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[2019] ZALAC 68
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Business Unity South Africa v Minister of Higher Education and Training and Others (JA111/2018) [2019] ZALAC 68; [2020] 1 BLLR 1 (LAC); (2020) 41 ILJ 137 (LAC) (16 October 2019)

IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JA111/2018
In
the matter between:
BUSINESS
UNITY SOUTH AFRICA

Appellant
and
MINISTER
OF HIGHER EDUCATION AND
TRAINING

First Respondent
THE
NATIONAL SKILLS AUTHORITY

Second Respondent
THE
NATIONAL SKILLS FUND

Third Respondent
Heard:
20 August 2019
Delivered:
16 October 2019
Summary:
Minister re-promulgating Regulation that was set aside by the Labour
Court– issue for determination whether the re-promulgation
of
the Regulation constitutes irrational or arbitrary action or whether
the Minister provided an explanation why the very same
regulation had
been promulgated in the face of a previous declaration of invalidity.
Held
that no clear explanation from the Minister as to what he, as the
decision-maker who promulgated Regulation 4 (4) considered
had
changed in the context giving rise to the decision to promulgate the
same regulation…Absent any cogent justification,
a decision to
eschew an appeal against a judgment of a court and then, shortly
thereafter, to reproduce the very same decision
which has already
been held to be unlawful, is an action which is manifestly at war
with the rule of law. Labour Court’s
judgment set aside and
appeal upheld with costs.
Coram:
Davis and Coppin JJA and Murphy AJA
JUDGMENT
DAVIS
JA
Introduction
[1]
This dispute requires the answer to one
critical question: is the first respondent (the Minister) entitled to
promulgate a regulation
in exactly the same terms which a court has
found to be unlawful.
[2]
The court
a
quo
answered this question in the
affirmative. The court
a quo
found that the impugned promulgation of the regulation did not offend
the principle of illegality, nor did it contravene any of
the
provision of the Promotion of Administrative Justice Act (‘PAJA’)
and thus “vitiate the administrative action
taken by the
Minister in re-promulgating Regulation 4 (4) in 2016”. It is
this finding, with the leave of the court
a
quo
which has been appealed and, in
terms of which appeal, appellant contends the order should be set
aside.
The
factual background
[3]
The
Skills Development Levies Act 9 of
1999
established a compulsory levy scheme in terms of which employees
were required to pay levies in order to fund education and training

as envisaged in the Skills Development Act 97 of 1998 (‘SDA’).
The amount payable was calculated at 1% of the total
amount of
remuneration paid by an employer to its employees. In terms the
Sector Education and Training Authority’s (‘SETA’)

Grant Regulations Regarding Monies Received by a SETA and Related
Matters (published in Government Gazette R713 of 18 July 2005
and
amended by Government Notice R88 of 2 February 2007 (‘the 2005
Grant Regulations)), an employer who paid the skills development
levy
could claim 50% of these levies back in the form of a mandatory
grant, if it complied with the eligibility criteria as set
out
therein. These grant regulations were repealed by the 2012 Grant
Regulations, which were promulgated in Government Notice R990
of
December 2012.
[4]
For the purposes of this judgment, there
were two fundamental changes. In the first place, Regulation 4 (4)
reduced the mandatory
grant that an employer could claim back from
50% to 20% of the total levies paid by the employer. In addition, the
2012 Grant Regulations
introduced Regulation 3 (12), in terms of
which, a “sweeping mechanism” was introduced which
effectively provided that
at the end of a financial year, it was
expected that a SETA must have spent or committed to spend at least
95% of the discretionary
funds available to it by 31 March of each
year. A maximum of 5% of uncommitted funds could be carried over to
the next financial
year. In terms of Regulation 3 (12), the remaining
surplus of discretionary funds had to be paid back by the SETA as of
1 October
of each year into the National Skills Fund.
[5]
Both of these regulations were the
subject of litigation which was heard by Coetzee AJ in the Labour
Court on 24 June 2015. The
appellants (who were the applicants in
that case) applied to review and set aside the 2012 Grant Regulations
insofar as Regulations
3 (12) and 4 (4) were concerned. Coetzee AJ
upheld their application on two grounds being, that the Minister had
failed to consult
the National Skills Authority on the content of
these Regulations and, particularly on the two regulations regulating
the mandatory
grant and the sweeping mechanism. In addition, Coetzee
AJ found that the reduction of the mandatory grant was irrational “in

