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[2021] ZASCA 121
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Afriforum NPC v Minister of Tourism and Others; Solidarity Trade Union v Minister of Small Business Development and Others (499/2020; 498/2020) [2021] ZASCA 121; [2022] 1 All SA 1 (SCA); 2022 (1) SA 359 (SCA) (22 September 2021)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no. 499/2020
In the matter
between:
AFRIFORUM NPC
Applicant
and
MINISTER OF
TOURISM
First
Respondent
DEPARTMENT OF
TOURISM
Second
Respondent
DIRECTOR-GENERAL
OF THE
DEPARTMENT OF
TOURISM
Third
Respondent
Case no. 498/2020
and in the matter
between:
SOLIDARITY TRADE
UNION
Applicant
and
MINISTER OF SMALL
BUSINESS DEVELOPMENT First
Respondent
MINISTER OF TRADE
AND INDUSTRY
Second
Respondent
MINISTER OF
TOURISM
Third
Respondent
Neutral
citation:
Afriforum NPC v
Minister of Tourism and Others
;
Solidarity Trade
Union v Minister of Small Business Development and Others
(499/2020 and 498/2020)
[2021]
ZASCA 121
(22 September 2021)
Coram:
Wallis, Schippers and Plasket JJA and
Potterill and Phatshoane AJJA
Heard
:
25 August 2021
Delivered
:
This judgment was handed down electronically by circulation to the
parties’ legal
representatives by email. It has been published
on the Supreme Court of Appeal website and released to SAFLII. The
date and time
for hand-down is deemed to be 09h45 on 22 September
2021.
Summary:
Disaster
Management Act 57 of 2002 (DMA) – validity of direction made by
Minister of Tourism under the DMA for the provision
of funds from the
Tourism Relief Fund to defined types of businesses in the tourism
industry – purpose of Funds to mitigate
the impact of Covid-19
– Minister of Tourism not obliged by
s 10(1)
(e)
of the
Broad-Based Black Economic Empowerment Act 53 of 2003
to make
eligibility criteria subject to Tourism Sector Code in terms of the
Act – Minister committed error of law.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Kollapen J, sitting as court of
first instance):
In
each appeal:
1. Leave to appeal
is granted.
2. The appeal is
upheld with costs, including the costs of two counsel
3. The order of the
court below is set aside and replaced with the following order.
‘
1.
It is declared that:
(a)
when making the
direction dated 6 April 2020, in terms of regulation 10(8) of the
regulations under the
Disaster Management Act 57 of 2002
, the
Minister of Tourism was not legally obliged by
s 10(1)
(e)
of the
Broad-Based Black Economic Empowerment Act 53 of 2003
to make
eligibility for assistance from the Tourism Relief Fund subject to
the Tourism Sector Code made in terms of that Act; and
(b)
the direction was
consequently unlawful.
2. The order in
paragraph 1 above does not authorize or oblige the Minister of
Tourism to recover funds already disbursed from the
Tourism Relief
Fund.
3. The respondents
are directed to pay the costs of the applicant, including the costs
of two counsel.’
JUDGMENT
Plasket JA
(Wallis and Schippers JJA and Potterill and Phatsoane AJJA
concurring):
[1]
Acting in terms of authority delegated to her by the regulations made
under the Disaster
Management Act 57 of 2002 (the DMA), the Minister
of Tourism (the Minister) issued a direction in which she created a
Tourism Relief
Fund (the Fund). In the direction, she specified the
criteria for exempted micro enterprises in the tourism industry to
qualify
for financial relief to mitigate the economic impact of the
Covid-19 pandemic.
[2]
The appellants, Solidarity Trade Union (Solidarity) and a non-profit
company, Afriforum
NPC (Afriforum), applied urgently, in separate
cases, in the Gauteng Division of the High Court, Pretoria, to review
and set aside
what they described as ‘race-based criteria’
for eligibility for financial assistance from the Fund. The matters
were
argued together before Kollapen J. He dismissed the applications
with costs and refused leave to appeal. On petition to this court,
an
order was made referring the applications for leave to appeal for
oral argument in terms of
s 17(2)
(d)
of the
Superior Courts
Act 10 of 2013
, and directing that the parties should be prepared, if
called upon to do so, to argue the merits of the matter. The merits
of the
appeals were indeed argued.
Background
[3]
In early 2020 the first cases of the Coronavirus Disease 2019 –
Covid-19 –
were diagnosed in South Africa. As a result of the
rapid spread of the disease in this country, mirroring its spread all
over the
world, a state of national disaster was declared on 15 March
2020 in terms of the DMA. That state of disaster is still in force
throughout the country.
[1]
[4]
On 18 March 2020, the Minister of Co-operative Governance and
Traditional Affairs,
the designated minister in the national
government, promulgated regulations in terms of the DMA to take the
‘steps necessary
to prevent the escalation of the disaster or
to alleviate, contain and minimize the effects of the disaster’.
