MUNICIPALITY

Facts: An incident occurred when the plaintiff stepped off the end of a concrete pedestrian walkway or ramp, which runs alongside the western side of a centre known as Millwood Court. It allows visitors to access businesses in the centre from the adjacent parking area in Queen Street. The plaintiff walked down the walkway/ramp. But, instead of stepping off the end of it at the parking bay just after the tree, where his vehicle was parked, he did so at the bay which was just before it. He said that he did so because he mistook the vehicle that was parked in the bay just before the tree, for his vehicle, as it was also white, and it was dark at the time. He was expecting to take a small step down to the kerb and from there to the parking area. But, because he misjudged where he was, the step down was about twice the height he expected it to be. This caused him to fall forwards towards the parking area, and to hit his head as he landed. His left ankle was in pain. The following day he had it assessed at the local hospital where it was determined that he had sustained a fracture of the malleolus. His ankle was initially immobilized.

Claim: The plaintiff has sued the municipality (defendant) for damages he allegedly sustained when he fell outside the business centre. The plaintiff alleged that the defendant had a duty to take steps, which it failed to discharge, including: to construct the pavement in such a manner that it did not constitute a danger to personal safety or a threat of injury; to ensure that the pavement inclusive of all fixtures that formed part of it, was properly maintained and repaired as required from time to time, so that it did not constitute such a danger or threat; and to fix a guardrail to the inclining section of the pavement (the ramps) and ensure that it was properly maintained or replaced.

Discussion: The walkway on which the incident occurred serves, primarily, to afford access to the centre, by visitors to it, rather than to the broader, general public, and is used by the owners of the centre to further their commercial interests. It was built by the owners of the centre to serve the building which they put up next to it and was designed to fit in with its aesthetics and requirements. Access to and control of it lies in the hands of the owners of the centre and the centre manager, and not the municipality. In building it the owners encroached onto public land and in doing so effectively expropriated it for their private use. As a result, the walkway does not serve a public purpose in the same manner and way that a pavement along a public road does. Public policy requires that the plaintiff should have looked to the owners of the centre for possible recompense, and not the municipality. On the evidence as a whole it is apparent that the incident occurred because the plaintiff failed to keep a proper look-out and elected to step off the walkway at a point that was higher than when he first stepped onto it, thereby injuring himself, in the same way that any pedestrian who steps off an ordinary pavement at the side of the road because they fail to keep a proper look-out, would injure themselves.

Findings: The combined weight of the facts and circumstances of the case is against holding that the defendant was under a legal duty, in one or more of the particular forms claimed by the plaintiff. The legal convictions of the community and public policy considerations do not expect such a duty to be imposed on it. The plaintiff failed to place cogent and sufficient evidence before the court to show that he stepped off the walkway and injured himself because of a failure by the defendant to put up a balustrade or guardrail at that point. The municipality also contended that the action could not succeed because it was exempt from liability, by virtue of the provisions of section 23 of the National Building Regulations and Building Standards Act 103 of 1977. The section aims primarily to provide an indemnity from liability to a municipality, in instances where loss or harm is sustained because of the bona fide approval of a building plan or the grant of a right of use or occupancy, which should not have been granted. It cannot be interpreted to afford a municipality an exemption from liability where it was under a legal duty to take certain steps in order to prevent harm or loss from occurring and failed to do so.

Order: The action is dismissed with costs.

SHER J

Facts and issue: The applicant seeks to review and set aside a decision by the Bela-Bela Municipality not to provide a letter of support for its application to establish a vehicle testing station. This case raises important questions about the role of municipalities in the licensing process for vehicle testing stations, the interpretation of the relevant legislative framework, and the principles governing judicial review of municipal decision-making.

Discussion: The decision was made by the Bela-Bela Municipality, an organ of state. In considering the application for support, the municipality was exercising a public power derived from clause 6.2.2 of the Regulations. This power is exercised in terms of empowering legislation, namely the National Road Traffic Act 93 of 1996 and its Regulations. The decision adversely affects the rights of the applicant by impeding its ability to progress its licence application. The decision has a direct, external legal effect on the applicant's position. The municipality's decision constitutes administrative action reviewable under Promotion of Administrative Justice Act 3 of 2000.

