Eskom Holdings SOC Ltd v Sonae Arauco SA (Pty) Ltd and Others (Urgent Appeal) (3151/2023) [2023] ZAMPMBHC 54 (12 October 2023)

IN THE HIGH COURT OF SOUTH AFRICA

MPUMALANGA DIVISION (MAIN SEAT)

CASE NO: 3151/2023

(1) REPORTABLE: YES

(2) OF INTEREST TO OTHER JUDGES: YES

(3) REVISED.

DATE: 12 /10 / 2023

SIGNATURE: KGOELE J

In the matter between:

ESKOM HOLDINGS SOC LTD

APPELLANT

AND

SONAE ARAUCO SA (PTY) LTD

1ST RESPONDENT

MBOMBELA LOCAL MUNICIPALITY

2nd RESPONDENT

THE PREMIER OF MPUMALANGA:

R MTSWENI-TSIPANE N.O

3RD RESPONDENT

DIRECTOR GENERAL: OFFICE OF THE PREMIER

OF MPUMALANGA: M MAMPURU N.O

4TH RESPONDENT

MINISTER OF MINERAL RESOURCES OF

SOUTH AFRICA: S G MANTASHE N.O

5TH RESPONDENT

MINISTER OF ELECTRICITY: K RAMOKGOPA N.O 6TH RESPONDENT

REASONS FOR JUDGMENT : URGENT APPEAL

KGOELE J:

[1] This is an urgent appeal in terms of section 18(4)(ii) of the Superior Courts Act 10 of 2013 (the Act) against an execution order that was granted by Roelofse AJ(the court a quo) on 3 September 2023. The execution order stems from an urgent application that was granted by the court a quo on 16 August 2023, wherein Eskom (the appellant) and the Mbombela Municipality (the second respondent) were restrained and or interdicted from implementing load-shedding in the area where Sonae’s (the first respondent) factory is situated. Shortly after that, the appellant appealed this order and the first respondent in opposition to it also filed a section 18 execution application. After hearing both applications, the court a quo granted leave to the Supreme Court of Appeal on 3 September 2023, the same day it granted the execution order. The appellant

exercised its automatic right of appeal against the execution order, hence this appeal.

[2] The factual background of the interim interdict that culminated into the current urgent appeal was succinctly summarized by the court a quo in its judgment delivered on 16 August 2023 and need not be repeated here, except those that are necessary for the proper understanding of this judgment. As already indicated above, the first respondent instituted the proceedings to request the court a quo to interdict the appellant from load-shedding the area where the relevant grid of its factory is situated and to preserve the status quo of not being load-shed at all. The first respondent’s case is founded squarely upon an electricity curtailment agreement which was allegedly concluded with the second respondent. According to the allegations, the second respondent undertook to refrain from implementing load-shedding at the Rockysdrift sub-station where its factory is situated, and in turn, the first respondent agreed to curtail its electricity usage to approximately 70% during the load-shedding period. The existence and the validity of this agreement are subject to a highly contested dispute in part B of the application that was brought by the first respondent.

[3] Despite the concerted opposition that was made by the appellant and the second respondent, the court a quo agreed with the first respondent that the alleged right regarding the curtailed electricity that has existed for 2 and half years must continue, pending the finalization of the relief sought in part B. Its order effectively interdicted the appellant from load-shedding the place where the factory of the first respondent is situated. Aggrieved by this, the appellant applied for leave to appeal the interim order, contending as it did during the hearing of the interim interdict that its obligation amongst others is to implement load-shedding to ensure that electricity demand does not exceed supply. If it fails to do so, the demand will be high and will undoubtedly exceed the supply. The catastrophic result thereof as bemoaned by the appellant is that the electricity system will experience a total failure or blackout, meaning that the entire country is likely to be without electricity for two weeks or more.

[4] As already indicated above, the first respondent, in addition to opposing the appeal, instituted a section 18(3) application. The court a quo concluded that its interim order is appealable, and granted leave to the appellant to appeal same. It also granted the execution order that was prayed for by the first respondent. The appellant exercised its automatic right in terms of section 18 (4) and the urgent appeal served before this Court on 21 September 2023. This Court issued an order on the same day upholding the appeal with costs, with the undertaking that the reasons will follow. The reasons follow hereunder.

[5] The test on appeal is trite and need not be repeated here.

[6] The urgent appeal raised a plethora of grounds for the appeal,[1] and by virtue of the urgent nature of these appeals, I am of the view that the other grounds need not detain us, as the only ground this Court requested the parties to focus on during the submissions, is dispositive of the appeal as a whole. The second respondent supported the appeal but only filed the heads of argument bemoaning the costs order granted against it by the court a quo in the circumstances where it did not participate in the proceedings before it.

