Security Industry Alliance v Private Security Industry Regulatory Authority and Others (479/13) [2014] ZASCA 99; 2015 (1) SA 169 (SCA); [2014] 4 All SA 21 (SCA) (15 August 2014)

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[2014] ZASCA 99
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Security Industry Alliance v Private Security Industry Regulatory Authority and Others (479/13) [2014] ZASCA 99; 2015 (1) SA 169 (SCA); [2014] 4 All SA 21 (SCA) (15 August 2014)

THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
No: 479/13
Reportable
In
the matter between:
SECURITY
INDUSTRY
ALLIANCE
.............................................................................
APPELLANT
and
PRIVATE
SECURITY INDUSTRY REGULATORY
AUTHORITY
.....................................................................................................
FIRST
RESPONDENT
CHAIRPERSON
OF THE PRIVATE SECURITY
INDUSTRY
REGULATORY
AUTHORITY
..............................................
SECOND
RESPONDENT
MINISTER
OF
POLICE
.................................................................................
THIRD
RESPONDENT
Neutral
citation:
Security Industry
Alliance v Private Security Industry Regulatory
Authority
(479/13)
[2014] ZASCA 99
(15 August
2014)
Coram:
Mpati P, Mhlantla, Leach JJA and Hancke
and Swain AJJA
Heard:
5 May 2014
Delivered:
15 August 2014
Summary
:
Administrative law – administrative action – review –
making of regulations providing for payment of fees in
security
industry – validity of amendment to regulations challenged
under
Promotion of Administrative Justice Act 2000
of 1994 –
error of law not included as ground of review but flows from papers –
applicant entitled to raise it.
ORDER
On
appeal from:
North Gauteng High Court,
Pretoria (Vorster AJ sitting as court of first instance):
1 The appeal is
upheld.
2 The first and
second respondents are ordered to pay the appellant’s costs of
the appeal, which shall include the costs of
two counsel.
3 The order of the
court below is set aside and the following order is substituted in
its stead:
‘
(a)
The application succeeds.
(b) The amendment to
the regulations made under sections 43 and 44(7) of the Private
Security Industry Regulation Act 56 of 2001,
promulgated by the third
respondent in
Government Gazette
No 34775 of 25 November 2011,
is set aside.
(c)
The first and second respondents are ordered to pay the applicant’s
costs, which shall include the costs of two counsel.’
JUDGMENT
MPATI
P (MHLANTLA, LEACH JJA and HANCKE and SWAIN AJJA concurring):
[1]
This appeal emanates from a decision of the North Gauteng High Court
(Vorster AJ) dismissing the appellant’s application
to set
aside an amendment to regulations promulgated by the third respondent
and in terms of which security service providers,
in the security
industry, are required to pay increased levies. Section 2 of the
Private Security Industry Regulation Act 56 of
2001 (the Act)
establishes the Private Security Industry Regulatory Authority, the
first respondent, to which I shall refer as
‘the Authority’.
Its primary objects are to regulate the private security industry and
‘to exercise effective
control over the practice of the
occupation of security service provider in the public and national
interest and the interest of
the private security industry itself . .
.’ (s 3). The Authority is governed by a Council, established
in terms of s 6 of
the Act. Its funds, which consist of money from
any legitimate source, must be used for defraying the expenditure it
has incurred
in the achievement of its objects and the performance of
its functions (s 16). Although the Authority is enjoined by s 5(4) of
the Act to ‘perform its functions in terms of this Act and the
Levies Act [23 of 2002] . . .’ the latter Act is yet
to come
into operation.  The Act, on the other hand, came into operation
on 14 February 2002 and repealed, on that date, the
Security Officers
Act 92 of 1987 (repealed legislation), ‘with the exception of
its provisions, including the regulations,
relating to the deduction
and payment of annual amounts, the funding of the Security Officers’
Interim Board and the imposition
of criminal and other sanctions
relating thereto’ (s 43).
[2]
The objects of the Security Officers’ Interim Board (Board)
were, inter alia, to ‘exercise control over the occupation
of
security officer . . . and to ensure that the industry acts in the
public interest’ (s 2(2) of the repealed legislation).
The
transitional provisions of the Act provide, inter alia, that ‘all
assets, rights, obligations, duties and liabilities
of the Board vest
in the Authority and are deemed to have been acquired or incurred by
the Authority . . .’ (s 44(2)(
a
))
and that ‘anything done or any decision or steps taken by the
Board in terms of a provision of the repealed legislation
is deemed
to have been done or taken by the Authority’ (s 44(2)(
b
)).
[3]
One of the saved provisions of the repealed legislation is s 18, of
which subsec (1) reads:
‘
Every
person registered as a security officer shall annually on or before a
prescribed date pay to the Board the prescribed amount:
Provided that
with effect from 1 January 1994 the said amount shall be paid before
or on 1 April of the year concerned and of every
subsequent year
.’
The
other relevant saved section, for present purposes, is s 32, which
empowers the Board (now the Authority) to make regulations,
with the
concurrence of the Minister of Police (then Minister of Safety and
Security), relating to, inter alia, ‘any matter
which in terms
of [the repealed legislation] is required or permitted to be
prescribed’ (s 32(1)(
a
)).
[1]
In terms of s 32(2) different regulations may be made ‘with
reference to different categories of security officers’.
[4]
The regulations contemplated in s 32 of the repealed legislation were
issued and published in the
Gazette
.
[2]
Regulation 9(3) and (4) make provision for the formulae to be applied
for the determination of the prescribed amount contemplated
in
section 18(1) of the repealed legislation, to be paid in the case of
‘a security business registered as a security officer’

