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[2016] ZASCA 85
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e.tv (Pty) Ltd and Others v Minister of Communications and Others (1039/2015) [2016] ZASCA 85; [2016] 3 All SA 362 (SCA); 2016 (6) SA 356 (SCA) (31 May 2016)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 1039/2015
In
the matter between:
e.tv
(PTY) LTD
FIRST
APPELLANT
NATIONAL
ASSOCIATION OF MANUFACTURERS
OF
ELECTRONIC COMPONENTS (First Group) SECOND
APPELLANT
SOS
SUPPORT PUBLIC BROADCASTING
COALITION
THIRD
APPELLANT
MEDIA
MONITORING AFRICA
FOURTH
APPELLANT
and
MINISTER
OF COMMUNICATIONS
FIRST RESPONDENT
MINISTER OF
TELECOMMUNICATIONS
AND
POSTAL SERVICES
SECOND
RESPONDENT
INDEPENDENT
COMMUNICATIONS
AUTHORITY
OF SOUTH AFRICA
THIRD
RESPONDENT
UNIVERSAL SERVICE AND
ACCESS
AGENCY
OF SOUTH AFRICA
FOURTH RESPONDENT
SOUTH AFRICAN
BROADCASTING
CORPORATION SOC
LIMITED
FIFTH
RESPONDENT
ELECTRONIC
MEDIA NETWORK LTD
SIXTH
RESPONDENT
ASSOCIATION OF
COMMUNITY
TELEVISION
– SA
SEVENTH
RESPONDENT
SOUTH
AFRICAN COMMUNICATIONS FORUM
EIGHTH
RESPONDENT
SENTECH
SOC LTD
NINTH
RESPONDENT
CELL
C (PTY) LTD
TENTH
RESPONDENT
TELKOM
SOC LTD
ELEVENTH
RESPONDENT
TELLUMAT
(PTY) LTD
TWELFTH
RESPONDENT
NATIONAL ASSOCIATION
OF
MANUFACTURERS OF
ELECTRONIC
COMPONENTS (Second
Group)
THIRTEENTH RESPONDENT
Neutral
Citation:
e.tv
(Pty) Ltd v Minister of Communications
(1039/2015)
[2016] ZASCA 85
(31 May 2016)
Coram:
Lewis, Saldulker,
Swain and Mbha JJA and Baartman AJA
Heard:
9 May 2016
Delivered:
31 May 2016
Summary:
Legality: an amendment by the
Minister of Communications of the Digital Broadcasting Migration
Policy in 2015 that did not follow
a process of consultation was
irrational and in breach of the principle of legality: amendment did
not achieve its purpose and
was thus irrational and invalid on that
basis too: the Minister purported to bind regulatory authorities and
broadcasters and thus
acted ultra vires: amendment reviewed and set
aside.
ORDER
On
appeal from:
Gauteng Division of the High
Court, Pretoria (Prinsloo J sitting as court of first instance).
1
The appeal is upheld with the costs of two counsel.
2
The respondents are ordered to pay the costs of the appeal jointly
and severally.
3
The order of the court a quo is set aside and replaced with the
following:
‘
(a)
The application is granted with the costs of two counsel where so
employed.
(b)
Clause 5.1.2(B)(a) of the Digital Migration Policy is declared
unlawful and invalid and is accordingly set aside.’
JUDGMENT
Lewis
JA (Saldulker, Swain and Mbha JJA and Baartman AJA concurring)
[1]
This appeal concerns the legality of an amendment to the Broadcasting
Digital Migration Policy (the policy), made by the Minister
of
Communications, Ms Faith Muthambi, in March 2015. The policy has had
a long gestation. It was first published in 2008 by the
then
Minister, Ms Ivy Matsepe-Casaburri. It was amended in 2012 by her
successor, Ms Dina Pule, and again in 2013 by her successor,
Mr Yunus
Carrim. The amendment in early 2015 by the present Minister is
alleged to have been effected unlawfully for a number of
reasons,
both substantive and procedural.
[2]
The first appellant, e.tv (Pty) Ltd, a national television
broadcaster, supported by several other parties, has challenged the
amendment, but the application to review it and set it aside was
opposed not only by the Minister, who is the first respondent,
but
also by other broadcasters, including the South African Broadcasting
Corporation SOC Ltd (SABC), the fifth respondent, and
Electronic
Media Network Ltd (M-Net), the sixth respondent, as well as a group
of representatives of the National Association of
Manufacturers of
Electronic Components (NAMEC), the thirteenth respondent (the NAMEC
second group). The first group in NAMEC, the
second appellant,
supports e.tv’s application to set aside the amendment, as does
SOS Support Public Broadcasting Coalition
(SOS), the third appellant,
and Media Monitoring Africa (MMA), the fourth appellant. The latter
bodies are associations formed
in the public interest and have no
financial interest in the outcome of the dispute. None of the parties
question the standing
of the different groups representing NAMEC
which take different positions.
[3]
The policy was published in terms of s 3(1) of the Electronic
Communications Act 36 of 2005 (ECA). Both the Constitution and
the
ECA empower the Minister of Communications to make policy regarding
broadcasting. The policy in question deals with digital
migration of
broadcasting signals. The process of dealing with migration to
digital broadcasting of a television signal began in
2005, following
a global trend. At present, signals sent to television aerials
(terrestrial television) are in analogue form. This
is the process
through which the majority of the population in the country receives
their television broadcast. There are
only two free-to-air
commercial terrestrial broadcasters at present, the SABC and e.tv.
There are also a number of community broadcasters
who use analogue
signals, as does M-Net, but it charges a fee to subscribers who use
it. Other licensed broadcasters who charge
a fee for broadcasting use
digital signals which are received through a satellite dish and a
decoder.
Digital
Migration
[4]
Terrestrial television, which is free-to-air, is presently available
on four channels, three run by the SABC, and one by e.tv.
