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[2021] ZAFSHC 1
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Nketoana Local Municipality v Eskom Holdings (SOC) Limited (1222/2018) [2021] ZAFSHC 1 (7 January 2021)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number
:
1222/2018
In
the matter between:
NKETOANA
LOCAL MUNICIPALITY
Applicant
and
ESKOM
HOLDINGS (SOC) LIMITED
Respondent
CORAM:
LOUBSER,
J
JUDGEMENT
BY:
LOUBSER, J
HEARD
ON
: 10
SEPTEMBER 2020
DELIVERED
ON
: 7
JANUARY 2021
[1]
In recent years our courts have constantly been confronted with the
endemic
problem of municipalities failing to pay Eskom for the bulk
supply of electricity to their areas of jurisdiction, and of Eskom
wanting to implement stringent measures against those municipalities
in order to enforce immediate payment of what is due to it.
This
matter is no exception.
[2]
Here the Applicant has filed an application seeking certain relief in
circumstances where it is facing a massive bill of outstanding
payments due to the Respondent for the supply of electricity. In
its
response, the Respondent has filed a counter application seeking
certain relief designed to place the Applicant in a position
where it
simply has to pay without any further delay.
[3]
In the main application, the following relief is sought by the
Applicant:
1.
That the application be heard as an urgent
application in terms of the provisions of Rule 6 (12) and, if
applicable, condonation
for the non-compliance with the stipulations
of Section 35 of the General Law Amendment Act 62 of 1955.
2.
That a Rule nisi do hereby issue,
returnable on a certain date and time, calling on the Respondent to
show cause, if any, why the
following orders should not be made
final:
2.1.
that the Respondent be interdicted and
restrained from implementing electricity restrictions in Nketoana
Municipality including
those which is advertised to commence on
Tuesday, 13 March 2018, and that the aforementioned electricity
restrictions be stayed,
pending the initialization and finalization
of a process for the debatement of the Applicant’s account with
the Respondent;
2.2.
that the Respondent be ordered to render a
complete reconciled account, fully motivated and supported by the
underlying contracts,
vouchers and meter readings, if applicable, on
which the Respondent rely to hold the Applicant liable for
electricity payments,
such account to be delivered within 30 days
from the date of order;
2.3.
that the Respondent avail three days after
the period of 30 days in terms of paragraph 2.2 above has lapsed, on
which it will avail
personnel to meet with the Applicant’s
representatives at the Respondent’s offices in Bloemfontein to
debate the account
of the Applicant;
2.4.
that the Respondent pays the costs of the
application in the event of it opposing same.
3.
That the relief in paragraph 2.1 above will
apply with immediate effect as an interim interdict pending the
finalization of the
application.
[4]
The Applicant is therefore seeking interim relief in the form of an
interdict
restraining the Respondent from implementing electricity
restrictions, pending the outcome of a debatement of the Applicant’s
account with the Respondent. Now it is trite that where an interim
interdict is sought, an Applicant has to satisfy the following
requirements:
a)
a
prima facie
right to the relief sought, even if it is open
to some doubt;
b)
a reasonable apprehension of irreparable and imminent harm to the
right if an
interdict is not granted;
c)
the balance of convenience must favour the grant of the interdict,
and
d)
the Applicant must have no other remedy.
[5]
The question whether the Applicant has satisfied these requirements
in
the present application, must be considered with reference to the
factual matrix of the matter before the court. It appears from
the
founding affidavit of the Applicant, deposed to by its
municipal manager, that the Respondent supplies electricity to
the
Applicant, whereupon the Applicant redistributes electricity to the
following towns in its district: Reitz, Petrus Steyn, Ntha
and
Lindley.
[6]
It is further stated in the founding affidavit that the Applicant was
paid up with its electricity account with the Respondent up to about
the year 2013, but then, during that year, the Applicant fell
in
arrears with payments due to the financial mismanagement caused by
“unscrupulous or corrupt” municipal officials.
According
to the municipal manager, the Applicant has undertaken corrective
measures to eradicate the corrupt practices and to
deal with the
delinquent officials.
“
The
Applicant is also committed to make good any debt it may have, but
this will obviously take time to accomplish as the Applicant
must
obviously do so within its financial means
”
he
says.