and of ‘a security officer, not acting as a security
business’.
[3]
The regulations were amended with effect from 1 December 2011. In
terms of the amendment the fees payable by a security business
to the
Authority were increased. Prior to the amendment the prescribed
amounts payable in terms of reg 9(3) and (4) were:
(a)
in respect of a security business:
(i)
R250 per month;
(ii)
70 cents per month for each security
officer rendering security service; and
(b)
each security officer was obliged to pay to
the Authority R7,00 per month.
The
issue in this appeal is the validity or otherwise of the decision of
the first and third respondents (the Authority and the
Minister) to
make and publish the amendment to the regulations.
[5]
The effect of the amendment is that a security business is now
required to pay R4 250 per annum and R7,00 in respect of
each
security officer rendering security service in its employ, whilst the
amount payable by each security officer has not been
increased. In
addition, the annual amount of R4 250 must be paid on or before
30 April of the year concerned, meaning that
it is payable in one
lump sum in advance. In terms of reg 7(5), however, a written
agreement may be concluded between the Authority
and any security
business ‘regarding the method and date of payment of the
prescribed amount’. The amount of R7 in
respect of each
security employee, which, depending on the size of the security
business, could be a substantial sum, is payable
within three days
after the end of each calendar month.
[6] After the
publication of the amendment to the regulations the appellant, an
association incorporated under s 21 of the Companies
Act 61 of 1973,
which describes itself as an umbrella body representing various
organisations with interest in the security industry,
including
security service providers and employers’ associations,
instituted review proceedings against the three respondents
seeking
the following relief:
‘
1.
The decision of the first and [third] respondents to make and publish
the Amendment to the Regulations under sections 43 and
44(7) of the
[Act] read with section 32(1) of the Security Officers Act . . . ,
promulgated on 25 November 2011 in Government Gazette
No 34775 (the
Amendment to the Regulations) is set aside.
2. The first
respondent is ordered to refund the difference, if any, between the
amount paid by members of the applicant in terms
of the Amendment to
the Regulations and the amount that they would have paid in terms of
the Regulations Relating to Security Officers
GN R797, published
under GG 12413, 2 April 1990.
3. The first
respondent and any other respondent that opposes this application are
ordered to pay the applicant’s costs.
4. . . .’
The
application was opposed, but the third respondent, the Minister of
Police (Minister), did not participate in the proceedings
both in the
court below and in this court. (I shall, however, refer to the first
and second respondents collectively as ‘the
respondents’.)
The court below dismissed the application with costs, holding that
the appellant had ‘failed to prove
a case on the merits which
justifies the granting of the relief claimed’. This appeal is
with its leave.
[7]
Section 32(4) of the repealed legislation provides that:
‘
Before
any regulations are made under subsection (1), a draft of the
proposed regulations shall be published by the Board in the
Gazette
together with a notice intimating that the Board intends to issue
such regulations as regulations under subsection (1) and inviting

