KwaZulu-Natal Joint Liaison Committee v MEC for Education, KwaZulu-Natal and Others

• Jurisdiction: South Africa
• Judge: Mogoeng CJ, Moseneke DCJ, Cameron J, Froneman J, Jafta J, Khampepe J, Nkabinde J, Skweyiya J, Yacoob J and Zondo J
• Judgment Date: 25 April 2013
• Docket Number: CCT 60/12 [2013] ZACC 10
• Hearing Date: 22 November 2012
• Court: Constitutional Court
• Counsel: O Moosa SC (with A Boulle) for the applicant. S Yacoob for the respondents. J Brickhill (with Z Gumede) for the amicus curiae.

Cameron J (Moseneke DCJ, Froneman J, Khampepe J, Skweyiya J and Yacoob J concurring): E

[1] The applicant — an association of independent schools in KwaZulu-Natal — seeks leave to appeal against a decision of the KwaZulu-Natal High Court, Pietermaritzburg (the high court) dismissing its application to enforce payment of certain moneys it claims to be due to the schools F it represents. Leave to appeal was refused by both the high court and the Supreme Court of Appeal.

[2] The application stems from a subsidy the first respondent, the Member of the Executive Council for Education in KwaZulu-Natal (MEC), granted to independent schools in the province in accordance G with s 48 of the South African Schools Act [1] (Schools Act). On 22 September 2008, the second respondent, the Department of Education in the province of KwaZulu-Natal (department), issued a notice (2008 notice) to independent schools in KwaZulu-Natal setting out 'approximate' funding levels for 2009. These respondents were represented jointly in the proceedings with the third respondent, the national H Minister for Basic Education (minister).

[3] The 2008 notice, reproduced below, was directed to principals of independent schools, owners of independent schools, and associations of independent schools in KwaZulu-Natal. It was headed 'Subsidies to I Independent Schools 2009/2010'. The notice provided a table to the recipients '(t)o determine the level in which your school shall be based'. It went on to say that '(i)n order for schools to prepare budgets for

Cameron J (Moseneke DCJ, Froneman J, Khampepe J, Skweyiya J and Yacoob J concurring)

A 2009 approximate funding levels will therefore be' [2] as set out. The notice concluded by stating that '(i)t should be noted that subsidy allocations will be reviewed annually'.

'KZN EDUCATION	Private Bag X9044
B PIETERMARITZBURG 3200
UMNYANGO WEZEMFUNDO
ISIFUNDAZWE SAKWAZULU-NATALI
Ref: Circulars 2008
Enquiries: SLN Kheswa	Date: 22 September 2008
C All: Principals of Independent Schools Owners of Independent Schools; Associations of Independent Schools in KwaZulu-Natal; D 'SUBSIDIES TO INDEPENDENT SCHOOLS 2009/2010
1. To determine the level in which your school shall be based (in comparison with the January 2004 school fees), the following table is provided as a guide.

E	Primary		Secondary
Level	Fees (January 2004)	Level	Fees (January 2004)
1	Below R2528,50	1	Below R2698,00
F 2	R2528,50 – R5057,00	2	R2698,00 – R5396,00
3	R5057,00 – R7585,50	3	R5396,00 – R8094,00
4	R7585,50 – R12 642,50	4	R8094,00 – R13 490,00
5	Above R12 642,50	5	Above R13 490,00
The above figures are based on 2005/2006 state per capita G expenditure of R5057 for Primary level and R5396 for Secondary level.
2. In order for the schools to prepare budgets for 2009 approximate funding levels will therefore be as follows:

H Level	% of state per capita amount	Amount per learner
5 Primary	0%	R0,00
5 Secondary	0%	R0,00
4 Primary	15%	R1137,45
4 Secondary	15%	R1190,25
I 3 Primary	25%	R1895,75
3 Secondary	25%	R1983,75
2 Primary	40%	R3033,20

Cameron J (Moseneke DCJ, Froneman J, Khampepe J, Skweyiya J and Yacoob J concurring)

2 Secondary	40%	R3174,00 A
1 Primary	60%	R4549,80
1 Secondary	60%	R4761,00

The above figures are based on the 2009/10 state per capita expenditure of B; The above figures are based on the 2009/10 state per capita expenditure of B; Secondary: R7935

3. It should be noted that subsidy allocations will be reviewed annually. Yours sincerely C [Signature] Mr SLN Kheswa [signed 22/09/08] Chief Education Specialist Schools Affairs Head Office.' [3] D

[4] This undertaking the department later qualified by a further circular to independent schools. This was by letter dated 5 May 2009, which the provincial Superintendent General signed on 18 May 2009, and the schools concerned received only later. The letter was headed 'Reduction E of Budgets in the 2009/10 MTEF' and stated that as part of the province's 'turn around strategy in dealing with the current cash crisis', the recipients had to 'please expect a cut not exceeding 30% in [their] current subsidy allocation for the financial year 2009/10'.

