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[2013] ZASCA 67
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Gauteng Gambling Board and Another v MEC for Economic Development, Gauteng Provincial Government (620/2012) [2013] ZASCA 67; 2013 (5) SA 24 (SCA); [2013] 3 All SA 370 (SCA) (27 May 2013)

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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
SCA CASE NO: 620/2012
Reportable
In the matter between:
GAUTENG GAMBLING BOARD
..........................................................
FIRST
APPELLANT
SEFAKO PHANUEL PRINCE
MAFOJANE
....................................
SECOND
APPELLANT
and
MEC FOR ECONOMIC
DEVELOPMENT, GAUTENG
PROVINCIAL GOVERNMENT
.....................................................................
RESPONDENT
Neutral Citation:
GGB
& another v MEC for Economic Development
(620/2012)
[2013]
ZASCA 67
(27 May 2013)
Coram:
NAVSA and
LEACH JJA, WILLIS, SWAIN and SALDULKER AJJA
Heard:
9 MAY 2013
Delivered:
27 May
2013
Summary: Member of the
Executive Council for Economic Development, Gauteng Provincial
Government dissolving the Gauteng Gambling
Board, ostensibly for not
complying with an instruction to relocate to a central location to
enable efficient service delivery
– held that she acted with an
ulterior purpose – to pressurise the Board into accommodating,
in a building owned by
it, a commercial entity named by her –
public officials are constrained by the principle that they may
exercise no power
and perform no function beyond that conferred on
them by law – principle of legality – decision to
terminate the membership
of all the members of the Board set aside –
court expressing displeasure at the high-handed manner in which MEC
behaved –
courts in future should seriously consider holding
such officials personally liable for costs.
______________________________________________________________________
ORDER
_____________________________________________________________________
On appeal from the South
Gauteng High Court, Johannesburg (Mathopo J sitting as the court of
first instance.)
The following order is
made:
(1) The appeal is upheld
and the respondent is ordered to pay the costs of the first and
second appellants on an attorney client
scale.
(2) The order of the
court below is set aside and substituted as follows:
‘
a. The
termination on 23 January 2012 by the respondent of the membership of
all the members of the Gauteng Gambling Board is declared
unlawful
and invalid.
b. The respondent is to pay the costs
of the application on the attorney and client scale.’
(3) The substituted order
set out in para 2 is effective from the date of this judgment.
_____________________________________________________________________________________
JUDGMENT
______________________________________________________________________
NAVSA JA (LEACH JA,
WILLIS, SWAIN & SALDULKER AJJA CONCURRING):
[1] Our country is a
democratic state founded on the supremacy of the Constitution and the
rule of law. It is central to the conception
of our constitutional
order that the Legislature, the Executive and Judiciary, in every
sphere are constrained by the principle
that they may exercise no
power and perform no function beyond that conferred on them by law.
This is the principle of legality,
an incident of the rule of
law.
1
Public
administration must be accountable and transparent. All public office
bearers, judges included, must at all times be aware
that principally
they serve the populace and the national interest. This appeal is a
story of Provincial Government not acting
in accordance with these
principles.
[2] The appeal is by the
Gauteng Gambling Board (the Board) and its chairperson Mr Sefako
Phanuel Prince Mafojane (Mafojane), against
the dismissal by the
Gauteng High Court (Mathopo J), of an application to review and set
aside the termination by the respondent’s
predecessor, of the
membership of all the members of the Board. The respondent is the
present Member of the Executive Council for
Economic Development in
the Gauteng Provincial Government. His predecessor (the MEC)
dissolved the Board, ostensibly on the basis
that they had
unanimously decided against complying with her instruction to
relocate their offices to a central hub in Johannesburg’s

central business district, in which her Department and associated
statutory organs are housed. Essentially, the complaint by the

appellants is that the MEC terminated their membership because they
had refused to obey her earlier instruction to accommodate,
in a
building owned by the Board, the offices of a commercial entity named
by her. The appellants contended that she had no power
to dissolve
the Board for the reasons contended by her or indeed on any other
basis. The appeal is before us with the leave of
this Court. The
detailed background is set out in the paragraphs that follow.
[3] The Board is a
statutory body established in terms of s 3 of the Gauteng Gambling
Act 4 of 1995 (the Act). For some time the
Board had conducted its
operations from premises which it owned in Centurion. As its staff
compliment and accommodation needs grew
it was compelled to find
accommodation elsewhere. The Board frequently holds public hearings
to determine applications for gambling
licences and thus has to cater
for parking for applicants and others who attend such hearings. At
the time that the Board contemplated
relocating it considered that
operating from Johannesburg would make it more accessible to those
whom it serves.
[4] Whilst the Board
itself took the decision to relocate, it nevertheless sought and
obtained the approval of the MEC’s predecessor
in that regard.
Since the relocation necessarily involved State expenditure the Board
had also sought and obtained approval from
both the provincial
treasury and the MEC’s predecessor, to utilize part of the
surplus funds it had accumulated to that end.
An amount of
approximately R101 million was spent on purchasing the land and
constructing a building that would meet the Board’s
specific
needs and to enable it to discharge its responsibilities in terms of
the Act. The new building to which the Board moved
is situated in
Bramley, Johannesburg.
