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[2022] ZAECGHC 30
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Cradock Business Forum and Others v Inxuba Yethemba Local Municipality and Others (1781/2021) [2022] ZAECGHC 30 (5 April 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE DIVISION, GRAHAMSTOWN
CASE
NO.1781/2021
THE
CRADOCK BUSINESS FORUM
1
st
Applicant
THE
MIDDELBURG RATEPAYERS ASSOCIATION
2
nd
Applicant
THE
CRADOCK RATEPAYERS
ASSOCIATION
3
rd
Applicant
and
INXUBA
YETHEMBA LOCAL MUNICIPALITY
1
st
Respondent
THE EXECUTIVE MAYOR OF
THE INXUBA
2
nd
Respondent
YETHEMBA LOCAL
MUNICIPALITY
THE MUNICIPAL MANAGER
OF THE
3
rd
Respondent
INXUBA YETHEMBA LOCAL
MUNICIPALITY
ESKOM HOLDINGS SOC
LIMITED
4
th
Respondent
JUDGMENT
NQUMSE
AJ:
Introduction
[1]
This is an application in which the
applicant seeks an order against the first, third and fourth
respondents (the respondents) in
the following terms:
1.1.
It is declared that the Inxuba Yethemba
Local Municipality, the Municipal Manager of Inxuba Yethemba Local
Municipality and Mr Mkululi
Mbebe, in his personal capacity, are in
wilful and
mala fide
contempt of the order of Mr Justice Bloem of 17 June 2020 for their
failure to have made payments to Eskom, in respect of its bulk
supply
of electricity to the towns of Cradock and Middelburg during the
period 31 July 2020 to 31 January 2021 in circumstances
where the
income received by the Inxuba Yethemba Local Municipality from its
sale of electricity was sufficient for it to have
done so;
1.2.
That a
rule
nisi
is hereby issued calling upon Mr
Mkululi Mbebe to appear before the above Honourable Court, on a date
to be determined, to show
cause why he should not be committed to
prison for such period as the above Honourable Court may find
appropriate;
1.3.
That the order of Mr Justice Bloem of 17
June 2020 be supplemented with orders in the following terms:-
1.3.1
that the first respondent shall effect payment to Eskom of the sum of
its
monthly accounts in respect of its bulk supply of electricity to
the towns of Cradock and Middelburg from the income derived from
the
first respondent’s electricity reticulation business;
1.3.2.
in the event that the first respondent should not be able to effect
payment of
the full sum of the monthly accounts of Eskom for its bulk
supply of electricity to Cradock and Middelburg for any month they
shall
then include in their reports:-
1.3.2.1.
an explanation as to why payment was not, or could not, be made;
1.3.2.2.
an accounting in respect of what expenses of the first respondent
were paid for the proceeds of the sales of electricity other than the
payment of the monthly accounts of Eskom and the arrear liability
of
the first respondent to Eskom;
1.3.2.3.
how the non-payment of Eskom’s monthly bulk supply accounts
will be made up in the future.
1.4.
That the first respondent, the second respondent and the fourth
respondent, in his personal capacity,
pay the costs of this
application, jointly and severally, the one paying the others to be
absolved, on the scale as between attorney
and client.
2.
The application arises out of a judgment
and order of Bloem (“the order”) where both Eskom and the
municipality were
the respondent’s in terms of which:
2.1.
It was declared that the municipality was
indebted to Eskom in the sum of R127 974 276.27;
2.2.
The municipality was ordered to make
monthly payments in the aggregate sum of R900 000.00 towards the
payment of its arrear
liability to Eskom;
2.3.
The respondents were ordered to keep
separate financial statements and a balance sheet in respect of the
municipality’s electricity
reticulation business as envisaged
by section 27 (1) of the electricity Reticulation Act No. 4 of 2006
in which a distinction was
to be made, on a monthly basis, between
capital and ongoing expenditure and the bulk purchases of electricity
and of revenue received
with a disclosure of monthly revenue and the
extent to which it was appropriated for payment of municipality’s
current account
with Eskom and the payments it was ordered to make
towards the repayment of its arrear liability.
