About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2021
>>
[2021] ZAGPPHC 257
|
|
Solidarity and Another v Minister of Tourism and Others (14128/2021) [2021] ZAGPPHC 257 (6 May 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
(1)
REPORTABLE: YES
(2)
OF INTEREST TO OTHER JUDGES: YES
(3)
REVISED: YES
07/05/2021
CASE NUMBER 14128/2021
In the matter between:
SOLIDARITY
First Applicant
AFRIFORUM
NPC
Second Applicant
and
MINISTER OF
TOURISM
First Respondent
DIRECTOR GENERAL OF THE
DEPARTMENT
OF
TOURISM
Second Respondent
THE DEPARTMENT OF
TOURISM
Third Respondent
SMALL ENTERPRISE FINANCE
AGENCY (SOC) LTD
Fourth Respondent
MINISTER OF TRADE AND
INDUSTRY
Fifth Respondent
REASONS FOR
JUDGEMENT: URGENT COURT ORDER
Before
Holland-Muter AJ:
(
Reasons
delivered electronically in accordance with the Directives regarding
special arrangements during the National State of Disaster.
The
Reasons will be uploaded onto Case Lines to the electronic file of
this matt
er
and will be electronically submitted to the
parties/their representative
s by Email).
[1] The
matter came before this court on 16 April 2021 in the Urgent Court.
Due to the intense public interest in the matter it
was heard in open
court and Judgement was reserved. The order was handed down
electronically on 26 April 2021 with reasons to follow.
[2] The
purpose of the application is twofold namely Part A in which the
applicants seek interim relief pending the adjudication
of Part B
where final relief is sought. The interim relief is to restrain the
respondents from the processing of applications and/or
making
payment(s) to identified beneficiaries of the Tourism Equity Fund
(TEF) announced by the Minister of Tourism (the “Minister”)
on 29 January 2021 pending the finalisation of Part B seeking to
review the announced TEF for reason of unlawfulness, unreasonableness
and inconsistent with the
Constitution of the Republic of South
Africa, Act 108 of 1996 (“Constitution”).
[3] The
applicants also seek the disclosure of the identity of the commercial
bank(s) purportedly co-funding the TEF. This prayer
became moot as
the bank involved was identified on behalf of the respondents during
address of the court on behalf of the respondents.
There is no longer
a need to disclose the bank’s identity.
SEPARATION
OF POWERS BETWEEN THE EXECUTIVE AND THE COURTS:
[4] There is
no clear separation of powers expressly mentioned in the
Constitution
(as amended). The Constitution implicit distinguish between the
three branches of government namely the National Executive (the State
President as Head of State together with all members of Cabinet); the
Legislative Authority consisting of Parliament on national
level and
subsidiary legislators on provincial sphere vested in provincial
legislators and local authority vested in Municipal
Councils. The
third branch of government is the Administration of Justice vested in
the hierarchy of courts. See
De Lange v Smuts NO and Others
1998(3) SA 785 CC par 60.
[5] The
separation of power between the three branches of government is often
a contested issue in a constitutional democracy. The
courts are often
criticized and accused of exceeding their powers and interfering in
the operation of the other branches of government.
[6] The
Courts are granted jurisdiction under the Constitution and cannot
decline to intervene simply because there may be political
consequences to the decision. On the other hand Courts will only
grant temporary restraining orders against the exercise with regard
to the exercising of statutory powers in exceptional circumstances
and a strong case for that relief must be made out. See
National
Treasury v OUTA
2012 (6) SA 223
CC par 43-44.
The so-called
“
OUTA-test”
entails that a court will only
enter the exclusive terrain of the executive and legislative branches
of government where the intrusion
is mandated by the Constitution and
when a “
clearest of cases”
to intervene exist.
[7] The
Broad-Based Black Economic Empowerment Act, No 53 of 2003 (“B-BBEE
Act”),
together with the Constitution and the Tourism Code
,
finds application and forms the centre of the legislative
framework within which the Tourism policy in respect of
transformation
as envisaged and as set out below since 2017. I will
deal with the aspect of whether the decision taken by the Minister of
Tourism
(‘Minister’) amounts to an administrative action
subject to judicial review or whether it is executive action normally
excluded form judicial review for reason of policy, below.
ADMINISTRATIVE
ACTION V EXECUTIVE ACTION:
[8] It was a
concern on behalf of the respondents that the relief sought by the
applicants amount to the court usurping executive
powers because the
action attacked amounted to the exercising of executive powers not
subject to judicial review. This refers to
the distinction between
administrative action versus executive action.
