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Eskom Holdings SOC Ltd v Vaal River Development Association (Pty) Ltd and Others (23 December 2022)

23 December 2022

The judgment of the Constitutional Court of South Africa can be found  here

  • Case number: CCT 44/22
  • Coram: Kollapen J, Madlanga J, Majiedt J, Mathopo J, Mhlantla J, Mlambo AJ, Theron J, Tshiqi J and Unterhalter AJ
  • Judge: Madlanga J (majority), Unterhalter AJ (dissenting)
  • Date of judgement: 23 December 2022
  • Date of hearing: 23 May 2022

Outcome:

  • Leave to appeal to the Constitutional Court is granted and Eskom’s appeal dismissed with costs.
  • The residents are granted temporary relief directing Eskom to restore electricity supply to the levels prior to reduction.

Summary:

Historically, Eskom concluded electricity supply agreements with the Lekwa and Ngwathe Municipalities under which a maximum amount of bulk electricity was to be supplied. However, as the Municipalities grew, their consumption of electricity exceeded the amounts provided for in the agreements. Eskom supplied the additional electricity to the Municipalities but charged penalties for this. The Municipalities failed to pay Eskom for the electricity or the penalties.

In 2020, Eskom reduced the amount of electricity it supplied to the Municipalities to the amount historically agreed to as set out in the agreements between the two parties.

The reduction led to power shortages in the municipalities which resulted in deplorable living conditions that violated basic human rights including the right to dignity, the right of access to healthcare services, the right to access sufficient water, the right to an environment that is not harmful to health or wellbeing, and the right to basic education.

Residents’ associations of the two municipalities applied to court for an interim interdict prohibiting Eskom from reducing the supply of power. The residents succeeded in the High Court and the Supreme Court of Appeal.

The Constitutional Court found that Eskom, as an organ of state, has the duty to at least respect the rights in the Bill of Rights by refraining from ‘unreasonable conduct that results in the infringement of rights in the Bill of Rights.’

In considering the requirements for an interdict, the court found that since a number of Constitutional rights had been violated and there was a reasonable apprehension of irreparable and imminent harm. On the question of balance of probabilities, the Court found that the residents suffered violations of basic rights where Eskom suffered only financial harm. Eskom was found to have been able to supply electricity above the agreed levels; should payment from the Municipalities have been forthcoming, the supply would have been restored.

The court discussed a number of procedural issues relating to the manner in which Eskom had communicated the reduction of supply to the Municipalities which had in turn failed to communicate this to residents. A separate judicial review relating to Eskom’s decision to reduce the power supplied is pending.

Justice Madlanga did not pronounce on whether the residents had a Constitutional right to electricity, but indicated that Eskom had violated the residents’ other constitutional rights by the reducing the amount of electricity supplied to the Municipalities holding:

Without deciding the question whether the residents have a constitutional right to a direct supply of electricity by Eskom, it is so that there is contractual privity between Eskom and the municipalities, and not between the residents and Eskom. That matters not. The lack of contractual privity does not stand in the way of the residents asserting other rights protected by the Bill of Rights, which have been infringed by the decision to reduce electricity supply substantially.

Order

The court issued the following order:

  1. Eskom’s leave to appeal to the Constitutional court granted.
  2. The appeal is dismissed with costs, such costs to include the costs of two counsel.
  3. The residents are to be granted interim relief that directs Eskom to restore electricity supply to what it was before the reduction.