interested persons to submit to the Board within a stated period, but
not less than four weeks as from the date of publication
of the
notice, any objections to or representations concerning the proposed
regulations: Provided that if the Board after the expiry
of the said
period decides on any alterations of the proposed regulations so
published, as a result of any objections or representations
submitted
thereanent, it shall not be necessary to publish such alterations
.’
It
is not in dispute that the Authority complied with the provisions of
s 32(4). A consultation paper was published on 2 April 2011
under the
heading ‘
Review of the annual fees
for the Private Security Industry’
and
sent to key stakeholders in the private security industry, including
the appellant.
[8]
The motivation for the extent of the increases proposed in the
consultation paper was set out as follows:
‘
Historically,
the annual fees were reviewed based on inflationary increases of each
financial year. However this inflationary increment
did not take
place since 2002. As such, the basis for determining the proposed
annual fees is as follows:
Normal
percentage of CPI compounded over the past 9 years; and
The
number of security officers employed by a security business or made
available by it to render a security service during a
calendar
month;
Monthly
gross income of security service provider;
Equitable
contribution by different classes or categories of security service
providers.’
The
consultation paper contained an undertaking that the industry would
be given an opportunity to submit their initial comments
and
representations on the proposed annual review. All comments and
submissions would be taken into account by the Authority ‘before

a request for concurrence is submitted to the Minister of Police for
his independent consideration’.
[9]
The appellant submitted its written comments on 14 April 2011 and
raised certain concerns such as, amongst others, that the
proposed
increase was not related to the consumer price index; that the
increase could not be absorbed by the industry and would
not be
economically viable; that no improved services by the Authority had
been proposed to justify the increase; and that the
amendment to the
regulations would create cash flow problems for the appellant’s
members. The Authority did not respond to
these comments, but alleged
in the answering affidavit that it had considered the submissions of
the appellant and other stakeholders.
On 26 August 2011 the
Minister, following recommendations made to him by the Authority,
published a draft of the proposed amendment
to the regulations in
Government Gazette
No 3450. Interested parties were invited to submit objections to or
representations on ‘the outcome of the consultation process
as
well as the recommendations’. This prompted the appellant to
make further written submissions to the Authority on 21 September

