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[2013] ZAFSHC 195
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Association of Body Corporates, Owners and Lessees of Townhouses, Flats And Retirement Villages and Others v Centlec (Pty) Ltd and Others (A334/2011) [2013] ZAFSHC 195 (15 November 2013)
IN THE HIGH COURT
OF SOUTH AFRICA
FREE STATE
DIVISION, BLOEMFONTEIN
Case No.: A334/2011
In
the matter between:-
THE
ASSOCIATION OF BODY CORPORATES,
OWNERS
AND LESSEES OF TOWNHOUSES,
FLATS AND
RETIREMENT VILLAGES
..............................
1
st
Applicant
MRS MARTHA MAGRIETA
BARROW
..............................
2
nd
Applicant
MRS ISOLDE MARIA
OLIVIER
...........................................
3
rd
Applicant
and
CENTLEC (PTY) LTD
......................................................
1
st
Respondent
MANGAUNG
METROPOLITAN MUNICIPALITY
BLOEMFONTEIN
...........................................................
2
nd
Respondent
THE
NATIONAL ENERGY REGULATOR OF
SOUTH AFRICA
(NERSA)
..............................................
3
rd
Respondent
THE MINISTER OF
ENERGY
.........................................
4
th
Respondent
CORAM:
KRUGER,
et
DAFFUE,
JJ
HEARD ON:
4
NOVEMBER 2013
JUDGMENT BY:
DAFFUE, J
DELIVERED ON:
15 NOVEMBER 2013
I
INTRODUCTION
[1] This application is
cast in the form of a review and has been brought in accordance with
the provisions of Rule 53. The essence
thereof is the alleged
discrimination between consumers staying in private
dwellings/residences on the one hand and those staying
in complexes
such as townhouse developments, blocks of flats and retirement
villages (hereinlater referred to as “complexes”).
[2] The applicants are
aggrieved at the electricity tariffs introduced and implemented from
1 July 2010 in respect of complexes
which caused dramatic increases
in the electricity bills of these customers. Applicants attribute the
increases to 1
st
respondent’s metering policy in
terms whereof complexes are supplied with electricity through a
single point of supply each
with one meter per erf measuring usage
and the implementation of a new Time of Use tariff (TOU).
Consequently a bulk tariff is
applied to complexes and individual
customers, i.e. owners and tenants in complexes, do not receive the
intended benefits of TOU
tariffs.
II
THE PARTIES
[3] The main protagonists
are an association of body corporates, owners and lessees of
townhouses, blocks of flats and retirement
villages (ACBOT), the 1
st
applicant on the one hand and Centlec (Pty) Ltd, the 1
st
respondent and the Mangaung Metropolitan Municipality, the 2
nd
respondent on the other (herein later referred to as “the
respondents”). Two individual owners, Mrs Barrow and Olivier
have been cited as 2
nd
and 3
rd
applicants. The
National Energy Regulator of South Africa (NERSA) has been cited as
3
rd
respondent and the Minister of Energy as 4
th
respondent. No relief is claimed against 3
rd
and 4
th
respondents in the Notice of Motion although NERSA was eventually
supposed to play a role in the proceedings as will appear later
herein.
III
THE RELIEF
INITIALLY SOUGHT, THE RELIEF CLAIMED DURING ARGUMENT UNDER
ALTERNATIVE RELIEF AND THE OPPOSITION THERETO
[4] In the Notice of
Motion applicants seek the following relief:
“
1. Dat die
besluit deur eerste en/of tweede respondente op of omtrent
17
Oktober 2007
om
die meterbeleid bylaag “
B”
tot die
funderende beëdigde verklaring goed te keur asook die beleid as
sulks hersien, nietig verklaar en tersyde gestel word;
2. Dat die besluit van die tweede
en/of eerste respondente ingevolge waarvan die 2011/2012
elektrisiteitstariewe vir Mangaung goedgekeur
is en die tariewe as
sulks hersien, nietig verklaar en tersyde gestel word;
3. Dat uit hoofde van die bepalings
van artikel 3(2) van die Wet op Arbitrasie, Wet 42 van 1965 gelas
word dat die geskille tussen
die partye waarna in die funderende
beëdigde verklaring van die applikant verwys word, nie na
arbitrasie verwys sal word nie
en dat geskilbeslegtingsprosedure soos
in die vooruitsig gestel in die “
Electricity Regulations
Act”
, nr. 4 van 2006 en in die besonder artikel 30 daarvan
nie van krag sal wees op die geskille tussen die partye nie;
4. Dat die tydperk van 180 dae
waarbinne aansoek gedoen moet word om hersiening van die besluit in
smeekbede 1 hierbo en soos voorgeskryf
in artikel 7 van die Wet op
Bevordering van Administratiewe Geregtigheid, Wet 3 van 2000 verleng
word ooreenkomstig die bepalings
van artikel 9 van daardie Wet;
5. Koste van geding gesamentlik en
afsonderlik teen eerste en tweede respondente asook sodanige ander
respondente wat hierdie aansoek
mag bestry;
6. Verdere en/of alternatiewe
regshulp.”
[5] Basically the
applicants want this court to set aside the 1
st
respondent’s metering policy.
[6] Respondents who
oppose the application filed opposing papers relying on the following
defences
in limine
:
6.1 There was an
impermissible delay in instituting the application.
6.2 There are material
and foreseeable disputes of fact.
6.3. Applicants should
have used the mandatory statutory internal remedy available to them.
Pertaining to the merits,
respondents contend that the metering policy adopted was as a result
of second respondent’s electricity
by-laws to the effect that
only one metering point is allowed per erf where the consumption
exceeds 100 amps. The measures of respondents
are reasonable and fair
to developers and consumers in complexes with reference to a plethora
of reasons provided.
