National Lotteries Board and Others v South African Education and Environment Project

• Jurisdiction: South Africa
• Judge: Brand JA, Van Heerden JA, Cachalia JA, Shongwe JA and Seriti JA
• Judgment Date: 28 September 2011
• Citation: 2012 (4) SA 504 (SCA)
• Docket Number: 788/10 [2011] ZASCA 154
• Hearing Date: 16 September 2011
• Counsel: PM Kennedy SC (with FA Boda) for the appellants. D Borgström (with L Ackermann) for the respondent.
• Court: Supreme Court of Appeal

National Lotteries Board and Others v South African Education and Environment Project
2012 (4) SA 504 (SCA)

2012 (4) SA p504

Citation	2012 (4) SA 504 (SCA)
Case No	788/10; [2011] ZASCA 154
Court	Supreme Court of Appeal
Judge	Brand JA, Van Heerden JA, Cachalia JA, Shongwe JA and Seriti JA
Heard	September 16, 2011
Judgment	September 28, 2011
Counsel	PM Kennedy SC (with FA Boda) for the appellants.; D Borgström (with L Ackermann) for the respondent.

Flynote : Sleutelwoorde D

Administrative law — Administrative action — Policy guidelines — Application — Inflexible application of guidelines by decision-maker — May result in E failure to exercise any discretion at all — If object of guideline met, then insignificant or technical instances of non-compliance generally to be condoned — Failure to properly exercise discretion may not be remedied by giving different reasons after fact.

Gaming and wagering — Lottery — National Lotteries Board — Policy guidelines F for allocation of grants — Inflexible or unreasonable application of guidelines not justified.

Gaming and wagering — Lottery — National Lotteries Board — Mandate — Board holding public funds for distribution to socially deserving projects — Funds not belonging to board — Grants not 'gratuities' to be distributed as G its largesse — Board to ensure that funds allocated as intended.

Headnote : Kopnota

Administrative decision-makers should not be excessively inflexible or dogmatic when applying the regulatory guidelines or general criteria enacted to aid them in their task. Elevating the guideline or criterion being applied into an immutable rule will unlawfully restrict or even abrogate the decision-maker's H discretion. If the object of the guideline or criterion was met, then insignificant or technical instances of non-compliance should generally be condoned. A decision-maker who unlawfully restricts or abrogates his discretion cannot remedy the situation by substituting different reasons after the fact. (Paragraphs [9], [11] and [28] at 509A – C, 509F – 510A and 514B – D.)

I The Lotteries Board holds public funds in trust for the purpose of allocating them to deserving projects, and it is under an obligation to ensure that they are so allocated, provided the projects in question meet the requirements. The funds do not belong to the board, nor are the grants 'gratuities' to be disbursed as its largesse. (Paragraph [39] at 516H – 517B.)

Applying these principles, the Supreme Court of Appeal held that the Lotteries Board J had not been justified in declining certain applications for financial

2012 (4) SA p505

grants. The court found that the board had, by dogmatically applying its A guidelines, unlawfully abrogated its discretion, and that this could not be remedied by relying on a new reason introduced for the first time in its answering papers in the high court. The SCA accordingly upheld the high court's order setting aside the board's decision to decline the applications. (Paragraph [38] at 516F – H.) B

Cases Considered

Annotations:

Case law

Southern Africa

Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others C 2004 (4) SA 490 (CC) (2004 (7) BCLR 687): dictum in para [57] applied

Fidelity Cash Management Service v CCMA [2008] 3 BLLR 197 (LAC): distinguished

Foodcorp (Pty) Ltd v Deputy Director-General, Department of Environmental Affairs and Tourism: Branch Marine and Coastal Management, and Others D 2006 (2) SA 191 (SCA) ([2005] 1 All SA 531): dictum in para [9] applied

Jicama 17 (Pty) Ltd v West Coast District Municipality 2006 (1) SA 116 (C): dictum in para [11] applied

MEC for Agriculture, Conservation, Environment and Land Affairs v Sasol Oil (Pty) Ltd and Another E 2006 (5) SA 483 (SCA) ([2006] 2 All SA 17): dictum in para [19] applied

S v Makwanyane and Another 1995 (3) SA 391 (CC) (1995 (2) SACR 1; 1995 (6) BCLR 665): referred to

Unitrans Passenger (Pty) Ltd t/a Greyhound Coach Lines v Chairman, National Transport Commission, and Others; Transnet Ltd (Autonet Division) v Chairman, National Transport Commission, and Others F 1999 (4) SA 1 (SCA) ([1999] 3 All SA 365): referred to

Unlawful Occupiers, School Site v City of Johannesburg 2005 (4) SA 199 (SCA) ([2005] 2 All SA 108): compared.

