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[2023] ZAGPPHC 1929
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Madeline Properties (Pty) Ltd v City of Tshwane Metropolitan Municipality and Another (4012/2022) [2023] ZAGPPHC 1929 (7 July 2023)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
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SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NUMBER
: 4012/2022
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED: NO
DATE:
7/07/2023
SIGNATURE
In
the matter between:
MADELEINE
PROPERTIES (PTY) LTD
Applicant
AND
THE
CITY OF TSHWANE METROPOLITAN MUNICIPALITY
First
Respondent
THE
MUNICIPAL MANAGER OF THE CITY OF TSHWANE
METROPOLITAN
MUNICIPALITY
Second Respondent
JUDGMENT
OOSTHUIZEN-SENEKAL
AJ:
[1]
On 16 May 2013
the applicant brought an urgent application on the grounds that the
respondents are in contempt of the court orders
granted on 19 May
2021; 29 July 2021 and 3 February 2022 under case number(s)
2361/2021, 4012/2022 and 36713/2021.
[2]
On the morning
of the hearing the parties informed me that they had reached an
agreement in the matter whereafter a draft order
was presented to
me. The only issue which the parties failed to agree upon was
that of costs.
The
applicant declined to accept the respondents tender of costs on a
party and party scale and sought a punitive cost order against
the
first respondent.
After
hearing oral arguments from both sides regarding costs I granted the
following order:
Having
read the papers filed on record and having heard the representatives
of the parties, by agreement between the parties, it
is ordered:
1.
A further
consolidated interim interdict is granted restraining the first and
second respondents from terminating and/or lowering
(or threatening
to do so) the municipal services to Portion
0
of Erf 8[...] A[...], Registration Division J.R Province of Gauteng,
held by Deed of Transfer T8967/2003, and Portion 0 of Erf
1119
Arcadia, Registration Division J.R., Province of Gauteng, held by
Deed of Transfer T24844/1965, situated at 2[...] H[...]
Street //
5[...] P[...] Street, Pretoria, also known as the Pretoria Hotel
(herein “the properties”), pending the outcome
and final
adjudication of:
1.1
the disputes lodged by the applicant with the first respondent on 11
May 2021 and 29 June 2021 in terms of the provisions of
Section 95(f)
read together with Section 102(2) of the Municipal Systems Act, No.
32 of 200 (herein ‘the Systems Act”)
in respect of
municipal accounts with numbers 2[...] and 2[...] (herein “the
applicant’s accounts)
2.
The first and
second respondents are directed and ordered to comply with the Court
Orders granted by this Court on 19 May 2021 (under
case numbers
23618/2021: “the Court Order”), and 28 July 2021 (under
case number 36713/2021: “the second Court
Order”);
3.
The first and
second respondents shall ensure that pending the operation of this
interdict and the previous interdicts, the applicant’s
accounts
are secured with a “dunning lock” which shall be in place
until 11 August 2023, whereafter, and if the issues
between the
parties as set out in order 1 above have not been resolved, the first
and second respondents shall ensure that the
secured “dunning
locks”, shall be extended.
4.
The contempt
application with this case number is postponed
sine
die
and
the respondents shall file their answering affidavits within 20
(twenty) days from the date of this order.
5.
The first
respondent shall pay all the applicant’s costs in respect of
the urgent application of 16 May 2023 on the scale
as between
attorney and client.
[3]
Consequently,
on 17 May 2023 the respondents requested written reasons in terms of
Rule 49 regarding prayer 5, the cost order.
Due to internal
communication challenges, I only received the said request on 26 June
2023.
[4]
The applicant
is Madeleine Properties (Pty) Ltd, (“the applicant”), a
company with limited liability, duly established
and incorporated in
terms of the Company Laws of the Republic of South Africa and the
registered owner of Portion 0 of Erf 8[...],
A[...], Registration
Division JR Province of Gauteng, held by deed of transfer
T8967/2003. The applicant conducts a
business as a hotel
which accommodates hundreds of guests, which also consists of a
conference and function venue. The applicant
is dependent on
electricity supply to be sustainable. Although the applicant
has access to a backup generator, it cannot
continually rely on
generator-power, due to the enormous costs thereof and the limitation
generator-power imposes. In addition,
the tranquillity of the
hotel environment is
negatively impacted and the increased costs will mean the downfall of
the hotel. It is furthermore important
to emphasize that any
termination and/or interruption of municipal utilities to the
property causes reputational damage to the
applicant who can
permanently lose clientele if the situation carries on indefinitely.