Analogue
technology entails the transmission of the television picture and the
sound in their entirety. The policy was designed
to change this to
require that all signals be broadcast digitally. Digital broadcasting
entails converting the picture and the
sound into compressed digital
information and transmitting it so compressed. When the signal is
received it is converted by a device
back into a full picture and
sound on the viewer’s television set. The reason for changing
to digital technology is to free
up signal space for other purposes,
and is universally acknowledged to be a necessary process. Indeed,
South Africa co-ordinates
its use of the signal spectrum with other
countries to ensure that there is no interference between
broadcasting signals. The International
Telecommunications Union, to
which South Africa is a party, has agreed that there should be a
switch from analogue to digital broadcasting,
the due date for which
was June 2015. That did not happen for a variety of reasons, not
least of which is the current litigation.
The process in terms of
which the shift from analogue signals to digital signals will take
place is referred to as the ‘digital
migration process’
as all terrestrial viewers will have to migrate from receiving
analogue broadcasts to receiving them in
digital form. Digital
migration has thus not yet occurred.
[5]
The migration process is unfortunately costly, because most people in
South Africa do not possess television sets that have
an in-built
device to convert signals broadcast digitally: these are becoming
increasingly common, but are unaffordable at present
by the majority
of television viewers who are poor. Television sets that do not have
built-in devices to convert the digital signal
will require set-top
boxes (ST boxes or STBs, as they are referred to in the policy) to
receive and convert the digital signal.
Such boxes will not be
required indefinitely, but at least for the foreseeable future while
the majority of people in the country
still possess television sets
that can receive only analogue signals.
[6]
It is estimated that more than eight million households currently
rely on terrestrial television. Thus at least eight million
ST boxes
will have to be manufactured and supplied at a cost of some R600
each. This amount is beyond the reach of at least five
million
households. The government has resolved to subsidize the cost of five
million ST boxes and provide them at no cost to those
who need them.
Encryption/decryption
or conditional access
[7]
The contested issue is whether the subsidized ST boxes should be
manufactured so as to enable them to decrypt signals that are
encrypted. e.tv wishes to encrypt the signals that it transmits for a
variety of reasons, and so considers that the subsidized
ST boxes
should have decryption capability (referred to, generally as
‘encryption capability’). The first group of
NAMEC, which
will manufacture the ST boxes, also argues that encryption is
desirable, as do SOS and MMA. e.tv initially took a
different stance
in 2008, but subsequently changed its approach. The SABC, M-Net and
the second group of NAMEC oppose the introduction
of decryption
capability. It is not necessary to determine which approach is
better, although the debate has some bearing on the
legality of the
2015 policy as amended, and I shall turn to it in due course.
Encryption is also referred to as conditional access.
[8]
It is agreed by all concerned, however, that the ST boxes should have
some form of technological control. This would determine
the extent
to which ST boxes can be managed from and interact with the point
from which a broadcast emanates. The first policy,
published in
2008, stated that the ST boxes would ‘have a control system to
prevent STBs from being used outside the borders
of South Africa and
to disable the usage of stolen STBs’ (clause 5.1.2.2). It also
provided that ST boxes would have ‘capabilities
to unscramble
the encrypted broadcast signal so that only fully compliant STBs made
or authorized for use in South Africa can work
on the network’
(clause 5.1.2.7). In order for ST boxes to have decryption
capability they must be loaded with particular
software, hardware and
decryption keys.
[9]
But there appears to be some confusion about the control requirement
in subsequent iterations of the digital migration policy.
In February
2012, Minister Pule published amendments to the policy, and clause
5.1.2.7 was changed. It provided that ST boxes should:
‘
include
a STB control system that will protect the investment by government
in its STB subsidy scheme, as well as the electronic
manufacturing
industry. A robust STB control will also benefit consumers by
ensuring that they do not have to own multiple boxes.
Government
believes that the needs of consumers should be at the forefront of
the DTT [digital terrestrial television] process;
the STB control
system provided will be interoperable with other systems’.
There
is no express reference to encryption. But the national standard for
ST boxes, formulated by the South African Bureau of Standards
and
published by Ms Pule in June 2012, makes it clear that conditional
access was intended.
[10]
The standard states that:
‘
The
main functional elements specified for security are: a) a secure
over-the-air software and bootstrap loader; b) a mechanism
to prevent
STB decoders from functioning in non-RSA DTT networks; c) STB control
system that will enable mass messaging.
Detailed
security requirements are not specified in this document.
The STB
decoder manufacturer is responsible for the implementation of the
security requirements specified by the free-to-air individual
broadcasting service licensees in South Africa
and for the proper
configuration of the chipsets.
Manufacturers
can obtain the security requirements from the free-to-air individual
broadcasting service licensees in South Africa
. . . .’ (My
emphasis.)
[11]
Implicit in this is the requirement that ST boxes should have
encryption capability. It was thus understood by all parties
that
encryption, or conditional access, was required in terms of the 2012
policy. That this was the position adopted by Minister
Pule is
underscored by the answering affidavit in an application brought by
e.tv against the Minister in 2012 (
e.tv v Minister of
Communications & others
[2012] ZAGPJHC 268 per GC Pretorius
AJ) in which e.tv challenged the validity of a decision by Minister
Pule that the ST boxes
be manufactured and supplied by Sentech Ltd.
The deponent on behalf of the Minister stated, in relation to the
appointment of Sentech
as the ST box manufacturer, that Sentech had
over the years operated a full conditional access system for
encrypting content and
gained experience in operating such a system.
It continued:
‘
However,
for the existing Conditional Access to meet the requirements of the
STB control as defined in the policy and subsequently
in terms of the
SABS (
SANS 862
)
standard, there was a need for Sentech’s system to be
upgraded.’
I
shall refer to the judgment of the high court as
e.tv
2012
and discuss it
more fully later.
[12]
It is to be noted that all pay television operators, like M-Net and
Multichoice (DSTv) (both owned by Naspers Ltd) broadcast
using
encryption technology to ensure that only fee-paying subscribers can
watch their broadcasts. e.tv argues that it is necessary
also for
free-to-air broadcasters to prevent the importation or sale of poor
quality products. SOS and MMA argue in addition that,
to ensure high
quality broadcasting (in high definition format), and to prevent
piracy, encryption is necessary for terrestrial
television as
broadcasters will not be able to acquire high-quality programmes from
studios unless they can assure them of the
security of broadcasts.
