About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2018
>>
[2018] ZAGPJHC 599
|

|

Cape Gate (Pty) Ltd and Others v Eskom Holdings SOC Ltd and Others (27317/2018) [2018] ZAGPJHC 599; [2019] 1 All SA 141 (GJ); 2019 (4) SA 14 (GJ) (8 November 2018)

Links to summary

REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
CASE
NO: 27317/2018
In
the matter between
:
Cape
Gate (Pty)
Ltd                                                                                            1
st
Applicant
ACT
(Pty) Ltd t/a CBI-Electric: African
Cables                                                   2
nd
Applicant
Scaw
South Africa (Pty)
Ltd                                                                                3
rd
Applicant
Naledi
Ringrollers, a subsidiary of Naledi Holdings (Pty)
Ltd

4
th
Applicant
Consolidated
Wire Industries (Pty)
Ltd                                                               5
th
Applicant
Glotan
Steel (Pty)
Ltd                                                                                         6
th
Applicant
South
African Role Company (Pty)
Ltd                                                               7
th
Applicant
Emerald
Safari
Resorts                                                                                      8
th
Applicant
and
Eskom
Holdings SOC
Ltd                                                                              1
st
Respondent
Emfuleni
Local
Municipality                                                                           2
nd
Respondent
National
Energy Regulator of South
Africa                                                    3
rd
Respondent
The
Premier, Gauteng Provincial
Government                                              4
th
Respondent
J
U D G M E N T
The
court
:
Introduction
[1]
The 2
nd
respondent local authority (“
Emfuleni”
)
owes the 1
st
respondent (“
Eskom”
) more
than R1billion for electricity consumption charges, and neglects to
pay the Eskom bill for on-going consumption. Eskom now
wishes to
interrupt the supply of bulk electricity to it. The applicants are
manufacturers (the 8
th
applicant a casino operator) in the
municipal area of Emfuleni. Emfuleni reticulates the electricity that
it receives in bulk from
Eskom to consumers such as the applicants.
If Eskom were to interrupt bilk supply to Emfuleni, consumers such as
the applicants
will be forced to shut down.
[2]
The 1
st
applicant therefore initiated interdict
proceedings against Eskom and Emfuleni and, after an intervention by
the 2
nd
to 4
th
applicants, and a consolidation
with a similar  application of the 5
th
to 8
th
applicants, all eight applicants bring an application against the
respondents for both interim and final relief.  The three
sets
of applicants were separately represented.
[3]
The final relief sought, which it is anticipated will only be heard
in due course, is for a review of Eskom’s decision
to interrupt
the supply of electricity to Emfuleni.  Pending that review, the
applicants, who largely make common cause, apply
to interdict Eskom
from implementing interruptions in bulk supply of to Emfuleni. The
National Energy Regulator (“
Nersa”
) was joined as
3
rd
respondent but did not participate in the proceedings.
[4]
The Part A interim relief included, apart from the primary prayer,
three alternative prayers.  The first alternative prayer
was for
an order directing Eskom, pending the review, to supply electricity
on an uninterrupted basis to Emfuleni “
on the basis that the
applicant(s) will make direct payment to the 1
st
respondent for the supply of electricity to it
”.
[5]
The second alternative prayer was to order Emfuleni and/or the 4
th
respondent (“
the Premier
”) immediately to pay all
outstanding amounts due to Eskom for the supply of electricity to
Emfuleni in order to ensure that
an interrupted supply of electricity
is provided to the 2
nd
respondent from 6 August 2018.
[6]
In the third alternative prayer, the applicants asked for an order
that Eskom, Emfuleni, and/or the Premier are ordered to agree,
within
three days, a payment plan in respect of Emfuleni’s
indebtedness to Eskom so as to ensure that an uninterrupted supply
of
electricity is provided to Emfuleni. The 5
th
to 8
th
applicants did not join in asking for the alternative relief.
[7]
The applicants all, when they moved the application, sought only the
primary interim interdict and not the alternatives to which
we have
referred.  However, in the course of exchanges with the court
while the applicants were replying, on the second day
of the hearing,
and in the context of debating whether relief under section 172(1)(b)
of the Constitution was competent and appropriate,
the issue of
direct payment relief again surfaced.
[8]
Section
172(1)(b) of the Constitution empowers a court “
when
deciding a constitutional matter within its power
”,
to “
make
any order that is just and equitable
”.
The pertinence of section 172 of the Constitution in the debate
before the court arose because, although the applicants
initially
moved the court for the interim interdict on the well-trodden
Setlogelo
[1]
basis (a
prima
facie
right although open to some doubt, etc), it appeared that the
ever-prevalent underlay of the case, as the affidavits already
presaged,
was a dispute between organs of state within the context of
sections 40 and 41 of the Constitution.
[9]
Since the parties had not had an opportunity fully to develop their
submissions concerning relief, the court afforded the parties
a
period after it had adjourned for the submission of further written
argument on this issue.
The
essential facts
[10]
As can be
inferred from these remarks, the case concerns commercial enterprises
who dutifully pay their local authority
for the supply of
electricity by the latter to the former, but the local authority
persistently defaults in paying the electricity
generator
[2]
(Eskom) for the bulk supply of electricity.  Eskom, faced with a
spiralling debt (at the time of the hearing, upward of R1
billion),
and having unsuccessfully sought to coax Emfuleni to pay its bill,
resolved to terminate the bulk supply of electricity
to it. The
immediate result, that of threatening the very existence of the
commercial viability of the applicants, is no doubt
disastrous, but
that is a consequence which, says Eskom, is a function not of Eskom’s
lawful action, but of Emfuleni’s
unlawful inaction.
[11]
The milestones leading up to the matter before the court are these.
By September 2016, Emfuleni was in arrears with payment
owed to Eskom
in the amount of R205m. Various interactions between these two sought
to address this. In January 2017 they concluded
a payment arrangement
agreement. Emfuleni defaulted. In July 2017 Eskom wrote to the
Premier of Gauteng Province and the Mayor,
requesting intervention.
On 31 July 2017 Eskom published its first notice advising consumers
that it was considering the interruption
of bulk supply of
electricity to Emfuleni, and inviting representations.
[12]
Eskom first proposed specific interruptions to the electricity supply
on 10 August 2017 with effect from 3 October 2017. In
response some
of the present applicants made detailed submissions to Eskom as to
why this should not be done. They explained the
catastrophic way in
which they would affected by the proposed interruptions. No response
was received, but the interruptions did
not materialize. On 15 August
2018 Eskom wrote again to the Premier, updating him on the status of
Emfuleni’s debt, and on
Eskom’s (still) intended
interruption of bulk supply.
[13]
On 6 September 2017 Eskom met with Emfuleni’s chief financial
officer, its municipal manager, the Provincial Treasury,
and an
advisor from National Treasury to discuss a possible payment
arrangement. In the same month it concluded a second payment

arrangement with Emfuleni. This covered both arrears and current
obligations. Emfuleni defaulted, and it failed to respond to Eskom’s

many requests for payment and to discuss the default.
[14]
In January 2018 various discussions took place between Eskom and
Emfuleni, and in February 2018 Eskom requested the Premier
to
intervene. In the meantime Nersa was made fully aware of the
developments. On 6 February 2018 a meeting was arranged with a

ministerial task team, coordinated by National COGTA (Department of
Cooperative Governance and Traditional Affairs), “to
intervene
at national level to assist the process for a realistic affordable
arrangement between municipalities”. Emfuleni
made numerous
promises to Eskom, all to no avail.
[15]
On 20 February 2018 Eskom published a notice of a final decision to
interrupt electricity supply from 8 March 2018. At that
stage
Emfuleni owed Eskom just short of R700 000. The notice explained
that this consequence followed because Emfuleni had
not honoured its
repayment agreement; and that Eskom had considered all
representations, and the negative effect that the interruptions
would
have, particularly on paying customers, but the decision was
inevitable.
[16]
On 2 March 2018 Emfuleni assured the 1
st
applicant that a
further payment arrangement had been agreed and the threatened
interruptions would not occur. On 5 March 2018
the 1
st
applicant again advised Eskom of the disastrous effect of
interruptions; in short, that it would lead to a complete shut-down
of its plant and concomitant job-losses. The 1
st
applicant
suggested a payment arrangement between Eskom and Emfuleni whereby
the 1
st
applicant would pay Eskom direct. Neither Eskom
nor Emfuleni responded substantively to this proposal.
[17]
Various further discussions followed, resulting in an acknowledgment
of debt and repayment plan agreement on 6 March 2018.
That agreement
makes provision for the repayment of the arrear debt of (by then)
R641m in instalments (suggested by Emfuleni) by
16 January 2023, and
for Emfuleni to pay its current bill as and when it fell due for
payment. This agreement was made an order
of court by Prinsloo, J on
6 March 2018. Emfuleni again defaulted. On 5 April 2018 Eskom wrote
to the Mayor complaining about not
only Emfuleni’s default, but
also about its failing even to respond to Eskom’s
correspondence and calls.
[18]
Some five months ago, on 11 June 2018 (unbeknown to the 1
st
applicant) the Gauteng Provincial Government (“GPG”)
published a media statement advising that since November 2015
both
the Provincial Treasury and the (Provincial) COGTA had been working
with Emfuleni and its Mayor to provide institutional support
under
s.154 of the Constitution. It stated that this notwithstanding, the
financial position of Emfuleni was continuing to deteriorate
to the
point where Emfuleni was no longer able to guarantee the provision of
minimum services without the intervention of both
national and
provincial government.
[19]
It said further that the Provincial Executive Council had decided to
institute a comprehensive intervention plan under s.139
of the
Constitution. This entailed amongst others five work streams, one of
which would focus on energy and electricity.
The Premier would
convene monthly meetings with the Mayor, the MECs, and members of the
Mayoral Committee to review the progress
on intervention; and once a
week the Premier and the Mayor would join the teams.
[20]
Next, on 11 and 12 June 2018 Eskom again published a notice inviting
the public to make representations as to why Eskom should
not
interrupt bulk electricity supply to Emfuleni with effect from 20
July 2018.  The anticipated interruptions were: in the
first
week, 06h00 to 09h00 and again 17h00 to 20h30 during the week, and
08h30 to 12h00 and again 15h00 to 19h00 on weekends. Then,
as from 13
August 2018 until Emfuleni’s breach was remedied, the
interruption would be from 06h00 to 20h00 during both weekdays
and
weekends. It stated that if the debt situation did not improve, Eskom
reserved the right entirely to disconnect electricity
on 15 days’
notice.
[21]
The notice stated that on 2 October 2017, Eskom had suspended the
then proposed interruptions as Eskom and Emfuleni had reached
an
agreement regarding the manner in which Emfuleni would settle its
debt to Eskom. The notice explained that Emfuleni had defaulted
on
this agreement and is also defaulting on its current usage
obligations, which amounted to R200m per month, and had also
defaulted
on a court order. It said that Eskom was proceeding to
execute on the court order. It invited the public to make
representations
by 29 June 2018 as to why the disruptions should not
be implemented, and as to alternatives that Eskom should be
considering.
[22]
On 14 June 2018 the Gauteng MEC for Finance, Ms Barbara Creecy, wrote
to Eskom, saying that Emfuleni was experiencing major
service
delivery challenges; that Province had often assisted Emfuleni but to
no avail; and that on 14 June 2018 the Provincial
Executive Council
of Gauteng resolved to intervene in terms of s.139(1)(b)(i) of the
Constitution, and s.139(5) of the Constitution,
read with s.139 of
the Local Government: Municipal Finance Management Act 56 of 2003
(“MFMA”), by placing Emfuleni
under administration. She
requested too that Eskom not interrupt bulk supply pending the
submission of a financial recovery plan,
which would be concluded no
later than 90 days after the date of the letter.
[23]
Eskom’s affidavit says that its attitude in response to this
latter was that “
Eskom was not willing to sit back and wait
for a further ninety days for the recovery plan which the Government
had promised.”
[24]
On 21 June 2018 the 1
st
applicant duly made submissions
and again proposed direct payment. The next day, 22 June 2018, other
applicants requested an urgent
meeting with Eskom and Nersa in order
to find a solution. No response was received. These applicants also
made a submission to
Eskom in which they recorded amongst other
things that during June 2018 the Provincial Minister: COGTA had
placed Emfuleni under
administration in terms of s.139(5) of the
Constitution.  These submissions were followed by another letter
by the 1
st
applicant dated 29 June 2018, again
underscoring the harm that the 1st applicant would experience if
interruptions were to follow.
No substantive response was received.
[25]
On 4 July 2018 Eskom sent a letter to Nersa, the government and Ms
Creecy advising that in all the circumstances Eskom was
left with no
option but to interrupt the electricity supply to Emfuleni. Eskom
proposed that going forward, Nersa permit and Emfuleni
agree that
certain large electricity consumers of Emfuleni – such as the
applicants – pay Eskom direct for the electricity
supply to
them. In turn Eskom undertook that, for so long as those consumers
paid Eskom direct then, pending the finalisation of
the financial
recovery plan, Eskom would not interrupt bulk supply to Emfuleni.
[26]
On 12 July 2018 the respondents replied, declining the invitation to
meet to discuss the Eskom proposal, saying that the recovery
plan
will holistically address all the issues, and that it was anticipated
to be ready by September 2018.
[27]
On 13 July 2018 the 1
st
applicant wrote again to Eskom,
asking it to clarify whether it intended interrupting supply from 20
July 2018. As it happened,
that was the very day on which Eskom
decided that it would implement the interruptions in the bulk supply,
and so it notified the
1
st
applicant that it had decided
to implement its decision. The notice was said to be given in terms
of PAJA; and it explained that
Eskom had proactively approached the
GPG to facilitate a position where electricity would not be
interrupted, but no cooperation
was received from either the GPG or
Nersa. Eskom had therefore decided to implement its decision to
interrupt from 6 August 2018.
[28]
In a subsequent letter of 23 July 2018 to the applicants, Eskom
advised the 1
st
applicant that it had taken a final
decision to proceed with the disruptions from 6 August 2018 since
Emfuleni was in persistent
breach of its payment obligations. It said
that Emfuleni did not have sufficient attachable movables to satisfy
its judgment debt,
and attaching the infrastructure was not on,
because it would cause a collapse of Emfuleni’s business.
[29]
The letter stated that Eskom had actively engaged the GPG since it
had taken control of Emfuleni, and also Nersa, with a temporary

