Reducing electricity supply: Special public importance

Note: Footnotes omitted, and emphasis added

UNTERHALTER AJ (Kollapen J, Majiedt J and Mlambo AJ concurring):

Introduction

[1] This is an application for leave to appeal against a judgment and order of the Supreme Court of Appeal dismissing the applicant’s appeal against the judgment and order of the High Court of South Africa, Gauteng Division, Pretoria (High Court). The High Court granted an interim interdict in terms of which it prohibited the applicant from implementing its decision to reduce bulk electricity supply to two municipalities, pending finalisation of an application to review that decision.

Parties

[2] The matter originates from two urgent applications that were joined before the High Court. Before this Court, although there is but one application, the parties are cited as they were in the original applications.

[3] Eskom Holdings SOC Limited (Eskom) is the applicant in both applications. The National Energy Regulator of South Africa (NERSA) and the Minister of Energy (Minister) are the third and fourth respondents in both applications.

[4] In the first application, the first respondent is the Vaal River Development Association (Pty) Limited, a non-profit organisation representing the residents of Ngwathe Local Municipality (Ngwathe Municipality). Ngwathe Municipality is the second respondent. The fifth and sixth respondents are the Premier of the Free State and the Member of the Executive Council for Cooperative Governance and Traditional Affairs, Free State.

[5] In the second application, the first respondent is the Lekwa Ratepayers Association, a non-profit organisation representing the residents of Lekwa Local Municipality (Lekwa Municipality). Lekwa Municipality is the second respondent. The fifth and sixth respondents are the Premier of Mpumalanga and the Member of the Executive Council for Cooperative Governance and Traditional Affairs, Mpumalanga. The first respondents in both applications are referred to jointly as “the Associations” or “the residents”.

[6] In both applications, only Eskom and the Associations filed papers before this Court.

The origins of the case

[7] Eskom supplies bulk electricity, under contract, to the Lekwa and Ngwathe Municipalities (municipalities). The contracts concluded between Eskom and the municipalities for the supply of electricity obliged Eskom to supply electricity up to each municipality’s Notified Maximum Demand (NMD). The NMD for the Ngwathe Municipality was agreed in 2008. For the Lekwa Municipality, an increased NMD was agreed to in 2010. For extended periods since these agreements were struck, Eskom supplied electricity to the municipalities in excess of their NMD.

[8] In July 2020, Eskom applied what it styled “rotational load reduction” to the supply of bulk electricity to the municipalities. In effect, Eskom restricted the supply of electricity to the municipalities to accord with the NMD of each municipality. There was some dispute as to the reasons for Eskom’s actions. Certainly it is that the municipalities had failed to pay Eskom for all the electricity supplied to them. Indeed, the municipalities are severely dysfunctional and in serial default of their constitutional and statutory obligations towards both Eskom and the residents. Despite owing a constitutional duty to the residents to supply municipal services as provided in sections 152 and 153(a) of the Constitution; and owing statutory duties to Eskom in terms of the Electricity Regulation Act (ERA), the municipalities have failed dismally and have shown gross incompetence in the execution of their duties. Eskom announced that its restrictions of supply were necessitated by the failure of the municipalities to eliminate illegal connections; their inability to recover payment for electricity supplied; and their failure to provide the infrastructure required to support the supply of electricity above the NMD, and thus secure the integrity of the national grid.

[9] The restriction of supply to the municipalities required the municipalities, in turn, to reduce the supply of electricity to their customers. Residents of the municipalities, who conducted their businesses in the towns administered by the municipalities, were moved to bring legal proceedings in the High Court. Their complaint was this. They were paying the municipalities for the electricity they received and required to run their businesses. If the municipalities had failed to honour their contractual obligations to Eskom, that did not permit Eskom to restrict the supply of electricity, as it had done. The consequences of Eskom’s actions were dire. In addition to the harm caused to businesses from rotational disruptions, the effect upon essential services in the two towns was described as “an unfolding human and environmental catastrophe”. It compromised drinking water supply and sewage disposal; adversely affected hospitals and old age homes; and caused the pollution of the Vaal River from untreated waste.

[10] The residents, acting through the Associations, brought urgent applications before the High Court. The Associations sought, in essence, interim relief to secure the restoration of the supply of electricity that Eskom had provided to the municipalities prior to the restrictions it had imposed. This interim relief was to operate pending the final adjudication of a judicial review to set aside Eskom’s decision to limit the bulk supply of electricity to the municipalities to the level of their NMD.

The salient facts

[11] On 29 September 2008, Eskom and the Ngwathe Municipality concluded a bulk electricity supply agreement. In terms of the agreement, Eskom would supply 24 300 kVA to the municipality. Clause 11.3 of the agreement stated that if an increase of the NMD is required, the municipality must give adequate notice to Eskom. An increase shall be subject to the terms and conditions agreed upon by the parties in writing and, in the absence of such an agreement, no increase in the NMD shall be implemented. The terms and conditions of the increase must take into account the additional capital expenditure to be incurred by Eskom and the additional capacity required by Eskom to meet the demand.

[12] In January 1981, Escom (the Electricity Supply Commission, Eskom’s predecessor, established under the Electricity Act) and Lekwa Municipality entered into a bulk electricity supply agreement. In terms of the agreement, Eskom would supply 22 260 kVA to the municipality. In 2010, the bulk electricity supply was increased to 55 000 kVA. Similar to the agreement concluded between Eskom and Ngwathe Municipality, any increase of the NMD required adequate notice to Eskom. Additionally, no increase could be implemented without an agreement between the parties.

[13] Since 2008 and 2010, no increase in the NMD was agreed between Eskom and the municipalities. However, the consumption of and need for electricity by the residents of the municipalities exceeded the agreed NMD. Eskom supplied electricity in excess of the contracted NMD to both municipalities for an extended period of time. Eskom charged monthly penalties to the municipalities each time they exceeded their agreed NMD.

This was done in terms of the NMD and Maximum Export Capacity (MEC) Rules (NERSA Rules), which state:

“When customers exceed their monthly NMDs and/or MEC, a network access charge (NCC) is imposed for the excess. This is due to the fact [that] a customer that exceeds the NMD/MEC does so without permission. They use capacity that is not allocated to their point of delivery, put the network under strain, hamper the ability to do proper network and capacity planning. Moreover they place the network and other customers’ electricity supply and the licensee at risk.”

[14] The municipalities applied to increase their NMD supply levels to meet the additional electricity demand, but Eskom refused to agree to these increases. Seemingly, because the municipalities had defaulted on their payment obligations.

[15] In February 2020, Eskom decided to reduce bulk electricity supply to the municipalities to the NMD levels set out in the supply agreements (the reduction decision). This meant that it would no longer supply electricity to the municipalities in excess of the agreed NMD levels. Eskom informed the municipalities of the reduction decision but did not inform the residents. The decision was implemented in 2020 and resulted in rotational load shedding in the municipalities. This had a significant impact on essential services such as water supply and the functioning of sewage works. Once the electricity supply was disrupted, the water treatment plants came to a standstill. As a result, taps ran dry and industrial and commercial activities, such as the poultry industry and abattoirs in or close to the affected towns, ceased functioning. Sewage also started spilling into the streets of the affected towns and into the Vaal River.

[16] Efforts on the part of the Ngwathe and Lekwa residents to engage with Eskom, the municipalities and Members of the Executive in their respective provinces were unsuccessful. Furthermore, negotiations between Eskom and the two municipalities to increase their contractually agreed NMD supply levels yielded no results. Thus, the Ngwathe and Lekwa residents, through the Vaal River Development Association on behalf of the Ngwathe residents, and the Lekwa Ratepayers Association on behalf of the Lekwa residents, approached the High Court for urgent relief.

Litigation history

High Court

[17] Before the High Court, the Associations sought interim orders, pending the determination of review proceedings. The interim relief sought was, inter alia, to compel Eskom, as the sole supplier of electricity to the municipalities, to restore the supply of electricity to the levels enjoyed before the implementation of the reduction decision.

[18] Eskom contended that it had no obligation to the residents of the municipalities; that it was entitled to enforce the contracts concluded with the municipalities; and, if the residents were adversely affected, they should seek relief from the municipalities. Eskom further submitted that this case differed from previous matters in which the supply of electricity had been terminated; here it was reduced in conformity with the supply agreements.

[19] On behalf of the residents, it was argued that the reduction decision constituted administrative action and that Eskom had a constitutional obligation to the residents of the municipalities. It was also submitted that Eskom’s decision resulted in catastrophic humanitarian and environmental consequences. The residents sought an interim interdict prohibiting Eskom from implementing its decision to reduce the bulk electricity supply to the municipalities.

[20] The High Court held the view that the applications were urgent and granted the interim interdicts.

[21] First, it determined whether the residents had a prima facie right, though open to some doubt, notwithstanding that there was no contractual relationship between the residents of the municipalities and Eskom.

[22] The High Court held that, although the right to electricity is not specifically provided for in the Bill of Rights, the supply of electricity is inextricably intertwined with the rights to dignity, life, housing, healthcare, food, water and social security.

With reference to Grootboom, the Court held:

“While there is no specific reference in Grootboom to the provision of access to and supply of electricity, it is self-evident that the supply of electricity is the cornerstone upon which all the realisation of other rights is based.”

[23] The High Court found that although the residents were not parties to the agreements concluded between Eskom and the municipalities, Eskom’s enforcement of those agreements infringed the rights of the residents.

It found that Eskom’s reliance on its contractual relationships with the municipalities did not detract from the fact that it is a state-owned enterprise that—

“exists with the benefit of an ostensible monopoly on the supply of electricity, not only for the purpose of generating income for the state but also for the promotion of the rights of individual citizens.”

[24] Thus, it held, the residents have a right to the supply of electricity and therefore a prima facie right had been established.

[25] The High Court went on to hold that enjoying a clear right to be supplied with electricity requires the supply of sufficient electricity “to meet the basic threshold of the individual rights in the Bill of Rights”. To find otherwise would render those rights and the obligation of state organs, such as Eskom, to fulfil those rights nugatory.

[26] Second, the High Court found that the limited electrical supply had an adverse effect on all basic municipal services, most notably in respect of sewerage reticulation and the provision of clean water. The harm suffered by the residents was not contested by Eskom.

[27] Third, the High Court considered that for an extended period of time before the implementation of the NMD limitations, Eskom provided both municipalities with electricity in excess of the NMD. It held that the municipalities’ debt levels and the extent of the time during which Eskom permitted them to exceed the NMD while imposing penalties for doing so, militated against any prejudice that Eskom may suffer. The residents, however, were faced with prejudice that could not be measured in monetary terms or even mitigated. The balance of convenience thus favoured the residents. Fourth, the Court held that Eskom enjoys a monopoly over the supply of bulk electricity.

[28] The residents thus had no alternative other than to approach the High Court for relief. The Court accordingly granted the order as set out in paragraphs 51 and 52 of the judgment. In summary, Eskom was ordered to increase or, alternatively, restore the maximum electricity load supply to the level supplied prior to the reduction decision; thus interdicting and prohibiting Eskom from implementing its decision to limit electricity supply. The order of the High Court was to operate as an interim interdict pending final adjudication of the residents’ application for a review of Eskom’s reduction decision in terms of the Promotion of Administrative Justice Act (PAJA) and/or legality.

[29] The High Court also noted that—

“[f]or so long as the NMD penalties and interest charges which Eskom levies on the municipalities exceed the cost of actual consumption, paying consumers will be saddled with hopelessly insolvent municipalities that have no prospect whatsoever, without outside intervention or assistance, of paying their outstanding debt to Eskom. The result is a catch 22 situation for the applicants and consumers in the municipalities and Eskom has become the proverbial cholesterol in the municipal service delivery breakdown in Ngwathe and Lekwa. They simply have no other recourse than to approach the court.” (Emphasis added.)

[30] A punitive costs order was granted against Eskom.

Supreme Court of Appeal

[31] The question for determination on appeal was whether the High Court was correct in its finding that the residents had established a prima facie right to interim interdictory relief. It was common ground that the matter was one in which the interests of justice demanded that the interim interdicts granted by the High Court were appealable. The Supreme Court of Appeal held that the appeal raised an issue of special public importance.

[32] The Supreme Court of Appeal referred (with approval) to Resilient High Court where the High Court found that although Eskom has the power to interrupt the supply of electricity for non payment in terms of section 21(5) of ERA, given the nature and source of this power, its exercise amounted to administrative action for the purposes of section 33 of the Constitution and PAJA. The exercise of the power is constrained, if not by the requirement of reasonableness, then certainly under the standard of rationality.

In Resilient High Court, in light of the catastrophic socio economic and humanitarian consequences that were to follow, the High Court found that Eskom’s decision to incrementally reduce electricity supply with the ultimate goal of terminating supply altogether, was not rationally connected to the purpose for which the power to do so was given.

[33] The Supreme Court of Appeal also referred, with approval, to its decision in Resilient SCA. In Resilient SCA, the Supreme Court of Appeal held that electricity is a component of the basic services that municipalities are constitutionally obliged to provide to their residents. Thus, before Eskom decided to invoke its powers under section 21(5), it was required to take into account its constitutional obligations as an organ of state.

The Supreme Court of Appeal held further that Eskom, as an organ of state, supplies electricity to local spheres of government to secure the economic and social well-being of the people. This brought the relationship within the purview of the Intergovernmental Relations Framework Act (IRFA). In terms of IRFA, organs of state are constitutionally and statutorily required to make reasonable efforts in good faith to settle intergovernmental disputes.

[34] The Supreme Court of Appeal, in the present matter, held that the attempt by Eskom to distinguish the findings in Resilient SCA was artificial. The Supreme Court of Appeal, adopting the reasoning in Resilient SCA, held that Eskom was not constitutionally and statutorily permitted to unilaterally reduce the bulk electricity supply to the municipalities without first making every reasonable effort to settle its intergovernmental disputes with the municipalities and other spheres of government.

[35] The Supreme Court of Appeal found that all the requirements for granting interim interdictory relief had been established and that the High Court had correctly granted the interim interdicts.

Submissions before this Court

Applicant’s submissions

[36] Eskom submits that the key issues requiring determination by this Court are—

(a) whether the residents are entitled to an order compelling Eskom to supply them with sufficient electricity;
(b) whether the residents are entitled to sufficient electricity and, if so, who determines the appropriate NMD to be supplied; and
(c) whether a dispute concerning NMD ought to be resolved in terms of ERA or IRFA.

Urgency and jurisdiction

[37] Eskom contends that the interlocutory order compels it to supply electricity that it cannot generate. According to Eskom, it must consider the national grid and its lack of capacity to comply with such a broad and drastic order. Furthermore, Eskom submits that the order will result in its financial ruin, which would ultimately be to the detriment of the whole country and will not be in the interests of justice.