This is necessary to meet the objectives for which they campaign –
open, competitive and high-quality
broadcasting. The Minister, the
SABC and M-Net argue otherwise. Whether e.tv and the other appellants
are correct is not, as I
have said, in issue. What is at issue is
whether the policy was radically changed after 2012.
[13]
In December 2013 a different Minister of Communications, Mr Yunus
Carrim, gave notice that he intended to change the policy.
In his
statement published for comment, he said that the proposed amendments
would ensure that the ‘extent of monopolisation’
would be
reduced and competition encouraged ‘by creating space for new
players in the pay television market’. This
cannot be done
without encrypting broadcast signals. Cognisant of the decision in
e.tv 2012
,
that held that an attempt by Minister Pule to determine who would
manufacture the ST boxes was invalid, Minister Carrim said that
while
government has the right to make policy on ST Box control, it could
not prescribe the supplier, the operator of the control
system, or
the type of control to be used. He said that ‘broadcasters are
free to decide whether they want to use control
or not’. That
was said in the context of denying that a decision had been made
about the management of a control system,
and stating that government
was not prescribing encryption or conditional access. He also stated
that the cost per ST box for control
would be about R20, and that
broadcasters wanting to use a control system would have to pay
government for that cost. Minister
Carrim presented these proposals
to cabinet on 18 February 2014.
[14]
e.tv and other broadcasters made submissions to the department in
early 2014. e.tv and SOS welcomed the compromise proposed
–
that broadcasters who wished to encrypt their signals could do so at
their own cost. SOS issued a press statement noting
that the Carrim
proposals were a ‘valiant compromise’, the result of
which was that ‘STBs would have the capacity
to have a control
mechanism through encrypted television signals, but that this
potential would only be implemented if broadcasters
wish to do so’.
[15]
The SABC and M-Net, on the other hand, opposed the proposed
amendment. The SABC said in its submission that, in the public
interest, there should not be conditional access for free-to-air
broadcasting. It would detrimentally affect consumers, driving
up the
cost of ST boxes, and the global trend was against it. M-Net claimed
that the Minister did not have the power to prescribe
conditional
access, citing the decision in
e.tv
2012
as authority
in this regard. It is thus clear that the 2013 proposed amendments
were understood by all concerned to permit encryption
capability on
the subsidized ST boxes, albeit at the broadcaster’s expense.
[16]
However, the proposed amendments were not made. After the general
elections in May 2014 the department of communication was
divided
into two departments and Ms Faith Muthambi became Minister of
Communications. (The other department was that of Telecommunications
and Postal Services).
[17]
No progress was made in so far as digital migration was concerned
throughout 2014. But on 18 March 2015 the Minister published
amendments to the policy. In effect, encryption capability was
dropped from the subsidized ST boxes. The SABC and M-Net have argued
that the amended clauses are no different in substance from those in
the 2012 policy and in the proposed 2013 amendments. The provisions
referred to earlier, and the responses to the Carrim proposals, show
that not to be correct.
[18]
Clause 5 of the policy was amended by the insertion of new
provisions. These are:
‘
5.1.2(A)
In keeping with the objectives of ensuring universal access to
broadcasting services in South Africa and protecting government
investment in subsidized STB market, STB control system in the
free-to-air DTT will be non-mandatory.
5.1.2(B)
The STB control system for the free-to-air DTT STBs
shall-
(a)
not have capabilities to encrypt broadcast signals for the
subsidized STBs
; and
(b)
be used to protect government investment in subsidized STB market
thus supporting the local electronic manufacturing sector.
5.1.2(C)
Depending on the kind of broadcasting services broadcasters may want
to provide to their customers,
individual
broadcasters may at their own cost make decisions regarding
encryption of content.
’ (My
emphasis.)
[19]
The result of this is that the subsidized ST boxes will not have
encryption capability. If e.tv or any other broadcaster wishes
to
broadcast encrypted signals it shall have to bear the costs of
supplying five million ST boxes at its cost, which is prohibitive
and
defeats the object Minister Carrim sought to achieve. This new
approach has drawn different responses and interpretations,
and the
Minister herself claims that it does not preclude e.tv from supplying
the necessary software for decryption after the ST
boxes have been
manufactured. I shall turn to that argument shortly.
[20]
The core of the appellants’ complaint is that, despite Minister
Muthambi’s statement, on publication of the amended
policy,
that she had taken into consideration submissions made by
stakeholders on the amendments proposed in December 2013, she
did not
consult them, nor the statutory bodies charged with the
implementation of the ECA, ICASA (the Independent Communications
Authority of South Africa established by s 3 of the Independent
Communications Authority Act 13 of 2000 and referred to in the
ECA as
‘the Authority’) or USAASA (the Universal Service and
Access Agency of South Africa established by s 80 of the
ECA, and
referred to in the ECA as the ‘Agency’). Both ICASA and
USAASA were cited as respondents by e.tv, but neither
has opposed the
relief sought and we do not know what their respective positions are.
They have been entirely silent in the litigation.
[21]
The grounds of review raised by e.tv in its application before the
court a quo were that the amendment, not being preceded
by a
consultation process, was unlawful and should be set aside; that
although it was an amendment of a policy, it nonetheless
amounted to
administrative action (the implementation of policy) and should be
set aside under the Promotion of Administrative
Justice Act 3 of 2000
(PAJA); that it was irrational and thus breached the principle of
legality, and that it was ultra vires.
Prinsloo J in the Gauteng
Division of the High Court (Pretoria) rejected all of e.tv’s
arguments and refused the application.
He based much of his reasoning
on the assumption that the 2015 amendment was not different in
substance from that adopted in 2012,
and the proposed amendments
advanced in 2013. The learned judge did, however, grant leave to
appeal not only to e.tv but also to
SOS, the first NAMEC group, and
MMA, which were cited as respondents by e.tv, but which supported its
application.
Was
consultation necessary?
[22]
Section 3 of the ECA is headed ‘Ministerial Policies and Policy
Directions’. Section 3(1) provides that:
‘
[T]he
Minister may make policies on matters of national policy applicable
to the ICT [information, communications and technology]
sector,
consistent with the objects of this Act and of the related
legislation in relation to-
.
. .
(d)
the application of new technologies pertaining to electronic
communications services, broadcasting services and electronic
communication network services; . . .