[7]
Currently the Respondent holds the Applicant liable for the payment
of
an amount of R 158 392 418-16. The Applicant disputes
its liability to pay this amount on the basis that it is not
factually
or contractually justified. The reason for this is that the
amount claimed must stem from various electricity supply agreements,
which agreements are not available, the Applicant alleges. These
agreements would clarify the provision and quantity of supply,
the
various remedial steps that the parties are allowed to take when
there is a breach in some or all of the obligations by any
of the
parties, the powers that the Respondent has with regards to the
limitation or disconnection of electricity, the rates at
which
electricity is measured and quantified, and the possible dispute
resolution prescripts for disputes.
[8]
The agreements to which the Applicant refers in this respect, are the
following: in certain areas in the Applicant municipality, the
Respondent itself supplies and redistributes electricity to the towns
of Petsana, Arlington, Mamafubedu and Leratswana. The Respondent
provides electricity to Petsana in terms of a service delivery
agreement between Petsana and the Respondent. This agreement is in
the hands of the Applicant, and a copy thereof is attached to
the
founding affidavit. Despite a diligent search, however, the Applicant
was unable to locate similar service delivery agreements
for the
towns of Arlington, Mamafubedu and Leratswana. According to the
Applicant, the Respondent must be in possession of those
agreements.
To make things even worse for the Applicant, it was unable to find
supply agreements with the Respondent for the supply
of electricity
to Reitz, Petrus Steyn, Ntha and Lindley.
[9]
The Applicant contends that it is entitled to proof of its actual
indebtedness
with reference to the various clauses of the particular
agreements that were concluded with the Respondent. In addition, the
Applicant
avers that the Respondent owes it money for arrear rentals
pertaining to the service delivery agreement that was concluded for
Petsana in 1992. The position may be the same as far as the
agreements for the other towns that are mentioned above, are
concerned.
A debatement of the Applicant’s account would have
to be substantiated by such agreements, and hence the Applicant’s
request for a debatement is reasonable, fair and in the interest of
all parties, as this would ensure legal certainty, it is alleged.
[10]
Lastly, the Applicant states that it has been paying its current
accounts with the
Respondent diligently since November 2017, and that
it intends to pay the arrears with the income of ring-fenced
accounts. However,
the Applicant has the right to obtain certainty of
the arrear debts claimed, and for that purpose it needs to debate the
account
with reference to the supply agreements that have not been
supplied. Meanwhile, the Respondent gave notice on 28 February 2018
of its intention to implement electricity supply restrictions for the
Applicant as from Tuesday, 30 March 2018. It is this notice
that
spurred the Applicant into action to approach this court, seeking an
urgent interdict against the Respondent.
[11]
Responding to the application, the Respondent immediately filed a
counter application
in which the following orders are sought:
1.
Declaring that:
1.1.
Nketoana Local Municipality was, at the end of October 2018, indebted
to Eskom in the amount
of R 209 322 105 - 59, being an
amount due and payable in respect of the electricity supplied to it
by Eskom;
1.2.
the Municipality is liable for interest at the prime rate charged to
Eskom by its bankers in
respect of that part of the debt due for
electricity supplied in Reitz from date of
mora
to date of payment;
1.3.
the Municipality is liable for interest at the prime rate plus 5% as
charged to Eskom by its
bankers in respect of that part of the debt
due for electricity supplied in Lindley and Petrus Steyn, from date
of
mora
to
date of payment;
1.4.
the failure by the Municipality to pay the aforesaid amount within 10
days as envisaged in the
Electricity Supply Agreements entered into
between the Municipality and Eskom, would entitle Eskom to
discontinue the supply of
electricity to the Municipality after
having given a further 14 days written notice of its intention to do
so;
1.5.
this right of discontinuation of the supply of electricity to the
Municipality is subject to
Eskom following a fair administrative
process, especially with regard to parties who may be affected by the
discontinuation of
electricity supply to the Municipality;
1.6.
that the process initiated by Eskom on/or about 14 November 2016,
which caused a notice of termination
to be published in the public
media circulating within the Municipality’s area of
jurisdiction in terms of which:
1.6.1.
The public was requested to submit representations
by no later than
15 December 2016 as to why Eskom should or should not give effect to
the disconnection;
1.6.2.