[2]
The Minister of Tourism relied on these regulations as the source of
her authority to issue the direction that stipulated the criteria
for
access to grants from the Fund.
[5]
On 26 March 2020, a lockdown was imposed on the populace in terms of
which virtually
everyone was restricted to their homes, subject to
extremely limited exceptions. The lockdown had devastating effects on
all aspects
of life. Its economic impact, in particular, was severe:
it shut down all businesses except those that were deemed to be
providers
of essential services; and even after the initial phase of
the lockdown – the so-called hard lockdown – the
re-opening
of the economy was phased in gradually.
[6]
In order to mitigate some of these effects, the government put in
place various measures
to assist businesses that were adversely
affected by the lockdown and its aftermath. The Fund was one such
measure. In terms of
this initiative, R200 million was allocated to
provide once-off payments of up to a maximum of R50 000 to
businesses in the
tourism industry which were adversely affected.
This industry was one of the first economic casualties of the
pandemic as international
travel was closed down and, during the
lockdown, domestic tourism also ground to a halt.
The DMA and the
regulations
[7]
The legal regime that regulates and empowers the government’s
management of
the pandemic is the DMA, the regulations made in terms
of
s 27(2)
and delegated authority granted to ministers to make
directions within their functional areas of operation. It is to this
regime
that I now turn.
[8]
The DMA is the principal statutory instrument that enables the
government to take
action aimed at ‘preventing or reducing the
risk of disasters, mitigating the severity of disasters’,
allowing for
the ‘rapid and effective response to disasters’
and for ‘post-disaster recovery and rehabilitation’.
[3]
It does so by creating structures and processes to deal with
disasters on the national, provincial and local levels.
[4]
It defines a disaster as ‘a progressive or sudden, widespread
or localised, natural or human-caused occurrence’ which
has the
effect of either causing or threatening to cause ‘death, injury
or disease’; ‘damage to property, infrastructure
or the
environment’; or ‘significant disruption of the life of a
community’; and ‘is of a magnitude that
exceeds the
ability of those affected by the disaster to cope with its effects
using only their own resources’.
[5]
Clearly, the Covid-19 pandemic fell squarely into this definition.
[9]
The DMA applies when a disaster is not serious enough to justify the
declaration of
a state of emergency, but serious enough that the
ordinary law cannot deal with it.
[6]
It is administered by the Minister of Co-operative Governance and
Traditional Affairs, who was designated to fulfil this function
by
the President.
[7]
[10]
Disasters may be national, provincial or local disasters, depending
on their nature and severity.
Obviously, the Covid-19 pandemic is a
national disaster.
Section 26(1)
of the DMA provides that the
cabinet, in the national sphere of government, is ‘primarily
responsible for the co-ordination
and management of national
disasters’.
[8]
[11]
In terms of
s 26(2)
, the cabinet is required to deal with a national
disaster:
‘
(a)
in terms of existing legislation and contingency arrangements, if a
national state of disaster
has not been declared in terms of
section
27(1)
; or
(b)
in terms of existing legislation and contingency
arrangements as augmented by regulations or directions made or issued
in terms
of
section 27(2)
, if a national state of disaster has been
declared.’
[12]
A national state of disaster may, in terms of
s 27(1)
, be declared by
the designated minister by notice in the
Government Gazette
if
‘existing legislation and contingency arrangements do not
adequately provide for the national executive to deal effectively
with the disaster’ or if ‘other special circumstances
warrant the declaration of a national state of disaster’.
[13]
After a national disaster has been declared, the designated minister
may, in terms of
s 27(2)
, ‘make regulations or issue directions
or authorise the issue of directions’ concerning the following:
‘
(a)
the release of any available resources of the national government,
including stores, equipment,
vehicles and facilities;
(b)
the release of personnel of a national organ of
state for the rendering of emergency services;
(c)
the implementation of all or any of the provisions
of a national disaster management plan that are applicable in the
circumstances;
(d)
the evacuation to temporary shelters of all or
part of the population from the disaster-stricken or threatened area
if such action
is necessary for the preservation of life;
(e)
the regulation of traffic to, from or within the
disaster-stricken or threatened area;
(f)
the regulation of the movement of persons and
goods to, from or within the disaster-stricken or threatened area;
(g)
the control and occupancy of premises in the
disaster-stricken or threatened area;
(h)
the provision, control or use of temporary
emergency accommodation;
(i)
the suspension or limiting of the sale, dispensing
or transportation of alcoholic beverages in the disaster-stricken or
threatened
area;
(j)
the maintenance or installation of temporary lines
of communication to, from or within the disaster area;
(k)
the dissemination of information required for
dealing with the disaster;
(l)
emergency procurement procedures;
(m)
the facilitation of response and post-disaster
recovery and rehabilitation;
(n)
other steps that may be necessary to prevent an
escalation of the disaster, or to alleviate, contain and minimise the
effects of
the disaster; or
(o)
steps to facilitate international assistance.’
