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[2018] ZASCA 168
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Dark Fibre Africa (Pty) Ltd v City of Cape Town (195/2018) [2018] ZASCA 168; 2019 (3) SA 425 (SCA) (7 November 2018)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 195/2018
In
the matter between:
DARK
FIBRE AFRICA (PTY)
LTD
APPELLANT
and
CITY
OF CAPE
TOWN
RESPONDENT
Neutral
citation:
Dark Fibre Africa v City of Cape Town
(195/2018)
[2018] ZASCA 168
(30 November 2018)
Coram:
Lewis, Cachalia, Seriti and Molemela JJA and Rogers AJA
Heard:
7 November 2018
Delivered:
30 November 2018
Summary:
Section 22(1) of the Electronic Communications Act confers the
power on a licensee under the Act to enter upon land and construct
telecommunications networks for the benefit of the public. A licensee
is, however, required to meet other requirements laid down
by an
owner of land, or a municipality in terms of bylaws or other
regulatory laws. The right of a licensee is not unlimited and
must be
exercised having regard to all applicable laws.
ORDER
On
appeal from:
Western Cape Division of the High Court, Cape Town
(Davis J sitting as court of first instance):
The
appeal is dismissed with the costs of two counsel.
JUDGMENT
Lewis
JA (Cachalia, Seriti, Molemela JJA and Rogers AJA concurring)
[1]
This appeal turns on the legal implications of s 22 of the Electronic
Communications Act 36 of 2005 (the ECA). The section gives
to
entities which have been licensed under the Act the power to enter
upon land and construct electronic communications networks
on
privately or state owned property. The section has given rise to
considerable litigation and there is some confusion as to how
it is
to be interpreted. This court has pronounced upon it (
Mobile
Telephone Networks (Pty) Ltd v SMI Trading CC
2012 (6) SA 638
(SCA) and
Msunduzi Municipality v Dark Fibre Africa
[2014]
ZASCA 165)
and so has the Constitutional Court (
Tshwane City v
Link Africa
2015 ZACC 29
;
2015 (6) SA 440
(CC)).
[2]
Despite this, the parties in this appeal dispute the powers that the
section confers on a licensee. Their dispute was determined
by Davis
J in the Western Cape Division of the High Court (referred to for
convenience as the high court) to which Dark Fibre Africa
(Pty) Ltd
(Dark Fibre), the appellant, applied for an order that the City of
Cape Town, the respondent, desist from imposing conditions
on its use
of public roads owned by the City. The high court found that the City
was entitled to impose the conditions, all relating
to the payment of
moneys for working and trenching on municipal roads. Dark Fibre
appeals with the leave of the high court.
[3]
Section 22 of the ECA reads:
‘
Entry
upon and construction of lines across land and waterways.
(1)
An electronic communications network service licensee may—
(a)
enter upon any land, including any street, road, footpath or land
reserved for public purposes, any railway and any waterway
of the
Republic;
(b)
construct and maintain an electronic communications network or
electronic communications facilities upon, under, over,
along or
across any land, including any street, road, footpath or land
reserved for public purposes, and railway and any waterway
of the
Republic; and
(c)
alter or remove its electronic communications network or electronic
communications facilities, and may for that purpose
attach wires,
stays or any other kind of support to any building or other
structure.
(2)
In taking any action in terms of subsection (1),
due regard must
be had to applicable law
and the environmental policy of the
Republic.’ (My emphasis.)
The
legal implications of s 22 of the ECA
[4]
Dark Fibre maintains that it has statutory consent in terms of s
22(1) to lay fibre-optic cable throughout the City and that
it
accordingly does not need the City’s consent to do so. In
particular, the City may not prevent it from doing so and may
not
require that Dark Fibre make payments to it, either in the form of
refundable or non- refundable deposits, nor constrain its
activities
in the exercise of its power. As it states, in its heads of argument
before this court:
‘
A
local authority like the City may
not
impose (through
“wayleaves” or otherwise) a requirement on
statutorily-authorized service providers to obtain prior
consent to
fulfill the compelling legal imperative of installing fibre-optic
infrastructure.’
[5]
The City has for some ten years been regulating the manner in which
electronic licensees exercise their rights to lay fibre-optic
cable.
It does so by invoking the City of Cape Town By-Law Relating to
Streets, Public Places and Prevention of Noise Nuisances
2007 (the
Streets By-Law) and levying tariffs on licensees in terms of s 75A of
the Local Government: Municipal Systems Act 32
of 2000 (the Systems
Act).