relation to the stated purpose for the reduction” and further,
that the sweeping mechanism was
ultra
vires
the relevant provisions SDA.
[6]
The Minister appealed the order of the
Labour Court but only against the setting aside of Regulation 3 (12).
In the interim, that
is on 13 January 2016, the Minister published
Government Notice 239592 in which, after consultation with the Skills
Development
Authority, he re-promulgated Regulation 4 (4). Hence the
appeal against the order of Coetzee AJ did not require this Court to
deal
with the rationality or reasonableness of Regulation 4 (4) but
only with Regulation 3 (12).  This Court dismissed the
Minister’s
appeal.
[7]
In essence, the appellant now contends
that the judgment of Coetzee AJ was binding insofar as the status of
Regulation 4 (4) is
concerned. This part of the order had not been
overturned on appeal; indeed, an appeal was not lodged by the
Minister and hence,
in the view of appellant, this precluded the
Minister from re-promulgating Regulation 4 (4) in exactly the same
terms which the
Labour Court had held to be legally wanting.
Issue
Estoppel
[8]
The case on appeal raised two legal
bases for a decision in favour of appellant, being issue estoppel and
the principle of legality.
The case presented by appellant did raise
the argument of issue estoppel although not in these precise terms
nor in any major detail
in the written argument received by this
Court. Issue estoppel has been described in
Boshoff
v Union Government
1932 TPD 345
at
350 as follows:
‘
Where
the decision set up as
res
iudicata
necessarily involves a judicial determination of some question of law
of issue of fact, in the sense that the decision could not
have been
legitimately or rationally pronounced by the tribunal without at the
same time, and in the same breath, so to speak,
determining that
question or issue in a particular way, such determination, though not
declared on the face of the recorded decision,
is deemed to
constitute an integral part of it as effectively as if it had been
made so in express terms; but, beyond these limits,
there can be no
such thing as a
res
iudicata
by implication.  ‘
[1]
[9]
Whatever the debate about whether the
court in
Boshoff
developed
our law of issue estoppel along the lines of English law, it is clear
that the enquiry which a court must now undertake,
if the question of
issue estoppel arises, is to determine that the parties are the same
and whether the same issue has arisen again.
See
KBI
v Absa Bank Bpk
1995 (1) SA 653
(A).
To determine the application of the doctrine in this case, the only
question is whether the dispute is
res
judicata;
that is the same disputed
issue has already been decided in the judgment of Coetzee AJ and
between the same parties.
[10]
A
two-stage enquiry is thus mandated: firstly a court is required to
determine what was finally decided by the court whose decision
is
said to have created the bar and, secondly, to examine the essential
findings of this judgment and to decide whether any of
this findings
is also an essential element of the impugned claim or defence.
[2]
[11]
The argument developed by Mr Oosthuizen,
who appeared together with Mr Pio on behalf of respondents, was that,
even though Regulation
4 (4), as promulgated in 2016 was the same as
that which had been set aside by Coetzee AJ, the justification for
the re-promulgation
had changed, in that the context in which the
Minister had made the decision had altered. Accordingly, the doctrine
of issue estoppel
was not applicable to the present dispute.
[12]
Given the view that I adopt to this
dispute, it is unnecessary to decide whether issue estoppel should be
applied. My reason is
that the principle of legality must apply to
the facts as I have outlined them as well to the arguments which were
raised by respondents
in defence of the judgment of the court
a
quo
.
Legality
[13]
In the written arguments presented by
both of the parties, there was a debate as to whether the provisions
of PAJA applied to this
case. For the reason that, in view of the
court
a quo,
the promulgation of regulations constitutes administrative action as
defined in PAJA. In
Mostert v
Registrar of Pension Funds
2018 (2)
SA 53
(SCA) at para 8, the Supreme Court of Appeal offered a word of
caution as to whether the Constitutional Court decision in
Minister
of Health and another NA v New Clicks South Africa (Pty) Ltd and
others
2006 (2) SA 311
(CC)
constituted clear authority for the proposition that the making of
regulations by a Minister is administrative action for
the purposes
of PAJA.
[14]
Mercifully, there is no need in this
case to resolve this question to determine where or the balance of
authority as divined from
the various judgments in the
New
Clicks
decisions
at the Constitutional Court, may lie. The Constitutional Court in a
Minister of Defence v Motau and
others
2014 (5) SA 69
(CC),
unfortunately only in footnote (28), did state that the correct order
of inquiry is to determine first whether PAJA applies
and then, only
if it does not, the Court said that what is demanded in the
