Premier, Eastern Cape, and Others v Cekeshe and Others

• Jurisdiction: South Africa
• Judge: Somyalo JP, Madlanga J and Locke J
• Judgment Date: 23 September 1998
• Citation: 1999 (3) SA 56 (TK)
• Docket Number: 1091/97
• Hearing Date: 03 April 1998
• Counsel: PB Hodes (with him RP Quinn and SV Notshe) for the appellants NK Dukada for the respondents
• Court: Transkei Division

Locke J: I

1.

The parties

The first appellant herein is the Premier for the Province of the Eastern Cape. The second appellant herein is the Member of the Executive Council for Agriculture and Land Affairs for the Province of the Eastern Cape. There were originally nine respondents in the Court J

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a quo but only first and second respondents are parties to this A appeal. Respondents herein are the applicants in the main application, Boyd Bafo Cekeshe and 45 others, listed as per annexure 'A' to the notice of motion in the application filed of record on 21 August 1997.

2.

Order of Van Zyl J

On 13 November 1997 Van Zyl J made the following order in the Court a quo: B

'1.

That Proc 10 issued by the first respondent on 10 July 1997 is hereby declared invalid and is set aside.

2.

That the termination of the applicants' employment is hereby set aside C with effect from 10 July 1997.

3.

That the first and second respondents pay the costs of the application.'

3.

Application for leave to appeal D

The appellants applied on 11 December 1997 for leave to appeal directly to the Supreme Court of Appeal against the whole of the judgment and order made by Van Zyl J on 13 November 1997 on the following grounds:

'1.

The Court erred in holding that the exercise by the first applicant of E his statutory powers in passing Proc 10 constituted an administrative action.

2.

The Court erred in holding that Proc 10 was an administrative act and therefore had to comply with the provisions of s 33 of the Constitution of the Republic of South Africa Act 108 of 1996.

3.

The Court erred in holding that the action of the first applicant in F passing Proc 10 did not amount to original legislative action and was therefore subject to judicial review.

4.

The Court erred in holding that the decision of the first applicant to dissolve the third respondent falls under category (b) as enumerated in South African Roads Board v Johannesburg City Council G 1991 (4) SA 1 (A) at 12E - G.

5.

In any event even if the Court did not err in its finding that the decision of the first applicant aforementioned falls under category (b) the Court erred in not finding that in the circumstances of the instant case the first applicant was not obliged to afford the respondents a H hearing before exercising his powers in terms of s 13.'

On 11 December 1997 Van Zyl J, having heard argument, granted the appellants leave to appeal to the Full Bench against the judgment and ordered that the costs of the application for leave to appeal be costs in the appeal. I

4.

Grounds of appeal numbers 1, 2, 3 and 4

The appellants submit that the exercise by first appellant of his statutory powers in passing Proc 10

(a)

is original legislation; J

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(b)

as such, is not subject to judicial review; A

(c)

does not constitute administrative action;

(d)

does not have to comply with the provisions of s 33 of the Constitution.

To examine whether Proc 10 is original legislation, it is necessary to set out a B brief overview of the legislation applicable to the Transkei Agricultural Corporation (hereinafter referred to for purposes of convenience as 'Tracor').

5.

Legislation applicable to the Transkei Agricultural Corporation

Tracor was established in terms of the Corporations Act 10 of 1976 (Tk). This Act was subsequently C amended by Act 3 of 1977, Act 7 of 1978 and Act 16 of 1980 (all Transkeian legislation).

Tracor was formally established in terms of Government Notice 199, published in Special Gazette 28 dated 12 December 1980. In terms thereof D Tracor was established with effect from 1 January 1981 by the Minister of Commerce, Industry and Tourism who was acting in terms of ss 3 and 7(1)(b) of Act 10 of 1976. The initial share capital was R1 000 divided into 1 000 shares of R1 each. Amongst the powers assigned to Tracor were the following:

'(1)

(T)o employ persons (permanently or temporarily) and to remunerate E them;

(2)

with regard to all persons employed by it -

(i)

to prescribe their general conditions of service, including conditions relating to remuneration, retirement, sick benefits, housing and accommodation;

(ii)

to prescribe a disciplinary code for them and to suspend or discharge F them;

(iii)

to provide for pensions, gratuities or retiring allowances and for that purpose to establish and make contributions to a pension or superannuation fund;

(iv)

to provide for medical benefits and for that purpose to establish and G make contributions to a medical aid fund;

(v)

to plan, promote, undertake, finance, and provide such facilities or to take such other steps as may be necessary for their proper training in any field of the various activities of the Corporation;

(vi)

to make such other provision as may be necessary for their H administration and for their physical and spiritual wellbeing as may be necessary.'