[5] The Board had not
relinquished ownership of the building it had vacated in Centurion
and intended, in due course, to lease it
to suitable tenants. At one
point during 2011 the MEC requested the Board to accommodate a
commercial entity, styled African Romance,
in its new building in
Bramley. The building was not designed or able to house more than the
Board itself. Thus, the Board found
itself unable to accede to the
request. It did, however, offer to lease the building it owned in
Centurion to African Romance.
[6] In October 2011, in
order to resolve the apparent impasse, a meeting was held between
Board members, the MEC and members of
her department and African
Romance. At the end of that meeting the MEC
instructed
the
Board to provide African Romance with 1000 square metres of office
space at its Bramley Building – an instruction the
MEC
belatedly acknowledged, in her answering affidavit, to be unlawful.
At the conclusion of the meeting the Board was also instructed
to
relocate to Main Street in the Johannesburg Central business district
where the MEC’s department is housed.
[7] Board members
ultimately took the view that they could only operate and conduct
themselves within the parameters of their statutory
powers and
duties. They considered themselves bound by the prescripts of the
Public Finance Management Act 1 of 1999 (the PFMA)
and the Treasury
Regulations (the Regulations). In relation to the leasing of premises
owned by it the Board, as a public institution,
would have to follow
prescribed procedures and would require to be financially prudent and
accountable in incurring any expense
not budgeted for. All the more
so, because it had recently expended more than R101 million of public
money. I intend, later in
this judgment, to deal with the relevant
provisions of the PFMA and the Regulations.
[8] At the time the Board
took the view articulated in the preceding paragraph, it also adopted
the position now recanted, that
if the MEC delegated her power to
them they would be enabled to conclude a lease agreement with African
Romance, but nevertheless
thought it necessary to get approval from
the Provincial Treasury. The Board would at that time have preferred
to lease its Centurion
building to African Romance rather than
attempt to accommodate it in Bramley. The Board ascertained that
there were other premises
available to African Romance in Bramley and
informed the MEC about this in a memorandum to her head of department
(HOD). The memorandum
also set out the Board’s views referred
to in para 7.
[9] I consider it
necessary to quote in full the HOD’s written response:
‘
Your
memorandum dated 17 October 2011 is hereby acknowledged.
As you are aware EXCO recently took a
decision to rationalize agencies. As a result of this decision all
Agencies reporting to the
Department of Economic Development were
instructed to move to 124 Main Street, Johannesburg. The decision to
move all Agencies
were considered in line with and adherence to all
legislative requirements, amongst others the Public Finance
Management Act, 1999
(PFMA) and Treasury Regulations.
The Gauteng Gambling Board is listed
as a 3 C Public Entity in terms of the PFMA. Treasury Regulations and
more specifically Regulation
19.2 define a trading entity as an
entity operating within the administration of a department. It is
implied by the provisions
of Regulation 19.2 that the Member of the
Executive Council (MEC) or Head of Department (HOD) can request or
instruct Agencies
through the Board or CEO of the relevant Agency to
adhere to and implement operational decisions taken by EXCO which
might affect
them. In addition to the above the Gauteng Gambling Act
2001 also explicitly gives the MEC certain powers to instruct the
Board
in writing to perform certain functions.
With reference to the meeting held on
11 October 2011 at the Hyatt Hotel and your subsequent memorandum
alluded to above the Department
of Economic Development (DED) is of
the view that the instruction by the MEC to the Gauteng Gambling
Board (GGB) to provide accommodation
to Wakegem (Pty) Ltd t/a African
Romance and for GGB to move its place of business to 124 Main Street,
Johannesburg, is of an operational
nature and does not require the
involvement or decision making of the Board.
In light of the above and in the
spirit of good governance by the instruction of the MEC, you are
requested to immediately start
with the process of identifying
adequate office space for GGB at 124 Main Street in order for GGB to
be able to relocate by no
later than 31 December 2011. The CEO is
also requested to immediately identify, secure and enter into an
arrangement with African
Romance in respect to them leasing the
building from GGB.
Should a need arise to discuss this
matter further, please do not hesitate to call my office.’
The reference to EXCO is
a reference to the Executive Council of the Gauteng Provincial
Government.
2
[10] The Board
predictably took legal advice on the contents of the HOD’s
letter, as a result of which it decided to refuse
to comply with the
MEC’s instructions. There were threats by the MEC, reported in
the media, that the Board was to be dismissed
in its entirety.
Subsequently, the MEC telephoned the chairperson of the Board and
informed him that she expected the entire Board
to resign. The Board
unanimously refused to do so. On 16 January 2012 the MEC wrote a
letter to each member of the Board requesting
reasons as to why she
should not terminate his or her membership of the Board. They were
given two days – until 16h30 on
18 January 2012 – to
respond. These actions moved the Board, on 18 January 2012, to launch
an urgent application in the South
Gauteng High Court for an interim
interdict, inter alia, to prevent the MEC from carrying out her
threat to dissolve the Board.