direct payment proposition on behalf of seven companies (until the
administrator of Emfuleni submitted a financial recovery plan
that
was acceptable to Eskom), in exchange for Eskom not interrupting
electricity supply to Emfuleni. Eskom says that this all
was to no
avail. The 1
st
applicant was supportive, in principle, of
the Eskom proposal to GPG and Nersa. Other applicants received a
similar letter from
Eskom.
[30]
On 24 July the 1
st
applicant launched its application, and
on 30 July 2018 the 2
nd
, 3
rd
and 4
th
applicants launched theirs. By order of court dated 31 July 2018
these applicants were granted leave to intervene in the 1
st
applicant’s application. Collis, J ordered too that the parties
were to enrol the application for hearing on 24 August 2018,
and that
Eskom, Emfuleni and the Premier file their answering affidavits by 10
August 2018, the applicants to reply by on 17 August
2018.
[31]
On 13 August 2018 the 5
th
, 6
th
and 7
th
applicants brought their application. In it they too, supported by
the 8
th
applicant (not by then yet a party), proposed that
they make direct payment to Eskom so as to avoid Eskom terminating
the electricity
supply to Emfuleni.
[32]
In the meantime a dispute between the 1
st
applicant and
Emfuleni concerning the tariff at which the 1
st
applicant
should be billed had erupted, resulting in Emfuleni interrupting the
1
st
applicant’s electricity supply. The 1
st
applicant approached the Johannesburg seat of the Gauteng Division
urgently, and on 20 August 2018 Molahlehi, J made a consent
order in
that application, directing Emfuleni forthwith to reconnect
electricity supply to the 1
st
applicant and associated
relief.
[33]
The main application, having been enrolled on 24 August 2018 pursuant
to the order of Collis J, came before Twala J who postponed
the
application sine die, granting the respondents leave to file their
answering affidavits by 31 August 2018, and the applicants
to reply
by 10 September 2018. The learned judge reserved costs. And on 4
September 2018 Mojapelo, DJP granted an order consolidating
the prior
applications into the one currently before this court.
[34]Emfuleni
counter-applied for three prayers:  the first, under section
152(1), read with section 153(1)(a) or (b), and (2)(b)
of the Local
Government: Municipal Finance Management Act No 56 of 2003 (“MFMA”).
This relief is sought against
the 1st, 2nd, 3rd and 4th applicants,
as well as against Eskom, the National Energy Regulator of South
Africa (NERSA), and the
Premier.
[35]Those
sections provide (commencing with section 152(1)), that if a
municipality is unable to meet its financial commitments,
it may
apply to the high court for an order to stay (for a period not
exceeding 90 days) all legal proceedings, including the execution
of
legal process, by persons claiming money from the municipality.
Under section 153(1)(a) there is provision for the same
relief and in
section 153(1)(b), such an order may include an order “to
suspend the municipality’s financial obligations
to creditors,
or any portion of those obligations, until the municipality can meet
those obligations”.
[36]Under
section 153(2)(b) of the MFMA, it is provided that a court may make
such an order for the stay of all legal proceedings
only if the
Provincial Executive will have intervened in terms of section 139 of
the MFMA;  and a financial recovery plan
to restore the
municipality to financial health has been approved for the
municipality; and the financial recovery plan is likely
to fail
without the protection of such a court order.
[37]The
reference to section 139 of the MFMA is to a section which obliges
the Provincial Executive promptly (“must promptly”)
to
request the “municipal financial recovery service” to
make certain enquiries and then to prepare an appropriate
recovery
plan for the municipality which is to be submitted to the MEC for
finance in the province the termination and assessment;
and
ultimately to consult the Mayor of the municipality to obtain its
cooperation in implementing the recovery plan.
[38]The
reference to the “municipal financial recovery service”
is a concept defined in the MFMA; and it is established
in terms of
section 157(1) of the MFMA as an institution within the public
service which forms part of and functions within the
National
Treasury. In short, Emfuleni in its counter-application A, patently
applied to the court to order a stay of the whole
proceedings against
it on the basis that the Provincial Executive has intervened in terms
of section 139, and a financial recovery
plan has been approved, and
the financial recovery plan is likely to fail without the protection
of such a court order.
[39]By
the time this matter was argued no financial recovery plan had been
placed before the court, and so the court was not in
a position to
assess whether the financial recovery plan was likely to fail without
the protection of the court order which Emfuleni
sought. What was
undoubtedly established on the papers, is that the Provincial
Executive had intervened in terms of section 139
of the MFMA but also
in terms of section 139 of the Constitution.
The
applicants’ case
[40]
The 1
st
applicant opened its case by relying on National Treasury v
Opposition to Urban Tolling Alliance
[3]
(“Outa”) for the proposition that the Constitutional
Court refined the trite test laid down in Setlogelo for interim

interdicts by stressing that those principles must still be applied,
but cognisant of the normative scheme and democratic principles
that
underpin the Constitution.  Counsel stressed that the first
requirement, that of a
prima
facie
right although open to some doubt is not satisfied by simply pointing
to the right to approach a court to review administrative
action; in
addition, the right must be such that if the interdict is not issued,
irreparable harm would ensue.
[41]
Counsel submitted that the 1
st
applicant plainly crossed
that hurdle since the harm to it, if Eskom were permitted to
implement its decision to interrupt the
supply of electricity to
Emfuleni, was cataclysmic.  To Eskom, so submitted counsel, the
harm was financial (if it were interdicted
against implementing its
decision) and not as immediate as with the first applicant.
[42]
Counsel stressed that the 1
st
applicant could not afford
even a lesser form of electricity interruption such as what is
colloquially known as “
load-shedding”
. Counsel
stressed that the 1
st
applicant did not know where the
Premier stood in this all; and the only relief which the 1
st
applicant sought against the Premier, was costs.
[43]
The 1
st
applicant submitted in relation to the
counter-application by Emfuleni:  the 1
st
applicant
dealt only with the third prayer, which was for an order against the
1
st
applicant to pay it the amount of R11 million which
had been billed to it by Emfuleni.  Underlying this prayer was a
factual
dispute between the parties and the 1
st
applicant’s response was accordingly that prayer C against it
should be dismissed for foreseeable factual disputes with costs;
or
at least struck out for lack of urgency.
[44]
As regards prayer B this did not affect anyone other than Eskom, and
was for an order directing Eskom first to attend to the
requirement
of alternative dispute resolution mechanism in terms of the IGR Act.
[45]
The 1
st
applicant, as regards costs, specifically asked
for the costs that were reserved on 20 August 2018. That related to
an urgent application
which the 1
st
applicant launched
when Emfuleni, at a meeting with Cape Gate at 11h00 on that date,
told Cape Gate, the 1
st
applicant, that it was proceeding
immediately to cut off the electrical supply to the 1
st
applicant since the 1
st
applicant had not paid it, there
and then, the R11 million that was owing.
[46]
The 1
st
applicant launched the urgent application,
prepared the papers, and served it on Emfuleni at 17h20 on 20 August
2018.  At
18h48 on that day Emfuleni gave notice that it
intended opposing that application, but when at approximately 19h20
the 1
st
applicant’s attorney of record was driving
to court on that day, he received a call from Emfuleni’s
attorney of record,
who advised him that the local authority had
agreed to restore the electrical supply to the 1
st
applicant.  The two legal teams met at court and Molahlehi, J by
agreement made a court order which included an order that
the costs
of that day were to be determined in the present matter.
[47]
The first applicant asks not only for those costs but also that they
be awarded on the punitive scale on the basis that the
cut-off of the
electricity by Emfuleni was malicious and intentional, when it knew
that there was a
bona fide
dispute between the 1
st
applicant and Emfuleni as to whether or not Emfuleni was in fact owed
the R11 million by the 1
st
applicant.
[48]
As to costs of the application for the interim interdict, the 1
st
applicant asked that those costs be in the cause of the application
for final relief in Part B.
[49]
For the 2
nd
to 4
th
applicants, counsel opened their case by pointing to the fact that
Emfuleni itself sought an order for an interim interdict in
terms of
prayer 2 of the 1
st
applicant’s application; and that in fact, the Premier
(although he did not formally counter-apply) also asked that Eskom’s

