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[2013] ZACC 11
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Rademan v Moqhaka Local Municipality and Others (CCT 41/12) [2013] ZACC 11; 2013 (4) SA 225 (CC); 2013 (7) BCLR 791 (CC) (26 April 2013)
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CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case
CCT 41/12
[2013]
ZACC 11
In
the matter between:
OLGA
RADEMAN
.............................................................................................
Applicant
and
MOQHAKALOCAL
MUNICIPALITY
..................................................
First
Respondent
M
A MOKGOSI
...................................................................................
Second
Respondent
M
V DUMA
............................................................................................
Third
Respondent
JIMMY
MASWANGAYI
.....................................................................
Fourth
Respondent
RUDOLPH
MEYER
................................................................................
Fifth
Respondent
Heard
on : 5 February 2013
Decided
on : 26 April 2013
JUDGMENT
ZONDO
J (Mogoeng CJ, Moseneke DCJ,Jafta J, Mhlantla AJ, Nkabinde J,
Skweyiya J and Van der Westhuizen J concurring):
Introduction
[1]
The applicant is Ms OlgaRademan, a resident of Kroonstad,a town that
falls under the MoqhakaLocal Municipality(Municipality)
in the Free
State. The first respondent is the Municipality. The second and
further respondents are officials of the Municipality
who have not
participated in the proceedings in this Court.
[2]
Ms Rademan has brought an application to this Court for leave to
appeal against a judgment and order of the Supreme Court
of Appeal
1
in terms of which that Court dismissed her appeal against a decision
of the Free State High Court, Bloemfontein (High Court).
Whereas
Rule 19(2) of the Rules of this Court required Ms Rademan to bring
her application within 15 court days from the date
of the delivery
of the judgment sought to be appealed against, she brought her
application about five and a half months after
the expiry of the
prescribed period. She has brought an application for the
condonation of her failure in this regard. That condonation
application is based on an affidavit that has been deposed to by her
attorney in these proceedings.
[3]
The explanation given by the attorney for the delay leaves much to
be desired. However, there are, in my view, reasonable
prospects of
success in that the matter is reasonably arguable and, more
importantly, not only has the Municipality not opposed
her
condonation application but it in effect consents to the granting of
condonation. In this regard the Municipality has urged
us to deal
with the matter on the merits because it says that the matter raises
issues of great importance and interest to local
government
authorities throughout the country on which they need certainty that
can only come with a pronouncement of this Court
on those issues. In
the light of this, I am of the opinion that, even though the period
of delay was excessive and the explanation
less than satisfactory,
the other factors mentioned by the Municipality, the fact that the
Municipality effectively consents
to the granting of condonation and
that there are reasonable prospects of success persuade me that it
is in the interests of
justice that condonation be granted.
Background
[4]
Ms Rademandecided not to pay her rates in respect of her
property in Kroonstad because she was unhappy about what she
regarded as poor or inefficient service delivery by the
Municipality. She was not the only one who did this. The Moqhaka
Ratepayers
and Residents’ Association (Association) of which
Ms Rademan is a member had decided that this was what residents
should
do in the light of the alleged poor or inefficient service
delivery. Other members of the Association did the same. Ms Rademan,
nevertheless, continued to pay for her electricity and other
services provided by the Municipality.
[5]
The Municipality gave Ms Rademan notice that it would cut off
electricity supply to her property in the light of her failure
to
pay part of her account with the Municipality. This did not make Ms
Rademan change her mind about not paying the whole amount
she owed
the Municipality. The Municipality then disconnected the supply of
electricity to Ms Rademan’s property.
Magistrate’s
Court
[6]
Ms Rademan brought an application in the Magistrate’s Court,
Kroonstad (Magistrate’s Court), for an order for
the
restoration of her electricity supply. Although in her founding
affidavit Ms Rademangave poor or inefficient service delivery
by the
Municipality as her reason for not paying her rates, that reason was
not the ground upon which she contended that the
Municipality had no
power to disconnect her electricity supply. Ms Rademan advanced
three grounds upon which she contended that
the Municipality had no
power to disconnect her electricity supply. The one was the absence
of an order of court. In this regard
her case seems to have been one
for a spoliation order. Another one was that her electricity account
was not in arrears. Yet
another one was the absence of any one of
the three conditions prescribed in section 21(5)(a), (b) and (c) of
the Electricity
Regulation Act
2
(ERA).She said that none of the three conditions was present in her
case. The Municipality opposed the application. The Court
found in
favour of Ms Rademan and made an order for the restoration of
the supply of electricity to her property.
High
Court
[7]
On appeal the High Court concluded that the Municipality was not
required to obtain an order of court before it could cut
off a
resident’s electricity supply where the resident owed the
Municipality payment. It also took the view that the fact
that
Ms Rademan was not in arrears in respect of her electricity
account did not preclude theMunicipality from cutting off
her
electricity supply since she owed money to the Municipality. The
High Court upheld theMunicipality’s appeal, set aside
the
order of the Magistrate’s Court and replaced it with an order
dismissing Ms Rademan’s application.
