CIV/T/379/96 IN THE HIGH COURT OF LESOTHO
LESOTHO ELECTRICITY CORPORATION PLAINTIFF
AND
LESOTHO HOTELS INTERNATIONAL (PTY) LTD DEFENDANT
JUDGMENT
Delivered by the Honourable Mrs Justice K.J. Guni on the 25th day of May 1999
Plaintiff has been supplying electricity to defendant at VICTORIA HOTEL COMPLEX where such electric power so supplied by plaintiff is being consumed since around about August 1982. Demands for payment or bills for electricity consumed by defendant were sent by plaintiff and for a period of two to three years such bills were satisfactorily fully paid up.
Plaintiff is LESOTHO ELECTRICITY CORPORATION, created by and
operates under the Lesotho Electricity Corporation Act No.7 of 1969. The
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primary function of this Corporation is to generate, transmit, distribute and supply electricity and perform any other ancillary functions connected and/or related to its main functions. Defendant is LESOTHO HOTELS INTERNATIONAL (PTY) LTD. A company duly incorporated in terms of the Company Laws of Lesotho. It carries on the Hotel Business at VICTORIA HOTEL COMPLEX at Kingsway, Maseru. It is at these premises where Plaintiff supplies Defendant with electric power there consumed.
Correspondence between the parties shows this Court that Defendant experienced some financial problems as a result of which it became increasingly difficult for it to meet its financial commitments. Round about 1988 its financial state of affairs deteriorated to such an extent that Defendant was placed under judicial management. Only part-payments of the electricity bills rendered by Plaintiff to Defendant were made. Undertakings to pay fully the outstanding bills were also made during that period. The dispute which had been simmering, from as early as 1984 - regarding the exact amount of electricity for which Defendant is liable came to the surface. In the letter (at page 22 of EXHIBIT B bundle - produced by agreement by the parties) it is claimed that the tenants listed in that letter receive their electricity through the one and the same meter as the Hotel. Defendant was
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in that letter requesting Plaintiff to arrange to instal separate meters for the electricity supplied to those other tenants. It was pointed out to Plaintiff subsequently in a letter (at page 23 of EXHIBIT B bundle) that the LESOTHO TOURIST BOARD offices situated on Kingsway receives its electricity supply through the same meter as the Hotel. It was emphasized that the said state of affairs had been going on for the previous five years. It was expressly stated on behalf of Defendant in that letter that the hotel pays electricity for boiling the water for the following:-
Tangles Hair Salon
Kingsway Cinema
S.P. Pharmacy
Lesotho Airways Reservation Office
Sharp Stationers
Molly's shoe Shop
Blues Boutique
The outstanding balance on the electricity account of the Defendant to Plaintiff in the late eighties was a cause for concern to the parties. It was felt on behalf of the hotel that if these other tenants paid for their consumption of electricity Defendant would
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be in a position to manage payment for its own consumption. Defendant expected its electricity bill to be reduced substantially by installation of separate meters for supplying those other tenants. Were these expectations founded and reasonable in the circumstances of this case? Evidence will give a clear answer to this question.
The Managing Director of LESOTHO ELECTRICITY CORPORATION, one Mr E.R. MAPETLA in his letter (at page 25 - Bundle - EXHIBIT B) in reply to the letter written on behalf of Defendant (at page 23 - Bundle - EXHIBIT B) pointed out that only the LESOTHO TOURIST BOARD offices on Kingsway receive electricity through the same meter as the hotel. All others had their own separate meters. Was Defendant unaware that this was the position? The case is still open for Defendant to show that this was not the position as stated on behalf of Plaintiff. But so far there has been no evidence to show this Court that Defendant was paying electricity for those tenants for which it is not liable - with the exception of the tourist Board at some stage because presently it is no longer the position.
