Vresthena (Pty) Ltd t/a Tuscany v Rustenburg Local Municipality (CIV APP MG13/2023) [2024] ZANWHC 280 (11 November 2024)

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

FLYNOTES: MUNICIPALITY – Billing – Dispute – Obligation to serve pre-termination notice – Whether pending dispute between parties which prohibited respondent from terminating municipal services – Did not serve pre-termination notices on appellant’s tenants – Entitlement to fair administrative action – Obligation to notify all users of disconnection – Court a quo erred by failing to deal with applicable constitutional and legislative framework – Appeal upheld – Local Government: Municipal Systems Act 32 of 2000, s 102(2).

IN THE HIGH COURT OF

SOUTH AFRICA

NORTH WEST DIVISION,

MAHIKENG

CASE NO: CIV APP MG13/2023

Reportable: NO

Circulate to Judges: NO

Circulate to Magistrates: NO

Circulate to Regional Magistrates: NO

In the matter between: -

VRESTHENA (PTY) LTD t/a TUSCANY Appellant And

RUSTENBURG

LOCAL MUNICIPALITY Respondent Coram: Hendricks JP, Mfenyana J & Morgan AJ

Delivered: This judgment was handed down electronically by circulation to the parties’ representatives via email. The date for hand-down is deemed to be 11 November 2024.

ORDER

1. The appeal is upheld with costs.

2. The judgment and order of the court a quo is set aside and substituted with the following:

“1. Pending the determination of the applicant’s dispute with the respondent regarding erroneous consumption charges under account number 15592423, the respondent and any of its employees, agents and /or contractors are interdicted and restrained from disconnecting the electricity and/or water supply to Erf 8[…] Cashan Extension 5, also known as 4[…] – 4[…] B[…] Road, Rustenburg.

2. In the event that the respondent disconnects the applicants’ electricity and and/ or water supply after the granting of this order, that the applicant is authorised to instruct an electrician and or service provider to reconnect the electricity and or water supply, for which reasonable costs the respondent shall be liable.

3. The orders in paragraphs one and two above shall operate as an interim interdict with immediate effect.

4. If the officer dispute is resolved in favour of the applicant the respondents credit control department is ordered to reverse all incorrect charges on the applicant's account within seven days.

5. The respondent shall pay the costs of the application an attorney and client scale.”

JUDGMENT

Mfenyana J

Introduction

[1] This is an appeal against the whole judgment and order of this court handed down by Mahlangu AJ on 16 August 2022.

[2] The appellant avers that the court erred in its findings of fact and law on the grounds outlined in the notice of appeal. Such grounds are, inter alia, as follows:

2.1. That irrespective of whether or not a dispute was declared, even assuming that no dispute was declared, the court a quo failed to consider if any termination of services would be unlawful for want of compliance with the respondent’s own policies and bylaws and/or the requirement of procedural fairness.

2.2. That the court a quo erred in finding that there was no dispute between the parties since the common cause facts clearly dictated otherwise, thus precluding any termination of services.

2.3. That even if it were to be accepted that there was some doubt about the lawfulness of the respondent’s conduct or the declared dispute, the court a quo failed to consider the facts, and the relief sought through the lens of an application seeking interim relief.

[3] The history of the matter is relevant to this appeal. The facts giving rise to the appeal are that on 21 April 2022, the appellant launched an urgent application against the respondent for an interim order interdicting the respondent from disconnecting electricity and water supply to the applicant’s business premises, pending the determination of the appellant’s dispute with the respondent regarding erroneous consumption charges under account

number 15592423.

[4] The appellant further sought an order authorising the respondent to reconnect the electricity and water supply should the respondent disconnect the electricity supply. In the event that the dispute was resolved between the parties, the appellant sought an order directing the municipality’s credit control department to reverse all incorrect charges on the applicant’s account within seven days.

