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[2020] ZALCJHB 52
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Construction Education and Training Authority (CETA) and Another v Minister of Higher Education, Science and Technology and Others (J113/20) [2020] ZALCJHB 52 (25 February 2020)
THE
LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
case
no:
J
113/20
In
the matter between:
CONSTRUCTION EDUCATION
AND
TRAINING
AUTHORITY (CETA) First
Applicant
WEBSTER
MFEBE N.
O Second
Applicant
and
MINISTER OF HIGHER
EDUCATION, SCIENCE AND
TECHNOLOGY First
Respondent
DIRECTOR
GENERAL, HIGHER EDUCATION AND
TRAINING Second
Respondent
NATIONAL
SKILLS AUTHORITY Third
Respondent
SABELO
WASA Fourth
Respondent
Heard
:
20
February 2020
Delivered
:
25 February 2020
Summary:
Legality review – urgently enrolled by a court order.
Quare
:
has the requirements of section 15 (4) of the Skills Development Act
No. 97 of 1998 (SDA) been complied with in order to legalise
the
actions of the Minister in appointing an administrator to take over
the functions of the CETA or not? Consultation with the
relevant
bodies is of paramount importance before the power to appoint an
administrator is exercised. Should the functionary avoid
this
paramount duty, detriment to the capacity to perform the functions
ought to be demonstrated. Held: (1) The decision taken
by the
Minister on 29 January 2020 is hereby reviewed and set aside. (2) The
appointment of Sabelo Wasa (fourth respondent) is
hereby reviewed and
set aside. (3) It is declared that the suspension of the Accounting
Authority (AA) is of no legal force and
effect and thus uplifted with
immediate effect, entitling the members of the AA to continue with
their statutory functions. (4)
The Minister to pay the costs of this
application.
JUDGMENT
MOSHOANA,
J
Introduction
[1]
The application before me is effectively a legality review. The
single
issue to be determined by this Court was succinctly spelled
out in the supplementary founding affidavit deposed to by the second
applicant before me. In simple terms, the issue is whether the first
respondent, the Minister of Higher Education, Science and
Technology
(the Minister) acted within the confines of the law or not. If the
Minister did, that is the end of the matter for the
applicants.
Equally, if the Minister did not, then his decision is bound to be
set aside purely on application of the principle
of legality and
rationality.
Background
facts
[2]
Briefly, the facts pertinent to this single
legal issue are that on 14 December 2019, the Minister addressed
correspondence to the
Construction, Education and Training Authority
(CETA) through its Chairperson, Mr Raymond Cele (Cele). In the
correspondence, the
Minister tabulated a catalogue of allegations,
which allegedly demonstrated lack of governance at the CETA. Having
done that in
conclusion the Minister stated the following:
“
Therefore,
to mitigate against exacerbating the risk of
further
contravention which will result to a total collapse of the CETA
operations,
I am considering to apply
section 15 (4) of the Act
, as a matter
of urgency. But
before I can make a
decision, the Accounting Authority is directed to respond and advise
me, why I should not impose section 15
(4) of the Act to the CETA.”
[3]
On 10 January 2020, Cele provided a lengthy
and detailed response or advice, as requested by the Minister. In the
response, gross
financial mismanagement was accepted to be factually
present. On 29 January 2020, the Minister communicated a decision to
the following
effect
: “I have
taken a decision to put the CETA under administration in terms of
section 15 (4) of the Act
so that
an independent investigation can be conducted
.”
[4]
It baffles this Court as to why did the
Minister not seek a similar advice from the National Skills Authority
(NSA). Aggrieved by
the decision set out above the applicants, on 6
February 2020, approached this Court for an urgent relief. The urgent
relief was
dismissed by my brother Van Niekerk J. In the interim, the
decision was gazetted; the fourth respondent was appointed and the
Accounting
Authority was stripped of powers to take financial
decisions during the reign of the fourth respondent. On 7 February
2020, this
Court made an order firstly dismissing the urgent relief
and secondly directed the Registrar to have this review enrolled
within
a stated expedited period. Indeed, the Registrar enrolled this
application on 20 February 2020 as directed by the Court. In the
interim, owing to the developments that occurred (gazette being
issued; appointment of the administrator and stripping of financial
powers), the applicants amended the notice of motion in order to seek
a relief in line with those developments. It does appear
that the
parties quibbled over the issue of hearing the matter within 14 days.