England G

R v Westminster City Council, Ex parte Ermakov [1996] 2 All ER 302 (CA): dicta at 315g – 316d applied

S, T and P v London Borough of Brent [2002] EWCA Civ 693: dictum in para [26] applied.

Case Information

Appeal from a decision in the Western Cape High Court (Gamble J). H

PM Kennedy SC (with FA Boda) for the appellants.

D Borgström (with L Ackermann) for the respondent.

Cur adv vult. I

Postea (September 28).

Order

The appeal is dismissed with costs, including the costs of two counsel. J

2012 (4) SA p506

Judgment

Cachalia JA (Brand JA, Van Heerden JA, Shongwe JA and Seriti JA concurring): A

[1] This is an appeal, with leave of the Western Cape High Court (Gamble J), against an order reviewing and setting aside certain decisions B of the National Lotteries Board (the board). The decisions relate to the board's refusal to approve three applications by two registered charities for financial grants from the National Lottery Distribution Trust Fund (the fund). The main issue in this appeal concerns whether or not the board was justified in declining the applications because they did not comply with the guidelines for the distribution of moneys from C the fund.

[2] The fund was created under s 21 of the Lotteries Act 57 of 1997 (the Act) to receive moneys raised through national lottery competitions. The board, which is the first appellant, administers the fund primarily for the purpose of allocating grants to socially worthy projects. [1] The D South African Education and Environment Project, the first respondent, and the Claremont Methodist Church Social Impact Ministry, Sikhula Sonke, the second respondent, are the charities whose grant applications the board declined. It shall be convenient to refer to the first respondent by its acronym SAEP and to the second respondent by its abbreviated E name, Sikhula Sonke.

[3] The two charities have, over a period of time, applied to the board for funding. The projects for which they seek funding support pre-school and educational facilities in deprived areas of Cape Town. SAEP operates in the Philippi area by supporting crèches started up by women in the F Philippi community, providing extracurricular programmes in under-resourced high schools; offering bridging courses for promising students in preparation for tertiary education and supporting university students. Sikhula Sonke offers 'educare' facilities to approximately 4000 children in 65 pre-schools in the Khayelitsha community.

G [4] Distribution agencies (DAs), appointed by the Minister of Trade and Industry, facilitate the adjudication of funding applications and the distribution of funds to charities whose applications have been approved. [2] The agencies are not juristic persons in their own right, but subcommittees of the board. They perform their functions on the board's behalf. There are four such agencies of which only two concern H us, namely the DA for Charities, represented by the second appellant, and the DA for Arts, represented by the third appellant. The former is responsible for considering applications from organisations seeking funds earmarked for 'charitable expenditure'. [3] The Minister of Trade and Industry has determined that not less than 45% of the amounts available must be allocated for these purposes. The latter is similarly I responsible for considering applications for 'arts, culture and the

2012 (4) SA p507

Cachalia JA (Brand JA, Van Heerden JA, Shongwe JA and Seriti JA concurring)

national historical, natural, cultural and architectural heritage'. In its A case not less than 28% of the amounts available in the fund have to be paid to meet these objectives. [4]

[5] Despite the minister's determinations and the overwhelming social need for these funds, the board and DAs have consistently failed to meet B their targets. This has resulted in major under-expenditure of the moneys earmarked for allocation. According to the board's annual report, in 2008, it set itself the 'strategic objective' to 'disburse 85% of the funds allocated', but made less than 50% available for allocation. Of this reduced amount the DA for Charities managed to distribute 40% and the DA for Arts only 29% of the total amount allocated. This C represented 32,5% of the total amount available in the fund for distribution. In 2009 they fared even worse distributing only 42% of the allocated funds, which represented only 15% of the total amount in the fund available for distribution. Of this amount the DA for Charities distributed 37% and the DA for Arts only 28%. In total, in 2009, the fund had R6 billion in unallocated funds. For the years we are D considering the fund had simply not fulfilled its mandate.

[6] In its founding affidavit SAEP initially sought to review seven of its failed funding applications under s 6 of the Promotion of Administrative Justice Act 3 of 2000. In Sikhula Sonke's case, two applications were put E in issue. When the review was launched, SAEP was content to pursue its review only in respect of four of its unsuccessful applications. And, when the matter was called, SAEP abandoned one more, leaving three remaining. Counsel for the board conceded the review in respect of two of these applications, leaving only one in issue, which was identified in the papers as the seventh application. Sikhula Sonke's dispute related to the eighth F and ninth applications. Three thus remained — SAEP's seventh application and Sikhula Sonke's eighth and ninth applications.

[7] As I mentioned at the beginning, the...