Supreme
Court of Appeal
[8]
Ms Rademan appealed to the Supreme Court of Appeal against the
judgment and order of the High Court. A reading of the judgment
of
the Supreme Court of Appeal suggests that two contentions were
advanced on behalf of Ms Rademan. The first was that the
Municipality’s failure to obtain an order of court authorising
the termination of the electricity supply to Ms Rademan’s
property before it terminated the supply rendered the termination
unlawful. The other was that the Municipality had no right
or power
to terminate the electricity supply since Ms Rademan’s
electricity account was not in arrears. According to counsel
for Ms
Rademan there was another contention that was addressed to the
Supreme Court of Appeal with which the Court did not deal
in its
judgment. That contention was that the Municipality’s power to
terminate a resident’s electricity supply was
limited to the
grounds listed in section 21(5) of the ERA and, unless the
Municipality could show that one of the grounds
listed in that
subsection exists, a resident’s electricity supply cannot be
terminated. It is true that this contention
was not addressed in the
judgment of the Supreme Court of Appeal.
[9]
The Supreme Court of Appeal rejected both contentions.As to the
first contention, the Court held that there was nothing in
the Local
Government: Municipal Systems Act
3
(Systems Act) to justify the contention that the Municipality needed
an order of court before it could cut off a resident’s
electricity supply. With regard to the second contention, the Court
referred to the provisions of section 102 of the Systems
Act
4
which confer power upon a municipality to consolidate accounts and
concluded that a municipality had power to consolidate all
the
various accounts of a resident into one account in which event the
resident is required to pay the whole account. The Supreme
Court of
Appeal said that, in such a case, if the resident did not pay the
whole amount due, the Municipality had power to cut
off the
electricity supply to the resident’s property. It dismissed
the appeal with costs.
Constitutional
matter
[10]
The parties are agreed that this matter raises a constitutional
issue. The provision of municipal services to communities
in a
sustainable manner is one of the objects of local government.
5
A
local government is enjoined to strive, within its financial and
administrative capacity, to achieve, among others, its object
of
ensuring the provision of services to its communities in a
sustainable manner.
6
The
Constitution confers upon a municipality “the right to govern,
on its own initiative, the local government affairs of
its
community, subject to national and provincial legislation as
provided for in the Constitution.”
7
The
national and provincial governments must, by legislative and other
measures, support and strengthen the capacity of municipalities
to
manage their own affairs, to exercise their powers and to perform
their functions.
8
The Systems Act is a legislative measure intended to support and
strengthen the capacity of municipalities to manage their own
affairs, exercise their powers and perform their functions. There
can be no doubt that this matter is a constitutional matter.
Accordingly, this Court has jurisdiction.
Interests
of justice
[11]
Both parties are agreed that it is in the interests of justice that
this Court grants the applicants leave to appeal. They
base this on
the importance of the matter and the fact that it is in the public
interest that this dispute be resolved by this
Court. I agree and
would grant leave to appeal.
The
appeal in this Court
[12]
Before us Ms Rademan’s counsel advanced two grounds upon which
he urged us to set aside the order of the Supreme Court
of Appeal.
The one was that, since Ms Rademan’s electricity account
was not in arrears, the Municipality had no power
to cut her
electricity supply off even though her rates account was in arrears.
In other words the submission was that Ms Rademan’s
electricity account had to be in arrears first before the
Municipality could acquire the power to cut her electricity supply
off. The second was that, in any event, the Municipality’s
right or power to cut off Ms Rademan’s electricity
supply
was circumscribed by section 21(5) of the ERA and it could only
exercise that power if at least one of the conditions
prescribed in
that provision is met. Section 21(5) precludes a licensee (in this
case the Municipality) from reducing or terminating
the supply of
electricity to a customer (Ms Rademan in this case) unless at least
one of three conditions is met. The first is
that the customer is
insolvent. The second is that the customer has failed to honour, or
refuses to enter into, an agreement
for the supply of electricity.
The third is that the customer has contravened the payment
conditions of the licensee.
[13]
It is common cause that the Municipality is a licensee as
contemplated in section 21(5) and that Ms Rademan is a customer
as contemplated in the same provision. No elaboration is needed in
respect of the first condition. With regard to the second
condition,
the reference to an agreement for the supply of electricity is a
reference to an agreement between a customer and,
for example, the
municipality that has the obligation to provide the electricity to
the customer. Although it is common cause
between the parties that
the condition in section 21(5)(a) is not present, the parties are in
dispute with regard to the conditions
in section 21(5)(b) and (c).
