AAA Investments (Pty) Ltd v Micro Finance Regulatory Council and Another

• Jurisdiction: South Africa

AAA Investments (Pty) Ltd v Micro Finance Regulatory Council and Another
2007 (1) SA 343 (CC)

2007 (1) SA p343

Citation	2007 (1) SA 343 (CC)
Case No	CCT51/05
Court	Constitutional Court
Judge	Langa CJ, Moseneke DCJ, O'Regan J, Ngcobo J, Madala J, Mokgoro J, Nkabinde J, Sachs J, Skweyiya J, Yacoob J, Van Der Westhuizen J
Heard	February 28, 2006
Judgment	July 28, 2006
Counsel	G J Marcus SC (with A C Dodson) for the appellant.; C D A Loxton SC (with J Cassette) for the respondents.

Flynote : Sleutelwoorde F

Constitutional law — Legislation — Delegation of legislative power — In what circumstances — By G Minister's exemption notice to regulator of micro-lending sector.

Constitutional law — Legislation — Subordinate legislation — Validity of — Rules of industry regulator — Rules of regulator of micro-lending sector — Regulator's legislative public power to make rules delegated by Minister — Exercise of power not usurping power reserved to National or Provincial Legislatures or H municipal councils — Rules valid and enforceable.

Constitutional law — Organ of State — What is — Test — Any institution exercising public power or performing public function in terms of any legislation, qualifying as organ of State — Private entity as organ of State — Regulator of micro-lending sector — Regulator performing public function in terms of I national legislation — Qualifying as organ of State.

Constitutional law — Public power — Exercise of — Control of — Constitution establishing commitment to supremacy of Constitution and rule of law — Exercise of all public power subject to constitutional control — Exercise of public power by private entities — Regulator of micro-lending sector — In performing regulatory function and in being subject to almost J

2007 (1) SA p344

absolute ministerial control, regulator performing public function — Bill of Rights applicable to A regulator's decisions and rules — Constitution, ss 1(c), 2, 8(1) and 172(1)(a).

Headnote : Kopnota

The applicant sought leave, on constitutional grounds, to appeal to the Constitutional Court against the finding of the Supreme Court of B Appeal that the rules made and administered by the first respondent, the regulator of the micro-lending sector, were valid and enforceable. The High Court had found that the making of the rules entailed the exercise of a public power, so that they were governed by the Constitution of the Republic of South Africa, 1996; and that they were unconstitutional and invalid in that, in making them, the first respondent had exercised a public legislative power which had not C been properly delegated to it and which usurped the power reserved to Parliament, the provincial legislatures and municipal councils. On appeal to the SCA the appeal court set aside the decision of the High Court and found that the rules operated only in the private sphere, by reason of a contractual relationship between the first respondent and those micro-lenders registered with it, that they were therefore not governed by the Constitution, that the first respondent had D been authorised by its memorandum and articles of association to make them and that there was no basis upon which their legality could be impugned.

Held, as to the application for leave to appeal, that the Constitutional Court would grant leave to appeal only if it were in the interests of justice to do so. In light of the significant differences between the decision of the High Court and the decision of the SCA and E the significant implications of the respective decisions for the South African democracy, it was clearly in the interests of justice to hear the appeal. (Paragraphs [26] and [27] at 357H - 358H.)

Held, further, as to whether the Constitution applied to the first respondent, that under s 8(1) of the Constitution the Bill of Rights was applicable to organs of State, and an organ of State F included entities that performed public functions under national legislation. (Paragraph [40] at 364F - G.)

Held, further, that the first respondent performed its functions in terms of the Minister's exemption notice, which qualified as 'national legislation', and because its functions were essentially regulatory of an industry and were subject to the almost absolute control of the Minister, they qualified as a 'public function'. (Paragraphs [43] - [44] and [45] at 365E - G and G 366D - E.)

Held, further, that the decisions and rules of the first respondent were therefore governed by the Constitution, including the guarantee of the right to privacy, and that the decision of the SCA could thus not be upheld. (Paragraph [45] at 366F.)

Held, further, as to whether the first respondent exercised legislative power not expressly delegated to it, that the Minister's exemption notice had approved the first respondent as a H regulatory institution, and that the power to make rules had by necessary implication been delegated to it. In the absence of a challenge to the validity of the notice, it had to be accepted as valid, and likewise the delegation in terms of the notice. (Paragraphs [47] - [48] and [54] at 366H - 367C and 368G - 369A.)

Held, further, that the first respondent exercised public legislative power in terms of the exemption notice. In I exercising that power the first respondent did not usurp the national, provincial or municipal legislative power: it made binding rules authorised by law and with the force of law. (Paragraph [49] at 367E - F.)

