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[2019] ZAGPPHC 112
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Sabie Chamber of Commerce and Tourism and Others v Thaba Chweu Local Municipality and Others; Resilient Properties Proprietary Limited and Others v Eskom Holdings Soc Ltd and Others (2295/2017, 83581/2017) [2019] ZAGPPHC 112 (7 March 2019)
THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
Case No: 2295/2017
(In Mpumalanga)
In
the matter between:
SABIE
CHAMBER OF COMMERCE
FIRST APPLICANT
AND
TOURISM
LYDENBURG
CHAMBER OF COMMERCE
SECOND APPLICANT
AND
TOURISM
GRASKOP CHAMBER OF
COMMERCE
THIRD APPLICANT
AND
TOURISM
And
THABA
CHWEU LOCAL MUNICIPALITY
FIRST RESPONDENT
MUNICIPALITY
MANAGER: THABA
CHWEU
LOCAL MUNICIPALITY
SECOND RESPONDENT
EXECUTIVE
MAYOR: THABA CHWEU
THIRD RESPONDENT
LOCAL
MUNICIPALITY
CHIEF
FINANCIAL OFFICER: THABA
FOURTH RESPONDENT
CHWEU
LOCAL MUNICIPALITY
ESKOM
HOLDINGS SOC LIMITED
FIFTH RESPONDENT
NATIONAL
ENERGY REGULATOR
SIXTH RESPONDENT
OF
SOUTH AFRICA
MINISTER
OF
ENERGY
SEVENTH RESPONDENT
MEC:
COOPERATIVE GOVERNANCE
EIGHTH RESPONDENT
AND
TRADITIONAL AFFAIRS
MINISTER:
COOPERATIVE GOVERNANCE
NINTH RESPONDENT
AND
TRADITIONAL AFFAIRS
Case
No: 83581/2017
In
the matter between:
RESILIENT
PROPERTIES PROPRIETARY
FIRST APPLICANT
LIMITED
CHANGING
TIDES 91 PROPRIETARY
SECOND APPLICANT
LIMITED
RETRACTION
PROPS 7 PROPRIETARY
THIRD APPLICANT
LIMITED
MOGWELE
TRADING 278 PROPRIETARY
FOURTH APPLICANT
LIMITED
And
ESKOM
HOLDINGS SOC LTD
FIRST RESPONDENT
EMALAHLENI
MUNICIPALITY
SECOND RESPONDENT
MEC:
CO-OPERATIVE GOVERNANCE
THIRD RESPONDENT
&
TRADITIONAL AFFAIRS (MPUMALANGA)
MINISTER
OF
ENERGY
FOURTH RESPONDENT
NATIONAL
ENERGY REGULATOR OF
FIFTH RESPONDENT
SOUTH
AFRICA
And
SAKELIGA
NPC
AMICUS CURIAE
(previously
known as AFRISAKE NPC)
Neutral citation:
Sabie
Chamber of Commerce and Tourism; Resilient Properties Proprietary
Limited v Eskom and Others
(2295 &
8358/2017) [2019] ZAGDP (07 March 2019)
Coram:
Hughes J
Heard:
13 August 2018 to 17 August 2018
Delivered:
07
March 2019
Summary:
Review - decision by Eskom to
terminate or interrupt supply of electricity - declaratory order of
illegality sought; certification
of a class action - Administrative
law - section 6(2)(e)(iii) of PAJA – failure to pursue other
remedies.
ORDER
The following order is made:
[1]
The decision of Eskom to schedule
interrupted electricity cuts is reviewed and set aside.
[2]
The respondents are ordered to pay the
costs of the applicant's, the one paying the other to be absolved.
[3]
Such costs include the employment of two
counsel where so employed.
JUDGMENT
HUGHES J
Introduction
[1]
There are two review applications before
me. In both applications the applicants seek to have a decision taken
by Eskom to terminate
or interrupt the supply of electricity to their
respective municipalities declared invalid and inconsistent with the
Constitution.
The applicants seek a declaration of invalidity and
unconstitutionality. Thus, the decision be reviewed and set aside.
[2]
In the first review the applicants are
Sabie Chamber of Commerce and Tourism (Sabie), together with
Lydenburg Chamber of Commerce
and Tourism and Graskop Chamber of
Commerce and Tourism. Whilst, in the second review the applicants are
Resilient Properties Proprietary
Ltd (Resilient), with Changing Tides
91 Proprietary Limited, Retraction Props 7 Proprietary Limited and
Mogwele Trading 278 Proprietary
Limited.