Findings: The municipality's stated reasons for not supporting the application, concerns about oversaturation and impact on municipal revenue, are not rationally connected to the purpose of clause 6.2.2, which is to allow municipalities input on local planning and governance issues. These considerations fall outside the municipality's proper role in the process. The decision falls to be set aside on multiple grounds under section 6 of PAJA.

Order: The decision is reviewed and set aside. The matter is remitted to the Bela-Bela Municipal Council for reconsideration.

Facts: A fire broke out the plaintiff’s premises. Eduan was the only witness who was at the scene the whole time from when the fire first ignited to the evening and who observed, from his point of view, the relevant events. Eduan did not know that there was no water on the day. There was a water interruption to the East End area on the day of the fire and there was consequently no water available at the premises of the plaintiff. Eduan became aware of the fire when an employee shouted that there was a fire. Eduan ran to the hose reel inside the building and rolled it off completely. When he opened it, there was no water. Outside the building was a second hose reel which he then took, tested it for water, but there was also no water available. The vehicle wreck where the fire ignited then set alight the vehicle which was packed on top of it. After approximately 10 to 15 minutes after the fire truck started spraying water, the water of the water truck was also emptied out. The water truck left to refill, but while it was away, the fire re-ignited. After the water tanker returned, the fire truck again sprayed water on the fire to extinguish it, but by that time it had spread.

Application: The plaintiff instituted a delictual action against the defendants for damages as the result of a fire which ignited at its premises. The amount claimed by the plaintiff amounts to R785,714.30 consisting of general damages for the value of the total loss of vehicles and spare parts and consequential damages in the form of loss of income from the sale of the aforesaid vehicles and spare parts.

Discussion: The fact that Eduan was not able to contain the fire, was not due to the inadequacy of the plaintiffs’ permanent fire-fighting equipment, but due to the absence of water for the hose reels. The fire would therefore not have spread if it had not been for the absence of water when Eduan attempted to use the hose reels. The “second” spreading of the fire occurred when the water tanker left to fill up with water. Had there been water in the fire hydrants, the water tanker would not even have been necessary, as the fire truck would have extracted water directly from the fire hydrants. It cannot be found that the plaintiff had been contributory negligent in any degree in having caused the damages suffered by the plaintiff. The legal duty or statutory duty of the defendant to ensure within its means and its available resources, water supply to residents and businesses in the East End area on the day of the fire, is not in dispute and has been conceded by the defendants. A water interruption to the East End area in fact occurred on the day of the fire, which resulted in the premises and the fire hydrants to have been without water during the time of the fire. That omission of the defendant was therefore prima facie wrongful.

Findings: The plaintiff proved the wrongfulness of the defendant’s conduct due to its failure to have complied with its (conceded) legal duty or statutory duty. A reasonable person in the position of the defendant would have foreseen the reasonable possibility that the extended interruption of the water could injure another person’s property and cause patrimonial loss, and such a reasonable person would have taken reasonable steps to guard against such occurrence. The defendant failed to take such reasonable steps. The plaintiff discharged its onus in respect of the element of negligence. The quantum of the plaintiff’s general damages is not in dispute. Regarding the consequential damages claimed by the plaintiff, it is pleaded to be damages in the form of loss of income from the sale of the vehicles and spare parts lost in the fire. Steyn attempted to explain how the amount of R185,292.58 was compounded and calculated, but was unable to do so. Damages and the basis for the calculation thereof are to be proven, not guessed. No proper and reliable evidence was placed on the basis of which the court can award any amount of damages in respect of consequential damages. It is on the balance of probabilities evident that the wrongful and negligent omission of the first defendant was the cause of the plaintiff’s general damages, and it should be held responsible for the payment thereof.

Order: The defendants are ordered to pay R648,542.02.

VAN ZYL J

Facts: The respondent instituted action against the municipality. The claim was for specific performance of the contract, alternatively enrichment. After negotiations, the respondent’s claim was settled. The settlement was initiated by an offer made at the instance of the municipality represented at the time by its then acting municipal manager, Mr Mosala, who had at all material times instructed their attorney and senior counsel. The respondent accepted the offer. The acceptance constituted a settlement in terms of which the municipality would pay the respondent the amount of R19,140,000 and culminated in the order taken by consent. The order recorded that the settlement shall, by agreement between the parties, be made an order of court and that it shall constitute a judgment of the court entitling the respondent to proceed to execution in the event of the municipality’s failure to comply therewith. During events following the consent order the municipality proposed a structured payment plan. The respondent declined acceptance and caused a writ of execution to be issued, whereupon the sheriff attached movable property to the value of R862,600.