version be rejected and that it be made liable to pay the costs of
the application on a punitive scale. Counsel submitted that
Eskom’s
persistence in seeking to interrupt the supply of electricity in bulk
to Emfuleni was offensive on various bases.
[50]
First,
since organs of state have a duty to raise responsible arguments,
Eskom ought not to have persisted in its attitude in the
face of the
unreported judgment of this court in Resilient Properties (Pty) Ltd v
Eskom Holding SOC Ltd and Others.
[4]
Second, counsel submitted that Eskom itself concedes that the
applicants will suffer cataclysmic harm. Third, Eskom has alternative

remedies, counsel submitted.
[51]
This
included the court order of 6 March 2018 in terms of which Eskom
obtained judgment against Emfuleni. Eskom did not fully execute
that
judgment on the pretext that if Eskom were to attach and sell in
execution infrastructure belonging to Emfuleni, this would
cause a
total collapse of the business of Emfuleni (whilst not sharing the
same concern for the businesses of the applicants).
Further,
counsel submitted that Eskom had available to it the mechanism of
contempt of court proceedings for the failure of Emfuleni
to comply
with the court order of 6 March 2018 and here counsel relied on Pheko
and Others v Ekurhuleni Metropolitan Municipality
(No 2).
[5]
[52]
There the Constitutional Court stressed that the Constitution enjoins
organs of state like a municipality to adhere and give
effect to its
principles and provisions, as they must to court orders issued under
the Constitution.  Counsel submitted that
Eskom was clearly
embarking upon a debt collection measure as was evidenced by its
submission that it had investigated the possibility
of taking
execution steps against the assets belonging to Emfuleni.  But
it was submitted that the current decision to implement
the
interruption of bulk electricity supply to Emfuleni clearly cannot
achieve the debt collection purpose; therefore the decision
is not
rationally connected to any power that Eskom may have to discontinue
the supply of electricity for non-payment.
[53]
Finally, counsel submitted that Province has plainly embarked upon a
process to resolve the issue of Emfuleni’s non-payment
of its
liability to Eskom; and Eskom should not have turned its face against
this process but should have honoured it.
[54]
Counsel for the 2
nd
to 4
th
applicants submitted
further that Eskom’s response to the endeavour upon which
Province had embarked to address Emfuleni’s
financial
challenges, was to ignore it.  This conduct, it was submitted,
was constitutionally offensive for three reasons.
First, it
failed to meet the test of employing the least invasive means to
obtain its object.
[55]
Second, the
Premier’s evidence in these proceedings and his conduct in the
correspondence preceding the proceedings, ought
to be deferred to by
the court under s.41(1)(h) of the Constitution;  that paragraph
exhorts (“
must
”)
all spheres of government and all organs of state within each sphere
to cooperate with one another in mutual trust and
good faith by,
amongst others, avoiding legal proceedings against one another
s.41(1)(h)(vi).  Counsel referred in this regard
to Minister of
Police and Others v Premier of the Western Cape and Others.
[6]
[56]
In that matter the Constitutional Court underscored (at [58] ff) that
the court has a discretion to refuse to hear a dispute
if it is not
satisfied that the parties have made every reasonable effort to
settle it.  Parties are duty bound to make a
meaningful effort
to comply with the requirements of co-operative government and should
not pay mere lip-service to the obligation;
it involves much more
than an effort to settle a pending court case. The court concluded at
paragraph [64]:
“
Courts must be
astute to hold organs of state to account for the steps they have
actually taken to honour their co-operative governance
obligations
well before resorting to litigation.
”
[57]
And the third respect in which Eskom’s response (i.e. the
decision to interrupt the supply) ignored the process embarked
upon
by Province, was that Eskom’s conduct did not meet the test of
“
reasonable conduct of an organ of state
”; it
amounted to “
collective punishment
”, aka
“
bullying
”.
[58]
Counsel proposed that this court should, in the circumstances, grant
the interdict sought in prayer 2, pending the resolution
of Part B;
but should also expressly refer the dispute back to the organs of
state involved as envisaged in section 41(4) of the
Constitution, and
require the organs of state to report back to the court within 60
days of the progress that will have been made.
A proposed handwritten
draft order to this effect was handed up.
[59]
Counsel asked for the costs of Part A, and also that the court
imposed timeframes for the hearing of the matter under Part
B.
[60]
Counsel for the 5
th
to 8
th
applicants generally
made common cause with the other applicants, and asked for an order
in terms of prayer 2 (the interim interdict);
and that costs should
be in the cause.
Eskom’s
case
[61]
Eskom opened by stressing that it had no constitutional obligation to
supply electricity, not to Emfuleni, nor to the applicants
as
end-users.  Its licence conditions in fact precluded it from
supplying electricity direct to end-consumers.
[62]
It followed that the applicants have not established a
prima facie
right at all.  Relying on Outa, paragraphs [41], [48], [50], and
[71] counsel submitted that the well-known requirements for
the grant
of an interim interdict set out in Setlogelo (subsequently refined)
were qualified by the Constitutional Court. Counsel
stressed that, as
the Constitutional Court held at paragraph [50], the
prima facie
right required to be established by an applicant for an interim
interdict was not merely the right to approach a court in order
to
review an administrative decision; what was required was in fact a
right which, if not protected by an interim interdict, would
result
in irreparable harm ensuing for the applicant.
[63]
Since an interdict is meant to prevent future conduct and not
decisions already made, quite apart from the right to review
and to
set aside impugned decisions, an applicant is required to demonstrate
a
prima facie
right that is threatened by an impending or
imminent irreparable harm.
[64]
Counsel stressed particularly paragraph [71] of
Outa
.
There the Constitutional Court held that before granting interdictory
relief pending a review court, an interdict court
must – in the
absence of
mala fides
, fraud or corruption – examine
carefully whether its order will trespass upon the terrain of another
arm of government in
a manner inconsistent with the doctrine of
separation of powers.
[65]
The court held:
“
That would
ordinarily be so, if, as in the present case, a state functionary is
restrained from exercising statutory or constitutionally
authorised
power. In that event, a court should caution itself not to stall the
exercise unless a compelling case has been made
out for a temporary
interdict. Even so, it should be done only in the clearest of cases.
”
Counsel
submitted that this
dictum
applied to Eskom:  Eskom as an
organ of state is sought to be restrained by the applicants from
exercising a statutory authorised
power to interrupt the supply of
electricity to Emfuleni under section 21(5) of the Electricity
Regulation Act 4 of 2006; granting
the interdict would therefore be
trespassing upon the wholly grail of separation of powers.
[66]
Counsel
stressed, in the context of the applicants’ submissions that as
an organ of state Eskom was somehow integrated with
National,
Provincial, and Municipal Government, that each part of Government
operates independently (section 40(1) of the Constitution;
compare
also the minority judgment of Froneman, J in Rademan
[7]
at paragraphs [49], [50], [51] and [52]). Counsel submitted that it
is Emfuleni as local authority, and not Eskom, that has the

constitutional obligation to supply electricity under section
152(1)(b) of the Constitution.
[67]
Counsel responded to the attack on the rationality of Eskom’s
decision by submitting that Eskom’s reason for wishing
to
terminate the supply of electricity to Emfuleni was entirely
rational:  its object was to stop Emfuleni’s debt from

spiralling completely out of control.  Eskom’s power was
granted for that purpose, as is evident from the ERA, Eskom’s

licence, Eskom’s supply agreement with Emfuleni, and indeed the
court order of 6 May 2018.  Counsel eschewed the notion
that
Eskom’s real purpose was merely to collect the debt.
[68]
Counsel submitted that Eskom’s decision was not only rational
but in fact reasonable.  He submitted that in any
commercial
context it was reasonable to stop supplying electricity if the
supplier would not be paid for it.
[69]
A central tenet of counsel’s submission was that there was no
“dispute” as envisaged in section 41 of the
Constitution.
With reference to judgments that interpreted the notion of a
“dispute” for purposes of a reference to
arbitration,
counsel submitted that a debtor who admits its indebtedness to its
creditor, but simply cannot pay and is seeking
extensions of time, is
not “disputing” the indebtedness.
[70]
Counsel bemoaned the absence of NERSA in the litigation; it was
NERSA’s statutory obligation to have taken steps against

Emfuleni.  Counsel submitted that Eskom did not have alternative
means at its disposal to achieve its legitimate objective
of
preventing the debt spiralling out of control (or, as it was also put
by counsel, to prevent Eskom supplying free electricity).
Counsel
submitted that contempt of court proceedings were not available under
the already existing court order because the order
was in fact an
order
ad pecuniam solvendam
; and in any event expressly gave
Eskom the right to terminate supply if payment in terms of the court
order was not forthcoming.
Emfuleni’s
case
[71]
Emfuleni opposed only prayers 3 – 5, the alterative prayers, in
the notice of motion. Counsel pointed out that Eskom
was not itself
claiming relief against Emfuleni, and submitted that since the
applicants are not asking for the alternative relief
at this stage,
Emfuleni has succeeded against the applicants.
[72]
Counsel submitted that in fact Emfuleni was siding with the
applicants against Eskom, in that on the date that Eskom took the

decision to interrupt bulk supply, 90 days since the date of the
media statement on 11 June 2018 concerning Province’s
intervention
in Emfuleni, had not yet expired. The thrust of the
submission was that Eskom resolved to press ahead with interruption
of bulk
supply despite the fact that s.139(5) of the Constitution,
and s.139 of the MFMA, had been invoked.
[73]
Counsel submitted that Emfuleni was entitled to relief claimed in its
counter-application prayer A, because it had come to
court to say
that Eskom was entitled by interrupting bulk supply, to interfere
with the process that had been set in motion in
terms of the
Constitution and the MFMA. As to counter-application prayer B, the
submission was that since the Constitution and
the MFMA had been
invoked, Eskom was obliged to act in terms of s.40 of the IGR Act.
The IGR Act is national legislation as envisaged
in terms of s.41(2)
of the Constitution.
[74]
S.40 of the IGR Act obliges all organs of state to make every
reasonable effort to settle intergovernmental disputes without

resorting to judicial proceedings. S.44(1) of the MFMA likewise
obliges organs of state to make every reasonable effort to avoid

intergovernmental disputes, and the parties must “
as
promptly as possible take all reasonable steps that may be necessary
to resolve the matter out of court.”
Counsel for Emfuleni
thus submitted that it was also entitled to that relief.
[75]
As to counter-application prayer C, counsel submitted that it was
clear that the 1
st
applicant considered that the relief
there sought was not urgent and, in any event, constrained by factual
disputes. Emfuleni had
no objection to that prayer being referred for
oral evidence, or being postponed; but the 1
st
applicant
was then liable for Emfuleni’s costs.
[76]
Counsel thus asked for dismissal of prayers 3 – 5, and for
counter-application prayers A and B to be granted with costs,

including the costs of three counsel. In addition, counsel asked for
the costs reserved by Twala, J on 24 August 2018.
The
Premier’s case
[77]
Counsel for the Premier opened by referring to section 139 of the
Constitution, and sections 135, 139, and 141(2) of the MFMA.
He
stressed that the issue concerning Emfuleni’s non-payment of
the debt owed to Eskom was being managed in terms of these
sections.
He referred particularly to section 157 of the MFMA to underscore the
point that the municipal financial recovery service
forms part of and
functions within the National Treasury;  and that clearly
National Government was already involved in the
process.
[78]
He submitted that the financial recovery plan has in fact been
prepared and was in the process of being discussed with relevant

stakeholders, ultimately to be submitted to amongst others the MEC
for Finance in the Province for approval. He submitted that
Eskom
knew that this was the path along which the issue concerning Emfuleni
was following and it was therefore inappropriate of
Eskom to have
embarked upon its decision to interrupt the supply of electricity.
[79]
He submitted that, so far as pertains the 1
st
applicant,
it was unnecessary for it to have joined the Premier since no case at
all is made out in their founding papers against
the Premier.
He submitted that the high watermark of the 1
st
applicant’s case was the argument that the Premier did not
properly and fully appraise the public of the steps taken to address