[14]
The regulation-making powers of the designated minister are limited
as to their purpose.
Section 27(3)
provides:
‘
The
powers referred to in subsection (2) may be exercised only to the
extent that this is necessary for the purpose of-
(a)
assisting and protecting the public;
(b)
providing relief to the public;
(c)
protecting property;
(d)
preventing or combating disruption; or
(e)
dealing with the destructive and other effects of the disaster.’
[15]
Section 56
sets out guiding principles for the funding of
post-disaster recovery and rehabilitation. The section provides:
‘
(1)
This Chapter is subject to
sections 16
and
25
of the
Public Finance
Management Act, 1999
, which provide for the use of funds in emergency
situations.
(2) When a disaster occurs the
following principles apply:
(a)
National, provincial and local organs of state may
financially contribute to response efforts and post-disaster recovery
and rehabilitation.
(b)
The cost of repairing or replacing public sector
infrastructure should be borne by the organ of state responsible for
the maintenance
of such infrastructure.
(3) The Minister may, in the
national disaster management framework, prescribe a percentage of the
budget, or any aspect of a budget,
of a provincial organ of state or
a municipal organ of state, as the case may be, as a threshold for
accessing additional funding
from the national government for
response efforts.
(4) Any financial assistance
provided by a national, provincial or municipal organ of state in
terms of subsection (2)
(a)
must be in accordance with the
national disaster management framework and any applicable
post-disaster recovery and rehabilitation
policy of the relevant
sphere of government, and may take into account-
(a)
whether any prevention and mitigation measures
were taken, and if not, the reasons for the absence of such measures;
(b)
whether the disaster could have been avoided or
minimised had prevention and mitigation measures been taken;
(c)
whether it is reasonable to expect that prevention
and mitigation measures should have been taken in the circumstances;
(d)
whether the damage caused by the disaster is
covered by adequate insurance, and if not, the reasons for the
absence or inadequacy
of insurance cover;
(e)
the extent of financial assistance available from
community, public or other non-governmental support programmes; and
(f)
the magnitude and severity of the disaster, the
financial capacity of the victims of the disaster and their
accessibility to commercial
insurance.’
[16]
The first regulations to deal with the Covid-19 pandemic were
promulgated on 18 March 2020.
[9]
Among other far-reaching restrictions on the freedoms of the
populace, they prohibited gatherings,
[10]
closed educational institutions and partial care facilities
[11]
and limited the sale, dispensing or transportation of liquor.
[12]
[17]
Regulation 10
empowered the Ministers of Health, Justice and
Constitutional Development, Basic Education, Higher Education,
Police, Social Development,
Trade and Industry and Transport to issue
directions specific to their portfolios. For instance, the Minister
of Justice and Constitutional
Development was empowered to issue
directions ‘to address, prevent and combat the spread of
COVID-19 in all Correctional
Centres and Remand Detention Facilities’
in the country and, ‘after consultation with the Chief Justice,
where appropriate’,
to ‘address, prevent and combat the
spread of COVID-19 in all courts and court precincts’ in the
country; and to vary
directions ‘as the circumstances
require’.
[13]
[18]
Regulation 10(8)
empowered all other ministers to issue directions.
It is relevant to this case. It provides:
‘
Any
Minister may issue and vary directions, as required, within his or
her mandate, to address, prevent and combat the spread of
COVID-19,
from time to time, as may be required, including –
(a)
disseminating information required for
dealing with the national state of disaster;
(b)
implementing emergency procurement
procedures;
(c)
taking any other steps that may be
necessary to prevent an escalation of the national state of disaster,
or to alleviate, contain
and minimize the effects of the national
state of disaster; or
(d)
taking steps to facilitate
international assistance.’
The Minister’s
direction
[19]
The Minister’s direction was published on 6 April 2020 and
headed ‘Tourism Relief
Fund for SMMEs’. The direction
stated that the Fund ‘provides once-off capped grant assistance
to Small Micro and Medium
Enterprises (SMMEs) in the tourism sector
to mitigate the impact of COVID-19 in order to ensure their
sustainability’. Grants
were to be capped at R50 000 per
entity and were to be used by beneficiaries to ‘subsidise
expenses towards fixed costs,
operational costs, supplies and other
pressure cost items’.
[20]
The direction provided that preference would be given to enterprises
with the highest scores
in respect of pre-qualification criteria and
that the ‘final evaluation will be done by a panel of experts
in terms of functionality’.
The direction then provided:
‘
Guided
by the Tourism Broad Based Black Economic Empowerment (B-BBEE) Codes
of Good Practices approved by the Minister of Trade
and Industries in
2015 (in line with the B-BBEE Amendment Act No. 46 of 2013), the
Tourism Relief Fund is administered in line
with the objectives of
Economic Transformation, and our vision to ensure sustainable and
inclusive tourism development.’
