About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Constitutional Court
SAFLII
>>
Databases
>>
South Africa: Constitutional Court
>>
2018
>>
[2018] ZACC 26
|
|
South African Social Security Agency and Another v Minister of Social Development and Others (CCT48/17) [2018] ZACC 26; 2018 (10) BCLR 1291 (CC) (30 August 2018)
Links to summary
Heads of arguments
CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case
CCT 48/17
In
the matter between:
SOUTH
AFRICAN SOCIAL SECURITY
AGENCY
First
Applicant
CHIEF
EXECUTIVE OFFICER OF THE
SOUTH
AFRICAN SOCIAL SECURITY AGENCY
Second Applicant
and
MINISTER
OF SOCIAL DEVELOPMENT
First Respondent
BLACK
SASH
TRUST
Second Respondent
MINISTER
OF
FINANCE
Third Respondent
NATIONAL
TREASURY
Fourth Respondent
CASH
PAYMASTER SERVICES (PTY) LIMITED
Fifth Respondent
INFORMATION
REGULATOR
Sixth Respondent
SOUTH
AFRICAN POST OFFICE SOC LIMITED
Seventh Respondent
FREEDOM
UNDER LAW
NPC
Eighth Respondent
and
CORRUPTION
WATCH (NPC)
RF
First Amicus Curiae
Neutral
citation:
South Africa Social Security
Agency and another v Minister of Social Development and others
[2018]
ZACC 26
Coram:
Mogoeng
CJ, Zondo DCJ, Cachalia AJ, Dlodlo AJ, Froneman J, Goliath
AJ, Jafta J, Khampepe J, Madlanga J, Petse AJ and Theron J
Judgments:
Jafta J (unanimous)
Heard
on:
6 March 2018
Decided
on:
30 August 2018
Summary:
Social grants — extension of the declaration of invalidity
— just and equitable remedy — case justifying urgency
has
been made —personal cost liability of the application against
the Minister and CEO of South Africa Social Security Agency
respectively.
JUDGMENT
JAFTA
J (Mogoeng CJ, Zondo DCJ, Cachalia AJ, Dlodlo AJ, Froneman J,
Goliath AJ, Khampepe J, Madlanga J, Petse AJ and Theron
J
concurring):
[1]
On 23 March 2018 this Court issued an order and indicated that
reasons would follow. Here are the reasons which also include
the determination of costs that were reserved. The order in
question was formulated in these terms:
“
1. The South
African Social Security Agency (SASSA) is granted direct access to
bring this application.
2. It is declared that,
for the period of six months from 1 April 2018, SASSA and Cash
Paymaster Services (Pty) Limited (CPS) are
under a constitutional
obligation to ensure payment of social grants to beneficiaries who
are paid in cash.
3. The declaration of
invalidity of the contract between SASSA and CPS, in relation to cash
payment of social grants to beneficiaries
who are paid in cash, is
further suspended for a six-month period from 1 April 2018.
4. SASSA and CPS must
ensure that for the period of six months from 1 April 2018 payment of
social grants is made to beneficiaries
who are paid in cash on the
same terms and conditions as those in the current contract between
them.
4.1
CPS may in writing request National Treasury during the six month
period to investigate and make a recommendation regarding
the price
to be paid for the services it is to render in terms of paragraph 4
of this order.
4.2
National Treasury must file a report with this Court within 21 days
of receipt of the request setting out its recommendation.
4.3
Within 30 days of the completion of the period of the contract, CPS
must file with this Court an audited statement of the expenses
incurred, the income received and the net profit earned under the
contract.
4.4
SASSA must immediately thereafter obtain an independent audited
verification of the details provided by CPS under paragraph
4.3.
4.5
The audited verification must be approved by National Treasury and
filed by SASSA with this Court within 60 days of the completion
of
the contract.
4.6
CPS must permit the auditors appointed by SASSA to have unfettered
access to its financial information for this purpose.
5. The Minister and SASSA
must file reports on the implementation of the order at the end of
April and each subsequent month until
the end of August 2018.
6. If there is any
material change in respect of any matter contained in a report
contemplated in paragraph 5, the Minister and
SASSA must immediately
report on affidavit to this Court and explain the reasons for, and,
consequences of, the change.
7. SASSA must ensure that
the payment method it determines:
7.1
contains adequate safeguards to ensure that the personal data of
beneficiaries obtained in the payment process remains private
and may
not be used for any purpose other than payment of the grants or any
purpose sanctioned by the Minister in terms of section
20(3) and
(4) of the Social Assistance Act; and
7.2
precludes a contracting party from inviting beneficiaries to ‘opt in’
to the sharing of confidential information
for the marketing of goods
and services.
8. The Panel of Experts
appointed by this Court, shall:
8.1
evaluate the implementation of cash payment of social grants during
the six-month period;
8.2
evaluate the steps proposed or taken by SASSA for any competitive
bidding process or any other processes aimed at the appointment
of a
new contractor or contractors for the cash payment of social grants
by SASSA in terms of
section 4(2)(a)
of the
South African Social
Security Agency Act 9 of 2004
;
8.3
evaluate the steps proposed or taken by SASSA aimed at SASSA itself
administering and paying the grants in the future; and
8.4
file reports on affidavit with this Court by 15 May 2018 and by
the 15th of every subsequent month until 15 September
2018, for the
6-month period commencing 1 April 2018, setting out the steps they
have taken to evaluate the matters referred to
in paragraphs 8.1 to
8.3, the results of their evaluations and any recommendations they
consider necessary.
