
was levied by City Power as a service charge for the entire building
and the approximately R27 000,00, which
the landlord charged the
tenants, constituted a profit to which it was not entitled in terms
of Regulation 13 of the Unfair Practice
Regulations
[4]
,
which, according to their argument, meant that a landlord may not
recover more than the value of the electricity actually consumed
by
the tenants. Although it was conceded that the landlord was a
re-seller of electricity in terms of the bylaws, it was
submitted
that the bylaws precluded it from making a profit. It could only make
a profit as a trader, but was not a trader. In
their argument the
complainants went on to define the issue as not being about whether
the service charge was reasonable, or about
what the profit was being
used for by the landlord, but whether there was a basis in law for
the applicant to levy the service
charge. According to the
complainants’ argument, there was no merit in the reasons
raised by the landlord for levying the
service charge, namely, the
funding of maintenance, because maintenance had to be funded from the
rental received and not from
a separate service charge levy. It
was also argued that “
the
entire purport of Regulation 13 is to permit a tenant to
cross-reference the charges levied by the landlord with that levied
by the Utility
”
and that taking all of the above into account, the service charge was
unlawful.
[18]
According to the argument of the complainants “
the
most probable interpretation of Regulation 13(1)(d) is that the
landlord may only pass on the actual costs levied by City Power
to
the consumer. A failure to do this would amount to an exploitative
practice
”.
It was also argued that any attempt by the landlord to rely on clause
7 of the lease agreements, which it had concluded
with the tenants,
and which allowed for the levying of service charges, was “
unfounded
”
when viewed in the light of the decision of the majority of the
Constitutional Court in
Maphango
v Aengus Lifestyle Properties
[5]
, where it was, inter alia, clarified that the Tribunal had the power
to set aside any provision in a lease agreement which it
regarded as
unfair.
THE
APPLICANT’S SUBMISSIONS BEFORE THE TRIBUNAL
[19]
The applicant’s submissions are summarised in the Tribunal’s
ruling. They were briefly the following. Clause 7
of the lease
agreements, which were concluded freely and voluntarily between the
applicant and the tenants, allows for the levying
of a service charge
and that it had to be respected. It was submitted further that
the issue was not one of profit, but about
whether the landlord was
entitled to levy the service charge in terms of the applicable
legislation. The “
profit
”
that it made had to be seen in the light of a NERSA proposal in its
concept paper, that a reseller of electricity was entitled
to a
“
profit
”.
It was argued that there was no breach of the Unfair Practice
Regulations and that those regulations were not applicable.
The
Regulations only dealt with consumption, whereas the complaint that
was brought to the Tribunal did not relate to the consumption
of
electricity, but to the levying of a service charge. The profit was
not a “
profit
”
in the conventional sense, but money to which the landlord was
entitled in terms of the applicable legislation. According
to this
argument, the applicant had indicated what those monies were being
used for, but was not obliged to do so and only did
so out of an
abundance of caution. The service charges levied by it are what City
Power would have levied each tenant if it had
contracted with the
tenants directly and individually. It was further submitted
that in this instance the landlord (the applicant),
which receives
its electricity supply in bulk from City Power, was responsible for
the electrical network at the premises,
including the
installation and maintenance of the network, meter reading, billing,
administration, collection of revenue
and customer services and was
therefore entitled to levy a charge for those services in accordance
with City Power’s tariffs,
which is an amount over and above
the amount charged for the actual electricity consumed by the
tenants.
[20]
The applicant submitted further that the charges, which were the
subject of the complaint, were in accordance with NERSA proposals
and
did not equate to a profit. It was further submitted that the
applicable bylaws were not contravened because each tenant
was not
paying any more than what he, or she, would have paid had they
contracted directly with the utility service provider (i.e.
City
Power). According to this argument, what was significant was the
contention that it, as the landlord, was the service provider
to the
tenants, and not City Power. The applicant argued further
that It did not require a licence to trade in electricity,
because it
was not supplying electricity to the tenants as a commercial
activity. The applicant relied in this regard on section
7(2)
especially point 3 of Schedule 2 of the Electricity Regulation Act
[6]
(“the Electricity Regulation Act”). According to the
applicant, it could not have been the intention of the Legislature
that the landlord was permitted to only “
pass
on
”
the service charge levied on it by City Power, by merely billing each
tenant for a portion of that charge. It submitted,
in summary, that
the charges were reasonable and lawful in terms of the Johannesburg
Metropolitan Electricity Bylaws (“the
bylaws’), the
Electricity Regulation Act, the NERSA concept paper and the common
law.
THE
TRIBUNAL’S REASONING
[21]
The Tribunal considered that the “
fundamental
question
” before it was whether
the service charge levied by the landlord (present applicant) “
is
lawful in light of the applicable legislation and the authorities
cited and the mandate of the Tribunal
”.
Having concluded that it had the authority to strike down any
provision in a lease which it regards as an ‘unfair
practice’
in light of the decision in
Maphango
,
and that ‘unfair practice’ is a wide concept, the
Tribunal went on to reason as follows. Although “
rent
”
was not defined in the Act, its dictionary meaning was clear and that
the payment for the use of a service provided by another
may be
described as “
rent
”;
that a landlord is entitled to charge, over and above the rent, for
services such as “utilities, security, parking
and such like”;
and that this was allowed by section 5(6)(h) of the Act.
[22]
According to the Tribunal, the question was whether the service
charges levied by the landlord were justifiable in light of
the
argument presented. The fact that the landlord may be regarded by the
tenants as a re-seller of electricity was of no effect,
because it
was actually not a service provider. The ultimate service
provider was City Power. The landlord could not be regarded
as a
service provider, because it did not have the power to terminate the
electricity supply to the tenants without a court order.
According to
the Tribunal, this was apparent from Regulation 13(1)(b) read with
Regulation 7(1)(h) which requires a landlord, amongst
other things,
to maintain electrical systems of the leased premises.
According to the Tribunal, the mere fact that the landlord
maintained
the electrical network and incurs other expenses, ancillary to the
supply of electricity individual tenants, does not
entitle the
landlord to levy the service charge to recoup those other expenses
and that those remain the prerogative of the municipality.
The
Tribunal found that the Act and Regulations were applicable and that
the applicant’s conduct was in contravention of
them. The mere
fact that parties have agreed that the landlord may levy the charges
and that the agreement to that effect was entered
into freely and
voluntarily, did not preclude the Tribunal from striking down the
agreed practice as being unfair, as held in
Maphango
.
[23]
The Tribunal then went on to comment on the total amount recovered
by the landlord in the levying of the service charge and
stated that
“
even if evidence was adduced to
demonstrate that the money was ploughed into maintenance this
practice clearly violates Regulation
13”
and
that it must be struck down. Central to this reasoning was the view
that the required maintenance cannot be funded from
a levy of service
charges, but had to come from the rental that was being collected by
the landlord.
