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[2013] ZACC 10
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KwaZulu-Natal Joint Liaison Committee v MEC Department of Education, Kwazulu-Natal and Others (CCT 60/12) [2013] ZACC 10; 2013 (6) BCLR 615 (CC); 2013 (4) SA 262 (CC) (25 April 2013)
Links to summary
CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 60/12
[2013] ZACC 10
In the matter between:
KWAZULU-NATAL
JOINT LIAISON COMMITTEE
.....................................
Applicant
and
MEMBER
OF THE EXECUTIVE COUNCIL,
DEPARTMENT
OF EDUCATION, KWAZULU-NATAL
....................
First
Respondent
PROVINCIAL
HEAD OF DEPARTMENT,
DEPARTMENT
OF EDUCATION, KWAZULU-NATAL
...............
Second
Respondent
MINISTER
FOR BASIC EDUCATION
................................................
Third
Respondent
and
CENTRE
FOR CHILD LAW
......................................................................
Amicus
Curiae
Heard on : 22 November 2012
Decided on : 25 April 2013
JUDGMENT
CAMERON J (Moseneke DCJ, Froneman J, Khampepe J, Skweyiya J and
Yacoob J concurring):
[1] The
applicant – an association of independent schools in
KwaZulu-Natal – seeks leave to appeal against a decision
of
the KwaZulu-Natal High Court, Pietermaritzburg (High Court)
dismissing its application to enforce payment of certain monies
it
claims to be due to the schools it represents. Leave to appeal was
refused by both the High Court and the Supreme Court of
Appeal.
[2] The application stems from a subsidy the first respondent, the
Member of the Executive Council for Education in KwaZulu-Natal
(MEC), granted to independent schools in the province in accordance
with section 48 of the South African Schools Act
1
(Schools Act). On 22 September 2008, the second
respondent, the Department of Education in the province of
KwaZulu-Natal
(Department), issued a notice (2008 notice) to
independent schools in KwaZulu-Natal setting out “approximate”
funding
levels for 2009. These respondents were represented jointly
in the proceedings with the third respondent, the national Minister
for Basic Education (Minister).
[3] The 2008 notice, reproduced below, was directed to principals of
independent schools, owners of independent schools, and
associations
of independent schools in KwaZulu-Natal. It was headed “SUBSIDIES
TO INDEPENDENT SCHOOLS 2009/2010”.
The notice provided a table
to the recipients “[t]o determine the level in which your
school shall be based”. It
went on to say that “[i]n
order for schools to prepare budgets for 2009
approximate
funding levels will therefore be”
2
as set out. The notice concluded by stating that “[i]t should
be noted that subsidy allocations will be reviewed annually.”
“
KZN
EDUCATION Private Bag X9044
PIETERMARITZBURG
3200
TEL: 033 341 8655/45
FAX: 033 341 8642
UMNYANGO WEZEMFUNDO
ISIFUNDAZWE SAKWAZULU-NATALI
REF: Circulars 2008
ENQUIRIES: S.L.N. KHESWA DATE:
22 September 2008
__________________________________________________________________
All:
Principals of Independent
Schools
Owners of Independent Schools
Associations of Independent
Schools in KwaZulu-Natal
SUBSIDIES TO INDEPENDENT
SCHOOLS 2009/2010
To determine the level in
which your school shall be based (in comparison with the January
2004 school fees), the following
table is provided as a guide.
Primary
Secondary
Level
Fees (January 2004)
Level
Fees (January 2004)
1
Below R2 528.50
1
Below R2 698.00
2
R2 528.50 –
R5 057.00
2
R2 698.00 –
R5 396.00
3
R5 057.00 –R7 585.50
3
R5 396.00 –
R8 094.00
4
R7 585.50 –
R12 642.50
4
R8 094.00 –
R13 490.00
5
Above R12 642.50
5
Above R13 490
The above figures are based on
2005/2006 state per capita expenditure of R5057 for Primary level
and R5396 for Secondary level.
In order for the schools to
prepare budgets for 2009
approximate
funding levels
will therefore be as follows:
Level
% of state per capita
amount
Amount per
learner
5 Primary
0%
R0.00
5 Secondary
0%
R0.00
4 Primary
15%
R1 137.45
4 Secondary
15%
R1 190.25
3 Primary
25%
R1 895.75
3 Secondary
25%
R1 983.75
2 Primary
40%
R3 033.20
2 Secondary
40%
R3 174.00
1 Primary
60%
R4 549.80
1 Secondary
60%
R4 761.00
The above figures are based on
the 2009/10 state per capita expenditure of
Primary: R7 583
Secondary: R7 935
It should be noted that
subsidy allocations will be reviewed annually.
Yours sincerely
[Signature]
Mr. S.L.N. Kheswa [signed
22/09/08]
Chief Education Specialist
Schools Affairs
Head Office.”
3
[4] This undertaking the Department later qualified by a further
circular to independent schools. This was by letter dated 5
May
2009, which the provincial Superintendent General signed on 18 May
2009, and the schools concerned received only later. The
letter was
headed “REDUCTION OF BUDGETS IN THE 2009/10 MTEF” and
stated that as part of the province’s “turn
around
strategy in dealing with the current cash crisis”, the
recipients had to “please expect a cut not exceeding
30% in
[their] current subsidy allocation for the financial year 2009/10”.
[5] The Department received a total budget for the 2009/10 financial
year of R24.8 billion, of which R19.2 billion was allocated
for
salaries. R2.7 billion was for operational expenses, R1.6 billion
for infrastructure, machinery and equipment, and R1.4 billion
for subsidies to public ordinary schools, independent schools,
public special schools, and further education and training colleges.
When the 2008 notice was issued, only 97 schools were included in
the subsidy structure. Accordingly, the subsidies had to be
paid out
from the then budgetary allocation to independent schools of
R55.861 million.
[6] The
first two tranches for 2009 were paid only in mid-July. They
reflected a reduction of 30% from the amounts indicated in
the 2008
notice.
[7] Later during 2009, meetings were held and correspondence
exchanged between the applicant and the Department regarding the
two
notices, the subsidies and the shortfalls. Despite the applicant’s
attempts to secure payment of the full subsidies
for 2009, the
subsidies eventually paid to independent schools for that year were,
on average, 30% less than those set out in
the 2008 notice.
[8] In
November 2010, the applicant brought proceedings to enforce what it
said were the “promises” in the 2008 notice.
High
Court
[9] In its founding papers the applicant relied on the 2008 notice
as constituting an enforceable promise to pay the amounts
set out in
it for the whole school year of 2009. Hence it sought an order
directing the Department to pay the exact shortfall
in the subsidies
actually received in 2009 as compared to that set out in the 2008
notice. Alternatively, the applicant sought
an order for payment of
a percentage of the shortfall.
[10] Against this, the respondents argued that there was no
acceptable evidence that the “promise” was made with
the
intention of creating an enforceable obligation.
[11] As a
starting point, Koen J stated that he was “prepared to accept
in favour of the applicant” that the 2008
notice was made with
the intention to create contractual obligations. But did the 2008
notice contain terms sufficiently certain
to give rise to
enforceable obligations? This depended on the meaning of
“approximate” in the notice. The Court found
that the
word is unambiguous in that it means “almost exact” or
“very close”. It said that to conclude
that the 2008
notice conveyed a promise that the exact amounts would be paid would
either be to ignore the word “approximate”
or to assign
it meaning that it does not have. Therefore, the applicant was not
entitled to the payments it sought.
[12] The alternative claim to be paid a percentage of the shortfall
also failed. The High Court was not convinced that “approximate”
could be given fixed content with reference to the prior conduct of
the parties. To give fixed meaning to “approximate”
would be arbitrary and would amount to making an agreement for the
parties.
[13] The High Court therefore dismissed the application, with costs
of two counsel. As already indicated, the High Court also
refused
leave to appeal, as did the Supreme Court of Appeal.
In this Court
Applicant’s submissions
[14] The applicant seeks leave to appeal to this Court. It contends
that the High Court found that the parties acted with the
intention
of bringing enforceable obligations into existence (
animo
contrahendi
). It should, therefore, have endeavoured to uphold
and enforce the contract, and should have given meaning to
“approximate”.
This is especially so because the
Department had partially performed in terms of the contract, and
because the right to a basic
education is directly implicated.
[15] The applicant submits the High Court was wrong not to fix an
approximate percentage and to conclude it would be making a
contract
for the parties. Courts regularly define generally imprecise terms
in a particular contractual setting. In the present
case, the
Department in previous years paid amounts very close to those
indicated in previous notices. The High Court ought to
have relied
on this to give meaning to “approximate”.
[16] Taking into account past practice and that the applicant’s
schools had budgeted in reliance on the 2008 notice, payment
of 70%
was not substantial performance. In fact, having regard to the
respondents’ position, the applicant submits that
its
alternative relief, though still competent, essentially falls away,
and that it is most appropriate for this Court to direct
the second
respondent to pay the exact amounts stipulated.
[17] This Court has held that the law of contract must be infused
with constitutional values such as ubuntu and human dignity,
and
that contracting parties must relate in good faith. The applicant
argues that this is an instance par excellence.
[18] The applicant counters the respondents’ “insufficient
funds” defence by contending that a lack of funds
is no
impediment to an order against government. The MEC could have
applied to the Minister or the Minister of Finance for further
money. Anyhow, the MEC has already overspent the budget by R171.892
million, and the province by R1.899 billion, so there is
no reason
why they could not overspend a little more. Lastly, to accommodate
the applicant’s schools’ learners in
public schools
would be 17 times as expensive.
Respondents’ submissions
[19] The respondents argue that the applicant’s remedy lies
not in the law of contract, but in public law – which
the
applicant has not pleaded. In any event, there is not enough
evidence to determine whether it is just and equitable to order
the
Department to make the payments.
[20] The respondents say the case is not about the right to a basic
education, but rather the constitutional provision permitting
state
subsidies for independent schools.
4
They claim that the constitutional issues raised are not those
advanced by the applicant. Rather, they are: i) whether an
administrative
undertaking made in the exercise of a statutory power
gives rise to an enforceable contract; ii) whether such an
undertaking
gives rise to a legitimate expectation; iii) whether the
remedy lies in contract or public law; and, if it lies in contract,
iv) the relevance of the respondents’ constitutional and
statutory obligations.
[21] The relief sought, whether founded in contract or public law,
affects the statutory obligations and budgetary functions
of the
province. Section 48 of the Schools Act empowers the MEC to grant
subsidies to a registered independent school from funds
appropriated
by the provincial legislature for that purpose. Sections 39 and 63
of the Public Finance Management Act
5
(PFMA) oblige the Head of Department (HoD) and the MEC to ensure
that their expenditure is in accordance with the budget vote
of the
provincial department.
[22] The respondents contend that the 2008 notice merely served as a
guideline to independent schools. It was not an offer, which
schools
were called on to accept, nor was there a right to negotiate in
terms of a contract. The essential defining factors of
a contract
are thus not present, even without the difficulties associated with
“approximate”. Moreover, a contract
that purports to
bind the MEC in a manner that conflicts with his obligations to
public schools and his discretion to grant subsidies
only in terms
of the budget vote would be incompatible with the law and
unenforceable.
[23] The respondents note that the development of the common law was
not argued before the High Court. They contend that, while
the
constitutional questions whether undertakings of this kind are
contracts and whether the law of contract needs to be developed
are
clearly important, they do not warrant granting leave to appeal.
[24] Regarding remedy, the respondents submit that “considerations
of justice and equity behove” them to bring the
applicant’s
possible success in public law to the Court’s attention. There
has been insufficient argument on whether
the undertaking gave rise
to a legitimate expectation, and, if so, what remedy should be
granted. But if these questions are
reached, this Court should
either remit the matter to the High Court, or call for comprehensive
factual submissions.
Amicus
curiae
[25] In this Court, the Centre for Child Law (amicus), a registered
law clinic based at the University of Pretoria, whose main
objective
is to establish and promote child law and to uphold the rights of
children, was admitted as amicus curiae.
[26] It makes three submissions. First, the right to a basic
education in the Bill of Rights extends to learners at both public
and independent schools. Given that subsidies to independent schools
assist the realisation of the right to a basic education,
it is
inappropriate to regard an independent school and the state as mere
parties to a contract. The right to a basic education
comes under
threat when the state reduces, or does not pay, promised subsidies.
The negative obligation the state bears to respect
existing access
to rights is heightened because the subject of the right is a child,
and because the text of section 29(1)(a)
of the Constitution is,
unlike other socio-economic rights, without internal qualification.
[27] Second, when a provincial education department promises a
subsidy in terms of the applicable statutory and constitutional
framework, it creates a legitimate expectation in respect of the
amount promised. Here, there was both a promise and past practice
in
relation to the payment of the subsidy. The necessary value
judgement, it says, must be made upon the foundation of the
legislative framework, which includes the Constitution, the Schools
Act, and the statutory Amended National Norms and Standards
for
School Funding
6
(Norms).
[28] The
amicus’ third argument is that the facts relating to the
promise and past practice that give rise to a legitimate
expectation
are adequately pleaded on the papers. The Court should not inquire
formalistically whether the label “legitimate
expectation”
was used, but must rather determine whether its elements (a promise
and/or settled practice and resultant
prejudice) are pleaded and
supported by the facts on record. The Court is thus in a position to
make a finding regarding the
legitimate expectation of the affected
schools, and to grant appropriate relief.
Leave to appeal
[29] For leave to appeal there must be a constitutional issue, and
the interests of justice must favour its grant. At least one
constitutional issue is in plain view – the right to a basic
education of the learners at the applicant’s schools
–
and the contentions the applicant advances have prospects of
success. The requisites for leave have been established.
Did the 2008 notice give rise to an enforceable undertaking?
[30] The 2008 notice clearly constituted an undertaking by the
Department to pay the schools, to which the notice was directed,
the
approximate amounts set out in it. In argument, counsel for the
respondents confirmed that the undertaking was given with
an
intention to honour its terms. This is undoubtedly correct. The
question is whether the courts can enforce the undertaking,
or any
part of it.
[31] Courts enforce undertakings when parties agree by contract to
be bound by their terms; when the undertaking gives rise to
a
legitimate expectation and administrative fairness requires some
measure of their enforcement;
7
or when any other legal principle or rule requires enforcement. In
its affidavits, the applicant said its case was that it relied
purely on a promise or undertaking to pay. It said that it was
“neither here nor there” whether this derived from
administrative action or “something akin to a contractual
obligation”. But the form of the applicant’s case
is
important. If enforcement is sought on the basis of administrative
action, the proceedings should have been instituted under
the
Promotion of Administrative Justice Act
8
(PAJA), in the form of a review, and (subject to condonation) within
the 180-day period PAJA allows.
9
None of this was done.
[32] Nor
is this only a matter of form. The respondents’ defence was
that the undertaking in the 2008 notice could not be
fulfilled
because of a budgetary knock-on. The Department’s budgetary
allocation for the 2009 school year had been reduced,
and hence they
could not pay the amounts set out in the 2008 notice. The record of
the budget allocation and decision-making
would have been highly
pertinent to a claim to enforce a promise at administrative law. It
is not before us.
[33] The result is that, despite the amicus’ argument to the
contrary, it is not possible to consider the applicant’s
claim
for payment for the whole of the 2009 school year on the basis that
the Department breached the right to just administrative
action when
it revoked the undertaking in May 2009.
[34]
Given this dearth of evidence, should we remit the matter to the
High Court to obtain it? I do not think so. Counsel for
the
applicant discouraged remittal. The applicant’s members have
run out of money and, he implied, energy and time for
further legal
contest on this issue. They have schools to run. He strongly urged
that the matter be decided, do or die, on whether
the 2008 notice’s
promise was enforceable. The applicant is master of the process it
has initiated (
dominus litis
). I would respect its wishes.
The matter should not be remitted.
[35] On
what basis can the applicant claim enforcement of the undertaking? I
do not think that the undertaking is enforceable
because of an
agreement. A contract is an agreement between parties, entered into
with the intention of creating binding obligations,
to perform
according to the terms agreed. Government often contracts, of
course, and the courts give effect to the obligations
it undertakes
in doing so. Our courts have indeed enforced agreements concluded in
response to circulars or notices setting out
the terms on which
governmental subsidies may be procured.
10
But here there was no contract. The undertaking was not extended as
part of a bilaterally binding agreement, which is the hallmark
of
contractually enforceable obligations.
[36] Nor
was there any intention on the part of the Department, or indeed the
schools, to be contractually bound by a private
agreement. The
Department seems to me to have been extending an undertaking that it
intended to make payments in accordance with
its statutory and
constitutional obligations. This is distinct from an intention to
enter into legal obligations for the purpose
of concluding an
enforceable contract.