Such a quibble culminated in an application seeking
to vary the court
order. This Court dismissed the said application.
[5]
A
point of
locus
standi
was also raised and dismissed by this Court. After hearing
submissions from both parties, it emerged that the issue that there
was financial mismanagement became common cause. The issue that
remained for determination is the other jurisdictional leg of the
powers emanating from
section 15
(4) of the
Skills Development Act
="_ftnref1">[1]
(SDA) – “
and
the delay caused by the consultation would be detrimental to the
SETA’s capacity to perform its functions.”
[6]
In this judgment, attention would be
directed to this sole jurisdictional leg.
Evaluation
[7]
It is common cause before me that the
Minister did not consult with the CETA and the NSA before directing
the Director General to
appoint the fourth respondent to take over
the administration of the CETA. During argument, an attempt was made
by Mr Motau SC,
appearing for the Minister, to suggest that
consultation as statutorily required happened. In that argument, he
was referring to
the Minister’s correspondence to Cele and the
response thereto. I must point out, the consultation contemplated in
section 15
(1) is of paramount importance. It ought to happen before
the statutory powers (directing the Director General to appoint an
administrator
to take over the administration of a CETA or to perform
the functions of a CETA) are exercised.
[8]
However, the alleged consultation punted
for by the Minister’s counsel was one aimed at giving the CETA
audi alteram partem
before exercising the extreme powers set out in
section 15
(4) of the
SDA. Such is not the consultation contemplated in
section 15
(1) of
the SDA. In any event, the Minister made it very clear in that
correspondence that he does not intend to follow
section 15
(1) but
to follow
section 15
(4) which permits the Minister to dispense with
the statutory consultation requirement. In my view, a submission that
there was
consultation at least with the one body contemplated in
section 15
(1) – which is not compliant in any event – is
contradictory and actually unhelpful but damaging to the Minister’s
case.
[9]
I now turn to the jurisdictional leg
relevant in this judgment. Before I consider the Minister’s
case in this regard, I have
the following to say. In my view, the
usage of the phrase “
would be
detrimental
” in the section
suggests that the bar or threshold is set high. The Minister is
behooved to demonstrate a detriment as a
matter of fact and not
speculation that would arise. The dictionary meaning of the word
detrimental means injurious; hurtful or
causing damage; harm;
diminution or loss. Thus, the Minister, in my view, is exalted to
show the injury or loss that would occur
if the consultation process,
as required, is undertaken.
Put it differently, the Minister
must provide reasons why the important process of consultation should
be discounted.
[10]
During
argument, Mr Motau SC, directed the attention of this Court to the
evidence laid out in paragraphs 14 – 31 of the answering
affidavit deposed in opposition to the dismissed urgent relief.
Having had regard to the evidence, the Minister does not tell this
Court why before 29 January 2020, consultation would have been
detrimental to the CETA’s capacity to perform its functions
[2]
.
All this Court is told is the history of the corporate governance and
the lack thereof since 2017. The issue is not about the
corporate
governance or lack thereof, the issue is, if the Minister complies
with the statutory consultation process, there would
be injury caused
to the capacity to perform the statutory functions directly by
consulting. There is no evidence to support this
possibility. It is
not enough for the Minister to baldy say, as he did in his letter of
14 December 2019 that the further contravention
will result in a
total collapse of the CETA.
[11]
This statement is not substantiated and/or predicated on
anything substantial. As pointed out earlier, the alleged
consultation
was damaging to the Minister’s case, the
consultation contemplated in the section is not one that is elaborate
nor extensive.
In a consultation process, there is no need to achieve
an agreement. That being the case, as at 14 December 2019, the
circumstances
that would have ignited the need to statutorily consult
had already manifested themselves. The question is why did the
Minister
not simply consult the CETA and the NSA at that time? The
Minister was capable of doing so, hence the misguided consultation
process
allegedly undertaken by the Minister. The Minister was in a
position to wait for a period of a month and couple of weeks before
taking the impugned decision. This Court is not told whether during
that waiting period the injury would have or had happened and
if it
did not what prevented it to happen.
[12]
There
is no
iota
of explanation why counsel of NSA was not sought in December 2014.