[7] At the core of the plethora of the grounds raised by the appellant was the contention that the court a quo applied the wrong test.

[8] For a proper analysis of the issues before us, it is important to quote paragraph 42 of the order of the court a quo in full as it captures the genesis of its conclusions regarding the requirements that needed to be proved by the first respondent with regard to the execution order and, to determine whether the submissions made by the appellant in this appeal holds any merit. It was couched as follows:

“42. And that is precisely the point, Eskom has failed to demonstrate that in this moment in time and in the interim, there is a great likelihood that there is a national disaster on its way. Its

against this perspective or perceived possibility of a national disaster and total loss of electricity and a grid collapse that I have to weigh in the basket of irreparable harm, the harm that was clearly demonstrated by the applicant. In my view, the likely or unlikely totally collapse of the grid which is no manner at this moment in time sustained or established, is far less in weight than the irreparable harm, that is staring the factory directly in its face”.[Own Emphasis added]

[9] First, it is instructive to look at the requirements as laid down in section 18 of the Act. It provides:

“18. Suspension of decision pending appeal.-

(1) Subject to subsections (2) and (3), and unless the court under exceptional circumstances orders otherwise, the operation and execution of a decision which is the subject of an application for leave to appeal or of an appeal, is suspended pending the decision of the application or appeal.

(2) Subject to subsection (3), unless the court under exceptional circumstances orders otherwise, the operation and execution of a decision that is an interlocutory order not having the effect of a final judgment, which is the subject of an application for leave to appeal or of an appeal, is not suspended pending the decision of the application or appeal;

(3) A court may only order otherwise as contemplated in subsection (1) or (2), if the party who applied to the court to order otherwise, in addition proves on a balance of probabilities that he or she will suffer irreparable harm if the court does not so order and that the other party will not suffer irreparable harm if the court so orders.

(4) If a court orders otherwise, as contemplated in subsection (1)-

(i) the court must immediately record its reasons for doing so;

(ii) the aggrieved party has an automatic right of appeal to the next highest court;

(iii) the court hearing such an appeal must deal with it as a matter of extreme urgency; and

(iv) such order will be automatically suspended, pending the outcome of such appeal.”[Own Emphasis added]

[10] The law is settled in as far as these requirements are concerned. The applicant must prove on a balance of probabilities that exceptional circumstances exist; that it will suffer irreparable harm; and that the other party will not suffer irreparable harm. The disjunctive nature of the three requirements is such that failure to prove one is fatal to the applicant looking at how the section was couched.

[11] The case of KGA Life v Multisure[2] succinctly summarized the developments in this area of law. I need only emphasize the following paragraphs in Knoop No and Another v Gupter[3] as they are key to the issues before this Court. This case is still a good authority and one of the cases that was highly relied upon in the KGA Life v Multisure. Wallis JA, as he then was said the following:

“[46] Courts have always eschewed any attempt to lay down a general rule as to what constitutes exceptional circumstances. The reason is that the enquiry is a factual one. There is a helpful summary in MV Ais Mamas that has been endorsed both by this court and by the Constitutional Court. In the context of s 18(3) the exceptional circumstances must be something that is sufficiently out of the ordinary and of an unusual nature to warrant a departure from the ordinary rule that the effect of an application for leave to appeal or an appeal is to suspend the operation of the judgment appealed from. It is a deviation from the norm. the exceptional circumstances must arise from the facts and circumstances of the particular case. When dealing with someone’s removal from office, be it a BRP or a liquidator in relation to a company, or a trustee or an executor, or some other office bearer, the mere fact that the court has held that they should no longer fill that office does not, in and of itself, constitute exceptional circumstances. There must be something more in the circumstances of the particular case that makes the immediate implementation of the removal order necessary.

[47] The need to establish exceptional circumstances is likely to be closely linked to the applicant establishing that they will suffer irreparable harm if the removal order is not implemented immediately…..”

[12] But in particular and more relevant to our matter, the following was said[4]:

“[48] Section 18(3) requires the applicant for an execution order to establish that the respondent will not suffer irreparable harm if the order is granted. The judgment in UFS v Afriforum indicates that the requirements of irreparable harm to the applicant and no irreparable harm to the respondent, unlike the common-law position, do not involve a balancing exercise between the two, but must both be established on a balance of probabilities. If the applicant cannot show that the respondent will not suffer irreparable harm by the grant of the execution order, that is fatal. It is unnecessary to decide whether in those circumstances the court would be empowered to grant other relief pending the hearing of the appeal in order to protect the applicant’s position.”