[24]
The Tribunal commented again on the recovery by the applicant of R27
000,00 per month in respect of the service charge when
it only
incurred costs, i.e. from City Powers’ billing for service
charges, in the amount of about R400,00, and expressed
the view that
it “
cannot be justified, either in
terms of the spirit nor the letter of the Act
”
and that the amount recovered by the applicant constitutes “
a
profit to which it was not entitled
”.
The Tribunal held that the NERSA proposal constitutes “
no
more than an opinion and did not assist the applicant
”.
On the strength of the aforesaid reasoning, the Tribunal went on to
make the ruling which the applicant seeks to review
and set aside.
I have quoted that ruling earlier in this judgment.
THE
REVIEW
[25]
As I have pointed out at the outset the applicant seeks to review and
set aside the ruling essentially on certain grounds set
out in
section 6 of PAJA. In the alternative, it seeks to review the
ruling in terms of the Constitution and the common
law, and
still, further alternatively, in terms of section 24, in particular,
sections 24(1)(a) and (c), of the Supreme Court Act
[7]
.
[26]
The applicant’s main argument, however, is that PAJA is
applicable, because the actions, including the ruling, of the
Tribunal constitutes “
administrative
action
” and that section 24 of
the Supreme Court Act only applies to the review of inferior courts
and not to tribunals such as
the Rental Housing Tribunal (i.e. the
Tribunal). The applicant then presented its argument on the
assumption that PAJA applied.
It was submitted that if PAJA did
not apply, the decision was still reviewable in terms of sections of
the Supreme Court Act that
I have referred to earlier.
[27]
In the written heads of argument counsel for the second respondent
submitted that the decision of the Tribunal was not administrative
action and that PAJA did not apply, although the said counsel
appeared to concede the applicability of PAJA during oral argument.
However, it was still submitted that the applicant could not rely on
PAJA, the Constitution and the common law, simultaneously.
[28]
I shall now briefly consider the legal position before considering
the actual grounds of review relied upon, and firstly,
with the
submission that the applicant could not rely on PAJA, the
Constitution and the common law, simultaneously, if PAJA was
applicable. In my view there is merit in the point. Section
33(1) of the Constitution provides that everyone has the right
to
administrative action that is lawful, reasonable and procedurally
fair. Section 33(3) provides that national legislation
giving
effect to the rights embodied in section 33, that includes
subsections 33(1) and 33(2), must be enacted to give effect to
those
rights and must (a) provide for the review of administrative action
by a court or, where appropriate, an independent impartial
tribunal;
(b) impose a duty to give effect to the rights in subsections (1) and
(2) and, (c) promote efficient administration.
PAJA has been
identified as that legislation. In
Minister
of Health v New Clicks (SA) (Pty) Ltd and Others
[8]
;
Ngcobo
J (as he then was) stated the position concerning reliance on PAJA
and section 33(1) of the Constitution and the common law,
where PAJA
was applicable, as follows:
“
Our
Constitution contemplates a single system of law which is shaped by
the Constitution. To rely directly on Section 33(1) of the
Constitution and on common law when PAJA, which was enacted to give
effect to Section 33, is applicable, is, in my view, inappropriate.
It will encourage the development of two parallel systems of law, one
under PAJA and another under Section 33 and the common law.
Yet
this Court has held that there are not two systems of law regulating
administrative action – the common law and the Constitution
–
‘but only one system of law grounded in the Constitution’.
And in
Bato Star
we
underscored this, holding that ‘the Court’s power to
review administrative action no longer flows directly from the
common
law but from PAJA and the Constitution itself.
”
The
majority of the Constitutional Court seemingly agreed with this view.
[29]
I now turn to the question of the applicability of PAJA. PAJA
itself states in its long title and preamble that it is
the
legislation that is contemplated in section 33(3) of the
Constitution. It is clear from the definition of the term
“
administrative
action
”
in PAJA that it does not apply to the review of the judicial
functions of a judicial officer of a court referred to in section
166
of the Constitution, or of a special tribunal established under
section 2 of the Investigating Units and Special Tribunals
Act
[9]
.
In terms of section 1 of PAJA, which defines “administrative
action” for the purposes of that statute, such
functions are
not included in the definition of “
administrative
action
”.
[10]
The word “
court
”
in terms of section 1 of PAJA means the Constitutional Court, High
Court or a court of similar status or a magistrate’s
court,
either generally, or in respect of a specified class of
administrative actions.
[30]
Section 7 of the Act empowers the member of the Executive Council of
a Province, who is responsible for housing, to, by notice
in the
Gazette, establish a Rental Housing Tribunal in the Province.
Such a tribunal is required to fulfil the duties imposed
upon it in
Chapter 4 of the Act and is obliged to do all things necessary to
ensure that the objectives of the said chapter are
achieved.
Section 10 of the Act deals with the meetings of the Tribunal and
provides,
inter alia,
that
these meetings must be convened for the consideration of any
complaint referred to it in terms of section 13 or any other
matter
which the Tribunal may, or must, consider in terms of the Act
(section 10(4)). The decisions are taken by consensus
and where
consensus cannot be reached the decision of the majority of the
members is a decision of the Tribunal. The section
(section 10)
also provides that minutes of the proceedings of the Tribunal must be
kept.
[31]
Section 13 of the Act deals with complaints and sets out the
procedure that must be followed where a complaint has been lodged
with the Tribunal by a tenant, or landlord, or groups of the same
concerning an unfair practice. Through its staff it must conduct
the
necessary preliminary investigations to determine whether the
complaint does relate to a matter which constitutes an unfair
practice. The Tribunal must consider whether the dispute can be
resolved through mediation and facilitate the same. Where the dispute
cannot be resolved through mediation it must conduct a hearing and
make such ruling “
as it may
consider just and fair in the circumstances
”
(section 13(2)(d)). In section 13(3) some of the Tribunal’s
powers in connection with the hearing are set out.
[32] In terms of
section 13(11) of the Act a Magistrate’s Court may refer a
matter, concerning an unfair practice, to the
Tribunal for
resolution. The Tribunal in terms of section 13(12), also has the
power to make a ruling on costs issues, spoliation,
issue attachment
orders and grant interdicts. Section 13(13) provides that:
“
A
ruling by a tribunal is deemed to be an order of the magistrate’s
court in terms of the Magistrate’s Court Act, 1944
(Act 32 of
1944) and is enforced in terms of that Act.
”
However,
section 13(14) provides that the Tribunal does not have jurisdiction
to hear applications for eviction orders.
[33] Section 17 of
the Act further provides for a review of the proceedings of these
tribunals. The section provides:
“
Without
prejudice to the constitutional right of any person to gain access to
a court of law, the proceedings of a tribunal may
be brought under
review before the high court within its area of jurisdiction.
”
However,
the Act does not spell out what grounds would be applicable to the
review and whether it would be the Constitution, PAJA
or the
provisions of the Supreme Court (i.e. section 24). That is a matter
that has to be decided.