3.
The order further provided for the
municipality to furnish quarterly records to the applicant, Eskom and
the court.
4.
Eskom and the municipality were granted
leave to enrol the application for the purpose of formulating orders
arising out of the
financial statements and reports which the
municipality was required to file.
5.
The brief background which has led to this
application is that the applicants had brought an application (main
application) which
served before Bloem J, in which they sought the
remedy to put an end to the delinquency of the municipality in its
management of
its electricity reticulation business in order to
prevent a situation that may arise in which Eskom could terminate its
bulk supply
of electricity to the towns of Cradock and Middleburg.
After the application was argued, Bloem J, issued an order in terms
of which
as set out above. It is apparent from the order of Bloem J,
that at the time of the application the municipality had accrued an
arrear liability of R127 974 276.27. the importance of this
figure will become clearer below as I deal with the merits
of this
application.
6.
According to Wilhelm Smit (Smit) who
deposed to the founding affidavit, the first report which was to be
filed on 15 November 2020
by the municipality was filed accordingly,
albeit only on 8 January 2021. The second report which was due to be
filed on 15 February
2021 was filed on 16 March 2021. Both reports
were annexed to the founding affidavit as annexures “D”
and “E”
respectively.
7.
The late filing of the reports that were
due on 15 November 2020 led the applicants to launch an application
under reference case
number 27494/2020 on 11 December 2020, for
contempt of court against the municipality manager (manager) since as
it is contended
by the applicants, the respondents have failed to
comply with the filing requirements as required in the order.
8.
Smit, further stated that the late
report of 15 November 2021 which was received by the applicant during
the course of the conduct
of their application, established that the
municipality had been paying what it was ordered to pay towards its
arrear liability
but was not making payment towards its current
account, this is despite it having made a forfeit from the sale of
electricity supplied
by Eskom.
9.
This caused the applicant to adapt the
relief sought in that application so as to direct and oblige the
manager to appear before
this court and to produce the Eskom accounts
and proof of such payments as were made toward the purchases of
electricity during
the months of August, September and October of
2020. If no such payments were made for the manager to disclose, why
such payments
were not made.
10.
Instead of the municipality addressing the
issue raised in the application, it sought, whilst represented by its
acting manager,
Mkululi Mbebe to have the applicant’s replying
affidavit struck out and objected to the adaptation of the relief,
this is
despite the provisions of paragraph 21.9 of the order of
Bloem J. the application to strike out served before Lowe J and was
dismissed.
Subsequently, the municipality’s application for
leave to appeal Lowe J’s order was granted.
11.
The applicants contend that under the
circumstances the delinquency of the municipality remains
un-addressed. It is further contended
that the municipality and its
manager have adopted a stratagem to avoid their accountability of the
municipality’s electricity
reticulation business and according
to Smit have set out about a game of “catch me if you can”.
A conduct that cause
the applicants to expend monies to compel the
municipality to properly discharge its obligations.
12.
Smit further stated that the repots which
were filed reveal in their balance sheets that the municipality’s
liability to Eskom
has increased from R127 974 276.27 on 17
June 2020 at the time the order of Bloem J to R203 708 470.00
as at
31 January 2021. The reason for the alarming increase according
to Smit is caused by the municipality paying in addition to what
it
was ordered by the court to pay, only an aggregate sum of R90 000
during July 2020 and the sum of R6 000 000.00
during
January 2021 toward its current account. This is despite the
consistent profit earned by the municipality after taking into
account all its labilities including provision for the payment of
Eskom current accounts.
13.