[6]
The City makes it clear, in its answering affidavit in Dark Fibre’s
application, that it is keen to co-operate with licensees
in the
provision of fibre-optic cable, and therefore in the provision of
access to broadband, for the residents of Cape Town. At
the same time
it has exercised its constitutional and statutory rights in respect
of municipal roads. It has done so within the
framework of the
Streets By-Law that requires persons who wish to dig trenches in and
across roads and pavements (the road reserve)
to obtain its consent
and to do so in accordance with the City’s requirements. These
include the conditions that Dark Fibre
now refuses to comply with:
the payment of a deposit that may or may not be refundable, depending
on whether Dark Fibre trenches
across or along a street (there are in
fact two conditions that deal with this deposit but I shall treat
them as one); a reservation
by which the City reserves the right to
impose a tariff charge in respect of the use of City land for the
installation of its network
cables; and a condition that provides
that should the services have to be relocated by Dark Fibre, then it
will do so at no cost
to the City.
[7]
The City points out that since 2008, at a rate of more than 5 000
projects a year, it has approved some 50 000 projects for
the
installation of electronic communication facilities on its land. Dark
Fibre has itself applied for consent to lay its cables
on numerous
occasions. And it has paid the deposits and tariffs required by the
City. In 2012, the City introduced a standard process
for the laying
of fibre- optic cable, which required a licensee to apply to the City
for a construction permit and meet the payment
requirements imposed
by the City. Dark Fibre complied with the procedure laid down.
[8]
However, Dark Fibre informed the City on 30 May 2016 that it would
refuse to accept the City’s conditions, and in January
2017 it
stated that the roadway trenching deposits paid by it previously
would no longer be paid. Dark Fibre informed the City
that it would
commence construction in the Durbanville (Kraaifontein) area of Cape
Town without abiding by the roadway trenching
conditions. It wrote to
the City stating that it proposed to commence construction in the
area and invited the City to comment
on the construction. But, it
said, if it and the City could not reach consensus on practical
issues within 30 days it would commence
construction anyway.
[9]
On 17 February 2017 the City granted a ‘wayleave’
(municipal permission to access land and work on it) and a work
permit for Dark Fibre to undertake the proposed work in the
Durbanville area. The City’s standard conditions were included.
Dark Fibre collected the documents from the City, but when completing
them, it deleted the four conditions including the requirement
that
it pay roadway trenching deposits. It took the view, relying on the
Constitutional Court decision in
Link Africa
, that
‘commencement of construction is . . . not dependent on the
issue of what is commonly referred to as a “wayleave”
or
in this case a “road permit”’. The City responded
that it had never refused a wayleave to Dark Fibre but that
s 22(2)
of the Act provided that Dark Fibre had to comply with applicable
laws. The City stated that it was merely requesting Dark
Fibre to
adhere to the City’s conditions, which protect the public and
the City from unsafe and damaging practices.
[10]
Dark Fibre ignored written warnings from the City that starting works
on the roads without complying with the City’s
conditions would
amount to an unlawful breach of s 11(1) of the Streets By-Law. That
section reads:
‘
Excavation
in streets
(1)
No person shall make or cause to be made an excavation or dig or
cause to be dug a pit, trench or hole in a public road—
(a)
except with the written permission of the City; and
(b)
otherwise than in accordance with the requirements prescribed by the
City.
.
. . .’
And
so, without the written permission of the City, Dark Fibre started
works in the Durbanville area. It ignored all requests to
stop work
and on 20 April 2017 a City official issued a stop-work instruction.
Dark Fibre claims that City officials threatened
to incarcerate its
workers. The City denies this.
[11]
Dark Fibre sought an interdict in the high court that would prevent
the City from imposing the conditions that it routinely
did for such
works. The order sought would interdict the City from prescribing or
imposing conditions, or interfering in any works
carried out by Dark
Fibre in constructing or maintaining any electronic communications
network within the City’s jurisdiction,
except enforcement of
its bylaws or policies relating to the preservation of the
environment, traffic control, reinstatement of
land where
construction was done and the erection of barricades to ensure the
safety of the public.
[12]
The City responded in its answering affidavit, explaining why it was
necessary for the City to regulate the matters targeted
by the
application. It asserted that Dark Fibre had a history in the City of
not working to safe and adequate standards, and that
its work had
posed an unacceptable risk to public safety and to the integrity of
the City’s road infrastructure. It asserted
that Dark Fibre
used contractors who were unregistered, lacked the necessary
qualifications and failed to comply with health, safety
and traffic
regulations. The City detailed the previous poor workmanship of Dark
Fibre and the hazards caused by trenching in roads
and pavements. The
details are not germane to the appeal, save to state that cutting
into a road or a pavement is inherently problematic.
It reduces the
longevity of the surface; if not properly done, it may cause the
collapse of a road or pavement, and it leaves unsightly
scars.