[34]
In
New
Clicks
[11]
,
Ngcobo
J (as he then was) held there that the starting-point in determining
whether PAJA was applicable to the exercise of power,
under
consideration in that case, was section 33(1) of the Constitution and
that the enquiry commenced by ascertaining whether
the exercise of
the power constituted “
administrative
action
”
as contemplated in section 33 of the Constitution. Having determined
that it was, it then had to be considered whether PAJA
nevertheless
excludes such action (in terms of its exclusionary provisions).
Ngcobo J emphasised that the provisions
of PAJA in themselves
“
cannot
be used as an aid to determine the meaning of administrative action
in the Constitution. At best they can be used to fortify
the
inference that PAJA excludes the exercise of this specific power from
its ambit
”.
[35]
In considering whether particular action constitutes “
administrative
action
”
as contemplated in section 33 of the Constitution, the Constitutional
Court has held that it was the nature of the action
and not the actor
that was determinative. In
President
of the Republic of South Africa v South African Rugby Football Union
(
“
SARFU
”
)
[12]
it
was stated that:
“
In
section 33 the adjective ‘administrative’ not ‘executive’
is used to qualify ‘action’.
This suggests that the
test for determining whether conduct constitutes ‘administrative
action’ is not the question
whether the action concerned is
performed by a member of the executive arm of government. What
matters is not so much the functionary
as the function. The question
is whether the task itself is administrative or not. It may
well be, as contemplated in Fedsure
that some acts of a legislature
may constitute ‘administrative action’. Similarly,
judicial officers may, from
time to time, carry out administrative
tasks. The focus of the enquiry as to whether conduct is
‘administrative action’
is not on the arm of government
to which the relevant actor belongs, but on the nature of the power
he or she is exercising.
”
[36]
From a review of the cases, some of which I will discussing later in
this judgment, it is apparent that while the nature of
the actor is
not determinative of whether or not its functions are administrative,
it is a relevant factor that is taken into account
in determining
whether its function (or at least those that are in issue) are
administrative or not.
[37]
Thus the main enquiry in the present case is essentially about the
nature of the tribunal’s functions. In my view
the
functions of the tribunal that are in issue in this case and which
are essentially sourced from section 13 of the Act, though
prima
facie
of a judicial nature, are actually administrative. Having said that,
it is acknowledged that the classification of functions is
not a
simple matter, as appears from several matters before the
Constitutional Court.
[13]
[38]
In its early years the Constitutional Court in
Nel
v Le Roux NO and Others
[14]
had to,
inter
alia,
decide what the nature was of the summary sentencing procedure
contemplated in
section 205
of the
Criminal Procedure Act 51 of
1977
. It held that the procedure was “
clearly
judicial and not administrative action
”.
It said that it was subject to appeal in the same manner as a
sentence imposed in any criminal case.
[15]
In
Bernstein
v Bester NO
[16]
the
Constitutional Court considered aspects of the enquiry in terms of
sections 417 and 418 of the Companies Act 61 of 1973 (the
so-called
insolvency enquiry). Ackermann J, who wrote the majority
judgment, concluded that he had difficulty seeing how
the enquiry
could be characterised as administrative action. It formed an
intrinsic part of the liquidation of a company pursuant
to a court
order and in particular was part of the process directed at
ascertaining and realising the assets of the company and
can be seen
as part of the execution process. It was also stated that it
could not fit into the mould of administrative action
because it was
not “
aimed
at making decisions binding on others
”.
It was merely a mechanism to gather information to facilitate the
liquidation process (i.e. it was investigative).
[39]
In
Total
Support Management (Pty) Ltd v Diversified Health Systems SA (Pty)
Ltd
[17]
the Supreme Court of Appeal held that a consensual arbitration was a
form of private adjudication and that the function of the
arbitrator
was not administrative, but judicial in nature. It confirmed that
decisions made in the exercise of judicial functions
do not amount to
administrative action
[18]
.
The Supreme Court of Appeal also confirmed the correctness of
the conclusion to that effect in
Patcor
Quarries v Issroff and Others
[19]
.
In that case the court held that an arbitrator does not perform an
administrative function when adjudicating a dispute in
arbitration
proceedings, but rather, a judicial function, because an arbitration
is in the nature of litigation, in that it is
about the resolution of
a dispute between at least two parties, which could have been
adjudicated upon by the courts, but was,
in the interest of a speedy
and less costly resolution, referred to arbitration. Another
characteristic such an arbitration had
in common with court
proceedings, was the finality of the award.
[40]
In the
Total
Support
case Smalberger ADP did however mention that the position may be
different in the case of statutorily imposed arbitrations and
referred in that regard to the Labour Appeal Court’s decision
in
Carephone
(Pty) Ltd v Marcus
NO
and Others.
[20]
There
is was held that the Commission for Conciliation, Mediation and
Arbitration (“
CCMA
”),
established in terms of the
Labour Relations Act 66 of 1995
(“
the
LRA
”),
was an organ of state and that its proceedings amounted to
“
administrative
action
”
for the purposes of the Constitution. It conducts compulsory
arbitrations in terms of the LRA which “
involves
the exercise of a public power and function because it resolves
disputes between parties in terms of the LRA without needing
the
consent of the parties
”.
The LAC rejected the argument that the arbitration function of the
CCMA was of a judicial nature and that it did
not amount to
“
administrative
action
”
for the purpose of the administrative justice section in the Bill of
Rights.
[21]
One of the reasons
for the LAC’s decision was because even though the CCMA and
other organs of state may perform functions
of a judicial nature they
are not courts of law and thus have no judicial authority under the
Constitution. Referring to
Bernstein
Froneman DJP (as he then was) stated:
[22]
“
Their
judicial functions do not transform them into part of the judicial
arm of the State, nor does it make them part of the judicial
process.
”
Froneman
DJP went on to hold that the purpose of administrative justice
section of the Bill of Rights was to extend the values of
accountability, responsiveness and openness to institutions of public
power which might not previously have been subjected to such
constraints. Courts have always been subjected to similar
constraints and it would be incongruous to exempt public bodies
which
exercise judicial functions from those constraints.
[23]
[41]
In
Sidumo
v Rustenburg Platinum Mines Ltd
[24]
the Constitutional Court apparently accepted that the CCMA was an
administrative body and that its functions, even though they
resembled the functions of a court of law, were “
administrative
action
”
as envisaged in section 33 of the Constitution, although the LRA,
instead of PAJA, applied
[25]
.
In the majority judgment Navsa AJ pointed out that:
“
In
form, characteristics and functions administrative tribunals
a
wide spectrum at one end they implement or give effect to policy of
the legislation at the other some tribunals resembled courts
of
law.
”
[26]
Examples
were given of other tribunals that resembled and performed functions
similar to courts of law but which were regarded as
administrative
bodies, namely the Industrial Court, established under the Labour
Relations Act 28 of 1956, the Amnesty Committee,
established in terms
of the
Promotion of National Unity and Reconciliation Act 34 of
1995
.
