Brief Summary

Contempt of Court — Municipal services — Urgent application for interdict against termination of services — Applicant sought punitive costs against municipality for repeated contempt of court orders — Court granted further interim interdict restraining municipality from terminating services pending resolution of disputes — Municipality ordered to comply with previous court orders and pay applicant's costs on attorney and client scale.

Comprehensive Summary

Summary of Judgment

Introduction

The proceedings concerned an urgent application brought by Madeleine Properties (Pty) Ltd for relief premised on alleged contempt of court by the City of Tshwane Metropolitan Municipality and its Municipal Manager. The application followed repeated prior litigation in which the applicant had obtained interdictory and mandatory orders restraining the respondents from terminating or reducing municipal services to the applicant’s property and directing compliance with earlier orders.

The parties were Madeleine Properties (Pty) Ltd (the applicant), as owner of the relevant immovable properties and operator of a hotel business, and the City of Tshwane Metropolitan Municipality (first respondent) together with its Municipal Manager (second respondent). The dispute arose in the context of municipal billing, valuation, and service-termination measures threatened or implemented by the municipality despite pending disputes and existing court orders.

Procedurally, the urgent contempt application was enrolled for hearing on 16 May 2023. On the morning of the hearing, the parties reached agreement on the substantive relief and presented a draft order to the court. The only outstanding issue was costs, with the applicant seeking a punitive costs order against the first respondent, rather than costs on a party-and-party scale. The court granted an order incorporating the agreed relief and made a punitive costs order. The respondents subsequently requested written reasons for the costs order in terms of Rule 49, and the judgment provides those reasons.

The general subject-matter of the dispute concerned the lawfulness of threatened or actual termination of municipal services, the effect of lodged disputes under the Local Government: Municipal Systems Act 32 of 2000, and the respondents’ alleged non-compliance with multiple court orders regulating service termination while disputes and review proceedings were pending. The judgment itself was confined to explaining why the court awarded attorney-and-client costs against the first respondent.

Material Facts

It was common cause that the applicant owned and operated a hotel business at the properties described in the order and was dependent on uninterrupted electricity supply for viable operations. The court accepted that disruptions to electricity supply had significant operational and reputational consequences for a hospitality business, and that reliance on generator power was costly and practically limiting.

The court relied on a largely common-cause litigation history demonstrating repeated municipal threats of disconnection, instances of disconnection, and repeated urgent court interventions. In May 2021, the first respondent served a notice of discontinuation of services. The applicant lodged a formal dispute on 11 May 2021 in terms of the Municipal Systems Act, directed (amongst other issues) at clarification regarding increased rates and taxes and the property valuation.

When the termination threat was not withdrawn, the applicant launched urgent proceedings under case number 23618/2021, brought in two parts, with Part A for interim interdictory relief pending Part B (a review of the decision increasing the property valuation). On 18 May 2021, an interdict was granted preventing termination or lowering of services pending the review (referred to in the reasons as the May Court Order). Notwithstanding that interdict, the municipality disconnected electricity to the property on 24 May 2021, after which supply was restored following correspondence.

Further disputes followed. On 29 June 2021, the applicant lodged a second dispute concerning municipal service billing, specifically electricity billing. On 15 July 2021, the applicant received a final demand in respect of alleged arrears. The applicant sought an undertaking that termination would not occur, but no response was received. This led to a further urgent application under case number 36713/2021, and on 28 July 2021 an order was granted by agreement granting further interdictory relief pending finalisation of the disputes and pending review proceedings. That order also required the respondents to file answering affidavits within 20 days in respect of postponed relief, which (on the facts accepted in the judgment) had not been done by the time of the present matter.

Despite the existing interdicts, the respondents served a notice of termination again on 11 January 2022. The applicant launched a further urgent application (under case number 4012/2022) seeking contempt relief. On 3 February 2022, an order was granted with mandatory relief directing compliance with all court orders and authorising the applicant to approach the court again on the same papers (as supplemented) if further contemptuous conduct occurred. The February order was served by hand on 6 April 2022, and receipt was acknowledged.

The record further reflected that on 29 April 2022 the respondents served a final demand which triggered litigation steps, but the matter was removed from the roll after the respondents’ attorneys indicated the demand would not be acted upon and had been issued by mistake. In December 2022, the applicant launched a further review relating to a further increase in a new valuation roll.