[5] The department received a total budget for the 2009/10 financial F year of R24,8 billion, of which R19,2 billion was allocated for salaries. R2,7 billion was for operational expenses, R1,6 billion for infrastructure, machinery and equipment, and R1,4 billion for subsidies to public ordinary schools, independent schools, public special schools, and further education and training colleges. When the 2008 notice was issued, only 97 schools were included in the subsidy structure. Accordingly, G the subsidies had to be paid out from the then budgetary allocation to independent schools of R55,861 million.

[6] The first two tranches for 2009 were paid only in mid-July. They reflected a reduction of 30% from the amounts indicated in the 2008 notice. H

[7] Later during 2009 meetings were held and correspondence exchanged between the applicant and the department regarding the two notices, the subsidies and the shortfalls. Despite the applicant's attempts to secure payment of the full subsidies for 2009, the subsidies eventually paid to independent schools for that year were, on average, 30% less I than those set out in the 2008 notice.

[8] In November 2010 the applicant brought proceedings to enforce what it said were the 'promises' in the 2008 notice.

Cameron J (Moseneke DCJ, Froneman J, Khampepe J, Skweyiya J and Yacoob J concurring)

High court A

[9] In its founding papers the applicant relied on the 2008 notice as constituting an enforceable promise to pay the amounts set out in it for the whole school year of 2009. Hence it sought an order directing the department to pay the exact shortfall in the subsidies actually received in B 2009 as compared to that set out in the 2008 notice. Alternatively, the applicant sought an order for payment of a percentage of the shortfall.

[10] Against this, the respondents argued that there was no acceptable evidence that the 'promise' was made with the intention of creating an C enforceable obligation.

[11] As a starting point Koen J stated that he was 'prepared to accept in favour of the applicant' that the 2008 notice was made with the intention to create contractual obligations. But did the 2008 notice contain terms sufficiently certain to give rise to enforceable obligations? This depended D on the meaning of 'approximate' in the notice. The court found that the word is unambiguous in that it means 'almost exact' or 'very close'. It said that to conclude that the 2008 notice conveyed a promise that the exact amounts would be paid would either be to ignore the word 'approximate' or to assign it meaning that it does not have. Therefore, the applicant was not entitled to the payments it sought.

E [12] The alternative claim to be paid a percentage of the shortfall also failed. The high court was not convinced that 'approximate' could be given fixed content with reference to the prior conduct of the parties. To give fixed meaning to 'approximate' would be arbitrary and would amount to making an agreement for the parties.

F [13] The high court therefore dismissed the application, with costs of two counsel. As already indicated, the high court also refused leave to appeal, as did the Supreme Court of Appeal.

In this court

Applicant's submissions G

[14] The applicant seeks leave to appeal to this court. It contends that the high court found that the parties acted with the intention of bringing enforceable obligations into existence (animo contrahendi). It should, therefore, have endeavoured to uphold and enforce the contract, and H should have given meaning to 'approximate'. This is especially so because the department had partially performed in terms of the contract, and because the right to a basic education is directly implicated.

[15] The applicant submits the high court was wrong not to fix an approximate percentage and to conclude it would be making a contract I for the parties. Courts regularly define generally imprecise terms in a particular contractual setting. In the present case, the department in previous years paid amounts very close to those indicated in previous notices. The high court ought to have relied on this to give meaning to 'approximate'.

[16] Taking into account past practice and that the applicant's schools J had budgeted in reliance on the 2008 notice, payment of 70% was not

Cameron J (Moseneke DCJ, Froneman J, Khampepe J, Skweyiya J and Yacoob J concurring)

substantial performance. In fact, having regard to the respondents' A position, the applicant submits that its alternative relief, though still competent, essentially falls away, and that it is most appropriate for this court to direct the second respondent to pay the exact amounts stipulated.

[17] This court has held that the law of contract must be infused with B constitutional values such as ubuntu and human dignity, and that contracting parties must relate in good faith. The applicant argues that this is an instance par excellence.

[18] The applicant counters the respondents' 'insufficient funds' defence by contending that a lack of...