The documents referred to as D
and E above sum up the picture of purchases, payments and profit made
by the municipality over the
period 31 July 2020 to 31 January 2021
as follows:-
13.1.
the municipality purchased electricity from
Eskom at an aggregate cost of R51 089 363.00;
13.2.
the municipality received from the sale of
electricity the aggregate sum of R52 898 542.00;
13.3.
in the period 31 July 2020 to 31 January
2021 the municipality with permission having been made for the
payment of its monthly purchases
of electricity from Eskom, has
accrued a net profit in the sum of R1 850 338.00;
13.4.
the municipality made no payments in
respect of its monthly bulk purchases of electricity other than
during July 2020 when it paid
R9 000 000.00 and in January
2021 when it paid the sum of R6 000.000.00.
14.
The applicants contend that the
municipality, its manager who is also the accounting officer have
been content to on-sell the electricity
supplied to it by Eskom to
residents account businesses in its jurisdiction and to keep not only
the profit earned from its electricity
reticulation business, but
almost everything else received from its sale of electricity and not
to make payments to Eskom for its
bulk purchases of electricity when
it could have done so from the proceeds of its sales of electricity.
15.
According to the applicants the
municipality has deliberately and wilfully breached its contractual
obligation and the order of
Bloem J, in not making payments towards
its current account liability but instead by making modest sums of
payments towards its
arrear liability, notwithstanding its means to
meet its obligation. A proper interpretation of Bloem J ‘s
order is directed
at:
15.1
compelling the municipality to make
payments towards the reduction of its arrear liability to Eskom;
15.2
for the municipality to keep adequate
financial statements regarding its electricity reticulation business
and
15.3
for the municipality to administer its
electricity reticulation business in accordance with those financial
statements, which extends
to making payments of bulk purchases of
electricity from Eskom from revenue it receives from the supply and
sale of electricity
to residents and businesses of the towns of
Cradock and Middelburg.
16.
The attitude of the municipality so it was
contended, to make payments towards the arrear liability with no
obligation to make payments
towards its current accounts for the
supply of electricity has the effect of defeating the entire purpose
of the order of Bloem
J. A further effect of the municipality’s
attitude is to render the order ineffective and it will continue with
its delinquent
conduct with no consequences. The applicant contends
that the current interpretation of the order by Bloem J, particularly
paragraph
4 thereof, required the municipality to account for its
revenue received from its sales of electricity and application of
that
revenue toward the payment of its current account and the
payments directed by the order of court be made against its arrear
liability.
17.
Due to the continued delinquency of the
municipality and its manager, the applicant contends that the
contempt of the order by the
fourth respondent necessitates his
imprisonment. The applicants further find it necessary for the order
of Bloem J be expanded
as envisaged in paragraph 9 thereof, so as to
extend its supervisory terms for the municipality to make payments
each month of
its current accounts of Eskom and, in the event that it
is not able to do so, in full or at all, that it provide a written
explanation
of its failure to do so in which it sets out why, if it
is the case, any of the income received from the sale of electricity
was
not applied to the payment of the expenses necessary for the
conduct of its electricity reticulation and with as to what the
income
from the sale of electricity not applied toward the expenses
of its electricity reticulation business was spent and how the
non-payment
of that required to be paid to Eskom will be made up.
18.
Mkululi Mbebe (Mbebe) in his opposing
affidavit, took a
point in limine by
raising
the failure of the applicants
to comply with Rule 41 A (2) (a) of the Uniform Rules wherein the
applicants were obliged to indicate
whether they agree or not to the
referral of the dispute to mediation. This the applicants did not do,
albeit this being a new
application.
19.
In response to the allegation in the
founding affidavit he denies that he and the first respondent acted
delinquently in the administration
of its electricity reticulation
business. In support of his assertion he attached a report for the
months of February, March and
April 2021 which is marked “MM1”.
According to “MM1” a payment in the sum of R900 000.00
was made
to Eskom during February 2021, a further payment of R6,9
million was made during March 2021 and another payment of R900 000
00 was made during April 2021. Due to an equitable share of R11.3
million received by the municipality in March 2021, this caused
the
municipality to be able to pay an amount of R6 million to Eskom which
is above the Order to pay R900 000.00 per month.
