About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2016
>>
[2016] ZAGPPHC 548
|
|
Euphorbia (Pty) Ltd t/a Gallagher Estates v City of Johannesburg (A5052/2015) [2016] ZAGPPHC 548 (17 June 2016)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
LOCAL DIVISION, JOHANNESBURG)
DATE:
17 JUNE 2016
CASE
NO: A5052/2015
In
the matter between
EUPHORBIA
(PTY) LTD t/a
GALLAGHER
ESTATES
.................................................................................................
APPELLANT
And
CITY
OF
JOHANNESBURG
.......................................................................................
RESPONDENT
Local
Authority - water supply effluent and incidental charges - consumer
disputing liability for payment of – arrears alleged
-
Municipality disconnected water supply -consumer paid two amounts to
municipality in terms of agreements to procure re-connection
of water
supply and issuing of a rates and taxes clearance certificate -
payments made under protest and with reservation of rights
- onus on
municipality to prove consumer’s indebtedness - testing of
water measuring meter – failure to use prescribed
method of
testing – Municipality failed to discharge onus - consumer
having over-paid and entitled to refund.
FHD
VAN OOSTEN
J
U D G M E N T
VAN
OOSTEN J:
Introduction
[1]
The appeal concerns the appellant’s
(Euphorbia) liability for payment of charges in respect of water
supply, effluent
and incidental charges (the services) to the
respondent (the City), to a property, then owned by Euphorbia,
described as Erf 5,
H H, E 7 Township, better known as G E, situate
at 1 R D M. The City instituted action against Euphorbia, in which it
claimed the
amount of R4 482 652.96 in respect of the
delivery of services, allegedly due owing and payable, for the period
1 October
2001 up to and including 30 November 2008 (the contentious
period). Euphorbia filed a plea and two counterclaims for payment of
the amounts of R5 031 104.00 and R4 482 652.96
respectively. Three pre-trial conferences were convened, two of which
before a judge of this Division. An agreement between the parties in
respect of the further admission of facts and limitation of
issues
was concluded and recorded. The trial of the matter came before Levin
AJ. Having heard the evidence on behalf of both parties
the learned
judge found for the City. Euphorbia subsequently unsuccessfully
applied for leave to appeal before Levin AJ but the
Supreme Court of
Appeal on petition granted leave to appeal to this court.
The
facts relevant to the disputes
[2] A broad outline
of the relevant facts is the following. In October 2003 the City
installed a new combination meter (the contentious
meter) to measure
water consumption at the Gallagher Estates premises. It was however
read for the first time, in March 2005 and
the account delivered to
Euphorbia pursuant thereto, revealed a spike of 13 times the historic
average consumption measured by
the old meter. The City, in addition,
based the interim charges from October 2003 until March 2005 on the
readings obtained from
the contentious meter.
[3] Euphorbia,
understandably alarmed by the inordinate water consumption as
reflected on the City’s account, requested, as
it was entitled
to do under the City’s By-laws, the testing of the contentious
meter. In February 2006 the City removed the
contentious meter and
subjected it to testing by the City’s flow operational manager
Mr Termets, who testified that he was
the only person ‘legally
allowed’ to test the City’s meters. Having obtained the
test results the City advised
Euphorbia that the contentious meter
functioned properly and that it was not faulty. Shortly thereafter
the City disposed of the
contentious meter.
[4] After removal of
the contentious meter, the City installed yet another meter. The
meter readings obtained from this meter, although
Euphorbia’s
business had by then substantially grown, revealed water consumption
three times less than the quantities measured
by the contentious
meter. From 2006 the City continued billing Euphorbia on the readings
obtained from this meter.
[5] Euphorbia made
payments to the City based on its own calculations. It was further up
to date with all payments in respect of
the other services delivered
by the City. The dispute between the parties only concerned debits
raised in regard to water, effluent
and incidental charges, derived
from the contentious meter readings. In monetary terms the difference
between the amounts billed
by the City during the period October 2003
and December 2005 and the amounts paid by Euphorbia lies at the heart
of the dispute.
Euphorbia’s
counter claim
[6]
In its plea to the City’s declaration,
Euphorbia
denies all essential allegations. In the plea conclusion a set off in
regard to its counterclaims is pleaded.