[37]
Nevertheless, the setting in which the 2008 notice promised payment
to its recipients indicates that it was seriously given,
in the
expectation that it would be relied upon, and that payment in its
terms would indeed be forthcoming, subject only to the
possibility
of due revocation. These indications are set out in the ensuing
paragraphs.
[38]
First, under the Bill of Rights, everyone has the right to a basic
education.
11
The right is given in unqualified terms
12
and, in contrast to other socio-economic rights in the Bill of
Rights, is not subject to progressive realisation. The Constitution
expressly states that it does not preclude state subsidies for
independent educational institutions.
13
[39] The Schools Act empowers the Minister by notice in the
Government Gazette to determine norms and minimum standards for
granting subsidies to independent schools.
14
The MEC “may, out of funds appropriated by the provincial
legislature for that purpose, grant a subsidy to an independent
school.”
15
Non-compliance with a condition, subject to which a subsidy was
granted, empowers the HoD to terminate or reduce the subsidy
“from
a date determined”.
16
The HoD may not use this power to terminate or reduce the subsidy
without hearing the affected school,
17
and an appeal against termination or reduction lies to the MEC.
18
[40] The
Norms are of great significance to the applicant’s case. The
Norms note the “valuable educational services”
provided
by independent schools.
19
They note that independent school enrolment amounts to about two
percent of the total nation-wide but that if all independent
learners were to transfer to public schools, “the cost of
public education in certain provinces might increase by as much
as
five percent”.
20
In other words, independent schools constitute a saving on the
public purse.
[41] And
indeed the practice of granting state subsidies to registered
independent schools is well established in South Africa.
21
The Norms explain that the Ministry bases its subsidy policy on both
fiscal and social grounds. On fiscal grounds, the state
has a
“constitutional and statutory responsibility to provide school
education to all learners”.
22
State subsidies to independent schools “cost the state
considerably less per learner than if the same learners enrolled
in
public schools”. The subsidy policy is therefore “cost
efficient for the state”.
23
[42] The
Norms further note that the Schools Act enables the MEC to grant
subsidies to registered independent schools,
24
and records that the Norms themselves are intended to “provide
a stable and principled basis for MECs in all provinces,
to decide
the eligibility for subsidy and the level of subsidies for
registered independent schools”.
25
[43]
Subsidies are calculated on a per-learner basis according to
verified enrolment at a school at the beginning of each term.
26
A provincial education department may deviate from the subsidy and
fee levels set out in the Norms “only on good cause
shown”
to the national Department.
27
[44] At
the provincial level, the Kwazulu-Natal School Education Act
28
(KZN Act) as well as the regulations set out in the
Notice
Regarding the Registration of and Payment of Subsidies to
Independent Schools
29
(KZN Regulations) further make express practical provision for
subsidies to be paid to independent schools.
[45] So
while it is correct that the state is not obliged to pay subsidies
to independent schools, when it does so in terms of
national and
provincial legislation it is plainly acting in accordance with its
duty under the Constitution in fulfilling the
right to a basic
education of the learners at the schools that benefit from the
subsidy. And once government promises a subsidy,
the negative rights
of those learners – the right not to have their right to a
basic education impaired – is implicated.
As will emerge, once
the due date for the payment of a promised subsidy has passed, those
rights are most acutely implicated.
[46] In
keeping with this constitutional setting, the 2008 notice itself
clearly envisaged that the schools would prepare their
budgets in
reliance on it. Not only that, but it was expressly issued on the
basis that the schools would incur expenditure relying
on its terms.
[47] This
constitutional and statutory setting makes it plain that the 2008
notice was not a mere record of ex gratia payments
the Department
proposed to afford the applicant’s schools as a favour. No.
The notice was issued in fulfilment of the Department’s
duty
under the Constitution, realised in the Schools Act and KZN Act, and
particularised in the Norms and KZN Regulations, to
help the
applicant’s schools do their job of educating the learners
attending them. That duty stems from the fact that
all learners,
including those at independent schools, are entitled to basic
education.
[48] Even
though the 2008 notice may not have given rise to an enforceable
agreement between the applicant and the respondents,
it constituted
a publicly promulgated promise to pay. And, once the due date for
payment of a portion of the subsidy had passed,
this created a legal
obligation unilaterally enforceable at the instance of those who
were intended to benefit from its promise.
This is by no means new
to our law. Before the Constitution, the Appellate Division found
“nothing peculiar” in the
notion that the state can
unilaterally make a promise to pay that becomes enforceable at the
instance of those intended to benefit
from it. In fact, the Court
found it “strange to think that the government’s
undertaking in terms of [a] notice can
be made enforceable only once
it has been accepted and converted into a contract”. In
Dilokong Chrome Mines (Edms) Bpk v Direkteur-Generaal,
Departement van Handel en Nywerheid
,
30
that Court said:
“
Naturally,
it can happen that a contractual relationship may be created between
the executive and a subject, as where a commercial
agreement is
concluded, but in the present case we are dealing with the making
available of financial assistance to subjects
from the State coffers
by way of a purely beneficial grant; something so unique to the
administrative law relationship that I
can see no space for a
finding of contractual liability on the part of the State. . . . At
face value the notice states that
the executive binds the State to
compensate subjects who meet certain requirements. . . . In contrast
to the situation where
two individuals are operating in the area of
private law, there is nothing peculiar in the idea that the State
can undertake
obligations towards its subjects unilaterally. On the
contrary, it would be strange to think that the government’s
undertaking
in terms of the notice can be made enforceable only once
it has been accepted and converted into a contract.” (My
translation.)
Retroactive
reduction of subsidies after date for payment has fallen due
[49] A
government promise to pay subsidies in an approximate amount can
seldom be incapable of retraction or reduction. The principal
reason
will usually be budgetary constraints. Indeed, in this case there is
no indication to gainsay the respondents’ evidence
that the
Department was hit with a 7.5% overall budgetary cut for 2009, and
that its knock-on effect simply had to be implemented.
As the
Department explained in the May 2009 circular and the respondents’
answering affidavit, the 7.5% cut, “as
well as the additional
funds required to cater for the newly registered 28 independent
schools”, led to the 30% reduction
announced.
[50] For
these reasons, it seems to me that the letter of May 2009
constituted an effective signal by the Department that schools
henceforth could no longer rely on the undertaking in the 2008
notice. Whether that signal could be over-ridden in law by any
legitimate expectation on the part of the schools is not a question
we can decide in this case.
31
[51] But
it does not follow from this that the Department is not liable for
part of the payments promised for 2009.
[52] In
Premier, Mpumalanga, and Another v Executive Committee,
Association of State-Aided Schools, Eastern Transvaal
32
(
Premier, Mpumalanga
), this Court suggested that “it
may be that in many cases a retroactive termination of benefits will
not be fair no matter
what process is followed unless there is an
overriding public interest”.
33
This statement was made along the way of the Court’s reasoning
(
obiter
), and was not part of its binding basis of judgment.
But in my view it reflects a sound principle of our constitutional
law.
It is that a public official who lawfully promises to pay
specified amounts to named recipients cannot unilaterally diminish
the amounts to be paid after the due date for their payment has
passed. This is not because of a legitimate expectation of payment.
Legitimate expectation relates to expected conduct. Rather, this
principle concerns an obligation that became due because the
date on
which it was promised had already passed when it was retracted.
[53] The
principle applies in this case. The scheme of the Norms and the KZN
Regulations provide for the determination and communication
of
subsidies on an annual basis so as to enable schools to budget, plan
and set their fee structures for the following year.
Importantly,
the scheme does not merely suggest general guidelines for payment of
subsidies promised – it sets deadlines.
[54] Item
195 of the Norms, positioned under the heading “Date of
subsidy payments”, reads:
“
[Provincial
Education Departments] must ensure that the first term’s
subsidy is paid no later than 1 April in each school
year.
Subsequent subsidies must be paid no later than six weeks after the
beginning of each school term.”
[55]
Section 50(1) of the Schools Act provides that an MEC “must”
by notice in the Provincial Gazette determine requirements
for
amongst others “criteria of eligibility, conditions
and
manner of payment of any subsidy
to an independent school”
(emphasis added). This the MEC did in the KZN Regulations. Those
provide that payment of subsidies
to independent schools “will
be made retroactively each quarter.”
34
This conforms exactly with Item 195 of the Norms.
[56] This
means that once an MEC has, out of funds appropriated by the
provincial legislature for subsidies, granted a subsidy
to an
independent school,
35
his or her department has a legal obligation to pay no later than 1
April.
36
This obligation is enforceable at the instance of those in favour of
whom a promise was made to pay a subsidy once the due date
for the
payment has passed. That obligation is enforceable here.
[57] When
the Department issued its May 2009 letter, it was already obliged,
under the Norms and KZN Regulations, to have paid
the first term’s
subsidy as promised in the 2008 notice. Its delay in doing so
constituted a breach of its obligations
under the Norms and the
Schools Act. It seems both legally and constitutionally
unconscionable that, more than a month after
the first tranche of
the promised subsidy had already fallen due under the national Norms
and the provincial regulation, the
Department should peremptorily
reduce it.
37
[58] It
is true that this was not the clasp on which the applicant
originally pegged its hopes. The applicant relied in its founding
and subsequent papers on what it simply and persistently described
as an enforceable undertaking to pay the entire year’s
subsidy
without any reduction. This cast the claim in contractual, or
ostensibly contractual, terms. In my view the undertaking
is indeed
enforceable, but on broader public law and regulatory grounds rather
than bilateral agreement.
[59]
Recognising that the basis for enforcing a portion of the
applicant’s claim had not expressly been pleaded, this Court
after the oral hearing invited additional written submissions. The
parties’ views were sought on whether the applicant
would be
entitled to an order for payment of the approximate subsidies in the
light of Item 195 of the Norms and Regulation 4(3)
of the KZN
Regulations.
38
Further, they were afforded an opportunity to present submissions on
whether
it would be permissible for the Court, in
the light of the case the applicant advanced and the evidence, to
grant partial relief
in respect of the portion of the subsidy that
fell due on 1 April 2009.
39
[60] In
response, the applicant and the amicus strongly contend that, at
minimum, Item 195 of the Norms and Regulation 4(3) of
the KZN
Regulations obliged the respondents to pay the first-tranche
payment. The amicus submits that the scheme of the Norms
(mirrored
in the KZN Regulations) ensures increasing certainty as particular
milestones are reached in the school and financial
year. The
entitlement to receive a subsidy “solidifies” from an
expectation, when indicative amounts are announced,
to an accrued
right once the payment deadline has passed. Once that date has
passed there is no longer a lawful basis on which
the subsidy
amounts can retroactively be reduced as happened here. I agree with
this submission.
[61] The respondents accept that provincial Regulation 4(3) means
the payment of a subsidy to a particular school is approved
in
principle on an annual basis. But they submit it does not guarantee
the level of the subsidy in all circumstances. To the
extent that
there was a retrospective reduction of subsidies already due and
payable, the effect of that retrospectivity is to
be tempered by the
applicant’s knowledge that the amount would be reduced owing
to budgetary constraints and other exigencies.
40
[62] But this answer falls grievously short. The respondents provide
no compelling answer to the legally enforceable obligation
the Norms
and KZN Regulations imposed to pay the amounts promised in the 2008
notice by 1 April. It cannot be countenanced, legally
or
constitutionally, that the amount of the subsidy be reduced
unilaterally after the date for payment has by regulation already
fallen due. This is so regardless of whether the intended
beneficiary might have been able to divine the possibility of a cut.
The respondents’ hands were tied once the due date for payment
stipulated in the regulation had passed.
[63] The reasons lie in reliance, accountability and rationality.
First, reliance. The schools budgeted for the whole year in
reliance
on the 2008 notice. The reduction in subsidy announced in the letter
of May 2009 would severely disappoint them. But
they could adjust
their future outlays. They could not do so in regard to the tranche
that had already fallen due. Their entitlement
should therefore be
taken to have crystallised.
[64] Second, accountability. Governance is hard. And the hardest
part, no doubt, is budgeting. Government officials are slaves
to the
resources allocated to them. Budget cuts can lacerate their
departmental spending plans and projections. Hence courts
should
respect the effect of budget cuts.
41
But their impact on those to whom undertakings have been made should
be announced quickly. As smartly as possible. Constitutional
accountability and responsiveness demand this.
42
It can never be acceptable in a democratic constitutional state for
budget cuts to be announced to those to whom undertakings
have been
made after payment has by regulation already fallen due.
[65] Last, rationality. Government officials must, in dealing with
those who act in reliance on their undertakings, act rationally.
A
budget cut announced in relation to payments promised but not yet
made would be regrettable. But it may be rational. Behaviour
and
expectations can be tailored to it. But it is impossible to tailor
behaviour and expectations to a promise made in relation
to a period
that has already passed. Revoking a promise when the time for its
fulfilment has already expired does not constitute
rational
treatment of those affected by it.
[66] These principles apply here. The subsidies promised in the 2008
notice could not be subject to retroactive diminution in
the absence
of “an overriding public interest”.
43
Apart from budgetary cuts, there appears to be none. And, indeed,
the fact that the Norms and KZN Regulations obliged the payment
of
the subsidy’s first portion by 1 April 2009 meant that
there could be no overriding public interest in the ex post
facto
retraction of the promise.
[67] The
applicant concedes that it did not specifically argue for relief on
the basis of the obligation created by the regulation.
However, its
founding affidavit expressly invoked Item 195 of the Norms, and
reliance on statutory obligations was foreshadowed
in its papers.
[68] In
support, the amicus submits that a claim arising from the Norms read
with the KZN Regulations is adequately pleaded. And,
it says, the
evidence on record lays a sufficient basis to find the applicant
schools had a right to be paid the first-quarter
tranche due on 1
April 2009.
44
Further, this Court has previously adopted remedies for a situation
where a claim is apparent from the papers and the evidence,
even if
it was not the cause of action expressly advanced or argued.
45
With this I agree. As in the cases the amicus mentions, there is no
prejudice to the respondents here.
[69] It
follows that the applicant has established an entitlement to payment
of the undertaking set out in the 2008 notice up
to 1 April 2009. It
is not necessary to decide whether, had the matter been pleaded or
evidenced differently, there may have
been a legitimate expectation
entitling the applicant to payment of the final three tranches of
the 2009 school year subsidy.
[70] The
respondents urged that if the Court finds that the applicant pleaded
sufficient facts to found a remedy in public law,
they be granted an
opportunity to present further evidence relevant to affordability.
In my view, there is no need for further
evidence. The respondents
were not entitled to reduce, retroactively, subsidies the payment
date for which had passed, regardless
of budgetary adjustments. Of
course affordability is a major issue in governance. But payment
dates are also of great significance
to citizens and others relying
on payment from the public coffers. When national norms and specific
regulations require payment
by a particular date, government is
legally obliged to pay.
[71] This
is by no means a radical intervention. Accountability and
rationality demand that government prepare its budgets to
meet
payment deadlines. It cannot reach back and diminish accrued rights
in order to manage its own shortfalls. Any further evidence
relating
to budgetary constraints is therefore unnecessary.
The 28 “extra” schools
[72] It was a theme of the respondents’ answering affidavits
that the applicant had sought, after the 2008 notice, to add
28
extra schools to the 97 members it previously represented. It seems
to me that only those schools that were actually affiliated
with the
applicant at the time the 2008 notice was distributed, and thereby
received notice of the promised subsidies, can benefit
from it.
“
Approximate”
[73] The 2008 notice sets out “approximate funding levels”
specified in Rand amounts. In my view there is no reason
why this
Court cannot order a party to pay an amount of money that is
“approximate” to a specified sum.
46
[74]
There are neither practical nor linguistic obstacles to granting an
order that a party must pay an opposing litigant an “approximate”
amount specified. As an adjective, approximate, according to the
Concise Oxford English Dictionary,
47
means “fairly accurate but not totally precise.” In its
verbal sense, it means to “estimate fairly accurately.”
There is no reason why a court order must be “totally
precise”. Courts frequently give orders that are very general
indeed.
48
The only novelty here is that the order relates to an approximate
amount of money, and it is usual that amounts of money payable
by
court order are precise.
[75] The 2008 notice specified exact sums, and undertook to pay them
approximately. That is an obligation that is coherent and
legally
enforceable. And the Department is obliged to engage with the
schools to find finality in complying. The Department will
tender
performance in terms of the Court’s order. If the recipient
schools consider its tender inadequately “approximate”
to the Rand amounts specified, they can apply to the High Court for
appropriate relief.