[13]
Although Dark Fibre employs a professional consultant to oversee its
work and ensure quality control, the consultant, the City
alleged,
seldom performed the necessary oversight, and had acknowledged that
the work of Dark Fibre has at times been done in an
inadequate
manner. The City argues that Dark Fibre has not, in its papers, cited
a single instance where it has performed the work
of installing
fibre- optic cable to the standards required by the City.
[14]
The City points out that Dark Fibre has not challenged the
constitutionality or validity of the Streets By-Law, nor has it
challenged the City’s tariffs or taken the City’s budget
on review. After the City’s answering affidavit was
filed, Dark
Fibre amended the relief it sought by seeking to impugn only the four
monetary conditions imposed by the City. On appeal,
however, it
argues that a local authority is not permitted to impose any
conditions or pass any bylaw that authorizes the imposition
of
conditions on a licensee. It argues that the City ‘cannot
impose conditions which restrict the very action authorized
by s
22(1) of the Act’. That raises the fundamental question at
issue in this appeal: is a licensee’s power to construct
electronic communications networks unfettered, despite the express
provision in s 22(2) of the Act that the licensee must have
regard to
applicable law?
[15]
The conditions that the City imposes, and with which Dark Fibre
refuses to comply, are that before starting work on any municipal
road or pavement, the licensee must: (a) pay a refundable, or in
certain circumstances non-refundable, deposit before the City
will
issue any wayleave or permit, together with a trench reinstatement
deposit; (b) agree to the City’s reservation of a
right to
impose a tariff charge in respect of the use of City land for the
installation of an electronic communications structure;
(c) undertake
that should the structures it has installed have to be relocated at
the City’s instance, then the licensee
will do the relocation
at no cost to the City.
[16]
Dark Fibre asserts that it is not bound to meet these conditions –
that the statutory consent that it has as a licensee
overrides the
municipal bylaws and the tariffs imposed in terms of the Systems Act.
It makes this assertion because of its understanding
of the judgment
of the Constitutional Court in
Link Africa
. Indeed, it argues
that Davis J in the high court did not understand
Link Africa
and
treated the essential question of the nature of a licensee’s
power as if it were ‘res nova’. As I shall show,
that was
far from the case. It was Dark Fibre’s gloss on
Link Africa
that showed misunderstanding. It is appropriate at this stage to
deal with the authorities I referred to at the outset in this
judgment.
[17]
In
MTN
this court held that a licensee does not require a
private owner’s consent to occupy a base station on land that
it had hired
from the owner. Malan JA said (paras 14 and 15):
‘
The
powers given by s 22 are . . . required to enable the providers of
both fixed-line and wireless telecommunications operators
to achieve
their objectives . . . The reason for the powers given by s 22(1)
would fall away if consent of the owner were to be
a requirement.
Section 22(1) specifically dispenses with the need to obtain the
owner’s consent. The words “with due
regard” [in s
22(2)] generally mean “with proper consideration” and, in
the context impose a duty on the licensee
to consider and submit to
the applicable law. This duty arises only when the licensee is
engaged “in taking any action in
terms of subsection (1)”:
the action referred to by s 22(1) is entering, constructing and
maintaining, altering and removing.
These actions are authorized. It
is “in their taking” that due regard must be had to the
applicable law. A fortiori
the “applicable law” cannot
limit the very action that is authorized by s 22(1).’
[18]
Perhaps that statement lends itself to misinterpretation, for in
Msunduzi
this court was faced with a licensee that contended
that it did not need the municipality’s consent to trench on
its roads.
The municipality in question had flatly refused to grant
the licensee wayleaves to do its work of laying fibre-optic cable. It
had placed a moratorium on the grant of all wayleaves. Dambuza AJA
held that the statement in
MTN
did not mean that licensees did
not have to comply with applicable laws (paras 11 and 14). The
municipality argued that the licensee
had to comply with its bylaw
regulating motor vehicles and road traffic, which required permission
from the city engineer to dig
on the roads and thoroughfares of
Pietermaritzburg. Dambuza AJA said that the municipality’s
contention fell foul of the
principle that applicable law may not be
used ‘
to limit the very act authorized under s 22
’
(my emphasis).
[19]
That does not mean, however, that the power of the licensee is
unlimited. For as Dambuza AJA went on to say ‘a public
authority would be entitled to challenge the manner in which a
licensee takes the action contemplated under s 22’ if it does
not comply with applicable law. That was not, however, the issue with
which the court was faced in
Msunduzi
. Dark Fibre in this
matter contends that this court in
Msunduzi
held that a
licensee did not need an owner’s consent to enter upon land and
dig up roads.