[7]
Euphorbia’s first counterclaim is
based on an agreement concluded with the City after the City had cut
off its water supply
in November 2008, which of course had a
devastating effect on its business of providing conference
facilities. In terms of the
agreement, to which I shall revert,
Euphorbia paid the amount of R5 031 104-00 under protest to
the City, in return for
which its water supply was restored.
[8]
The second counterclaim is based on a similar agreement, concluded
after the issue of summons, for the purpose of Euphorbia
obtaining a
clearance certificate required for the registration of transfer
pursuant to the sale of its property. In terms of this
agreement
Euphorbia, again under protest, paid the sum of R
11 495 483-35,
inclusive of the amount claimed in the summons, to the City in return
for which the required clearance
certificate, was duly issued. I
shall henceforth refer to these agreements as the agreements.
The
incidence of onus
[9] The incidence of
the onus of proof is decisive in the adjudication of this matter. The
learned judge a quo’s point of
departure was that Euphorbia had
accepted the onus of establishing that the amounts were not due. The
argument advanced by Euphorbia
and found favour with the learned
judge was that, where a party pays under protest, the amount paid
under protest can only be recovered
if that amount was not due. The
onus accordingly, so it was held, rested on Euphorbia to prove that
the amounts paid under duress
were not due. In this court counsel for
Euphorbia did not challenge the finding and the contentions advanced
were premised on the
onus resting on Euphorbia to prove that the
amounts were not due.
[10] In my view the
premise for both the finding of the court a quo and the acceptance of
the onus by counsel for Euphorbia, is
flawed. The starting point is
to consider the majority judgment of the then Appellate Division in
CIR v National Industrial Bank Ltd
[1990] ZASCA 49
;
1990 (3) SA 641
(A), which
was exclusively relied on in and by the court a quo. In that matter
the respondent Bank, under protest, paid the amount
of R488 353-80
to the Commissioner for Inland Revenue, which was claimed in
respect of an ‘autocard scheme’
operated by the Bank. The
Bank was of the view that the scheme did not attract stamp duty but
the Commissioner, notwithstanding
having received the Bank’s
representations in support of its contention, insisted on payment of
the stamp duty and the bank
resolved to pay the amount under protest.
The Bank did not expressly reserve its rights to recover the sums
paid nor did it invite
the Commissioner to agree to a suggestion that
the sums be repaid if the dispute should be resolved in its favour.
[11]
First
National Industrial Bank
was decided on the basis of a finding
that the parties tacitly agreed that the sum paid by the Bank to the
Commissioner under protest,
would be refunded, if the cause for the
Commissioner claiming the payment would subsequently prove to be
wrong. Premised on the
tacit term, it was held, the Bank was entitled
to recover the capital amount of the payment. The facts we are here
concerned with
are fundamentally different and therefore
distinguishable.
First National Industrial Bank
accordingly
does not constitute authority for incorporating a tacit term into the
agreements that the amounts paid under protest
would be refunded only
if those amounts were shown by Euphorbia not to be due.
[12] The reason for
Euphorbia having made the payments under duress must be considered in
the context of the terms of the agreements.
It needs to be emphasised
that the terms of the agreements were expressly agreed on and are
common cause between the parties. As
for the first agreement, it was
expressly agreed that the payment of R5 031 104-00 was made
under protest in order to
procure the re-connection of the water
supply which had been terminated by the City. It was further agreed
that the payment would
not be construed as a waiver or abandonment of
any of Euphorbia’s rights or as an admission of liability on
its part that
the amount was due owing and payable on that particular
date. The terms of the second agreement were identical, except that
the
payment was made in order for the City to issue the required
clearance certificate. The payments accordingly, were not in any way
related to the underlying cause for Euphorbia’s alleged
indebtedness but for a distinctly different reason, entirely
unrelated
to the question of such liability. Put differently, the
City’s claim, at all times, remained disputed in respect of all
its
elements. The express terms of the agreements are dispositive to
the incorporation of a tacit term that repayment of the amount
would
only be made by the City if it was subsequently proved that the
amounts were not due. For an entitlement to repayment of
the amounts
paid under protest, it was incumbent on Euphorbia to prove, first,
that the agreements were concluded, second, that
the amounts were
paid pursuant thereto, and, third, that the water supply was
re-connected and the clearance certificate issued.