Section
3(1A), inserted in the ECA in 2007, provides that:
‘
The
Minister may, after having obtained Cabinet approval, issue a policy
direction in order to-
(a)
initiate and facilitate intervention by Government to ensure
strategic ICT infrastructure investment; and
(b)
provide for a framework for the licensing of a public entity by the
Authority [ICASA] . . . .’
Section
3(2) deals with the issuing of policy directions to either ICASA or
USAASA in relation to certain matters.
[23]
Section 3(5) is at the centre of the dispute. It reads:
‘
When
issuing a policy under subsection (1) or a policy direction under
subsection (2) the Minister-
(a)
must consult the Authority or the Agency, as the case may be; and
(b)
must, in order to obtain the views of interested persons, publish
the text of such policy or policy direction by notice in the
Gazette
-
(i)
declaring his or her intention to issue the policy or policy
direction;
(ii)
inviting interested persons to submit written submissions in relation
to the policy or policy direction in the manner specified in such
notice in not less than 30 days from the date of the notice;
(c)
must publish a final version of the policy or t
he
policy direction in the
Gazette
.’
[24]
Section 3(6) deals with amendments to policy directions. It reads:
‘
The
provisions of subsection (5) do not apply in respect of any amendment
by the Minister of a
policy direction
contemplated in subsection (2) as a result of representations
received and reviewed by him or her after consultation or publication
in terms of subsection (5). (My emphasis.)
[25]
Interestingly, the requirement of publication and consultation in
respect of policies was introduced only in 2014. Yet previous
policy
amendments were in fact published and there was consultation and
submissions were made, as evidenced by Minister Carrim’s
proposed amendments published for comment in December 2013.
[26]
The question thus arises as to whether Minister Muthambi was obliged
by the ECA to publish the amendment she introduced and
to consult
about it before it was ‘enacted’. She does not deny that
consultation was necessary. Rather, in the Department’s
answering affidavit, the Acting Director-General of the Department of
Communications asserted that the submissions of e.tv and
other
stakeholders made in response to Minister Carrim’s proposed
amendments were taken into account by the current Minister
and that
she had ‘met with various stakeholders on aspects of the BDM
policy to attempt to reach agreement’. Those
stakeholders were
not identified, however, and e.tv states, without any contradiction,
that it was not consulted about the difference
in approach taken by
Minister Muthambi.
[27]
The Minister also maintains that it is still open to e.tv to provide
technology for decryption in the subsidized ST boxes,
at its expense,
despite the wording of clause 5.1.2(B)(a) which states that the ST
boxes ‘shall not have capabilities to
encrypt broadcast
signals’. The answering affidavit also states that it is open
to free-to-air broadcasters to ‘invest
in whatever technology
they want in their own STBs and the relevant manufacturers will
manufacture such STBs to meet their requirements’.
This would
require the television viewer to use at least two ST boxes which is
what the previous versions of the policy wished
to avoid. The
appellants point out that it is not possible to ‘retrofit’
the subsidized STBs with decryption capability,
and that the Minister
had adopted contradictory positions in this regard. Which option is
the Minister saying is possible? Providing
an additional ST box for
each viewer, or, despite the express wording of the amended policy,
fitting the subsidized ST boxes with
encryption capability?
[28]
The contradictory positions adopted show, as e.tv points out,
considerable confusion, first as to the effect of her amendment,
and
second as to the meaning of the previous policy and proposed
amendments to that, which I discussed earlier, the last of which
was
that free-to-air broadcasters could provide encryption capability on
the government subsidized STBs at their expense. Had the
Minister
consulted interested parties such as the appellants she might have
understood the position better and dispelled the confusion.
I shall
discuss the varied responses of Minister Muthambi, and her apparent
confusion, in relation to the review ground of irrationality.
[29]
Accepting, as I do, that the amendment does introduce a completely
different provision in relation to conditional access in
the policy,
what required the Minister to consult interested parties and,
especially, ICASA and USAASA? The court a quo found that
even if
s 3(5) of the ECA obliged the Minister to have consulted on an
amendment to the policy, she had done so by considering
the
submissions made pursuant to the proposed amendments in 2013. But
that conclusion was premised on the assumption that the encryption
amendment in 2015 was not markedly different from the proposed
amendment in 2013, which in my view is not correct.
The
interpretation of s 3(5) of the ECA
[30]
e.tv argues that one must interpret the word ‘issue’ in s
3(5) so as to include ‘amend’. The word should
not be
confined to the original ‘enactment’ of the policy. This
would achieve the purpose of s 3(5), which is to promote
openness and
proper consultation in the process of shaping policy that affects the
public. All the more so, it would not undermine
the roles to be
played by ICASA and USAASA. Such an interpretation would also, it is
argued, give effect to the fundamental values
of the Constitution –
openness, transparency and accountability (
Doctors
for Life International v Speaker of the National Assembly &
others
[2006] ZACC
11
;
2006 (6) SA 416
(CC) paras 110-116).
[31]
Although a fundamental tenet of statutory interpretation is that
words should be given their ordinary linguistic meaning, this
is
subject to certain ‘riders’: statutory provisions should
be interpreted to give effect to the purpose of the statute;
they
must be properly contextualized; and they must be construed
consistently with the Constitution:
Cool
Ideas 1186 CC v Hubbard & another
[2014]
ZACC 16
; 2014 (SA) 474 (CC) para 28.
[32]
Requiring consultation prior to effecting an amendment would also,
argue the appellants, facilitate the involvement of ICASA
and USAASA:
s 3(4) of the ECA provides that both bodies, in exercising their
powers and duties under the Act and related legislation,
must
consider both policies and policy directions made by the Minister.
And s 3(9) provides that ICASA may make recommendations
to the
Minister on policy matters in accordance with the Act. Section 4 of
the ECA empowers ICASA to make regulations on a variety
of matters
including technical matters necessary or expedient for the regulation
of certain services. It makes no sense for significant
policy
amendments to be made by the Minister with no obligation to consult
ICASA, USAASA or other interested parties.
