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 Rights… There 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.”
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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.”
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