The Minister cannot rush to the draconian powers – to
avoid
consultation – when an opportunity to consult had presented
itself but spurned. Clearly, given the draconian effect
of the powers
in
section 15
(4) of the SDA, the legislature must have intended
sparing usage. It does not make sense for a Minister to announce a
month and
couple of weeks that he shall be using what I choose to
term exigency powers. In that period, certainly, a statutory
consultation
could have happened with ease. It is a trite principle
of administrative law that where consultation is statutorily
required, it
must be done at a formative stage. In
R
v North and East Devon Health Authority; Ex Parte Coughlan
[3]
,
the following was said:
“
It is common
ground that, whether or not consultation of interested parties and
the public is a legal requirement, if it is embarked
upon
it must
be carried out properly
. To be proper, consultation
must be
undertaken at a time when proposals are still at a formative stage
;
it must include sufficient reasons for particular proposal to allow
those consulted to give intelligent consideration and an intelligent
response; adequate time must be given for this purpose; and the
product of consultation must be conscientiously taken into account
when the ultimate decision is taken”
[13]
In further support of the alleged imminent danger that would
have manifested had the consultation happened as statutorily
required,
this Court was referred to further evidence tendered by the
Minister in part B of the answering affidavit. Under the heading
“
Delay
” the Minister told this Court the
following:
“
Once
it is established that there is financial mismanagement, the
principles outlined in section 195 of the Constitution are being
undermined: CETA is not efficiently, economically and effectively
using its resources; there is lapse of accountability and
in
the present circumstances, a serious failure of human resources
practices.
I
was
therefore, compelled by section 237 of the Constitution to act in
terms of section 15 (4) of the SDA without further delay”
[14]
What
the Minister is effectively telling this Court is that due to a
serious failure of human resources practices, he was exalted
by
section 237 to avoid the consultation requirement. I may point out
upfront that reference to section 195 is wholly misguided.
The
Constitutional Court has already decreed that the section only
assists in interpretation and its provisions must be understood
from
the context of section 23 (1) of the Constitution
[4]
.
[15]
Section 237 of the Constitution provides that all
constitutional obligations must be performed diligently and without
delay. The
provisions of this section does not apply. On pure
application of the principle of subsidiarity, the legal duty
implicated in this
matter arises from a statute and not from the
Constitution. Far from it, it is not a constitutional obligation. A
constitutional
obligation is one that stems from the provisions of
the Constitution. The duty to consult does not stem from the
Constitution but
from the provisions of section 15 of the SDA. Aptly
named, it is a statutory power, popularly known as an exercise of
public power.
[16]
In my view, the Minister dismally failed to demonstrate that
the CETA would have been lacking in capacity to perform its statutory
functions, had consultation, as statutorily commanded, preceded the
decision. Therefore, the jurisdictional fact to exercise the
statutory power is lacking.
[17]
The law requires functionaries to exercise powers that they
have. If a functionary exercises the powers that it does not in law
have, a Court is empowered to set aside such a purported exercise of
statutory power on application of the principle of legality.
The
other element of legality is rationality. It simply denotes that the
power must be exercised for the purpose that the power
was given. It
is clear that the sole purpose to appoint an Admistrator is for him
or her to ensure a functional SETA. The evidence
reflects that the
Minister exercised the powers for a wrong purpose – to conduct
an independent investigation in order to
decide on the appropriate
intervention necessary to restore good corporate governance and
stability at the CETA. This appears to
be a noble purpose, however,
it cannot be achieved by invoking the statutory powers reserved in
section 15 (4) of the SDA. Thus,
it must also follow that the
decision was irrational and susceptible to be set aside on
application of the principle of legality.
I tend to agree with Mr
Cassim SC for the applicants that the Minister seems to have put the
cart before the horse – i.e.
acted prematurely.
Costs
[18]
I
now turn to the issue of costs. This application is opposed only by
the Minister. The applicants contend that the Minister should
be
ordered to pay the costs in his personal capacity. The reason for
that being that this Court and the Labour Appeal Court had
already
given an interpretation of section 15 of the SDA and as a result, the
Minister should not have committed the same error
in applying the
provisions of the section. In order for the Court to uphold the
applicants’ contention, this Court must be
satisfied that the
Minister acted in bad faith and/or with gross negligence
[5]
.