After the application was launched and,
as it now appears, before the MEC became aware of it she purported,
on 23 January 2012,
to dismiss the entire Board. The material parts
of the letter purporting to terminate the membership of all the
members of the
Board, is reproduced hereunder:
‘
In my letter
addressed to you dated the 10
th
January
2012, in my capacity as the responsible Member for the Department of
Economic Development and in exercise of my powers under
Section 8(2)
of the Gauteng Gambling Act 4 of 1995 I invited you to provide
reasons, if any, why your membership on the board of
the Gauteng
Gambling Board (GGB) should not be terminated.
For amplification, I record that the
decision of the Gauteng Executive Committee to rationalise the
Gauteng Provincial State Owned
Agencies (GPSOA), which includes the
Gauteng Gambling Board, was influenced inter alia by the intention of
the Provincial Government
to facilitate service delivery in having
the identified GPSOA operating in the same premises.
In a letter dated the 18
th
January 2012 and in the letter
addressed to me purportedly signed by the Chairperson, Mr SP Mafojane
of the Gauteng Gambling Board
it has been communicated to me that Mr
Mafojane is mandated to respond to my letter dated the 10
th
January 2012 that you elected not to
furnish me with any reasons but instead to state that, “those
reasons are contained in
the court papers”, which papers have
not been furnished to me.
In the circumstances I hereby
terminate your membership of the Gauteng Gambling Board with
immediate effect.’
[11] The application for
the interim interdict was thwarted by the MEC’s termination of
the membership of all the members
of the Board, which was effected
after the litigation was launched but before the matter was heard. On
26 January 2012 when the
urgent interdict and an associated
application by the Board for final relief to set aside the
terminations effected by the MEC
were to be heard, the parties agreed
that the following order should be issued by the High Court:
‘
1. The
decision of the respondent to terminate the membership of the members
of the Board communicated on 23 January 2012 is hereby
stayed.
2. The parties are directed to make
every reasonable effort within the meaning of the Inter-governmental
Relations Framework Act,
1995 to settle the dispute in this matter.
3. Each party to pay its own costs.
4. The proceedings are adjourned sine
die.’
[12] An attempt to
resolve matters by way of mediation failed.
3
This resulted in, the
approach to the High Court by way of an application for final relief
in the following terms:
‘
4. Setting
aside the purported termination on 23 January 2012 by the Respondent
of the membership of the members of the Gauteng
Gambling Board (“the
Board”).
5. Interdicting the Respondent from
unlawfully interfering with the operations of the Applicant herein.
6. Interdicting the Respondent from
appointing an administrator pending the finalization of the review
application that was launched
in this Court on 18 January 2012.
7. Alternatively to paragraph above,
and in the event that an administrator has been appointed, setting
aside that appointment forthwith.’
[13] The basis of the
Board’s urgent and later application in the court below was
that it has statutory obligations and powers
within which it is
constrained to operate. It asserted that it was for it as a Board to
make the decision on where it is to be
located and when state
expenditure is to be incurred it cannot act without considering its
obligations in terms of the PFMA and
the Regulations. The Board
adopted the position that the MEC was ignoring the fact that it was
obliged to follow certain prescribed
procedures before it could sell
or lease immovable property – in line with the Regulations.
Furthermore, the Board took the
view that since it had recently
acquired the building it occupied, at great expense to the State, it
would be acting in breach
of its statutory and constitutional
obligations to incur further relocation expenses, which would be a
further unwarranted drain
on State finances. The Board feared that in
complying with the MEC’s instructions it might also incur
criminal liability
and be liable to statutory sanction in relation
thereto. The Board considered that the MEC had no power to act in the
manner complained
of and more particularly that she could not so act
on the postulated basis. In addition, the Board contended that the
terminations
were effected in a manner that was contrary to the
provisions of the Promotion of Administrative Justice Act 3 of 2000
(PAJA) both
substantively and procedurally. Ultimately, the Board’s
position was that the MEC had acted unlawfully in terminating the

membership of all its members.
[14] In resisting the
relief sought by the Board and Mafojane, the MEC stated that her
decision to dissolve the Board was that of
EXCO, acting through her.
In this regard she relied on the provisions of s 125(2)
(d)
and
(e)
of
the Constitution, the material parts of which are as follows:
‘
The Premier
exercises the executive authority, together with other members of the
Executive Council by –
. . .
. . .
. . .
Developing and implementing
provincial policy;
Co-ordinating the functions of the
provincial administration and its departments . . .’
[15] In essence the MEC
contended that the provincial executive had taken the decision that
statutory agencies, like the Board,
linked to her department were to
be located in a central hub to facilitate the functions of the
Provincial Administration and that
in doing so the executive had
acted within its powers to develop and implement policy. It was
contended by the MEC that the refusal
by the Board to relocate
frustrated the mandate of the provincial legislature and the
executive and militated against service delivery.
[16] The MEC pointed out
that eight other linked agencies namely Blue IQ, The Gauteng Economic
Development Agency, Gauteng Enterprise
Propeller, Gauteng Film
Commission, Gauteng Tourism Authority, Cradle of Human Kind World
Heritage Site and Dinokeng and The Liquor
Board have all now moved
into the building where her office is located.
[17] The MEC took the
view that the decision to terminate the membership of the members of
the Board was for ‘good reasons’
within the meaning of
that expression in ss 8(2) and (3) of the Act, the provisions of
which will be dealt with in due course.
