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[2017] ZALAC 69
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Minister of Higher Education and Training and Another v Business Unity South Africa and Another (JA70/16) [2017] ZALAC 69; (2018) 39 ILJ 160 (LAC) (1 November 2017)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JA70/16
In
the matter between:
THE
MINISTER OF HIGHER EDUCATION
AND
TRAINING
First
Appellant
THE
NATIONAL SKILLS
FUND
Second
Appellant
and
BUSINESS
UNITY SOUTH
AFRICA
First
Respondent
NATIONAL
SKILLS
AUTHORITY
Second
Respondent
Heard:
31
May 2017
Delivered:
01 November 2017
Summary:
Regulations
3(12) and 4(4) of the Sector Education and Training Authorities
(SETAs) Grant Regulations Regarding Monies Received
by a SETA and
Related Matters promulgated in terms of
s 36
of the
Skills
Development Act, 97 of 1998
– Business Unity South Africa
contending that Minister never consulted with National Skill
Authority in terms of
section 36
of the SDA – Issue for
determination is whether in making and promulgating the 2012 Grant
Regulations the Minister complied
with his obligation to consult the
National Skill Authority – Minister consulting with three
members of the Authority in
different fora – Held that t
he
requirements to be met by the Minister before promulgating the
Regulations are unambiguously set out in the SDA. The Statutorily
created Authority, which the Minister is required to consult before
he makes and promulgates the Grant Regulations, should not
be
obfuscated with the constituencies from which its members are
elected. Further that the Authority is a separate legal person
and
distinct statutory body from NEDLAC. The Authority cannot be
substituted with discussions at NEDLAC, a different body established
in terms of the National Economic Development and Labour Council Act,
34 of 1994, which serves a different purpose to that of the
Authority. Neither can consultation in NEDLAC be used to usurp the
statutory function of the Authority. To hold otherwise would
render
the SDA nugatory. Labour Court’s judgment upheld – appeal
dismissed with costs.
Coram:
Tlaletsi AJP, Kathree-Setiloane AJ
A
and
Phatshoane AJA
JUDGMENT
PHATSHOANE
AJA
[1]
This is an appeal by the Minister of Higher Education and Training
(“the Minister”) and the National Skills Fund
(“the
Fund”), the first and second appellants, against parts of the
judgment and order of the Labour Court (Coetzee
AJ) dated 07 August
2015 in which he declared invalid and set aside Regulations 3(12) and
4(4) of the Sector Education and Training
Authorities (SETAs) Grant
Regulations Regarding Monies Received by a SETA and Related Matters
promulgated in terms of s 36 of the
Skills Development Act, 97 of
1998 (“SDA”), in Government Notice R.990 of 03 December
2012 (“the 2012 Grant Regulations”).
[2]
The appeal is with leave of the Court
a
quo
.
In granting leave the Labour Court confined it to its finding in
respect of Regulation 3(12) and 4(4) of the 2012 Grant Regulations.
However, the present appeal concerns the review and the setting aside
of Regulation 3(12) styled in this litigation: “the
sweeping
mechanism.” On 13 January 2016 the Minister published
Government Notice. 239592 in which he, after consultation
with the
Skills Development Authority (“the Authority”), the
second respondent, re-promulgated Regulation 4(4),
[1]
which effectively rendered emasculate argument on the rationality or
reasonableness of Regulation 4(4).
[4]
There is also before us a prolix application to reinstate the lapsed
appeal; the condonation of the late filing of the record
of the
appeal and heads of argument by the appellants.
The
principles applicable to applications for condonation are well known.
Factors which are generally taken into account are the
degree of
lateness, the explanation therefor, the prospects of success and the
importance of the case.
[2]
[5]
Leave
to appeal was granted on 15 September 2015. Thereafter the parties
agreed on a timetable for the future conduct of the matter.
In terms
of this timetable the appellants had to file the record and their
heads of argument on 12 and 23 November 2015, respectively.
[6]
In terms of Rule 5(17) of the Rules
Regulating
the Conduct of Proceedings in this Court
[3]
if
an
appellant fails to lodge the record within the prescribed period
he/she will be deemed to have withdrawn the appeal.
The
appellants failed to file the record on the agreed date and the
further extended date of 18 November 2015. Consequently, the
appeal
lapsed.
[7]
In his explanation of the delay, the appellants’ deponent, Mr
Reginald Shabangu, an Assistant State Attorney, says that
Business
Unity South Africa’s (BUSA’s) attorneys of record, Bowman
Gilfillan, brought it to his attention on 04 November
2015 that the
index to the record, as received from the transcription service, did
not reflect a number of documents. On 17 November
2016 Bowman
Gilfillan granted an indulgence to the State Attorney to file the
record on 18 November 2015 and that the heads of
argument be filed on
23 November 2015. As already alluded to, the appellants defaulted. On
26 November 2015 Bowman Gilfillan informed
the State attorney that
the appeal was deemed to have been withdrawn. On 03 December 2015 the
compilation of the record was completed.
Upon enquiring on the
whereabouts of the record, the State Attorney was informed on 15
December 2015 that the record was dispatched
to iAfrica Transcription
Services in Johannesburg. What turned out to be an incomplete record
was collected by the State Attorney
from the Labour Court on 23
December 2015 and filed in January 2016.
[8]
Apparent from the founding affidavit is that the matter had been
handled by few of the employees of the Office of the State
Attorney
who left its service. At some stage, on Mr Shabangu’s own
admission, “the matter lay fallow within the office
of the
department for a few months”. On 07 March 2016 the officials of
the State Attorney directed an e-mail to their erstwhile
counsel to
approach the Court for the reinstatement of the appeal. A barrage of
e-mails was exchanged between the officials of
the State Attorney
with regard to the unavailability of counsel to settle the papers.
[9]
On 20 April 2016 the present counsel was briefed. He informed the
State Attorney that he needed to be afforded an opportunity
to peruse
the bulky record. The application for reinstatement was finalised on
06 May 2016. Before the founding affidavit in respect
of the
application to reinstate the appeal was filed it emerged that the
filed record was incomplete. A flurry of e-mails between
the
transcription services, the State Attorney and counsel, regarding the
filing of the record, was exchanged. The application
to reinstate the
appeal was eventually lodged on 08 August 2016, almost 09 months
after the agreed date.