2011, which were essentially identical to those submitted in response
to the consultation paper. Specific comments were made in
these
submissions about small businesses such as electronic installers,
small and medium importers and distributors and locksmith
businesses
with fewer than five employees, who are all required to pay the same
annual fees as multi-national and bigger companies.
The submissions
concluded with a statement that the proposed increases were not
acceptable and that further discussions should
take place ‘in
order to arrive at an acceptable solution’.
[10]
According to the Authority only five submissions were received, which
objected to the increase of annual fees ‘despite
the fact that
the annual fees were never increased since 2001’. It stated
that after intensive deliberations upon receipt
of the submissions,
it proposed a reduction of annual fees that would be payable by
security businesses from R5 750 to R4 250.
It thereafter
‘presented the outcome of the consultation process with
recommendations to the Minister’ on 28 October
2011, who
published the amendments to the regulations in the
Government
Gazette
on 25 November 2011. The
amendments were to take effect on 1 December 2011.
[11]
It appears from the Authority’s final recommendations to the
Minister that, besides the objections by the stakeholders
in the
security industry, the National Treasury also expressed a concern
that the increases would have an inflationary impact on
the economy.
It therefore supported an increase of only 9.1 per cent. The
Authority dismissed Treasury’s concerns because
the percentage
increase it proposed ‘could not be justified without
quantifying the impact on the economy’. It may
be mentioned
that the annual fees of R4 250 and the R7 payable in respect of
each security officer represent increases of
41.6 per cent and 1000
per cent respectively.
[12] The
justification proffered by the Authority for the increases, as
contained in a justification report sent to the Minister
under cover
of a letter dated 22 June 2011, are:
(a) The current
annual fee structure creates inequalities between security officers
and business security providers in that the
security officers
contribute significantly towards regulation of the industry.
(b) The private
security industry has grown significantly over the last decade, which
poses challenges to the regulator with regard
to its capacity to
regulate the industry effectively. This means that the Authority must
expand its human capacity.
(c) Historically the
Authority has been performing poorly, posting deficits since 2009.
In
seeking the Minister’s concurrence for the proposed amendment
to the regulations the Authority submitted that, in the absence
of
Government funding, and in order to deal with the challenges facing
it, it has to source the necessary funds (increase in fees)
from the
only avenue available to it, namely the security industry.
[13]
Six main grounds of review were relied upon in the founding affidavit
in support of the relief sought by the appellant. I shall,
for
present purposes, mention only two. These were:
(a) The consultation
process leading to the promulgation of the new regulations was
inadequate and therefore procedurally unfair.
(b) The increases of
the prescribed amounts are unreasonable and irrational.
It
is on the basis of these and other grounds that the appellant sought
to review the decisions of the respondents in terms of the
provisions
of the Promotion of Administrative Justice Act 3 of 2000 (PAJA).
[14]
Elaborating on ground (a) the appellant alleged that although it
twice provided the Authority with written submissions, it
was never
given the opportunity to engage the Authority to explain the full
impact of the proposed changes despite expressly asking
for such an
opportunity. Nor did the Authority engage or attempt to engage with
it in an attempt to formulate a fee increase that
would be feasible
and workable for the security industry. The appellant thus concluded
as follows:
’
61.1
The [appellant] and its members were not given a reasonable
opportunity to make representations as required by section
3(2)(b)(ii)
of the PAJA. The decision to make the amendment to the
Regulations is accordingly procedurally unfair and reviewable in
terms of
section 6(2)(c) of the PAJA.
61.2 Due to the
failure to engage with the [appellant] and other stakeholders, the
respondents failed to take into account relevant
considerations in
deciding to make the Regulations. The decision is accordingly
reviewable in terms of section 6(2)(e)(iii) of
the PAJA.
61.3 Due to the
failure to consider, properly or at all, the representations of the
[appellant], the decision was not rationally
connected to the
information before the respondents and is reviewable in terms of
section 6(2)(f)(ii)(cc) of the PAJA.
61.4
The respondents’ failure to consider the representations of the
[appellant] demonstrates that the respondents did not
have an open
mind, and effectively decided the form that the amendment to the
Regulations would take before they embarked on the
consultation
process. As such, the decision was taken in bad faith and is
reviewable in terms of section 6(2)(e)(v) of the PAJA
.’
The
court a quo held that the Authority had taken the concerns raised by
the appellant in its written submissions into account and
found ‘that
the increase of the fees and the extent of such increase is clearly
rationally connected with the reason for
the decision, being the
budget deficit which the [Authority] seeks to address . . . ’.
[15]
It is not in dispute that the decision of the Minister to publish the
amendment to the regulations on the recommendation of
the Authority
constituted administrative action.
[4]
It will be convenient, at this stage, to deal briefly with a
conclusion reached by the court below in respect of an argument
advanced
before it by counsel for the respondents. Relying on the
judgment of the Constitutional Court in
National
Treasury & others v Opposition to Urban Tolling Alliance &
others
2012 (6) SA 223
(CC), counsel had argued that the Authority could
lawfully and reasonably make the decision to increase the fees within
the framework
of Government policy, which excludes the raising of
funding from sources other than the private security industry. The
making of
policy, so the argument continued, falls within the proper
preserve of the executive and is therefore not subject to scrutiny by