9. The former Minister of
Social Development Ms Bathabile Dlamini and the acting Chief
Executive Officer of SASSA, Ms Pearl Bhengu,
are hereby ordered to
show cause by way of affidavits why:
a)
They should not be joined in these proceedings in their personal
capacities; and
b)
They should not be held personally liable to pay costs or any portion
thereof.
9.1
The affidavits referred to in paragraph 9 must be filed by 16 April
2018;
9.2
Should any party wish to file any affidavit in response, it must do
so by 25 April 2018;
9.3
Should Ms Bathabile Dlamini and Ms Pearl Bhengu desire to file
further affidavits in response, they must do so by 30 April 2018.
10. Pending the
finalisation of this matter, costs are reserved.”
[2]
This is yet another application for the extension of an
unlawful contract that was declared invalid by this Court in 2014.
The application was instituted as one of urgency by the South African
Social Security Agency (SASSA) and the Chief Executive Officer
(CEO)
of SASSA. In an unusual manner, they have cited the Minster of
Social Development (Minister) as the first respondent.
She is
the person to whom SASSA is accountable and in the past cases that
came before this Court in respect of the contract in
question, the
Minister and SASSA were always on the same side. But even now
the previous Minister deposed to an affidavit
in support of the
application and that affidavit is annexed to SASSA’s founding
papers.
[3]
SASSA cited as further respondents, the Minister of Finance;
the National Treasury; the Information Regulator and the South
African
Post Office (SOC) Limited (SAPO). The other respondents
are the Black Sash Trust (Black Sash); Cash Paymaster Services (Pty)
Ltd (Cash Paymaster) and Freedom Under Law NPC. Apart from the
Minister, parties who participated actively in these proceedings
were
SAPO; the Black Sash; Freedom Under Law and Cash Paymaster.
Factual
background
[4]
SASSA
was established primarily for the administration and payment of
social assistance.
[1]
Its
CEO is, subject to the direction of the Minister, responsible for the
management of SASSA. With the concurrence
of the Minister,
SASSA may conclude contracts with third parties for payment of social
grants. Following a tender that was
awarded to Cash Paymaster,
SASSA and Cash Paymaster concluded a contract in terms of which Cash
Paymaster was to provide services
relating to the payment of social
grants on behalf of SASSA, for a fee. The duration of the
contract was five years.
[5]
But
the tender was declared invalid by this Court on 29 September
2013.
[2]
Later, and after
affording the parties an opportunity to address us on the appropriate
remedy, this Court declared the contract
between SASSA and Cash
Paymaster invalid.
[3]
However, this declaration of invalidity was suspended until 31 March
2017 to enable SASSA to award a new tender. Having
advised this
Court in November 2015 that it would itself provide the relevant
services, SASSA failed to do so. Despite being
aware in April
2016 that it would not be able to provide those services, SASSA did
not inform this Court of this fact until 28
February 2017. On
that day, it launched an urgent application which it sought to
withdraw the next day. Fortunately,
Black Sash had also
instituted an application seeking the extension of the suspension of
the declaration of invalidity of the relevant
contract, on specified
conditions. In that matter this Court promptly delivered
judgment and issued an order.
[4]
[6]
It is apparent from paragraphs 5 and 6 of the order of 17
March 2017 that the suspension of the declaration of invalidity was
extended
for 12 months from 1 April 2017 to 31 March 2018.
The Court resumed its supervisory role and ordered the Minister
and
SASSA to file reports every three months on steps taken to ensure
that payment of social grants was not disrupted upon the
expiry of
the extended period of suspension.
[7]
Indeed,
SASSA submitted to the Court quarterly reports which were also
evaluated by a Panel of Experts,
[5]
appointed in terms of the order of 17 March 2017 in
Black
Sash
.
[6]
Concerns were raised by the Panel of Experts in relation to the
reports filed by SASSA and its failure to cooperate with
the experts
on further information requested by them. As a result of the
concerns raised, the Court issued fresh directions
in November 2017
which required SASSA to file reports on a monthly basis, setting out
the steps taken in preparing for the uninterrupted
payment of social
grants upon the expiry of the extended suspension.
[7]
[8]
In summary, those directions instructed SASSA to provide the
Panel of Experts with information requested and also to furnish them
and the Court with a plan “to effect the uninterrupted payment
of social grants”. The report had to address specific
issues like “definite roles and responsibilities, precise
timelines, dependencies, desired outcomes, and risk-mitigation
measures”. SASSA was also required to file monthly
reports on the implementation of the plan and steps taken to mitigate
risks which could prevent full execution of the plan. Notably,
the directions required SASSA, in addition, to furnish the
Court with
a contingency plan if a seamless transition on 1 April 2018 was not
achievable. SASSA was thus ordered to prepare
a contingency
plan in November 2017, but we were told at the hearing on 6 March
2018 that the plan does not exist, without any
explanation as to why
the directions were not obeyed.