[20]
That is not an interpretation that is consonant with what was said in
Msunduzi
, and if it was, then this court stated the
proposition too widely. The City contends that if that was what was
meant in
Msunduzi
, then it has not been confirmed by the
Constitutional Court in
Link Africa
and is incorrect. The
statements in
Msunduzi
must, however, be read in context:
there the municipality had refused to even entertain applications for
consent to start construction
on municipal roads. The municipality’s
conduct, being a blank refusal, did not in truth constitute a
decision taken in furtherance
of its administration of municipal
roads. The position in this matter is very different. The City has
issued wayleaves and seeks
only to regulate the manner in which Dark
Fibre does its work, something that this court in
Msunduzi
said
it was entitled to do. As I explain more fully below, the conditions
that the City imposes fall comfortably within the proper
administration of municipal roads pursuant to s 11(1) of the Streets
By-Law.
[21]
Davis J in the high court held that the judgments in
Link Africa
also arose in a different context. There the challenge was to the
common law rights of a property owner confronted by what it termed
a
‘public servitude’ created by s 22. The minority judgment
in
Link Africa
considered that s 22(1) amounted to a
deprivation of rights of the owner (Tshwane City) at common law,
amounting to expropriation,
and was thus unconstitutional.
[22]
The majority judgment of Cameron and Froneman JJ, dealing with this
conclusion, held that the real dispute before the Constitutional
Court was not about entry on to property without consent, but about
the common law rights of an owner in relation to a public servitude
created by s 22. The servitude allowed the holder of the right (the
licensee) to gain access to the property in so far as it was
necessary for the exercise of the servitude, but that such access had
to be constrained by the common law obligation to exercise
a
servitude ‘
civiliter modo
’ – with due regard
to the owner’s property rights.
The
majority stated (para 104):
‘
Servitudes
conferred by statute have conveniently, and without any doctrinal
problems, been referred to for many decades as public
servitudes.
Their existence is reflected in virtually every title deed in South
Africa. Almost every property in urban areas has
servitudes
registered over it for sewage, water reticulation, electricity supply
and the provision of telephone services. These
servitudes are
routinely registered as part of the process of opening a township
register. The same is the case with rural properties.
These may
include road and rail reserves, powerline servitudes, rights of way,
rights to convey water and various mining servitudes.’
[23]
The majority judgment continued (para 127):
‘
The
grant of the right under s 22(1) to a network licensee does not
determine how that licensee may exercise it. For that, one has
to go
to s 22(2). And this explicitly requires that ‘
[i]n taking
any action
in terms of subsection (1), due regard must be had to
applicable law’. The applicable law, it held, included the
analogous
principles and rules of the common law on servitudes.
[24]
Referring to
Hollman & another v Estate Latre
1970 (3) SA
638
(A), the court said that a servitude holder cannot ‘come
barging in, brazenly disregarding municipal protections and duties
and works’. That would be ‘alien to our conception of
rights over another’s property. As stated in
Hollman
,
exercise of a servitude is subject to the important condition that
incidental rights must be ‘exercised
civiliter
’
(para 142). By
civiliter
the law means ‘respectfully and
with due caution’ –
Anglo Operations Ltd v Sandhurst
Estates (Pty) Ltd
2007 (2) SA 363
(SCA) para 21.
[25]
The majority concluded in
Link Africa
(para 152):
‘
(a)
Network licensees may select the premises and access to them for the
purposes of constructing, maintaining, altering or removing
their
electronic communications network or facilities in taking action in
terms of s 22(1).
(b)
this selection must be done in a civil and reasonable manner. This
would include giving reasonable notice to the owner of the
property
where they intend locating their works. The proposed access to the
property must be determined in consultation with the
owner;
(c)
compensation in proportion to the advantage gained by the network
licensees and the disadvantages suffered by the owner is payable
in
respect of the exercise of the public servitudes s 22(1) grants; and
(d)
where disputes arise from the manner of exercising the rights under s
22(1) or the extent of the compensation payable, these
must be
determined by way of dispute resolution to the extent that it is
possible or by way of adjudication.
Access to the property in the
absence of resolution will be unlawful
’ (my emphasis, and
footnotes omitted).
[26]
The majority continued (para 155):
‘
While
the legislation does not expressly include notice and compensation
requirements in s 22(1), it is equally silent on disclaiming
notice
and compensation requirements. It is true that provisions expressly
stating that compensation and notice are not required
could have been
included. But, instead, the legislation has s 22(2). Therefore
common-law requirements of notice, consultation
and compensation
apply.’
[27]
The majority went on to point out (para 185) that municipalities are
in a distinctive position from private landowners. Applicable
law, it
said, refers to municipal laws ‘that they make within their
constitutional legislative competence in terms of ch
7 of the
Constitution. If laws fall within that competence, they must be
complied with before s 22(1) may be exercised.’
Link Africa
does not say that a municipality has no common law rights as a
landowner. It may demand notice and compensation under the common
law
relating to servitudes, just as a private landowner may do. But the
City in this matter does not locate its rights only in
the common
law. It acts as a local authority with the constitutional powers to
enact and enforce legislation. It relies on the
Streets By-Law and on
the Systems Act to lay down tariffs.