[7] The respondents’
answering affidavit and the points raised
in limine
apparently
gave applicants’ counsel reason to believe that the Notice of
Motion, which had been issued as long ago as 7 December
2011, ought
to be amended and consequently a Notice of Intention to Amend was
filed on 26 October 2012, a month before the initial
hearing of the
application on 26 November 2012. I quote the following from the
applicants’ notice:
“
Deur na
smeekbede
2
(p.2)
die volgende nuwe smeekbedes in te voeg:
‘
3. Dat
verklaar word dat die vasstelling van elektrisiteitstariewe vir
elektrisiteitsverbruik deur inwoners van meenthuise woonstelle
en
aftreeoorde wat verskil van die elektrisiteitstariewe wat van
toepassing is op elektrisiteitsverbruik deur inwoners van individuele
woonhuise wat direk deur die eerste en/of tweede respondente van krag
voorsien word, onreëlmatig, ontoelaatbaar en onwettig
is.
4. Dat die eerste en/of tweede
respondente verbied word om elektrisiteitstariewe vas te stel en van
toepassing te maak op elektrisiteitsverbruikers
wat woonagtig is in
meenthuise, woonstelle en aftreeoorde wat verskil van die
elektrisiteitstariewe wat vasgestel en van toepassing
gemaak word op
elektrisiteitsverbruikers wat inwoners is van individuele woonhuise
waaraan die eerste en/of tweede respondente
direk krag verskaf.
5. Dat die eerste en/of tweede
respondente gelas word om dieselfde elektrisiteitstariewe vas te stel
en van toepassing te maak op
elektrisiteitsverbruikers wat inwoners
is van meenthuise, woonstelle en aftreeoorde as wat vasgestel en van
toepassing gemaak word
op kragverbruikers wat inwoners is van
individuele woonhuise waaraan die eerste en/of tweede respondente
direk krag verskaf.
6. Dat die tweede respondent gelas
word om artikel 57(2) van sy elektrisiteits bywet te wysig tot die
effek dat regspersone en beheerliggame
van meenthuise, woonstelle en
aftreeoorde in staat gestel word om die totale bedrag wat hulle ten
opsigte van elektrisiteitsverbruik
aan eerste en/of tweede
respondente betaal, vanaf die elektrisiteitsverbruikers in sodanige
meenthuise, woonstelle en aftreeoorde
te verhaal.
2.
Deur paragrawe 3, 4, 5 en 6 te
hernommer.”
Respondents objected in
terms of Rule 28(3). The grounds relied upon for objecting to the
notice of amendment are the following:
“
1. The
notice of amendment was served late on the afternoon on 26 October
2012. The applicant’s heads of argument are due
on 2 November
2012. The period for objection by the respondents in terms of the
High Court Rules expires on 9 November 2012. The
respondents will not
be able to file their heads of argument before the pleadings relevant
to the applicants’ application
to amend its notice of motion
has been finalized. This cannot be done without an application in
terms of the provisions of Rule
28(4) by the applicants.
2. The applicants issued their
application on 7 December 2011. The applicants have delayed
unreasonably in seeking amendment of
the relief set out in the notice
of motion.
3. The respondents are, in all the
circumstances set out herein, materially prejudiced by the failure by
the applicants to seek
timeously to amend their notice of motion.
4. The Court itself is manifestly
prejudiced by the late attempt to amend, given the fact that the
lengthy heads of argument by
the applicants do not deal substantively
with their new case, while the respondents are not called upon to
answer it until such
time as the amendment is argued and should it be
allowed.
5. The amendment sought is in any
event in terms such that it cannot be entertained by a court: it
simultaneously seeks a permanent
interdict in futuro, irrespective of
prevailing circumstances, and this in relation to all persons
(including those not in any
manner represented in these proceedings).
Furthermore, it does so in terms which are in conflict with the
provisions of the Electricity
Regulation Act 4 of 1996.
6. In terms of the provisions of the
regulations promulgated by the fourth respondent in government
gazette no. 992150 of 18 July
2008 Notice R733, the second respondent
is compelled to introduce Time Of Use tariffs, no later than 1
January 2012 to all consumers
with a monthly consumption not less
than 1000 KWh per month or 6 Amps drawn from the supplier per month.
7. The second respondent is in the
process of complying with these provisions. As a result of financial
constraints, the second
respondent has not been able to comply fully
and has obtained permission to implement the provisions of the
regulations, in so
far as it has not been able to do so financially
and otherwise to date, after 1 January 2012.
8. The 2012/2013 tariff structure
approved by NERSA authorizes the second respondent to apply this
tariff to connections larger
than 80 Amps until such time as all
connections are replaced with Time of Use meters.
9. The first respondent’s aim is
to replace between 1000 – 3000 meters with Time of Use meters
per year, at an estimated
capital expenditure of ten to twenty
million rands per year. The replacements thus far include all
connections bigger than 150
amps which applies to all single
connection points at townhouses and other similar developments.
10. Subject to the following,
townhouses are entitled to install Time of Use meters in their
individual units:
10.1. That the distribution systems
comply with the second respondent’s standards.
10.2. That the ownership of the
distribution systems has been transferred to the second respondent.
10.3. That the second respondent shall
have access to the Time of Use meters installed in units, to enable
it to maintain, replace
and read such meters.
11. Presently there are approximately
250 000 complexes under the second respondent’s
jurisdiction.
12. The second respondent’s
bylaw 57(2) with regard to the compulsory installation of single
points of supply was promulgated
before the promulgation of the
regulations by the fourth respondent introducing the Time of Use
principle.
13. The consequence of this is that
the distribution systems and meters in individual units in complexes
have to be replaced to
enable the first respondent to meter the
monthly consumption of electricity in each unit separately.
14. The costs of this to the second
respondent and body corporates will be prohibitive and wasted should
an alternative solution
to the problem that was created nationwide be
found. This problem is vexing in nature and the subject of national
investigation
by the third respondent.
15. Until such time as the third
respondent has complicated (sic) its investigation, which has already
commenced, and provided guidelines
to resolve the problem, the
amendment of the second respondent’s bylaws will be premature
and could lead to unnecessary and
wasted costs to implement it.
16. The relief sought by the
applicants will result in a situation where the second respondent
will not be entitled to apply tariffs
to complexes unless they differ
from tariffs applied to single residential households. This would
result in the second respondent
being unable to adjust its tariffs in
such a manner that complexes deserving of lower tariffs than those
applicable to residential
households, being set. The tariffs as
proposed by the applicants will be discriminatory per definition.