[38] Eskom argues that the question whether IRFA takes precedence over ERA engages a constitutional issue. It argues that the issue pertaining to the NMD raises a novel point of law and refers to the Supreme Court of Appeal’s finding that the issues in this matter are of “special public importance”.

Grounds of appeal

[39] Eskom submits that an order to compel it to supply sufficient electricity to the municipalities is at odds with this Court’s decision in Mazibuko where it was held that section 26(2) of the Constitution stipulates that the state must take reasonable legislative and other measures progressively to realise the right of access to adequate housing within its available resources.

Eskom also relies on Treatment Action Campaign. It says the reasoning in these decisions does not support the conclusion that Eskom is compelled to supply a particular amount of electricity. Additionally, so Eskom submits, a dispute regarding the amount of electricity to be supplied must be decided by NERSA as the specialist regulator under ERA.

[40] Eskom submits that in some instances the NMD was exceeded as a result of illegal connections, and it has no obligation to supply electricity to meet illegal demand. Eskom relies on Sidoyi to contend that if there is no underlying lawful basis to supply, such as an electricity supply agreement, Eskom cannot be compelled to supply electricity to that customer.

[41] Eskom contends that the High Court and Supreme Court of Appeal failed to consider that it does not have excess electricity and that supplying electricity above the contracted NMD levels puts a strain on the infrastructure and Eskom’s network. Eskom further submits that the lower courts also failed to distinguish between the different roles that Eskom and municipalities play in supplying electricity. The municipalities have been absolved from their constitutional obligations. Relying upon New National Party, Eskom contends that fault must lie with the municipalities for failing to carry out their duties. Eskom further submits that the lower courts failed to take into account that any increase to NMD levels must be in accordance with the NMD Rules and a dispute pertaining to NMD must be decided in accordance with ERA, not IRFA.

[42] In respect of ERA, Eskom submits that section 30 of ERA provides an internal remedy to resolve such disputes.

Thus, the internal remedies provided by ERA should have been utilised before invoking PAJA and approaching the courts. Eskom submits that in terms of section 7(2)(a) of PAJA, the High Court had no jurisdiction to hear the matter prior to the internal remedies of ERA having been exhausted.

According to Eskom, NERSA, as the specialist regulator, has the necessary expertise and exclusive jurisdiction to resolve a dispute pertaining to a complex issue such as NMD supply. Eskom relies on Bato Star, where this Court enunciated the import of judicial deference to administrative agencies such as NERSA. Eskom also referred to Koyabe, where the failure to exhaust internal remedies proved fatal to a party’s review under PAJA.

[43] Finally, Eskom submits that interruptions resulting from a municipality’s poor planning differ from interruptions in terms of section 21(5); because in the former, Eskom is still supplying electricity, albeit strictly in accordance with the contracted NMD. According to Eskom, these are legitimate interruptions that fall outside the purview of Resilient SCA, where the interruptions occurred with the aim of terminating electricity supply. In the present matter, Eskom continues to supply electricity to the municipalities.

The Associations’ joint submissions

Jurisdiction

[44] The Associations submit that Eskom has not raised a constitutional issue or an arguable point of law of general public importance outside of the law settled in Resilient SCA. They also submit that Eskom does not raise a dispute between organs of state requiring a decision by this Court. Thus, this Court’s jurisdiction is not engaged. As to Eskom’s submission that the High Court and the Supreme Court of Appeal failed to consider the municipalities’ payment obligations, this cannot be entertained absent a counter application by Eskom against the municipalities.

Leave to appeal

[45] The Associations contend that before the Supreme Court of Appeal, the interests of justice demanded that the interim interdict was appealable due to the issue of special public interest, namely whether the residents had established a prima facie right to be supplied with a specified amount of electricity. The Associations submit that it is not in the interests of justice to grant leave to appeal to this Court, because there are no conflicting judgments in respect of the issues raised by Eskom and all relevant principles that have already been established in Resilient SCA.

[46] The Associations submit that there are no material differences between the present case and Resilient SCA. There, Eskom reduced electricity supply to the municipalities to obtain payment. That is the case in this instance as well. In Resilient SCA, Eskom relied on a contractual right to interrupt electricity supply in the event of non payment.

Here, Eskom relies on the contractual right relating to the NMD to reduce supply. The Associations contend that the same legal framework is applicable and the effect of both decisions (to interrupt or reduce electricity supply) is the same, namely catastrophic consequences for the residents.

[47] The Associations contend that Eskom cannot reduce or interrupt the supply of electricity by relying on a contractual right it has against a municipality, without engaging with the affected residents.

They rely on this Court’s decision in Joseph, where this Court held that a municipal service cannot be denied to a citizen because of a municipality’s outstanding debts.

[48] The Associations contest Eskom’s reliance on its contracts to justify the reduction decision because, while the supply agreements subsist between state organs, the agreements impact the residents. The residents do not seek to enforce contractual rights, but instead seek to enforce their public law rights because Eskom is an organ of state. Therefore, its decisions constitute administrative action and are reviewable under PAJA.

[49] The Associations also submit that Eskom has created an impossible situation where it knows that the municipalities’ electricity demands are much higher than the contracted NMD. It has been supplying electricity to the municipalities in excess of the contracted NMD over an extended period of time; yet it refuses to revise the supply agreements to make provision for the increased demand.

[50] In respect of Eskom’s submission that this matter must be resolved by NERSA, the Associations submit that it was incumbent on Eskom to refer the dispute to NERSA but it failed to do so.

[51] Finally, the Associations submit that the question of whether they have the right to sufficient electricity, as posited by Eskom before this Court, was never an issue before the courts below. The only issue was Eskom’s reduction of supply to outdated NMD levels without following due process. Any dispute regarding payment and increasing the NMD levels must be resolved by the relevant intergovernmental players.

Assessment

[52] The following issues require our consideration.

• First, does this Court enjoy jurisdiction to entertain this application?
• Second, if so, should we grant leave to appeal?
• Third, if we grant leave to appeal, was the Supreme Court of Appeal correct to dismiss Eskom’s appeal and affirm the interim relief ordered by the High Court?

Jurisdiction and leave to appeal

[53] There can be no doubt that this appeal raises a constitutional issue. The interim relief granted to the residents is predicated upon their prima facie right to seek judicial review of Eskom’s power to restrict the supply of electricity to the municipalities. A review brought under section 6 of PAJA gives effect to the right to just administrative action in the Constitution.

Central to the review are two issues.

• First, does Eskom owe constitutional or statutory duties to the residents of the municipalities to maintain the supply of electricity that it made available in the past?
• Second, may Eskom reduce the supply of electricity to the NMD agreed with the municipalities without taking reasonable measures to settle the intergovernmental disputes affecting that supply, pursuant to the Constitution and IRFA?

[54] Eskom provides the great majority of the country’s electricity. It is a near monopoly. Electricity is essential to the social and economic well-being of the country and its people. What constitutional and statutory duties Eskom owes and to whom are plainly constitutional matters of importance. Our jurisdiction is thus engaged in terms of section 167(3)(b) of the Constitution.

[55] Whether we should grant leave to appeal on an urgent basis is a question of what the capacious considerations of the interests of justice require. It will be a rare case in which an application for leave to appeal to this Court will be granted where it concerns an order for interim relief that has already enjoyed the attention of the Supreme Court of Appeal.

In OUTA and Afriforum, this Court set out what the interests of justice entail when an application for leave to appeal is brought to appeal an interim order. That an interim order is not usually of final effect and does not dispose of a substantial portion of the relief claimed are relevant matters to weigh, but they are not decisive.

What is salient is the intrusion of the interim order upon the exercise of public powers that takes place until the final adjudication of the review.

[56] In the present matter, we are faced with the following problem.

The municipalities have failed to discharge their constitutional and statutory duties. Their failure causes serious harm to the residents of the towns they are required to serve. Residents who pay for their electricity suffer shortages of electricity. This damages their businesses and causes widespread civic degradation. The municipalities are in serial default of their obligations to pay Eskom for the electricity supplied to them. Furthermore, Eskom complains that the municipalities have failed to terminate illegal connections; nor have they invested in the infrastructure required to maintain the grid and support the supply of electricity that the residents require. Hence Eskom has reduced the supply of electricity to the municipalities.

[57] Faced with permutations of this problem, courts have provided an answer that holds Eskom to the maintenance of the supply of electricity. Both in Resilient SCA and in the present case, the Supreme Court of Appeal held that Eskom cannot terminate or reduce its supply of electricity to defaulting municipalities, unless it makes reasonable efforts first to settle its intergovernmental disputes under the Constitution and IRFA.

The duties of Eskom that have been found to support this decision require careful consideration.

The Supreme Court of Appeal considered Resilient SCA to be dispositive. Whether that is so requires the consideration of this Court. Furthermore, given the widespread disarray that has assailed a great many municipalities throughout the country, there is every likelihood that residents in these municipalities will secure interim relief to hold Eskom to supply electricity, as they have in the past, should Eskom attempt to terminate or reduce supply to municipalities in default.

This is a systemic issue of great importance that requires an authoritative determination by this Court. Such a determination will have significant consequences for residents, municipalities, other spheres of government, and of course Eskom itself.

[58] I find that it is in the interests of justice that leave to appeal should be granted and that the appeal was warrantably brought on an urgent basis.

On interim relief

[59] To obtain the interim relief secured from the High Court, the residents, who had paid for electricity and would continue to do so, were required to show that they enjoyed a prima facie right, though open to some doubt. The residents contended in their founding affidavits that they, or at least those that pay the municipalities for electricity, have a right to the supply of electricity from Eskom. According to the residents, the supply of electricity is the means by which other fundamental rights are realised, such as the right to water, education and a healthy environment. The reduction of electricity supply by Eskom interferes with the enjoyment of these rights, and it prevents the municipalities from discharging their constitutional obligations to the residents.

[60] In both applications brought by the Associations, the notices of motion sought interim relief pending “the final adjudication of the applicants’ application for a review of the first respondent’s (Eskom’s) decision(s) in terms of the Promotion of Administrative Justice Act No 3 of 2000”.

The founding affidavits referenced a number of cases in which interim orders were granted against Eskom in like circumstances, and then reproduced and relied upon passages in Sabie Chamber of Commerce and Resilient.

There, the North Gauteng High Court (per Hughes J) reviewed and set aside the decisions of Eskom to interrupt the supply of electricity. It did so on the basis of the failure by Eskom and the municipalities to resolve their disputes by recourse to section 41(3) of the Constitution.

[61] I draw attention to the pleaded case of the Associations for the following reasons.

• First, the interim relief that was sought was an order pending the final determination of the Associations’ judicial review of Eskom’s reduction decisions.
• Second, the Associations referenced no rights, save those invoked to bring under review Eskom’s reduction decision.
• Third, I have identified the rights relied upon by the residents as the basis upon which the Associations contend that the reduction decision is unlawful and hence reviewable.

The more expansive account of the rights of the residents that are said to have been compromised by the reduction decision, taken up in the reasoning of the High Court, and by way of submission before this Court, is not borne out by the pleaded case.

This is of no small significance. Eskom was entitled to know the case it had to meet and, in particular, the rights claimed by the residents to give rise to a duty owed by Eskom to supply them with electricity.

[62] Some clarity is also required as to the showing that the Associations were required to make in order to secure the interim relief that they sought.

I engage upon this matter because the judgment of Madlanga J appears to understand an application for interim relief, pending a judicial review, to engage an enquiry distinct from the prospects of success of the proposed judicial review. That is not so.

When a person contends that their rights have been adversely affected by unlawful administrative action, they may bring that action under judicial review to have it set aside. That is what the Associations say they will seek by way of final relief.

[63] What prima facie right then, must the Associations establish to secure interim relief pending the determination of their review? It is a prima facie right to review and set aside the reduction decisions made by Eskom.

The grounds upon which that review will be brought are two-fold.

• First, that the residents have a right to the supply of electricity from Eskom and hence the reduction decisions are unlawful.
• Second, that Eskom has breached its constitutional and statutory duties to resolve its disputes with the municipalities.

[64] A very long line of cases, stretching back to the authoritative pronouncement of our modern law in Setlogelo, has made it plain that a prima facie right, though open to some doubt, is the standard used to assess the applicant’s prospects of success in obtaining final relief.

The enquiry is of necessity provisional because the available evidence is usually incomplete, untested under cross-examination (where there are disputes of fact), and the case may yet be more fully developed.

[65] What the standard requires has given rise to no small measure of difference. According to Webster v Mitchell, as qualified in Gool, the test is whether the applicant has furnished proof which, if uncontradicted at trial (here in the review), would entitle the applicant to final relief.

The Court will then consider the case of the respondent to decide whether it casts serious doubt on the case of the applicant. If it does, the standard is not met.

In Ferreira, a majority of a Full Court considered this test to be too exacting. It held that the prospects of success of the claim for the principal relief, albeit weak, may nevertheless suffice. This is so because other requirements for the grant of an interim interdict may be strongly grounded and hence compensate for the weakness as to prospects. This, it was thought better chimed with the holding in Eriksen Motors.

More recently, this Court, in Economic Freedom Fighters held that—

“before a court may grant an interim interdict, it must be satisfied that the applicant for an interdict has good prospects of success in the main review. The claim for review must be based on strong grounds which are likely to succeed. This requires the court adjudicating the interdict application to peek into the grounds of review raised in the main review application and assess their strength. It is only if a court is convinced that the review is likely to succeed that it may appropriately grant the interdict.” (Emphasis added.)

[66] What all of these cases make clear is that to secure interim relief, an applicant must establish their prospects of success of obtaining final relief to the required standard. Without that showing, there is no basis upon which a respondent can be required to endure the strictures of an interim order, pending the final determination of the case for final relief.

And even if the standard is satisfied and the applicant is granted an interim order, the order is generally subject to the following condition.

If the applicant ultimately fails in the main action, they will be liable for the damages that the respondent may have suffered as a result of the imposition of the interim order. This is a further demonstration of the manifest connection between the grant of interim relief and the likely outcome of the proceedings that will finally determine the matter.

[67] In sum, the following may be said of this account of our law.

First, an application for interim relief is decided upon a consideration of the applicant’s prospects of success in obtaining final relief. The prima facie right, though open to some doubt, that must be established to obtain interim relief is the right that is the subject of the main action (or proceedings). In the present case that is the Associations’ right to the judicial review of Eskom’s reduction decisions. Hence, an application for interim relief is never decided on some separate consideration of rights unrelated to the claim for final relief. As I shall show, the second judgment proceeds without sufficient regard to this fundamental precept. For this reason, I am in respectful disagreement with its approach.

