Gauteng Gambling Board and Another v MEC for Economic Development, Gauteng

• Jurisdiction: South Africa
• Judge: Navsa JA, Leach JA, Willis AJA, Swain AJA and Saldulker AJA
• Judgment Date: 27 May 2013
• Citation: 2013 (5) SA 24 (SCA)
• Docket Number: 620/2012 [2013] ZASCA 67
• Hearing Date: 09 May 2013
• Counsel: V Soni SC (with K Millard) for the appellants. LT Sibeko SC (with AL Platt) for the respondent.
• Court: Supreme Court of Appeal

Navsa JA (Leach JA, Willis AJA, Swain AJA and Saldulker AJA F concurring):

[1] Our country is a democratic state founded on the supremacy of the Constitution and the rule of law. It is central to the conception of our constitutional order that the legislature, the executive and judiciary, in every sphere are constrained by the principle that they may exercise no G power and perform no function beyond that conferred on them by law. This is the principle of legality, an incident of the rule of law. [1] Public administration must be accountable and transparent. All public office bearers, judges included, must at all times be aware that principally they serve the populace and the national interest. This appeal is a story of H provincial government not acting in accordance with these principles.

[2] The appeal is by the Gauteng Gambling Board (the board) and its chairperson, Mr Sefako Phanuel Prince Mafojane (Mafojane), against

Navsa JA (Leach JA, Willis AJA, Swain AJA and Saldulker AJA concurring)

the dismissal by the Gauteng High Court (Mathopo J) of an application A to review and set aside the termination by the respondent's predecessor of the membership of all the members of the board. The respondent is the present Member of the Executive Council for Economic Development in the Gauteng Provincial Government. His predecessor (the MEC) dissolved the board, ostensibly on the basis that they had unanimously B decided against complying with her instruction to relocate their offices to a central hub in Johannesburg's central business district, in which her department and associated statutory organs are housed. Essentially, the complaint by the appellants is that the MEC terminated their membership because they had refused to obey her earlier instruction to accommodate, in a building owned by the board, the offices of a commercial entity C named by her. The appellants contended that she had no power to dissolve the board for the reasons contended by her or indeed on any other basis. The appeal is before us with the leave of this court. The detailed background is set out in the paragraphs that follow.

[3] The board is a statutory body established in terms of s 3 of the D Gauteng Gambling Act 4 of 1995 (the Act). For some time the board had conducted its operations from premises which it owned in Centurion. As its staff complement and accommodation needs grew it was compelled to find accommodation elsewhere. The board frequently holds public hearings to determine applications for gambling licences E and thus has to cater for parking for applicants and others who attend such hearings. At the time that the board contemplated relocating it considered that operating from Johannesburg would make it more accessible to those whom it serves.

[4] While the board itself took the decision to relocate, it nevertheless F sought and obtained the approval of the MEC's predecessor in that regard. Since the relocation necessarily involved state expenditure the board had also sought and obtained approval from both the provincial treasury and the MEC's predecessor to utilise part of the surplus funds it had accumulated to that end. An amount of approximately R101 million G was spent on purchasing the land and constructing a building that would meet the board's specific needs and enable it to discharge its responsibilities in terms of the Act. The new building to which the board moved is situated in Bramley, Johannesburg.

[5] The board had not relinquished ownership of the building it had H vacated in Centurion and intended, in due course, to lease it to suitable tenants. At one point during 2011 the MEC requested the board to accommodate a commercial entity, styled African Romance, in its new building in Bramley. The building was not designed or able to house more than the board itself. Thus, the board found itself unable to accede to the request. It did, however, offer to lease the building it owned in I Centurion to African Romance.

[6] In October 2011, in order to resolve the apparent impasse, a meeting was held between board members, the MEC and members of her department, and African Romance. At the end of that meeting the MEC instructed the board to provide African Romance with 1000 square J

Navsa JA (Leach JA, Willis AJA, Swain AJA and Saldulker AJA concurring)

A metres of office space at its Bramley building — an instruction the MEC belatedly acknowledged, in her answering affidavit, to be unlawful. At the conclusion of the meeting the board was also instructed to relocate to Main Street in the Johannesburg Central Business District where the MEC's department is housed.