17. The amendments sought by the
applicants have not been fully canvassed on the papers before the
Court and the Court will not
be able to adjudicate these unless the
parties have been afforded the opportunity to do so.
18. For the abovementioned reasons,
the first and second respondents object to the proposed amendments by
the applicants.
19. There have been important
legislative and consultative developments between first, second and
third respondents as well as other
suppliers of electricity with
regard to the solution of the problems arising from the regulations
introduced by the fourth respondent
which is essential that the Court
should take note of and which impacts on the amended relief now
sought.
20. The applicants have caused the
respondents to incur additional costs by their notice and have not
offered to pay the wasted
costs that the applicants occasioned by it.
The respondents are entitled to these costs and shall seek an order
compelling the
applicants to pay such costs before it may proceed
with the application for amendment.
21. The respondents shall move for the
review application to be postponed to a date suitable for all parties
and their counsel,
due to the applicants’ late application to
amend.”
As a result of this
objection, applicants decided not to proceed with the proposed
amendment. Applicants’ attitude in withdrawing
its intended
amendment cannot be described as anything but an abandonment of the
relief they intended to seek in addition to that
set out in the
Notice of Motion. This court was informed on 14 November 2012 by
letter from applicants’ attorneys as follows:
“
Ons verwys
na bovermelde aangeleentheid en die Kennisgewing van Voorgenome
Wysiging wat op 29 Oktober 2012 namens die Applikant
geliasseer is.
Ons sal dit waardeer indien u die
Agbare Voorsittende Regters in kennis stel dat die Applikant nie met
die voorgenome wysiging voortgaan
nie.”
Mr Danzfuss confirmed
applicants’ stance in court when the matter was initially heard
on 26 November 2012. I have quoted the
intended amendments and
objections thereto fully in view of the developments during argument.
[8] During oral argument
on 4 November 2013 Mr Danzfuss, appearing with Mr Rautenbach,
submitted that we can and should come to
the aid of applicants by
granting orders similar to those in the notice of intention to amend
under alternative relief. Mr Gauntlett,
who appeared with Mr Pelser
for respondents, objected to such course being taken by the court.
[9] Mr Danzfuss asked for
the following relief:
(1) Declaring the
metering policy of the 1
st
respondent void and setting it
aside;
(2) Declaring that the
electricity tariffs charged for complexes may not be higher than the
tariffs for residential houses.
[10] This relief, Mr
Danzfuss said, is the same as the relief sought in the Notice of
Amendment.
IV
GRANTING RELIEF
UNDER FURTHER OR ALTERNATIVE RELIEF
[11] In answer to the
statement that annexure B, which the applicants in the Notice of
Motion seek to have reviewed and set aside,
Mr Danzfuss submitted
annexure B constitutes a void document, according to which the
respondents were working. He said it did not
matter what you call it,
it contained the principles according to which the respondents were
working. He submitted we should give
a declaratory order (as
contemplated in the Notice of Amendment).
[12] In
SA Property
Owners Association v Johannesburg Metropolitan Municipality and
others
2013 (1) SA 420
(SCA) the applicants claimed review,
alternatively a declarator (para [66]). In this case the applicants
in the Notice of Motion
only claimed a review, no declarator. The
prayer for a declarator was introduced in the Notice of Amendment,
which Notice of Amendment
was abandoned.
[13] A declaratory order
was made in
Herbert Porter Co Ltd and another v Johannesburg
Stock Exchange
1974 (4) SA 781
(W) under the prayer for
alternative relief (796C-F). The court held the order to be a
variation in the form rather than the substance
of the relief sought
(796E). A similar approach was followed in
Luzon Investors
(Pty) Ltd v Strand Municipality and another
1990 (1) SA 215
(CC) at 229G – H. Here the court found that all relevant facts
were before it and were dealt with in argument and therefore
it was
appropriate that a declaration be made in terms of the prayer for
alternative relief.
[14] In
Eye of
Africa Developers (Pty) Ltd v Shear
[2012] 2 All SA 32
(SCA)
the High Court granted an order reviewing and setting aside a
decision of the Gauteng Department of Agriculture, Conservation
and
Environment allowing Eye of Africa to use certain water resources to
irrigate a golf course. The Supreme Court of Appeal held
that review
was not an appropriate procedure as the letter of the Department
granting the consent did not constitute administrative
action as
contemplated by PAJA, and that the letter was without legal effect on
the rights of Mrs Shear, the respondent in the
appeal. Consequently
the court dismissed the appeal with costs, but the order of the court
a quo
was set aside and
inter alia
replaced by an order
in terms whereof the 4
th
respondent’s purported
amendment dated 25 July 2008 (through the letter of the official) was
declared to be of no force and
effect. Mr Danzfuss argued that, just
as review procedure was not appropriate in that case, but relief
nevertheless granted, confirmed
on appeal, this court can grant the
relief now sought by the applicants. Three aspects that would have to
be dealt with in order
to consider Mr Danzfuss’ arguments are
first, the consequential relief that might or might not have to be
given, second,
that a declaratory order would have a negative impact
on at least four budgets already approved, i.e. for the 2010/2011,
2011/2012,
2012/2013 and 2013/2014 financial years and finally it
would have serious financial consequences for respondents and the
public
at large and consumers in complexes in particular insofar as
the whole infrastructure pertaining to electricity reticulation would
have to be revamped.
[15] In this case the
applicants wanted to amend their prayers to include the relief now
sought. The respondents objected, and the
applicants withdrew the
intended amendment. Now the applicants ask us to grant relief set out
in the Notice of Amendment to which
the respondents objected and
indicated their prejudice.
V
THE FACTUAL
MATRIX
[16] In terms of a
service delivery agreement entered into between respondents, 1
st
respondent is responsible for the reticulation of electricity to
consumers within the Mangaung municipal area.
[17] 2
nd
Respondent promulgated by-laws relating to electricity supply in
Local Government Notice 110 of 28 October 2005. The parties are
at
loggerheads as to whether the by-laws provide for the installation of
one electricity meter and one single point of electricity
supply per
erf (also in the case of complexes), or a single point of supply per
erf, but with separate electricity meters for each
of the
owners/tenants in the complexes. This aspect will be dealt with
further later herein.
