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[2011] ZALCJHB 36
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Services Sector Education and Training Authority and Others v Minister of Higher Education and Training and Others (J677/2011) [2011] ZALCJHB 36; (2011) 32 ILJ 2251 (LC) (6 May 2011)
IN THE LABOUR COURT OF
SOUTH AFRICA
HELD IN JOHANNESBURG
Reportable
Case No: J677/2011
In the matter between:
Services Sector
Education and
Training Authority
….............................................
1
st
Applicant
IVOR
BLUMENTHAL
….......................................................................
2
nd
Applicant
UASA THE UNION
(“UASA”)
…...................................................
3
rd
Applicant
FEDERATION OF UNIONS
OF SOUTH AFRICA
(“FEDUSA”)
…............................................
4
th
Applicant
CONFEDERATION OF
ASSOCIATIONS
IN THE PRIVATE
EMPLOYMENT
SECTOR (“CAPES”)
….................................................................
5
th
Applicant
ASSOCIATION OF
PERSONNEL
SERVICE ORGANISATIONS
OF
SOUTH AFRICA (“APSO”)
….......................................................
6
th
Applicant
BEVERLEY ANNE JACK
…..........................................................
7
th
Applicant
LEON GROBLER
…......................................................................
8
th
Applicant
CLIVE EDWARD WICKS
…..........................................................
9
th
Applicant
SHADRACK MOTLUONG
…......................................................
10
th
Applicant
FEROZA FAKIR
…......................................................................
11
th
Applicant
And
THE MINISTER OF HIGHER
EDUCATION
AND TRAINING
…....................................................................
1
st
Respondent
ACTING DIRECTOR
HIGHER EDUCATION AND
TRAINING
…..............................
2
nd
Respondent
SIHLE MOON
….......................................................................
3
rd
Respondent
SHAKEEL ORI
…......................................................................
4
th
Respondent
NOLWANDE MANTASHE
…....................................................
5
th
Respondent
MZWAMADODA WISEMAN
DINWA
…...................................
6
th
Respondent
ASHLEIGH CLAIRE VAN
GREUNEN
…..................................
7
th
Respondent
KIM VELTMAN
….....................................................................
8
th
Respondent
PATRICK MAHUBELA
….........................................................
9
th
Respondent
PAM SNYMAN
…....................................................................
10
th
Respondent
ADENE PRINGLE
…...............................................................
11
th
Respondent
JOYCE MHLONGO
…............................................................
12
th
Respondent
JOYCE DIMAKATSO SEEMA
…............................................
13
th
Respondent
JUDGMENT
GUSH J.
This is an urgent
application brought by the applicants’ for the following
relief:
Permitting this
application to be heard as a matter of urgency and dispensing with
the ordinary period and notice requirements
of the rules;
reviewing and setting
aside the purported appointment by the first and second respondents
of the third respondent as the administrator
for the Services Sector
Education and Training Authority (“Services SETA”);
Reviewing and setting
aside the first respondent’s decision to direct the second
respondent - and of the second respondent
to act in terms of such
direction - to issue Government Notice 372 in Government Gazette
34245 of 21 April 2011, and setting
aside that notice as invalid.
Reviewing and setting
aside the second respondent order purporting to direct the transfer
of all funds in the Service’s
SETA”s bank account to the
National Skills Fund.
Directing the first
and second respondents to take all necessary measures immediately to
ensure the retransfer all funds which
had been transferred from the
Services SETA’s bank account to the National skills fund,
pursuant to the said Gazette Notice,
back into the Services SETA's
bank account.
Declaring that the
administration and control of the affairs of Services SETA and its
assets, personnel and operations, lawfully
vest not in the third
respondent (purportedly as administrator) but in the Council of the
Services SETA as elected by members
of the Services SETA on 12 April
2011, under the chairpersonship of the seventh applicant and the
vice chairpersonship of the
eighth applicant (subject to the
Judgment and Order of this Honourable Court in case number
J604/2011
)
Ordering those of the
respondents as may oppose this application, to pay the costs of this
application, jointly and severally,
the one paying the other to be
absolved.
