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IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, JOHANNESBURG
Case Number: 2023-055416
(1) REPORTABLE: YES/NO
(2) OF INTEREST TO OTHER JUDGES: YES/NO
(3) REVISED.
DATE: 12 DECEMBER 2024
SIGNATURE
In the matter between:
CURRO HOLDINGS LIMITED FIRST APPLICANT
CURRO MERIDIAN, COSMO CITY SCHOOL SECOND APPLICANT
CAMPUS AND PROPERTY MANAGEMENT
COMPANY (PTY) LTD THIRD APPLICANT
and
CITY OF JOHANNESBURG METROPOLITAN FIRST RESPONDENT
MUNICIPALITY
THE CITY MANAGER SECOND APPLICANT
JUDGMENT
WINDELL, J:
Introduction
[1] This is a dispute about the second applicant’s municipal account and the right
of the respondent to disconnect the water supply to the second applicant’s premises
situated at 4[...] C[...] City, Extension 5 (“the premises”).
[2] The first applicant is an independent school provider, Curro Holdings Limited,
with its registered address at Durbanville in Cape Town. The second applicant is an
independent school managed by the first applicant, namely, Curro Meridian, Cosmo
City School with its learning facilities situated on the premises. Campus and Property
Management Company (Pty) Ltd, is the third applicant . It owns the premises on
which the school is erected. For the sake of convenience, the first, second and third
applicants are referred to collectively as (“the applicants”).
[3] The first respondent is the City of Johannesburg Metropolitan Municipality
(“the municipality ”). The premises of the second applicant falls within the area of
jurisdiction of the municipality. The second respondent is the City Manager, who was
cited for purposes of a contempt of court application launched on 15 June 2023. The
parties have subsequently agreed that this application does not need to be
determined by this court save for the issue of costs.
[4] Central to the subject matter in these proceedings is a settlement agreement
that was allegedly entered into between the parties in terms of which the outstanding
amount indebted to the municipality was settled in an amount of R8 555 790.20. The
applicants seek an order directing the municipality to pass the requisite journals to
reflect the settlement agreement entered into by the parties and, pending the
passing of the said journals, interdicting them from disconnecting the water.
Background facts
[5] During July 2021, the a pplicants’ attorney lodged a dispute with the
municipality in terms of section 95(5) read together with section 102(2) of the
Municipal Systems Act, 32 of 2000 (the Act) , regarding the applicants’ alleged
indebtedness to the municipality. It was alleged that the third applicant was indebted
to the municipality in the sum of R13 094 040.82.
[6] Thereafter various meetings were held on 13 October 2021, 2 February 2022
and 10 May 2022 between Mr Dali Mantlana (“Mantlana”) of Dali Mantlana and
Partners, an attorney appointed by the municipality to represent it pertaining to the
disputes lodged by the applicants , and the applicant’s attorney , Mr Werner Bruyns
(“Bruyns”).
[7] Bruyns was notified on 23 June 2022 that Mantlana no longer represented
the municipality. Mantlana referred Bruyns to Mr Arthur Mbobo (“Mbobo”) , the
municipality’s regional deputy director, who would now attend to the matter further.
Accordingly, Bruyns addressed a letter to Mbobo on 28 June 2022.
[8] Further correspondence was addressed to Mbobo and Lufano Mashau,
(“Mashau”) of the municipality, by Bruyns on 28 June 2022, 30 June 2022, 11 July
2022 and 18 August 2022 respectively. No response was received from either
Mbobo or Mashau.
[9] On 18 August 2023, however, Mbobo addressed an email to Mr Selby
Rasoesoe (“Rasoesoe”), the deputy director of legal in the employ of the
municipality, in which Bruyns was copied. As a result, Bruyns sent correspondence
to Mbobo, Mashau and Rasoesoe on 19 August 2022, 29 August 2022 and 5 August
2022 that was disregarded by the municipality. Eventually, Bruyns received an email
on 5 September 2022 from Mbobo in which it was stated that all the disputes had
been referred to the Rasoesoe.
[10] Following the interaction between Rasoesoe and Bruyns, the disputes
declared on behalf of various entities of the applicants, for example, Curro Midrand,
Curro Waterfall and Curro Wilgeheuwel, became settled on 16 September 2022.