[28]
Dark Fibre does not submit that the City was not able to pass and
enforce the Streets By-Law, or to impose tariffs. It does
not
challenge the legality or constitutionality of any of the municipal
laws that the City relies on. But it argues that the Constitutional
Court held that an owner may not do anything to thwart the exercise
of its s 22(1) power. The municipalities that appeared in
Link
Africa
, including Msunduzi, argued that a licensee cannot ‘simply
come into a municipality and without warning dig up a busy
intersection,
or lay cables along a busy pedestrian walk without
consulting the local authority. . .’ . The majority accepted
the argument.
It said (para 188)
‘
Section
151(4) of the Constitution provides that national or provincial
government “may not compromise or impede a municipality’s
ability or right to exercise its powers or perform its functions”’.
[29]
But Dark Fibre relies on the following passage in the majority
judgment in
Link Africa
(para 189) in support of its argument:
‘
These
provisions [of the Constitution, regulating the powers and
obligations of municipalities] indicate that licensees, though
empowered by national legislation, must abide by municipal bylaws.
The only limit is that bylaws may not
thwart
the purpose of
the statute by requiring the municipality’s consent. If bylaws
exist that regulate the manner . . . in which
a licensee should
exercise its powers, the licensee must comply.’ (My emphasis.)
[30]
So what, in the context, does ‘thwart’ mean? Dark Fibre
argues that it means that the City cannot impose a requirement
of a
‘second’ consent. It cannot therefore lay down conditions
about payment. It cannot tell a licensee that it may
not start
construction unless it pays a deposit. In my view, the argument is
based on a false premiss: that when the City requires
notice and
payment it is withholding consent to do that which s 22(1)
authorizes. The thrust of the argument is that because a
licensee has
a statutory power, a municipality or other owner cannot lay down
conditions that limit that power.
[31]
In this case, the City refuses to consent to digging up its roads
unless certain conditions are met. That is impermissible
on Dark
Fibre’s argument. But it fails to take into account that the
City is not requiring consent to lay fibre-optic cables.
It requires
only that the City consents to the manner in which the digging up of
the roads and pavements over which it has control,
for the public
benefit, is done. That is not withholding consent to – or
thwarting – the licensee’s exercise
of its statutory
power. As a fact, the installation of fibre-optic cabling in the City
has not been ‘thwarted’ by its
insistence on compliance
with requirements imposed in terms of its Streets By-Law. On the
contrary, such networks have been rolled
out on an impressive scale.
[32]
The general principle that applies where a number of different
authorities are required to consent to an activity is to be
found in
Maccsand (Pty) Ltd v City of Cape Town
[2012] ZACC; 2012
(4)
SA 181 (CC). There the Constitutional Court was concerned with a
company that had been granted a right to mine in terms of
the
Minerals and Petroleum Resources Development Act 28 of 2002 (the
MPRDA). The MPRDA authorizes the holder of such a right to
enter the
land to which the right relates; bring on to it the equipment and
materials that it needs to construct or lay down any
surface,
underground or undersea infrastructure required for the purposes of
mining; and mine for its own account on or under the
land. Like s 22
of the ECA, the powers conferred on the holder of a mining right by
the MPRDA are in the public interest: the facilitation
of
exploitation of mineral resources to promote economic growth,
employment and the social and economic welfare of all South Africans.
Maccsand and the Minister for Mineral Resources argued that because
it had various powers under the MPRDA, which is national legislation,
Maccsand did not need to obtain the City’s planning consent in
terms of the Land Use Planning Ordinance 15 of 1985 (LUPO)
then in
force.
[33]
This court (
Maccsand (Pty) Ltd v City of Cape Town
[2011]
ZASCA 141
;
2011
(6)
SA 633
(SCA)) held that ‘a successful applicant for a mining
right or a mining permit will also have to comply with LUPO in the
provinces in which it operates’. The Constitutional Court
upheld this finding. Jafta J, writing for a unanimous court, held
(para 43):
‘
These
laws, as the Supreme Court of Appeal observed, serve different
purposes within the competence of the sphere charged with the
responsibility to administer each law. While the MPRDA governs
mining, LUPO regulates the use of land. An overlap between the two
functions occurs due to the fact that mining is carried out on land.
This overlap does not constitute an impermissible intrusion
by one
sphere into the area of another because spheres of government do not
operate in sealed compartments.’
And
(para 44):
‘
If
it is accepted, as it should be, that LUPO regulates municipal land
planning and that, as a matter of fact, it applies to the
land that
is the subject-matter of these proceedings, then it cannot be assumed
that the mere granting of a mining right cancels
out LUPO’s
application.’ And (para 48):
‘
The
fact that in this case mining cannot take place until the land in
question is appropriately rezoned is therefore permissible
in our
constitutional order. It is proper for one sphere of government to
take a decision whose implementation may not take place
until consent
is granted by another sphere, within whose area of jurisdiction the
decision is to be executed.’