In April 2023, contractors of the first respondent arrived at the property, served a termination notice, and municipal services were disconnected. Although services were restored on 12 April 2023 during the day, a further disconnection occurred later that same day, with restoration only later that evening. Against this background, on 2 May 2023 the applicant served the current contempt application for adjudication in the normal course, reserving the right to enrol it urgently if further threats were made. Thereafter, final demands were delivered on 8 and 9 May 2023, and a disconnection notice was served on 10 May 2023 (described in the reasons as being served notwithstanding that the demands allowed a 14-day period before such a notice was warranted). The applicant amended its notice of motion to expedite the contempt application to the urgent roll of 16 May 2023.

The facts material to the determination of costs included that, on the morning of the hearing, the parties reached agreement on the operative interdict and compliance provisions, leaving only costs in dispute; and that the court regarded the opposition to the application (in the circumstances described) as unnecessary and abusive, particularly in light of the repeated history of non-compliance and delay attributed to the respondents.

Legal Issues

The central legal question the court was required to determine in the reasons judgment was whether, in the exercise of the court’s discretion on costs, the first respondent’s conduct warranted an award of punitive costs on the attorney-and-client scale, rather than costs on the ordinary party-and-party scale (or a tender on that scale).

This was not a determination of the merits of contempt (the contempt application itself was postponed sine die by agreement). Instead, the dispute concerned the application of established costs principles to the facts of the litigation history and the respondents’ conduct, including compliance with court orders, delay, and the appropriateness of opposition. It also entailed an evaluative judgment as to whether the conduct justified the court marking its displeasure by way of a punitive costs order, and whether such an order was fair in all the circumstances.

Court’s Reasoning

The court approached the costs issue on the basis that costs awards are discretionary and must be exercised judicially after considering all the circumstances, with a view to reaching a fair outcome. The court treated the question as one requiring consideration of what led to the urgent application, the conduct of the parties, and any other factor bearing on fairness.

In setting out the applicable legal framework, the court relied on authority that punitive costs serve as a mark of the court’s displeasure where an unsuccessful litigant’s conduct makes it unfair for the successful party to be left out of pocket for attorney-and-client costs. The judgment referred to the principle that vexatious, unscrupulous, dilatory, or mendacious conduct may justify attorney-and-client costs, and that a punitive order may be justified where a party adopts an “unconscionable stance”.

A further strand of the court’s reasoning was constitutional. The court emphasised the importance of section 165(5) of the Constitution, namely that court orders bind all persons and organs of state to which they apply, and that compliance with court orders is foundational to the rule of law and constitutional democracy. The court adopted the stance (supported by the cited authority) that disobedience of court orders undermines constitutional governance and cannot be treated lightly, particularly where the litigant is an organ of state.

The court also drew on authority emphasising the heightened standards applicable to public officials and organs of state in litigation, including duties of accountability, candour, and proper conduct. The reasoning treated this as relevant because the first respondent was a municipality and the second respondent its municipal manager, and because the litigation history reflected repeated instances where the municipality threatened or implemented service terminations in the face of existing interdicts and ongoing disputes.

Applying these principles to the facts, the court viewed the chronological record as demonstrating repeated and ongoing disregard of court orders and a failure to resolve the underlying disputes despite their having been pending since May 2021. The court characterised the respondents’ manner of conducting the litigation as lackadaisical, cavalier, and repeatedly contemptuous of various court orders. It held that the respondents unnecessarily dragged out the dispute for approximately two years, thereby causing undue expense to the applicant and diverting judicial resources.

The court also accepted the practical and commercial prejudice to the applicant’s hotel business from interruptions to electricity supply, including increased costs, reputational harm, and operational impacts. While these business impacts were not treated as independent legal grounds, they formed part of the broader context in which the court evaluated the fairness of an adverse punitive costs order, particularly in circumstances where the dispute could have been narrowed or resolved earlier through active participation by the respondents in dispute-resolution processes.

An additional, distinct factor in the court’s assessment was the nature of the litigation posture adopted by the respondents. The court considered it significant that the matter ultimately settled by agreement on the morning of the hearing, with only costs remaining in issue. On that basis, and given the background of repeated non-compliance and delay described in the reasons, the court concluded that the opposition to the urgent application was unnecessary and amounted to an abuse of process. This conclusion supported the court’s view that it was justifiable to award attorney-and-client costs as a punitive measure.