[11] Significantly, the dispute lodged on behalf of the third applicant also became
settled on 16 September 2022. The first and third applicant agreed to pay the
municipality an amount of R8 555 790.20. The municipality addressed
correspondence by way of a letter dated 13 December 2022 from its Interest
Reversal Committee to the third applicant wherein it was advised that the
municipality accepted the proposed amount in full and final settlement of the
account. The settlement amount excluded the charges of R453 907.15 for December
2022 which amount was due and payable on 23 December 2022. The settlement
amount was paid by the first applicant in respect of the third applicant’s indebtedness
on 22 December 2022.
[12] Despite the settlement , the municipality disconnected the water supply to the
premises of the second applicant on 24 February 2023. The water supply was
however restored to the premises on 27 February 2023 after the intervention of
Rasoesoe.
[13] Upon investigation by the applicants regarding the initial disconnection , it
became apparent that the municipality had failed to take the necessary steps to pass
the credit notes to reflect the settlement agreement reached by the parties. In terms
of the agreement, the municipality was required to pass a credit note in favour of the
applicants in the sum of R 4 538 250.60.
[14] The second applicant received a pre -termination notice on 29 April 2023 in
which it was alleged that the second applicant was indebted to the municipality in the
amount of R4 076 874.25. The receipt of the notice caused the applicants to address
correspondence directed to the municipality and specifically to Rasoesoe on 2 May
2023. The applicants recorded their request to the municipality to withdraw the pre -
termination notes and sought t wo additional undertakings: that pending the
rectification of the municipal account, that the services rendered to the second
applicant by the municipality will not be disrupted again; and that the municipal
account will be rectified immediately.
[15] Upon receipt of the applicants’ correspondence of May 2023, Rasoesoe
instructed certain municipal officials to “Prepare journals to effect the settlement
agreement and Livhu should flag the account until the matter is settled.” In addition,
Rasoesoe directed that the pre -termination notice be withdrawn to avoid
disconnecting services to the second applicant.
[16] On 30 May 2023, pursuant to the correspondence addressed to municipal
employees by Rasoesoe, Bruyns directed a letter to Rasoesoe in which he was to
ensure that the required journals were being passed to bring finality to the dispute.
[17] However, at the municipality’s instance, on 8 June 2023, the water supply to
the second applicant’s premises was again disconnected. On this occasion, after
reaching out to Rasoesoe for assistance, the municipality did not restore the water
supply to the premises of the second applicant. This act triggered the launch of the
applicants’ urgent application in this court against the municipality.
[18] On 9 June 2023 , an order was granted by van Nieuwenhuizen AJ in the
urgent court in the following terms:
“After hearing the submissions made by the representative for the applicant
IT IS ORDERED THAT:-
1. That this application be enrolled and heard as an urgent application in
terms of Rule 6(12) and that the ordinary prescribed time limits, terms
and services provided for the Rules be dispensed with.
2. The respondent is ordered to reconnect the water supply at the
premises situated at 4[...] C[...] City, Extension 5 by 18h00 on 9 June
2023.
3. Should the respondent fail to adhere to paragraph 2 of this order
timeously, the applicant is authorised to instruct a duly qualified service
provider to reconnect the water supply to the premises situated at 4[...]
C[...] City, Extension 5. The applicants reserve their rights to reclaim
the costs associated herewith from the respondent.
4. Pending the finalisation of this application, the respondent is interdicted
from disconnecting the water supply to the premises situated at 4[...],
C[...] City, Extension 5.
5. The normal timelines specific to applications as set out in Rule 6 of the
Uniform Rules of Court shall apply.
6. The order as set out in paragraph 2 shall operate as an interim order
with immediate effect and with return date 13 May 2023.
7. The cost of this application is reserved for determination on the return
date.
[19] The return date was subsequently extended to 23 August 2024, the date of
this hearing.
[20] The court order of 9 June 2023 made provision for the exchange of pleadings
in accordance with Rule 6 of the Uniform Rules of Court. The municipality failed to
file its answering affidavit in accordance with the time provided by the Rule s. The
municipality subsequently sought condonation for the late filing of its answering
affidavit.
Condonation
[21] In the municipality’s condonation application, it explained the reasons for its
tardiness in filing its answering affidavit within the prescribed time period . In a
nutshell its excuse for the late filing was that municipal employees “had taken leave
for the June 16 and the like ”; an investigation had to be undertaken by the
municipality to determine under what circumstances the settlement agreement was
concluded; staff meetings were held with the municipality’s employees to ensure that
similar agreements were not reached with other account holders; there had been
communication with the applicant’s attorney of record; as an organ of sta te, the
municipality could ill afford to set aside the substantial amounts sought to be credited
to the applicants; and no prejudice had been suffered by the applicants as water was
being supplied to the premises of the second applicant.