[10]
It is so that the parties initially agreed that the appeal be
disposed of on an expedited basis. The delay in prosecuting the
appeal is extremely substantial and founders in the face of that
agreement. The explanation proffered for the delay is completely
unacceptable with various intervening periods left unexplained. It is
no excuse, as the State Attorney sought to argue, that its
office was
understaffed and snowed under a workload.
[11]
Mr Franklin SC, for BUSA, the first respondent, contended that the
Minister’s prospects of success were fatally diminished
by the
fact that his right of appeal has been perempted in that he
separately, after the appeal had lapsed, purported to comply
with the
terms of the order of the Court
a
quo
in
one respect, by introducing a fresh Regulation to substitute
Regulation 4(4), one of the impugned Regulations. The doctrine of
peremption was eloquently reaffirmed as follows in
SA
Revenue Service v Commission for Conciliation, Mediation &
Arbitration and Others
:
[4]
‘
[26] Peremption
is a waiver of one’s constitutional right to appeal in a way
that leaves no shred of reasonable doubt
about the losing
party’s self-resignation to the unfavourable order that
could otherwise be appealed against.
Dabner
[
Dabner
v SA Railways & Harbours
1920
AD 583]
articulates principles that govern peremption very
well in these terms:
‘
The
rule with regard to peremption is well settled, and has
been enunciated on several occasions by this Court. If the
conduct of
an unsuccessful litigant is such as to point indubitably and
necessarily to the conclusion that he does not intend to
attack the
judgment, then he is held to have acquiesced in it. But the conduct
relied upon must be unequivocal and must be inconsistent
with any
intention to appeal. And the
onus
of
establishing that position is upon the party alleging it.’
The
onus to establish peremption would be discharged only when the
conduct or communication relied on does ‘point indubitably
and
necessarily to the conclusion’ that there has been an
abandonment of the right to appeal and a resignation to the
unfavourable
judgment or order.’
[12]
I am not swayed that this is a case where it could be said that the
appellants unequivocally acquiesced in the judgment of
the Court
a
quo
and later on decided to appeal. In my view, as I shall
demonstrate, the prospects of success are weak for other reasons.
[13]
Undoubtedly, the matter is important to the parties and to a wide
range of other stakeholders. The parties were
ad
idem
,
when they approached the Judge President on 23 September 2015 in
terms of Rule 5(22),
[5]
that
“
the
matter has very significant implications for the system under which
workplace skills development is funded in the country, and
is of
major significance to employers, employees, SETAs, and related
stakeholders.
”
In
my view, in a matter such as the present, the overriding
consideration should be the question of public interest, the interest
of justice, and the importance of the need for legal certainty on the
questions of law raised. These interests warrant consideration
of the
merits of the appeal by this Court. It is on this basis that the
application for the reinstatement of the appeal and condonation
for
the late lodging of the record of the appeal should succeed.
The
statutory framework
[14]
The
Skills Development Levies Act, 9 of 1999
, established a compulsory
levy scheme to which employers are required to contribute to fund
education and training as envisaged
in the SDA. The amount payable is
calculated as 1% of the total amount of remuneration paid to
employees.
[15]
Section 9
of the SDA establishes the SETAs each of which is aimed at
training and skills development in a specific national economic
sector:
for example construction, education, etc.
[6]
In terms of
s14
of the SDA 80% of the skills development levies,
interest and penalties collected in respect of the SETAs, through the
compulsory
levy scheme, must be paid to the SETAs. The remaining 20%
of the levies, interest and penalties collected in respect of every
SETA
must, in terms of
s27
of the SDA, be paid to the Fund.
[16]
In terms of the SETAs Grant Regulations Regarding Monies Received by
a SETA and related matters as published in Government
Notice R.713 of
18 July 2005, as amended by GN R.88 of 02 February 2007 (“the
2005 Grant Regulations”),
[7]
an employer who paid skills development levies could claim 50% of
those levies back in the form of a mandatory grant if it complied
with the eligibility criteria.
[17]
The 2005 Grant Regulations were repealed by the 2012 Grant
Regulations.
[8]
It is the 2012
Grant Regulations that formed the subject matter of the review
application before the Labour Court.
[18]
Regulation 4(4) of the 2012 Grant Regulation reduced the mandatory
grant that an employer could claim back from 50% to 20%
of the total
levies paid by the employer. It provides as follows:
‘
20%
of the total levies paid by the employer in terms of s 3(1) read with
section 6
of the
Skills Development Levies Act during
each financial
year will be paid to the employer who submits a [Workplace Skills
Plan] and [Annual Training Report] as a mandatory
grant.’
[9]
[19]
The 2012 Grant Regulations also introduced “the sweeping
mechanism” as follows:
19.1
Regulation 3(11) provides that:
‘
(11)
At the end of each financial year it is expected that a SETA must
have spent or committed (through actual contractual obligations)
at
least 95% of discretionary funds available to it by the 31 March of
each year and a maximum of 5% of uncommitted funds may be
carried
over to the next financial year.’
19.2
Regulation 3(12) provides that:
‘
(12) The
remaining surplus of discretionary funds must be paid by the SETA by
1 October of each year into the National Skills
Fund (NSF).’
[20]
The upshot is that if a SETA has not spent at least 95 % of its
discretionary funds, the surplus will be “swept”
into the
Fund on 01 October of each year. This sweeping mechanism is a
completely new concept which was not contained in the 2005
Grant
Regulations.
A
synopsis of the salient chronology of events
[21]
The engagement between the Minister and the Authority concerning the
introduction of the new Grant Regulations commenced at
a joint
workshop between their representatives held on 17 and 18 November
2011. During the workshop the Department of Higher Education
and
Training (DHET) (“the department”) representatives
proposed,
inter alia
, that the mandatory grant in the 2005
Grant Regulations be reduced from 50% to 40 % of the total levies
paid by the employer. The
department’s representatives also
distributed a draft of the proposed Grant Regulations. The minutes of
the workshop recorded
that the draft Regulations would be submitted
to the Minister for his consideration; issued for public comment for
a period of
21 days; and presented to the Authority after the public
comment process.