[21]
In terms of the direction, applications for funds would be processed
weekly while funds lasted,
and ‘while observing equitable
spatial distribution in terms of provinces’.
[22]
Three categories of SMME were identified as being eligible for
funding. They were accommodation
establishments like hotels and guest
houses; hospitality and related services businesses like those
providing conference venues
and professional catering services; and
travel and related services undertakings like tour operators, travel
agencies and tourism
guides.
[23]
The direction set out a list of 11 criteria that it described as
qualifying criteria. In the
first place, they included the provision
of formal documentation. An applicant was required to provide proof
of ‘valid registration’
with the Companies and
Intellectual Property Commission; a valid tax clearance certificate;
proof of compliance with minimum wage
requirements; and proof of UIF
registration for employees. Non-compliance with any of these
requirements would automatically disqualify
an applicant.
[24]
Secondly, three criteria as to the nature of the applicant were
specified. They were that an
applicant had to be an ‘Exempted
Micro Enterprise (EME) defined in terms of the Amended Tourism B-BBEE
Sector Code, 2015’;
that it was ‘an existing
tourism-specific establishment as outlined in the scope of
application’; and that it had been
‘in existence for at
least one business financial year’.
[25]
Thirdly, an applying entity was required to provide certain
operational information. It had to
provide proof that ‘the
relief is required as a result of the impact of COVID-19’; its
latest statements reflecting
its financial position, financial
performance and cash flow; bank statements for a six month period;
and, in the case of accommodation
establishments, a grading
certificate or proof of application to be graded.
[26]
In addition to this information, an application had to also include
the following: certified
copies of the identity documents of
directors or members; a business profile; relevant industry
certificates; a statement indicating
‘the intended use of the
resources – budget breakdown (to be adhered to in the
expenditure)’; the latest ‘UIF/U-filing
contribution
certificate’; a ‘[c]ertificate of B-BBEE or Affidavit’;
and medical certificates ‘for Persons
with Disability where
applicable’.
[27]
The final section of the direction set out the criteria for scoring
applications and their weight.
Five points each were awarded for five
formal documentary requirements, namely proof of a company’s
registration, tax compliance,
payment of the minimum wage, payment of
UIF, and possession of industry operating certificates.
[28]
Ten points were awarded for five ‘functionality’
criteria. They were a comprehensive
business profile; the profiles
and functions of team members; the entity’s latest annual
financial statements; proof that
the entity’s operation ‘is
affected by COVID-19 pandemic’; and a certified reference
letter. Five points were
awarded for the provision of six months’
bank statements.
[29]
Finally, points were awarded depending on the B-BBEE status level of
an applicant. This score
ranged from 20 points in the case of
entities that furnished proof that they were classified at level 1,
to 12 points for those
that provided proof that they were at level 4.
(In terms of s 13.2 of the Tourism Sector Code, exempted micro
enterprises, the
target of the Fund, are deemed to have a level 4
B-BBEE status at least.)
The issues
[30]
The full R200 million that comprised the Fund has, we were informed,
been disbursed to recipients
chosen by the panel of experts referred
to in the direction. Despite this, the parties agree that the appeals
should proceed because
of the importance of the issues involved. I
agree that the appeals raise matters of public importance and so
should be determined.
[31]
As the principal relief sought by Afriforum and Solidarity was the
review and setting aside of
the Minister’s direction, the first
issue that must be determined is the jurisdictional basis for the
review: if the making
of the direction constituted administrative
action as defined in the Promotion of Administrative Justice Act 3 of
2000 (the PAJA),
the Minister’s exercise of power was subject
to review in terms of s 6 of that Act; if, on the other hand, the
Minister’s
exercise of power was some species of public power
other than administrative action, it is reviewable in terms of the
principle
of legality sourced in the Constitution’s founding
value of the rule of law. It is necessary to determine this issue at
the
outset because the ‘development of a coherent
administrative law demands that litigants and courts start with PAJA,
and,
only when PAJA does not apply, should they look to the principle
of legality and any other permissible grounds of review lying outside
PAJA’.
[14]
[32]
Once the basis for the court’s review jurisdiction has been
determined, it will be possible
to turn to the merits. As I shall
explain in more detail, the Minister argued that she was obliged by
statute to include in her
direction B-BBEE criteria for eligibility
to financial assistance. This, it seems to me, is the crux of the
case: if she is correct,
then the appeals must fail because she would
have done what the law required her to do; but if she is incorrect,
the appeals may
succeed because in making the direction on the basis
of an incorrect interpretation of the law, she may have committed a
material
error of law.
The pathway to
review
[33]
In
Esau
,
[15]
this court held that the making of regulations by the Minister of
Co-operative Governance and Traditional Affairs in terms of s
27(2)
of the DMA was administrative action as defined in the PAJA. In this
case, it seems to me, the same result should follow
in respect of an
exercise of power that was empowered by those regulations: it strikes
me as incongruous and illogical to hold
that despite the Minister of
Co-operative Governance and Traditional Affairs acting
administratively when she made regulations
to authorise ministers to
make directions, the Minister of Tourism acted executively, and not
administratively, when she exercised
that power that had been
delegated to her.