[18] On 17 October 2007
several senior officials of 1
st
respondent recommended the
acceptance of a policy under the heading “Policy: The number of
electricity meters per erf”.
Ex facie
the document
annexed as annexure “B” to the founding affidavit this
“policy” was neither approved by the
Chief Executive
Officer, nor the Chairman of the Board of 1
st
respondent.
In prayer 1 of the Notice of Motion applicants seek an order in terms
whereof 1
st
and/or 2
nd
respondents’
decision to adopt this “policy” be reviewed and set
aside. The third paragraph under the heading
“Introduction”
in annexure “B” reads as follows:
“
On the 22
nd
June 2005
this policy was revised to provide only one meter per erf due to the
fact that our core business is distribution and not
metering systems.
The same amount of electricity would be sold through one meter but
the maintenance of meters and boxes as well
as the number of accounts
would increase if the number of meters are not restricted. This
however created much conflict between
the owners of a sectional title
consisting out of only two units.”
In paragraph 7 of the
document the following was recommended as a policy to be adopted:
“
7.1. For
sectional title erven with up to three units each unit will be
supplied with a separate connection similar to a single
registered
erf;
7.2. For all flats, townhouse
developments or sectional title erven with more than three units a
single meter at the requested supply
rating will be provided and all
sub-metering and account/token management will be managed by the body
corporate.”
[19] What is clear from
the documentation before us is that neither the 1
st
, nor
the 2
nd
respondent adopted the recommendations of 17
October 2007 as a policy and no decision was taken in this regard by
anyone of these
two entities. Fact of the matter is that, as
indicated in the introduction of annexure “B” and the
third paragraph
thereof in particular, one electricity meter per erf
had been installed for complexes long before October 2007. Bearing in
mind
the number of complexes affected, 1
st
respondent and
before it, 2
nd
respondent, probably adopted such policy
even before the passing of the electricity by-laws of 2005.
[20]
Ex facie
the
documents before us there was never any dispute between respondents
and developers, complex owners/tenants or body corporates,
save as
stated in annexure “B”, concerning the approach adopted
of installing one electricity meter per erf in respect
of complexes.
There is no indication on the papers that complaints were made by
customers or received by respondents prior to 1
July 2010.
[21] From July 2010 and
since the approval of 2
nd
respondent’s 2010/2011
budget, a disparity in tariffs became evident with particular
reference to consumers in single residential
dwellings on the one
hand, and consumers in complexes on the other. The Home Power Bulk
tariff was done away with from 1 July 2010
and in its place Inclining
Block Tariffs (IBT) and Time of Use tariffs (TOU) were implemented.
Applicants do not apply for the
review and setting aside of the
tariffs implemented as from 1 July 2010. They complain about the
decision to approve the electricity
tariffs for the 2011/2012
financial year, i.e. the financial year starting on 1 July 2011 and
terminating on 30 June 2012. The
tariffs implemented during this year
differed from the tariffs implemented in the 2010/2011 financial
year.
[22] Both IBT and TOU may
be to the benefit of electricity users. IBT provides for four blocks.
If a customer uses less than 50
kWh of electricity per month he/she
is charged at the lowest level set out in block 1, but a customer
using 600 kWh and more is
charged at the highest level as set out in
block 4. In between these blocks incremental increases in the tariff
are provided for
in blocks 2 and 3 depending on the amount of
electricity used. A customer who uses electricity sparingly, can save
on his/her electricity
bill. TOU has been introduced by the 4
th
respondent in regulations promulgated on 18 July 2008. In terms
hereof an end user or customer with a monthly electricity consumption
of 1000 kWh and above must have a so-called smart card system and be
charged on TOU tariffs not later than 1 January 2012. Respondents
had
no choice but to introduce TOU. Although they could have delayed
introduction of TOU for another year, they decided to implement
it
from 1 July 2010. TOU provides for peak, standard and off-peak
periods. Off-peak periods are between the hours of 22h00 to 06h00
and
during weekends and public holidays.
[23] One does not have to
be an electrical engineer or accountant such as the deponents who
filed affidavits herein on behalf of
the parties to understand the
benefits to be reaped by consumers if they make use of the savings
measures introduced by these two
types of tariffs, as and when they
are applicable. A non-expert will also realise that several customers
in a complex where electricity
is supplied in bulk through one
service connection and one electricity meter can never receive the
intended benefits of the IBT
tariffs as the consumption of complex
will invariably be in excess of 600 kWh. As the electricity usage of
a consumer in a complex
is not individually measured with a TOU
meter, it is also common sense that such person cannot save on
electricity unless everyone
or at least the majority in the complex
do likewise.
[24] Amendments of the
applicable tariffs were also made in respect of the 2012/2013
financial year and it is common cause that
during this financial year
(2012/2013) consumers in complexes were much better off than during
the previous two financial years
insofar as complexes were not
charged tariffs applicable to commercial properties as was the case
during the previous two financial
years. On 19 December 2011 the
Electricity Regulation Second Amendment Bill was published in the
Government Gazette which might
afford the respondents a more flexible
approach pertaining to the imposition of tariffs. Also at NERSA
level, consultations and
negotiations with relevant role players are
apparently on-going pertaining to several aspects of electricity
reticulation and the
effect on consumers as is apparent from the
NERSA documents attached to applicants’ replying affidavit
dated August 2011
and 14 October 2011 respectively.
[25] On 26 November 2012
the court made the following order by agreement:
“
1. Die
aansoek word
sine
die
uitgestel
hangende die partye se pogings om deur bemiddeling van Derde
Respondent ‘n oplossing vir die geskilpunte te vind.
2. …..
3. …..
4. Derde Respondent word gelas om voor
of op 28 Februarie 2013, op ‘n wyse soos deur hul voorgeskryf
en met oorweging van
die partye se voorleggings soos hierbo
uiteengesit, ‘n oplossing te vind ten aansien van die geskille
tussen die partye en
die implementering daarvan ten einde die
aangeleentheid voor laasgenoemde datum af te handel.
5. …..