On the facts of this case, I do not believe that the actions of the
Minister were
mala
fide
and/or grossly negligent. It is common cause in this matter that the
one and, in my view, the most important jurisdictional requirement
to
exercise the statutory power was present – mismanagement of the
finances of the CETA. However, all the Minister did wrong
was to miss
the step of consultation. In missing the step, he genuinely believed
that the law supports him to act without following
the important step
of consultation.
[19]
Clearly, the Minister in this regard may have not been
appropriately advised, as he should have been, that in order to
bypass the
important step of consultation, he needed to demonstrate
that the CETA would be in a state of paralysis, as it were, if he
delays
acting at the altar of a statutory consultation process. It
must have been concerning to the Minister that factually there was
financial mismanagement at the CETA, irrespective of who might have
caused the mismanagement.
[20]
Under those circumstances, a reasonable,
albeit
unlawful, thing to have been done by the Minister was to have rushed
to the powers in section 15 (4) of the SDA. For all the above
reasons, the Minister cannot be held personally liable for the
litigation costs.
[21]
Having said that, that is not the end of the enquiry. When it
comes to costs in the Labour Court, the guiding principle remains
that of the law and fairness. In assessing fairness, this Court would
have regard to the conduct of the Minister as an opposing
party to
the litigation. In this regard, the conduct of his representatives
come into play too. This Court must look at the conduct
in defending
the matter and one during the proceedings. In other words, was
opposition of this matter reasonable, regard being
had to all the
circumstances?
[22]
In my view, this is not a matter which the Minister should
have opposed, more particularly in the manner in which it was done
during
the proceedings. This application, turned on a very narrow
legal point. However, it took this Court the entire day to deal with
the matter, owing to spurious interlocutory applications launched on
the instructions of the Minister. With that in mind, it would
be
unfair to mulct the applicants with the costs of this litigation.
Fairness warrants an exercise of discretion in favour of making
an
order as to costs. I do not agree with a submission that the Minister
being a responsible person to establish the CETA should
not by that
fact, be ordered to pay the costs. SETAs are funded on a different
basis and as such distinct bodies from the establishing
Minister. The
fact that other members of the Accounting Authority are singing
praises of the Minister’s action is a red herring.
[23]
For all the above reasons, I am minded to make an order of
costs against the Minister. There was no opposition from any of the
cited
respondents. In terms of prayer 5 of the amended notice of
motion, the applicants sought costs only in the event of opposition.
[24]
In the results the following order is made:
Order
1. The decision taken by
the Minister on 29 January 2020 to place the CETA under
administration within the contemplation of section
15 (4) of the SDA
is hereby reviewed and set aside.
2. The decision to direct
the Director General to issue and the issuance of GN 86 in Gazette
No: 42991 published on 3 February 2020
is declared invalid and
ineffective in law.
3. The appointment of the
administrator (Mr S Wasa) is set aside.
4. It is declared that
the suspension of the members of the Accounting Authority is lifted
and they may resume performance of their
statutory duties and
functions as members of the Accounting Authority of the CETA.
5. The instruction issued
by the Minister on 23 January 2020 prohibiting the Accounting
Authority to make any decision with financial
implications is hereby
revoked and set aside.
6. The Minister, as a
party to these proceedings is to pay the costs of this application.
______________________
GN Moshoana
Judge
of the Labour Court of South Africa
Appearances:
For the
Applicant: Advocate
N Cassim SC and Advocate
M Morgan
Instructed
by: Werkmans
Attorneys, Sandton
For the First
Respondent: Advocate T Motau SC and Advocate R Tshetlo
Instructed
by: Norton
Rose Fulbright South Africa Inc, Sandton
[1]
No. 97 of 1998.
[2]
The functions of a SETA are spelled out in section 10 of the SDA. As
an example, the Minister must demonstrate that if consultation
happen, the SETA would not have the capacity to (a) develop a sector
skills plan; (b) implement the skills plan; (c) promote
learning
programmes; (d) register agreements; (e) perform delegated
functions; (f) collect levies; (g) liaise with the NSA; (h)
submit
budgets and financial reports; (i) liaise with provincial offices
and labour centres; (j) appoint staff and (k) perform
duties in
terms of this Act and related Acts.
[3]
[2001] QB 213.
[4]
See:
Chirwa
v Transnet Limited and Others
2008 (4) SA 367 (CC).
[5]
See:
Black
Sash Trust v Minister of Social Development and others
2017 (9) BCLR 1089
(CC).