[34]
The
Maccsand
principle has most recently been relied on by the
Constitutional Court in
Maledu v Itereleng Bakgatla Mineral
Resources (Pty) Ltd
[2018] ZACC 41
para 106.
[35]
The City argues that the
Maccsand
principle is applicable in
so far as the licensee of a telecommunications network under the ECA
is concerned. Although Dark Fibre
is the holder of a licence, it may
not exercise its rights without the authorization of the City to work
on its property and comply
with its requirements. This is not a
‘second consent’, or licence, under that Act. It is
authorization to make use
of its streets in the manner prescribed by
its by-laws. It does not override the consent under the ECA. It is
consent to dig on
its roads, which is governed by by- laws applicable
to everyone in the City’s jurisdiction. That is precisely what
the majority
in
Link Africa
held in para 189, cited above.
[36]
The same conclusion was drawn in
Telkom SA Soc Ltd v Kalu NO
[2018] ZAWCHC 53
where Andrews AJ said that
Link Africa
had
been misinterpreted by Telkom. She said (para 48):
‘
Section
22 cannot operate in a vacuum. . .[I]t has to co-exist in a web of
other laws including municipal by-laws. The Respondent’s
[City
of Cape Town’s] zoning requirements do not conflict with
Section 22(1) because before a licensee may exercise its rights
in
terms of [s 22] the licensee must comply with all applicable law,
including laws enacted by the municipality. . . .I am not
persuaded
that it is the intention of the legislature to grant a licensee
unqualified rights to conduct activities on land without
obtaining
any permit, licence or other authorization required by any law from
any authority.’
[37]
To conclude on the issue of the legal implications of s 22(1) of the
ECA: a licence granted to a licensee constitutes general
authority to
enter land and construct a network of fibre-optic cables or to
perform any of the functions that it is licensed to
do. It stands
alongside any other authority that must be given, by an owner, or
under a bylaw, to do the work in a way that is
determined by a
municipality or other landowner. Different, and separate,
independent, consents required for different activities
(environmental, zoning, municipal or other) must be obtained by a
licensee or its operations will not be lawful. The right of a
licensee under the ECA does not ‘trump’ other rights. It
exists alongside other rights created by applicable law, and
none
overrides the other.
The
power of the City to require deposits and levy tariffs
[38]
The City contends that its functional areas, as set out in Schedule
5B to the Constitution, include municipal roads, public
places,
traffic and parking. It is obliged to administer these areas and to
make by-laws for their effective control. It is under
an obligation
to ensure that roads within its jurisdiction are safe for public use.
A sound road infrastructure is essential for
the community that the
City serves. It controls some 10 900 km of roads. The infrastructure
is very costly and the City is obliged
to ensure that roads under its
management achieve their full life span, which would normally be
about 50 years. It cannot afford
to replace prematurely degraded
roads.
[39]
That is why s 11(1)(b) of the Streets By-Law prohibits the excavation
of roads, and digging in them, trenching or making holes
otherwise
than in accordance with the City’s requirements. The bylaw is
essential to protect the road infrastructure and
other services in
the road reserve from degradation and damage. The evidence of the
City, which was not contested, is that trenching
is a hazardous
activity that must be controlled in so far as possible. Trenching
damages the structural integrity of a road or
pavement, reducing its
lifespan. It also disrupts traffic, and can be dangerous, especially
to pedestrians, if not done in accordance
with the City’s
requirements. It increases the cost of maintenance of roads, which is
borne by the City’s ratepayers.
[40]
Trenching is often not necessary. It is possible to use other methods
of laying fibre-optic cable, such as directional drilling,
which goes
under a road surface and thus avoids breaking the road and reduces
disruption to traffic. However, the City asserts,
licensees often
prefer to trench because trenchless methods are technically more
demanding and require expensive equipment. Accordingly,
the policy of
the City is that a licensee may trench only where necessary. If a
licensee proposes to trench it is required to provide
a technical
motivation to do so. Approval will be given by the City where it is
necessary, but in general it imposes a charge to
disincentivise
licensees from trenching. A licensee is required to pay a deposit
determined by the City, which will be refunded
if the licensee does
not in fact trench.
[41]
The City cited examples of damage done to roads and road reserves by
Dark Fibre amongst other licensees. In its answering affidavit
to
Dark Fibre’s application to interdict the City from imposing
various conditions, an official of the City said: ‘Licensees
who dig into road reserves without obtaining, and following, the City
requirements of how and where to carry out the work, risk
damaging
other infrastructure and services which occupy the road reserve.