[22]
On 12 January 2012 the Minister published a set of draft Regulations
(“the draft Regulations”) and invited public
comment
within 21 days. They differed in material respects from the 2012
Grant Regulations as finally promulgated; in particular,
they did not
contain the sweeping mechanism provision in Regulation 3(12); and
provided for a reduction in mandatory grants from
50% of the total
levies paid by an employer to 40% (not 20%).
[23]
The draft Regulations were discussed at a meeting of the Authority on
06 February 2012. At a special meeting of the Authority
held on 17
February 2012, on the table of inputs and recommendations, business
and the SETAs made representations that the mandatory
grant should
remain at 50%. Labour did not comment on the percentage allocation of
mandatory grants in the draft Regulations.
[24]
In March 2012 a Ministerial Task Team (subcommittee on planning and
delivery) circulated the final report
[10]
recommending that the 2005 Grant Regulations be changed,
inter
alia
,
to make provision for the mandatory grant to be reduced from 50% to
20% of the total levies paid by the employer.
[11]
[25]
On 18 April 2012 the department made a presentation to the National
Economic Development and Labour Council (“NEDLAC”)
persisting that the mandatory grant be reduced to 40% as opposed to
20%, as reflected in the draft Regulations. Instead of the
sweeping
mechanism, which would transfer unclaimed funds into the Fund, the
presentation proposed that unclaimed mandatory grants
be transferred
into the Pivotal Grant.
[12]
[26]
A sub-committee of the Authority reported to the Authority on 15 May
2012 that the draft Regulations had been tabled for discussion
at
NEDLAC on 18 April 2012. Other meetings of the Authority were
subsequently held during 2012 but the proposal by the Ministerial
Task Team that the mandatory grant be reduced from 50% to 20% was not
raised for discussion. Its report had not been provided to
the
Authority and the Minister did not consult the Authority on the
proposal.
[27]
The Minister signed the 2012 Grant Regulations on 15 November 2012 on
the strength of a memorandum prepared by the department
to the
Minister on 06 November 2012. BUSA and the Authority were not aware
that the Minister signed the 2012 Grant Regulations.
[28]
On 28 November 2012, before the promulgation of the 2012 Grant
Regulations, the department held an information sharing meeting
concerning the draft Regulations with representatives of various
social partners represented in NEDLAC which included BUSA. At
this
meeting the Director-General of Higher Education and Training, for
the first time, referred to the proposal that the mandatory
grant be
reduced to 20%. He also highlighted the introduction of the sweeping
mechanism. At that stage the 2012 Grant Regulations
had already been
finalised and signed by the Minister some two weeks earlier, on 15
November 2012.
[29]
There is a dispute of fact on whether the meeting referred to in the
preceding paragraph proceeded on the basis that the Regulations
had
not been finalised and that the department was willing to consider
further submissions on the draft Regulations. According
to BUSA the
Director-General professed to invite discussions on the draft
Regulations. Ms Stella Carthy, one of BUSA’s representatives
at
this meeting, took contemporaneous notes which reflected that the
Director-General “
invited members to forward comments in
writing by 14 December 2012 on the revised draft SETA Grant
Regulations which were distributed
at the meeting
”.
According to the Minister the discussions centred on what was
contained in the final set of the 2012 Grant Regulations
which he was
likely to approve and promulgate in the next few days. The
implications and measures for the implementation of those
Regulations
were also scrutinised.
[30]
At the strategic planning meeting of the Authority held on 29 and 30
November 2012 a revised set of draft Grant Regulations
was presented.
These incorporated the impugned Regulation 4(4) and 3(12) which were
placed before the Authority for the first time.
The Authority had not
yet been informed that these were the final set of the 2012 Grant
Regulations which had been signed by the
Minister. These Regulations
were published in the Government Gazette on 03 December 2012 and came
into effect on 01 April 2013.
BUSA’s
contention on review before the Court
a quo
[31]
BUSA advanced two review grounds as follows:
31.1
The first ground is predicated on the process that was followed
leading to the promulgation of the 2012 Grant Regulations.
BUSA
contended that the Minister failed to consult with the Authority as
required in terms of s 36 of the SDA before he made the
2012 Grant
Regulations. This irregularity, it was argued, vitiated the 2012
Grant Regulations in their entirety.
31.2
The second ground is premised on the substance of the 2012 Grant
Regulations. BUSA argued that Regulation 3(12) was reviewable
in
light of its content as the introduction of the sweeping mechanism
was irrational and unreasonable. It further contended that
the
sweeping mechanism was
ultra vires
the SDA.
The
Judgment of the Court
a quo
[32]
On the failure to consult, the Court
a quo
held that:
32.1
The argument that there had been substantial compliance with the
requirement to consult as contemplated in s36 of the SDA was
unconvincing. The obligation to consult was statutory and the
function of the Authority was to advise the Minister. It further
held
that it was insufficient to consult NEDLAC, the individual
representatives of the Authority, or a proxy to advise the Minister.
The Authority is a separate legal
persona
distinct from
NEDLAC. The constituent membership of the Authority was much broader
than that of NEDLAC. The latter had three main
constituencies,
notably; business, labour and government whereas the Authority was
more broadly constituted and included subject-matter
experts. Apart
from organised labour and business the Authority included
representatives appointed to represent: community and
development
interest; the interest of the State and those of education; and
skills development providers. Only three of the individuals
on the
Authority out of the 30 representatives were part of the consultation
process in NEDLAC.
32.2
The appellants’ argument that the Authority could never have
formulated a unified view because it could not reach consensus
is
unsubstantiated and mere conjecture because the Minister had not
sought the Authority’s advice. The Authority must formulate
its
advice to the Minister on the Regulations with a two-thirds vote of
members which was attainable for a unified point of view.
The
Minister was required to have regard to the position of the Authority
even if it was to provide the Minister with a divided
view.
32.3
The Minister had failed to consult the Authority on the two impugned
Regulations, a factor which renders the Regulations reviewable.