[9]
It is apparent from these directions read with the obligations
imposed by the order of 17 March 2017 that if SASSA discharged its
obligations diligently and without delay, the uninterrupted payment
of social grants could have been achieved. And the need
for
instituting an urgent application would not have arisen. More
will be said about this later.
Urgent
application
[10]
On 6 February 2018, SASSA lodged this application, requesting
the Court to entertain it as a matter of urgency and grant an
extension
of the suspension of the declaration of invalidity for six
months. The requested extension was limited to that part of the
contract which dealt with the provision of the cash payment service.
[11]
In
this Court, urgent applications are governed by
rule 12
of the Rules
of this Court which requires that the application be on notice of
motion supported by an affidavit, “setting
forth explicitly the
circumstances that justify a departure from the ordinary
procedures”.
[8]
The
rule stipulates that circumstances which render the application
urgent be explicitly set out in the supporting affidavit,
to enable
the Court to exercise its discretion and authorise a departure from
the ordinary procedures.
[12]
SASSA’s
supporting affidavit does not comply with this rule. It does
not set out explicitly circumstances that render
the matter urgent.
But this shortcoming may not be fatal to its case if such
circumstances, although not explicitly mentioned,
are apparent from
its affidavits.
[9]
Here
the only factor apparent from SASSA’s papers which suggested
that the matter was urgent was the impending expiry
of the suspension
of the declaration of invalidity.
[13]
The question was whether in the present circumstances the
imminent expiry of the contract in terms of which social grants are
provided,
rendered the matter urgent as envisaged in the relevant
rule. The answer to this question lay in what was done by SASSA
as
soon as it realised that a further extension was needed. In
the affidavit deposed to by its acting CEO, SASSA told us that
the
request for the extension was necessitated by the fact that the
service that forms the subject-matter of the extension was
then
recently put out to tender. A further extension would enable
SASSA to finalise the tender process and appoint a new
service
provider to replace Cash Paymaster.
[14]
There was a delay on the part of SASSA, relating to
advertising the tender. SASSA averred that the decision to call
for tenders
was taken in September 2017, upon realising that SAPO
lacked the capacity to provide the relevant service. But the
first
step towards advertising was only taken on 8 December 2017.
Even then the tender was not advertised but only a notice of it
was
placed in the Government Gazette. No explanation was furnished
for this delay.
[15]
Eventually, the tender was advertised only on 24 January 2018
and the closing date was set for 5 February 2018. This was
later
extended to 28 February 2018. The reason furnished for
the delay between 8 December 2017 and 23 January 2018 was that
according
to the National Treasury’s prescripts, the period
between 15 December and 15 January is taken as a “closed
period”
during which no tenders are advertised.
[16]
This explanation does not cover the period between 8 December
and 14 December 2017. Moreover, we are not told why the
National Treasury was not approached with a request to urgently
advertise the tender during the closed period. Circumstances
were unusual and called for urgent action, as the expiry of the
extended suspension was drawing closer. Even after the tender
was advertised, SASSA was willing to extend the closing date beyond 5
February to 28 February 2018, further reducing the limited
time it
had. In the report filed in this Court on 9 March 2018, SASSA
mentioned that it had been requested to extend the
closing date of
the tender to 30 March 2018.
[17]
After extending the closing date of the tender SASSA
approached this Court, urging it to entertain the matter on an urgent
basis.
Apart from the lack of diligence on the part of SASSA in
relation to its preparation for the transition on payment of social
grants,
there was not even a hint of why SASSA left it until it was
too late to approach this Court for relief.
[18]
In light of what is outlined above, the inference that SASSA
wished to “force” this Court to grant it a further
extension,
as it did last year, was irresistible. There is no
suggestion that the period of 12 months, by which the declaration of
invalidity
was extended, was inadequate. Despite this Court
having ordered on 7 November 2017 that SASSA must develop a
“contingency
plan if a seamless transition on 1 April 2018”
was not attainable, SASSA did not mention the plan in its application
for
extension. When this issue was raised at the hearing on 6
March 2018, its counsel informed the Court that the plan does not
exist and that if the extension is not granted there would be chaos
on 1 April 2018. This was contradicted by SASSA a few
days
later. A report filed with this Court on 9 March 2018 contained
a contingency plan, devoted to arresting the situation,
in the event
of the Court declining to extend the suspension further.
[19]
Therefore, not only was the so-called urgency self-created,
there are further disturbing features in this case. It is
disconcerting
that SASSA did not only lack candour but had gone
further to suppress information material to the determination of the
matter.
The issue of the contingency plan was so important to
the scheme of things that it could hardly have been omitted from
SASSA’s
papers, on account of an innocent oversight. SASSA’s
affidavit sketches out historical facts and quotes copiously from
its
December report to illustrate the challenges faced by SASSA and the
solutions it proposed to address those challenges.
But it
failed to mention what SASSA would do if the extension is not
granted. No case was made out for urgency.
[20]
But the absence of urgency did not mean that as a matter of
course, the application should be dismissed. This Court had to
consider whether in the special circumstances of this case, there
were reasons which justified the granting of a further extension.
