City of Tshwane Metropolitan Municipality v Vresthena (Pty) Ltd and Others [2024] ZASCA 51 (18 April 2024)

A municipality has a constitutional obligation to provide basic services, such as electricity, to residents while also ensuring the collection of revenue for these services.

Author

Ross Shepstone
April 30, 2024

The case involves a dispute over the supply of electricity to a commercial property, the Zambezi Retail Park Centre, in South Africa. The City of Tshwane Metropolitan Municipality (the City) provides electricity to the property through a single supply point to the different sectional title units, billing the Body Corporate of Zambezi Retail Park (the Body Corporate). However, the Body Corporate has consistently failed to pay for the electricity services, resulting in significant arrears. In January 2022, due to non-payment, the City implemented credit control measures, including the disconnection of electricity, to collect the outstanding revenue.

One of the owners of the sectional title units within the Zambezi Retail Park, Vresthena (Pty) Ltd (Vresthena), filed an urgent application in the Gauteng Division of the High Court, Pretoria, seeking to compel the City to restore the electricity supply and to provide an updated reconciliation of the Body Corporate's electricity consumption account. Vresthena also sought a separate electricity connection for its sections of the Retail Park. The High Court granted the urgent relief, ordering the City to restore electricity and water supply to the property and to provide an updated reconciliation of the electricity account. The City was further directed to accept and reconsider Vresthena's application for a separate electricity connection.

"The order granted by the high court has a number of shortcomings. First, the order does not make reference to the application for an additional electricity service connection as sought by Vresthena in paragraph 1 of Part B of the notice of motion. Second, the duration of the order is indefinite, which means that it shall endure until such time that the legal process in Part B is completed. This leaves all the parties in a state of uncertainty. Third, there is no causal link between the order granted by the court in Part A and Part B of the notice of motion. Part A directs the City to continue to supply electricity and water to the entire Retail Park pending the resolution of Part B. However, 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 owned by it. What is more, 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 as contemplated in s 7 of its By-laws. Therefore, the court order does not set out steps to regulate Part B of the application. Fourth, the restoration of electricity without the provision for the payment of arrears creates an anomaly in that the City 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. These characteristics of the order demonstrate that its effect is final in nature. At the very least, for reasons I traverse below, 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."



The City sought leave to appeal the High Court's decision, arguing that the order was final in effect and fell within the Zweni triad, a set of criteria for determining the appealability of court orders. Vresthena, on the other hand, submitted that the order was not appealable as it was interim in nature and did not dispose of a substantial portion of the relief sought.

The Supreme Court of Appeal of South Africa first addressed the issue of whether the High Court's order was appealable. The Court considered the recent developments in South African law regarding the appealability of interim orders, noting that the Constitutional Court had affirmed the role of the interests of justice in this determination. The Court concluded that the order granted by the High Court was final in nature and had a final effect, as it compelled the City to act contrary to its constitutional mandate and statutory powers to terminate services for non-payment. The indefinite duration of the order and the absence of a causal link between the relief granted and the potential review of the City's decision on the separate electricity connection application further supported the finality of the order.

Having established the appealability of the order, the Court granted condonation for the late filing of the notice of appeal and reinstated the appeal. On the merits of the case, the Court examined the relevant constitutional and statutory provisions governing the supply of electricity by municipalities. The Court highlighted the reciprocal obligation of citizens to pay for municipal services, such as electricity, and the constitutional duty of municipalities to implement debt collection measures for non-payment. The Court found that Vresthena and the other owners of the sectional title units had no right, even prima facie, to continue receiving electricity without payment. The Court concluded that the High Court failed to consider the City's constitutional obligation to collect revenue for the services provided and that Vresthena had alternative remedies available against the Body Corporate.

The Court upheld the City's appeal, setting aside the High Court's order and dismissing Vresthena's application. The Court ordered Vresthena to bear the costs of the appeal, including the costs consequent upon the employment of two counsel where applicable.

The core legal principle underlying the decision is the constitutional obligation of municipalities to provide basic services, such as electricity, to residents while also ensuring the collection of revenue for these services. This case highlights the reciprocal obligation of citizens to pay for municipal services and the right of municipalities to implement debt collection measures for non-payment. The court stressed the negative impact of non-payment on the municipality's ability to provide services and upheld the municipality's right to disconnect electricity as a form of credit control. The court also addressed the issue of appealability, concluding that the order was final in nature and had a final effect, warranting its appealability.