[33]
The legislature expressly provided in s 3(6) that amendments to
policy
directions
need not be published or be subject to a consultation process if they
were the result of submissions made after publication or
consultation. It is silent as to policy amendments. The court a quo
held that the inference to be drawn from the distinction is
that
amendments to a policy, as opposed to a policy direction (which would
usually be a direction to one of the statutory bodies),
need not be
published or made subject to a consultation process in terms of the
ECA. The finding is puzzling, for it seems to me
to be
quintessentially a situation where a member of the Executive should
be consulting on important matters of public concern.
[34]
In my view, s 3(6) simply excludes the need to publish amendments to
policy directions. That means that amendments to policies
must be
published. The default position is that policy amendments must be
published for comment and there must be consultation
about them.
There is no need to strain at the construction of the word ‘issue’.
Section 3(6) makes it quite clear that
only amendments of policy
directions, made as a result of representations received, need not be
published again for comment. Policy
amendments, on the other hand,
must be published for comment and a process of consultation followed.
This construction gives effect
to the constitutional values of
openness, participation and accountability and thus achieves the
purpose of s 3 of the ECA. In
any event, the principle of legality
itself imposes the obligation.
The
principle of legality
[35]
In
Kouga Municipality v Bellingan & others
[2011] ZASCA
222
;
2012 (2) SA 95
(SCA) this court held that a bylaw determining
liquor trading hours passed in 2006 was invalid because it had not
been published
as required by s 160(4)(b) of the Constitution and
s 12(3)(b)
of the
Local Government: Municipal Systems Act 32 of
2000
. The argument of the Municipality was that it had published the
bylaw in 2004 for comment. This court rejected the argument since
the
version published for comment in 2004 was markedly different from
that enacted in 2006. Cloete JA said (para 9) that the significant
differences between the two versions:
‘
lead
to the inevitable conclusion that the Municipality did not comply
with the provisions of the Constitution or the Systems Act
. . . .
The Municipality contended that the 2004 and 2006 publications were
part of one continuous process. But the changes to
the bylaws made
available pursuant to the first publication in 2004 were
far-reaching. . . . [N]ot every change has to be
advertised
otherwise the legislative process would become difficult to
implement; but here the two sets of proposed bylaws were
so markedly
different that republication of the revised draft was necessary to
meet the legislative requirements of the Constitution
and the Systems
Act. That did not happen. The second publication in 2006 could not
have served to alert the public that the Municipality
intended to
adopt an amended bylaw to regulate liquor trading hours.’
[36]
The same view was taken in relation to publication and consultation
in
Earthlife Africa
(Cape Town) v Director-General: Department of Environmental Affairs
and Tourism & another
[2005] ZAWCHC 7
;
2005 (3) SA 156
(C) paras 62 and 63. There Griesel J held that where
a decision-maker is apprised of new information before making the
decision,
an interested party ought to be afforded a hearing in
respect of that new fact.
[37]
There are of course differences between bylaws, administrative
decisions and policies. But the same principle underlies the
requirement of publication of a policy for comment: openness and
accountability, the foundations of a democratic State, require
the
participation of those affected. The court a quo recognized this
principle but considered that the 2015 encryption amendment
was not
markedly different from the 2013 proposals published for comment. As
I have indicated, that was simply incorrect. The SABC
and M-Net also
do not contend that the principle in
Kouga
is not applicable when dealing with policy amendments. They argue
that the court a quo correctly found that there was no marked
difference between the 2015 amendments and previous versions of the
policy. That argument cannot be sustained.
[38]
Where a policy or policy amendment impacts on rights (and in this
case on powers and duties in the case of ICASA and USAASA)
it is only
fair that those affected be consulted. Fairness in procedure, and
rationality, are at the heart of the principle of
legality. In
Albutt
v Centre for the Study of Violence and Reconciliation & others
[2010] ZACC 4
;
2010 (3) SA 293
(CC) the Constitutional Court dealt
with the President’s power to pardon offenders in terms of s
84(2)
(j)
of the Constitution. The President had announced a
special pardoning dispensation for offenders convicted of politically
motivated
crimes, but who had not participated in the Truth and
Reconciliation Commission process. One of the questions raised was
whether,
before exercising the power to pardon, the President was
required to afford a hearing to the victims of the offences. Ngcobo
CJ
said that the question to be asked was whether such a hearing was
rationally related to the achievement of the objects of the process.
He said (paras 50-51):
‘
All
this flows from the supremacy of the Constitution. The President
derives the power to grant pardon from the Constitution and
that
instrument proclaims its own supremacy and defines the limits of the
powers it grants. To pass constitutional muster therefore,
the
President’s decision to undertake the special dispensation
process, without affording victims the opportunity to be heard,
must
be rationally related to the achievement of the objectives of the
process. If it is not, it falls short of the standard demanded
by the
Constitution.
The
Executive has a wide discretion in selecting the means to achieve its
constitutionally permissible objectives. Courts may not
interfere
with the means selected simply because they do not like them, or
because there are more appropriate means that could
have been
selected. But, where the decision is challenged on the grounds of
rationality, courts are obliged to examine the means
selected to
determine whether they are rationally related to the objective sought
to be achieved. What must be stressed is that
the purpose of the
enquiry is to determine not whether there are other means that could
have been used, but whether the means selected
are rationally related
to the objective sought to be achieved. And if, objectively speaking,
they are not, they fall short of the
standard demanded by the
Constitution.’
[39]
In
Minister of Home Affairs & others v Scalabrini Centre &
others
[2013] ZASCA 134
; 2013 (6) 421 (SCA) Nugent JA (para 69)
said that the process by which a decision is taken, in
contradistinction to the merits
of the decision, might be ‘impeached
for want of rationality’. That was the view too of the
Constitutional Court in
Democratic Alliance v President of the
Republic of South Africa & others
[2012] ZACC; 2013
(1) SA
248 (CC), where Yacoob ADCJ said (para 34):
‘
It
follows that both the process by which a decision is made and the
decision itself must be rational.
Albutt
is authority for the same proposition.’
And
(para 36):
‘
The
means for achieving the purpose for which the power was conferred
must include everything that is done to achieve that purpose.
Not
only the decision employed to achieve the purpose, but also
everything done in the process of taking that decision, constitutes
means towards the attainment of the purpose for which the power was
conferred.’