6. Die partye sal geregtig wees om
hulle hofstukke aan te vul ten aansien van die mediasie proses
minstens 4 weke voor die verhoordatum
en sal die ander party daarop
kan antwoord minstens 2 weke voor die verhoordatum.
7. Geen van die partye se regte word
geraak ten aansien van die geskilpunte tans voor die hof nie.
8. Die koste van vandag sal oorstaan
vir latere beregting.”
[26] NERSA approached the
court to obtain an extension of time to comply with the above order
which was granted. A process was conducted
at NERSA and the parties
hereto took part therein by providing NERSA with their submissions.
However NERSA did not make any decision
notwithstanding several
requests made on behalf of applicants. Consequently the matter was
enrolled for hearing on 4 November 2013
and the parties filed further
affidavits in accordance with the above order.
VI
THE METERING
POLICY
[27] The main thrust of
Mr Danzfuss’ argument concerns the metering policy of the
respondents. The objection is against the
principle that electricity
is supplied to body corporates of complexes at the bulk tariff. If
one has regard to the consumer in
Parnon Court, referred to as an
example by applicants, she was charged R0,79 per kWh in April 2012
(which is not during the financial
year applicants complain about),
whereas the consumer in the Stellenryk Complex paid R1, 06 per kWh in
the same month. Separate
meters are installed for the consumers in
Parnon Court and they are billed directly by 1
st
respondent as is the case with consumers in private residential
dwellings. They are also afforded the advantages of IBT. Contrary
thereto Stellenryk’s electricity is supplied at bulk through
one service connection and one electricity meter. The body corporate
(not the consumer directly) is billed by 1
st
respondent
and the individual consumer does not have the benefit of IBT.
According to Mr Danzfuss the application of the metering
policy
together with TOU tariffs leads to an unfair result. Consumers in
these complexes are not permitted by the system to save
electricity.
Electricity is supplied to the body corporate at the high bulk
tariff. Mr Danzfuss submitted that section 21(2) of
the Electricity
Regulation Act, 4 of 2006 prohibits discrimination. He argued the
metering policy makes it impossible for the users
in complexes such
as Stellenryk to be end-users such as is the case with private
residential dwellings and those complexes where
separate electricity
meters (not sub-meters) have been installed by respondents. That he
submitted is discrimination.
VII
APPLICABLE LEGISLATION AND
AUTHORITIES
[28]
Although review proceedings are to be brought in accordance with the
provisions of Rule 53 - parties sometimes adopt the procedure
prescribed in Rule 6 - the applicable test pertaining to the
adjudication of motion proceedings remains the same. Refer to the
following
dictum
from
the recent judgment by Brand JA in
Oakdene Square
Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami) (Pty)
Ltd and Others
2013 (4) SA 539
(SCA) at para [3] p 542A –
C:
“…
the
observation by Harms DP in
National
Director of Public Prosecutions v Zuma
2009
(2) SA 277 (SCA)
… para 26 to the effect that motion
proceedings such as these are aimed at 'the resolution of legal
issues based on
common cause facts'. They are simply not geared
toward the decision of factual disputes. In consequence, so Harms DP
reminded us,
it is well established that, where in motion proceedings
disputes of fact arise on the papers, the matter can only be decided
on
the respondent's version of the disputed facts, unless that
version is so far-fetched or clearly untenable that it
can justifiably
be rejected merely on the papers. What is more,
it makes no difference to this approach that, as in this case, motion
proceedings
have been dictated by the legislature. Neither does it
make any difference where the legal or evidential onus lies.”
[29] Applicants seek the
review of certain administrative actions and they rely on a plethora
of reasons why these administrative
actions should be reviewed and
set aside with specific reference to s 6 of the Promotion of
Administrative Justice Act, 3 of 2000
(PAJA). Section 1 of the Act
defines administrative action as
“…
any
decision taken, or any failure to take a decision, by ̶
(a) an organ of state, when ̶
(i) ...
(ii) exercising a public power or
performing a public function in terms of any legislation; or
(b) a natural or juristic person,
other than an organ of state, when exercising a public power or
performing a public function in
terms of an empowering provision,
which adversely affects the rights of any person and which has a
direct, external legal effect,
but does not include ̶
(aa) …
(bb) …
(cc) the executive powers or functions
of a municipal council...”
[30] Section 7(1) of PAJA
stipulates a time bar of 180 days for the institution of proceedings
for judicial review. Nugent JA explained
in
Gqwetha v Transkei
Development Corporation Ltd and Others
2006 (2) SA 603
(SCA)
at paras [22] and [23]:
“
[22] It is
important for the efficient functioning of public bodies… that
a challenge to the validity of their decisions
by proceedings for
judicial review should be initiated without undue delay…
[23] ...
It is for
that reason in particular that proof of actual prejudice to the
respondent is not a precondition for refusing to entertain
review
proceedings by reason of undue delay, although the extent to
which prejudice has been shown is a relevant consideration
that might
even be decisive where the delay has been relatively slight.”
[31] As Brand JA put it
in
Opposition to Urban Tolling Alliance and Others v The South
African National Roads Agency Ltd and Others
, Case No 90/2013
[2013] ZASCA 148
(9 October 2013) (“OUTA”) at para [26]:
“…
s
7(1) of PAJA requires the same two stage approach. The difference
lies, as I see it, in the legislature’s determination
of a
delay exceeding 180 days as
per
se
unreasonable.
Before the effluxion of 180 days, the first enquiry in applying s
7(1) is still whether the delay (if any) was unreasonable.
But after
the 180 day period the issue of unreasonableness is pre-determined by
the legislature; it is unreasonable
per
se
.
It follows that the court is only empowered to entertain the review
application if the interest of justice dictates an extension
in terms
of s 9. Absent such extension the court has no authority to entertain
the review application at all. Whether or not the
decision was
unlawful no longer matters. The decision has been ‘validated’
by the delay (see eg
Associated
Institutions Pension Fund
para
46). That of course does not mean that, after the 180 day period, an
enquiry into the reasonableness of the applicant’s
conduct
becomes entirely irrelevant. Whether or not the delay was
unreasonable and, if so, the extent of that unreasonableness
is still
a factor to be taken into account in determining whether an extension
should be granted or not (see eg
Camps
Bay Ratepayers’ and Residents’ Association v Harrison
[2010] 2 All
SA 519
(SCA) para 54).”
