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[2010] ZAWCHC 629
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Northlink FET College v The Western Cape Provincial Minister of Education and Others (24526/2010) [2010] ZAWCHC 629 (14 December 2010)
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE HIGH COURT, CAPE TOWN)
Case number: 24526/2010
In the matter between:
Northlink FET College
…......................................................................................
Applicant
and
The Western Cape Provincial
Minister of Education
…............................................................................
First
Respondent
The Head: Education of
the Western Cape Province
…..............................................................
Second
Respondent
The Western Cape Provincial Minister
of Transport and Public Works
…..........................................................
Third
Respondent
The Head: Transport and Public Works
of the Western Cape Province
…..........................................................
Fourth
Respondent
The Western Cape Provincial
Minister of Finance
…...............................................................................
Fifth
Respondent
The National Minister of Higher
Education and Training
….......................................................................
Sixth
Respondent
The Director-General of Higher Education
and Training
….....................................................................................
Seventh
Respondent
The National Minister of Finance
….....................................................
Eighth
Respondent
Seaman's
Property Investment (Pty) Ltd
…..........................................
Ninth
Respondent
JUDGEMENT
DELIVERED ON 14 DECEMBER 2010
Baartman
J
[1]
Northlink FET College
(the
applicant)
approached
this court on an urgent basis claiming payment of the following sums
of money:
(a) R1 902 745.45 in respect of rental paid by the
applicant on behalf of the Western Cape Education Department (WCED).
(b) R6 091 817.21 in respect of municipal rates and
taxes paid by the applicant on behalf of the WCED.
(c) R15 623 388.00 in respect of a non/personnel
non/capital subsidy due to the applicant by the WCED.
THE
PARTIES
[2] The applicant is a public FET
college established initially in terms of the Further Education and
Training Act 98 of 1998
(the
1998 Act)
and
subsequently upon the repeal of the 1998 Act, in terms of the
Further Education and Training Colleges Act 16 of 2006
(the
FET Colleges Act),
which
commenced on 11 December 2006 and which repealed the 1998 Act. In
terms of both acts, a public FET college is a juristic
entity whose
assets, liabilities, rights and obligations vest in the public
college itself and any agreement lawfully entered
into by it or on
its behalf is regarded as having been concluded by the public
college itself. The reason for this was to grant
public FET colleges
autonomy with regard to the affairs of the institution. The Public
FET Colleges are responsible for administering
their own financial
and other affairs through college councils that are responsible for
governing the colleges.
[3] The first respondent is the
Minister of Education of the Western Cape Province. In that
capacity, the first respondent is
a member of the executive council
who is responsible for education in the Western Cape Province. The
first respondent is also
"executive authority" as defined
in the Public Services Act
1994 Act 103
of 1994 and as such is the
executive authority in relation to the Provincial Department of
Education
(the
WCED).
The first
respondent, from money appropriated for this purpose by the
provincial legislature, funds public colleges such as the
applicant
on a fair, equitable and transparent basis. The first respondent
may, subject to the norms and standards determined
in terms of
section 22 of the FET Colleges Act, impose any condition in respect
of an allocation of funding contemplated in sub-section
(1) as
provided for in Section 22(2)(a) of that Act.
[4] The second respondent is the head of education in
the Western Cape Province and is responsible for the efficient
management
and administration of the department. The second
respondent also holds the position of Superintendent General of the
WCED. The
third respondent is the Provincial Minister of Transport
and Public Works, who is also an executive authority and as such the
executive authority in relation to the Provincial Department of
Transport and Public Works. The fourth respondent is the Head
of
Transport and Public Works in the Western Cape Province.
[5] The fifth respondent is the Western Cape Provincial
Minister of Finance and was cited in these proceedings, in terms of
a
practice directive of the Constitutional Court, because he/she
will ultimately be responsible for payment of any amount awarded
to
the applicant. The sixth respondent is the National Minister of
Higher Education and Training, who is also an executive authority
as
defined in the Public Services Act. Previously, there was only one
National Department of Education with a single Minister
of Education
and Director General. Currently, the position is that there are two
departments responsible for education at National
Level, the
Department of Basic Education and the Department of Higher Education
and Training who is responsible for tertiary
education including
colleges. The seventh respondent is the Director General of Higher
Education and Training.