These include water mains, electricity reticulation,
stormwater
drains, and the services of other telecommunication licensees. For
example, DFA [Dark Fibre], digging and drilling in
roads without the
necessary authorization, has burst water mains disrupting supply to
residents, disrupting traffic and causing
the loss of more than a
million litres of scarce water during the current severe drought.’
[42]
To avoid the problems caused by trenching, the City has determined a
tariff for trenching which includes a forfeitable deposit
to be paid
before a licensee starts work on any road. It has set different
tariffs for different types of road, distinguishing,
for example,
between local roads and metro roads.
[43]
Dark Fibre argues that the tariff is irrational since it is
predetermined and bears no relation to the actual cost of repairing
a
road on which it has worked. It contends that the tariffs are
disproportionate to the damage anticipated, and that the City has
no
power (vires) to impose a tariff for damage caused to road structure.
It contends that there is no legal basis for the requirements
(the
conditions) that the City imposes.
[44]
The City as landowner may, at common law, determine the compensation
it requires for the use of the land, and damage to it.
Link Africa
makes this clear – para 152(c). The City relies
principally, however, on the powers afforded it by the Systems Act.
Section
75A of that Act provides that
‘
A
municipality may—
(a)
le
vy and recover fees, charges or tariffs
in respect of any function or service of the municipality; and
(b)
rec
over collection charges and interest on
any outstanding amount.’
Dark
Fibre’s contention is that the Streets By-Law requires that the
City ‘prescribe’ its requirements. It relies
on the
minority judgment of Corbett JA in
Goldberg v Minister of Prisons
1979
(1) SA 14
(A) in which he held that ‘prescribed’
meant pre-ordained. The City, it argues, has not pre-ordained tariffs
but has
set them on an ad hoc basis. In my view, one cannot interpret
the meaning of words in legislation without regard to context. In
Goldberg
the court was dealing with an Act that determined
what political prisoners were permitted to read in prison. In this
matter, we
are dealing with requirements of a local authority laid
down so that it can perform its municipal functions. One cannot look
to
the use of a word in one enactment to interpret what ‘prescribed’
means in another and different context. As Corbett
JA subsequently
said, in
Johannesburg
Stock
Exchange
v
Witwatersrand
Nigel
Ltd
1988 (3) SA 132
(A) at 150D-F, a rule must be interpreted in its
context.
[45]
Davis J held in the high court that one of the City’s municipal
functions is to provide and maintain structurally sound
municipal
roads in a financially sustainable manner. The tariffs are charged in
order to enable the City to carry out that function.
He found that
there was nothing in the wording of the Streets By-Law that indicated
that a licensee under the ECA falls outside
that function. Dark
Fibre’s argument that the City has no power to impose a tariff
on a service provider, rather than on
a user, is based on the premiss
that a service provider does not use its services. But the provision
of roads is itself a service
to the public and licensees use the
roads to carry out their functions. The City undoubtedly has the
power to prescribe a charge
for the use of its roads and their
maintenance after a licensee has worked on them. And in any event,
and even if a service charge
could not be imposed on a service
provider such as Dark Fibre, s 75A is not confined to services
provided by a municipality. It
may also levy and recover fees,
charges and tariffs in respect of any function it performs. The
relevant function is that of providing
municipal roads and regulating
the activities of third parties such as Dark Fibre when their works
disrupt or impair the City’s
roads.
[46]
Dark Fibre challenges the validity of each of the conditions imposed
by the City. The first two comprise a deposit to be paid
before work
commences – a roadway trenching tariff. The purpose of the
deposit is to discourage (disincentivize) trenching
across roads, for
the reasons I have explained. If a licensee does not trench, the
deposit is refundable. If it does trench, the
deposit is used to
provide payment of part of the cost of compensation to which the City
is entitled because of the degradation
of its roads. Although the
deposit is provided for in two separate conditions, it is in fact one
deposit, which is either refunded
if the City confirms that no
trenching has taken place, or kept by the City as part compensation
where there has been trenching.
[47]
One of Dark Fibre’s arguments underlying its challenge to these
two conditions is that the tariff prevents the expeditious
construction of its network. It provides no evidence to support this
challenge, and the City’s uncontroverted evidence is
that it
grants wayleaves within a very short time after they have been
applied for. The City is empowered by the Streets By-Law
to lay down
requirements in respect of licensees’ use of its roads. It is
empowered by s 75A of the Systems Act to charge
a tariff for such
use. It is also entitled, as landowner, to claim compensation:
Link
Africa
para 152(c). There are various legal sources, therefore,
empowering the City to charge and to require deposits that may or may
not
be refundable, depending on whether the licensee trenches on
roads or pavements. The charge is in fact levied as a tariff under
the Systems Act.
