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[2017] ZAGPPHC 356
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Net1 Applied Technologies South Africa and Others v Chief Executive Officer of the South African Social Security Agency and Others; Finbond Mutual v Chief Executive Officer of the South African Social Security Agency and Others; Smart Life Insurance Company Limited v Chief Executive Officer of the South African Social Security Agency and Others; Information -Technology Consultants (Pty) Ltd v Chief Executive Officer of the South African Social Security Agency and Others (43557/16; 46024/16; 46278/16; 47447/16) [2017] ZAGPPHC 356 (9 May 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case
number: 43557/16
46024/16
46278/16
47447/16
Date:
9 May 2017
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
NOT
REVISED
In
the matter between:
Case
number: 43557/16
NET1
APPLIED TECHNOLOGIES SOUTH AFRICA FIRST
APPLICANT
MONEY
LINE FINANCIAL SERVICES (PTY) LTD SECOND
APPLICANT
MANJE
MOBILE ELECTRONIC
PAYMENT THIRD
APPLICANT
SERVICES
(PTY) LTD
and
THE
CHIEF EXECUTIVE OFFICER OF
THE FIRST
RESPONDENT
SOUTH
AFRICAN SOCIAL SECURITY AGENCY
THE
SOUTH AFRICAN SOCIAL SECURITY SECOND
RESPONDENT
AGENCY
THE
MINISTER OF SOCIAL DEVELOPMENT THIRD
RESPONDENT
OF
THE REPUBLIC OF SOUTH AFRICA
THE
SOUTH AFRICAN RESERVE BANK FOURTH
RESPONDENT
THE
PAYMENT ASSOCIATION OF SOUTH AFRICA FIFTH
RESPONDENT
GRINDROD
BANK
LIMITED SIXTH
RESPONDENT
Case
number: 46024/16
FINBOND
MUTUAL APPLICANT
and
THE
CHIEF EXECUTIVE OFFICER OF
THE FIRST
RESPONDENT
SOUTH
AFRICAN SOCIAL SECURITY AGENCY
THE
SOUTH AFRICAN SOCIAL SECURITY SECOND
RESPONDENT
AGENCY
MINISTER
OF SOCIAL DEVELOPMENT OF THE THIRD
RESPONDENT
REPUBLIC
OF SOUTH AFRICA
THE
SOUTH AFRICAN RESERVE BANK FOURTH
RESPONDENT
THE
PAYMENT ASSOCIATION OF
SOUTH FIFTH
RESPONDENT
AFRICA
GRINDROD
BANK
LIMITED SIXTH
RESPONDENT
Case
number: 46278/16
THE
SMART LIFE INSURANCE COMPANY
LIMITED APPLICANT
and
THE
CHIEF EXECUTIVE OFFICER OF
THE FIRST
RESPONDENT
SOUTH
AFRICAN SOCIAL SECURITY AGENCY
THE
SOUTH AFRICAN SOCIAL SECURITY SECOND
RESPONDENT
AGENCY
THE
MINISTER OF SOCIAL DEVELOPMENT OF THIRD
RESPONDENT
THE
REPUBLIC OF SOUTH AFRICA
THE
SOUTH AFRICAN RESERVE BANK FOURTH
RESPONDENT
THE
PAYMENT ASSOCIATION OF SOUTH FIFTH
RESPONDENT
AFRICA
GRINDROD
BANK
LIMITED SIXTH
RESPONDENT
Case
number: 47447/16
INFORMATION-TECHNOLOGY
CONSULTANTS (PTY) LTD APPLICANT
and
THE
CHIEF EXECUTIVE OFFICER OF
THE FIRST
RESPONDENT
SOUTH
AFRICAN SOCIAL SECURITY AGENCY
THE
SOUTH AFRICAN SOCIAL SECURITY AGENCY SECOND
RESPONDENT
THE
MINISTER OF SOCIAL DEVELOPMENT OF THIRD
RESPONDENT
THE
REPUBLIC OF SOUTH AFRICA
THE
SOUTH AFRICAN RESERVE BANK FOURTH
RESPONDENT
THE
PAYMENT.ASSOCIATION OF
SOUTH FIFTH
RESPONDENT
AFRICA
GRINDROD
BANK
LIMITED SIXTH
RESPONDENT
IN
THE APPLICATIONS TO INTERVENE OF:
THE
BLACK SASH
TRUST FIRST
APPLICANT
SIPHO
LENNOX
BANI SECOND
APPLICANT
MARIA
HENDRICKS
THIRD
APPLICANT
PATRICIA
SAPTOE
FOURTH
APPLICANT
EVERNESS
VEPI
NKOSI FIFTH
APPLICANT
SANNIE
SEIPATI
NTHITE SIXTH
APPLICANT
ALETTA
BEZUIDENHOUT SEVENTH
APPLICANT
IN
THE APPLICATIONS FOR ADMISSION AS
AMICI
CURIAE
OF:
DAVID
DANIEL
CONSTABLE FIRST
APPLICANT
LUNGILE
VICTOR
MNYATELI SECOND
APPLICANT
NELLIE
OERSON THIRD
APPLICANT
THENJIWE
JANUARY FOURTH
APPLICANT
JUDGMENT
VAN
DER WESTHUIZEN, AJ
[1] Initially this judgment commenced
as an extended and rather lengthy judgment, however, after much
reflection and reconsideration
and for what follows, it was happily
not to be.
