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[2022] ZAECBHC 5
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Mcinga and Company (Pty) Limited t/a M & C Business Solutions v Eskom Holdings SOC Limited (09/2022) [2022] ZAECBHC 5 (24 March 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, BHISHO)
CASE
NO.: 09/2022
Date
of hearing: 17 February 2022
Electronically circulated: 24 March
2022
In the
matter between:
MCINGA
& COMPANY (PTY) LIMITED T/A
M &
C BUSINESS
SOLUTIONS
Applicant
And
ESKOM HOLDINGS SOC
LIMITED
Respondent
JUDGMENT
MAJIKI
J:
[1]
The application was before court on the return day of a
rule
nisi
issued on 18 January
2021. The applicant had approached court for an interim urgent
order, in the main for the reconnection
of electricity supply, by the
respondent, to the premises leased by the applicant. The said
order was granted and the respondent
was also prohibited from
disconnecting the electricity supply, pending the finalisation of the
matter. The application is
opposed by the respondent.
[2]
The common cause background to the application is that in December
2018 the applicant
occupied erf 1194 Hamburg (the premises) belonging
to Ngqushwa Municipality (municipality). At all material times
the electricity
was supplied by the respondent in the premises.
As will become apparent hereunder, no payments were made for the
consumption
of the electricity. In fact, neither the
municipality nor the applicant was invoiced by the respondent for the
electricity
supply. According to the respondent as a result of
the internal audit, consumption reading and the discovery that the
account
in respect of the premises was not active, the electricity
was disconnected.
[3]
Consequent to the disconnection of the electricity, on 27 August 2021
the applicant
and the respondent concluded a written electricity
supply agreement (the agreement). The terms of the agreement
are also
common cause.
[4]
Both parties are in agreement that when the applicant was invoiced,
the account included
the consumption in respect of the period prior
to the date of the signing of the agreement. According to the
applicant the
invoice it received was for the period from August 2018
to September 2021. According to the respondent the applicant
was
billed for the arrears which accrued since December 2018.
The invoices sent by the respondent to the applicant are also common
cause, they are as follows:
Invoice NM2 received on 22 September
2021 reflecting R94 955.05
Invoice NM3 also received that same
day reflecting R244 064.11
Invoice NM4 received on 27 September
2021 reflecting R389 803.74
Invoice NM6 received on 11 October
2021 reflecting R409 073.64.
[5]
On 4 November 2021 the respondent disconnected the electricity supply
in the premises.
THE
APPLICANT’S CASE
[6]
According to the applicant on 27 September 2021 it sent an email to
the respondent
querying the account and requesting a monthly
breakdown of the charges of the account. There was no
response.
[7]
The applicant avers that the municipality never issued invoices to
it, therefore it
was wrongful to disconnect the electricity supply on
the basis of the arrears, which according to the applicant were
accumulated
by the municipality. Further, the invoices have
discrepancies. Its attempts to resolve the issue with the
respondent
yielded no results.
[8]
The applicant avers that at a later stage the respondent
communicated. Among
others it identified the amount of
R12 901.78 from 22 August 2021 to 21 September 2021, that of
R16 212.61 in respect
of the period from 21 September 2021 to 21
October 2021. Further, the respondent said the applicant
illegally consumed electricity
from December 2018 to 23 August 2021,
the cost thereof was in the tune of R376 901.96. On 11
January 2022 the applicant
responded to the respondent’s
letter. The applicant denied that the electricity was consumed
illegally. It recorded
that the right of occupation and use of
electricity was granted to it by the municipality, the respondent’s
client.
Therefore, the municipality was liable for the period
before the applicant and the respondent concluded the agreement in
August
2021.
[9]
The applicant stated further that, it was wrongful and unlawful for
the respondent
to disconnect electricity whilst it had failed to
initiate mediation and arbitration process. It was also
unlawful for the
respondent to disconnect electricity because it had
miscalculated its account. It undertook to pay the sums of
R12 901.78
and R16 212.61 within fourteen (14) days after
the restoration of electricity. According to the applicant it
never received
invoices reflecting the said amounts for the period
August to October 2021.