[40]
In
Scalabrini
,
the Director-General of Home Affairs had taken a decision to close
down a refugee reception office in Cape Town. He had done so
without
consulting the Standing Committee for Refugee Affairs, as he was
obliged to do. He had in fact simply informed the Standing
Committee
of the decision which he had already taken. Moreover, his
representative in Cape Town, although charged specifically
with
consulting various stakeholders, including the respondent, an
organization that assists refugees, did not do so properly.
[41]
This court concluded that the failure to consult was not rational.
Not all decisions taken without consulting interested parties
would
be irrational, said Nugent JA (para 72). But in this case the duty
had arisen because of the particular circumstances.
‘
Such
a duty will arise only in circumstances where it would be irrational
to take the decision without such consultation, because
of the
special knowledge of the person or organization to be consulted, of
which the decision-maker is aware. Here the irrationality
arises
because the Director-General, through his representatives, at the
meeting . . . acknowledged the necessity for such consultation.
That
he did so is not surprising, bearing in mind that the organisations
represented at that meeting included not only the Scalabrini
Centre,
with its close links to the refugee community, but also the United
Nations High Commissioner for Refugees, and organisations
close to
the challenges relating to alleged refugees.’
[42]
The duty to consult arises from the value of fairness underlying the
principle of legality. It is recognized in English law
too. In
R
(on the application of Moseley) v Haringey London Borough Council
[2014] UKSC 56
the court held that a public authority’s duty to
consult before making a decision could arise in several ways
including the
common law duty to act fairly. The court (para 25)
repeated the requirements of fairness in the consultation process set
out in
the earlier decision of
R v Brent London Borough Council,
ex p Gunning
(1985) 84 LGR 168:
‘
First,
that consultation must be at a time when proposals are still at a
formative stage. Second, that the proposer must give sufficient
reasons for any proposal to permit of intelligent consideration and
response. Third, . . . that adequate time must be given for
consideration and response, and, finally, fourth, that the product of
consultation must be conscientiously taken into account in
finalizing
any statutory proposals.’
[43]
Failure to consult where a marked change in policy is made, and the
Minister’s failure to consult ICASA and USAASA is,
e.tv argues,
especially serious because the encryption amendment has implications
for the statutory and regulatory mandates of
the two bodies. As the
independent authority created to regulate broadcasting, ICASA’s
independence is enshrined in the Constitution
(s 192). It licenses
broadcasters and determines the terms of their licences. If a
broadcasting licensee, such as e.tv, encrypts
its signal, and the
five million ST boxes subsidized by government do not have encryption
capability, then e.tv might breach the
conditions of its licence, and
the digital migration regulations passed in 2012 (GN R1070,
GG
36000
, 14 December
2012).
[44]
USAASA also has a role to play in implementing the policy. The ST
boxes will be subsidized out of its budget, in turn allocated
by the
Department of Telecommunications and Postal Services. It would be the
body procuring the ST boxes and it is most curious
that the Minister
did not consult that body where the costs were of great importance.
The Minister did not claim to have consulted
either ICASA or USAASA.
And as I have indicated earlier, they did not play any role in this
dispute and we do not know what their
stance is.
[45]
In my view, the failure by Minister Muthambi to consult ICASA and
USAASA is even more egregious given their statutory duties.
(The
court a quo considered that they must in fact have been consulted.
But it based this conclusion on flimsy evidence and the
Minister says
nothing in response to the e.tv allegations about failure to consult
these bodies.) So too the failure to consult
the appellants, all of
whom had an interest in the policy, was quite simply irrational. Thus
the ECA’s silence on the requirement
of consultation in respect
of the amendment of the policy is of no moment. The Minister was
required by the principle of legality,
which encompasses the
obligation to act rationally, to consult the statutory bodies and all
broadcasters with an interest in the
digital migration process.
Minister Muthambi’s failure to consult, based upon her
misunderstanding of what the 2015 amendment
signified, was taken in a
procedurally unfair manner, and was irrational.
Irrationality
in the amendment itself
[46]
Minister Muthambi sought to achieve two goals that were not consonant
with the amended policy itself. She intended to
indicate that
government would not subsidize encryption, but that free-to-air
broadcasters would have the right to encrypt their
broadcasts. This
would have been no different from the proposals made by Minister
Carrim in 2013. But that is not what the amendment
states nor what it
achieves. Her response to the appellants’ objections is that
the only issue that e.tv did not want to
accept was that it pay for
encryption facilities itself. But in fact the amended clause
5.1.2(B)(a) expressly prohibits encryption
for the subsidized ST
boxes, despite the further clause inserted (5.1.2(C)) which states
that ‘individual broadcasters may
at their own cost make
decisions regarding encryption of content’. Government had made
a ‘political decision’,
she said, that it would not bear
the costs of encryption, and thus would not permit encryption
capability of the subsidized ST
boxes.
[47]
Yet, the policy permitted broadcasters to broadcast their signals in
encrypted form. So the poorest members of society would
not have
access to television of high quality, including high definition
display. (The SABC and M-Net deny that this assertion
is correct, but
as I have said, this appeal is not concerned with whether the one
view or the other is right.) The result is that
if e.tv or any other
broadcaster wishes to encrypt its signal it will have to provide
additional ST boxes to the five million households
that are given ST
boxes by government. That does not achieve the purpose of the policy.
Rationality review is ‘about testing
whether there is a
sufficient connection between the means chosen and the objective
sought to be achieved’:
Minister
of Defence and Military Veterans v Motau & others
[2014] ZACC 18
;
2014 (5) SA 69
(CC) para 69 fn 101.
[48]
The rationality of the 2015 amendment must be determined at the time
when it was made. The court a quo’s view that the
advantages or
disadvantages of encryption in some way impacted the rationality
enquiry was thus at odds with the requirement of
objective
rationality underlying the decision itself. Minister Muthambi did not
object to e.tv’s wish to encrypt its signals.
She wished to
ensure that broadcasters were free to decide whether or not they
wanted to encrypt signals, but not at government’s
expense. But
the policy does not achieve this.