the courts. The court below said the following in its judgment (para
10):
‘
In
the instant case the [Authority] made a policy decision to service
its budget deficit by means of an increase of fees payable
by
registered security service providers and security officers employed
by them. It is common cause that the [Authority] was created
and
functions in terms of an Act of Parliament and has a public duty to
fulfil relating to
inter alia
the coordination and control of security services within the Republic
of South Africa. As such, it is part of executive Government.
It
follows that I am driven to the conclusion that the level of increase
of fees as a means to finance the budget of the [Authority]
is not a
lawful ground of review based on the level of the increase.
Consequently, I am of the view that the application must fail
on this
ground.’
Despite
this conclusion, though, the court proceeded to consider the merits
of the application, in the event of its interpretation
of the
Constitutional Court judgment being erroneous.
[16]
I agree with counsel for the appellant that the decision that funding
for the operational expenses of the Authority be sourced
from the
security industry, which was a policy decision, was never in issue in
the case. In
Urban
Tolling Alliance
the dispute was whether the users or a general fuel levy should fund
the improvement of roads. In the present matter the decision
to
increase the fees payable by the security industry constitutes the
application of policy and is therefore an administrative
decision,
susceptible to review.
[5]
It follows that the court a quo’s reliance on
Urban
Tolling Alliance
was misplaced. Indeed, counsel for the respondents did not support
the court’s finding.
[17] The appellant’s
primary complaint is that the consultation process followed by the
Authority was ‘conducted in
a mechanical and formalistic manner
without properly considering the comments received’
.
In
publishing its draft amendment to the regulations and calling for,
and receiving, comments and representations thereon the Authority

chose to follow the notice and comment procedure provided for in s
4(3) of PAJA to give effect to the requirement of procedurally
fair
administrative action (s 4(1), albeit that it was complying with the
provisions of s 32(4) of the repealed legislation. It
is not in
dispute that the regulations, or the decision to amend them,
materially and adversely affected the rights of the public,

particularly persons in the security industry. Section 4(3) of PAJA
provides:
‘
If
an administrator decides to follow a notice and comment procedure,
the administrator must –
(
a
)
take appropriate steps to communicate the administrative action to
those likely to be materially and adversely affected by it
and call
for comments from them;
(
b
) consider
any comments received;
(
c
)
decide whether or not to take the administrative action, with or
without changes; and
(
d
)
comply with the procedures to be followed in connection with notice
and comment  procedures, as prescribed.’
The
primary question here is whether the Authority and the Minister
considered
the comments received from interested parties and
decided
whether or not to proceed with the amendment to the regulations with
or without changes as required by the section.
[18]
In this court counsel for the appellant submitted that in amending
the regulations, thereby increasing the fees payable by
security
service providers by huge margins, the Authority and the Minister
failed to differentiate between small and large companies.
It was not
in dispute, so it was argued, that the Authority did not assess
whether smaller companies could cope with the increases.
Counsel
contended that the reason for the failure to differentiate was that
the Authority felt that its hands were tied, in that
it had no power
to differentiate. The Authority, therefore, appreciated that there
was a need to differentiate, but held the belief
that it could not do
so. Counsel accordingly submitted that the failure to differentiate
between small and large companies was
materially influenced by an
error of law on the part of the Authority and the Minister, and that
the regulations ought to be set
aside on this ground (s 6(2)(
d
)
of PAJA), because s 35(2) of the Act does make provision for
differentiation. Section 35(2) reads:
‘
Different
regulations may be made in terms of subsection (1) with reference to
different categories or classes of security service
providers.’
[19] In a final
report containing its recommendations to the Minister, sent under
cover of a letter dated 28 October 2011, and which
the Minister
approved and signed on 14 November 2011, the Authority dealt with
comments and submissions received by it following
the notice and
comment procedure. Under the heading ‘Analysis of comments’
it says the following about differentiated
fees:
‘
The
last comment relates to smaller business objecting to the R5 250.00
which is levied to each business regardless of size
of business.
Whilst all avenues were exhausted to arrive at a more equitable fee
structure, current legislation does not permit
classification of
business by size or income in order to arrive at differentiated fees.
This matter will only be addressed by the
introduction of the levies
through the Private Security Levies Act.
’
It
is clear from this comment that the Authority believed that the
legislation currently in force, including the saved provisions
of the
repealed legislation, did not permit it to differentiate between
small and large companies when it considered the increase
of annual
fees.
[20]
Counsel for the respondents conceded during argument that the advice
given to the Minister by the Authority, relating to a
lack of power
to differentiate as aforesaid, was wrong and was based on an error of
law. However, on 12 May 2014 the registrar
of this court received a
letter from the State Attorney, Pretoria, representing the
respondents, in which it was stated that upon
reconsidering the issue
after the hearing, they established that the submission made on
behalf of the appellant and conceded by
counsel for the respondents
was in fact not correct. The letter recorded further that the State
Attorney had received instructions
‘to file supplementary heads
of argument’ which were in the course of being prepared. The
appellant did not object
to this move. The supplementary heads were
subsequently lodged with the registrar and a response from counsel
for the appellant
was also delivered thereafter.
[21]
The supplementary heads of argument open with a statement that at the
hearing of this appeal ‘the appellant raised an
argument which
was not foreshadowed in its pleadings; raised at the court
a
quo
;
or its heads of argument in this Honourable Court’. The
argument referred to relates to the issue presently under discussion