[3]
In the papers and during the
proceedings, in this court, the applicants in the first review
application are referred to as 'Sabie'
and in the second review as
'Resilient'. The main respondent in both applications is Eskom
Holdings SOC Limited (Eskom,) whilst
the respective municipalities,
being Thaba Chweu Local Municipality (TCLM) in the Sabie application
and Emalahleni Municipality
(Emalahleni) in the Resilient application
are also cited as respondents. The other relevant respondents who did
not participate
in the proceedings are the Minister of Energy, the
National Energy Regulator of South Africa (NERSA), and the Minister
of Co-operative
Governance and Traditional Affairs amongst others.
[4]
It must be pointed out that the two
review applications were not formerly consolidated to be heard
together, they were merely allocated
to be heard simultaneously. This
came about as a result of a directive issued by the Deputy Judge
President. Even though the facts
of each case differ the issue to be
determined in both matters is the same. I propose to set out
separately the pertinent facts
in each application, thereafter I will
address the common issue between the applicants, their municipalities
and Eskom.
[5]
Both applicant's, Sabie and Resilient,
contend that the decision by Eskom to terminate or interrupt the
supply of electricity arose
from their respective municipalities'
non-payment of their electricity debt to Eskom. The conduct of the
municipalities thus necessitated
the applicants, being ratepayers in
good standing, to seek an order to make payment of their electricity
account directly to Eskom.
In the case of Resilient, further to the
declaration of unconstitutionality, they seek certification to
institute a class action.
Admission
of the
amicus curiae
[6]
At the commencement of the proceedings,
Sakeliga NPC previously known as AfriSake, a non-profit company whose
main objective is
the protection of constitutional and property
rights, sought to be admitted as
amicus
curiae
in terms of section 16A(2) of
the Uniform Rules of Court in the proceedings pertaining to Resilient
as an applicant. The company
contends that it has 100 members made up
of both individuals in their personal capacity and members
representing business in the
Emalahleni municipal area who would be
severely prejudiced by the interruption of electricity supply by
Eskom.
[7]
They sought to be admitted on the
premise that they would make submissions on the question of law and
on the undisputed facts, which
would assist the court in the
adjudication of this matter. I am mindful of the
dicta
of the constitutional court as set
out in
Children's Institute v
Presiding Officer, Children's Court, Krugersdorp , and Others
2013
(2) SA 620
(CC) at para 26 :
'[26] Thus, the role of an amicus envisioned in
the Uniform Rules is very closely linked to the protection of our
constitutional
values and the rights enshrined in the Bill of Rights.
Indeed, Rule 16A (2) describes an amicus as an "interested party
in
a
constitutional issue
raised in proceeding’s.
Therefore, although friends of the court played a variety of roles at
common law, the new Rule was
specifically intended to facilitate the
role of amici in promoting and protecting the public interest. In
these cases, amici play
an important role first, by ensuring that
courts consider a wide range of options and are well informed; and
second, by increasing
access to the courts by creating space for
interested non-parties to provide input on important public interest
matters, particularly
those relating to constitutional issues. As
this Court has noted:
"The
role of an
amicus
is
to draw the attention of the Court to relevant matters of law and
fact to which attention would not otherwise be drawn. In return
for
the privilege of participating in the proceedings without having to
qualify as a party, an
amicus
has
a special duty to the Court. That duty is to provide cogent and
helpful submissions that assist the Court."
[1]
[Footnotes omitted]
[8]
Besides the constitutional and statutory
provisions relied upon by Sakeliga NPC which were also advanced by
the applicants and the
municipalities, in my view, they advanced a
novel legal point, which the other parties had not introduced, that
being, the application
of the Intergovernmental Relations Framework
Act 13 of 2000 and the Guidelines, which I address later in this
judgment. This in
fact allows for a broader consideration of the
facts before me and a very persuasive one at it. I deal with this
consideration
later in the judgment.
[9]
There was no objection raised by any of
the parties with regards to Sakeliga being admitted as an
amicus
curiae.
I accordingly find that they
have made out a case to be admitted as such and are duly admitted.
Background
Sabie's Case
[10]
The three Chamber of Commerce and
Tourism institutes, namely Sabie, Lydenburg and Graskop, represent
business and industries operating
within TCLM. Sabie has been duly
authorised by the other institutes to make submissions on behalf of
the applicants. These institutes
are voluntary associations formed
for the mutual benefit and interest of their members operating
business and industries in TCLM.
As such they represent and serve the
collective interest of business and tourism within TCLM and are
responsible for the promotion
and development of economic and social
system within TCLM.
