THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no. 499/2020

In the matter between:

AFRIFORUM NPC

Applicant

and

MINISTER OF TOURISM

First Respondent

DEPARTMENT OF TOURISM

Second Respondent

DIRECTOR-GENERAL OF THE
DEPARTMENT OF TOURISM

Third Respondent

Case no. 498/2020

and in the matter between:

SOLIDARITY TRADE UNION

Applicant

and

MINISTER OF SMALL BUSINESS DEVELOPMENT
First Respondent

MINISTER OF TRADE AND INDUSTRY

Second Respondent

MINISTER OF TOURISM

Third Respondent

Neutral citation:
Afriforum NPC v Minister of Tourism and Others; Solidarity Trade
Union v Minister of Small Business Development and Others
(499/2020 and 498/2020) [2021] ZASCA 121 (22 September
2021)

Coram:

Wallis, Schippers and Plasket JJA and Potterill and Phatshoane AJJA
Heard:         25 August 2021
Delivered:
This judgment was handed down electronically by circulation to the
parties’ legal representatives by email. It has been published on the
Supreme Court of Appeal website and released to SAFLII. The date
and time for hand-down is deemed to be 09h45 on 22 September 2021.
Summary:
Disaster Management Act 57 of 2002 (DMA) – validity of direction
made by Minister of Tourism under the DMA for the provision of funds from the
Tourism Relief Fund to defined types of businesses in the tourism industry – purpose
of Funds to mitigate the impact of Covid-19 – Minister of Tourism not obliged by s
10(1)(e) of the Broad-Based Black Economic Empowerment Act 53 of 2003 to make
eligibility criteria subject to Tourism Sector Code in terms of the Act – Minister
committed error of law.

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Kollapen J, sitting as
court of first instance):
In each appeal:
1. Leave to appeal is granted.
2. The appeal is upheld with costs, including the costs of two counsel
3. The order of the court below is set aside and replaced with the following order.
‘1. It is declared that:
(a) when making the direction dated 6 April 2020, in terms of regulation 10(8) of
the regulations under the Disaster Management Act 57 of 2002, the Minister of
Tourism was not legally obliged by s 10(1)(e) of the Broad-Based Black
Economic Empowerment Act 53 of 2003 to make eligibility for assistance from
the Tourism Relief Fund subject to the Tourism Sector Code made in terms of
that Act; and
(b) the direction was consequently unlawful.
2. The order in paragraph 1 above does not authorize or oblige the Minister of Tourism
to recover funds already disbursed from the Tourism Relief Fund.
3. The respondents are directed to pay the costs of the applicant, including the costs
of two counsel.’

JUDGMENT

Plasket JA (Wallis and Schippers JJA and Potterill and Phatsoane AJJA
concurring):

[1] Acting in terms of authority delegated to her by the regulations made under the
Disaster Management Act 57 of 2002 (the DMA), the Minister of Tourism (the Minister)
issued a direction in which she created a Tourism Relief Fund (the Fund). In the
direction, she specified the criteria for exempted micro enterprises in the tourism
industry to qualify for financial relief to mitigate the economic impact of the Covid-19
pandemic.

[2] The appellants, Solidarity Trade Union (Solidarity) and a non-profit company,
Afriforum NPC (Afriforum), applied urgently, in separate cases, in the Gauteng Division
of the High Court, Pretoria, to review and set aside what they described as ‘race-based
criteria’ for eligibility for financial assistance from the Fund. The matters were argued
together before Kollapen J. He dismissed the applications with costs and refused leave
to appeal. On petition to this court, an order was made referring the applications for
leave to appeal for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10
of 2013, and directing that the parties should be prepared, if called upon to do so, to
argue the merits of the matter. The merits of the appeals were indeed argued.

Background
[3] In early 2020 the first cases of the Coronavirus Disease 2019 – Covid-19 – were
diagnosed in South Africa. As a result of the rapid spread of the disease in this country,
mirroring its spread all over the world, a state of national disaster was declared on 15
March 2020 in terms of the DMA. That state of disaster is still in force throughout the
country.1

[4] On 18 March 2020, the Minister of Co-operative Governance and Traditional
Affairs, the designated minister in the national government, promulgated regulations
in terms of the DMA to take the ‘steps necessary to prevent the escalation of the
disaster or to alleviate, contain and minimize the effects of the disaster’.2 The Minister
of Tourism relied on these regulations as the source of her authority to issue the
direction that stipulated the criteria for access to grants from the Fund.

