How should the aims of cost cutting and efficiency be balanced against the right of an existing stakeholder in a less-efficient process to be treated fairly?

For two years the Northern Cape Education Department involved book publishers closely in public schools’ book procurement. Publishers prepared a departmental catalogue of learner teacher support materials at their own expense. Schools placed orders with bookshops in the province, which then ordered the books from the publishers. The department then abruptly changed the process by cutting past the schools and bookshops and by procuring the materials itself. This was done in the interests of efficiency and cost cutting. The department did not consult with the publishers and did not inform them of the change. In MEC for Education, Northern Cape v Bataleur Books (Pty) Ltd 2009 (4) SA 639 (SCA) the publishers brought an application for an interdict.

The Supreme Court of Appeal found in the publishers’ favour on the following basis:

- An applicant in a legitimate expectation case does not necessarily have to show that she relied on the undertaking to her detriment. That said, the publishers as a group benefited from the existing, more costly, practice.

- The department laudably aimed at costs savings and efficient ordering of materials, but given its past practice these aims had to be pursued in a fair manner.

- Schools-based ordering of materials decentralised the process and diversified the choices schools made, which spread the funds more randomly. Central provisioning would concentrate orders on some while it would exclude others.

- A predetermined time need not have elapsed before a departmental practice can give rise to a duty of fair treatment. The relevant factor is whether a procedure was designed to lay a basis for planning future conduct and arrangements. The system that had been in place had been designed and intended to continue. Until the system had been revoked, it was a fairly settled way of doing things.

- The settled practice and the reliance that the publishers placed on it in planning their future conduct were enough to trigger a legal duty to give the publishers reasonable notice that the department was planning to change the procurement process. To have changed the existing system without notice was unfair.

- This finding did not mean that procurement could never be centralised. It only confirmed that the existing practice could only be changed with proper notice.

Municipalities’ responsibility in ensuring access to housing

When a group of informal settlers moved onto land after the property they lived on was flooded, the owners of the land applied for an eviction order. They cited the occupiers as first respondents and the relevant municipality as the second respondent. The occupiers made a counter-application in which they asked for a declaratory order that the municipality was under a constitutional and statutory obligation to make short-term provision for the occupiers, to provide relief and to give adequate priority and resources to their needs. The occupiers also asked for an interdict preventing their eviction from the property.

The High Court granted judgment in the occupiers’ favour in Dada v Unlawful Occupiers of Portion 41 of the Farm Rooikop 2009 (2) SA 492 (W). The court held as follows:

- In Government of the RSA v Grootboom 2001 (1) SA 46 (CC) the Constitutional Court held that in terms of section 26 of the Constitution the State had an obligation to provide housing to those who could not afford to provide for themselves. The court had not in that case, or since, ordered the monitoring of the conduct of the State, including municipalities, in ensuring the provision of housing for the poor.

- The Constitution allows for a robust role for the judiciary in South Africa’s legal and political life. The essence of this role is to judicially review governmental conduct against the Constitution.

- A court must interfere where an organ of State is consistently failing in its functions and obligations, particularly towards the poor.

- To give effect to the socio-economic rights enshrined in the Constitution, courts must be willing to review government spending.

- The Housing Act requires all municipalities to take all reasonable steps to ensure that inhabitants in its area have access to housing on a progressive basis and must give priority to the needs of the poor.

The court ordered the municipality to purchase the property from the owners of the property for R250 000, which was the purchase price for which the land had previously been offered by the owners to the Municipality, within 30 days from date of the court order and to forthwith provide essential services to the occupiers.

The Municipality appealed to the Supreme Court of Appeal, contesting only the High Court's order that the Municipality purchase the property on which the occupiers were living. In Ekhuruleni Metropolitan Municipality v Dada NO and Others (2009) 4 SA 463 the SCA set aside the High Court's order relating to the purchase of the property, holding that the court did not have the power to make such an order. The SCA held that the courts are required to show the appropriate level of deference to the executive in respect of the measures taken to progressively realize the right of access to housing. The court also emphasized that the executive is in a much better position to determine the specific steps that need to be taken to fulfill its obligations in this regard.

Webber Wentzel acted on a pro bono basis for the occupiers of the land in this matter.

Access to sufficient water – prepayment water meters

How should a municipality go about ensuring that it adheres to its constitutional and statutory duty to provide affordable water to poor residents on a sustainable basis?

City of Johannesburg v Mazibuko 2009 (3) SA 592 (SCA) dealt with the City of Johannesburg’s installation of prepayment water meters in the Soweto township of Phiri. The residents argued that the City had a constitutional duty to provide free water to those who could not afford to pay for the water and that the City was not allowed to restrict access to water by using prepayment meters.

After the High Court granted far-reaching relief, the City appealed to the Supreme Court of Appeal. The Supreme Court of Appeal cut back on the High Court’s ruling and held that 42 litres of water per Phiri resident per day would constitute sufficient water in terms of section 27(1) of the Constitution and that the City would be obliged to provide this water free of charge if it would be reasonable to do so, given the City’s available resources. The court also ordered the City to reconsider and reformulate its free water policy in light of these findings and, pending this reformulation, to provide each Phiri resident who is registered with the City as an indigent with 42 litres of free water per member of that household per day. The pre-payment meters were also declared unlawful but the court allowed the City two years within which to legalise the use of pre-payment meters in so far as it may be possible to do so.

