Sakeliga obtains court judgment that could save business communities countrywide millions

11 March 2019

Based on “novel” and “dispositive” arguments by Sakeliga in the high court in Pretoria, local business communities are likely to save millions of rands in legal costs against Eskom. This is the implication of a watershed judgment last week in the case between Resilient Properties and others against Eskom and the eMalahleni Municipality, where Sakeliga acted as a friend of the court (amicus curiae) to prevent Eskom from cutting power to local communities.

Under the judgment Eskom (as an organ of state) is not allowed to interrupt electricity supply to a delinquent municipality (also an organ of state) until it has exhausted all remedies contained in sections 41 and 42 of the Intergovernmental Relations Framework Act, No 13 of 2005.

In her judgment Judge Hughes indicates that Sakeliga’s contributions were decisive: “Besides the constitutional and statutory provisions relied upon by Sakeliga NPC which were also advanced by the applicants and the municipalities, in my view, they advanced a novel legal point, which the other parties had not introduced, that being, the application of the Intergovernmental Relations Framework Act 13 of 2005 and the Guidelines, which I address later in this judgment. This in fact allows for a broader consideration of the facts before me and a very persuasive one at it.”

She continues: “In my view, the legal argument of the amici [Sakeliga] is dispositive to the constitutional challenge. Section 41(3) of the Constitution provides that an organ of state involved in an intergovernmental dispute must make every reasonable effort to settle the dispute by means of appropriate mechanisms and procedures provided and must exhaust all other remedies before the courts are approached to resolve the problems. The situation in this case is such an intergovernmental dispute.”

Piet le Roux, Sakeliga’s chief executive, remarks: “We are delighted that Sakeliga’s arguments in this matter had been decisive. Our objective had been precisely to assist the court with sound research and inputs in support of jurisprudence in the general interest.”

Far-reaching implication

Le Roux says the judgment has far-reaching implications for local business communities and the public across the country: “Eskom’s unilateral interruption of power supply because of disputes with municipal authorities were destroying local economies all over the country. Paying business people and other users were being held hostage, as it were, in a dispute between two dysfunctional branches of the same state: on the one hand Eskom and on the other hand municipalities. This has cost local business communities millions of rands in obtaining court orders to prevent Eskom from interrupting their power supply after they had already paid for the electricity but the local municipality had failed to pay the money over to Eskom. This judgment means that the threshold at which Eskom is allowed to cut power to local communities is now much higher than before. We believe this could save business communities all over the country millions in legal costs.”

“While this is only the beginning of our legal strategy, we are delighted that we have been able to make such a huge difference at this early stage. We have an excellent legal team and we are already working on other cases, amongst others to put defaulting municipalities under new forms of administration,” Le Roux said.

Armand Greyling, legal practitioner at Sakeliga, comments on the essence of the court’s decision: “Eskom now cannot continue interrupting power supply to municipalities until it has exhausted all its remedies as contained in sections 41 and 42 of the Intergovernmental Relations Framework Act, No 13 of 2005. Because such a decision to interrupt power supply amounts to an administrative decision, section 6(2)(e)(iii) of the Promotion of Administrative Justice Act, No 3 of 2000, also is applicable. In terms of this section, Eskom and municipalities have to exhaust all alternative remedies in such disputes. If this is not done, any decision by Eskom to interrupt power supply is subject to revision by the court.”

Backgroun

Sakeliga applied for admission as a friend of the court in August 2018 in the action instituted by Resilient Properties and others against Eskom and the eMalahleni Municipality. The applicants approached the court to intervene and prevent Eskom from interrupting the electricity supply to the local community. At the time, the eMalahleni Municipality owed Eskom approximately R1,6 billion.

“After considering several legal challenges, Sakeliga concluded that the Resilient case was one of the suitable cases for us to develop jurisprudence to prevent Eskom from holding paying electricity users hostage in order to recover money from municipalities,” Le Roux says.

Le Roux continues: “We deplore Eskom’s efforts over the past couple of years to circumvent the relevant dispute resolution mechanisms at its disposal, as provided for in the Intergovernmental Relations Framework Act. By its disruptions of electricity supply to municipalities of its own accord, Eskom not only tried to sidestep the courts, but also failed to follow applicable dispute resolution procedures. This undermining of the spirit and objective of legislative provisions forced paying electricity users all over the country to approach the courts for relief at great expense.”

Other cases and legal strategy

This judgment is the first for Sakeliga in an action against Eskom and municipalities this year.

In 2018, Sakeliga succeeded in obtaining an interim interdict to prevent Eskom from cutting the electricity supply to the community of Musina. Also in 2018, Sakeliga rendered financial assistance when business people and concerned consumers in the Koster area obtained an interim interdict against the Kgetlengrivier local municipality and Eskom to prevent interruption of the electricity supply. These and several other cases will now probably be able to rely on the favourable findings on Sakeliga’s latest arguments.

“Even though we are now only at the beginning of our legal strategy, we are glad to be making such a difference already. We have an excellent legal team and are already working on further cases, including the possibility to place delinquent municipalities under new forms of administration,” says Le Roux.

Issued by Moira-Marie Kloppers, Head: Media and Marketing, Sakeliga, 10 March 2019