[68] Second, it is axiomatic that if an applicant cannot prove that they have a clear right, the very nature of satisfying a court that they have a prima facie right, though open to some doubt, is a provisional judgment. The court that finally determines the matter will decide whether the right, that the applicant relied upon to secure interim relief, has been proven on a balance of probabilities so as to secure final relief.

The second judgment cites a passage from the decision of this Court in National Gambling Board to support the proposition that what is before us at this stage is about what must happen in the interim, what is to be decided by the reviewing court is left open for that court.

[69] National Gambling Board held that the High Court enjoyed jurisdiction to grant interim relief, even though the High Court lacked jurisdiction to determine the final relief because that matter fell into this Court’s exclusive jurisdiction.

That holding followed the position at common law that a court may grant interim relief even though it lacks jurisdiction to decide the main dispute. National Gambling Board casts no doubt on the proposition, dealt with above, that the grant of interim relief requires the consideration of the prospects of success in the main proceedings. That is so even if the High Court lacks jurisdiction over those proceedings.

In Airoadexpress, the Court held that it was precisely because the appellant was bound to succeed in its administrative appeal that the High Court was empowered to grant interim relief.

[70] Nor does National Gambling Board hold to the position that the outcome of an application for interim relief always entails that no final determination of the rights of the parties can occur. There is an important distinction between what an application for interim relief seeks and what the court that considers that application may decide.

National Gambling Board references this matter. If, in an application for interim relief, there are no disputes of fact or law, there is no reason why a court should not grant final relief. So too, if the court should find that the application is premised upon a proposition of law that cannot be sustained, there is no reason why the court should not decide the question of law and dismiss the application.

Of course, where the court grants the interim relief on the basis that the applicant has shown a prima facie right, though open to some doubt, the court that decides whether final relief should be granted will not be bound by the prior interim decision.

[71] In the case before us, there are important questions of law that need to be considered as to whether the residents have a right to the supply of electricity from Eskom, and hence whether the Associations have prospects of success in the review. It is for this very reason that the matter falls within our jurisdiction, and it is in the interests of justice to decide the appeal.

If those questions of law are decided against the residents, then that is dispositive of the matter and the High Court would have erred in granting the relief that it did. Just as the High Court must dismiss an application for interim relief if it finds, as a matter of law, that the applicants do not enjoy the rights they claim, so too this Court may so find on appeal.

That the second judgment holds otherwise, and does so relying upon National Gambling Board, is an error.

Eskom’s duties and the residents’ rights

[72] The starting point is therefore to determine what duties Eskom has, and to whom these duties are owed. The Eskom Conversion Act (Conversion Act) converted Eskom into a public company, incorporated in terms of the Companies Act. The Conversion Act did not privatise Eskom.

Upon conversion, the state was Eskom’s sole shareholder. Its conversion required Eskom and the Minister of Public Enterprises to enter a Shareholder compact. The Shareholder compact is defined in section 1 of the Conversion Act to mean “the performance agreement to be entered into between Eskom and the government of the Republic of South Africa”.

In doing so, the Minister was required to take account of the “developmental role of Eskom” and “the promotion of universal access to, and the provision of, affordable electricity, taking into account the cost of electricity, financial sustainability and the competitiveness of Eskom”.

[73] The Conversion Act is not a charter for the singular pursuit of profit by Eskom for the benefit of its shareholder. Rather, the point of the Shareholder compact is to give statutory force to the role of Eskom as a provider of public goods, taking account of cost, financial sustainability and competitiveness.

Eskom is a state owned enterprise. Whilst so constituted, the Conversion Act requires the Minister of Public Enterprises to take account of the developmental role of Eskom, under the commercial disciplines listed in section 6(5)(b). The Shareholder compact is enforceable as between Eskom and its shareholder, the state.

[74] The provision of electricity is an essential resource. Eskom has historically enjoyed a near monopoly over the generation, transmission and distribution of electricity in the country. Unsurprisingly, therefore, the electricity industry has been made subject to extensive regulation. The regulatory framework is to be found in ERA. ERA empowers NERSA as the independent regulator of this framework.

[75] The essential features of the framework are as follows:

(a) No person may, without a licence, operate any generation, transmission or distribution facility.
(b) A person may apply to NERSA for a licence.

NERSA must decide upon an application for a licence and may make any licence subject to conditions relating to defined but broadly framed areas of regulation.

Among these are prices and tariffs, performance targets and service quality; the regulation of a licensee’s revenue; the obligations of a licensee to generate, transmit or distribute electricity; the termination of electricity supply to customers and end users; and the classes of customers and end users to whom electricity may or must be supplied.

[76] NERSA may also vary, suspend or remove any licence condition, and include any additional licence conditions. This may be done on application by a licensee but also, if necessary, for the purposes of ERA, upon application by an affected party. Thus, for example, an end user may not only hold Eskom to the conditions of its licence, but if Eskom’s licence conditions fail to give effect to some aspect of supply that affects an end user, they may seek an amendment to Eskom’s licence.

[77] The scope of NERSA’s regulatory competence is wide. NERSA may regulate much of what a firm would otherwise be free to decide if it operated in an unregulated market. What may be produced, how much may be produced, at what price, to whom and under what conditions, all fall within the scope of NERSA’s regulatory powers.

[78] NERSA’s powers go further still. It adjudicates contraventions of licences. NERSA must settle disputes between a customer or end user and a licensee. NERSA’s decisions are, in turn, governed by the National Energy Regulator Act, which specifies how NERSA is to take decisions and provides for rights of appeal and review.

[79] Furthermore, ERA outlines a number of objects it was created to fulfill.

In terms of section 2 of ERA, the objects of the Act are to—

“(a) achieve the efficient, effective, sustainable and orderly development and operation of electricity supply infrastructure in South Africa;
(b) ensure that the interests and needs of present and future electricity customers and end users are safeguarded and met, having regard to the governance, efficiency, effectiveness and long-term sustainability of the electricity supply industry within the broader context of economic energy regulation in the Republic;
. . .
(g) facilitate a fair balance between the interests of customers and end users, licensees, investors in the electricity supply industry and the public.”

[80] The sustainability and efficiency model contemplated in ERA is further amplified in section 15 which regulates tariffs. In terms of section 15—

“(1) [a] licence condition determined under section 14 relating to the setting or approval of prices, charges and tariffs and the regulation of revenues—
(a) must enable an efficient licensee to recover the full cost of its licensed activities, including a reasonable margin or return;
. . .
(c) must give end users proper information regarding the costs that their consumption imposes on the licensee’s business;
. . .
(2) A licensee may not charge a customer any other tariff and make use of provisions in agreements other than that determined or approved by the Regulator as part of its licensing conditions.”

[81] It is thus evident that any duty imposed on Eskom to provide electricity, cannot be separated from its fiscal responsibilities.

These fiscal duties are not only aimed at protecting Eskom as a licensee, but also serve the purpose of protecting it as the nation’s electricity provider. Of significance is NERSA’s Multi Year Price Determination Methodology (MYPDM). The MYPDM is developed for the regulation of Eskom’s required revenues. It forms the basis upon which NERSA evaluates the price adjustment applications received from Eskom. It is a cost-of-service based methodology, with incentives for cost savings and efficient and prudent procurement by the licensee (Eskom). Thus, Eskom is meant to function as a viable licensee.

[82] That, in summary, is the regulatory landscape governing the generation, transmission and distribution of electricity.

[83] Municipalities have a central role to play in the distribution of electricity.

In Joseph, this Court set out the constitutional and statutory basis of the public duty of a municipality to provide electricity to its residents. Under the provisions of the Local Government: Municipal Structures Act (Structures Act), municipalities are empowered to manage the bulk supply of electricity to end consumers. Municipalities procure bulk supplies of electricity from Eskom and must then discharge their duties to supply end consumers.

[84] ERA recognises the importance of municipalities. It contains provisions that give effect to the constitutional duty of municipalities to supply electricity to their residents. In terms of section 27, each municipality is required to exercise its executive authority to perform a list of stated duties.

These duties include:

• ensuring sustainable reticulation;
• progressively ensuring access to at least basic reticulation services through appropriate investment in electricity infrastructure;
• providing reticulation services at no cost or at minimum cost to certain classes of end users within its available resources; and
• preparing and implementing relevant plans and budgets.

[85] Under the provisions of ERA, municipalities are the customers of Eskom when they purchase bulk electricity. Those to whom the municipalities, in turn, supply electricity are end users, under the definition in ERA.

The Local Government Municipal Finance Act (Municipal Finance Act) provides for the budgetary control of municipalities, including revenue collection in accordance with the municipal budget; treasury oversight of the pricing of bulk electricity and the payments made by municipalities for bulk electricity; and the regulation of proposed price increases by an organ of state for the supply of bulk electricity to a municipality.

[86] The following may be said of the regulatory scheme that I have sketched.

First, Eskom is constituted to supply electricity for the country. The state, as its sole shareholder, may require Eskom to secure public goods, consonant with the Conversion Act. Eskom is regulated by NERSA under ERA. Among the extensive powers conferred upon NERSA, it enjoys the power to regulate licensees which would otherwise enjoy monopoly power. But NERSA also has the competence to implement national government’s electricity policy framework. That is a further indication that a licensee such as Eskom may be used to secure public goods. Eskom is also a major public entity listed in schedule 2 of the Public Finance Management Act (PFMA). Eskom is thus made subject to the application of chapter 6 of the PFMA, which regulates the duties of accounting authorities responsible for public monies. It follows that Eskom does perform public functions in terms of legislation and thus qualifies as an organ of state under the definition in section 239 of the Constitution.

[87] Second, municipalities, as this Court found in Joseph, have constitutional and statutory duties to procure and pay for bulk electricity and then to supply electricity to residents. That must be done by the provision of a system of reticulation that serves the residents, makes provision for the poor, within the resources available to a municipality, and implements a budget to collect revenue so that the municipality can procure electricity to supply to its residents.

[88] In fact, so far do a municipality’s powers to collect revenue extend that this Court, in Rademan, confirmed that a municipality may disconnect a resident’s electricity supply where that resident failed to pay for other municipal services, but still paid for electricity supply. There, this Court held that where a resident, as a customer of the municipality, contravened the municipality’s conditions of payment, as set out in the municipal by-laws read with the Local Government: Municipal Systems Act (Systems Act) and the agreement between the parties, then section 21(5)(c) of ERA was met.

Accordingly, a municipality is then entitled to cut off the resident’s electricity supply.

On what basis then can Eskom, an organ of state that does not bear the responsibility of providing municipal services directly to the residents, be held liable for the supply of electricity if the conditions of its electricity supply agreements have been breached?

[89] Third, the relationships between Eskom, as supplier; the municipalities as customers; and the residents as end users of electricity, are regulated under ERA. ERA, as I have observed, gives NERSA extensive powers to do so. Those powers include the resolution of disputes that end users may have against Eskom.

[90] I reiterate, where do the residents locate the duties that Eskom has to them that they may enforce against Eskom?

It is not in the contracts for the supply of electricity that subsist between the municipalities and Eskom. The residents are not parties to those contracts. Nor do the residents rely upon any contravention by Eskom of its licence. They do not seek to enforce any provision of Eskom’s licence against Eskom. The residents also do not seek an amendment to Eskom’s licence to place an obligation upon Eskom to supply them.

[91] Furthermore, the residents do not contend that Eskom was prohibited by section 21(5) of ERA from reducing the supply of electricity to the municipalities.

That provision reads as follows:

“A licensee may not reduce or terminate the supply of electricity to a customer, unless—
(a) the customer is insolvent;
(b) the customer has failed to honour, or refuses to enter into, an agreement for the supply of electricity; or
(c) the customer has contravened the payment conditions of that licensee.”

[92] It is clear that the municipalities, as customers, are in arrears and do not pay for all of the electricity they procure from Eskom.

Therefore, the condition for the reduction of supply in terms of section 21(5)(c) was met. Section 21(5) authorised Eskom to take the reduction decision.

[93] The residents do not rely upon the Conversion Act. They do not say that the Minister of Public Enterprises has failed to discharge his mandate to agree to a Shareholder compact that would protect the interests of the residents.

[94] What rights then do the residents contend they may invoke to impugn the reduction decision?

That is the threshold issue of importance for two reasons.

• First, even in the extended sense explained in Grey’s Marine, the proposed review under PAJA requires that the administrative action adversely affect the rights of the residents.
• Second, the grounds of review relied upon by the residents are based upon the proposition that Eskom’s duty of supply to the residents rendered the reduction decision unlawful.

The pleadings

[95] In their founding affidavits, the residents invoke what they style a basic public right to the supply of electricity. The specific rights they mention are the rights to life, dignity, water, education and a healthy environment. The founding affidavits do not contend that these rights include the right to the supply of electricity. Indeed, they say nothing as to the contents of these rights. Rather, they aver that electricity is a means by which these rights are realised. They also reference decisions of the High Court that have interdicted Eskom’s termination or restrictions of supply, and rely upon the holding in Resilient SCA.

[96] In the High Court, Millar AJ reasoned that the residents’ right to the supply of electricity was inextricably bound up with their constitutional rights to dignity, life, housing, healthcare, food, water and social security.

The second judgment agrees. It also adds, to the list of rights infringed by Eskom’s reduction decision, the right to a basic education.

[97] The first difficulty with these wide-ranging findings is to source their origin in the pleaded case.

Beyond the bare averment that the supply of sufficient electricity to the citizens of municipalities is a basic public law right; and, that “the continuous supply of electricity serves as a means to realise other fundamental rights such as rights to water, education and a healthy environment”, nothing more is said in the founding affidavits as to the contents of the rights invoked by the residents.

Neither the High Court, nor the second judgment, explain how the long list of rights they rely upon have a content that gives rise to the infringement they find to have been established.

Rather, as I shall explain, the second judgment proceeds from the premise that the calamitous social and economic effects of the reduction decision self-evidently establish the infringement of the rights referenced in the founding affidavits and those inferred in the second judgment.

[98] The second judgment says that it suffices for a court to examine the facts that have been pleaded and derive the infringement of rights from those facts. The second judgment frames the matter as thus:

“[t]he residents make a simple case. Eskom’s decision of substantially reducing the electricity supply has resulted in a breach of several rights protected by the Bill of Rights”.

The reasoning of the second judgment is this. Eskom substantially reduced the supply of electricity to the municipalities. This has caused deplorable conditions in the municipalities. Therefore, the identified constitutional rights of the residents have been infringed.

[99] There is a missing step in the reasoning, which is fundamental.

Does Eskom owe a duty to the residents to supply them with the electricity that supports their well being?

And do the residents enjoy a correlative right to claim that electricity from Eskom?

If Eskom has no such duty and the residents have no such right, the reduction of supply by Eskom cannot infringe a right, the contents of which does not include a claim by the residents to the supply of electricity from Eskom.