[34]
In
Grey’s
Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and
Others
,
[16]
Nugent JA made the point that, in general terms, administrative
action involves ‘the conduct of the bureaucracy (whoever
the
bureaucratic functionary might be) in carrying out the daily
functions of the state, which necessarily involves the application
of
policy, usually after its translation into law, with direct and
immediate consequences for individuals or groups of individuals’.
In this instance, after R200 million had been made available for
Covid-19 relief in the tourism industry, the Minister decided
in the
direction she issued how to distribute it. That is bureaucratic in
nature and amounts to administrative action.
[17]
The result is that the validity of the Minister’s direction
must be determined with reference to the grounds of review set
out in
s 6(2) of the PAJA.
The Minister’s
exercise of power
[35]
In her answering affidavit, the Minister stated that, in her view,
the direction did not impose
a race-based eligibility criterion for
access to assistance from the Fund. It provided instead for the
distribution of funds on
the basis of a scoring system in which one
of the components was the B-BBEE status level of applicants for
funds, as defined in
the B-BBEE Tourism Sector Code made in terms of
the Broad-Based Black Economic Empowerment Act 53 of 2003 (the B-BBEE
Act).
[36]
The Minister made it clear in a number of passages in her answering
affidavit that she considered
herself legally bound in accordance
with the Tourism Sector Code to include in the criteria for funding
the B-BBEE status level
of applicants. For instance, she said:
‘
Section
10 of the B-BBEE Act makes codes of good practice mandatory: “[e]very
organ of state . . . must apply any relevant
code of good practice
issued in terms of this Act in . . . determining criteria for the
awarding of incentives, grants and investment
schemes in support of
broad-based black economic empowerment”. In short, statute
requires
the Department of Tourism to apply the Tourism Sector Code to the
tourism fund. Alone, this is a complete answer to Afriforum’s
case; in the absence of a constitutional challenge to the B-BBEE Act,
Afriforum cannot interdict or review something that is required
by
statute.’
[37]
In a later passage, the Minister returned to the same theme. She
stated that the statutory obligation
imposed on her by s 10 of the
B-BBEE Act to apply B-BBEE criteria for eligibility to the fund
‘should be the start and end
of this application’. She
re-iterated that ‘the Department
must
apply the B-BBEE
Tourism Sector Code’ and that the result of this was that, on
its own, ‘this is a complete answer
to Afriforum’s
relief’ because ‘Afriforum cannot interdict or review
something that is required by statute’.
[38]
In order to determine whether the Minister was correct in believing
that she was obliged to include
B-BBEE status levels as part of the
eligibility criteria for funding under the DMA, it is necessary, as a
first step, to consider
the purpose and objects of the B-BBEE Act.
The long title of the B-BBEE Act states that its purposes are, inter
alia, to ‘establish
a legislative framework for the promotion
of black economic empowerment’ and to ‘empower the
Minister to issue codes
of good practice and to publish
transformation charters’.
[39]
B-BBEE is defined in s 1 of the Act to mean ‘the viable
economic empowerment of all black
people, in particular women,
workers, youth, people with disabilities and people living in rural
areas, through diverse but integrated
socio-economic strategies that
include but are not limited to’ the following six listed
strategies:
‘
(a)
increasing the number of black people that manage, own and control
enterprises and productive
assets;
(b)
facilitating ownership and management of
enterprises and productive assets by communities, workers,
co-operatives and other collective
enterprises;
(c)
human resource and skills development;
(d)
achieving equitable representation in all
occupational categories and levels in the workforce;
(e)
preferential procurement from enterprises that are
owned or managed by black people; and
(f)
investment in enterprises that are owned or
managed by black people.’
[40]
Section 2 sets out the objectives of the Act. It provides:
‘
The
objectives of this Act are to facilitate broad-based black economic
empowerment by-
(a)
promoting economic transformation in order to
enable meaningful participation of black people in the economy;
(b)
achieving a substantial change in the racial
composition of ownership and management structures and in the skilled
occupations of
existing and new enterprises;
(c)
increasing the extent to which communities,
workers, cooperatives and other collective enterprises own and manage
existing and new
enterprises and increasing their access to economic
activities, infrastructure and skills training;
(d)
increasing the extent to which black women own and
manage existing and new enterprises, and increasing their access to
economic
activities, infrastructure and skills training;
(e)
promoting investment programmes that lead to
broad-based and meaningful participation in the economy by black
people in order to
achieve sustainable development and general
prosperity;
(f)
empowering rural and local communities by enabling
access to economic activities, land, infrastructure, ownership and
skills;
(g)
promoting access to finance for black start-ups,
small, medium and micro enterprises, co-operatives and black
entrepreneurs, including
those in the informal business sector; and
(h)
increasing effective economic participation and
black owned and managed enterprises, including small, medium and
micro enterprises
and co-operatives and enhancing their access to
financial and non-financial support.’