Appeal: This case concerns the legality of a settlement agreement. The consent order between the parties emanated from a defended action instituted by the respondent against the municipality and was made an order of court. Subsequent thereto, the court dismissed the application by the municipality to have the consent order rescinded. Following that dismissal, the judge granted the municipality leave to appeal to this court. The central question is whether it would be appropriate for the court to rescind an earlier court order which had incorporated a compromise or settlement agreement concluded between the appellant (municipality) and the respondent during contested proceedings.

Discussion: The municipality posits that the legality issue is underpinned by the lack of authority of its manager to have concluded the agreement and maintains that it renders the consent order liable to be set aside. The municipality contends that the issue goes to the root of the matter and constitutes just cause for seeking rescission. The crux of the municipality’s case for rescission was that the acting municipal manager, Mr Mosala, acted contrary to the council resolution to defend the action instituted by the respondent and by concluding the settlement agreement it became obliged to incur expenditure that was not in accordance with an approved or adjusted budget, in terms of its approval process and the Local Government: Municipal Finance Management Act 56 of 2003 (MFMA). Where a party seeks to make a case that an official has exceeded the mandate conferred on him by a resolution of the municipal council it is incumbent on it to provide the resolution. While conceding that the resolution to defend is not included in the papers, counsel for the municipality argued that, in any event, Mr Mosala did not have the authority to conclude the settlement agreement because no budget was approved. The respondent disputed this.

Findings: The respondent’s main claim in the action was for specific performance of the contract that flowed from the award of a tender. While admitting that it had purported to contract with the respondent the municipality denied that a lawful contract had resulted. It filed a counterclaim in which it sought an order that the purported contract was unlawful and void ab initio. In respect of the alternative claim, it tendered to pay to the respondent such sum as may ultimately be determined as constituting any enrichment enjoyed by the municipality, because of goods and services delivered to the municipality pursuant to the purported agreement. The mandate given to counsel includes the authority to compromise the action or any matter in it, unless he has received instructions to the contrary. This did not amount to incurring “expenditure” as envisaged in section 15 or section 19 of the MFMA. It merely involved the determination of the extent of a pre-existing liability. Unless some impropriety in the conduct of the legal practitioners is established, and none was suggested, or the settlement is shown to be unlawful on another basis, the municipality is bound by it, and by the order of court. The municipality has advanced no persuasive argument for rescinding the order of the court a quo.

Order: The application for condoning the late filing of the notice of appeal is dismissed with costs. The appeal is dismissed with costs.

RUGUNANAN J (EKSTEEN J and BODLANI AJ concurring)

Facts: The trust (applicant) operated a holiday resort in a peaceful and tranquil setting approximately 35km from Johannesburg in the direction of Vereeniging. The holiday resort traded on the peace and quiet of the area and the possibility of an escape from city life. The resort provided accommodation in the form of self-catering chalets and camping facilities. There were also pools, a water slide and trampolines. The municipality owned neighbouring land which had been earmarked for low-income housing developments, but occupiers built informal housing on the undeveloped land and this increased at what the applicant described as an “an alarming rate”. The applicant asserts that this caused security issues and also nuisance from the burning of tyres and wood.

Application: The applicant twice previously approached the court and secured orders, that the municipality should report back to the court and that it comply with its own by-laws and applicable legislation, but the municipality failed to comply. The applicant approached the court a third time and sought an order for the payment of constitutional damages in the sum of R9,100,000, being the claimed reduction in value of the applicant’s property caused by the municipality’s failure to comply with its statutory obligations and the terms of the two prior court orders. The initial quantum was based on a valuation report, but the property was later sold for somewhat higher than valued for the report, which reduced the claim to R8,600,000.

Discussion: Insofar as the applicant relies on the violation to its rights under section 34 of the Constitution (access to courts), the applicant relies on the failure by the municipality to comply with its obligations under successive court orders to report to this court on what it intends to do and has done to deal with the situation. These failures do not interfere with the applicant’s right of access to courts or the enforcement of court orders. On the contrary, the applicant would have been fully entitled to seek further orders holding the municipality or its relevant officials in contempt of court, or to have made further efforts to ensure that relevant officials of the municipality are brought before court. In this sense the applicant had not come to the end of the road in its attempts to secure compliance with court orders, and its right of access to court cannot be said to have been infringed. The applicant has failed to show a causal connection between the failure to report to court and the diminution in value of the land. It is also far from clear whether any other failure on the part of the municipality has caused that loss of value.