[76] I
would on this limited basis grant leave, allow the appeal, and give
an order for the payments which fell due on 1 April
2009, with costs
in this Court and below.
Condonation
[77] This
Court, by way of directions dated 24 October 2012, invited parties
to respond to submissions of the amicus by 9 November 2012.
The respondents explain that due to an “administrative error”
they only took note of this invitation on 8 November
2012, which is
when their counsel became aware of the directions. The respondents
therefore seek condonation for the late filing
of their response.
Condonation is not opposed and little prejudice, if any, was
suffered by the delayed response. I would therefore
grant
condonation for the late filing of the submissions in response to
the amicus’ written submissions.
[78]
OrderThe following order is made:
Condonation
is granted.
Leave
to appeal is granted.
The
appeal succeeds.
The
order of the High Court is set aside and in its place, there is
substituted—
“
The second respondent is directed to pay
to the schools affiliated with the applicant on 22 September 2008
the approximate amounts
specified in the notice of that date which
had fallen due for payment on 1 April 2009.”
The
respondents are ordered to pay the applicant’s costs, in this
Court and in the High Court, including the costs of
two counsel.
FRONEMAN
J:
[79] How
important is the legal label one attaches to a set of facts upon
which a party relies for a remedy under the law? Not
decisively so,
I would suggest, in a matter where the facts are not essentially
disputed and no material prejudice to any party
flows from whatever
label is assigned to them by the formality of the law. This is that
kind of case, but the opposing parties
urged us to attach different
labels to the facts upon which relief was sought, and determine the
outcome according to the label.
The invitation should be resisted –
substance should count, not form.
[80]
Formalism has many meanings, but Professor Cora Hoexter helpfully
describes one of its meanings as “a judicial tendency
to
attach undue importance to the pigeonholing of a legal problem and
to its superficial or outward characteristics; and a concomitant
judicial tendency to rely on technicality rather than substantive
principle or policy, and on conceptualism instead of common
sense.”
49
(Footnote omitted.) She explains:
“
In
cases displaying formalistic legal reasoning the merits often seem
strangely divorced from the outcome of the case, so that
it is
difficult and perhaps even embarrassing to explain the case to a
layperson. There is often a reliance on what one might
call
code
:
legalistic shorthand that lawyers may understand, however dimly, but
that others will find impenetrable and altogether mystifying.
Above
all, as Alfred Cockrell has observed, there is a tendency to avoid
substantive reasons in the form of ‘moral, economic,
political, institutional or other social consideration[s]’ and
instead to put up a screen of formal reasons.
50
Thus
formalism as I describe it here frequently entails a kind of
misdirection: not adverting to the real or fundamental reasons
behind a particular result, not saying what one really thinks.”
51
[81] The
facts here are not in dispute. As had been the case in previous
years the Member of Executive Council, Department of
Education
KwaZulu-Natal (MEC) granted a subsidy to independent schools in
KwaZulu-Natal. On 22 September 2008 the Department
of Education,
KwaZulu-Natal (Department) issued a notice to independent schools
(schools) setting out approximate funding levels
for the year 2009.
As in the past, the schools relied on the promised subsidy for their
operation. During May 2009 the Department
sent a circular to them
indicating that budgetary constraints necessitated a reduction of
not more than 30% in the subsidy allocation
for the financial year
2009/10. The subsidies paid for 2009 on average reflected a
reduction of 30% from the amounts indicated
in the initial notice.
The applicant, representing the schools, then sought to enforce the
undertaking to pay the full amount
mentioned in the notice or a
percentage thereof, as determined by the court. In this Court, the
applicant contends that a 30%
reduction falls outside any
understanding of “approximate”. Finally, and most
importantly, the matter concerns the
right to a basic education.
52
[82] In
the main judgment Cameron J eschews formalism and finds for the
applicant on the basis that the retraction of the undertaking
to pay
may only operate prospectively and cannot apply to those amounts for
which the date of payment had passed, that is, for
the first term of
2009.
53
He gives substantive reasons for holding the Department to its word
in relation to that limited period.
54
[83] The
substantive justification the main judgment gives for preventing a
public official from retracting a lawful promise to
pay an amount to
someone after the date for payment has passed is that it is “legally
and constitutionally unconscionable”
55
when tested against the standards of “reliance, accountability
and rationality.”
56
But the same may be said of the promise to make payments for the
whole year, even after the Department indicated on 5 May 2009
that
it was reducing the allocated subsidy to pay by not more than 30%.
The applicant also relied on the promise to pay the later
amounts;
the first and second respondents remained accountable for what they
had done; and their retraction still needed to be
rational. So what
prevents testing the payment of the later amounts against the
standards of reliance, accountability and rationality?
[84]
According to the main judgment the enforcement of this part of the
claim should have been brought under the provisions of
the Promotion
of Administrative Justice Act
57
(PAJA). In addition, the record of the budgetary allocation and
decision-making process would have been highly pertinent to enforce
a claim at administrative law.
58
[85] I
agree with the reasoning that it is just and equitable to enforce
the promise made by the Department, but I consider that
this
rationale also applies to the promises made for the whole of the
year, not only for the first term. It is for this reason
that I take
issue with the main judgment. In addition, to the extent that a
label given to a claim is decisive, the applicant’s
whole
claim may comfortably be accommodated within the law of contract, as
it is pleaded. The first reason seeks to engage with
the reasoning
of the main judgment and accepts its premises, but attempts to push
its reach further on the basis of its own logic.
The second deals
with the formalistic argument, not made in the main judgment, that
the outcome is dictated by labels –
a proposition I resist,
but nevertheless feel compelled to meet on its own terms.
Procedure
and substance
[86] The
applicant brought its application by way of notice of motion. Even
if it chose review of administrative action as the
formal label it
was not obliged to use rule 53
59
– the procedural mechanism for a review – for that
purpose. The rule exists principally in the interests of an
applicant, and an applicant can choose to waive a procedural right.
60
In this case, where a litigant brings proceedings against the state,
“the latter can always, in answer to an ordinary application,
supply the record of the proceedings and the reasons for its
decision”.
61
There was thus nothing in the form of the proceedings in the High
Court that prevented the first and second respondents from
producing
the record of the budget allocation and decision-making in regard
thereto, or anything else they considered relevant.
They could have
done it whether the claim was based in contract or in administrative
law. The blame for their failure to do so
cannot be laid at the
applicant’s door.
[87] The
reliance the applicant placed on the promise to pay was a reliance
that the promised amounts were for the whole financial
year, not
only for the first term.
62
The schools budgeted for the whole year in reliance on the notice.
There is nothing on record to indicate that they were prejudiced
only in respect of the earlier tranches paid but not in respect of
the later ones.
[88] The
accountability of the respondents similarly did not stop at the end
of the first term. Accountability is an ongoing and
fundamental
responsibility under the Constitution.
63
[89] What
remains in the substantive analysis is the question of rationality.
On the respondents’ own version, the cost
of accommodating the
learners in public schools would increase the budget by at least 5%
in KwaZulu-Natal alone, as opposed to
keeping them in the
independent schools. Remember that under the Bill of Rights,
everyone has the right to a basic education.
64
It is an unqualified right.
65
There is no rational basis that I can discern how the means used –
reducing the subsidies to independent schools –
can rationally
advance or contribute to the end – the advancement of the
right to a basic education – if it will
effectively raise the
cost of public basic education.
[90] That
is the first reason for my disagreement with the limited ambit of
the main judgment’s finding, namely that its
substantive logic
or reasoning reaches further than it is prepared to countenance.
[91] The
second is that if we have to use formal labels, which the parties
urged us to do, the applicant’s choice of contract
is
plausible and acceptable. But for that to be done some cobwebs need
to be cleared.
Public/private
law divide
[92] The
distinction between public and private law comes to us from Roman
law.
66
To the extent that the distinction rested on the dual assumptions
that public law dealt with unequal power relationships and
was
political in nature, while private law was apolitical law between
equals,
67
it needs better justification, but that is not our concern here. For
present purposes it suffices to state that this Court has
recognised
that under the Constitution the divide between public and private
law is more diffuse,
68
and that our courts have enforced agreements concluded in response
to circulars or notices setting out the terms on which governmental
subsidies may be procured.
69
[93]
There is thus nothing in principle that hinders one from enquiring
whether the facts before us may attract the label of being
a
contract under our law. In that enquiry it will be useful to examine
whether there is anything that prevents constructing this
matter as
one falling under the law of contract from both perspectives, the
law of contract on the one hand and administrative
law on the
other.
70
These perspectives overlap and are interconnected, but convenience
permits separate discussion before drawing the strings together
in
conclusion.
‘
Pure’
contract
[94] Our
law of contract, unlike English law, enforces promises seriously
made, not bargains.
71
Not all promises are enforced, only those made “seriously and
deliberately and with the intention that a lawful obligation
should
be established”, in the words of Wessels AJA in
Conradie v
Rossouw
.
72
There have been different formulations of this “redelike
oorsaak” or underlying cause for a contract,
73
but what
Conradie
settled more than 90 years ago was that
consideration is not a requirement for a valid contract in our law.
74
And although the underlying rationale for rejecting consideration as
a separate requirement for the validity of a contract is
that mere
serious agreement between parties is sufficient to constitute a
contract, our law is also practical enough to recognise
that it
must, as a general rule, concern itself with the external
manifestations, and not the workings of the minds of parties
to a
contract.
75
When a person thus expresses his or her intention in relation to the
formation of a contract the decisive question is often not
what he
or she subjectively intended, but what it leads the other party, as
a reasonable person, to believe was his or her intention.
76
Once again, this has been formulated in many ways by our courts.
Perhaps the most famous and enduring is that of Innes J in
Pieters
& Co v Salomon
:
77
“
When
a man makes an offer in plain and unambiguous language, which is
understood in its ordinary sense by the person to whom it
is
addressed, and accepted by him
bona
fide
in
that sense, then there is a concluded contract. Any unexpressed
reservations hidden in the mind of the promisor are in such
circumstances irrelevant. He cannot be heard to say that he meant
his promise to be subject to a condition which he omitted to
mention, and of which the other party was unaware.”
[95] In
Saambou
78
it was stated that it would lead to greater clarity if the concepts
of “redelike oorsaak” and that of
animus contrahendi
(intention to contract) be separated, so that the latter should
not overlap with the former.
79
The intention to contract would then be found in the express or
implied intention to be bound by the acceptance of an offer made.
In
the context of assessing the intention of the offeror, Professor
Christie says:
“
[T]he
phrase ‘lack of
animus
contrahendi
’
is
appropriate to describe those cases in which from the surrounding
circumstances or the manner in which the ‘offer’
was
made, or both, it is clear to the court and was or ought to have
been clear to the offeree that the ‘offer’ was
not
intended to be taken seriously.”
80
[96] It
can hardly be gainsaid that the promise by the Department to pay the
subsidies was made with the serious intention to
honour the promise.
That the underlying cause for making it was its statutorily
undertaken obligation matters not at this stage,
although it might
play a role later in determining the legality of the contract.
[97] As
far as the intention to contract (
animus contrahendi
) is
concerned, it seems to me to be somewhat artificial to say that even
though the promise to pay the subsidies was made seriously
with the
intention to honour the promise, it was made with no concern as to
whether the schools would accept the subsidy. I agree
with the
finding made in the main judgment that the schools acted in reliance
on the promise that the subsidy would be paid to
them. The
Department was, or should have been, aware of this. I would add that
this inference is strengthened by the conduct
of the parties in
relation to the payment of subsidies in previous years after similar
promises of payment. In purely contract
law terms, unaffected by
possible administrative law considerations, it seems to me that the
past and present conduct of the
Department would have satisfied the
requirement of intention to contract had the promise been made by it
as a private person.
[98] By
parity of reasoning the same must be said in relation to acceptance
of the promise to pay the subsidy by the schools.
Their conduct in
reaction to the promise made in 2008, the same as what it was to
similar subsidy promises made and executed
in previous years, is
more than adequate evidence of acceptance.
81
[99] The
content of the promise is enforceable, for the reasons set out in
the main judgment.
82
[100]
Contract law, unaffected by administrative law considerations, is
thus no bar to finding for the applicant in contract.
Do
administrative law or other public law considerations prevent the
promise of the subsidy and its acceptance being recognised
as a
contract?
Contract
and public administration
[101] The
potential interplay between principles of contract law and those of
administrative law is a contested and controversial
subject on
which, I think it is fair to say, the final word has yet to be
spoken.
83
This case does not involve procurement, a major area of dispute. For
present purposes we should restrict the inquiry into to
whether
administrative law principles impact on: first, the formation of a
contract between the schools and the Department; second,
the content
of the contract; and third, the termination of the contract.
84
From what follows it will be apparent that in applicable instances
administrative or public law considerations may come into
play at
each of these levels, but on the facts before us it is only
necessary to consider the first, namely those relevant to
the
formation of the contract.
[102] It
is an adjunct of the rule of law, or legality, that the state cannot
act outside its constitutional or legislative powers.
85
There is no dispute here that the state may award subsidies to
independent schools in terms of the Constitution.
86
Nor is it disputed that the subsidy was granted to the schools in
terms of section 48 of the South African Schools Act.
87
And as we have seen from the
Ninja
case,
88
payment of public subsidies may be done by way of contract in our
law. The constraint derived from administrative law here is
thus not
one based on the state acting beyond its constitutional or
legislative powers, but something else.
[103]
What else may it be? It seems to be something to the effect that no
intention to
contract
may be inferred where the
primary source of the state’s obligation derives from
legislation and may be enforced by administrative
law remedies. But
that flies in the face of the acceptance in our law that the same
facts may give rise to different causes of
action.
89
[104]
There may, however, be a substantive and valid reason underlying the
purported exclusion of other remedies in a matter with
public law
overtones. The increasing overlap between private and public law in
the modern contracting state is a reality also
in other countries.
In the United Kingdom the general rule that it would be contrary to
public policy and an abuse of the process
of court to permit a
person to enforce rights protected by public law by way of action
and not by review, enunciated by Lord
Diplock in
O’Reilly
and Others v Mackman and Others
,
90
is subject to exceptions where disputes involve a mix of public law
and private law ingredients. The exceptions should be dealt
with on
a case-by-case basis.
91
More recently the following was stated in
Mercury Communications
Ltd v Director General of Telecommunications and Another
:
92
“
The
recognition by Lord Diplock that exceptions exist to the general
rule may introduce some uncertainty, but it is a small price
to pay
to avoid the over-rigid demarcation between procedures reminiscent
of earlier disputes as to the forms of action, and
of disputes as to
the competence of jurisdictions apparently encountered in civil law
countries where a distinction between public
and private law has
been recognised. It is of particular importance, as I see it, to
retain some flexibility, as the precise
limits of what is called
‘public law’ and what is called ‘private law’
are by no means worked out. The
experience of other countries seems
to show that the working out of this distinction is not always an
easy matter. In the absence
of a single procedure allowing all
remedies – quashing, injunctive and declaratory relief,
damages – some flexibility
as to the use of the different
procedures is necessary. It has to be borne in mind that the
overriding question is whether the
proceedings constitute an abuse
of the process of the court.”
93
[105] So
there might be substantive concerns that by using one procedure –
enforcing a contractual claim – a litigant
may gain an unfair
advantage, to the detriment of the state, which he or she would not
have had if another procedure –
review – had been used.
Whether that might be a good substantive defence to a claim based on
contract is, however, not
possible to determine without
investigation of the facts of each case.
[106] The
lack of an intention to contract was the only real defence that the
Department offered to the contractual claim of the
applicant. The
promise to pay the subsidies to the schools is reasonably
susceptible to a construction that it was an offer to
the schools
which was accepted by them. Nothing in private contract law or in
public administrative law excludes that construction
as a matter of
principle.
[107] It
was open to the Department to put up a more detailed defence on the
papers. Procedurally nothing prevented it from doing
that. It could
have raised the defence of unfair procedural advantage by pointing
out in what way the applicant benefitted unfairly
from proceeding on
contract. It could have raised the defence that even if the
formation of the contract was accepted, its content
was nevertheless
contrary to public policy because it fettered the state’s
discretion to expend public money in the public
interest. Or it
could have pleaded that the contract was terminated by subsequent
impossibility or illegality because of statutory
budgetary
obligations. These defences may have proved successful if the facts
and law supported them. But we do not know whether
that would have
been so, because the Department did not raise these defences
properly on the papers. On the papers as they stand
there is nothing
to prevent the making of the promise and its acceptance by the
schools being labelled as a contract between
the parties.