[41]
Section 9 empowers the Minister of Trade and Industry to issue codes
of good practice that may
include such matters as the ‘further
interpretation and definition’ of B-BBEE and ‘the
interpretation and definition
of different categories of black
empowerment entities’; the ‘qualification criteria for
preferential purposes for procurement
and other economic activities’;
indicators to measure B-BBEE; the weightings to be attached to those
indicators; and guidelines
for the drafting of transformation
charters and codes of good practice.
[42]
Section 10(1) is concerned with the application of codes of good
practice. It provides:
‘
Every
organ of state and public entity must apply any relevant code of good
practice issued in terms of this Act in-
(a)
determining qualification criteria for the issuing
of licences, concessions or other authorisations in respect of
economic activity
in terms of any law;
(b)
developing and implementing a preferential procurement policy;
(c)
determining qualification criteria for the sale of state-owned
enterprises;
(d)
developing criteria for entering into partnerships with the private
sector; and
(e)
determining criteria for the awarding of
incentives, grants and investment schemes in support of broad-based
black economic empowerment.’
[43]
The only relevant provision of s 10(1) is that listed in subsection
(e)
. That is the subsection that the Minister relied on
expressly, arguing that it required her to apply the Tourism Sector
Code when
she issued her direction as to the eligibility criteria for
grants from the Fund.
[44]
It is apparent that the purposes of the DMA, on the one hand, and the
B-BBEE Act, on the other,
are very different and that each statute is
directed at achieving different goals: the DMA is aimed at preventing
or limiting disasters,
mitigating their impact and enabling
post-disaster recovery, while the B-BBEE Act is aimed at promoting
black economic empowerment
in order to enable black people to
participate meaningfully in the economy. The differences in purpose
are clear, in particular,
when s 27(2) of the DMA and reg 10(8) –
the provisions that empower the making of regulations and directions
– are
juxtaposed with s 2 of the B-BBEE Act which sets out the
objects of that Act.
[45]
It is also clear that the Minister was in no doubt as to the purpose
of her direction. She said
in it that the Fund was established to
provide ‘grant assistance’ to small businesses in the
tourism industry ‘to
mitigate the impact of COVID-19 in order
to ensure their sustainability’. In her answering affidavit,
she added that the
Fund was aimed at alleviating, containing and
minimising the effects of the state of disaster and, ‘in
particular, its economic
fallout’.
[46]
As the DMA’s empowering provisions for the making of
regulations and directions make no
mention of B-BBEE objectives, the
only way in which they could be imported into the Minister’s
empowerment would be if she
was correct that s 10(1)
(e)
of the B-BBEE Act required her to include them in her direction. In
the absence of that, their inclusion would appear to amount
to the
pursuit of an improper purpose – one not authorised by the
empowering provision – no matter how laudable her
intentions.
[18]
Statutory
powers, after all, ‘however permissive, must be used with
scrupulous attention to their true purposes and for reasons
that are
relevant and proper’.
[19]
Our constitutional jurisprudence shows that ‘it is trite that a
statutory power may only be used for a valid statutory purpose’
[20]
and that there is a ‘well-established principle that a power
given for a specific purpose may not be misused in order to
secure an
ulterior purpose’.
[21]
[47]
In order to determine whether the Minister is correct in her view, it
is necessary to determine
the scope of operation of s 10(1)
(e)
of the B-BBEE Act. The section requires organs of state and public
entities to apply the Tourism Sector Code (in this instance)
when
they determine criteria for awarding incentives, grants and
investment schemes in support of B-BBEE. The question to be answered
is thus whether the amounts paid from the Fund are grants in support
of B-BBEE.
[48]
The Minister, in her direction, made no such claim. Instead, she made
it clear that the grants
were intended to mitigate the impact of
Covid-19 on the qualifying businesses. And, in her answering
affidavit, she said that they
were meant to alleviate, contain and
minimise the effects of the economic fallout wrought by the pandemic
and the consequent state
of disaster. The words she chose resonate
with s 27(2)
(n)
of the DMA and reg 10(8)
(c)
– the
empowering provisions in terms of the DMA for the Minister of
Co-operative Governance and Traditional Affairs to make
regulations
and the applicable empowering provision that authorised the Minister
to issue her direction. In my view, the grants
contemplated for these
purposes are consequently not grants in support of B-BBEE as
contemplated by s 10(1)
(e)
of the B-BBEE Act but grants to
further the purposes of the DMA.
[49]
When a person exercising public power has committed themselves
unequivocally to a basis for their
authority to exercise that power,
they stand or fall by that choice. They are, generally speaking, not
free to rely on some other
source of empowerment which may enable
them to do what they have purported to do.
[22]
This principle was given effect by the Constitutional Court in
Minister
of Education v Harris
.