Discussions and negotiations went on between the parties for sometime - while they tried to find the ways and means of settling the apparent dispute. There was no settlement. As the dispute went on, so did the Defendant's consumption of
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electric power supplied by Plaintiff. The arrears continued to built up to an unacceptable amounts. Defendants at some stage paid how much it wanted, when it felt like doing so. Defendant had more excuses to support the refused to pay for its consumption of electricity supplied by Plaintiff. It would appear that at some stage Defendant claimed that the street lights and robots controlling traffic at Kingsway were energized from the same source and through the same meter as the hotel. So far the evidence led on behalf of Plaintiff showed this Court that the street lights and those robots are energized from the pillar boxes found there at Kingsway. The investigations conducted by an expert witness - one Dr Botha, did not disclose any connection between their meters, at any stage in the life of the street lighting and robots and also the hotel. Plaintiff supplied electricity for street lighting and robots separately and from the different source.
At the time this trial was going on, which is approximately six months ago, the electricity consumption of Defendant was valued at well over three million maloti. At the close of Plaintiff's case, by an agreement between the parties, the special and an Amended Plea was filed on behalf of Defendant. It is pleaded that the Plaintiff's claim is based on the supply of electricity in terms of and in accordance with the provisions of ELECTRICITY ACT NO.7 of 1969 and electricity Regulations 1970. (Here after referred to as the Act and the Regulations). Plaintiff has not alleged
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the conclusion of a written agreement with the Defendant, nor consequently pleaded the identity of the representatives concluding the same, or the time and place of conclusion thereof or the terms thereof.
In this special and amended plea, Defendant relies on the provisions of Section 9. Electricity Regulations 1970 which provides thus:-
" No person shall use a supply of electricity from the mains unless or until he shall have entered into a written agreement with the corporation for such supply. The agreement shall be in terms of Form 1 as annexed to these regulations. (My underlining).
These regulation were made by the Minister in terms of Section 46 (1) of the Electricity Act for the sole purpose of carrying into effect the provisions, purposes and principles of the said act. It is argued on behalf of the Defendant that the consumer such as this Defendant may only be supplied with electricity pursuant to the conclusion of a written agreement between the Plaintiff and the consumer. There is no other way except as provided for by the Act and Regulations. There is no written agreement between the Plaintiff and the Defendant for the supply of the electricity which is consumed by Defendant. Defendant is therefore in terms of the above proviso:- "a person using a supply from the mains without having entered into a written agreement." An application for supply of electricity was
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made by the Judicial Manager of Defendant. That is no more than what it is, the mere application. No conclusion of a written agreement between the parties is alleged on behalf of Plaintiff. Plaintiff's claim is based on the supply of electricity to Defendant in terms of and in accordance with the provisions of the ELECTRICITY ACT NO.7 of 1969 and the Electricity Regulations 1970.
In terms of section 20 (1) Electricity Act 1969, Plaintiff is obliged and entitled to supply electric power to the occupier of any premises. The relevant portion of this section reads as follows:-
"20 (1) subject to the provisions of this Act, the corporation, on being requested to do so by the owner or occupier of any premises, shall within a reasonable time make and continue to make a supply of electricity available to those premises." (My under lining)
A request or application for supply of electricity was made to Plaintiff on behalf of the Defendant hotel. It is not denied that such a request for supply of electricity by Plaintiff was made on behalf of the hotel even although an initial application which was made prior to defendant being placed under judicial management was not readily available. It would appear that it was on the basis of this special request by Defendant that Plaintiff acted in accordance with the provisions of section 20(1)
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of the Act by supplying and continuing to supply Defendant with electricity. Defendant does not deny that electricity is being supplied to it by Plaintiff. This Defendants admits that it is a consumer of electricity (as shown in its plea at paragraph 3.2- page 17 of the Pleadings). The word "consumer" is defined in Part 1, section 2 of the ELECTRICITY ACT 1969. It means a person supplied or entitled to be supplied with electricity by the corporation, the Plaintiff in this matter. It is denied on behalf of the defendant hotel that plaintiff is supplying electricity in accordance with the Act and Regulations. The fact that plaintiff is supplying defendant with electricity is not denied. The denial is directed at the manner in which the supply was being metered. It is described as not being in terms of proper system provided by the Act and Regulations. (Paragraph 4 Plea at page 18 of the pleadings).