20.
He further stated that the first respondent
has complied with the order of Bloem J which was obtained by
agreement and before which,
an interdict was obtained by the
municipality interdicting Eskom from interrupting or disconnecting
the power supply to Cradock
and Middleburg which order is still in
force and applicants are fully aware thereof. Pursuant the previous
administration he and
the first respondent are endeavouring despite
all the challenges and those related to the current Covid-19 pandemic
to administer
the functions of the first respondent effectively and
diligently. He contends that the barrage of applications by the
applicants
to have him committed to prison is clear that the
applicants hold a personal vendetta against him.
21.
He further denies that the first respondent
is making a monthly profit as alleged by the applicants. He
attributes this wrong assumption
to the misinterpretation of annexure
“MM1” specifically annexures “D” and “E”
attached to the
founding affidavit.
22.
His explanation of the surplus or deficit
reflected in the financial information for the Technical Department:
Electricity as required
by the Court Order includes any costs
directly attributable to the department which are separately
identifiable in the financial
system. He stated that in terms of
GRAP23, a conditional grant revenue is recognised in the statement of
financial performance
as and when conditions for the grant are met.
23.
In the case of the municipality, grant
revenue directly attributable to the Intergrated National
Electrification Programme (INEP)
accounting to R4 500 000.00
has been recognised in the current year and contributes directly to
the surplus for the Technical
Department: Electricity. He further
stated that the cost of funding the administrative functions and
depreciation as required by
GRA16, which represents the
municipality’s cost of using the infrastructure which is
calculated annually had not yet been
taken into account when
determining the reported surplus or deficit.
24.
Therefore, so he contended, the Technical
Department: Electricity, will incur a deficit for the financial year
ended 30 June 2021
once all adjustments have been taken into account.
He also stated that other necessary expenses pertaining to the
administration
of the municipality is the payment of staff benefits,
such as salaries of employees which are in the region of R6,8 million
to
R7 million. The result of the monthly salary costs is that the
profit from the sale of electricity is utilised to assist in the
payment of employees.
25.
As a result of these obligations the
respondent is unable to effect more payments to Eskom than what it
currently pays. The first
respondent’s council in an endeavour
to rectify its financial position, resolved to request assistance
from COGTA in collaboration
with DBSA to assist the first respondent
with a Financial Recovery Plan to improve its cash flow position.
Whilst admitting the
increase of its liability towards Eskom, the
respondents contend that such increase is as a direct result of the
first respondent’s
financial inability to effect greater
payments than what it is currently effecting. It’s inability to
effect greater payments
is not wilful and mala fide.
26.
According to Mbebe a plain reading of the
order of Bloem J, the first respondent has to file financial
statements which shall distinguish
on a monthly basis: firstly,
between the capital and an-going expenditure in respect of
reticulation infrastructure and the bulk
purchase of electricity,
secondly, the revenue received in respect of both the reticulation
infrastructure and the supply of electricity
to customers. The
financial statements shall disclose, on a monthly basis, the revenue
received in respect of the supply of electricity
and the extent to
which the revenue is appropriated for payment of its current account
with Eskom and its obligations in terms
of annexure “A”
of the Court Order. Respondents contend that the order does not
compel the first respondent to make
payment to Eskom for the current
usage of electricity, even if it is being paid to Eskom. The effect
of the Order is directed to
compel the first respondent to make
payments of the arrears to Eskom as indicated in paragraph 1 thereof.
27.
The respondents admit their awareness of
the order but deny its interpretation by the applicants. According to
the respondents,
the misinterpretation of the order by the applicants
is evident in the order sought to supplement Bloem J’s order to
incorporate
an order to oblige the respondents to make payments for
the current supply of electricity by Eskom. The order sought, it is
contended
is not competent as it does not comply with Rule 42 (1) (b)
neither does the court have the jurisdiction to supplement the Order
of Bloem J.
28.