The presence of any one of the three conditions would have entitled
the Municipality to cut Ms Rademan’s
electricity off. As the
parties focussed on the condition in section 21(5)(c), I propose to
deal with that condition first and,
depending on the conclusion I
reach in regard to that condition, it may be unnecessary to decide
whether the condition in section
21(5)(b) is present.
[14]
Before I deal with the parties’ contentions, it is necessary
first to discuss the Municipality’s power, if any,
to cut off
the electricity supply to residents or consumers within its area of
jurisdiction. Since the supply of electricity
is a service provided
by the Municipality, it is necessary to begin the discussion with a
reference to the Municipality’s
obligation to provide services
to its residents and ratepayers, the residents’ obligation to
pay for such services and
to pay municipal taxes and the
Municipality’s remedy when residents or ratepayers do not
comply with their obligations
towards the Municipality in this
regard. That discussion will also encompass conditions of payment,
if any, that the Municipality
had stipulated for customers as
contemplated in section 21(5) of the ERA. I begin with a discussion
of the relevant parts of
the Constitution.
Constitutional
provisions
[15]
The executive and legislative authority of a municipality vests in
its Municipal Council.
9
A
municipality has “the right to govern, on its own initiative,
the local government affairs of its community, subject to
national
and provincial legislation, as provided for in the
Constitution.”
10
The“national
or a provincial government may not compromise or impede a
municipality’s ability or right to exercise
its powers or
perform its functions.”
11
[16]
Section 152 sets out the objects of local government. Two of these
are “to provide democratic and accountable government
for
local communities” and “to ensure the provision of
services to communities in a sustainable manner”.The
national
and provincial governments are enjoined to support, by legislative
and other measures, the “capacity of municipalities
to manage
their own affairs, to exercise their powers and to perform their
functions”.
12
[17]
Section 156 sets out the powers and functions of municipalities.
Section 156(1) provides that a municipality has executive
authority
in respect of, and has the right to administer—
“
(a)
the local government matters listed in Part B of Schedule 4 and Part
B of Schedule 5; and
(b)
any other matter assigned to it by national or provincial
legislation.”
Electricity
and gas reticulation is one of the matters listed in Part B of
Schedule 4. Section 156(2) provides:
“
A
municipality may make and administer by-laws for the effective
administration of the matters which it has the right to administer.”
It
is necessary to also refer to certain provisions of the Systems Act.
The
Systems Act
[18]
The Systems Act is a legislative measure that seeks to support and
strengthen the capacity of municipalities to manage their
own
affairs, exercise their powers and to perform their
functions.
13
Section
4(3) of the Systems Act requires a municipality, in the exercise of
its executive and legislative authority, to “respect
the
rights of citizens and those of other persons protected by the Bill
of Rights.”Section 5(1)(g) provides that “[m]embers
of
the local community have the right to have access to municipal
services which the municipality provides, provided the duties
set
out in subsection (2)(b) are complied with.” These are dealt
with below.
[19]
Section 5(2)(a) places a duty on members of the local community,
when exercising their rights, to observe the mechanisms,
processes
and procedures of the municipality. Section 5(2)(b) places upon
members of the local community, where applicable and
subject to
section 97(1)(c), the obligation “
to pay promptly service
fees, surcharges on fees, rates on property and other taxes, levies
and duties imposed by the municipality
”.(Emphasis added.)
Section 5(2)(e) places a duty on members of the local community “
to
comply with by-laws of the municipality applicable to
them
.”(Emphasis added.)
[20]
Amunicipality is obliged to collect all money that is due and
payable to it, subject to the Systems Act and any other applicable
legislation.
14
It
is further enjoined, for the purposes of the collection of all money
due and payable to it, to provide for a credit control
and debt
collection policy.
15
Section
102(1) of the Systems Act reads:
“
A
municipality may—
(a)
consolidate any separate accounts of persons liable for payments to
the municipality;
(b)
credit a payment by such a person against any account of that
person; and
(c)
implement any of the debt collection and credit control measures
provided for in this Chapter in relation to any arrears on
any of
the accounts of such a person.”
The
by-laws
[21]
Chapter 1 of the Moqhaka Local Municipality Credit Control and Debt
Collection By-Laws
16
(by-laws) defines “municipal services”, for purposes of
the by-laws, as “services provided by the Council or
its
authorised agent, including refuse removal, water supply,
sanitation, electricity supply and rates or any one of the above.”
Section 11(1) of the by-laws provides:
“
A
customer shall be responsible for payment of
all
municipal services consumed by him/her or it
from the commencement date of the agreement until his/her or its
account
hasbeen
settled in full and the Council or its authorised agent must recover
all applicable charges due to the Council
.”(Emphasis
added.)
This
provision means that a customer is liable for payment in full of all
municipal services including rates, electricity supply,
refuse
removal, water supply, sanitation and others.
[22]
The provisions of section 12 of the by-laws are important. They read
as follows:
“
(1)
Where an account is not settled in full, any lesser amount tendered
to and accepted shall not be deemed to be in final settlement
of
such an account.