[50] …….Our finding that the three requirements for making an execution order were not established means that we did not have to consider whether there is discretion once they are present and, if so, whether the prospects of success should affect its exercise…..”[5]

[13] In as far as the first requirement is concerned, the first appellant submitted before the court a quo and in this Court that the circumstances were sufficiently exceptional to justify execution because (a) its factory uses the machinery that poses a safety risk to itself and more particularly to its employees as lives might be lost if it is load-shed; (b) it, its employees, including the surrounding community will sustain financial harm if it is load-shed. The appellant on the the other hand replied by contending that on the common cause evidence that was laid before the court a quo, this was not the first time that the first respondent had been load-shed. It had been load-shed before 2020, in December 2022, and in June and July 2023. By definition, the argument continued, this means that load-shedding at the Rockysdrift sub-station is nothing new and therefore not “a truly exceptional circumstance” justifying execution.

[14] It is a well-known fact that most if not all the people and businesses in South Africa are being load-shed. I fully agree with the appellant’s submission that the court a quo should have concluded that the first respondent’s circumstances were not sufficiently exceptional to warrant execution prior to the determination of the appeal by the SCA, as the circumstances were not “something out of the ordinary and of an unusual nature; “……in the sense that the general rule does not apply to it; [and] something uncommon, rare or different.”[6] The first requirement was therefore not satisfied during the execution order.

[15] Coming to the second and third requirements, the provisions of section 18(3) are clear and emphatic. But this is where the cookies crumbled in the judgment of the court a quo. It is trite law the provisions do not permit a court to weigh the respective interests of the parties and make an assessment in terms of where the balance of convenience lies. Instead, these two requirements are disjunctive in that the applicant must prove each of the two requirements. This is so because they are co-joined by the word ‘and’.

[16] As Sutherland J explained in Incubeta v Ellies[7]:

“[22] The proper meaning of [section 18(3) is that if the loser, who seeks leave to appeal, will suffer irreparable harm the order must remain stayed, even if the stay will cause the victor irreparable harm too. In addition, if the loser will not suffer irreparable harm, the victor must nevertheless show irreparable harm to itself” [Own Emphasis added]

[17] As far as the third and fourth requirements are concerned, I fully agree that the court a quo applied a test entirely at odds with the aforementioned trite principles. First, the court a quo laboured under the misapprehension that the appellant had to prove that it would suffer irreparable harm if the order was executed.

This much is borne out by its conclusion that the section 18(3) order was warranted because “Eskom [had] failed to demonstrate” that it would suffer irreparable harm. This is patently wrong. The appellant bore no such onus. Instead, it was the first respondent that was required to establish that the appellant would not suffer irreparable harm if the order was executed. At any rate, the appellant denied this averment that it would not suffer any harm and provided reasons for this denial. More about this later in the judgment.

[18] Secondly, the court a quo also erred by applying a balancing test when it analysed the two requirements with regard to the element of irreparable harm of the two parties. It introduced “the basket of irreparable harm” to weigh the first respondent’s alleged harms against that of the appellant. From the relevant authorities quoted above, one can clearly see that this was simply not the relevant exercise to embark on. The ‘’basket” and the “weight scale” that was brought into the judgment by the court a quo to determine and balance the harm that was to be suffered by the appellant and the first respondent was unfortunately misplaced. Its conclusion that “ …..I have to weigh in the basket of irreparable harm, the harm that was clearly demonstrated by the applicant. In my view, the likely or unlikely totally collapse of the grid which is no manner at this moment in time sustained or established, is far less in weight than the irreparable harm, that is staring the factory directly in its face.” is fundamentally flawed and cannot be sustained.

[19] The upshot of all these is that the first respondent would only have been entitled to a section 18(3) order if it proved on the balance of probabilities that it would suffer irreparable harm and the appellant would not suffer irreparable harm. I therefore do not agree with the proposition as put up by the first respondent that the analysis of the three requirements by the court a quo was sound.

[20] The first respondent instead of addressing the issue of the wrong test head-on, was noticeably silent regarding the authorities that supported the appellant’s contention that the wrong test was applied. It attempted to disway this Court from the principles laid in these authorities by arguing that the decision to grant a section 18(3) order constitutes a wide discretion, and the appellant failed to make out a case for interference with that discretion. This argument was also ill-conceived in my view. I am fortified in this view by the remarks that I have already quoted above made by Wallis JA where he said: “Once we make a finding that the three requirements for making an execution order were not established means that we did not have to consider whether there is a discretion” “…….. and that prospects of success in the appeal have a role to play in considering the exercise of that discretion”.