[5]
The first
respondent is the City of Tshwane Metropolitan Municipality (“the
municipality”), a municipality duly established
in terms of the
Local Government Municipal Structures Act, Act 117 of 1998.
[6]
The second
respondent is the Municipal Manager of the City of Tshwane
Metropolitan Municipality (“the municipal manager”).
The
municipal manager is the head of the municipality's administration
appointed in terms of section 54A of the Local Government:
Municipal
Systems Act, Act 32 of 2000 (“the Systems Act”).
[7]
These are my
reason for granting a punitive cost order against the first
respondent.
[8]
The
history of this litigation is replete with facts that are common
course between the parties.
[9]
It
is necessary to comprehensively traverse the history and background
facts of the matter, and in particular to highlight what
was no less
than egregious conduct on the part of the first respondent in the
application, which led to the punitive order of costs
being granted.
[10]
For
sake of convenience the relevant chronological history of the matter
will be set out in table form as follows:
DATE
EVENT
5
May 2021
First
respondent served a notice of discontinuation of services on the
applicant.
11
May 2021
Applicant
lodged a formal dispute with the first respondent in terms of the
relevant provisions of the Systems Act, which
dispute was directed
at,
inter
alia
,
seeking clarification on the increase of the applicant’s
rates and taxes account and valuation of the property.
13
May 2021
Due
to the fact that the notice of termination of municipal services
not being withdrawn and remained a threat, the applicant
launched
an application against the first respondent under case number
23618/2021 which was heard on 18 May 2021. The
said
application was brought in two parts - Part A being for
interdictory relief pending Part B, the latter of which was
a
review application to set aside the decision by the Municipal
Valuer increasing the property value.
18
May 2021
Mbongwe
AJ heard the said Interdict application under case number
23618/2021 and granted an order interdicting the first respondent
from terminating or lowering the
municipal
services to the property pending Part B of the application. (“the
May Court Order)
24
May 2021
First
respondent, notwithstanding the existing interdict preventing it
from doing so, disconnected the electricity supply
to the
property. Following various correspondence addressed to the
first respondent the electrical supply was restored.
29
June 2021
Applicant
issued a second dispute with and to the first respondent
pertaining to the billing of its municipal services, specifically
electricity billing.
15
July 2021
Applicant
received a final demand in respect of alleged arrears on its
municipal accounts.
Considering
the
May
2021 order, the subsequent termination of the applicant’s
municipal services and the reconnection, following the
applicant’s
demand, the applicant again, through its attorneys, demanded an
undertaking that termination of the municipal
services shall not
be effected. No response was forthcoming in the regard from
the first respondent.
23
July 2021
Applicant
again approached the Court on an urgent basis for interdictory
relief against the respondents under case number
36713/2021, which
application was set down for 28 July 2021.
27
July 2021
Respondents
delivered a notice to oppose the urgent application set down for
28 July 2021.
28
July 2021
After
engagement with the respondents, Mbongwe J granted an order by
agreement between the parties. In terms of the
order,
further interdictory relief was granted against the respondents
pending finalisation of the disputes lodged with the
first
respondent, pending the review and pending the outcome of the
remainder of the relief sought in that application (since
some of
the relief was postponed
sine
die
).
The respondents were also ordered to file their answering
affidavit in the application under case number 36713/2021
pertaining to the postponed relief, within 20 days from date of
the order. To date, no answering affidavit has been
delivered. (“the July Court Order”)
11
January 2022
Respondents
in disregard of the existing interdicts again served a notice of
termination of services on the applicant.
24
January 2022
In
response the applicant launched an application under this case
number on an urgent basis for relief holding the respondents
in
contempt of court and compelling compliance with the two court
orders granted.
3
February 2022
Janse
van Nieuwenhuizen J granted an order which contained mandatory
relief ordering the respondents to comply with all court
orders
and also authorised the applicant to approach this Court on the
same papers, as supplemented, in the event of further
contemptuous
behaviour on the part of the respondents. (“February
Court Order)
6
April 2022
A
copy of the court order dated 3 February 2022 was served on the
respondents by hand, which the respondents have acknowledged
receipt thereof.