[23]
[50]
In that case, the Minister of Education had published a notice in
terms of
s 3(4)
of the
National Education Policy Act 27 of 1996
in
which he purported to determine the school-going age for children
attending independent schools. The court held that the Minister
only
had the power to make policy in terms of the section he expressly
relied on and that he had ‘no power to issue an edict
enforceable against schools and learners’.
[24]
It was clear that he had intended his notice to have binding
effect.
[25]
The result was
that the notice was ‘
ultra
vires
the powers granted to the Minister by s 3 of the National Policy
Act’.
[26]
[51]
It was argued in
Harris
by the Minister’s counsel, however, that even if he did not
have the power to make a rule in terms of s 3(4), he nonetheless
had
the power to do so in terms of
s 5(4)
of the
South African Schools
Act 84 of 1996
; and that the fact that he had mistakenly relied on
s
3(4)
did not mean that his exercise of power was invalid. The court
expressed doubt that
s 5(4)
of the
South African Schools Act applied
to independent schools, but assumed without deciding, for purposes of
the argument, that it did apply. It held nonetheless that
the
invocation of
s 5(4)
could not save the Minister’s exercise of
power from invalidity:
[27]
‘
In
this case, there is no suggestion in the affidavits filed by the
Minister of an administrative error. On the contrary, the notice
in
the present matter not only cites s 3(4)(i) of the National Policy
Act three times as the source of its authority, it identifies
itself
with the Act by means of its heading “Draft Age Requirements
For Admission to an Independent School
Policy
”
(my italics). There can be little question then that the provision
was deliberately chosen. It might well be that those
responsible for
drafting the notice had doubts about whether the powers under s 5(4)
of the Schools Act could be used in respect
of independent schools, a
matter which I have expressly left open. They might have had other
reasons for choosing to issue the
notice under s 3(4) of the National
Policy Act. It is not necessary to speculate. What is clear is that
they consciously opted
to locate the notice in the framework of s
3(4) of the National Policy Act. The result is that it is not now
open to the Minister
to rely on s 5(4) of the Schools Act to validate
what was invalidly done under s 3(4) of the National Policy Act. The
otherwise
invalid notice issued under the National Policy Act can
therefore not be rescued by reference to powers which the Minister
might
possibly have had but failed to exercise under the Schools
Act.’
[52]
In this case, the Minister unequivocally relied on s 10(1)
(e)
requiring her to include B-BBEE status levels as a criterion for
eligibility for grants from the Fund, although in her answering
affidavit there was a suggestion that even if she was wrong, she was
nonetheless entitled, on another basis, to include them in
her
direction. In the light of the principle set out in
Harris
,
however, her counsel properly conceded that it was not open to the
Minister to justify the inclusion of the B-BBEE status levels
on any
other basis.
[53]
Section 6(2)
(d)
of
the PAJA provides for the review of an administrative action if ‘the
action was materially influenced by an error of law’.
This
formulation was taken from the common law ground of review
articulated by this court in
Hira
and Another v Booysen and Another
.
[28]
The court held in
Hira
that an error of law will be material if it distorts the exercise of
discretion of the decision-maker: if ‘the tribunal “asked
itself the wrong question”, or “applied the wrong test”,
or “based its decision on some matter not prescribed
for its
decision”, or “failed to apply its mind to the relevant
issues in accordance with the behests of the statute”’.
[29]
[54]
In this case the Minister believed erroneously that she was bound by
s 10(1)
(e)
of
the B-BBEE Act to apply the Tourism Sector Code in her direction. Her
error was material because it distorted her discretion
in the sense
that it caused her to fail to apply her mind properly to the criteria
that should have been used for eligibility.
[30]
Her inclusion of the B-BBEE status level of applicants for assistance
as a criterion for eligibility for grants from the Fund was
therefore
invalid.
Conclusion
[55]
As the entire Fund has been disbursed to those identified as
beneficiaries by the panel of experts,
no purpose would be served in
making an order reviewing and setting aside the direction in whole or
in part. Counsel for Afriforum
suggested, and counsel for Solidarity
agreed, that in the event of leave to appeal being granted and the
appeals succeeding, a
declarator would be a more appropriate order in
the circumstances. It is also necessary to add a rider to the effect
that the order
does not mean that the disbursed funds must be
recovered from beneficiaries. Neither Afriforum nor Solidarity seek
such relief.
Both accept that it would be unfair in respect of
beneficiaries and agree that the rider should be added.
[56]
As there is no difference between the two cases, the same order
should be issued in each. It
is the following.
1. Leave to appeal
is granted.
2. The appeal is
upheld with costs, including the costs of two counsel
3. The order of the
court below is set aside and replaced with the following order.
‘
1.
It is declared that:
(a)
when making the
direction dated 6 April 2020, in terms of regulation 10(8) of the
regulations under the
Disaster Management Act 57 of 2002
, the
Minister of Tourism was not legally obliged by
s 10(1)
(e)
of the
Broad-Based Black Economic Empowerment Act 53 of 2003
to make
eligibility for assistance from the Tourism Relief Fund subject to
the Tourism Sector Code made in terms of that Act; and
(b)
the direction was
consequently unlawful.