The respondent sought an order dismissing
the application with costs on an attorney and client scale on the
grounds that the application
is wholly misplaced and not bona fide.
The result of which taxpayers’ monies are utilised to oppose
frivolous and repetitive
applications by the applicant.
29.
In his answering affidavit, Smit stated
that the increase of the first respondent’s liability to Eskom
is because the first
respondent has limited its payments to Eskom
contrary to what was ordered by Bloem J. this is despite the
on-selling of the electricity
at a profit. Since the relief that is
sought it concerns the order issued in case 1900/2019 and raises
issues which cannot be resolved
by medication, reliance upon Rule 41
A (2) (a) is misplaced. The applicants insist that the order of Bloem
J requires of the respondent
to make payments to Eskom of its ongoing
monthly purchases of bulk electricity.
30.
He further stated that the balance sheet of
the first respondent over the months, February, March and April
demonstrates that the
first respondent purchased bulk electricity of
R20 560 955.00. fFom the sale of that electricity it
received R22 933 320.00
and paid to Eskom R7 800 000.00.
He further stated that the figures in the balance sheet and those in
the financial income
statements do not accord since according to the
income statement, the first respondent purchased electricity over the
same period
above, for the sum of R15 957 908.00, whilst
the income from the sale of electricity was R22 933 320 00
and
it paid to Eskom R7 800 000.00.
31.
According to the balance sheet it was
further revealed that over the period May and June 2021 the first
respondent purchased bulk
electricity at a cost of R17 555 085.00,
whereas the income statement shows that the bulk electricity over the
same period
was purchased at a cost of R13 089 382.00 and
from its sale the first respondent received R13 798 856.00.
Further,
according to the balance sheet the first respondent paid
R900 000.00 to Eskom but made no payments during June 2021. No
payment
for April was made and no explanation was made why such
payment is not reflected. The applicants contend that whilst the
payment
of R6 000 000.00 is reflected, it does not detract
from the fact that the first respondent despite receiving from its
sale of electricity more than the cost of its purchase of bulk
electricity, has consistently failed to pay its current account
and
as a consequence, allowed its liability to increase.
32.
He averred that the order interdicting
Eskom, which was an interim order had not been prosecuted by the
respondents and they are
of the belief that it is no longer of any
effect. However, they contend that any order precluding Eskom from
terminating its supply
of electricity does not excuse the first
respondent from making payment of its purchase of electricity from
Eskom. Neither does
the Covid pandemic justify the failures of the
respondents to make payments of what is owed to Eskom. According to
the applicants
their applications against the respondents are not a
money making scheme nor frivolous as alleged by the respondents but
are as
a result of the respondent’s failure to comply with its
contractual obligation and the order of Bloem J.
33.
It is also not sustainable for the first
respondent to utilise its income from the sale of electricity to pay
its salary bill nor
can it “structure its profits” so as
to avoid making payment of its creditor which is Eskom. Instead first
respondent
under the management of the third and fourth respondents
is utilising Eskom to fund its operation with no intention, and with
no
hope of ever making payments of the continually increasing sum it
owes to Eskom. The only additional payment which have been made
over
and above that which is expressly ordered by Bloem J to Eskom have
been paid from grant funds.
34.
Smit also contends that a proper
interpretation of the order of Bloem J, does not justify the first
respondent making payment to
Eskom only of what it was ordered to pay
by the court which is payment towards its arrear liability. Instead,
the third and fourth
respondents have deliberately sought to
frustrate the purpose of the order of Bloem J and the only mechanism
available to the applicants
to hold the fourth respondent accountable
is to find him in contempt of court. The applicants aver that the
order is express or
at least implicit, that the first respondent is
required to apply the proceeds it receives from its sale of
electricity toward
payment if its current accounts from Eskom for its
bulk supply of electricity to the first respondent.
35.
