The Supreme Court of Appeal (SCA) delivered a judgment on March 28, 2024, in the case of Prasa Real Estate vs Community Property Company and eThekwini Municipality, concerning a contractual dispute over electricity consumption. The sale of a business lacked tacit cession provisions, prompting the Community Property Company (CPC) to pursue a claim based on unjustified enrichment.

 

Background

Prasa appealed against a ruling by the KZN High Court that mandated them to pay around R2.6 million for electricity consumed at CPC’s premises. CPC asserted that it had an agreement with eThekwini Municipality for bulk electricity supply to its premises, including Prasa’s, at the Bridge development.

Previously, Crowie Projects had bought land from eThekwini to construct a shopping centre, residential apartments, and transportation facilities. Crowie then sold the Bridge development to CPC under a sale of business agreement, envisioning the cession of certain rights to CPC, as specified in the agreement.

CPC sought reimbursement for electricity payments made to eThekwini, contending a tacit cession. However, Goosen JA determined that, apart from the rights ceded per the sale of business agreement, there was no cession of rights from Crowie to CPC concerning electricity consumption. The sale agreement outlined a specific cession procedure, which was not fulfilled.

Consequently, CPC failed to establish a contractual basis for its claim. CPC also invoked unjustified enrichment but failed to demonstrate CPC’s impoverishment, a crucial aspect of such claims.

The sale agreement included a general indemnity clause, requiring Crowie to compensate CPC for any loss arising from Prasa’s operations if they couldn’t agree on the loss. CPC needed to prove that its claim didn’t fall under this clause, which it didn’t.

 

Conclusion

Prasa’s appeal was successful, and CPC was ordered to pay costs.

For further information, individuals may reach out to SchoemanLaw Inc. for guidance.