(2)
Sub-section (1) shall prevail notwithstanding the fact that such
lesser payment was tendered and/or accepted in full and final
settlement, unless the Municipal Manager or the Manager of the
Council's authorised agent made such acceptance in writing.”
[23]
Section 18 bears the heading: “Consolidated Debt”.
Section 18(1) reads:
“
If
one account is rendered for more than one municipal service provided
the amount due and payable by a customer constitutes a
consolidated
debt, and any payment made by a customer of an amount less than the
total amount due, will be allocated in reduction
of the consolidated
debt
in the following order—
(a)
towards payment of the current account;
(b)
towards payment of arrears; and
(c)
towards payment of interest where applicable.” (Emphasis
added.)
Section
18(3) precludes a customer from electing how an account is to be
settled if it is not settled in full or if there are
arrears. It
reads:
“
A
customer may not elect how an account is to be settled if it is not
settled in full or if there are arrears
.”(Emphasis
added.)
[24]
Section 19 of the by-laws deals with queries or complaints in
respect of accounts. Section 19(1) allows a customer to lodge
a
query or complaint “in respect of a specific municipal service
as reflected on the account rendered.” Section 19(4)
provides:
“
A
query or complaint must be accompanied by the payment of at least
the total amount, excluding the amount in respect of which
a query
or complaint is lodged, due and payable in respect of the account.”
If
a customer lodges a query or complaint in accordance with section 19
of the by-laws, the Municipal Council (Council) or its
authorised
agent is required to investigate the complaint and make a finding
within nine days of the lodgement of the complaint.
There is a right
to appeal against the finding of the Council. The appeal goes to an
appeals committee whose decision is final
in terms of the procedures
and mechanisms in the by-laws.
17
[25]
Section 25(1) of the by-laws reads in relevant part:
“
The
Municipality may restrict or disconnect the supply of water and
electricity or discontinue any other service to any premises
whenever a user of any service—
(a)
fails to make full payment on the due date or fails to make
acceptable arrangements for the repayment of any amount for
services,
rates or taxes
;
(b)
fails to comply with a condition of supply imposed by the
Municipality
”. (Emphasis added.)
Section
25(3) reads as follows:
“
The
right to restrict, disconnect or terminate service due to
non-payment shall be in respect of
any
service rendered by the Municipality and shall prevail
notwithstanding the fact that payment has been made in respect of
any specific service and shall prevail notwithstanding the fact that
the person who entered into agreement for supply of services
with
the municipality and the owner are different entities or persons, as
the case may be.
”
(Emphasis added.)
Agreement
for the provision of municipal services
[26]
Under the by-laws of the respondent a customer is defined as “a
person with whom the Council or its authorised agent
has concluded
an agreement for the provision of municipal services”. Section
1 of the by-laws provides:
“
No
person shall be entitled to municipal services unless application
has been made to, and approved by, the Council or its authorised
agent on the prescribed form.”
Section
1(g) reads:
“
An
application for services submitted by a customer and approved by the
Council or its authorised agent shall constitute an agreement
between the Council or its authorised agent and the customer, and
such agreement shall take effect on the date referred to or
stipulated in such agreement.”
Section
1(j) reads:
“
Municipal
services rendered to a customer are subject to the provisions of
these by-laws, any applicable by-laws and conditions
contained in
the agreement.”
[27]
The by-laws contain, in annexure “A”, a sample of the
application for municipal services that a customer would
sign which
in terms of the by-laws constitutes an agreement between the Council
and the customer. That agreement reads as follows:
“
I,
the undersigned hereby make application for the supply of
electricity, water, refuse removal and sanitation to the
above-mentioned
property (or properties), and agree to be bound by
the By-laws, Regulations or Policies adopted by the Moqhaka Local
Municipality
for the purpose of controlling and distributing the
supplies, and for collecting or enforcing payment thereof, and sign
this
agreement as being of all intents and purposes, cognisant of
such by-laws, regulations and policies.
I
hereby accept the conditions and tariffs of the Moqhaka Local
Municipality services supply by-laws and regulations as amended,
for
the supply of services to the above property which by-laws and
tariffs shall be deemed incorporated in, and to form part
of this
contract.
.
. .
.
. .
Signature
of Applicant or Authorised Representative ………………………
Name
of Representative(Please Print)……………………………………….
I.D.
Number:………………………
Date:…………………20……”.