Emfuleni’s debt.  On his submission that does not aspire
to a cause of action, and even if the Premier ought to have
been
joined for his interest, there was no basis upon which the 1
st
applicant could have asked for costs against the Premier.  He
accordingly asked that the application against the Premier be

dismissed, and that the costs of the Premier be borne by the 1
st
applicant and Eskom jointly and severally.
Replying
submissions
Applicants’
reply
[80]
The 1
st
applicant submitted that Eskom’s attack on
1
st
applicant’s lack of a
prima facie
right
was unsound.  All the 1
st
applicant need show was a
right which, if it was not protected by an interdict, would result in
harm flowing to the 1
st
applicant. As to Eskom’s
asserted object to be attained by the interruption of the
electricity, he disputed that this was
to arrest the spiralling debt.
He submitted that Eskom took the decision to interrupt electricity
supply solely to attempt to recover
long-outstanding historical debt,
and the inability to resolve the dispute in that regard.
[81]
He submitted that all the alternative steps had the potential of
resolving the dispute.  Yet Eskom did not take the judgment

against Emfuleni in its favour any further.  In any event, it
appears also that there are other steps that are available under

section 139 of the Constitution and section 139 of the MFMA that can
be taken to resolve the dispute concerning the outstanding
debt, but
that did not involve the drastic decision of interrupting electricity
supply.  He stressed that the consequences
of the failure of an
organ of state and a sphere of government to resolve a dispute should
not be visited upon innocent citizenry.
[82]
Concerning Emfuleni, he submitted that the local authority was
integrally involved in the litigation and could not avoid
responsibility
for its failure to pay its debt to Eskom by joining
the applicants in seeking relief against Eskom.  He submitted
that Emfuleni
was the direct cause of the threatened infringement of
the applicants’ constitutional rights and that therefore, if a
costs
order were made, at this stage, it should be made against
Emfuleni.
[83]
Concerning the costs reserved on 24 August 2018, he referred to the
court order and particularly paragraph 5, in terms of which
the court
indulged the parties and directed that the matter was to be enrolled
for hearing on 24 August 2018. It was on that basis
that all the
parties attended court on that date. It was his submission that the
costs that were reserved on 31 July 2018 and those
that were reserved
on 24 August 2018 ought to be directed to be costs in the cause.
[84]
However, the 1
st
applicant did seek costs on a punitive
scale in respect of the appearance on 20 August 2018 when costs were
reserved.  That
concerned case number 28716/2018 and the
appearance which was brought about by the cutting of the 1
st
applicant’s electricity by Emfuleni.  Concerning the
counterclaim prayer C by Emfuleni against the 1
st
applicant counsel submitted that if the claim is not struck off the
roll for lack of urgency, then it is to be postponed in any
event for
factual disputes; the 1
st
applicant was entitled to a
costs order against Emfuleni brought about by such a postponement, on
the basis that counterclaim prayer
C should never have been brought
in the first place.
[85]
He
submitted that a counterclaim had to be judged for its own urgency,
and could not rely on the urgency of the claim in convention,
on the
strength of Luster Products v Magic Styles.
[8]
Concerning the Premier, counsel submitted that the court should not
take cognisance of what counsel stated from the Bar concerning
the
state of the recovery plan, as it was not on the affidavits.  He
submitted that there was no basis upon which to conclude
that the
recovery plan would be accepted and, indeed, no recovery plan was
placed before the court.
[86]
Counsel made common cause with counsel for the 2
nd
to 4
th
applicants in asking that the court’s oversight ought to be
invoked on the back of an order which the court should make under

section 41(4) of the Constitution, by referring the matter back to
the organs of state involved. He submitted that the Premier
was
obliged to have been joined, and if a costs order is made at this
stage, it should be against all of the respondents including
the
Premier, particularly since the Premier’s own role remains
unclear in the process under section 139 of the Constitution
that had
been embarked upon.
[87]
Concerning whether or not any costs order should be made on the
application at this time, he gave notice that the 1
st
applicant had changed its stance; it was no longer that costs should
be in the cause, but rather that the costs should be paid
by the 1
st
,
2
nd
and 4
th
respondents jointly and severally
(including the costs of two counsel), on the basis that the court
hearing the Part B application
would not be in a better position to
consider the question of costs than this court.  He submitted
too that in fact Part B
of the application may never be reached.
[88]
For the 2
nd
to 4
th
applicants, counsel
contested Eskom’s submission that the applicants had not shown
a
prima facie
right.  He typified Eskom’s argument
as being:  we have a power to cut;  we are permitted to cut
in terms
of the licence for non-compliance; our power to cut prevails
despite the catastrophic consequences.
[89]
Counsel submitted that this approach offended the conduit principle
referred to in Joseph; it offends the constraints on the
exercise of
a public power in terms of which all decisions must be reasonable and
also rational; Eskom is not permitted to delink
the consequences,
catastrophic as they are, from its asserted objective in terminating
electricity supply, which is not to supply
electricity free of
charge.
[90]
Counsel
submitted that the applicants’ case is essentially that they
are asking for continued performance by Eskom of what
they had been
receiving before.  Counsel submitted that the applicants’
right is to prevent a retrogressive impact by
Eskom’s decision
on socio-economic rights, including the right to electricity supply,
which the applicants had in fact been
enjoying.  Counsel relied
on Mkontwana v Nelson Mandela Metropolitan Municipality and Another;
Bissett and Others v Buffalo
City Municipality and Others; Transfer
Rights Action Campaign and Others v MEC, Local Government and
Housing, Gauteng, and Others
(KwaZulu-Natal Law Society and Msunduzi
Municipality and Amici Curiae)
[9]
in this regard.
[91]
Counsel submitted that Joseph made it clear that there was in fact an
obligation to supply electricity resting upon not the
contractual
party in that case (the local authority), but in fact on City Power
which was a different entity.  By parity of
reasoning, so went
the argument, Eskom owes the applicants a duty not to invade their
rights by adopting retrogressive measures.
Concerning Eskom’s
reliance on Outa, counsel stressed that Outa specifically concluded
that it was not necessary to fashion
a new test for an interim
interdict.  With reference to paragraph [47] of Outa, counsel
submitted that in that matter there
was no claim of an impact on
rights that the applicants had been enjoying, as is the case here.
[92]
As to the Eskom submission that it had no alternative but to cut the
electricity supply, counsel submitted that on the facts
that
contention relied on saving the national business of Eskom; however,
saving the national business, submitted counsel, had
nothing to do
with the particulars of this case.  This is because the
potential loss if Eskom were to be interdicted temporarily
is small
in the context of the national perspective. But, submitted counsel,
no matter how desperate Eskom’s position was,
there is no basis
upon which innocent parties had to suffer catastrophic consequences.
Counsel referred to page 596 where
MEC Creecy said expressly that
there was a recovery plan in place.
[93]
Counsel submitted that courts are not permitted to resort to a
jurisprudence of exasperation, because in fact Eskom had not
properly
considered other options. Here counsel referred to the letter of MEC
Creecy. Counsel referred also to the 6 March 2018
order at page 586
and in particular paragraph 1.3, in terms of which no rights of Eskom
were being waived. In terms of paragraph
2.1 of that order, Emfuleni
had to pay for the electricity consumption going forward.
[94]
Counsel
submitted that s.40 of the Constitution and the failure of Eskom to
have discharged its obligations under Chapter 3 opened
the door to
the court making an order under s.172(1)(b) of the Constitution,
without having to decide whether or not the applicants
had
independently of this Chapter, established a
prima
facie
right.  Counsel referred in this regard to paragraph 97 of Head
of Department: Mpumalanga Department of Education and Another
v
Hoërskool Ermelo and Another.
[10]
[95]
The question of making a direct payment order to interdict not to
interrupt electricity supply was raised with counsel.
After
some debate the court intimated and ultimately ordered the parties to
submit further written submissions on the power and
practicality,
under s.172 of the Constitution, of making a direct payment order.
[96]
For the 5
th
to 8
th
applicants, counsel was not
supportive of a direct payment order and submitted that the most
practical way would be to order Emfuleni
to pay direct to Eskom that
which the applicants pay to Emfuleni.  Otherwise, submitted
counsel, the only alternative would
be to direct the applicants to
pay Eskom direct in respect of the full amount raised by Emfuleni on
the applicants. Counsel submitted
that ultimately the 5
th
to 8
th
applicants asked for a temporary interdict against
Eskom, and for costs to be in the cause. Alternatively, counsel
submitted that
if a different costs order were made in favour of the
other applicants, the 5
th
to 8
th
applicants
asked that the same order to be made in their favour.
Eskom’s
answer to Emfuleni’s counter-application
[97]
Counsel submitted that ss.152 and 153 of the MFMA, and s.41(3) of the
Constitution, all of them relating to inter-governmental
disputes,
have no application in this matter because, as counsel submitted in
main argument, there was no “dispute”
as there envisaged.
Counsel referred to Emfuleni’s replying affidavit, pointing out
that it has never been the case of Emfuleni
that there was such a
dispute.  Indeed, Eskom has exhausted all of the remedies
available to it against Emfuleni;  and
Eskom has approached
Nersa as well as government. This was to no avail.
[98]
Counsel submitted that the actions under the IGR Act envisage a
different path to that which applies when there is governmental

interference in terms of s.139 of the MFMA.  In the case of the
IGR Act, the declaration of a dispute is a prerequisite. Counsel

submitted that Emfuleni plainly did not employ ss.151, 152 and 153 of
the MFMA. Ultimately, submitted counsel, Emfuleni’s