Granting the
applicants further or alternative relief”
The application was
opposed by the first second and third applicants.
The parties agreed that
the matter was urgent and I agree.
The parties to the
application are as follows:
Applicants:
the
first applicant is a duly established sector education and training
authority in accordance with the provisions of section
9 of the
Skills Development Act
1
(the
Act);
the second applicant is
employed by the first applicant as its chief executive officer;
the third applicant is a
registered trade union and one of the employee representative
members of the first applicant
the fourth applicants is
a union federation to which various registered unions are affiliated
including the third applicant and
is a member of NEDLAC and holds a
seat on the National Skills Authority;
the fifth applicant is a
representative body of employers engaging industries covered by the
first applicant and is a member of
business Unity South Africa which
sits on NEDLAC and has a seat on the National Skills Authority;
the sixth applicant is
an association representing personnel service organisations and is a
member of the first applicant and
the fifth applicant and holds a
seat on the National Skills Authority
the seventh applicant is
a member of the executive committee and management committee of the
fifth applicant and is a member of
the first applicant's council and
chairperson thereof;
the eighth applicant is
the chief operating officer of the third applicant and a member and
vice chairperson of the first applicant's
council;
the ninth applicant is
the chief executive officer of the Contractors Plant Hire
Association and is a member of the first applicant's
council;
the tenth applicant is
an official of the third applicant and a representative of organised
labour and a member of the first applicant's
council;
the 11th applicant is
the president of the beauty health and skincare employers
Association and is a representative of organised
business and a
member of the first applicant's council.
Respondents who oppose
the application are:
the first respondent is
the Minister as defined in the Act viz. the Minister of Higher
Education and Training;
the second respondent is
the Acting Director-General in the Department of Higher Education
and Training as defined in the Act
and referred to in section 15 of
the Act;
the third respondent is
the person appointed as administrator of the first applicant by the
second respondent as directed by the
first respondent.
The remainder of the
respondents are variously members elected to the council of the
first respondent or appointed by the Minister
to a council the
details of which are dealt with below.
On 20 April 2011 the
second respondent, having been so directed by the first respondent,
caused a notice to be published in the
government Gazette of the 21
April 2011 suspending the accounting authority of the first
applicant, directing that the funds
in the first applicant's bank
account be transferred to the National which Skills and Fund and
appointing the third respondent
as an administrator with powers and
duties which are set out in a schedule to the notice.
In suspending the
accounting authority of the first applicant and in appointing the
third respondent the second respondent recorded
in the notice that
he was so acting by virtue of the powers vested in him by section
15(2) of the Act and as directed by the
first respondent in terms of
section 15(1) and section 15(4) of the Act.
The first applicant’s
Accounting Authority is its council.
The relevant sections of
the act read as follows:
Section 15
the Minister may,
after consultation with the National Skills and Authority and the
SETA in question, direct the Director –
and General to appoint
an administrator to take over the administration of a SETA or to
perform the functions of a SETA if –
the SETA fails to
perform its functions;
there is
mismanagement of its finances is;
…
;
the SETA has failed
to comply with the service level agreement; or
the SETA has failed
to comply with an instruction issued by the Minister in terms of
section 14 A.