29
April 2022
Respondents
served a final demand on the applicant, which triggered this
application. After the exchange of correspondence
between
the parties’ legal teams, the matter was removed from the
roll since the first respondent attorneys advised
that the final
demand will not be acted upon and was issued by mistake.
13
December 2022
Applicant
launches a second review under case number 061018/2022, reviewing
a further increase in new valuation roll.
6
April 2023
Contractors
of the first respondent arrived at the property and served a
termination notice of electricity supply to the property
on the
applicant. The municipal services were disconnected by the
contractors.
11
April 2023
The
applicant’s attorneys of record addressed a letter to the
respondents and their attorneys of record advising of
the
unlawfulness of the termination of the applicant’s municipal
services and requesting an undertaking to restore
the electricity
supply to the property.
12
April 2023
At
approximately 11h20, the applicant’s municipal services were
restored. Applicant did not proceed with the envisaged
urgent application being prepared.
At
approximately 13h35, a contractor of the first respondent again
arrived at the property and advised the applicant that
he was
there to disconnect municipal services of the applicant.
At
about 15h30 the disconnection of the applicant’s electricity
supply was effected by the contractor.
At
23h00 the electricity supply to the applicant was restored by the
first respondent.
2
May 2023
Applicant
served the current contempt of court application on the
respondents’ attorney of record to be adjudicated
in the
normal course with reservation to bring it on urgent basis should
further threats of termination be issued by the
respondents of
services to the property.
8
May 2023
The
respondents’ attorneys of record confirmed receipt of the
contempt application.
Respondents
delivered a final demand to discontinue services under account
number 2[...] to the applicant.
9
May 2023
Respondents
delivered a final demand to discontinue services under account
number 2[...] to the applicant.
10
May 2023
Respondents
served a disconnection notice upon the applicant, notwithstanding
the demands allowing a period of 14 days before
such notice was
warranted.
Applicant
amended its notice of motion to expediate the contempt application
to be heard on urgent court roll- 16 May 2023.
11
May 2023
Notice
to oppose filed by the respondents.
[11]
It
is known to the parties that in awarding costs this court has a
discretion which should be exercised judicially upon the
consideration
of the facts in the matter and that, in essence, a
decision be made where fairness to both sides should be considered.
This
requires me to consider the circumstances that has led to
the urgent application, the conduct of the parties and any other
factor
which may have a bearing on the issues of costs and
accordingly make an order which is fair.
[1]
[12]
In
considering an appropriate order as to costs, a court must exercise
its discretion judicially to bring about a fair result. Punitive
costs serve as a mark of a court’s displeasure with one or more
facets of the unsuccessful litigant’s conduct. In
Geerdts
v Multichoice Africa (Pty) Ltd
[2]
,
Myburgh JP held that:
“
Vexatious,
unscrupulous, dilatory or mendacious conduct on the part of an
unsuccessful litigant may render it unfair for his opponent
to be out
of pocket in the matter of his own attorney and client costs”.
[13]
The
Supreme Court of Appeal in
Du
Toit NO v Thomas NO and Others
[3]
held
that a punitive costs order is also justified where a party displayed
an “unconscionable stance”.
[14]
It
is of the utmost importance to be alive to the provisions of section
165(5) of the Constitution that an order or decision issued
by a
court binds all persons to whom and organs of state to which it
applies. There is no doubt that court orders, once issued,
are
binding and must therefore be complied with.
[4]
In
Moodley
v Kenmont School and Others
[5]
Madlanga
J said:
“
I
cannot but again refer to section 165(5) of the Constitution which
provides that ‘[a]n order or decision issued by a court
binds
all persons to whom and organs of state to which it applies’.
This is of singular importance under our constitutional
dispensation, which is founded on, amongst others, the rule of law.
The judicial authority of the Republic vests in the courts.
Thus, courts are [the] final arbiters on all legal disputes,
including constitutional disputes. If their orders were
to be
disobeyed at will, that would not only be ‘a recipe for a
constitutional crisis of great magnitude’, '[i]t [would]
strike
at the very foundations of the rule of law and of our constitutional
democracy.”