The court reached this conclusion on the following basis:

- The Water Services Act 108 of 1997 and the regulations promulgated in terms of the Act set a minimum threshold of 6 kilolitres of water per household per month or 25 litres per person per day. Parliament did not stipulate that this quantity would in all circumstances constitute sufficient water.

- The right of access to sufficient water constitutes access to that quantity of water that is required for dignified human existence, which would in turn depend on the circumstances of the relevant individual.

- The basic minimum set out in the Water Services Act must have been determined by reference to the needs of households or individuals who can manage without waterborne sanitation.

- On the expert evidence presented by both sides, 42 litres per person per day would constitute sufficient water for Phiri residents.

- Local authorities are required to act reasonably and to progressively fulfill their obligation to ensure that everyone has access to sufficient water. It was not the City’s case that is was unable to provide Phiri residents with sufficient water.

- In terms of General Comment No 15 of the United Nations Committee on Economic, Social and Cultural Rights, water and water services must be affordable for all.

- Section 4(3)(c) of the Water Services Act provides that procedures for the limitation or discontinuation of water services may not result in a person being denied access to basic water services for non-payment where that person is unable to pay for such basic services.

- A court cannot usurp the function of the City and cannot itself revise the City’s free water policy. The City should have the knowledge and expertise required to undertake such an exercise.

- The City’s water services bylaws provide for the circumstances under which water services may be discontinued and for cut-off procedures. These bylaws provide for cut-offs for non-payment but do not authorise cut-offs by way of pre-payment meters. The bylaws do not authorise the installation of pre-payment meters. The installation of the pre-payment meters was thus unlawful.

- However, many Phiri residents had expressed a preference to have pre-payment meters and the installation involved massive capital expenditure. As a result of the installment of the meters a dramatic reduction in the level of unaccounted water occurred which enabled the City to plan for the extension of basic water infrastructure to about 105 000 households that do not have access to basic water. Therefore the court granted the City a two year suspension of the order of unlawfulness to allow it to legalise the use of pre-payment meters.

Disconnection of electricity supply – administrative justice; access to housing

If tenants pay their electricity bills as part of their rent accounts and keep up their payments, but the landlord is in arrears with payment of the electricity bill that he receives from the relevant municipality and the municipality then disconnects the electricity supply, what is the tenants’ remedy?

The tenants in Darries v City of Johannesburg 2009 (5) SA 284 (GSJ) argued that it was unlawful and unconstitutional for the municipality to disconnect the supply without complying with the requirements set out in the Promotion of Administrative Justice Act 3 of 2000 (PAJA) relating to procedural fairness. The High Court disagreed with the tenants, reasoning that:

- Sections 4(2) and 73(2)(c) of the Local Government: Municipal Systems Act 32 of 2000 stipulate that municipal services must be financially sustainable. Section 98 requires a municipality to adopt by-laws to give effect to its credit control and debt collection policy, the policy’s implementation and enforcement.

- The City adopted such by-laws, which provide that disconnection of electricity supply is a legitimate method for the collection of arrears and may be followed by legal action to recover payment. Notice must be given to the customer and the customer is afforded adequate opportunity to make arrangements to pay or to make representations why the supply should not be discontinued. This requirement complies with PAJA. A person becomes a customer by concluding a relevant agreement with the City and thus the landlord was the customer and not the tenants. Consequently the tenants did not need to be notified.

- Unlike the right to water, there is no absolute right of access to electricity or an uninterrupted supply of electricity, particularly when the City was not being paid and the consumers were not indigent.

- Even if it is held that the by-laws infringe the tenants’ Constitutional rights, these limitations are justifiable under section 36 of the Constitution.

- If residents are allowed to run up substantial arrears without the termination of supply, the City would fail in its Constitutional duty to provide sustainable municipal services.

- Tenants are allowed to conclude direct billing arrangements with the City. The landlord’s consent is required to put such arrangements in place. Should the landlord refuse his consent, the tenants may approach a court to compel the landlord to either pay the respondents for electricity supplied, or to give his consent to direct billing contracts between the City and the tenants.

- It would be impractical and onerous for the respondents to give notice to every tenant of a building to which it supplied electricity and to afford such tenants an opportunity to be heard prior to terminating electricity supply.

The tenants appealed to the Constitutional Court and were successful in overturning the High Court judgment. In Joseph and Others v City of Johannesburg [2009] ZACC 30, which was handed down on 9 October 2009, the Constitutional Court held that the City had acted unlawfully and ordered that the City immediately restore power to the building. The Court held that:

- City Power supplies electricity in fulfillment of the constitutional and statutory duty to provide basic municipal services to all persons living in the City. The tenants received electricity by virtue of their right to receive basic municipal services;

- In depriving the tenants of a service that they were receiving as a matter of right, the City was obliged to do so in a procedurally fair manner;

- Procedural fairness in this case would have required the City to display a notice in the building at least 14 days before termination of the electricity supply;

- Regarding the constitutional validity of the by-laws which did not require for tenants to be notified, the court held that the Credit Control and Debt Collection By-Laws (2005) can be read consistently with PAJA to require procedural fairness for any person materially affected. The Electricity By-Laws (1999) were found to be unconstitutional in so far as they allowed for disconnection "without notice". The invalidity was cured by the severing of these words from the relevant by-law.