Having established an understanding between the parties that the Plaintiff will continue to supply the Defendant with the electricity consumed by the said Defendant at its hotel, the Defendant made further admission (in its plea at paragraph 3.3 - page 18) that it is obliged to pay to the Plaintiff the price for electricity consumed by it. Plaintiff continued to make electric power available to this Defendant hotel at its premises on Kingsway Maseru, sincerely believing and correctly so, that this Defendant will honour its obligations to pay, as expected of
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such a consumer, the price of electricity consumed by it as admitted in the plea.
At paragraph 5 of the Plaintiff's declaration or particulars of its claim, it is made clear that in terms of the Act and /or regulations the Defendant is obliged to make payment for the full value of electricity consumed by it in a particular period upon receipt of a statement of account by the Plaintiff, reflecting the amount due in respect of such period. In its plea (page 18 of the pleadings) at paragraph 4, admission is made on behalf of the Defendant with regard to the references to the regulations. The Defendant's problem appears up until this stage, to be with regard to the proprietary and/or accuracy of the metering system. The liability to pay for electricity consumed by the Defendant hotel is not totally and completely denied. It seems to me, that once the problem of metering system is resolved the way to determine the amount of money to be paid for the electricity consumed by the Defendant will be found. The evidence led so far by Plaintiff was to establish first of all that defendant is liable to pay for its consumption of electricity supplied to it by plaintiff. In the second place, plaintiff endeavoured to show this court the extent of such liability. The validity or invalidity of the agreement or arrangement between the parties does not arise. Laing v The Caledon Municipality (19C.T.R599). The type or form of the arrangement under which the defendant hotel is being supplied with electricity by plaintiff, cannot be
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used as an excuse for refusal by the defendant to honour its commitment under the same arrangement.
The failure to have a written Agreement as required by the Act, may just have been a slip up, mishap, an oversight and/or negligence. For many years defendant's conduct induced plaintiff to continue to supply it with electricity on the understanding that defendant is obliged and wilting to pay for its consumption of electricity so supplied to it by plaintiff
Defendant relies, in his special plea on the nature of Plaintiff Plaintiff is a creature of statute and only has those powers and capacities as set out in the relevant Act and Regulations. Defendant admits that Plaintiff supplied and still, is supplying electricity to it. Defendant admits that it is a consumer of electricity supplied to it by Plaintiff. Defendant admits further that it is obliged to pay to Plaintiff the value and/or price of the electricity it consumes. This chain of admissions made by Defendant deliberately or inadvertently, is a clear indication that there was an understanding between these two parties that Plaintiff will supply Defendant with electric power and that Defendant will pay as indeed, Defendant paid for sometime at the beginning of their relationship. Plaintiff led evidence to prove the extent of the Defendant's liability. It was after such evidence that a special plea was filed.
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It is on the basis of that special and Amended plea that an application for absolution from the instance was made.
Section 9 of Electricity Regulations 1970 prohibits the use of the supply of electricity without a written agreement by the user. Defendant admittedly is deliberately breaking the law. It has been using the supply of electricity without a written agreement between it and Plaintiff. The fact that Defendant is breaking the law by using the supply of electricity without a written agreement does not absolve Defendant from liability which results from such unlawful use. Plaintiff's claim is based on the portions of the Act and Regulations which authorise the supplying of electricity. It is not based on the unlawful use although - thieving also may result in some kind of liability once the thief is caught and brought to book. This is not the case here. It was also argued that Plaintiff's claim is not based on unjust enrichment, therefore the court is not entitled even to look at that aspect. I do appreciate all these sentiments herein expressed. But the issue raised by special and Amended plea is whether or not plaintiff can legally make arrangement other than the one specified in the regulations?