[15]
In
line with a notable trend by our courts in recent times to hand down
punitive orders, particularly against malfeasant state officials,
the
Supreme Court of Appeal in the matter of
Ndabeni
v Municipal Manager: OR Tambo District Municipality and Another
[6]
granted
a punitive costs order against respondents to mark its displeasure at
the manner in which they conducted the litigation.
In doing so,
the Supreme Court of Appeal reinforced the principle that organs of
state are duty bound to conduct themselves
in an exemplary manner,
remarking that:
“
The
lackadaisical manner in which the respondents conducted this
litigation warrants a punitive costs order against them. They
dragged the litigation unnecessarily to the detriment of the
appellant. Almost all their responses to the appellant were
preceded by an application for condonation for the late filing of
their documents. They were not candid with the court and
provided information scantily. They did nothing for at least
nine months until the appellant launched the contempt application.
This must be frowned upon by this Court in line with what was
said by Cameron J in Merafong.”
[16]
The majority judgment
is important for a number of reasons. Most obviously, because
it reaffirms the pertinent provisions
of section 165 (5) of the
Constitution that speak to the important constitutional role of
courts of law, their independence, and
the sanctity of their orders,
and reaffirms the rule of law, a foundational value that underpins
our constitutional democracy.
Perhaps, however, its real
significance lies in the fact that the judgment signals that the
majority were not prepared to
let obstructive and dilatory legal
tactics by a state litigant win the day.
[17]
As
was recently emphasised by the Constitutional Court in
Public
Protector v South African Reserve Bank
[7]
:
“
The
Constitution requires public officials to be accountable and observe
heightened standards in litigation. They must not
mislead or
obfuscate. They must do right and they must do it properly.
They are required to be candid and place a full
and fair
account of the facts before a court.”
[18]
In my view, by
parity of reasoning the above statements apply with equal force in
the circumstances of this case. The history
and background
facts set out above clearly speaks for itself and I need not discuss
the respondents’ inexcusable approach
to the applicant’s
predicament. The respondents’ conduct has been repeatedly
contemptuous of various court orders.
[19]
Therefore, the
lackadaisical and cavalier manner in which the respondents conducted
this litigation warrants a punitive costs order
against them. They
dragged out the litigation unnecessarily and without justifiable
cause to the detriment of the appellant.
They did nothing,
since May 2021, to resolve the disputes until the appellant launched
the contempt application. This
must be frowned upon by this
Court in line with what was said by Cameron J in
Merafong
supra.
[20]
The
applicant conducts a business in the hospitality industry, and it
make a contribution to the economy of the country. The
food
hospitality industry relies on uninterrupted electricity to ensure
their product maintains up to standard. Sustaining
constant
refrigeration of food produce is crucial, and unlawful termination of
electricity supply compromises this, which could
result in losses
from having to dispose of food and increasing the risk of
contamination. Furthermore, such businesses lose
clientele,
because of not being able to provide guaranteed services during
functions and or conferences. Companies, as the
applicant, are
forced to explore alternative methods to sustain their businesses.
All this could be prevented if the respondents’
actively and
expeditiously participate in disputes that arise similar to the
dispute in the present matter. It is unacceptable
that a
dispute of this nature dragged on for two years.
[21]
As
already indicated costs have been awarded on a punitive scale against
the respondents in this matter. The conduct of the
respondents,
in particular, has demonstrated the necessity for such an order. The
respondents displayed a complete disdain
for the applicant in the way
they treated the applicant. The respondents have been
dismissive of the applicants’ pleas
for the matter to be dealt
with expeditiously since May 2021, two years ago. The principal
contributors to the unnecessary
prolonging of this dispute and
processes after May 2021 are the respondents. This has not only
diverted judicial resources,
but also caused undue expense to be
incurred and effort to be expended by the applicant.
[22]
In
so far as the punitive costs were concerned, I am of the view that,
it unnecessary for the applicant’s application to have
been met
with any opposition, as I find that such opposition was simply an
abuse of process and misguided. In fact, on the
morning of the
hearing the parties reached an agreement and an order was granted to
that effect. On that basis alone a cost
order on attorney and
client scale was justifiable.
[8]
[23]
In
Minister
of Police v Sheriff, Mthatha and Another
[9]
reiterated
the test regarding punitive cost orders as follows:
“
[57]
The following remarks relating to an award of punitive costs on an
attorney and client scale in
Public
Protector
[10]
are
helpful:
“
[221].
