Johannesburg - Municipalities may not cut off power to tenants with utility accounts in their own names to force landlords to pay outstanding rates bills.
This was the ruling handed down by the high court in Johannesburg after hearing an appeal in a dispute between the Ekurhuleni Metropolitan Municipality and a company, Anzotrax, which trades as Topbet Germiston.
The court was so annoyed by the metro’s litigation that it awarded a punitive costs order against it.
Anzotrax, a betting company, is renting space in Germiston from a property company called Robfair.
The landlord, Robfair, had rates arrears of R300 000 but claimed this bill was in dispute.
The tenant, Anzotrax, had opened its own electricity account with the municipality in 2012, which was fully paid up.
However, in December 2013, Ekurhuleni disconnected the electricity because of the landlord’s rates arrears.
Anzotrax then paid the municipality six instalments of R32 000 on Robfair’s rates bill to get the electricity restored. Anzotrax deducted these amounts from the rent, which the landlord objected to, claiming it would prejudice his court case in his rates dispute.
So Anzotrax stopped paying Robfair’s bill and the municipality again cut the electricity to Anzotrax.
In April last year, Anzotrax applied for two urgent applications asking the municipality to reconnect the electricity, and restraining the municipality from cutting the electricity supply again unless Anzotrax’s own account was in arrears.
The municipality opposed the applications but lost.
Ekurhuleni then appealed the decision in the high court in Johannesburg.
The municipality claimed that it was allowed to disconnect in accordance with its credit and debit control policies, which allowed it to consolidate separate accounts on the basis of the owner and tenant being jointly and severally liable for payment of all debts owing in respect of the property.
The judges felt this could “lead to manifest absurdities and could never have been the intention of the lawgivers”.
The judges found there was “no legal basis of any nature or kind” for holding an owner or landlord and a tenant jointly and severally liable in regard to the owner’s rates and taxes.
They also found that while the municipality could consolidate the different accounts of a single person, it could not consolidate accounts of any number of people who were liable for payment to it.
The judges found the Ekurhuleni metro unfairly discriminated against the tenant.
“The ensuing litigation became unduly protracted and the municipality’s persistence with the appeal was ill-considered and irresponsible… Spurious arguments on its behalf proposing an unsustainable interpretation were advanced and persisted with in this court,” the judges said.
A punitive costs order was imposed on Ekurhuleni as an appropriate sanction, “as a mark of the court’s disapproval of such conduct”.
An attorney acting for the tenants, Nicola Ross, said this was a fair victory.
“We are happy that the court found that municipalities cannot consolidate random consumer accounts,” she said.
“The two accounts were totally unrelated. The tenants cannot be held to ransom for the landlord’s outstanding arrears on another separate account.”