[2] Various applicants brought similar
applications against the first, second and third respondents. At the
commencement of the
hearing of those applications, they were
consolidated and heard together. It was agreed between the parties
that Grindrod Bank
Limited (Grindrod), although the sixth respondent,
would argue as applicant, as it supports the relief sought by the
various applicants.
This is a consolidated judgment.
[3]
It is recorded that various parties applied to intervene and others
to be admitted as
amici curiae.
I heard submissions from those
parties and indicated that I would consider the applications to
intervene and for the admission as
amici curiae
and deal
therewith in this judgment. I have considered those applications
thoroughly and gave much thought thereto. For what follows
in this
judgment and in view of the approach taken herein, I am of the view
that those applications should not be granted. The
relief sought in
those applications are not relevant, nor appropriate, to the approach
adopted in this judgment and particular
in view of the relief sought
by the applicants and the relief I intend granting. I shall briefly
return thereto later in this judgment.
[4]
Net1 Applied Technologies South Africa (Pty) Ltd (Net1) applied for
condonation of the filing of a supplementary affidavit responding
to
new facts raised in the application by The Blacksash Trust. Leave was
granted and the supplementary affidavit admitted into
evidence.
However nothing turns thereon.
[5]
The consolidated applications concern the meaning and legality of
amendments to regulations 21 and 26A of the Regulations under
the
Social Assistance Act,13 of 2004 (the Act), that were promulgated on
6 May 2016 (the Regulations).
[6] The relief that all the applicants
in the main applications seek is in effect a declarator that the
amended regulations, and
in particular regulations 21 and 26A
thereof, do not restrict beneficiaries in the manner in which they
operate their respective
bank accounts.
[7]
As the applications concern primarily the interpretation of the
aforementioned regulations, I do not intend to deal with other
issues, raised in the papers, that are not directly relevant to the
issue of interpretation.
[8]
When reference is made to applicants, it refers to the various
applicants in the main consolidated application excluding the
applicants in the applications for intervention and admission as
amici curiae.
[9]
The crux of the first, second (SASSA) and third (the Department)
respondents' interpretation of the new regulations 21 and 26A,
relates to an interpretation as prohibiting all electronic debits,
stop orders and electronic fund transactions (EFTs) from beneficiary
accounts held at Grindrod. The alleged premise being that the bank
accounts held at Grindrod constitute a
"method determined by
the Agency".
[10]
Following on that interpretation, SASSA instructed Cash Paymaster
Services (Pty) Ltd (CPS) and Grindrod to stop all debit orders
being
processed off the beneficiary accounts with immediate effect from
promulgation of the new regulations.
[11]
The various applicants contested SASSA and the Department's
interpretation and have resisted implementation of the said
instruction.
Consequently, Net1, CPS and Grindrod have been
criminally charged under s 30 of the Act.
[12]
The practical implications of the first, second and third
respondents' interpretation of the said new regulations affect the
operation of over 10 million beneficiary bank accounts that translate
into a value of approximately R550 million per month.
[13]
In this regard, the South African Reserve Bank (SARB) cautions that
the effect of the first, second and third respondents'
aforesaid
instruction
"would disrupt the system of collection and
payment by creditors and debtors"
that
"would result
in
a
broader economic impact"
due to the unsuccessful
collection of debts.