[18] In her opposing
affidavit dated 25 January 2012, the MEC revealed for the first time
that subsequent to the purported dissolution
of the Board she had
appointed an administrator, which in her view was within her powers
as set out in s 18(1) of the Act.
4
[19] The MEC denied that
she had failed to afford board members an opportunity to be heard. In
this regard she referred to her letter
mentioned in para 10 above.
Far from being apologetic on this aspect, the MEC was emphatic that
board members were to blame for
failing to engage with her and make
representations concerning her intended termination of their
membership.
[20] In relation to her
prior instruction that the Board accommodate African Romance, the MEC
stated the following:
‘
I am advised
and now accept that I or the Head of Department could not instruct
the Board to conclude a lease agreement with any
entity. The mistaken
view was more intended to ensure that there are no financial losses
as a result of the Board moving its operations
to the City Centre. It
was a view purely intended to mitigate any possible financial loss.’
[21] In respect of
contentions by the Board and Mafojane that they were obliged by
statutory prescripts, more particularly the PFMA
and the Regulations,
to be financially prudent and accountable and therefore not liable to
follow her instructions to relocate,
the MEC, in her answering
affidavit, pointedly declined to join issue. Furthermore, the MEC did
not join issue with the Board that
the power to lease a building
owned by it fell squarely within its domain.
[22] As stated above, the
Board in motivating for interim relief, had referred to a newspaper
article by the Mail and Guardian.
Importantly, in that article,
reference is made to an e-mail apparently sent by the MEC to the
Board’s Acting Chief Executive
in November 2011, in which she
was alleged to have stated the following:
‘
I sense that
you want to use every trick in the book not to move offices. May I
suggest that you speed the process of moving before
I lose my cool
with you. I want to reiterate what I said to you over the phone while
I was overseas that the board has no role
nor responsibility on this
matter and if they want to get involved in admin work I will remove
all of the board ASAP. If you have
serious problems with my decision
please tender your resignation . . . ‘
In the founding affidavit
Mafojane referred to the apparent existence of the e-mail as an
indicator that the MEC, whatever the cost,
was intent on dissolving
the Board, which she considered to be obstructive. The MEC’s
response was that she did not intend
to respond to newspaper reports.
Thus she did not join issue on the existence of the e-mail. It is
common cause that subsequent
to the newspaper article the MEC phoned
Mafojane requesting the Board to resign.
[23] It is unchallenged
that on Monday, 16 January 2012, at a meeting of Chief Executive
Officers of provincial entities over which
the MEC held oversight she
told them that she intended to fire the Board and appoint an
administrator. It will be recalled that
on the same day the MEC wrote
the letter referred to in para 10.
[24] It will also be
recalled that in motivating her instruction for the Board to relocate
the MEC relied on a decision made by
EXCO. The latter took the
decision based on a document entitled
Business
Case for [Department of Economic Development] Agencies Migration
compiled by the MEC’s department. Significantly,
that document provides for the relocation of agencies which
apparently are
linked to the department, namely the Gauteng Film
Commission, The Gauteng Tourism Authority, Cradle of Human Kind,
Gauteng Economic
Development Agency, Gauteng Enterprise Propeller and
Blue IQ. That document was very specific in dealing with the
accommodation
needs of the stated related agencies and the budget was
specific and limited to those agencies. Although the MEC referred to
the
relocation of the liquor board being part of the EXCO decision,
its relocation was not motivated in the document. It is worth noting

that the named agencies all have a statutory origin and the parties
are agreed that they are all subject to the PFMA. No particulars
were
supplied of the circumstances under which
they
took their decisions to relocate and of the extent to
which they complied with their statutory obligations, either in
respect of
the statute in terms of which they were established or the
PFMA.
[25] Before the hearing
of the present appeal we received an application for leave to
intervene on behalf of persons who were purportedly
appointed as a
‘new Board’ by the Respondent, subsequent to the decision
of the court below, but pending the hearing
before us. The purpose of
the application for leave to intervene was stated by the principal
deponent, Mr Bally Paul Makgweba Chuene
(Chuene), formerly the
administrator, appointed by the MEC, to be as follows:
‘
I proceeded
to serve as the Administrator from [18 May 2012] . . . .
13.4 Accordingly during this period,
in my capacity as the Administrator, I made a wide range of decisions
affecting third parties.
These included:
13.4.1 More than 150 decisions
concerning the amendment or variation of gambling licences, in order
to accommodate (for example)
changes in shareholding or changes in
gaming positions;
13.4.2 Decisions approving
expenditure, for example for salaries and performance bonuses; and
13.4.3 Decisions concerning the
appointment of staff.
13.5 It is, I submit, imperative that
the validity of these decisions not be imperilled by any order given
by this Court in the
pending appeal.’
[26] I shall refer to the
persons who sought leave to intervene as the purported successors. In
the affidavit in respect of the
application for leave to intervene
they were adamant that they did not seek to become involved in the
question of whether the MEC’s
decision to terminate the Board
was lawful. They adopted no view in this regard and instead confined
themselves to the question
of the remedy (if any) to be granted in
the event that this Court upheld the Board’s submissions.