[11]
The applicants derive their jurisdiction
to pursue this application in terms of section 38 (a), (d) and (e) of
the Constitution
[2]
in that they have an interest as consumers, they are acting in the
public interest and they are acting in the interest of their
members.
[12]
On 9 October 2017, Eskom in an attempt
to collect its debt owed by TCLM, instituted electricity supply power
cuts within TCLM. These
occurred in the mornings, during the week,
between 06h00-08h00 and in the afternoons between 17h00-19h30. During
the weekends the
supply cuts were between 08h30-11h00 and
15h00-17h30. As a result, on 24 October 2017 Sabie filed this
application, by then TCLM
owed Eskom R487 million, in arrears, for
bulk supply of electricity purchased. Significantly, TCLM does not
deny that it owes Eskom
the aforesaid amount.
[13]
Sabie contends that the times when the
interruptions were imposed encroached on family time. In that, this
was when families where
preparing to go to school and work. As
regards to the afternoon interruptions, this was when dinner and
homework preparation were
being conducted. The worst was when the
power supply was returned, so they contend, as this created far
reaching consequence that
had catastrophic effects on health, safety,
access to water and sanitation for both residents and businesses.
[14]
In its founding affidavit Sabie sets out
aptly these far reaching consequences of Eskom's periodic power cuts,
being:
'Firstly, when the power supply is cut, all
sewage works immediately come to a standstill. This means that sewage
is not pumped
to the sewage processing plants but instead, will
simply sit (eventually spill into the streets) for the duration of
the cut-off,
with the associated, serious risks to the health of the
community.
Secondly, the minute the power is shut off, the
water purification and processing plants as well as those pumping
water to the community
to ensure adequate water pressure come to an
immediate standstill. This means that taps run dry, households run
out of water, and
critical water based facilities will cease
functioning. Even worse, when the supply is reconnected, it will take
some time for
an adequate reserve to be generated to enable the
community and business to recommence.
Thirdly,
of course, any process (industrial, commercial or domestic) that is
dependent on electricity will immediately cease.'
[3]
[15]
From the affidavits filed by both TCLM
and Eskom, Sabie submits that even if it would have wanted to pay,
TCLM is unable to pay
its debt owed to Eskom. Further, the decision
taken by Eskom to interrupt the electricity power supply to TCLM was
irrational as
it was not rationally connected to the decision taken,
that being collecting on the debt due.
Resilient's
Case
[16] The case of
Resilient emanates from within the Emalahleni Municipal district,
where they own
the Highveld Mall. According to Resilient they
dutifully pay over what is due in respect of electricity to the
Municipality concerned.
Emalahleni Municipality bills Resilient for
electricity which it in turn purchases from Eskom. Resilient pays the
Municipality
as billed, however the Municipality due to its dispute
with Eskom, does not and has not paid over the full amount it is
billed
by Eskom.
[17] As Resilient
puts it 'Emalahleni, is a financially delinquent municipality' and
its conduct is
unlawful. During May 2016 Emalahleni completed an
acknowledgement of debt admitting it owed Eskom an amount of R544 066
777, 67
which Eskom asserts has been accruing since 2012. The
eventuality was that Eskom, having given Emalahleni notice, forged
ahead
and implemented the interruptions of the electricity supply
during the course of February/March 2017. Due to interventions on the
part of provincial government member's Eskom suspend the
interruptions. This lead to the officials of Emalahleni Municipality
providing yet a further undertaking to the effect that by December of
2017 the full outstanding balance would be paid. In the face
of these
undertakings Emalahlein breached the undertakings and Eskom
re-instated the power supply interruptions.
[18]
Resilient echoes the same sentiment as
Sabie, that when Eskom implements these interruptions it has
catastrophic consequences. They
go on further to explain that besides
the commercial implications, the entire water and sewage system of
the municipality stops
functioning. This lead to sewage drying up in
the municipal pipes which in turn leads to the raw sewage seeping
into the Crocodile
River, being the only water source. The worst is
that their basic right to water is infringed as households have no
access to running
water during these periods and beyond.
[19]
Though Resilient states that the conduct
of the municipality is unlawful they submit that Eskom's conduct in
disconnecting the power
supply and its continued treats to do so, are
unconstitutional and unlawful, hence this application.