The public was informed that written representations
would be
considered and a final decision made and published on 22 December
2016; and
1.6.3.
in the event that Eskom decided to continue
with the disconnection,
the disconnection would occur on/or about 5 January 2017, was a fair
process envisaged by the
Promotion of Administrative Justice Act 3 of
2000
and Eskom, to the extent necessary, is entitled to enforce its
rights to discontinue electricity supply to the Municipality.
2.
The Municipality is directed to deliver a written report to this
Court within
7 calendar days after the expiry of a period of 90
calendar days after the granting of this order, accounting for the
above-mentioned
90 calendar day period, the following;
2.1
the total amount received in respect of electricity sold to its end
users; and
2.2
the amount of equitable share received from national treasury as well
as the portion thereof
allocated for the use of electricity by the
indigent.
[12]
Together with the Notice of Motion in the counter application, the
Respondent filed an affidavit
titled “Answering Affidavit and
Founding Affidavit”. In this affidavit, deposed to by the
Respondent’s senior
manager of customer service for the Free
State, the following is stated:
[13]
The towns of Arlington, Leratswana, Mamafubedu and Petsana receive
their electricity directly
from Eskom. The residents of Lindley,
Ntha, Petrus Steyn and Reitz, on the other hand, receive their
electricity from the Municipality,
which in turn receives its
electricity in bulk from Eskom. This means that the Municipality is
indebted to Eskom in respect of
bulk electricity supplied to it for
only the towns of Lindley, Ntha, Petrus Steyn and Reitz. As for the
remaining towns mentioned
above, the Applicant has no basis or claim
for the rendering of any statements or the debatement thereof.
[14]
It further appears from this affidavit that on 29 March 2018, that is
20 days after the filing
of the main application, the Respondent
provided the Applicant with a bundle of documents addressing the
issues raised by the Applicant
in its founding affidavit. These
documents comprised of Electricity Supply Agreements for the relevant
towns, as well as invoices,
reconciliations and calculations. Copies
thereof are attached to the affidavit under discussion.
[15]
On 18 April 2018 the Applicant informed the Respondent that the said
documentation were not sufficient.
The Respondent then delivered
further invoices, reconciliations and statements to the Applicant on
25 May 2018. At the same time
the Respondent addressed all the issues
raised by the applicant in its letter of 18 April 2018, and it
confirmed that there was
a credit due to the Applicant in the amount
of R 374 413 - 32 in respect of so-called wheeling charges. This
amount has been
credited to the Applicant’s account.
[16]
On 2 November 2018 the Applicant confirmed in a letter that it has
considered all of the documentation
and that it sought clarity on
certain aspects. In response thereto the Respondent furnished the
Applicant with reconciled accounts
of amounts due to it by the
Applicant, as well as accounts giving rise to the arrear electricity
charges due and owing by the Applicant.
According to the Respondent,
the Applicant has never challenged any of the accounts rendered to
date, nor has it challenged any
of the responses provided by the
Respondent to its queries.
[17]
It is further pointed out in the affidavit of the Respondent that on
30 October 2018, the total
amount of electricity charges due to the
Respondent by the Applicant has risen to R 209 322 105 -
59. This is after an
amount of R 1 735 175 - 34 for
wheeling charges and commission payable in terms of takeover
contracts has been credited
to the Applicant’s account.
[18]
Meanwhile, the Respondent published various notices in the local
media advising that it wanted
to exercise its right to interrupt the
electricity supply to the Municipality. In these notices persons who
were likely to be affected
by the Respondent’s decision, were
invited to make representations to the Respondent whether or not it
should proceed with
this action. No representations were received
from the public.
[19]
In addition, the Respondent delivered an audit by an expert to the
Applicant on 19 January 2018,
establishing that electricity sold by
the Respondent to its top customers was appropriately metered and
accounted for. The purpose
of this audit was to optimize the
Applicant’s revenue collection to accommodate any revised
repayment plan for the Applicant.
In the end, however, the applicant
persisted to default on its payment obligations, and the Respondent
then decided to proceed
with the implementation of the scheduled
interruptions. On 28 February 2018 a notice was published to this
effect by the Respondent
in the local newspapers.