[32] A concerned person’s
awareness of administrative action that he/she seeks to set aside for
one or other of the reasons
set out in PAJA, is not sufficient. Again
as Brand JA stated in the
OUTA
case at para [27]:
“
In its terms
s 7(1) envisages asking when ‘the person concerned’ was
informed, or became aware,
or
might reasonably be expected to have become aware, of the
administrative action
.
This admits of an answer where the act affects and is challenged by
an individual, but does not readily admit of an answer where
it
affects the public at large…. It seems to me that in those
circumstances [where the public at large is affected] a court
must
take a broad view of when the public at large might reasonably be
expected to have had knowledge of the action, not dictated
by the
knowledge, or lack of it, of the particular member or members of the
public who have chosen to challenge the act.”
(
emphasis
added.
)
[33] In para [36] of the
OUTA
case the SCA dealt with the legality argument as
follows:
“
While it is
true that the principle of legality is constitutionally entrenched,
the constitutional enjoinder to fair administrative
action, as it has
been expressed through PAJA, expressly recognises that even unlawful
administrative action may be rendered unassailable
by delay.”
[34] With reference to an
argument by Mr Danzfuss that the metering policy was null and void
ab
initio
and that the time limits set out in PAJA was not
applicable in order to have it set aside, I quote the following from
para [38]
of the
OUTA
judgment:
“
[38]
However, the passage in
Oudekraal
upon which
the appellants rely is authority for the contrary. That passage makes
it clear that, unless an invalid administrative
act is set aside by a
competent court, it is regarded as valid for the purpose of
consequent acts. That is supported by the following
statement in the
unanimous judgment of the Constitutional Court in
Camps
Bay Ratepayers’ & Residents’ Association and another
v Harrison and another
2011
(4) SA 42
(CC) para 62:
‘
As was
explained in
Oudekraal
Estates (Pty) Ltd v City of Cape Town and Others
[para 31]
administrative decisions are often built on the supposition that
previous decisions were validly taken and, unless that
previous
decision is challenged and set aside by a competent court, its
substantive validity is accepted as a fact. Whether or
not it was
indeed valid is of no consequence.’”
[35] The delay rule,
according to Brand JA in para [41] of
OUTA
“
gives
expression to the fact that there are circumstances in which it is
contrary to the public interest to attempt to undo history”.
[36] The question to be
considered in this case is as Brand JA put it, “whether the
clock could be turned back”, or
as Mr Gauntlett has put it,
“whether the omelette could be unscrambled”. I shall
consider this in the evaluation of
the evidence and arguments. Fact
remains that unless and until impugned decisions are reviewed and set
aside they are regarded
as valid in law.
[37] Although respondents
throughout their affidavits tried to convince us that owners/tenants
in complexes were not worse off than
consumers staying in single
residential dwellings or in those complexes such as Parnon Court
where individual meters are installed,
it is apparent that there is a
disparity which was directly caused by the introduction of IBT and
TOU as from 1 July 2010, bearing
in mind the historical situation
that one electrical meter per erf had been installed also in the case
of certain complexes such
as Stellenryk. Mr Gauntlett relied in this
regard on
s 75
of the
Local Government: Municipal Systems Act, 32 of
2000
which reads as follows:
“
(1) A
municipal council must adopt by-laws to give effect to the
implementation and enforcement of its tariff policy.
(2) By-laws in terms of subsection (1)
may differentiate between different categories of users, debtors,
service providers, services,
service standards and geographical areas
as long as such differentiation does not amount to unfair
discrimination.”
This section cannot be
read in isolation and must be read with
s 74
which
inter alia
provides for the principle that users of municipal services should be
treated equitably in application of tariffs. (See
section 74(2)(a).)
As indicated above Mr Danzfuss, on the other hand, relied on s 21(2)
of the Electricity Regulation Act, 4 of 2006 which reads as
follows:
“
A licensee
may not discriminate between customers or classes of customers
regarding access, tariffs, prices and conditions of service,
except
for objectively justifiable and identifiable differences approved by
the regulator.”
The regulator referred to
is NERSA, the 3
rd
respondent in this application. It is
not in dispute that NERSA has approved the tariffs applied by 1
st
respondent from time to time.
[38]
It is important to heed the warning by Schreiner JA more than five
decades ago in
Trans-African Insurance Co Ltd v Maluleka
1956 (2) SA 273
(AD)
at 278F – G where the
learned judge stated that:
“…
technical
objections to less than perfect procedural steps should not be
permitted, in the absence of prejudice, to interfere with
the
expeditious and, if possible, inexpensive decision of cases on their
real merits.”
Although in a different
context, the following
dictum
of Froneman J in
KwaZulu-Natal
Joint Liaison Committee v MEC for Education, KwaZulu-Natal and Others
2013 (4) SA 262
(CC) at para 80, relying on comments by Prof Cora
Hoexter is apposite:
“
Formalism
has many meanings, but Professor Cora Hoexter helpfully describes one
of its meanings as ‘a judicial tendency to
attach undue
importance to the pigeonholing of a legal problem and to its
superficial or outward characteristics; and a concomitant
judicial tendency to rely on technicality rather than substantive
principle or policy, and on conceptualism instead of common sense'.
Hoexter is further quoted
as follows:
'In cases displaying formalistic legal
reasoning the merits often seem strangely divorced from the
outcome of the case, so
that it is difficult and perhaps even
embarrassing to explain the case to a layperson.’”
I shall consider this
when applicants’ claim that we grant relief under the heading
of alternative relief is discussed.
VIII
MOOTNESS
[39] Mr Gauntlett
submitted that the dispute between the parties had become moot.
Courts will not decide abstract, academic or hypothetical
questions.
Mr Danzfuss submitted that it is in the interests of justice for the
court to decide this case, and said this judgment
will give guidance
to the respondents with reference to
SA Property Owners
Association v Johannesburg Metropolitan Municipality
supra
at para [63] (the minority judgment of Southwood AJA).
