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Eskom Holdings SOC Ltd v Mathabeng Local Municipality and Others - Application for Leave to Appeal (3367/2020) [2023] ZAFSHC 445 (10 November 2023)

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Land and Property Law
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Brief Summary

Leave to appeal — Application for leave to appeal against dismissal of contempt of court application — Applicant sought to hold the 1st Respondent in contempt for failing to comply with a court order regarding the registration of a bond over certain farms — Court found that the Applicant was bound by the terms of the agreed order and that the contempt claim did not meet the necessary requirements — Application for leave to appeal dismissed on the grounds that it did not have reasonable prospects of success.

Comprehensive Summary

Summary of Judgment


1. Introduction


This judgment concerned an application for leave to appeal brought in the Free State Division of the High Court. The applicant was Eskom Holdings SOC Ltd (Eskom). The first to third respondents were Mathabeng Local Municipality, its Executive Mayor, and its Municipal Manager. The Sheriff Bloemfontein West and ABSA Bank Limited were also cited as respondents, reflecting their roles in the execution process and the holding of attached funds.


The procedural history arose from earlier litigation in which Eskom had obtained a money judgment for debt against the Municipality under case number 924/2013 on 18 September 2014. In execution of that judgment debt, Eskom attached monies in the Municipality’s bank account. Following the Municipality’s approach to court for relief, the parties negotiated and concluded an agreement which was made an order of court on 11 September 2020.


Subsequently, Eskom brought an application seeking an order declaring the Municipality to be in contempt of court for alleged non-compliance with the 11 September 2020 order. That contempt application was dismissed (the judgment and order sought to be appealed were granted on 22 March 2023). The present proceedings were Eskom’s attempt to obtain leave to appeal against that dismissal.


The general subject matter was therefore the enforcement of a prior judgment debt and the consequences of a settlement order regulating execution and security pending further proceedings, viewed through the lens of civil contempt and the statutory threshold for leave to appeal under the Superior Courts Act.


2. Material Facts


It was common cause that Eskom obtained judgment for debt against the Municipality on 18 September 2014 (case number 924/2013). It was also not in dispute that Eskom subsequently attached funds held in a bank account of the Municipality in execution of that judgment debt.


After the Municipality approached the court for relief, the parties negotiated and agreed to an order granted on 11 September 2020. In terms of that order, Eskom was to uplift the attachment over the Municipality’s ABSA bank account. Pending final determination of an action under case number 5830/2019, the funds that were in the account at the date of attachment (recorded as R2 781 586.14) were to remain under attachment, held by the Sheriff of Bloemfontein West in a separate interest-bearing trust account. Eskom also undertook not to execute certain earlier orders granted in case number 924/2013.


A central component of the 11 September 2020 order was the Municipality’s undertaking to provide Eskom with security for the judgment in case number 924/2013 and any judgment that might be pronounced in respect of Eskom’s claim in the main action under case number 5830/2019, for the amount of R2 525 017 401.66. The security was to be provided through the registration of a covering bond over 139 farms registered in the name of the Municipality within its municipal boundaries, which were stated to be unencumbered at date of registration.


In the subsequent contempt proceedings (which formed the subject of the intended appeal), the court recorded that the bonds could not be registered over the 139 farms as contemplated by the order. It was also recorded that the Municipality registered bonds over 69 farms which were unencumbered. Against that factual background, the court in the contempt matter was not persuaded that the Municipality’s conduct satisfied the requirements for contempt, and further reasoned that a court cannot order the performance of something it knows to be an impossibility.


The present application sought leave to appeal the dismissal of the contempt application, with Eskom contending, among other things, that the court a quo had misdirected itself in finding Eskom bound to the remedy it had agreed upon in paragraph 7 of the 11 September 2020 order, and that the incorrect standard of proof had been applied in contempt proceedings.