[27]
[42]
Navsa AJ mentioned the similarities and differences between the CCMA
arbitrations and proceedings of courts of law. The similarities
included, the process allowing for the adducing of evidence,
questioning of witnesses and presentation of argument, the power to
subpoena and the binding nature of the award and the consequences of
failing to comply with an award as well as the powers to make
costs
orders. The differences included the power of a Commissioner to
conduct arbitrations in an expeditious manner with very little
formality, the absence in the CCMA of a blanket right to legal
representation, the absence in the CCMA of a system of binding
precedent and the different security of tenure enjoyed by CCMA
Commissioners.
[43] O’Regan
J, who concurred in the judgment of Navsa AJ (i.e. the majority
judgment), points out in a separate judgment,
inter alia,
that:
“
While
independent and impartial tribunals may perform adjudicative tasks,
it does not automatically follow that their functions
are not within
the contemplation of
section 33.
Nor does it necessarily follow that
because independent and impartial tribunals are governed by
section
34
they are not governed by
section 33.
”
[28]
O’Regan J then
also discusses the decisions in,
inter alia,
Nel
and
the rationale for the Constitutional Court’s decision in that
case.
[44]
The Rental Tribunal is not a court of law. Although its adjudicative
functions have some similarities
to judicial functions there are
significant differences. Once an unfair practice complaint has been
lodged with the Tribunal the
Tribunal is obliged through its staff to
conduct a preliminary investigation
(section 13(2)(b)).
If it
is satisfied that there is a dispute as contemplated in
section 13
it
must consider whether the dispute cannot be resolved through
mediation and if so, it must appoint a mediator to mediate.
However, if it resolves that mediation is inappropriate, or has
failed, the Tribunal must conduct a hearing and then make such
a
ruling as it may consider just and fair in the circumstances
(section
13(2)(d)).
The Tribunal has specific powers for the purposes of
conducting the hearing. These powers are set out in
section
13(3)(a).
It may,
inter alia
, require any Rental
Information Office to submit reports to it and require an inspector
to appear before it to give evidence, or
provide information, or
produce a report, or document. It may also require the rental
information office to advise it concerning
a dwelling, or complaint
received and it may summon persons to give evidence, or provide
information, or documents and may administer
the oath or
affirmation. It is obliged to keep a register of complaints and
may make a ruling on costs
(section 13(12)(b)).
The Tribunal
may also make a mediation agreement a ruling of the Tribunal
(section
13(12)(b)).
It may make spoliation and attachment orders and
grant interdicts
(section 13(12)(c))
but unlike a court of law, it
may not hear applications for eviction orders
(section 13(14)).
The proceedings of the Tribunal are also not subject to appeal, but
may be brought on review
(section 17).
Furthermore, the Tribunal does
not have a formal system of binding precedent and the tenure of the
officers presiding in the Tribunal,
is different from that of judges.
[45]
Although the functions of the Tribunal
resemble those of courts of law in some respects, it is not
a court
of law. The mere fact that its ruling is deemed to be an order of the
magistrate’s court in terms of the Magistrates
Courts Act and
is enforced in terms of that Act (s 13(13)), does not make the
Tribunal a court of law and does not make its adjudicative
actions
judicial acts. There are similar provisions in the LRA with regard to
arbitration awards of CCMA commissioners or arbitrators
[29]
,
but that has not affected the administrative nature of those
acts
[30]
. The Tribunal is,
nevertheless, a state organ exercising public power. Its functions
are essentially administrative in nature and
its proceedings are
expressly made reviewable and its rulings are not appealable.
It is appropriate that the Rental Tribunal
be held to the standards
espoused by the Constitution in section 33, namely, lawfulness,
reasonableness and procedural fairness.
When all facts and
circumstances are taken into account its functions, including those
of an adjudicative nature, constitute “
administrative
action
”
as contemplated in section 33 of the Constitution.
[46]
PAJA does not exclude the proceedings and funtions of the Rental
Tribunal from its sphere of application.
It expressly excludes those
of courts of law and specific tribunals but not the proceedings of
the Rental Tribunal established
in terms of the Act. Since PAJA is
the legislation contemplated to give effect to the rights
contemplated in section 33 of the
Constitution, it is applicable to
the proceedings of the Rental Tribunal.
THE GROUNDS RELIED
UPON BY THE APPLICANT
[47]
The applicant relies on three, what it terms “
grounds of
review
” against the ruling of the Tribunal, but which can
more appropriately be described as “
heads of attack
”,
because several grounds of review are relied upon under each head.
The first head relates to the Tribunal’s
finding concerning the
standing of the complainants in the proceedings before it. The second
relates to the issue of jurisdiction
and, in particular, the
Tribunal’s acceptance that the regulations were applicable and
the third heading relates to the Tribunal’s
ruling in respect
of the merits of the complaint.
[48]
Under the first, second and third heads of attack the applicant
relies on the grounds set out in section
6(2) of PAJA. That
section provides as follows:
“
(2)
A court or tribunal has the power to
judicially review an administrative action if –
(a)
the
administrator who took it –
(i)
was
not authorised to do so by the empowering provision;
(ii)
acted
under a delegation of power which was not authorised by the
empowering provision, or
(iii)
was
biased or reasonably suspected of bias;
(b)
a
mandatory and material procedure or condition prescribed by an
empowering provision was not complied with;
(c)
the
action was procedurally unfair;
(d)
the
action was materially influenced by an error of law;
(e)
the
action was taken –
(i)
for
reason not authorised by the empowering provision;
(ii)
for
an ulterior purpose or motive;
(iii)
because
irrelevant considerations were taken into account or relevant
considerations were not considered;
(iv)
because
the unauthorised or unwarranted dictates of another person or body;
(v)
in
bad faith; or
(vi)
arbitrarily
or capriciously;
(f)
the
action itself –
(i)
contravenes
a law or is not authorised by the empowering provision; or
(ii)
is
not rationally connected to –
(aa)
the purpose for which it was taken;
(bb)
the purpose of the empowering provision;
(cc)
the
information before the administrator; or
(dd)
the
reasons given for it by the administrator;
(g)
the
action concerned consists of a failure to take a decision;
(h)
the
exercise of the power or the performance of the function authorised
by the empowering provision, in pursuance of which the administrative
action was purportedly taken, is so unreasonable that no reasonable
person could have so exercised the power or performed the function;
or
(i)
the
action is otherwise unconstitutional or unlawful.
”
THE FIRST HEADING OF
ATTACK (i.e.
LOCUS STANDI)
[49]
The applicant contends that paragraph 85 of the Tribunal’s
ruling was not competent as it relates
to all the complainants,
whereas the applicant did not concede at the hearing before the
Tribunal that all the complainants had
standing and only made such a
concession in respect of those complainants who had paid the service
charge which it levied in terms
of valid lease agreements.