IX
EVALUATION OF
THE EVIDENCE AND ARGUMENTS OF COUNSEL
[40] Mr Danzfuss conceded
that neither 1
st
nor 2
nd
respondent resolved on
17 October 2007 to implement the metering policy attached as annexure
“B” to the founding affidavit.
This should be the end of
prayer 1 of the Notice of Motion, save insofar as further relief is
also sought that the policy as such
be reviewed, declared null and
void and set aside. Insofar as the applicants tried to bring their
case within the parameters of
PAJA, the application of such policy
can never be regarded as an administrative action which might be set
aside on review. Therefore
Mr Danzfuss opted for an argument that
this court should come to the assistance of the applicants by
granting a declaratory order
in the form set out above under the
prayer for alternative relief in the notice of motion.
[41] To accede to Mr
Danzfuss’ request will probably cause severe prejudice to
respondents. In this regard the objections
raised in their notice of
objection in terms of Rule 28(3) which I quoted fully above should be
considered. It is not necessary
to discuss these in any detail.
Firstly, the relief is totally different from the case that
respondents had to meet and secondly,
applicants intended to ask for
relief which would have had the same consequences applicants tried to
achieve during the oral argument
before us, but their counsel
unequivocally abandoned reliance thereon by withdrawing the
application for amendment. Furthermore,
respondents have been
supplying one service connection and one electricity meter per
complex for a number of years and long before
2007 and, as they –
respondents - say in accordance with the by-laws adopted in 2005. It
appears as if this manner of supplying
electricity has been carrying
on for a considerable period prior to the passing of the by-laws in
2005, if one considers the vast
number of townhouse complexes and
retirement villages on the list provided, many of which must have
been developed before 2007
or even 2005. The costs to be incurred and
time needed to switch to a system where all consumers in complexes
individually be provided
with separate meters (not sub-meters as is
the present position) and the manpower and costs if these meters are
to be read by 1
st
respondent’s personnel have not
been fully canvassed. No doubt this will be a major operation with
serious financial implications
as indicated by respondents in their
answering affidavits..
[42] Bearing this in mind
there can be no doubt that developers of complexes were aware for
several years that respondents granted
one supply point and one
electricity meter per complex and it is also clear that the trustees
of body corporates as well as the
owners and tenants in these
complexes were fully aware of the fact that the consumers did not
receive their accounts from the 1
st
respondent (and
earlier from 2
nd
respondent), but from the body corporates
on the basis as explained in the applicants’ papers.
[43] The different
tariffs applied from 1 July 2010 with reference to the discontinuance
of household bulk tariff and the introduction
of IBT and TOU
immediately had consumers in complexes up in arms, although they
might not have known during that first month what
exactly caused the
severe increases as compared to the accounts of consumers in private
residential dwellings. They could have
established through
investigation that their electricity was charged at tariffs
applicable to commercial properties and thus different
from consumers
in private residential dwellings and those complexes where individual
meters are installed. It would have become
clear to them at an early
stage and already in 2010 that instead of getting the advantages of
IBT or TOU, the bulk supply of electricity
to complexes with one
electricity meter caused them to be negatively affected. Although
conceding that there are factual disputes,
Mr Danzfuss submitted that
these related to issues such as calculation to show that there were
differences pertaining to the tariffs
charged and that no material
factual disputes exist. That might be so, and we accept that
disparity pertaining to tariffs existed,
but this does not mean that
no other factual disputes exist. Applicants allege that there was no
public participation pertaining
to the acceptance of the 2011/2012
tariffs, but this has been denied by respondents who produced proof
that a proper process had
been undertaken and in any event that the
tariffs for the particular year had been approved by NERSA. There is
no application that
NERSA’s decisions in this regard be
reviewed and set aside. In so far as Mr Danzfuss relies on section
21(2) of the Electricity
Regulation Act, this does not assist him as
NERSA approved the tariffs for the particular year and this court is
not in a position
to intervene and set aside those tariffs.
X
THE STRIKING OUT
APPLICATION
[44] Nothing really turns
on the application for striking out certain paragraphs in the
affidavit of Mr Kritzinger on behalf of
respondents. Mr Danzfuss
argued that respondents relied on an unsigned document apparently
prepared by Mr Barnard, the applicants’
expert, the status of
which had not been proven and that respondents should not be allowed
to testify pertaining to their version
of the allegations contained
in this document. It is applicants’ submission that the
allegations contained in this supplementary
affidavit should have
been contained in the answering affidavit and respondents should not
be given the opportunity to have the
proverbial second bite at the
cherry. Mr Barnard did not present an affidavit which formed part of
the founding papers as his version
was relied upon in the replying
affidavit of applicants for the first time. The parties were in any
event given leave in the court
order of 26 November 2012 to file
supplementary affidavits. Respondents were entitled to place further
evidence before the court.
It is not necessary to consider the
procedural defect pertaining to the notice to strike out relied upon
by Mr Gauntlett, namely
that, these being motion proceedings, the
application to strike out should have been brought under rule 6(15).
The application
for striking out should be dismissed.
XI
CONCLUSION ON
THE REVIEW APPLICATION
[45] The review
application was issued on 7 December 2011. This is nearly 18 months
after July 2010 when the applicants were confronted
with the
differentiation in tariffs and the enormous increases they complain
about. Applicants rely on the fact that the respondents
were
obstructive in that they did not present them with the documents they
needed to prepare an application for review. That might
be so and the
history indicates that applicants had to approach the court for the
required information. However it is unnecessary
to deal with
culpability at this stage as it is apparent from the history of this
matter that it is impossible to unscramble the
egg now. A delay has
taken place and history cannot be undone. Two further tariff changes
have taken place and two further budgets
have been approved since the
2011/2012 financial year, to wit for the 2012/2013 and 2013/2014
financial years. The tariffs arrived
at have been approved by NERSA
as well.
