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[2019] ZAECELLC 30
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Alpha Omega Youth Outreach v National Lottery Commission (EL1461/2018) [2019] ZAECELLC 30 (12 November 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, EAST LONDON)
CASE NO.: EL1461/2018
In
the matter between:
ALPHA
OMEGA YOUTH OUTREACH
APPLICANT
And
NATIONAL
LOTTERY COMMISSION
FIRST RESPONDENT
JUDGMENT
Smith
J:
[1]
This matter concerns the validity of the
respondent’s refusal of an application for a financial grant
from the National Lottery
Distribution Trust Fund (the fund)
submitted to it by the applicant. The applicant seeks an order,
inter
alia
, reviewing and setting aside that
decision, and that the application should not be remitted to the
respondent for reconsideration,
but that the court should instead
substitute its decision for that of the respondent, and approve the
application.
[2]
The applicant is a non-profit organisation whose
main aim is to address social problems such as crime and drug abuse
amongst the
youth. The respondent is the National Lottery Commision,
established in terms of the Lotteries Act, No. 57 of 1997 (the Act).
The
main functions of the respondent are,
inter
alia
, to receive
monies raised through national lottery competitions, to adjudicate
funding applications, distribute funding to charities,
and administer
the fund. The respondent is assisted in the adjudication of funding
applications from qualifying entities by distribution
agencies
appointed by the Minister of Trade and Industry in terms of sections
28(1) and 28(2) of the Act. These agencies are, however,
merely
sub-committees of the Commission and perform their functions on its
behalf. It is common cause that in adjudicating applications
for
funding the respondent exercises a public power, and its decisions
are consequently subject to judicial scrutiny.
[3]
On 14 September 2015 the respondent published a
notice in various newspapers inviting applications for funding from
non-profit organisations
for the 2016/2017 financial year. The
stipulated closing date was 22 October 2015.
[4]
The applicant submitted an application before the
stipulated deadline, applying for a grant in excess of R 800 000.00.
According
to the applicant its application, as well as supporting
documents, complied with the respondent’s terms and conditions
in
all respects.
[5]
On 28 March 2017 the respondent advised the
applicant that it had depleted its funds available for the 2016/2017
financial year
and that its application would accordingly only be
considered in respect of the 2017/2018 financial year.
[6]
The applicant was eventually advised, on 25 April
2017, that its application had been declined for the following
reasons;
o
“
The dates of the financial year end in the
founding document is not aligned to the date in the Annual financial
statements.
o
Furthermore, the Arts and Culture Distributing
Agency noted the acknowledgment of the error by the applicant however
the guidelines
are prescriptive on the requirement and thus can’t
be overridden.”
[7]
It is common cause that the contended
non-alignment of the dates refers to the fact that the applicant’s
constitution provides
that its financial year runs from the 1
st
of February to the 1
st
of February of the ensuing year, whereas the financial statements
were in respect of the period commencing 1 February 2014 and
ending
31 January 2015.
[8]
The applicant subsequently lodged an internal
appeal which was also unsuccessful. The applicant has also previously
successfully
applied for condonation for its failure to bring the
proceedings within the 180 day period as prescribed by The
Promotion
of Administrative Justice Act, No. 3 of 2000
.
[9]
Mr
Sellem
,
who appeared for the applicant, submitted that the respondent failed
to exercise its discretion properly, or at all. He argued
that the
respondent had on previous occasions approved applications submitted
by the applicant based on financial statements which
suffered from
the same alleged non-alignment of dates. He argued that it is thus
clear that on this occasion the respondent has
adopted a dogmatic and
intransigent approach, and has consequently rejected the applicant’s
application for flimsy reasons.
[10]
It is indeed evident from the papers that the
respondent has made no effort to consider whether or not it should
condone the irregularity
in the financial statements, if indeed there
were one. It seems logical to me that external auditors, when faced
with a founding
document that defines a financial year as commencing
on 1 February and ending on 1 February of the ensuing year, would
audit the
books from 1 February until 31 January of the following
year. The ensuing year’s audited financials would again
commence
on 1 February. The audit would therefore of necessity cover
a period of an entire financial year. I am accordingly of the view
that the difference of a day between the financial year end as
defined in the applicants constitution and the period stipulated
in
the financial statements is more perceived than real.