Conclusion
[108] I
thus, in the first place, support the substantive reasoning made for
the order in the main judgment, but on an extension
of that
reasoning I would not restrict its operation only to the first term
payments of 2009. I arrive at the same result even
if one goes the
route of contract.
NKABINDE J:
Introduction
[109] I
have had the privilege of reading the judgments prepared by my
colleagues, Cameron J (main judgment), Mogoeng CJ and Jafta
J,
Froneman J and Zondo J. I agree with the main judgment that
condonation and leave to appeal should be granted. There can be
no
doubt that this matter raises important constitutional issues. The
issues concern subsidies for independent educational institutions,
implicate the right to a basic education which may be accessed
through those institutions and involve the interpretation of a
subsidy notice. Further issues relate to whether the claim is based
on a promise giving rise to a legitimate expectation and
whether the
appropriate remedy lies in the law of contract or in public law.
[110] The
existence of independent schools, through which the right to a basic
education may be accessed, is a factual reality
in South Africa.
Many independent schools will have an interest in the decision of
this Court on the merits of the applicant’s
case. This is the
first occasion on which this Court has been asked to determine the
appropriateness of the claim for payment
of subsidies to independent
schools based on an alleged enforceable promise or the alleged
intention to contract by the parties
for the payment of subsidies
which, if established, would give effect to the fundamental human
right to a basic education and
prevent the state from escaping its
obligation to pay. While I do not agree that the contentions
advanced by the applicant have
prospects of success, this is not the
only consideration, nor is it always decisive, in considering
whether to grant leave to
appeal. A consideration of what is in the
interests of justice involves the weighing up of relevant factors,
including the prospects
of success. Other factors include the
importance of the issues raised and the public interest.
94
The issues raised are of considerable public importance and stand to
have an impact beyond the parties before us. In view of
the
important issues raised and the constitutional right implicated, the
interests of justice dictate that leave to appeal should
be granted.
While I do not agree with Mogoeng CJ and Jafta J or with Zondo J
that leave to appeal should be refused, I support
their analysis of
the merits of the applicant’s case.
[111] The
appeal should not succeed and the order of the KwaZulu-Natal High
Court, Pietermaritzburg (High Court) should not be
set aside. In
particular, I do not agree that the notice issued by the Provincial
Head of Department, Department of Education,
KwaZulu-Natal (the
Department) in 2008 (2008 notice) constituted a promise to pay the
allocated funds, nor do I agree that the
alleged promise constituted
an enforceable obligation. The reasons follow.
[112] The
circumstances that give rise to this application are set out in the
main judgment. I will not deal with them in detail
except for those
upon which I base my findings and conclusion.
Background
[113]
This application arises from a subsidy allocation in terms of a
notice issued by the second respondent, the Department.
The notice
provides a table in terms of which the subsidy level for each
independent school for 2009 would be based.
95
Paragraph 1 of the notice expressly states that “[t]o
determine the level in which your school shall be based (in
comparison
with the January 2004 school fees), the following table
is provided as a
guide
”. (Emphasis added.) The table
shows the primary and secondary school fees for January 2004. Below
the table, it is stated
that the “figures are based on
2005/2006 state per capita expenditure of R5057 for primary level
and R5396 for secondary
level.” The following then appears in
the second paragraph of the 2008 notice
:
“
2. In
order for schools to prepare budgets for 2009
approximate
funding
levels will therefore be as follows:
Level
% of state per capita
amount
Amount per
learner
5 Primary
0%
R0.00
5 Secondary
0%
R0.00
4 Primary
15%
R1 137.45
4 Secondary
15%
R1 190.25
3 Primary
25%
R1 895.75
3 Secondary
25%
R1 983.75
2 Primary
40%
R3 033.20
2 Secondary
40%
R3 174.00
1 Primary
60%
R4 549.80
1 Secondary
60%
R4 761.00
The above figures are based on
the 2009/10 state per capita expenditure of
Primary: R7 583
Secondary: R7 935
3. It should be noted that
subsidy allocations will be reviewed annually.”
[114] In
a circular dated 5 May 2009 and signed 18 May 2009, the Department
reduced the “approximate funding levels”
by 30%
96
in the light of a budget cut of 7.5% by the KwaZulu–Natal
Provincial Treasury, and also because additional funds were required
to cater for 28 newly registered independent schools which were
added at the behest of the applicant. These new schools were
not
included when the subsidy levels were projected. According to the
respondents, the inclusion of the 28 new schools resulted
in the
payment amounts projected in the 2008 notice not being complied with
as there were more schools sharing the allocated
R55,861 million.
The 30% reduction resulted in discussions on the subsidy issues
between the Department’s officials and
the applicant.
97
[115] The
allocation of R55,861 million for independent schools was discussed
at the meeting of 19 May 2009 between the applicant
and the
officials of the Department. The applicant was informed that the
inclusion of new schools in the subsidy allocation increased
the
number of eligible schools from 97 to 125. This meant that a balance
of R41,557 million was to be distributed to all eligible
schools for
the next three payments – a cut of 30% to accommodate all
independent schools. It was also explained that the
year-on-year
budget increase had traditionally been fixed at 6.5%, but that the
2009 budget decreased by 7%. It was explained
further that the 30%
cut would mean an effective cut of 6-8% per school based on the
subsidy received.
[116]
Significantly, the applicant noted that there would be a reduction
in the allocation to independent schools in order to
accommodate new
schools. At the meeting of 19 May 2009, one of the members of the
applicant expressed appreciation to the Department
for having
included the new schools in the subsidy allocation. After the
explanation by the Department, the applicant decided
to meet with
the MEC to discuss the issue of increasing the budget allocation to
accommodate new schools. Consequently, when
the applicant’s
efforts to reach agreement came to naught, semi-urgent proceedings
were instituted in the High Court. Essentially,
the applicant’s
complaints were that the amount allocated in the provincial budget
for independent school subsidies was
too low and that the subsidies
promised were not paid in full or timeously, as required by
Regulation 195 of the Amended National
Norms and Standards for
School Funding (Norms and Standards).
98
Litigation background
[117] The applicant sought relief for “the full extent of the
subsidies that [the] Department promised to pay to [the relevant
independent schools]”. Alternatively, it sought payment of a
percentage of the shortfall to be determined by the Court
and costs
in the event of opposition. The 2008 notice relied upon allegedly
constituted such promise. The applicant sought to
enforce that
promise.
[118] The
applicant described the applicable constitutional
99
and legislative framework in section 48 of the South African Schools
Act
100
(Schools Act) and the Regulations promulgated under the Schools
Act
101
,
in terms of which the Norms and Standards for granting a subsidy to
independent schools are laid out. The applicant contended
that,
while the 2008 notice only contained indications, the schools were
entitled to proceed on the assumption that the “subsidies
would not deviate materially from the indications provided”.
It needs to be acknowledged at the outset that section 29
of the
Constitution, section 48 of the Schools Act and certain Regulations
governing state subsidies for independent schools,
102
constitute an important constitutional and legislative framework.
[119] Relying on the alleged promise, the applicant said that the
Department had previously “paid exactly what it had promised”
and that “there is no reason why [the High Court] should not
order [the Department] to honour its indications for 2009
in the
same fashion.” (Emphasis removed.)
[120] The respondents denied that the promise was enforceable. They
maintained that the decision to reduce the subsidy was an
administrative one which should have been challenged under the
Promotion of Administrative Justice Act 3 of 2000 (PAJA). The
respondents referred to the departmental circular dated 18 May 2009
which explained the reasons for the reduction.
103
The figures in the 2008 notice, the respondents said, were
“projected” and “mere approximations” and
further that “the Respondents cannot be held to them.”
The respondents referred to items 191 and 192(b) of the Norms
and
Standards.
104
They explained that the Department did not have funds to pay the 30%
shortfall.
[121] The
applicant asserted in its replying affidavit that it “stands
or falls by its contention that it relies on an undertaking
or
promise by [the Department] to pay a certain subsidy.” It
submitted that it is entitled to rely on the promise for payment
of
an amount as promised. According to the applicant, the claim is
fact-specific for the 2009-2010 year. The applicant contended
that
“[w]hether that promise or undertaking is characterised as
being of an administrative nature or something akin to
a contractual
obligation is neither here nor there.” It said that “[i]f
it is characterised as an administrative
act then it is clearly
unlawful . . . [and if] it is contractual, then [the] applicant is
entitled to claim specific performance.”
The applicant argued
that the fact that the respondents do not have the necessary monies
to make payments sought did not preclude
the High Court from
ordering the Department to pay the promised amount. It criticised
the respondents for failing to adduce evidence
supporting the claim
that they cannot pay.
[122] In
dismissing the application with costs the High Court accepted, in
favour of the applicant, that the 2008 notice was made
with the
intention of bringing an enforceable obligation into existence
(
animo contrahendi
).
105
On whether the notice contained terms sufficiently certain to give
rise to an enforceable obligation in law, the Court first
determined
the meaning of “approximate”.
106
Interpreting the word objectively, the High Court held that the word
means “almost exact” or “very close”
and is
not ambiguous in its meaning.
107
It held:
“
To
reach the conclusion that the [2008 notice] conveyed a promise that
the actual amounts referred to in the [2008 notice] would
be paid,
would either be to ignore the word ‘approximate’, which
would offend against the basic principles of interpretation,
or
would amount to assigning it a meaning it clearly does not have.”
108
[123]
Leave to appeal was refused by both the High Court and the Supreme
Court of Appeal.
In
this Court
[124] The
applicant steadfastly relies on the 2008 notice which, it maintains,
constituted a promise to pay the allocated funds
and is enforceable.
In its further written submissions
109
the applicant contends that the statutory provisions give compelling
support for the contention that the promise is binding and
therefore
enforceable. It argues that item 195 of the Norms and Standards read
together with Regulation 4(3) of the
Notice
Regarding the Registration of and Payment of Subsidies to
Independent Schools
110
,
“create an obligation on the [MEC] to pay the approximate
subsidies of the entire 2009 school year to [the] applicant’s
members.”
[125]
Although the applicant correctly accepts that it did not argue for
relief on the above statutory basis, it contends that
by express
reference to the statutory provisions, which includes item 195, the
obligations that arise under those provisions
were foreshadowed in
the papers.
[126] The
amicus curiae bases its submissions on the right to education.
111
It posits that the applicant acquired a legitimate expectation which
is alleged to have been sufficiently pleaded. The respondents
deny
this and argue that the applicant belatedly seeks to change the case
made and considered by the High Court, thus effectively
making this
Court a court of first instance.
Issues
[127] The issues for determination are whether the 2008 notice
constituted a promise to pay the allocated funds and whether the
promise or the Norms and Standards constituted enforceable
obligations. The answers to these questions lie in the
interpretation
of the 2008 notice and the extent of the pleaded
causal action. It is important to delineate at the outset, the
principles applicable
when interpreting written documents.
Interpretive principles
[128] The
principles applicable to interpreting written documents are now
settled. The notice must be read as a whole,
112
having regard to its context and background facts to determine its
meaning and purpose.
113
The point of departure is to focus on the words used in the 2008
notice. The words should be given their ordinary meaning unless
the
context in which they are used indicates that a different meaning
was contemplated.
[129] In
Natal Joint Municipal Pension Fund v Endumeni
Municipality
,
114
the Supreme Court of Appeal cautioned against substitution of the
actual words in a document for what is considered to be reasonable,
sensible or businesslike. The Court remarked:
“
Over
the last century there have been significant developments in the law
relating to the interpretation of documents, both in
this country
and in others that follow similar rules to our own. It is
unnecessary to add unduly to the burden of annotations
by trawling
through the case law on the construction of documents in order to
trace those developments. The relevant authorities
are collected and
summarised in
Bastian
Financial Services (Pty) Ltd v General Hendrik Schoeman Primary
School.
The
present state of the law can be expressed as follows: Interpretation
is the process of attributing meaning to the words used
in a
document, be it legislation, some other statutory instrument, or
contract, having regard to the context provided by reading
the
particular provision or provisions in the light of the document as a
whole and the circumstances attendant upon its coming
into
existence. Whatever the nature of the document, consideration must
be given to the language used in the light of the ordinary
rules of
grammar and syntax; the context in which the provision appears; the
apparent purpose to which it is directed and the
material known to
those responsible for its production. Where more than one meaning is
possible each possibility must be weighed
in the light of all these
factors. The process is objective, not subjective. A sensible
meaning is to be preferred to one that
leads to insensible or
unbusinesslike results or undermines the apparent purpose of the
document. Judges must be alert to, and
guard against, the temptation
to substitute what they regard as reasonable, sensible or
businesslike for the words actually used.
To do so in regard to a
statute or statutory instrument is to cross the divide between
interpretation and legislation; in a contractual
context it is to
make a contract for the parties other than the one they in fact
made. The ‘inevitable point of departure
is the language of
the provision itself’, read in context and having regard to
the purpose of the provision and the background
to the preparation
and production of the document.”
115
(Footnotes
omitted.)
Does the 2008 notice constitute a promise?
[130] Keeping the above interpretive principles in mind, I now
consider the words employed in the 2008 notice to determine whether
it constitutes a promise to pay the amounts allocated. The notice
provides a table as a guide to determine the level at which
each
school subsidy will be based in comparison with January 2004 school
fees. Below the table the following words appear: “[t]he
above
figures are based on 2005/2006 state per capita expenditure of R5057
for primary level and R5396 for secondary level.”
[131] It is important to note that so far the notice does not
promise anything, let alone payment of subsidies. Instead, it tells
us that the purpose of the table is to determine the level at which
subsidy allocations per school will be based and that such
level is
in comparison with the school fees payable in January 2004.
[132] The notice further states: “[i]n order for schools to
prepare budgets for 2009
approximate
funding levels
will therefore be as follows”. (Emphasis in original.) A
second table is set out illustrating the approximate
funding levels
in various percentages and sums of money for primary and secondary
levels. The second table is followed by this
explanation: “[t]he
above figures are based on the 2009/10 state per capita expenditure
of Primary: R7 583 [and] Secondary:
R7 935”.
[133] The
notice concludes by stating that “[i]t should be noted that
subsidy allocations will be reviewed annually”.
Once more, no
promise to pay is made. The apparent purpose of the second table was
to provide approximate funding levels to help
schools in preparing
their budgets. The words used in the notice are clear and cannot be
construed to mean that the Department
has promised to pay, without
reading into the notice words which are not used in it. According to
Endumeni Municipality
such an approach is impermissible
because it falls outside the scope of interpretation.
[134] For these reasons I am of the view that, properly construed,
the 2008 notice does not constitute a promise to pay.
[135] Even if one were to assume that the 2008 notice amounts to a
promise to pay, the use of the word “approximate”
evidently shows that the allocations in that notice were mere
projected figures and not exact amounts. The remarks by the High
Court in this regard
116
therefore cannot be faulted. In any event, the applicant correctly
admitted that the amounts referred to in the 2008 notice are
approximations and that the respondents cannot be held to those
exact amounts.
[136] The applicant expressed doubt that a 30% reduction of the
subsidies indicated in the 2008 notice constitutes an “approximate”
payment of those amounts. It invited this Court to give content to
the “approximate” qualification in the notice
or
determine the correct percentage by which the subsidies could have
been decreased, despite the paucity of cogent evidence
with regard
to the respondents’ ability to pay. Relevant evidence in this
regard might have proved helpful. At the hearing
the applicant was
put to an election to have the matter remitted for further evidence.
It declined to have the matter remitted
for that purpose. The
applicant must be held to its election.
[137] The
fact that the applicant construed the notice as amounting to a
promise is immaterial. This is so because interpretation
is a
question of law and not of fact. Consequently, the import of the
2008 notice falls to be determined by the Court, independent
of
whatever interpretation is placed on the notice by the parties. In
KPMG Chartered Accountants (SA) v Securefin Ltd and Another
,
117
the Supreme Court of Appeal summarised the rules relating to the
admissibility of parol evidence. The Court said:
“
First,
the integration (or parol evidence) rule remains part of our law.
However, it is frequently
ignored
by
practitioners and seldom enforced by trial courts. If a document was
intended to provide a complete memorial of a jural act,
extrinsic
evidence may not contradict, add to or modify its meaning . . . .
Second, interpretation is a matter of law and not
of fact and,
accordingly, interpretation is a matter for the court and not for
witnesses . . . . Third, the rules about admissibility
of evidence
in this regard do not depend on the nature of the document, whether
statute, contract or patent . . . . Fourth, to
the extent that
evidence may be admissible to contextualise the document (since
‘context is everything’) to establish
its factual matrix
or purpose or for purposes of identification, ‘one must use it
as conservatively as possible’
. . . . The time has arrived
for us to accept that there is no merit in trying to distinguish
between ‘background circumstances’
and ‘surrounding
circumstances’. The distinction is artificial and, in
addition, both terms are vague and confusing.