in this judgment, namely whether or not the Authority had the power
to differentiate between small and large companies when it
considered
the increases. The issue involves a point of law, which may be raised
for the first time on appeal; provided it is covered
by the
allegations made in the papers and it does not result in unfairness
to the other party.
[6]
In my view, the issue was indeed covered in the papers.
[22]
I have mentioned above (in para 9) that specific comments were made
by the appellant in its response to the Authority’s

consultation paper, about small businesses such as electronic
installers, etcetera, who are all required to pay the same annual

fees as multi-national and big companies.  In its founding
affidavit the appellant alleged that the impact of the amendment
to
the regulations on many of its members will be significant and, ‘in
the case of the smaller service providers, potentially
fatal’.
The following allegation was also made in the founding affidavit:
‘
[The
Authority] did not bother to find out what the impact of the increase
would be on those who have to pay it. It did not assess,
for example,
whether the smaller marginal security service providers could cope
with the increase, due two weeks after the amendment
to the
Regulations were promulgated. This unbalanced approach is
unreasonable and unfair.’
In
the answering affidavit the Authority dealt expressly with the
objections relating to smaller businesses and concludes that the

issue ‘will only be addressed by the introduction of the
Private Security Levies Act’. Clearly, then, the argument
on
behalf of the appellant based on an error of law flows from the
papers and counsel was entitled to raise it.
[23]
With regard to the reference to s 35(2) of the Act as the basis for
the argument that the Authority did have the power to differentiate

between small and large companies, counsel for the appellant
maintained their stance in their response to the supplementary heads

