In the case of Minister of Tourism v Afriforum NPC, the Minister of Tourism (the Minister), together with the Department of Tourism and the Director-General (DG) of the Department of Tourism, applied to the Constitutional Court (CC) to appeal a judgment by the Supreme Court of Appeal (SCA), which judgment and order related to whether the Minister was obliged or entitled to include Broad-Based Black Economic Empowerment (B-BBEE) status level criteria among the criteria that the Department of Tourism used to select small, micro and medium sized businesses (SMMEs) that would be given grants out of the Tourism Relief Fund for SMMEs.
In 2020, after South Africa (SA) discovered that the COVID-19 had made its way to the country and was spreading fast, the Minister of Cooperative Governance and Traditional Affairs (COGTA) declared a state of disaster in SA. The government placed several regulations in place, which also instituted a lockdown throughout the country, the lockdown had different levels, namely, from level five up to level one. Only essential workers, such as doctors, nurses, police, media, and other essential workers were allowed to travel to continue giving the country essential services.
Many businesses suffered and some people lost their livelihood due to the lockdown, which was implemented to curb the spread of the virus. The government in response to the lockdown gave financial aid to businesses to assist with the financial crisis. In separate applications, Afriforum and Solidarity sought to have the Minister’s decision to include the race-based criteria (B-BBEE status level) as some of the criteria to be used to select SMMEs to receive grants from the COVID-19 Tourism Relief Fund (the Fund) removed and set aside. This was on various bases including that the Minister had no power to include such criteria in the Fund related to providing relief to businesses that had suffered because of the COVID-19 pandemic.
In response to the national lockdown and in the attempt to alleviate or prevent or contain the adverse economic and financial impact of the national lockdown on SMMEs within the tourism sector, the Minister established the Fund in terms of reg 10(8) of the Disaster Management Act 57 of 2002: Regulations issued in terms of s 27(2) of the Act promulgated by the Minister of COGTA, to the total amount R 200 million. The Minister decided that SMMEs selected for the grants under the Fund would be paid R 50 000 each to assist them.
In order to select businesses which were to be given grants out of the Fund, the Minister decided that the Department would be guided by the Tourism B-BBEE Code of Good Practice, which were approved by the Minister of Trade and Industries in 2015. The codes were made in terms of the Broad-Based Black Economic Empowerment Act. The selection of SMMEs, which would benefit from the Fund, was based on scores that would be given to the SMMEs that applied for grants out of the Fund.
The Minister, DG and Department opposed the application in the High Court, on among others, the basis that she was obliged by law to include the criteria taken from the Tourism B-BBEE Codes of Good Practice (ie, the criteria that Afriforum and Solidarity called raced-based criteria). The Minister also stated that she was entitled to include such criteria because one of the goals of the Department was the transformation of the tourism industry. She said that there was no reason why, in seeking to alleviate, prevent, or contain the economic effects of the COVID-19 pandemic on SMMEs, the Department could not have due regard to the transformation agenda of the Department for the tourism industry.
The matter came before Kollapen J. He concluded that:
‘(a) given the other criteria that the represent 80 points, it could hardly be suggested that the other consideration of race created an insurmountable advantage for black businesses over white business, on the contrary; Kollapen J said that the point of difference between two and eight points was capable of being bridged by the scoring in other categories and it was possible that a white applicant could score more points than a black applicant.
(b) the criteria were flexible and did not perpetuate an unfair advantage for some candidates over others based on race; in summary, Kollapen J pointed out that the criteria did not have the effect of excluding white applicants nor did it “seal in an advantage” for black candidates but rather it had the effect of providing those candidates with a head start which other candidates could overcome within the general scoring system which was both diverse and flexible.
(c) the Minister’s decision was not irrational.’
After the High Court refused leave to appeal, Afriforum and Solidarity petitioned the SCA for leave to appeal against the decision taken in the High Court.
