City of Tshwane Metropolitan Municipality v Glofurn (Pty) Ltd

The dispute arose from the City of Tshwane's migration of Glofurn's electricity account from a post-paid system (account number 2059776379) to a pre-paid system (account number 5017747050) effective 1 March 2022. Although the City closed the old account and notified Glofurn via email, Glofurn did not receive invoices and continued making payments to the old account, which by June 2022 was in credit by R400,000. Meanwhile, the City issued invoices on the new account starting 29 June 2022, claiming Glofurn was in arrears for R766,457.81. Glofurn disputed this debt and the existence of the new account, denying it had opened or applied for the account. Glofurn lodged a formal dispute in terms of s 102(2) of the Local Government: Municipal Systems Act 32 of 2000, read with s 95(f). The City threatened to disconnect Glofurn's electricity supply, prompting Glofurn to launch an urgent application for an interdict to prevent disconnection pending resolution of the dispute.

• Whether the City was entitled to implement credit control measures against Glofurn while a dispute remained unresolved under s 102(2) of the Systems Act
• Whether Glofurn's dispute had been properly resolved by the City as required by its Credit Control and Debt Management Policy
• Whether the high court correctly found that the City's Credit Control and Debt Management Policy was unenforceable in the absence of promulgation into By-laws as required by s 98(1) of the Systems Act
• Whether Glofurn satisfied the requirements for an interdict
• Whether it was permissible for the high court to pronounce on the enforceability of the municipal policy without a formal review application

The appeal was dismissed with costs, including costs of two counsel where so employed. The interim interdict granted by the high court preventing the City from disconnecting Glofurn's electricity supply pending resolution of the dispute was upheld.

The binding legal principles established are: (1) Section 102(2) of the Local Government: Municipal Systems Act 32 of 2000 precludes municipalities from implementing debt collection and credit control measures where a dispute exists between the municipality and a consumer concerning any specific amount claimed. (2) A dispute lodged under s 102(2) remains unresolved until the municipality has properly investigated it in accordance with its policy requirements and the consumer has been afforded the opportunity to exercise any appeal rights provided for in the policy. (3) Where a municipal policy provides for an appeal mechanism, a decision cannot be considered final until the appeal period has expired or any appeal lodged has been determined. (4) A municipality's failure to properly investigate a dispute or afford a consumer the opportunity to appeal constitutes a failure to resolve the dispute for purposes of s 102(2). (5) The requirements for an interdict in the context of municipal service disconnection are satisfied where: (a) the consumer has lodged a proper dispute; (b) the dispute remains unresolved; and (c) the municipality threatens to disconnect services in contravention of s 102(2). (6) An appellate court will not interfere with the exercise of discretion by a lower court in granting or refusing an interdict unless the lower court failed to exercise its discretion judicially, was influenced by wrong principles or misdirection on the facts, or reached a decision which could not reasonably have been made by a court properly directing itself to all relevant facts and principles.

The majority judgment included obiter comments that the City's Credit Control and Debt Management Policy had not been promulgated into By-laws as required by s 98(1) of the Systems Act and was therefore unenforceable. However, the majority clarified that these comments were obiter and not legally binding, as the order granted was silent on the status of the policy and merely granted interdictory relief. Tolmay AJA's concurring judgment provided more extensive obiter observations on procedural matters: (1) It was improper for the high court to allow the issue of validity and enforceability of the municipal policy to be raised for the first time in supplementary heads of argument without this issue being raised in the affidavits. This approach is contrary to the principle in Fischer v Ramahlele that parties must define the nature of their case in pleadings or affidavits. (2) Challenges to the validity of municipal policies constitute administrative action as defined in s 1 of PAJA and should be brought through proper review proceedings under s 6 of PAJA, not raised as a point of law in interdict proceedings. (3) Allowing such issues to be raised without proper review proceedings prejudices the municipality by denying it the opportunity to address the implications and to file a proper record, and prevents the court from granting a just and equitable remedy under s 172 of the Constitution and s 8 of PAJA. (4) The Oudekraal principle (as confirmed in Kirland and Merafong) that administrative decisions remain valid and have legal effect based on their factual existence until set aside by a competent court should apply to municipal policies. The minority approach in Tasima suggesting that invalid administrative acts have no legal effect was not adopted by the Constitutional Court majority. (5) The enforceability of a municipal policy may not be pronounced upon before the matter is taken on review and set aside in proper review proceedings.

This case is significant in South African jurisprudence for several reasons: (1) It clarifies the application of s 102(2) of the Local Government: Municipal Systems Act 32 of 2000, confirming that municipalities are precluded from implementing debt collection and credit control measures where an unresolved dispute exists with a consumer. (2) It emphasizes that municipalities must properly investigate disputes lodged by consumers in accordance with their own policies and that consumers have a right to appeal decisions, which must be respected before disputes can be considered resolved. (3) It addresses the tension between the Oudekraal principle (that administrative decisions remain valid until set aside by a competent court) and situations where policies have not been properly promulgated into By-laws as required by enabling legislation. (4) It reinforces the importance of procedural fairness in municipal debt collection processes and the protection of consumers' rights to electricity as a basic municipal service. (5) The case illustrates proper judicial restraint in interdictory proceedings versus review proceedings, particularly Tolmay AJA's concurring judgment which cautions against allowing validity challenges to be raised for the first time in supplementary heads without proper review proceedings under PAJA. (6) It confirms that electricity supply is a basic municipal service that should not be arbitrarily disconnected without proper dispute resolution processes being followed.