Tshwane must reconnect electricity to sectional title units at Zambezi Retail Park

The Supreme Court of Appeal (SCA) has effectively ordered the City of Tshwane to reconnect the electricity supply to the owner of six units in a sectional title scheme at Zambezi Retail Park in Pretoria.

A portion of the shopping centre, now called Tshwane China Shopping Mall, was developed by Capicol (Pty) Ltd – since renamed Thumos Properties (Pty) Ltd – and marketed and promoted by Sharemax as a property syndication scheme.

However, it is unclear if the six sectional title units were part of this property syndication.

The SCA judgment relates to an appeal by the City of Tshwane against an interim order obtained by Vresthena (Pty) Ltd, which owns the six units and leases them to different businesses.

Also listed as respondents in the case were the body corporate of the mall, Thumos Properties, Zambezi Retail Park Investments (Pty) Ltd and ZRJ Properties (Pty) Ltd.

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The SCA heard that the six properties share a single electricity supply point, with the city providing electricity to them through the body corporate.

However, the SCA said the body corporate has been dysfunctional from its inception and the municipality on 28 March 2022 issued disconnection notices to the tenants and occupiers of the scheme.

It said these notices were given because the tenants and occupiers had failed to pay for electricity and other services, resulting in the electricity and water services being disconnected on 13 April 2022.

Vresthena filed an urgent application requesting the Pretoria High Court to compel the municipality to accept and review its application for a separate electricity connection for the tenants and was seeking an order to restore its electricity and water supply.

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Interim order

The high court on 16 June 2022 granted an interim order on an urgent basis ordering the municipality to restore electricity and water supply to the property within 14 days and, if the municipality failed to comply with the order, authorising Vresthena to instruct an electrician to reconnect the electricity supply.

The municipality on 6 July 2022 filed an application for leave to appeal, with Vresthena on 23 August 2022 filing an application under Section 18(3) of the Superior Courts Act 10 of 2013 seeking a declaratory order stating that the order issued by the high court on 16 June 2022 should not be suspended while the municipality’s application for leave to appeal is being considered.

The high court on 28 September 2022 granted the municipality leave to appeal the judgment and also ordered that the order given on 16 June 2022 should be put into effect and carried out while the appeal decision is pending.

The municipality then exercised its automatic right of appeal under Section 18(4) of the act by filing an appeal to the full court of the high court against the execution order.

A full bench on 10 November 2022 rejected the municipality’s appeal and issued an order allowing the main order to be implemented while the appeal decision was pending.

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‘Next highest court’

The municipality on 22 November 2022 filed a notice of appeal in the SCA, claiming that the phrase ‘next highest court’ in Section 18(4) of the act should be interpreted to include more than one court of appeal.

However, Vresthena claimed that Section 18(4) allows for only one appeal to the court immediately above the lower court and the municipality’s notice of appeal is therefore irregular and, as a result, void.

SCA Judge Keoagile Matojane said Section 18(4) of the act serves as a protective measure to prevent irreversible harm caused by a court granting an execution order inappropriately and the court is required to immediately document its reasons for such a decision.

He said the party affected by the order has an automatic right to appeal, unlike the usual situation where leave to appeal is required, and the appeal against the execution order is an inherent right, and the party who obtained the order cannot object to it.

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“If they want to uphold the execution order, they must contest the appeal,” said Judge Matojane.

“In an instance where they want to avoid the suspension of the execution order and potential harm, their recourse is to approach the head of the court overseeing the appeal and take all necessary steps to expedite an urgent hearing, as provided by this section.”

Judge Matojane said the municipality argues that the automatic right of appeal should be interpreted in a less restrictive manner and claimed that limiting litigants to only one right of appeal would result in an interpretation that goes against the Constitution and constitutional rights.

He said the municipality further claimed that such a restriction would lead to injustices.

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‘Extraordinary avenue’ for ‘exceptional circumstances’

Judge Matojane said the municipality was essentially suggesting that allowing multiple appeals is necessary to ensure fairness and protect the constitutional rights of aggrieved litigants.

He added that Section 18(4) of the act establishes a distinct provision that establishes a unique category of appeals, specifically designed to be utilised solely for orders made under Section 18(3) of the act.

He said this provision carves out a specific and extraordinary avenue for appeals in exceptional circumstances, especially when it can be proved that irreparable harm would follow if the operation and execution of a decision is suspended.

Judge Matojane said the provision enhances access to court on appeal by guaranteeing one automatic appeal, bypassing the typical screening process outlined in the general provisions of sub section 16 and 17 of the act.

Judge Matojane said the purpose of this sub section is to streamline and facilitate access to courts for these specific appeals, providing a more efficient and expedited avenue for seeking redress without infringing the Section 34 Constitutional right of access to courts.

The municipality claimed the fundamental right to access to courts in Section 34 of the Constitution entails an automatic right of access to all appeal courts.

Judge Matojane ruled that the notice of appeal dated 22 November 2022 delivered by the municipality is irregular and void and no proper appeal has been served before the SCA.

He issued an order striking that matter from the roll, with costs.

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Historical context

The board of the Sharemax Zambezi Retail Park syndication in July 2011 concluded an agreement with Capicol, now called Thumos Properties, to acquire ownership of the Zambezi Retail Park mall.

However, Thumos Properties subsequently alleged that Sharemax failed to fulfil certain suspensive conditions of this agreement.

A judgment of the Pretoria High Court in January 2020 confirmed that the suspensive conditions contained in the sale of business amendment agreement signed on 5 July 2011 were not fulfilled.

It is believed that this matter is still in dispute and subject to litigation.

Prior to the sale of business agreement, an arbitration ruled that Sharemax Investments owed Capicol R64.5 million in relation to the development of Zambezi Retail Park.

About 18 600 investors collectively invested R4.6 billion of their savings and pensions in Sharemax’s various schemes.

Sharemax collapsed in 2010 after the findings of a Registrar of Banks investigation – that Sharemax’s funding model contravened the Bank Act – became public knowledge.

This led to new investments drying up and Sharemax being unable to make monthly payments to investors.

Nova Property Group, a rescue vehicle born out of a scheme of arrangement, now owns all the properties syndicated by Sharemax, which resulted in the investors being offered either shares or debentures.

This article originally appeared on Moneyweb and was republished with permission.
Read the original article here.