The applicants further stated that the
reason the order is sought to supplement the order of Bloem J, is to
dispel the respondent’s
belief that the order does not require
the payment of Eskom’s current accounts, and for the
respondents to account for any
failure to do so and to further
address how it will make payment of its now considerably greater
liability to Eskom.
Discussion
36.
The issue to be determined by this court
which has been referred to by Mr Olivier, counsel for the
respondents, as the crux of this
application, is whether the
respondents are in wilful and mala fide contempt of the order of
Bloem J, and thus for the court to
issue an order for the
incarceration to prison of the fourth respondent or he be cautioned
and warned as prayed for by the applicants
in their heads of
argument, and if he commits any further contempt it may result in his
committal to prison.
37.
As a point of departure I find it necessary
to refer to the order of Bloem J, only to the extent it relates to
the paragraphs that
are relevant to this application.
38.
In paragraph 21.1 the order reads “
The
third respondent (the municipality) be and is hereby declared to be
indebted to the first respondent (Eskom) in the sum of
R127 974 276.27 which shall be paid to Eskom in terms of
the payment schedule annexed to this order and marked “A”
.
39.
In paragraph 21.4 the order states “
The
municipality’s financial statements shall disclose on a monthly
basis, revenue received in respect of the supply of electricity
and
the extent to which such revenue is appropriated for payment of its
current account with Eskom and to obligation in terms of
Annexure “A”
to effect payment for arrears”
.
Annexure “A” reflects the monthly payments to be effected
by the municipality in respect of both Middleburg and Cradock.
The
total figure payable monthly according to the annexure is an amount
of R900 000.00 for both towns.
40.
Undeniably, the municipality has
endeavoured to effect payments towards its arear liability to Eskom.
This fact is borne out in
the statements of income and balance sheet
contained in annexure “MM1” more specifically annexures
“D”
and “E” although it is patently clear
that the municipality’s payments towards Eskom is weigh below
the revenue
it collects from selling electricity to its customers. It
has been sufficiently demonstrated by the applicants, using the
balance
sheets of the municipality that as a result of the short
payments to Eskom by the municipality, its liability to Eskom is ever
increasing. What is also clear is that due to the inconsistent
payments and a deviation from the structured plan envisaged in
Annexure
“A” of the order, the objective of the order may
never be realised in the envisaged period.
41.
Of great concern which is admitted by the
municipality is its inability to meet its obligations and the ongoing
financial troubles
it finds itself in. Whilst I agree with the
applicants that the municipality’s financial troubles are no
justification not
to meet its obligation towards Eskom, it is with no
surprise that part of the revenue and even profit derived from the on
sold
electricity to respondents is not optimally utilised towards its
intended purpose in order to maintain a healthy balance sheet of
its
electricity reticulation business. The effect of the conduct of the
respondents as it currently stands is merely to comply
with the order
to the extent it refers to arrear liability. This brings me to the
interpretation of the order.
42.
First, what is patently clear from
paragraph 21.1 of the order is that the municipality was indebted to
Eskom in the sum of R127 974 276.27
(at the time) and the
municipality was ordered to pay the said arrear amounts owing.
Second, in paragraph 21.3 of the order the
municipality was ordered
to keep separate financial statements including a balance sheet of
its electricity reticulation business.
43.
From the facts before me, it appears that
in keeping and in compliance with the order in respect of the two
aforementioned paragraphs
the municipality has acted accordingly. I
say this because, in acknowledging its debt owed to the municipality,
there are payments
which have been effected in order to address its
arrear obligation towards its debt to Eskom. This is so, albeit
effected with
staggered payments with varying amounts.
44.
Second, it appears that the municipality
has managed to separate its financial statements including a balance
sheet of its electricity
reticulation business. This is borne out in
the reference to the income statements which established what the
municipality had
received from its sales of electricity which was
substantially more than it was obliged to pay for its purchases of
electricity
and wherein it has paid a paltry sum of money towards its
debt owed to Eskom.
45.