B [7] Board members ultimately took the view that they could only operate and conduct themselves within the parameters of their statutory powers and duties. They considered themselves bound by the prescripts of the Public Finance Management Act 1 of 1999 (the PFMA) and the Treasury C Regulations (the regulations). In relation to the leasing of premises owned by it the board, as a public institution, would have to follow prescribed procedures and would be required to be financially prudent and accountable in incurring any expense not budgeted for. All the more so because it had recently expended more than R101 million of public money. I intend, later in this judgment, to deal with the relevant D provisions of the PFMA and the regulations.

[8] At the time the board took the view articulated in the preceding paragraph, it also adopted the position — now recanted — that if the MEC delegated her power to them they would be enabled to conclude a lease agreement with African Romance, but nevertheless thought it necessary E to get approval from the provincial treasury. The board would at that time have preferred to lease its Centurion building to African Romance rather than attempt to accommodate it in Bramley. The board ascertained that there were other premises available to African Romance in Bramley and informed the MEC about this in a memorandum to her head F of department (HOD). The memorandum also set out the board's views referred to in para [7] above.

[9] I consider it necessary to quote in full the HOD's written response:

'Your memorandum dated 17 October 2011 is hereby acknowledged.

G As you are aware EXCO recently took a decision to rationalise agencies. As a result of this decision all agencies reporting to the Department of Economic Development were instructed to move to 124 Main Street, Johannesburg. The decision to move all agencies were considered in line with and adherence to all legislative requirements, amongst others the Public Finance Management Act, 1999 (PFMA) and Treasury H Regulations.

The Gauteng Gambling Board is listed as a 3C public entity in terms of the PFMA. Treasury regulations and more specifically regulation 19.2 define a trading entity as an entity operating within the administration I of a department. It is implied by the provisions of Regulation 19.2 that the Member of the Executive Council (MEC) or head of department (HOD) can request or instruct agencies through the board or CEO of the relevant agency to adhere to and implement operational decisions taken by EXCO which might affect them. In addition to the above the Gauteng Gambling Act 2001 also explicitly gives the MEC certain powers to instruct the board in writing to perform certain J functions.

Navsa JA (Leach JA, Willis AJA, Swain AJA and Saldulker AJA concurring)

With reference to the meeting held on 11 October 2011 at the Hyatt A Hotel and your subsequent memorandum alluded to above the department of Economic Development (DED) is of the view that the instruction by the MEC to the Gauteng Gambling board (GGB) to provide accommodation to Wakegem (Pty) Ltd t/a African Romance and for GGB to move its place of business to 124 Main Street, Johannesburg, is of an operational nature and does not require the involvement or B decision making of the board.

In light of the above and in the spirit of good governance by the instruction of the MEC, you are requested to immediately start with the process of identifying adequate office space for GGB at 124 Main Street in order for GGB to be able to relocate by no later than 31 December 2011. The CEO is also requested to immediately identify, secure and C enter into an arrangement with African Romance in respect to them leasing the building from GGB.

Should a need arise to discuss this matter further, please do not hesitate to call my office.'

The reference to EXCO is a reference to the Executive Council of the D Gauteng Provincial Government. [2]

[10] The board predictably took legal advice on the contents of the HOD's letter, as a result of which it decided to refuse to comply with the MEC's instructions. There were threats by the MEC, reported in the E media, that the board was to be dismissed in its entirety. Subsequently, the MEC telephoned the chairperson of the board and informed him that she expected the entire board to resign. The board unanimously refused to do so. On 16 January 2012 the MEC wrote a letter to each member of the board requesting reasons as to why she should not terminate his or her membership of the board. They were given two days — until F 16h30 on 18 January 2012 — to respond. These actions moved the board, on 18 January 2012, to launch an urgent application in the South Gauteng High Court for an interim interdict, inter alia, to prevent the MEC from carrying out her threat to dissolve the board. After the application was launched and, as it now appears, before the MEC became G aware of it she purported, on 23 January 2012, to dismiss the entire board. The material parts of the letter purporting to terminate the membership of all the members of the board are reproduced hereunder:

'In my letter addressed to you dated 16 January 2012, in my capacity as the responsible member for the department...