That, as I have
mentioned, became common cause at the trial. In the context of the
agreements, in particular having regard to the
non-waiver and
reservation of rights clauses, it remained in issue whether the
amounts were due. The saddling of Euphorbia with
the onus to prove
that the amounts were not due, in my view, cannot be justified on a
proper interpretation of the agreements and
is accordingly legally
untenable.
[13] The court a quo
went further and held that Euphorbia bore the onus of establishing
that ‘the meter readings were defective
and, if so, the extent
of the loss that it had suffered as a consequence of the defective
meter readings’. This finding was
indeed challenged by counsel
for Euphorbia. In my view the finding, likewise, was incorrect.
[14] In civil
proceedings the incidence of onus of proof, as matter of substantive
law, is primarily determined on the factual allegations
contained in
the pleadings (
Mabaso v Felix
1981 (3) SA 865
(A)).
Considerations of policy, practice and fairness might arise in the
determination of the incidence of onus and each of the
parties might
bear the burden of proof in relation to separate issues in the trial
(
Schwikkard Van der Merwe
Principles of Evidence 3
rd
ed 571-575).
[15]
On a conspectus of the pleadings as a whole, the City bore the onus
of proof in regard to the accuracy and correctness of the
contentious
meter readings and, as for its counterclaims, Euphorbia the onus of
proving the agreements. Upon a proper construction
of the agreements
no admission was made as to any of the elements the City was required
to prove. A somewhat odd position arose
because the second ‘under
duress’ agreement was concluded after the institution of the
action. The agreed statement
of facts did not affect or shift the
incidence of onus: it merely assisted the parties in discharging the
onus resting on each
of them.
[16]
The accurateness and correctness of the contentious meter remained in
dispute and the onus in regard thereto accordingly, rested
and
remained on the City. Euphorbia, in discharging its onus, was
assisted by the statement of agreed facts which, in any event,
was
duly confirmed at the trial by the uncontested evidence of the
attorney Yudaken, who acted on its behalf in concluding the
agreements.
[17]
In the absence of special circumstances, considerations of policy,
practice and fairness require that the City is saddled with
the onus
of proving the correctness of its meters, the measurements of water
consumption and statements of account rendered pursuant
thereto. It
cannot reasonably be expected from the consumer, having raised a bona
fide dispute concerning the services delivered
by the City, to pierce
the municipal veil in order to prove aspects that peculiarly fall
within the knowledge of and are controlled
by the City. In the
present matter it was impossible for Euphorbia to perform its own
test on the contentious meter as, firstly,
only Termets was legally
permitted to perform the tests and, as it happened, the meter was
untimely disposed of by the City. The
statements and other data
concerning the water usage were in the possession and under control
of the City. Euphorbia relied on
justified inferences arising from a
sudden spike in water consumption arising from its own comprehensive
investigation, in order
to verify the correctness thereof. It
accordingly raised a bona fide dispute as to the City’s billing
in regard to the services,
and the City bore the onus to prove the
correctness thereof.
Discussion
[18]
The case for the City flounders at the testing of the contentious
meter. The court a quo was alive to the ‘inadequacies’
in
the evidence of Termets but found it unnecessary to determine the
issue as to the validity of the testing of the meter, as in
its view
the onus rested on Euphorbia to prove the actual or inferential
defectiveness to the contentious meter. The validity of
the testing
conducted by Termets is entirely dependent on whether the proper test
was utilised having regard to the diameter size
of the meter.
[19]
Euphorbia, as I have alluded to, requested the testing of the
contentious meter. Section 32 of the City’s Water Services
By-laws 2003 (the By-laws) provides that in such event, ‘the
device must be subjected a standard industry test to establish
its
accuracy’. In terms of s 5(a) of the By-laws, if the outcome of
the test shows that the device is within a prescribed
range of
accuracy, the consumer shall be liable not only for the costs of the
tests but also for ‘all other amounts outstanding’.