[20]
In the Respondent’s affidavit reference is also made to an
Acknowledgment of Debt signed
on behalf of the Applicant on 13
January 2017. In this document, the Applicant acknowledged its
indebtedness to the Respondent
in the amount of R 119 287 924
- 64 at the time, and it undertook to pay this debt in stipulated
monthly instalments.
In paragraph 4.1 of the document, the Applicant
renounced the usual legal benefits, including the benefits of
non
causa debiti, errori calculi
and the
revisions of accounts. It is the case for the Respondent that the
Applicant has breached its undertakings in terms of the
repayment of
its debts and on the payment of current charges.
[21]
The Applicant subsequently filed an Answering and Replying Affidavit
on 19 December 2019, and
the Respondent a Replying Affidavit on 17
February 2020. In its affidavit, the Applicant states that it has
been a mammoth task
for its officials to grapple with agreements
dating years back and accounts based on tariffs that have been
amended from time to
time through the years. The Applicant intends
employing the services of an expert in the field to assist by doing a
total audit
or reconciliation of the account. Once that has been
done, the Applicant intends referring a formal dispute for dispute
resolution
in terms of the Intergovernmental Relations Framework Act
13 of 2005 (IRFA). This will be done, it says, in the event that the
informal debatement proves unsuccessful.
[22]
The Applicant furthermore denies that the process initiated on 14
November 2016 by the Respondent
was a fair process envisaged by the
Promotion of Administrative Justice Act 3 of 2000
. The Applicant
accepts that it is indebted to the Respondent for amounts in respect
of bulk electricity supply, but the amount
which is owing is
disputed, it says. Although it has not raised any dispute with the
documentation and accounts that were rendered
by the Respondent, it
has also not confirmed that the documentation was in order and that
it constituted a full exposition of the
Respondent’s account.
[23]
The Acknowledgment of Debt signed by the Applicant, to which the
Respondent made reference in
its Answering Affidavit, was signed
under duress. The Respondent left it with no choice and unlawfully
threatened to interrupt
the electricity supply if it did not sign the
document, the Applicant alleges.
[24]
The Applicant also denies that the Respondent is entitled to judgment
in the amount of R 209 322 105
- 59. It denies that it is
owing such amount, since the process of debatement has not been
finalized, and since the Applicant wants
to refer the dispute to
formal dispute resolution. It also states that the Respondent is not
entitled to utilize electricity interruptions
as a debt collection
measure.
[25]
According to the Applicant, the Respondent’s accounts were
incorrect from the beginning
because it was indebted to the Applicant
in various amounts. This is still the case, it alleges. It is further
contended that the
Respondent is obliged under the IRFA to make
informal attempts to resolve disputes pertaining to its account, and
whether the process
be termed the debatement of account or otherwise,
is irrelevant.
[26]
In its Replying Affidavit, the Respondent mentions that the
Applicant’s debt has increased
meanwhile to the sum of R
298 736 774 – 17 as at December 2019. The last
payment made by the Applicant to
the Respondent was an amount of R10
million during July 2019.
[27]
Respondent does concede in this affidavit that the relief claimed by
it to compel the Applicant
to deliver ring fenced accounts, is not
foreshadowed in the papers. Such relief can therefore not be
considered.
[28]
It is further pointed out by the Respondent that all of the
documentation and information the
Applicant sought in terms of prayer
2.2 of the Notice of Motion, have been provided by the Respondent
during May 2019. On its own
version, however, the Applicant is yet to
establish, through the engagement of an expert, if it in fact has a
claim against the
Respondent. On the other hand, the Respondent has
really shown its good faith by paying what it considered owing, and
by providing
the Applicant with all the relevant information
necessary to enable it to establish any claim it may have against the
Respondent,
it states.
[29]
By now it should be clear that this court is again confronted by the
classic problem of a municipality
that is unable to pay the
spiralling debts it owes to Eskom, while Eskom finds itself in a
position where it has to take extraordinary
measures to ensure that
payment of these debts will be forthcoming. In the present case, this
problem is further complicated by
the lapse of time since the
municipality fell in arrears with the payment of its account in 2013,
but more particularly, since
the filing of the urgent application on
9 March 2018.
[30]
On that date, the matter was removed from the roll by agreement to
provide for the exchange of
further papers in the application. The
costs of the day stood over for later adjudication. At the same time,
it was agreed that
Eskom would not interrupt the electricity supply
to the municipality pending the finalization of the matter. After a
long delay
of almost two and a half years, the matter was eventually
set down for hearing by Eskom on 4 August 2020, to be heard on 10
September
2020.