[14]
New regulation 21 provides as follows:
"21 Method of payment of
social assistance
(1) The Agency shall pay
a
social grant-
(a) into
a
bank account of
the beneficiary or institution where the beneficiary resides,
provided that
(i) the beneficiary of the social
grant consents to payment in accordance with sub regulation 21(1)(a)
in writing and has submitted
such consent in person to the Agency;
(ii) where
a
beneficiary is
unable to submit the consent contemplated in sub paragraph (i) in
person, alternative arrangements must be made with
the Agency; or
(b) by the payment method
determined by the Agency;
(2) Social assistance must be paid
monthly by the Agency or
a
person appointed by the Agency for
that purpose in terms of section 4 of the SASSA Act;
(3) Subject to the provisions of
subregulation (2)-
(a) in the case of manual payments
a
beneficiary must-
(i) identify himself or herself by
means of an identity document or biometric identification;
(ii) personally or via
a
person
appointed by the beneficiary or Agency, take receipt of the social
assistance payable to him or her; and
(iii) sign an acknowledgement of
the amount received, if he or she receives payment of his or her
social ass/stance manually;
(b)
a
beneficiary's
signature or biometric identification serves
as
acknowledgement
of receipt for the amount received, unless he amount of the social
assistance is credited to an account held at
a
financial
institution.
(4) The method of payment
contemplated in sub-regulation 1(b) shall not allow for any
deductions, except for deductions allowed
for in terms of this Act."
[15] The amended regulation 26A reads
as follows:
"26A
Circumstances under which
a
deduction may be made directly from
a
social grant
(1) The Agency may allow only one
deduction per month not exceeding 10 percent of the value of the
beneficiary's social grant for
a
funeral policy issued by an
insurer registered under the Long-Term Insurance Act, 1998 (Act 52 of
1998) to be made directly from
a
social grant where-
(a) the beneficiary of the social
grant consents to such deduction in writing and has submitted such
consent in person to the Agency;
(b)
a
beneficiary is unable
to submit the consent contemplated in paragraph (a) in person,
alternative arrangements must be made with
the Agency.
(2) Despite sub-regulation (1) no
deduction may be made in respect of
a-
(a) foster child grant;
(b) care dependency grant;
(c)
child support grant; and
(d)
social grant awarded for
a
period not exceeding
twelve months.
(3) Active deductions for
a
funeral insurance or a funeral scheme from social grants that are
excluded in terms of sub-regulation (2), may continue to be deducted
from
a
social grant for
a
period not exceeding six
months following publication of these Regulations to allow the
beneficiaries and funeral service providers
to make alternative
payment arrangements."
[16] The Supreme Court of Appeal has
confirmed the approach to be followed when interpreting a document,
whether it be a statute
or other statutory instrument or contract, in
Natal Joint Municipal Pension Fund v Endumeni Municipality
2012(4)
SA 593 (SCA). The following was said in that regard at [18]:
"The present state of the law
can be expressed as follows. Interpretation is the process of
attributing meaning to the words
used in
a
document, be it
legislation, some other statutory instrument, or contract, having
regard to the context provided by reading the
particular provision or
provisions in the light of the document as
a
whole and the
circumstances attendant upon its coming into existence. Whatever the
nature of the document, consideration must be
given to the language
used in the light of the ordinary rules of grammar and syntax; the
context in which the provision appears;
the apparent purpose to which
it is directed and the material known to those responsible for its
production. Where more than one
meaning is possible each possibility
must be weighed in the light of all these factors.
15
The process is objective not subjective. A sensible meaning is to
be preferred to one that leads to insensible or unbusinesslike
results or undermines the apparent purpose of the document. Judges
must be alert to, and guard against, the temptation to substitute
what they regard
as
reasonable, sensible or businesslike for
the words actually used. To do
so
in regard to
a
statute
or statutory instrument is to
cross
the divide between
interpretation and legislation. In
a
contractual context it is
to make
a
contract for the parties other than the one they in
fact made. The 'inevitable point of departure is the language of the
provision
itself,
16
read in context
and having regard to the purpose of the provision and the background
to the preparation and production of the document."
[17]
Counsel appearing on behalf of Net1 submitted that the first, second
and third respondents' aforementioned interpretation militates
against the ordinary language of the said regulations when read with
s 20 of the Act.
[18]
That section provides as follows:
"20. Restrictions on transfer
of rights and payments of social assistance.-
(1) A grant may not be transferred,
ceded, pledged or in any other way encumbered or disposed of unless
the Minister on good grounds
in writing consents thereto.