3. Legal Issues


The central legal question was whether Eskom satisfied the statutory threshold for leave to appeal under section 17(1) of the Superior Courts Act 10 of 2013, namely whether the contemplated appeal would have a reasonable prospect of success, or whether there existed some compelling reason for an appeal to be heard.


Within that overarching enquiry, the application raised issues that were primarily concerned with the application of established legal principles to the facts, rather than the development of new legal rules. Eskom’s grounds implicated two main aspects: first, whether the court a quo erred in holding Eskom to the remedial arrangement embodied in the settlement order (particularly paragraph 7); and second, whether the court a quo applied the correct standard of proof in contempt proceedings (in light of the principle articulated in Fakie N.O. v CCII Systems (Pty) Ltd).


The court treated the dispute, for purposes of leave to appeal, as turning essentially on the consequences of an agreement made an order of court, and on whether Eskom had shown a realistic prospect that an appellate court would interfere with the court a quo’s conclusions on those matters.


4. Court’s Reasoning


The court began by identifying the governing statutory framework for leave to appeal in section 17(1) of the Superior Courts Act 10 of 2013. It emphasised that leave to appeal may only be granted if the judge is of the opinion that the appeal would have a reasonable prospect of success or that there are compelling reasons for the appeal to be heard, and it referenced authority confirming that this threshold is higher than the pre-Act formulation.


In applying section 17(1), the court relied on decisions which articulate that the bar for granting leave to appeal has been raised, including Matoto v Free State Gambling and Liquor Authority and Others and MEC for Health, Eastern Cape v Mkhitha and Another. The court also referred to S v Smith for the proposition that reasonable prospects require a “sound, rational basis” for concluding that an appeal has a realistic chance of success, and that more is required than an arguable case or a mere possibility of success.


Turning to Eskom’s challenge that the incorrect standard had been applied in the contempt analysis, the court pointed to paragraph 48 of the prior judgment, which stated that once the elements of contempt are established, wilfulness and mala fides are presumed, and the respondent bears an evidentiary burden to establish reasonable doubt. The court linked this approach to Fakie N.O. v CCII Systems (Pty) Ltd, indicating that its earlier articulation of the standard corresponded with that authority. In consequence, Eskom’s contention that the court ought to have applied a balance of probabilities was not accepted as demonstrating a reasonable prospect of success on appeal.


A further theme in the reasoning was that the issues raised for purposes of leave to appeal were characterised as “nothing more than” issues arising from the agreement between the parties that had been made an order of court. The court considered there to be no basis, at the leave stage, to depart from the conclusion reached in the contempt proceedings that Eskom was bound by the remedial structure it had agreed to, including the mechanism in paragraph 7 of the 11 September 2020 order.


The court also referenced, as part of its underlying assessment (drawn from the earlier contempt judgment), that the contemplated security arrangement could not be implemented exactly as originally set out (the bonds could not be registered over 139 farms), and that the Municipality had registered bonds over 69 unencumbered farms. It stated that it did not regard that conduct as meeting the requirements of contempt, and further reasoned that a court cannot order something to be done where it is known to be an impossibility. Against that background, and bearing in mind that leave to appeal requires a demonstrated realistic prospect of a different result on appeal, the court concluded that the contemplated appeal lacked reasonable prospects of success and that no compelling reason had been shown.


5. Outcome and Relief


The court dismissed the application for leave to appeal. It ordered that the application for leave to appeal was dismissed with costs.


Cases Cited


Bekazuku Properties (Pty) Ltd v Pam Golding Properties (Pty) Ltd [1996] 1 All SA 509 (C)


Fakie N.O. v CCII Systems (Pty) Ltd [2006] ZASCA 52; 2006 (4) SA 326 (SCA)


Matoto v Free State Gambling and Liquor Authority and Others (4629/2015) [2017] ZAFSHC 80 (8 June 2017)


S v Smith 2012 (1) SACR 567 (SCA)


MEC for Health, Eastern Cape v Mkhitha and Another (1221/2015) [2015] ZASCA 176 (25 November 2016)


Legislation Cited


Superior Courts Act 10 of 2013, section 17(1)


Superior Courts Act 10 of 2013, section 16(2)(a)


Rules of Court Cited


No rules of court were cited in the provided judgment text.