[33]
Concerning the sweeping provision (Regulation 3(12)) the Court
a
quo
held that it was not rationally connected to the purpose for
which it was taken or to the information before the Minister and was
so unreasonable that “no reasonable person could have exercised
the power or performed that function.” The scheme devised
by
Regulation 3(12) that the SETAs spend or commit at least 95% of their
discretionary funds by 31 March of each year was irrational
in that
the Ministerial Task Team had already found that the SETAs were
unable to deal adequately with the funds. This was likely
to result
in substantial unspent discretionary grant funds at the end of the
financial year which will then be swept into the Fund.
[34]
The Court further found that the sweeping mechanism was
ultra
vires
because on the one hand s14(3) of the SDA provides that the
monies received by a SETA may be used only in a prescribed manner and
in accordance with any prescribed standards to “fund the
performance of its function; and pay for its administration within
the prescribed limits” but on the other, Regulation 3(12),
required the SETAs to pay the surplus money to the Fund. This
was not
the purpose authorised by s 14(3) of the SDA. The Minister had no
competence in law to require the SETA to use the money
for an
unauthorised purpose.
[35]
Section 27(2) of the SDA provides that the Fund must be credited with
(a) 20% of the skills development levies, interest and
penalties
collected in respect of every SETA:
‘
(c)
money appropriated by parliament for the Fund;
(f)
money received from any other source.’
[36]
The Court
a quo
held that Parliament provided that the Fund be
credited with 20% of the Skills Development Levies while remaining
80% would be
allocated to the SETA. The sweeping mechanism has the
effect that the Fund may receive more than 20% of the Skills
Development
Levies allocated to it by s27(2). The money received from
“
any other source
” cannot be money received from
the SETAs as they receive their allocation in terms of the SDA and no
provision is made in
the SDA or any other legislation to transfer
part thereof to the Fund. Only parliament has the power to
appropriate more funds
to the Fund and it is not competent for the
Minister, as a delegated lawmaker, to do so by Regulation.
[37]
As already alluded to, the Court
a quo
declared invalid and
set aside Regulations 3(12) and 4(4) of the 2012 Grant Regulations.
The order was suspended until 31 March
2016 to afford the Minister
the opportunity to correct the impugned Regulations.
The
grounds of appeal
[38]
As their ground of appeal to this Court the appellants contended that
the Court
a quo
erred:
38.1
in finding that there was no substantial compliance with the
requirements relating to consultation with the Authority;
38.2
in failing to find that the circumstances were such that there was no
coherent position adopted or capable of being adopted
by the
Authority and that the consultation with the individual constituent
members of the Authority, including BUSA, constituted
adequate
consultation;
38.3
in finding that Regulation 3(12), the sweeping mechanism, was not
rationally connected to the purpose for which it was taken
or to the
information before the Minister and that it is so unreasonable that
no reasonable functionary could have exercised the
power or perform
the function;
38.4
in finding that Regulation 3(12) is
ultra vires
ss14(3) and
27(2) of the SDA.
The
evaluation
[39]
The crux of this appeal is whether in making and promulgating the
2012 Grant Regulations the Minister complied with his obligation
to
consult the Authority as contemplated in s36 of the SDA. The second
issue is whether the sweeping mechanism, Regulation 3(12)
was
rationally connected to the purpose for which it was taken or to the
information before the Minister. Lastly, it should also
be determined
whether the said Regulation is
ultra vires
the provisions of s
14(3) and 27(2) of the SDA.
The
requirement of consultation:
[40]
It is important to commence this enquiry with reference to few
authorities on the meaning of the word “
consultation
”
as
referred to in various statutory provisions.
In
Hayes
v Minister of Housing, Planning and Administration, Western Cape,
[13]
the
Court considered the meaning of “
consultation
”
within
the context of s44(2) of the Land Use Planning Ordinance, 15 of
1985, which required the Minister of Housing, Planning
and
Administration to determine an appeal “after consultation with
the council concerned.” Having referred to the definition
of
the word in various dictionaries, the South African and English
authorities on the subject, the Court pronounced that:
‘
In
ordinary legal parlance, a consultation would usually be understood
as a meeting or conference at which discussions take place,
ideas are
exchanged and advice or guidance is sought or tendered. The parties
or their representatives could be physically present
at such meeting
or conference, but not necessarily so. In these times of advanced
communications technology, persons or parties
can consult with one
another in a variety of ways, such as by fax or e-mail or, in a
somewhat less sophisticated way, by correspondence.
Circumstances
will dictate in what form the consultation should take place. As long
as the lines of communication are open and
the parties are afforded
a reasonable opportunity to put their cases or points of view to one
another, the form of consultation
will usually not be of great
import.’
[41]
In
Scalabrini
Centre and Others v Minister of Home Affairs and Others,
[14]
the Court lucidly dealt with the requirement of consultation as
follows:
‘
[72]
…First, a substantive level consultation entails a genuine
invitation to give advice and a genuine receipt of that advice
(see
R
v Secretary of State for Social Services, Ex parte Association of
Metropolitan Authorities
[1986]
1 WLR 1
(QB) ([1986]
1 All ER 164)
at 167
g
–
h
(All
ER) G
Hayes
and Another v Minister of Housing, Planning and Administration,
Western Cape, and Others
1999
(4) SA 1229
(C) at 1242C – F). Consultation is not to be
treated perfunctorily or as a mere formality (
Port
Louis Corporation v Attorney-General of Mauritius
[1965]
AC 1111
(PC) at 1124
d
–
f
).
This means,
inter
alia
,
that engagement after the decision-maker has already reached his
decision or once his mind has already become 'unduly fixed' is
not compatible with true consultation
(
Sinfield
v London Transport Executive
[1970]
2 All ER 264
(CA) at 269
c
–
e
).
Secondly, at the procedural level, consultation may be conducted in
any appropriate way determined by the decision-maker, unless
a
procedure is laid down in the legislation. However, the procedure
must be one which enables consultation in the substantive
sense
to occur. This means that sufficient information must be supplied to
the consulted party to enable it to tender helpful advice;
sufficient
time must be given to the consulted party to enable it to provide
such advice; and sufficient time must be available
to allow the
advice to be considered (
Association
of Metropolitan Authorities
supra
at 167
h
–
j
;
Hayes
supra
at 1242C – 1243B).’