Eskom's
defences
[20]
Eskom asserts that in terms of section
51(1)(b)(i) of the Public Finance Management Act 1 of 1999 (the PFMA)
it is bound by statute
to recover revenue owed. It further states,
that the provisions of the Electricity Regulation Act 4 of 2006 (ERA)
and the terms
of the Electricity Supply Agreement (ESA), which
agreement is concluded with the various municipalities, permits it to
terminate
the supply of electricity of its customers completely, for
want of non-payment. In this instance they submit that they did not
opt to implement such a drastic measure, hence the interruptions
employed.
[21]
Eskom contends that it does not bear the
duty to supply electricity to local authorities, this duty lies with
the municipalities.
As such, they argue that their decision to
implement the interruptions, which is the subject of these review
proceedings, was not
taken arbitrarily, capriciously, unreasonably or
irrationally. In fact, they submit that they acted within the
prescripts of the
constitution and relevant statutes.
[22]
In the process of recovering revenue
owed, in the case of TCLM, they concluded an acknowledgment of debt
on 9 May 2016. On 20 July
2017 Eskom issued a letter informing TCLM
of its intention to implement scheduled interruptions in the supply
of electricity and
a letter of demand was issued by Eskom to TCLM on
22 June 2017. Eskom states that before implementation of the
interruptions it
further engaged TCLM, resulting in a further
acknowledgment being concluded by TCLM. Incidentally TCLM failed to
adhere to the
terms of the acknowledgment.
[23]
On 17 August 2017 Eskom published its
intention to interrupt the supply of electricity, to errant
municipalities for non-payment,
TCLM was one of them. During the
course of August, September and October 2017 TCLM engaged Eskom in
negotiations. It provided Eskom
with a 'catch-up-plan' on 17 August
2017 to which Eskom responded on 14 September 2017. A further
'Supply- Catch Up Plan' was provided
to Eskom on 6 October 2017 to
which Eskom responded on 9 October 2017. Pertinently, in the last
response Eskom highlighted that
an amount of R487 million was in
arrears. Even so it only requested of TCLM to settle the shortfall of
R79.5 million so as to suspend
the interruptions which had already
commenced.
[24]
On 23 October 2017, TCLM and Eskom
attempted to negotiate, present at the said meeting, together with
TCLM and Eskom, was the Premier
of the Province and members of the
Provincial Department of Co-operative Governance and Traditional
Affairs. This meeting did not
yield a positive outcome and the
stand-off between TCLM and Eskom was not resolved. Hence, this
application was brought on an urgent
basis, which eventually
culminated on 30 January 2018, whence Roelosfse AJ granted an order
interdicting Eskom from interrupting
the supply of power to TCLM
pending the judgment in this application.
[25]
On 8 September 2017 and by publication,
Eskom notified Emalahleni Municipality of its intention to interrupt
the bulk supply of
electricity to Emalahleni Municipality. In the
notice it called for representations and received same from the
applicants and Emalahleni
Action Group. Having considered all the
representations made and having followed the process of engagement
with all those concerned,
Eskom none the less followed through on its
decision to implement the scheduled interruptions.
[26] Thus, the
crux of Eskom's defence is that it has a statutory duty and
obligation, under the PFMA
and ERA, to recover costs of its bulk
supply of electricity from the various municipalities, such as TCLM
and Emalahleni. It was
merely complying with such duty. In any event,
so it contends, the municipalities have a corresponding duty to pay
for the electricity
supplied, in terms of the Electricity Supply
Agreements (ESA)concluded with various municipalities.
The general provision of electricity
framework
[27]
The production or generation of
electricity as a commodity is undertaken by Eskom, the only license
holder in South Africa. The
custodian and regulator is NERSA duly
established in terms of section 3 of the ERA
[4]
.
NERSA amongst its duties regulates prices and tariffs, considers
applications and issues licences, issues rules designed to implement
the generation, transmission or distribution of electricity. Eskom
has been issued, by NERSA, with a licence to distribute electricity
to its
customers
[5]
in bulk, being the municipalities or
directly to the
end user
[6]
outside of the authorised
distribution areas of the various municipal metropolitans. In turn,
the various municipalities such as
TCLM (a licensee), are licensed by
NERSA to reticulate the said electricity it receives from Eskom, to
the end users, within their
metropolis. The reticulation is conducted
in terms of section 27 of the ERA. Consequently, the municipalities
distribute within
their designated areas as authorised by NERSA.
[28] The
municipaltiies distribute the electricity to the end users at a
tariff approved by NERSA.
