CoCT v Minister and NERSA Judgment

Judgment in the City of Cape Town v Minister Energy and NERSA case has been handed down – a rather disappointing outcome!

The judge didn’t delve into the substantive issues on local government’s rights to generate electricity at all, but instead finds that the city failed on the first hurdle – the failure to first follow the intergovernmental dispute process before resorting to litigation.

In any event, the case has not been dismissed, merely postponed, and the dispute referred back to the parties. In the event of the disputes – having been declared a formal intergovernmental dispute in terms of section 41 of the Intergovernmental Relations Frameworks Act – and all efforts to settle the dispute in terms of Chapter 4 of that Act being unsuccessful, any party may apply to this Court for leave to re-enroll the application for hearing on the same papers and on such conditions as the Court may determine.

Some relevant judgment excerpts:

[29] To sum up, the City’s argument that a dispute about constitutional validity does not constitute an intergovernmental dispute, is without merit. All three disputes are clearly inter-governmental disputes and the parties herein were required to cooperate to resolve the dispute before turning to the court.

[41] Although it is a tempting proposition, an organ of State’s failure to comply with the peremptory provisions of the Constitution and the Framework Act cannot be condoned just because it is of the opinion that it would in any event have been unsuccessful in its efforts to settle a dispute. It would have been a consideration had the City made some effort to engage with the Minister and NERSA in the spirit of co-operative government, but there was no such effort. As alluded to above, there was no immediate urgency to institute the application after the legal opinion was received. NERSA in its response to the City’s letter of 5 May 2017 indicated that it was willing to engage with the City and briefly set out its interpretation of s 34 and the extent of a municipality’s powers. The City however did not make any attempt to engage with NERSA or the Minister on this issue. Organs of State have a duty to avoid legal proceedings against each other. This duty requires each organ of State to re-evaluate its position fundamentally and to consider alternative possibilities and compromises and “to do so with regard to the expert advice the other organs of State have obtained”.21

The City has failed in its duty as organ of State to avoid litigation and has only paid lip service to this obligation. It made no reasonable effort to follow the steps provided for in the Framework Act to settle the dispute before launching the present proceedings and has offered no valid or reasonable excuse for its failure. In Uthukela, the court held that in view of the important requirements of co-operative government, a court, will “rarely decide” an intergovernmental dispute unless the organs of State involved in the dispute have made every reasonable effort to resolve it at a political level. This is not one of those rare occasions. It follows that the City failed to show good cause in order for this court to condone the non-compliance with s 45(1) of the Framework Act.

[43] I am aware that the application is of great importance and interest to the City and its citizens. But, as it was stated in Economic Freedom Fighters v Gordhan and Others; Public Protector and Another v Gordhan and Others,22 it must at all times be remembered “that courts must show fidelity to the text, values and aspirations of the Constitution. A court should not be moved to ignore the law and the Constitution, and merely make a decision that would please the public. The rule of law, as entrenched in the Constitution, enjoins the judiciary, as well as everyone within the Republic, to function and operate within the bounds of the law. This means that a court cannot make a decision that is out of step with the Constitution and the law of the Republic. It must impartially apply the law to the prevailing set of facts, without fear, favour or prejudice.”

[44] In the result the following order is made:

ORDER:

1. The application is postponed sine die.

2. The disputes between the parties are referred back to the parties in terms of s 41(3) of the Constitution.

3. In the event of any such disputes having been declared a formal intergovernmental dispute in terms of section 41 of the Intergovernmental Relations Frameworks Act, 2005, and all efforts to settle the dispute in terms of Chapter 4 of that Act were unsuccessful, any party may apply to this Court for leave to re-enroll this application for hearing on the same papers and on such conditions as the Court may determine.

4. The costs of the hearing on 11 and 12 May 2020 (including the costs relating to heads of argument for the hearing) are to be paid by the applicant. Such costs will include the cost consequent upon the employment of three counsel.

5. All other costs are reserved.