1 For a detailed account of the background to the declaration of the national state of disaster, see Esau
and Others v Minister of Co-operative Governance and Traditional Affairs and Others [2021] ZASCA 9;
2021 (3) SA 593 (SCA) paras 18-33.
2 Government Notice 318, Government Gazette 43107 of 18 March 2020.

[5] On 26 March 2020, a lockdown was imposed on the populace in terms of which
virtually everyone was restricted to their homes, subject to extremely limited
exceptions. The lockdown had devastating effects on all aspects of life. Its economic
impact, in particular, was severe: it shut down all businesses except those that were
deemed to be providers of essential services; and even after the initial phase of the
lockdown – the so-called hard lockdown – the re-opening of the economy was phased
in gradually.

[6] In order to mitigate some of these effects, the government put in place various
measures to assist businesses that were adversely affected by the lockdown and its
aftermath. The Fund was one such measure. In terms of this initiative, R200 million
was allocated to provide once-off payments of up to a maximum of R50 000 to
businesses in the tourism industry which were adversely affected. This industry was
one of the first economic casualties of the pandemic as international travel was closed
down and, during the lockdown, domestic tourism also ground to a halt.

The DMA and the regulations
[7] The legal regime that regulates and empowers the government’s management
of the pandemic is the DMA, the regulations made in terms of s 27(2) and delegated
authority granted to ministers to make directions within their functional areas of
operation. It is to this regime that I now turn.

[8] The DMA is the principal statutory instrument that enables the government to
take action aimed at ‘preventing or reducing the risk of disasters, mitigating the
severity of disasters’, allowing for the ‘rapid and effective response to disasters’ and
for ‘post-disaster recovery and rehabilitation’.3 It does so by creating structures and
processes to deal with disasters on the national, provincial and local levels.4 It defines
a disaster as ‘a progressive or sudden, widespread or localised, natural or human-

3 Long title.
4 The most important structure that the DMA creates is the National Disaster Management Centre, an
institution within the public service (s 8). Its objective is to ‘promote an integrated and co-ordinated
system of disaster management, with special emphasis on prevention and mitigation, by national,
provincial and municipal organs of state, statutory functionaries, other role-players involved in disaster
management and communities’ (s 9).

caused occurrence’ which has the effect of either causing or threatening to cause
‘death, injury or disease’; ‘damage to property, infrastructure or the environment’; or
‘significant disruption of the life of a community’; and ‘is of a magnitude that exceeds
the ability of those affected by the disaster to cope with its effects using only their own
resources’.5 Clearly, the Covid-19 pandemic fell squarely into this definition.

[9] The DMA applies when a disaster is not serious enough to justify the
declaration of a state of emergency, but serious enough that the ordinary law cannot
deal with it.6 It is administered by the Minister of Co-operative Governance and
Traditional Affairs, who was designated to fulfil this function by the President.7

[10] Disasters may be national, provincial or local disasters, depending on their
nature and severity. Obviously, the Covid-19 pandemic is a national disaster. Section
26(1) of the DMA provides that the cabinet, in the national sphere of government, is
‘primarily responsible for the co-ordination and management of national disasters’.8

[11] In terms of s 26(2), the cabinet is required to deal with a national disaster:
‘(a)
in terms of existing legislation and contingency arrangements, if a national state of
disaster has not been declared in terms of section 27(1); or
(b)
in terms of existing legislation and contingency arrangements as augmented by
regulations or directions made or issued in terms of section 27(2), if a national state of disaster
has been declared.’

[12] A national state of disaster may, in terms of s 27(1), be declared by the
designated minister by notice in the Government Gazette if ‘existing legislation and
contingency arrangements do not adequately provide for the national executive to deal
effectively with the disaster’ or if ‘other special circumstances warrant the declaration
of a national state of disaster’.