Murphy J in
Afriforum
NPC v Eskom Holdings
[7]
sets out the statutory framework
aptly. I reiterate paragraphs 10 and 11:
'[10] Section 27 of the ERA provides that, in
relation to the exercise of its powers in respect of the supply of
electricity, a
municipality must
inter alia
: (i) provide
basic reticulation services free of charge, or at a minimum cost, to
certain classes of end-users; (ii) ensure sustainable
reticulation
services through effective and efficient management; (iii) must
report to National Treasury and NERSA; (iv) keep separate
financial
statements, including a balance sheet of its reticulation business.
This means that once electricity is delivered by
Eskom to the
municipal switchgear, the municipality is responsible for performing
the distribution function.
[11]
Eskom supplies the licensed
municipalities in bulk at a pre-determined tariff, and the
municipalities then re-sell electricity to
end-users within their
municipal borders at a mark-up. The terms on which electricity is
supplied by Eskom to the municipalities
are recorded in electricity
supply agreements ("ESAs"). In this agreement
municipalities are "customers" of
Eskom for purposes of the
ERA, and the parties (such as the applicants) who purchase
electricity from the municipalities are end-users.
Eskom invoices
municipalities monthly for the supply of electricity in terms of the
ESAs concluded with each municipality. Municipalities
are obliged to
effect payment of all amounts owing in terms of section 41 of the
Local Government: Municipal Finance Management
Act ("the
Municipal Finance Act").'
[8]
[Without footnotes)
[29] It is worth
re-mentioning that Eskom, duly authorised by NERSA, concludes
Electricity Supply
Agreements (ESA) with its distributing
Municipalities. In this case these would be TCLM and Emalahleni
Municipality.
[30] In terms of
section 51(1) (b) of the PFMA, Eskom states it has a legal obligation
to collect
all revenue due to it in a legal and legitimate manner.
Section 51 (1)(b) reads as follows:
'51
General responsibilities of accounting authorities
(1)
An accounting authority for a
public entity-
(a)
...
(b)
must take effective and
appropriate steps to -
(i)
collect
all revenue due to the public entity concerned; and
(ii)
prevent
irregular expenditure, fruitless and wasteful expenditure, losses
resulting from criminal conduct, and expenditure not complying
with
the operational policies of the public entity; and
(iii)
manage
available working capital efficiently and economically;
[31]
The provision set out above ought to be read with clause 9 of the
ESA. Clause 9.1 provides that
the electricity account ought to be
sent to the distributor at the end of the month and payment thereupon
will be due and payable
on receipt of such account. Whilst clause 9.2
states that if such payment is not received within 10 (ten) days from
the date the
account was deemed to have been received, 'Eskom may
discontinue the bulk supply to the Distributor and/or terminate the
electricity
supply agreement after having given the Distributor 14
(fourteen) days written notice.'
[9]
[32]
Eskom places reliance on section 21(5) of the ERA, in doing so it
states that by virtue of this
section it is permitted to terminate,
reduce or implement scheduled interruptions to the bulk supply of
electricity. It contends
that the relevant sections it relies on are
21(1) and 21(5) of the ERA, which deals with reduction and
termination of electricity
supply. These I set out below:
'21
Powers and duties of licensee
(1)
A licence issued in terms of this Act
empowers and obliges a licensee to exercise the powers and perform
the duties as set out in
such licence and this Act, and no licensee
may cede, transfer any such power or duty to any other person without
the prior consent
of the Regulator.
….
(5)
A licensee may not reduce or terminate
the supply of electricity to a customer, unless-
(a)
the
customer is insolvent;
(b)
the
customer has failed to honour, or refuses to enter into, an agreement
for the supply of electricity; or
(c)
the customer has contravened the payment
conditions of that licensee.'
Discussion
Eskom's reliance on section 21(5) of the ERA
[33]
The regulator NERSA is responsible for
issuing of licences to generate, transmit or distribute the supply of
electricity.
[10]
The recipient of such a licence is a licensee and is defined as:
'licensee means the holder of a
licence granted or deemed to have been granted by the Regulator under
the
Act'.
[11]
[34]
Eskom asserts that NERSA has issued it
with a licence to distribute bulk supply of electricity to the
municipalities. Such supply
of electricity is regulated by the ESA
concluded between Eskom and that specific municipality. In the
circumstances, the municipalities
are Eskom's customers in terms of
the ERA, as they purchase electricity from Eskom. In terms of section
7 (1) of the ERA, NERSA
issues a licence to a party in order that
they are able to generate, distribute, transmit, import, export and
trade in the supply
of electricity. It is undisputed that both Eskom
and the municipalities qualify as licensee's having attained licences
from the
regulator from time to time. In turn those that purchase
electricity from the municipalities are defined as end-users.