[5] Subsequent to the launching of the urgent application, the parties agreed to put the litigation on hold to monitor municipal consumption at the appellant’s premises. In line with the discussions between the parties, the municipality gave an undertaking that it would not disconnect the electricity and water supply for two months. The parties agreed to remove the matter from the roll on that basis. The order issued on 21 April 2022 also records that the parties reserved their rights in respect of the urgency of the matter.

[6] When the two-month period agreed upon by the parties was nearing its end, the appellant sought to extend it on the basis that the monitoring device had not been properly installed. Thus, there had not been sufficient time to run the test. It sought an undertaking from the respondent that it would not disconnect or reduce the electricity and water supply to the premises pending the outcome of their dispute. The respondent did not give the undertaking.

[7] On 6 July 2022, a municipality consultant delivered a final demand to the appellant’s premises. The demand states that “water and electricity supply will be disconnected without further notice if your account is not paid or, payment arrangement entered or dispute lodged with the Municipality within 14 (fourteen) days from date of this notice.”

[8] The following day, the appellant addressed another letter to the municipality reiterating its request for an undertaking that the electricity and water supply would not be disconnected pending the outcome of the dispute. It stated that it disputed the amount of R4 671 479.85 claimed by the municipality for reasons already known to

the municipality. When the municipality failed to respond to the letter or provide an undertaking, the appellant re-enrolled the

application.

[9] To that end, the appellant delivered an amended notice of motion and a supplementary affidavit, the essence of which was to seek an interim order interdicting the municipality from disconnecting the

water and electricity supply to the appellant’s premises pending the determination of the dispute between them, authorising

the appellant to reconnect the electricity and water supply should the municipality disconnect it after the granting of the order, and that in the event of the dispute being resolved, the municipality be ordered to reverse all incorrect charges within seven days. The appellant also sought an order against the municipality on attorney and client scale.

[10] The respondent opposed the application, and on hearing it on 5 August 2022, Mahlangu AJ reserved judgment and handed it down on 16 August 2022. She dismissed the application with costs.

[11] The appeal turns on two issues. The first issue is whether the respondent was obliged to give a pre-termination notice to all the consumers of municipal services supplied to the appellant’s premises, being its 13 tenants. The second is whether there is a pending dispute between the parties as envisaged in section 102 of the Municipal Systems Act[1] (the MSA), as a result of which the respondent was prohibited from terminating the municipal services.

Proceedings in the court a quo

[12] The appellant contended that interim relief should have been granted as it had established a clear right, alternatively, a prima facie right, to the protection provided in section 102 of the MSA. It further contended that it had demonstrated that a dispute was pending

between the parties. The appellant contended further that it would suffer irreparable harm, and no alternative remedy existed. Also, the balance of convenience favoured it.

[13] Relying on the decision of the Constitutional Court in Joseph[2], the appellant averred that, in terms of the Electricity Supply By-law, the municipality must give seven days’ notice to remedy a default to the consumer before disconnecting the electricity supply. The respondent, however, avers that section 102 of the MSA is not applicable as the appellant had not raised a dispute as envisaged in section 102 of the MSA.

[14] The respondent further contended that it is not obligated to give notice to all the tenants/consumers on the appellant’s premises as the appellant and one of the tenants (Spar) had received the notice. In this regard, the respondent averred that the principle enunciated in Joseph does not find application in the facts of the present case in that Joseph relates to the termination of municipal services in respect of residential dwellings. In contrast, this case pertains to business premises.

[15] I must at the outset point out that while the Constitutional Court in Joseph was concerned with the socio-economic right of access to electricity, it also concluded that the applicants were entitled to procedural fairness in the exercise of their right to electricity, which included adequate notice.

Submissions in this court

[16] The appellant contends that the respondent’s by-laws oblige it to serve disconnection notices on the consumers of municipal services and not only to occupiers. In response, the respondent argued that its current by-laws permit service by email. The respondent does not deny that in terms of its current by-laws, it is obliged to serve the disconnection notice on consumers. Further, in terms of theof the respondent’s Credit Control Policy, any person who consumes municipal services ‘irrespective of whether that person has concluded a service level agreement with the Municipality, andMunicipality and may also include a person who illegally and unlawfully connects to municipal services’.