5 Section 1.
6 Section 2.
7 Section 3.
8 Section 26(1).

[13] After a national disaster has been declared, the designated minister may, in
terms of s 27(2), ‘make regulations or issue directions or authorise the issue of
directions’ concerning the following:
‘(a)
the release of any available resources of the national government, including stores,
equipment, vehicles and facilities;
(b)
the release of personnel of a national organ of state for the rendering of emergency
services;
(c)
the implementation of all or any of the provisions of a national disaster management
plan that are applicable in the circumstances;
(d)
the evacuation to temporary shelters of all or part of the population from the disaster-
stricken or threatened area if such action is necessary for the preservation of life;
(e)
the regulation of traffic to, from or within the disaster-stricken or threatened area;
(f)
the regulation of the movement of persons and goods to, from or within the disaster-
stricken or threatened area;
(g)
the control and occupancy of premises in the disaster-stricken or threatened area;
(h)
the provision, control or use of temporary emergency accommodation;
(i)
the suspension or limiting of the sale, dispensing or transportation of alcoholic
beverages in the disaster-stricken or threatened area;
(j)
the maintenance or installation of temporary lines of communication to, from or within
the disaster area;
(k)
the dissemination of information required for dealing with the disaster;
(l)
emergency procurement procedures;
(m)
the facilitation of response and post-disaster recovery and rehabilitation;
(n)
other steps that may be necessary to prevent an escalation of the disaster, or to
alleviate, contain and minimise the effects of the disaster; or
(o)
steps to facilitate international assistance.’

[14] The regulation-making powers of the designated minister are limited as to their
purpose. Section 27(3) provides:
‘The powers referred to in subsection (2) may be exercised only to the extent that this is
necessary for the purpose of-

(a)
assisting and protecting the public;

(b)
providing relief to the public;

(c)
protecting property;

(d)
preventing or combating disruption; or

(e)
dealing with the destructive and other effects of the disaster.’

[15] Section 56 sets out guiding principles for the funding of post-disaster recovery
and rehabilitation. The section provides:
‘(1) This Chapter is subject to sections 16 and 25 of the Public Finance Management Act,
1999, which provide for the use of funds in emergency situations.
(2) When a disaster occurs the following principles apply:
(a)
National, provincial and local organs of state may financially contribute to
response efforts and post-disaster recovery and rehabilitation.
(b)
The cost of repairing or replacing public sector infrastructure should be borne
by the organ of state responsible for the maintenance of such infrastructure.
(3) The Minister may, in the national disaster management framework, prescribe a percentage
of the budget, or any aspect of a budget, of a provincial organ of state or a municipal organ of
state, as the case may be, as a threshold for accessing additional funding from the national
government for response efforts.
(4) Any financial assistance provided by a national, provincial or municipal organ of state in
terms of subsection (2)(a) must be in accordance with the national disaster management
framework and any applicable post-disaster recovery and rehabilitation policy of the relevant
sphere of government, and may take into account-
(a)
whether any prevention and mitigation measures were taken, and if not, the
reasons for the absence of such measures;
(b)
whether the disaster could have been avoided or minimised had prevention
and mitigation measures been taken;
(c)
whether it is reasonable to expect that prevention and mitigation measures
should have been taken in the circumstances;
(d)
whether the damage caused by the disaster is covered by adequate insurance,
and if not, the reasons for the absence or inadequacy of insurance cover;
(e)
the extent of financial assistance available from community, public or other non-
governmental support programmes; and
(f)
the magnitude and severity of the disaster, the financial capacity of the victims
of the disaster and their accessibility to commercial insurance.’

[16] The first regulations to deal with the Covid-19 pandemic were promulgated on
18 March 2020.9 Among other far-reaching restrictions on the freedoms of the

9 Government Notice 318, Government Gazette 43107 of 18 March 2020.

populace, they prohibited gatherings,10 closed educational institutions and partial care
facilities11 and limited the sale, dispensing or transportation of liquor.12

[17] Regulation 10 empowered the Ministers of Health, Justice and Constitutional
Development, Basic Education, Higher Education, Police, Social Development, Trade
and Industry and Transport to issue directions specific to their portfolios. For instance,
the Minister of Justice and Constitutional Development was empowered to issue
directions ‘to address, prevent and combat the spread of COVID-19 in all Correctional
Centres and Remand Detention Facilities’ in the country and, ‘after consultation with
the Chief Justice, where appropriate’, to ‘address, prevent and combat the spread of
COVID-19 in all courts and court precincts’ in the country; and to vary directions ‘as
the circumstances require’.13

[18] Regulation 10(8) empowered all other ministers to issue directions. It is relevant
to this case. It provides:
‘Any Minister may issue and vary directions, as required, within his or her mandate, to address,
prevent and combat the spread of COVID-19, from time to time, as may be required, including
–
(a) disseminating information required for dealing with the national state of disaster;
(b) implementing emergency procurement procedures;
(c) taking any other steps that may be necessary to prevent an escalation of the national
state of disaster, or to alleviate, contain and minimize the effects of the national state
of disaster; or
(d) taking steps to facilitate international assistance.’