2. The order in
paragraph 1 above does not authorize or oblige the Minister of
Tourism to recover funds already disbursed from the
Tourism Relief
Fund.
3. The respondents
are directed to pay the costs of the applicant, including the costs
of two counsel.’
C Plasket
Judge of Appeal
APPEARANCES:
For the appellant,
Afriforum:
M Engelbrecht SC (with J Hamman)
(Case no.
499/2020)
Instructed
by:
Hurter Spies Inc, Pretoria
Claude Reid,
Bloemfontein
For the appellant,
Solidarity:
C Goosen (with D J Groenewald)
(Case no.
498/2020)
Instructed by:
Serfontein, Viljoen & Swart, Pretoria
Claude
Reid Inc, Bloemfontein
For the
respondent:
AE Bham SC (with J Mitchell and M Ramaili)
Instructed by:
The State Attorney, Pretoria
The State Attorney,
Bloemfontein
[1]
For a
detailed account of the background to the declaration of the
national state of disaster, see
Esau
and Others v Minister of Co-operative Governance and Traditional
Affairs and Others
[2021] ZASCA 9
;
2021 (3) SA 593
(SCA) paras 18-33.
[2]
Government
Notice 318,
Government
Gazette
43107 of 18 March 2020.
[3]
Long title
.
[4]
The
most important structure that the DMA creates is the National
Disaster Management Centre, an institution within the public
service
(s 8). Its objective is to ‘promote an integrated and
co-ordinated system of disaster management, with special
emphasis on
prevention and mitigation, by national, provincial and municipal
organs of state, statutory functionaries, other
role-players
involved in disaster management and communities’ (s 9).
[5]
Section
1.
[6]
Section
2.
[7]
Section
3.
[8]
Section
26(1).
[9]
Government
Notice 318,
Government
Gazette
43107 of 18 March 2020.
[10]
Regulation
3.
[11]
Regulation
6.
[12]
Regulation
8.
[13]
Regulation
10(2).
[14]
Minister of Defence
and Another v Xulu
[2018] ZASCA 65
;
2018 (6) SA 460
(SCA) para 50.
[15]
Note 1
paras 76-84.
[16]
Grey’s
Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and
Others
[2005]
ZASCA 43
;
2005 (6) SA 313
(SCA) para 24.
[17]
Ed-U-College
(Section 21) (PE) Inc v Permanent Secretary, Department of Education
and Welfare, Eastern Cape and Another
2001
(1) SA 257
(SE) at 263F;
Permanent
Secretary, Department of Education and Welfare, Eastern Cape and
Another v Ed-U-College (Section 21) (PE) Inc
[2000] ZACC 23
;
2001 (2) SA 1
(CC);
2001 (2) BCLR 118
(CC) para 16.
[18]
Van Eck NO and Van
Rensburg NO v Etna Stores
1947 (2) SA 984
(A) at 997;
Fernwood
Estates v Cape Town Municipality
1933 CPD 399
at 403;
Administrator,
Cape v Associated Buildings Ltd
1957 (2) SA 317
(A) at 329A-B. This principle has been repeatedly
affirmed by this court, most recently in
Scalabrini
Centre, Cape Town and Others v Minister of Home Affairs and Others
[2018] ZASCA 126
;
2018 (4) SA 125
(SCA) para 60.
[19]
H W R Wade and C F Forsyth
Administrative
Law
(8 ed) (2000) at
386.
[20]
Bernstein
and Others v Bester NO and Others
[1996]
ZACC 2
;
1996 (2) SA 751
(CC);
1996 (4) BCLR 449
(CC) para 46.
[21]
Ex
parte Speaker of the National Assembly: In re Dispute Concerning the
Constitutionality of Certain Provisions of the National
Education
Policy Bill 83 of 1995
[1996]
ZACC 3
;
1996 (3) SA 289
(CC);
1996 (4) BCLR 518
(CC) para 33.
[22]
Administrateur,
Transvaal v Quid Pro Quo Eiendomsmaatskappy (Edms) Bpk
1977 (4) SA 829
(A) at 841B-G;
Pinnacle
Point Casino (Pty) Ltd v Auret NO and Others
1999 (4) SA 763
(C) at 769G-770A.
[23]
Minister
of Education v Harris
[2001]
ZACC 25; 2001 (4) SA 1297 (CC); 2001 (11) BCLR 1157 (CC).
[24]
Para
11.
[25]
Para
12.
[26]
Para
13.
[27]
Para 18.
[28]
Hira and Another v
Booysen and Another
1992 (4) SA 69 (A).
[29]
At 93H-I.
[30]
Ehrlich v Minister of
Correctional Services and Another
2009 (2) SA 373
(E) para 40.