The Director-General
must publish a notice in the Gazette appointing an administrator and
in that notice the director-general
–
must determine the
powers and duties of the administrator, which may include a
performance by the administrator of the SETA's
functions in terms
of the Public Finance Management Act;
may suspend or
replace one or more of the members of the seta for a reason
contemplated in subsection (1) (a) to (e);
…
; and
may direct the
transfer of all or some of the funds in the SETA’s bank
account to the National Skills Fund
…
The Minister may act
in terms of subsection (1) without consulting the National Skills
authority and the SETA in question if there
is financial
mismanagement of the SETA
and
the delay caused by the
consultation would be detrimental to the SETA's capacity to perform
its functions.(my emphasis)
In essence the
applicants’ application is founded on the averment that the
first respondent did not comply with the provisions
of section 14A
or 15 of the act in that not only was there no financial
mismanagement of the first applicant but that the first
respondent
had not consulted as is required by the Act. The applicants averred
that accordingly the directive issued by the Minister
(first
respondent) to and the action taken by the Acting Director-General
(second respondent) in accordance therewith should
be reviewed and
set aside.
Specifically,
in argument, Mr. Kennedy, on behalf of the applicants, submitted
that in order to comply with section 15 of the
Act, the first
respondent was obliged, before issuing the directive to the second
respondent to appoint an administrator to take
over the
administration of the SETA, by virtue of the provisions of that
subsection to first consult with the National Skills
authority and
the SETA in question. If however, as is the case in this matter, the
first respondent wished to act in terms of
subsection (1) without
consulting the National Skills Authority or the SETA as envisaged by
section 15(4), he could only do so
if in addition to “
financial
mismanagement of the SETA” “the delay caused by the
consultation would be detrimental to the SETA's capacity
to perform
its functions
”
2
It was common cause that
the first respondent had not consulted with either the National
Skills Authority or the SETA in question.
The notice the second
respondent published in the Government Gazette expressly refers to
section 15(4) as the authority the first
respondent relied on in
issuing the directive.
As far as the second
respondent's authority to suspend the accounting authority of the
first applicant and direct the immediate
transfer of all the funds
in the the first applicant's bank account to the National Skills
Fund this authority is naturally dependent
upon the validity of
directive issued by the first respondent.
In
the answering affidavit filed on behalf of the first second and
third respondents the deponent sets out the reasons why the
first
respondent directed the second respondent to appoint an
administrator in terms of section 15(1)
3
.
These reasons are:
financial
mismanagement;
“
There had to
be someone who runs the affairs and functioning of the
[first applicant]
authoritatively
;
“
There has to
be someone running the [first applicant] authoritatively from the
date of judgment and to the date of judgment
in any field that may
be instituted by any of the parties
”
“
In the event
that the court in the first application holds that neither
accounting authority was properly or legally appointed,
it is
required that an Administrator authoritatively run the affairs and
functioning of the
[first
applicant]
until
the
[first
respondent]
has
concluded the processes of appointing a new Accounting Authority.
Whilst it is clear from
the respondents’ answering affidavit that the first respondent
relied on financial mismanagement
of the first applicant it could
only have been mismanagement of which the first respondent was aware
at the time he issued his
directive to the second respondent. The
second respondent issued the notice of appointment of the
administrator on the 20 April
2011 which was published on 21 April
2011 at a time when he had some time earlier appointed the third
respondent as the chairperson
of the first applicant’s council
and had in fact appointed a new council.
The respondent avers
that the financial mismanagement was based payments being made by
what it refers to as the “
renegade council
”.
The payments referred to
are listed in an annexure to the answering affidavit and conspicuous
by its absence is any reference
to any specific complaint relating
to any payment. A perusal of these payments reveals that they are
all payments which would
be reasonably be made by the first
applicant in the normal course of events.
The respondents raise
two specific instances of payments which they allege are irregular.
The first relates to payments made to
the applicants’
attorneys. The allegation made regarding the irregularity of these
payments is not supported by any documentation
or affidavit and in
any event the allegation is adequately answered by the applicants.
The applicants in their replying affidavit
point out that the
attorneys in question have acted for some time for the first
applicant, were appointed in accordance with
the first applicants
procurement policies and explain the how and the reason why the
payments were made.