[10]
According to the applicant it is unclear how it would be said it
illegally consumed electricity
because the respondent supplied
electricity to the municipality and failed to invoice the
municipality. On 16 August 2021
the respondent’s records
reflected a balance of R0.00.
[11]
The applicant avers that it was suffering on going harm. It had
an agreement with the department
of transport to accommodate its
officials who are working on R72 road project. The agreement
would end in February 2022.
There are jojo tanks stored in the
premises that require electricity in order to pump water to the
units. The water is a
scarce resource, the premises are located
in a rural area.
[12]
The applicant avers further that, it first occupied the premises in
December 2018. In February
2019 the respondent’s technical team
responded to the municipality’s director of technical service’s
request
to fix a faulty transformer. That indicates that the
respondent was always aware of the electricity consumption in the
premises.
On 4 September 2021 the municipality unlawfully
dispossessed the applicant of the premises. The spoliation
proceedings it
instituted against the municipality had were finalised
in the applicant’s favour.
[13]
The director of the applicant and the deponent herein says her
attempts to obtain an invoice
were unsuccessful. She says in July
2019 she contacted Mr Reddy, the then respondent’s provincial
general manager who said
the respondent’s client was the
municipality, she should communicate with the municipality. The
municipality said it
would give her an invoice once the lease
agreement was finalised. In March 2020 Mr Gobingca who was also
a provincial general
manager, expressed sentiments similar to those
of Mr Reddy. According to the respondent, as confirmed by Mr
Reddy, in July
2019 he had already left Eastern Cape and had no
recollection of the said discussion. As for Mr Gobingca, he
left the respondent’s
employ, the respondent could not locate
him within the time that was available to the respondent, during the
preparation of the
answering affidavit.
[13]
Regarding urgency, the applicant says when it launched the
application on 14 January 2022 there
had been no electricity since 4
November 2022. A letter from the department of transport dated
12 November 2021 had been
delivered to the applicant, giving notice
of breach of contract. The department gave notice to the
applicant to rectify all
the recorded issues within seven days of the
notice. Among those, was non-availability of water on the
premises. The
applicant requested indulgence from the
department to resolve the electricity issues and the department gave
it limited time.
On 14 December 2022 the applicant’s
attorney tested positive for Covid 19 and came back to office on 4
January 2022 and was
able to consult with counsel on 8 January 2022.
The applicant says the application was brought on semi-urgent basis.
THE
RESPONDENT’S CASE
[15]
According to the respondent the non-existence of an agreement with
the municipality was an oversight
due to an administrative error.
No electricity is being claimed from the applicant in respect of a
period before the applicant
took occupation of the property.
The applicant never paid for electricity consumption since the
conclusion of the contract,
as well. The applicant failed to
comply with its material obligation in the terms of the agreement.
The respondent
therefore is excused from complying with its
obligations in terms of the contract, including the obligation to
supply electricity.
[16]
Further, the applicant only paid part of the R150 000.00 agreed
security deposit. The applicant
also failed to pay R13 000.00 it
had undertaken to pay in terms of the debit order arrangement.
The payments were dishonoured
due to insufficient funds. The
applicant in reply disputes that it failed to make payment and avers
that the respondent only
attempted to make deductions on 10 November
2021, after the disconnection. The respondent reported
that an error occurred
with its loading of the debit order. No
deduction was made in September and October. Regarding the
deposit, the applicant
replied that it negotiated its payment to be
over a period of 3 (three) months. That was accepted on
condition that R50 000.00
was paid immediately, which was done.
Two instalments amounting to R100 000.00 were paid. The
last instalment
would have been due on 30 November 2021. The
attached confirmation of payments reflects:
R50 000.00
on 30 August 2021
R20 000.00
on 27 October 2021
R50 000.00
on 16 November 2021
[17]
Furthermore, when invoices were dispatched the applicant was given
notice to pay. On the second
page of the invoice under the
heading LATE PAYMENTS, NON-PAYMENTS AND DISCONNECTION it is recorded
that Eskom is entitled to disconnect
supply for non-payment. The
arrears are in respect of the period from December 2018 when the
applicant took occupation. During
the hearing Mr Beyleveld,
counsel for the respondent, submitted that the applicant was given
notice of the disconnection.