[28]
It is clear from the provisions of section 1 of the by-laws that no
customer may be provided with municipal services unless
he or she
has applied to the Council for the supply of the relevant municipal
service. Section 1(g) of the by-laws makes it clear
that the
application for the municipal services that a resident or ratepayer
makes to the Council constitutes the agreement between
the
Municipality and the customer concerned. It is also clear from a
reading of the Systems Act and the by-laws that residents
and
ratepayers are bound by the by-laws. Indeed, in the application for
municipal services that a resident or ratepayer makes
to the
municipal Council, he or she agrees to be bound by the by-laws,
regulations and policies of the respondent relating to
the control
and distribution of supplies and for the collection or enforcement
of payment thereof. In fact he or she also accepts
therein “
the
conditions and tariffs of the Moqhaka Local Municipality services
supply by-laws and regulations, as amended, for the supply
of
services
”(emphasis added).
[29]
It is clear from the above that the Municipality’s conditions
of payment for the provision of its services and payment
of rates
are to be found in the provisions of the Constitution, the Systems
Act, particularly sections 5(2)(b), 96(a) and (b)
97(1)(c) and 102,
on the one hand, and, on the other, the provisions of the by-laws,
particularly sections 12(1) and (2), 18(1)
and (3), 19 and 25 and
the agreement between the customer and the Municipality. The
conditions include:
(a)
the obligation on the customer’s part “to pay promptly
service fees, surcharges on fees, rates on property and
other taxes,
levies and duties imposed by the Municipality”;
18
(b)
the obligation “to comply with the by-laws of the Municipality
applicable to them”;
19
(c)
payment of “all municipal services consumed by [the
customer]from the commencement date of the agreement
until[her]account
has been settled in full”;
20
(d)
that “a customer may not elect how an account is to be settled
if it is not settled in full or if there are arrears”;
21
(e)
that whenever a user of
any
service—
(i)
fails to make
full
payment on the due date or fails to make
acceptable arrangements for the repayment of any amount for
services, rates or taxes;
(ii)
fails to comply with a condition of supply imposed by the
Municipality;
the
Municipality“may restrict or disconnect the supply of water
and electricity or discontinue any other service to any
premises”;
22
(f) “
the
right to restrict, disconnect or terminate a service due to
non-payment shall be in respect of any service rendered by the
Municipality and shall prevail notwithstanding the fact that payment
has been made in respect of any specific service”;
23
and
(g)
that, where one account is rendered for more than one municipal
service provided, all arrears due and payable by a customer
constitute a consolidated debt, and any payment made by a customer
of an amount less than the total amount due will be allocated
in
reduction of the consolidated debt in the following order towards—
(i)
payment of the current account;
(ii)
payment of arrears;
(iii)
payment of interest where applicable; and
(iv)
costs incurred in taking relevant action to collect amounts due and
payable.
24
[30]
It is also important to draw attention to the provisions of section
102 of the Systems Act which have been quoted in [19]
aboveas well
as those of section 25(1) and(3) of the by-laws. Those provisions
give the respondent the power to consolidate the
accounts of a
consumer or consumers. When that has been done, the various amounts
due become what the by-laws call a consolidated
debt.
25
Counsel for the applicant submitted that the term “consolidation”
meant putting together two or more accounts relating
to different
properties as opposed to putting together different accounts for
different services relating to the same property.
Counsel sought to
rely on the language of the provision of section 102 of the
Systems Act to justify this restricted meaning
of the term
“consolidation”. There is nothing in the language of
section 102 to justify counsel’s submission
in this regard.
The term “consolidation” is wide enough to include both
scenarios. Accordingly, this contention falls
to be rejected.
[31]
Counsel for the respondent submitted that, once various accounts
have been consolidated, they lose their individual identities
and
become one account. Counsel for the applicant did not dispute the
correctness of this submission. I agree with this submission.
[32]
The effect of the various accounts becoming one consolidated account
is that it is not open to the customer who is presented
with such an
account to speak about an electricity account or a refuse removal
account or a rates account or to say that he or
she will pay one or
more of those accounts and not others. This is because there are no
longer separate accounts butonly one
account with various components
such as the electricity component and the rates component.
[33]
Another effect of the consolidation of accounts is that, if a
customer pays only part of the account and not the whole account,
the customer is in breach of his or her obligations and has
contravened the respondent’s conditions of payment because
one
of those conditions is that a customer must pay his or her account.
None of these options applies to a case where the customer
has made
an arrangement with the Municipality to settle his or her account by
instalments.
[34]
In the light of all the above, it seems to me that, in paying the
various components of her account but not paying the rates,
Ms
Rademan elected how she was to settle her account which is precluded
by section 18(3) of the by-laws and placed herself in
default. This
was in breach of her obligations towards the respondent. This
constituted a contravention by Ms Rademan of the
respondent’s
conditions of payment of an account consisting of various
components. This also means that the contention
that, since
Ms Rademan did not owe anything on electricity, the respondent
was not entitled to cut her electricity off,
falls to be rejected.