The Minister’s direction
[19] The Minister’s direction was published on 6 April 2020 and headed ‘Tourism
Relief Fund for SMMEs’. The direction stated that the Fund ‘provides once-off capped
grant assistance to Small Micro and Medium Enterprises (SMMEs) in the tourism
sector to mitigate the impact of COVID-19 in order to ensure their sustainability’.
Grants were to be capped at R50 000 per entity and were to be used by beneficiaries

10 Regulation 3.
11 Regulation 6.
12 Regulation 8.
13 Regulation 10(2).

to ‘subsidise expenses towards fixed costs, operational costs, supplies and other
pressure cost items’.

[20] The direction provided that preference would be given to enterprises with the
highest scores in respect of pre-qualification criteria and that the ‘final evaluation will
be done by a panel of experts in terms of functionality’. The direction then provided:
‘Guided by the Tourism Broad Based Black Economic Empowerment (B-BBEE) Codes of
Good Practices approved by the Minister of Trade and Industries in 2015 (in line with the B-
BBEE Amendment Act No. 46 of 2013), the Tourism Relief Fund is administered in line with
the objectives of Economic Transformation, and our vision to ensure sustainable and inclusive
tourism development.’

[21] In terms of the direction, applications for funds would be processed weekly
while funds lasted, and ‘while observing equitable spatial distribution in terms of
provinces’.

[22] Three categories of SMME were identified as being eligible for funding. They
were accommodation establishments like hotels and guest houses; hospitality and
related services businesses like those providing conference venues and professional
catering services; and travel and related services undertakings like tour operators,
travel agencies and tourism guides.

[23] The direction set out a list of 11 criteria that it described as qualifying criteria.
In the first place, they included the provision of formal documentation. An applicant
was required to provide proof of ‘valid registration’ with the Companies and Intellectual
Property Commission; a valid tax clearance certificate; proof of compliance with
minimum wage requirements; and proof of UIF registration for employees. Non-
compliance with any of these requirements would automatically disqualify an
applicant.

[24] Secondly, three criteria as to the nature of the applicant were specified. They
were that an applicant had to be an ‘Exempted Micro Enterprise (EME) defined in
terms of the Amended Tourism B-BBEE Sector Code, 2015’; that it was ‘an existing

tourism-specific establishment as outlined in the scope of application’; and that it had
been ‘in existence for at least one business financial year’.

[25] Thirdly, an applying entity was required to provide certain operational
information. It had to provide proof that ‘the relief is required as a result of the impact
of COVID-19’; its latest statements reflecting its financial position, financial
performance and cash flow; bank statements for a six month period; and, in the case
of accommodation establishments, a grading certificate or proof of application to be
graded.

[26] In addition to this information, an application had to also include the following:
certified copies of the identity documents of directors or members; a business profile;
relevant industry certificates; a statement indicating ‘the intended use of the resources
– budget breakdown (to be adhered to in the expenditure)’; the latest ‘UIF/U-filing
contribution certificate’; a ‘[c]ertificate of B-BBEE or Affidavit’; and medical certificates
‘for Persons with Disability where applicable’.

[27] The final section of the direction set out the criteria for scoring applications and
their weight. Five points each were awarded for five formal documentary requirements,
namely proof of a company’s registration, tax compliance, payment of the minimum
wage, payment of UIF, and possession of industry operating certificates.

[28] Ten points were awarded for five ‘functionality’ criteria. They were a
comprehensive business profile; the profiles and functions of team members; the
entity’s latest annual financial statements; proof that the entity’s operation ‘is affected
by COVID-19 pandemic’; and a certified reference letter. Five points were awarded for
the provision of six months’ bank statements.

[29] Finally, points were awarded depending on the B-BBEE status level of an
applicant. This score ranged from 20 points in the case of entities that furnished proof
that they were classified at level 1, to 12 points for those that provided proof that they
were at level 4. (In terms of s 13.2 of the Tourism Sector Code, exempted micro
enterprises, the target of the Fund, are deemed to have a level 4 B-BBEE status at
least.)

The issues
[30] The full R200 million that comprised the Fund has, we were informed, been
disbursed to recipients chosen by the panel of experts referred to in the direction.
Despite this, the parties agree that the appeals should proceed because of the
importance of the issues involved. I agree that the appeals raise matters of public
importance and so should be determined.