It is captured in annexure NM3,
affording the applicant seven days to avoid further disconnection.
Annexure EH2, which is
an invoice for January 2021 recorded that
overdue accounts must be paid immediately, otherwise the supply may
be subject to disconnection
without further notice.
[18]
Furthermore, the invoices for the period from December 2018 were
rendered after the conclusion
of the contract, that was why the
arrears were shown to be as at sixty (60) days. The billing was
backdated, it is in respect
of the period 28 December 2018 to 20
December 2019 but billed in September 2021. For the period 21
December 2020 to 20 September
2021 the billing was on 23 September
2021. For the period 21 September 2021 to 20 October 2021 the
billing was on 25 October
2021. Finally, for the period 21
October to 20 November 2021 the billing was on 20 November 2021.
The contract does
not detract from the fact that prior to the
conclusion of the agreement the applicant was obliged to pay for
electricity consumed
from the date it took occupation. The
applicant is at least, enriched by the amount of electricity received
and the respondent
is impoverished by not receiving payment for
electricity supplied at applicable tariff.
[19]
As a result thereof, according to the respondent the applicant
further contravened the respondent’s
payment conditions as
envisaged in terms of section 21(5) of the Electricity Regulations
Act 4 of 2006, as amended, (the Act) by
failing to pay for consumed
electricity. The applicant also contravened section 21(5)
of the Act by failing to enter
into agreement for the supply of
electricity. The applicant has an alternative remedy, that of
paying what is owing, and
the issues would be resolved. It is
not open to the applicant to tender what it considers reasonable or
impose conditions
for payment. It has to pay for the
electricity it has consumed.
[20]
According to the respondent it has no obligation to reconnect the
electricity. The interim
order was granted in its absence.
It was only able to instruct attorneys to oppose the matter on 25
January 2022. Further,
the respondent avers that there is no
genuine dispute between the applicant and the respondent regarding
the amount of tariff fees
raised. The applicant in its own
version has not paid for the period after the conclusion of the
contract. The said amount
remains unpaid even after the electricity
was reconnected.
[21]
The respondent strongly disputes that the matter is urgent. It
avers that there was no
rational reason for the extremely short
truncated periods elected by the applicant. The applicant
adopted a supine attitude
since the disconnection in November last
year, whilst aware of the disconnection since then. The matter
cannot even be described
as semi-urgent. The application was
issued on Friday 14 January 2022, the respondent was to file
answering affidavit on or
before 18 January 2022 and the hearing for
the interim relief was set down for the same day.
[22]
The material terms of the contract referred to by the applicant are:
‘
6 This Agreement shall come
into force on the date of signing hereof and shall remain in force,
subject to clauses 26 and 31 or
(three) month’s written notice
of termination by either Party or following the occurrence of an Act
of Insolvency in respect
of the CUSTOMER which shall entitle ESKOM to
immediately terminate this Agreement upon written notice to the
CUSTOMER.
8.2 Should the CUSTOMER
authorise payment of its electricity accounts by debit order as set
out in Annexure ‘K’
(Authorisation for Debit Order or
Automatic Payment of Electricity Account), ESKOM shall debit the
CUSTOMER’s bank account
with the total amount payable on the
Due Date.
25.1 This Agreement
constitutes the sole and entire agreement between the Parties and
supersedes all previous negotiations,
arrangements or agreements in
respect of the subject-matter of this Agreement, other than the
Quote, separate agreement or documents
relating to rights-of-way
and/or servitudes.’
