Comair Ltd v Minister of Public Enterprises and Others

• Jurisdiction: South Africa
• Citation: 2016 (1) SA 1 (GP)

Comair Ltd v Minister of Public Enterprises and Others
2016 (1) SA 1 (GP)

2016 (1) SA p1

Citation	2016 (1) SA 1 (GP)
Case No	13034/2013
Court	Gauteng Division, Pretoria
Judge	Fabricius J
Heard	May 5-14, 2015
Judgment	June 6, 2015
Counsel	DN Unterhalter SC (with M du Plessis and A Coutsoudis) for the applicant.; JJ Gauntlett SC (with S Yacoob and F Pelser) for the first and second respondents.; No appearance for the third and fourth respondents.; NH Maenetje SC (with SS Linda) for the fifth respondent.; BE Leech SC (with KS Hofmeyr) for the sixth respondent.; C Loxton SC (with L Sisilana) for the seventh respondent.; M Chaskalson SC (with KS Hofmeyr) for the eighth respondent.

Flynote : Sleutelwoorde

Aviation — National airline — State funding — Loan guarantee — Legality — Compliance with statutory framework — Impact of likely inability of national airline to repay loan — Strategic role of national airline — Non-financial considerations relevant — Guarantee lawful — Public Finance Management Act 1 of 1999, s 70. C

State — Finance — Loan guarantee — Issuing of loan guarantee constituting executive action subject to principle of legality — Not for court to second-guess financial wisdom of guarantee — Public Finance Management Act 1 of 1999, s 70. D

Headnote : Kopnota

The applicant, Comair, a private domestic airline, requested the court to annul the government's December 2012 decision to issue a two-year R5 billion loan guarantee to SAA, the insolvent state-owned airline. (The guarantee was converted into a perpetual guarantee in November 2013.) The application was opposed by the government, the Departments of Public Enterprise, E Transport and Finance, and three banks that had made loans to SAA on the basis of the guarantee. The granting of government guarantees is regulated by s 70 of the Public Finance Management Act 1 of 1999 (the PFMA), which states that cabinet members may issue guarantees in respect of financial commitments incurred by public entities like SAA. F

Comair argued that the guarantee and in particular its conversion into a perpetual guarantee was void administrative or executive action. If executive, it was void for being ultra vires s 70 of the PFMA and contrary to stated government domestic air-transport policy. Comair based its case in part on competition law, but this endeavour failed at the first hurdle when the High Court determined it lacked jurisdiction because there had been no investigation by competition authorities (paras [24] – [25]). G

2016 (1) SA p2

A Held

Though it was not for the court to reverse government policy (para [40]), the impugned decision had (under the doctrine of legality) to comply with its legislative framework (para [44.1]), in casu the Constitution and s 70 of the PFMA (paras [27] – [30]). Since the issuing of the perpetual guarantee was an executive decision (paras [45] – [46]), PAJA did not apply to it (para [51]).

B There was nothing in s 70 to suggest that it could only be resorted to when it was reasonably certain that the guarantee would not be called up (para [41]). An enquiry under s 70 was not a commercial or financial one, and the issue here was simply whether, in the government's estimation, SAA's strategic role in the economy warranted support in the form of a guarantee (para [43]). Optimism about the ability of SAA to repay the guaranteed loans C was not a requirement (para [55]).

The decision to guarantee loans to SAA on a perpetual basis subject to the stated (and perfectly rational) conditions [*] was not contrary to aims of the PFMA (para [56]). The government had a wide discretion to select the means to achieve constitutionally permitted objectives and the courts could not D interfere simply because they did not like them or because other means might have been selected (para [56]). The factors taken into account by the government, which included the catastrophic effects of a failure of SAA, were permissible — even obligatory — considerations under the Constitution and the PFMA (para [57]). Hence the government acted lawfully when it took into account considerations other than financial ones when it decided to E issue the guarantee (paras [57] – [58]).

Application refused.

Cases Considered

Annotations

F Case law

Southern Africa

Affordable Medicines Trust and Others v Minister of Health and Others2006 (3) SA 247 (CC) (2005 (6) BCLR 529; [2005] ZACC 3): dictum in para [49] applied

Akani Garden Route (Pty) Ltd v Pinnacle Point Casino (Pty) Ltd G 2001 (4) SA 501 (SCA) ([2001] ZASCA 59): dictum in para [7] applied

Albutt v Centre for the Study of Violence and Reconciliation and Others2010 (3) SA 293 (CC) (2010 (5) BCLR 391; [2010] ZACC 4): dictum in para [51] applied

Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, H South African Social Security Agency, and Others2014 (1) SA 604 (CC) (2014 (1) BCLR 1; [2013] ZACC 42): dictum in para [60] applied

Arun Property Development (Pty) Ltd v Cape Town City2015 (2) SA 584 (CC): dictum in paras [45] – [46] applied

Biowatch Trust v Registrar, Genetic Resources, and Others2009 (6) SA 232 (CC) I (2009 (10) BCLR 1014; [2009] ZACC 14): referred to

Computer Investors Group Inc and Another v Minister of Finance1979 (1) SA 879 (T): dictum at 898C – E applied