[42]
More pertinently,
R
v Secretary of State for Social Services, Ex parte Association of
Metropolitan Authorities
,
[15]
concerned judicial review where the Association of Metropolitan
Authorities applied to quash the Housing Benefits Amendment (No 4)
Regulations
1984, SI 1984/1965
, made by the Secretary of State for
Social Services on the ground that the Secretary failed to consult
the applicant association
properly or at all with regard to the
making of the regulations before making them. In that case the Court
pronounced:
‘
There
is no general principle to be extracted from the case law as to what
kind or amount of consultation is required before delegated
legislation, of which consultation is a precondition, can validly be
made. But in any context the essence of consultation is the
communication of a genuine invitation to give advice and a genuine
consideration of that advice. In my view it must go without
saying
that to achieve consultation sufficient information must be supplied
by the consulting to the consulted party to enable
it to tender
helpful advice. Sufficient time must be given by the consulting to
the consulted party to enable it to do that, and
sufficient time must
be available for such advice to be considered by the consulting
party. Sufficient, in that context, does not
mean ample, but at least
enough to enable the relevant purpose to be fulfilled. By helpful
advice, in this context, I mean sufficiently
informed and considered
information or advice about aspects of the form or substance of the
proposals, or their implications for
the consulted party, being
aspects material to the implementation of the proposal as to which
the Secretary of State might not
be fully informed or advised and as
to which the party consulted might have relevant information or
advice to offer.’
[43]
Section 4 of the SDA establishes the Authority while s6(1)(2)
provides for its composition as follows:
‘
(1)
The National Skills Authority consists of-
(a)
a voting
chairperson appointed by the Minister;
(b)
4 voting
and six non-voting members appointed by the Minister; and
(c)
its
non-voting executive officer appointed in terms of section 8 (2)
(a)
.
(2)
The members referred to in subsection (1)
(b)
are-
(a)
five
voting members nominated by NEDLAC and appointed by the Minister to
represent organised labour;
(b)
five
voting members nominated by NEDLAC and appointed by the Minister to
represent organised business;
(c)
five
voting members nominated by NEDLAC and appointed by the Minister to
represent organisations of community and development interests,
which
must include-
(i)
a woman who represents the interests of women;
(ii)
a person who represents the interests of the youth; and
(iii)
a disabled person who represents the interests of people with
disabilities;
(d)
five
voting members appointed by the Minister to represent the interests
of the State;
(e)
four
voting members appointed by the Minister to represent the interests
of education and skills development providers;
(e
A
)
two
non-voting members, who have expertise in skills development,
appointed by the Minister after consultation with the National
Skills
Authority;
(f)
two
non-voting members, who have expertise in the provision of employment
services, appointed by the Minister;
(g)
a
non-voting member nominated by the South African Qualifications
Authority and appointed by the Minister; and
(h)
a
non-voting member nominated by the QCTO and appointed by the
Minister.’
[44]
In terms of s5(1)(i)-(v) of the SDA the Authority must advise the
Minister on, amongst others, national skills development
policy,
strategy and Regulation to be made. This should be read in
conjunction with s7(5) which provides that a
supporting
vote of at least two-thirds of the Authority's members is required
for purposes of advising the Minister on the Regulations
to be made.
In
terms of s36 of the SDA the Minister
may,
after consultation with the Authority, by notice in the
Gazette
,
make Regulations in respect of the number of issues listed in s36,
inter
alia
,
any procedure, period, criterion or standard for SETAs to perform any
function in terms of s10 (1); on categories and amounts
of
grants that may be allocated in terms of s10 (1)
(b)
(iii);
on the criteria or conditions that may be attached to grants
allocated in terms of s10 (1)
(b)
(iii)
and so forth.
[45]
The general drift of Mr Hulley SC’s argument, for the
appellants, is that the Minister substantially complied with the
requirement to consult because he considered the views of certain of
the Authority’s constituent members separately and in
different
fora
. He argued that, while there may not have been
consultation with the Authority, its member’s views were
considered during
the consultation process in NEDLAC. There was
therefore substantial compliance with the obligation to consult in
terms of the SDA.
[46]
In his answering affidavit the Minister says that the individuals who
represented each constituency in the Authority were to
a significant
degree the same individuals as those that represented that same
constituency in NEDLAC. He mentioned Ms Bev Jack,
whom he says was
the leader of the organised business constituency on the Authority
and one of its deputy chairpersons. He also
referred to Ms Janet
Lopes, another BUSA’s representative on the Authority. As he
puts it “
BUSA’s delegates would act in concert and
simply articulate and promote a particular united, coherent mandate
they had received
from their organisation and affiliates/members
”.
He further says that the labour constituency was represented by Mr
Babhali ka Mamphikela Nhlapo. Clearly, only three members
of the 30
members of Authority were part of the consultation process in the
Labour Market Chamber of NEDLAC.
[47]
According to the Minister there was also an overlap in relation to
some members of the State’s delegation to the Authority
and the
NEDLAC Task Team. He went on to explain that the participants from
each of the constituencies, business, labour, and government
were at
all times actively involved in the different structures. This, he
says, gave them the opportunity to engage at great length
and in
depth with each other. In any event, he intimated, the constituent
bodies represented in the Authority were also represented
in NEDLAC,
where the matter was debated in detail in the presence and with the
participation of the department officials.
[48]
The Minister further explained that he could not consult with the
Authority because of the disagreements between business and
labour
constituency which were manifest in two NEDLAC task team meetings
held on 18 April and 02 May 2012. He expatiated:
‘
261.
In the April meeting, labour constituency raised the proposal that
the mandatory grant allocation to employers be reduced from
50% to
20%. They raised serious concerns about the inadequacies and the
effectiveness of much of the training provided by employers
using
this allocation, and the dire need for better skills provision
through more formal education and training using learnership,
scholarship and the like through universities, FET colleges etc.
262.