[50]
Paragraph 85 of the ruling states that the present applicant
(respondent in that hearing) “
is directed to repay to the
complainants all service charges levied against the complainants
since May 2009
”. The applicant’s argument in this
regard is based on an interpretation of that ruling to the effect
that it relates
to all complainants even those against whom no
service charge was levied and/or who did not pay the service charge.
The applicant
contends, based on that interpretation, that the ruling
is reviewable on the grounds set out in sections 6(2)(a)(i),
6(2)(e)(i)
to (iii) and (vi), 6(2)(f)(i) and section 6(2)(f)(iii)(aa)
to (dd), section 6(2)(h) and section 6(2)(i) of PAJA. The applicant
does however aver that “
if it were to be accepted that the
effect of the order in paragraph 85 is that only the complainants
against whom it was so charged
and who effected payments are to be
re-compensated, then the locus standi point will no longer be
pursued
”.
[51]
On behalf of the respondents it was submitted that there was no merit
in the applicant’s “
locus standi point because
properly construed the ruling only related to those complainants who
had been charged the service fee
and who had paid it
”.
[52]
In my view there is merit in this contention of the respondents.
The ruling requires the applicant
to “
repay
”. This
can only mean to pay back to those who have paid the service charge.
That, of necessity, excludes those that may have
been in the ranks of
the complainants, but who did not pay the service fee,
inter alia
,
because they were not levied. The applicant’s first point of
attack is based on a wrong interpretation of paragraph 85 of
the
ruling and cannot be upheld.
THE SECOND HEADING
OF ATTACK (I.E. THE JURISDICTIONAL ISSUE)
[53]
The applicant contends that it argued at the outset at the hearing
before the Tribunal that the regulations
were not applicable because
the service charge does not constitute a “
service
”
as contemplated in the Regulations; that the Tribunal never
considered the point and that “
the sweeping statement
”
made in its ruling that the Regulations are applicable, without
furnishing reasons for that conclusion, indicates that the
Tribunal
“
did not direct its mind to this issue
” and,
accordingly committed a gross irregularity.
[54]
On the second respondent’s behalf it was argued that the
regulations were applicable and that
the Tribunal applied its mind to
the issue; was correct in that regard and did not commit an
irregularity, let alone a gross irregularity.
[55]
The applicant’s argument was that the Act and the Regulations
do not cover the complaints
relating to the service charge, because
only the word “
services
”
is defined in the Regulations as “
the
provision of water, electricity, gas services and refuse removal
”;
that it was “
clearly
aimed at consumption
”
and that the service charge which was the subject of the complaint
was not a consumption charge but a fixed charge. It was
submitted
that as the Regulations did not apply the Tribunal had no
jurisdiction to determine the matter and that the regulation
of such
service charge was in the domain of the the
NERSA
and the Electricity Regulation Act
[31]
(“the
Electricity
Regulation Act
”).
The applicant averred that the Tribunal’s finding that the
regulations were applicable was reviewable in terms
of a slew of
provisions under section 6(2) of PAJA, namely, section 6(2)(a)(i),
section 6(2)(c), section 6(2)(d), section 6(2)(e)(i)
and (ii),
section 6(2)(e)(iii), section 6(2)(e)(vi), section 6(2)(f)(i),
section 6(2)(f)(ii)(aa), (bb) and (cc), section 6(2)(h)
and section
6(2)(i).
[56]
The second respondent’s argument in response was briefly the
following: The Regulations
are applicable and the Tribunal
correctly and reasonably found in that regard. The mere fact that the
applicant was not satisfied
with the Tribunal’s finding is not
a ground for review.
[57]
It was argued that it is clear from the Tribunal’s decision
that it applied its mind to
the question of the applicability of the
Regulations. The mere fact that the Tribunal did not mention in
its ruling every
factor or circumstance that it took into account
does not warrant a review of that ruling. In support of the latter
point reference
was made to what the court stated in
Hamata
v Chairperson, Peninsula Technikon Internal Disciplinary
Committee
[32]
,
namely:
“
[
e]ven
a court of law is not required to show that it took every relevant
consideration into account or that it went through every
relevant
thought process; and the court’s failure to indicate that
it did so does not, as a general principle, constitute
a ground for
interfering with the decision eventually arrived at … We
do not believe that stricter formal requirements
can be imposed upon
administrative bodies not consisting of trained lawyers than those
applying to judicial officers
”.
[58]
The second respondent further submitted that Regulation 13 was not
definitive of the Tribunal’s
powers to entertain complaints
under the Act. Section 10(4) of the Act does not confine the
Tribunal’s functions to
the consideration of complaints about
unfair practices. It is open to the Tribunal to consider any other
matter which it may or
must consider in terms of that Act. In any
event, the powers of the Tribunal, to declare a particular practice
or conduct unfair,
are wide.
[59]
I need not define the precise scope of the Tribunal’s powers
here, because, in my view,
there is merit in the second respondent’s
point that the Tribunal’s finding that the Regulations were
applicable to
the complaint, was correct and reasonable in the
circumstances. It did not have to spell out in detail how it came to
that conclusion.
[60]
Regulation 13 was intended to regulate,
inter
alia,
the charging for electrical
services by a landlord, who is by law, or in terms of a lease
agreement, obliged to provide (
inter
alia
) electricity services to a
tenant. It does not only cover actual consumption costs, but
all charges that the landlord may
levy against the tenant in
connection with
inter alia
its supply of electricity services to the tenant. Regulations
13(1)(e) and 13(1)(f) make it plain that it is not only electricity
consumption that is being referred to, but the consumption of
‘electrical services’ . In the case of a dwelling which
is not separately metered for such service the landlord is obliged to
comply with the applicable law or obligations regarding the
amount to
be charged to the tenant. Regulation 13(f) provides that in a
multi-tenanted building the landlord may not recover
collectively
from the tenants for the services rendered, in excess of the amounts
“
totally charged by the utility
service provider and the landlord
”.
Read with Regulation 13(d), in cases where the dwellings are
separately metered, the landlord may only charge a tenant
the exact
amount for services consumed. The phrase “services consumed”
is not confined to the electricity that has
been consumed, but
includes all “electricity services” that have been
consumed by a tenant, that would include the
portion of the service
charge levied by the utility provider against the landlord. It would
be untenable to expect a landlord,
who is not only billed by the
utility service provider for the actual amount of electricity
consumed in the building (i.e. by the
tenants collectively), but also
a service charge, to not be legally entitled to pass on the service
charge to the tenants.
In my view, therefore, the Tribunal
reasonably and correctly concluded that the Unfair Practice
Regulations were applicable to
the complainant of the second
respondent.
THE
THIRD HEAD OF ATTACK (I.E. THE MERITS
)
[61]
The applicant’s attack is mainly aimed a the Tribunal’s
finding that the levying of the service charge in connection
with the
supply of electricity on each tenant was in contravention of the
Regulations (in particular Regulation 13) and was unlawful.