counter-application cannot succeed and must be refused with costs.
[99]
Concerning the costs reserved on 24 August 2018, counsel submitted
that the matter had not been improperly enrolled.
It had been
postponed by agreement and the costs there reserved should be costs
in the cause of the Part A relief. And, following
upon that, counsel
submitted that the costs award in respect of Part A should be
deferred for determination under Part B.
Emfuleni’s
reply
[100]
Counsel submitted with reference to page 742 that the Premier’s
affidavit clearly illustrates the existence of a dispute.
He
submitted that the IGR Act applies and clearly Eskom has a dispute
with another organ of state. With reference to direct payment
relief,
counsel submitted that the applicants are now ambushing Emfuleni by
asking for this, and that this was unfair.  Counsel
submitted
that, as regards the costs that had been reserved on 24 August 2018,
paragraphs 6 and 7 of the order is a prerequisite
for the application
of paragraph 5 of the order relating to enrolment.  There was no
point in enrolling the matter if the
affidavits referred to in
paragraphs 6 and 7 had not been first been provided.
[101]
Counsel submitted that the Deputy Judge President was approached and
he then replied on 24 August 2018 and offered a meeting
on 31 August
2018.  Thereafter the 5
th
to 8
th
applicants filed their papers and needed to be joined.
Consolidation was then raised.  That being so, there was no need

at all for the 1
st
applicant to have enrolled the matter
for the 24
th
August 2018.  The enrolment could only
have served a purpose if the pleadings (in the form of the
affidavits) had been filed.
That being so, Emfuleni wanted the costs
of the hearing on 24 August 2018 since they were forced to come to
court.
[102]
Concerning counterclaim prayer B, counsel submitted that Eskom’s
argument that Emfuleni had not made out a case for
relief under ss.40
and 41 of the Constitution, and that in fact it never refers to s.139
of the Constitution (“
provincial intervention in local
government
”), was wrong. Counsel referred to page 618
paragraphs 11 and 12 and stressed that the court had an affidavit
from the Premier
who says that he was acting in terms of s.139.
Ms Creecy also says in her letter that that section was being
invoked.
They, that is the Premier and Ms Creecy, were
communicating to Eskom that Eskom had to act in accordance with the
inter-governmental
obligations resting upon it.
[103]
Counsel referred to page 648 and submitted that the Minister of
Finance confirmed that he had received the recovery plan,
and was
expecting cooperation from Eskom.  Counsel submitted that the
crisis had clearly been registered at National Governmental
level,
and that the court could not ignore what is at pages 618 paragraph 11
to page 619 paragraph 14.
Counsel
submitted that accordingly a process under s.139 of the Constitution
is in place and Eskom was at all times aware of it.
Counsel submitted
that the true picture was that Eskom had deliberately decided to
terminate electricity supply in the face of
the inter-governmental
actions that were being taken at the time.
[104]
Concerning direct payment relief, counsel submitted that the
applicants had either abandoned such relief or conceded that
it was
inappropriate. He submitted that the constitutional process that had
been invoked was to produce a rescue plan.  This
involved the
finances of Emfuleni, including its revenue. This includes revenue
from the applicants.  For a court to cut off
that revenue
stream, would have the court interfere with the process that was
already underway to address the crisis; it would
also interfere with
the separation of powers. Counsel submitted that any direct payment
relief would involve an accounting problem
for Emfuleni.
The
Premier’s reply
[105]
Counsel for
the Premier relied on the process already in place between the organs
of state. He denied that a dispute was not in
place and referred in
this regard to the matter of Durban City Council v Minister of
Labour,
[11]
and the definition
of “dispute” in that matter.
Discussion:
introduction
[106]
A convenient place to start the discussion is with what these
applicants ask of this court. They ask for an interim interdict

pending a final administrative law review. An interim interdict is
not a right; it is a remedy. And although every right may not
have a
remedy, certainly a prerequisite for an entitlement to a remedy is a
right. This is relevant particularly here where it
would appear from
the papers and the submissions that organs of state might not have
complied with their co-operative government
obligations under the
Constitution.
[107]
If that is so, then the question arises whether this court should
engage at all on the parties’ respective rights and
duties, or
whether it should not under s.41(4) of the Constitution decline to
deal with the matter and instead refer the matter
back to the organs
of state involved.  If the court finds that there is a “dispute”
as envisaged there in this
case, and if the court were to refer the
dispute back to the organs of state, that would necessarily imply
that the court would
in effect have declined even to consider the
application for interim – not final – relief.
[108]
And it would also imply leaving intact the contentious conditions
that have pertained in the five months or so leading up
to this
application, including the intended interruption of bulk electricity
supply to Emfuleni, resulting in the shut-down of
the applicants’
businesses without having considered whether they have made out a
case for a temporary restraint. That takes
one back to what a court
should do if it were to resolve to refer a dispute back to organs of
state under s.41(4) of the Constitution.
[109]
One area in which an order under that section might appropriately
feature in this case, is in the realm of an appropriate
event to
which an interim order, if it is granted, should be pended: either an
appropriate event in the s.139 of MFMA process,
or a final review
under PAJA. Put differently, an order under s.41(4) fits
appropriately in the relief section of this case, still
leaving the
applicants with the burden of making out a case for interim relief.
[110]
But there is another, independent reason, why the applicants should
be required independently to make out a case, even if
an order under
s.41(4) issues. The Constitutional Court stressed in Outa that given
the separation of powers that is the leitmotif
of the Constitution,
even interim interdicts should not be granted against state organs
unless a strong case for them is made out.
This would suggest that
even in those cases where a court is asked by an applicant to invoke
its powers under s.41(4) of the Constitution,
which could arguably
suggest that the court might not need to engage upon the merits of
the applicant’s case at all, then
still a court will not grant
restraining relief against an organ of state without the applicant
first having established the four
Setlogelo requirements.
[111]
But compliance with the s.41 obligations may be also pertinent in
considering the rationality and reasonableness of Eskom’s

interruption decision for the purposes of PAJA, a matter further
developed below. It is thus inevitable to examine whether the

applicants have made out a case for an interim interdict.
The
applicant’s prima facie rights, generally
[112]
A prima
facie right, although open to some doubt, is the first
requirement.
[12]
What are the
applicants’ asserted prima facie rights? The 1
st
applicant argued for a prima facie right to a successful review under
PAJA  (and under the principle of legality) of Eskom’s

decision, principally on the basis that there were less drastic
alternative measures that Eskom had failed to consider. The case
made
out in its founding papers is not explicitly based on PAJA. There its
case really falls into two streams: a case built on
an asserted right
against both Eskom and Emfuleni to be supplied with electricity
timeously and consistently; and a right that
the infighting between
Eskom and Emfuleni should not prejudice it. In neither case is there
a reference to a specific statute.
[113]
It is
arguable that reliance on a right to just administrative action under
s.33 of the Constitution, as embodied in PAJA, has as
its
precondition the existence of another right, given the definition of
“administrative action”: a decision which
“adversely
affects the rights of any person”. Only if such a decision will
have been taken, will administrative action
have occurred, and only
then “any person” acquires under s.6 of PAJA the right to
review such administrative action.
In other words, first a right that
has been adversely affected by the decision, and then (another) right
comes into existence –
to review the decision.
[13]
[114]
The obverse
proposition is that the right to just administrative action under
PAJA avails whenever the right to just administrative
action has been
“adversely affected”, despite the apparent circuity.
[14]
If the applicants do have rights, other than their PAJA just
administrative action rights, that will be adversely affected by the

interruption decision, this conceptual difference will not be
relevant here. Then - provided that such other right has been
adversely
affected by the decision to interrupt - the applicants have
PAJA rights to rationality and reasonableness reviews.
[115]
The 2
nd
to 4
th
applicants also argued for PAJA
rights, but they added three others: the right to electricity; a
collection of constitutional rights
(to dignity, property, freedom of
trade and occupation, administrative fairness and the rule of law);
and the right to insist that
Eskom complies with its obligations of
cooperative government. In their founding affidavit their case was
based only on PAJA, and
on a collection of other fundamental
constitutional rights, coupled with the unarticulated premise of an
entitlement directly to
rely on these, despite the principle of
subsidiarity. In particular, there was no reliance there, either
explicitly or by necessary
implication, on a right directly to
enforce s.41(4) of the Constitution as against Eskom and Emfuleni.
[116]
And the 5
th
to 8
th
applicants argued for a
right to electricity, and for the s.22 and 25 constitutional rights.
In their pleaded case the 5
th
to 7
th
applicants
rely on these asserted rights, but also on “the principle of
legality and the provisions of PAJA”. They
say that Eskom’s
decision is “unfair, unreasonable and irrational.” These
applicants, although not identifying
s.41 of the Constitution, also
say that their rights are being trampled on by Emfuleni, Nersa and
the Premier. The 8
th
applicant, whose case started off
separately, followed the template laid down by the 5
th
to
7
th
applicants.
[117]
The aggregation of all these asserted rights makes for a broad sweep
and in an application where interim relief only is sought,
it seems
preferable – if the case can be decided on the basis of only
one of them - not to engage on an examination of all
the others.
After all, the cases have been consolidated and the factual substrate
of all the applicants’ cases is the same;
if one succeeds in
showing a prima facie right and is granted an interim interdict, then
that relief should inure to all.
The
applicants’ prima facie right
[118]
The applicants’ asserted right to be supplied with electricity
by Emfuleni is not disputed. It founds in chapter 7 of
the
Constitution, in the set of national laws regulating local
governance, including the GMFA and
Local Government: Municipal
Systems Act 32 of 2000
, and in their electricity supply agreements
with Emfuleni. This right would, it is suggested, comfortably qualify
as a “right”
in terms of the definition of
“administrative action”, which if “adversely
affected” by Eskom’s interruption
of bulk supply, thus
fulfilling the definition, will invoke the PAJA rights; in turn
triggering an examination of whether the Eskom
decision was rational
and reasonable.
[119]
The applicants argued however for a “right” against Eskom
to be supplied with electricity which, if adversely
affected by
Eskom’s decision to interrupt bulk supply to Emfuleni, would
thus open up PAJA rights in relation to Eskom’s
decision. Given
the fullness of the submissions it is appropriate to deal with this
contention.
[120]
The
principal judgment relied on was Joseph and Others v City of
Johannesburg and Others
[15]
,
coupled with the principle that retrogressive measures, such as the
phasing out or down-scaling of a particular social security
scheme or
grant, are
prima
facie
incompatible
with the obligation progressively to realise the right to access to
social security and social assistance. Any such
reduction or
down-scaling will be subject to the courts’ careful
consideration. The notion that retrogressive measures
are
incompatible with the progressive realisation of a right, such as
those envisaged in s.26 and 27 of the Constitution, is still

predicated on the prior existence of such a right; see s.26(2) and
s.27(2).
[121]
What exactly did Joseph decide on this point? In that case the
tenants of a building had a contractual relationship with their

