The North Gauteng high court passed judgement recently on the case between the Security Industry Alliance (SIA) and Private Security Industry Regulatory Authority (PSIRA). The case based on the new regulations promulgated on November 2011 and published in the Government Gazette no. 34775 were to take effect from February 2012.
The regulations stipulated that the amount payable by security service providers under Regulation 9(3)(a) and (b) increased by 40% and is no longer payable on a monthly basis, but it must be paid annually upfront. The monthly amount payable by security providers under regulation 9(3)(c) in respect of each of their employees increased by 1000% and has to be paid annually upfront before the 30th of April.
In 2011, SIA took PSIRA to court in order to have these new fees reviewed and set aside. SIA successfully interdicted PSIRA from implementing the fees, meaning the regulator could not collect or force security companies to pay the new fees.
SIA maintained that the new regulations were beyond the powers of PSIRA. “The regulations were made without adequate consultation with the industry and where responses were received, these were not considered. There is no reciprocal increase in service delivery by PSIRA and there is no correlation between the price increases and the operating costs of PSIRA. It is beyond the powers of PSIRA to levy any amount in excess of its reasonable needs,” said director cum CEO at PSIRA, Manabela Chauke.
On 13 May 2013, the North Gauteng High Court dismissed the application by the Security Industry Alliance (SIA) for the court to order PSIRA to have its Annual Fees Regulations reviewed and set aside, SIA lodged an application for appeal. On 15 August 2014, the Supreme Court of Appeal of South Africa took a decision to have the appeal by SIA upheld.
In passing its judgment last month, the court echoed the same sentiments that SIA contended.
1. PSIRA had failed to engage with the industry, as it has not considered the responses submitted.
2. PSIRA didn’t consider how the increased fees would affect small companies compared to large international companies as it insisted on the same fee structure for all entities regardless of the size and operations.
3. PSIRA’s approach 'lacked law'.
4. PSIRA had misinformed the Minister of Police in the proposition of its new regulations.
5. PSIRA has failed to prove the avenues it claims to have exhausted to reach to its equitable fee structure.
6. PSIRA’s proposed levy structure on the industry was not adequate and exceeded their limits in regulating the industry.
In response to the judgment, Chauke supported the move by the authority to increase the fees. “The private security industry has grown significantly since the fees were reviewed nine years ago. The review of fees was informed by the need to align the funding of regulation to that growth. This alignment will obviously ensure that there are adequate resources for effective regulation of the industry and strengthen our effort towards improving industry compliance.”
However, he said any stakeholder who had dissatisfaction with the review of fees was free to go to court, as that is its right. “The process of reviewing fees has been a collective one from a consultative point. SIA, like any other stakeholder, have the right to approach the courts for recourse if they feel aggrieved by the review of fees. We cannot adjudicate on whether they were justified or not. PSIRA respects the judiciary system and strongly believes that the review of the fees was conducted in the interest of the industry to ensure effective regulation of the private security industry,” said Chauke
PSIRA’s fee review structure will continue as per usual. “PSIRA has always been empowered to review fees on an annual basis by legislation. The process to review fees for the industry will continue as a collective process in consultation with all stakeholders within the industry.”
After this judgment, it seems as if the authority will be working more closely with the private security industry. “PSIRA has always viewed the process as a collective exercise and therefore will be engaging the industry at large, including with SIA, on the way forward on the review of the fees.
“The outcome of the court will definitely impact on the ability of the authority to effectively regulate the industry and PSIRA believes that fees must be reviewed to allow enough capacity to effectively regulate the industry and deliver excellent service to all our stakeholders,” said Chauke.
Legal representatives from PSIRA are still studying the judgment and will communicate the way forward to the industry stakeholders in due course.
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