Consequently,
everything tends to be admitted. The terms ‘context’ or
‘factual matrix’ ought to suffice.”
118
[138] The
applicant contended further that the announcement of a 30% cut in
May 2009 was made too late for independent schools
to rearrange
their affairs. This might well be the case. However, the delay in
payment was explained by the Department to the
applicant and
representatives of member schools at the meeting of 19 May 2009. In
any event the lateness of the announcement
and the delay in
effecting payment does not, without more, render the promise
enforceable.
[139] For
these reasons I conclude that the 2008 notice does not constitute a
promise to pay either the full extent of the allocated
funds or any
percentage thereof.
Enforceability
[140] As
mentioned earlier, the applicant relied steadfastly on the 2008
notice which it said constituted a promise to pay the
allocated
funds and that the promise is enforceable. However, in further
written submissions filed pursuant to the Directions,
119
it is contended that the Norms and Standards (item 195 and
Regulation 4(3)) created an enforceable obligation to pay.
120
The submissions do not withstand close scrutiny. I acknowledged
earlier that section 29 of the Constitution, section 48 of the
Schools Act and the Norms and Standards comprise an important
legislative framework. However, they are not dispositive of the
issues before us.
[141]
Reliance on the said Regulations as a basis for creating an
enforceable obligation is a departure from the case as pleaded
in
the High Court. That much was readily accepted by the applicant and
the main judgment correctly bears that out.
121
In substance, the applicant’s case did not concern whether the
funds allocated to the individual schools were determined
in
accordance with the Norms and Standards. The case was about payment
of the funds determined and allegedly promised to be paid
by the
respondents.
[142] In any event, item 195 and Regulation 4(3) cannot be read in
isolation.
122
Items 191 and 192(b) of the Norms and Standards, referred to below,
are also relevant. They deal with subsidies in relation to
PED
budgets. Items 191 and 192(b) provide:
“
191.
The Ministry of Education is sensitive to the connection between the
total cost of independent school subsidies and the overall
budgetary
position of a Provincial Education Department [PED]. Recent
reductions in the overall funds available for independent
school
subsidies because of urgent budgetary expediency should not become
de facto policy by default. At the same time, PEDs
must have
latitude to vary budgetary allocations between programme areas, in
relation to the total funds at their disposal, and
the priorities
established in terms of national and provincial policies.
192. A PED may, therefore,
alter the fee levels and/or corresponding percentage subsidies
levels except for the 0% subsidy level
applicable to school fee
level 5 in figure 4 after consultation with the [Department],
if the application of these norms would—
. . .
(b) contribute to
over-expenditure on the PED’s budget in the year they are
applied”. (Emphasis added.)
[143] The
respondents explained in the circular of 18 May 2009 that because of
the “cash crisis”, Cabinet agreed on
a reduction
equivalent to 7.5% of their allocation for 2009/10 MTEF.
123
As a result, the Department had to effect a reduction in its
equitable share. It was explained further that funds had to be
distributed to cater for additional new schools that became eligible
for a subsidy in the same financial year. All of this was
not
refuted by the applicant. It follows that the Department was
entitled, under item 192(b), to make a reduction to avert
over-expenditure.
[144] Everyone has a right to a basic education. It is indeed so
that the right to a basic education may be accessed through
independent schools.
124
Therefore the state has a concomitant obligation to ensure that the
right to a basic education can be enjoyed by everyone. In
this
context, the Schools Act requires the state to “fund public
schools from public revenue on an equitable basis in order
to ensure
the proper exercise of the rights of learners to education and the
redress of past inequalities in education provision.”
125
The state is also required to provide public schools with an annual
indication of funding to enable them to prepare their budget
for the
next financial year.
126
In contrast, independent schools may be established and maintained
by anyone at their own cost.
127
It follows that the payment of a subsidy is not a right under the
Bill of Rights. The applicant accepted this. The MEC may grant
a
subsidy to a registered independent school that complies with
prescribed standards,
128
from funds appropriated by the provincial legislature for that
purpose.
129
At best, the applicant was entitled to claim the subsidy.
[145] The form of the applicant’s case is important. The first
time the applicant mentioned a contract was in its replying
affidavit when it made an assumption that the promise is a contract.
In its words “[w]hether that promise or undertaking
is
characterised as being of an administrative nature or something akin
to a contractual obligation is neither here or there.
. . . If it is
contractual, then applicant is entitled to claim specific
performance.” Ordinarily, a litigant who relies
on a contract
has the onus to establish its existence and must show, on balance,
the breach of an undertaking.
130
The main judgment holds:
“
The
applicant relied in its founding and subsequent papers on what it
simply and persistently described as an enforceable undertaking
to
pay the entire year’s subsidy without any reduction. This
casts the claim in contractual, or ostensibly contractual,
terms. In
my view the undertaking is indeed enforceable, but on broader public
law and regulatory grounds than a bilateral agreement.”
131
[146] I do not agree that the alleged promise constituted an
enforceable obligation, nor do I agree that the applicant’s
claim can be classified in contractual terms. In the pleadings a
quo, the applicant persistently relied on the 2008 notice which,
it
said, constituted an enforceable promise. I do not think that
reliance on the alleged promise for payment of the full extent
of
the subsidy was, by itself, a sufficient ground for concluding that
a contract or quasi-contract came into being.
[147] The purpose of pleadings, as dealt with by the Supreme Court
of Appeal in
Minister of Safety and Security v Slabbert
,
132
albeit in action proceedings, is apposite. The Court remarked:
“
The
purpose of the pleadings is to define the issues for the other party
and the court. A party has a duty to allege in the pleadings
the
material facts upon which it relies. It is impermissible for a
plaintiff to plead a particular case and seek to establish
a
different case at the trial. It is equally not permissible for the
trial court to have recourse to issues falling outside the
pleadings
when deciding a case.
There are, however,
circumstances in which a party may be allowed to rely on an issue
which was not covered by the pleadings.
This occurs where the issue
in question has been canvassed fully by both sides at the trial.”
133
(Footnote omitted.)
Notably,
in casu, the existence of a contract or quasi-contract was neither
pleaded nor agreed upon by the parties nor was the
broader public
law ground pleaded.
[148] For
these reasons, I conclude that neither the alleged promise nor the
Norms and Standards created an enforceable obligation.
[149] In
the result, I would have granted leave to appeal, condoned the late
filing of the respondents’ written submissions
in response to
the amicus’ submissions, disallowed the appeal and confirmed
the order of the High Court dismissing the
application.
ZONDO J (Mogoeng CJ and Jafta J concurring):
Introduction
[150] I
have had the opportunity of reading the judgments prepared by my
Colleagues, the Chief Justice and Jafta J, Cameron J,
Nkabinde J and
Froneman J. I agree with the judgment prepared by Cameron J
(main judgment) that there is a constitutional
issue in this matter
but I am unable to agree that the appeal should succeed. In fact I
do not even agree that the applicant
should be granted leave to
appeal. In my view, on the case that the applicant brought the
respondents to Court to answer, which
is the only case that we are
entitled to decide, the applicant has no case whatsoever and its
application for leave to appeal
should be dismissed. I agree with
Nkabinde J’s judgment in so far as it is consistent with this
judgment but would conclude,
even on that judgment, that leave to
appeal should be refused. I am in full agreement with the joint
judgment of the Chief Justice
and Jafta J.
What is the applicant’s case?
[151] The
applicant’s case as set out in its founding affidavit was
simple. It was that the Provincial Department of Education,
KwaZulu-Natal (Department) promised to pay approximate amounts of
subsidies to certain independent schools which the applicant
represents in this matter but that, when the Department paid
subsidies to the schools, it paid amounts that were substantially
lower than the “indications” or “approximations”
of amounts it had promised to pay to the schools. The
applicant
contended that the independent schools were entitled to be paid the
indications or approximations of the amounts of
the subsidies that
the Department had promised.
[152] Mr Ebrahim Ansur deposed to the applicant’s founding
affidavit in the High Court. In the applicant’s founding
affidavit he inter alia said:
“
I am
advised that it has been held that an independent school has no
right to be paid a subsidy. Against that, I am advised that
an
independent school has a right to claim a subsidy where a Department
or any other organ of State has promised to pay such
a subsidy.”
(Emphasis omitted.)
In the
same affidavit Mr Ansur submitted that “the notices from the
Department, to the independent schools, setting out
the subsidies
that would be paid in the following years, constituted such
promises”. He went on to say:
“
Importantly,
I do not think that it would necessarily be correct to say that the
Department promised to pay the exact amounts
that they indicated
they would pay. Rather, it is clear that the Department promised to
pay
an
amount approximate to the indications
in
the annual letters.
Applicant,
on behalf of its members, seeks to enforce that promise
.”
(Emphasis added.)
The first
emphasised portion of this quotation reveals that, as support for
the promise upon which the applicant’s case
is based, the
applicant relies on a statement that, on the applicant’s own
understanding, is double-vague. I say this because
the fact that the
amounts were indications or approximations is vague enough to be
fatal to the applicant’s case but in
this quotation the
applicant says that “it is clear that the Department promised
to pay an amount approximate to the indications
in the annual
letters.” This means that, on the applicant’s own
understanding, this was not an approximation to a
specific amount,
but an approximation to another indication or approximation. In the
applicant’s founding affidavit Mr
Ansur inter alia said:
“
From
the aforegoing I submit that it is clear that the Department has
materially deviated from the subsidies that it indicated
that it
would pay.”
In the
next paragraph, Mr Ansur also said:
“
In
saying this, I am acutely mindful that the notices from the
Department emphasise that the projected subsidies are only
‘indications’
or are ‘approximate’”.
[153] One of the defences put up by the respondents in their
answering affidavit was that the applicant wanted the Court to force
the Department to pay the schools amounts that were approximations.
The respondents contended that the Department could not be
held to
approximations. In the applicant’s replying affidavit Mr Ansur
had the following to say in this regard:
“
I
admit that these amounts are approximations.
Respondents
are quite correct that they cannot be held to exactly these amounts.
I
sincerely doubt that respondents will seek to contend that a 30%
reduction in promised amounts still constitutes an ‘approximate’
payment. Applicant has made provision for this Court to determine
the latitude to be allowed to respondents regarding the
‘approximate’
qualification in the promise. Importantly,
in the previous payments what was promised was paid.”
(Emphasis added.)
What the
applicant was saying in this passage is: we accept that, since the
amounts indicated by the Department to the schools
were
approximations, the Court cannot order the payment of those amounts
to the schools but we are asking the Court to determine
what the
amounts are that they must pay to the schools which are approximate
amounts. In this quotation the applicant says it
is quite correct
that the respondents cannot be held to these exact amounts. The
question that arises then is: if the Department
cannot be held to
exactly these amounts, to exactly what amounts can it be held if it
can be held to any amounts at all? In my
view the obvious answer is:
none. The Department cannot be held to any amounts because it never
committed itself to any exact
amounts.
[154] Mr
Ansur further submitted that “there is no reason why this
Court should not order [the Department] to honour its
‘indications’
for 2009 in the same fashion” as it did in 2008 when,
according to Mr Ansur, “the [Department]
paid exactly what it
had promised”. In the same affidavit he says that the other
option (to enforce the Department’s
promise to pay amounts
approximate to the indications given in its letters), “is for
this Court to decide what it considers
(as a percentage) to be
approximate.” Mr Ansur goes on to say in the same
paragraph:
“
Approximate
is defined as ‘almost exact’ or ‘very close’.
If this court is of the view that approximate
should mean, for
example, within 2% of the given indications then the third order in
the notice of motion (in the alternative
to the order in the second
order) allows for this Court to order the Department to pay such an
approximate amount. If, following
the example, this Court decided
that approximate could reasonably mean within 2% of the given
indications, then this Court could
order the Department to pay 98%
of the amounts in column 8.”
Then soon
after the above passage, Mr Ansur says: “All that the
[applicant] seeks to do in this application is to enforce
those
promises.” In other words, the promises that the applicant
sought to enforce are the promises of the indications
or
approximations of the amounts. In my view the passages I have quoted
above from Mr Ansur’s affidavits reveal quite
clearly
that the applicant wanted the Court to decide what the amount is
which the Department should pay to the schools since
the Department
never promised the schools any exact amount. In other words, the
Court was being asked to hold the Department
to an amount that the
Department never undertook to pay. If ever there was a case in which
a Court was asked to make a contract
for the parties, clearly this
is such a case.
Deviation by the main judgment from the applicant’s case
[155] What I have set out above represents the only case that the
applicant set out in its founding affidavit. There is no other
case
foreshadowed in the founding affidavit. That is also the case that
Koen J decided in the High Court which he dismissed.
In my view Koen
J was, without any doubt, correct in dismissing the applicant’s
application. That is also the case in respect
of which the Supreme
Court of Appeal refused a petition for leave to appeal. That Court
was absolutely correct in refusing leave
to appeal. In fact that is
also the case which counsel for the applicant argued before us in
this Court.
[156] It
is necessary to point out that during the hearing of argument in
this matter in this Court, various questions from the
Bench were put
to counsel for the applicant that were aimed at clarifying what his
case was. One of these was whether he was
relying on the doctrine of
legitimate expectation. His answer was: No! He was asked whether he
was relying upon public law. His
answer was: No! He was asked
whether the matter should be remitted to the High Court to give the
parties an opportunity to place
more evidence before the court and
his answer was yet another: No. He said that this matter had been
going on for too long and
the applicant wanted finality. He made it
clear that the applicant’s case was that the Department was
contractually bound
to pay the relevant schools the approximate
amounts indicated in the papers. He presented the applicant’s
case on the basis
that the Department had a contractual obligation
to pay the approximate amounts. He said that the applicant stood or
fell by
that case.
[157] The main judgment concludes that the “undertaking”
or “promise” is not enforceable “because
of an
agreement”.
134
It continues and points out that—
“
[a]
contract is an agreement between parties, entered into with the
intention of creating binding obligations, to perform according
to
its terms agreed . . . . But here there was no contract. The
undertaking was not extended as part of a bilaterally binding
agreement, which is the hallmark of contractually enforceable
obligations.”
135
In the
next paragraph the main judgment continues: “Nor was there any
intention on the part of the Department, or indeed
the schools, to
be contractually bound by a private agreement.”
136
This should have been the end of the applicant’s case in the
main judgment because that is the only case foreshadowed in
the
applicant’s founding affidavit.
[158]
Notwithstanding the conclusion that the applicant’s case based
on a contract must fail, the main judgment proceeds
to find for the
applicant on a basis not included in the case by which the
applicant’s counsel said he stood or fell. This
is a matter in
which the applicant was represented by senior counsel and not a case
where it was unrepresented or represented
by some inexperienced
legal practitioner. Once we have found that the applicant has no
contractual case, the applicant must be
allowed to fall. The Court
should not seek to pick the applicant up and make it stand upon a
different case.
[159] The
main judgment finds that the respondents were obliged under the
Amended National Norms and Standards for School Funding
137
(Norms) and the South African Schools Act
138
(Schools Act) to pay the approximate amounts of subsidy in regard to
the first term. The main judgment then points out that,
when the
Department issued its letter signed on 18 May 2009 in which it
informed the schools that they should expect a cut “not
exceeding 30% in your current allocation for the financial year
2009/10”, the first term’s subsidy as promised in
the
2008 notice had already fallen due.
139
The main judgment also expresses the view that the Department’s
delay in making payment for the first term “constituted
a
breach of its obligations under the Norms and the Schools Act.”
140
[160] In
the next paragraph the main judgment concedes that this was not the
case which the applicant had brought to Court. It
says:
“
It is
true that this was not the clasp on which the applicant originally
pegged its hopes. The applicant relied in its founding
affidavit and
subsequent papers on what it simply and persistently described as an
enforceable undertaking to pay the entire
year’s subsidy
without any reduction. This cast the claim in contractual or
quasi-contractual terms. In my view the undertaking
is indeed
enforceable, but on broader public law and regulatory grounds rather
than bilateral agreement.”
141
With
regard to the last part of this sentence I can only say again that,
when counsel for the applicant was asked at the hearing
whether his
case included any reliance on public law, he disavowed any reliance
on public law. That being the case, it is not
permissible for the
main judgment to rely on public law to support its finding in favour
of the applicant. In the “applicant’s
supplementary
replying affidavit” Mr Ansur put the applicant’s case
thus: “The crisp legal issue is whether
the letter (annexure
‘E’ to the founding affidavit) constitutes an
enforceable promise.” He did not base the
applicant’s
cause of action on the Norms and Regulations. He based it simply on
the indications and approximations in annexure
“E”. This
Court has repeatedly said that in motion proceedings a party must
make its case in its papers.