landlord, and paid it for electricity supply. They were up to date,
and thus not in breach of their contract. It can be assumed
that the
landlord had a contractual obligation in turn to supply them with
electricity. The landlord breached that obligation because
City
Power, the service provider of the local authority, terminated the
supply. It did so because the landlord was in breach of
its
contractual obligation to City Power to pay it for the supply of
electricity to the building.
[122]
The court
described the relationship between City Power, the landlord, and the
tenants in this context, as follows:
[16]
“
Moreover, in
viewing the issues through an entirely contractual lens, the High
Court misdirected itself insofar as it failed to
take account of the
link between the contractual relationship between Mr Nel (the
landlord) and the applicants on the one hand,
and that between Mr Nel
and City Power on the other. Mr Nel concluded a contract as a
“customer” with City Power for
the sole purpose of
facilitating the supply of electricity to tenants in his building. He
was a conduit. In supplying electricity
to Ennerdale Mansions, City
Power knew that it was providing electricity to tenants living in the
building. It is therefore, in
my view, artificial to think of the
contractual relationship between Mr Nel and City Power as being
unrelated to the benefits that
accrued to the applicants under this
contract.”
[123]
The
question that arose was whether the tenants could rely on PAJA as
against City Power or the local authority despite not being
in
contractual privity with City Power or the local authority. The court
examined specifically whether the tenants had a right
which was
adversely affected by City Power’s decision to terminate the
electricity supply. Skweyiya J for the court was unpersuaded
that any
contractual rights which the tenants held against their landlord were
adversely affected by City Power’s decision
to terminate the
electricity supply.
[17]
The
court defined the real issue as being whether the broader
constitutional relationship that exists between a public service

provider and the members of the local community gives rise to rights
that could invoke the application of PAJA.
[18]
[124]
It held,
relying on Mkontwana, that a local authority had a public duty to
provide water and electricity to the residents in its
area. It held
that, “
Electricity
is one of the most common and important basic municipal services and
has become virtually indispensable,
particularly
in urban society.”
[19]
It founded that duty on s.152 and 153 of the Constitution, and on the
Systems Act.
[125]
The court
went further. It relied on Walele v City of Cape Town and Others
[20]
for the proposition that “right” for the purposes of
s.3(1) of PAJA must be interpreted “generously”; and
on
Premier, Mpumalanga, and Another v Executive Committee, Association
of State-Aided Schools, Eastern Transvaal
[21]
for the proposition that a notion of “right”
broader than that used in private law may well be appropriate.
[22]
[126]
The court
held that the corollary of the local authority’s duty to
provide electricity, was a concomitant right on the part
of the
residents to receive the electricity.
[23]
The Joseph court then concluded:
[24]
“
In my view,
proper regard to the import of the right to administrative justice in
our constitutional democracy confirms the need
for an interpretation
of rights under section 3(1) of PAJA that makes clear that the notion
of “rights” includes not
only vested, private law rights
but also legal entitlements that have their basis in the
constitutional and statutory obligations
of government. The preamble
of PAJA gives expression to the role of administrative justice and
provides that the objectives of
PAJA are inter alia to “promote
an efficient administration and good governance” and to “create
a culture of
accountability, openness and transparency in the public
administration or in the exercise of a public power or the
performance
of a public function”. These objectives give
expression to the founding values in section 1 of the Constitution,
namely that
South Africa is founded on the rule of law and on
principles of democratic government to ensure accountability,
responsiveness
and openness.”
[127]
Applying
this reasoning to the present matter leads, it is suggested, to the
following. Eskom is an organ of state. It performs
a public function
by exercising the powers and performing the duties set out in its
licence and in the ERA.
[25]
Eskom knows that the electricity that it supplies to Emfuleni is not
all consumed by Emfuleni, but is passed through (reticulated)
to
private consumers; that is expressly laid out in s.27(d), (f), and
(i) of the very Act (the ERA) under which it is licenced
to supply
electricity to Emfuleni.
[128]
In terms of
the same Act, Eskom has a right to terminate supply of electricity to
its customer if the customer has contravened its
payment conditions;
in this case, if Emfuleni has not paid it.
[26]
It was held in Resilient that Eskom’s entitlement to do this is
subject to the constraints of just administrative action
as envisaged
in s.33 of the Constitution, as have percolated down into PAJA. That
implies at least a rationality threshold, but
likely too a
reasonableness threshold.
[27]
[129]
Undoubtedly Emfuleni has a right, deriving from s.21(5)(c) of the ERA
as interpreted in the light of Eskom’s status
as an organ of
state, to insist that Eskom acts in accordance with the
constitutional constraints on the exercise of public power
which, if
adversely affected by Eskom’s decision, would entitle it to
invoke PAJA rights against Eskom. But do the applicants,
as retail
consumers next in line, have a comparable right, even if in an
expanded sense of that word? It is suggested that they
do, for the
following reasons.
[130]
First, by parity of reasoning with Joseph, there exists a “special
cluster of relationships” between Eskom, Emfuleni,
and retail
consumers of electricity such as the applicants. Eskom supplies
electricity to Emfuleni, knowing full well that Emfuleni
reticulates
it through to the applicants. The applicants pay Emfuleni, knowing
full well that Emfuleni, having deducted its margin,
on-pays those
very funds to Eskom for that very supply of electricity. Emfuleni is
thus in the Joseph sense a mere conduit: it
passes on from Eskom
upstream the electricity downstream to the applicants (on the way it
retains some of it for its other consumers,
and for itself); and it
passes back upstream the applicants’ payment (on the way it
retains some of it, its margin, for itself).
[131]
Second, Eskom has a public law duty – founded in the ERA and
its licence - to supply electricity to Emfuleni; and in
turn,
Emfuleni has a public law duty – founded in the Constitution
and the Systems Act – to on-supply that electricity
on to the
applicants.
[132]
Third, Emfuleni has, as a corollary to the public law duty that Eskom
owes it to supply the electricity to it, the right to
enforce against
Eskom the right to just administrative action by Eskom in Eskom’s
supply of electricity to it.
[133]
Fourth, Emfuleni has a public law duty to supply electricity to the
applicants; and the applicants have, as a corollary to
the public
duty that Emfuleni owes them, the right to enforce against Emfuleni
the right to just administrative action by Emfuleni
in its supply of
electricity to them.
[134]
Fifth, the concept of a “right” in this scenario is not
to be understood in the usual circumscribed private law
sense. It has
a wider more generous meaning here, in a public law sense. And as has
been seen, public law imposes a duty on each
supplier of electricity
top down; and reciprocally proper discharge of that duty can be
enforced upwards.
[135]
In these circumstances it would be incongruous if the ultimate
beneficiary of and payer for the electricity stream downwards
did not
have the right to enforce due performance by the initiating supplier
of the electricity of a public law duty owed by it
to the conduit of
the electricity and the payment for it.
[136]
Assuming
therefore, without deciding, that the applicants do not have a right
directly enforceable against Eskom to supply of electricity,
it is
suggested that they have at least the right directly enforceable
against Eskom, in a broad public law sense, to insist that
Eskom
discharges its public law duty of the supply of electricity
downstream to Emfuleni, duly and properly in a manner which,
in the
language of Joseph,
[28]
accords with constitutional values and is responsible, respectful and
fair. That right, if adversely affected by the interruption
decision,
results in the decision to interrupt constituting “administrative
action”, triggering the entitlement on
the part of the
applicants to rely on the PAJA rights to just administrative action.
[137]
This conclusion fits Eskom’s own view of its ultimate
obligations. Although Eskom submitted that the applicants had
no
direct right against Eskom to electricity, it did accept that the
applicants had the right at least to insist that Eskom complies
with
the tenets of just administrative action before terminating the
supply. Its contention was that, as a fact, it did comply
with those
tenets.
[138]
Will the applicants’ rights be adversely affected by the
interruption decision? The consequences of the decision is,
without
being hyperbolic, to shut-down the applicants’ businesses.
Their rights will become meaningless and devoid of real
content, and
this qualifies as “a direct, external legal effect”.
Rationality
and reasonableness
[139]
The
decision to interrupt is thus “administrative action”,
and the applicants are entitled to challenge it under the
PAJA
standard. Does the Eskom decision to terminate comply with tenets of
rationality and reasonableness? If the objective was
to recover
arrear debt, likely not.
[29]
It may be tested this way. Emfuleni now owes Eskom in excess of R1
billion. If the electricity supply is terminated, the
applicants all
envisage severe job losses and an economic assault on the very
viability of their businesses.
[140]
The applicants are consumers who actually pay for their electricity.
It would seem to follow axiomatically that Emfuleni’s
ability
to collect arrear electricity debts from its direct consumers is
dependent on the consumers actually owing Emfuleni a debt
in respect
of past consumption of electricity. And the applicants do not. But
more important: there is just no suggestion that
terminating the
supply of electricity in the manner suggested would result in
R1billion being recovered. The obverse, that it will
not make one
iota of a difference, seems self-evident.
[141]
Eskom contends that no case for either unreasonable or irrational
conduct has been established against it. It says that it
has done all
it could to try exact payment from Emfuleni: it has sued and taken
judgment against it, to no avail; it has contacted
the Premier to
become involved, but that has not produced satisfactory results
either. The Premier and Emfuleni drag their heels
and do not appear
appreciative of the gravity of Eskom’s problems.
[142]
Its objective in terminating supply in the manner it intends, if
permitted, is not to coerce Emfuleni into paying all of its
mammoth
arrears. It objective is simply to stop supplying Emfuleni with free
electricity. In examining the traction of this proposition,
it is not
necessary to differentiate between reasonableness and rationality for
the purposes of PAJA. Eskom drew no such distinction,
and the 2
nd
to 4
th
fourth applicants argued that none existed.
[143]
The enquiry must therefore turn to whether Eskom’s stated
purpose in taking the decision, that to terminate electricity
supply
in the current circumstances is aimed at preventing Eskom from having
to supply free electricity to Emfuleni, is rationally
connected: to
the result that will follow (s.6(2)(f)(ii)(aa); or to the purpose for
which the power to terminate (in the ERA) was
given
(s.6(2)(f)(ii)(bb). The 1
st
applicant must establish
either of these two. Or it must establish that the decision to
terminate was so unreasonable that no reasonable
person would have
taken it (s.6(2)(h)).
[144]
It is necessary to reflect for a moment on Eskom’s position.
Under the ERA, a customer is defined as someone who “purchases”