application of the general constitutional principle
of legality which
flows from the principle of the rule of law.  In this case, the
uncertainty regarding the application of
PAJA and the clear linkage
between the rule of law and the nature of the facts in the present
dispute dictates that the enquiry
can be conducted on the basis of
legality.
[15]
It was agreed by the parties and,
correctly so, that the promulgation of regulations is an exercise of
public power which cannot
be conducted in an arbitrary or rational
fashion. As Chaskalson P said in
President
of the Republic of South Africa v South African Rugby Football Union
2000 (1) SA 1
(CC) at para 148:
‘
It
is a requirement of the rule of law that the exercise of public power
by the Executive and other functionaries should not be
arbitrary.
Decisions must be rationally related to the purpose for which the
power was given, otherwise they are in effect
arbitrary and
inconsistent with this requirement.  It follows that in order to
pass constitutional scrutiny the exercise of
public power by the
Executive and other functionaries must, at least, comply with this
requirement.  If it does not, it falls
short of the standards
demanded by our Constitution for such action.’
[16]
The crisp question therefore for
determination in the present case is whether the re-promulgation of
the Regulation 4 (4) constitutes
irrational or arbitrary action or
whether the Minister has, in his papers in this case presented
sufficient argument to show that
there was a different context which
prompted him re-promulgate the regulations and hence that he was
justified in his apparent
circumvention of the order of Coetzee AJ.
[17]
In this connection, the enquiry must now
turn to an examination of the answering affidavit of the Minister in
which he was required
to motivate the basis upon which the
promulgation of the same Regulation 4 (4) was rational,
notwithstanding the earlier judgment.
In his affidavit, the Minister
referred to a process of consultation which took place with the
National Skills Authority on 11
September 2015 and which consultation
was designed to deal with the judgment of Coetzee AJ.
[18]
The Minister then summarised the
contents of a series of slides which were prepared for a presentation
of 11 September 2015 and
which was made by one “Boshoff and
Erra at Zimbali KwaZulu Natal”. These slides appear in the
record as they form part
of the Rule 53 record of decision which
appears to have been made available to appellant. Thereafter, the
Minister’s affidavit
sets out the contents of a special board
meeting of the National Skills Authority of 2 October 2015 and a
further meeting of the
same authority on 3 November 2015 at which it
appeared that the authority supported the Minister with regard to the
re-promulgated
Regulation 4 (4).
[19]
The affidavit then poses the question
“how the issues in the judgment were addresses”.  To
this Minister provides
the following answer:
‘
In
terms of the process I have quoted except of the record where 2/3
majority of member of the NSA supported the re-promulgation
of
Regulation 4 (4).  I have referred to all the relevant
paragraphs and sub-paragraphs as well as minutes and memorandum
which
were directed to myself by both the Chairperson of the NSA and
Director-General as well as various minutes of the NSA where
such a
decision was taken.  I refer in this regard to what I have said
in the preceding paragraphs when delaying with the
record
.’
[20]
The only other attempt in his affidavit
in which he seeks to answer the question which he posed appears in
the following paragraph:
‘
It
is my contention that NSA through this document has supported the
process of re-promulgating the Regulation 4 (4) and justification
and
the rationale for doing so in this document.  This document
despite attempts by the applicant to canvass a contrary view
speaks
for itself and should be considered by the court as the basis for the
re-promulgation.  As I have indicated it addresses
the two
issues that the court was concerned with during the judgment of
August 2015.   The two issues were the process
that was
followed in the promulgation of the 2012 Grant Regulations and
whether the Regulations were reasonable and rational.
I have in
this regard addressed these issues by referring the Honourable Court
to the document appearing at pages 33 to 53 of the
filed record
.’
(
That is the slides from the
presentation of 11 September 2015
)
[21]
There is, in short, no clear explanation
from the Minister as to what he, as the decision-maker who
promulgated Regulation 4 (4)
considered had changed in the context
giving rise to the decision to promulgate the same regulation and
hence a fresh justification
for promulgating exactly the same
regulation, notwithstanding that it had been held to be unlawful by a
court, which judgment had
never been appealed. As Joffe J said in
Swissborough Diamond Mines v
Government of the RSA
1999 (2) SA
279
(t) at 324 F – G:
‘
Regard
being had to the function of affidavits, it is not open to an
applicant or a respondent to merely annexe to its affidavit