142
That is the rule of practice that the courts in this country follow
and have followed for a very long time which this Court is
also
obliged to follow in adjudicating cases brought to Court by way of
motion proceedings. When this Court deviates from such
established
practices for the adjudication of cases which other courts are
obliged to follow, it may cause uncertainty and confusion
whether
other courts must still follow such practices. There is no warrant
for the creation of such a situation.
The order for the payment of approximated amounts
[611]
Another reason why I am unable to agree with the main judgment is
that it holds that the Department made an enforceable
promise or
undertaking in this matter and makes an order that the Department
pay to the relevant schools approximate amounts.
Assuming that there
was a promise made by the Department, that promise could only be a
promise to pay the schools concerned approximately
the amounts it
indicated in the relevant circular. That would be a promise to pay
approximate amounts. In law that does not give
rise to a legal
obligation or an enforceable obligation. Indeed, the deponent to the
respondents’ answering affidavit said:
“In any event the
amounts listed in annexure E to the applicant’s founding
affidavit are mere approximations and
the respondents cannot be held
to them.” It is a basic tenet that a legal obligation must be
clear and certain. The rationale
for this is that the person who
bears the obligation may have no uncertainty about what he or she is
required to do in order
to discharge the obligation because a
failure to discharge the obligation may have serious and
far-reaching consequences for
him or her and, maybe, others. He,
therefore, must be clear about what he needs to do in order to avoid
a breach of the obligation
and the consequences that would flow from
such a breach. If a document is vague or uncertain or if a statement
which is said
to give rise to an obligation is vague or uncertain,
there can be no legal obligation that arises from it or from the
document.
[162] An
order of court must also be clear and unequivocal so that the person
against whom it is made knows exactly what he or
she must do to
comply with it if it orders him or her to do something or what he or
she must not do if it orders him or her not
to do something. One of
the orders made in the main judgment reads as follows:
“
The
[Department] is directed to pay to the schools affiliated with the
applicant on 22 September 2008 the approximate amounts
specified in the notice of that date as had fallen due for payment
on 1 April 2009.”
If I
promise to pay you approximately R100, you cannot successfully sue
me to pay you approximately R100 because no legal obligation
arises
from such a promise. If you say I have a legal obligation arising
out of making such a statement, the question that would
arise is:
exactly how much do I owe you in terms of that obligation? Do I owe
you R99,50 or R99 or R98 or R95 or R80? How much
exactly would I
have to pay you in order to discharge my obligation to you? There
can be no answer to this question.
[163] It
is precisely because the statement that I will pay you approximately
R100 is unclear, vague and uncertain that it does
not give rise to a
legal obligation. That is part of my difficulty with the proposition
that the Department’s circular,
which gave “indications”
or “approximations” (even by the applicant’s own
admission) of amounts,
gave rise to a legal and enforceable
obligation on the part of the Department to pay those “indications”
or “approximations”
of subsidies to the relevant
schools. Those “indications” or “approximations”
are no different from the
example I have given above of a promise to
pay someone approximately R100. It is as simple as that. In law such
a statement or
promise does not give rise to an enforceable
obligation. Let me give one more example to show the
unenforceability of the approximations
or indications made by the
Department to the relevant schools. Let us say Mr Smith offers to
buy Mr Swart’s second
hand car and Mr Swart asks him: for
how much do you offer to buy my car? Mr Smith says:
approximately R30 000. At that
stage and before Mr Swart
accepts or rejects the “offer”, has Mr Smith made a
valid and enforceable offer to Mr Swart?
The clear answer is: No!
There is no valid and enforceable offer because the price is
uncertain. Exactly the same principle applies
to this case. I accept
that the main judgment finds that no contract has been shown in this
case but finds that, viewed from
a public law perspective, the word
“approximate” or “approximations” or the
phrase “approximate
amounts” is enforceable. This means
that, in the example of Mr Smith and Mr Swart that I have just given
above, if Mr Smith
made the “offer” in his capacity as a
state functionary, the reasoning of the main judgment would be that
that “offer”
or indication by Mr Smith is enforceable. I
cannot agree.
[164] A
court can certainly not order someone to pay another person
approximately a certain amount. The order proposed in the
main
judgment orders the Department to pay indications or approximations
of subsidies in respect of the first school term of
2009 less the
amounts already paid. In my view such an order is not competent in
law. The Department will rightly be uncertain
about exactly how much
it should pay the schools.
[165] The
main judgment says that “it is usual that amounts of money
payable by court order are precise” but it also
says “there
is no reason why a court order must be ‘totally precise’”.
143
I beg to differ. An order of court must be certain. The reason for
this is obvious. If it is not certain, it cannot be carried
out. For
the reasons that I have given above it is a principle of our law
that an order of court must be clear and certain. An
order that
someone pay another approximately R100 is uncertain and vague and,
therefore, it does not meet a basic requirement
for an order of
court.
[166] In
support of the proposition that the word “approximate”
is not vague and that an order may be made requiring
payment of an
“approximate” amount, the main judgment relies upon
Fluxman v Brittain
.
144
[167] In
Fluxman
a submission was made that a condition in an
agreement that an employee could draw “moderate amounts”
from the share
of his profit in the business over a certain period
was void for vagueness. Four of the five Judges of Appeal who heard
the matter
wrote separate judgments. Only Tindall JA made a
finding to the effect that the phrase “moderate amounts”
was
not vague. His motivation was contained in a single sentence. He
said:
“
Though
it might not be easy to determine what is a moderate amount at a
particular time, such determination would be possible
on evidence of
the various relevant facts such as, for example, the financial
position and requirements of the business at such
time.”
145
[168] In
the relevant footnote the main judgment says that in
Fluxman
:
“
. . .
the Appellate Division had to interpret the meaning of ‘moderate
amounts’ in an agreement in which the employee
had agreed to
leave his undrawn share in profits in the business. Tindall JA found
the condition not void for vagueness. On the
contrary, he stated
that a determination of what ‘moderate amounts’ would
mean ‘would be possible on evidence
of the various relevant
facts, such as, for example, the financial position and requirements
of the business at such time.’
The reasoning by the other
members of the court made it unnecessary to address Tindall JA’s
view regarding the enforceability
of ‘moderate amounts’.
However, none of the other judges explicitly disagreed with his
conclusion on this.”
146
[169]
There are some important points to bear in mind about
Fluxman
in
considering the main judgment’s attempt to draw support from
that case. They are that:
(a) it was not the Court which found the phrase “moderate
amounts” not void for vagueness but it was only one out
of
five Judges of Appeal, namely Tindall JA;
(b) Tindall JA conceded in his judgment that it “might not be
easy to determine” what constituted “moderate
amounts”;
(c) the only reason Tindall JA advanced for his conclusion that the
phrase “moderate amounts” is not vague is that
determining “moderate amounts” “would be possible
on evidence of the various relevant facts” and he went
on to
give examples of such facts. In the present case it cannot be said
that the determination of “approximate”
amounts would be
possible on evidence. No evidence is required to determine what
amount is approximate to a specific amount.
Accordingly, the reason
advanced by Tindall JA in support of his finding in
Fluxman
cannot apply to the word “approximate” or
“approximations” with which we have to deal in the
present matter;
and
(d) the main judgment makes the point that, although the other
Judges of Appeal did not concur in Tindall JA’s judgment,
they
also did not explicitly disagree with his conclusion. That the other
Judges of Appeal did not explicitly disagree with Tindall
JA’s
conclusion cannot be used to draw any favourable inference
supportive of Tindall JA’s conclusion. In any event,
the main
judgment points out that the reasoning of the other Judges of Appeal
made it unnecessary to make a finding on the vagueness
or otherwise
of the phrase in question.
[170] If
Tindall JA intended to suggest that a court may order a party to pay
“moderate amounts” to another party,
that is, in my
view, not the correct legal position. Such an order is not
competent in law. It is vague and uncertain and
the party to whom it
is directed will not know exactly how much he or she should pay the
judgment creditor in order to comply
with the order. It is
also not clear what amount would have to be inserted in the writ of
execution if the Sheriff had
to be instructed to execute such an
order. One cannot ask the Sheriff to execute an approximate amount.
This criticism applies
with equal force to the order in the main
judgment ordering the Department to pay approximate amounts to the
relevant schools.
[171]
There is implied acknowledgement in the main judgment that the
Department may have difficulties in complying with the order
that it
pay approximate amounts to the relevant schools. Three sentences in
the main judgment support this. They read thus:
“
The
2008 notice specified exact sums, and undertook to pay them
approximately. That is an obligation that is coherent and legally
enforceable. And the Department is obliged to engage with the
schools to find finality in complying.”
147
If the
order that is made is “coherent and legally enforceable”,
why is there a need for the main judgment to seek
to compel the
Department to engage with the schools to find finality in complying?
If the obligation on which this order is based
is clear and certain,
why does the main judgment seek to get the Department and the
applicant to engage with each other?
[172] In
my view the statement in the preceding quotation that “the
Department is obliged to engage with the schools to
find finality in
complying” is included in the main judgment because the order
is vague. Where an order is clear and the
person against whom it has
been made cannot legitimately claim to be unsure what it requires
him to do or not to do, no need
arises for engagement if the person
required to comply fails or refuses to comply. It is only when an
order is not clear that
engagement may be required. Furthermore, the
applicant never asked for any engagement in its founding papers.
[173] The
main judgment continues and says:
“
The
Department will tender performance in terms of the Court’s
order. If the recipient schools consider its tender inadequately
‘approximate’ to the rand amounts specified, they can
apply to the High Court for appropriate relief.”
148
In this
passage the main judgment reveals, once again, an implied acceptance
that difficulties may arise with the implementation
or execution of
the order. It says that the Department will tender performance in
terms of the Court’s order. If the order
that the main
judgment makes against the Department is clear and certain, the main
judgment should not expect the Department
to tender performance. It
should expect it to comply with the order. The main judgment does
not explain why it says that the
Department is obliged to engage
with the schools to find finality in complying nor does it explain
what the basis is for this
obligation to engage in order to find
finality in compliance with an obligation that it says is clear and
enforceable. It must
be pointed out that, if an order of court is
clear and enforceable, as all orders made by courts should be, and
the party against
whom such an order has been made does not comply
with it, what is supposed to follow is the enforcement of the order
and not
engagement between the parties about how much the party who
has failed to comply was required by the order to pay. How much that
party was required to pay is supposed to have been determined by the
order of court.
[174] In
my view this obligation to engage with the schools which the main
judgment now places upon the Department, which was
never part of the
applicant’s case and which the applicant never asked to be
placed upon the Department, is introduced
to cater for the
eventuality that the Department may offer to pay the schools amounts
that the schools might not regard as approximate
enough to the
approximations that the Department had given. In other words, it is
introduced to address the possibility that
there may be a dispute
between the parties as to what amount would constitute compliance
with the order. That is precisely one
of the difficulties I have
with the main judgment and the order it seeks to make.
[175] The
main judgment seeks to make up for the uncertainty and vagueness of
the order it makes by introducing an inexplicable
obligation to
engage. That is precisely because there is a realisation that,
without such obligation to engage, the schools may
not be able to
enforce the order proposed in the main judgment. Obviously, the main
judgment hopes that during the engagement
an agreement will be
reached between the Department and the schools as to the amount that
the Department will pay. That, however,
should have happened before
the applicant took the Department to court and, precisely because
that did not happen before, the
applicant has no case and should not
have come to court. The main judgment talks about the Department
tendering performance because
it does contemplate that the
Department may not be certain as to the amount that it must pay each
school if it is to give effect
to the order.
[176] In
the passage quoted above the main judgment goes on to say in effect
that, if a recipient considers that the amount tendered
by the
Department is inadequately “approximate” to the Rand
amounts that were indicated, then “[the recipient]
can apply
to the High Court for appropriate relief.” I am completely in
the dark as to what the main judgment contemplates
that the
recipient can go to the High Court about at that stage. When a
litigant has been granted an order sounding in money,
which the
order of the main judgment is supposed to be, and the judgment
debtor does not satisfy that order, the judgment creditor’s
next step is not to approach a court “for appropriate relief”
but to set in motion the process of execution by having
a writ of
execution issued so as to recover the amount specified in the order.
Such judgment creditor would already have been
granted appropriate
relief by the Court. So, why and on what basis can or should the
recipient go to Court for other relief in
the present case?
Furthermore, the main judgment’s suggestion that at that stage
a recipient school may approach the High
Court for appropriate
relief is contrary to the clear stance taken by the applicant
through its counsel at the hearing that it
wanted finality in this
litigation. Of course, the implication of this suggestion by the
main judgment is that any decision by
the High Court at that stage
may give rise to further appeals up to even this Court.
[177] I
have said earlier that part of the difficulty with the order of the
main judgment is that it is not enforceable because,
if you want to
enforce it and have reached the stage where you must have a writ of
execution issued, you would not know what
amount to insert in the
appropriate space in the writ of execution. This is because in the
writ you cannot, for example, insert
“approximately R100 000”.
The Registrar will not issue such a writ and if, by mistake, the
Registrar issues
it, the Sheriff will refuse to execute such a writ
because he or she will not know what the value of the goods are
which he or
she must attach in terms of the writ. So, there is a
real problem with how the order proposed in the main judgment can be
enforced
or executed.
[178] The
dispute which this Court is called upon to resolve finally is
exactly how much the Department is obliged to pay the
schools
concerned if it is obliged at all. Earlier on I quoted a passage
from one of Mr Ansur’s affidavits where he said
that the
applicant was asking the Court to make a determination of the
approximate amounts which the Department must be ordered
to pay.
149
That is asking a court to make a contract for the parties. The main
judgment conspicuously refrains from doing this despite the
fact
that this is what the applicant has wanted since it initiated this
litigation in the High Court a few years ago and this
is the relief
that it sought in this Court. This is the relief that the
applicant’s counsel must have had in mind also
when he said
that the applicant stood or fell by its case.
[179] The
main judgment says that the applicant has a case but does not give
it the order it has sought in three courts including
this one. In my
view the reason why the main judgment does not make such an order is
that it appreciates that it cannot order
the Department to pay an
amount it never specified it would pay. If that is the case and if
the main judgment is justified in
not making an order specifying the
approximate amount that the Department must pay to each school
concerned, what is the legal
basis for the suggestion that a
recipient school which considers the amount tendered by the
Department inadequately approximate
may approach the High Court for
appropriate relief? What relief would be appropriate?
[180] It
seems clear that the relief that the main judgment contemplates that
the recipient school may seek from the High Court
is an order
specifying the approximate amount that the Department should pay to
it. I have immense difficulties with the proposition
that at that
stage a recipient school can approach the High Court for such an
order. This is the relief that, through the applicant,
the relevant
schools sought in the High Court, Supreme Court of Appeal and in
this Court. If this Court does not grant that order
in the present
proceedings, the issue will be res judicata and no school will have
a cause of action to approach the High Court
for that relief. If a
school were to approach the High Court for such relief, the
Department would be entitled to say to the
High Court: “That
is relief that through its association the school asked for in
previous litigation and we successfully
showed that it was not
entitled to that relief. All the courts were not prepared to grant
that order. The school cannot restart
the whole litigation afresh on
the same issue.” If the issue will be res judicata between the
parties, this Court cannot
make an order that in effect takes away
the defence of res judicata that the respondents would, otherwise,
have and effectively
help the applicant or the schools to have a
second bite at the cherry. In my view the main judgment unduly leans
over to make
a case for the applicant which the applicant neither
made in its papers nor asked for and I find this extremely unfair to
the
respondents.
[181] The
respondents also pointed out that one reason for the payment of
subsidies that were approximately 30% less than the
indications of
amounts of subsidies that the Department had given to the schools
was that its budgetary allocation was substantially
reduced by the
provincial Treasury. Another reason that the respondents gave was
that 28 new independent schools were included
in the subsidies at
the applicant’s request even though they were not part of the
schools to which the indications of subsidy
payments had been given
in 2008. One of the points made by the deponent to the respondents’
answering affidavit is that,
when it gave the indications or
approximations of subsidies, the Department gave them in respect of
97 schools. However, continues
the deponent, it was subsequently
requested by the applicant to include 28 other schools. The
Department says it agreed to this
at the insistence of the
applicant. The Department says that, after the inclusion of the 28
schools, the applicant could not
have legitimately expected that
payments of subsidies would be in accordance with Annexure “E”
or in accordance with
the approximations or indications made earlier
by the Department in respect of 97 schools. The inclusion of the 28
schools meant
that in effect an approximated budget which would have
been divided among 97 schools was now to be divided among 125
schools.