. . An award of punitive costs on an attorney and client scale may be
warranted in circumstances where it would be unfair
to expect a party
to bear any of the costs occasioned by litigation.
[222]
The question whether a party should bear the full brunt of a costs
order on an attorney and own client scale must be answered
with
reference to what would be just and equitable in the circumstances of
a particular case. A court is bound to secure
a just and fair
outcome.
[223]
More than 100 years ago, Innes CJ stated the principle that costs on
an attorney and client scale are awarded when a court
wishes to mark
its disapproval of the conduct of a litigant.
[11]
Since then this principle has been endorsed and applied in a
long line of cases and remains applicable. Over the years,
courts have awarded costs on an attorney and client scale to mark
their disapproval of fraudulent, dishonest or
mala
fides
(bad faith) conduct; vexatious conduct; and conduct that amounts to
an abuse of the process of court.”
[12]
[24]
For
all the above reasons a punitive order of costs against the
respondents was warranted in this matter.
CSP OOSTHUIZEN-SENEKAL
ACTING JUDGE OF THE
HIGH COURT
GAUTENG DIVISION,
PRETORIA
This
judgment was handed down electronically by circulation to the
parties’ representatives by email, by being uploaded to
Case
Lines
and by release to SAFLII. The date and time for
hand-down is deemed to be 16h00 on 7 July 2023.
DATE OF
HEARING:
16 May 2023
DATE JUDGMENT
DELIVERED:
7
July 2023
APPEARANCES
:
Counsel
for the Applicant:
ADVOCATE
D VAN DEN BOGERT
Chambers,
Menlyn Maine
Tshwane
Society of Advocates
Cell:
083 556 7397
Email:
dingenus@counseltsa.co.za
Attorney
for the Applicant:
JACQUES
CLASSEN INCORPORATED ATTORNEYS
Lynnwood
Office Park, Suite 5
474
Lynnwood Road
Lynnwood,
Pretoria
Tel:
(012) 942 9478
Email:
ansie@propdevlaw.co.za
leslie@propdevlaw.co.za
Counsel
for the First and Second Respondent:
Adv
KT Mogatla
Attorney
for the First and Second Respondent:
Lawtons
Africa
Tel.:
011 286 6900
Email:
sj.thema@lawtonsafrica.com
Email:
sipho.mtsweni@lawtonsafrica.com
Email:
andile.mphale@lawtonsafrica.com
[1]
Erasmus
Superior Court Practice 2
nd
Edition,
Vol 2, pages D5-5 – D5-26
[2]
[1998]
ZALAC 10
(29 June 1998) at para [48].
[3]
(635/15)
[2016] ZASCA 94
(1 June 2016).
[4]
Ndabeni
v Municipal Manager: OR Tambo District Municipality and Another
(Case
no 1066/19)
[2021]
ZASCA 08
(21 January 2021).
[5]
[2019]
ZACC 37
;
2020 (1) SA 410
(CC);
2020 BCLR 74
(CC) at para 36.
[6]
Case
no 1066/19)
[2021] ZASCA 08
(21 January 2021) Also see
Merafong
City v Anglogold Ashanti Ltd
[2016]
ZACC 35
,
2017 (2) BCLR 182
(CC);
2017 (2) SA 211
CC.
[7]
2019
(6) 253 (CC) at para [152]
[8]
Minister
of Police v Sheriff, Mthatha and Another
2022
(1) SA 229 (ECM)
[9]
2022
(1) SA 229
(ECM) para [57}.
[10]
Public
Protector v South African Reserve Bank
[2019]
ZACC 29;
2019
(9) BCLR 1113
(CC)
2019
(6) SA 253
(CC), at para 220.
[11]
Orr
v Solomon
1907
TS 281
[12]
Also
see Plastic Converters Association of South Africa on behalf of
Members v National Union of Metalworkers of SA (2016) 37 ILJ
2815
(LAC) ([2016] ZALAC (39), where the Labour Appeal Court held, in the
context of non-constitutional matters, that —
“
(t)he
scale of attorney and client is an extraordinary one which should be
reserved for cases where it can be found that a litigant
conducted
itself in a clear and indubitably vexatious and reprehensible
conduct. Such an award is exertional and is intended
to be very
punitive and indicative of extreme opprobrium.”