[62]
The Tribunal found in effect that the applicant could not levy a
separate charge on the tenant for its own service to the tenant
regarding the supply of electricity, such as for billing the tenant,
or for maintenance of the electricity network. The Tribunal’s
view was that the landlord had to recover those costs by way of the
rental. Thus in calculating the rental to be paid by
a tenant
for premises occupied or to be occupied, the landlord had to factor
in the costs of such billing and maintenance and could
not charge for
those services “
in addition to the
rental
” and,
inter
alia
, in addition
to
the electricity services consumed by the tenant at the premises.
The Tribunal’s finding clearly implied that the services
consumed would consist of the actual electricity used by the tenant
at the premises and the
pro rata
share of the service charge which the utility service provider, in
this instance, City Power, levied against the landlord for the
entire
building.
[63]
The service charge levied by the applicant in respect of each
tenant, but for the fact that it was close to the amount which
the
utility provider, City Power, charged it in respect of the entire
building, according to the evidence presented, bore little
resemblance to the utility provider’s charge and was not the
recovery by the applicant of that charge, but the applicant’s
own charge levied against each of the tenants for the services it
alleged it provided to the tenants, such as for billing and the
maintenance of the electricity network, etc. In addition to the
Tribunal’s finding that the applicant could not levy such
a
charge as an additional charge, the Tribunal held that even if it
could be shown by the applicant in respect of such a charge
that the
yield was utilised for maintenance, it was not legally permissible
for the applicant to levy it.
[64]
The applicant’s attack on the Tribunal’s finding on the
merits was essentially the following: that the Tribunal
made a
mistake of law in finding that there had been a contravention of
Regulation 13; that its ruling in paragraph 74, namely,
that
the Act and Regulations were applicable and that the present
applicant (the respondent there) contravened them by levying
its own
service charge, was not supported by the evidence; that the Tribunal
failed to give reasons why the Regulations were applicable
and that
such failure justified an inference of arbitrariness; that the
Tribunal’s findings were wrong and that no reasonable
person
would have come to the same conclusion as the Tribunal.
[65]
One must bear in mind that this is not an appeal, but a review and
the ultimate test is not whether the Tribunal was right
or wrong, but
whether its decision was so unreasonable that no reasonable person,
or more specifically, Rental Tribunal, could
have come to that
conclusion in the circumstances
[33]
.
[66]
I have already dealt under a previous heading with the Tribunal’s
conclusion that the Act and Regulations were applicable
and stated my
view that the Tribunal could reasonably have concluded that the Act
and Regulations were applicable to the complaint.
The
Tribunal’s finding in that regard cannot, in my view, be said
to be so unreasonable that no reasonable person or tribunal
would
have come to the same conclusion as it. The fundamental weakness in
the applicant’s argument regarding the applicability
of the
Regulations and the Act resides in an erroneous point of departure,
namely, that Regulation 13 only deals with the consumption
(or use)
of electricity, and did not cover electrical service charges, whereas
Regulation 13 explicitly deals with the consumption
(
inter
alia
) of “
electrical
services
”, which is much more
than the mere consumption of electricity. The Regulation deals with
everything ancillary to the consumption
of electricity which falls
within the compass of “electricity services”, including
the service charges levied in connection
with the use or supply of
electricity.
[67]
It is apparent from the Tribunal’s ruling that it was alive to
the issues and applied its mind to their resolution. As
pointed out
earlier in this judgment with reference to what was stated in
Hamata
[34]
,
the mere fact that the Tribunal did not specifically mention in its
written ruling every factor and circumstance which it took
into
account, does not of its own warrant an inference that the Tribunal
did not apply its mind, or did not take relevant factors
into
account, or that it took irrelevant factors into account. The
Tribunal is not a court of law and to apply the same principles
to
its proceedings, such as the so-called “
Plascon-Evans
rule
”,
that is a rule as formulated in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[35]
is inappropriate. In any event, even if that rule could be applied to
its proceedings (especially those in the form of applications
accompanied by affidavits) the application of the rule was not
appropriate in this instance. There was no factual dispute
that
required resolution. The dispute was essentially a legal and
interpretational dispute.
[68]
It stands to reason that in deciding upon the amount to charge as
rental a landlord would and should take into account its
expenses or
overheads, including costs pertaining to maintenance of the building
and infrastructure, such as the electricity network,
the billing of
tenants, etc.. Thus, the finding of the Tribunal that such costs were
recovered or recoverable through the rental
is not so unreasonable
that no reasonable person could have arrived at it.
[69]
Regulation 13 obliges a landlord, who is required by law or by the
express or implied terms of a lease to provide,
inter
alia
,
electricity services to a tenant, to provide such services. It cannot
interrupt, or cut off the service without a court order,
except in an
emergency, or if the interruption is in order to do maintenance, or
for repairs, or renovations. But even in such
instances reasonable
notice must be given and the service must be resumed within a
reasonable period after such emergency, maintenance,
repairs or
renovations. The mere fact that the parties to the lease agreement
may have agreed that the landlord may levy such charge,
or that the
tenant would pay such a charge levied by the landlord, does not
preclude the Tribunal from finding that such an act
(albeit agreed
to) constitutes a violation of the Regulations and is an unfair
practice.
[36]
The
Regulations furthermore oblige the landlord to maintain the building
(Regulation 7) and,
inter
alia
,
the electrical systems (Regulation 7(h)). This obligation is
not made subject to or conditional upon the tenant paying a
service
charge to the landlord for such maintenance, or for providing the
electrical service.
[70]
The Tribunal’s finding, in effect, that the applicant could not
be equated with the utility service provider (i.e. the
municipality
or City Power) is also reasonable and is not irrational. There are
important and significant differences between the
two. It is not
unreasonable to conclude in light of the Regulations and the Act that
the mere fact that the utility service provider
could have charged
each tenant a service fee if there was a direct relationship between
them, does not entitle the landlord, who
receives a supply of
electricity from the utility service provider in bulk and is obliged
to provide it to the tenants, to charge
its own service fee, which is
in addition to the rental, for doing so. The Tribunal did not ignore
the fact that the applicant
or landlord may have been responsible for
the installation and maintenance of the electrical network and that
it collects electricity
payments from tenants and performs all
administrative functions relating to the payment and collection for
the supply of the electrical
services, nor did it find that the
landlord (or applicant) was not entitled to be compensated. However,
it concluded, in effect,
in that regard that the landlord could not
levy its own service charge, which is in addition to the rental and
the cost of consumption
of the electrical services by the tenant.
Those things would, or should, of necessity have been or should be
factored in when determining
the rental amount.
[71]
It is reasonably conceivable that the levying of a separate service
charge, such as that complained of, unless properly and
effectively
regulated, could be abused by landlords. The amount of the charge is
not determined by agreement, nor is it fixed.
The amount is entirely
within the discretion of the landlord and may be determined at will
by it. It could be used as a mechanism
to generate profits, or to
recover losses or expenses from all the tenants for which they
otherwise would not be liable, such as
those due to one or some
tenants not paying their rent or electricity accounts. Such a
practice would be inherently unfair
to the paying tenants.
