In Sonae Arauco (SA) Pty Ltd v Mbombela Local Municipality and Others, the full bench of the Mbombela High Court heard an urgent appeal in terms of section 18(4)(ii) of the Superior Courts Act ("the Act") against an execution order that was granted by Roelofse AJ in the court a quo on 3 September 2023. The applicant, Sonae Arauco (SA) Pty Ltd ("Sonae"), alleged that it had concluded an electricity curtailment agreement with the Mbombela Municipality, whereby the Municipality would not load-shed the area within which Sonae was situated.
The execution order followed an urgent application on 16 August 2023, wherein the appellant ("Eskom") and the Mbombela Municipality, the second respondent, were restrained and interdicted from implementing load-shedding in the area where Sonae's factory is situated. However, the Mbombela Municipality denied the existence of the curtailment agreement, and Eskom further argued that the requirements to enter into a curtailment agreement had not been met by Sonae. Therefore since the proper process had not been followed, the exclusion from load-shedding of the area within which Sonae is situated placed the national grid at risk.
After the urgent interim interdict was granted by the court a quo against Eskom and the Municipality, Eskom applied for leave to appeal and contended that it did not have to adhere to the urgent interim interdict while the application for leave to appeal and any subsequent appeal were pending. Consequently, Sonae filed a section 18 application seeking that the court a quo's urgent interim order was, despite the application for leave to appeal, immediately executable. After hearing the applications for leave to appeal as well as Sonae's section 18 application, the court a quo granted Eskom leave to appeal to the Supreme Court of Appeal and granted Sonae's section 18 application. Eskom then exercised its automatic right of appeal against the section 18 order, which resulted in the appeal to the full bench.
At the appeal hearing against the section 18 order, the full bench noted that Eskom had raised various grounds of appeal but requested that all parties' counsel focus on one specific ground of appeal, as this was dispositive of the appeal as a whole. The ground of appeal in question was that the court a quo applied the wrong test in granting the section 18 application and quoted the court a quo's judgment as follows, "to weigh in the basket of irreparable harm, the harm that was clearly demonstrated by the applicant. In my view, the likely or unlikely total collapse of the grid, which is no manner at this moment in time sustained or established, is far less in weight than the irreparable harm that is staring the factory directly in its face".
The full bench thereafter referred to section 18 of the Act, which provides that:
"18. Suspension of decision pending appeal.-
(1) Subject to subsections (2) and (3), and unless the court under exceptional circumstances orders otherwise, the operation and execution of a decision which is the subject of an application for leave to appeal or of an appeal, is suspended pending the decision of the application or appeal.
(2) Subject to subsection (3), unless the court under exceptional circumstances orders otherwise, the operation and execution of a decision that is an interlocutory order not having the effect of a final judgment, which is the subject of an application for leave to appeal or of an appeal, is not suspended pending the decision of the application or appeal;
(3) A court may only order otherwise as contemplated in subsection (1) or (2), if the party who applied to the court to order otherwise, in addition, proves on a balance of probabilities that he or she will suffer irreparable harm if the court does not so order and that the other party will not suffer irreparable harm if the court so orders.
(4) If a court orders otherwise, as contemplated in subsection (1)- (i) the court must immediately record its reasons for doing so; (ii) the aggrieved party has an automatic right of appeal to the next highest court; (iii) the court hearing such an appeal must deal with it as a matter of extreme urgency; and (iv) such order will be automatically suspended, pending the outcome of such appeal."
The full bench remarked that the law was settled as far as these requirements were concerned and further explained that the applicant must prove on a balance of probabilities that exceptional circumstances exist, that it will suffer irreparable harm, and that the other party will not suffer irreparable harm. They also explained that the disjunctive nature of the three requirements is such that failure to prove one is fatal to an applicant seeking relief under section 18.
The full bench aligned itself with the judgment of Wallis JA in KGA Life v Multisure, which stated that "section 18(3) requires the applicant for an execution order to establish that the respondent will not suffer irreparable harm if the order is granted. The judgment in UFS v Afriforum indicates that the requirements of irreparable harm to the applicant and no irreparable harm to the respondent, unlike the common-law position, do not involve a balancing exercise between the two but must both be established on a balance of probabilities. If the applicant cannot show that the respondent will not suffer irreparable harm by the granting of the execution order, that is fatal. It is unnecessary to decide whether in those circumstances the court would be empowered to grant other relief pending the hearing of the appeal in order to protect the applicant's position".
Considering KGA Life v Multisure, where an applicant bringing a section 18 application failed to establish any of the requirements, a court did not have to go further and consider whether it was empowered to grant relief pending the hearing of the appeal. In considering the first requirement, the full bench noted that Sonae had submitted that the circumstances were sufficiently exceptional to justify execution because:
- Its factory uses machinery that poses a safety risk to itself,
- Its employee's lives and
- The financial consequences to the surrounding community if it is load-shed.
Eskom, in response, argued that Sonae had previously been load-shed in 2020, in December 2022, and in June and July 2023. Therefore load-shedding in the area where Sonae fell was not a truly exceptional circumstance justifying execution.
The full bench agreed with Eskom's argument, stating that "it is a well-known fact that most, if not all, the people and businesses in South Africa are being load-shed". Accordingly, it found that the court a quo was incorrect in its finding that there were exceptional circumstances justifying the order.
Considering the second and third requirements, the full bench stated that it was trite in law that the provisions do not permit a court to weigh the respective interests of the parties and make an assessment in terms of where the balance of convenience lies. Instead, these two requirements are disjunctive in that the applicant must prove each of the two requirements. Furthermore, it was clear that the court a quo had applied a test that was entirely at odds with the aforementioned trite principles which was evident it labouring under the misapprehension that Eskom had to prove that it would suffer irreparable harm if the order was executed.
The full bench explained that Eskom in respect of the section 18 test, bore no such onus. Instead, it was Sonae who was required to establish that Eskom would not suffer irreparable harm if the order was executed. They further noted that the court a quo acted in error in applying a balancing test when it analysed the two requirements with regard to the element of irreparable harm of the two parties. According to the full bench, the need to balance the two harms was misplaced, flawed and could not be sustained.
In closing, the full bench noted that despite Eskom's submissions that the execution order increases the risk of a blackout, the court a quo rejected Eskom's version on the basis that no evidence of whatsoever nature had been provided to demonstrate the risk to the grid. This was despite Eskom delivering a confirmatory affidavit from Mr Nkosinathi Dlamini, its Technical Manager: Network Optimisation, who had specific expertise in load-shedding and provided a report that showed that if Sonae was not load-shed, it would be compromising the performance of the network and putting the grid at risk. This, again, was a misdirection by the court a quo.
Consequently, the full bench found that the court a quo had applied the incorrect test and further failed to properly consider Eskom's submissions; thus, the appeal was upheld in Eskom's favour with costs.
Parties who institute a section 18 application must ensure that they have sufficient evidence to show that their circumstances are indeed exceptional, that the other party will not suffer harm and also show the harm that they will suffer if the order is not granted in their favour. The respondent is not required to prove the harm it will suffer if the applicant fails to do so.
ENS acted for Eskom in this matter.
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