Held, further, that the decision of the High Court setting aside the rules as being unconstitutional could thus not be upheld. (Paragraph [56] at 370D - E.) J

2007 (1) SA p345

The order of the SCA setting aside the order of the High Court upheld. Appeal dismissed. (Paragraphs [62] and [64] at 371E and 372C.) A

Cases Considered

Annotations

Reported cases

Southern African cases B

AAA Investments (Pty) Ltd v Micro Finance Regulatory Council and Another 2004 (6) SA 557 (T): referred to

African Christian Democratic Party v Electoral Commission and Others 2006 (3) SA 305 (CC) (2006 (5) BCLR 579): referred to

Alexkor Ltd and Another v The Richtersveld Community and Others 2004 (5) SA 460 (CC) (2003 (12) BCLR 1301): referred to C

Aluchem (Pty) Ltd and Another v Minister of Mineral and Energy Affairs and Others 1985 (3) SA 626 (T): referred to

Attorney-General, OFS v Cyril Anderson Investments (Pty) Ltd 1965 (4) SA 628 (A): referred to

Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others 2004 (4) SA 490 (CC) (2004 (7) BCLR 687): dictum in para [22] applied D

Bernstein and Others v Bester and Others NNO 1996 (2) SA 751 (CC) (1996 (4) BCLR 449): referred to

Bruce and Another v Fleecytex Johannesburg CC and Others 1998 (2) SA 1143 (CC) (1998 (4) BCLR 415): referred to

Brummer v Gorfil Brothers Investments (Pty) Ltd and Others 2000 (2) SA 837 (CC) (2000 (5) BCLR 465): referred to E

Catholic Bishops Publishing Co v State President and Another 1990 (1) SA 849 (A): referred to

Chairman, Board on Tariffs and Trade, and Others v Teltron (Pty) Ltd 1997 (2) SA 25 (A) ([1997] 1 All SA 387): referred to F

City of Cape Town and Another v Robertson and Another 2005 (2) SA 323 (CC) (2005 (3) BCLR 199): dictum in paras [76] - [77] applied

DEP Investments (Pty) Ltd v City Council, Pietermaritzburg 1975 (2) SA 261 (N): referred to

Dawnlaan Beleggings (Edms) Bpk v Johannesburg Stock Exchange and Others 1983 (3) SA 344 (W): referred to G

Executive Council, Western Cape Legislature, and Others v President of the Republic of South Africa and Others 1995 (4) SA 877 (CC) (1995 (10) BCLR 1289): dicta in paras [51] and [62] applied

Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others 1999 (1) SA 374 (CC) (1998 (12) BCLR 1458): dicta in paras [40], [56] and [58] applied H

Fraser v Naude and Others 1999 (1) SA 1 (CC) (1998 (11) BCLR 1357): referred to

Government of the Province of the Eastern Cape v Frontier Safaris (Pty) Ltd 1998 (2) SA 19 (SCA) ([1997] 4 All SA 500): referred to

Hoffmann v South African Airways 2001 (1) SA 1 (CC) (2000 (11) BCLR 1211): referred to I

Independent Electoral Commission v Langeberg Municipality 2001 (3) SA 925 (CC) (2001 (9) BCLR 883): dictum in paras [9] - [11] applied

Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others: In re Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others 2001 (1) SA 545 (CC) (2000 (2) SACR 349; 2000 (10) BCLR 1079): referred to J

2007 (1) SA p346

Islamic Unity Convention v Independent Broadcasting Authority and Others 2002 (4) SA 294 (CC) (2002 (5) A BCLR 433): referred to

J T Publishing (Pty) Ltd and Another v Minister of Safety and Security and Others 1997 (3) SA 514 (CC) (1996 (12) BCLR 1599): dictum in paras [15] - [17] applied

Johannesburg Stock Exchange and Another v Witwatersrand Nigel Ltd and Another 1988 (3) SA 132 (A): referred to B

Khumalo and Others v Holomisa 2002 (5) SA 401 (CC) (2002 (8) BCLR 771): referred to

Logbro Properties CC v Bedderson NO and Others 2003 (2) SA 460 (SCA) ([2003] 1 All SA 424): referred to

Matatiele Municipality and Others v President of the RSA and Others 2006 (5) SA 47 (CC) (2006 (5) BCLR 622): C dictum in para [50] applied

Mathipa v Vista University and Others 2000 (1) SA 396 (T): referred to

Member of the Executive Council for Development Planning and Local Government, Gauteng v Democratic Party and Others 1998 (4) SA 1157 (CC) (1998 (7) BCLR 855): referred to

Micro Finance Regulatory Council v AAA Investments (Pty) Ltd and Another 2006 (1) SA 27 (SCA) ([2006] 3 D All SA 256): confirmed on appeal but for different reasons

Minister of Trade and Industry and Others v Nieuwoudt and Another 1985 (2) SA 1 (C): referred to

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