[27] A useful starting
point in resolving the dispute between the parties is a reference to
the material parts of the Act in terms
of which the Board was
established. The Act regulates and controls gambling within the
province. Section 3 establishes the Board
as a juristic person.
Section 4 stipulates the functions and powers of the Board, namely:
‘
(a) to
oversee and control gambling activities in the Province;
(b) to advise and make recommendations
to the responsible Member on matters in connection with the licensing
of persons to conduct,
and the regulation and control of, gambling in
the Province, either of its own accord or at the request of the
responsible Member;
and
(c) to exercise such powers and
perform such functions and duties as may be assigned to the board in
terms of this Act and any other
law.’
[28] In terms of s 4A the
MEC ‘must’, for each financial year after consulting the
Board, identify the Board’s
objectives and outcomes and
determine performance measures and indicators for assessing the
Board’s performance in relation
thereto. The Board itself is
obliged to submit proposals to the MEC in relation to matters
referred to above by no later than nine
months prior to the start of
each financial year or on a date otherwise prescribed. The
constitution of the Board is dealt with
in s 5 of the Act. The
persons identified as comprising the Board are intended to achieve a
balanced board with the necessary skills
and expertise to meet their
needs.
[29] Sections 8(2) and
(3) under which the MEC purported to act reads as follows:
‘
(2) ‘The
responsible Member may, after giving the board member concerned an
opportunity to be heard and after consultation
with the Standing
Committee of the Provincial Legislature responsible for economic
affairs, terminate the membership of any member
of the board if good
reasons exist for doing so.
(3) Without limiting the scope of
subsection (2), the reasons contemplated in subsection (2) may relate
to –
(a) the manner in which the Board has
performed its functions or exercised its powers.’
[30] Section 11 deals
with the manner in which the Board is to hold meetings and take
decisions. Section 12 provides for the staff
of the Board, including
the Chief Executive Officer. Section 14 allows for committees to be
appointed to assist the Board. Section
15 permits the Board in
meeting its objectives to call on expert and other assistance.
Importantly, s 16(1) provides:
‘
The Board
shall, subject to subsection (2), function in a transparent and open
manner.’
This provision is made
subject to non-disclosure of confidential and other information which
for present purposes require no further
exploration.
Section 17 deals with how
the funds of the Board are to be acquired and dealt with. Section 18
is of special importance in that
it deals with the accounting
responsibilities of the Board. Section 18(1) expressly makes the
Board an accounting authority subject
to the provisions of the PFMA.
Section 18(4) provides that the Board must:
‘
(a)
exercise the duty of utmost care to ensure reasonable protection of
the assets and records of the board;
(b)
act with fidelity, honesty,
integrity and in the best interest of the board in managing the
financial affairs of the board;
(c)
on request, disclose to the
responsible Member or the provincial legislature, all material facts,
including those reasonably discoverable,
which in any way may
influence the decisions or actions of the responsible Member or
provincial legislature; and
(d)
seek within the sphere of
influence of the board, to prevent any prejudice to the financial
interest of the state.’
[31] Section 18B entitles
an MEC, if he or she is satisfied that the Board has failed to
perform any function or exercise any proposed
power imposed on it in
terms of the Act or to comply with its strategic planning, to
instruct the Board to perform the functions
or exercise the power
concerned, which must be specified. The notice for such instructions
must set out the reasons therefor and
the steps that must be taken
and the period within which the instruction must be complied with.
Failure by the Board to comply
would have enabled an MEC to take
further steps.
[32] If an individual
staff member is involved, disciplinary steps could ultimately be
compelled by the MEC
5
.
If an individual board member is involved, that board member’s
membership may ultimately be terminated by the MEC
6
.
If an entire board is involved, the Board may in its entirety be
dissolved by the MEC
7
.
In all of these instances, in terms of s 18B(7), there has to be
‘good reasons’ for the MEC’s actions.
[33] In the event of the
entire board being dissolved, s 18C(1) enables the MEC to appoint an
administrator after consultation with
EXCO. The administrator is
empowered to perform the functions and exercise the powers of the
Board, excluding the granting and
revocation of licences.
[34] As can be seen from
all these provisions, the Board has a regulatory, statutory framework
to which it owes its existence and
from which its powers and
obligations are derived. Put simply, even though the MEC has
oversight and can take steps to ensure that
the Board conducts its
operations in accordance with the provisions of the Act, the Board
nevertheless has an independent statutory
existence with its members
being obliged to comply with their obligations in terms of the Act.
[35] Thus, the Board is
subject to the provisions of the PFMA which the Act makes expressly
applicable. It is to those provisions
that I now turn, the material
parts of which are set out in the paragraphs that follow.
[36]
Section
6 obliges the National Treasury inter alia, to exercise control over
the implementation of an annual national budget, including
any
adjustment budgets. Furthermore, the National Treasury must monitor
implementation of Provincial Budgets and promote and enforce

transparency and effective management in respect of revenue,
expenditure, assets and liabilities of departments, public entities

and constitutional institutions.
