Recently, a number of companies - which operate food and drink kiosks on the main beaches in Tel-Aviv and which rent out beach furniture (sun umbrellas, deck chairs and sun-beds) – filed a petition against the Tel-Aviv Municipality. The petitioners conduct their operations further to franchises which were granted to them resulting from various tenders, which had been published by the Municipality, and further to agreements entered into with the Municipality. While the agreements for the food and drink kiosks were still in effect, the agreements which enabled them to rent out beach furniture had expired. The petitioners sought to prevent the Municipality from starting to rent out such furniture itself without any tender offer to private entities. According to the petitioners, the agreements for the operation of the food and drink kiosks and the renting out of the beach furniture are interdependent and resulted in reliance which prevents that Municipality from changing its policy in this matter.
The Administrative Affairs Court in Tel-Aviv rejected the petition and found that there is nothing in the agreements for the operation of the food and drink kiosks to link into the arrangements for the rental of the beach furniture, and these agreements are not interwoven. The agreements for the rental of the beach furniture are valid for one year and the Municipality has the option to extend them. By contrast, the agreements for the operation of the food and drink kiosks are valid for a longer period.
The petitioners claimed that for many years the beach furniture has been rented out by the franchisees who had been the successful bidders in the tenders for the operation of the food and drink kiosks on the neighboring beaches. The petitioners claimed that this conduct provides them with a legitimate interest to continue to rent out the beach furniture. This claim was also rejected by the court on the ground that it contradicts the language of the agreements and also that - under general principles of administrative law in this context - no person has a proprietary right in the continuation of an economic policy which has been adopted towards such person.
The petitioners also claimed that the operation of the services by the Municipality would be ultra vires. To this argument the court answered that the services of providing beach furniture for the benefit of the public, in and of itself, was a municipal service that the Municipality is empowered to perform under the Municipalities Ordinance, whether pursuant to Section 249(2) of the Ordinance (which addresses the provision of services for the welfare of the public) or pursuant to Section 249(8) (which grants the Municipality with the power to supply, install and establish rest or vacation places for public use). It was decided that the Municipality has the power to charge for the service in order to be able to fund it, since this is not an 'obligatory' payment but rather a voluntary payment made by the beach goers. It was noted that is in keeping with the Park Ra'anana precedent (HCP 8576/00 Adam Teva et al v Ra'anana Municipality – 19/10/04). In addition this does not involve flagrant business-economic activities of the Municipality but rather services provided for the benefit of residents.
Reference: Admin Petition (Tel Aviv) 23093-04-15 E.R.N. (Doctori) Management and Maintenance Ltd v Tel-Aviv-Yafo