Findings: The applicant had not been deprived of access to its property, nor can it be said to have been deprived of access to the courts by reason of the municipality’s failure to comply with prior orders of this court. The failure of a municipality to comply with its own municipal by-laws or other related laws under which property use is authorised and regulated, while unlawful, does not by itself engage fundamental rights. The court is not persuaded that the applicant has established either that it has suffered damages in consequence of a violation of its constitutional right of access to courts or that it has established a causal connection between a breach of obligations by the municipality and any loss suffered by it at the particular point in time at which it decided to realise the current value of its land by disposing of it to a third party, in that way perfecting the reduction in value of the property at a point in time chosen by the applicant.

Order: The application for constitutional damages is dismissed with costs.

TODD AJ

Facts: The municipality (defendant), represented by Dr Maake and Khari Investments (plaintiff), represented by Mr Gwanga, entered into an oral agreement resulting in the plaintiff rendering professional services to the defendant. The defendant required the plaintiff to draft a technical report to enable the defendant to apply for funding from the Department of Water and Sanitation to restore the effective functioning of the sewage plant. The defendant denies that it entered into an oral agreement, alternatively denies that Dr Maake had the required authority to represent the defendant in the alleged oral agreement and furthermore denies having received performance in terms of the oral agreement. The crux of the defence lies with the fact that the alleged oral agreement is not aligned with the procurement processes, thus rendering the oral agreement void for lack of legality and consequently unenforceable.

Application: The plaintiff claims payment from the defendant in an amount of R2,412,434.66 including Value Added Tax calculated at 14%. The claim is premised on an oral agreement concluded between the plaintiff and the defendant. From the facts, it is unquestionable that an oral agreement was concluded between the plaintiff and the defendant. The court is called upon to determine, having regard to the prevailing legal position, the supply chain management policies and internal financial procedures of the defendant, if the oral agreement is valid and enforceable.

Discussion: The defendant’s Supply Chain Management Policy (SCM policy) allows for deviation from the procurement process in compliance with its peremptory provisions. Deviations from the normal procurement processes are possible provided that they fall under the circumstances contemplated in section 283 of the SCM policy. Giving effect to the constitutional mandate, Chapter 11 of the Local Government: Municipal Finance and Management Act 56 of 2003 (MFMA), is aimed at expenditure control. The defence raise by the defendant is premised on a contravention of the principle that expenditure must be incurred following the correct procedures. The defendant opines that the failure to follow the prescribed procedures relating to expenditure decisions results in irregular expenditure. Irregular expenditure is unlawful. The crux of the plaintiff’s argument is that an oral agreement can be concluded by deviating from the SCM policy. The plaintiff loses sight of the provisions of the MFMA in as far as the MFMA renders a contravention of the provisions of the said Act as financial misconduct and an irregular expenditure.

Findings: The MFMA pertinently prohibits the conclusion of oral agreements. This is a peremptory provision. It cannot be said that the SCM policy by implication allows a municipal manager to conclude an agreement that is rendered unlawful by legislation. This will defeat the purpose of preventative legislation of this nature. The SCM policy and the provisions of the MFMA is not an "internal document" for purposes of applying the well-known indoor management rule. It is a public document to which parties, wishing to participate in the process, have a right to access. They have the obligation and the means to ascertain the public rules of the game before they participate. It therefore cannot be said that the plaintiff did not have knowledge of either the SCM Policy or the provisions of the MFMA when it concluded the oral agreement with the defendant. Estoppel cannot be utilized to validate an illegality. Having concluded that the non-compliance with the provisions of section 116 of the MFMA renders the oral agreement by its very nature, unenforceable, further determination of the merits is unnecessary.

Order: The plaintiff’s claim is dismissed.

BRESLER AJ

Facts and issue: The applicant applies for interim interdictory relief pending the finalization of the review contained in Part B of the application. What lies at the heart of the dispute is the development of the applicant’s property vis-à-vis the development of the respondent’s property directly adjacent thereto. The development of the respondent's property has purportedly since been approved and they are adamant to continue notwithstanding the pending review.