The labour constituency also proposed a sweeping mechanism for major
portion of funds unspent by the SETAs to be transferred
to the NSF
(the Fund). It raised arguments about the under-utilization of
significant amounts, which exacerbated the ineffectiveness
of the
skills levy system and the problems with urgently needed education
and training.
263.
At this meeting in April 2012, BUSA delegates argued against the
labour delegation’s proposal and contentions. They argued
for
retention of 50 % allocation system (which at that stage applied,
under the 2005 Regulations). They were opposed to any reduction,
even
40%.
265.
The next meeting of NEDLAC Task Team was held on 02 May 2012. BUSA’s
delegates indicated that they might be willing to
move to the level
of 40% for the mandatory grant to employers, which had been the
original proposal from DHET (Department of Higher
Education and
Training). The labour delegation were opposed to this, and moved
their demand to a greater reduction, to the 10%
level. BUSA’s
delegates stated that they could not move below 40 % without further
mandate.
267.
Subsequently, the business and labour constituencies did not reach
consensus. Their respective positions were taken into account
both by
the DHET’s officials, including those who sat on the
Departmental Task Team, and by me when I took the decision to
promulgate the 2012 Regulations.
268.
Ultimately, the arguments raised by labour were found to be
compelling both in relation to the 20% mandatory grant allocation
to
employers and the sweeping mechanism.’
[49]
On the Minister’s own version, it was unrealistic and
artificial for BUSA to argue that he should have obtained the advice
of or consulted with the Authority before making and promulgating the
2012 Grant Regulations. He says that the parties had reached
a
stalemate on the mandatory allocation to the employers and the
sweeping mechanism in NEDLAC and had exhausted the process for
meaningful consultation. In the Minister’s view, nothing of any
consequence turns on the fact that the impasse had been reached
in
the deliberations of the NEDLAC’s Task Team and not those of
the Authority. His argument is that it is artificial to suggest
that
the Authority could adopt a consensus view to formulate and convey to
him.
[50]
The requirements to be met by the Minister before promulgating the
Regulations are unambiguously set out in the SDA. The Statutorily
created Authority, which the Minister is required to consult before
he makes and promulgates the Grant Regulations, should not
be
obfuscated with the “constituencies” from which its
members are elected. As correctly found by the Court
a
quo
the
Authority is a separate legal person and distinct statutory body from
NEDLAC. It has several constituencies
[16]
which are not limited to business and labour with experts on skills
development and provision of employment services to advise
the
Minister. A reading of the Minister’s affidavit suggests that
he only consulted with business and labour at NEDLAC.
[51]
I am of the view that, on a plain reading of the language used in s36
“
The
Minister may, after consultation with the National Skills Authority,
by notice in the Gazette, make regulation”
,
the consultation with the Authority is mandatory. It cannot be
substituted with discussions at NEDLAC, a different body established
in terms of the
National Economic Development and Labour Council Act,
34 of 1994
, which serves a different purpose to that of the
Authority
[17]
. Neither can
consultation in NEDLAC be used to usurp the statutory function of the
Authority. To hold otherwise would render the
SDA nugatory.
[52]
Section 5
of the SDA makes it clear that the statutory mandate of the
Authority is to advise the Minister on matters relating to,
inter
alia
the making of the Regulations.
Section 7(3)
prescribes the
manner in which the Authority is to advise the Minister on the
Regulations to be made as follows:
‘
(3)
At least 30 days’ notice must be given for a meeting of the
Authority at which an amendment of the constitution or a regulation
to be made is to be considered.’
Section
7(5)
further provides:
‘
(5)
A supporting vote of at least two-thirds of the Authority's members
is required for advising the Minister on regulations to
be made.’
[53]
A decision-maker is required to consider the views of interested
parties before taking a decision.
[18]
In
Joseph
and Others v City of Johannesburg and Others
,
[19]
the Court, citing Hoexter
Administrative
Law in South Africa
(Juta,
Cape Town 2007), the Court held:
'Procedural
fairness…is concerned with giving people an opportunity to
participate in the decisions that will affect them,
and - crucially -
a chance of influencing the outcome of those decisions. Such
participation is a safeguard that not only signals
respect for the
dignity and worth of the participants, but is also likely to improve
the quality and rationality of administrative
decision-making and to
enhance its legitimacy.'
[54]
No meeting of the Authority was held with the required 30 days’
prior Notice. The 2012 Grant Regulations, in particular,
the
reduction of the mandatory grant from 50% to 20% of the total levies
paid by the employer and the introduction of the sweeping
provision
were never subjected to a vote as required in terms of the SDA to
determine if they met the required two-thirds support
from the
Authority’s members necessary to advise the Minister. In light
of this, the Minister’s view that the Authority
would never
have been able to reach an agreement for purposes of advising him on
the Regulations amounts to mere conjecture and
speculation.
[55]
Apparent from the factual matrix sketched, the Minister did not
consult the Authority on the material changes to the 2012 Grant
Regulations. He did not afford the Authority an opportunity to
comment on these material aspects of the Regulations. In addition,
no
information regarding these aspects was placed before the Authority
until two weeks after the Minister had already signed the
Regulations
in final form.
[56]
The argument that it would serve no purpose for a formal consultation
process to be pursued with the Authority where its house
was
irretrievably divided between the dominant schools of thought, being
business and labour constituencies, is unmeritorious.
The Minister is
wrong in law and in fact in averring that the Authority had no advice
to give when he had not even attempted to
obtain the advice from the
Authority itself. A Minister is constrained to make decisions in
accordance with the statutory prescripts.
The exercise of public
power is subject to constitutional control and constrained by the
principle of legality. A repository of
power may not exercise any
power or perform any function beyond that conferred upon it by law
and must not misconstrue the nature
and ambit of the power.
[20]
[57]
The purported consultation with the Authority on 29 and 30 November
2012 could hardly constitute adequate or genuine consultation
because
the Minister had already signed the final 2012 Grant Regulations on
15 November 2012. Although in certain exceptional circumstances
it
may be possible for an administrator to justify affording a hearing
after taking a decision,
[21]
s36 of the SDA makes it plain that the Minister may make Regulations
“
after
consultation
with the National Skills Authority” while s5(1)(a)(v) provides
that the Authority’s function is “to
advise the Minister
on … any Regulations
to
be made.