The SCA granted Afriforum and Solidarity leave to appeal. It then concluded that:
‘(a) in making the direction that included the B-BBEE criteria for eligibility, the Minister was acting administratively;
(b) given (a) above, her conduct was subject to the Promotion of Administrative Justice Act [3 of 2000] (PAJA) and could, therefore, be challenged on review under PAJA; and
(c) the Minister had erred in believing that she was obliged by section 10(1)(e) of the [Broad-based Black Economic Empowerment Act 53 of 2003 (B-BBEE Act)] to apply the B-BBEE status levels as part of the criteria for eligibility for grants from the Tourism Relief Fund which, therefore, means that in her decision she was materially influenced by an error of law as contemplated by PAJA.’
The SCA upheld the appeal with cost of two counsel. It set aside the decision of the High Court and replaced it with an order declaring that when the Minister made the direction of 6 April 2020 in terms of reg 10(8) of the regulations under the Disaster Management Act, she was not legally obliged by s 10(1)(e) of the B-BBEE Act to make eligibility for assistance from the Fund subject to the Tourism B-BBEE Sector Code made in terms of B-BBEE Act. The SCA declared the Minister’s decision unlawful. It also made an order to effect that the declaratory order did not authorise the Minister to recover funds already disbursed from the Fund.
In the CC the Minister, DG and the Department applied for leave to appeal against the judgment and order of the SCA. Afriforum and Solidarity opposed the application on basis that the matter is moot, and, in any event, there are no reasonable prospects of success. Furthermore, the Minister submitted that the CC has jurisdiction because part of the dispute is whether she was obliged to include the B-BBEE level status among the criteria to be used to select SMMEs to benefit from the Fund. Since the decision that is challenged is a decision, which the Minister says she took to advance transformation in the tourism industry, it is a decision that raises constitutional issues, which such issues relate to s 9 of the Constitution.
The CC said that it grants leave to appeal if it is in the interests of justice to do so. In its answering affidavit filed to the CC, Solidarity contended, among others, that the application for leave to appeal should be dismissed because the matted has become moot. The Minister in her written submission referred to the fact that the High Court and the SCA had given conflicting judgments. The SCA said that the Minister submitted that it was in the interests of justice that the CC should decide on the matter even if it is moot.
The CC added that Afriforum also took the point that the matter was now moot and that, for that reason alone, it was not in the interests of justice to grant leave. The CC said that a case is moot when there is no longer a live dispute or controversy between the parties, which would be practically affected in one way or another by a court’s decision or which would be resolved by a court’s decision. The CC added that counsel for the Minister conceded that the matter was moot but submitted that nevertheless, it was in the interests of justice for the CC to grant leave to appeal. The CC pointed out that in support of this, counsel pointed out that a judgment of the CC could give guidance on whether the Minister is entitled to use the B-BBEE level status in respect of relief under the Disaster Management Act. The CC said that there was no merit in this point and that the Minister’s defence to attack Afriforum and Solidarity was very specific.
The CC added that the Minister’s defence to the attack by Afriforum and Solidarity were very specific and related to the state of disaster, the Disaster Management Act and the regulations that were promulgated to regulate certain matters during the state disaster. The CC pointed out that the state of disaster has been terminated and it may take a long time before SA is faced with another state of disaster. The CC said that there are no sound reasons for it to entertain this matter despite it being moot. The CC added that the High Court and SCA in this matter gave conflicting decisions does not on its own carry much weight. The CC added that it may have been different if the issue that it was dealing with was about conflicting decisions of different courts in different matters raising the same issue. The CC said it does not mean that it will never entertain a matter that is moot if there are proper grounds justifying that it should entertain a moot matter.
Leave to appeal was refused with costs including the cost of two counsel.
Kgomotso Ramotsho Cert Journ (Boston) Cert Photography (Vega) is the news reporter at De Rebus.
This article was first published in De Rebus in 2023 (June) DR 26.