Held


The court held that Eskom had not shown that the intended appeal would have a reasonable prospect of success, nor that there existed compelling reasons warranting the granting of leave to appeal. It regarded the proposed appeal as turning on the consequences of an agreement between the parties made an order of court and found no basis to conclude that an appellate court would differ. The application for leave to appeal was accordingly dismissed with costs.


LEGAL PRINCIPLES


The judgment applied the principle that leave to appeal under section 17(1) of the Superior Courts Act 10 of 2013 is granted only where the contemplated appeal would have reasonable prospects of success or where compelling reasons justify an appeal. The court applied authority confirming that this threshold is more exacting than the earlier standard and requires a sound, rational basis for concluding that success on appeal is realistic and not merely possible.


The judgment also proceeded on the approach to civil contempt described in Fakie N.O. v CCII Systems (Pty) Ltd [2006] ZASCA 52; 2006 (4) SA 326 (SCA), namely that once the required elements are established, wilfulness and mala fides may be presumed, subject to an evidentiary burden on the respondent to establish reasonable doubt.


Finally, in its assessment of prospects, the court endorsed the proposition that a court will not require performance of what is known to be an impossibility, and it treated the agreement made an order of court as binding on the parties for purposes of evaluating whether the earlier contempt application had merit and whether an appeal would likely succeed.

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[2023] ZAFSHC 445
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Eskom Holdings SOC Ltd v Mathabeng Local Municipality and Others - Application for Leave to Appeal (3367/2020) [2023] ZAFSHC 445 (10 November 2023)