The prohibition for the use of supply of electricity without a written agreement, is mainly the protection of the Plaintiff. The form which is prescribed in the
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Regulations, is essentially for the identification of the premises where the supply must be availed and the particulars of the consumer who must be bound to pay for such consumption. I share the sentiments which led to the conclusion that the agreement referred to in section 9 Electricity Regulations 1970, is not a prerequisite for the creation of a binding relationship between the consumer and the supplier. There is a relationship between this Plaintiff and Defendant, it can be called tacit or implied agreement. Plaintiff is the supplier of electricity, Defendant is the consumer of the electricity so supplied by Plaintiff Defendant does not show the slightest inclination to terminate this relationship, Defendant persists in enjoying the benefit of this so called illegal relationship and making profit for itself by using electricity at no cost to itself for nearly two decades. Was the intention of the legislator, by enacting section 9 Electricity Regulation 1970 to facilitate the smooth functioning of the corporation or to disrupt and penalise it? Section 46( 1) THE ELECTRICITY ACT 1969 authorises the Minister to make regulations for the sole purpose of carrying into effect provisions, purposes and principles of the said act. The interpretation suggested by defendant will definitely bankrupt the corporation if where there is no written agreement, as it is the case here, the hotel must consume electricity free of charge. That could never have been the intention of the legislator. Nowhere in the provisions, purposes and principles of the Act is there any indication that in the event of consumption of electricity without written
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agreement there should be no charge to the consumer.
The provisions of the Electricity Act and Regulations must be interpreted generously and benevolently particularly those which give or take away the powers to the corporation. The requirement to enter into a written agreement for the supply of electricity is a protection that can be waved by the parties as seems to be the case in this present case. These two parties acted, from 1982 for quite sometime presumably in good faith, believing that there is a binding agreement between them. The principle of Estoppel though not pleaded and established by the plaintiff-Plaintiff is nevertheless entitled to rely on it, to counter the belated amended and special plea filed by defendant at the close of Plaintiff's case BLACKIE SWART ARGITEKTE v VAN HEERDEN 1986 (1)SA 249 at 260 1-J.
It was submitted on behalf of Plaintiff that neither Regulation 9, nor any of the other regulations forbid the supply of electricity by Plaintiff to any customer prior to the completion of the stipulated form. To interpret the terms of this provision so strictly as suggested on behalf Defendant will led to a total miscarriage of justice. There were apparent casual mistakes which were brought about by an operation of good faith and enthusiasm to render service.
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Justice could only be seen, to be done if and when the law is applied in such a way that the occurrence of injustices such as that which may result when allowing Defendant to consume electric power supplied by Plaintiff for the running of its business at the total expense to Plaintiff only and at hundred percent profit to itself, is stopped.
The mischief, which section 9 of Electricity Regulations 1970, was directed to prevent or stop, clearly must have been the unlawful consumption of electricity and mostly the resultant prejudice which the corporation must suffer because of such unlawful consumption. It is absurd for defendant to expect this court to support its conduct of deriving unfairly, and by deception the benefit of free electricity at the expense of plaintiff. Defendant had no reason to receive and consume the electricity supplied, if it believed it is not entitled. The entitlement comes along with the liability. Defendant cannot take the one without the other.
For years before Defendant was placed under Judicial Management demands by Plaintiff for payment of electricity supplied to the Defendant hotel were nearly satisfactorily met. Even during the period when the Defendant hotel was under judicial management correspondence between the parties show this Court
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that attempts were being made to find ways and means of reducing Defendant hotel's indebtedness to Plaintiff for the consumption of electricity supplied to it by Plaintiff. There was still no written agreement between the parties for the supply of electricity by Plaintiff to Defendant hotel. By their conduct the parties behaved as if there is a valid and binding contract between them. Since 1982 Defendant hotel's conduct led the Plaintiff corporation into believing that their relationship was proper and lawful. Now almost two decades after receiving benefits and making profit for itself from such contract, Defendant wishes to be excused from liability on the ground that it was acting unlawfully. If defendant was, for all these years blind and could not see that plaintiff had no capacity nor authority to supply it with electric power, was turning the blind eye an advantage to defendant? Defendant cannot escape the liability on that ground. That would be permitting defendant to take advantage of the circumstances created by its deceitful conduct. The legal position was succinctly expressed on this point by Lord Campbell L.C, as he then was, in the case of CAIRCROSS v LORIMER, (1860) 3 MACQ. 877 at page 829 thus:
"If a man either by words or by conduct, has intended that he consents to an act which has been done, and that he offer no opposition to it, although it could not have been lawfully done without his consent and he
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thereby induced others to do that from which they otherwise might have abstained, he cannot question the legality of the act he has so sanctioned to the prejudice of those who have so given faith to his words or to the fair inference to be drawn from his conduct."