[35]
During the hearing there was much debate about whether there is a
conflict between section 21(5) of the ERA and the by-laws
which
confer power upon a municipality to cut a ratepayer’s
electricity supply off in certain circumstances. Section 21(5)
reads as follows:
“
A
licensee may not reduce or terminate the supply of electricity to a
customer,unless—
(a)
the customer is insolvent;
(b)
the customer has failed to honour, or refuses to enter into, an
agreement for the supply of electricity; or
(c)
the customer has contravened the payment conditions of that
licensee.”
[36]
The condition in (a) is clear and not in issue. Section 21(5)(b)
contemplates two scenarios. The one scenario is where there
is an
agreement between a resident and the municipality as to the supply
of electricity by the municipality to the customer and
the customer
refuses to honour the agreement. The other scenario is where there
is no agreement for the supply of electricity
and the customer
refuses to enter into an agreement. In either case the municipality
would be entitled to cut off the electricity
supply to the resident
or customer if it was already supplying electricity to the customer.
Section 21(5)(c) is very important.
It contemplates conditions of
payment that the municipality may have stipulated even if they were
not agreed to with the customer
or resident. If the condition in
section 21(5)(c) is not applicable, then that means that the
municipality cannot rely upon section
21(5)(c) to terminate the
electricity supply to a resident’s property.
[37]
The contention advanced on Ms Rademan’s behalf is that
the Municipality’s power to cut off a resident’s
electricity supply is limited to situations where at least one of
the conditions prescribed in section 21(5) is present.
Counsel
implied that, in so far as the by-laws may grant the Municipality
power to cut off a resident’s electricity supply
in
circumstances that fall outside the conditions in section 21(5),
there is a conflict between section 21(5) and the provisions
of the
by-laws. He submitted that in such a case the provisions of section
21(5) must prevail because the ERA is an Act that
specifically deals
with the supply of electricity. Counsel for the Municipality
contended that there is no conflict between section
21(5) and the
relevant provisions of the by-laws governing the Municipality’s
power to terminate a resident’s electricity
supply.
[38]
I pointed out earlier that it was common cause between the parties
that Ms Rademan is a consumer as contemplated in
section 21(5)
and that the Municipality is a licensee as contemplated in that
provision. For purposes of the present matter I
am prepared to
assume, without deciding, that the Municipalityhad to show that the
condition in section 21(5)(c) was present
before it could exercise
its power to terminate Ms Rademan’s supply of electricity. On
that assumption, the question that
arises is whether the condition
in section 21(5)(c) was present when the Municipality cut
Ms Rademan’s electricity
supply off. The determination of
that question requires ascertaining the conditions of payment of the
Municipality that were
applicable to Ms Rademan and whether she
had contravened them. Counsel on both sides accepted that the
Municipality’s
conditions of payment are to be found in the
provisions of the Systems Act and the by-laws.Earlier on I referred
to them.
[39]
One of the Municipality’s conditions of payment is that a
resident or ratepayer has no right to decide on the manner
of
settlement of his or her account for municipal services if he or she
does not settle his or her account in full or is in arrears.
Another
one is that, when the Municipality has consolidated a resident’s
accountsfor various services, the various accounts
become one
consolidated account and the resident is obliged to pay the whole
consolidated debt. If a resident pays for one component
of the
account and not others or pays for some components but not another
one, he or she contravenes the Municipality’s
conditions of
payment. This, then, entitles the Municipality to cut off the
resident’s electricity supply or the supply
of any other
service. The Municipality is not confined to cutting off the supply
of a particular service but may cut off the
supply of any service to
the resident. In this case Ms Rademan failed to pay her rates
account and the Municipality cut her electricity
supply off. It was
entitled to do so in the circumstances of this case.
[40]
It was submitted that the effect of section 21(5)(c) was that the
Municipality could not consolidate the electricity component
of Ms
Rademan’s account with other components and disconnect the
electricity supply if Ms Rademan was in arrears in respect
of any
one of the components of her account. I am unable to uphold this
submission. Section 21(5)(c) contemplates a licensee
which has its
own conditions of payment for electricity. It is not prescriptive of
the conditions of payment that a licensee
is expected to have.
Accordingly, the conditions of payment of a licensee can be any
conditions that are not illegal or unlawful.
In this case it has not
been suggested that the Municipality’s conditions of payment
are illegal.
[41]
There was some debate during the hearing on what the remedy of a
resident or ratepayer is where the municipality demands
payment for
a service or for services in circumstances where the municipality
has not provided the service or services. Counsel
for the respondent
suggested that the resident or ratepayer would not be able to refuse
to pay in such a case but would have
to approach a court of
competent jurisdiction for a declaratory order.