[37] Section 18 imposes
obligations on the Provincial Treasury to exercise control over the
implementation of provincial budgets
as well as promoting and
enforcing transparency and effective management in respect of
revenue, expenditure, assets and liabilities
of provincial
departments and provincial public entities. Section 21 obliges the
provincial treasury to enforce compliance with
the provisions of s
226 of the Constitution. Section 226 of the Constitution provides
that money may only be withdrawn in terms
of an appropriation by a
provincial Act or as a direct charge against the Provincial Revenue
Fund when it is provided for in the
Constitution or a Provincial Act.
[38] Section
34 deals with unauthorized expenditure and the circumstances and
processes required for it to be subsequently ratified.
Section 36
obliges every department and every constitutional institution to have
an accounting officer. Section 38 obliges accounting
officers to
ensure that represented institutions maintain effective, efficient
and transparent systems for financial and risk management
and
internal control. In addition accounting officers are required to
take effective and appropriate steps to prevent unauthorized,

irregular and fruitless and wasteful expenditure as well as losses
resulting from criminal conduct
.’
[39] It is not my
intention to deal in any detail with the Regulations. The Regulations
published in terms of s 76 of the PFMA
8
,
inter alia, contain provisions to prevent financial misconduct by
officials and employees of all departments and constitutional

institutions. Furthermore, they are designed to ensure budgetary
controls to prevent unauthorised, irregular and wasteful expenditure.

They also deal with asset and liability management. Accounting
officers have a responsibility to ensure that institutions they

represent implement systems and procedures when dealing with third
parties that are open, competitive and transparent and that
provide
safeguards against favouritism, improper practises and opportunities
for fraud, theft and corruption. Parts of the regulations,
as can be
expected, echo the provisions of the PFMA.
[40] The Board was
therefore obliged and well within its rights to be concerned about
fiscal prudence and accounting responsibility
in terms of the PFMA,
the Regulations and the Act. Indeed, it is startling that the MEC, in
issuing her instruction for the Board
to accommodate African Romance
and to relocate and in dealing with the Board’s resistance,
showed scant concern, if any,
in this regard.
[41] Counsel representing
the MEC was rightly constrained to concede that the sequence of
events, the written and verbal communications
between the Board and
the MEC and her department as well as other utterances and documents,
led to the ineluctable conclusion that
the MEC was motivated to act
in the manner complained of by an ulterior purpose, namely, to compel
compliance with the prior instruction
to accommodate African Romance.
[42] Initially the MEC
solicited the Board’s assistance in housing African Romance.
Her request then turned into an instruction.
Opposition to the
instruction led to further pressure being applied by the MEC.
Persistent opposition by the Board led to the drastic,
unwarranted
act of dissolution.
[43] The MEC then
instructed the Board to move to a central location, ostensibly
because this is what EXCO had decided was the best
means of achieving
administrative efficiency and service delivery. This clearly was
contrived. The Business Plan on which the MEC
relied does not provide
a basis for the instruction or the subsequent dissolution of the
Board. On the contrary, as pointed out
above, the Board was never
included in that plan as an ‘agency’ destined for
relocation. It, in any event, is questionable
whether an instruction
without more to relocate offices is rightly within the MEC’s
powers.
[44] The MEC’s
reliance on s 8 was misplaced. That section was intended primarily to
deal with the disqualification of individual
members of the Board.
First, on the basis set out in s 6 of the Act, all of which is
inapplicable
9
.
Second, a member of the Board is required to vacate office if he or
she has been absent for more than two consecutive meetings
of the
Board without leave of the Chairperson. In these instances the MEC,
in terms of s 8(2), may terminate the membership of
any member of the
Board. Admittedly, s 8(2) is worded widely, empowering the MEC to
terminate the membership of any member of the
Board, if ‘good
reasons’ exist to do so, as is the case with s 8(3), which
provides that the ‘reasons’
contemplated in s 8(2) may
relate to ‘the manner in which the Board has performed its
functions or exercised its powers’.
In the scheme of the Act, s
8 deals with instances unrelated to the facts of this case. They fall
to be dealt with in terms of
another section of the Act.
[45] If, as alleged, the
MEC had been dealing with a truly errant board, the applicable
statutory provision would have been s 18B
which, as appears above,
provides that the MEC may issue an instruction to a board failing to
perform any function or exercise
any power imposed on it by the Act.
Section 18B(7) sets out the consequences for failure of the board to
comply with such an instruction,
and reads as follows:
‘
The
responsible Member may at any time terminate the term of office of
any member of the Board or the
entire
Board
if in the responsible Member’s opinion there are good reasons
for doing so.’ (My emphasis)
It is the only provision
of the Act that deals with the dissolution of the board en bloc. The
similarity between s 18B(7) and ss
8(2) and (3) is that, in respect
of action taken under either section, ‘good reasons’ have
to exist.
[46] More than six
decades ago this court in
Van Eck N.O. and Van
Rensburg N.O. v Etna Stores
1947 (2) SA 984
(A)
said the following:
‘
For to
profess to make use of a power which has been given by statute for
one purpose only, while in fact using it for a different
purpose, is
to act
in
fraudem
legis
,
construing that term in the more restricted manner adopted by the
majority of this Court in the case of
Dadoo
Ltd. v Krugersdorp Municipal Council
(1920,
A.D. 530)
(see also
Commissioner
of Customs & Excise v. Randles Bros. & Hudson Ltd
.