[17] This provision is reiterated in the respondent's Electricity by-law, which extends the definition of ‘consumer’ to include a tenant of a customer or any person or entity consuming or receiving electricity.

[18] In addition, section 34 of the Credit Control Policy states that the municipality shall serve a pre-termination notice informing the consumer that it would disconnect the services within 14 days. It is on this basis that the appellant contends that the respondent has failed to comply with its own by-laws and policies.

[19] A further issue between the parties relates to whether the appellant had raised/declared a dispute with the respondent about the arrear amount claimed by the respondent. The appellant’s contention in this regard is that it had raised a dispute with the respondent and that even if this was not the case, the respondent failed to serve a notice on the tenants at the property, who are the consumers of the municipal service. It is common cause that the demand was only emailed to the appellant, inviting the appellant to pay the arrears or declare a dispute within 14 days.

[20] The appellant contends that on 25 February 2022, within 14 days of receiving the demand from the respondent, it responded to the respondent, again setting out the pending dispute between the parties. It also provided the respondent with a list of its tenants, presumably for service of pre-termination notices. In the same letter, the appellant sought an undertaking, and when no undertaking was forthcoming, it instituted the urgent application.

Discussion

[21] Section 33 of the Constitution guarantees a right to administrative action that is lawful, reasonable, and procedurally fair. This is mirrored in the Promotion of Administrative Justice Act (‘PAJA’)[3]. In terms of section 3 (2) of PAJA a decision taken by the municipality must be procedurally fair. As an organ of state and a third tier of government, the municipality is bound by the basic tenets of the law, particularly PAJA.

[22] In ensuring procedural fairness, municipalities are not merely bound to fulfil their statutory mandates but must do so in a manner that respects and promotes the rights enshrined in section 33 of the Constitution. The entitlement to fair administrative action, as articulated in PAJA, encompasses the right to notice, particularly when adverse consequences arise from municipal decisions. Adequate notice is not merely procedural; it is a constitutional guarantee, especially significant in instances where the affected parties have limited control over the services they receive.

[23] Section 34 of the respondent’s Credit Control Policy states in peremptory terms that the respondent shall serve a notice on the consumer. It is not in dispute that the respondent did not serve pre-termination notices on the appellant’s tenants. Its averment is that it was not obliged to do so. This is not correct. Its own Credit Control Policy requires it to. In terms of the principle established in Joseph, the respondent had an obligation to serve a pre-termination notices on all the consumers.

[24] The respondent contends that Joseph cannot be applied in a vacuum and is distinguishable in that it relates to residential property and not commercial premises. There is no merit to this argument. The import of Joseph, to put it crudely, is to afford a pre-termination notice to all persons affected by the termination. That being the case, the by-laws must necessarily be consistent with the requirements of procedural fairness set out in section 3(2) of PAJA and section 33 of the Constitution. The following extract from Joseph is instructive:

“Taken together, the values and principles described above require government to act in a manner that is responsive, respectful and fair when fulfilling its constitutional and statutory obligations. This is of particular importance in the delivery of public services at the level of local government. Municipalities are, after all, at the forefront of government interaction with citizens. Compliance by local government with its procedural fairness obligations is crucial, therefore, not only for the protection of citizens’ rights, but also to facilitate trust in the public administration and in our participatory democracy.”[4]

[25] The Constitutional Court in Joseph noted further in respect of persons with whom the service provider has no contractual relationship and who consequently are not ‘customers’ for purposes of the Credit Control by-laws that “they are entitled to procedural fairness where their rights are materially and adversely affected by the termination of a municipal service.[5]

[26] The respondent’s assertion that the by-laws apply differently to residential and commercial premises is unpersuasive in light of the definitions provided within the by-laws themselves. The term ‘consumer’ is explicitly extended to all users of municipal services, irrespective of whether they have any formal agreement with the municipality or not. Accordingly, tenants, employees, or any individuals using services at a commercial property are entitled to procedural protection as residents, making

the obligation to notify all users of disconnections applicable in the present case.

