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South Africa: Kwazulu-Natal High Court, Pietermaritzburg
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[2019] ZAKZPHC 65
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Newcastle Minicipality and Another v Eskom Soc Ltd (7349/19P) [2019] ZAKZPHC 65 (8 October 2019)
In
the High Court of South Africa
KwaZulu-Natal
Division, Pietermaritzburg
Case No. 7349/19P
In
the matter between:
NEWCASTLE
MUNICIPALITY
First
Applicant
MEC,
KZN, FOR THE DEPARTMENT
OF
CO-OPERATIVE GOVERNANCE AND
TRADITIONAL
AFFAIRS (COGTA)
Second
Applicant
and
ESKOM
SOC LTD
Respondent
JUDGMENT
Delivered on: 8 October 2019
BEZUIDENHOUT
J
1]
Applicants brought an urgent application on 29 September 2019 to
interdict respondent from
disconnecting the electricity supply to
first applicant pending finalisation of an application for the review
of respondent’s
decision to disconnect the electricity supply.
The matter was then adjourned to 03 October 2019 for respondent to
file an answering
affidavit and also the filing of a replying
affidavit.
2]
On 03 October 2019 I was informed that a date had been obtained on
the opposed roll on 06
December 2019 for the hearing of the said
application. The only issue at this stage is whether interim
relief should be granted
preventing the disconnection of the
electricity supply. Mr Shangisa, on behalf of respondent, opposed the
granting of such relief.
Mr Pretorius appeared on behalf of a
company Lanxeso Cisa (Pty) Ltd, a chrome plant in Newcastle,
KwaZulu-Natal, requesting leave
to intervene. First and second
applicant did not oppose such application and respondent indicated
that it would abide the
decision of the court.
3]
Lanxeso Cisa (Pty) Ltd does have an interest in this matter as the
disconnection of the electricity
supply and even the interruption
thereof will severely affect its operation. Accordingly, it is
just and equitable that Lanxeso
Cisa (Pty) Ltd be granted leave to
intervene. In the circumstances it may be prudent to allow them
to be joined as second
respondent. The issue to be decided is
whether a disconnection or even an interruption of the electricity
supply to first
applicant should be interdicted pending the
finalization of the application.
4]
It was submitted on behalf of respondent that first applicant
generates a profit of approximately
R200million a year from the sale
of electricity to consumers and therefore must have sufficient funds
to pay respondent.
It is common cause that a substantial amount
is owing to respondent by first applicant for electricity.
First applicant is
not unique as it appears to be a position facing
many municipalities within the country. It is however incorrect
that R200million
profit is generated. This fails to take into
account the operating expenses of maintaining the electrical supply
network,
the upkeep thereof and breakages that may occur as well as
the salaries etc with regard thereto. It was submitted on behalf of
respondent that in terms of section 27(i) of the Electricity
Regulations Act 2006 (“ERA”) that first applicant must
“
ring fence
” the electricity money that it
collects from rate payers to pay respondent. A reading of
section 27(i) of ERA does
not support this submission. Section
27 deals with the duties of Municipalities and does not require that
such money must
be kept for the payment of respondent. Section
27(i) requires the keeping of separate financial statements including
a balance
sheet of the reticulation business. This in no way
refers to the payments which are to be made to respondent.
5]
In the founding papers, first applicant indicated that a payment of
R20million per month
would be made to respondent and during argument
it was submitted that this amount can be increased to R30million per
month.
Respondent however rejected this payment as
insufficient. There has been various demands from respondent to first
applicant to
pay the arrear amounts. Agreement was also reached as to
amounts which would be paid by first applicant on a monthly basis.
First applicant failed to comply therewith. Second applicant
intervened and meetings between the parties were held and a further
meeting was to be held on 30 September 2019. However, before this
respondent indicated that it would either disconnect the electricity
supply or interrupt the electricity supply to various areas of the
Municipality at specific times, times when the usage of electricity
would have been required both by households as well the large
industrial area of Newcastle.
6]
It has been held in
Resilient Properties (Pty) Ltd v Eskom
Holdings (SOC) Ltd and Others
2019 (2) SA 577
(GJ) and
Cape
Gate (Pty) Ltd and others v Eskom Holdings (SOC) Ltd and others
2019 (4) SA 14
(GJ) that the decision by respondent to disconnect
electricity was indeed an administrative action and reviewable in
terms of PAJA.
In the present case it is in dispute if notice
thereof was given. First applicant’s municipal manager contends
he only saw
such a notice in a newspaper. Accordingly, there are
grounds for review of the decision of respondent to either disconnect
or interrupt
the electricity supply. This is not an issue to be
decided at this stage. That would be in issue at the hearing of
this application on 06 December 2019. The only issue now is
whether interim relief should be granted preventing the electricity
supply being disconnected or interrupted.