Put differently, how, in law, can Eskom be required to supply electricity to the residents that it has no duty to supply because its failure to do so causes substantial suffering to the residents? The answer is that Eskom cannot be required to do what it has no duty to do. The duty to act lies elsewhere. That is, with the municipalities. The Associations do not plead that Eskom has a duty of supply to the residents. The second judgment insists that no such pleading is required.

[100] This is a surprising position to adopt.

While a court will often wish to interpret pleadings with generosity, as this Court made plain in Bato Star,

“it is desirable for litigants who seek to review administrative action to identify clearly both the facts upon which they base their cause of action, and the legal basis of their cause of action”.

Since the Associations base their proposed review on what they style a basic public law right, it is not fetishistic formalism to require the Associations to specify the rights of the residents upon which they rely, the contents of those rights, and the facts that support their infringement.

The residents list the rights they rely upon, but fail to plead the contents of these rights that impose a duty upon Eskom to supply them with electricity.

Hence, they make no showing as to how Eskom has breached a duty that the residents have never pleaded or established.

[101] This is an issue of some importance. The rights advanced by an applicant have a specific content.

• First, a respondent is entitled to know what rights are claimed so as to understand its correlative duties; whether it has complied with those duties; and, if not, whether its breach may be justified by way of limitation.
• Second, a court must decide the dispute before it, and not author a result on equitable grounds when no case in law has been pleaded or made out.

[102] The approach adopted in the second judgment allows a court to read into the facts the rights and their contents that it considers worthy of vindication. That is an invocation of divination at the instance of the court. It is not the role of the courts to do so, nor is it our law.

[103] Do residents who procure electricity from the municipalities in which they reside enjoy constitutional rights to the supply of electricity from Eskom?

This Court’s decision in Joseph identified the obligations of local government to provide basic municipal services, including electricity. Those obligations derive from the objects of local government in section 152 of the Constitution and the developmental duties of municipalities set out in section 153 of the Constitution, read with the relevant provisions of the Municipal Systems Act.

[104] Our holding in Joseph has been held by certain High Courts as being capable of extension so as to impute onto Eskom the obligations of a municipality to supply electricity. An exposition of this reasoning is to be found in Cape Gate.

That Court reasoned as follows.

The municipality is a conduit between the supplier of electricity, Eskom, and the consumers who pay for the electricity supplied, that is the residents. If the residents have a public law right as against the municipality to procure a supply of electricity,

“it would be incongruous if the ultimate beneficiary of and payer of the electricity stream downwards did not have the right to enforce due performance by the initiating supplier of the electricity of a public-law duty owed by it to the conduit of the electricity”.

[105] This reasoning is mistaken.

The Constitution imposes obligations upon municipalities. Municipalities constitute the autonomous local sphere of government under the Constitution. They enjoy specified powers, discharge crucial functions, bear defined duties and form part of the democratic government of the country. Municipalities can in no measure be characterised as a conduit. That is to transpose the commercial interposition of a middleman upon a constitutionally ordained autonomous sphere of government. Municipalities are required to discharge their constitutional mandate, including their duty to provide basic services. They cannot abdicate that duty, nor delegate it. A municipality is responsible for the functions it performs. It is ultimately answerable to its local electorate. The municipality is not a conduit of obligations.

[106] True enough, municipalities must often procure goods and services to discharge their functions. Providers of those goods and services may, in certain instances, be organs of state, such as Eskom, that may bear their own constitutional and statutory duties. But the mere fact that Eskom supplies almost all of the electricity that municipalities require does not make the duties of the municipalities those of Eskom. Eskom has duties of its own. But they do not come about simply because Eskom is a monopoly supplier of electricity.

[107] If Eskom does not bear the duty to supply residents by reason of the transposition of the municipalities’ duties upon Eskom, what is the independent basis in the Constitution that imposes such a duty?

[108] The Supreme Court of Appeal, in the appeal now before us, considered the reasoning of Petse DP in Resilient SCA to answer this question.

In Resilient SCA, Eskom was found to have two constitutional duties.

First, Eskom is an organ of state. Municipalities are solely dependent on Eskom for electricity supply. Eskom has a constitutional duty to ensure that municipalities “are enabled to discharge their obligations under the Constitution”.

Adopting a passage in Allpay, this duty was found to derive from section 8(1) read with section 7(2) of the Constitution. Since Eskom is an organ of state, the Bill of Rights is binding upon it. Furthermore, since the state must respect, protect, promote and fulfil the rights in the Bill of Rights, Eskom is required to enable the municipalities to discharge their duties. To do so, Eskom bears a duty of supply. I shall refer to this as the enablement argument.

[109] The second basis for imposing a constitutional duty upon Eskom is this. As an organ of state, Eskom is bound, in terms of section 41(3) of the Constitution, and the provisions of IRFA, to make every reasonable effort to settle an intergovernmental dispute in which it is involved.

Until Eskom has done so, it may not implement a decision to interrupt supply, as was the case in Resilient SCA, or to reduce supply, as occurred in the matter before us. I shall refer to this as the settlement argument.

The right to the supply of electricity: the enablement argument

[110] I consider first the enablement argument. I have set out above why it is that Eskom qualifies as an organ of state. It forms part of the state. It is thus bound under section 7(2) of the Constitution to respect, protect, promote and fulfil the rights in the Bill of Rights.

But what rights in the Bill of Rights do the residents contend provide for the supply of electricity?

None were advanced on the pleadings or in the submissions before us. The residents go no further than to contend that the supply of electricity is a means by which certain rights may be realised. This is unsurprising.

The Bill of Rights does not provide that all persons shall have a right to electricity. In Joseph, the constitutional duty resting upon a municipality to provide basic services does not derive from the Bill of Rights.

Section 7(2) of the Constitution is not of application to rights that derive from duties sourced elsewhere in the Constitution.

The enablement argument cannot prevail relying as it does on section 7(2) of the Constitution, unless a case is made out that residents have a right, sourced in the Bill of Rights, to be supplied with electricity.

No such right has been claimed on the pleaded case before us.

[111] I should not be understood to hold that such a case could not be made out. It may be that the right in section 27(1)(c) to social security is wide enough to include access to basic services, including electricity. I make no finding whatever on this score.

If, for the sake of argument, the provision of electricity forms some part of the right to social security, Eskom may be required in its decision-making to promote and fulfil that right.

However, that is not the case before us.

The residents have not relied upon section 27(1)(c). This right, as this Court has held in Grootboom, does not require the state to do more than its available resources permit. Accordingly, section 27 is judged by what measures are reasonable within the state’s available resources to achieve the progressive realisation of the right. Section 27 does not impose a minimum level of assistance.

In the present matter, we thus have no idea whether the supply of electricity to the NMD levels in the supply agreements concluded between Eskom and the municipalities conforms to what would be required of Eskom to promote and fulfil a right to electricity as a basic service, if such a right should exist.

[112] The second difficulty is just as problematic.

A right must have a defined content. No right in the Bill of Rights gives express recognition to a right of every person to electricity. As I have noted, section 27(1)(c) may have that implicit content. But, as I have observed, that is not the case before us.

The Associations plead that the supply of electricity is a means to realise other fundamental rights.

[113] This reasoning cannot be sustained. A particular means by which a right may be secured does not make that means the subject matter of the right. In the case of the right to housing (section 26) or rights to health care, food, water and social security (section 27), it is for the state to take reasonable measures within its available resources to achieve the progressive realisation of these rights.

The state must determine the means by which these rights are progressively realised. But the means to realise the rights do not define the contents of the rights. Not least because there may be entirely different, but equally permissible means used to realise the same right. These rights must be progressively realised. How that is to be done is for the state to determine, provided the measures taken are reasonable. Thus, how the state may use the supply of electricity; through what agency; and, under what conditions to realise the rights in sections 26 and 27 of the Constitution, is for the state to determine.

[114] It follows that the residents cannot claim a right to the supply of a certain quantity of electricity from Eskom on the basis that the electricity has utility in securing their rights under sections 26 and 27 of the Constitution. That would be to disintermediate the state and the decisions the state must make as to how to realise these rights, and how to do so on an aggregative basis that permits of their progressive realisation.

The residents may complain that the state is not taking the measures required of it. But that is not the case before us.

What the residents cannot do, within the scheme of the Constitution, is to fasten upon a particular organ of state and select it to provide them with a resource (here, electricity) that would secure for them better access to housing, health care, food, water and social security.

The content of the other rights in the Bill of Rights

[115] What of the rights in the Bill of Rights that are not so qualified? The Associations and the High Court refer to the right to life and dignity.

The second judgment adds the right to a basic education.

The Associations, in their founding affidavits, make mention of the right to an environment that is not harmful to their health or well-being. Of these rights, the High Court said that the right to the supply of electricity is inexorably bound up with the rights it referenced in the Bill of Rights.

The Associations contended that the supply of electricity was a means to the enjoyment of the rights they rely upon, including the right to water, education and a healthy environment. The second judgment finds that Eskom’s reduction decisions constitute clear infringements of the rights identified in the judgment.

[116] None of these approaches commences with the correct starting point: what is the content of the right invoked? In particular, does the content of these rights include a right enjoyed by the residents to be supplied with a given quantity of electricity by Eskom?

[117] Before I consider this question, I must address its relevance because the second judgment says that this is the wrong question.

The second judgment holds the position that the constitutional rights it identifies should be the focus of the Court’s concern and not the constitutional right of the residents to be supplied with electricity.

The second judgment variously describes my preoccupation with the right of supply to electricity to be mistaken and that I am focusing on “the wrong right”.

It considers that the facts set out in the founding affidavit self-evidently show an infringement of the residents’ right to dignity, life, an environment that is not harmful to health or well being, basic education, and clean water. Whether the contents of these rights provide for a right to a specific quality of electricity from Eskom is a demonstration that need not be made.

It is, in the words of the second judgment, “to straitjacket” the second judgment. Without this constraint, the second judgment says that the implications of its holding upon the state’s budget do not arise.

[118] This reasoning is mistaken, and profoundly so.

Rights, conceptually, are held by some person and against another person (or entity). So too, duties are owed by a person (or entity) to another. Rights always have a content. We do not have a right in the air. We have a right to something. And the right enjoyed by a person gives rise to a duty owed by another to the rights-holder.

Rights standardly fall into two principal categories:

• first, a right that others do some action with respect to the rights holder (a claim right); and
• second, a right that a rights holder may do some action (an active right).

The content of the right determines which type of right is enjoyed by the rights holder. Drawing this together, in the case of a claim right, the rights holder (X) has a claim against another (Y) that Y performs an action (A). Y has a correlative duty to X of the same content, that is, to do A. In the case of an active right, the rights holder (X) may take some action (A). Y must forebear and permit X to do so because Y has no right, as against X, to prevent X from doing the action, A.

[119] I have set out this foundational understanding of rights because the second judgment fails to adhere to it. The residents do not have a right to life or dignity in the air. The rights that they claim must have a content. That content determines whether the rights relied upon are claim rights or active rights. The rights can only exist if they give rise to co-extensive duties of a specific content borne by identified persons (or entities). What then is the contents of the residents’ right to life, to dignity, to an environment that is not harmful to their health or well being?

The second judgment does not tell us. It holds to the proposition that it suffices to read the founding affidavit, observe the deplorable conditions brought about by the reduction decisions, and hence recognise that these rights are being infringed.

[120] That is an error of some gravity.

We can only decide whether a right has been infringed if we know

• the content of the right to which the rights holder has a claim;
• upon whom the duty rests to secure the content of the right; and,
• hence whether the duty has been carried out.

The residents complain that the reduction decisions of Eskom have caused them to suffer the deplorable conditions set out in the founding affidavit. Those decisions are to be challenged on review because they infringe the residents’ rights. To what do the residents claim a right?

To the restoration of the supply of electricity that Eskom provided prior to the reduction decisions. It is an unavoidable step in the analysis of the case before us that the content of the rights claimed is to the supply of a determined amount of electricity. The residents contend that they have claim rights upon Eskom to restore the electricity it supplied to the municipalities prior to the reduction decisions, and that Eskom has a correlative duty to do so. We can thus identify the right-holders, what is claimed, and against whom.

[121] The second judgment identifies the rights-holders as the residents. It enumerates constitutional rights enjoyed by the residents, without identifying their contents, which the second judgment considers to be an unnecessary step in the reasoning. The second judgment holds that because the deplorable conditions suffered by the residents have come about because of the reduction decisions, Eskom must be ordered to restore the status quo.

Why Eskom, as opposed to the municipalities, has the legal duty to do so is unexplained. And that is so because Eskom cannot have a legal duty to restore supply to the residents if the residents have no right to claim that supply.

The second judgment impermissibly avoids the central question upon which the case of the Associations rests: do the contents of the constitutional rights enumerated in the second judgment include a claim right by the residents upon Eskom to the restoration of the supply of electricity?

[122] The reasoning of the second judgment comes down to this.

Eskom was supplying electricity at a particular level. Its reduction decisions have caused deplorable conditions for the residents of the municipalities. These effects self-evidently amount to an infringement of the enumerated constitutional rights of the residents. Hence, a prima facie case has been made out for the interim restoration of supply by Eskom, pending the determination of the review.

[123] This reasoning begs the central question: what do the residents claim?

They claim the restoration of the supply of electricity that Eskom’s reduction decisions have deprived them of. Do the residents have a right to claim this from Eskom by virtue of the rights they have enumerated?

The second judgment erroneously answers this question in the affirmative. It says, if Eskom once supplied the electricity and the consequences of not doing so are harmful, the residents have a right to claim restoration of the supply of electricity.

This reasoning avoids the unavoidable issue: did the residents ever enjoy the right to the supply of electricity from Eskom by virtue of their constitutional rights?

If not, how did the residents acquire this right?

To this question, neither the pleaded case before us, nor the High Court judgment, nor the second judgment provides an answer.

And for understandable reasons, because the residents have no such right. Their rights lie against the municipalities, as Joseph has held.

Alternatively, they could seek recourse under the regulatory scheme of ERA. To avoid this issue, as the second judgment assiduously does, does not diminish its salience.

Put simply, the residents cannot claim something as of right which forms no part of the contents of the rights they invoke. And no invocation of deplorable social and economic effects can cure this juridical lacuna. Nor can section 7(2) of the Constitution fill this gap. This is so because if the residents have not established a right under the Bill of Rights to the restoration of supply by Eskom, there is no duty, deriving from section 7(2), for Eskom to respect, protect, promote or fulfil rights that do not exist.

[124] The second judgment considers there to be no lacuna. It holds that the residents need not show that they have a right to claim from Eskom the supply of electricity that it has reduced. The residents’ rights lie elsewhere.

