Defend Truth

Opinionista

With a thoroughly broken Eskom and impoverished SA citizens, Constitutional Court delivers palliative care

mm

In real life, Professor Balthazar is one of South Africa’s foremost legal minds. He chooses to remain anonymous, so it doesn’t interfere with his daily duties.

Eskom received an unwanted present two days before Christmas when the majority of the Constitutional Court delivered a judgment that is likely to exacerbate its financial woes. 

Two judgments that were delivered represent the most frosty exchanges between justices since the advent of the Constitutional Court, reflecting the profound consequences that flowed from this case. The plethora of legal disputes within the court cannot possibly be comprehensively canvassed in one piece; hence, this column by its nature must be selective.

In summary, the case involved the following: In 2008, Eskom concluded a supply agreement with Ngwathe Municipality in terms of which it would supply bulk electricity to the municipality in accordance with the Notified Maximum Demand (NMD) stipulated in the supply agreement. The NMD is a contractual value of demand which binds Eskom and its customer, in this case, the municipalities.

In 1981, Eskom concluded a similar supply agreement with Lekwa Municipality. In 2010, the contracted NMD for Lekwa Municipality was increased. The municipalities’ consumption of and need for electricity, however, exceeds the NMD supply levels agreed to. Eskom had been supplying electricity in excess of the contracted NMD to both municipalities for an extended period of time and charging monthly penalties to the municipalities. Despite these penalties, the municipalities failed to pay Eskom for the electricity supplied to them and remain in serial default.

In 2020, Eskom decided to reduce the bulk electricity supply to the municipalities to the NMD levels set out in the supply agreements (reduction decisions). This meant that it would no longer supply electricity in excess of the contracted NMD levels. It informed the municipalities but did not inform the residents. This had a significant impact on essential services in the municipalities, such as water supply and the functioning of sewage works. Thus, two associations acting on behalf of the residents of the two municipalities instituted applications for interim relief before the high court.

In granting an interim interdict preventing Eskom from reducing the electricity supply, the high court held that sufficient electricity supply is inextricably linked to the rights to healthcare, food, water and social security; hence, the residents had a prima facie right that deserved protection. 

The limited electrical supply had an adverse effect on all basic municipal services, resulting in irreparable harm to residents who had dutifully paid their municipality for electricity. Further, the balance of convenience favoured the residents on account of the fact that Eskom’s prejudice was financial, compared with the irreparable harm suffered by the residents by being denied electricity for which they had paid.

In broad terms, the Supreme Court of Appeal agreed with the high court and thus with the order so granted by the high court. Thus, the dispute reached the Constitutional Court.

The minority judgment

In his minority judgment, Justice David Unterhalter questioned the source of the residents’ prima facie right, a key requirement for the grant of an interim interdict. In his view, it could not be sourced in the contracts for the supply of electricity that subsist between the municipalities and Eskom.

The residents were not parties to the contracts between the municipality and Eskom. The residents could not rely upon any contravention by Eskom of its licence. They did not seek to enforce any provision of Eskom’s licence against Eskom. The residents also do not seek an amendment to Eskom’s licence to place an obligation upon Eskom to supply them. 

The majority judgment, written by Justice Mbuyiseli Madlanga, had located the prima facie rights of the residents in their constitutional rights to dignity, life, water, education and a healthy environment. In response, Justice Unterhalter said that the majority judgment found that

“[T]he residents make a simple case. Eskom’s decision of substantially reducing the electricity supply has resulted in a breach of several rights protected by the Bill of RightsThere is a missing step in the reasoning, which is fundamental. Does Eskom owe a duty to the residents to supply them with the electricity that supports their well-being? And do the residents enjoy a correlative right to claim that electricity from Eskom? If Eskom has no such duty and the residents have no such right, the reduction of supply by Eskom cannot infringe a right, the contents of which does not include a claim by the residents to the supply of electricity from Eskom. Put differently, how, in law, can Eskom be required to supply electricity to the residents that it has no duty to supply because its failure to do so causes substantial suffering to the residents? The answer is that Eskom cannot be required to do what it has no duty to do. The duty to act lies elsewhere. That is, with the municipalities.”

In the view of Justice Unterhalter, there was another fatal obstacle to the granting of interim relief. The relevant legislation requires SA’s energy regulator, Nersa, to settle disputes between an end user, defined to mean a user of electricity, and a licensee, such as Eskom. But, said Justice Unterhalter: 

“The residents have not had recourse to section 30. They do not traverse this matter in their papers, nor in their submissions before this Court. Yet their claim for interim relief is predicated upon a review under Paja [Promotion of Administrative Justice Act]. Section 7(2) of Paja requires the exhaustion of all internal remedies, save in exceptional circumstances. The residents have not explained why relief under section 30 of ERA [Electricity Regulation Act] is neither possible, adequate or timeous. Instead, they contend that it was incumbent on Eskom to refer the dispute to Nersa. They have failed to provide a reason why they, as the aggrieved parties, did not refer the dispute to Nersa before bringing the reduction decision for review under Paja. This omission means that the promised review of the reduction decision was stillborn, and hence the interim relief for this reason also cannot hold good.