An
enquiry into an extension of this kind involves consideration of
relevant principles and facts of a particular case.
Principles
[21]
The
extension of a declaration of invalidity cannot be had for the
asking.
[10]
A proper
case justifying the extension must be made out. This is so
because the effect of suspending the operation
of a declaration of
invalidity is to keep alive conduct that has been declared invalid.
In the present instance, a contract
that was declared invalid because
the process leading up to its conclusion was inconsistent with the
values enshrined in the Constitution,
continued to operate as if it
was valid. This was the consequence of the suspension of the
declaration of its invalidity.
The object of the suspension was
two-fold. The first was to avoid disruption in the payment of
social grants which could
have caused intolerable suffering to the
recipients of social grants and their dependants. The second
was to afford SASSA
the opportunity to put matters right by
concluding a fresh valid contract.
[22]
Despite
having been initially afforded a period of three years, SASSA has
failed to remedy the defect before the expiry of the original
period
of suspension. This Court was placed in an invidious position
last year in March 2017 when it was asked to extend
further the
period of suspension. The breach of the obligation imposed on
SASSA by section 27(1)(c) of the Constitution weighed
heavily in the
determination to grant a further extension of 12 months.
[11]
All in all, SASSA has been afforded four years to sort out the
problem but has failed to do so.
[23]
Without
showing that the last period of suspension was inadequate and giving
a complete explanation as to why it has once again
failed to cure the
defect, SASSA had a serious obstacle standing in the way of the
relief it sought. To clear that obstacle
SASSA was required to
establish that it would be just and equitable to grant it yet another
extension. Justice and equity
are the principles that guide the
Court in determining whether to grant an extension or not.
These principles apply regardless
of whether the request relates to a
further extension.
[12]
[24]
Other principles relevant to the enquiry into whether it would
be just and equitable to extend a period of suspension were usefully
collected in the decision of this Court in
Ex Parte Minister of
Social Development
. In that case, Ngcobo J summed them up
in these terms:
“
The principles
that emerge from these cases may be summarised as follows:
(a) The principle of
finality in litigation which underlies the common law rules for the
variation of judgments and orders is applicable
to constitutional
matters. If courts were to be asked to reconsider final orders
declaring provisions of statutes invalid,
this could well lead to an
intolerable situation and uncertainty.
(b) This Court has the
power under its ‘just and equitable’ jurisdiction to vary
the period of suspension of an order
of invalidity and to determine
the conditions which are attached to the extension of the period.
If the period of invalidity
is not suspended or the period of
suspension has lapsed, this Court has no power to suspend or extend
the suspension of the declaration
of invalidity. To do so would
be to revive legislation which had been invalidated in terms of the
Court’s order.
(c) The Court will vary
the period of suspension that has not yet expired when it is just and
equitable to do so. The determination
of what is ‘just
and equitable’ or is ‘in the interests of justice’
involves similar considerations.
http://www.saflii.org/za/cases/ZACC/2006/3.html
- sdfootnote31sym
And what is just and equitable depends on the facts of each case.
(d) Factors that are
relevant to the enquiry whether it is just and equitable to extend
the period of suspension include the sufficiency
of explanation for
failure to comply with the original period of suspension; the
potentiality of prejudice being sustained if the
period of suspension
were extended or not extended; the prospects of complying with the
deadline; the need to bring litigation
to finality; and the need to
promote the constitutional project and prevent chaos.
(e) What is required is a
balancing of all the relevant factors bearing in mind that the
ultimate goal is to make an order that
is just and equitable.
(f) An application for
the extension of the period of suspension must be made within a
reasonable time. It must be made in
sufficient time to allow
the matter to be considered by this Court before the expiry of the
period of suspension.
(g) The explanation for
failure to correct the constitutional defect within the time limit
set out in the court order ‘must
be set out fully, candidly,
timeously and in a manner that conforms with the Rules of the Court’.
(h) It should not be
assumed that an extension of the period will be granted as a matter
of course and in the public interest. If
a proper case for the
extension of the period of suspension is not made out, an applicant
for the extension of the period of time
runs the risk of the request
being refused.
(i) This Court has the
responsibility to ensure that the provisions of the Constitution are
upheld and enforced. An applicant
for the extension of the
period of suspension should not therefore assume that the Court will
lightly grant the suspension of an
order of invalidity.”
[13]
[25]
The question that arose in the present matter was whether the
balancing of the relevant factors favoured the granting of a further
extension. In answering this question, the Court had to examine
those factors and weigh them up. They are addressed
separately.
Sufficiency
of explanation
[26]
The explanation furnished for why a further extension must be
granted was utterly inadequate. It was neither candid nor
complete.
The details of that explanation were outlined earlier
when the urgency of the matter was evaluated. With regard to
SAPO’s
incapacity to provide the cash payment service, SASSA’s
affidavit did not tell us why SAPO, which was also an organ of state,
was not given the necessary capacity instead of opting for inviting
tenders from third parties to provide that service. We
were
informed from the Bar during the hearing that Cash Paymaster’s
price for the relevant equipment was too high and therefore
Government was unwilling to procure the equipment at the price
demanded by Cash Paymaster.