documentation and to request the Court to have regard to it.
What is required is the identification of the portions thereof
on
which reliance is placed and an indication of the case which is
sought to be made out on the strength thereof.  If this
were not
so the essence of our established practice would be destroyed.
A party would not know what case must be met
.’
[22]
Unlike in
Executive
Officer, Financial Services Board v Dynamic Wealth Limited
2012 (1) SA 453
(SCA) at 462, this was not a case where the slides,
to which I have made reference, had to be considered as evidence. The
issue
before this Court is whether the Minister as the decision-maker
provided an explanation in his answering affidavit as to his reasons

for why the very same regulation had been promulgated in the face of
a previous declaration of invalidity. The very least that
could have
been expected from the Minister was a clear statement in his
answering affidavit as to why the context, which would
justify the
re-promulgation of Regulation 4 (4) had changed sufficiently to
render his decision justifiable in the circumstances.
The Minister
simply repeated aspects from the slides taken from the presentation
by Boshoff and Erra, without either comment or
any basis as to how he
had applied his mind to the contents thereof. In other words, the
affidavit merely summarises the contents
of slides of a third party
which appear earlier in the record.
[23]
It is therefore not possible for this
Court to divine the reasons which motivated the Minister, as a
decision-maker, to re-promulgate
Regulations 4 (4) nor is it possible
to assess and interrogate in any meaningful way the cogency of any
justification that could
have been offered for his decision, and
which the Minister, as the basis of clear rules of procedure was
obliged to set out in
this answering affidavit.
[24]
The principle of legality stems from the
overarching principle of the rule of law.  Absent any cogent
justification, a decision
to eschew an appeal against a judgment of a
court and then, shortly thereafter, to reproduce the very same
decision which has already
been held to be unlawful, is an action
which is manifestly at war with the rule of law.  In this case
no clear justification
was offered for the decision by the Minister
which, absent an explanation in his answering affidavit, flew in the
face of a court
order.  Regrettably no such justification was
set out in clear terms in the answering affidavit deposed to by the
Minister.
For this reason, the only conclusion to which this
Court can arrive, is that the decision to re-promulgate Regulation 4
(4) was
irrational and lacking in any legal justification.
[25]
For these reasons, the following order
is made:
1.
The appeal is upheld with costs,
including the costs of two counsel.
2.
The order of the Labour Court of 31
August 2018 is set aside and replaced with the following:
2.1
Regulation 4 (4) as promulgated in Government Notice 23 of 2016,
published in Government Gazette 39592 in terms of
s 36
of the
Skills
Development Act 97 of 1998
is hereby set aside.
2.2
The first respondent is ordered to pay the costs of this application,
including the costs of two counsel.
_____________
Davis
JA
Coppin
JA and Murphy AJA concur.
APPEARANCES:
FOR
THE APPELLANT:
Adv A Myburgh SC and Adv
M Seape
Instructed by Bowman
Gilfillan Attorneys
FOR
THE RESPONDENTS:         Adv
MM Oosthuizen SC and Adv P C Pio
Instructed by the State
Attorneys
[1]
This
is a passage from Spencer Bower
Res
Judicata
cited with approval by Greenberg J (as he then was)
[2]
See
LAWSA Estoppel Volume 18 para 76.