Discussion: The applicant alleges its property already formed the subject matter of applications for land use rights for similar purposes, being fuel station facility development rights. Further, that the co-existence of two similar filling station facilities virtually adjacent to each other, in the highly competitive and regulated Petroleum Industry in South Africa, is in practice improbable from a Town Planning and Economic Viability point of view. It is undeniable that the applicant is the current registered owner of the property. A development has been approved in respect of the adjacent property. This clearly affects the rights of the current owner. The applicant has established a prima facie right. There is no alternative remedy that would yield satisfactory results.

Findings: The harm lies in the development of the respondent having an adverse economic effect on the proposed development of the applicant. This rings true especially in lieu of the fact that both developments purport to be of a similar nature providing for similar facilities including but not limited to the filling stations. The court is satisfied that irreparable harm might result should the relief not be granted on an interim basis. The grounds for review have a reasonable prospect of success.

Order: The application succeeds.

Facts: The radical reforms from 1990 that were intended to lead South Africa to democracy led to proponents of Afrikaner self-determination finding alternative ways of realizing their ideal of an Afrikaner enclave. The Boere-Vryhyeidsbeweging (the BVB), a Boer liberation political movement that advocated for an independent homeland for Afrikaners based on the old Transvaal and Orange Free State Republics, so established the Kleinfontein settlement. The site was of symbolic and historical significance to the founders of Kleinfontein because it was the site where, in 1900, the Battle of Diamond Hill took place during the Second Anglo Boer War. A trading cooperative emerged called Kleinfontein Boerebelange Köoperatief Beperk (the KBKB). The old Cooperatives Act 91 of 1981 allowed a corporate structure which could be aligned with the ideological substratum of Kleinfontein’s existence, namely that the settlement was to be the precursor of a Volkstaat.

Application: The applicants’ case is that the Kleinfontein settlement is an illegal township, and its continued expansion contravenes various laws relating to municipal planning and building regulation. The contravention of the laws has a detrimental impact on the applicants, and they are entitled to enforce the laws. The continued expansion of the settlement negatively impacts on the rights of the applicants as consumers and residents to adequate “municipal” services.

Discussion: To date parliament is yet to enact national legislation to give effect to the right of self-determination for any cultural or linguistic community, or in general, to give effect to section 235 of the Constitution (self-determination). The perceived lacuna allowed the Kleinfontein Aandeleblok (Edms) Bpk (the KAEB) and its predecessors to unlawfully usurp functions assigned to local government, with issues such as planning, building regulation and provision of services being regulated by internal agreement through various private legal instruments, without statutory or regulatory imprimatur. The KBKB’s directors and their predecessors did not apply for the Kleinfontein settlement to be established as a township in terms of the pertinent Ordinance, nor did they apply for the boundaries of an approved township to be extended to include the settlement. It is common cause that the applicants reside in an illegal township. It is also common cause that the applicants’ own use of the property is unlawful and illegal. It is farcical to suggest that the applicants’ unlawful and illegal use of the KAEB’s property somehow bestow on them the right to insist that the KAEB should not use its property for the very same purpose.

The City: The applicants clearly established that the conduct of the KAEB, its directors, and its shareholders, which invariably includes the applicants, is not only unlawful, but illegal. It is not open to the court to prescribe to the City which remedies it should pursue. It is settled law that the court must be sensitive and accord other branches of government due respect and should exercise self-restraint in exercising judicial power. In deciding on an appropriate enforcement mechanism, the City is implored to consider the extent of the breaches that have occurred over the past 30 years. The shareholders and directors of the KAEB are clearly a group of individuals with an identified hierarchy engaged in significant criminal activity. The directors and their predecessors have shown themselves capable of egregious and criminal behavior, insidiously evading laws relating to municipal planning and building regulation, and the KAEB is eligible to be labelled a criminal enterprise.

* See from paras [125]-[127] on the unclean hands defence and that the applicants’ hands are not merely “unclean” but dripping with moral turpitude.

** And see from para [128] regarding the relief sought regarding the influencing of shareholders of the KAEB to withhold levies, or not to pay any financial obligation towards the KAEB.

Order: The City of Tshwane is to immediately take appropriate steps to enforce all relevant laws relating to planning and building regulation in as far as it relates to the farms comprising the Kleinfontein settlement.