[11]
In the event, even if the respondent is correct
in its assertion that there was non-alignment of the dates stipulated
in the aforesaid
documents, it would have been a relatively
insignificant matter and certainly one which at the very least
impelled the respondent
to exercise a discretion in this regard. This
is more so since it appears that the respondent had on previous
occasions either
ignored or decided to condone a similar discrepancy.
[12]
Mr
Tisani
,
who appeared for the respondent, conceded that it had a discretion to
condone the perceived irregularity. He argued, however,
that the
respondent has indeed exercised its discretion properly since the
irregularity is not only a technical one but goes to
the root of the
respondent’s responsibility to ensure probity in all
applications that serve before it.
[13]
I do not agree with these submissions. In
my view it is manifest that the respondent adopted a rigid, dogmatic
and entirely technical
approach. Once it decided that the guidelines
are “prescriptive” and cannot be “overridden”,
it effectively
refused to exercise a discretion. This was no doubt a
strategy to enable it to deal with the large number of applications
that
serve before it.
[14]
In
National Lotteries
Board vs The South African Education and Environment Project
2012 (4) SA 504
(SCA), at para. 9, the Supreme Court of Appeal
criticized this type of inconsistent and rigid application of
guidelines. In that
matter the board had refused an application for
funding because the applicant’s financial statements were not
properly signed.
The court held that the respondent was not entitled
to treat every departure from the strict prescripts of the guidelines
as fatal.
The court held furthermore that a proper exercise its
discretion compelled the respondent to consider whether, despite the
discrepancy,
the objects of the guidelines had been achieved, and if
it has “then insignificant or technical instances of
non-compliance
should generally be condoned. (See also:
Kemp
NO v Van Wyk
2005 (6) SA 519
(SCA), at
para.1)
[15]
In this matter the respondent has similarly
failed to exercise its discretion properly by applying the guidelines
dogmatically and
rigidly. This much is evident from the reasons
provided for the decision. I am accordingly of the view that the
decision falls
to be reviewed and set aside.
[16]
Mr
Tisani
has, however, argued correctly that the applicant did not make out a
case for its prayer that this court should substitute its
own
decision for that of the respondent. It is established law that the
default position is that where the decision of an administrative
functionary is reviewed and set aside, the matter must be remitted to
that functionary for reconsideration in the light of the
reviewing
court’s findings. The provisions of PAJA
(s.8(1)(c)(ii)
(aa))
contemplates the substitution of decision making where the decision
is a foregone conclusion, remittal would be a waste of
time, or the
decision maker has displayed bias. (
Tripartite
Steering Committee & Another vs Minister of Basic Education &
Another
2015 (5) SA107 (ECG). None of these
factors has been established in this matter.
[17]
The applicant has elected not to follow the
procedure prescribed by Uniform Court
Rule 53
, which means that I do
not have before me all the information and documentation that had
served before the respondent. I am accordingly
not in a position to
determine whether, if the matter is remitted to the respondent, the
outcome would be a foregone conclusion.
The matter must therefore be
remitted to the respondent for reconsideration.
[18]
In the result the following order issues:
a)
The respondent’s decision to refuse the
application for funding submitted by the applicant under reference
number 93382, is
hereby reviewed and set aside.
b)
The matter is remitted to the respondent for
reconsideration on the basis that the applicant has submitted proper
financial statements.
c)
The respondent is ordered to pay the costs of the
application.
__________________________
J.E
SMITH
JUDGE
OF THE HIGH COURT
Appearances
Counsel
for the Plaintiff
: Adv.
Selem
Attorneys
for the Plaintiff
:
Sotenjwa Attorneys
Office no 10 Central
Square Building
Gladstone Street
East London
Counsel
for the Defendant
:
Adv. Tisani
Attorneys
for the Defendant
: Diale
Mogashoa Attorneys
Pretoria
Date
Heard
:
17/10/2019
Date
Delivered
:
12/11/2019