JUDGEMENT ATTACHING ELM BANK ACCOUNTS SUSPENDED

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Gauteng High Court orders BXC South Africa to repay all monies removed from municipality’s bank accounts

The Gauteng High Court on Monday (07 December 2020) handed down judgement in the matter between Emfuleni Local Municipality (ELM) and Beijing Fuxing Xioa-Cheng Electronic Technology Stock Company LTD JVOLE Power Systems (BXC South Africa), and Sherriff of Court, Johannesburg Central.

BXC South Africa had been awarded a default judgement on 18 September 2020 which subsequently led to the attachment of municipal bank accounts. Delivering the judgement, Judge HM Barnadt said he held a view that the municipality was not in willful default of entering an appearance to defend proceedings by BXC South Africa. The municipality argued that the summons was not properly served, rendering subsequent proceedings null and void.

In part, the judgement reads, “I am further of the view, again without deciding the issue, that the default judgement was erroneously granted against the Applicant (ELM). Had the Court been appraised of the full facts pertaining to the service of the impugned summons, the Court would have declined to grant the default order sought.”

The Court ordered the suspension of the execution of the 18 September 2020 default judgement and BXC South Africa to repay all monies removed from ELM accounts. This was after ELM successfully applied for an interim interdict, effectively stopping the execution of the default judgement.

A hearing for the municipality’s application to review and set aside the conclusion of the PPP contract will be heard in the High Court in Pretoria on 11 March 2021. It is for this reason that Judge HM Barnadt said, “I am of the view that it was impermissible for the First Respondent (BXC South Africa) to commence with an action against the Applicant (ELM) while a similar matter is pending before another court.” 

NOTES TO EDITORS

  1. ELM entered into a Public-Private-Partnership (PPP) smart metering agreement with BXC South Africa in 2013.  In July 2018, BXC South Africa approached the courts to claim for more than R25 million and the municipality duly opposed this application, which was subsequently withdrawn in September 2019.
  2. In 2019, the municipality launched an application for the review and setting aside of the agreement with BXC South Africa. The municipality argued there was not proper compliance with Section 78 of the Municipal Systems Act which was a prerequisite to the conclusion of the PPP agreement between ELM and BXC South Africa. There was also noncompliance the publicly-advertised invitation for bids which had the effect of depriving the public the benefit of an open, fair and transparent competitive bidding process which violates the principles of fairness, competitiveness and transparency enshrined in Constitution, the Municipal Finance Management Act (MFMA) and Supply Chain Management (SCM) Regulations.
  3. In March 2020, despite pending review proceedings regarding the legality of the agreement between the parties, BXC South Africa issued summons commencing proceedings against the municipality.
  4. Following the 18 September 2020 default judgement in favour BXC South Africa for the payment of more than R400 million, BXC South Africa ordered the Sheriff of the Court to attach the municipal bank accounts from which all monies were then withdrawn. This left the municipality without any resources to fulfill its financial obligations, which include regular payments to Rand Water and Eskom.

ELM remains committed to resolving this matter amicably and expeditiously, and in the interest of its residents. The municipality is confident that the second part of the judgement, its application for rescission of judgement, for which a decision is expected within the next ten days, will also be in its favour.

ENDS

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