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[2022] ZAECMHC 15
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Sakhingomso Training and Development Centre v Member of Executive Council for Social Development and Another (426/2021) [2022] ZAECMHC 15 (14 June 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, MTHATHA)
Case
No: 426/2021
In
the matter between:
SAKHINGOMSO
TRAINING AND DEVELOPMENT
CENTRE
Applicant
And
THE
MEMBER OF EXECUTIVE COUNCIL FOR
SOCIAL
DEVELOMPENT
1
st
Respondent
HEAD
OF DEPARTMENT OF SOCIAL DEVELOPMENT
IN
THE EASTERN CAPE PROVINCE
2
nd
Respondent
JUDGMENT
BESHE
J:
[1]
This is an application for an
order declaring second respondent’s decision to suspend
funds
that are due to the applicant on a monthly basis, unlawful,
unconstitutional and invalid and setting same aside. Applicant
also
seeks an order that the respondents to be directed to pay
R2 145 000.00 being the total of amounts due to the
applicant
from April 2020 to February 2021.
The
Parties
[2]
The applicant is described as a
non-profit organisation that was established in 2005 and
registered
with the Department of Social Development (The Department) in 2008.
This was done in order for applicant to get funding
(financial
benefits) from the said department so as to provide social welfare
services to disabled children in the Eastern Cape.
The deponent to
the founding affidavit
Mr Dingalenkosi Wisani
describes
himself as the General Manager of applicant.
[3]
First respondent is the Member
of the Executive Council (MEC) responsible for the department.
Second
respondent is the Head of Department who is responsible for the
management and administration of the department. Second
respondent is
said to have taken the impugned decision.
Evidence
[4]
It appears to be common cause
that applicant received a subsidy from the first respondent
in order
for it to fulfil obligations imposed by the
Non-Profit
Organizations Act
[1]
and in extension of first respondent's mandate to provide social
welfare services to the society, with special attention to disabled
children. As pointed out earlier, applicant is a non-profit
organization and is registered as such with the Department of Social
Development.
[5]
A non-profit organization is
defined as a trust, company or other organization of persons
established for a public purpose.
[2]
[6]
Section 3 of the Act
outlines the state’s responsibility to non-profit organizations
and provides thus:
“
Within the limits
prescribed by law every organ of state must determine and co-ordinate
the implementation of its policies and measures
in a manner designed
to promote, support and enhance the capacity of the non-profit
organization to perform their duties.”
[7]
According to
Mr Wisani
,
the applicant receives a monthly subsidy of R195 000.00 from the
Department of Social Department, Eastern Cape. The last
such payment
was received in March 2020.
[8]
As a result of the non-payment
of subsidies by the respondents, the applicant has incurred
huge
debts to
inter alia
Spargs Wholesalers Mthatha, OR Tambo
District Municipality. It has been unable to pay its creditors. It
has not been able to pay
its employees since November 2020. And
therefore unable to effectively provide social welfare services to
the disabled.
[9]
It is contended on behalf of the
applicant that the decision by the respondents to cut
off payments to
it is an unjust administration as it infringes on the Constitutional
Rights of children concerned. This is so,
so it is contended by the
applicant, because the main beneficiaries of the services provided by
the applicant to provide education
and skills through practical and
theoretical training, are vulnerable members of the society who are
living with disabilities and
are poor. Applicant also uses the
funding to provide feeding schemes for the beneficiaries. That
applicant is the only institution
that provides basic and critical
services for the deaf, blind and physically disabled children in
Mthatha and surrounding areas.
[10]
Enquiries to the department about the non-payment
of subsidies was met with a response contained in an undated
letter
from first respondent. The letter records
inter alia
the
following:
“
3. Following
various enquiries within the Department, the Office of the MEC wishes
to advise as follows:
3.1 The Department’s
internal investigation as conducted by our Risk Management
Directorate is still in process and close
to completion. Both the
Office of the MEC and the Office of the HoD urgently awaits the
outcome of the investigation.
3.2 The above
investigation was initiated following the Department’s decision
to suspend funding to the organisation for accountability
purposes as
a result of allegations of mismanagement of funds. The suspension of
funding is still currently in place.
3.3 The Department will
review the suspension pending the finalization of the investigation
by the Risk Directorate and the recommendations
made therein to the
Office of the HoD and the Office of the MEC.
3.4 The Office of the MEC
was cited as a second respondent in a court application initiated by
the Centre and Management in the
Mthatha High Court against the Board
Members. No relief was sought against the Hon MEC. We are advised
that the matter is
sub judice
and that the Mthatha High Court
has not granted any order under case no. 263 / 2020.
4. In the circumstances,
the Office of the MEC wishes to assure the Centre that the matter is
receiving the attention that it deserves,
and that the Department’s
further handling of the matter will be communicated in due course.”
[11]
The application is opposed. The respondents also
raised a number of points
in limine
, to wit:
Lack of urgency;
Lack of
locus standi
;
Non-joinder;
Lis pendens
; and
Dispute of facts.
The
last point
in limine
seems to be to be a repetition of the
complaint relating to lack of
locus standi
and about the
deponent to the founding affidavit being complicit in the alleged
mismanagement of applicant’s funds.
[12]
It would appear to me that the department seeks to
involve itself in leadership squabbles relating to the
applicant.
Yet, they seem to acknowledge that there was a change at the helm of
the applicant and specifically addressed their
communication relevant
to this matter to the interim Board of Management. I do not think
this complaint has any merit. As far as
lack of urgency is concerned,
the delay has been adequately explained by the applicant, including
inter alia
the state of affairs brought about by the state of
disaster that was declared resulting in a lockdown. As well as
attempts that
were made to engage the department in regard to the
funding and getting by with other sources of funding / donations.