[31] As the principal relief sought by Afriforum and Solidarity was the review and
setting aside of the Minister’s direction, the first issue that must be determined is the
jurisdictional basis for the review: if the making of the direction constituted
administrative action as defined in the Promotion of Administrative Justice Act 3 of
2000 (the PAJA), the Minister’s exercise of power was subject to review in terms of s
6 of that Act; if, on the other hand, the Minister’s exercise of power was some species
of public power other than administrative action, it is reviewable in terms of the
principle of legality sourced in the Constitution’s founding value of the rule of law. It is
necessary to determine this issue at the outset because the ‘development of a
coherent administrative law demands that litigants and courts start with PAJA, and,
only when PAJA does not apply, should they look to the principle of legality and any
other permissible grounds of review lying outside PAJA’.14

[32] Once the basis for the court’s review jurisdiction has been determined, it will be
possible to turn to the merits. As I shall explain in more detail, the Minister argued that
she was obliged by statute to include in her direction B-BBEE criteria for eligibility to
financial assistance. This, it seems to me, is the crux of the case: if she is correct, then
the appeals must fail because she would have done what the law required her to do;
but if she is incorrect, the appeals may succeed because in making the direction on
the basis of an incorrect interpretation of the law, she may have committed a material
error of law.

The pathway to review

14 Minister of Defence and Another v Xulu [2018] ZASCA 65; 2018 (6) SA 460 (SCA) para 50.

[33] In Esau,15 this court held that the making of regulations by the Minister of Co-
operative Governance and Traditional Affairs in terms of s 27(2) of the DMA was
administrative action as defined in the PAJA. In this case, it seems to me, the same
result should follow in respect of an exercise of power that was empowered by those
regulations: it strikes me as incongruous and illogical to hold that despite the Minister
of Co-operative Governance and Traditional Affairs acting administratively when she
made regulations to authorise ministers to make directions, the Minister of Tourism
acted executively, and not administratively, when she exercised that power that had
been delegated to her.

[34] In Grey’s Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and
Others,16 Nugent JA made the point that, in general terms, administrative action
involves ‘the conduct of the bureaucracy (whoever the bureaucratic functionary might
be) in carrying out the daily functions of the state, which necessarily involves the
application of policy, usually after its translation into law, with direct and immediate
consequences for individuals or groups of individuals’. In this instance, after R200
million had been made available for Covid-19 relief in the tourism industry, the Minister
decided in the direction she issued how to distribute it. That is bureaucratic in nature
and amounts to administrative action.17 The result is that the validity of the Minister’s
direction must be determined with reference to the grounds of review set out in s 6(2)
of the PAJA.

The Minister’s exercise of power
[35] In her answering affidavit, the Minister stated that, in her view, the direction did
not impose a race-based eligibility criterion for access to assistance from the Fund. It
provided instead for the distribution of funds on the basis of a scoring system in which
one of the components was the B-BBEE status level of applicants for funds, as defined
in the B-BBEE Tourism Sector Code made in terms of the Broad-Based Black
Economic Empowerment Act 53 of 2003 (the B-BBEE Act).

15 Note 1 paras 76-84.
16 Grey’s Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others [2005] ZASCA
43; 2005 (6) SA 313 (SCA) para 24.
17 Ed-U-College (Section 21) (PE) Inc v Permanent Secretary, Department of Education and Welfare,
Eastern Cape and Another 2001 (1) SA 257 (SE) at 263F; Permanent Secretary, Department of
Education and Welfare, Eastern Cape and Another v Ed-U-College (Section 21) (PE) Inc [2000] ZACC
23; 2001 (2) SA 1 (CC); 2001 (2) BCLR 118 (CC) para 16.

[36] The Minister made it clear in a number of passages in her answering affidavit
that she considered herself legally bound in accordance with the Tourism Sector Code
to include in the criteria for funding the B-BBEE status level of applicants. For instance,
she said:
‘Section 10 of the B-BBEE Act makes codes of good practice mandatory: “[e]very organ of
state . . . must apply any relevant code of good practice issued in terms of this Act in . . .
determining criteria for the awarding of incentives, grants and investment schemes in support
of broad-based black economic empowerment”. In short, statute requires the Department of
Tourism to apply the Tourism Sector Code to the tourism fund. Alone, this is a complete
answer to Afriforum’s case; in the absence of a constitutional challenge to the B-BBEE Act,
Afriforum cannot interdict or review something that is required by statute.’

[37] In a later passage, the Minister returned to the same theme. She stated that the
statutory obligation imposed on her by s 10 of the B-BBEE Act to apply B-BBEE criteria
for eligibility to the fund ‘should be the start and end of this application’. She re-iterated
that ‘the Department must apply the B-BBEE Tourism Sector Code’ and that the result
of this was that, on its own, ‘this is a complete answer to Afriforum’s relief’ because
‘Afriforum cannot interdict or review something that is required by statute’.

