Tshwane successfully appeals electricity reconnection order

The City of Tshwane (CoT) has successfully appealed a high court judgment ordering it to, among other things, reconnect the electricity supply to the owner of six units in a sectional title scheme at the Zambezi Retail Park shopping centre in Pretoria.

The appeal followed an interim order handed down in the High Court in Pretoria in June 2022 to an application brought by Vresthena (Pty) Ltd, owner of the six units.

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Vresthena brought the urgent application when the city in January 2022 implemented credit control measures, including the disconnection of electricity, in an attempt to collect outstanding revenue due to the failure of the body corporate of Zambezi Retail Park to pay for services.

The Zambezi Retail Park Sectional Title Scheme was established in 2006 and comprises eight sections.

It is owned 50% by Thumos Properties (Pty) Ltd, previously Capicol (Pty) Ltd, and 50% by Zambezi Retail Park Investments (Pty) Ltd, originally part of the failed Sharemax group.

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A judgment handed down in the Supreme Court of Appeal (SCA) last week by Judge Yvonne Mbatha – with judges Baratang Mocumie, Wendy Hughes, Fayeeza Kathree-Setiloane and acting judge Raylene Keightley concurring – said the orders granted by the high court have a number of shortcomings.

‘State of uncertainty’

Judge Mbatha said the high court order does not make reference to the application for an additional electricity service connection as sought by Vresthena in its notice of motion, and the duration of the order is indefinite, which means it shall endure until such time that the legal process in Part B is completed and leaves all the parties in a state of uncertainty.

She said there is no causal link between the order granted by the court in Part A and Part B of Vresthena’s notice of motion.

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Mbatha said Part A directed the city to continue to supply electricity and water to the entire Zambezi Retail Park pending the resolution of Part B, while Part B is directed only at a possible review of a possible decision by the city to refuse Vresthena’s application for a separate supply to the units or sections it owns.

In addition, there is no time frame laid down for the anticipated review or for Vresthena to file its application with the city for a separate electricity supply.

The court order therefore does not set out steps to regulate Part B of the application, she said.

Power-without-payment ‘anomaly’

Judge Mbatha added that the restoration of electricity without the provision for the payment of arrears creates an anomaly in that the CoT is forced to provide electricity to the property where payment is not being made.

“Lastly, the chilling effect of the order is that it compels the City to act contrary to the prevailing law and its constitutional mandate: it must continue to supply electricity to users who are in arrears and have a history of non-payment for the foreseeable future, and at the same time the City is denied the statutory power to terminate services without approaching a court to obtain leave to do so,” she said.

“These characteristics of the order demonstrate that its effect is final in nature.

“At the very least … this is one of those cases where the relief sought ought to have never been granted, and the order is appealable on this basis too.”

Mbatha said it was submitted on behalf of Vresthena that Part A of the order balanced the competing interest of the parties, pending the hearing of Part B, in that electricity will be provided and Vresthena will pay the city for the electricity consumed while the dispute relating to the accuracy of the account can be registered and reviewed in the interim.

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But she said this argument is flawed as it does not address the payment of arrears and, in addition, the argument is made against the backdrop that the electricity would be restored to the entire Zambezi Retail Park.

“Disturbingly, however, the order places no direct obligation on other owners to pay for their consumption of electricity,” she added.

“It merely directs the applicant to place a resolution before the Body Corporate as to how payment to it, and hence to the City, should be dealt with in future.

“In other words, the City is obliged to reconnect services to all owners without a concomitant obligation on all of them to pay for the services they use.”

No plans for payment of arrears

Judge Mbatha said there was also no mention that Vresthena has made any arrangements for the payment of arrears to the city or the body corporate.

“The order simply insulates the Body Corporate and its members from payment for the consumption of electricity.

“This is bound to lead to irreparable harm to the City,” she said.

Judge Mbatha added that from the National Energy Act it may be concluded that Vresthena and the other owners of the sections had no right to continue to receive electricity without payment for those services and the city was enjoined to implement the credit and debt collection measures against the body corporate and terminate the supply of electricity to Zambezi Retail Park.

She said the order of the high court failed to take this into account and, despite the history of ongoing non-payment over many years, assumed Vresthena and the other owners had a right to receive electricity and ordered the restoration of its supply without imposing the reciprocal obligation on the owners for payment of the substantial arrear amount.

Alternatives not considered

Judge Mbatha said the high court also failed to consider whether Vresthena had other alternatives, when it clearly did.

She said Vresthena and the other owners have recourse against the body corporate, adding that it is not enough for them to say the body corporate is dysfunctional and that it therefore cannot take steps to rectify the situation regarding payment to the city for the electricity consumed by the commercial owners of sections in the shopping centre.

“In effect, the High Court’s order impermissibly interfered with the constitutional obligation on the City to ensure the collection of revenue for the services it provides.

“Consequently, the High Court should not have granted the order as it did not satisfy the requirements of an interdict,” she said.

City pleased customer obligations ‘confirmed’

The City of Tshwane welcomed the judgment and said it confirms the obligation of customers to pay for services rendered and failure to pay empowers the city to enforce its credit control by-laws.

It said the judgment also confirms that sectional title owners cannot hide behind a dysfunctional body corporate to compel the city to provide services that sectional title owners are not ordinarily entitled to receive.

“It must be emphasised that it is critical that Body Corporates need to ensure that their affairs are properly managed and, if it is not properly managed, Sectional Title Unit owners must take recourse against the Body Corporate in terms of the applicable laws governing the functioning of Sectional Titles in the country,” it said.

This article was republished from Moneyweb. Read the original here.