The Appellate Division of South Africa in Wellington Court Shareblock v Johannesburg City Council 1995 (3) SA 827, when dealing with similar issue, held, on the authority of long line of cases, such as Laing v Caledon Municipality (1909) 19 CT R 599, Blemhof Village Council v Calder 1924 TPD 7, Barnard v Celliers 1929 EDL 106, S.A. Hotel v City of Cape Town 1932 CPD 229. Morland v Niehams 1973 (1) S.A. 240 (C) that the appellant, having received benefits under the contract was estopped from raising the ultra-vires defence. All these cases are on fours with our present case. This defendant is estopped from claiming that plaintiff has no authority or capacity to make any arrangement under which it supplied him with electricity as long as this defendant contined to benefit under the same arrangement.
As it was pointed out during the trial the Defendant continues to consume the electricity and its consumption is now approaching four million maloti.
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Defendant cannot therefore be heard to say that Plaintiff has and continues to supply it with such electricity without the written agreement and therefore Plaintiff is not entitled to payment because of the absence of such written agreement. The absence of the written Agreement cannot operate only to the benefit of the defendant and prejudice of plaintiff. If it brought the benefit acceptable to defendant, similarly the liability that goes with that benefit must be acceptable to defendant.
At all times, the failure to pay for electricity supplied by LEC to Defendant hotel where it was consumed, was based on the ground that Defendant hotel was not accurately and properly metered for such consumption. Defendant was accepting liability to pay for its electricity consumption once adjustments were made and accurate meters installed. This is the impression I get when perusing correspondence between the parties, in particular the letter of 10th December 1991 - written to Plaintiff's attorneys by defendant's attorney. (Page 63 EXHIBIT B - BUNDLE).
As was pointed out, in Petersen v Lesotho Electricity Corporation CIV/APN/260/98, by His Lordship Mr Justice N. Mofolo at page 5, "This Court will not allow consumers to play hide and seek tactics with the LEC to its
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prejudice" after it has gone out of its way to supply consumers with electric power at great expense to itself. Defendant cannot expect this Court to accept that it should be allowed to consume Plaintiff's electric power free of charge on the ground that there is no written agreement between the hotel and LEC.
The examination of the correspondence filed of record, between the parties and the minutes of the meetings held by the parties' representatives (as found in EXHIBIT B - Bundle) leave no doubt in my mind whatsoever that at all time Defendant convinced Plaintiff that liability for consumption of electricity supplied is not disputed. What seemed to matter was the question of how much is due and payable. That is why I completely associate myself with the sentiments expressed by His Lordship Mr Justice N.Mofolo in Petersen's case- (supra) that consumers must not be allowed by the Courts to play, hide and seek games instead of honouring their obligations to the LEC which is or has honoured its obligations to them. The interpretation of the Act and the Regulation must be done in such a way that the corporation is able to perform its functions for which it was created.
The special and Amended plea must for those reasons fail. The application for absolution from the instance cannot succeed. It is therefore dismissed with costs
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which includes the costs for the two counsels.
K. J. GUNI JUDGE
25th May 1999
For Plaintiff: Webber & Newdigate For Defendant: Du Preez , Liebetrau & Co
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