of argument. Counsel submitted that ‘section 35(2) of the old
Act gives the Minister the power to make regulations “
as
to, generally, any matter which he considers necessary or expedient
to prescribe for the attainment of the objects of this Act”
’.
The reference to s 35(2) of the old Act is erroneous. Section 35 of
the repealed legislation has no subsec (2) and deals
with offences
and penalties. The correct provision is s 32(1)(
f
)
.
In view of what follows, however, it is not necessary to say more in
this regard.
[24] In the
supplementary heads of argument counsel for the respondent correctly
identified the saved provisions of the repealed
legislation that are
relevant to this issue, namely s 32(2). It reads:
‘
Different
regulations may be made under subsection (1) with reference to
different categories of security officers.’
Counsel
contended, however, that s 32(2) of the repealed legislation clearly
empowers the Authority, with the concurrence of the
Minister, to
differentiate only between categories of security officers and not
between categories or classes of security service
providers. The
contention is fallacious.
[25]
Section 18(1) of the repealed legislation
[7]
provides that every person registered as a
security
officer
shall
pay to the Authority a prescribed amount annually on a prescribed
date. The section does not provide that security service
providers
are required to pay an annual fee. But the regulations do contain
such a provision. They do so because ‘security
officer’
is defined
[8]
in the repealed legislation as ‘a person or employee referred
to in section 10(1)’.  Section 10(1) reads as follows:
‘
10
Persons prohibited from performing certain acts unless registered as
security officers. –
(1)
As from a date determined by the Minister
by notice in the
Gazette
-
(a)
no person shall render a security
service unless he,
and if such a person
is a company or a close corporation
, it
and every director of the company or it and every member of the close
corporation, are registered with the Board as a security
officer; and
(b)
. . . .’ (My underlining)
It
follows that, contrary to the view conveyed to the Minister by the
Authority that current legislation did not permit it to classify

businesses by size or income in order to arrive at differentiated
fees, it was so permitted. The Authority thus misconstrued the

provisions of the repealed legislation which empower it to make
regulations. It committed an error of law.
[26]
The question to be considered now is whether the error of law was
material. In
Johannesburg
Metropolitan Municipality v Gauteng Development Tribunal
2010
(6) SA 182
(CC) Jafta J observed that an error of law is not material
if it does not affect the outcome of the decision. This occurs, he
said,
if, on the facts, the decision-maker would have reached the
same decision, despite the error of law.
[9]
[27]
I have referred above to the Authority’s final report to the
Minister in which it stated, in essence, that were it not
for the
fact that ‘current legislation’ did not permit it to
differentiate between small and large security service
providers in
relation to the levies, it would have differentiated. The Authority
thus appreciated that there should be differentiation,
but considered
itself powerless to consider the imposition of differentiated fees.
Furthermore, the misapprehension of its powers
was the probable
cause, I consider, for the Authority not to take up the invitation of
the appellant for further consultation.
The failure by the Authority
to take up the invitation is the basis for the appellant’s
submission, which is not without
substance, in my view, that there
was inadequate consultation in the process leading up to the
promulgation of the amendment to
the regulations. In my view, the
error of law clearly affected the outcome of the Authority’s
decision. It was therefore
material.
[28]
It will be recalled, in addition, that in its report and
recommendations to the Minister the Authority recorded that it had

exhausted all avenues ‘to arrive at a more equitable fee
structure’. There is nothing in the report, nor in the
answering
affidavit, to indicate what those avenues were, or when
they were considered. Specific allegations were made in the founding
affidavit:
First, that although the appellant twice provided the
Authority with submissions, it was never given the opportunity to
engage
with the Authority to explain the full impact of the proposed
changes; second, that the Authority never engaged, or attempted to

engage, with it to attempt to formulate a fee increase that would be
feasible and workable for the security industry.  The