[9] The
Constitutional Court drew a distinction between executive and
administrative action in
President of the Republic of South Africa
v South African Rugby Football Union and Others
2000 (1) SA 1
CC
paras 140-143.
In broad the distinction primarily depends
on the nature of the power that is exercised or the function that is
being performed.
[10]In some
instances administrative action is very closely related to policy
considerations but it can in general be stated that
administrative
action is primarily concerned with the implementation of
legislation/policy whereas executive action relates to
the
development or formulation of policy and the initiation of
legislation. See
De Ville; Judicial Review of Administrative
Action in South Africa (Lexis-Nexis) 59.
(‘De Ville”).
[11] There
are other considerations to determine whether the impugned action
constitutes administrative action or executive action.
Factors such
as the source of the power, the subject-matter thereof and whether it
involves the exercise of a public duty are taken
into account to
determine whether the action is administrative or executive. In
Permanent Secretary, Department of Education, Eastern Cape and
Another v Ed-U-College (PE) (Section 21) Inc
2001 (2) SA 1
CC par 18
it has been held that the determination by the MEC for Education
of the criteria or formulae for the grant of subsidies to independent
schools constituted administrative action. The action was therefore
subject to administrative review. See
De Ville supra
for
further examples in this regard.
[12] In order
to decide on the interim relief (Part 1) it is necessary to “peek”
into the merits of the main application
(Part 2) to decide on the
interim relief. It does not mean that obiter remarks made pre-judges
the main issue. Any obiter remarks
should be regarded in this way. It
also not intended to bind the trial court when adjudicating Part B of
the application later.
SUMMARY OF
THE FACTS:
[13] The TEF
(Fund) has been in the making since 2017 when a National Tourism
Transformation Summit was hosted by the Department
of Tourism where a
resolution was passed to create such Fund to enhance transformation
in the tourism business.
[14] For
reasons not applicable here, the progress implementing the resolution
was slow and the Fund was set up with a qualification
criteria of at
least 30% black ownership in tourism entities. The initial target of
30% in the Tourism Code was the focus of the
proposed application by
the Minister during 2019 to the Minister of Trade and Industry (“DTI
Minister”) to exceed the
levels of the existing 30% black
ownership goal set in the Tourism Code for approval of a deviation
thereof to a 51% black ownership
criteria.
[15] The
approval sought during May 2019 was however never gazetted by the DTI
Minister and to remedy this formal error, the current
Minister on 6
February 2021 approached the DTI Minister with a renewed request.
See annexure
AA-3
to the answering affidavit by the Minister.
[16] The
Minister informed the DTI Minister that the B-BBEE Commission advised
her (the Tourism Minister) to comply with the Act
when determining
eligible criteria for grant funding. The B-BBEE Commission further
advised the Minister that all organs of state
are required to apply a
relevant Code of Good Practise and that the necessary exemption to
exceed the qualification from 30% to
51% black ownership must be
applied for from the DTI Minister to allow such deviation. The
Commission referred the Minister to
Section 10(2) of the B-BBEE Act.
The request by the Minister to the DTI Minister was in terms of
section 9(6) of the Act but in
my view it should have been in terms
of section 10(2) and not in terms of section 9(6) of the Act because
there were existing criteria
and the purpose was now the exceed
existing criteria.
[17] The
Minister announced the Fund on 26 January 2021 before any
consultation of kind took place with the DTI Minister or other
stake
holders to exceed or deviate from the existing requirements in the
TEF. When confronted by the applicants, The Minister requested
an
audience with the applicants to discuss the applicants’
objections with regard to the announced TEF. A virtual audience
was
held on 15 February 2021 but the Minister did not inform the
applicants of the pending deviation application to DTI.
[18] The
audience did not resolve the issues raised by the applicants and on
16 February 2021 the Minister announced that the TEF
would continue
as originally announced. This meant that the Fourth Respondent,
Small
Enterprise Finance Agency (SOC) Ltd (SEFA)
would continue to
administer and process all applications and payments of grants
and/loans in terms of the TEF on the deviated non-gazetted
criteria.
The DTI Minister only gazetted the deviations on 19 February 2021.
The public in general was not aware of these new gazetted
exemptions
when the TEF was announced on 26 January 2021. See below the effect
of this non-compliance with the B-BBEE Act.