They are to be found in the rights set out in the founding affidavits; by recourse to the obligations of the state to respect, protect, promote and fulfil the rights in the Bill of Rights, as section 7(2) of the Constitution requires; and, by reference to the residents’ case that Eskom has acted without procedural fairness, contrary to the requirements of PAJA.

[125] This reasoning is mistaken.

First, the right of the residents to claim electricity from Eskom is not a claim that stands apart from the rights in the Bill of Rights that the residents rely upon. It is the claim that the residents make and would impose upon Eskom. If that claim forms no part of the contents of the rights that the residents invoke, then they have no claim in law deriving from these rights. It is hard to understand how the residents need make no case that they have a right to the supply of electricity from Eskom, but they can nevertheless compel the restoration of supply from Eskom, as a matter of legal right, the contents of which entails no claim to such supply.

The right to the supply of electricity from Eskom is not a right the residents may choose to ignore and still prevail. It is the necessary contents of the rights that they must show or fail to show in their application.

[126] Second, section 7(2) of the Constitution cannot do the work required of the residents to make out a case if the residents do not have a right in the Bill of Rights that supports their claim. The second judgment places some emphasis upon the duty of the state to respect the rights in the Bill of Rights. That duty is plainly set out in section 7(2). However, if the residents have established no right in the Bill of Rights, as I hold, then there is nothing for the state to respect. The duty only arises in section 7(2) if the residents have a right.

Put simply, if there is no right, there is no duty.

[127] Third, in what follows, I will explain why the residents have made out no case for a want of procedural fairness.

It suffices here to identify the same threshold problem that affects the residents’ case. However generously we interpret the meaning of administrative action, the relevant power must adversely affect the rights of the residents. However, if the residents have no rights of the kind claimed by them, it is difficult to comprehend what it would mean for their rights to be adversely affected by Eskom’s reduction decision. If the residents have no legal right to the supply of electricity from Eskom, the reduction of supply has no capacity to affect their legal rights.

This is so even in the expanded sense recognised in Grey’s Marine.

The second judgment cites, with approval, academic commentary that understands the class of rights that may be affected to be broad. I agree, although I have some difficulty understanding what it means to say that there is no “natural limit” to rights that fall into the class.

Here, however, the residents rely upon rights they contend for in the Bill of Rights. Without those rights, for reasons I shall explain, the residents have no right to procedural fairness.

[128] I draw attention to what I consider to be the fundamental error in the second judgment because it holds the seeds of much constitutional danger. Many people in this country suffer dire conditions that gravely compromise their life chances. The breakdown and incapacity of the state, in many aspects of its operations, exacerbates this suffering.

The second judgment proceeds from the following premise. Constitutional rights, such as the right to life and dignity, coupled with the obligations cast upon the state in section 7(2) of the Constitution, give rise to claim rights upon the state in every one of its constituent elements where resources might be applied to redress conditions of immiseration. The moral sentiment is worthy. But, as I will explain, that is not what our Constitution provides. Nor should it because it would lead to the courts allocating the greater part of our public resources and deciding how the state should do so. That would be an impermissible usurpation of democratic government.

[129] I proceed, then, to the central issue: what is the content of the rights that the second judgment enumerates? The content of the right to life, or dignity, or an environment not harmful to health or well-being is not a claim by the rights-holder to a specific quantity of a specific resource that the state is bound to provide; so as to sustain the enjoyment of these rights at a particular level. I shall refer to such a claim as the resources claim. That is so for a number of reasons. First, it is inconsistent with the structure of the Bill of Rights.

The Constitution has given express recognition in sections 26 and 27 to rights that place an obligation upon the state to use its resources for the progressive realisation of these rights. This Court has also held that in cases concerning the rights in sections 26 and 27, other rights, such as the right to life, dignity and equality, should be taken into account when deciding whether the state has complied with the constitutional standard of reasonableness. If the rights to dignity or life required that the state be placed under an obligation (absent limitation) to secure a particular standard of living or level of economic opportunity by way of the resources claim, this would not only eclipse, indeed it would render redundant, the more limited and rigorous requirements of sections 26 and 27. Additionally, it would amount to a substantial subordination of the power of the Executive and the Legislature to decide upon fundamental questions of policy and legislation that accord with the democratic mandate of the government of the day. No coherent interpretation of the Constitution allows for this understanding of the rights in the Bill of Rights as posited in the second judgment.

[130] Second, the contents of these rights do not include the resources claim because it is contrary to the precedent of this Court. In Soobramoney, the applicant sought dialysis treatment from the state so as to be kept alive since he lacked the private means to secure such treatment. He invoked the constitutional guarantee of the right to life, as also section 27 of the Constitution.

Of the right to life claimed by Mr Soobramoney, this Court had the following to say:

“The state has to manage its limited resources in order to address all these claims. There will be times when this requires it to adopt a holistic approach to the larger needs of society rather than to focus on the specific needs of particular individuals within society.”

[131] The claim for treatment was dismissed for failing to make out a case in terms of section 27(1) and (2). Soobramoney makes plain the proposition that direct claims upon the resources of the state should not be sought in the right to life, but rather in the socio economic rights in the Bill of Rights that give express treatment to such claims. A failure to observe this distinction undermines the duties of the state to make decisions over limited resources. That is its preserve to secure the welfare of the country and its people.

[132] Third, if, as the second judgment proposes, the right to life or to dignity not only found a claim to specific state resources but also to such resources as might be required to maintain a certain level of welfare, this Court will soon become the arbiter of the entire state budget. As I have explained, this is a country where poverty greatly curtails the life chances of a very large number of people and, as a result, gravely limits their dignity.

The right to life or to dignity may be enhanced for particular classes of persons by claims upon state resources. Every poor person would lead a more dignified life if the state gave them a minimum income every month. That may be a good policy for the state to adopt. It is a matter of considerable public debate. Such a policy may or may not be affordable. But these are not measures that may be claimed as an incident of the right to life or the right to dignity. They should not be decided by the courts. They are matters to be decided by other institutions of a democratic state: the Legislature and the Executive.

[133] I should not be understood to hold that ending an infringement of a right to dignity or life, or the other rights referenced above, apart from the socio economic rights in the Bill of Rights, may never have consequences for state expenditure. Plainly that is not so. The remedy imposed to cure the infringement of rights very often requires the use of state resources. What I do hold is that the rights claimed by the Associations, expanded upon by the High Court and in the second judgment, are not rights, the contents of which lay claim to a specific state resource, to be maintained at a specific level.

[134] This is so, even in respect of rights, the contents of which may give rise to a claim upon state resources. The rights in sections 26 and 27 are expressly predicated upon reasonable measures, within the state’s available resources, to achieve the progressive realisation of these rights. The right to basic education, referenced in the second judgment, may require the expenditure of state resources to provide such an education. However, the state will retain the power to decide how to do so and with what resources. That will always remain within the state’s margin of appreciation. As the Associations acknowledge, electricity is a means to secure the enjoyment of a right. However, a rights-holder cannot require the state to use this means to secure the enjoyment of a right. Hence, the right to a basic education is not a right to a specific state resource. The same is true of the right to an environment that is not harmful, under section 24(a) of the Constitution, as raised by the Associations. What the state may be required to do, rather than cease doing, so as not to infringe the right, does not translate into a claim to a specific state resource.

[135] In sum, by failing to analyse the contents of the rights advanced by the High Court and in the second judgment, their reasoning cannot support the conclusions they reach. The High Court considered that because the supply of electricity is bound up with the right to dignity and to life, there is a right to the supply of electricity. But that is to confuse what may make the enjoyment of a right more fulsome with the content of the right itself. The second judgment assumes that curtailing the supply of electricity is an infringement of various rights.

This puts the matter the wrong way round. It is only once the content of the right is determined, as I have explained, that the question of infringement may be decided. The second judgment does not demonstrate that the content of the rights it references includes the right of the residents to a particular level of supply of electricity.

[136] The second judgment places emphasis on the rights of the residents to procedural fairness. The treatment of this issue in the founding affidavits is so sparse that it is difficult to discern that a case was made out. In the case advanced by the Vaal River Association, reference is made to a meeting between representatives of the municipality, Eskom and the Association during which the Association made representations to Eskom. This meeting occurred after the announcement of the reduction decision, but the engagement was undertaken to find a solution. It came to naught because the municipality and Eskom could not resolve the question of the municipality’s indebtedness to Eskom. The Association, in its account of the residents’ prima facie rights, makes no mention of procedurally fair administrative action.

[137] In the Lekwa Association case, the founding affidavit recounts that Eskom served notice of the reduction decision on the municipality, but the notice was not served at the council meeting, nor was it distributed to political parties or the business community. Here too, no prima facie right to procedurally fair administrative action is invoked.

[138] The absence of a properly pleaded case notwithstanding, the second judgment holds that the reduction decision constitutes administrative action and, this Court’s decision in Joseph establishes that the residents have a right to procedurally fair administrative action in terms of section 3 of PAJA. The passage from Joseph referenced in the second judgment does no such thing.

It reads as follows:

“Indeed, a finding that the rights of the applicants were materially and adversely affected for the purposes of section 3 of PAJA would necessarily imply that the decision had ‘direct, external legal effect’ on the applicants. Conversely, a finding that the rights of the applicants were not materially and adversely affected would have the result that section 3 of PAJA would not apply – barring, of course, a claim based on legitimate expectations which was not raised in this case.”

[139] The holding in Joseph requires a determination of the very issue with which I remain in disagreement with the second judgment. That is, do the residents have rights to assert against Eskom to restore the supply of electricity that the reduction decisions have reduced? In Joseph, the rights of the residents derived from the constitutional and statutory duties resting upon local government to provide basic municipal services, including electricity.

I hold that the residents in the present matter have no such rights as against Eskom, and hence, following Joseph, there was no duty resting upon Eskom to extend procedural fairness to the residents in taking the reduction decisions. The second judgment holds that because the residents have a number of constitutional rights as against Eskom, though not a right to the supply of electricity, Eskom was required to accord the residents procedural fairness in deciding to reduce the amount of electricity that Eskom supplied to the municipalities. The question of procedural fairness, even if a case had been properly pleaded, is derivative of what constitutional rights the residents enjoy against Eskom. For the reasons given, I hold that no such rights have been established.

[140] There is one last issue on this aspect of the matter that warrants consideration.

The second judgment emphasises that this appeal concerns the grant of interim relief, and hence the Associations need only show a prima facie right, though open to some doubt. This, the second judgment holds, has been done. It is important, however, to distinguish a question of law from the evidence marshalled as to the facts upon which an application for interim relief rests. A question of law may be difficult to decide, but it has a right answer. And hence, where the rights relied upon by an applicant turn on a question of law, the law either recognises the rights claimed or it does not. It is not a matter that is decided by reference to weight (weak or strong).

That is the case we have before us. The Constitution and the relevant statutory scheme either confer a right upon the residents to the supply of electricity from Eskom or they do not. I hold that they do not. The second judgment takes comfort in the notion that it suffices for the purposes of interim relief that the residents have a prima facie right to the supply of electricity from Eskom. I am very doubtful that a question of law can yield such a conclusion. But if it could, I find no basis to find that the residents have any such right, prima facie or otherwise.

[141] The enablement argument thus cannot hold sway because neither in the appeals before us, nor in Resilient SCA, was a right in the Bill of Rights advanced, much less established, that burdens Eskom with the duty to supply the residents of the municipalities with electricity.

Section 7(2) of the Constitution

[142] Emphasis is placed in the second judgment upon section 7(2) of the Constitution. But, absent a finding that the residents have a right to the supply of electricity located in the Bill of Rights, section 7(2) has no application. I cannot, for the reasons given, find that the Associations have established such a right.

[143] The second judgment references the duty cast upon the state by section 7(2) to respect the rights in the Bill of Rights. How can it be, the second judgment asks, that Eskom does not have a duty to restore the supply of electricity that it has decided to reduce when the reduction bears so harshly upon the residents? The second judgment takes it to be axiomatic that Eskom has a duty of restoration because that is the respect that is due to the constitutional rights of the residents. There are, however, two separate issues which should not be confused. First, what rights, located in the Bill of Rights, do the residents have to electricity? Second, if the residents have the right to electricity, arising from the Bill of Rights, against whom may these rights be claimed? The second judgment avoids both questions.

[144] If the residents have no constitutional right to the supply of electricity, then no duty is cast upon Eskom to restore electricity out of respect for rights that have not been established. But even if a right to the supply of electricity had been established, it does not follow that section 7(2) would cast an obligation upon Eskom to supply that electricity to the residents. This, the second judgment assumes to be the case; but wrongly so. The second judgment has recourse to section 7(2) so as to find a basis upon which Eskom may be held liable to make good the infringement of the residents’ rights. Section 7(2) does not do so.

[145] Section 7(2) requires the state to respect, protect, promote and fulfil the rights in the Bill of Rights. The state is made up of many parts, of which Eskom is an organ. The obligations of section 7(2) are not cast upon every constituent part of the state. Regard must be had to the division of responsibility under which the state is organised. This is in part dictated by the Constitution itself. By way of example, the Reserve Bank may not be called upon to cure the failure by officials of the Department of Home Affairs to issue a passport to a citizen.

[146] The present case bears out this principle. It is the municipalities, under the Constitution and by reason of the regulatory scheme that governs the supply of electricity, which are required to supply electricity to the residents. That duty has not been allocated to Eskom. The municipalities constitute the sphere of government to which the duty has been given. They must carry out their duties and, by so doing, fulfil the obligations of the state in section 7(2). Section 7(2) cannot be understood to require an organ of state to which the duty to supply electricity to residents has not been given, to do what the municipalities have failed to do, so as thereby to honour the state’s obligations under section 7(2). Yet this is what the second judgment would require of Eskom, and without explanation as to why, if the resident’s rights have been infringed, the municipalities should not be that part of the state that must make good the state’s obligations under section 7(2).

Subsidiarity

[147] Even if the residents had been able to identify a constitutional right that they could invoke, they would be met by a further difficulty.

[148] The ERA is a comprehensive piece of legislation that regulates the generation, transmission and distribution of electricity. In particular, ERA regulates the relationships of supply with which this appeal is concerned. That is, the relationship between Eskom, as the supplier of bulk electricity to municipalities; the municipalities as customers of Eskom; and the residents of the municipalities, who procure electricity from the municipalities as end users. The rights of end users, such as the residents of the municipalities, to the supply of electricity and Eskom’s obligations to do so are regulated under ERA. Once Parliament has legislated in this way, may the residents look outside ERA to assert rights against Eskom?