[42]
Before dealing with the question of what remedy a resident has in a
case where the municipality is demanding payment for
services not
rendered, it is necessary to point out that in the present matter it
was not Ms Rademan’s case that the Municipality
claimed
payment for services that it had not rendered. Indeed, in the
present matter it has not been proved that the Municipality
was
claiming payment for services that had been rendered poorly or
inefficiently. However, where a municipality claims payment
from a
resident or ratepayer for services, it is only entitled to payment
for services that it has rendered. By the same token,
where a
municipality claims from a resident, customer or ratepayer payment
for services, the resident, customer or ratepayer
is only obliged to
pay the municipality for services that have been rendered. There is
no obligation on a resident, customer
or ratepayer to pay the
municipality for a service that has not been rendered. Accordingly,
where, for example, a municipality
included in a customer’s
account for services an item for electricity when in fact no
electricity has been connected to
the particular property and,
therefore, no electricity was supplied, the customer is entitled to
take the stance that he or she
will pay the total bill less the
amount claimed for electricity supply.
[43]
Section 10 of the by-laws requires the Council to “ensure that
all money that is
due and payable
to the Municipality is
collected, subject to the Municipal Systems Act.” (Emphasis
added.) No money is due and payable to
a municipality for a service
not rendered. If a dispute arises between the resident or ratepayer
or customer, on the one hand,
and the Municipality, on the other,
about whether or not electricity was supplied to the particular
property during the relevant
period, either party may institute
legal proceedings to have a court adjudicate that dispute. In this
regard section 17(5)(b)(iii)
of the by-laws envisages the
Municipality instituting legal action to recover an amount that has
been due for forty days.
[44]
In addition to the option – not an obligation – referred
to above, the resident, ratepayer or customer may also
lodge a
complaint or query concerning “the accuracy of an amount due
and payable in respect of a specific municipal service
as reflected
on the account rendered”.
26
In terms of section 19(4) of the by-laws such a query or complaint
must be accompanied by the payment of the undisputed amount.
The
result of this is that the customer does not have to pay the
disputed portion of the account pending the outcome of his or
her
appeal to an appeals committee provided for in the by-laws. The
decision of the appeals committee is final. That, of course,
is
final in terms of internal remedies.
27
There is nothing in the Systems Act that confers upon a municipality
the right or power to claim payment for services not rendered
nor is
there anything obliging residents or ratepayers to pay
municipalities for services not rendered.
[45]
It will be seen from the above discussion that, contrary to the
contention that there is a conflict between section 21(5),
on the
one hand, and the Systems Act and provisions of the by-laws, on the
other, there is no such conflict and these pieces
of legislation are
harmonious in the respect raised in this matter.
Summary
of essential conclusions
[46]
In the light of all the above I conclude that—
(a)
the applicant failed to settle her account in full as she withheld
payment for the rates;
(b)
the fact that the applicant had paid the electricity component of
her account did not preclude the respondent from cutting
off her
electricity supply after she had failed to pay her account in full;
(c)
the applicant, as a customer of the respondent, contravened the
respondent’s conditions of payment as set out in the
by-laws
read with the Systems Act and the agreement between the parties;
(d)
the condition prescribed by section 21(5)(c) of the ERA for the
termination of a customer’s electricity supply by the
respondent was met; and
(e)
the respondent was entitled or had power to cut off the applicant’s
electricity supply.
Order
[47]
In the result I make the following order:
1.
Condonation is granted.
2.
Leave to appeal is granted.
3.
The appeal is dismissed.
4.
There is no order as to costs.
FRONEMAN
J:
[48]
The main judgment disposes of the case on a legal basis different to
the one advanced by the Moqhaka Local Municipality (Municipality)
on
the record before this Court,
28
an approach I have no problem with because the facts are not in
dispute and what is at issue is the interpretation of legislation.
In these circumstances there is no prejudice to the parties.
However, because I have some difficulty in appreciating why section
21(5) of the Electricity Regulation Act
29
(ERA) applies to the case at all, I prefer to add another string to
the bow by dealing with the alleged conflict between the
provisions
of the Local Government: Municipal Systems Act
30
(Systems Act) and the ERA from a different angle.
[49]
This is a case about the failure to pay property rates, not the
failure to pay for electricity. The ERA deals only with the
supply
of electricity.
31
It does not deal with the payment of rates;the Systems Act and the
by-laws made by the Municipality do. The applicant has not
attacked
the constitutionality of any of the provisions of the Systems Act or
the by-laws. They provide, as set out in the main
judgment, the
manner and conditions for the payment of rates. The applicant has
failed to abide by these conditions.
[50]
In
Gauteng Development Tribunal
,
32
this Courtrecognised the autonomy for each sphere of government,
33
even when the different spheres deal with overlapping areas:
“
It
is, however, true that the functional areas allocated to the various
spheres of government are not contained in hermetically
sealed
compartments. But that notwithstanding, they remain distinct from
one another. . . . The distinctiveness lies in the level
at which a
particular power is exercised”.
34
[51]
The ERA deals with the termination of electricity in the context of
a functional area of national government, namely providing
the
national regulatory framework for the electricity supply industry.
The Systems Act and the municipal by-laws deal with the
termination
of electricity in the context of local government, namely, in this
case, the imposition and payment of rates, which
falls within the
Municipality’s competence.
