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[2015] ZAFSHC 203
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Eskom Holdings Soc Limited v Maluti-A-Phofung Municipality and Others; In re: Maluti-A-Phofung Municipality v Eskom Holdings Soc Limited and Others (4723/2014) [2015] ZAFSHC 203 (10 September 2015)
I
N THE HIGH COURT OF SOUTH AFRI CA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No: 4723/2014
In
the matter between
ESKOM
HOLDINGS SOC
LIMITED
Applicant
and
MALUTl-A-PHOFUNG
MUNICIPALITY
1st Respondent
THE
MEMBER OF THE EXECUTIVE COUNCIL
CO-OPERATIVE
GOVERNANCE, TRADITIONAL
AFFAIRS
AND HUMAN SETTLEMENTS
FREE
STATE
PROVINCE
2nd Respondent
MEMBER
OF THE EXECUTIVE COUNCIL,
FINANCE
FREE STATE PROVINCE
3rd
Respondent
MINISTER
OF PUBLIC
ENTERPRISES
4th
Respondent
MINISTER
OF ENERGY
5th
Respondent
In
re
MALUTl-A-PHOFUNG
MUNICIPALITY
Applicant
And
ESKOM
HOLDINGS SOC
LMITED
1st Respondent
THE
MEMBER OF THE EXECUTIVE COUNCIL
CO-OPERATIVE
GOVERNANCE, TRADITIONAL AFFAIRS
AND
HUMAN SETTLEMENTS
FREE
STATE
PROVINCE
2nd Respondent
MEMBER
OF THE EXECUTIVE COUNCIL,
FINANCE
FREE STATE
PROVINCE
3rd Respondent
MINISTER
OF PUBLIC ENTERPRISES
4th
Respondent
MINISTER
OF
ENERGY
5th
Respondent
CORAM:
NAIDOO, J
JUDGMENT:
NAIDOO, J
HEARD
ON:
4 JUNE 2015
DELIVERED
ON:
10 SEPTEMBER 2015
[1]
This is an application for condonation of the first
respondent's non compliance with a court order dated 12
March 2015. Mr A Burger represented the first respondent (applicant
in this matter - MAP) and Mr M Khoza, with Mr
N
Moloto,
represented the applicant (first respondent in this matter - Eskom).
From the outset, the other respondents have not appeared
or featured
in this matter.
[2]
On 3 October 2014, MAP and others came before court (Jordaan J
presiding), in separate applications, urgently seeking to interdict
Eskom from terminating their electricity supply. It seems that only
MAP and Eskom appeared at the hearing. By agreement, the parties
handed up a draft order which was made an order of court in the
following terms:
"1
The applications be postponed to 3 and 4 December 2014;
2
Eskom Holdings SOC Ltd undertakes not to disconnect the electricity
supply to any of the applicant
municipalities pending the
finalisation of the applications;
3
The applicants, should they so wish, are to supplement their papers
by not later than 24 October
2014;
4
Eskom Holdings SOC Ltd, should it wish, shall file any counter
application by not later than
24 October 2014;
5
Answering affidavits to the main applications and counter
applications are to be filed by
not later than 7 November 2014;
6
Replying Affidavits shall be filed by not later than 14 November
2014;
7
Heads of argument shall be filed by the parties in accordance with
the practice directives of the
above Honourable Court during the week
of 17 to 21 November 2014;
8
The applicant municipalities are, pending the finalisation of the
applications, to pay over to Eskom
Holdings SOC Ltd, all amounts
recovered in respect of electricity;
9
Costs to stand over."
[3]
It appears that as a result of MAP's application being served on
Eskom's Bloemfontein offices, instead of its attorneys' offices,
Eskom was unable to file its papers as envisaged in the court order
of 3 October 2014. Consequently when the matter came before
court
again on 3 December 2014, the parties agreed to new timelines for the
exchange of documents and the matter was postponed
to 12 March 2015.
[4]
The matter was argued before me on 12 March 2015, after Eskom
indicated that it wished to raise MAP's contempt of court (in
respect
of the court order dated 3 October 2014) as a point
in
limine.
After arguments were heard, the parties then
agreed on an order, and they presented a draft order, which was made
an order of court
in the following terms:
"1
The applicant, represented by the Municipal Manager, is directed to
file an affidavit in which he reports on whether or
not the applicant
has complied with the court order dated 3 October 2014, and
specifically:
1.1
whether or not, it has, pending the finalisation of the applications,
paid over to Eskom Holdings SOC Ltd all amounts, if any,
recovered in
respect of electricity.
2.
The applicant, as represented by the Municipal Manager, is further
called upon to provide the following information:
2.1
The total amount billed for electricity usage by the Maluti-A-Phofung
community from 3 October 2014 to date, in respect of:
a.
Conventional meters;
b.
Pre-paid Meters;
c.
Time of Use Meters
d.
Any other meters
2.2
The total amount recovered for electricity usage
as set out in 2.1
above, if any.