[49]
By precluding the subsidized ST boxes from having encryption
capability the Minister has made it impossible for e.tv and other
broadcasters to broadcast encrypted signals to television viewers who
have subsidized ST boxes. This may place e.tv in breach of
its
licence conditions. It is not possible for e.tv – or anybody
else – to fit these ST boxes with encryption capability
after
manufacture. It would be required to manufacture additional ST boxes
for the five million households that cannot afford them
and
distribute them at no charge. It cannot do that. The cost would
exceed two years of its revenue, some R3 billion.
[50]
The effect of this, as pointed out by the first group of NAMEC, is
that once the analogue signal is switched off, free-to-air
broadcasters will not be able to encrypt their signals and all those
with television sets that do not have ST boxes with encryption
capability will not be able to access high-definition content that
can compete with the pay-television broadcasts. This is the
view also
of the Competition Commission, which advocates conditional access, as
well as that of SOS and MMA. All the appellants
advocate encryption
in order, inter alia, to facilitate competition amongst broadcasters.
The effect of the amendment is that high-quality
television will not
be available to the poorest in our society, and competition will be
stifled. The ability of free-to-air broadcasters
to encrypt their
signals, as allowed for in in clause 5.1.2(C), is thus illusory. The
Minister has thus not achieved her purpose
and the amendment is
irrational for that reason alone.
[51]
That irrationality is exacerbated by the Minister’s own
misunderstanding of the effect of the amendment. The appellants,
the
SABC and M-Net agree that the five million subsidized ST boxes will
not have encryption capability. The result is that if e.tv
encrypts
its signal, its broadcasts will not be seen by those who have only
the subsidized ST boxes. If e.tv wishes to avoid that
result it will
have to spend some R3 billion in providing additional ST boxes with
encryption capability to five million households
at no cost to them.
[52]
The Minister recognized this in responding to e.tv’s founding
affidavit. The Acting Director-General stated that e.tv
misunderstood
the effect of the amendment. He said:
‘
Paragraph
5.1.2(B)(a) is a policy statement that in respect of the free STBs
government shall not incur the costs of providing encryption
capabilities. In 5.1.2(C), it is made clear that the FTA broadcaster
is free to provide encryption broadcasts at its own cost.
This means
that the FTA broadcasters would bear the cost of providing encryption
capabilities. It is up to the FTA broadcaster
to elect the means for
providing such encryption capabilities, and the manufacturer to
supply them, to ensure that its broadcasts
are received.’
The
Acting Director-General stated later:
‘
It
is correct that the 5 million subsidized STBs shall not be able to
decrypt encrypted signals. This is due to the fact that the
government will not spend money to install encryption capabilities in
such STBs. The reason for this is simply that encryption
capability
is not required for purposes of broadcasting digital migration policy
for which the government is providing subsidized
STBs.’
[53]
On the other hand he stated elsewhere:
‘
As
I understand it, there is nothing preventing the applicant from
developing its own software that would enable its viewers to
receive
and view encrypted broadcast signals. The applicant may even
investigate the possibility of doing so through the government
subsidized STBs as long as it pays for it.
It
is correct that the encryption amendment was intended to clarify
government’s position that government subsidized STBs
will not
have encryption capability. The need for this clarification came as a
result of the submissions made to the Minister despite
the fact that
encryption capability was removed from the Policy in February 2012.’
That
is not correct, as I have shown. On this interpretation e.tv could
encrypt the government subsidized boxes at a cost of only
R100
million, which would be commercially feasible.
[54]
Which position of the Minister are we to accept? They are at variance
and the commercial implications are stark. The Minister’s
confusion as to the effect of the amendment shows its irrationality,
and for that reason too it is in breach of the principle of
legality
and invalid. The appeal must succeed on the ground that the amendment
was made in an irrational and thus unlawful manner
and is inherently
irrational as well.
The
ultra vires challenge
[55]
In addition to the rationality challenge, e.tv contends that the
encryption amendment is ultra vires in terms of the ECA. This
is
because the Minister is not permitted to make binding decisions on ST
box control issues that affect free-to-air broadcasters.
The Minister
is empowered by the ECA and the Constitution to make policies, but
she cannot regulate. The regulatory authority is
ICASA. e.tv argues
that by purporting to prohibit subsidized ST boxes from having
encryption capability (‘shall not have
capabilities to encrypt
broadcast signals for the subsidized STBs’) the Minister has
transgressed her policy-making powers.
[56]
Section 192 of the Constitution requires national legislation to
‘establish an independent authority to regulate broadcasting
in
the public interest, and to ensure fairness and a diversity of views
broadly representing South African society’. That
legislation
is the ICASA Act referred to above, section 4 of which determines
ICASA’s functions and powers. In
Trinity Broadcasting
(Ciskei) v Independent Communications Authority of South Africa
[2003] ZASCA 119
;
2004 (3) SA 346
(SCA) Howie P confirmed that ICASA
is ‘an independent arbiter and it must be left to act
independently, without governmental
pressure, real or apparent, of
any kind’ (para 32).
[57]
ICASA is given regulation-making powers by s 4 of the ECA. It is
specifically given the power to regulate broadcasting services
in
chapter 9 of the ECA. The Minister, by contrast, is given no
regulatory powers in respect of broadcasting by the ECA, nor can
she
make binding determinations. That was the effect of the decision in
e.tv 2012
,
which held that the Minister does not have the power to prescribe to
free-to-air broadcasters how they should manage ST boxes,
or to
prescribe or make binding decisions relating to ST box control. The
decision of Pretorius AJ in
e.tv
2012
was not
appealed against by Minister Pule, who announced that the department
accepted the decision. So too did the SABC and M-Net.
[58]
The court in
e.tv 2012
stated (paras 37 and 38):
‘
If
one has regard to the clear distinction in the ECA between the
authority and power of the Minister to make policy, and the power
and
obligation of ICASA to consider such policy when regulating the
broadcasting industry, it is clear to me that the Minister
does not
have the power to prescribe to free-to-air broadcasters how they
should manage set top boxes. Even if she had such powers,
her
decision would have been administrative action as part of policy
execution rather than policy formation.
It
follows from what I have set out that the Minister has no legal power
to prescribe or make binding decisions relating to set
top box
control.’
[59]
The SABC, M-Net and the second group of NAMEC argue that the policy
amendment is different from the direction to appoint Sentech
as the
manufacturer and supplier of the ST boxes. That is correct. But
Minister Muthambi purported to bind free-to-air broadcasters.