”
The
phrase “
after
consultation with”
is
well known in our law. It requires the decision to be taken in good
faith with due regard to the advice given.
[22]
The Minister should give serious consideration to the views of the
Authority but would leave him free to disagree with them.
[23]
In any event, according to the Minister, the purpose of the meeting
of 29 and 30 November 2012 was not to consult the parties and
receive
their input for possible inclusion in the draft Regulations. That
process was done and dusted. The meeting was convened
to,
inter
alia
,
inform the delegates of what was contained in the Regulations that
had been sent to the Minister for approval and promulgation.
[58]
To sum up, the Court
a quo
correctly rejected the Minister’s
argument that he sufficiently complied with the statutory requirement
of consultation because:
58.1
Firstly, the constituent membership of the Authority was much broader
than that of NEDLAC. Only three of the Authority’s
members out
of 30 representatives were part of the consultation process at
NEDLAC.
58.2
Secondly, the Minister’s submission that the Authority could
not have formulated a unified view was mere conjecture;
58.3
Thirdly, there was no reason that the Authority could not have
achieved a two-thirds majority vote in favour of a unified view.
[59]
The cases referred to by Mr Hulley in support of the argument that
there had been substantial compliance
[24]
are distinguishable. They concern compliance by the municipalities
with certain statutory provisions before imposing property rates.
None of these cases deals with failure by the Minister to properly
consult before making and promulgating subordinate legislation.
I am
not persuaded that the process followed by the Minister in making and
promulgating the 2012 Grant Regulations achieved the
legislature’s
objective of the requirement that the Minister should consult the
Authority. The mandatory statutory requirement
to consult cannot be
confined or reduced to a mere sufficiency of compliance. There
had been, in this case, no compliance
by the Minister with the
statutorily enjoined obligation to consult.
[60]
The appellants’ further contention concerns BUSA’s
standing to bring the review application. BUSA launched the
review in
its own interest; in the interest of its members; and in the public
interest in terms of s38(d) of the Constitution.
[25]
It submitted, in the founding affidavit, that the 2012 Grant
Regulations have a significant impact on the South African business
and it is in the public interest that business should not be required
to comply with the Regulations that are unlawful.
[61]
The appellant’s argument is that the obligation to consult is
owed to the Authority and not to BUSA which cannot mount
a legal
challenge to enforce a right that inheres in the Authority. Put
differently, BUSA has no standing to raise a failure to
consult in
circumstances where the Authority has not raised that complaint
itself. In support of this contention Mr Hulley relied
on
Doctors
for Life International v Speaker of the National Assembly and Others
(Doctors for Life).
[26]
He contended that only a party who has made attempts to be heard or
to be consulted and has been rebuffed can launch a legal challenge
that its procedural right has been violated.
[62]
Doctors for Life
is distinguishable and is not authority for
the proposition that a party cannot review the Minister’s
decision where he had
failed to comply with a legislative
requirement, as in the circumstances of this case. In that case the
applicant applied directly
to the Constitutional Court for an order
declaring that the National Council of Provinces (the NCOP) and the
nine provincial legislatures
had failed to comply with the
constitutional obligations in terms of s72(1)
(a)
and s
118(1)
(a)
of the Constitution to facilitate public involvement
in their legislative processes in enacting certain statutes. Both ss
72(1)
(a)
and 118(1)
(a)
of the Constitution of the
Republic of South Africa, 1996 (Constitution) provides that the NCOP
and the provincial legislatures,
respectively, “must facilitate
public involvement in [its] legislative and other processes and
(those of) its committees”.
The application raised five issues
that required determination by the Court. One of this related to the
nature and the scope of
the duty to facilitate public involvement
comprehended in ss 72(1)
(a)
and 118(1)
(a)
of the
Constitution.
[63]
In respect of the applicant’s standing to approach the Court
for relief, the Constitutional Court held that the applicant
had
actively sought to obtain an opportunity to be heard on the Bills
both at the NCOP and in the provincial legislatures, but
the
attempts, though repeated and persistent, had been in vain. It
further held that the Court will consider an application to
declare
legislation invalid on the grounds set out in its judgment only in
circumstances where the applicant has sought and been
denied an
opportunity to be heard on the Bills and where the applicant has
launched his or her application for relief in the Constitutional
Court as soon as practicable after the Bills had been promulgated.
Only those applicants who have made diligent and proper attempts
to
be heard by the NCOP should be entitled to rely on any failure to
observe s72 of the Constitution. Similarly, applicants who
have not
pursued their cause timeously in the Court might well be denied
relief.
[64]
BUSA represent organised business, one of the major constituent
member represented in the Authority. At the time he deposed
to the
answering affidavit the Minister explained that the Authority, which
had not taken any active part in this litigation, was
not
constituted. Be that as it may, it remained his responsibility to
appoint members of the Authority in terms of s6 of the SDA.
[65]
Where the exercise of statutory power depends on the existence
of jurisdictional facts, the repository of the power may
not exercise
it in the absence of such jurisdictional facts. A jurisdictional fact
was defined as follows in
South
African Defence and Aid Fund and Another v Minister of Justice:
[27]
‘
[It]
is a fact the existence of which is contemplated by the Legislature
as a necessary pre-requisite to the exercise of the statutory
power.
The power itself is a discretionary one. Even though the
jurisdictional fact exists, the authority in whom the power resides
is not bound to exercise it. On the other hand, if the jurisdictional
fact does not exist, then the power may not be exercised
and any
purported exercise of the power would be invalid.’
The
legal position as articulated in
South
African Defence and Aid Fund
was
re-affirmed by the Constitutional Court in
President
of the Republic of South Africa and Others v South African Rugby
Football Union and Others.
[28]
In
my view, BUSA had sufficient interest and the right to challenge the
unlawful exercise of public power and to rely on the lack
of
consultation of the Authority by the Minister. The presence or
absence of consultation is a jurisdictional fact the presence
or
absence of which is objectively justiciable by a Court.
