Constitutional Court sets the tone in urgent application involving the payment of social grants

23 March 2017|In eBriefs Nortons Inc News NortonsInc

In this edition:

  • Constitutional Court sets the tone in urgent application involving the payment of social grants

Constitutional Court sets the tone in urgent application involving the payment of social grants

On Friday 17 March 2017, the Constitutional Court handed down its judgment in the urgent application brought by The Black Sash Trust (“the Black Sash”) against, among others, the Minister of Social Development (“the Minister”), the South African Social Security Agency (“SASSA”), the CEO of SASSA and Cash Paymaster Services (“CPS”). This is undoubtedly one of the most far reaching and important judgments handed down by the Constitutional Court. The judgment is indicative of the extent to which the Court felt it was necessary to exercise supervisory oversight over the social grants process. The case also demonstrates the important role played by NGO’s in bringing constitutional litigation and the impact which it can have on civil society. Nortons is pleased that we could be involved in such a seminal case in the country’s constitutional jurisprudence.

Background:

In 2012, pursuant to a tender process, SASSA entered into a contract with CPS in terms of which CPS would pay social grants to South African grant beneficiaries on behalf of SASSA. The losing bidder, Allpay (represented by Nortons Inc.), challenged the granting of the contract which was subsequently declared invalid by the Constitutional Court which ordered SASSA to rerun the tender process. However, so as not to jeopardise the payment of social grants, the Constitutional Court suspended the order of invalidity until 1 April 2017 and retained supervisory oversight of the new tender process.

SASSA, in November 2015, filed a report with the Constitutional Court indicating that it would not award a further contract for the payment of social grants, but intended to take over the payment of grants in its own right. As a result of this report, the Constitutional Court discharged its supervisory role. However, it became clear that from April 2016, the responsible functionaries of SASSA were aware that SASSA could not comply with its undertaking to the Court, that SASSA itself would not be in a position to pay social grants from 1 April 2017 and that SASSA required further assistance from CPS to ensure that payment of the grants would be effected.

The Black Sash brought its application in the public interest and in the interest of all grant beneficiaries to seek reinstatement of the Constitutional Court’s oversight role for the payment of social grants and to ensure that SASSA complies with its constitutional obligation to provide social assistance in a lawful manner. Freedom Under Law, represented by Nortons Inc., sought to intervene as a second applicant in the Black Sash’s application, seeking relief aimed at further disciplining the proposed interim contract between the Minister, SASSA and CPS. Corruption Watch and the South African Post Office filed applications to be admitted as amici of the Court.

The Court Order:

After hearing arguments on Wednesday, 15 March 2017, the Constitutional Court on Friday, handed down the following order:

  • The Black Sash was granted direct access, Freedom Under Law was granted leave to intervene and Corruption Watch and the South African Post Office were admitted as friends of the Court.
  • SASSA and CPS were declared to be under a constitutional obligation to ensure payment of social grants to grant beneficiaries from 1 April 2017 until an entity other than CPS is able to do so. Failure to do so will infringe upon grant beneficiaries’ rights of access to social assistance.
  • The declaration of invalidity of the contract was further suspended for a 12-month period from 1 April 2017.
  • SASSA and CPS were directed to ensure payment of social grants to grant beneficiaries from 1 April 2017, for a period of 12 months, on the same terms and conditions as those prevailing in the current contract between them, subject to terms ensuring accountability, transparency and protecting beneficiaries’ personal information.
  • CPS may request National Treasury during the relevant 12-month period to investigate and make a recommendation in relation to the existing price in the contract.  The National Treasury shall within 21 days of receiving such a request, report to the court with its recommendations.
  • CPS must within 30 days of completion of the contract file an audited statement of expenses incurred, income received and net profit earned during the period of the contract after which SASSA must obtain an independent audited verification of the audited statement submitted by CPS. The independent verification must be approved by Treasury.  CPS must allow unfettered access to its financial information to the independent auditors appointed by SASSA.
  • The Minister and SASSA are required to file reports on affidavit with the Court every 3 months, setting out how they intend to ensure payment of social grants after the expiry of the 12-month period and what steps have been and will be taken.
  • An independent legal advisor or technical expert is to be appointed to assist the Auditor-General in evaluating the implementation of payment of social grants during the 12-month period, the steps taken by the Minister and SASSA and to file reports with the Court every three months.
  • The Minister is called upon to explain on affidavit on or before Friday, 31 March 2017, why she should not be joined in her personal capacity and why she should not pay the costs of the application from her own pocket.