The second instance
refers to payments made to a security company appointed to protect
employees of the first applicant in circumstances
where the third
respondent and persons engaged or appointed by him have assaulted
and threatened these employees. As with the
allegation regarding the
payments made to the attorneys this allegation too is
unsubstantiated and the applicants’ have
provided an adequate
explanation for the payments made.
In the circumstances I
am not persuaded that the there was any financial mismanagement
which justified the first respondent invoking
the provisions of
section 15(4) of the Act.
Even had I found that
there was financial mismanagement the first respondent would have
been obliged to establish that to consult
as require by section
15(1) would have resulted in a delay which in turn would be
detrimental to the first applicant’s
capacity to perform its
functions.
I wish therefore to deal
briefly with the averments made by the respondents which I have
referred to in paras 13(ii) (iii) and
(iv) above. The respondents do
not in any suggest that it was for these reasons that the first
respondent did not consult as
the delay the consultations would
caused would have been detrimental to the SETA’s capacity to
perform its functions. The
only suggestion made is that the first
applicant required “
someone running
[it]
authoritatively”
generally and specifically “
from
the date of judgment”.
There is no mention of any delay or
for that matter any detrimental consequences that would result from
consulting with the parties
referred to in section 15(1).
As far as the reference
to the judgment is concerned, in a related matter under case number
J604/2011
the same applicants as in this matter approached
this court as a matter of urgency to inter alia review and set aside
the first
respondents appointment of the third respondent as
chairperson of the first applicant’s council; reviewing and
setting
aside the appointment by the first respondent of the new
council and the imposition of a new constitution declaring the first
applicant's elected council to be validly constituted and
interdicting the second and further respondents from interfering
with
the functions of the applicant.
This application was
considered by the Honourable Judge Basson on 20 April 2011 who
reserved her judgment. This was same day that
the second respondent
issued the notice appointing the administrator
suspending the first
applicant’s accounting authority and directing the transfer of
all the first funds in to the National
Skills Fund.
In so far as the first
respondent wished to rely on the possible outcome of Basson J’s
reserved judgment and his fears of
a finding that “
neither
accounting authority was properly or legally appointed
”
these fears were proved groundless.
On the 3
May
2011 the day before this application was heard Basson J handed down
her judgment granting the applicants’ application
inter alia
declaring the “
renegade council
” to be the
legitimate council.
At the conclusion of the
hearing of the matter I invited both counsel to file supplementary
heads of argument should they so wish.
The respondents’
have filed supplementary heads. In the heads the respondents’
counsel argue that as the appointment
of the administrator was made
before the judgment of Basson J was handed down the first respondent
was only suspending the accounting
authority (council) he had
appointed himself. In the circumstances as this council was found
not to have been validly appointed
the reason for the application
had fallen away and that it should be dismissed with costs.
This suggestion clearly
has no merit.
The applicants pointed
out in their papers that the funds had not at the time of hearing
been transferred but the account had
been frozen. The applicants
asked that the relief they sought in this regard be amended to
accommodate the circumstances.
As far as costs are
concerned both parties argued that costs should follow the result
and I see no reason why this should apply.
In the circumstances I
make the following order.
The order is granted in
terms of paragraphs 1, 2 and 3 of the notice of motion;
In the event that the
funds in the first applicant’s bank account have been
transferred to the National Skills Fund I
grant prayers 4 and 5;
In the event that first
applicant’s bank account has been frozen I order in so far as
it is necessary that the bank account
be unfrozen;
The first and second
respondents are to pay the costs of this application the one to pay
the other to be absolved.
_______________
GUSH
J
Date of Hearing : 4 May
2011
Date of Judgment : 6 May
2011
Appearances
For the Applicant : Adv P
Kennedy SC
Instructed by : Edward
Nathan Sonnenbergs Inc
For the Respondent: Adv G
Malindi SC with him Adv M Zulu.
Instructed by : The State
Attorney
1
Act
97 of 1998
2
Section
15(4) of the Act
3
Answering
affidavit para 18