[29]
Conclusion
[66]
Minister’s engagement with some of the constituent members of
the Authority at NEDLAC before he made and promulgated
the 2012 Grant
Regulations was insufficient compliance for purposes s36 read with s
5(1)(a)(v) of the SDA. The Court
a
quo
correctly
set aside the 2012 Grant Regulations because a mandatory and material
procedure or condition prescribed by an empowering
provision was not
complied with, as contemplated by s6(2)(b) of PAJA. No cogent
criticism of the Court
a
quo
’
s
findings can be sustained. It is not necessary to traverse the
remaining grounds of appeal as the lack of consultation of the
Authority by the Minister, in my view, disposes of the appeal.
The ineluctable conclusion is that the appeal must fail.
The
issue of costs
[67]
In accordance with the requirements of law and fairness, I am of the
view that, the costs of this appeal should follow the
results. I can
conceive of no reason not to order the appellants, who made common
cause in relation to all the issues in this case,
to share the costs
burden jointly and severally.
Order
1.
The
application for reinstatement of the appeal is upheld;
2.
The
application for condonation of the late filing of the record of
appeal is upheld;
3.
The
appeal is dismissed;
4.
The
Minister of Higher Education and Training and the National Skills
Fund, first and second appellants, are to pay the costs of
this
appeal jointly and severally, the one paying the other to be
absolved. Such costs are to include the costs consequent upon
the
employment of two counsel.
_________________________
MV
Phatshoane
Acting
Judge of the Labour Appeal Court
Tlaletsi
AJP and Kathree-Setiloane A
JA
concur
in the judgment of Phatshoane AJA
APPEARANCES:
FOR
THE APPELLANTS: Adv M Hulley SC assisted by Adv Seneke
Instructed
by the State Attorney, Pretoria
FOR
THE RESPONDENT: Adv A Franklin SC assisted by Adv M Seape
Instructed
by Bowman Gilfillan
[1]
See
GN
23 in
GG
39592
of 13 January 2016.
[2]
Melane v Santam
Insurance Company Limited
1962
(4) SA 531 (A).
[3]
Published
under GN 1666 in
GG
17495
of 14 October 1996.
[4]
(2017)
38 ILJ 97 (CC)
at
109-110 para 26.
[5]
Rule 5(22) provides
that: “
A
party may on notice to all other parties apply orally or in writing
to the Judge President for an appeal to be heard urgently.
If the
application is successful, the Judge President must give directions
as to the future conduct of the appeal.
[6]
The functions of the
SETAs are set out in s10 of the SDA.
[7]
Record: Vol 2, annexure
NM5 to the Founding Affidavit, at 121-136.
[8]
Section 10 of the 2012
Grant Regulations repealed “
The
Sector Education and Training Authorities (SETAs) Grant Regulations
regarding monies received by a SETA and related matters,
published
in Government Notice R713 in
Government
Gazette
27801
of 18 July 2005, as amended by Government Notice R88 and published
in
Government
Gazette
29584
of 02 February 2007
.
[9]
Regulation 4(4) of the
2012 Grant Regulations.
[10]
Record: Vol 3, annexure
NM15 to the Founding Affidavit, p 289- 329.
[11]
Record: Vol 4, annexure
NM16 to the Founding Affidavit, p 330- 346, slide 7(336).
[12]
PIVOTAL Grants are
described in the Minister’s answering affidavit as
(Professional, Vocational, technical, and Academic
learning) Grants.
[13]
1999 (4) SA 1229
(C) at
1242-1243.
[14]
2013 (3) SA 531
(WCC) at
para 72 at 553F-J.
[15]
[1986] 1 All ER 164
at
167.
[16]
See s 6 of the SDA.
[17]
The purpose of NEDLAC is
set out in s 5(1)(a) to (e) of the National Economic Development and
Labour Council Act, 34 of 1994.
[18]
Premier, Western Cape
v President of the Republic of South Africa and Another
[1999] ZACC 2
;
1999 (3) SA 657
(CC) at
685 para 85.
[19]
2010 (4) SA 55
(CC) at
para 42.
[20]
South African
National Roads Agency Ltd v Cape Town City
2017
(1) SA 468
(SCA) at 495A-B para 75.
[21]
Nortje v Minister van
Korrektiewe Dienste
2001
(3) SA 472
(SCA) at 480G – I para 19. In this case, it was
held that, as a rule, a hearing after the decision will suffice only
if
an earlier hearing was not possible.
[22]
Ex parte Chairperson
of the Constitutional Assembly: In re Certification of the
Constitution of the Republic of South Africa,
1996
(4) SA 744
(CC) at 816E para 131.
[23]
Minister of Health
and Another NO v New Clicks South Africa (Pty) Ltd and Others
(Treatment Action Campaign and Another as Amici
Curiae)
2006 (2) SA 311
(CC) at
413C para 285.
[24]
Weenen Transitional
Local Council v Van Dyk
2002
(4) SA 653
(SCA),
Nokeng
Tsa Taemane Local Municipality v Dinokeng Property Owners
Association and others
[2011]
2 All SA 46
(SCA);
Liebenberg
NO and Others v
Bergrivier Municipality
2013
(5) SA 246 (CC).
[25]
Section 38 provides that
“Anyone listed in this section- has the right to approach a
competent court, alleging that a right
in the Bill of Rights has
been infringed or threatened, and the court may grant appropriate
relief, including a declaration of
rights. The persons who may
approach a court are — (a) anyone acting in their own
interest; (
b
)
anyone acting on behalf of another person who cannot act in their
own name; (
c
)
anyone acting as a member of, or in the interest of, a group or
class of persons;(
d
)
anyone acting in the public interest; and (
e
)
an association acting in the interest of its members.
[26]
[2006] ZACC 11
;
2006 (6) SA 416
(CC) at
paras 216 – 221.
[27]
1967 (1) SA 31
(C) 34G –
H.
[28]
2000 (1) SA 1
(CC) para
168 fn132.
[29]
This view as expressed
in
Hospital
Association of SA Ltd v Minister of Health and Another; ER24 EMS
(Pty) Ltd and Another v Minister of Health and another;
SA Private
Practitioners Forum and others v Director-General of Health and
others
[2011]
1 All SA 47
(GNP) at 54 para 17. I fully agree with it.