[6] The sixth and
seventh respondents were cited merely because of the fact that they
had an interest in this matter. No relief
was sought against them.
Similarly, the applicant claimed no relief against the National
Minister of Finance, the eighth respondent,
who was cited because he
has an interest in the outcome of this application.
[7] Seamans Property Investment
(Pty) Ltd
(the
ninth respondent)
is
the owner of the premises from which the applicant conducts its
Table Bay Campus
(the
Table Bay Campus).
The
applicant sought no relief against the ninth respondent. The lease
agreement in terms of which the applicant occupied the
Table Bay
Campus is relevant to this judgment. I deal with the dispute in
respect of the lease below.
[8]
Only
the first and the second respondents opposed the application, and
therefore all references herein to the respondents refer
to the
first and second respondents only.
Basis
for applicant's claim
[9]
The
applicant had paid the rent and municipal taxes due in respect of
its Table Bay campus. It is the applicant's case that the
Western
Cape Education Department
(the
WCED)
had entered
into a lease agreement with the ninth respondent in respect of the
Table Bay campus and therefore the rental and municipal
rate
payments due in terms of the lease were for the WCED's account. The
applicant alleged that it had an agreement with the
WCED in terms of
which the applicant would make payments due to the ninth respondent
in respect of the Table Bay campus lease
and that the applicant
would claim the amounts so paid from the WCED. In these proceedings,
the applicant claimed a refund of
the amounts already paid in
respect of rental and municipal rates, i.e. R1 902 745.45 (rental)
and R6 091 817.21 (municipal rates).
[10] The first and second respondents have denied the
existence of a lease agreement between the WCED and the ninth
respondent
and have instead alleged that the lease was between the
applicant and the ninth respondent. Therefore, the respondents
denied
liability to refund the applicant for amounts paid in respect
of rental and municipal rates.
[11] The applicant further alleged that the WCED had
allocated to it a subsidy of R15 623 388, but had failed to pay the
amount
over to the applicant. In these proceedings, the applicant
claimed payment of the amount. It was common cause that the WCED had
allocated the subsidy to the applicant and that instead of paying
the amount over to applicant, the WCED had utilised the amount
as
part payment of salaries due to the applicant's staff.
[12] In these proceedings, the applicant alleged that
the salary bill was for the WCED's account and the WCED in turn
alleged
that the salary bill was for the applicant's account.
Disputes
of fact
[13] The first and second respondents alleged that
there existed several disputes of fact that could not be resolved
without referral
to oral evidence. Adv Potgieter SC, who appeared
for the first and the second respondents, submitted that I should
dismiss the
applicant's claim.
[14] Adv Oliver, who appeared for
the applicant, submitted that there were no
bona
fide
disputes of
fact and that I should not refer the matter to oral evidence but
instead find for the applicant on the papers. Counsel
submitted that
the applicant needed relief urgently and requested me to make an
order with reasons to follow.
[15] To the extent that there is a
dispute of fact on papers, the circumstances of this matter are such
that it would not be appropriate
for me to exercise my discretion to
refer the matter to oral evidence. (See
Joh-Air
(Pty) Ltd v Rudman
1980
(2) SA 420
(T) and
Miioc
Financial Solutions (Pty) Ltd v Logistic Technologies (Pty) Ltd and
Others
2008(4)
SA 325 (SCA).)
[16] It follows that the matter
stands to be decided on the papers. Deciding the matter on the
affidavits filed on record has
the following implications. A court
will only grant final relief if the facts stated by the respondents
together with the facts
alleged by the applicant that are admitted
by the respondent justify such an order. (See
Stellenbosch
Farmers Winery Ltd v Stellenvale Winery (Pty) Ltd
1957(4)
SA 234(C) and
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623(A).)
BACKGROUND
The
parties to the Table Bay campus lease
[17] The facts that gave rise to this application are
mainly common cause. In its founding papers, the applicant alleged
that
its establishment coincided with the amalgamation of 4 colleges
in the Western Cape approximately 8 years ago. The applicant has
various campuses, one of which is the Table Bay Campus, which is
accommodated in the ninth respondent's premises in Table Bay
Harbour. The campus offers maritime studies and other vocational
educational programmes. Approximately 15 staff members are employed
at the campus and currently 400 students attend the campus.
[18] On 30 October 1990, Transnet
Ltd (as the lessor) and the Republic of South Africa represented by
the Department of Local
Government, Housing and Agriculture in the
House of Representatives (as the lessee) concluded a lease agreement
in respect of
the Table Bay Campus
(the
1990 lease agreement).
The
now Provincial Department of Transport and Public Works succeeded
the Department of Local Government, Housing and Agriculture
as the
lessee in terms of the 1990 lease agreement.
[19] In terms of Clause 6.1 of annexure A to the 1990
lease agreement, the lessee was liable for the payment of rates and
taxes
in respect of the Table Bay Campus over and above the rental
in respect thereof. Prior to the merger that culminated in the
establishment
of the applicant, institutions submitted their rates
and taxes accounts to their respective education departments for
refunds.
[20] When the 1990 lease agreement
expired, the WCED indicated to the applicant that it should conclude
a long-term lease with
the ninth respondent. Negotiations aimed at
concluding a lease commenced. In the course of those negotiations,
the applicant
received a letter, dated 20 December 2006, from Keith
Loynes
(Loynes),
the chief planner
of the colleges who at the time was the head of the WCED. The
relevant portion of the letter stated as follows:
"Kindly be informed that the lease agreement
has been concluded in respect of the Table Bay Campus of Northlink
College.
The period of the agreement of lease, is 1 September 2006
to 31 August 2011 (5 years). In terms of this lease, the WCED will
refund Northlink College for payments made against this lease. An
amount of R668 000.00 is available to be claimed for the period
1
November 2006 to 31 March 2007, in the current financial year
2006/7. It is recommended that such claims be submitted at the
end
of each 6/month cycle, but at least 1/month before the end of the
State's financial year, namely 31 March. Claims received
after the
end of
February cannot be considered.
You are requested to furnish this office with the necessary
documentation that includes the lessee's
invoices and proof of
payments made against the invoices by Northlink College. This
arrangement will continue for the duration
of the lease
and
is subject to the availability of funds.
"
[21] The applicant in its founding papers alleged that
it had been submitting claims in respect of rental, rates and taxes
in
respect of the Table Bay Campus to the WCED since March 2007 at
least every 6 months and had been duly reimbursed by the WCED in
respect of such payments.
[22] It was common cause in these proceedings that the
lease referred to by Loynes was never concluded. Loynes was
mistaken. In
these proceedings, the applicant relied on Loynes's
letter for its claim in respect of rental payments made, in respect
of the
Table Bay campus, to the ninth respondent.
[23] In a letter dated 27 May 2008,
Mr Beech
(Beech),
the applicant's
director, indicated to Loynes that:
"Rental/lease agreement: Table Bay Campus. The
attached proposed rental/lease agreement has reference.
1. The lease/rental agreement for
the Table Bay Campus expired during 2007.
In
the interim, occupation is maintained on a monthly basi
s,
(my
emphasis)
The
building requires remedial maintenance and up/grade of facilities.
The current landlord will undertake to do all the required
remedial
work and facilities upgrade if a new lease agreement is signed. The
proposed new lease agreement will commence at R221
445.00 (VAT
included) per month and escalate annually. See attached document.
2. The proposed schedule of remedial work and
up/grade details are included in the attached document/annexure "B".
The
proposed lease agreement has been scrutinized by PAWC/Legal
Services ... Shawn Richter...
3. In terms of the SETC Act 16 of
2006 ... herewith ...
the
college herewith requires the approval to accept the lease
agreement,
(my
emphasis)
The
funding of the lease has always been maintained by the Department of
Public Works. The college will require that the funding
of the lease
be maintained by WCED as the college itself cannot afford the upkeep
of such a lease/rental payment.
Kindly
consider the attached request in terms of the agreement."
[24] Beech attested to the applicant's founding papers
and said that:
"Subsequent to the expiry of the 1999 agreement
and prior to 15 December 2009, I was informed by Mr Loynes that the
Provincial
Department of Public Works had informed the WCED that it
had to budget and take responsibility for the lease amount, which it
subsequently did. ...
It was part of the agreement that came into being
between the applicant and the WCED that the arrangement whereby the
WCED would
re-imburse the applicant in respect of the rental as
aforesaid, would continue for the duration of the lease and be
subject to
the availability of funds."
[25] On 15 December 2009, the applicant received a
letter from the WCED stating that:
"It is with pleasure that we inform you of the
all inclusive financial assistance that is available to your college
for the
2010/11 financial year ... based on the funding norms of FET
colleges and the available budget. Note that no provision has been
made for Municipal Taxes. Rentals or Transport allowances. These
expenses are the responsibility of the FET college concerned."
[26] In its founding papers, the applicant said the
following about that letter: (record pg 25 para 64)
"The letter dated 15 December 2009 from Ms
Vinjevold referred to above, constitutes a unilateral variation of
the agreement
concluded between the applicant and the second
respondent in 2006 in that the second respondent purported to
repudiate the WCED
obligation in terms of the 2006 agreement to
reimburse the applicant for rental, rates and taxes. The applicant
did not accept
this repudiation and chose to abide by the 2006
agreement in terms whereof it was entitled to submit claims in
respect of rentals,
rates and taxes to the WCED every 6 months at
least 1 month before the end of the WCED's financial year and in
terms whereof
the WCED reimbursed it for payment of such rentals,
rates and taxes."
[27] According to Beech, on 25 May 2010, the second
respondent recommended that the applicant should reduce its staff
component
and close a campus or campuses as a measure to relieve its
financial problems.
The
respondents' version
[28] It was common cause that with effect from 1 April
2010, the funding of FET colleges was regulated by the national
norms and
standards for funding further education and training
colleges as envisaged in Section 23 of the FET Colleges Act
promulgated
in Government Gazette No. 32010 dated 16 March 2009.
Prior thereto, the funds were allocated by the state to FET colleges
mainly
in terms of the National Department of Education Policy
Report 191.
[29] It is the respondents' case that the lease of the
applicant's Table Bay premises was concluded on 1 September 1999 by
the
state on behalf of the college in terms of the then applicable
regime, which made provision for the state to take primary
responsibility
in respect of the affairs of the institution in
question. As lessee, the state, represented by the then Department
of Local Government
Housing and Agricultural Administration, House
of Representatives, was liable for all obligations arising from the
lease, which
included the payment of rental as well as rates and
taxes. However, in 1994, the Western Cape Department of Transport
and Public
Works was substituted as a lessee under the lease
agreement, which expired on 31 August 2006.
[30] The respondents alleged that
negotiations for the conclusion of a new lease commenced but were
never concluded. In May 2006,
there were negotiations between D
Fourie
(Fourie)
of
the Department of Transport and Public Works and Mr Bouwer
(Bouwer)
representing the
ninth respondent as lessor concerning the possible extension of the
lease for a further 5-year period. Fourie,
so the respondents
alleged, merely facilitated the negotiations but the conclusion of
any contract was subject to approval by
Fourie's superiors, the
Provincial Cabinet of the Western Cape Government. However, prior to
finalisation of an agreement, Fourie
was advised that the applicant
itself had to enter into the lease agreement with the ninth
respondent, Seamans, since the assets,
liabilities, rights and
obligations in respect of the college had been transferred to the
applicant in terms of the FET College
Act.
[31] Fourie advised Bouwer and the then head of the
Table Bay Campus, Mr Van Wyk, accordingly. Mr Ely, the chief
financial officer
of the Department of Education of the Western Cape
Province, who attested to the respondents' answering affidavit, said
the following:
I
can
confirm that at our monthly coordinating meetings with the
Department of Transport and Public Works, it was reaffirmed that
due
to the fact that all tertiary institutions in the Western Cape were
responsible for providing their accommodation, the functions
in
respect of the leasing of premises vested in the applicant and not
the education department. The leasing funding budget for
FET
colleges
was accordingly shifted from the Department of
Transport and Public Works to the Education Department in accordance
with the necessary
approval."
[32] Ely further says that the Department of Transport
and Public Works budgeted R668 049.12 for the period of 1 September
2006
to 31 March 2007 and a further R2 672 196.48 for the 2007/08
and 2008/09 financial years as its contribution towards the
applicant's
lease payment. These amounts were transferred to the
Department of Education and made available to the applicant.
[33] The respondents further
conceded that Loynes' letter dated December 2006, referred to above,
was incorrect. However, the
respondents alleged that on 16 August
2006, they had corrected any misrepresentation made to the
applicant. The respondents relied
on email correspondence circulated
among Mr Nat Kaschula
(Kaschula),
a WCED official,
Beech and Bouwer. In the email, Kaschula informed both Beech and
Bouwer that the lease agreement in respect of
the Table Bay Campus
had to be concluded between the applicant and ninth respondent.
"Mr Kaschula
:
s
email to Mr Bouwer at 2:01pm, I refer to the need for a lease to be
concluded between the owner of the building and Northlink
College.
The signatories to the lease agreement must be the owner of the
building and the CEO of Northlink College, Mr Leon Beech.
His mobile
no. is 082 557 2993. A draft copy of the lease should be submitted
to me at your earliest convenience because the
clauses have to be
checked and approved by the Western Cape Education Department's
lawyers. Please do not sign the lease agreement
before I inform you
to do so."
[34] In an email to Beech at 14h28:43 on 16 August,
Kaschula said the following to Mr Beech:
"Leon, Mr Menno Bouwer, will make contact with
you soon over a lease agreement between yourself as the CEO of
Northlink College
and the owner of the building. Please meet with
him and contribute to the drafting of the lease agreement. (Be weary
of lease
agreements in excess of 5 years, be very clear about who is
responsible for structural defects (normally owner), who is
responsible
for maintaining the building (interior/usually the
tenant, exterior/usually the owner), annual escalation clause (stick
with
an annual inflation rate of around 6% (not compounded
interest).
The owner must also pay property rates and taxes and
the insurance on the structure of the building. You pay municipal
utilities
(water, electricity, refuge removal) and the insurance of
movable items inside the building like computers, etc. The big
question
is whether the owner will be prepared to repair the
building because it is literally sinking into the sea. It is
estimated that
it will cost approximately 6 million rand to repair
the structural damage and to stabilize the foot stripping
foundation.
The swimming pool on the first floor also need
sealing. Mr Andy Sheldon of the WCED's finance branch confirmed
today that an agreement
will be reached, and a memorandum of
understanding signed between the head of the Department of Transport
(Mr Tami Manyathi)
and the CG (Mr Ron Swart) to the effect that the
DTPW will transfer the funds within an MTEF year to the WCED to
finance the
lease amount. The WCED, in turn, will transfer monthly
lease amount to your college in order for you to be able to pay the
owner.
This payment process will continue for as long as the lease
agreement is valid. Please do not sign the lease agreement before
the WCED's lawyers approve it. I have requested Mr Menno Bouwer to
let me have a draft copy of the lease agreement as soon as
possible
so that it can be checked by our legal people before both parties
sign the documents. Thanks Nat."
[35] The respondents relied on the Kaschula emails to
submit that Beech could not reasonably have believed that the WCED
had entered
into a further 5-year lease in respect of the Table Bay
campus.
[36] The respondents further alleged that the applicant
paid amounts equal to a rental increase of 9% and that this
escalation
was in access of the 6% suggested in the Kaschula
correspondence. The applicant made monthly rental payments of R146
940.30 including
VAT to the ninth respondent; according to the
respondents this was more than the amount Loynes indicated the WCED
had available
for rental. It is so that Loynes indicated that R668
000 was available for rental and this translated into R133 600 per
month.
The payments, so the respondents argued, suggested that a
lease had been concluded between the applicant and the ninth
respondent
and that the WCED was not a party thereto.
[37] In their answering affidavit, the respondents
said:
"The Department of Transport and Public Works
could not have agreed to a monthly rental ofR128 895, excluding VAT
(146 940.30
including VAT) since the department only had budgeted
monthly amount of R133 600 available to contribute to lease
payments. In
any event the department did not agree to extend the
lease in question. The respondents therefore allege that no lease
agreement
was entered into between it and the owner"
[38] The respondents further alleged that from
applicant's papers, it appeared that the applicant had paid the
rates and taxes
as well as the insurance premiums in respect of the
Table Bay campus. Those payments were, on the respondents' version,
never
their responsibility in terms of any contract with the ninth
respondent.
[39] The respondents have further relied on the draft
lease agreement, which appears to have been drafted on 1 January
2007, for
its contention that the applicant knew it had to conclude
a lease in respect of the Table Bay campus and that pending the
conclusion
of the lease, the applicant and the ninth respondent
entered into a month-to-month lease. The preamble to that agreement
appears
from the papers to be the following:
"Preamble: The lessee has been in occupation of
the premises since 1 September 2006 on a monthly notice basis in
terms of
a separate agreement at rental of R128 895 p/m plus VAT.
The parties herewith agree that this rental will continue to 30
April
2008 from which date the rental as set out in 6.0 below will
apply in terms of this agreement."
[40] The respondents have further relied on the content
of a legal opinion that was compiled at the instance of Beech for
their
submission that the applicant knew it had to conclude a lease
agreement with the ninth respondent. The following appears from the
opinion:
"1. Consultant is Mr Leon Beech, CEO of
Northlink College, a further education and training (FET) college as
envisaged by
the Further Education and Training Colleges Act 16 of
2006.
2. Consultant requested a legal opinion and
recommendation with regard to the memorandum of agreement of lease
between Seamans
Property Investment (Pty) Ltd and itself with regard
to property situated in Table Bay Harbour.
3. Consultant furthermore requested that the legal
opinion concentrate on those areas highlighted by the consultant.
..."
[41] The respondents admit that they made various
contributions to the applicant in respect of the lease agreement for
the Table
Bay Campus.; however, they emphasised that the
contributions were expressly subject to availability of funds. The
WCED on the
above basis denied liability for the rental and
municipal rates in respect of the Table Bay campus.
[42] Mr Oliver further, with
reference to the Law of Contract in South Africa 5
th
Edition by Christie (see pages
88-89) submitted that a tacit month-to-month lease agreement came
into effect when the 1990 lease
agreement expired. That tacit lease
agreement, he submitted, was between the WCED and the ninth
respondent. The passages referred
to are authority for the
submission that a tacit lease agreement comes into existence in
circumstances where at the expiry of
a written lease the parties to
that lease agreement continue as if the lease was still in
existence.
[43] However, the circumstances of the matter are
distinguishable. I am persuaded on the facts of this matter that
there existed
no tacit lease agreement, month to month, between the
respondents and the ninth respondent. I am further satisfied that as
early
as 25 September 2007, when Beech sought the legal opinion, he
was aware that the applicant would, as lessee, have to take
responsibility
for any lease agreement between itself and the ninth
respondent. This was also in line with the legislative intent:
[44] Section 3(2) of the FET College Act provides that:
"Every public college is a juristic person."
[45] The applicant was such a juristic person and
consequently the applicant was capable of entering into agreements
and to own
property. Sections 5(1 )(b) and (c) provide that:
"...5 Consequences of
declaration as public college -
...(b) the assets, liabilities, rights and
obligations of the institution vest in the public college; and
...(c) any agreement lawfully entered into by or on
behalf of the institution must be regarded as having been concluded
by the
public college."
[46] Mr Oliver alleged that the respondents failed to
put up evidence in support of their allegation. I disagree. In my
view,
having regard to the approach in motion proceedings, discussed
in paragraph 16 above, the respondents have put up evidence to
justify a finding in their favour.
THE
NONE PERSONNEL/NONE CAPITAL SUBSIDY ARREARS
[47] On 16 March 2009, the National
Minister of Education promulgated the norms in terms of Section 23
of the FED Colleges Act
(the
Norms).
In terms
of the Norms, tertiary education institutions such as the applicant
would receive funding based on a particular formula.
In terms of
paragraph 28 of the Norms, formal funding of programmes was intended
to cover the recurrent costs of delivering FET
programmes as well as
certain capital costs associated with those programmes, specifically
costs relating to the replacement
of facilities and equipment used.
[48] Moreover, the formula funding of programmes was
intended to cover college overhead costs, specifically those related
to administration
and student support. The funding format has 3 key
components:
(a) The first is a government subsidy that covers 80%
of the programme cost.
(b) The second is student fees, which were capped at
20% of programme costs. This measure was to ensure that poor
students also
have an opportunity to undergo higher education.
(c) The third is the establishment of a national
bursary scheme to ensure that academically capable but poor students
are assisted
to pay the college fees.
[49] The applicant submitted its strategic plan to the
department for funding in terms of the new formula. In a letter
dated 15
December 2009, the respondents indicated that the
applicant's proposal had been approved. The respondents alleged that
in October
2009, the National Department of Higher Education and
Training awarded the applicant an indicative budget of R41 275 308
in terms
of the funding norms. In essence, this meant that in terms
of the funding norms, the 41.2 million was the only state funding
available to the applicant from the programmes FET colleges budget
through which the education department funds FET colleges. Mr
Potgieter submitted that:
"1. The effect of this was that the applicant
would not have had sufficient funding to service its salary bill of
approximately
67 million, which is being administered on the state's
Persal system by the education department as agent on the
applicant's
behalf. The education department, in an effort to ensure
that the applicant would be able to meet its salary commitments,
advised
the applicants that the education department was able to
secure additional funding of R23 774 763 to make up for the short
fall
in the applicant's salary bill.
2. Hence the applicant was informed on 15 December
2009 ... that it was being allocated total funding of R68 050 071.00
for the
2010/11 financial year. ... Applicant pursuant to an
agreement that the education department as agent will pay the
salaries of
the applicant's personnel and supporting staff via the
state Persal salary payment facility pending the applicant being
able
and having the necessary infrastructure to deliver this service
itself.
3. The net effect of this decision was that the
applicant was able to meet its salary commitments, but could not be
paid directly
any portion of its funding allocation, including the
amount of R15 623 388 in respect of the none/personnel none/capital
component,
included in the indicative budget of R41.2 million and
which is being claimed in these proceedings. ...
4. Put differently, if the education department had
paid out the subsidy funding allocation to the applicant, the latter
would
have had a shortfall of R23 774 763 on its salary bill, which
it in any event would have had to source from income, other than
the
programme 5 FET colleges budget. ... Accordingly even if the
applicant were entitled to receive payment of the amount of
R15 623
880 claimed this would be set off against the amount of R23 774
763.00 leaving a balance of R8 151 375 owing by the applicant."
[50] The respondents alleged that the WCED funded only
the salaries of staff who taught the NC(V) related syllabus. The
syllabus
takes into account the government's assessment of the
country's training needs. Higher education institutions, such as the
applicant,
are at liberty to offer non-NC(V) related courses but not
to receive government funding for them. The respondents have in
their
answering affidavit and in submissions alleged that:
"...the students on the NC(V) programs only
represented approximately 8% of the applicant's total student
population. At
some other FET colleges the ratio is reversed, namely
approximately 90% of the student population is on the NC(V)
programmes,
which significantly increases the funding allocation for
those entities. The applicant, so the argument went, appears to have
taken a deliberate policy decision not to convert significantly to
the NC (V) programs and to rely on its traditional funding
sources
instead of the NC (V) funding allocation."
[51] It was common cause that the applicant's staff was
paid by the WCED through the latter's Persal system - all government
employees
are paid through that system. However, on 31 December
2007, the applicant's entire staff establishment as reflected on the
Persal
system was transferred to the applicant's employ. The WCED
nevertheless continued to administer the payment conditions of these
staff members with the appropriate funding within the WCED to the
value of approximately R40 million.
[52] Section 20 of the FET College Act provides that:
"20(1)... The college is the employer of all
lecturers and support staff."
[53] I am persuaded that it was competent for the
respondents to have applied the subsidy allocated to the applicant
to remunerate
the applicant's staff. Section 20(3) of the FED
College Act provides that:
"...20(3) The council must appoint and
remunerate staff from the funds allocated in accordance with the
norms and standards
contemplated in section 23 and other income
received by the college from other sources."
ORDER
[54] I, for the reasons stated above, make the
following order.
(a) The application is dismissed with costs such costs
to include the costs occasioned by the employment of two counsel.
Baartman J