VORSTER AJ

Facts and issue: The applicant (MEC) seeks an order declaring the resolutions passed by the councils of the respondent municipalities (NLM and ZDM), in terms of which the two municipalities had reduced the number of their executive committee members, to be unlawful. The MEC also seeks a declaratory order that municipal councils may not reduce or increase the number of members of their executive committees once it has been determined at an inaugural council meeting held after elections, unless all the members of the executive committee are removed in accordance with the provisions of section 53(2) of the Structures Act 117 of 1998. The issue concerns the interpretation of a statute.

Discussion: The dispute between the MEC, NLM and ZDM, turns on the interpretation of ss43, 45, 46, 47 and 53 of the Structures Act. These sections deal with various aspects of the executive committee and membership to that committee. In terms of s 43(1)(a) of the Structures Act, if the council of a municipality establishes an executive committee, it must determine several councillors necessary for effective and efficient government, provided that no more than 20 per cent of the councillors or 10 councillors, whichever is the least, are determined. The essence of the contention was that the discretion to establish an executive committee is in the context of the autonomy of the municipality granted by s 151(2) of the Constitution. In such circumstances, so the contention goes, if the council has the discretion to establish an executive committee, inherently that power includes the power to change the size of its executive committee for as long as, in doing so, the council acts lawfully. The discretion of the council to form and determine the size of its executive committee is conferred as well by s 43(1) of the Structures Act. The court agrees.

Findings: The council has the power to reduce the size of its executive committee, provided that, in doing so, it follows a lawful process and complies with the prescripts of the Structures Act and the Constitution. The council cannot increase the number of its executive committee beyond 20 per cent of its councillors or may not have more than ten councillors in the executive committee. The council has the discretion to determine the number for as long as it complies with the upper and lower limits of the number as determined by the statute. Section 53(1) confers a discretion to the council to remove one or more of its executive committee members. The reason for removal is not required. All that is required from the council is to ensure that it gives prior notice of intention to move a motion for the removal of member(s) from the executive committee. Both NLM and ZDM have acted lawfully in reducing the size of their executive committees.

Order: The application is dismissed.

Facts and issue: Due to complaints received and a subsequent inspection carried out by the City of Ekurhuleni, it was noticed that the respondent was carrying on building works at the property, which works were in contravention of the National Building Regulations and Building Standards Act, Act 103 of 1977 and the relevant provisions of the Ekurhuleni Town Planning Scheme. The inspection resulted in a verbal warning having been issued to the respondent to desist from the said unlawful activities. The urgent court granted an order interdicting the continuation of the respondent’s unlawful conduct but refrained from having granted the demolishing order and directed that same be dealt with in the ordinary course, which is now before this court.

Discussion: The respondent did not contest the fact that he had acted unlawfully and orally explained that he had submitted amended building plans to the city of Ekurhuleni for consideration, in line with the now amended building structures at the property, and that he was awaiting the City’s approval thereof. The City of Ekurhuleni has received the amended plans but will not be able to approve same. Consequently, the structures erected by the respondent would remain unlawful. The respondent’s efforts to uplift not only himself but others not only should be applauded but encouraged. These efforts must take place within the boundaries of the law. The structures erected by the respondent outside the approved building plans were buildings in respect of which plans and specifications were required to be drawn and submitted in terms of the Act. It is not denied that the actions of the respondent are and remain unlawful, that he has had ample opportunity to correct same and that he failed to adhere to the notices issued to him as well as the urgent court order granted against him.

Order: The structure was already erected by the respondent on the property, is to be demolished by the respondent on or before 17 August 2024.

Facts and issue: The applicant seeks the dismantling and removal of a metal advertising sign and mast (the structure), on account of its unlawful construction, which is located on the immovable property owned by the respondents. The applicant alleges that the respondents erected the structure without a permit and without prior approval of building plans, and accordingly seeks the dismantling and removal of the structure.

Discussion: Contravention notices in terms of section 38(1) of the By-law, requiring the removal of the unauthorised display of the advertising sign, were served on the respondents. On the same day, the applicant also delivered a notice in terms of section 21 of the National Building Regulations and Building Standards Act 103 of 1977, requiring the demolition of the structure. The applicant's attorneys notified all three respondents, and the first respondent's attorneys of the contravention of section 38(1) of the By-law, and requested copies of the outdoor advertising permit, the approved building permit, and the approved building plan for the structure. The letter warned that proceedings would be commenced for the removal or demolition of the structure should the requests not be complied with. When no response was received, the applicant's urgent application followed. On the same day, and not long after the service of the applicant's urgent application papers, the respondents submitted the permit application online on the applicant's website. The respondents' application for a permit was incomplete for want of the respondents providing approved building plans for the structure. Thus, the unlawful construction of the structure without a permit was common cause.