[38] In order to determine whether the Minister was correct in believing that she was
obliged to include B-BBEE status levels as part of the eligibility criteria for funding
under the DMA, it is necessary, as a first step, to consider the purpose and objects of
the B-BBEE Act. The long title of the B-BBEE Act states that its purposes are, inter
alia, to ‘establish a legislative framework for the promotion of black economic
empowerment’ and to ‘empower the Minister to issue codes of good practice and to
publish transformation charters’.

[39] B-BBEE is defined in s 1 of the Act to mean ‘the viable economic empowerment
of all black people, in particular women, workers, youth, people with disabilities and
people living in rural areas, through diverse but integrated socio-economic strategies
that include but are not limited to’ the following six listed strategies:
‘(a)
increasing the number of black people that manage, own and control enterprises and
productive assets;

(b)
facilitating ownership and management of enterprises and productive assets by
communities, workers, co-operatives and other collective enterprises;
(c)
human resource and skills development;
(d)
achieving equitable representation in all occupational categories and levels in the
workforce;
(e)
preferential procurement from enterprises that are owned or managed by black people;
and
(f)
investment in enterprises that are owned or managed by black people.’

[40] Section 2 sets out the objectives of the Act. It provides:
‘The objectives of this Act are to facilitate broad-based black economic empowerment by-
(a)
promoting economic transformation in order to enable meaningful participation
of black people in the economy;
(b)
achieving a substantial change in the racial composition of ownership and
management structures and in the skilled occupations of existing and new
enterprises;
(c)
increasing the extent to which communities, workers, cooperatives and other
collective enterprises own and manage existing and new enterprises and
increasing their access to economic activities, infrastructure and skills training;
(d)
increasing the extent to which black women own and manage existing and new
enterprises, and increasing their access to economic activities, infrastructure
and skills training;
(e)
promoting investment programmes that lead to broad-based and meaningful
participation in the economy by black people in order to achieve sustainable
development and general prosperity;
(f)
empowering rural and local communities by enabling access to economic
activities, land, infrastructure, ownership and skills;
(g)
promoting access to finance for black start-ups, small, medium and micro
enterprises, co-operatives and black entrepreneurs, including those in the
informal business sector; and
(h)
increasing effective economic participation and black owned and managed
enterprises, including small, medium and micro enterprises and co-operatives
and enhancing their access to financial and non-financial support.’

[41] Section 9 empowers the Minister of Trade and Industry to issue codes of good
practice that may include such matters as the ‘further interpretation and definition’ of

B-BBEE and ‘the interpretation and definition of different categories of black
empowerment entities’; the ‘qualification criteria for preferential purposes for
procurement and other economic activities’; indicators to measure B-BBEE; the
weightings to be attached to those indicators; and guidelines for the drafting of
transformation charters and codes of good practice.

[42] Section 10(1) is concerned with the application of codes of good practice. It
provides:
‘Every organ of state and public entity must apply any relevant code of good practice issued
in terms of this Act in-
(a)
determining qualification criteria for the issuing of licences, concessions or
other authorisations in respect of economic activity in terms of any law;

(b)
developing and implementing a preferential procurement policy;

(c)
determining qualification criteria for the sale of state-owned enterprises;

(d)
developing criteria for entering into partnerships with the private sector; and
(e)
determining criteria for the awarding of incentives, grants and investment
schemes in support of broad-based black economic empowerment.’

[43] The only relevant provision of s 10(1) is that listed in subsection (e). That is the
subsection that the Minister relied on expressly, arguing that it required her to apply
the Tourism Sector Code when she issued her direction as to the eligibility criteria for
grants from the Fund.

[44] It is apparent that the purposes of the DMA, on the one hand, and the B-BBEE
Act, on the other, are very different and that each statute is directed at achieving
different goals: the DMA is aimed at preventing or limiting disasters, mitigating their
impact and enabling post-disaster recovery, while the B-BBEE Act is aimed at
promoting black economic empowerment in order to enable black people to participate
meaningfully in the economy. The differences in purpose are clear, in particular, when
s 27(2) of the DMA and reg 10(8) – the provisions that empower the making of
regulations and directions – are juxtaposed with s 2 of the B-BBEE Act which sets out
the objects of that Act.