The
use of the prescribed test was therefore vital to the City’s
entitlement to payment of all outstanding amounts. The contested
meter had a nominal bore of 150mm and therefore fell within the
parameters of ‘100mm but not exceeding 800mm in diameter’,
in respect of which, in terms of s 32(7)(b) of the By-laws, the test
in accordance with SABS Code 1529 Part 4-1998, applied. Termets
testified that he used the test contained in SANS 1529-1:2003: Ed 3,
of which the particulars were not made available to the trial
court,
but which he maintained is similar to the test provided for in SANS
1529-1: 2003: Ed 2.2 and Ed 2.3. Those tests however
apply to meters
with a nominal bore not exceeding 100mm. Termets confirmed that the
testing procedure for a meter, such as the
contested meter, provided
for in SANS 1529-4 applied, but conceded that he did not subject the
contentious meter to this test.
No evidence was led that the
incorrect tests conducted by Termets would yield similar or
materially similar results to those of
the correct tests. In the
absence of proof that the prescribed test was conducted, Euphorbia
was not liable to pay the charges
measured by the contentious meter.
Euphorbia would have become liable to pay such charges only if the
prescribed test had been
performed and the meter had been found to
have been within the prescribed range of accuracy.
[20]
The By-laws further provide that if the measuring device is found to
be defective, the City, in terms of s 35 must estimate
the quantity
of water supplied after having afforded the consumer the right to be
heard. That of course, in this case, the City
failed to do.
[21]
In summary: the expert evidence concerning the testing of the
contentious meter, in my view, was seemingly unsatisfactory and
insufficient for the purpose of finding that the contentious meter
measured the water supply correctly and accurately. The City
accordingly failed to discharge the onus to prove its accuracy and it
must accordingly be non-suited.
Estimate
of Euphorbia’s use of water during the contentious period
[22] In its heads of
argument as well as in argument in this court, Euphorbia fairly and
properly accepted liability for payment
of reasonable charges in
respect of its water consumption during the contentious period.
Counsel for Euphorbia referred to Euphorbia’s
enrichment
flowing from such use and proposed a just and equitable amount in
respect thereof in order to facilitate the final determination
of the
liability of either party. Full details of the premise for the
calculation and arithmetic employed were set out in counsels’
heads of argument and counsel for the City were invited to advance
argument in response thereto. In essence the calculation is
based on
Euphorbia’s average consumption figures during the period of
the third and last meter which, as I have alluded to,
may well err on
the side of an over-estimate, as by then the business of Euphorbia
had steadily grown from what it used to be in
the contentious period.
Counsel for the City did not challenge either the methodology or the
correctness of the amounts arrived
at. Nor were any alternatives to
Euphorbia’s proposal advanced. I am satisfied that in the
prevailing circumstances, Euphorbia
availed itself of the best
available method in determining the reasonable charges in respect of
Euphorbia’s use of water
during the contentious period and that
the resultant calculations of the amounts due, paid and owing in
regard thereto, are accurate.
I merely need to add that the bottom
end of the calculation reflects an indebtedness by the City in
respect of overpayments made
by Euphorbia in the sum of
R6 397 002-80, together with a refund of interest levied by
the City, in the total sum of
R1 727 947-50, resulting in
the grand total of R8 124 950-30. It follows that Euphorbia
is entitled to an order
for payment of this amount.
[23]
In the result the following order is made:
1.
The appeal is
upheld.
2.
The respondent
is ordered to pay to the appellant:
2.1
The sum of
R8 124 950-30.
2.2
Interest on the amount in 2.1 above
at the applicable
mora
rate, presently 9% per annum, from date of judgment to date of final
payment.
3.
The respondent is ordered to pay the
costs of the appeal, such costs to include the costs consequent upon
the employment of two
counsel.
FHD
VAN OOSTEN
JUDGE
OF THE HIGH COURT
MHE
ISMAIL
JUDGE
OF THE HIGH COURT
RE
MONAMA
JUDGE
OF THE HIGH COURT
COUNSEL
FOR APPELLANT ADV FA SNYCKERS SC
ADV
LM SPILLER
APPELLANT’S
ATTORNEYS MERVYN TABACK INC
COUNSEL
FOR RESPONDENT ADV RM WISE SC
ADV
N BEHARIE
RESPONDENT’S
ATTORNEYS MUNNIK BASSON DAGAMA INC
DATE
OF HEARING 3 JUNE 2016
DATE
OF JUDGMENT 17 JUNE 2016