[22] It is trite that the relevant factors a court must consider in a condonation
application include the nature of the relief sought, the extent and cause of the delay,
its effect on the administration of justice and other litigants, the reasonableness of
the explanation, the importance of the issue and prospects of success.1
[23] There are three compelling reasons why this issue should not derail the
adjudication of this application . One, the interests of justice favour that the
application be properly ventilated. In Freedom of Religion South Africa ,2 Mogoeng
CJ said that “[t]echnicalities and senseless constraints that come with rigidity should
never be allowed to stand in the way of a legitimate and demonstrably desirable
pursuit and attainment of justice” . Two, there can be no prejudice to the applicant.
The pleadings have been exchanged and the respective heads of argument filed.
Lastly, the municipality has provided a satisfactory explanation of the delay in filing
its answering affidavit. There is thus no compelling reason why condonation should
not be granted.
Status of the settlement agreement
[24] The facts leading up to the conclusion of the settlement agreement are not
disputed. In rebuttal of the relief sought by the applicants, the municipality raised two
issues: Firstly, Rasoesoe lacked the necessary authority to conclude the agreement
between the second applicant and the municipality and did not comply with ‘the
internal processes ’ in concluding the settlement agreement . As a result, so it is
argued, the settlement agreement was void (“the lack of authority defence ”).
Secondly, the settlement agreement was not made an order of court at the time of
concluding the alleged unlawful agreement and as a result there is no lis pending
between the parties (“the no lis defence”).
[25] The municipality’s lack of authority defence is misconstrued for the following
reasons. Bruyns first received correspondence from the municipality’s Interest
Referral Committee on 13 December 2022 in which it was conveyed that the
proposed settlement agreement for payment of R8 555 790.50 was accepted in fu ll
and final settlement of the outstanding amount as of 5 December 2022. Additional
1 Grootboom v National Prosecuting Authority [2013] ZACC 37; 2014 (2) SA 68 (CC); 2014 (1) BCLR
65 (CC) at para 22.
2 Freedom of Religion South Africa v Minister of Justice and Constitutional Development 2020 (1) SA
1 (CC) at para [18].
terms were recorded , namely, that the charges for the month of December 2022
were excluded from the settlement agreement. It is not challenged by the
municipality that the applicants had complied with the terms of the settlement
agreement.
[26] Secondly, when Rasoesoe signed the settlement agreement on behalf of the
municipality it was done in his capacity as Chairperson of the Interest Reversal
Committee and not in his individual capacity as Deputy Director: Legal. This issue is
crucial to the determination of this application, because it is the municipality’s case
that Rasoesoe in his capacity as Deputy Director: Legal did not have the necessary
authority to enter into the settlement agreement on behalf of the municipality with the
applicants and not that the Interest Reversal Committee had acted outside of its
ambit.
[27] Specifically, the municipality did not assert in its pleadings that the Interest
Reversal Committee lacked the authority to consider, accept, and finalise the
agreement between the parties, nor did it establish or present a case that the
Interest Reversal Committee violated the provisions of the Act and/or the Local
Government: Municipal Finance Management Act , 56 of 2003 . It also failed to
specify which internal procedures were not adhered to or with whom the applicants
had to negotiate in order to reach a "binding" agreement, or which procedures had to
be followed to achieve that "binding" agreement.
[28] Thirdly, in City of Tshwane Metropolitan Municipality v RPM Bricks (Pty) Ltd ,3
the Supreme Court of Appeal (SCA) had occasion to consider whether or not the
doctrine of estoppel may be raised against a statutory body, such as the
municipality. In considering the proposition, the SCA found that a distinction must be
drawn between acts beyond or in excess of the legal powers of a public authority
and the irregular or informal exercise of power granted.
[29] I agree with the submissions of Mr Hinrichsen, counsel on behalf of the
applicants, that the failure by a statutory body to comply with provisions which the
3 2008 (3) SA 1 (SCA)
Legislature has prescribed for the validity of a specified transaction falls within the
first category described above and cannot be remedied by estoppel because that
would give rise to a transaction that is unlawful and therefore ultra vires . This is ,
however, to be distinguished from the failure by a statutory body to adhere to all the
relevant internal arrangements and formalities, which falls within the second
category described above and in respect of which estoppel may be successfully
invoked.4
[30] The process followed by the Interest Reversal Committee falls within the
second category and consequently, and even if there was non-compliance with any
of the internal arrangements and formalities, the municipality is estopped from
invoking such non-compliance.