[45] It is also clear that the Minister was in no doubt as to the purpose of her
direction. She said in it that the Fund was established to provide ‘grant assistance’ to
small businesses in the tourism industry ‘to mitigate the impact of COVID-19 in order
to ensure their sustainability’. In her answering affidavit, she added that the Fund was
aimed at alleviating, containing and minimising the effects of the state of disaster and,
‘in particular, its economic fallout’.

[46] As the DMA’s empowering provisions for the making of regulations and
directions make no mention of B-BBEE objectives, the only way in which they could
be imported into the Minister’s empowerment would be if she was correct that s
10(1)(e) of the B-BBEE Act required her to include them in her direction. In the
absence of that, their inclusion would appear to amount to the pursuit of an improper
purpose – one not authorised by the empowering provision – no matter how laudable
her intentions.18 Statutory powers, after all, ‘however permissive, must be used with
scrupulous attention to their true purposes and for reasons that are relevant and
proper’.19 Our constitutional jurisprudence shows that ‘it is trite that a statutory power
may only be used for a valid statutory purpose’20 and that there is a ‘well-established
principle that a power given for a specific purpose may not be misused in order to
secure an ulterior purpose’.21

[47] In order to determine whether the Minister is correct in her view, it is necessary
to determine the scope of operation of s 10(1)(e) of the B-BBEE Act. The section
requires organs of state and public entities to apply the Tourism Sector Code (in this
instance) when they determine criteria for awarding incentives, grants and investment
schemes in support of B-BBEE. The question to be answered is thus whether the
amounts paid from the Fund are grants in support of B-BBEE.

18 Van Eck NO and Van Rensburg NO v Etna Stores 1947 (2) SA 984 (A) at 997; Fernwood Estates v
Cape Town Municipality 1933 CPD 399 at 403; Administrator, Cape v Associated Buildings Ltd 1957
(2) SA 317 (A) at 329A-B. This principle has been repeatedly affirmed by this court, most recently in
Scalabrini Centre, Cape Town and Others v Minister of Home Affairs and Others [2018] ZASCA 126;
2018 (4) SA 125 (SCA) para 60.
19 H W R Wade and C F Forsyth Administrative Law (8 ed) (2000) at 386.
20 Bernstein and Others v Bester NO and Others [1996] ZACC 2; 1996 (2) SA 751 (CC); 1996 (4) BCLR
449 (CC) para 46.
21 Ex parte Speaker of the National Assembly: In re Dispute Concerning the Constitutionality of Certain
Provisions of the National Education Policy Bill 83 of 1995 [1996] ZACC 3; 1996 (3) SA 289 (CC); 1996
(4) BCLR 518 (CC) para 33.

[48] The Minister, in her direction, made no such claim. Instead, she made it clear
that the grants were intended to mitigate the impact of Covid-19 on the qualifying
businesses. And, in her answering affidavit, she said that they were meant to alleviate,
contain and minimise the effects of the economic fallout wrought by the pandemic and
the consequent state of disaster. The words she chose resonate with s 27(2)(n) of the
DMA and reg 10(8)(c) – the empowering provisions in terms of the DMA for the
Minister of Co-operative Governance and Traditional Affairs to make regulations and
the applicable empowering provision that authorised the Minister to issue her direction.
In my view, the grants contemplated for these purposes are consequently not grants
in support of B-BBEE as contemplated by s 10(1)(e) of the B-BBEE Act but grants to
further the purposes of the DMA.

[49] When a person exercising public power has committed themselves
unequivocally to a basis for their authority to exercise that power, they stand or fall by
that choice. They are, generally speaking, not free to rely on some other source of
empowerment which may enable them to do what they have purported to do.22 This
principle was given effect by the Constitutional Court in Minister of Education v
Harris.23

[50] In that case, the Minister of Education had published a notice in terms of s 3(4)
of the National Education Policy Act 27 of 1996 in which he purported to determine the
school-going age for children attending independent schools. The court held that the
Minister only had the power to make policy in terms of the section he expressly relied
on and that he had ‘no power to issue an edict enforceable against schools and
learners’.24 It was clear that he had intended his notice to have binding effect.25 The
result was that the notice was ‘ultra vires the powers granted to the Minister by s 3 of
the National Policy Act’.26

22 Administrateur, Transvaal v Quid Pro Quo Eiendomsmaatskappy (Edms) Bpk 1977 (4) SA 829 (A) at
841B-G; Pinnacle Point Casino (Pty) Ltd v Auret NO and Others 1999 (4) SA 763 (C) at 769G-770A.
23 Minister of Education v Harris [2001] ZACC 25; 2001 (4) SA 1297 (CC); 2001 (11) BCLR 1157 (CC).
24 Para 11.
25 Para 12.
26 Para 13.