2.3
The amounts, if any, received form National and/or Provincial
Treasury in terms of the equitable share allocation since October
2014 to date.
2.4
How much of the amount set out in 2.3 above was earmarked for
electricity usage by indigent people.
3.
In the event that the applicant has not paid, in accordance with the
court order dated 3 October 2014, to the respondent monies
recovered
in respect of electricity, the Municipal Manager is required to give
reasons why:
3.1
the applicant and/or the Municipal Manager should not be held in
contempt of court for failing to comply with the
court order;
3.2
its application should not be dismissed; and/or
3.3
the Municipal Manager should not be sentenced to a period of
imprisonment following the finding of contempt;
3.4
the applicant should not be ordered to pay the money recovered in
terms of paragraph 2.2 above to Eskom within 15
days of the hearing
of the contempt application.
4.
The applicant, as represented by the Municipal Manager, must include
such reasons, if any, and information required in paragraphs
1,
2 and 3 above, in the affidavit referred to in paragraph 1 above and
which affidavit must be served and filed no later
than 21 days after
the date of this order.
5.
Eskom is to reply within 1O days of service of the applicant's
explanatory affidavit, referred to in paragraph 4 above.
6.
The application is postponed to 4 June 2015.
7.
Costs to stand over."
[5]
On 4 June 2015, being the date to which the matter was
postponed on 12 March 2015, the matter came before me once again.
MAP
filed an affidavit purportedly in compliance with the court order of
12 March 2015, together with an application for condonation,
as the
affidavit was filed outside the 21 day period stipulated in the
order. MAP alleged that, barring the late filing of the
affidavit, it
has complied or substantially complied with the court order of 12
March 2015. The application for condonation was
opposed by Eskom. I
note from the documents filed in the court file, that neither the
founding affidavit in the condonation application
nor the affidavit
in response to the court order dated 12 March 2015 bears a date when
such affidavits were attested to. The commissioner
of oaths, one
Banathi Olwethu Masoka, did not take the trouble to ensure that he
and the deponent completed the date when these
affidavits were
signed. The deponent alleges that after he consulted with his legal
representatives on 27 May 2015, the affidavits
were finalised. Both
affidavits were served on the respondents on 29 May 2015, and as the
affidavits have the month of May printed
in the attestation clause,
one can only assume they were signed between 27 and 29 May 2015.
[6]
Rule 27(1) of the Uniform Rules of Court provides:
"In
the absence of agreement between the parties, the court may upon
application on notice and on good cause shown, make an
order
extending or abridging any time prescribed by these rules or by an
order of court or fixed by an order extending or abridging
any time
for doing any act or taking any step in connection with any
proceedings of any nature whatsoever upon such terms as to
it seems
meet"
The
requirement of "good cause" to be shown is repeated in
sub-rule (3) which provides that "The court may, on good
cause
shown, condone any non compliance with these rules".
These
two sub-rules of Rule 27 provide the court with a wide discretion to
condone non-compliance with the Rules. It is clear, however,
that an
important safe guard is that good cause must be shown.
[7]
I proceed to examine the explanation given by the deponent to
the founding affidavit in this application, Torno
Charles
Taetsane, who (at least up 2 June 2015) was MAP's Municipal Manager.
He alleges that he was unaware of the court order
dated 3 October
2014, as it appears in the form of a draft order and was not served
on him or MAP. Prior to this he sketches a
background in an attempt
to explain his inaction. He alleges that on 16 March 2015, he was
advised that he would be removed from
his position as Municipal
Manager and redeployed as Director of Community Services. Due to this
uncertainty brought about
by his imminent redeployment, he did
not feel at ease or comfortable to depose to an affidavit in his
capacity as Municipal Manager.
He was called, during the week of 16
March 2015, to a consultation with his legal representatives in
connection with the court
order, but clearly did not respond. He also
received a copy of the court order dated 12 March 2015 during
that week, from
which he learned of the court order dated 3 October
2015. It seems that he only reacted approximately
five
weeks later, on 21 April 2015, when he attended a
consultation with his legal representatives. He asserts that it was
only during
this consultation that he became aware of the content of
the October 2014 court order, because it was never served on him or
MAP.
He does not explain why it took another five weeks to finalise
the affidavits now before me.
[8]
In his argument before me in this matter, Mr Burger appears to adopt
the stance that the draft order is not an order of court,
alternatively that it was not made an order of court. While I am
mindful that the matter before me is an application for condonation,
it bears mention that when I heard the matter on 12 March 2015, the
parties asked for a short adjournment to clarify the situation
regarding paragraph 8 of the October court order. When the matter
resumed, I was advised that they agreed that it was the order
made by
the court. Common sense dictates that if there was agreement that
paragraph 8 was an order of court, then there must have
been
agreement that there was a court order in place. The existence of the
court order was never in dispute. The fact that it may
not have been
typed in the usual form that court orders are typed in this Division
could simply point to an administrative oversight,
which certainly
does not affect the existence or validity of such an order. As I
indicated, that order (on 3 October 2014) was
made by agreement
between the parties, and I have no doubt that an examination of the
Bench Book of Jordaan J, who heard this matter
on that day will
confirm this. I understand that Mr Burger appeared for MAP on 3
October 2014. Mr Burger also represented MAP on
12 March 2015, and a
representative from the firm attorneys instructing him was also
present in court. I agree with Mr Khoza that
it is opportunistic to
argue that the form of the order (that is to say, a draft order)
justifies the presumption that there was
no onus on the Municipal
Manager or MAP to act thereon. They must surely have been advised by
their legal representatives of the
fact that a court order was made,
by agreement between the parties, on 3 October 2014. This would have
been within the knowledge
of Mr Burger and his instructing attorney.