[23]
In answer to the submissions on behalf of the applicant Mr Beyleveld
submitted firstly that,
the non-variation clause does not apply to
clauses 7.2 and 9 of the agreement. It provides:
‘
7.2.1 The Tariff is the
standard tariff as published by ESKOM and prescribed in the Schedule
of Standard Prices for the Tariff,
subject however to (a) ESKOM’s
right to adjust the prices it charges for electricity supplied in
accordance with the provisions
of the Electricity Regulation Act and
with the approval of NERSA, and (b) the CUSTOMER’s obligation
to pay any taxes and/or
levies which may be imposed in terms of any
existing and/or future Law or as approved by NERSA.
9.1 As
security for the due payment of the electricity accounts to be
rendered in terms of this
Agreement, the CUSTOMER shall, prior to the
supply being made available in terms of this Agreement, furnish ESKOM
an Electricity
Accounts Guarantee for an amount equal to the
Electricity Account Guarantee Amount as set out in Part A of Annexure
‘D’.
[24]
The respondent disputes that the applicant’s letter of demand
constitutes a dispute in
terms of clause 32 of the agreement.
It avers that even if there was a genuine dispute, the applicant has
no basis for simply
not making payments at all.
Clause
32.7 provides:
‘
The Parties agree that while a
Dispute is continuing, they shall both continue to perform their
respective obligations under this
Agreement until the Dispute has
been fully and finally resolved in accordance with the provisions of
this Clause 32. It being
specifically agreed that where the
nature of the Dispute precludes compliance (whether in full or in
part) with this Clause 32,
the Party who is so precluded from
performing shall forthwith notify the remaining Party/ies that it is
so unable to perform and
the reasons therefor. Any Party
receiving notice of an inability to perform in terms of this Clause
may dispute the content
thereof, which dispute shall in itself be
dealt with contemporaneously with the Dispute.’
[25]
The issue for the application is whether the applicant has made out a
case for the confirmation
of the
rule
nisi
issued on 18 January
2022.
[26]
Firstly, with regard to urgency, the applicant approached court in
terms of rule 6(12) of the
Uniform rules. The applicant
referred to rule 6(12) (a) only in the notice of motion however, in
actual fact both rule 6
(12) (a) and (b) are applicable.
Rule
6(12) provides:
‘
(a)
In urgent application the court or a Judge may dispense with the
forms and
service provided for in these rules
and may dispose of such matter at such time
and place and in such manner and in
accordance with such procedure (which
shall as far as practicable be in
terms of these rules) as to it seems meet.
(b)
In every affidavit or petition filed in support of any application
under paragraph (a) of
this sub rule, the applicant shall set forth
explicitly the circumstances which he avers render the matter urgent
and the reasons
why he claims that he could not be afforded
substantial redress at the hearing in due course.’
[26]
During the hearing, Mr Mafu, counsel for the applicant, seemed to be
under the impression that
on the return day the aspects relating to
urgency and costs of the application were no longer issues to be
dealt with and determined.
According to him the court
that granted the interim relief disposed of the said issues.
[27]
The order was framed as
follows:
‘
1.
The forms and service provided for in the Rules are dispensed with
and that the matter is
disposed of as one of urgency at the time and
place set out herein, in terms of rule 6(12) (a) of the Uniform Rules
of Court;
2.
A
Rule Nisi
is granted calling upon the respondents to show cause, if any, on
Tuesday, 15 February 2022 (the return date) at 09h30 or so soon
thereafter as the matter may be heard as to why the following Order
should not be made final:
2.1
The
respondent is ordered to immediately reconnect the applicant’s
electricity supply at Erf 1194, Hamburg (commonly known
as Emthonjeni
Arts Centre)
2.2
The
respondent is prohibited from disconnecting the applicant’s
electricity supply at Emthonjeni Art Centre pending the finalisation
of the dispute resolution process.
2.3
The costs of the application
are to be paid by the respondent on the scale as between attorney and
client.
3.
Sub paragraphs 2.1 and 2.2
above will operate as an interim order pending the finalisation of
the matter.
4.
The applicant is granted leave
to serve this Order by:
4.1
Serving a copy via
Sheriff to the respondent’s chosen address being
Megawatt Park, Maxwell Drive,
Sunninghill Extension 3, Sandton,
Gauteng.