[27] Notably, Mr Kok, arguing on behalf of the respondent, placed reliance on specific paragraphs of Joseph to augment his proposition that Joseph is not applicable to the present case. With reference to Mkontwana v Nelson Mandela Metropolitan Municipality (Mkontwana)[6], he submitted that that ought to be the end of the matter. He contended that the appellant’s defences with regard to the

claim are spurious if regard is had to the origin of the debt. If anything, the dictum in Mkontwana is that municipalities have an obligation to provide municipal services.

[28] The appellant’s stance is that there is no explanation for the R1.6 million debt which existed when the account was opened, and the respondent has not allocated historical payments made by the appellant. it. To my mind, at best, all that the respondent should have done in the circumstances is to afford procedural fairness to the appellant as it is obliged to, in terms of the Constitution and PAJA.

[29] A transparent and reliable billing system is a cornerstone of any municipal service framework. Discrepancies or sudden spikes in charges must be carefully scrutinised, as such issues can severely impact service users. In instances where substantial arrears are claimed, as with the appellant, municipalities must go beyond mere notification and ensure that any billed amounts are correct and verifiable. This transparency is essential not only for maintaining trust but for allowing consumers to understand and engage with their obligations under the law.

[30] In Eskom Holdings SOC Ltd v Lekwa Ratepayers Association and Others; Eskom Holdings SOC Ltd v Vaal River Development Association (Pty) Ltd and Others,[7] Petse DP noted that electricity disruptions and the ultimate termination of electricity supply have a devastating effect, as they threaten the very fabric of society… with hospitals, schools, and businesses severely disrupted. Thus, there can be no doubt that the intended termination would be detrimental to the appellant and its tenants.

[31] The potential disconnection of services has far-reaching implications beyond immediate financial consequences. In the context of commercial operations, it touches upon the constitutional right to engage in lawful economic activities and undermines business stability, with direct effects on employees, clients, and the community. The deprivation of electricity and water impedes not only economic functioning but also the broader constitutional values of dignity, equality, and freedom, underscoring the need for municipalities to exercise restraint and adhere strictly to fair processes.

[32] It may well be that in the present matter, the rights to be protected are the right to trade and access to electricity as equally applicable to the appellant and the tenants. These rights are constitutionally protected. The fundamental issue is that both the Constitution and PAJA require that a “pre-termination notice be sent to all persons whose rights may be materially and adversely affected by the termination of a municipal service.” In my view, this disposes of the respondent’s argument that it was under no obligation to serve a pre-termination notice to the appellant’s tenants. The law dictates that it does. What is more is that the Electricity by-law of the respondent, as well as its Credit Control Policy, unlike in Joseph, already recognise that the definition of ‘consumer’ includes persons who are consumers of municipal services irrespective of whether or not they have concluded an agreement with the municipality.

[33] It is in the public interest that municipalities, as custodians of essential services, act transparently and in alignment with their by-laws. Compliance with procedural safeguards not only protects individual rights but reinforces public confidence in local government accountability. Disconnection without adequate notice and adherence to internal policies undermines this public trust and erodes the values enshrined in our Constitution. In this respect, municipalities hold a unique public duty to balance operational objectives with the social and economic well-being of those they serve, necessitating vigilance in upholding procedural fairness.

[34] Municipalities occupy a unique position as both service providers and protectors of public welfare. In fulfilling their mandates, they must act as partners in service delivery, ensuring that their actions enhance rather than detract from the socio-economic fabric of their communities. The role of local government is not merely to enforce payment compliance but to foster an environment where essential services are provided equitably, within the rule of law, and with due consideration to all stakeholders.