The majority judgment

By contrast, Justice Madlanga, writing for the majority, framed the dispute thus:

“Must this Court — at an interim stage — allow the residents to be subjected to such abject misery and horrendous violation of fundamental rights? My colleague Unterhalter AJ, whose judgment (first judgment) I have had the pleasure of reading, says yes. I say no.” 

In the development of his view, Justice Mdlanga went on to say: 

“[T]he residents’ case [is] that Eskom failed to respect several of their rights protected by the Bill of Rights. In terms of section 7(2) of the Constitution, the state (including Eskom) bears an obligation to respect the rights in the Bill of Rights. If the conduct — howsoever arising — has the effect of infringing the residents’ rights, that is the focal point.”


Visit Daily Maverick’s home page for more news, analysis and investigations


Justice Madlanga emphasised that his judgment did not extend to a finding that the residents had a right to electricity, as the following passage made clear:

“Without deciding the question whether the residents have a constitutional right to a direct supply of electricity by Eskom, it is so that there is contractual privity between Eskom and the municipalities, and not between the residents and Eskom. That matters not. The lack of contractual privity does not stand in the way of the residents asserting other rights protected by the Bill of Rights, which have been infringed by the decision to reduce electricity supply substantially.”

Horrendous consequences

The verbal intensity of the exchanges between the judges reflects both the complexity of the case and, as Justice Madlanga noted, the horrendous consequences that were imposed on the residents who were denied electricity. The fact that the relief sought was for an interim interdict pending a review of the Eskom decision to reduce electrical supply adds weight to the commendable effort of the majority to protect poor residents from the consequences of a sudden cessation of their source of electrical supply and related thereto to a fundamental trenching of key constitutional rights.

The difficulty, as noted in the minority judgment, is that much of the emphasis of the majority judgment was upon the lack of notice or fair procedure adopted before Eskom reduced the electrical supply. And the relevant legislation afforded the residents a clear internal remedy to obtain an order from Nersa to prevent Eskom from proceeding with its action.

These legal differences aside, as the minority judgment emphasised, the constitutional scheme was to place the primary obligation on the relevant municipality to provide its residents with electricity for which the latter had paid. The collapse of local government lies at the heart of this case. 

The important constitutional rights highlighted by the majority cannot be vindicated meaningfully in a state as broken as the South African one. Courts can attempt bravely, as did the majority judgment, to afford temporary relief, but unless the state can be made to work for the population as a whole, as opposed to an elite who have diverted public funds into their own bank accounts, a court can only administer palliative care. 

In addition, looming large as an implication of the outcome of this case is possible further litigation against Eskom for its breach of the rights of millions of the poor and many small businesses who now must live with the consequences of the disaster of Eskom without the benefit of generators or inverters. DM

Gallery

Comments - Please in order to comment.

  • Jon Quirk says:

    The judgement supports the view that Eskom is not in fact an SOE, run according to normal rules and regulations applicable to all enterprises, but is rather an extension of Government and the social engineering they are seeking to impose, irrespective of whether such is actually affordable.

    In law, and in common sense, the minority judgement is indubitably the only correct legal decision. Eskom can never perform satisfactorily if it remains a plaything of Government and the unions – a place where all must be provided with electricity, irrespective of whether they actually pay, and Eskom must pander to the unions and employ far too many, far too many under skilled, and at far to high levels of remuneration.

    This judgement lays bare the real issues in Eskom, and they lie in Luthuli House and not Maxwell Drive.

  • Joe Soap says:

    “The high court held that sufficient electricity supply is inextricably linked to the rights to healthcare, food, water and social security; hence, the residents had a prima facie right that deserved protection.” – Sounds like we can all take Eskom to court for violating our human rights.

  • Johan Buys says:

    If you take this outside Eskom:Council:Consumer relationship it implies that if a refuse removal company has a contract with a council and council breaches the contract by nonpayment, the refuse removal company cannot stop collecting refuse without consulting with the residents. What next? If I sell widgets to PnP and they don’t pay, I must consult with PnP clients before cancelling supply of widgets when PnP does not pay?