The Department’s point is that 28 schools is about
28,9% of 97 schools and that, therefore, this meant that whatever
the
125 schools could legitimately expect to be paid as subsidies
had to be at least about 28,9% less than what would have been
received
by the 97 schools had the 28 schools not been included.
[182] For
the above reasons I would refuse leave to appeal.
MOGOENG CJ AND JAFTA J (Zondo J concurring):
[183] We
have read the judgments prepared by our Colleagues Cameron J (main
judgment), Froneman J, Nkabinde J and Zondo J. For
reasons
articulated in the judgments of Nkabinde J and Zondo J, we do not
agree with the main judgment and also the judgment
of Froneman J.
However, we do not agree with Nkabinde J that leave to appeal should
be granted. But we agree with the rest of
her judgment.
[184]
In our view the prospects of success, though not a decisive factor,
assumes significance in the present circumstances. This
is the
position because the determination of this case does not depend on
the interpretation of the Constitution or statutory
provisions
regulating access to basic education. The case concerns the question
whether the 2008 notice issued by
Provincial
Department of Education, KwaZulu-Natal
and
which applied for one year to independent schools in the province of
KwaZulu-Natal, gave rise to an enforceable claim for
payment of
subsidies. That narrow question does not extend to the whole country
and is unlikely to arise again. If ever it does
arise, it would be
in respect of a different notice which is likely to be worded
differently.
[185] In
our view, two additional obstacles stand in the way of the remedy
granted by the main judgment. The first obstacle is
that in its
founding affidavit in the High Court, the applicant explained that
the subsidies were granted to individual learners
but payable to
schools and did not cover the entire fee charged per learner.
Instead, the subsidy constituted 25% of the fees
charged by a
particular school. These fees varied from school to school.
[186] In
this regard the applicant’s chairperson said:
“
The
subsidy granted to an independent school per learner depends on the
school fees charged by the independent school. For example,
if the
school fees for a learner at an independent school are between 1.0
and up to 1.5 times the PAEPL,
150
then
that school receives a subsidy, for that learner, of 25% of the
PAEPL. In order to make this clearer, I give an example.
Let us
assume that an independent school charges school fees, for one
learner, for a year, of R10 000.00. Further, let us
assume
that, the PAEPL is R8 000.00. Accordingly, the school fees of
R10 000.00 fall into the category above, namely,
they are more
than the PAEPL but less than 1.5 times the PAEPL. Accordingly, that
school would receive a subsidy of 25% of the
PAEPL of R8 000.00.
That subsidy would, then, accordingly be 25% of R8 000.00 which
is R2 000.00.” (Footnote
added.)
[187]
This statement indicates that the number of learners qualifying for
subsidy is crucial to quantifying the amounts of subsidies
payable
to each school. This accords with the tables set out in the 2008
notice, which reflects different amounts for primary
and secondary
schools. Without the information on the number of learners in each
grade who qualify for a subsidy, it will be
impossible for the
second respondent to calculate an approximate amount payable to each
school.
[188]
The second obstacle is that according to the main judgment, the
independent schools were entitled to be paid the undiminished
amounts approximate to what was contained in the 2008 notice for the
first term only, hence the order that they be paid approximate
amounts which had fallen due on 1 April 2009. The main judgment
finds that the subsidies already paid to independent schools
for
2009 were, “on average, 30% less than those set out in the
2008 notice”.
151
This illustrates, in our view, that the schools
were paid 70% of the total annual subsidies.
[189] But
the facts on record do not show how much was due to each school for
the first term. Nor does the evidence indicate the
amount of fees
charged by each school per learner in each term. In fact there is no
evidence establishing that any of the schools
represented by the
applicant charge fees per term. In short, on the present facts the
applicant has failed to establish that
the second respondent owed
the schools any amount for the first term. In these circumstances
there is no justification, in our
view, to order the second
respondent to make further payments.
[190] For
these reasons and the reasons set out fully in the judgments of
Nkabinde J and Zondo J, we would dismiss the application
for leave.
For the
Applicant: Advocate O Moosa SC and Advocate A Boulle instructed
by Pather & Pather Attorneys.
For the
Respondents: Advocate S Yacoob instructed by the State Attorney.
For the
Amicus Curiae: Advocate J Brickhill and Advocate Z Gumede
instructed by the Legal Resources Centre.
1
84
of 1996. See below n 14 to n 18 for relevant provisions of section
48 of the Schools Act.
2
Emphasis
in original.
3
The
2008 notice.
4
Section
29(4) of the Constitution.
5
1
of 1999.
6
Government
Gazette 29179, Government Notice 869, 31 August 2006.
7
The
current position in our law is that where a party has a legitimate
expectation he or she is entitled to procedural fairness.
That is,
an opportunity to be heard before an adverse decision is made. Our
courts have expressly left open the question whether
a legitimate
expectation may give rise to a substantive benefit. See for example
Bel Porto School Governing Body and
Others v Premier of the Western Cape Province and Another
[2002] ZACC 2
;
2002 (3) SA 265
(CC);
2002 (9)
BCLR 891
(CC) at para 96 and
South
African Veterinary Council and Another v Szymanski
2003
(4) SA 42
(SCA) at para 15. For a detailed discussion of substantive
legitimate expectation see
Duncan v
Minister of Environmental Affairs and Tourism and Another
2010 (6) SA 374
(SCA) at para 13.
8
3
of 2000.
9
Section
7(1) of PAJA provides that proceedings for judicial review must be
instituted without unreasonable delay and in any event
within 180
days, though section 9(2) provides that a court may extend the
180-day period “where the interests of justice
so require”.
10
See
Minister of Home Affairs and Another v American Ninja IV
Partnership and Another
[1992] ZASCA 164
;
1993 (1) SA 257
(AD), where film
producers who registered their films for subsidy purposes under a
departmental circular setting out the tax
and subsidy benefits due
to them, and then produced and marketed the films, were held to
benefit from contractually enforceable
obligations on the part of
the state.
11
Section
29 of the Constitution provides in relevant part:
“
(1) Everyone has the right—
(a) to a basic education, including adult basic
education”.
12
See
Governing Body of the Juma Musjid Primary School and Others v
Essay N.O. and Others (Centre for Child Law and Another as Amici
Curiae)
[2011] ZACC 13
;
2011 (8) BCLR 761
(CC) at para 37.
13
Section
29(4) of the Constitution provides: “Subsection (3) does not
preclude state subsidies for independent educational
institutions.”
14
Section
48(1) of the Schools Act, under the heading “[s]ubsidies to
registered independent schools”, provides:
“
The Minister may, by notice
in the Government Gazette, determine norms and minimum standards for
the granting of subsidies to
independent schools after consultation
with the Council of Education Ministers and the Financial and Fiscal
Commission and with
the concurrence of the Minister of Finance.”
15
Id
section 48(2) provides:
“
The Member of the Executive
Council may, out of funds appropriated by the provincial legislature
for that purpose, grant a subsidy
to an independent school.”
16
Id
section 48(3) provides:
“
If a condition subject to
which a subsidy was granted has not been complied with, the Head of
Department may terminate or reduce
the subsidy from a date
determined by him or her.”
17
Id
section 48(4) provides:
“
The Head of Department may
not terminate or reduce a subsidy under subsection (3) unless—
(a) the owner of such independent school has been
furnished with a notice of intention to terminate or reduce the
subsidy and
the reasons therefor;
(b) such owner has been granted an opportunity to make
written representations as to why the subsidy should not be
terminated
or reduced; and
(c) any such representations received have been duly
considered.”
18
Id
section 48(5) provides:
“
The owner of an independent
school may appeal to the Member of the Executive Council against the
termination or reduction of a
subsidy to such independent school.”
19
Item
47 of the Norms.
20
Id
Item 48.
21
Id
Item 49.
22
Id
Item 54.
23
Id.
24
Id
Item 172.
25
Id
Item 173.
26
Id
Item 194.
27
Id
Item 193.
28
3
of 1996. See, particularly, section 37 of the KZN Act, which
provides:
“
(1) A registered independent
school may annually, on or prior to the prescribed date, apply to
the Secretary in writing for the
prescribed subsidy.
(2) The Secretary may at his/her discretion grant or
refuse an application referred to in subsection (1). He/she
shall not
grant any application unless he/she is satisfied that the
registered independent school complies with the prescribed
requirements.
(3) If the Secretary is of the opinion that a
requirement, subject to which a subsidy is granted under subsection
(2), has not
been complied with, he/she may at any time terminate or
reduce the subsidy from a date determined by him/her: Provided that
the
Secretary shall, before he/she terminates or reduces such
subsidy, give the owner of the independent school or his/her
representative,
an opportunity to make representations to him/her in
connection with the proposed termination or reduction.”
29
Provincial
Gazette 5387,
Provincial Notice 287, 28 October
1999.
30
1992
(4) SA 1
(A) at 18C-I. The original text reads as follows:
“
Dit kan natuurlik gebeur dat
’n kontraktuele verhouding geskep word tussen die uitvoerende
gesag en ’n onderdaan,
soos wanneer ’n kommersiële
ooreenkoms beklink word, maar in die huidige geval is die
beskikbaarstelling aan onderdane
van geldelike bystand uit die
Staatskas deur middel van ’n suiwer begunstigende beskikking,
iets wat so eie is aan ’n
administratiefregtelike verhouding
dat ek geen ruimte daarin kan sien vir ’n bevinding van
kontraktuele aanspreeklikheid
van Staatskant nie. . . . Op die oog
af verklaar die kennisgewing dat die uitvoerende gesag die Staat
verbind tot die vergoeding
van onderdane wat aan sekere vereistes
voldoen. . . . Anders as in die geval van twee individue wat op
privaatregtelike terrein
beweeg, is daar niks vreemds in die gedagte
dat die Staat eensydig aanspreeklikheid teenoor sy onderdane opdoen
nie. Inteendeel
sou dit vreemd wees om te dink dat die owerheid se
onderneming ingevolge die kennisgewing slegs deur middel van aanname
en omskepping
tot ’n kontrak afdwingbaar gemaak kan word.”
31
See
- above.
32
[1998]
ZACC 20
;
1999 (2) SA 91
(CC);
1999 (2) BCLR 151
(CC).
33
Id
at para 41, with the footnoted comment by the Court that “[i]t
is not surprising that the European Court of Justice has
taken the
view that the retroactive implementation of policy changes by
government will be unlawful unless it can be shown that
the
retroactivity is justified by an overriding public interest.”
The Constitutional Court cited
Karl Spagl v Hauptzollamt
Rosenheim
[1990] ECRI-4539 and
J Mulder v Minister van
Landbouw en Visserij
[1988] ECR 2321
where the European Court of
Justice had to decide the validity of amendments limiting the
granting of “special reference
quantities” to dairy
farmers. The crucial consideration on the amendments was their
retroactive effect on the “legitimate
expectations” of
the affected farmers. The European Court of Justice reasoned that
the legitimate expectations of the farmers
concerned must be
balanced with the “general interest” of the European
Community, but in that Court’s eyes
the discrimination could
not be justified. See also the discussion in Schwarze
European
Administrative Law
(Sweet and Maxwell Limited, London 1992) at
867-8.
34
Regulation
4(3) of the KZN Regulations.
35
Section
48(2) of the Schools Act above n 15.
36
Item
195 of the Norms.
37
Indeed
some schools, when they eventually were paid the first-tranche
subsidy, were given even less than half of the anticipated
approximate amount (despite the indication that the reduction in
subsidies would not be more than 30%).
38
The
directions dated 30 January 2013 read in relevant part as follows:
“
Is the applicant entitled to
an order for payment of the approximate subsidies for the whole of
the 2009 school year or, at least,
that portion that had fallen due
for payment on 1 April 2009, on the basis that the first respondent
is obliged to do so in the
light of—
Item 195 of the Norms and Standards for School Funding
of 2006; and
Regulation 4(3) of the KwaZulu-Natal Notice Regarding
the Registration of and Payment of Subsidies to Independent Schools
published
under Provincial Notice No. 287 dated 28 October 1999,
issued under
sections 46(2)
and
50
(1) of the
South African Schools
Act 84 of 1996
.”
39
The
directions dated 30 January 2013 read in relevant part as follows:
“
In the light of the case the
applicant advanced on the papers and in oral argument, and the
evidence, is it permissible for the
Court to grant partial relief in
respect of the portion of the subsidy that fell due on 1 April 2009
on the basis that the reduction
in subsidy could not be applied
retroactively to that portion?”
40
The
respondents refer here to the applicant’s attempts to have 28
additional schools obtain subsidies. See below.
41
See
for example
Soobramoney v Minister of Health (Kwazulu-Natal)
[1997] ZACC 17
;
1998 (1) SA 765
(CC);
1997 (12) BCLR 1696
(CC)
at para 29, where this Court stated:
“
The provincial administration
which is responsible for health services in KwaZulu-Natal has to
make decisions about the funding
that should be made available for
health care and how such funds should be spent. These choices
involve difficult decisions to
be taken at the political level in
fixing the health budget, and at the functional level in deciding
upon the priorities to be
met. A court will be slow to interfere
with rational decisions taken in good faith by the political organs
and medical authorities
whose responsibility it is to deal with such
matters.”
42
Section
195 of the Constitution provides in relevant part:
“
Basic values and principles
governing public administration
(1) Public administration must be governed by the
democratic values and principles enshrined in the Constitution,
including the
following principles:
. . .
(e) People’s needs must be responded to, and the
public must be encouraged to participate in policy-making.
(f) Public administration must be accountable.
(g) Transparency must be fostered by providing the
public with timely, accessible and accurate information.”
43
See
Premier, Mpumalanga
above n 32 at para 41.
44
The
amicus referred the Court to portions of the record in which the
basis for a claim in public law was pleaded and, they contend,
established on the facts.
45
Maphango
and Others v Aengus Lifestyle Properties (Pty) Ltd
[2012] ZACC
2
;
2012 (3) SA 531
(CC);
2012 (5) BCLR 449
(CC) and
Masetlha v
President of the Republic of South Africa and Another
[2007]
ZACC 20
;
2008 (1) SA 566
(CC);
2008 (1) BCLR 1
(CC).
46
See,
for example,
Fluxman v Brittain
1941 AD 273
at 293, where the
Appellate Division had to interpret the meaning of “moderate”
amounts in an agreement in which
the employee had agreed to leave
his undrawn share in profits in the business. Tindall JA found the
condition not void for vagueness.
On the contrary, he stated that a
determination of what “moderate” amounts would mean
“would be possible on
evidence of the various relevant facts,
such as, for example, the financial position and requirements of the
business at such
time.” The reasoning by the other members of
the Court made it unnecessary to address Tindall JA’s view
regarding
the enforceability of “moderate” amounts.
However, none of the other judges explicitly disagreed with his
conclusion
on this.
47
Concise
Oxford English Dictionary
11 ed (Oxford University Press, Oxford
2009).
48
See,
for example,
Rail Commuters Action Group and Others v Transnet
Ltd t/a Metrorail and Others
[2004] ZACC 20
;
2005 (2) SA 359
(CC);
2005 (4) BCLR 301
(CC) at para 111, where this Court made a
declaratory order stating that the first and second respondents were
obliged to ensure
that “reasonable measures” are taken
to provide for the security of rail commuters.
49
Hoexter
“Contracts in Administrative Law: Life after Formalism”
(2004) 121
SALJ
595
at 597.
50
Cockrell
“Rainbow Jurisprudence”
(1996) 12
SAJHR
1
at 5,
referring to Atiyah and Summers
Form and Substance in
Anglo-American Law: A Comparative Study of Legal Reasoning, Legal
Theory, and Legal Institutions
(Clarendon Press, Oxford 1987) at
1 ff.
51
Hoexter
above n 49 at 597.
52
Section
29 of the Constitution.
53
See
main judgment [62] above.
54
Id
[63]-[71] above.
55
Id
[57] above.
56
Id
[63]-[65] above.
57
3
of 2000.
58
See
main judgment [31]-[32] above.
59
Rule
53 of the Uniform Rules of Court provides:
“
Reviews.
(1) Save where any law otherwise provides, all
proceedings to bring under review the decision or proceedings of any
inferior court
and of any tribunal, board or officer performing
judicial, quasi-judicial or administrative functions shall be by way
of notice
of motion directed and delivered by the party seeking to
review such decision or proceedings to the magistrate, presiding
officer
or chairman of the court, tribunal or board or to the
officer, as the case may be, and to all other parties affected—
(a) calling upon such persons to show cause why such
decision or proceedings should not be reviewed and corrected or set
aside,
and
(b) calling upon the magistrate, presiding officer,
chairman or officer, as the case may be, to despatch, within fifteen
days
after receipt of the notice of motion, to the registrar the
record of such proceedings sought to be corrected or set aside,
together
with such reasons as he is by law required or desires to
give or make, and to notify the applicant that he has done so.