[27]
But we were not told why similar equipment was not procured
from other parties at a price acceptable to Government. The
tender
that was advertised in January 2018 has elicited responses
from other companies. This suggests that those companies have
the necessary equipment for providing the cash payment service.
It is apparent from these facts that SASSA and Government
had other
options which they could have explored instead of trying to force the
hand of the Court to extend the operation of an
invalid contract.
Indeed, in the report filed with this Court on 9 March 2018, SASSA
explicitly states that various options
were considered but does not
tell us what options those were and why they were not pursued.
Prospects
of compliance with the deadline
[28]
SASSA’s affidavits did not assure us that if the
extension for six months was granted, the defect would be remedied
within
that period. The closing date for the tender had already
been extended to 28 February 2018. In the report filed on
9 March 2018, SASSA stated that there was a further request
for extending the deadline to 30 March 2019. However,
SASSA did
not say whether that request had been acceded to. Even if the
tender were to be awarded within the requested period
of extension,
there is no guarantee that the process would be free from
irregularities which might give rise to the validity of
the award of
that tender being successfully challenged. The information on
record is not adequate for determining whether
there is a likelihood
of compliance with the order that requires SASSA to remedy the
defect.
Finality
in litigation
[29]
The
principle of finality in litigation promotes certainty which forms
part of the rule of law, one of the founding values of the
Constitution. The need for finality here is more acute.
The original award of the tender to Cash Paymaster in 2012
has
generated no less than five cases in this Court alone.
[14]
There have been cases in other courts too.
[15]
The uncertainty in relation to whether social grants would be paid
must come to an end. SASSA and other relevant organs
of state
must make every effort to ensure that the interruption of the payment
of social grants is prevented.
[30]
With regard to finality in litigation, in
Ntuli
this
Court stated:
“
The principle of
finality in litigation which underlies the common law rules for the
variation of judgments and orders is clearly
relevant to
constitutional matters. There must be an end to litigation and
it would be intolerable and could lead to great
uncertainty if courts
could be approached to reconsider final orders made in judgments
declaring the provisions of a particular
statute to be invalid.”
[16]
Potentiality
of prejudice
[31]
Apart from setting out the synopsis of steps taken by SASSA in
an attempt to comply with the order of 17 March 2017 and outlining
the challenges it still faced, SASSA has not said a word about the
consequences of a refusal to extend further. That it was
SASSA’s duty to inform this Court of those consequences is
beyond doubt. In approaching this Court for a further
extension,
SASSA sought an indulgence. It was therefore
duty-bound to be candid and place all relevant information before
this Court
to enable it to decide the matter on the basis of full
facts.
[32]
SASSA has not established any prejudice it would suffer if the
extension was not granted. Nor did it show that any of the
parties would be harmed by a failure to extend the suspension in
question. However, it was apparent from the papers that the
recipients of grants would be seriously prejudiced by the failure to
extend. Approximately 2.8 million recipients could have
been
affected. These people would not have received their grants if
a further suspension of the invalidity was not granted.
These
are poor people with virtually no income for daily financial needs
except the grants they receive from SASSA.
[33]
The interests of the recipients of grants and the hardship
they could have faced had to be weighed against other factors which
did
not support the granting of a further extension. This was
done in order to determine whether a refusal to extend the relevant
suspension would be just and equitable in the circumstances of this
case.
[34]
While factors like finality of litigation, sufficiency of
explanation and prospects of compliance with the deadline warranted
refusal
to grant a further suspension, there were other factors which
strongly supported the granting of the extension requested.
These included the large number of poor people who would have been
adversely affected by the refusal; the violation of their rights
of
access to sufficient food and social security and the fact that the
grant recipients were not to blame for SASSA’s failure
to act
diligently and comply with the extended period in the order.
[35]
What emerged from this balancing exercise was that it would be
just and equitable to grant a further extension of the suspension
of
the invalidity order so as to avoid the serious prejudice which
millions of poor people could have suffered.
Costs
[36]
In the order of 23 March 2018, the question of costs was
reserved for determination at a later date. This was
necessitated
by the fact that the order envisaged an enquiry into
whether the former Minister of Social Development, Ms Bathabile
Dlamini and
SASSA’s acting CEO, Ms Pearl Bhengu should be
enjoined and be held personally liable for costs of the application.
In their respective affidavits, both of them have urged this Court
not to order them to pay costs in their personal capacity.
[37]
It is now settled that public officials who are acting in a
representative capacity may be ordered to pay costs out of their own
pockets, under specified circumstances. Personal liability for
costs would, for example, arise where a public official is
guilty of
bad faith or gross negligence in conducting litigation. In
Black Sash 2
, this Court made it clear that this test applies
to conduct relating to litigation and the discharge of constitutional
obligations.
Froneman J said:
“
Within that
constitutional context the tests of bad faith and gross negligence in
connection with the litigation, applied on a case
by case basis,
remain well founded. These tests are also applicable when a
public official’s conduct of his or her
duties, or the conduct
of litigation, may give rise to a costs order.”