Findings: The erection of outdoor advertising is made lawful by the granting of a permit, without which such outdoor advertising will be unlawful. The respondents did not obtain a permit before erecting the structure and belatedly made that application on the day that service of the application took place. Their application remains incomplete and the structure unlawful. The applicant is entitled to a demolition order in terms of section 21 of the Act, and it has both a statutory and a moral duty to approach the court for that order.

Order: The respondents are directed to forthwith dismantle and remove the advertising structure, together with the mast.

Facts: Municipalities calculate the tariffs that people and businesses (end-users) pay for electricity. The National Energy Regulator of South Africa (NERSA), as custodian and enforcer of the regulatory framework, must consider and approve the tariffs calculated by the municipalities. Both the application by municipalities and the approval by NERSA must be based on the cost of supply of electricity. Afriforum contends that the practice of NERSA to approve municipalities' electricity tariffs is in accordance with a method that deviates from the regulatory prescripts. NERSA itself considered and investigated the matter, and the conclusion reached was that the failure to set cost-reflective tariffs means, practically, for end-users, that tariffs are increasingly unaffordable.

Application: The controversy is whether the methodology used to determine tariff increases is based on the cost of supply of electricity. Afriforum (applicant) contends, in the interests of the end-users, that the method employed by NERSA to approve the increase in tariffs is not premised on the cost of supply and is, therefore, unlawful. The third respondent, the South African Local Government Association (SALGA), makes common cause with the applicant in this regard. The cost of supply study serves a dual function. The first is to ensure that municipalities efficiently distribute electricity. The second is to ensure a standardised and transparent process that end-users can engage with. These twin principles of efficiency and transparency underpin the requirement of a cost-of-supply study.

Cost of supply studies: NERSA enacted a framework to give effect to the obligation to conduct a cost-of-supply study. The Cost of Supply Framework identifies Policy Position 23, which provides that electricity distributors shall undertake Cost of Supply (COS) studies. The court concludes that there is an obligation to use a cost-of-supply approach, which requires a cost-of-supply study. NERSA conceded that it altered its requirement, to no longer require a cost-of-supply study, in response to municipalities' non-compliance with the requirement. The new model (whether it is a cost breakdown or an assumption methodology) does not require a cost-of-supply study. NERSA's motivation for using the latter methodologies is that some municipalities did not conduct a COS study. The new methodology eliminates this requirement. NERSA accepted that a cost-of-supply study was required. However, when faced with non-compliance, rather than enforcing compliance, it decided to act outside the law and use a new unlawful methodology. This is at odds with its duties as a regulator. The court declares the new methodology introduced by NERSA unlawful.

Budgetary constraints: SALGA's concern was the financial impact on municipalities if they were not permitted to charge the tariffs which NERSA had approved on the unlawful methodology. It is not a breach of a right that the State seeks to justify through reliance on section 36 of the Constitution. It is the breach of law of an obligation in terms of statute and Policy. In these circumstances, there is no similar option available to the State to justify its non-compliance with a statutory provision as section 36 offers to justify the limitation of a fundamental right. NERSA has breached a statute; it cannot justify that breach regarding a lack of funds as would be available to it under a section 36 analysis. It must agitate for its amendment if it cannot comply with the law. A court cannot ignore the law and permit an illegality to continue. The court does not accept that a budgetary constraint can be used as the basis to deviate from what the statute requires of the State.

Order: NERSA’s mechanism for approval of municipal electricity tariffs as set out in the Notice to Municipal Licenced Electricity Distributers of January 2024 is declared to be unlawful, invalid and of no force and effect. For the 2024/2025 municipal financial year, NERSA shall consider and, if they are legally compliant, approve such electricity tariff applications by municipalities as are based on the municipalities' cost-of-supply studies timeously submitted. NERSA is prohibited from considering and approving municipal electricity tariffs for the 2024/2025 municipal financial year and subsequent municipal financial years where the municipalities’ applications for the approval of municipal electricity tariffs are not based on cost-of-supply studies.

DE VOS AJ

* See the application for leave to appeal at SALGA v Afriforum NPC [2024] ZAGPPHC 826.