[48]
Dark Fibre contends that a regulatory charge cannot be used as
a disincentive to harmful conduct. But the Constitutional Court in
South African Reserve Bank v Shuttleworth
2015 (5) SA 146
(CC)
held that such a charge – to discourage harmful conduct –
is constitutionally permissible.
[49]
A further challenge to the conditions regarding the payment of a
deposit is that there is no proportionality between any benefit
to
Dark Fibre and the tariff. It does not substantiate this assertion
with any evidence. The City, in response to this challenge,
showed
how the amount of the deposit is calculated. It is based on the cost
of directional drilling (not trenching), which the
City encourages,
and the likely disadvantages of roadway trenching. It also takes into
account the increased maintenance for roads
and pavements.
[50]
The City’s allegations about the inherent problems of
trenching, and what is needed to maintain roads and pavements after
trenching, are not denied by Dark Fibre. Increased maintenance costs
include resealing the joint between the pre- existing asphalt
and
that which has been reinstated; repair of cracks; repair of potholes
caused; and accommodation of traffic flow during repairs.
The City
states that the amount of the deposit required is conservatively
estimated (that is, is less than the likely additional
cost the city
will incur over the long term because of trenching) and does not
compensate it for the effective sterilisation of
the road reserve for
a period.
[51]
Dark Fibre has not denied these allegations and does not say what
charge it considers to be proportionate. The City’s
version
must be accepted on the
Plascon Evans
principle.
[52]
The second condition relates to a ‘trench reinstatement
deposit’. The purpose of this deposit is to cover the potential
costs to the City of rectifying substandard reinstatement works. Dark
Fibre’s argument, as I understand it, is that the City
has
adduced evidence of only 14 instances where it did not reinstate to
the City’s standard. However, the City pointed out
that it had
cited these instances as examples, and that Dark Fibre’s work
was consistently below standard. And since a licensee
only forfeits
the deposit where the licensee has failed to reinstate
satisfactorily, it is of no moment how many instances of poor
construction work there are. Dark Fibre’s attack is essentially
an attempt to review the manner in which the City has exercised
its
power to impose requirements in terms of s 11(1) of the Streets
By-Law. I do not consider that the requirement of a refundable
deposit is irrational or unreasonable. Licensees are business
entities seeking to make a profit. In doing so, they make use of
facilities administered by the City for the benefit of its residents.
There is no reason why the City, and in effect the ratepayers,
should
be content with attempting to recover, in arrears, the cost of making
good unsatisfactory work done by licensees. The challenge
to this
condition must thus also fail.
[53]
The third condition objected to is that the City reserves the right
to impose a tariff charge in respect of use of City property
for the
installation of telecommunications infrastructure, or, put
differently, the City reserves the right to levy a charge, or
rental,
for the land occupied by infrastructure. The City argues that in
reserving the right to charge for the use of its property,
it is
exercising its common law right as owner. The objection is founded on
the argument by Dark Fibre that the common law right
was taken away
from municipalities by
Link Africa
. As I have shown, the
argument rests on a misinterpretation of
Link Africa
. But the
majority judgment makes it clear, in my view (para 152 (c)), that
owners of land subject to a public servitude are entitled
to require
compensation. It distinguishes municipalities only by stating that
they have greater regulatory rights under the Constitution
than other
owners do. (There is no evidence that the City in practice exercises
this reserved right.) There is accordingly no reason
to review and
set aside this condition.
[54]
The fourth condition relates to relocation costs. It states that
should the City require a licensee to relocate its services,
then the
licensee is obliged to do so at its own cost. Dark Fibre had in fact,
in 2010, indemnified the City against the costs
of relocation. In its
founding affidavit, Dark Fibre relied on the provision of this
indemnity in arguing that the conditions that
the City sought to
impose were invalid. In the circumstances it cannot now challenge the
validity of the condition.
[55]
Dark Fibre does not, on appeal, persist with its claim for
interdictory relief and there is accordingly no reason to deal with
it.
[56]
I conclude that Davis J in the high court correctly interpreted
Link
Africa
and
Maccsand
. Section 22 of the ECA
does not override the requirements of other statutes or bylaws. The
rights conferred on a licensee under
the ECA must be considered
together with all other regulatory instruments, and, where they
require consent for an activity, a licensee
is bound by those
requirements.
[57]
The appeal is dismissed with the costs of two counsel.
_________________
C
H Lewis Judge of Appeal
APPEARANCES
For
Appellant: J J Gauntlett SC QC (with him F B Pelser)
Instructed
by:
Roestoff
& Kruse Attorneys, Pretoria
Symington
& De Kok Attorneys, Bloemfontein
For
Respondent: G Budlender SC (with him R Paschke)
Instructed
by:
CK
Attorneys, Cape Town
Webbers
Attorneys, Bloemfontein