4.2
Emailing a
copy of the Order to the respondent’s email addresses…’
[28]
The order was obtained in the absence of and without the benefit of
hearing the respondent.
The respondent had not filed the notice
to oppose and the answering affidavit in the matter. It had no
opportunity to oppose
the very issues of urgency and costs. No
argument could have occurred in relation to the said issues when the
interim order
was issued. The only terms of the order the court
made a determination that they should operate, in the interim, are
contained
in paragraph 2.1 to 2.3 of the order.
[28]
Regarding urgency, the time line of events is as follows:
4 November 2021
-
the
electricity was disconnected
12
November 2021 -
the department of transport wrote to the
applicant
giving it notice to rectify the water supply issue.
18
November 2021 -
the applicant sent an email to the respondent
requesting it to reconnect the
electricity.
25 November 2021
-
the applicant sent a letter of demand to the respondent.
14
December 2021
-
the respondent’s legal department, responded
to
the letter of demand.
11 January 2021
-
the
respondent responded to the letter of demand, for electricity to be
restored by 12 January 2021
14 January 2021
-
the application was launched.
[29]
The explanation given by the applicant relates the time lapse from 14
December 2021 to 4 January,
when its legal representative was not in
office due to having tested positive to Covid 19. There is no
explanation why the
application was not brought between 5 November
2021 and 13 December, before he tested positive. There is
also no explanation
of what the applicant did until the letter from
the department of transport on 12 November 2021. The first contact by
the applicant
to the respondent was on 18 November 2021, despite the
fact that the applicant had stated that the department gave a limited
time
to rectify the electricity supply and related issues. Similarly,
explanation is lacking as to why the application could not be brought
either on 4 or 5 January 2022 and why consultation with counsel could
only take place on 8 January 2022.
[30]
When the applicant finally brought the application on Friday 14
January 2022 it called on the
respondent to file its answering
affidavit in about 24 hours or less with the matter enrolled for
hearing within the same 24 hours
at 10h00 on 18 January 2022.
The applicant has not furnished any reason for the very stringent
truncated timeframes, after
it took so long to launch the
application.
[31]
At this point reference is made to the judgments of this division in
Malawi v
MEC Corporate Governance and
Traditional Affairs, Grahamstown Case No. 779/2020
(delivered on 29 June 2020). Therein, the applicant had been
removed as a councillor on 18 March 2020. The matter was
enrolled for hearing of Part A on 26 March 2020. On that date,
significantly, an order was agreed to by the litigants.
It
incorporated a timetable, including an order for the filing of the
record. All affidavits by the applicant, had been filed,
including a supplementary affidavit after the filing of the record.
The matter was argued in June 2020. In the
affidavits the
applicant had not addressed the requirement of rule 6(12) (b) of the
rules. In argument it was submitted that
a municipal
by-election was to be held in July 2020. The application was
struck of the roll, the court held that the applicant
had
unacceptably truncated the timeframes provided for in the rules. The
litigants in the present case did not even agree about
the next date
of hearing.
[32]
In
Oos Vrystaat Kaap
Operations v De Klerk Grahamstown Case No. 1075/2020
(delivered
on 3 July 2020) the applicant had first heard reports of the first
respondent’s contravention of a restraint of
trade agreement on
13 May 2020. He was approached to refrain from his actions.
More reports that the first respondent
was, on 26 to 28 May 2020
soliciting business came in. A letter of demand was sent on 3
June 2020. Application papers
were issued on 8 June. The
notice to oppose, answering and replying affidavits were filed on 9,
15, 18 June respectively.
The court re-iterated that, deviation
from the usual rules should not be taken lightly. It was in
exceptional circumstances
that the court would deal with applications
on urgent basis. The court was not satisfied that the interests
of justice outweighed
the right of parties to have a considered
opportunity to place their case before court, in circumstances where
it was speculative
if applicant’s clients were affected by the
contravention.
[33]
The applicant has failed to demonstrate that the degree of urgency of
the matter justified the
very short time frames it afforded the
respondent. As intimated during the hearing, the matter was
argued in full.
