6 June 2018 by and Dispute Resolution Alert

The Cape Town High Court affirms the right of municipalities to claim compensation from Telco’s who trench on their land

Section 22 of the 2005 Electronic Communications Act (ECA) granted licensed electronic communications network providers (ECNS) rights to enter onto land to deploy their networks on land belonging to public or private owners. The ambit of that right was, however, never delineated clearly in regulations and, following protracted legal battles, resulted in a constitutional court ruling, in Tshwane City v Link Africa and Others 2015 (6) SA 440 (CC) (the Link Africa judgment).

At its core, the issue concerns the balance of rights between property owners (in that case, an organ of state) on the one hand and on the other, the rights of licensees to enter upon any land, (including street, road, footpath) to roll-out infrastructure to provide services. 

The Link Africa majority judgment found that s22 effectively created a public servitude in favour of ECNS licensees, meaning that a licensee can select and access land to construct, maintain, alter or remove networks or facilities, but must do so in a civil and reasonable manner, which includes consultation with and the provision of reasonable notice to the owner of the property. The judgment also requires the payment of proportionate compensation for the right, relative to the disadvantages suffered by the owner. However, a s22 right is not an unfettered one and access to the property in the absence of resolution of disputes is unlawful. As such licensees may not simply march onto property to build networks without engaging the landowner and arriving at a mutual agreement. In the context of public land, this interaction between the licensee, as the holder of the public servitude, and a municipality, as the landowner, usually culminates in the grant of a wayleave, or right of way, generally in exchange for payment.

The most recent pronouncement on this continued area of contestation is a December 2017 High Court judgment in the Western Cape in Dark Fibre Africa (Pty) Ltd (DFA) v The City of Cape Town (7748/2017) [2017] ZAWCHC 151. Here, DFA objected to the City of Cape Town’s wayleave condition that it be required to pay a non-refundable trenching deposit for digging trenches into the City’s road reserve instead of using less damaging means to lay cables underneath the City’s roads, such as side drilling.

DFA contended that the “condition was not authorised by law because it purports to provide for ‘pre-emptive damages”’ and further served to thwart its rights under s22. In response, the City successfully contended that it was entitled to impose the condition in accordance with its “function and service of providing roads together with the administration thereof.” The City argued, in substantiation of the condition, that the deposit would only be forfeited in the event of the licensee digging up the road reserve causing damage to the road infrastructure. In the City’s view, therefore, the forfeited deposit represented “a part compensation to which [it was] entitled for the inherent degradation that roadway trenches cause to the structural integrity of its roads”.

In finding in the City’s favour, Davis J highlighted “the need to reconcile national with local legislation” and recognised “that a road authority like the City has a role to play in dealing with the implementation of a license under the ECA.” The City was accordingly “entitled to reserve the right to impose a compensation charge for the use and occupation of its land . . . without statutory authority on the basis of [Link Africa]”.

Undoubtedly and notwithstanding the Link Africa judgment, the ambit of s22, the extent of compensation to be paid, and the balancing of rights between landowners and licensees, unless clarified in detail through further legislation or regulation, will continue to be delineated over time in case law.

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