NATURE OF
ACTION BY THE RESPONDENTS:
[19] The
Minister avers that the action sought to be reviewed amounts to an
executive policy and not ordinary administrative action.
If so, the
court should be on its guard not to intervene unless it is convinced
that it is a “clearest of cases” for
interim relief. The
test in this regard was highlighted in the
OUTA case supra.
It
simply means that an applicant has a higher bar than usual to satisfy
before such interim relief can be granted.
[20] As
referred to above in the MEC matter in the Eastern Cape (par 11
supra), it was held that the actions by the MEC there determining
certain precise criteria or formulae for the granting of subsidies to
independent schools amounted to administrative action. Although
not
the relief sought in Part A of the application before this court, I
find it difficult to envisage why a review court later
(when Part B
ids hear) will not hold differently.
[21] The
Minister also indicated in her application on 5 February 2021 to the
DTI Minister (annexure AAA to the answering affidavit)
that the
B-BBEE Commission advised her office on 3 February 2021 to adhere to
the statutory requirements of section 10(1) of the
Act when
considering to be exempted from criteria in the Code of Good Practice
with regard to be exempted from existing criteria.
Section 9(6) of
the Act permits the DTI Minister to specify qualification criteria
for procurement and other economic activities
which exceed those set
by the DTI Minister in terms of section 9(1). To exceed the
existing criteria of the Code the application
by the Minister to the
DTI Minister should be in terms of section 10(2) of the Act. The
criteria as gazetted were in terms of section
9(6) and not section
10(2) of the Act.
[22] In
Airports Company South Africa SOC Ltd v Imperial Group Ltd and
Another
2020 (4) SA 17
SCA (ACSA)
the question of non-compliance
with section 9 & 10 of B-BBEE Act was discussed. The Department
of Tourism and SEFA fall within
the ambit of sections 9 & 10. The
Provisions of sections 9 & 10 are peremptory and the ratio is to
ensure uniformity suggested
in the B-BBEE Act, and the non-compliance
with the Act will lead to each organ of state to design its own
unique criteria that
will negate the uniformity sought to be achieved
by the B-BBEE Act. The aim of the Act is to achieve uniformity and an
organ of
state may not act without the obtained consent/input of the
DTI Minister. In this instance, although the input was sought shortly
after the announcement of the TEF on 28 January 2021, it remains
contrary the peremptory provisions of the Act.
ACSA supra par
[34]-[39]
.
[23] The
Minister approached the DTI Minister (on 5 February 2021)
after
already announcing the REF (the envisaged deviation of the
existing criteria applicable) on 28 January 2021. I am not convinced
that there is any room for retrospective consent by the DTI Minister
to ratify the already announced deviations by the Minister.
I am in
accordance with
De Ville supra
(on p 191-192) that the
announced deviation from the existing criteria by the Minister on 28
January 2021 was not authorised by
the applicable legislation (B-BBEE
Act) and the later gazetting by the DTI Minister on 15 February 2021
cannot cure the defect.
This is however for the trial court to decide
when adjudicating Part B of the application.
[24] It is
however clear to me from the above that there is sufficient reason to
find that the application for interim relief ought
to succeed and
that the application passes the “
clearest of cases-test”
under
OUTA
should the action be executive of nature.
In my view the applicants made out a case for this court to order the
interim relief.
I am not convinced that the relief sought is
executive action (such as policy-making) but rather administrative
action of implementing
policy.
[25]It is
also clear that
SEFA
(the fourth respondent) will manage the
TEF as is on behalf of the Department of Tourism subject to the
existing criteria. I am
of the view that the oversight and the late
application to the DTI Minister and the later gazetting thereof
after, the announcement
of the TEF amounts to an irregularity. The
oversight was conceded during arguments by Mr Bham on behalf of the
Minister. If allowed
to proceed as is, it may amount to the
circumvention of legislation to give effect to the constitutional
imperative to transformation
not in line with the B-BBEE Act’s
provisions.
SEFA
will be performing an administrative function
delegated to it by the Minister and as such the administrative action
falls squarely
within the ambit of
PAJA
for review purposes
under the prevailing situation.
[26] The
facts in this matter can be distinguished from the matter in
Afriforum v University of the Free State 2018 (2) SA185 CC.
In
that matter it amounted to a new adopted language policy while in
this matter it is the deviation from an existing Code and the
deviation from already gazetted criteria. It also illustrates the
distinction between administrative action (implementation of
policy)
versus executive action where policy is founded. Again the
trial court should elude on these aspects.