United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others [2022] ZACC 34; [2023] 1 SA 353 (CC); [2022] 12 BCLR 1521 (CC): This case affirmed the role of the interests of justice in determining the appealability of an interim order. The Constitutional Court held that an interim order may be appealable, taking into account a range of factors, and that the interests of justice are a crucial consideration.

Cyril and Another v Commissioner for the South African Revenue Service [2024] ZASCA 32: This case highlighted the recent developments in South African law regarding the appealability of interim orders. It noted that the Constitutional Court affirmed the role of the interests of justice in this determination and that the doctrine of finality should guide the assessment.

City of Cape Town v South African Human Rights Commission [2021] SASCA 182: This case provided an interpretation of the Constitutional Court's decision in National Treasury and Others v Opposition to Urban Tolling Alliance and Others, emphasising the consideration of the interests of justice and the assessment of whether an interim order has a final effect or disposes of a substantial portion of the relief sought.

FirstRand Bank Ltd v McLachlan and Others [2020] ZASCA 31; [2020] 6 SA 46 (SCA): This case confirmed the traditional approach to appealability set out in Zweni v Minister of Law and Order of the Republic of South Africa, stating that an order must be final in effect, definitive of the rights of the parties, and dispose of a substantial portion of the relief sought to be appealable.

TWK Agriculture Holdings (Pty) Ltd v Hoogveld Boerderybeleggings (Pty) Ltd and others [2023] ZASCA 63; [2023] 5 SA 163 (SCA): This case favored the doctrine of finality as the primary guide for determining appealability, emphasising the need for orderly use of the court's capacity, preventing piecemeal appeals, and providing criteria for litigants to determine appealability with certainty.

Cloete and Another v S; Sekgala v Nedbank Limited [2019] ZACC 6; [2019] 5 BCLR 544 (CC); [2019] 4 SA 268 (CC): This case affirmed the consideration of avoiding piecemeal adjudication and its consequences when granting leave to appeal, stating that it is undesirable to fragment a case by bringing appeals on individual aspects before the resolution in the court of first instance.

Nedbank Limited and Another v Survé and Others [2023] ZASCA 178; [2024] 1 All SA 615 (SCA): This case extended the principle that an interim order may be appealable, particularly when it ought never to have been granted in the first place, causing serious reputational repercussions for the interdicted party.

International Trade Administration Commission v SCAW South Africa (Pty) Limited: This case was cited for its affirmation that irreparable harm, while important, is not the sole consideration in assessing the interests of justice. The court must evaluate various factors, including the kind and importance of the constitutional issue, prospects of success, final effect of the decision, and potential irreparable harm.

Joseph and Others v City of Johannesburg and Others [2009] ZACC 30; [2010] 3 BCLR 212 (CC); [2010] 4 SA 55 (CC): This case affirmed the constitutional and statutory obligation of municipalities to provide electricity to residents and the reciprocal obligation of citizens to pay for such services. The court underlined the importance of legitimate debt recovery by municipalities.

Mkontwana v Nelson Mandela Metropolitan Municipality [2004] ZACC 9; [2005] 1 SA 530 (CC); [2005] 2 BCLR 150 (CC): This case established that electricity is a component of basic services and that municipalities have a duty to provide it. However, non-payment negatively impacts the provision of such services, and citizens have a reciprocal obligation to pay.

National Energy Act 34 of 2008: This Act provides that one of its objects is to ensure an uninterrupted supply of energy to the nation and to facilitate energy access to improve the quality of life of South African people.

Local Government: Municipal Systems Act 32 of 2000: This Act sets out the general duties of municipalities, including ensuring access to basic services and financial sustainability. It also regulates credit control and debt collection measures for services rendered by municipalities.

City of Tshwane Metropolitan Municipality Standard Electricity Supply By-laws (2013): These by-laws govern the supply of electricity by the City of Tshwane. They include provisions on the definition of a consumer, supply by agreement, payment of charges, and the right to disconnect and suspend supply.