[72]
It was apparent from its ruling that the Tribunal did consider
whether the applicant was empowered in terms of other laws to
levy
its own service charge. In that regard it considered in effect
whether the applicant could be equated with City Power
and concluded
that it could not be. In another context it also made reference
to the proposal NERSA made in its concept paper.
[73]
The applicant’s argument before the Tribunal that it was
entitled or empowered, in terms of the Electricity Regulation
Act and
the Greater Johannesburg Metropolitan Council Electricity Bylaws
(“the bylaws”), to levy the service charge
complained of,
was fundamentally flawed in that its reliance on such legislation is
misconceived. The applicants argument , basically,
was that in terms
of bylaw 17 read with the NERSA concept paper it was a ‘reseller’
of electricity; that the bylaw
provided that if electricity is resold
the charge of the reseller, for such electricity, shall not exceed
that of the Council.
Accordingly, so it was contended, the applicant
was entitled to charge the tenants what the Council would have
charged them if
they had contracted individually and directly with
the Council for the supply of the electricity.
[74]
The applicant further argued that in terms of the Electricity
Regulation Act it was a supplier of electricity, although it
was not
making a profit from the buying or selling of electricity. Section
15(1)(a) of that law allowed a licensee to recover the
full cost of
its licensed activities “including a reasonable margin or
return”. The applicant averred that it was exempted
in terms of
section 7(2), read with schedule 2 item 3, from being licensed, but
section 15(1)(a) was, nevertheless, equally applicable
to it.
[75]
However, the applicant did not make adequate averments to establish
that the Electricity Regulation Act, indeed, applied to
it. That law
regulates the operation of any electricity generation, transmission
or distribution facility (s7(1)(a)), the import
and export of
electricity (s7(1)(b)), and the buying and selling of electricity as
a commercial activity (i.e. “trading”
in
electricity)
[37]
. Those are
the activities for which licensing by the Regulator (NERSA) is
required, unless the person involved has been exempted
as envisaged
in section 7(2) read with schedule 2. By alleging that it was
exempted in terms of section 7(2) read with schedule
2 item 3, it
implied that it is operating a “non-grid connected supply of
electricity except for commercial use”. That
is clearly not
correct. It is stated in the NERSA concept paper that
electricity supply activities, such as those engaged
in by the
applicant as landlord, are unregulated and that they are operating
“under the radar screen” as it were.
[76]
To the extent that it might be contended that the applicant could be
a person that distributes electricity, since “distribution”
is defined in section 1 of the Electricity Regulation Act as “the
conveyance of electricity through a power system excluding
trading”,
the applicant did not make out a case before the Tribunal that that
was in fact the case, that it was as a fact
operating a distribution
facility as contemplated in that Act. The NERSA paper equates the
transmission of electricity, from the
service provider (the Council)
to the landlord and finally to the tenant (the consumer), to
“trading”, for which a
license is required. On its own
admission the applicant was not “trading” in electricity
as defined in The Electricity
Regulation Act and was not licensed
accordingly, or at all.
[77]
Insofar as the applicant averred in the proceedings before the
Tribunal that it performed a similar service to the Council
in
respect of the supply of electricity, it did not establish that it
was a “service provider” as envisaged in the
Electricity
Regulation Act. In terms of that law “service provider”
means “a person or institution of any combination
of persons or
institutions which provide a municipal service in terms of a service
delivery agreement”. The term “service
delivery
agreement” is defined as “an agreement between
municipality and an institution or person providing electricity
reticulation (i.e. trading of distribution or electricity and
includes services associated therewith), either for its own account
or on behalf of the municipality”. Section 28 of that law lays
down strict requirements for the conclusion of such agreements.
The
applicant did not aver that it concluded such an agreement with the
Council.
[78]
Insofar as the applicant relies on the electricity bylaws, they do
not define “resale” or “reseller”.
But the
applicant purported to rely on the definition of those terms in the
NERSA paper for its conclusion that it was a reseller
in terms of the
bylaws. In the NERSA concept paper the definition of the terms
“resale” and “reseller”
is acknowledged to be
an attempt at defining those terms and did not purport to be
ultimately definitive of those concepts. They
are defined there
merely for the purpose of the project engaged in by NERSA as
envisaged in that paper. The paper states that its
definition of
“reseller” is derived from the definition of “trading”
in section 1 in the Electricity Regulation
Act and a “reseller”
is treated in the paper as being synonymous with a “trader”
as defined in the Electricity
Regulation Act. According to the paper,
it is a person or entity who buys electricity from a licensed
distributor and sells it
within the area of such distributor.
However, the term “trader” is not defined in the
Electricity Regulation Act, instead,
the term “trading”
is defined. And it is defined as “the buying and selling of
electricity as a commercial activity”.
In its founding
affidavit made in support of this review, Mr. Tsai, on behalf of the
applicant, states“ [t]he [a]pplicant
does not supply
electricity as a commercial activity that is, making profit from
buying and selling electricity”.
[79]
It is not permissible to use the NERSA paper to interpret the bylaw
or more particularly, to apply the NERSA definition as
if it is the
meaning intended by the bylaw. Particularly because the NERSA paper
proceeds from the premise that this activity of
landlords, of
on-selling electricity to tenants, is as yet unregulated,
presupposing that the bylaw does not apply to them. In
any event,
while the bylaw does not purport, at least, expressly, to apply to
the situation between the landlord and the tenant
in respect of the
supply of electricity by the former to the latter, the Act and the
Unfair Practice Regulations are specifically
intended to regulate the
entire relationship between landlord and tenant, including the rights
and obligations pertaining to the
supply and consumption of
electricity services. Regulation 13 of the Regulations specifically
deals with the supply of all the
electricity services by the landlord
to the tenant and the charging for those services.
[80]
At best for the applicant, even if it were too be assumed that it was
a “trader” as envisaged in the Electricity
Regulation
Act, it could not legally trade in electricity without a licence.
Save for its say-so, it has provided no evidence of
having been
exempted from licensing, nor of being registered with NERSA, as is
required in terms of the Electricity Regulation
Act. It is noteworthy
that the NERSA paper raises concerns,
inter
alia
, about the unregulated environment
and the fact that “resellers”, such as the applicant,
operates “outside the
radar screen” of the Energy
Regulator; use electricity as a leverage to exact payment for other
services; that tenants are
at the mercy of such landlords and are “a
captive customer base and [are] vulnerable to being charged
exorbitant prices with
minimal prospects of recourse”.
