Hippo Valley Estates and Triangle Limited v Zimbabwe National Water Authority

The applicants are commercial agricultural estates in Zimbabwe's low veld area that grow sugar-cane and depend on raw water supplied by the respondent (ZINWA) for irrigation. On 17 December 2015, the respondent wrote to the applicants advising that government had reviewed raw water tariffs for commercial agriculture from $9.45 per megalitre to $12 per megalitre, effective retrospectively from 1 December 2015. The applicants had existing water supply agreements with the respondent (Annexures B1 and B2) which provided for consultation and negotiation procedures before any tariff review. The respondent did not consult the applicants before implementing the 27% tariff increase. The applicants filed an appeal with the Minister which was pending, and subsequently on 6 May 2016, Statutory Instrument 48 of 2016 was promulgated confirming the tariff increase.

• Whether the respondent complied with the procedural requirements of section 30 of the Zimbabwe National Water Authority Act when increasing water tariffs
• Whether the respondent breached its contractual obligations under the water supply agreements to consult the applicants before reviewing tariffs
• Whether the retrospective application of the tariff increase was lawful
• Whether the application was premature given the pending appeal to the Minister
• Whether the respondent's decision was tainted with gross irregularity, unreasonableness, unlawfulness, unfairness, irrationality and/or discrimination

The application was granted with costs. The court set aside the respondent's decision to increase water tariffs from $9.45 to $12 per megalitre as communicated in the letter of 17 December 2015.

A statutory authority must comply with the procedural requirements of its enabling legislation when fixing or increasing charges. Section 30 of the ZINWA Act requires: (a) written application to the Minister with full details and basis for proposed charges/increases; (b) ministerial consideration of fairness and reasonableness having regard to costs, proposed improvements and economic factors; and (c) ministerial approval. Failure to follow these procedures renders the decision unlawful. Further, valid subsisting contractual agreements between parties cannot be unilaterally disregarded by a statutory body without proper legal basis. Where such agreements provide for consultation and negotiation procedures before tariff reviews, these must be honored. Retrospective application of tariff increases without prior notice to affected parties is unlawful and unfair. Administrative decisions by statutory bodies must meet the standards of rationality, fairness and reasonableness and are subject to judicial review when they fail these standards.

The court observed with 'disquiet' that the respondent chose to flout agreements it had concluded with the applicants in a 'most shameful manner'. The court noted that a contract is a legally enforceable agreement and parties who conclude agreements in their 'sound and sober senses' must be compelled to observe and comply with what they agreed upon. The court expressed the view that the respondent 'must have realised the unpalatable situation which it created for itself' and sought to have the irregularity rectified by influencing the Minister to promulgate SI 48/2016 to regularize the irregular situation. The court stated that the respondent 'clutched on straws to prop up a defenceless situation' and 'failed, in a dismal way, to justify its conduct and/or the rationality of the same'. These observations reflect the court's strong disapproval of the respondent's conduct beyond the strict legal determinations required.

This case is significant in Zimbabwean administrative and contract law for establishing that: (1) statutory bodies must strictly comply with procedural requirements prescribed by enabling legislation when making decisions that affect parties' rights; (2) valid contractual obligations cannot be unilaterally ignored by statutory bodies on the basis that statutory provisions supersede them, particularly when those contracts are subsisting and not challenged; (3) retrospective application of tariff increases without notice is unlawful and unfair; (4) administrative decisions must meet standards of rationality, fairness and reasonableness; and (5) the principle that where a decision-maker (the Minister) has already promulgated regulations confirming a decision, an appeal to that same decision-maker is rendered futile and does not constitute an effective domestic remedy that must be exhausted.