Tshwane wins appeal over R24m power bill

The Tshwane metro has won a court case in an ongoing dispute involving R24m it says it is owed for unpaid electricity by a large retail park with sectional titles.

Despite claims the retail park’s body corporate is “dysfunctional”, the Supreme Court of Appeal (SCA) ruled the right to electricity “is not absolute”, and sectional title owners must use internal remedies before rushing to court.

The Zambezi Retail Park is a large commercial property of nine portions in a sectional title scheme. Four of the sections are owned by a company called Vresthena, which leases its sections. The city provides electricity through a single supply point and the body corporate of the retail park receives the bill.

However, in 2022, the city implemented “control measures” because, it said, it was owed in excess of R24m by the body corporate.

Vresthena petitioned the city to have its own electricity meters installed so it could be charged separately and avoid power cuts. However, the city refused and cut off power to the entire retail park.

In 2022, Vresthena sought an urgent interdict from the high court to have the power restored. The Pretoria high court granted the interdict ordering the city to restore power and outlining a payment scheme that allowed Vresthena to monitor and pay for its own sections.

However, the city can only supply electricity to the entire park or none due to the single bulk supply system.

Unsatisfied with this scenario and the continued nonpayment, the city appealed to the SCA.

The SCA agreed with the city, noting that the high court’s ruling “impermissibly interfered with the constitutional obligation on the city to ensure the collection of revenue for the services it provides”.

Writing for a unanimous court, SCA judge Thokozile Mbatha said if the high court’s order was not overturned, “Vresthena and the body corporate would enjoy carte blanche the supply of the electricity to the Retail Park without making payments to the city.”

Large retailers and properties such as Zambezi Retail Park often use body corporates as its representative to deal with metropolitans. However, Vresthena said the body corporate was “dysfunctional” and “did nothing” when asked to address the electricity issue.

Mbatha said the body corporate had chosen a “bulk supply system”, meaning “Vresthena could not seek to have a separate meter installed”. Vresthena argued it was “not liable” for the entire outstanding amounts. It was being, effectively, punished because of others.

However, Mbatha was unmoved.

“The right to access electricity is not absolute,” she said. She noted the law allows, “as a form of credit control, any municipality [the] right to terminate [electricity] services on notice”.

Pointing to earlier case law, she said “if debts are not paid to the municipality, it has a constitutional duty to implement debt collection measures”. This includes cutting off power.

Vresthena and other sectional title holders have a relationship with the body corporate, paying the body corporate “levies”. In law, the body corporate is supposed to use these levies to pay the city. She criticised Vresthena for “simply [alleging] that the body corporate is dysfunctional” and now “expect[s] the municipality to regulate the body corporate’s affairs”.

But this is unlawful as “a municipality has no right to interfere in the [sectional title] affairs”. She found it “disturbing that instead of compelling the body corporate ... to perform its mandate”, Vresthena went straight to court.

“Vresthena and other owners have a remedy in terms of the Sectional Titles Act,” she said, “which entitles them to appoint new and effective trustees.”

By going to court, Vresthena skipped immediate, internal remedies. “The High Court should not have granted the order,” she ruled.

She overturned the order and dismissed Vresthena’s entire application.

The city can now take necessary debt collection measures to obtain the outstanding R24m, and Vresthena can find redress within sectional title legislation. The court’s view on electricity supply to sectional titles applies to all municipalities and sectional titles around SA.

moosat@businesslive.co.za