Flowing from paragraph 21.3 is paragraph
21.4 wherein the municipality shall disclose the revenue received in
respect of the supply
of electricity and the extent to which such
revenue is appropriated for payment of its current account with Eskom
and its obligations
as per the annexure. The bone of contention is
whether in the plain reading of this part of the order, the
municipality was ordered
to pay its current account.
46.
It
is a trite legal principle and correctly referred to by Mr De La
Harpe for the applicants that a court order is to be interpreted
as
the executory part of the judgment in accordance with the ordinary
rules of interpretation
[1]
. I
agree with the submission by the applicants that a plain reading of
the order (paragraph 21.4) clearly points out that the municipality
should make monthly payments to Eskom in terms of the schedule which
was annexed to the order. And further, it was required to
disclose
the revenue received and the extent to which such revenue is
appropriated for payment of its current account with Eskom
and its
obligation. Whilst there may be a strong belief that the order
contemplates payment of the current account, it has not
been spelt
out clearly in the order and in the direct terms as reflected in the
previous paragraphs of the order. Neither does
the with specificity
prevent the municipality from using the money available from its sale
of electricity to pay for other commitments
unrelated to its
electricity reticulation business.
47.
The difficulty that is apparent in the
order in relation to this aspect, has caused the applicants to argue
that the order for the
municipality to pay its current account if it
is not express it is implied, hence it seeks a relief for the order
to be supplemented
in order to give more clarity and certainty on
this aspect.
Contempt
of Court
48.
In
Pheko
and others v Ekurhuleni City
[2]
,
the Constitutional Court laid down the requirements to be met and to
be established for contempt of court as the following:-
(a)
The order must exist;
(b)
The order must have been duly served on, or
brought to the notice of, the alleged contemnor,
(c)
There must have been non-compliance with
the order; and
(d)
The non-compliance must have been wilful or
mala fide.
49.
The
standard of proof which must be applied in application for contempt
of court was stated in
Matjabeng
Local Municipality v Eskom Ltd and Others
[3]
as that for an order of contempt where committal is sought, the
standard of proof beyond reasonable doubt applies. In
Fakie
N.O. v CC 11 Systems (Pty) Ltd
[4]
it was held that whenever committal to prison for civil contempt is
sought, the criminal standard of proof applies. Once an applicant
for
committal order has proved the elements in (a), (b) and (c) above,
the respondent bears the evidentiary burden to create reasonable
doubt in the existence of wilfulness and mala fides.
50.
In
Fakie
[5]
the requirements for wilful and mala fide were stated thus
“
[9]
The test for when disobedience of a
civil order constitutes contempt has come to be stated as whether the
breach was committed deliberately
and mala fide. A deliberate
disregard is not enough, since the non-complier may genuinely albeit
mistakenly believe him or herself
entitled to act in the way claimed
to constitute the contempt. In such a case, good faith avoids
infaction. Even a refusal to comply
that is objectively unreasonable
may be bona fide (though unreasonableness could evidence lack of good
faith); [10] These requirements
- that the refusal to obey should be
both wilful and mala fide, and that unreasonable non-compliance,
provided it is bona fide,
does not constitute contempt – accord
with the brander definition of the crime, of which non-compliance
with civil orders
is a manifestation. They show that the offence is
committed not by mere disregard of a court order, but by the
deliberate and intentional
violation of the court’s dignity,
repute or authority that this evinces. Honest belief that
non-compliance is justified or
proper is incompatible with that
intent”
.
51.
I now propose to apply these criteria with
reference to the conduct of the first, third and fourth respondents.
As alluded there
appears to be no contention with the rest of the
orders by Bloem J, save the order in paragraph 21.4, a proper
scrutiny of the
conduct of the respondents have to be juxtaposed with
the terms of the order. As indicated above the municipality
endeavours to
meet its obligation of arrears owed to Eskom but it
fails to do so when it comes it its current account. This is
notwithstanding
it’s the ability to do so, if it were to
utilise the money received from its sale of electricity purely for
that purpose
and not for any other expenses of the municipality. It
must be mentioned that, it appears that the money it received has
been accounted
for, albeit used for a different commitment other than
for its electricity reticulation business. Whilst this may warrant
criticism
in its administrative functioning, it may not necessarily
amount to a conduct demonstrating disobedience for the order of the
court.