OBITER
GENERAL REMARKS:
[27] This
judgement is by no means an attack on the policy making function
(executive action) by the Minister. Transformation is
a
constitutional imperative and accounted for in the B-BBEE Act but
there are rules (direction giving legislation) to abide and
to follow
when executing policy.
THE NATURE
OF THE TEF:
[28]The TEF’s
intention to give tailored preference to black-owned business is a
constitutional preference and in achieving
it the jurisprudence is
built on the presumption that equal treatment is not identical
treatment. This is embedded into our law
since
Minister of Finance
v Van Heerden
[2004] ZACC 3
;
2004 (6) SA 121
CC t [26].
Again this is not to be
decided as part of the interim relief but is for the trial court to
decide.
[29] The
parties are in agreement with one another that the TEF was a
transformation initiative and not a Covid-19 relief fund.
I do
not intend to differ from the expressed views of the parties that the
TEF is a transformation initiative. I then fail
to see how certain
averments were made on behalf of the applicants that the TEF
discriminates on racial lines. If the TEF was indeed
also to be a
Covid-19 Relief fund, these issues may be raised and section 9 of the
Constitution will apply. Again, the trial court
should adjudicate
this if relevant.
[30] It was
however mentioned by the State President during the virtual launch of
the TEF on 28 January 2021 that “
the TEF could play a
pivotal role in transforming the recovery of the industry in aiding
the economic recovery in the wake of the
Covid-19 pandemi
c”.
The Minister in her announcement echoed similar sounds to the “
effect
of the Covid-19 Pandemic which brought the tourism sector to a
grinding halt”,
and that government “
will
contribute to the rejuvenation of the tourism market”
in
“
response to the devastation of the sector by the pandemic”.
The respondents never denied these averments by the applicants and
the announcements may create the impression that the TEF was
indeed
also there to rejuvenate the tourism sector. See par 59 of the
answering affidavit.
RELIEF
SOUGHT:
[31] The
respondents further opined that, should the court grant the interim
relief, there is no reason to prohibit the respondents
from carry-on
processing any applications pursuant the finalization of Part B of
the application. I differ because it may be that
the trial court
grant Part B resulting in the unnecessary processing of applications
on afore going criteria, causing applicants
to have a “
legitimate
expectation”
and may result in dissatisfaction from
applicants under the TEF grants/loans should the main application
succeed and applicants
have to return received funds.
URGENCY:
[32] I am
satisfied that the matter was indeed urgent despite the incorrect
reference to “
semi-urgency”
in the
applicants’ heads of arguments. The issue involves a
substantial large amount of money (R 1,2 billion) and should
the
matter only be decided during the normal course somewhere later this
year, there is no guarantee that any money would be re-collected
should the review succeed. Our country is at present due to various
circumstances experiencing financial hardship and to risk such
large
amounts before properly scrutinizing the procedures and
administration thereof may amount to improper conduct. It is not
a
Covid-19 relief fund but should that be the case, the need of those
affected by the pandemic for assistance would be paramount
and great
care of funds ought to take place. It is in the general interest that
public funds be dealt with in a responsible fashion.
I am satisfied
that the matter is indeed urgent.
[33] All in
all I am satisfied that the applicants made out a case for the
interim relief in prayers 2 and 4. Prayer 3 became moot
after the
identity of the participating bank was disclosed during arguments.
The order as handed down earlier on 16 April 2021
is confirmed to be
the order of this court. A copy of the order is annexed hereto as
annexure “XYZ”.
[34] I want
to thank both Me Engelbrecht and Mr Bham for the professional and
dignified way in which they presented their arguments
and for the
very helpful heads of arguments. Their conduct is an example how to
differ from another without bringing the decorum
of the court into
disrepute.
J
HOLLAND-MÜTER
Acting Judge
of the Pretoria High Court
Reasons
handed down electronically on 6 May 2021
Attorneys obo
Applicants:
Serfontein
Viljoen Swart Attorneys
Niekie
Venter:
niekie@svslaw.co.za
Counsel obo
Applicants:
M J
Engelbrecht SC:
engelbrechtm@law.co.za
D Groenewald:
dirkgr723@gmail.co.za
Attorneys obo
1
st
; 2
nd
&3
rd
Respondents
State
Attorney, Pretoria
Mr Chowe:
IChowe@justice.gov.za
Counsel obo
1
st
;2
nd
&3
rd
Respondents:
A E Bham SC:
bhamae@law.co.za
J Mitchell:
Mitchell@group621.co.za