2016 (1) SA p3

Democratic Alliance v President of the Republic of South Africa and Others A 2012 (1) SA 417 (SCA) (2012 (3) BCLR 291; [2011] ZASCA 241): dicta in paras [12] and [93] – [96] applied

Director-General Department of Home Affairs and Another v Mukhamadiva 2014 (3) BCLR 306 (CC): applied

Doctors for Life International v Speaker of the National Assembly and Others B 2006 (6) SA 416 (CC) (2006 (12) BCLR 1399; [2006] ZACC 11): dictum in para [37] applied

Du Plessis and Others v De Klerk and Another1996 (3) SA 850 (CC) (1996 (5) BCLR 658; [1996] ZACC 10): dictum in para [180] applied

Ekurhuleni Metropolitan Municipality v Dada NO and Others2009 (4) SA 463 (SCA) ([2009] 3 All SA 379): referred to

Ex parte Chairperson of the Constitutional Assembly: C In re Certification of the Constitution of the Republic of South Africa, 19961996 (4) SA 744 (CC) (1996 (10) BCLR 1253; [1996] ZACC 26): dictum in para [109] applied

Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others1999 (1) SA 374 (CC) (1998 (12) BCLR 1458; [1998] ZACC 17): dictum in para [45] applied D

Foodcorp (Pty) Ltd v Deputy Director-General, Department of Environmental Affairs and Tourism: Branch Marine and Coastal Management, and Others2006 (2) SA 191 (SCA) ([2005] 1 All SA 531; [2004] ZASCA 100): dictum in para [10] applied

Gcaba v Minister for Safety and Security and Others2010 (1) SA 238 (CC) (2010 (1) BCLR 35; [2009] 12 BLLR 1145; [2009] ZACC 26): E applied

Grey's Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others2005 (6) SA 313 (SCA) (2005 (10) BCLR 931; [2005] 3 All SA 33; [2005] ZASCA 43): dictum in paras [23] – [24] applied

Kruger v President of the Republic of South Africa and Others2009 (1) SA 417 (CC): dictum in para [23] applied

MEC for Agriculture, Conservation, Environment and Land Affairs v Sasol Oil (Pty) Ltd and Another F 2006 (5) SA 483 (SCA) ([2006] 2 All SA 17): referred to

Minister of Education, Western Cape and Another v Beauvallon Secondary School and Others2015 (2) SA 154 (SCA) ([2015] 1 All SA 542): dictum in para [12] applied

Minister of Health and Another NO v New Clicks South Africa (Pty) Ltd and Others G (Treatment Action Campaign and Another as Amici Curiae)2006 (2) SA 311 (CC) (2006 (1) BCLR 1; [2005] ZACC 14): dictum in para [437] applied

Minister of Home Affairs and Others v Scalabrini Centre and Others2013 (6) SA 421 (SCA): dicta in paras [5] and [65] – [66] applied

Motsepe v Commissioner for Inland Revenue1997 (2) SA 898 (CC) (1997 (6) BCLR 692): H dictum in para [21] applied

Natal Joint Municipal Pension Fund v Endumeni Municipality2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13): dictum in paras [17] – [26] applied

National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others I 2000 (2) SA 1 (CC) (2000 (1) BCLR 39; [1999] ZACC 17): dictum in para [21] applied

Offit Enterprises (Pty) Ltd and Another v Coega Development Corporation and Others2010 (4) SA 242 (SCA): referred to

Oudekraal Estates (Pty) Ltd v City of Cape Town2004 (6) SA 222 (SCA) ([2004] 3 All SA 1; [2004] ZASCA 48): dictum in para [31] applied J

2016 (1) SA p4

Permanent Secretary, Department of Education and Welfare, Eastern Cape, and Another v Ed-U-College (PE) (Section 21) Inc A 2001 (2) SA 1 (CC) (2001 (2) BCLR 118; [2000] ZACC 23): dictum in para [18] applied

Pharmaceutical Manufacturers Association of SA and Another: In re Ex parte President of the Republic of South Africa and Others2000 (2) SA 674 (CC) (2000 (3) BCLR 241; [2000] ZACC 1): dictum in para [84] applied

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd B 1984 (3) SA 623 (A): referred to

Premier, Mpumalanga, and Another v Executive Committee, Association of State-Aided Schools, Eastern Transvaal1999 (2) SA 91 (CC) (1999 (2) BCLR 151; [1998] ZACC 20): referred to

Premier, Provinsie Mpumalanga, en 'n Ander v Groblersdalse Stadsraad1998 (2) SA 1136 (SCA): dictum at 1141E applied

President of the Republic of South Africa and Others v South African Rugby and Football Union and Others C 2000 (1) SA 1 (CC) (1999 (10) BCLR 1059; [1999] ZACC 11): dictum in para [216] applied

S v Mhlungu and Others1995 (3) SA 867 (CC) (1995 (2) SACR 277; 1995 (7) BCLR 793; [1995] ZACC 4): dictum in para [59] applied

South African Veterinary Council and Another v Szymanski D 2003 (4) SA 42 (SCA) (2003 (4) BCLR 378): dicta in paras [11] and [13]...