Service Delivery: What does the Constitutional Court say?

Facts

The facts of this case are that Rademan decided not to pay her rates relating to her residential municipality in Kroonstad which is part of the Moqhaka Municipality. She did so because of what she characterised as “poor or inefficient service delivery.” Rademan did however continue to pay for electricity and other services (which she directly consumed).

Following Rademan’s non-payment, the Municipality warned her of their intention to disconnect her electricity supply and then proceeded to do so when payment was not forthcoming.

Case History

Rademan started her litigation in the Magistrate’s Court (which found in Rademan’s favour), the High Court, the Supreme Court of Appeal and ultimately ending up in the Constitutional Court (all of which found in favour of the Municipality).

Rademan advanced three grounds as to why she was entitled to her electricity supply to be continued despite having outstanding rates owing to the Municipality:

• that an order of court was necessary before her electricity supply could be cut;
• alternatively, that her electricity account was not in arrears; and
• that none of the conditions considered in section 21(5)(a) – (c) of the Electricity Regulation Act (ERA) were evident.

Before the Constitutional Court, Rademan’s main contention was that the Municipality was precluded from disconnecting her electricity by the ERA because none of the grounds upon which the Municipality may cut off a resident’s electricity supply was applicable to her. Rademan also contended that there was a conflict between the Local Government: Municipal Systems Act and the Municipality’s Credit Control and Debt Collection by-laws on the one hand, and the ERA. Rademan argued that the ERA should prevail.

The Municipality contended that the Systems Act read with the by-laws entitled it to consolidate various accounts and to cut off Ms Rademan’s electricity as she had not paid the rates component of the consolidated account. The Municipality contended that there was no such conflict between the relevant legal provisions.

Findings

The Court found that it had jurisdiction to hear the matter. Notwithstanding the procedural issues with filing of papers before it, the Court was urged by the Moqhaka Municipality to hear the matter because in pronouncing on it, the Court would give clarity to other Municipalities that grapple with a similar withholding of payment.

In the Constitutional Court, the majority judgment penned by Zondo J, the Court dismissed an appeal against the decision of the Supreme Court of Appeal (SCA). The SCA upheld the right of the municipality to terminate its electricity supply to a resident who fails to properly pay their rates which the resident owes to it.

Zondo J held that the consolidation of an account means that different components of the account belong to one account and a resident cannot pick and choose which components to pay. The majority held further that there is no conflict between the relevant provisions of the ERA, and the Systems Act and provisions of the by-laws. The majority therefore dismissed the appeal.

In a concurring minority judgment, Froneman J agreed with the majority’s decision for different reasons. Froneman J dismissed the case on the grounds that the legislation which was relied on (the Electricity Regulation Act) did not apply in this case and rather that the Municipal Systems Act and the city’s own by-laws applied. Even in terms of that legislation, Rademan failed to comply with the provisions of the legislation and absenting a challenge to its constitutionality, her appeal must fail.

Point of Departure

However, it is significant that the Court seems to have opened a window of opportunity for residents to withhold rates on the grounds of non-delivery.

At paragraphs 42 and 43 of the judgment, Zondo J stated that:

“Before dealing with the question of what remedy a resident has in a case where the municipality is demanding payment for services not rendered, it is necessary to point out that in the present matter it was not Ms Rademan’s case that the Municipality claimed payment for services that it had not rendered.  Indeed, in the present matter it has not been proved that the Municipality was claiming payment for services that had been rendered poorly or inefficiently.  However, where a municipality claims payment from a resident or ratepayer for services, it is only entitled to payment for services that it has rendered.  By the same token, where a municipality claims from a resident, customer or ratepayer payment for services, the resident, customer or ratepayer is only obliged to pay the municipality for services that have been rendered.  There is no obligation on a resident, customer or ratepayer to pay the municipality for a service that has not been rendered.  Accordingly, where, for example, a municipality included in a customer’s account for services an item for electricity when in fact no electricity has been connected to the particular property and, therefore, no electricity was supplied, the customer is entitled to take the stance that he or she will pay the total bill less the amount claimed for electricity supply.

Section 10 of the by-laws requires the Council to “ensure that all money that is due and payable to the Municipality is collected, subject to the Municipal Systems Act.”  (Emphasis added.)  No money is due and payable to a municipality for a service not rendered.  If a dispute arises between the resident or ratepayer or customer, on the one hand, and the Municipality, on the other, about whether or not electricity was supplied to the particular property during the relevant period, either party may institute legal proceedings to have a court adjudicate that dispute.  In this regard section 17(5)(b)(iii) of the by-laws envisages the Municipality instituting legal action to recover an amount that has been due for forty days.”

What is clear from the reading of these paragraphs is that it remains to be seen whether in cases where a Municipality charges a consolidated amount of money for all services it is supposed to render, but in fact, does not, and a resident withholds such payment, if that act will be found to be unlawful.

Conclusion

Whilst the Municipality and the Department of Cooperative Government and Traditional Affairs may see this as a victory and as a mechanism to continue collecting rates in municipalities even where service delivery has entirely broken down, they should be cautious in doing so. The judgment is clear that the case of Rademan is different to one where no service delivery is the basis for non-payment. The HSF looks forward to running these arguments before the Court in an effort to ensure that Municipalities are held accountable  and that citizens retain some ability to force them to deliver on their mandate.

The facts, case history and findings and in large part based on the case summary of provided by the Constitutional Court available here.

Kameel Premhid – kameel@hsf.org.za
Intern
Helen Suzman Foundation