[21] In addition, the first respondent was at pains, and in fact failed to point out when probed by this Court, at least a sentence or paragraph in the judgment of the court a quo where it made a finding that the first respondent, who was the applicant in the execution order, managed to discharge on a balance of probabilities the onus that rested upon it that “the appellant (Eskom) will not suffer any prejudice by the execution order.” This is another material misdirection on the part of the court a quo which on its own, is fatal.

[22] The last aspect that is worth mentioning is the one that I now return to which relates to the issue of the denial the appellant put forward regarding the irreparable harm. The appellant in its papers provided information that the execution order increases the risk of a blackout. The court a quo rejected the appellant’s version on the basis that “no evidence of whatsoever nature” had been provided to demonstrate

the risk to the grid. This was entirely incorrect because the appellant in support of the averments regarding the risk posed if load-shedding is not implemented filed a confirmatory affidavit of Mr Nkosinathi Dlamini, it's Technical Manager: Network Optimisation, who had specific expertise in load-shedding and the risk the appellant is not able to reduce load sufficiently;[8] also attached the report it received on 8 June 2023 from its Network Optimisation Division, which indicated that the second respondent was unable to load shed White River (i.e Rockysdrift) and Barberton sub-stations and that this poses “a severe risk to the national power system”;[9] the report indicated further that the first respondent was “compromising the network performance or putting the grid at risk”; the first respondent also produced a further supporting affidavit deposed to by Mr Dlamini.[10]

[23] The appellant thus produced substantial evidence that execution of the order would increase the risk of a national blackout. The court a quo’s conclusion that the appellant had produced no evidence, demonstrates that it overlooked this evidence and thus constituted a further misdirection that is material.

[24] But the simple and short answer to all of the analysis above regarding the harm that the appellant will or not suffer is that, despite the observation I made above, in any event, the appellant bore no onus to prove that execution of the order would imperil the grid. As I have already concluded above, the first respondent was obliged to prove the converse, that execution would not impose such a risk.

[25] For all of the above reasons, this Court issued an order that the appeal be upheld with costs. There was no reason proffered and also, which this Court could find why the costs should not follow the results. The order this Court made summarily addressed the issue of costs which the second respondent bemoaned of, therefore the need to also analyse this issue fell away.

KGOELE J

I agree

MANKGE J

VUKEYA J

DATE OF HEARING: 21 SEPTEMBER 2023

DATE OF JUDGMENT: 12 OCTOBER 2023

This judgment was handed down electronically by circulation to the parties’ representatives by email and release to SAFLII. The date and time for hand-down is deemed to be 11h00 on 12 OCTOBER 2023.

THE NAMES, TELEPHONE NUMBERS AND EMAIL ADDRESSES OF THE LEGAL REPRESENTATIVES OF THE PARTIES

FOR THE APPELLANT: ADV S L SHANGISA SC / ADV L RAKGWALE INSTRUCTED BY: EDWARD NATHAN SONNENBERGS INC 129 RIVONIA ROAD, THE MARC, TOWER 1 SANDTON C/O MARULE ATTORNEYS 11 VEN DER MERWE STREET NELSPRUIT TEL: 013 754 7767 REF: 0519863/Mr Moosajee Email address: amoosajee@ensafrica.com jdavis@ensafrica.com olnxumalo@ensafrica.com impapa@ensafrica.com info@maruleattorneys.co.za Imarule@maruleattorneys.co.za FOR THE RESPONDENT : ADV J DE BEER INSTRUCTED BY: KRUSE ATTORNEYS 17 DELY ROAD,HAZELWOOD PRETORIA C/O CHRISTO SMITH ATTORNEYS VERITAS CIRCULE CHAMBERS 2 STRAHM STREET MBOMBELA TEL: 013 753 3187 REF: MR SMITH/YSwart/mb/MAT5503/AK0605 Email address: malcomlm@rkattorneys.co.za robert@rkattorneys.co.za jannes@rkattorneys.co.za yolandi@csprok.co.za

[1] Notice of appeal i.t.o sec 18(4) paginated pages 220-233

[2] KGA Life Limited v Multisure Corporation (Pty) Ltd and Others 2023 JDR 0009 (ECMA)

[3] Knoor No and Another v Gupta 2021 (3) SA 135 (SCA) para 46

[4] Ibid para 48

[5] Ibid para 50

[6] University of the Free State v Afriforum and Another (929/20160 [2016] ZASCA 165; [2017} 1 All SA 79(SCA) para 11

[7] Incubeta Holdings (Pty) Ltd v Ellies 2014 (3) 189 (GJ) para 22

[8] Page 100 of section 18(4) bundle

[9] Page 134 of section 18(4) bundle

[10] Id