[31] Lastly, in Hlobo v Multilateral Motor Vehicle Accident Fund ,5 the SCA was
required to consider a settlement agreement entered into between the Multilateral
Motor Vehicle Accident Fund (the Fund) and the plaintiff Mr Hlobo . The Fund
approached the court a quo to set aside an agreement on the grounds that the
claims handler appointed by the Fund to deal with its attorneys on all aspects of
claims lacked the authority to authorise the settlement . The court a quo found the
claims handler lacked contractual capacity to conclude the settlement agreement.
[32] On appeal, the SCA set aside the court a quo’s finding and held as follows
regarding the claim handler’s contractual authority:6
“[8] Against that background I return to the reasoning advanced by the court a quo
for setting aside the settlement. As to the first ground (the suggested lack of
contractual capacity): the inferences to be drawn from the exchange of
correspondence and the terms of Short’s letter of 17 July do not suggest that the
settlement was concluded on the strength of Mr Short’s independent initiative. The
limits of his authority to settle claims independently (shown to have been limited after
10 July to R150 000) would not seem to have any bearing on the matter. The court a
4 At para [11] to [13].
5 2001 (2) SA 59 (SCA).
6 At para [8].
quo’s conclusion that Short did not have the “capacity to contract” in relation to this
particular settlement would therefore seem to be at least questionable. But quite
apart from this it was, of course, of no significance. The settlement agreement was
not concluded between Short and Lowe. It was concluded between Lowe and De la
Harpe and on the evidence De la Harpe had been authorised to conclude such an
agreement. The debate concerning Mr Short’s power to conclude settlements is
misplaced.”
[33] The circumstances that gave rise to the conclusion of the settlement
agreement have been detailed in the applicants’ replying affidavit at paragraphs 16
to 30. The facts giving rise to the settlement agreement are not disputed. I am
satisfied that the agreement between the applicants and the municipality was lawfully
entered agreement and should be enforced, as demonstrated by the decisions of
Hlobo and RPM Bricks.
[34] As far as the no lis defence is concerned, there is no merit in the
municipality’s argument. The settlement agreement is a binding agreement. The
municipality refused to comply with their obligations in terms of the agreement. The
applicants approached the court to enforce the settlement agreement. That is the lis
between the parties.
Costs of the urgent application on 15 June 2023
[35] The municipality had failed to restore the water supply to the second appellant
in accordance with the interim order that was obtained by agreement on 9 June
2023. The order specifically stipulated that the water supply should be restored to
the second applicant by 18:00 on the same day.
[36] Bruyns sent numerous correspondences to the municipality and the
municipality’s attorney of record on 12 June 2023, in order to ensure that the water
supply was reconnected to the second applicant. The municipality had not yet
complied with the provisions of the order that the applicant had obtained by
agreement between the parties by 13 June 2023. Additionally, there was no
justifiable explanation provided by the municipality for the noncompliance with the
order. Based on these factors, the applicants initiated contempt proceedings.
[37] On 14 June 2023 at 14:46, the municipality’s attorney of record filed a notice
confirming the municipality’s intention to oppose the contempt application. The
municipality only restored the water supply to the second applicant on 14 June 2023
at 17h52.
[38] It is evident from the preceding sequence of events that the applicant s were
compelled to bring the contempt application . There is no reason why they should be
deprived to the costs associated with it.
Order
[39] In the result the following order is made:
1. The first respondent is directed to pass the requisite journals to reflect the
settlement agreement entered by the parties within 10 days from date of this
order and, pending the passing of the said journals, interdicted from
disconnecting the water to the premises situated at 4[...] C[...] City, Extension
5.
2. The first respondent is ordered to pay the costs of this application, which
include the reserved costs of 17 June 2023, 13 July 2023 and 5 February
2024.
3. The first respondent is to pay the reserved costs of the contempt application
of 15 June 2023.
L. WINDELL
JUDGE OF THE HIGH COURT
GAUTENG LOCAL DIVISION, JOHANNESBURG
(Electronically submitted therefore unsigned)
Delivered: This judgement was prepared and authored by the Judge whose name is
reflected and is handed down electronically by circulation to the Parties/their legal
representatives by email and by uploading it to the electronic file of this matter on
CaseLines. The date for hand-down is deemed to be 12 December 2024.
APPEARANCES
Counsel for the applicants: Advocate D.H. Hinrichsen
Instructed by: Couzyn Hertzog & Horak Attorneys
Counsel for the respondent: Advocate E. Sithole
Instructed by: Magagula Attorneys
Date of hearing: 23 August 2024
Date of judgment: 12 December 2024