(1941, A.D. 369)).
Such a use is a mere
simulatio
or pretext. . . . And I should add that, of course, if the person
exercising the power avowedly uses it for some purpose other
than
that for which alone it has been given, he acts simply
contra
legem
:
where, however, he professes to use it for its legitimate purpose,
while in fact using it for another, he acts
in
fraudem legis
(
D
.1.3.29,
as explained in
Dadoo’s
case, and compare
In
re Marsden’s Trust
(
supra
)).’
[47] In present-day
jurisprudence, acting with an ulterior motive or purpose, is subsumed
under the principle of legality
10
.
Section 6(2)(
e
)(ii)
of PAJA makes administrative action taken for an ulterior purpose or
motive subject to review. The classification of an action
taken by a
member of government is immaterial. As stated at the commencement of
this judgment, the Legislature, the Executive and
Judiciary, in every
sphere, are constrained by the principle that they may exercise no
power and perform no function beyond that
conferred on them by law.
[48] Having regard to the
concession rightly made by counsel on the respondent’s behalf
and taking into account the manner
in which the MEC conducted herself
in relation to the Board, it is clear that she resorted to the
stratagem of employing a power
of regulation for an ulterior purpose,
namely, to pressurise the Board into accommodating African Romance.
She also failed to consider
the confines of the statutory provisions
on which she relied and did so without due regard for the
consequences on the fiscus and
on transparent and accountable
governance. Her decision to dissolve the Board falls to be set aside.
It is therefore not strictly
necessary to debate the correctness of
the Board’s contention that they were not afforded an
opportunity to make representations
to the MEC concerning her threat
to dissolve the board. It is, however, worth noting that her
motivation and mind-set was such
that it is clear that she had no
intention of being swayed from terminating their membership. To sum
up, the MEC had acted beyond
her legal powers and contrary to the
principle of legality.
[49] There are two
further aspects that require brief attention. First, it is necessary
to say something to demonstrate the court’s
displeasure at the
manner in which the MEC behaved, over and above the manner in which
she terminated the membership of all the
members, more particularly
her conduct subsequent to the litigation being launched. It is true
that the Board is bound by the MEC’s
denial that she had not
actually seen the court papers for a few days after they had been
served. Her behaviour and that of her
department was strange indeed.
Her HOD knew of the threat of litigation and knew of the litigation
once it had occurred. The application
papers were not immediately
brought to the MEC’s attention. This is strange behaviour by a
department which primarily should
be concerned about the proper
functioning of the Board. One is driven to the conclusion that it was
convenient for the MEC not
to have sight of the application and
supporting documents. The MEC appointed an administrator almost
immediately after dissolving
the Board. The respondent, whilst not
actively associating himself with the MEC’s prior conduct,
nevertheless went ahead
and appointed the purported successors. This
was done even though the present appeal was pending.
[50] More than a century
ago Mason J in
Li Kui Yu
1906
TS 181
said the following:
‘
That being
so, it is impossible for me to pass over without some notice what is,
I consider, an offence of a serious kind, namely
that of interfering
with the administration of justice by taking an action which is bound
to prevent the Court granting a remedy.’
[51] The decision in
Li
Kui Yu
was qualified in
Roberts
v Chairman, Local Road Transportation Board
1980
(2) SA 472
(C) at 488 on the basis that, for an act to constitute
contempt, it was necessary that there be an intention to defeat the
course
of justice.
[52] Our present
constitutional order is such that the State should be a model of
compliance. It and other litigants have a duty
not to frustrate the
enforcement by courts of constitutional rights. In
Tswelopele
Non-Profit Organisation v City of Tshwane Municipality
2007 (6)
SA 511
at para 17, this court stated the following:
‘
This places
intense focus on the question of remedy, for though the Constitution
speaks through its norms and principles, it acts
through the relief
granted under it. And if the Constitution is to be more than merely
rhetoric, cases such as this demand an effective
remedy, since (in
the oft-cited words of Ackermann J in
Fose
v Minister of Safety and Security
)
“without effective remedies for breach, the values underlying
and the right entrenched in the Constitution cannot properly
be
upheld or enhanced”:
“
Particularly
in a country where so few have the means to enforce their rights
through the Courts, it is essential that on those
occasions when the
legal process does establish that an infringement of an entrenched
right has occurred, it be effectively vindicated.”’
[53] At para 27 of the
same case, the following appears:
‘
Vindication,
Kriegler J noted, “recognises that a Constitution has as little
or as much weight as the prevailing political
culture affords it.”
Essentially, the remedy we grant should aim to instil recognition on
the part of the governmental agencies
that participated in the
unlawful operation that the occupiers, too, are bearers of
constitutional rights, and that official conduct
violating those
rights tramples not only on them but should bear the instructional
message that respect for the Constitution protects
and enhances the
right of all. It is a remedy special to the Constitution, whose
engraftment on the
mandament
would
constitute an unnecessary superfluity.’
