- High Court holds Newcastle Municipality responsible for losses suffered by two businesses and their owners after their operations were halted.
- The municipality presented no evidence to support claims that the businesses discharged harmful substances into the sewer system.
- Court found the municipality acted wrongfully and negligently, paving the way for a claim for damages exceeding R18 million.
The High Court in Pietermaritzburg has held the Newcastle Municipality responsible for shutting down two businesses after obtaining and maintaining an interdict that cut off essential municipal services on allegations it could not prove.
The case was brought by Newcastle Industrial Launders CC, its owner Faizel Cassim, R.F. Screen Printers (Pty) Ltd and its managing director Roelien Andrie Venter. Together, they are pursuing damages of approximately R18.6 million arising from what they argued was the municipality's wrongful conduct.
Acting on allegations that harmful contaminants were being discharged into the municipal sewer and stormwater systems, the municipality obtained an urgent interdict in October 2021 that stopped the businesses from releasing industrial effluent and resulted in the termination of their water supply.
According to the court, the municipality acknowledged that the order would have the effect of shutting down the businesses.
Businesses left unable to operate
Judge SB Mngadi found that both businesses operated from the same industrial premises in Newcastle and were entirely dependent on municipal services to conduct their operations.
The industrial laundry and screen printing businesses generated income from their operations and employed Cassim and Venter in management roles. The court heard that the interdict remained in force until March 2023, despite repeated attempts by the businesses to have it varied or removed.
The businesses argued that the municipality's actions caused pure economic loss by preventing them from trading and earning income. They contended that the municipality owed them a legal duty not to cause harm to businesses operating within its jurisdiction.
Judge Mngadi accepted that the municipality's conduct resulted in the closure of the businesses and the losses that followed.
Municipality produced no supporting evidence
A central issue in the matter was the municipality's allegation that the businesses were discharging harmful contaminants into the sewer system. The businesses obtained multiple expert reports concluding that their waste did not contain harmful contaminants or pollutants. Those reports were provided to the municipality.
The judgment records that the municipality failed to place any expert evidence before the court to support its allegations and did not file evidence challenging the reports produced by the plaintiffs.
Judge Mngadi noted that the municipality admitted obtaining the interdict and later withdrawing it but never attempted to justify why it had sought the order in the first place. The court further recorded that municipal counsel informed the court that he had no instructions on the issue of liability and did not challenge the plaintiffs' evidence.
The judge found that the municipality had continued to maintain the interdict despite having no evidence supporting its allegations. "The defendant, although continuing not to have any evidence that supported its claim, kept the interdict extant until 7 March 2023," the judgment reads.
Court finds wrongful and negligent conduct
In considering delictual liability, Judge Mngadi found that the municipality had a legal duty not to harm the businesses through allegations unsupported by evidence. "The defendant, a municipality and an organ of state, had a legal duty not to harm the businesses of the first and third plaintiffs by claims not based on any evidence," said the judge. "It breached that duty, thus acting wrongfully, and it acted recklessly and negligently."
The court concluded that the municipality's conduct satisfied the requirements for delictual liability because there was conduct, wrongfulness, fault and resulting harm. As a result, Newcastle Municipality was found liable to compensate the businesses and their owners for losses proven to have been caused by its conduct.
Damages phase still to follow
The judgment dealt only with liability after the issues were separated under Rule 33(4). The amount of compensation remains to be determined in subsequent proceedings.
Judge Mngadi ordered that the municipality compensate the plaintiffs for losses proved to have resulted from its conduct and directed it to pay costs, including the costs of senior counsel and several expert witnesses.
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