[149] The principle of subsidiarity, repeatedly recognised by this Court, has a number of applications. One application of the principle is that a litigant cannot directly invoke a constitutional right when legislation has been enacted to give effect to that right. The litigant must either challenge the constitutionality of the legislation so enacted or rely upon the legislation to make its case.

[150] The residents do not impugn the reduction decision by recourse to ERA. This creates an obstacle that stands in the way of the proposed review of the reduction decision, and hence the interim relief that is predicated upon the review. Even if the residents had been able to identify a constitutional right that they could assert against Eskom, they would have had to show that they were not bound to seek recourse under ERA as the legislation enacted to give effect to that right. This they did not do. The principle of subsidiarity excludes the relief that the residents have sought in their review, and hence precludes the grant of the interim relief that they have obtained.

[151] The second judgment considers that the principle of subsidiarity poses no obstacle to the residents’ claim to the restoration of supply from Eskom because ERA does not give effect to the constitutional rights that the second judgment finds the residents to enjoy. The second judgment says that the constitutional rights of the residents are manifold, and that ERA is a single legislative instrument that could not have been enacted to give effect to all of these rights. The second judgment fails to recognise that it is not the number of the rights that it references, but the content of these rights. That content, as I have explained, concerns a claim by the residents to the supply of electricity. That is precisely what ERA and the regulatory scheme that I have described regulate. And hence the principle of subsidiary holds good.

[152] The second judgment also fails to have regard to the scope of the regulatory scheme under which powers, rights and duties are allocated for the supply of electricity to residents. I have set this out in detail. Suffice to say that it is the Constitution that places the municipalities at the centre of the supply of electricity to the residents.

There is an interlocking scheme of legislation and subordinate legislation that

• constitutes NERSA;
• confers wide powers upon it;
• regulates Eskom and the municipalities; and
• grants rights to end users.

It is hard to imagine a more comprehensive regulatory scheme. This scheme is clearly ordered to secure the public interest, of which the rights of end users, and hence residents, forms part. It is difficult to understand how this scheme can be understood, given its reach, not to give effect to such constitutional rights as the residents may enjoy. How the residents can apparently by pass this entire edifice by directly invoking their constitutional rights is a conclusion I find preposterous.

[153] The second judgment provides a lengthy disquisition on the concept of subsidiarity in our constitutional jurisprudence. That analysis shows that the principle of subsidiarity is generally, but not exclusively, of application in cases where a statute gives effect to a constitutional right. The second judgment cannot find anything in ERA that can be said to give effect to a constitutional right. The second judgment declines to decide whether subsidiarity can apply to legislation that does not give effect to a constitutional right. But it goes on to say that absent a definitive pronouncement on this point, the question of subsidiarity can do no more than cast some doubt on the residents’ prima facie rights.

[154] The second judgment is in error for two reasons.

First, it is not simply ERA, but the entire regulatory scheme that must be considered to determine whether the principle of subsidiarity is of application. That scheme is predicated upon the constitutional centrality of the municipality as the sphere of government responsible for the supply of electricity to its residents. The powers of NERSA and the rights and duties of Eskom are designed to cohere with the constitutional duties borne by municipalities. The rights of residents to the supply of electricity form part of this regulatory scheme. ERA provides the statutory means by which residents may enforce their rights. But there can be little doubt that it is a regulatory scheme that gives effect to the constitutional design by which electricity is to be made available to residents. The residents’ recourse under ERA forms part of that design, and hence triggers the application of the principle of subsidiarity. In so far as the second judgment considers the residents’ case not to depend on a constitutional right to the supply of electricity, that is a disagreement elsewhere explored in this judgment.

[155] Second, the second judgment further falls into error because it adheres to an incorrect understanding of what it means for an applicant for interim relief to establish a prima facie right, though open to some doubt. This requirement concerns the standard of proof that rests upon the applicant. The standard of proof is a standard that determines what is required of a litigant to prove facts, not law. A proposition of law which recognises a right is either correct or it is not. The evidence marshalled to establish that right must meet a particular standard. In the case of interim relief, the standard is a prima facie right, though open to some doubt. An arguable proposition of law has no bearing upon whether a right is prima facie established.

Whether a right exists in law is one thing. Whether an applicant has marshalled evidence sufficient to establish that right is quite another. The second judgment makes a category error. The principle of subsidiarity either excludes the claims of the Associations for interim relief or it does not: that is a question of law. Whether the residents have established a prima facie case is a question of evidence. The disinclination of the second judgment to decide the question of subsidiarity does not mean that at best that question can only cast some doubt on the prima facie case of the Associations.

Correctly understood, a question of law simply has no bearing on whether an applicant has met the standard of proof required for the grant of an interim order. If subsidiarity applies, the residents have no claim. If subsidiarity does not apply, or if a court is uncertain whether it applies, the evidence marshalled by the applicant is unaffected – it is neither enhanced nor diminished. Therefore, the principle of subsidiarity excludes the claims of the Associations. The second judgment declines to provide a definitive answer to the point.

[156] The second judgment takes the position that my approach is too rigid. It expresses the view that there may be circumstances in which a court, faced with an application for interim relief (sometimes on an urgent basis), cannot be expected to reach a definitive decision on a question of law. If that be so, a judge may say that prima facie there is enough pointing to the determination of the legal question in the applicant’s favour. I have some sympathy for this position. However, an arguable question of law, upon which the case of the applicant turns is not what it means for an applicant to have a prima facie right. That is to muddle an evidential standard as to facts with a legal standard. The correct approach is to recognise, as the majority of the Court did in the Full Court decision in Ferreira, that an applicant should meet the standard of a serious question of law to be tried. That is the standard in English law, and I see no impediment to its adoption.

[157] However, I can see no justification for the second judgment declining on appeal to decide the question of subsidiarity, and rather leaving this matter for the High Court. There is no good reason to do so. The facts and the law have been placed before us. The issue has been fully considered. The novelty and complexity of the matter does not warrant deferring a decision on the point. It is precisely cases of novelty and complexity that this Court is charged to decide. The matter should be decided. I hold that the principle of subsidiarity is of application and non-suits the Associations.

Section 7(2) of PAJA

[158] The residents face a further obstacle. ERA provides a comprehensive regulatory framework. Section 30 requires NERSA to settle disputes between an end user, defined to mean a user of electricity, and a licensee, such as Eskom. The residents have not had recourse to section 30. They do not traverse this matter in their papers, nor in their submissions before this Court. Yet their claim for interim relief is predicated upon a review under PAJA. Section 7(2) of PAJA requires the exhaustion of all internal remedies, save in exceptional circumstances. The residents have not explained why relief under section 30 of ERA is neither possible, adequate or timeous. Instead, they contend that it was incumbent on Eskom to refer the dispute to NERSA. They have failed to provide a reason why they, as the aggrieved parties, did not refer the dispute to NERSA before bringing the reduction decision for review under PAJA. This omission means that the promised review of the reduction decision was stillborn, and hence the interim relief for this reason also cannot hold good.

[159] The second judgment holds that section 7(2) of PAJA poses no obstacle to the residents in their application for interim relief because that application is not a review of the reduction decisions, and hence section 7(2) cannot be of application. The second judgment goes further still. It holds that section 7(2) of PAJA plays no role in the determination of applications for interim relief pending a PAJA review. It reasons that this would impose too great a burden on an applicant for interim relief, in that the grant of interim relief already requires a showing that there is no other satisfactory remedy. To add a requirement that an applicant must also show that it will comply with PAJA is to unduly curtail access to the courts. Furthermore, an applicant may yet persuade the review court of exceptional circumstances that, in terms of section 7(2)(c), excuse compliance with the obligation to exhaust any internal remedy.

[160] I recall what I have set out as to the relationship between an application for interim relief and the prospects of the applicants in securing final relief. The position taken in the second judgment fails to have proper regard to this. The issue before the High Court was this: what prospects do the Associations have of succeeding in their review of Eskom’s reduction decisions? A relevant consideration in answering that question is whether the residents will be able to show that the review court can grant final relief in the face of section 7(2) of PAJA.

If the Associations have an internal remedy ¬ and they do as section 30 of ERA provides a specific remedy to the residents of direct application to the reduction decision of which they complain ¬ a failure to exhaust this remedy means the court hearing the review will have no power to review the reduction decisions; save for exemption upon a showing of exceptional circumstances. The issue is not answered by saying that the application for interim relief is not the review. A failure to provide any explanation as to why an available internal remedy has not, will not or cannot be used gives rise to the difficulty that the court deciding upon interim relief must apprehend that the court adjudicating upon the case for final relief may not be competent to rule at all. If that is so, how does a court order interim relief pending such a review?

[161] Nor is it answered by saying that the residents may yet seek to exhaust their internal remedies under section 30 of ERA or show exceptional circumstances to exclude compliance. That they have not, and have indicated no intention of doing so, is relevant in deciding whether the Associations have prospects of prevailing in the review. That an application for interim relief is not a review, as the second judgment observes, is not salient. The application for interim relief necessarily casts forward to consider the applicants’ prospects of success. The Associations have an internal remedy available to them. They say nothing as to why they have not used it or could not use it to obviate the need for a review altogether. That is plainly relevant to the question as to whether the court deciding the review could come to the assistance of the Associations.

[162] The second judgment holds that traversing internal remedies at the stage of interim relief is unduly burdensome to an applicant because it adds to the requirement of showing the absence of another satisfactory remedy. The second judgment also considers that this would infringe an applicant’s constitutional right of access to the courts. In this, too, the second judgment is mistaken.

As I have shown, whether an applicant for interim relief will be able to comply with the requirements of section 7(2)(a) of PAJA in the review is plainly relevant to the question whether the applicant can secure relief from the courts in due course. If the applicant cannot, there is no warrant to impose injunctive burdens on the respondent in the interim. Some remedies available to an applicant may fall within the class of internal remedies provided for in any other law as section 7(2)(a) stipulates. If the applicant has recourse to such a remedy then, at the stage of interim relief, the question as to why the applicant has not or will not make use of this remedy cannot be avoided. It bears directly upon the applicant’s likely prospects of success in the review. If some other species of alternative remedy is available to an applicant, then it will also be necessary to determine whether it is satisfactory or whether the applicant can show that it is not so.

[163] These are assuredly burdens that an applicant must shoulder to enjoy interim relief. But they are neither gratuitous nor an infringement of the right of access to courts. They are relevant and necessary considerations that go to the justification for making an interim order. Courts will not incline to render a respondent subject to interim compulsory constraint by its order if there is no need to do so, or there are vanishingly modest prospects that the applicant can prevail in the review. Nor does an applicant, so burdened, suffer any restriction of their right to have the question of interim relief resolved by the application of law.

The difference I have with the approach taken by the second judgment concerns the legal considerations that are relevant to the grant of interim relief. A difference as to the substantive law of application to the grant of interim relief cannot be characterised as an issue of access to courts, as the second judgment unwarrantably seeks to do. The right to have a dispute resolved by the application of law cannot determine what substantive law is used to decide the dispute.

[164] When a court decides upon an application for interim relief, the question is whether the respondent must endure such an order if there are other satisfactory remedies available to the applicant. Thus, the issue is whether the applicant may secure adequate redress, at least in the interim, by recourse to another satisfactory remedy. The Associations have had nothing to say on this score to show why the internal remedies provided in section 30 of ERA, and available to the residents, would not suffice. The availability of an internal remedy, in this case, is an issue pertinent to two factually interconnected, but separate, legal issues. First, whether there is any prospect that the court that hears the review will enjoy the competence to grant final relief. Second, whether the internal remedy suffices to provide a satisfactory remedy. Both issues are relevant to the enquiry as to whether interim relief should be granted to an applicant who would bring an administrative action under judicial review.

[165] Whether examined from the vantage point of prospects of success in the review or the availability of a satisfactory alternative remedy, the Associations have failed to deal with these matters. The second judgment says this matters not because the residents averred that they had no other satisfactory remedy, the High Court agreed, and this Court is in no position to hold otherwise. This is not so. The founding affidavits of the Associations contended that it was Eskom’s duty to resolve its dispute with the municipalities and that “the municipality and for that matter, the applicant, have no other remedy”.

By law it may not purchase its electricity from any supplier other than Eskom. That Eskom is a monopoly supplier to the municipalities, and they, in turn, are monopoly suppliers to the residents answers the question as to whether the residents have an alternative source of supply. It says nothing at all as to whether the residents have an alternative satisfactory remedy. They do. It is an internal remedy provided for in ERA, and the residents have nothing at all to say on this score. It is an obvious omission and impediment to the grant of the relief that they sought. Eskom averred that the residents did have alternative recourse. The High Court’s only finding on this aspect of the matter was that the residents would not obtain relief by enforcing the obligations of the municipalities because the municipalities were hopelessly insolvent. Neither the High Court nor the Supreme Court of Appeal traverse the recourse of the residents under section 30 of ERA. I do not see how a finding by the High Court as to one remedy precludes the consideration by an appellate court of the availability of another remedy that is relevant to whether the interim order was correctly granted.

The residual PAJA ground

[166] The second judgment considers the residents to have made a supportable case that Eskom has acted for ulterior purposes because it took the reduction decisions to pressure the municipalities to settle their outstanding debts. While the second judgment acknowledges that this ground of review has not been pleaded, it holds that it can nevertheless be entertained on a discretionary basis.

[167] That is not so. An appeal court might entertain an appeal where an issue that strayed from the pleadings was fully ventilated before the Court below. But an appellate court cannot raise a ground of review that was not pleaded nor fully considered by the parties on their papers and in argument. In any event, the factual basis of the case for Eskom’s ulterior purpose is much contested on the facts. Eskom’s affidavit sets out the reasons for its reduction decisions which provide reasons for acting that are reasonable, given what it says as to the risks to the grid and the danger of illegal connections. On an application of Gool, or even the tests more favourable to the Associations, much doubt is cast on the ulterior purpose ground of review; whether cast as such, or under the more general case that was pleaded of rationality. There seems little to gainsay the point that Eskom was acting within its rights under the regulatory scheme of application to it. Such lawful action is not transformed into a reviewable irregularity by labelling it an ulterior purpose or irrational.

A variant of the enablement argument

[168] A variant of the enablement argument was this. Since the municipalities bear the constitutional duty to provide basic services, as Joseph has held, Eskom as an organ of state must make it possible for the municipalities to do so. The intuitive appeal of this contention cannot escape this question: what is the source of Eskom’s duty? It is not, as we have seen on the case before us, section 7(2) of the Constitution. Nor do the residents make out a case that the Constitution elsewhere casts a constitutional duty upon Eskom to enable the municipalities to carry out their constitutional functions. The duties of Eskom and, in particular its developmental role as I have described it, are set out in the Conversion Act and ERA. The residents have sought no recourse under this legislation. Without a right pleaded and established, intuition cannot make a case.