[81]
Under this head of attack the applicant raised another point which
was refined and elaborated upon in counsel’s argument,
namely,
that the Tribunal erred and unfairly made a ruling on the
reasonableness of the service charge levied by the applicant
in
circumstances where it was agreed that the only issue for decision
before the Tribunal was whether the applicant was entitled
(i.e.
legally) to levy the service charge. Counsel for the applicant, in
elaborating on this point, submitted that as a result,
the applicant
was deprived of the opportunity of properly and fully ventilating the
reasonableness of the amount of the service
charge and that the
Tribunal’s act, of nevertheless dealing with the reasonableness
aspect of the charge, was unfair and
constituted a gross irregularity
which justified the setting aside of its findings regarding the
service charge.
[
82 ] In terms of section 6(2)(c) of PAJA, the court has the power to
review administrative action that was procedurally unfair.
However,
in my view, the applicant has not shown, nor can one find, that the
Tribunal acted in a manner that was not procedurally
fair. This
argument of the applicant’s is, seemingly, based on a
misreading of the Tribunal’s findings. While
it appears that
the Tribunal was critical of the fact that the applicant,
prima
facie,
recovered a lot more than what
it had to pay to the utility service provider (i.e. as a service
charge), it was prepared to assume
that the applicant may even be
able to show that the excess, i.e. the difference between the R27
000,00 and the amount of approximately
R385,00 or R400,00, was used
for maintenance. However, the Tribunal’s finding was that even
that would not entitle the applicant
to levy the “
service
charge
”. This is consistent with
its finding that the applicant had to recover its overheads in
respect of (
inter alia
)
the billing of tenants and maintenance, including of its
electrical network, by way of the rental.
[83]
The Tribunal considered the NERSA concept paper, as was pointed out
earlier, and came to the conclusion that “
it
amounts to no more than an opinion
”
and was of no assistance to the applicant. This conclusion
cannot be faulted. The NERSA paper states that it a concept
paper and
only serves as a basis for the compilation of an “issues paper
on electricity resale” which is to be circulated
for public
comment. It does not create, nor does it purport to regulate, or to
create rights or duties. It was an exploratory step
in an
investigative process that was envisaged by NERSA. It did not purport
to be prescriptive or definitive on the issue of the
resale of
electricity and acknowledged that its definition of “reseller”
was merely an attempt at a definition of the
concept.
[84]
The Act empowers the Tribunal to make such a ruling as it may
consider just in such circumstances.
[38]
In my view the applicant has not shown that the Tribunal ruling was
not fair and just in the circumstances and, in any event,
has made
out no case either in terms of PAJA, or otherwise, justifying the
review and setting aside of the Tribunal’s ruling.
In the
result the following order is made:
The
application is dismissed with costs.
P
COPPIN
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
COUNSEL
FOR THE APPLICANT G M YOUNG
INSTRUCTED
BY MELTZ - LE ROUX – MOTSHEKGA
COUNSEL
FOR THE SECOND
RESPONDENT
STEWART WILSON
FRANCIS
HOBDEN
INSTRUCTED
BY SERI LAW CLINIC
HEARING
DATE 01 DECEMBER 2014
DATE
OF JUDGMENT 02 FEBRUARY 2015
[1]
Notice
4004 of 2001, 4 July 2001.
[2]
Act
No 3 of 2000.
[3]
Act No. 50 of 1999.
[4]
The Unfair Practices Regulations, 2001 made in terms of the
Rental
Housing Act, No. 50 of 1999
and published in the Provincial Gazette
in General Notice No.4004 of 2001 on 4 July, 2001 and as amended by
General Notice No.
1472 of 2002.
[5]
2012
(3) SA 531
(CC) especially paras [51]-[54].
[6]
Act 4 No. of 2006.
[7]
Act
No 59 of 1959.
[8]
2006
(2) SA 311
(CC) at 446 para [46].
[9]
Act
No.74 of 1996.
[10]
See
section 1(ee).
[11]
See
page 449 para [446].
[12]
2000
(1) SA 1
(CC)
(1999) 10 BCLR 1059
para [141]; also see the judgment
of Ngcobo J (as he then was) in
Chirwa
v Transnet Limited & Others
[2008] 2 BLLR 97
(CC) para [139].
[13]
See
Cora Hoexter “Administrative Law in South Africa” 2
nd
Edition pp 175 et seq. for a detailed discussion of the topic.
[14]
[1996] ZACC 6
;
1996
(3) SA 562
(CC).
[15]
In
this regard see at page 576 para [24].
[16]
[1996] ZACC 2
;
1996
(2) SA 751
(CC), particularly para [97].
[17]
[2002] ZASCA 14
;
2002
(4) SA 661
(SCA) (para [25]).
[18]
See
also
Nel
v Le Roux NO (supra).
[19]
1998
(4) SA 1069
(SECLD) at 1082G.
[20]
1999
(3) SA 304
(LAC).
[21]
See
at 311 para [15].
[22]
At
312F para [18].
[23]
See
per Froneman DJP at 312G-H para [19].
[24]
2008
(2) SA 24 (CC).
[25]
Compare:
Chirwa
v Transnet Limited & Others
[2008]2 BLLR 97 (CC) where the view was expressed by the majority
that the termination of a public sector employee was not
“administrative action” as contemplated in s 33 of the
Constitution, because that section does not deal with labour
and
employment issues. The minority, however, did not exclude the
possibility that there may be instances where the dismissal
of
public sector employees may constitute “administrative action”
under PAJA (see Langa CJ’s judgment para[194]).In
Gcaba
v Minister of Safety and Security and Others
2010 (1) SA 238
(CC) para 64, the Constitutional Court held that,
generally, employment issues did not amount to administrative action
under
s33 of the Constitution and PAJA, because s23 of the
Constituton dealt with those issues.
[26]
See
at 53 para [82] where reference was made to Baxter “
Administrative
Law
”
Juta, Kenwyn, (1984) at 24-6 and Hoexter “
Administrative
Law in South Africa
”
(Juta, Cape Town, 2007) at 52-3 and the case of
Grey’s
Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and
Others
[2005] ZASCA 43
;
2005 (6) SA 313
(SCA) ((2005)
10 BCLR 931)
paras [20]-[25].
[27]
See
at paras [82] and [83] pages 53-54.
[28]
See
at 63H-64A para [126].
[29]
See
s 143
of the
Labour Relations Act No. 66 of 1995
.
[30]
See
Sidumo
v Rustenburg Platinum Mines Ltd.
(
supra
).
[31]
Act No. 4 of 2006.
[32]
2000
(4) SA 621
(C) at 634.
[33]
See
s.6(2)(h)
of the
Promotion of Administrative Justice Act 3 of
2000
. Compare:
Sidumo
v
Rustenburg Platinum Mines Ltd.
2008 (2) SA 24
(CC), which,
inter
alia
,
deals with the test of review of the arbitration awards of CCMA
commissioners.
[34]
See
at 634.
[35]
[1984] ZASCA 51
;
1984
(3) SA 623
(A).
[36]
See
Maphango
v Aengus Lifestyle Properties
2012
(3) SA 531
especially paras [51]-[54].
[37]
Section
7(1)(c)
read with the definition of “trading” in
section
1.
[38]
Section
13(2)(d) of the Act.