[35] It is common cause that the court a quo in its judgment only dealt with whether or not the appellant had lodged a dispute in respect of the MSA and the respondent’s Credit Control and Debt Collection Policy. It found that the appellant had not. It is my respectful view that in the specific circumstances of this case, nothing turns on whether or not the appellant had lodged a dispute. To my mind, the issue is more serious than that. It is whether the respondent complied with the dictates of the various provisions, including the Constitution, PAJA, its own by-laws and related policies; whether the appellant and all the consumers of the services provided by the appellant were afforded procedural fairness in the respondent’s impending disconnection. Notably, in Joseph, the Constitutional Court dealt with what it referred to as a misapprehension affecting the reasoning of the high court in not

adopting PAJA as a starting point. Naturally, the issue would also turn on whether the appellant had satisfied the requirements for the interim interdict it sought. In my view, it did.

[36] PAJA serves as a critical framework in ensuring that administrative bodies exercise their powers fairly and justly, in accordance with their constitutional mandate. It applies broadly to all tiers of government, mandating transparency, responsiveness, and adherence to procedural fairness. As such, municipalities are not permitted to interpret PAJA narrowly or selectively, especially in decisions impacting fundamental services. Compliance with PAJA is essential in any matter where municipal actions directly affect the constitutional rights of service users, as is evident in this case. It reinforces the requirement that municipalities remain accountable, respecting both statutory duties and the underlying principles of public service.

[37] The respondent was obliged to give the requisite notice to all tenants who are ‘consumers’ of the municipal services. The court a quo ought to have considered the by-laws in this regard. By failing to deal with the applicable constitutional and legislative framework and confining itself to whether or not a dispute had been declared, the court a quo respectfully erred.

Costs

[38] In the court a quo, the appellant also sought an order for costs on attorney and client scale. As justification for the order, it contended that it had brought to the respondent's attention that the intended disconnection was unlawful. However, the respondent pressed ahead and refused to engage with the appellant. As such, the appellant avers that the application could have been avoided had the respondent adhered to its own by-laws and refrained from its unlawful conduct. I agree. Our jurisprudence is awash with decisions detailing the importance of preserving constitutionally entrenched rights. These decisions were relied on, interestingly, by both counsel. There was simply no basis for the respondent to persist with steps to disconnect the appellant’s municipal services, violating not only the constitution and PAJA but also its own by-laws and policies.

Order

[39] In the result, I make the following order:

1. The appeal is upheld with costs.

2. The judgment and order of the court a quo is set aside and substituted with the following:

“1. Pending the determination of the applicant’s dispute with the respondent regarding erroneous consumption charges under account number 15592423, the respondent and any of its employees, agents and /or contractors are interdicted and restrained from disconnecting the electricity and /or water supply to Erf 8[…] Cashan Extension 5, also known as 4[…] – 4[…] B[…] Road, Rustenburg.

In the event that the respondent disconnects the applicants’ electricity and and/ or water supply after the granting of this order, that the applicant is authorised to instruct an electrician and or service provider to reconnect the electricity and or water supply, for which reasonable costs the respondent shall be liable.

S

MFENYANA

JUDGE

OF THE HIGH COURT

NORTH WEST DIVISION, MAHIKENG

I agree.

RD

HENDRICKS

JUDGE PRESIDENT OF THE

HIGH COURT

LM MORGAN

ACTING JUDGE OF THE HIGH

COURT

APPEARANCES

For the appellant : Adv M. Louw Instructed by : Wiese & Wiese Inc. Email hein@wieseattorneys.co.za leandri@wieseattorneys.co.za litigation2@labuschagneatt.co.za For the respondent : Adv P. Kok Instructed by : M E Tlou Attorneys Email : mo@tlouattorneys.co.za Date reserved : 26 April 2024 Date of judgment : 11 November 2024

[1] Act 32 of 2000.

[2] Joseph and Others v City of Johannesburg and Others 2010 (4) SA 55 (CC).

[3] Act 3 of 2000.

[4] Joseph at para 45.

[5] Ibid at para 75.

[6] 2005 (1) SA 530 (CC).

[7] [2022] 1 All SA 642 (SCA).