Surely, the position would have been different had it been an
express provision of the court order that monies which have been
generated from the sale of electricity may not be used for any other
purpose other than for payment of its arrear obligation towards
Eskom
and for the payment of the current electricity purchases.
52.
I am therefore unable to find that the
respondents’ conduct constitutes a wilful and mala fide breach
of the order of Bloem
J. Nor am I convinced in light of the
explanation that had been proffered by the respondents for failing to
meet their obligation
on their current account can been seen as
contemptuous, warranting imprisonment alternatively a caution as
proposed by the applicants.
53.
In light of my finding here above, I do not
deem it necessary to deal with the preliminary issue that was raised
regarding the failure
by the applicant to comply with Rule 41 (A) (2)
since my findings above.
54.
In order to cure the apparent
lacuna
in the order of Bloem J or better stated, to sharpen its effect on
the municipality where it relates to the use of revenue collected
from the sale of electricity, the following has to be borne in mind.
According to paragraph 21.9 it is ordered that “
Eskom
and the municipality be and are hereby granted leave to re-enrol this
application on the same papers, duly amplified, for
the purpose of
formulating orders in regard to and arising out of the financial
statements and reports referred to in paragraphs
3,4 and 5 above”
.
I find myself in agreement with Mr Olivier for the respondents that
the application before me is under a different case number
and can
therefore not have been the application referred to by Bloem J under
(Case number 1900/2019). Furthermore, even if it was,
the order is
specific, that leave was granted in respect of Eskom and the
municipality and not the applicants. It therefore follows
that this
application for contempt of court, much as it flows from the order of
Bloem J, is a new application and is not in conformity
with paragraph
21.9 of the Order.
55.
I now turn to deal with the issue of costs.
Ordinarily cost should follow the successful party. However, this is
a matter, in my
view that requires the court to take into account
what was the reason for this litigation and whether, had things been
done differently,
it could not have been avoided.
56.
It is undeniable that the applicants are
citizens and business people who endeavour to hold their local
municipality accountable
to escape the misery that could be fall them
if Eskom were to terminate their electricity supply due to
non-payment of its debt
towards its purchase of electricity by the
municipality.
57.
It can be easily ascertained or reasonably
assumed that the applicants litigate through their pockets against an
organ of state
that is also funded through their tax monies. In light
thereof I am not persuaded that I should further cause the applicants
to
be mulcted by an order of costs. In the proper exercise of my
discretion, it is my view that a fair order is for each party to pay
its own costs.
58.
In conclusion the application ought to fail
with each party ordered to pay its own costs.
Order
59.
Therefore, the following order will issue:
(a)
The application is dismissed.
(b)
Each party to pay its own costs.
M.V.
NQUMSE
ACTING
JUDGE OF THE HIGH COURT
APPEARANCES
Counsel
for the applicants
:
Adv. De
La Harpe (S.C.)
instructed by McCallum
Attorneys
87 High Street
Grahamstown
Counsel
for the respondents
:
Adv.
Olivier
instructed by NN Dullabh
& Co.
5 Bertram Street
Grahamstown.
Date
of hearing
: 10
March 2022
Date
of delivery of judgment
:
05
April 2022
[1]
Firestone
South Africa (Pty) Ltd v Genticuro AG
1977 (4) SA 298
AD at 304;
Department of Transport & Others v Tasima (Pty) Ltd 2018 (9)
BCLR 1067 (CC)
[2]
2015
(5) SA 600
(CC) para 32
[3]
2018
(1) SA (CC)
[4]
[2006]
ZASCA 52
,
2006 (4) SA 326
(SCA) para 9
[5]
Ibid