Authority’s response in the answering affidavit was simply that
the appellant ‘never requested an oral hearing’;
that the
stakeholders ‘were afforded the opportunity to file objections
and representations which they responded to including
[the
appellant]’ and that the recommendations were duly considered
by it and recommendations were made to the Minister. There
is no
evidence as to what avenues were followed or considered.
[29]
In the absence of information relating to what avenues it had
exhausted to arrive at a more equitable fee structure, I am unable
to
find that, what was conveyed to the Minister in this regard, was the
truth. In my view, the position is quite the contrary.
It is
difficult to comprehend how all avenues could have been exhausted
without any further consultation with the industry, including
the
appellant, after the impact of the increases on smaller security
service providers was squarely raised in the representations.
[30]
The Minister was thus misinformed on two fronts. The first is that he
was incorrectly informed that the Authority had no power
to impose
differentiated fees (an error of law). The second is that he was
incorrectly informed that all avenues had been exhausted
to arrive at
a more equitable fee structure when there was no evidence to support
that assertion (misinformation as to the facts).
In these
circumstances, the Minister could not be said to have taken a proper
decision, in my view. His decision was contaminated
by the incorrect
interpretation, by the Authority, of the provisions of s 32(2) of the
repealed legislation and the consequent
misapprehension of its
powers, as well as the factual misinformation. The amendment to the
regulations accordingly falls to be
set aside.
[31]
Merely for purposes of completeness, I mention the other grounds of
review.  The third ground was that the implementation
of the
increases was irrational. In this regard it was alleged that the new
regulations gave the industry a week to adjust to the
new fees
regime. It was therefore submitted, inter alia, that the time allowed
for the security industry to respond to the increases
was not
reasonable and could not be justified. The fourth ground was that
there was no reciprocal increase in service delivery.
It was alleged
that the Authority had implemented an astronomical increase, but had
put forward no concrete proposals to increase
or improve the quality
of service it provided. The fifth ground was that the amendment to
the regulations was not made in terms
of the relevant empowering
provisions. In terms of the Act the Authority may only recover
revenue for the purposes provided by
it (the Act). It was submitted
that the decision to promulgate the regulations was taken for a
reason not authorised by the empowering
statute and that it was not
rationally connected to the purpose of the Act. The sixth ground was
that the costs recovered were
in excess of what is required for the
Authority’s operations. It was alleged that there was an
over-recovery which exceeded
the limits of the Authority’s
statutory power to collect fees. Given the conclusion I have reached
based on the question
of the misinformation conveyed to the Minister
on the law and on the facts, it is not necessary to consider these
grounds.
[32]
No argument was advanced in this court in respect of the order sought
in the second paragraph of the notice of motion, viz.
an order
directing the Authority to refund the difference, if any, between the
amount paid by the members of the appellant in terms
of the amendment
to the regulations and the amount they would have paid had the
amendment not come into operation. No such order
shall issue.
[33]
In the result the following order is made:
1 The appeal is
upheld.
2 The first and
second respondents are ordered to pay the appellant’s costs of
the appeal, which shall include the costs of
two counsel.
3 The order of the
court below is set aside and the following order is substituted in
its stead:
‘
(a)
The application succeeds.
(b) The amendment to
the regulations made under sections 43 and 44(7) of the Private
Security Industry Regulation Act 56 of 2001,
read with section 32(1)
of the Security Officers Act 92 of 1987, promulgated in
Government
Gazette
No 34775 of 25
November 2011, is set aside.
(c)
The first and second respondents are ordered to pay the applicant’s
costs, which shall include the costs of two counsel.’
____________________
L
MPATI
PRESIDENT
APPEARANCES
For
appellant: G J Marcus SC (with him C Steinberg)
Instructed
by: Blake Bester Incorporated, Roodepoort
Phatshoane
Henney Inc, Bloemfontein
For
First and Second Respondents: T Motau (with him J Nortje)
Instructed
by: State Attorney, Pretoria
State
Attorney, Bloemfontein
[1]
The
original s 32(1) empowered the Minister to make regulations ‘after
consultation with the Board’.
[2]
GN
R797,
GG
12413,
2 April 1990.
[3]
The
formulae are set out in the regulation.
[4]
Minister
of Health & another NO v New Clicks South Africa (Pty) Ltd &
others (Treatment Action Campaign & another
as
amici
curiae
)
2006 (2) SA 311
(CC) paras 121, 128 and 135.
[5]
President
of the Republic of South Africa & others v South African Rugby
Football Union & others
2000 (1) SA 1
(CC) paras 141-143.
[6]
Barkhuizen
v Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC) para 39 and the cases there cited.
[7]
Quoted
in para 3 above.
[8]
The
definition must, logically, have been saved together with sections
18 and 32.
[9]
Johannesburg
Metropolitan Municipality v Gauteng Development Tribunal
2010
(6) SA 182
(CC) p
ara
91. See also
Hira
& another v Booysen & another
1992 (4) SA 69
(A) at 93G-H.