Clearly the
other matter that is before court does involve the same
parties as in this matter nor is it about the same cause of action to
amount
to
lis alibi pendens
. This point too falls to be
overruled.
[13]
In the main without regurgitating the contents of
the answering affidavit, respondents gripe that led to
the suspension
of funding to the applicant is disclosed in their letter in response
to applicant’s enquiries regarding non-payment
of funds due to
applicant. They alleged mismanagement of funds. As well as, it would
seem the propriety or otherwise of the assumption
of office by the
impugned Board of Management including the deponent to the founding
affidavit who described himself as the Acting
General Manager and
board member of applicant, appears to be the reason for the
suspension of funding. The bulk of respondents’
answering
affidavit deals with the alleged mismanagement of funds. But, they do
not tell us how the decision to suspend the funding
was arrived at or
on what basis the funding was suspended. Hence applicant’s
contention that respondents’ decision
to suspend funding to the
applicant constitutes an unjust administrative action which adversely
infringes the constitutionally
enshrines rights of children.
[3]
Discussion
[14]
Section 33 of the Constitution
guarantees
everyone the right to administrative action that is lawful,
reasonable and procedurally fair.
[15]
The court is required to determine whether the
manner in which the decision was taken was acceptable making
it just
and therefore lawful. The court is to concern itself with the process
that led to the decision being taken.
[16]
In response to this allegation, respondents retort
that the decision to suspend the funds due to the applicant
is meant
to protect the applicant by extension the disabled children from
misuse and mismanagement of funds allocated to the applicant.
The
letter addressed to the applicant by the respondents referred to
earlier makes it plain that the funds were suspended following
the
department’s decision to suspend funding to the organisation
due to an alleged mismanagement of funds and its intention
to conduct
an investigation.
[17]
Even though the applicant seeks to have the
decision of the respondents reviewed, they did not call upon
the
respondents to provide reasons why the impugned decision was taken.
Granted that respondents’ letter makes it plain that
the
decision is allied to allegations of misuse of funds by the
applicant. Other than that we are in the dark as to why the decision
was arrived at or what procedure / process was followed in arriving
at the decision. It was also argued on behalf of the applicant
that
the decision to suspend funding for reasons other than those that are
usually listed in Service Level Agreement entered into
between
non-profit organisations and the department. This does not help the
applicant because this is not a case that is made out
in their
papers. Nor is the existence of a Service Level Agreement between
applicant and department alleged and proved.
[18]
My understanding of applicant’s case is that
respondents’ decision to suspend the funds / subsidy
provided
by the department to the applicant falls to be set aside because it
is unconstitutional in that it violates the fundamental
rights of
those affected. This is so because it renders the applicant unable to
provide the required services to them. Applicant
also pertinently
draws the court’s attention to
Section 28 of the
Constitution
which provides that ‘a child’s best
interests are of paramount importance in every matter that concerns
the child’.
Further that
Section 29 (1) (a) of the
Constitution
guarantees the right to basic education to all.
[19]
I stated earlier on that the respondent does not
tell us how the impugned decision was arrived at. About
the process
that was followed in arriving at the decision to suspend funding. It
appears to have been taken arbitrarily without
following any due
process. The main thrust of respondents’ opposition to the
granting of the relief sought by the applicant
is as I understand it,
that the decision to suspend the funds is meant to protect the
disabled children the applicant is supposed
to cater for against the
mismanagement of funds meant for them.
[20]
Be that as it may, the respondent is still
required to follow due process and not act arbitrarily. There
can be
no doubt that the department is duty bound to investigate
mismanagement of funds meant for members of vulnerable groups
and
deal with the wrongdoers. But more importantly, as provided for in
Section 3 of the Act (NPO Act)
the state has a responsibility
to promote support and enhance the capacity of non-profit
organisations to perform their functions.
It is therefore my
considered view that by unilaterally and arbitrarily stopping the
funding to the applicant, in so doing, adversely
affecting the rights
of the beneficiaries of the applicant’s services, the
respondent’s decision to do so is unlawful
and falls to be
reviewed and set aside. The applicant has made out a case for the
relief it seeks.
[21]
Accordingly, the following order will issue:
1. The decision taken
by the second respondent to suspend funds due to the applicant is
declared unlawful and is reviewed and set
aside.
2. The department is
ordered to pay to the applicant all amounts due to it by way of
subsidies from April 2020 within sixty (60)
days of granting of this
order.
3. The respondents are
to pay costs of this application.
N
G BESHE
JUDGE
OF THE HIGH COURT
APPEARANCES
For
the Applicant :
Adv: Nyobole
Instructed
by
:
MNQAYANA ATTORNEYS
55 Nelson Mandela Drive
Unit 6, Block E
MTHATHA
Ref: Mr Mnqayana
Tel.: 078 349 0987
For
the Respondents
:Adv: Mbiko
Instructed
by
:
STATE
ATTORNEY (MTHATHA)
94 Sission Street
Broadcast House
Fortgale
MTHATHA
Ref: 294/21-A2M
Tel.: 047 – 531
9900
Date
Heard
:
20 January 2022
Date
Reserved
:
20 January 2022
Date
Delivered
:
14 June 2022
[1]
Act
71 of 1997.
[2]
Section
1 of the Act.
[3]
See
page 30 of indexed papers [22].