[31]
The first question that arises, as indicated in paragraph 4 above, is
whether the Municipality
has satisfied the requirement of satisfying
the court that it has a prima facie right to the relief sought, even
if it is open
to some doubt. In this respect it must be kept in mind
that the relief sought is not aimed at eventually reviewing Eskom’s
decision to interrupt the supply of electricity, but to prevent the
interruption pending a process of debatement of Eskom’s
account.
[32]
Now it is so that Eskom is an organ of state. As an organ of state,
it performs a public function
as set out in the Electricity
Regulation Act 4 of 2006 (ERA). Section 21 (5) of ERA provides that a
licensee (Eskom in this case)
may not reduce or terminate the supply
of electricity to a consumer, unless the consumer (the Municipality)
has contravened the
payment conditions of the licensee. It is clear
from the facts in the present case that the Municipality has indeed
contravened
the payment conditions as set out in the relevant supply
agreements. Eskom therefore has a right to reduce or terminate the
supply
of electricity to the Municipality.
[33]
However, in
Resilient
Properties (Pty) Ltd v Eskom Holdings SOC Ltd and Others
[1]
, it was held that Eskom’s entitlement to reduce or terminate
is subject to the constraints of just administrative action
is
envisaged in Section 33 of the Constitution. That implies at least a
rationality threshold, but likely too a reasonableness
threshold
[2]
.
[34]
The next inquiry is then whether the Eskom decision complies with the
requirement of rationality
or even reasonableness. The decision was
obviously taken to compel payment of the arrear amount, and to compel
regular payment
of the current account. Viewed objectively, the
decision certainly cannot ensure payment of the arrear debt as it now
stands, and
perhaps not even payment of the current account. In this
respect, the decision cannot pass the test of rationality, even if it
encourages the Municipality to make every effort to pay the current
account. This is so, because the municipality does not have
the means
to pay the arrears. On the other hand, if the interruption or
termination is to be implemented, it would cause nothing
but disaster
to the residents of the municipal area. In this sense, the decision
does not even pass the test of reasonableness.
[35]
There is another reason why the decision under discussion is
untenable. That reason is that the
decision amounts to self-help,
which is unconstitutional and therefore prohibited. In
Head
of Department, Department of Education, Free State Province v Welkom
High School and Others
[3]
the Constitutional Court has expressed the principle as follows:
[4]
“
The
rule of law does not permit an organ of state to reach what may turn
out to be a correct outcome by any means. On the contrary,
the rule
of law obliges an organ of state to use the correct legal process.
Accordingly, section 7(2) (of the Constitution) and
the rule of law
demand that where clear internal remedies are available, an organ of
state is obliged to use them, and may not
simply resort to self-help.
I pause to emphasize that this court has consistently and unanimously
held that the rule of law does
not authorize self-help.”
[36]
The Municipality has therefore established a clear right to an
interim interdict. As for the
remaining requirements for an interim
interdict, the Municipality and its residents stand to face
undeniable hardship and even
disaster if Eskom’s decision is
implemented. Yet Eskom will not be destroyed if the interruption is
not implemented. It is
true that Eskom may have to wait until a
recovery plan is devised to ensure payment to it, which is lamentable
to say the least,
but that is a far lesser fate than awaits the
Municipality and its residents. It is certainly also true that the
Municipality had
no alternative remedy but to approach the court to
seek a restraint on Eskom’s rights to interrupt the supply of
electricity.
[37]
When it comes to a restraint pending the initialization and
finalization of a process for the
debatement of the Municipality’s
account with Eskom, there is some doubt as to the practicality and
the prospect of success
in such a process for debatement. To put it
differently, the question is whether the Municipality has made out a
proper case for
such a debatement, having regard to the history of
the matter.