[17]
[38]
In her written submissions the Minister contended that to hold
her personally liable for costs would constitute an impermissible
encroachment on the powers of the other arms of government. She
submitted that this Court lacks the authority to hold a Minister
to
account by ordering her or him to pay costs out of her or his
pocket. There is no merit in this argument. As mentioned,
Black Sash 2
affirms the principle that public officials may
be ordered to pay costs out of their own pockets if they are guilty
of bad faith
or gross negligence. The source of that power is
the Constitution itself which mandates courts to uphold and enforce
the
Constitution. It is apparent from
Black
Sash 2
that the object of a costs
de bonis propriis
order is to
vindicate the Constitution.
[39]
The other submission advanced by the Minister was that it is
not competent to make such a costs order in the absence of a request
from one of the litigants. The contention is ill-conceived.
At common law, courts may raise the issue of a personal
costs order
of their own accord provided that they act fairly against the
affected party. Fairness demands that such a party
be warned
that the court contemplates issuing a personal costs order and the
affected party must be afforded an opportunity to
address the court
on the issue.
[40]
The order of 23 March 2018 meets the requirement of fairness.
It called the Minister and the acting CEO to show cause why they
should not be enjoined in their personal capacities and be held
personally liable for costs. In response to the order, these
officials have filed affidavits and written submissions.
Therefore, the process followed in matters of this kind have been
adhered to.
[41]
For her part the acting CEO, while accepting that a personal
costs order is competent in circumstances described in
Black Sash
2
, argued that on the facts on record she was not guilty of bad
faith or gross negligence. Consequently, she urged this Court
not to make a personal costs order against her.
[42]
The question that arose in respect of both the Minister and
the acting CEO was whether they have acted in bad faith or grossly
negligent
in conducting this litigation or in the performance of
their constitutional functions. The affidavit filed by the
acting
CEO outlined steps undertaken by her in an attempt to comply
with the order issued in
Black Sash 1
on 17 March 2017.
It is evident from this affidavit that she was only appointed to the
position of acting CEO in July 2017.
[43]
Shortly after her appointment she approached the Treasury for
approval of the appointment of SAPO as a service provider to replace
Cash Paymaster. Once approval was obtained, a proposal was
solicited from SAPO. It was during the evaluation of this
proposal that it became clear that SAPO lacked the capacity to
provide the service for paying social grants in cash. Although
SASSA became aware of this shortcoming in September 2017, it was only
in mid-December 2017 that steps were taken to put the service
to open
tender. But the tender was advertised in January 2018.
This application was lodged in this Court on 6 February
2018 as a
matter of urgency.
[44]
As stated the urgency relied on was self-created and the
explanation furnished for the delay in approaching this Court was not
satisfactory.
But the unsatisfactory explanation falls short of
gross negligence or bad faith which would warrant a personal costs
order.
[45]
The test of bad faith or gross negligence has not been
established agains the Minister too, in respect of compliance with
the order
of 17 March 2017 which was issued in
Black Sash 2
.
It will be recalled that in terms of the empowering legislation
SASSA’s affairs are the primary responsibility of
the CEO.
This suggests that the CEO oversees the daily functions and
management of SASSA. However, this management
is subject to the
direction of the Minister. Ultimately the duty to see to it
that SASSA attains the objectives for which
it was established rests
on the Minister.
[46]
It is evident from the record that the Minister did not apply
an effective supervisory role, particularly after it had come to her
attention that SASSA had failed to comply with previous orders.
One would have expected that the Minister would demand that
she be
furnished with reports at frequent intervals, setting out steps taken
by SASSA to carry out court orders and for her to
intervene as soon
as it became clear that difficulties which put payment of social
grants at risk had arisen.
[47]
The Minister’s affidavit reveals that she deferred to
the Inter-Ministerial Committee on Comprehensive Social Security
which
was established by the President to provide oversight and
ensure compliance. It is however clear that the duty to give
direction
to SASSA is imposed on the Minister by the South African
Social Security Act. Therefore, the committee established by
the
President could not relieve the Minister from her statutory
duty. On the contrary, the committee could only support her in
performing her statutory functions. But the Minister’s
deference to the committee was mistaken. That is not sufficient
to
conclude that it constitutes bad faith or gross negligence.
[48]
What remains for determination is whether SASSA and its CEO in
her official capacity should pay costs of the application. Were
it not for the fact that the refusal to extend the period of
suspension would have severely prejudiced innocent grant recipients,
the application could have been dismissed. Consequently, the
applicants must bear the costs of the application.
Order
[49]
In the result the following order is made:
1. The South African
Social Security Agency and the Chief Executive Officer, in her
official capacity, are ordered to pay costs
of the application
jointly and severally and such costs shall include costs of two
counsel.
For
the Applicants: N Cassim SC and H Rajah instructed by Renqe FY
Incorporated.
For
the First Respondent: S Kazee instructed by the State Attorney.
For
the Second Respondent: G Budlender SC, G Snyman and Z Ngwenya
instructed by Centre for Applied Legal Studies.
For
the Fifth Respondent: L Morison SC, J Bleazard and N Luthuli
instructed by Smit Sewgoolam Incorporated.
For
the Seventh Respondent: A Bava SC and G Badela instructed by
Shepstone Wylie Attorneys
For
the Eighth Respondent: G Marcus SC, A Coutsoudis and X Hilta
instructed by Nortons Incorporated.