[169] For this reason also, the mere fact that the reduction decision has been taken by Eskom as an organ of state does not render the decision reviewable, without more. Section 1 of PAJA defines administrative action, applied to the case before us, as the exercise of public power which adversely affects the rights of any person. As I have already explained, on the most generous construction of what this means, following Grey’s Marine and its progeny, the reduction decision must have had the capacity to affect the rights of the residents. But the residents have no constitutional rights as against Eskom to supply electricity, not on the pleaded case or otherwise established before us. The reduction decision cannot have the capacity to affect rights that have not been established, either existing or prospective, as against Eskom. The residents have thus failed to show that the reduction decision is reviewable. The holding of the High Court in Resilient High Court that residents may review Eskom’s decision to terminate supply on rationality grounds is not correct. The rights of residents in this position are secured by recourse against the supplier of their electricity, the municipalities, or under the regulatory framework of ERA.

[170] Even if the residents had been able to make a case that Eskom has a duty to supply electricity to the municipalities, it is hard to imagine that Eskom could have been called upon to discharge that duty to enable the municipalities to perform their constitutional obligations. On the facts before us, the municipalities have abdicated their duty to provide basic services to their residents. Eskom cannot be required to enable the municipalities by supplying electricity when the municipalities cannot or will not carry out their primary constitutional obligations. Nor can the residents subvert the scheme of the Constitution by seeking relief, in effect, to substitute Eskom for the municipalities and require Eskom to do what the municipalities have not done, but are constitutionally required to do.

[171] In sum, the residents have simply failed to make out a case that Eskom owes a duty to them, either directly or through the municipalities, to supply them with electricity. They have not identified the constitutional right that requires Eskom to supply electricity above the contracted NMD. They do not rely upon ERA or the Conversion Act as the basis upon which the reduction decision is rendered reviewable. The residents have not confronted the problems of subsidiarity and the exhaustion of internal remedies. The residents have also not, in these proceedings, sought to compel the municipalities to carry out their constitutional duties. In these circumstances, the proposed review has no prospects of success, and hence the residents have failed to make out a case for interim relief pending that review.

The settlement argument

[172] I turn next to the settlement argument which formed the centrepiece of the holding in Resilient SCA. Must Eskom continue to supply electricity to the municipalities at the levels that predate the implementation of the reduction decision on the basis that Eskom failed to comply with its duties to make every reasonable effort to settle an intergovernmental dispute, as required by section 41(3) of the Constitution and IRFA? The Supreme Court of Appeal in Resilient SCA held Eskom to have such duties and the Supreme Court of Appeal in the present matter agreed.

[173] I have set out why it is that Eskom is an organ of state, at least as presently constituted. Section 41(1)(h) of the Constitution requires Eskom and the municipalities to co operate by assisting and supporting one another. The Associations have not relied on this provision, nor could they because, as I have observed, there can be no duty to co operate with a sphere of government that has abdicated its own constitutional responsibilities. The burden of the Associations’ case, both in the Supreme Court of Appeal and before us, was to rely upon the settlement argument in Resilient SCA.

[174] As stated above, section 41(3) of the Constitution places an obligation on an organ of state involved in an intergovernmental dispute to make every reasonable effort to settle the dispute by means of mechanisms and must exhaust all other remedies before it approaches a court to resolve the dispute.

[175] The mechanisms and procedures that have been provided to permit Eskom to comply with its duty to take every reasonable effort to settle an intergovernmental dispute are to be found in IRFA. Curiously, in terms of section 2 of IRFA, that Act applies to the national government, all provincial governments, and all local government; but it does not apply to any public institution that does not fall within the national, provincial or local sphere of government. The state is Eskom’s sole shareholder and the Minister of Public Enterprises has an important role to play in agreeing to Eskom’s Shareholder compact. Whether that suffices to make Eskom part of national government is a question I do not need to answer because I shall assume that IRFA may, for the purposes of section 2, be of application to Eskom.

[176] There are two reasons that nevertheless render IRFA of no assistance to the case of the residents. First, Chapter 4 of IRFA concerns the settlement of intergovernmental disputes. But Chapter 4 does not apply to the settlement of specific intergovernmental disputes in respect of which other national legislation provides resolution mechanisms and procedures. That is precisely what section 30(1)(b) of ERA does. NERSA enjoys jurisdiction to settle disputes between a customer and a licensee, that is, between the municipalities and Eskom. The central intergovernmental dispute in this matter is between the municipalities and Eskom. Hence, IRFA does not apply to this dispute and ERA does. Granted, this intergovernmental dispute has wider ramifications that may involve provincial government and perhaps national government given the wholesale failure of the municipalities. But Eskom is not in any intergovernmental dispute with provincial or national government. Its dispute is with the municipalities, and that dispute falls to be settled by NERSA under section 30(1)(b) of ERA. IRFA does not apply to the dispute between Eskom and the municipalities. Resilient SCA and the Supreme Court of Appeal in the present matter fell into error on this score.

[177] The second reason that IRFA is of no assistance to the Associations is that in terms of section 45(1) no organ of state may institute judicial proceedings in order to settle an intergovernmental dispute, unless the dispute has been declared a formal intergovernmental dispute in terms of section 41 of IRFA and all efforts to settle the dispute, in terms of Chapter 4 of IRFA, were unsuccessful. Section 45(1) determines how Chapter 4 of IRFA impacts upon judicial proceedings. However, the judicial proceedings in the present matter were not initiated by Eskom but by the Associations. There cannot be an intergovernmental dispute between the Associations and Eskom because the Associations are not organs of state. Nothing in section 41(3) of the Constitution, nor in IRFA, can non-suit Eskom in a claim initiated by private bodies against it. The purpose of section 41 of the Constitution, read with section 45(1) of IRFA, is to require that those subject to section 41(3) make every reasonable effort to settle their disputes before having recourse to the courts. What neither the Constitution nor IRFA do is to non suit Eskom in circumstances where a private party initiates judicial proceedings against it. In the result, Eskom is entitled to defend itself in those proceedings, and IRFA does not prevent it from doing so.

[178] The settlement argument must therefore fail.

The balance of convenience

[179] The second judgment says the balance of convenience favours the Associations because of the consequences that have ensued from the reduction decisions. Additionally, so it says, it is not as though in the interim Eskom cannot provide the additional electricity. The second judgment does not weigh in the balance what Eskom has set out in its affidavits.

[180] Eskom has indicated that in the past it was able to supply electricity above the NMD levels due to other customers not utilising their NMD allocations to the full. Furthermore, in addition to the strain on the national grid, Eskom makes the case that the municipalities’ infrastructure is dilapidated. For as long as this interim order operates, Eskom will be compelled to supply electricity above the NMD, putting the infrastructure and national grid under additional strain. Although Eskom has penalised the municipalities for exceeding the NMD, this has not induced corrective action by the municipalities. On the contrary, the municipalities continue to abdicate their duties.

[181] These are weighty considerations. So too are the terrible conditions that have resulted in the quality of life of residents. There is serial hardship and inequity in that residents who pay for electricity nevertheless suffer great detriment.

[182] I recognise that the harm to human health and well-being that is suffered by the residents without interim relief may appear greater than our collective interest in the integrity of the grid, the national availability of electricity and the solvency of Eskom. But this equation fails to take account of the true source of the problem: that the municipalities are not carrying out their constitutional and statutory duties. They must be made to do so, and if they cannot, then, as the Constitution requires, national and provincial government must step in to see to the effective performance by the municipalities of their functions (section 155(7) of the Constitution). This scheme of constitutional responsibility should not be subverted by using interim orders sought before the courts to assign the duties of the municipalities to Eskom.

[183] There is one further consideration that is systemic in nature. If Eskom is required to discharge the duties of the municipalities in this case, it will in all likelihood be called upon to do so across the hundreds of municipalities across the country that are in disarray. As the cases to which we have been referred indicate, this process appears to be well advanced. Eskom is a national asset upon which the welfare of the entire country depends. What the residents seek in this case, replicated across the country, will give rise to considerable risks for Eskom, and hence to our national welfare.

[184] The order of the High Court is a mandamus. It compels Eskom to supply electricity above the NMD levels, to install the necessary infrastructure to ensure the supply of this electricity and to provide ringfeed supply that will serve as a back up during emergencies (this is in respect of Ngwathe Municipality). Orders of this kind, writ large across the country, have grave consequences.

[185] Taking these matters into account, I cannot find that the balance of convenience favours the residents. But even if it did, absent a right to the supply of electricity from Eskom, there is no basis upon which the interim relief granted by the High Court can stand.

Conclusion

[186] The interim relief that the Associations sought and obtained in the High Court was predicated upon their having a prima facie right to review the reduction decision. The Associations have failed to establish that right. Furthermore, the Associations have not sought relief under the regulatory scheme created by ERA, as they could and should have done. Their review, as formulated, is stillborn under the principle of subsidiarity and for failing to pursue an internal remedy. IRFA provides no basis to non suit Eskom, much less does it accord a right of supply to the residents.

[187] Accordingly, leave to appeal must be granted and the appeals upheld. The orders of the Supreme Court of Appeal should be set aside and in their place the applications of the residents must fall to be dismissed. As the residents have raised matters of importance in the public interest, no costs should be awarded against them.

[188] Had I commanded the majority, I would have made the following order:

1. Leave to appeal is granted in both applications.
2. The appeal in respect of both applications is upheld.
3. The order of the Supreme Court of Appeal is set aside and substituted with the following:
“The appeal is upheld. The order of the High Court is set aside and replaced as follows:
In Case number 31813/20: The application is dismissed.
In Case number 35054/20: The application is dismissed.”
4. There is no order as to costs.

Summary

“Interim interdicts — nature of prima facie right — rights in Bill of Rights — content of rights — whether rights established — role of final relief in interim orders

Bulk electricity supply — reduction of electricity supply — section 21(5) of the Electricity Regulation Act

Pleadings — interpretation and purpose of pleadings — sufficiency of pleaded case

Section 7(2) of the Constitution — duty to respect rights — duties of different organs of state — role and functions of local government — section 152 and 153 of the Constitution

Section 7(2) of the Promotion of Administrative Act — exhaustion of internal remedies — section 30 of the Electricity Regulation Act

Subsidiarity — direct invocation of the Constitution or not — electricity regulatory framework

Grounds of review — procedural fairness — rationality — ulterior motive

Balance of convenience — separation of powers — polycentricty — rights violations — stability of national grid”

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MEDIA SUMMARY
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The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

“On Friday, 23 December 2022 at 10h00, the Constitutional Court handed down judgment in an application for leave to appeal against the judgment and order of the Supreme Court of Appeal. The Supreme Court of Appeal dismissed an appeal against the judgment and order of the High Court of South Africa, Gauteng Division, Pretoria (High Court). The application concerned whether the lower courts were correct to order Eskom, the applicant, to supply electricity to defaulting municipalities pending the institution of review proceedings.

The matter originates from two applications that were joined together before the High Court. In both applications, Eskom is the applicant. In the first application, the first respondent is the Vaal River Development Association (Pty) Limited, a non-profit organisation representing the residents of Ngwathe Municipality. In the second application, the first respondent is Lekwa Ratepayers Association, a non profit organisation representing the residents of Lekwa Municipality. The first respondents in both applications are referred to as the “residents” or “Associations”. The remaining respondents did not participate in the proceedings.

In 2008, Eskom concluded a supply agreement with Ngwathe Municipality in terms of which it would supply bulk electricity to the municipality in accordance with the Notified Maximum Demand (NMD) stipulated in the supply agreement. The NMD is a contractual value of demand which binds Eskom and the customer (the municipalities). In 1981, Eskom concluded a similar supply agreement with Lekwa Municipality. In 2010, the contracted NMD for Lekwa Municipality was increased. The municipalities’ consumption of and need for electricity, however, exceeds the NMD supply levels agreed to. Eskom has been supplying electricity in excess of the contracted NMD to both municipalities for an extended period of time and charging monthly penalties to the municipalities. Despite these penalties, the municipalities have failed to pay Eskom for the electricity supplied to them and remain in serial default.

In 2020, Eskom decided to reduce the bulk electricity supply to the municipalities to the NMD levels set out in the supply agreements (reduction decisions). This meant that it would no longer supply electricity in excess of the contracted NMD levels. It informed the municipalities but did not inform the residents. This had a significant impact on essential services in the municipalities, such as water supply and the functioning of sewage works. Thus, the Associations instituted applications before the High Court on the residents’ behalf.

The High Court held that sufficient electricity supply is inextricably intertwined with the rights to healthcare, food, water and social security and therefore found that the Associations had established a prima facie right. Second, the Court found that the limited electrical supply had an adverse effect on all basic municipal services, resulting in irreparable harm. Third, the High Court determined the balance of convenience to favour the residents on account of the fact that Eskom’s prejudice was financial, compared with the irreparable harm suffered by the residents. Finally, the Court held that Eskom has a monopoly over the supply of bulk electricity leaving no other satisfactory remedy available to the residents other than approaching the Court for relief. The High Court ordered Eskom to increase, alternatively to restore the maximum electricity load supply to the level supplied prior to its decision pending final adjudication of the Associations’ application for a review of Eskom’s decision in terms of the Promotion of Justice Act 3 of 2000 (PAJA) and/or legality.

Aggrieved, Eskom sought leave to appeal to the Supreme Court of Appeal. The Court, relying on Resilient Properties (Pty) Ltd v Eskom Holdings SOC Ltd (Resilient), held that, given the nature and source of Eskom’s power, the exercise of this power amounted to administrative action for the purposes of section 33 of the Constitution and PAJA. The Court held the facts in Resilient were similar to the present case, that the principles enunciated therein were of equal application, that all the requirements for granting interim interdictory relief were established and that the High Court correctly granted the interim interdicts. The Supreme Court of Appeal also referred to section 41(3) of the Constitution and the Intergovernmental Relations Framework Act 13 of 2005 (IRFA). It held that Eskom was obligated to take reasonable measures to resolve the intergovernmental dispute it had with the municipalities before reducing the bulk electricity. The appeal was dismissed.

In the Constitutional Court, Eskom submitted that the question whether the application ought to be resolved in terms of IRFA or the Electricity Regulation Act 4 of 2006 (ERA) raises a constitutional issue. Eskom further submitted that the lower courts compelling it to supply sufficient electricity to the municipalities is at odds with the Constitutional Court’s decision in Mazibuko v City of Johannesburg where the Constitutional Court held that in terms of section 26(2) of the Constitution, the state must take reasonable legislative and other measures to progressively realise the right of access to adequate housing within available resources. Eskom contended that the lower courts failed to consider that (a) its circumstances have changed and it no longer has capacity to supply electricity exceeding the contracted NMD and; (b) the orders of the lower courts put a strain on the national grid and the electricity infrastructure. Eskom also contended that the municipalities have, as a result of the lower courts’ decisions, been absolved of their constitutional obligations. Eskom submitted that section 30 of ERA provides an internal remedy to resolve such disputes. Thus, the internal remedies provided by ERA should have been utilised before invoking IRFA and PAJA and approaching the courts.