[35]
Turning to Eskom's defence, it submits
that in its defence for implementing the scheduled interruptions it
was authorised to do
so in terms of section 21(5) read with 21(1) of
the ERA. Eskom submits that in terms of the licence conditions issued
by NERSA,
the ESA it concluded with the municipalities the customers
and the ERA it is permitted to reduce or terminate the supply of
electricity
in circumstances where its customer has breached the
agreement for the supply of electricity.
[36]
On the other hand, according to the
applicants no such power exists. In fact they equate the power
prescribed in 21 of the ERA to
the municipalities and not Eskom. The
applicant's argue that no power is granted to Eskom to terminate or
interrupt the supply
to its customers. In fact they contend that if
such power exist it must be read in as being implied by the section.
[37]
I am persuaded that the existence of
such power as set out in section 21(5), empowers Eskom to terminate
or interrupt the supply
of electricity. I see no need to read into
the statute, there is no conflicting interpretations and the statute
in my view is clear.
In applying the principals emaciated in
Natal
Joint Municipal Pension Fund v Endumeni
2012
(4) SA 593
(SCA) at para's 18 and 23 I am mindful that the process of
interpretation is an objective one. On an examination of the specific
provision, section 21(5) read with 21(1), there is nothing, in my
view, to read into it as the literal interpretation does not
create
any conflicting interpretation. As was warned in
Endumeni
one ought to be careful as to cross
the divide and substitute the statute an unreasonable, non-sensible
and un-business-like manner.
In this instance, I am confident that
the words as they appear in the statute express clearly the objective
required thereof.
[38]
Afriforum
at
para 140 and part of para 149 highlights when the application of
section 21(1) and 21(5) becomes relevant. Murphy J states the
following:
'[140]
Section 21of the ERA deals with the powers and duties of licensee.
Section 21(5) is concerned specifically with the reduction
and
termination of the supply of electricity and is negatively framed as
an exception to a provision limiting power in that it
prohibits a
licensee from reducing or terminating the supply of electricity to a
customer unless certain conditions are met. That
exercise of power is
subject to conditions precedent. Those relevant to the matter are
that the customer must have failed to honour
the agreement for the
supply of electricity or contravened the payment conditions of the
licensee.
[149] Eskom in acting under section
21(5) of the ERA is implementing legislation and as such the exercise
of the power
constitutes administrative action in terms of PAJA and
section 33 of the Constitution. The exercise of such power is,
accordingly
subject to constitutional and administrative review....'
[39]
In the result I am fortified that
section 21(5) empowers Eskom as contended by Eskom as in this case
the
customer
of
Eskom is the municipalities, whilst the end user are the
applicants. In section 21(5) reference is made to
customer
and it is in this context that Eskom
asserts that it is able to reduce or terminate the services supplied
to its
customer,
which
in this case would be the municipalities. If one has cognisance of
section 21(1) it is clear that in terms of this provision,
one's
powers and duties in terms of one's licence is derived from the ERA.
Also worth mentioning is section 21(3). This provision,
yet again,
speaks to the
customer,
being
the municipalities, who generally have the licence to transmit and
distribute, whilst not to generate. It states that
those
who have licences to transmit and distribute ought to provide no
discriminatory access in the transmission and distribution
of same to
third parties. [My emphasis]
[40]
Further, to the above I am of the view
that Eskom can place reliance on section 21(5) without judicial
oversight as was stated in
Rademan v
Moqhaka Local Municipality and others
2012
(2) SA 387
(SCA) at para's 15 and 16. Thus, no order of court or
pre-authorisation from a court would be required for Eskom to
implement the
process set out in section 21(5). The SCA
pronouncement, that it was unrealistic and untenable to seek a courts
authorisation every
time discontinuation of services was sought, was
upheld by the Constitutional Court
[12]
.
[41]
In adopting the decision, which is
permitted in terms of section 21(5), Eskom notified and engaged the
public and the municipalities
before it proceeded to do so. Just as
the municipalities are constitutionally and statutory bound to take
appropriate steps to
recover debt due, so too is Eskom in terms of
section 51(1)(b)(i) of the PFMA. In my view, it could never be said
that the decision
Eskom made was not related to purpose for which it
was taken. Eskom is enjoined to comply with its constitutional and
statutory
obligation and it did just that when it took the said
decision. Thus, in the circumstances Eskom complied with the
pronouncement
set out in
Joseph v
City of Johannesburg
2010 (4) SA 55
(CC) at para 51, 52 and 61. Eskom having complied with its statutory
and constitutional prescripts, I do not see the necessity
to deal
with the aspect of direct payment raised by the applicants.