[1]
Section 4 of the South African Social Security Act 9 of 2004.
[2]
AllPay
Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer
of the South African Social Security Agency
[2013] ZACC 42
;
2014 (1) SA 604
(CC);
2014 (1) BCLR 1
(CC) (
AllPay
1
).
[3]
AllPay
Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer
of the South African Social Security Agency
[2014] ZACC 12
;
2014 (4) SA 179
(CC);
2014 (6) BCLR 641
(CC) (
AllPay
2
).
[4]
The order was issued in these terms:
“
1. The Black Sash
Trust is granted direct access to bring this application.
2. Freedom Under Law NPC
is granted leave to intervene.
3. Corruption Watch NPC
(RF) and the South African Post Office SOC Limited are admitted as
friends of the Court.
4. It is declared that
the South African Social Security Agency (SASSA) and Cash Paymaster
Services (Pty) Limited (CPS) are under
a constitutional obligation
to ensure payment of social grants to grant beneficiaries from 1
April 2017 until an entity other
than CPS is able to do so and that
a failure to do so will infringe upon grant beneficiaries’
rights of access to social
assistance under section 27(1)(c) of the
Constitution.
5. The declaration of
invalidity of the contract is further suspended for the 12- month
period from 1 April 2017.
6. SASSA and CPS are
directed to ensure payment of social grants to grant beneficiaries
from 1 April 2017, for a period of 12
months, on the same terms and
conditions as those in the current contract between them that will
expire on 31 March 2017, subject
to these further conditions:
6.1 The terms and
conditions shall:
(a) contain adequate
safeguards to ensure that personal data obtained in the payment
process remains private and may not be used
for any purpose other
than payment of the grants or any other purpose sanctioned by the
Minister in terms of
section 20(3)
and (4) of the
Social
Assistance Act 13 of 2004
; and
(b) preclude anyone from
inviting beneficiaries to ‘opt in’ to the sharing
of confidential information for the
marketing of goods and services.
6.2 CPS may in writing
request National Treasury during the 12-month period to investigate
and make a recommendation regarding
the price in the contract.
6.3 National Treasury
must file a report with this Court within 21 days of receipt of
the request setting out its recommendation.
6.4 Within 30 days of
the completion of the period of the contract, CPS must file with
this Court an audited statement of the
expenses incurred, the income
received and the net profit earned under the contract.
6.5 SASSA must
thereafter obtain an independent audited verification of the details
provided by CPS under paragraph 6.4.
6.6 The audit
verification must be approved by National Treasury and the audited
verification must be filed by SASSA with this
Court within 60 days.
6.7 CPS must permit the
auditors appointed by SASSA to have unfettered access to its
financial information for this purpose.
7. The Minister and
SASSA must file reports on affidavit with this Court every three
months, commencing on a date three months
after the date of this
order, setting out how they plan to ensure the payment of social
grants after the expiry of the 12-month
period, what steps they have
taken in that regard, what further steps they will take, and when
they will take each future step,
so as to ensure that the payment of
all social grants is made when they fall due after the expiry of the
12-month period.
8. The reports filed by
the Minister and SASSA as contemplated in paragraph 7 must
include, but is not limited to, the applicable
time-frames for the
various deliverables which form part of the plan, whether the
time-frames have been complied with, and if
not, why that is the
case and what will be done to remedy the situation.
9. If any material
change arises in relation to circumstances referred to in a report
referred to in paragraphs 7 or 8,
the Minister and SASSA
are required immediately to report on affidavit to the Court and to
explain the reason for and consequences
of the change.
10. It is declared that
SASSA is under a duty to ensure that the payment method it
determines:
10.1. contains adequate
safeguards to ensure that personal data obtained in the payment
process remains private and may not be
used for any purpose other
than payment of the grants or any other purpose sanctioned by the
Minister in terms of
section 20(3)
and (4) of the
Social
Assistance Act; and
10.2. precludes a
contracting party from inviting beneficiaries to ‘opt in’
to the sharing of confidential information
for the marketing of
goods and services.
11. The parties are,
within 14 days from the date of this order, required to submit the
names of individuals, with their written
consent, suitably qualified
for appointment as independent legal practitioners and technical
experts for the purposes referred
to in paragraph 12 below.
12. The Auditor-General
and any other person(s) or institution(s) appointed by the Court
after receipt of the names submitted
under paragraph 11, shall
jointly and until otherwise directed by the Court:
12.1 evaluate the
implementation of payment of social grants during the 12- month
period;
12.2 evaluate the steps
envisaged or taken by SASSA for any competitive bidding process or
processes aimed at the appointment
by SASSA in terms
of
section 4(2)(a)
of the
South African Social
Security Agency Act 9 of 2004
of a new
contractor or contractors for the payment of social grants;
12.3 evaluate the steps
envisaged or taken by SASSA aimed at SASSA itself administering and
paying the grants in the future or
SASSA itself permitting any part
or parts of the administration and payment processes in the future;
and
12. file reports on
affidavit with this Court every three months, commencing on a date
three months after the date of this order,
or any shorter period as
the legal practitioners and experts may deem necessary, setting out
the steps they have taken to evaluate
the matters referred to in
paragraphs 12.1 to 12.3 the results of their evaluations and any
recommendations they consider necessary.