M-Net
argues that the amendment must be interpreted in its context: the
policy provides that it is the framework for digital migration,
and
is published to inform and guide the process. It aims to establish a
policy environment within which the migration process
is implemented
and will assist government to meet its commitments to the ‘people
of South Africa as well as the global community,
especially the
developing world’. M-Net points out that the words ‘will’
and ‘shall’ are used interchangeably,
and that the use of
‘shall’ in this context does not impose any duty.
[60]
But the effect of the encryption amendment, as the Minister states in
response to the application, is that the government will
not
subsidize the costs of encryption. The subsidized ST boxes will have
no such capability. That has the effect of requiring free-to-air
broadcasters to procure ST boxes with encryption capability for the
eight million households that rely on terrestrial television.
It will
not be able to recover the costs from the five million households
that cannot afford them. That seems to me to be a decision
that has
binding effect.
[61]
e.tv relies for its argument that the amendment is ultra vires on
Minister of
Education v Harris
[2001] ZACC 25
;
2001 (4) SA 1297
(CC). That matter concerned a
challenge to a policy enacted in terms of the
National Education
Policy Act 27 of 1996
. The policy purported to determine the age at
which children could first attend an independent school. Harris
challenged the validity
of the policy on the ground that the Minister
did not have decision-making powers in terms of that Act. The
Constitutional Court
held that the Act did not confer on the Minister
the power to make decisions.
[62]
The policy stated that it gave notice of the ‘age requirements
for the admission of learners to an independent school
or different
grades at such a school’. It continued: ‘A learner must
be admitted to grade 1 if he or she turns seven
in the course of’
a calendar year. ‘A learner who is younger than this age may
not be admitted to grade 1. . . .’
[63]
Sachs J said (para 11):
‘
Policy
made by the Minister in terms of the National Policy Act does not
create obligations of law that bind provinces, or for that
matter
parents or independent schools. . . . There is nothing in the Act
which suggests that the power to determine policy in this
regard
confers a power to impose binding obligations. In the light of the
division of powers contemplated by the Constitution and
the
relationship between the Schools Act [The
South African Schools
Act 84 of 1996
] and the National Policy Act, the Minister’s
powers under section 3(4) are limited to making a policy
determination and he
has no power to issue an edict enforceable
against schools and learners. Yet the manifest purpose of the notice
is to do just that.’
[64]
M-Net seeks to distinguish
Harris
on the basis of the peremptory language in the notice; the objective
of the notice, which was to achieve uniformity between independent
and state schools by extending a rule in the Schools Act to
independent schools and the fact that the Minister did not dispute
that he purported to bind independent schools.
[65]
The SABC argues that ICASA, like the authorities regulating schools,
must consider policies but does not have to follow them.
The policy,
it argues, does not fetter ICASA. Nothing in the policy prevents
ICASA from making a decision that the subsidized ST
boxes would have
encryption capability.
[66]
In my view, Minister Muthambi has issued an edict. She has decreed
that the subsidized ST boxes shall not have encryption capability.
USAASA has said nothing on this score. It cannot make a financial
decision that is not consonant with the policy. The Minister’s
decision does purport to bind. And that is borne out by the
statements in the answering affidavit that say that government will
not bear the costs of encryption and that if e.tv wishes to broadcast
an encrypted signal it must provide the ST boxes to consumers
at its
cost. That, as has already been said, makes it commercially
impossible for e.tv to encrypt its broadcast signals despite
the
statement in clause 5.1.2(C) that it is free to do so.
[67]
In my view Minister Muthambi did purport to issue a binding
direction, which she was not entitled or empowered to do. For this
reason too the encryption amendment is invalid. The court a quo thus
incorrectly found that the amendment was not ultra vires.
The appeal
must succeed on this ground as well.
The
PAJA challenge
[68]
e.tv, in the court a quo, challenged the policy amendment on the
basis that it amounted to administrative action (implementation
of a
policy). It failed in this respect as well. On appeal, it maintains
the challenge, but did not argue it at the hearing. In
view of the
findings that I have made as to the irrationality of the amendment,
and as to it being ultra vires, it is not necessary
to consider this
ground of review as well.
Costs
[69]
The last issue is that of costs. The four appellants are entitled to
the costs of the appeal, including those occasioned by
the employment
of two counsel. The respondents should bear joint and several
liability for these costs. The appellants are also
entitled to the
costs of the application in the court a quo.
Order
[70]
For these reasons I order that:
1
The appeal is upheld with the costs of two counsel.
2
The respondents are ordered to pay the costs of the appeal jointly
and severally.
3
The order of the court a quo is set aside and replaced with the
following:
‘
(a)
The application is granted with the costs of two counsel where so
employed.
(b)
Clause 5.1.2(B)(a) of the Digital Migration Policy is declared
unlawful and invalid and is accordingly set aside.’
_______________________
C
H Lewis
Judge
of Appeal
APPEARANCES
For
the First Appellant:
S Budlender (with him J Berger and R Tshetlo)
Instructed by:
Norton Rose Fulbright
South Africa Inc.,
Sandton
Webbers, Bloemfontein
For
the Second to Fourth Appellants: M du
Plessis (with him L Kelly)
Instructed
by:
Nortons Inc,
Sandton
McIntyre & Van der
Post, Bloemfontein
For
the First Respondent:
N H Maenetje SC (with him K Tsatsawane)
Instructed by:
Gildenhuys Malatji Inc,
Pretoria
Honey Attorneys,
Bloemfontein
For
the Fifth Respondent:
A R Bhana SC (with him J Mitchell) (Heads of Argument also prepared
by A Friedman)
Instructed by:
Ncube Incorporated
Attorneys, Rosebank
Phatshoane Henney
Attorneys, Bloemfontein
For
the Sixth Respondent:
D N Unterhalter SC (with him M Norton SC)
Instructed by:
Werksmans Attorneys,
Sandton
Matsepes Inc,
Bloemfontein
For
the Thirteenth Respondent:
T Motau
SC (with him L Kutumela)
Instructed by:
Mota Attorneys,
Waterkloof Glen
Motaung Attorneys,
Bloemfontein