[42]
In as far as compliance with PAJA is
concerned, Eskom's compliance or lack thereof with the
intergovernmental relations mechanism
and procedures as prescribed, I
dealt with below.
The
conduct of non-payment by the municipalities
[43]
As legislated in sections 73(1)(c) and
73(2) of the Municipal Systems Act 32 of 2000 (Municipal Systems
Act), municipalities have
a duty to ensure and
must
guarantee that the provision of
basic municipal services such as water, sanitation, roads, transport
and electricity are provided
in an economically efficient manner
[13]
.
In
Joseph
at
paragraph 40, Skweyiya J stated, that although there is no specific
provision in the Constitution in respect of the provision
of
electricity, the latter is an 'important basic municipal service
which local government is ordinarily obliged to provide.'
[44]
Having established that the supply of
electricity is an important basic service provided by the
municipality, in terms of section
152(1)(b) of the Constitution,
local government is obliged to ensure that the provision of services
to communities are in a sustainable
manner.
[14]
The provision of such basic services by the municipalities cannot be
disputed as it is legislated and mandated in terms of the
Constitution to provide same.
[45]
.
It is well established that all spheres
of government must 'respect the constitutional status, institution,
powers and functions
of government in other spheres' and ought to
'exercise their power and perform their functions in a manner that
does not encroach
on the geographical , functional or integrity of
government in another sphere'
[15]
Therefore, the constitutional duty rests with the municipalities,
having been provided with bulk electrical supply from Eskom,
to
provide electricity in an economical and sustainable manner to the
end-user, being the applicants. Further, they were obliged
in terms
of the Municipal Finance Management Act 56 of 2003, section 65(2)(e),
to pay Eskom for the supply of bulk electricity
that they received
within thirty days of being invoiced for such bulk supply. In the
case of Sabie and Resilient, emanating from
this culture of
non-payment adopted by the municipalities, the municipalities failed
to adhere to the prescripts of the Constitution
and were remiss in
their statutory duties.
[46]
It is imperative to bear in mind that
the municipalities are regulated by section 84(1)(c) Municipal
Structures Act 117 of 1998.
This section 84 deals with the division
of functions and powers of district and local municipalities. In
terms of section 84(1)(c)
a district municipality is empowered to
manage the 'bulk supply of electricity, which includes the purpose of
supply, the transmission,
distribution and where a applicable the
generation of electricity supplied by Eskom, to the end-user.
[16]
[47]
Delinquent payers might the
municipalities be, however what emerges from the Constitution and the
statutes cited above, is the fact
that the municipalities are the
accountable party to the end-user, being the applicants.
[48]
The conduct and culture of non-payment
of both municipalities is contrary to legislation and the
constitution.
Compliance
with PAJA
[49]
In the case before me, I take cognisance
of the fact that I have two governmental institution of the state
working against each
other, with no end in sight to settle the
impasse between them. That is Eskom and the municipalities. It is
well established in
terms of the constitution that all governmental
institutions or organs must co-operate, work in good faith and
mutually trust each
other ensuring the facilitation of settling
intergovernmental disputes.
[17]
[50]
In my view, the legal argument of the
amicus
is
dispositive to the constitutional challenge. In terms of section
41(3) of the Constitution provides that an organ of state involved
in
an intergovernmental dispute
must
make every reasonable effort to
settle the dispute by means of appropriate mechanisms and procedures
provided and
must
exhaust
all other remedies before the courts are approached to resolve the
problems. The situation in this case is such an intergovernmental
disputes.
Incidentally, in the Sabie case this argument
was also raised by Sabie. Sabie contends that the constitution set
high standards
for the exercise of public power by state
institutions, in addition, it also guides these institutions as
regards basis values
and principles which govern public
administration
[18]
.
[51]
The act that deals with
intergovernmental disputes is the Intergovernmental Relations
Framework Act 13 of 2000 (IRFA). In the preamble
it sets out that the
IRFA is formulated 'to establish a framework for the national
government, provincial government and local
government to promote and
facilitate intergovernmental relations; to provide for mechanisms and
procedures to facilitate the settlement
of intergovernmental disputes
; and to provide for matters connected thereto'.
[52]
In terms of section 41 of IRFA a party
to an intergovernmental dispute may formally in writing notify the
other organ of state that
they are formally declaring a dispute.
However, prior to doing so that organ of state should in good faith,
make every reasonable
effort to settle the dispute, inclusive of
negotiations. Once this is done section 42 of IRFA kicks in and the
consequences of
having formally declared a dispute follow
[19]
.