(2) Any act in contravention of
subsection (1) is void and if the Minister becomes aware of any such
act, he or she may order that
payment· of the relevant grant
be terminated or suspended immediately and the Agency must, in
writing by registered mail
at the last known address of that
beneficiary or procurator,
as
the
case
may be, inform
him or her in the official language of the Republic in which he or
she made the application for the grant
(a) of the Minister's decision;
(b) of the reasons for that
decision; and
(c) that he or she has
a
right of appeal contemplated
in section 18 and of the mechanism and procedure to invoke that
right.
(3) A beneficiary must without
limitation or restriction receive the full amount of
a
grant
to which he or she is entitled before any other person may exercise
any right or enforce any claim in respect of that amount.
(4) Despite subsection (3), the
Minister may prescribe circumstances under which deductions may be
made directly from social assistance
grants: Provided that such
deductions are necessary and in the interest of the beneficiary.
(5) An amount that accrues or has
accrued to
a
beneficiary or his or her estate in terms of this
Act may not be attached or subjected to any form of execution under
a
judgment or order of
a
court or by law, or form part of his
or her insolvent estate.
(6) Notwithstanding the provisions
of subsection (1), in the case of death of
a
parent,
procurator or primary care giver receiving
a
grant on behalf
of or in respect of another person or child as the case may be, the
Agency must appoint
a
person to receive the grant on behalf or
in respect of such person or child, and to use it for his or her
benefit without suspending
the grant, subject to prescribed
conditions."
[19]
It may be prudent to recap on the payment system applicable in
respect of social grants. . In a nutshell it involves the following
procedure. Social grants are paid from the budget of the Department
of Social Development, administered by SASSA through CPS. In
that
regard, SASSA pays over the total amount of social grant payments to
CPS. In turn, CPS pays the amount received from SASSA
into the SASSA
Funding Accounts at
inter alia,
Grindrod. From those accounts,
the respective payments to the recipients are paid into their
respective personal accounts held at
Grindrod. Each of those
recipients who hold the bank accounts with Grindrod in their own
names, have direct client/banker relationships
with Grindrod, or with
any other banking institution. The grant recipients hold their
accounts subject to the terms and conditions
of the respective bank
accounts. Furthermore, the Grindrod bank accounts operate within the
ordinary and regulated banking environment
of the National Payment
System.
[20]
No contractual relationship exists between SASSA and Grindrod.
Furthermore, SASSA does not operate the accounts held at Grindrod.
Each recipient of a grant is obliged to present himself or herself
every month at an ATM, CPS pay-point or other merchant's
point-of-sale
device to authenticate the transfer of the grant into
his or her bank account. This is also true where recipients of social
assistance
hold bank accounts at other banking institutions.
[21]
The process provides that "direct deductions" are made
prior to the recipient's receipt of the grant, i.e. before
the grant
is paid into the recipient's bank account. This much is clear from
the provisions of s 20(3) of the Act. In contrast
thereto, any debit
order against an account at Grindrod, or other bank institution, is
made after the grant is paid into the said
account, i.e. the
processing of a debit order entails compliance on the part of
Grindrod, or other bank, with an instruction from
an account holder
to pay a third party and is effected only if sufficient funds are in
the said account.
[22]
In my view, from the foregoing procedure, it is clear that once the
grant is transferred into the recipient's account at Grindrod,
it
operates as any bank account at any Commercial Banking Institution.
There is clearly no difference and SASSA equally has no
control over
such account with Grindrod as it does not have control over any
account with a Commercial Bank. For the foregoing,
there is no merit
in the submission on behalf of the first, second and third
respondents that the Grindrod bank accounts are not
bank accounts hos
n by the beneficiaries, but is "a
method of payment chosen by
the Agency".
[23]
Further support is to be found in the provisions of new regulation
21(1)(a) which stipulates that a social grant is to be paid
into a
bank account. The type of bank account is not defined, nor specified.
Regulation 21(1)(a) clearly provides for two
scenarios,
either
a bank account, or a payment method determined by the Agency. The
latter method envisages a specific alternative method that
is not a
bank account. No such determination appears to have been made, but
for the constrained and forced interpretation by the
first, second
and third respondents referred to above.
[24]
On a purposive reading of regulation 21(1), it is clear that the
prohibition in regulation 21(4) is not applicable in respect
of
regulation 21(1)(a). The two categories, regulations 21(a) and (b),
must of necessity entail different and distinct payment
methods. That
much is clear from the use of the disjunctive "or" in
regulation 21(1).