[38]
The Municipality approached the Court on the basis that it did not
have access to various electricity
supply agreements that would
clarify, inter alia, the rates at which electricity is measured and
quantified. It is entitled to
proof of its actual indebtedness with
reference to the stipulations contained in the supply agreements. In
addition, the Municipality
alleged that Eskom is owing it for arrear
rentals pertaining to the service delivery agreement that was
concluded with Petsana
in 1992. It is not disputed that only 20 days
after the filing of the main application, Eskom did provide the
Municipality with
the supply agreements required, and with relevant
invoices, reconciliations and calculations. However, the Municipality
informed
Eskom that the said documentation were not sufficient. In
response thereto Eskom delivered further invoices, reconciliations
and
statements to the Municipality on 25 May 2018. At the same time,
Eskom confirmed that there was indeed a credit owing to the
Municipality.
[39]
On 2 November 2018, more than five months later, the Municipality
sought clarity on certain aspects
of the documentation mentioned.
Eskom then again furnished the Municipality with reconciled accounts
of amounts due to it by the
Municipality. By 30 October 2018 the
total amount of electricity charges due by the Municipality had
increased to more than R209
million. It is common cause that the
Municipality never challenged any of the accounts furnished. It is
also common cause that
Eskom has credited the Municipality’s
account with a further R1.7 million for wheeling charges and
commission before calculating
the final amount owing.
[40]
Now it can be argued that the Municipality has received everything it
wanted in the form of documentation,
and that there is nothing left
to debate as far as the initial amount of R 158 392 418-16
is concerned. Meanwhile, at
the time that the counter application was
filed, the arrears amount had risen to more than R 209 million. In
the process of calculating
the arrears at the time, Eskom had
credited the account of the Municipality with the R1.7 million
alluded to above.
[41]
As at December 2019, the outstanding amount has rocketed to almost R
300 million. The Municipality
accepts that it is indebted to Eskom in
respect of the bulk electricity supply, but it denies the amount of
indebtedness. In particular,
it denies the amount of
R 209 million, saying that the accounts of Eskom were incorrect from
the beginning
because Eskom was indebted to the municipality in
various amounts. This is still the case, it alleges, and it says that
certainty
regarding the quantum of Eskom’s claim can only be
achieved by a debatement of the account.
[42]
It is clear, therefore, that the Municipality is relying on the fact
that Eskom is owing it money,
and that this indebtedness should be
taken into account when final figures are calculated. In order to
attain clarity, the Municipality
wants to engage in an informal
debatement process. If this process is unsuccessful, it intends
employing the services of an expert
to obtain a total audit or
reconciliation of the account. Once that has been done, the
Municipality intends referring a formal
dispute for dispute
resolution in terms of the IRFA.
[43]
I am not persuaded that a process of informal debatement would result
in a successful resolution
of the existing problems between Eskom and
the Municipality, having regard to the history of those problems. In
my view, such a
process would only serve to delay a resolution even
further, while the arrear debts of the Municipality are increasing by
the day.
[44]
In the premises, the result is that the Municipality has made out a
proper case for an interdict
as formulated in prayer 2.1 of its
Notice of Motion, but not for an interdict pending a process of
debatement.
[45]
It is clear that there is a dispute between the parties. The dispute
not only relates to the
quantum of Eskom’s claim, but also to
the ability of the Municipality to pay the amounts demanded and the
timing and the
method of payment of the arrears. It follows that a
“dispute” exists for the purposes of Section 41(3) of the
Constitution.
Section 41(3) provides that an organ of state involved
in an intergovernmental dispute must make every reasonable effort to
settle
the dispute by means of mechanisms and procedures provided for
that purpose, and must exhaust all other remedies before it
approaches
a court to resolve the dispute.
[46]
Section 41(4) of the Constitution provides that if a court is not
satisfied that the requirements
of subsection (3) have been met, it
may refer a dispute back to the organs of state involved. This is
what happened in the case
of
Cape
Gate (Pty) Ltd and Others
v
Eskom Holdings (SOC) and Others
[5]
, where a full bench of the Johannesburg High Court has referred the
dispute between the parties back to the organs of state involved,
because it was of the view that the organs of state have not made
every reasonable effort to settle the dispute by means of the
mechanisms and procedures provided.