The Associations submitted that the order of the High Court does not compel Eskom to exceed the agreed upon NMD. Rather, it is an interim decision pending a review of Eskom’s decision to decrease the electricity supplied to the municipalities. The residents submitted that they sought to enforce their public law rights because Eskom is an organ of state. Therefore, its decisions constituted administrative action and are reviewable under PAJA. As to the application of ERA, the residents contended that it was incumbent on Eskom to approach the National Energy Regulator (NERSA) and seek to resolve the dispute. The residents further contended that citizens have a public law right to electricity. Additionally, electricity supply is required to realise other fundamental rights such as the rights to water, education and a healthy environment.

The minority judgment, penned by Unterhalter AJ (Kollapen J, Majiedt J and Mlambo AJ concurring) found that the matter engaged the Constitutional Court’s constitutional jurisdiction. It found that determining Eskom’s constitutional and statutory duties and to whom these duties are owed raised a constitutional matter of importance.

The minority judgment then determined whether the lower courts were correct to grant the interim relief to the residents. The minority judgment analysed the standard required to demonstrate a prima facie right. The test is whether the applicant has furnished proof which, if uncontradicted at trial (here, in the review), would entitle the applicant to final relief. This was reiterated by the Constitutional Court in Economic Freedom Fighters v Gordhan. Thus, to secure interim relief, an applicant must establish their prospects of success of obtaining final relief to the required standard. There is thus a connection between interim relief and the likely outcome of the final proceedings.

The minority judgment disagreed with the majority judgment’s reliance on National Gambling Board v Premier, KwaZulu-Natal. The minority judgment held that National Gambling Board was only authority for the proposition that a court may grant interim relief even though it lacks jurisdiction to decide the main dispute. It is not authority for the position that the outcome of an application for interim relief entails that no final determination of the rights of the parties can occur. According to the minority judgment, if an application is premised upon an incorrect point of law, there is no reason why the court should not decide the legal question and dismiss the application. The question of law in the present case was whether the residents have a right to the supply of electricity from Eskom, and hence whether the Associations have prospects of success in the review. The minority judgment answered this question in the negative on the following bases.

First, the electricity industry is governed by ERA. ERA sets out Eskom’s duties and grants NERSA wide regulatory competences over Eskom, municipalities and the residents of municipalities as end users insofar as the electricity industry is concerned. NERSA’s powers include adjudicating disputes that may arise between these parties. Furthermore, the objects of ERA make it evident that any duty imposed on Eskom to provide electricity cannot be separated from its fiscal responsibilities so as to protect Eskom as the nation’s electricity provider. Municipalities play a central role in the distribution of electricity in the form of municipal services. This was confirmed by the Constitutional Court in Joseph v City of Johannesburg and is reaffirmed, inter alia, by the Constitution, the Local Government: Municipal Structures Act 117 of 1998 (Structures Act), the Local Government: Municipal Systems Act 32 of 2000 (Systems Act), as well as ERA. This regulatory framework gives effect to the constitutional duty of municipalities to supply electricity directly to their residents. Having set out the regulatory framework, the minority judgment asks on what basis Eskom can be held liable for providing municipal services (electricity in this case) directly to the residents. In other words, what rights do the residents claim to have that are enforceable against Eskom?

To decide this question, the minority judgment considered the “public law right to electricity” pleaded by the Associations. The minority judgment also considered the Associations’ averments that electricity is a means by which the rights in the Bill of Rights are realised. It found that the Associations had failed to show that the contents of the rights (rights to life, dignity, water, education and a healthy environment) they invoked included the right to the supply of electricity by Eskom. The minority judgment disagreed with the majority judgment’s position that it suffices for a court to examine the facts that have been pleaded as to the consequences of Eskom’s actions and derive the infringement of rights from those consequences. It found this conclusion to have missed a necessary step in its reasoning, namely, whether Eskom owes a duty to the residents to supply them with the electricity. The failure to assess the contents of the rights of the residents and Eskom’s correlative duties resulted in the unsustainable legal conclusion and reasoning of the majority judgment. As a result, the lower courts and the majority judgment erroneously ascribed municipal constitutional obligations to another organ of state, Eskom.

Second, the minority judgment considered the application of section 7(2) of the Constitution, as posited in the majority judgment. It held that indeed, as an organ of state, Eskom is bound to section 7(2). However, there is no right to electricity in the Bill of Rights. The minority judgment referred to Joseph. The Constitutional Court confirmed that the constitutional duty resting upon a municipality to provide basic services does not derive from the Bill of Rights. It finds its origins in the constitutional duties of the municipalities to provide municipal services. It found the residents’ contention that the supply of electricity is a means to realise other fundamental rights to be unsustainable. According to the minority judgment, a particular means by which a right may be secured does not make that means the content of the right. The state must determine the means by which these rights are progressively realised, not the courts. Ultimately, the minority judgment found that section 7(2) cannot be used to ascribe to a particular organ of state the duties of another state organ. This ignores an entire constitutional scheme that sets out the constitutional obligations of each organ of state. According to the minority judgment, the manner in which the majority judgment uses section 7(2) undermines this constitutional scheme. Furthermore, the majority judgment applies section 7(2) without establishing the residents’ right to be supplied electricity by Eskom. That cannot be done.

The minority judgment also considered the majority judgment’s position that the residents need not show that they have a right to claim from Eskom, the supply of electricity that it has reduced. The minority judgment found this position to be mistaken. According to the minority judgment, the right of the residents to claim electricity from Eskom is not a claim that stands apart from the rights in the Bill of Rights they relied upon. If that claim forms no part of the contents of the rights that the residents invoke, then they have no claim in law deriving from these rights. The minority judgment found the conclusion reached by the majority judgment that the right to life or to dignity not only found a claim to specific state resources but also to such resources as might be required to maintain a certain level of welfare is contrary to Constitutional Court’s decision in Government of the Republic of South Africa v Grootboom.

Third, the minority judgment considered whether the residents had made out a case for procedural fairness. In other words, were Eskom’s reduction decisions procedurally unfair? The minority judgment found that the pleaded case did not support the finding of the majority judgment. The minority judgment found that in the case advanced by the Associations in their account of the residents’ prima facie rights, they made no mention of procedurally fair administrative action. The absence of a properly pleaded case notwithstanding, the majority judgment held that the reduction decisions constitute administrative action. The minority judgment disagreed with this finding. The central question, according to the minority judgment, is this: do the residents have rights to assert against Eskom to restore the supply of electricity that the reduction decisions have reduced? The minority judgment answered this question in the negative because Joseph confirmed that municipal services, such as electricity, find their origins in municipal constitutional obligations. Eskom, which does not fall under the umbrella of local government does not have such a duty. Thus, Eskom had no duty to extend procedural fairness to the residents when taking the reduction decisions.

Fourth, the minority judgment considered the issue of subsidiarity. The minority judgment held that the residents failed to have recourse to the regulatory framework governing electricity supply, in particular ERA. The minority judgment disagreed with the majority judgment that the question of subsidiarity can do no more than cast some doubt on the residents’ prima facie rights. According to the minority judgment, the entire regulatory framework for electricity supply places constitutional obligations on municipalities as the sphere of government responsible for the supply of electricity to its residents. Eskom’s duties are designed to cohere with this scheme. ERA provides the statutory means by which residents may enforce their rights. Therefore, the residents’ recourse under ERA forms part of the regulatory and constitutional design and triggers the application of the principle of subsidiarity. The minority judgment accordingly found that the principle of subsidiarity excluded the claims of the Associations.

The minority judgment also considered the application of section 7(2) of PAJA which concerns the exhaustion of internal remedies before approaching the courts. It found that the residents had failed to make use of the internal remedy provided for in section 30 of ERA (the adjudication of disputes by NERSA). Thus, according to the minority judgment, the residents also failed to exhaust internal remedies. The minority judgment disagreed with the majority judgment’s conclusion that section 7(2) of PAJA plays no role in the determination of applications for interim relief pending a PAJA review. In this respect too, the minority judgment emphasised the relationship between an application for interim relief and the prospects of the applicants in securing final relief. It found that the majority judgment continuously failed to have regard to this. According to the minority judgment, a failure to exhaust section 30 means the court hearing the review will have no power to review the reduction decisions; save for exemption upon a showing of exceptional circumstances. This issue is not answered by saying that the application for interim relief is not the review.

Finally, the minority judgment considered the issue of the balance of convenience. The minority judgment recognised that the harm to human health and well-being suffered by the residents without interim relief may appear greater than the country’s collective interest in the integrity of the national grid. However, it found that this equation failed to take account of the true source of the problem: the municipalities. According to the minority judgment, if replicated, the majority judgment’s findings will require Eskom to discharge of the duties of municipalities all over the country that are in the same position as those in this case. This will ultimately give rise to considerable risk of the national welfare.

In the result, the minority judgment would have granted leave to appeal and upheld the appeal in both applications.

A majority judgment penned by Madlanga J, and concurred in by Mathopo J, Mhlantla J, Theron J and Tshiqi J, held that this matter is less about the residents’ right to a direct supply of electricity by Eskom (which is wrongly the focus of the minority judgment); it is about Eskom’s decision which – to the agreement of even Eskom – was taken without notice to the residents. In short, the majority judgment makes the point that the reduction decision was taken without following a fair procedure, something that is impermissible in terms of PAJA. That decision has had an adverse impact on the residents in that it has resulted in the breach of several of their rights protected by the Bill of Rights: the right to life, the right to dignity, the right of access to water, the right to basic education and the right to an environment that is not harmful to health or well-being. That renders Eskom’s decision reviewable in terms of section 6(2)(c) of PAJA. So, the residents have pleaded a viable case for purposes of the intended review. The only question that remains is whether the residents proved a case for the interim interdict that was granted.

The majority judgment disposed of the notion advanced by the minority judgment that the majority decision will imperil the national grid to the detriment of the general public. The majority judgment disclaimed that it does not hold that the residents are entitled to a continued supply of electricity in quantities that guarantee that the rights they assert are not infringed even in circumstances where Eskom is entitled to terminate or reduce supply in terms of section 21(5) of the ERA. The majority clarified that the extent of its holding is, pending the determination of the proposed PAJA review of Eskom’s exercise of the section 21(5) power, the residents must be afforded interim relief that directs Eskom to restore electricity supply to what it was before the reduction. This observation is crucial, because it cuts across what the minority judgment perceived as an ominous threat of a total collapse if Eskom is not allowed to reduce or terminate supply where that is warranted. The majority judgment declared the threat of collapse a bogeyman which should seen for what it is. It observed that the residents’ case does not stand in the way of warranted section 25(1) reductions or terminations of supply; that reductions or terminations must take place in a manner not susceptible to a PAJA review; and that the majority decision is no bar at all to warranted section 21(5) reductions or terminations. In relying on MEC for Health, Eastern Cape v Kirland Investments, the majority pronounced that Eskom, as an organ of state, bears a higher duty “to respect the law, to fulfil procedural requirements and to tread respectfully when dealing with rights. . . . It must do right, and it must do it properly”.

Madlanga J explained that all that majority judgment says is that Eskom is perfectly entitled to avert any ominous grid collapse that it perceives, but because ours is a constitutional state, Eskom must do so in accordance with the Constitution and the law. It is neither above the law, nor a law unto itself. From where the residents are situated, alleging as they do that Eskom did not give them notice, the substantial reduction came out of nowhere. On their uncontroverted version of the facts, they were denied even the very basic opportunity to make representations to Eskom. The importance of notice and an opportunity to make representations cannot be overemphasised. The opportunity is so important that authority says it must not be denied, even where it is thought the affected person cannot possibly have anything to say or that whatever they may say is not likely to influence the decision.

The majority accepted that where reductions or terminations of supply are warranted, by all means it is open to Eskom to act in terms of section 21(5) of ERA. There will thus be no threat of collapse of the national grid. Of course, Eskom must act in accordance with the law and the Constitution. And that includes compliance with PAJA. If it does not, it must be sure that affected residents will litigate.

Reverting to the question whether the residents have made out a case for the interim interdict, the majority judgment recounted that a litigant seeking an interim interdict must show: a prima facie right even if it is open to some doubt; a reasonable apprehension of irreparable and imminent harm to the right if an interdict is not granted; that the balance of convenience favours the grant of an interim interdict; and that the applicant has no other satisfactory remedy.

Here, the majority concluded that the residents have shown several constitutional rights that were infringed as a result of the reduction decision; and, but for the interim interdict, the infringements would have continued unabated. The deplorable nature of the violations amply demonstrates that the harm suffered by the residents would be irreparable. Ergo, the majority judgment determined that the balance of convenience unquestionably favours the residents; and, accordingly, would have the residents – purely on an interim basis – living lives that are as near as possible to wholesome, than subject them to the current “human catastrophe”. The majority judgment held that the residents have established a prima facie right.

On the majority’s reading of the minority judgment, the minority says there must be a direct correlation between what is sought to be restored through an interim interdict and the right alleged to have been breached; or, in other words, the right alleged to have been breached must be a right to the supply of electricity in order for a restoration of supply to be competent.

The majority judgment reasoned that the minority judgment’s proposition fails to take into account the fact that multiple rights protected in the Bill of Rights can be violated by a single action – with those rights not always being squarely or perfectly correlative or corresponding. The majority said that what informs the need for their vindication is the fact of their violation and, in the present matter, it is the sudden substantial reduction of electricity that resulted in the rights violations. The logical corrective measure to address the rights violations is the reversal of the causative act, namely the restoration of the usual electricity supply.

On the balance of convenience, the minority judgment emphasised the risk of collapse of the national grid. The majority judgment, however, characterised Eskom’s reliance on this risk as nothing but a subterfuge, with the truth being that Eskom did not fear a risk of the grid collapsing if the supply to the two municipalities was not reduced. The majority pointed out that Eskom promised one of the municipalities that it would not effect the reduction if that municipality paid the arrears owed to Eskom, rendering the reduction decision a thinly veiled debt collection mechanism. Thus, the cry about the risk of collapse of the national grid rings hollow in the face of Eskom’s attempt to extract payment on pain of effecting a reduction in the electricity supply.

The residents’ evidence was also to the effect that there was no other satisfactory remedy. The High Court accepted this, and so did the Supreme Court of Appeal. The majority concluded that there is no appeal against that holding.

Therefore, on the majority’s holding, the residents have satisfied all the requirements for an interim interdict and the appeal fails.”