On the whole, the court held that the circumstances justified marking the court’s disapproval of the first respondent’s conduct through a punitive costs order, and that fairness required that the applicant should not bear any portion of the costs occasioned by the urgent proceedings.

Outcome and Relief

The court issued an order by agreement granting a further consolidated interim interdict restraining the respondents from terminating and/or lowering municipal services to the identified properties pending the outcome and final adjudication of the applicant’s disputes lodged with the municipality under section 95(f) read with section 102(2) of the Local Government: Municipal Systems Act 32 of 2000.

The court directed the respondents to comply with the prior court orders granted on 19 May 2021 and 28 July 2021, and ordered that the applicant’s municipal accounts be secured with a “dunning lock” until 11 August 2023, with provision for extension if the issues remained unresolved.

The contempt application under the present case number was postponed sine die, with the respondents directed to file answering affidavits within 20 days.

On costs, the court ordered that the first respondent pay all the applicant’s costs in respect of the urgent application of 16 May 2023 on the attorney-and-client scale. The present judgment provided written reasons for that punitive costs order following a request made in terms of Rule 49.

Cases Cited

Geerdts v Multichoice Africa (Pty) Ltd [1998] ZALAC 10 (29 June 1998).

Du Toit NO v Thomas NO and Others (635/15) [2016] ZASCA 94 (1 June 2016).

Moodley v Kenmont School and Others [2019] ZACC 37; 2020 (1) SA 410 (CC); 2020 BCLR 74 (CC).

Ndabeni v Municipal Manager: OR Tambo District Municipality and Another (Case no 1066/19) [2021] ZASCA 08 (21 January 2021).

Merafong City v Anglogold Ashanti Ltd [2016] ZACC 35; 2017 (2) BCLR 182 (CC); 2017 (2) SA 211 (CC).

Public Protector v South African Reserve Bank [2019] ZACC 29; 2019 (9) BCLR 1113 (CC); 2019 (6) SA 253 (CC).

Minister of Police v Sheriff, Mthatha and Another 2022 (1) SA 229 (ECM).

Orr v Solomon 1907 TS 281.

Plastic Converters Association of South Africa on behalf of Members v National Union of Metalworkers of South Africa (2016) 37 ILJ 2815 (LAC) ([2016] ZALAC 39).

Legislation Cited

Constitution of the Republic of South Africa, 1996, section 165(5).

Local Government: Municipal Systems Act 32 of 2000, sections 95(f) and 102(2), and section 54A.

Local Government: Municipal Structures Act 117 of 1998.

Rules of Court Cited

Uniform Rules of Court, Rule 49.

Held

The court held that a punitive costs order on the attorney-and-client scale was warranted against the first respondent because the respondents’ conduct, viewed against the history of repeated interdicts, repeated threats or implementation of disconnections, and prolonged failure to resolve the disputes, justified the court marking its displeasure. The court considered the respondents’ approach to the litigation to have been dilatory and contemptuous of court orders, and it regarded the opposition to the urgent proceedings as unnecessary and abusive, particularly given that the substantive relief was resolved by agreement on the morning of the hearing.

LEGAL PRINCIPLES

The judgment applied the principle that costs are within the discretion of the court, which must be exercised judicially with reference to fairness in all the circumstances, including the conduct of the parties and the events giving rise to the litigation.

It applied the principle that punitive costs on the attorney-and-client scale may be awarded to mark a court’s disapproval where a litigant’s conduct is vexatious, unscrupulous, dilatory, dishonest, in bad faith, or otherwise amounts to an abuse of process, and where it would be unfair to expect the successful party to bear any of the costs occasioned by the litigation.

It applied the constitutional principle in section 165(5) of the Constitution that court orders bind organs of state and must be obeyed, and that non-compliance undermines the rule of law. In this context, the judgment proceeded on the basis that organs of state and public officials are expected to adhere to heightened standards of accountability and proper conduct in litigation, including not obstructing proceedings through dilatory tactics and ensuring candid, proper engagement with disputes and court processes.

Madeleine Properties (Pty) Ltd v City Of Tshwane Metropolitan Municipality and Another (4012/2022) [2023] ZAGPJHC 1306 (7 July 2023)