electricity or a service related thereto. The objects of the Act
include to achieve sustainable electricity supply infrastructure
in
South Africa (s.2(a)); it includes to ensure that the interests and
needs of both present and future consumers and end users
are
safeguarded, having regard to the efficiency and long-term
sustainability of the electricity supply industry (S.2(b)); and
it
includes to facilitate investment in the electricity supply industry
(s.2(c)).
[145]
The Regulator may include in any licence conditions relating to the
quality of electricity supply and service (s.14(1)(j));
and relating
to the need to maintain facilities in a fully operational condition
(s.14(1)(x)). In terms of the Act, electricity
infrastructure does
not, as would be the case under the common law, accede to the land on
which it is situated (s.23(1)). And such
infrastructure may not be
attached in execution of any debt, nor may it be subject to the
common law landlord’s hypothec
for rent (s.23(2)).
[146]
Eskom is not part of a state department. It is, in terms of the
Eskom
Conversion Act 13 of 2001
, an incorporated public company with a
share capital and a shareholder. Other than by way of loans and other
forms of financial
assistance, monies are not appropriated from
fiscus on an annual basis to enable it to survive financially, and
discharge its public
obligation as the only public supplier of
electricity in South Africa. Eskom thus has to be operated on a
finically secure basis.
It must be able to raise finances off its own
balance sheet, and upon its own security, both here and in the
international market.
It therefore cannot, at least not on a
meaningful scale, supply limitless free electricity into the future.
[147]
Eskom’s stated purpose therefore cannot be faulted. Is the
termination decision and its consequence rationally connected
to that
purpose? Or is it so unreasonable that no reasonable person would so
have resolved
(s.6(2)(h))?
[148]
The context
in which the decision was taken really flows from the background that
was set out above. From that context it is evident
that there are
only two sources of funds on which Eskom can rely for payment in
respect of on-going supply of electricity to Emfuleni.
The one is
Emfuleni’s paying consumers, and the other is, ultimately,
National Treasury. And since in this country civilized
society cannot
exist and the economy cannot function without Eskom remaining
economically viable, National Treasury and ultimately
National
Government must inevitably step in when and where local authorities
fail; that is what the Constitution expressly envisages.
[30]
[149]
What are the likely consequences if Eskom were to interrupt bulk
supply? The applicants’ affidavits tell one. Most of
the
applicants, perhaps not the eighth applicant, cannot sustain their
operations, and will perforce shut down, causing job-losses
in a
country where judicial cognisance may be taken of the high
unemployment rate. Eskom’s riposte is not to join issue with

this evidence; its response is that that consequence should be laid
at the door of Emfuleni. That may be so, but it is no answer
to the
problem. The point is, the effect of the interruption decision will
be not only to destroy one of two sources of funds for
the bulk
electricity, but also to destroy viable business and job
opportunities.
[150]
Moreover, Eskom’s evidence does not suggest that there is any
hope that the decision will get Emfuleni to pay.
Nor is it
rationally comprehensible why it should. If the businesses of large,
paying consumers of electricity are destroyed, how
would Emfuleni be
better positioned to pay?
[151]
The problem clearly lies elsewhere; and the likely place is with the
financial mismanagement at Emfuleni, where payment arrangements

deliberately entered into are not honoured. And that leads on to the
next consideration. The only other source of funds for the
bulk
electricity, National Treasury, have actually become involved in
attempting to resolve the admitted financial crisis. Both
Provincial
and National Government have stepped into the breach, and had
statutorily stepped into the breach by the time Eskom
decided on 20
July 2018 to implement its interruption decision.  GPG had
invoked s.139 of the Constitution, and of the MFMA.
That implies,
given the role and function of the Municipal Financial Recovery
Service under s.157 of the MFMA, the direct participation
of National
Treasury.
[152]
Eskom’s response, as already alluded to above, was that it
could not wait any longer. But wait no longer for what? In
this case,
different from the facts in Resilient, the applicants have shown that
given the nature of their businesses (at least
the first seven
applicants), they could not even survive a lesser form of staggered
load-shedding. They had expressly informed
Eskom of this fact long
before the interruption decision was taken. The interruption decision
could not, reasonably or rationally
speaking, given Emfuleni’s
admitted financial crisis, bring it the payment Eskom suggested it
would.
[153]
It follows that, at a prima facie level, the applicants have shown
that the interruption decision is reviewable under PAJA.
Irreparable,
balance of convenience and other remedy?
[154]
If the interruption is proceeded with, the applicants, and
potentially other consumers in similar positions, will shut down.

That will render their review right moot. Yet Eskom will not be
destroyed if the interruption decision is not implemented. It may

have to wait before National Treasury devises a recovery plan that
will ensure payment for it, but that is a far lesser fate than
awaits
the applicants. And the applicants have no alternative than that to
seek a restraint on Eskom’s right to interrupt
the supply of
electricity.
Remedy
[155]
There is no contestation that in this case the court is called upon
to decide a “constitutional matter” as envisaged
in terms
of s.172 of the Constitution. This court accordingly “may make
any order that is just and equitable.”
[156]
The
intergovernmental nature of the differing positions of Eskom on the
one hand and National Treasury, the GPG and Emfuleni on
the other,
has been referred to above. Is this a “dispute” between
them for purposes of s.41(3) of the Constitution?
Eskom submits,
relying on the unreported judgement in the Free State High Court, in
Ngwathe Local Municipality v Eskom Holdings
SOC Ltd and others,
[31]
[32]
that in fact there is no
dispute between them: Emfuleni admits that it owes the money; it
simply neglects to pay it.
[157]
The facts
in Ngwathe were very different from here. There National Treasury and
Provincial Government had not (yet) invoked s.139
of the
Constitution; in fact, Eskom applied for an order compelling the
Provincial Government to do so. The court declined the
relief sought
on the basis that the Premier had not been joined.
[33]
Further, the Ngwathe court was able to find that the local authority,
every time Eskom threatened drastic action, would start implementing

a proper debt collection system.
[34]
[158]
Eskom’s argument cannot be upheld. The notion that no dispute
exists between creditor and debtor where the debtor admits
the
quantum of indebtedness and is simply not paying, derives from
private law, specifically in the context of the interpretation
of
arbitration agreements that refer a “dispute” to
arbitration. The creditor would sue for its money, only to be met
by
a recalcitrant debtor employing the delaying tactic of pleading a
stay of proceedings on the basis that the dispute has been
referred
to arbitration. The courts have been dismissive of such a defence,
precisely on the basis that there was no dispute to
be referred to
arbitration.
[159]
Here there
are not only more parties involved (National Treasury and the GPG as
well), but the “dispute” is also more
multi-facetted than
simply whether or not the amounts Eskom claims are in fact owing. It
concerns how to resolve the indebtedness,
given that Emfuleni is not
paying, ostensibly cannot pay, and admittedly has what the
Constitution has described
[35]
as a “crisis in its financial affairs”, whatever the
cause. The GPG has embarked on the constitutionally and statutorily

envisaged route, that of procuring an appropriate recovery plan for
Emfuleni. But, as pointed out above, Eskom was not prepared
to wait.
This attitude of Eskom is the kernel of the dispute.
[160]
It follows that a “dispute” exists for the purposes of
s.41(3) of the Constitution. Mechanisms and procedures
have been
provided for purposes of settling the dispute. These mechanism are
embodied in, amongst others, s.139 of the Constitution;
s.35, s.40,
s.41, and s.45 of the IGR Act; and s.44 and s.139 of MFMA. The GPG
became involved some five months ago. There was
some dispute at the
Bar as to whether a recovery plan had been prepared by the time the
application was argued, to be true. But
no-one suggests that that
route will not, if only eventually, open access by Eskom to National
Treasury intervention.
[161]
In these circumstances the organs of state have not made every
reasonable effort to settle the dispute by means of these mechanisms

and procedures, and accordingly the court has the power under s.41(4)
to refer the dispute back to the organs of state involved
and should
exercise it.
[162]
If Eskom is then be interdicted on a temporary basis from
interrupting bulk supply of electricity to Emfuleni, and if the