[46] Mr Danzfuss
submitted that there might be numerous people who have not paid their
electricity bills for that financial year
and for whom it might be
relevant to obtain relief. I find it inappropriate that anybody would
not have paid his or her electricity
bills which should have been
done more than 18 months ago and even before then. Insofar as it
might be argued that people might
be in a position to claim back
monies paid in excess once the 2011/2012 tariffs have been declared
invalid, this is again a matter
where it would be impossible to
unscramble the egg. It is water under the bridge and history cannot
be turned around. Respondents’
budgets were approved and
expenditure incurred as a result thereof. It would cause havoc if
relief is granted as requested. The
SA Property Owners’
Association
judgment of the SCA is applicable
in casu
and
lends support to my view in this regard. Refer to para [75] of the
majority judgment by Navsa JA and the relief granted by the
SCA in
para [80]. The appellants in that case also had in mind the setting
aside of municipal tariffs, but the court declined to
assist them.
[47] It is apparent from
the documentation that NERSA is in the process of consulting and
negotiating pertaining to aspects of electricity
reticulation with
role-players. Furthermore a new Bill has been introduced and which
will ensure a more flexible regime that should
be to the advantages
of all consumers of electricity. It is in any event inappropriate for
this court to intervene at this stage
with the processes to be
followed by NERSA and the legislature in view of the approach of the
Constitutional Court in
JT Publishing (Pty) Ltd & another v
Minister of Safety and Security & others
, Case CCT 49/95
(21 November 1996) (unreported).
[48] Although Mr
Gauntlett submitted that applicants should have obtained a court
order directing NERSA to comply with the court’s
order dated 26
November 2012 and because they are in default, they effectively did
not comply with the requirement that internal
remedies should have
been exhausted prior to coming to court on review, I am of the view
that it is not necessary to deal with
the application on this basis.
It is apparent that NERSA proved not to be helpful which is a pity
bearing in mind the important
role that it plays in electricity
matters in this country. It was surely in a much better position than
this court to deal with
aspects such as tariffs and the reasons for
differentiation in tariffs
in casu
, but it failed to be of any
assistance.
[49] The Electricity
Regulation Second Amendment Bill provides
inter
alia
that the Minister may by Notice in the
Gazette make Regulations regarding
inter alia
principles and procedures for the setting and approval
of tariffs, maximum tariffs and guideline tariffs, including
principles of
costs recovery by licensees. See clause 35(4)(rA). This
Bill has the interest of the wider community at heart and bearing in
mind
JT Publishing
,
supra
, this court
should not make orders which may interfere with the legislative
process. In this judgment the Constitutional Court
refused to grant a
declaratory order pertaining to the unconstitutionality of certain
sections of the old Publications Act and
stated that “(
I)n
all those circumstances there can hardly be a clearer instance of
issues that are wholly academic, of issues exciting no interest
but
an historical one, than those on which our ruling is wanted have now
become.”
This judgment is relevant
in
casu
.
[50] Counsel for the
parties interpret the by-laws of 2
nd
respondent
differently and specifically clause 37(7) thereof and considering
clause 21(4) and the various definitions. It should
be remembered
that it is respondents’ stance that the supply of electricity
has always been done in accordance with the 2005
by-laws in terms
whereof one service connection per erf was provided. Mr Danzfuss
differed from this and submitted that these by-laws
did not provide
for the installation of one meter per erf only. Mr Gauntlett
submitted that clause 37(7) provided for one service
connection in
order to provide electricity in bulk form to complexes. This is an
interesting aspect that need not be determined
by us, save to say
that it is apparent that respondents have acted, at least ever since
these by-laws were passed, on the basis
that one service connection
and one electricity meter per erf be installed – also in
respect of complexes - and there was
no objection thereto at any
stage prior to the institution of these proceedings.
[51] I am satisfied that
bearing in mind the history of the matter and the fact that meters
were installed on the basis as is common
cause, respondents were
entitled to differentiate between various classes of consumers in
accordance with the provisions of s 75
of the Systems Act based on
the ground raised by respondents in their papers and which I have to
accept as factually correct. The
2008 regulations made it compulsory
to change to a TOU tariff system and this had a direct, albeit
negative affect, on consumers
in certain complexes. No unfair
discrimination has taken place and differentiation was caused as a
result of the factors set out
by respondents and which I cannot find
to be far-fetched, untenable or unfounded. Under all these
circumstances I cannot accede
to the request of Mr Danzfuss to grant
the declarator he seeks under further or alternative relief. The
respondents never met that
case because the proposed amendment was
abandoned.
XII
COSTS
[52] It is apparent from
the respondents’ notice of objection to the applicants’
proposed amendment that the 1
st
respondent is in the
process of amending its policy. The papers show that complex
inhabitants are already reaping the benefits
of adaptations to the
policy. These changes to the metering policy have been brought to the
fore by applicants’ actions and
this application. The
respondents obstinately maintain that there is no differentiation
relating to the charging of different households.
The 1
st
and 2
nd
respondents could have done more to ensure
progress at the Nersa meetings. In the circumstances a costs order
against the applicants
would not be appropriate. By their actions the
applicants brought it to the attention of the respondents that the
tariffs were
unfair (and in the meantime steps have been taken to
make the tariffs or metering policy fairer).
The applicants tried to
vindicate their constitutional right to fair treatment. Their conduct
was not frivolous, vexatious or manifestly
inappropriate (see the
OUTA
case par [43].) In accordance with the Biowatch
principle (
Biowatch Trust v Registrar, Genetic Resources and
others
2009 (6) SA 232
(CC) paras [21] – [25]) the
applicants should not be ordered to pay the costs of this litigation,
also not the costs of 26
November 2012. The costs involved in the
striking out application were so minimal and took up a few minutes of
the court time that
it would be inappropriate to make a costs order
in respect thereof.
XIII
ORDER
[53] The following order
is made:
1. Applicants’
application is dismissed, no order as to costs.
______________
J.P. DAFFUE, J
I concur.
______________
A. KRUGER, J
On
behalf of applicants: Adv F.W.A. Danzfuss SC
With
him:
Adv
S Rautenbach
Instructed
by:
Rossouws
BLOEMFONTEIN
On
behalf of respondents: Adv J. J. Gauntlett SC
With
him:
Adv
F.B. Pelser
Instructed
by:
Phatshoane
Henney
BLOEMFONTEIN
/spieterse/wm-14
Nov 2013