I deem it prudent that, instead of striking off
the matter from the roll for lack of urgency, the matter must be
determined even
on the merits.
[34]
The submissions on behalf of the applicant regarding the approach to
the application are that
the application is seeking an interim order
pending the finalisation of the process in terms of alternate dispute
resolution. According
to Mr Beyleveld, the relief sought has a
final effect. This distinction impacts on the test to be
applied in the determination
of the matter. The submissions on
behalf of the respondent in this regard, which I agree with, find
support in LAWSA Volume
11, first re-issue at paragraph 314, and
OASIS Group Holdings (Pty)
Limited and another
2006 (4) AllSA 183
, paragraph 13. If the relief sought is in
the interim in form but final in substance the applicant must prove
the requirements
for the granting of a final interdict. The
requirement of balance of convenience, for instance, does not
feature. The
applicant has to prove a clear right and absence
of alternate remedy, among the requirements.
[35]
Regarding the merits, the applicant avers that it disputed the
invoices by the respondent.
The dispute should be resolved in
terms of dispute resolution process in terms of clause 32.1 of the
agreement. As for the
outstanding amount in the amount of
security deposit, the last instalment of the agreed payments was not
yet due at the time of
the disconnection. Finally, it is the
respondent that failed to collect the monthly payments in terms of
annexure A.
[36]
What emerges from clause 9.1 of the contract is that the applicant
was required to pay the security
deposit before the supply of
electricity was made available. Clauses 8.1 and 8.2 regulate when and
how the payments of the electricity
account were to be made by the
applicant.
[37]
The applicant has not shown that the respondent agreed that she
should make the payments over
3 (three) months. NM20 was
subject to approval. The applicant in terms of the contract was
obliged to pay for consumption.
To date it has not paid any
amount towards the consumption after the date of contract. That
amount is not part of any dispute.
Further, annexure ‘K’
has no stipulated amount. Even if there was an agreed amount,
at least by 20 October 2021,
upon receipt of NM18 and especially
after the communication of 10 November 2021, the applicant in its own
version was aware that
the respondent, initially, could not process
the debit order and subsequently, in November 2021, no debit order
amount had been
paid.
[38]
Further, the respondent averred that there were insufficient funds in
the selected applicant’s account.
The applicant blames
the respondent for the failure to make the deduction for the months
of September and October 2021. The
applicant also complains
about the fact that, the attempt to deduct was on 10 November 2021
before the agreed date of the 15
th
every month. The applicant does not say, the amount that would
have been due for the period September and October 2021, which
in
terms of debit order arrangement should have been debited on the 15
th
of the subsequent month, respectively, was available. If that
was so, the attempted debit in November 2021 ought to have
honoured. Even after reconnection, following the interim
order, the said amounts remain outstanding.
[39]
Consequently, the applicant is in breach of its contractual
obligations in terms of payment,
at least, in respect of electricity
consumed after the conclusion of the contract and full payment of the
security deposit.
[40]
Regarding the alternate relief, I agree with the respondent, payment
of arrears by the applicant,
even in respect of those for the period
after the conclusion of the agreement constitutes an alternate relief
for the applicant.
In terms of clauses 8.4 and 32.7 of the
contract, the applicant has to pay the account, even if there was a
dispute.
[41]
In the circumstances of this case the applicant has failed to make a
case for the urgent enrolment of the matter.
It has also not met the
requirements of a clear right and absence of an alternative relief.
Therefore, the
rule nisi
has to be discharged.
In
the result, the
Rule Nisi
is hereby discharged and the application is hereby dismissed with
costs.
B MAJIKI
JUDGE OF THE HIGH COURT
Counsel
for the applicant :
Mr Mafu
Instructed
by
: Messrs
Bax Kaplan Russel Incorporated
126 Alexandra Road
KING WILLIAMS TOWN
Counsel
for the respondent :
Mr Beyleveld
Instructed
by
: Messrs
Lulama Prince Incorporated
184 Cape Road
Mill Park
Port Elizabeth
c/o Hutton & Cook Attorneys
75 Alexandra Road
KING WILLIAM’S TOWN