On 26 December 1980, in Special Gazette 68, the Minister of Commerce, Industry and Tourism published regulations applicable to Tracor by way of Government Notice 222 of 1980. These regulations dealt with the conditions of service of the directors of Tracor and the powers and duties of the board. The I regulations also made provision for the submission to the Minister of Tracor's balance sheet, statement of income and expenditure and report of the board on the operations of Tracor.

A new Corporations Act was passed on 20 December 1985, being Act 10 of 1985, which repealed Act 10 of 1976 and the amendments thereto. In terms of s 17(2) thereof, Tracor continued to exist under the management and control of the existing board and the board could J

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exercise the powers, duties and functions which they exercised under the A repealed legislation. Schedule 2 to the Act provided that Tracor could employ persons and remunerate them. Section 4 of the Act provided that:

'A corporation shall be a corporate body with limited liability and perpetual succession capable of suing or being sued in its own name.' B

Sections 5(1)(a) and (b) provided:

'(a) Subject to the provisions of this Act, each corporation shall be under the management and control of a board of directors appointed by the President from amongst persons experienced in business and other administration or who are, by virtue of the offices held by them in the service of the Government or on other grounds, suitable in the opinion of the President, C for appointment.

(b) For the purposes of para (a), the President:

(i)

shall determine the number of directors of a corporation;

(ii)

shall designate one of such directors as the chairman of a board;

(iii)

may, if circumstances so require, appoint an alternate director to D act in the place of any director during his absence or incapacity and who shall, when so acting, be competent to exercise any power or perform any duty of such director.'

Section 5(3) provided:

'The President shall determine the period of office of the chairman and the other directors of a board.' E

Section 6 provided:

'(1) A board may, at any time, submit to the Minister for decision any matter relating to the powers of a corporation and shall do so when the Minister so requires.

(2) The Minister may, after consultation with the board, refer the matter to F the President for his consideration.

(3) The President, when giving a decision, may impose such conditions as he may deem fit.

(4) A decision given or condition imposed by the President under ss (3) shall be deemed to have been given or imposed by the board: Provided that no such decision or condition may be withdrawn or amended by the board except with the G approval of the President.'

Section 7 provided:

'(1) The initial share capital of a corporation, which shall be divided into ordinary shares of R1 each, shall consist of such sum of money as specified by the Minister by notice in the Gazette after consultation with the H Minister of Finance.

(2) The Minister may, from time to time, by notice in the Gazette and after consultation with the Minister of Finance, alter the share capital of a corporation.

(3) Only the government and other corporations shall be capable of becoming shareholders in a corporation.

(4) Subject to the provisions of the Transkeian Development and Reserve Fund I Act 3 of 1964 and any other law, the shares in a corporation shall, to the extent to which it may be necessary, be paid for out of moneys appropriated by the National Assembly for the purpose, and payment for such shares shall be made at such times and in such amounts as may be agreed upon between the Minister and the board.

(5) The liability of a shareholder in a corporation shall in each case be limited to the amount remaining unpaid on the shares which such shareholder holds.' J

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Section 10(1) and (2) provided: A

'(1) A board shall cause proper books of account to be kept in respect of all the affairs of a corporation, as well as such other books and documents as may be necessary for the purpose of maintaining an adequate record of such affairs.

(2) The accounts of all corporations shall be audited by the Auditor-General.'

Section 11 provided: B

'(1) A board shall, as soon as practicable after the end of every financial year, submit to the Minister -

(a)

the balance sheet and the statement of income and expenditure of the corporation;

(b)

a report signed by the Auditor-General stating that, on the C information supplied to him and to the best of his knowledge and belief, such balance sheet and statement of income and expenditure are true and correct: Provided that, if the Auditor-General is unable to make such a...