  • Tim Price says:

    An emotional judgment by the majority that fails the test of logical legal reasoning. The ruling kleptocracy won’t take heed. Legal certainty went out of the window and down the line this kind of judgment will come back to bite. Unterhalter got it right. All the CC did was put a plaster on the problem and permit the voting public, who no doubt put the ANC kleptocrats in power, to avoid the consequences of their poor decision making.

  • Roelf Pretorius says:

    I agree with the majority decision of the ConCourt. The whole reason for Eskom being a state SOE is due to its’ “developmental” role; as part of the government bureaucracy it shares the burden of the government to provide citizens with what their Constitutional rights. Take note that this is not the right to electricity, but the right to a clean environment and clean water (implying the sanitation and water supply pumps must have electricity), and so on. That is something that Eskom needs to respect. Which is more, I have a big problem with such big corporations that think they can one-sidedly change their contracts; if the sides agreed to the stipulations of a contract, then BOTH sides have to adhere to their responsibilities stipulated. This goes further than just Eskom; for instance I have a contract with Vodacom that gives me a certain amount of call minutes and data per month for two years; that means that I am committing myself for two years and Vodacom to the price agreed on. Yet then Vodacom recently unilaterally increased the prices because it suited them. That is a break of the contract; but because they are so big and powerful, they think they can do it. It is the same for Eskom in this case too. No matter how powerful they are, a contract is a contract and should be adhered to. If they can’t, they have to renegotiate the contracts; they can’t just unilaterally do what they want. It is time we as citizens take the cellphone companies on also, not just Eskom.

    • Herman GROBLER says:

      Eskom didn’t try to change the terms. The court decided that the contractual maximum power supply must be exceeded (contrary to the contract). It was not one-sided changed.

    • Colin Louw says:

      No Roelf, you got it wrong. Eskom merely reverted to the agreed contract. They did not “break” any contract as you state, in fact the municipality broke the contract by not paying, so this judgement is tragically incorrect and I for one am astounded at the blatant error made by the majority judge decision.

  • James Francis says:

    “Eskom’s decision of substantially reducing the electricity supply has resulted in a breach of several rights protected by the Bill of Rights…”

    Can we sue the ANC for the same breaches?

  • Paul Savage says:

    This judgement, albeit an interim interdict, is surely an invitation to all municipalities to take money from residents for electricity, and then not pay Eskom for the electricity they provided. De Ruyter must be so pleased to be walking away from this fiasco. And who should we blame? The entire bunch of kleptocrats who call themselves the ANC.

  • Pet Bug says:

    I’m beginning to really question the quality of our constitution.
    It probably requires a major rethink and rewriting for our country to get back on a sustainable path.
    The Bill of Rights, admirable, is fatally flawed, as the granting of substantial rights is not concurrent with required responsibilities and duties.
    The German constitution makes their system much more quid quo pro.
    And their constitutional court would’ve ruled quite differently than our rather binary majority / minority rulings.

    NB, what does the “interim ruling” mean here? Will there eventually be a final one that might temper the applicable ruling?

  • Barrie Lewis says:

    Is it not time that municipalities be compelled to ring-fence payments by citizens for electricity and water? And these moneys should be paid timeously to the utilities, first and foremost before being spent on other items on their agendas; like the mayor’s salary.
    It is unconscionable that Joe Citizen pays his electricity account timeously month of month and still gets cut off.
    In any event it’s forcing us to do what we should be doing anyway. Going solar.

  • Michael Forsyth says:

    Unfortunately in many decisions of the courts recently the Law takes second place to nebulous concepts such as Ubuntu. In a recent decision of the Cape High Court the judge made use of those very words :Ubuntu. This means that there is no longer any legal certainty and parties to litigation have to face the fact that the LAW, which may favour them, have to rely on the capriciousness of judges who make these arbitrary decisions.

  • Josie Rowe-Setz says:

    Surely one then sues the municipality in a class action?

  • Peter Smith says:

    Residents pay the municipality for services that are not delivered. Theses services fall under the National Consumer Commission who is a statutory body with lawyers that can take the municipality to court and bear the cost of doing so. The municipality is liable as they have not mitigated the risk of dependence on Eskom and could procure power from independent sources.

Please peer review 3 community comments before your comment can be posted

Daily Maverick The Gathering 2024 banner

Daily Maverick has secured an esteemed speaker line-up...

to help make sense of Elections 2024.

Trevor Manuel, Prof Thuli Madonsela and Minister Ronald Lamola are among the latest panellists confirmed for Daily Maverick The Gathering Twenty Twenty-Four.

Join us, on Thurs 14 March 2024 at CTICC Cape Town or online wherever you are, for an event that will put the election in perspective.

Otsile Nkadimeng - photo by Thom Pierce

A new community Actionist every week.

Meet the South Africans making a difference. Get Maverick Citizen in your inbox.