7]
It was submitted on behalf of first applicant that during August 2019
it had paid approximately
R50million to respondent. First
applicant submitted that its municipal manager had only on Sunday 29
September 2019 noticed
in a newspaper that respondent was to
interrupt or disconnect the electricity supply to first applicant.
It was submitted
on behalf of second applicant that no formal notice
was given that the electricity supply was to be interrupted or
disconnected.
There was no time to bring the application
earlier because it was only once such a decision had been made that
it became reviewable.
It was submitted that if the electricity was
disconnected or interrupted the effect thereof would be catastrophic
and that it would
severely affect the residents and businesses of
Newcastle.
8]
It is not disputed that respondent is entitled to payment for the
electricity supplied to
first applicant and that first applicant must
make such payments. It is also not disputed that if there is
non-payment respondent
is legally entitled to disrupt the electricity
supply. However, the situation is not that simple. Respondent
is the only
electricity supplier to municipalities in the country. It
is also not the non-payment for electricity of a specific entity but
of a municipality. It must be considered what the effect would be to
the residents and businesses if the electricity supply is interrupted
at the crucial hours which respondent contemplates or disconnected.
There are industrial areas in Newcastle depended on the electricity
supply as well as various businesses, households and government
departments etc. If the electricity supply is disconnected or
disrupted at crucial hours it would have a catastrophic effect not
only on all the residents and business but on the whole economy
of
the town. This will also not assist respondent in recovering money
owing as it would result in the failure of businesses and
large
factories in the area causing great job losses in a country where it
is common knowledge that the economy is struggling and
high rates of
unemployment is found in various areas of the country.
9]
I have already alluded to the injury which would be caused to the
community and industry
of Newcastle in the event of the electricity
supply being disconnected or interrupted. The prejudice to
respondent is indeed
less than that which it would be to first
applicant and the community of Newcastle if the supply is
disconnected. If the
electricity supply is to continue pending
the finalization of this application, respondent can still continue
operating and will
also receive some income from first applicant.
However, there would be irreparable harm to first applicant and the
inhabitants
of Newcastle if the interim relief is not granted.
It would result in the total collapse of the economy of Newcastle and
would severely affect the citizens of the town who pay for their
electricity, require electricity for various reasons and who in
certain circumstances would be unable to survive without it.
10] The
balance of convenience accordingly favours the granting of the
interim relief. I am also satisfied
that first applicant has no
other remedy than the present to ensure there is electricity supply
pending finalisation of this matter.
Conditions can be imposed
in the granting of interim relief and first applicant has indicated
that an amount of R30million per
month would be paid to respondent by
the 15
th
of each month. In deciding whether to grant
interim relief the court can also take into account the prejudice to
third parties
and the general public. Applicants had
established urgency a prima facie case and the balance of convenience
favours the
granting of the interim relief.
The
following order is made:
1.
A
rule nisi is granted in terms of paragraphs 1, 1.1, 1.2 and 3 of the
notice of motion. The date in paragraph 1 to be 6 December
2019;
2.
The
matter is to be set down on the opposed roll on 6 December 2019;
3.
Lanxeso
Cisa (Pty) Ltd is granted leave to intervene and is joined as second
respondent in these proceedings;
4.
Second
respondent is to file its answering affidavit by 18 October 2019;
5.
All
parties are granted leave to file supplementary papers by 29 October
2019;
6.
Pending
finalisation of this application first applicant is to make a minimum
monthly payment to respondent (Eskom) in the sum of
R30milion (thirty
million rand) per month by no later than the 15
th
of each month commencing on 15 October 2019.
7.
Cost
are reserved.
BEZUIDENHOUT
J
DATE
OF HEARING
:
3
October 2019
DATE
OF JUDGMENT :
8
October 2019
FOR
THE FIRST APPLICANT :
Mr
J Nxusani SC
Mr D Pillay
Brett Purdon
Attorneys
Applicants
Attorney
Suite 750A
Mansion House
12 Joe Slovo
Street
DURBAN
Tel: 031 –
2014100
Fax: 031 –
2021128
c/o Carlos
Miranda Attorneys
273 Prince
Alfred Street
PIETERMARITZBURG
033 –
5457450
033 –
432877
FOR
THE SECOND APPLICANT:
Mr
A Rall SC
Venns
Attorneys
281
Pietermaritz Street
PIETERMARITZBURG
E-mail:
Hiresen@venns.co.za
Ref: H
Govender
FOR
THE RESPONDENT:
Mr
SM L Shangisa
Ms L Rakgwale
Livingston
Leandry Inc
Applicants
Attorney
c/o Stowell &
Co
295 Pietermaritz Street
PIETERMARITZBURG
Tel: 033 – 8450500
E-mail:
paulf@stowell.co.za
/
zeldas@stowell.co.za
Ref: P L Firman/LIV/0120/zs