THE
HIGH COURT OF SOUTH AFRICA
FREE
STATE PROVINCIAL DIVISION
Reportable: YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
Case
Number 3367/2020
In
the matter between:
ESKOM
HOLDINGS SOC LTD
Applicant
and
MATHABENG
LOCAL MUNICIPALITY
1
st
Respondent
THE
EXECUTIVE MAYOR:
MATHABENG
LOCAL MUNICIPALITY
2
nd
Respondent
THE
MUNICPAL MANAGER
MATHABENG
LOCAL MUNICIPALITY
3
rd
Respondent
THE
SHERIFF BLOEMFONTEIN WEST
4
th
Respondent
ABSA
BANK LIMITED
5
th
Respondent
CORAM:
Berry AJ
HEARD
ON:
19 May 2023
DELIVERED
ON:
10 November
2023
JUDGEMENT
BY:
Berry AJ
JUDGMENT
– APPLICATION FOR LEAVE TO APPEAL
[1]
The
Applicant
obtained judgment for debt against the 1
st
Respondent under case number 924/2013 on 18 September 2014.
[2]
The Applicant attached money held in a bank account by the 1
st
Respondent in execution of the judgment debt.
[3]
The 1
st
Respondent approached the Court for relief and
after negotiations between the parties, the following Order was made
by agreement
on 11 September 2020.
“
IT
IS ORDERED THAT: (by agreement)
1.
The First Respondent (“
Eskom”
)
shall immediately uplift the attachment of funds in the bank account
of Applicant (“
the Municipality”
)
held with ABSA Bank Limited (“
Absa”
),
which attachment was perfected on
4
September 2020
and for this purpose,
will immediately instruct the Second Respondent and Absa, in writing,
to uplift the uplift (sic) and release
the said attachment of the
account.
2.
Pending the final determination of the action under case number
5830/2019
:
2.1
the funds currently in the bank account of the Applicant as at the
date of attachment, namely
R2 781 586.14
, will
remain under attachment with the Sheriff of Bloemfontein West, to be
held in the Sheriff’s trust account which is to
be a separate
interest bearing account; and
2.2
Eskom undertakes not to execute the terms of paragraphs 1 and 2 of
the order of the above
Honourable Court under case number
924/2013
,
dated
18 September 2014.
3.
The Municipality undertakes unconditionally to provide Eskom with
security for
the judgment under case number 924/2013 and any judgment
which the above Honourable Court may pronounce in respect of its
claim
in the main action under case number
5830/2019
, for the
amount of
R2 525 017 401.66
(‘
the
Security”
).
4.
The Security will be provided in the form of the registration of a
Covering Bond
(“
the Bond”
) to be registered over
one hundred and thirty-nine (139) farms registered in the name of the
Applicant within its municipal boundaries
(“
the Farms”
),
all of which, on date of registration of such bond will be
unencumbered.
5.
The Municipality will, within fourteen (14) days of date of this
order, provide
Eskom’s attorneys with a full description of the
Farms, as per an electronic Deeds Search.
6.
The Municipal Manager of the Municipality shall immediately on
request but no
later than twenty (20) days of this order provide
Eskom’s attorneys with all such consents / authorisations
required together
with all documents necessary and take all necessary
steps in order to secure the registration of the Bond over the Farms.
7.
Should the Municipality fail to comply with any terms of this order,
Eskom shall,
by delivering of written notice to the sheriff, be
entitled to appropriate the funds held in trust by the Sheriff of
Bloemfontein
West and proceed with further execution steps in respect
of the order under case number 924/2013.
8.
Eskom will instruct its attorneys to attend to the registration of
the Bond and
the Municipality will be responsible for – and
will pay the fees and disbursements associated with the preparing and
registration
of the Bond, which costs will be paid on demand.
9.
The Applicant withdraws this application.
10.
The costs of this application stands (sic) over for adjudication with
the main action under
case number 5830/19.”
[4]
The Applicant sought an Order finding the 1
st
Respondent
in contempt of Court for its failure to comply with the 11 September
2020 Order.
[5]
This Court dismissed the Application and held that the Applicant was
bound to the relief it agreed
upon in the Court Order of 11 September
2020.
7.
Should the Municipality fail to comply with any terms of this order,
Eskom shall,
by delivering of written notice to the sheriff, be
entitled to appropriate the funds held in trust by the Sheriff of
Bloemfontein
West and proceed with further execution steps in respect
of the order under case number 924/2013.
[6]
The Applicant seeks leave to appeal the whole of the Judgment and
Order granted on 22 March 2023.
GROUNDS
OF APPEAL
[7]
The Applicant submits that the importance of the matter constitutes a
compelling reason why leave
to appeal should be granted under Sec
17(1)(a)(ii) of the Superior Court Act.
[8]
The Applicant further
submits that the decision sought to be appealed against, involves
important questions of law and the administration
of justice in
general.
[9]
The Applicant further submits that the Court
a quo
misdirected
itself when it found that the Applicant was bound by the remedy it
agreed upon in Paragraph 7 of the
11
September 2020
Order.
[10]
The Applicant further submits that it has a right to elect
remedies such as specific performance, an interdict, a declaration of