(2) The notice of motion shall set out the decision or
proceedings sought to be reviewed and shall be supported by
affidavit setting
out the grounds and the facts and circumstances
upon which applicant relies to have the decision or proceedings set
aside or
corrected.
(3) The registrar shall make available to the applicant
the record despatched to him as aforesaid upon such terms as the
registrar
thinks appropriate to ensure its safety, and the applicant
shall thereupon cause copies of such portions of the record as may
be necessary for the purposes of the review to be made and shall
furnish the registrar with two copies and each of the other parties
with one copy thereof, in each case certified by the applicant as
true copies. The costs of transcription, if any, shall be borne
by
the applicant and shall be costs in the cause.
(4) The applicant may within ten days after the
registrar has made the record available to him, by delivery of a
notice and accompanying
affidavit, amend, add to or vary the terms
of his notice of motion and supplement the supporting affidavit.
(5) Should the presiding officer, chairman or officer,
as the case may be, or any party affected desire to oppose the
granting
of the order prayed in the notice of motion, he shall—
(a) within fifteen days after receipt by him of the
notice of motion or any amendment thereof deliver notice to the
applicant
that he intends so to oppose and shall in such notice
appoint an address within eight kilometres of the office of the
registrar
at which he will accept notice and service of all process
in such proceedings; and
(b) within thirty days after the expiry of the time
referred to in subrule (4) hereof, deliver any affidavits he may
desire in
answer to the allegations made by the applicant.
(6) The applicant shall have the rights and obligations
in regard to replying affidavits set out in rule 6.
(7) The provisions of rule 6 as to set down of
applications shall
mutatis mutandis
apply to the set down of
review proceedings.”
60
Jockey
Club of South Africa v Forbes
[1992] ZASCA 237
;
1993 (1) SA 649
(AD) at 661.
61
South
African Football Association v Stanton Woodrush (Pty) Ltd t/a Stan
Smidt & Sons and Another
2003 (3) SA 313
(SCA) at para 5.
62
The
notice is headed “SUBSIDIES TO INDEPENDENT SCHOOLS 2009/10”.
KZN Education Subsidy notice dated 22 September 2008.
See also main
judgment [3] above.
63
Section
1 of the Constitution in the relevant part provides:
“
The Republic of South Africa
is one, sovereign, democratic state founded on the following values:
(d) Universal adult suffrage, a national common voters
roll, regular elections and a multi-party system of democratic
government,
to ensure accountability, responsiveness and openness.”
Section
195(1) of the Constitution in the relevant part provides:
“
Public administration must be
governed by the democratic values and principles enshrined in the
Constitution, including the following
principles:
(f) Public administration must be accountable.”
64
Id
section 29(1).
65
See
Governing Body of the Juma Musjid Primary School and Others v
Essay NO and Others
[2011] ZACC 13
;
2011 (8) BCLR 761
(CC) at
para 37.
66
Cockrell
“‘Can You Paradigm?’ – Another Perspective
on the Public Law/Private Law Divide” in Bennett
and Others
(eds)
Administrative Law Reform
(Juta & Co, Ltd, Cape
Town 1993).
67
Id
at 228.
68
Rail
Commuters Action Group and Others v Transnet Ltd t/a Metrorail
and Others
[2004] ZACC 20
;
2005 (2) SA 359
(CC);
2005 (4)
BCLR 301
(CC) at para 78 and Hoexter
Administrative Law in South
Africa
2 ed (Juta, Cape Town 2012) at 446-51.
69
See
Minister of Home Affairs and Another v American Ninja IV
Partnership and Another
[1992] ZASCA 164
;
1993 (1) SA 257
(AD) (
Ninja
).
70
Compare
Ferreira “The Quest for Clarity: An Examination of the Law
Governing Public Contracts”
(2011) 128
SALJ
172
at 175.
71
See
Christie
The Law of Contract in South Africa
5 ed (LexisNexis
Butterworths, Durban 2006) at 8.
72
1919
AD 279
at 324.
73
Id,
De Villiers AJA, writing for the majority of the court said, at 320:
“
According to our law if two
or more persons, of sound mind and capable of contracting, enter
into a lawful agreement, a valid
contract arises between them
enforceable by action. The agreement may be for the benefit of the
one of them or of both (
Grotius
3.6.2). The promise must have
been made with the intention that it should be accepted (
Grotius
3.1.48); according
to Voet the agreement must have been entered into
serio
ac deliberato animo
.
And this is what is meant by saying that the only element that our
law requires for a valid contract is
consensus
,
naturally within proper limits – it should be
in
or
de
re licita ac honesta
.”
Solomon ACJ was more succinct, at 288:
“
An agreement between two or
more persons entered into seriously and deliberately is enforceable
by action.”
See also
Saambou-Nasionale Bouvereniging v Friedman
1979 (3) SA 978
(AA) (
Saambou
) at 990-1.
74
Conradie
above n 72 at 289.
75
South
African Railways & Harbours v National Bank of South Africa, Ltd
1924 AD 704
(
SA Railways
) at 715-6.
76
See
also, for a further example,
Sonap Petroleum (SA) (Pty) Ltd
(formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis
[1992] ZASCA 56
;
1992
(3) SA 234
(AD) at 239.
77
1911
AD 121
at 137.
78
Saambou
above n 73.
79
Id
at 991.
80
Above
n 71 at 30.
81
Offer
and acceptance may be demonstrated by conduct: see
SA Railways
above n 75.
82
See
main judgment [70]-[71] above.
83
Decisions
in the Supreme Court of Appeal do not appear to be altogether
harmonious: compare
Government
of the Republic of South Africa v Thabiso Chemicals (Pty) Ltd
[2008] ZASCA 112
;
2009
(1) SA 163
(SCA);
Logbro
Properties CC v Bedderson NO and Others
2003
(2) SA 460
(SCA); and
Cape
Metropolitan Council v Metro Inspection Services (Western Cape) CC
and Others
2001
(3) SA 1013
(SCA). For academic discussion see: Bolton
The
Law of Government Procurement in South Africa
(LexisNexis Butterworths,
Durban 2007); Hoexter above n 49; Hoexter above n 68; Ferreira above
n 70; and Quinot
State
Commercial Activity: A Legal Framework
(Juta & Co. Ltd, Cape
Town 2009).
84
Compare
Ferreira above n 70 at 174 ff.
85
Pharmaceutical
Manufacturers Association of SA and Another: In re Ex parte
P
resident of the Republic of South Africa and Others
[2000] ZACC 1
;
2000 (2) SA 674
(CC);
2000 (3) BCLR 241
(CC) at
para 17;
President of the Republic of South Africa and Others v
South African Rugby Football Union and Others
[1998] ZACC 21
;
2000 (1) SA 1
(CC);
1999 (10) BCLR 1059
(CC) at para 148; and
Fedsure Life Assurance Ltd and Others v Greater Johannesburg
Transitional Metropolitan Council and Others
[1998] ZACC 17
;
1999 (1) SA 374
(CC);
1998 (12) BCLR 1458
(CC) at para 58.
86
Section
29(3) and (4) of the Constitution.
87
84
of 1996.
Sections 39
and
63
of the
Public Finance Management Act 1
of 1999
oblige the first and second respondents to ensure that their
expenditure is in accordance with the budget vote of the provincial
department.
88
Above
n 69 at 268.
89
Lillicrap,
Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd
1985
(1) SA 475
(AD) at 496.
90
[1983] UKHL 1
;
[1983]
2 AC 237
at 285.
91
Id.
92
[1996]
1 All ER 575.
93
Id
at 581. For a general discussion see Brownsword
Contract Law -
Themes for the Twenty-First Century
2 ed (Oxford, 2006) at
229-40.
94
See
for example
Everfresh Market Virginia (Pty) Ltd v Shoprite
Checkers (Pty) Ltd
[2011] ZACC 30
;
2012 (1) SA 256
(CC);
2012
(3) BCLR 219
(CC) at paras 20-1 and 25;
National Education Health
and Allied Workers Union v University of Cape Town and Others
[2002] ZACC 27
;
2003 (3) SA 1
(CC);
2003 (2) BCLR 154
(CC) at para
25; and
Khumalo and Others v Holomisa
[2002] ZACC 12
;
2002
(5) SA 401
(CC);
2002 (8) BCLR 771
(CC) at para 10.
95
The
2008 notice is headed “SUBSIDY TO INDEPENDENT SCHOOLS
2009/2010”. The entire 2008 notice is referred to in the
main
judgment at [3] above.
96
In
a letter headed “Reduction of budgets in the 2009/MTEF”,
dated 5 May 2009 and signed by the provincial Superintendent
General
on 18 May 2009.
97
At
the meeting held on 19 May 2009, the Department explained that the
delay in paying the fourth quarter payments for 2008/2009
was due to
the withholding of payments for the first tranche by the Finance
Division because transfers are regulated by the
Division of Revenue
Act 2 of 2008
and voting had not yet taken place.
98
Government
Gazette 29179, Government Notice 869, 31 August 2006.
99
Section
29 of the Constitution provides, in relevant part:
“
(1) Everyone has the right—
to a basic education, including adult basic education;
and
(b) to further education, which the state, through
reasonable measures, must make progressively available and
accessible.
. . .
(3) Everyone has the right to establish and maintain,
at their own expense, independent educational institutions that—
(a) do not discriminate on the basis of race;
(b) are registered with the state; and
(c) maintain standards that are not inferior to
standards at comparable public educational institutions.
(4) Subsection (3) does not preclude state subsidies
for independent educational institutions.”
100
84
of 1996. See main judgment above n 14-8.
101
See
above n 98. The Norms and Standards, promulgated in terms of the
Schools Act, include norms for both public and independent
schools.
Regulation
48 indicates that independent school enrolment amounts to about 2%
of total nation-wide school enrolment and that if
all independent
school learners were to transfer to public schools, the cost of
public education may increase by as much as 5%
in certain provinces.
Regulation
54 acknowledges that the right to establish and maintain reputable,
registered independent schools is protected by
the Constitution and
that the payment of subsidies to such schools is not precluded. It
also accepts that public subsidies to
independent schools would cost
the state considerably less per learner than if the same learners
enrolled in public schools.
Regulation
173 sets out that the regulations dealing with subsidies to
independent schools are intended to provide a stable and
principled
basis for MECs in all provinces, to decide the eligibility for
subsidies and the level of subsidies for registered
independent
schools.
In
terms of Regulation 176, an independent school may be considered for
a subsidy if it meets the conditions of eligibility, which
include
that it must—
(a) be registered by the provincial education
department (PED);
(b) have made an application to the PED in the
prescribed manner;
(c) have been operational for one full school year; and
(d) be a registered non-profit organisation in terms of
the
Non-Profit Organisations Act 71 of 1997
.
Regulation
187
deals with the manner in which subsidies are to be calculated.
Regulations
191
and
192
(dealt with later in this judgment) as well as
Regulation 193
deal with the circumstances in which subsidy levels
may be changed.
Finally, Regulation 195 stipulates that the first
term’s subsidy must be paid by no later than 1 April in each
school year
and subsequent subsidies must be paid no later than six
weeks after the beginning of each school term.
102
Id.
103
The
circular reads:
“
REDUCTION OF BUDGETS IN THE
2009/10 MTEF
1. As part of the Province’s turn-around strategy
in dealing with the current cash crisis, as well as the
carry-through
effects the cash situation will have on the 2009/10
MTEF, it was agreed by Cabinet that a reduction in [the]
department’s
equitable share allocation is required.
2. As such, each department is required to effect a
reduction in their equitable share allocation which is equivalent to
7.5 per
cent of their 2009/10 MTEF
Goods and services
budget
in accordance with ‘THE PROVINCIAL TREASURY CIRCULAR: NO, PT
(2) OF 2009/10’.
3. In addition, funds are required to be redistributed
in order to cater for new schools that have become eligible for [a]
subsidy
in the current financial year. Refer to Government Gazette
Notice No. 29179 dated 31 August 2006 paragraphs 191, 192 (a), (b),
(c) and 193.
4. Due to the above please expect a cut not exceeding
30% in your current subsidy allocation for the financial year
2009/10.
5. Your cooperation in this regard will be highly
appreciated.”
104
Items
191 and 192(b) are set out in full at [142] below.
105
See
High Court judgment at para 9.
106
Id
at para 10.
107
Id
at para 11.
108
Id.
109
Pursuant
to the directions dated 30 January 2013.
110
Provincial
Gazette 5387,
Provincial Notice 287, 28 October
1999.
111
Above
n 99.
112
See
Sebola and Another v Standard Bank of South Africa Ltd and
Another
[2012] ZACC 11
;
2012 (5) SA 142
(CC);
2012 (8) BCLR 785
(CC) (
Sebola
) at paras 54-9.
113
In
Jaga v Dönges, N.O. and Another; Bhana v Dönges, N.O.
and Another
1950 (4) SA 653
(A) at 662-4, Schreiner JA drew
attention to two schools of thought on interpretation, one
maintaining that the context, in the
large sense in which he defined
it, must be taken into account as part of the process of
ascertaining the grammatical and ordinary
meaning of the words, the
other maintaining that the grammatical and ordinary meaning should
first be ascertained and recourse
had to the context only in order
to decide whether some other meaning ought to be preferred. See also
Bertie Van Zyl (Pty) Ltd and Another v Minister of Safety and
Security and Others
[2009] ZACC 11
;
2010 (2) SA 181
(CC);
2009
(10) BCLR 978
(CC) at para 21 and
List v Jungers
1979 (3) SA
106
(A) at 118D.
114
2012
(4) SA 593
(SCA) (
Endumeni Municipality
).
115
Id
at para 18.
116
High
Court judgment at para 11.
117
2009
(4) SA 399
(SCA).
118
Id
at para 39.
119
Dated
30 January 2013.
120
See
also the main judgment at [59] above.
121
Id
at [58] above.
122
Sebola
above n 112.
123
Medium
Term Expenditure Framework, as provided by the National Treasury on
an annual basis.
124
Above
n 99.
125
Section
34(1) of the Schools Act.
126
Id
section 34(2).
127
Above
n 99.
128
Section
48(1) of the Schools Act.
129
Id
section 48(2).
130
See
Dilokong Chrome Mines (Edms) Bpk v Direkteur-Generaal, Department
van Handel & Nywerheid
1992 (4) SA 1
(AD);
[1992] 2 All SA
209
(A).
131
Main
judgment at [58].
132
[2010]
2 All SA 474
(SCA) (
Slabbert
). See also
Gusha v Road
Accident Fund
2012 (2) SA 371
(SCA) at para 7 and
South
British Insurance Co. Ltd. v Unicorn Shipping Lines (Pty.) Ltd.
1976 (1) SA 708
(AD) at 714G.
133
Slabbert
above n 132 at paras 11-2.
134
Main
judgment at [35] above.
135
Id.
136
Id
at [36] above.
137
Government
Gazette 29179, Government Notice 869, 31 August 2006.
138
84
of 1996.
139
Main
judgment at [57] above.
140
Id.
141
Id
at [58] above.
142
Barkhuizen
v Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC);
2007 (7)
BCLR 691
(CC) at para 39;
Phillips and Others v National Director
of Public Prosecutions
[2005] ZACC 15
;
2006 (1) SA 505
(CC);
2006 (2) BCLR 274
(CC) at paras 39 and 43;
Bel Porto School
Governing Body and Others v Premier, Western Cape, and Another
[2002] ZACC 2
;
2002 (3) SA 265
(CC);
2002 (9) BCLR 891
(CC) at paras
115-9;
Carmichele v Minister of Safety and
Security (Centre for Applied Legal Studies Intervening)
[2001] ZACC 22
;
2001 (4) SA 938
(CC);
2001 (10)
BCLR 995
(CC) at para 31; and
Prince v President, Cape Law
Society, and Others
[2000] ZACC 1
;
2001 (2) SA 388
(CC);
2001
(2) BCLR 133
(CC) at para 22.
143
Main
judgment at [74].
144
1941
AD 273.
See the discussion in the m
ain judgment
above n 46.
145
Fluxman
at 293.
146
Main
judgment above n 46.
147
Main
judgment at [75] above.
148
Id.
149
See
[153] above.
150
Provincial
Average Estimate Per Learner.
151
Main
judgment at [7] above.