[9]
This brings me to another disturbing feature of Mr Burger's argument.
It has always been accepted that a legal representative
obtains
instructions from his/her client before agreeing to any order that
binds such a client. Mr Burger categorically stated
that in
concluding the agreement which culminated in the court order of 3
October 2014, MAP's legal representatives (which
can only refer
to himself and his instructing attorney) were acting without
instructions. This would mean that they took no steps
to advise their
client (MAP) on 3 October 2014 or shortly thereafter, that they acted
without instructions, and that they agreed
to a court order which
places a heavy burden on the client. It would also mean that they
took instructions for, drafted and settled
the application papers,
which were served on 24 October 2014, without advising their client
of the existence and import of the
October court order. I find this
incredible, and in my view this could well be a matter that merits
the attention of the Law Society
and/or the Bar Council.
[10]
Turning to the conduct of and explanations by the Municipal Manager,
his conduct is indicative of someone who has a lackadaisical
attitude
to his position and the great responsibilities that come with such a
position. The application on 3 October was moved
urgently (and I
understand without papers) in an attempt to prevent Eskom from
disconnecting the electricity supply to the area
of MAP's
jurisdiction. As the responsible officer, that application could only
(or ought to) have been moved on his instructions
and with his
knowledge. Yet he alleges that he was not in Bloemfontein at the
relevant time, he was not present when the agreement
was entered into
and he had no knowledge that an order of court was made. He only
gained knowledge of the agreement on 21 April
2015. This is clearly a
matter that has serious consequences for the municipality and yet its
chief accounting officer professes
to be clueless about it, and made
no attempt to find out exactly what the status of the application was
so that he, on behalf of
the municipality, could have acted
accordingly. It is little wonder, therefore, that the financial
affairs of the municipality
are in such an alarmingly bad state.
[11]
Having said that, this court must consider whether it can exercise
its discretion in favour of Map and condone the late filing
of the
relevant affidavit in this matter. The factors to consider are the
prejudice to each party, and whether such prejudice can
be addressed
by an appropriate costs order. The explanation given by the party
applying for the indulgence, and the strength of
his defence are also
factors to be considered. It is not in dispute that MAP owes a
phenomenal amount of money (about R?OO million)
to Eskom, and that it
is paying little or nothing in reduction of this debt. To my mind, it
appears, on the face of it, that this
situation has arisen due to
incompetence and mismanagement on the part of the functionaries
of the municipality. This needs
to be interrogated. While my view is
that the explanations given by the Municipal Manager for the default
in this matter are thin
and unconvincing, I have to look at his
explanations in the light of the submissions made by Mr Burger. If a
combination of laxity
on the part of the Municipal Manager and the
failure of his legal representatives to have acted as they ought to,
has caused the
delay in filing the affidavit in this matter, then it
is the community that MAP serves that must bear the consequences of
such
delay, should the court refuse to condone the late filing of the
affidavit. That Eskom is also suffering great prejudice is without
doubt, but this court has the difficult task of balancing the
financial interests of a corporate entity with those of a community
placed in a precarious position through no wrongdoing on its part, a
community that is faced with disconnection of a basic and
essential
service. My view is that if condonation is granted, allowing the
affidavit to be filed, the contempt of court application
that was
intended to have been heard on 12 March 2015 can now be properly
ventilated. The contents of the affidavit can then be
properly
scrutinised and an appropriate decision arrived at.
[12]
In the circumstances, I make the following order:
12.1
The application for condonation is granted
12.2
The applicant (Maluti-a- Phofung Municipality) is ordered to pay the
first respondent's (Eskom's) costs, on an attorney and
client scale;
12.2
The Registrar of this Court is directed to bring this judgment to the
attention of the Law Society and the Bar Council, for
their perusal
and such action, if any, they may deem appropriate.
___________________
S.
NAIDOO, J
On
behalf of the Applicants:
Adv M Khoza & Adv
N Moloto
Instructed
by:
Phatshoane Henney Attorneys
35 Markgraaff Street
BLOEMFONTEIN
On
behalf of the 151 Respondent: Adv A
Burger
Instructed
by:
Moroka Attorneys
Suite 19 Reitz Park
74 - 80 Pres Reitz Avenue
BLOEMFONTEIN
(SLL Motlegoloa)