[54] In the present case
the best that can be said for the MEC and her department is that
their conduct, although veering toward
thwarting the relief sought by
the Board, cannot conclusively be said to constitute contempt of
court. However, that does not excuse
their behaviour. The MEC, in her
responses to the opposition by the Board, appeared indignant and
played the victim. She adopted
this attitude whilst acting in
flagrant disregard of constitutional norms. She attempted to turn
turpitude into rectitude. The
special costs order, namely, on the
attorney and client scale, sought by the Board and Mafojane is
justified. However, it is the
taxpayer who ultimately will meet those
costs. It is time for courts to seriously consider holding officials
who behave in the
high-handed manner described above, personally
liable for costs incurred. This might have a sobering effect on
truant public office
bearers. Regrettably, in the present case, it
was not prayed for and thus not addressed.
[55] Lastly, it is
necessary to deal with the concern expressed by the purported
successors, namely the danger of not preserving
decisions made by
them and the administrator in pursuance of the Board’s
statutory objectives. This court, particularly having
regard to the
circumstances of this case, will not shrink from granting the Board
consequential relief following on the declaration
of the invalidity
of the MEC’s decisions to dissolve the Board. The purported
successor’s concern can be met by limiting
the retrospective
effect of the declaration of invalidity.
11
The effect of the order
that follows is to render the installation of the purported
successors invalid whilst preserving decisions
by them and the
administrator, which were otherwise properly taken in pursuit of the
Board’s objectives.
[56] The following order
is made:
(1) The appeal is upheld
and the respondent is ordered to pay the costs of the first and
second appellants on an attorney client
scale.
(2) The order of the
court below is set aside and substituted as follows:
‘
a. The
termination on 23 January 2012 by the respondent of the membership of
all the members of the Gauteng Gambling Board is declared
unlawful
and invalid.
b. The respondent is to pay the costs
of the application on the attorney and client scale.’
(3) The substituted order
set out in para 2 is effective from the date of this judgment.
____________________
MS NAVSA
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT: V Soni SC (with him K Millard)
Instructed by:
Hewu Attorneys, Johannesburg
Naudés, Bloemfontein
FOR RESPONDENT: L T Sibeko SC (with him A L Platt)
Instructed by
M V Gwala & Associates Inc., Johannesburg
Matsepes Inc., Bloemfontein
FOR INTERVENING PARTY: G J Marcus SC
1
Fedsure
Life Assurance Ltd and others v Greater Johannesburg Transitional
Metropolitan Council
and others
[1998] ZACC 17
;
1999 (1) SA 374
(CC)
(1998 (12) BCLR 1458)
at para 56 at 399D-E (SA) and para 58 at
400D-E (SA). See also
Pharmaceutical Manufacturers Association of
SA: In re Ex parte President of the Republic of South Africa
[2000] ZACC 1
;
2000 (2) SA 674
(CC)
(2000 (3) BCLR 241)
para 17 at 687D-E (SA),
Gerber v MEC for Development Planning & Local Government,
Gauteng
2003 (2) SA 344
at para 35.
2
Executive
Councils are established in terms of s 132 of the Constitution which
provides:
‘
(1) The Executive Council of
a province consists of the Premier, as head of the Council, and no
fewer than five and no more than
ten members appointed by the
Premier from among the members of the provincial legislature.
The Premier of a province appoints the members of the
Executive Council, assigns their powers and functions,
and may dismiss them.’
3
Section
41 (3) of the Constitution provides:
‘
An organ of state involved in
an intergovernmental dispute must make every reasonable effort to
settle the dispute by means of
mechanisms and procedures provided
for that purpose and must exhaust all other remedies before it
approaches a Court to resolve
the dispute.’
Section 40 of the Intergovernmental Relations Framework
Act states:
’
40 All organs of state must
make every reasonable effort –
To avoid intergovernmental disputes when exercising
their statutory powers or performing their statutory functions; and
To settle intergovernmental disputes without resorting
to judicial proceedings.’
Section 45 of the same Act states:
‘
45(1) No government or organ
of state may institute judicial proceedings in order to settle an
intergovernmental dispute unless
the dispute has been declared a
formal intergovernmental dispute in terms of section 41 and all
efforts to settle the dispute
in terms of this Chapter were
unsuccessful.’
4
Section
18(1) of the Act reads as follow:
‘
The responsible member may,
after consultation with the Executive Council, by notice in the
Provincial Gazette, appoint an administrator
to perform the
functions and exercise the powers of the Board, either in whole or
in part, excluding the granting and revocation
of licenses, if the
responsible member is of the opinion that there is good cause to do
so.’
5
Section
18B(6).
6
Section
18B(7).
7
Section
18B(7).
8
No.
R. 556 31 May 2000 (as amended).
9
The
disqualifications there relate to issues personal to the individual
disqualified, such as citizenship or being a member of
a political
party or having an interest in gambling activity.
10
See
Fedsure Life Assurance
op cit paras 56, 58,
President of
the RSA v SARFU
2000 (1) SA (CC) para 148, Cora Hoexter
Administrative Law in South Africa
2
nd
ed at para
5.7 pages 307-310 and the further authorities there cited.
11
See
s 172(1)
(b)
of the Constitution. In relation to PAJA, see s 8
of PAJA and
Bengwenyama Minerals v Genorah Resources
2011 (4)
SA 113
at para 82
.