rights, cancelation of the agreement or a claim for damages.
[11]
These rights are available under contractual law. The Applicant
elected the right it will exercise when it
agreed to the
11
September 2020
Order
[1]
.
[12]
The reality is that the bonds could not be registered over the 139
farms as ordered by agreement between
the parties.
[12]
The 1
st
Respondent registered the bonds over the 69 farms
which was unencumbered.
[13]    I
do not see how this conduct meet the requirements of contempt of
Court.
[14]    A
Court cannot order something to be done which the Court knows is an
impossibility.
[15]
The Applicant submits that I applied an incorrect standard of proof
in contempt proceedings in Paragraph
48 of the Judgment in that:
“…
Acting
Justice Berry ought to have applied the standard of proof as being on
a balance of probabilities.”
[16]
Paragraph 48 of the Judgment reads:
“
[48]
Once these elements have been established, wilfulness and
mala
fides
are presumed, and the Respondent bears an evidentiary
burden to establish reasonable doubt.”
FAKIE N.O. V CCII
SYSTEMS (PTY) LTD
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA)
.
[17]
Section 17(1) of the Superior Court’s Act 10 of 2013 provides
that leave to appeal may only be granted
if the judge concerned is of
the opinion that:
“
1.
The appeal would have a reasonable prospect of success or if there
are some compelling
reasons why leave should be granted.
2.
The decision sought on appeal does not fall within the ambit of
s16(2)(a) of
the Act.
3.
Where the decision sought to be appealed does not dispose of all the
issues in
the case, the appeal would lead to a just and prompt
resolution of the real issues between the parties.”
[18]
In
Matoto
v Free State Gambling and Liquor Authority and Others
[2]
the Court held:
“
There
can be no doubt that the bar for granting leave to appeal has been
raised. Previously, the test was whether there was a reasonable

prospect that another court might come to a different conclusion.
Now, the use of the word ‘would’ indicate a measure
of
certainty that another court will differ from the court whose
judgment is sought to be appealed against.”
[19]
In
S
v Smith
[3]
the Court dealt with the question of what constitutes reasonable
prospects of success as follows:
“
What
the test of reasonable prospects of success postulates is a
dispassionate decision, based on the facts and the law, that a
court
of appeal could reasonably arrive at a conclusion different to that
of the trial Court. To succeed, therefore, the appellant
must
convince this court on proper grounds that he has prospects of
success on appeal and that those prospects are not remote but
have a
realistic chance of succeeding. More is required to be established
than that there is a mere possibility of success, that
the case is
arguable on appeal or that the case cannot be categorised as
hopeless. There must, in other words, be a sound, rational
basis for
the conclusion that there are prospects of success on appeal.”
[20]
In
MEC
for Health, Eastern Cape v Mkhitha and Another
[4]
the Court held:
“
[16]
Once again it is necessary to say that leave to appeal, especially to
this court, must not be granted unless there truly is
a reasonable
prospect of success. Section 17(1)(a) of the Superior Court Act 10 of
2013 makes it clear that leave to appeal may
only be given where the
judge concerned is of the opinion that the appeal would have a
reasonable prospect of success; or there
is some other compelling
reason why it should be heard.
[17] An applicant for
leave to appeal must convince the court on proper grounds that there
is a reasonable prospect or realistic
chance of success on appeal. A
mere possibility of success, an arguable case or one that is not
hopeless, is not enough. There
must be sound, rational basis to
conclude that there is a reasonable prospect of success on appeal.”
[21]
The issues raised in this Application for leave to Appeal deals with
nothing more than the agreement between
the parties, which was made
an order of Court.
[22]
There is no reason why the Applicant should not be held to the terms
of the agreement reached between the
parties.
[23]
The Appeal does not have reasonable prospects of success.
[24]
ORDER
The
following order is made:
1.
The Application for leave to appeal is
dismissed with costs.
AP
BERRY, AJ
APPEARANCES:
For
the Applicant:
Adv.
LT Sibeko SC
with
Adv. HN Moloto
Instructed
by:
Phatsoane
Henney Attorneys
BLOEMFONTEIN
For
the 1
st
to 3
rd
Respondents
Adv.
S Ogunronbi
Instructed
by:
BOKWA
Law INC
BLOEMFONTEIN
[1]
BEKAZUKU PROPERTIES PTY (LTD) v PAM GOLDING PROPERTIES PTY LTD
[1996] 1 ALL SA 509
(C) at 513
[2]
(4629/2015)
[2017] ZAFSHC 80
(8 June 2017)
[3]
2012(1) SACR 567 (SCA) par [7]
[4]
(1221/2015)
[2015] ZASCA 176(25 November 2016)

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