35
In
relation to the termination of electricity, the two Acts deal with
different spheres of government.There is, on the case before
us, no
constitutional challenge to the termination of municipal services,
including electricity, for non-payment of rates in
accordance with
the Systems Act and the municipal by-laws.
36
Section 21(5) of the ERA is simply not applicable here.
[52]
Save for this, a different contextualisation within which the
Systems Act and municipal by-laws must be assessed, I concur
in the
main judgment.
For
the Applicant: Advocate M D Du Preez SC instructed by Grimbeek Van
Rooyen& Partners Incorporated.
For
the First Respondent: Advocate J Y Claasen SC and Advocate K Hopkins
instructed byMajavu Inc.
1
Rademan
v Moqhaka Municipality and Others
[2011] ZASCA 244
;
2012 (2) SA
387
(SCA).
2
4
of 2006. Section 21(5) is quoted in [35] below.
3
32
of 2000.
4
Section
102 of the Systems Act reads as follows:
“
(1)
A municipality may—
(a) consolidate any
separate accounts of persons liable for payments to the
municipality;
(b) credit a
payment by such a person against any account of that person; and
(c) implement any
of the debt collection and credit control measures provided for in
this Chapter in relation to any arrears on
any of the accounts of
such a person.
\(2) Subsection (1)
does not apply where there is a dispute between the municipality and
a person referred to in that subsection
concerning any specific
amount claimed by the municipality from that person.
(3) A municipality
must provide an owner of a property in its jurisdiction with copies
of accounts sent to the occupier of the
property for municipal
services supplied to such a property if the owner requests such
accounts in writing from the municipality
concerned.”
5
Section
152(1)(b) of the Constitution.
6
Id
section 152(2).
7
Id
section 151(3).
8
Id
section 154.
9
Id
section 151(2).
10
Id
section 151(3).
11
Id
section 151(4).
12
Id
section 154(1).
13
Id.
14
Section
96(a) of the Systems Act.
15
Id
section 96(b).
16
Published
in the
Free State
Provincial Gazette
38 of 14 May 2004.
17
Section
20 of the by-laws.
18
Section
5(2)(b) of the Systems Act.
19
Id
section 5(2)(e).
20
Section
11(1) of the by-laws.
21
Id
section 18(3).
22
Id
section 25(1).
23
Id
section 25(3).
24
Id
section 22(1).
25
Id
s
ection 18.
26
Section
19(1) of the by-laws.
27
Id
section 20.
28
The
Municipality’s case relied on the provisions of section
21(5)(b) of the Electricity Regulation Act 4 of 2006 (ERA),
namely
that (1) the agreement between the applicant and the Municipality
encompassed its by-laws and that, accordingly, because
of the breach
of the by-laws, the condition in the sub-section was fulfilled; (2)
alternatively, the words in the subsection
should be interpreted to
read “has failed to honour an agreement for the supply of
electricity
or any other municipal service
.” The
italicised words were those it contended should be read into the
sub-section.
29
4
of 2006.
30
32
of 2000.
31
The
long title of the ERA reads:
“
To
establish a national regulatory framework for the electricity supply
industry; to make the National Energy Regulator of South
Africa the
custodian and enforcer of the national electricity regulatory
framework; to provide for licences and registration
as the manner in
which generation, transmission, distribution, reticulation, trading
and the import and export of electricity
are regulated; to regulate
the reticulation of electricity by municipalities, and to provide
for matters connected therewith.”
Section
2 sets out the objects of the ERA:
“
The
objects of this Act are to—
(a) achieve the
efficient, effective, sustainable and orderly development and
operation of electricity supply infrastructure in
South Africa;
(b) ensure that the
interests and needs of present and future electricity customers and
end users are safeguarded and met, having
regard to the governance,
efficiency, effectiveness and long-term sustainability of the
electricity supply industry within the
broader context of economic
energy regulation in the Republic;
(c) facilitate
investment in the electricity supply industry;
(d) facilitate
universal access to electricity;
(e) promote the use
of diverse energy sources and energy efficiency;
(f) promote
competitiveness and customer and end user choice; and
(g) facilitate a
fair balance between the interests of customers and end users,
licensees, investors in the electricity supply
industry and the
public.”
32
Johannesburg
Metropolitan Municipality v Gauteng Development Tribunal and Others
[2010] ZACC 11;
2010 (6) SA 182
(CC);
2010 (9) BCLR 859
(CC)
(
Gauteng Development Tribunal
).
33
Id
at para 43.
34
Id
atpara 55.
35
See
City of Cape Town and Another v Robertson and Another
[2004]
ZACC 21
; 2005(2) SA 323 (CC) at para 67.
36
See
Body Corporate Croftdene Mall v Ethekwini Municipality
2012(4) SA 169 (SCA) at para 19.