Businesses, body corporates, and the right to electricity

Can a business enforce its right to receive electricity if the body corporate under which that business falls fails to pay its service fees to the municipality?

One of the statutorily prescribed obligations of a municipality is to provide residents with access to a minimum level of basic services, which includes the provision of electricity. The recipients of such services by the municipality have a reciprocal obligation to make payment for the services they receive. But what happens when the municipality stops or suspends the supply of electricity due to non-payment by a body corporate? 

This question was recently considered by the Supreme Court of Appeal in City of Tshwane Metropolitan Municipality v Vresthena (Pty) Ltd and Others (1346/2022) [2024] ZASCA 51, where the Supreme Court of Appeal (SCA) had to decide whether businesses who hold sectional title rights are entitled to continue to receive electricity despite the non-payment of service fees by the body corporate to the municipality.  

In this case, the City of Tshwane Metropolitan Municipality (“Municipality”) sought to appeal the decision of the Gauteng Division of the High Court, Pretoria in respect of the urgent application filed by Vresthena (Pty) Ltd (“Vresthena”). Vresthena owned sectional units in the Zambezi Retail Park Sectional Title Scheme which it leased to various business entities and the Municipality provided electricity to these business entities through the Body Corporate of Zambezi Retail Park (“Body Corporate”). The Municipality supplied electricity to the different sectional title units and the Body Corporate would then be billed. Due to the Body Corporate’s continuous failure to pay for services, the Municipality implemented credit control measures, which included the disconnection of electricity in an attempt to collect the outstanding revenue. Vresthena brought an urgent application to the High Court to reinstate the supply of electricity and the Court granted the order against the Municipality. 

On appeal, the SCA found that the court a quo had erred in its decision to compel the Municipality to reinstate Vresthena’s electricity supply and that the court a quo’s order was contrary to the Municipality’s constitutional obligations to take appropriate steps to ensure the efficient recovery of debt and ultimately forces the Municipality to continue to supply electricity to the Body Corporate despite their non-payment of service fees. In arriving at its decision, the SCA reiterated that the Body Corporate concluded a contract with the Municipality to supply electricity to the respective businesses, in turn, the Body Corporate remains liable for the payment of electricity supplied and any amounts in respect of other services provided by the Municipality.

Vresthena’s obligation is to pay its levies to the Body Corporate and the SCA further held that although electricity is a basic municipal service, the right to receive electricity is conditional on the payment thereof. 

Accordingly, the SCA held that Vresthena’s decision to file an urgent application before the court a quo was premature in that it had alternative forms of recourse which could first have been explored such as bringing an application to compel the Body Corporate to fulfil the terms of its mandate, alternatively appointing new trustees (if the current trustees were failing) to fulfil its mandate.

Therefore, Vresthena was found not to be entitled to the continued supply of electricity due to the non-payment of service fees by the Body Corporate. Although this judgment focused on a business and body corporates, it reconfirmed that one is not entitled to continued access to electricity where there is a failure to pay for such services.

Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy has been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s). 

June 27, 2024
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