dispute between the organs of state is then to be referred back to
them for resolution, two questions arise: what event should
terminate
the application of the interim interdict, and what should happen to
the applicants’ electricity payments, given
that they do not –
as a fact - pass through Emfuleni upwards to Eskom?
[163]
As to the first question: the applicants apply for interim relief
pending a final review of Eskom’s decision. But since
the
conclusion is that the dispute should be referred back to the state
organs for resolution, a final review is not envisaged;
unless of
course the reference back fails. The interim interdict should
therefore pend the resolution of the dispute by the state
organs, but
within a limited time-frame. Six months is a reasonable time, given
the background.
[164]
As to the second question, the parties have made further written
submissions, for which the court is grateful. The 1
st
applicant associates itself with the 2
nd
to 4
th
applicants on the issue of the legal competence of direct payment
relief. On the issue of the practicality of such an order, the
1
st
applicant explains that its tariff to Emfuleni does not include a
mark-up for Emfuleni; the 1
st
applicant thus pays what it
calls “the Eskom tariff”, being tariff 8.1. If direct
payment were to be ordered, the 1
st
applicant asks that an
order in the following terms also issues: “Nothing in this
order shall detract from the existing obligations
and duties owed by
Emfuleni Municipality to the applicants in terms, inter alia, of the
licence granted to the Emfuleni Municipality
by the National Energy
Regulator, or in terms of any other law.”
[165]
The 2
nd
to 4
th
applicants submit that in terms
of the broad powers availed under s.172 of the Constitution, this
court has the power to direct
those applicants that pay tariffs that
are made up of both the Eskom tariff, and Emfuleni’s “municipal
portion”,
to pay the Eskom tariff direct to Eskom, and to
continue paying the municipal portion to Emfuleni. They propose the
following order
in this regard:
“
pending the
outcome of Part B of this application, and subject to appropriate
oversight by Nersa in the discharge of its statutory
obligations
pursuant to the judgment of this court, the applicants are authorised
to discharge the debts that they incur to Emfuleni
Municipality in
respect of the ongoing supply of electricity to them, by:
(a) making payment for
electricity consumed at the rate of the Eskom tariff directly to
Eskom, and furnishing Emfuleni Municipality
with proof of such
payments to Eskom;
(b) continuing to pay the
difference between the municipal tariff and the Eskom tariff (i.e.
the municipal portion) to the municipality.”
[166]
In support
of the submission that the court has the power to make such an order,
the 2
nd
to 4
th
applicants contend: that the power under s.172 is not dependant on a
finding of constitutional invalidity;
[36]
that the power includes granting relief which is at odds with current
statutory arrangements;
[37]
no
legal principle is immune from the just and equitable remedial
jurisdiction under s.172;
[38]
courts are mandated to forge appropriate relief;
[39]
the court may legitimately leave it to the parties to fashion the
internal mechanics of direct payment.
[40]
[167]
The 5
th
to 8
th
applicants also make common
cause with the 2
nd
to 4
th
applicants. They ask
that Emfuleni be ordered to render invoices to them reflecting both
the Eskom tariff and the Emfuleni mark-up.
[168]
Eskom supports the concept that the applicants should be permitted to
pay the Eskom tariff direct to Eskom. It submits that
the court has
the power to make such an order. But it contends that the entire
amount, including Emfuleni’s margin, should
be paid over to it,
and   it undertakes then to credit Emfuleni with the full
amount. In other words, it will use the
Emfuleni margin of the
Applicants’ payments in partial discharge of the balance of
Emfuleni’s liability for bulk supply.
Thus the applicants’
payments will be used in part to pay for electricity used by other
consumers in Emfuleni’s municipal
area.
[169]
Emfuleni opposes the notion of direct payment relief. It submits that
counsel for the applicant had conceded that they were
not entitled to
direct payment relief in terms prayers 3 and following, and that the
court was bound by that concession. Counsel
submitted further that
s.12 relief was in any event inappropriate in Part A proceedings.
[170]
Even if there was a concession as submitted (the recollection of the
bench is that counsel were simply not pressing for that
relief), that
cannot preclude a court from making an order under the power
conferred in terms of s.172. It is correct that direct
payment relief
was raised by the court on the second day of the hearing, but the
parties were given full opportunity to make further
written
submissions on the issue.
[171]
It is suggested that the power of a court under s.172(1)(b) of the
Constitution cannot be constrained other than by the interests
of
justice itself. In this case it would unjust and inequitable to
require of the applicants to continue paying the Eskom margin
to
Emfuleni, when Emfuleni does not pay that margin, or all of that
margin, over to Eskom. This is particularly so in view of both
the
applicants and Eskom supporting direct payment relief. But it would
not be just and equitable to allow Eskom to use the applicants
as a
means to obtain payment in respect of electricity consumed by others.
[172]
Emfuleni’s counter-application is for relief in terms of
s.152(1) of the MFMA (A); an order directing Eskom first to
exhaust
the alternative dispute resolution procedures under the IGR Act
before interrupting bulk electricity supply (B); and for
judgment
against the 1
st
applicant in the amount of R11m. In view
of a reference back to the organs of state, relief in terms of the
MFMA is not now appropriate.
That prayer should be dismissed. As to
prayer B, the order made below does substantively include that
relief, but not in the terms
sought. In any event, it may yet
transpire that the root of the intergovernmental dispute is in fact
Emfuleni’s own mismanagement,
and so it is appropriate at this
time simply to reserve those costs. Prayer C cannot be granted for
factual disputes.
Costs
[173]
The submissions concerning costs cover the areas of the costs of this
interim application, the costs reserved by Molahleli
J on 20 August
2018, the costs reserved by Twala J on 24 August 2018, and the costs
of Emfuleni’s counter-application. The
latter has been dealt
with above. Emfuleni caused the urgent passage to court on 20 August
2018, and it should pay those costs
on the ordinary scale. Before
Twala J the matter could never have been ripe for hearing. Each party
should carry its own costs.
Order
[174]
In the circumstances the following order issues:
(a) The dispute between
the four respondents concerning the non-payment by the 2
nd
respondent to the 1
st
respondent for bulk electricity
supply and the manner and timing of its resolution given the
intervention of the 4
th
respondent is, in terms of s.41(4)
of the Constitution, referred back to the respondents for resolution
in terms of s.41(3) of
the Constitution.
(b) In the event that the
said dispute is not resolved within six months of date of this order,
any party may set down this application
for the determination of Part
B.
(c) The 1
st
respondent is interdicted from implementing interruptions in
electricity supply to the second respondent pending resolution of
the
aforesaid dispute within six months of date of this order or, if the
dispute is not so resolved, pending the outcome of the
final
determination of Part B of this application, whichever is the
earlier.
(d) For as long as the
interim interdict ordered above applies:
(i) the applicants are
authorised, subject to appropriate oversight by the 3
rd
respondent in the discharge of its statutory obligations pursuant to
the judgment of this court, to discharge the debts that they
incur to
the 2
nd
respondent in respect of the ongoing supply of
electricity to them, by:
(aa) making payment
directly to the 1
st
respondent for electricity they
consume at the rate of the Eskom tariff, and furnishing to the 2
nd
respondent proof of such payments to the 1
st
respondent;
(bb) continuing to pay,
in the case of the 2
nd
to 8
th
applicants,   the
difference between the municipal tariff and the Eskom tariff (i.e.
the municipal portion) to the 2
nd
respondent;
(ii) the 2
nd
respondent is directed, in invoicing the 5
th
to 8
th
applicants, to specify separately the Eskom tariff which the 2
nd
respondent would have paid to the 1
st
respondent in
respect of the electricity supplied by the 2
nd
respondent
to the 5
th
to 8
th
applicants under that
invoice, were it not for this order, and the municipal tariff in
respect of such electricity;
(iii) the 2
nd
respondent is interdicted from interrupting supply of electricity to
the applicants for any reason other than that the applicants
will not
have complied with their payment obligations as set out in this
order;
(iv) the respondents,
including the 3rd respondent, are directed to do all things necessary
and to take all reasonable steps to
give effect to this temporary
order.
(e) Nothing in this order
shall detract from the existing obligations and duties owed by the
2
nd
respondent to the applicants in terms, inter alia, of
the licence granted to the 2
nd
respondent by the 3
rd
respondent, or in terms of any other law.
(f) Prayer A of the 2
nd
respondent’s counter-application dismissed.
(g) Except for costs, no
order is made on prayer B of the 2
nd
respondent’s
counter-application.
(h) Prayer C of the 2
nd
respondent’s counter-application is referred to trial, the
notice of counter-application to stand as simple summons.
(i) The 2
nd
respondent is directed to pay the 1
st
applicant’s
costs of 20 August 2018 under case number 28716/2018.
(j) The parties are each
to pay its own costs that were reserved on 24 August 2018.
(k) Save as otherwise
herein provided, all other issues as to costs are reserved.
__________________
M
Makume
Judge,
High Court
Johannesburg
___________________
WHG
van der Linde
Judge,
High Court
Johannesburg
R
Keightley
Judge,
High Court
Johannesburg
For
the 1
st
applicant: Adv J P V McNally, SC
B
L Manentsa
1
st
Applicant’s Counsel
Instructed
by: Webber Wentzel Attorneys
1
st
Applicant’s Attorneys
90
Rivonia Road
Sandton
2196
Tel:
(011) 530 5867
Fax:
(011) 530 6867
Email:
trevor.versfeld@webberwentzel.com
Ref:
T Versveld/M Straeuli/D Rafferty/3025056
For
the 2
nd
to 4
th
applicants: Adv M du Plessis, SC
Adv
S Pudifin-Jones
Instructed
by: Joubert Galpin Searle Incorporated
2
nd
to 4
th
Applicants’ Attorneys
c/o
Nortons Incorporated
135
Daisy Street
Sandton
Johannesburg
Email:
mcb@jgs.co.za
debbies@jgs.co.za
Ref:
MC Botha/Jenna Foley
For
the 5
th
to 8
th
applicants: P F Rossouw, SC
M
Mostert
Instructed
by: PSN Incorporated
5
th
to 8
th
Applicants’ Attorneys
Junxion
Building
cnr
Frikkie Meyer Boulevard and Sullivan Street
Vanderbijlpark
Email:
nherbst@psn.co.za
For
the 1
st
respondent: Adv P L Uys
Instructed
by: Gildenhuys Malatji Inc
1
st
Respondent’s Attorneys
Katherine
and West Building
144
West Street
Sandton
Johannesburg
Email:
rventer@gminc.co.za
For
the 2
nd
respondent: Adv G Shakoane, SC
L
Mahasha
J
Langa
Instructed
by: Seleka Attorneys
2
nd
Respondent’s Attorneys
1406
Bram Fischer Towers
20
Albert Street
cnr
Eloff Street
Johannesburg
Email:
mo@selekattorneys.co.za
vee@selekattorneys.co.za
3
rd
respondent:
National
Energy Regulator of South Africa: Not represented
For
the 4
th
respondent: Adv M Khoza, SC
Adv
N Nharmuravate
Instructed
by: The State Attorney
4
th
Respondent’s Attorneys
95
Albertina Sisulu Street
Kensington
Johannesburg
Dates
argued: 15 & 16 October 2018, with further submissions on 23 &
30 October 2018.
Date
judgment: 8 November 2018.
[1]
Setlogelo v Setlogelo,
1914 AD 221
[2]
See the definition of “generator” in the Electricity
Regulation Act 4 of 2001 (“ERA”).
[3]
2012 (6) SA 223 (CC)
[4]
Case no 11316/2018 on 14 September 2018.
[5]
(CCT 19/11)
[2015] ZACC 10
;
2015 (5) SA 600
(CC);
2015 (6) BCLR 711
(CC) (7 May 2015) at paragraphs [61] and [63].
[6]
(CCT 13/13)
[2013] ZACC 33
;
2013 (12) BCLR 1365
(CC);
2014 (1) SA 1
(CC) (1 October 2013).
[7]
Rademan
v Moqhaka Local Municipality and Others (CCT 41/12)
[2013] ZACC 11
;
2013 (4) SA 225
(CC);
2013 (7) BCLR 791
(CC) (26 April 2013)
.
[8]
1979 (3) SA 13
(SCA) at paragraph [21].
[9]
[2004]
ZACC 9
;
2005
(1) SA 530
(CC);
2005
(2) BCLR 150
(CC).
[10]
(CCT40/09)
[2009] ZACC 32
;
2010 (2) SA 415
(CC) ;
2010 (3)
BCLR 177
(CC) (14 October 2009).
[11]
1948 (1) SA 220.
[12]
The other three are a reasonable apprehension of irreparable and
imminent harm to the right if the interdict is not granted,
the
balance of convenience must favour the grant of the interdict, and
the applicant must have no other remedy.
[13]
See Cora Hoexter, Administrative Law in South Africa, 2
nd
ed, p224, fn 403.
[14]
Transnet Ltd v Goodman Brothers (Pty) Ltd, 2001(1) SA 853 (SCA).
[15]
(CCT 43/09)
[2009] ZACC 30
;
2010 (3) BCLR 212
(CC) ;
2010 (4) SA 55
(CC) (9 October 2009).
[16]
At [22]
[17]
At [32]
[18]
At [33]
[19]
At [34]
[20]
[2008]
ZACC 11
;
2008
(6) SA 129
(CC);
2008
(11) BCLR 1067
(CC)
[21]
[1998]
ZACC 20
;
1999
(2) SA 91
(CC);
1999
(2) BCLR 151
(CC)
[22]
At [41]
[23]
At [39]
[24]
At [42]
[25]
S.23(1) of the ERA.
[26]
S.21(5)(c); Rademan v Mqhaka Local Authority,
2013 (4) SA 225
(CC)
at [36]; Resilient Properties (Pty) Ltd v Eskom Holdings SOC Ltd and
others, Case no 2018/11316, Gauteng Division, Johannesburg

(unreported, delivered 14 September 2018) at [69] ff.
[27]
S.6(2)(f)((ii); s.6(2)(h) of PAJA.
[28]
Joseph, [45] to [47].
[29]
Joseph at [53].
[30]
S.139(7).
[31]
Case no 4425/2014, delivered on 28 May 2018.
[32]
At [25] ff, per Jordaan, J.
[33]
At [40]
[34]
At [33]
[35]
S.139
[36]
Hoërskool Ermelo at [97].
[37]
Electoral Commission v Mhlope
[2016] ZACC 15
; 2016(5) SA 1 (CC);
2016(8) BCLR 987 (CC) at [130].
[38]
Corruption Watch NPC and Others v President of the Republic of South
Africa and Others; Nxasana v Corruption Watch NPC and Others
2018(2)
SACR 442 (CC) at [77].
[39]
President of the Republic of South Africa and Another v Modderklip
Boerdery (Pty) Ltd 2005(5) SA 3 (CC) at [52].
[40]
Ramakatsa and Others v Magashule and Others,
2013 (2) BCLR 202
(CC);
[2012] ZACC 31
at
[125]
.