Utility disconnection powerful tools for bodies corporate, landlords

MAIN IMAGE: Cilna Steyn SSLR Incorporated

Cilna Steyn

Lion Ridge Body Corporate vs Philanthea Alexander, Maropeng Valencia Morata, Mulalo Terrance Mukona and Cindy Sindiswe Makhanya

Since 2015, many bodies corporate were successful with Utility Disconnection Applications (UDA) in various High Courts in South Africa where these applications were brought as a last resort for the body corporate to mitigate their damages, in the instance of an owner not paying for the utility consumption in their unit.

These orders followed a decision in the South Gauteng High Court in which the body corporate approached the court for a utility disconnection order where the owner failed to pay the utilities and were demanded to pay the arrear utilities as well as future utilities as it became due and owing.

Only in the event of the respondent failing to make the payments, did the court order the disconnection of both water and electricity supply to the premises. In the years following this court order, the application of these orders turned into a misconstrued attempt of not just optimise utility collections but started to include utility disconnection applications to collect arrear rental and levy payments.

In one of the first utility disconnection applications in South Africa, (Anva Properties Cc v End Street Entertainment Enterprises CC (22109/2014)[2015])  it’s clear that the Western High Court only allowed this order for utility disconnection, in a situation where the landlord was unable to bring an eviction application because of legal limitations at the time. It was never the intention of the courts to allow such orders to strong arm a non-paying tenant or owner.

UDAs are extremely powerful legal remedies in the hands of bodies corporate, landlords or property owners, to mitigate damages and losses which they would suffer if they were required to pay for utility utilisation on the premises, without being paid by the occupant for such consumption.

What added to the incorrect application of these remedies was a misinterpretation and application after the watershed case of Eskom Holdings Soc Limited v Masinda 2019 (5) SA 386 (SCA) in which the Supreme Court of Appeal held that utilities supply cannot be seen as incidental to position of a property as the case was after the incorrect application of the Judge’s statement in the matter of Telkom SA Ltd v Xsinet (Pty) Ltd 2003 (5) SA 309 (SCA).

The confusion in the industry arose because the court held that the mandament van spolie was in fact not the appropriate remedy in matters in which the owner disconnected utility supply to the premises. An incorrect conclusion was drawn and shared through the property industry that parties to a lease agreement, or for that matter, members of a body corporate, may agree that in certain circumstances and on certain actions or omissions from one party, the other party would be allowed to disconnect utility supply to the premises without a court order.

The true legal effect of these judgments is that the courts agree that utility supply to a premises is not incidental to occupation, meaning that an occupant of a premises cannot assume that they will be provided with water and electricity, but rather that the supply of utilities to a premises must be dealt with by agreement between the parties. In such agreement the parties must agree to the counter performance by the occupant to enjoy the provision of these utilities. Should the owner of the property then fail to provide the utilities to the premises, the occupant would then not be successful in utilising the remedy of the mandament van spolie to reinstate the supply but should then approach a court to enforce the remedy of specific performance, in terms of the agreement.

It is paramount to appreciate that an application for specific performance can only be successful where the applicant in such an application can prove that they themselves have performed in terms of the agreement, or tender performance in terms of the agreement. It is then logical to infer that in the case of utility supply to a premises, the tenant, or for that matter, owner in a section title complex who are only entitled to utility supply to the premises, based on the contractual agreement between the parties, and would only be successful with a specific performance application, forcing the owner to provide utilities to the premises, in a case where the occupant did in fact perform by paying for the utility consumption at the premises.

In a recent case the court dismissed an application for utility disconnection to three owners in the same sectional title scheme because the body corporate requested the court to order utility disconnection to these owners to collect arrear levy payments. In this application, the applicant unfortunately combined the levies and utilities, which is problematic. The judge held that nowhere in the conduct rules did the parties agree to this method of collection and that a court can never enforce such a drastic, nearly unrelated, measure if the parties did not agree to such in their conduct rules. It is important to understand that the court did not dismiss an application for utility disconnection, where the basis for the disconnection was exclusively, or clearly distinguishable non-payment of utilities, this application centres around collection of arrear levies, which include utilities.

To distinguish between a body corporate or a landlord’s mitigation of damages and a drastic collection method is of paramount importance. This is even more so in a context of residential properties, even though many courts confirmed that utility supply cannot be seen as incident to occupation, it is still a very important element of occupation. The dismissal of the case for Lion Ridge Body Corporate confirms the position that utility disconnection can never be utilise as a method of arrear utility or rental collection. It confirms the position that on agreement the parties may enforce even such drastic collection methods. It reiterates the importance of a clear distinction between levy- and utility charges.

Utility disconnections can never be done without a court order, but when utilise correctly, and in a correct context, are powerful tools in the hands of bodies corporate and landlords alike.

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