[25]
Furthermore, I find support for the foregoing in the provisions of s
20(3) of the Act recorded above. That sub-regulation clearly
stipulates that a recipient is to receive the full grant amount
before any third party may exercise any rights or enforce any claim
in respect of that amount. Consequently, the full amount of the grant
(bar any direct deduction of a 10% funeral subscription)
is to be
transferred into the recipient's bank account prior to any deduction
thereof by way of a debit order. No other deductions
may be made
prior to the transfer of the grant amount into the recipient's
account, whether at Grindrod or other banking institution.
[26]
Section 20(4) of the Act, recorded above, qualifies the provisions of
s 20(3) of the Act. It provides that the Minister may
prescribe
circumstances under which deductions may be directly made from social
assistance grants, provided that such deductions
are
"necessary
and in the interest of the beneficiary".
By necessary
implication such deduction must be made prior to the beneficiary
receiving the grant amount in his or her bank account.
Such
interpretation is in accordance with the dictionary meaning of the
word "direct", i.e:
should be direct, straight and
close, not devious and remote".
(Concise Oxford English
Dictionary, s.v. 'direct')
[27]
Neither, in my view, does s 20(1) of the Act assist in interpreting
regulations 21 and 26A in accordance with first, second
and third
respondents' view. That sub-section clearly does not apply in respect
of debit orders entered against a banking account.
A debit order is
nothing more than an electronic form of payment that is effected upon
an instruction by the bank account holder
to his or her bank in
favour of a third party. In no way can it be interpreted as a
"cession, pledge
or
other encumberment".
The
debit order levied against a recipient's bank account is nothing
other than payment of a legitimate debt. In that sense, it
does not
amount to a transfer, cession, pledge, encumberance or disposal of
such grant.
[28]
Furthermore, it is common cause that neither SASSA, nor the Minister
of Social Development, is extended regulatory powers under
the Act
that would empower them to regulate and impose rules and restrictions
relating to electronic payment. Such powers are deferred
to the SARB.
[29]
The first, second and third respondents correctly concede that where
recipients hold bank accounts with other commercial banking
institutions, their aforesaid interpretation of sub-regulations 21
and 26A does not and cannot apply. In my view that concession
puts
paid to the first, second and third respondents' arguments. The
procedure of payment of the grant amount into the beneficiary's
account with Grindrod outlined above, is no different to that where
the grant amount is paid into a recipient's bank account with
a
Commercial Bank. Accordingly, the first, second and third
respondents' interpretation is contrived, forced and untenable.
[30]
Applying the principles enunciated in
Natal Joint Pension Fund,
supra,
the first, second and third respondents' interpretation
cannot be upheld for the reasons dealt with above. From the
foregoing, the
language used in the light of the ordinary rules of
grammar and syntax; the context in which the provisions appear; the
apparent
purpose to which it is directed and the material known to
those responsible for its production, clearly militates against the
first,
second and third respondents' interpretation. That
interpretation leads to an insensible and unbusinesslike result. It
defies the
purpose of the provisions of the regulations. Accordingly,
the correct and appropriate interpretation of those regulations are
as contended for by the applicants.
[31]
In the alternative to a declarator, relief is sought in the form of a
review of the promulgation of the offending regulations.
In view of
the foregoing findings of the correct and appropriate interpretation
of the said regulations, it is not required to
further consider such
relief.
[32]
I have held above that the applications to intervene and for
admission as
amici curiae
cannot succeed. The relief that
those parties seek, go much further. It deals with alleged
constitutiorial issues. Those are not
strictly relevant in
considering the interpretation of the provisions of regulations 21
and 26A, the subject of the main applications.
This is not the forum
to consider such issues and possible relief in that regard.
Accordingly, those applications are refused.
I intend to make no
order in respect of costs occasioned by those applications.
[33]
It follows that the applicants are entitled to a declarator.
I
grant the following order:
(a) It is declared that regulations 21
and 26A of the Regulations Relating to the Application for and
Payment of Social Assistance
and the Requirements or Conditions in
Respect ·of E1igibility for Social Assistance, as amended
under Government Notice
R.511 in Government Gazette 39978 of 6 May
2016, read with
section 20
of the
Social Assistance Act 13 of 2004
,
do not operate to restrict beneficiaries in the operation of their
bank accounts;
(b) The first, second, 9nd third
respondents are to pay the costs, including the cost of two counsel
where applicable, jointly and
severally, the one paying, the other to
be absolved;
(c) The applications to intervene and
the applications for admission as
amici curiae
are refused;
(d)
No order is made in respect of the costs occasioned by the
applications to intervene and for admission as
amici curiae.
C
J VAN DER WESTHUIZEN
ACTING
JUDGE OF THE HIGH COURT