[47]
The mechanisms and procedures are,
inter
alia
, the following: Section 139(1) of
the Constitution provides that when a municipality cannot fulfil an
executive obligation, the
relevant provincial executive may intervene
by taking any appropriate steps to ensure fulfilment of their
obligation. Section 44
of the Municipal Finance Management Act 56 of
2003 demands that whenever a dispute of a financial nature arises
between organs
of state, the parties concerned must as promptly as
possible take all reasonable steps that may be necessary to resolve
the matter
out of court. If the National Treasury is not a party to
the dispute, the parties must report the matter to the National
Treasury,
and may request it to mediate between the parties or to
designate a person to mediate between them. Section 139 of the same
Act
provides that where a municipality is in serious or persistent
material breach of its obligations to meet its financial commitments,
or admits that it is unable to meet its obligations or financial
commitments, the provincial executive must promptly request the
Municipal Financial Recovery Service, amongst others, to determine
the reasons for the crisis and to prepare an appropriate recovery
plan for the municipality.
[48]
Furthermore, Section 30 of the ERA provides that if there is a
dispute between licensees, the
National Energy Regulator must act as
a mediator if so requested by both parties to the dispute. Section 45
of the IRFA provides
that no organ of state may institute judicial
proceedings in order to settle an intergovernmental dispute unless
the dispute has
been declared a formal intergovernmental dispute in
terms of Section 41 of the Act, and all efforts to settle the dispute
were
unsuccessful. Once a formal intergovernmental dispute has been
declared, the parties must promptly convene a meeting between
themselves
in terms of Section 42 of the Act, and if they fail to do
so, the Minister or the MEC may convene such a meeting or may
designate
a facilitator on behalf of the parties. The facilitator
must,
inter alia
assist the parties to settle the dispute in any manner necessary.
[49]
In this matter, I am not satisfied that the parties have made every
reasonable effort to settle
the dispute by means of the mechanisms
and procedures referred to above. In terms of Section 41(4) of the
Constitution, I may therefore
refer the dispute back to the parties
involved. In any event, there is no evidence that a formal dispute
was ever declared in terms
of Section 41 of the IRFA by any of the
parties.
[50]
If Eskom is then to be interdicted on a temporary basis from
interrupting the bulk supply of
electricity to the municipality, that
interdict should pend the resolution of the dispute by the state
organs, but within a limited
timeframe. I am of the view that six
months is a reasonable time, given the background of the matter.
[51]
As for the costs, Eskom caused the urgent passage to court on 9 March
2018, and it should pay
those costs on the party and party scale. In
the main application, the municipality is for all intents and
purposes the successful
party, and Eskom must pay the costs of the
main application. Although Eskom is the unsuccessful party in the
counter application
because the prayers it seek cannot stand
alongside the referral of the dispute back to the parties, it has
already been found that
both parties are to be blamed for the failure
to invoke the applicable mechanisms and procedures in order to settle
the dispute.
Therefore each party is to pay its own costs in the
counter application.
[16]
In the premises, the following order issues:
1.
Eskom is interdicted from implementing
interruptions in electricity supply to the Nketoana Local
Municipality pending resolution
of the disputes between them within
six months of the date of this order.
2.
The disputes between the parties and the
manner and timing of its resolution, are referred back to the parties
in terms of Section
41(3) of the Constitution.
3.
The parties are ordered to make every
reasonable effort to resolve the disputes by means of the mechanisms
and procedures provided
by statute.
4.
Should the parties fail to resolve the
disputes in the manner aforesaid within the period of six months,
they are each granted leave
to approach the court again for
appropriate relief.
5.
Eskom is ordered to pay the costs of 9
March 2018 and the costs of the main application on the party and
party scale.
6.
The counter application is dismissed, with
no order of costs.
_________________
P.J.
LOUBSER, J
For
the Applicant:
Adv. M.C. Louw
Instructed
By:
Lessing Attorneys, Bethlehem
per
Honey Attorneys,
Bloemfontein
For
the Respondent:
Adv. L.T. Sibeko SC, with him
Adv.
N.H. Moloto
Instructed
By:
Phatshoane Henney Inc
Bloemfontein
[1]
2019(2)
SA 577 (GJ)
[2]
Section
6(2)(f)(ii) and Section 6(2)(h) of the Promotion of Administrative
Justice Act 3 of 2000 (PAJA)
[3]
2014(2)
SA 228 (CC)
[4]
At
par 86, page 255
[5]
2019
(4) SA 14
(G J)