[53]
It is apparent that there is a dispute
with regards to payments due to Eskom by the two municipalities
concerned. It is common cause
that both parties have constitutional
duties and obligations towards the public at large. Both parties in
my view, have failed
the public at large; on the one hand we have the
delinquent municipalities and on the one hand we have Eskom having
not been paid
by the municipalities opting to deprive the public of
basic services in terms of the Constitution and the Bill of Rights.
In conclusion
it is evident to me that Eskom and the Municipalities
failed to adopt the dispute mechanism at their disposal in terms of
IRFA.
[54]
In terms of section 6(2)(e)(iii) of
PAJA, the failure on the part of Eskom and the municipalities to
exhaust alternative remedies
and procedures before embarking on the
procedure of supply interruptions by Eskom, warrants the grant of the
review sought. This
section makes provision for a court to review an
administrative action if relevant considerations were not considered.
I agree
with the amici that in this instance, the failure to pursue
the process and mechanism, as is found in IRFA, would constitute a
ground for review.
Class
Action
[55]
Resilient proposed to argue a class
action, however they fell short in procuring a list of names and the
numbers required to get
the class action off the ground.
Costs
[56]
I see no need to deprive the victorious
party of it costs. I am also not convinced that either Eskom or the
municipalities should
not be liable to pay costs. The matter is
before court due to their actions or non-actions. As far as the other
respondents are
concerned they were vital parties in these proceeding
but sat back passively. They might have made an impact of the
litigious parties
had they taken an initiative to take part.
Therefore, costs are to follow the result. Such costs are to include
the employment
of two counsels where so employed.
Order
[1]
The decision of Eskom to schedule
interrupted electricity cuts is reviewed and set aside.
[2]
The respondents are ordered to pay the
costs the applicant's, the one paying the other to be absolved.
[3]
Such costs include the employment of two
counsel where so employed.
HUGHES J
JUDGE OF THE HIGH COURT,
GAUTENG
DIVISION.
In
Case No: 2295/2017
APPEARANCES
For
the Applicant:
Adv. A Katz SC
For
the 1
st
to 4
th
Respondents:
Adv.
W Mokhari SC
Adv. Z Gumede
For
the Fifth Respondent:
Adv. Notshe SC
Adv. M Gwala
In
Case NO: 83581/2017
APPEARANCES
For
the Applicant:
Adv. M Chaskalson SC
Adv. C van der Spuy
For
the 1
st
Respondent:
Adv. T Sibeko SC
Adv. N Moloto
For
the 2
nd
Respondent:
Adv. L van Wyk
For
the Amicus:
Adv C van Schalkwyk
[1]
In re Certain Amicus Curiae Application: Minister of Health and
Others v Treatment Action Campaign and Others
2002 (5) SA 713
(CC) in para
[2]
The Constitution of the Republic of South Africa, 1996
[3]
Founding affidavit of
Sabie
at page 7 para 24
[4]
Section 3 of the ERA
(1) The
National Energy Regulator established by section 3 of the National
Energy Regulator Act is the custodian and enforcer
of the regulatory
framework provided for in this Act.
[5]
Chapter 1 of the ERA under Definitions: 'customer' means a person
who purchases electricity or a service relating to supply of
electricity;
[6]
'end user'
means a user of electricity or a service relating
to the supply of electricity;
[7]
[2017] 3 All SA 663
GP
[8]
Ibid at 669-670
[9]
Eskom's Answering affidavit, annexure 'ESK4' page 1139 (the ESA)
[10]
Section 7 (1)(a) of the ERA
(1)
No person may, without a licence issue by the
Regulator in accordance with this Act
(a)
operate any generation, transmission or distribution
facility;'
[11]
Chapter 1
of the ERA under
Interpretation
[12]
Rademan v Moqhaka Local Municipality
2013 (4) SA 225
(CC) at para 46
[13]
Also
section 9(1)(a)(iii)
of the
Housing Act 107 of 1997
[14]
Section 152(1)(b)
(1) The objects of local government-
…
(b) to ensure the provision of services to communities in a
sustainable manner;
[15]
Section 41(1)(e) and (g) of the Constitution
[16]
Section 84(1)(c):
Division
of functions and powers between district and local municipalities
(1) A district municipality has the following
functions and powers: ...
(c) Bulk supply of electricity, which includes for the purpose of
such supply, the transmission, distribution and, where applicable,
the generation of electricity.
[17]
Section 41(1) and 41(2) of the Constitution
[18]
Section 195 of the Constitution
[19]
Section 42 of IRFA: