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[2010] ZAECPEHC 35
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Ed-U- College v MEC of the Provincial Governmentof the Eastern Cape, Education and Others (3146/08) [2010] ZAECPEHC 35 (22 June 2010)
11
FORM A
FILING SHEET FOR SOUTH EASTERN
CAPE LOCAL DIVISION JUDGMENT
PARTIES
:
ED-U-COLLEGE
Plaintiff
and
MEMBER
OF THE EXECUTIVE COUNCIL
OF THE
PROVINCIAL GOVERNMENT
OF THE
EASTERN CAPE RESPONSIBLE
FOR
EDUCATION
First
Defendant
MEMBER
OF THE EXECUTIVE COUNCIL
OF THE
PROVINCIAL GOVERNMENT
OF THE
EASTERN CAPE RESPONSIBLE
FOR
FINANCE Second Defendant
THE
NATIONAL MINISTER OF
EDUCATION Third
Defend
Case
Number
:
3146/08
High
Court
:
EASTERN
CAPE, PORT ELIZABETH
DATE
HEARD: 09/06/2010….
DATE
DELIVERED:
22/06/2010
JUDGE(S):
NEPGEN
J
…
LEGAL
REPRESENTATIVES –
Appearances:
For
the Plaintiff(s): Adv P Ellis SC, Adv G Kairinos
for
the Defendent
(s)
(1
st
and 2
nd
):
N Dukada SC, L A Schubart
Instructing
attorneys:
Plaintiff(s):
Mr P Abernethy (Oosthuizen Hazel & Wilmot)
Defendent
(s)
(1
st
and 2
nd
):
Mr
S P Mnyande (State Attorney)
CASE
INFORMATION -
Nature
of proceedings
:
Civil
Matter
Topic:
………………………
Key Words:
IN THE
HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE, PORT ELIZABETH)
Case No:
3146/08
In the
matter between:
ED-U-COLLEGE
Plaintiff
and
MEMBER
OF THE EXECUTIVE COUNCIL
OF THE
PROVINCIAL GOVERNMENT
OF THE
EASTERN CAPE RESPONSIBLE
FOR
EDUCATION
First
Defendant
MEMBER
OF THE EXECUTIVE COUNCIL
OF THE
PROVINCIAL GOVERNMENT
OF THE
EASTERN CAPE RESPONSIBLE
FOR
FINANCE Second Defendant
THE
NATIONAL MINISTER OF
EDUCATION Third
Defendant
_____________________________________________________________________
JUDG
MENT
_____________________________________________________________________
NEPGEN,
J
[1]
The Plaintiff is an
association incorporated in terms of Section 21 of the Companies
Act, No 61 of 1973. It is registered as
an independent school in
terms of Section 46 of the South African Schools Act, No 84 of 1996
(the Act). First Defendant is the
Member of the Executive Council of
the Provincial Government of the Eastern Cape responsible for
education. Second Defendant is
the Member of the Executive Council
of the Provincial Government of the Eastern Cape responsible for
finance. Third Defendant
is the Minister of Education of the
Republic of South Africa. The Plaintiff seeks no relief against
third defendant in this action.
What it
does
claim is payment by first defendant, alternatively second defendant,
of the sum of R 2 156 115.12. This amount is alleged
to represent
the shortfall in subsidies payable to the plaintiff in terms of
Section 48 of the Act, which section will be referred
to more fully
hereafter. Although this is not entirely clear from the allegations
made in the particulars of claim, it would appear,
from first and
second defendants’ plea, that the alleged shortfall in
subsidies is in respect of the period 1999 until 20
September 2005.
[2]
On the pleadings it
is common cause that the plaintiff is entitled to and that it has
received subsidies from first defendant, alternatively
second
defendant, in terms of Section 48 of the Act “for a number of
years” and that it continues to receive such subsidies.
It may
very well be that the admission in the plea, insofar as it relates to
second defendant, was made
per incuriam
when regard is had to the express disavowment of any obligation on
behalf of second defendant to the plaintiff in respect of the
plaintiff’s claim, but for present purposes that is neither
here nor there. It is further common cause that third defendant’s
predecessors in title have, in terms of the powers conferred by
Section 48(1) of the Act, determined norms and minimum standards
for
the payment of subsidies to independent schools such as the
plaintiff, the relevant Government Gazettes in this regard being
Government Gazette No 19347 dated 12 October 1998 and Government
Gazette No 24245 dated 10 January 2003. Both these Government
Gazettes refer to “National Norms And Standards For School
Funding”. For convenience I shall hereinafter merely refer
thereto as norms and standards. These norms and standards have since
been amended, but those in the Government Gazettes referred
to are
those which were applicable during the period over which the
plaintiff’s claim has been calculated.
[3] Apart from raising a special plea of prescription, most of the
allegations made by the plaintiff have been admitted by first
and
second defendants in their plea. Significantly, it is not disputed
that the plaintiff has not received the full subsidy calculated
in
accordance with the “Allocation table for independent school
subsidies”, which is to be found in paragraph 151 of
the norms
and standards (in this regard the reference in paragraph 10 of
Government Gazette No 24245 to paragraph No 152 is clearly
an error
and should be a reference to paragraph 151). In respect of the
allegation that first and/or second defendant failed to
pay such
subsidy to the plaintiff, the plea reads as follows:
“12.1 The grant of subsidy to the Plaintiff is the legal duty
of the First
Defendant in terms of the provisions of sub-section (2) of section 48
of the South African Schools Act (No 84 of 1996);
The Second Defendant has no legal duty to grant any subsidy to the
Plaintiff;
In the premises, the relief sought by the Plaintiff against the
Second
Defendant has no basis in law;
The grant of full subsidy by the First Defendant to the Plaintiff
during
the period from 1999 to 20 September 2005, as determined by the
formula prescribed by the national norms and standards, was dependant
on;
the amount of funds appropriated by the Provincial Legislature
for the programme relating to Independent Schools; and
The availability of funds in the Department of Education.
During the period 1999 to 20 September 2005 the Provincial
Legislature appropriated funds for Independent Schools but such
funds were less than the formula prescribed by the national norms
and
standards;
During the period 1999 to 20 September 2005 no funds were available
in the Department of Education to enable the First Defendant to grant
the Plaintiff and various other independent schools the full
subsidy
in terms of the national norms and standards;
Consequently, the First Defendant granted subsidies to the
Plaintiff and
various independent schools during the period from 1999 to 20
September 2005 based on funds which were available to the Department
of Education.”
[4] Prior to the hearing of the matter there had been discussions
between the parties regarding the separations of certain issues
in
terms of Rule 33 (4). Initially no agreement could be reached in
this regard, and this resulted in the plaintiff bringing a
substantive application for a separation of issues. However, by the
date of the hearing the parties had managed to agree on this
aspect
of the matter. This agreement was that there should be a separation
of issues and a document, titled “Separated
Issues”, was
handed in. The formulation of the issues to be determined initially,
in terms of the agreement between the
parties, was as follows:
“The aspect to be determined is the following:
1.1 Whether the First Defendant is entitled to furnish subsidies in
amounts less than that provided for in the Norms and Standards
on the
grounds alleged in paragraphs 10.2 read with 12.4 of the Defendant’s
Amended Plea dated 27 March 2009;
1.2 Whether the issue referred to in paragraph 1.1 constitutes a
defence in law.”
[5] Paragraph 10.2 of the defendants’ plea contains a denial of
the allegation that “First and Second Defendants”
are not
entitled to furnish subsidies in amounts less than that provided for
in the norms and standards. It is averred that the
reasons for such
denial “are set out below”.
[6] When the matter was called I made an order separating the issues
in accordance with the parties’ agreement. It was then
stated
that I should decide this issue as a point
in limine
.
Whatever one calls it, it seems to me that the second question raised
is dependent on the decision reached on the first. In
this regard it
would appear, further, that the approach to the question I have now
been asked to decide should be the same as if
the plaintiff had taken
exception to the plea on the ground that it does not disclose a
defence.
[7] The contention advanced on behalf of the plaintiff was, as I
understand it, that once first defendant decided to grant a subsidy
to an independent school he was bound by the formula provided for in
the norms and standards and could not deviate therefrom.
In this
regard I was referred to a number of so-called relevant paragraphs in
the norms and standards which, so it was submitted
on behalf of the
plaintiff, indicated that first defendant could only deviate from
these norms and standards in certain circumstances;
and as it had
not been pleaded that these circumstances existed, the admitted
deviation therefrom was unlawful.
[8] I agree with the submission made on behalf of the plaintiff that
the defendants’ case, as it appears from the pleadings,
is (a)
that the payment of subsidies in terms of the norms and standards was
dependent on the availability of funds appropriated
by the provincial
legislature and (b) that first defendant was entitled to grant
subsidies in amounts less than that provided for
in the norms and
standards. This meant, so it was contended by the plaintiff, that
the Eastern Cape Provincial Government had
under-budgeted for the
expenses envisaged in the norms and standards. It was further
contended that this does not constitute
a defence to the plaintiff’s
claim for payment of the full amount of subsidies determined
according to the formula prescribed
by the norms and standards. For
this contention reliance was placed on what was said by O’Regan,
J in
Permanent Secretary, Department of Education and Welfare,
Eastern Cape, and another vs Edu-College (PE) (Section 21) Inc
,
2001 (2) SA 1
(CC) at p16 [23] where it was stated that
“(I)f a court concludes that the Government owes money to a
litigant, the fact that the Government has not budgeted for such
payment cannot deprive the court of the power to make an appropriate
order. Nor will it excuse the Government from an obligation
to pay.”
[9] Reliance was also sought to be placed on the unreported decision
in
Crankshaw and others vs MEC, Education: Eastern Cape Province
and others
, Bhisho Case no 93/2006 in which Cossie, AJ made a
similar statement, which is almost identically worded and based on
that in the
Edu-College (PE)
case,
supra
. It was
further submitted that as the
Crankshaw
case was decided with
reference to the same norms and standards in issue the present
matter, it effectively disposes of the question
I have to decide in
this case. I will deal with this aspect of the matter more fully
later, but it should be mentioned at this
stage that I was informed
that leave to appeal against the judgment of Cossie, AJ was granted
to the full bench in Bhisho but that
that appeal has not yet been
heard.
[10] In order to consider whether or not the defendants’ plea
discloses a defence, regard must be had to what is provided
in
section 48 of the Act, which deals with subsidies to registered
independent schools. Subsections (1) and (2) provide as follows:
“(1) The Minister may, by notice in the Government Gazette,
determine norms
and minimum standards for the granting of subsidies to independent
schools after consultation with the Council of Education Ministers
and the Financial and Fiscal Commission and with the concurrence of
the Minister of Finance.
The Member of the Executive Council may, out of funds appropriated
by the provincial legislature for that purpose, grant a subsidy
to
an independent school.”
[11] It is clear that Section 48 (2) of the Act confers discretionary
powers on first defendant to grant a subsidy to an independent
school. However, before that discretion can be exercised, funds have
to be appropriated by the provincial legislature “for
that
purpose”, in other words for the purpose of providing
independent schools with subsidies. As I read this sub-section,
the
discretion conferred is not an unlimited one, but one which is
limited to granting subsidies “out of funds appropriated
by the
provincial legislature for that purpose”. This can be
considered to be consistent with what is pleaded in paragraph
12.4.1
of the defendants’ plea, although the wording used in the plea
is probably somewhat loose.
[12] Based on what I consider to be the clear meaning of section 48
(2) of the Act, the availability of funds in the Department
of
Education could only have relevance to the questions whether first
defendant may grant subsidies to independent schools if such
funds
were appropriated by the provincial legislature for the purpose of
granting subsidies to independent schools. The reference
in
paragraph 12.4.1 of the plea to the availability of funds in the
Department of Education may have been intended to be a reference
to
funds appropriated for such purpose. If that was not the intention,
that averment in the plea is irrelevant.
[13] Paragraph 12.4 of the defendants’ plea should not be
looked at in isolation in considering the issues I have been asked
to
decide at this stage. The allegations made in paragraphs 12.5 to
12.7, constituting some of the reasons referred to in paragraph
10.2,
can not be ignored. These allegations are capable of the
construction that funds were appropriated by the provincial
legislature
for the purpose of granting subsidies to independent
schools, but that such funds were insufficient to enable first
defendant to
grant full subsidies according to the formula prescribed
by the norms and standards. They are further capable of being
construed
as alleging that first defendant, in granting subsidies to
independent schools, utilised the funds that were actually
appropriated
by the provincial legislature for the purpose of
granting subsidies. What the exact position in this regard is, is
something that
may have to be determined by evidence in due course.
However, at this stage it must be assumed that these allegations will
be
established.
[14] The plaintiff’s contention that what the defendants’
have pleaded does not constitute a defence appears to be
based almost
entirely on the passage in the
Edu-College (PE)
case,
supra
,
which I have quoted. I am unable to agree that this passage assists
the plaintiff in any way. What the constitutional court
had
considered, prior to making that statement, was whether the
determination of the subsidy formula, which determined the amount
of
money to be paid to independent schools, constituted a legislative
act or other act which was not justiciable under Section
33 of the
Constitution (see p 8 [10]). It was held that the exercise of the
power granted in terms of Section 48 (2) of the Act
constituted
administrative action. Thereafter the Constitutional Court dealt
with a further argument on behalf of the applicants
in that case,
namely that because the Department of Education had spent the full
amount allocated to independent schools, it would
not be competent
for a court to make an order sounding in money against the
applicants. After stating, in effect, that that argument
was
unsustainable, the court made the statement referred to. It can thus
not be construed as a statement which means that Section
48 (2) of
the Act enables a Member of an Executive Council to grant subsidies
to independent schools out of funds appropriated
by the provincial
legislature for a purpose other than the purpose of granting such
subsidies.
[15] I am also of the view that the
Crankshaw
matter,
supra
,
does not assist the plaintiff. What had to be considered in that
case was whether the decision taken by the Member of the Executive
Council constituted unlawful, unreasonable and procedurally unfair
administrative action. In the present instance there is no
suggestion in the particulars of claim that the actions of first
defendant offended the provisions of Section 33 of the Constitution.
The reason for this is presumably because the plaintiff’s
approach is that the norms and standards are binding and may not
be
deviated from and that once a decision is taken to grant a subsidy it
must be in the full amount, irrespective of what amount
may have been
appropriated by the provincial legislature for that purpose. For the
reasons already mentioned, I cannot agree that
this is correct.
[16] In my judgment the point
in limine
must fail. The
parties are in agreement that the appropriate order to make in this
regard would merely be one dismissing the point
in limine
with
costs, such costs to include the costs of two counsel.
[17] In the result I make the following order:
The point
in limine
is dismissed with costs, such costs to
include the costs of two counsel.
J
J NEPGEN
JUDGE OF THE HIGH COURT
For the plaintiff: Adv. P Ellis SC, Adv G Kairinos instructed by
Oosthuizen Hazel & Wilmot
For the defence(1
st
and 2
nd
):
Adv. N Dukada SC and L A Schubart instructed by State Attorney