13. The Minister is
called upon to show cause on affidavit on or before
Friday 31 March 2017 why—
13.1 she should not be
joined in her personal capacity; and
13.2 she should not pay
costs of the application from her own pocket.
14. Costs are reserved
until conclusion of these proceedings.”
[5]
Paragraph
12 of the order actioned the appointment of the Auditor-General and
other persons, into a Panel of Experts.
[6]
Black
Sash Trust v Minister of Social Development
[2017] ZACC 8
;
2017 (3) SA 335
(CC);
2017 (5) BCLR 543
(CC) (
Black
Sash 1
).
[7]
The
directions of 7 November 2017 read:
“
Insofar as the
Court retains jurisdiction to ensure proper compliance with the
terms of its order dated 17 March 2017, the Chief
Justice has issued
the following directions:
1. The South African
Social Security Agency (SASSA) is directed to—
a)
forthwith and fully comply with any present or future request by the
Panel of Experts (Panel) for access to information held
by SASSA by
providing to the Panel soft copies, clearly indexed, of documents
containing the information requested within the
timeframes
stipulated by the Panel and, if unable to do so, to inform the Panel
of the reasons for this within three working
days of the request;
b)
provide the Panel with appropriate and sufficient details on the
process or processes undertaken by SASSA to obtain the services
of
service providers, including communications with the Office of the
Chief Procurement Officer and any legal advice provided
by SASSA’s
legal unit or outside lawyers, by 12 noon on Friday, 17 November
2017;
c)
combine statistics and information of all mechanisms, or generated
by all entities, involved in the payment of social grants
in one
consolidated document to be provided to the Panel on a monthly
basis;
d)
request that the Government Communication and Information System
develop and implement a focused communications plan to inform
current and potential beneficiaries/recipients of social grants of
the implications of the transition and of the benefits of
receiving
their social grants via bank accounts provided by a commercial bank
or financial institution of their choice;
e)
report to the Court, on affidavit, each month as to the progress
achieved in implementing a communications plan as described
in
paragraph (d);
f)
by Friday, 8 December 2017, report to the Court, on affidavit, as to
SASSA’s plan to effect the uninterrupted payment
of social
grants, specifying matters such as definite roles and
responsibilities, precise timelines, dependencies, desired outcomes
and risk-mitigation measures;
g)
after filing its plan in terms of paragraph (f) report to the Court,
on affidavit, each month as to the progress achieved in
implementing
the plan, the steps taken to mitigate risks which could prevent the
full execution of the plan and any other matters
which ought to be
brought to the attention of the Court;
h)
by Friday, 8 December 2017, report to the Court, on affidavit, as to
SASSA’s contingency plan if a seamless transition
on
1 April 2018 is not realisable; and
i)
provide the Panel with appropriate and sufficient information on any
steps taken to implement these directions.
2.
Further directions may be issued.”
[8]
Rule
12
provides:
“
(1) In urgent
applications, the Chief Justice may dispense with the forms and
service provided for in these rules and may give
directions for the
matter to be dealt with at such time and in such manner and in
accordance with such procedure, which shall
as far as is practicable
be in accordance with these rules, as may be appropriate.
(2) An application in
terms of subrule (1) shall on notice of motion be accompanied by an
affidavit setting forth explicitly the
circumstances that justify a
departure from the ordinary procedures.”
[9]
Compare
Cekeshe
v Premier, Eastern Cape
1998 (4) SA 935
(Tk) at 948.
[10]
Minister
of Agriculture, Forestry and Fisheries v National Society for the
Prevention of Cruelty to Animals
[2015] ZACC 27
;
[2015] JOL 33755
(CC); (11) BCLR 1387 (CC) at para
1.
[11]
Section 27(1) of the Constitution provides:
“
(1) Everyone has
the right to have access to-
(a) health care
services, including reproductive health care;
(b) sufficient food and
water; and
(c) social security,
including, if they are unable to support themselves and their
dependants, appropriate social assistance.”
[12]
Minister
of Agriculture, Forestry and Fisheries v National Society for the
Prevention of Cruelty to Animals
[2016] ZACC 26
; 2016 JDR 1560 (CC) (11) BCLR 1419 (CC) at para 14.
[13]
Ex
Parte Minister of Social Development
[2006]
ZACC 3
;
2006 (4) SA 309
(CC);
2006 (5) BCLR 604
(CC) at para 50.
[14]
These are
AllPay
1
;
AllPay
2
;
Black
Sash 1
;
Black
Sash Trust v Minister of Social Development
ZACC 8;
2017 (5) BCLR 543
(CC);
2017 (3) SA 335
(CC) (
Black
Sash 2
)
and the present matter.
[15]
AllPay
1
commenced in the High Court and went to the Supreme Court of Appeal
before it came to this Court.
[16]
Minister
of Justice v Ntuli
[1997] ZACC 7
;
1997 (3) SA 772
(CC);(6)
1997 BCLR 677
;(CC) at para
29.
[17]
Black
Sash 2
above
n 14 at para 9.