[51] It was argued in Harris by the Minister’s counsel, however, that even if he did
not have the power to make a rule in terms of s 3(4), he nonetheless had the power to
do so in terms of s 5(4) of the South African Schools Act 84 of 1996; and that the fact
that he had mistakenly relied on s 3(4) did not mean that his exercise of power was
invalid. The court expressed doubt that s 5(4) of the South African Schools Act applied
to independent schools, but assumed without deciding, for purposes of the argument,
that it did apply. It held nonetheless that the invocation of s 5(4) could not save the
Minister’s exercise of power from invalidity:27
‘In this case, there is no suggestion in the affidavits filed by the Minister of an administrative
error. On the contrary, the notice in the present matter not only cites s 3(4)(i) of the National
Policy Act three times as the source of its authority, it identifies itself with the Act by means of
its heading “Draft Age Requirements For Admission to an Independent School Policy” (my
italics). There can be little question then that the provision was deliberately chosen. It might
well be that those responsible for drafting the notice had doubts about whether the powers
under s 5(4) of the Schools Act could be used in respect of independent schools, a matter
which I have expressly left open. They might have had other reasons for choosing to issue the
notice under s 3(4) of the National Policy Act. It is not necessary to speculate. What is clear is
that they consciously opted to locate the notice in the framework of s 3(4) of the National Policy
Act. The result is that it is not now open to the Minister to rely on s 5(4) of the Schools Act to
validate what was invalidly done under s 3(4) of the National Policy Act. The otherwise invalid
notice issued under the National Policy Act can therefore not be rescued by reference to
powers which the Minister might possibly have had but failed to exercise under the Schools
Act.’

[52] In this case, the Minister unequivocally relied on s 10(1)(e) requiring her to
include B-BBEE status levels as a criterion for eligibility for grants from the Fund,
although in her answering affidavit there was a suggestion that even if she was wrong,
she was nonetheless entitled, on another basis, to include them in her direction. In the
light of the principle set out in Harris, however, her counsel properly conceded that it
was not open to the Minister to justify the inclusion of the B-BBEE status levels on any
other basis.

27 Para 18.

[53] Section 6(2)(d) of the PAJA provides for the review of an administrative action
if ‘the action was materially influenced by an error of law’. This formulation was taken
from the common law ground of review articulated by this court in Hira and Another v
Booysen and Another.28 The court held in Hira that an error of law will be material if it
distorts the exercise of discretion of the decision-maker: if ‘the tribunal “asked itself the
wrong question”, or “applied the wrong test”, or “based its decision on some matter not
prescribed for its decision”, or “failed to apply its mind to the relevant issues in
accordance with the behests of the statute”’.29

[54] In this case the Minister believed erroneously that she was bound by s 10(1)(e)
of the B-BBEE Act to apply the Tourism Sector Code in her direction. Her error was
material because it distorted her discretion in the sense that it caused her to fail to
apply her mind properly to the criteria that should have been used for eligibility.30 Her
inclusion of the B-BBEE status level of applicants for assistance as a criterion for
eligibility for grants from the Fund was therefore invalid.

Conclusion
[55] As the entire Fund has been disbursed to those identified as beneficiaries by
the panel of experts, no purpose would be served in making an order reviewing and
setting aside the direction in whole or in part. Counsel for Afriforum suggested, and
counsel for Solidarity agreed, that in the event of leave to appeal being granted and
the appeals succeeding, a declarator would be a more appropriate order in the
circumstances. It is also necessary to add a rider to the effect that the order does not
mean that the disbursed funds must be recovered from beneficiaries. Neither Afriforum
nor Solidarity seek such relief. Both accept that it would be unfair in respect of
beneficiaries and agree that the rider should be added.

[56] As there is no difference between the two cases, the same order should be
issued in each. It is the following.
1. Leave to appeal is granted.
2. The appeal is upheld with costs, including the costs of two counsel

28 Hira and Another v Booysen and Another 1992 (4) SA 69 (A).
29 At 93H-I.
30 Ehrlich v Minister of Correctional Services and Another 2009 (2) SA 373 (E) para 40.

3. The order of the court below is set aside and replaced with the following order.
‘1. It is declared that:
(a) when making the direction dated 6 April 2020, in terms of regulation 10(8) of
the regulations under the Disaster Management Act 57 of 2002, the Minister of
Tourism was not legally obliged by s 10(1)(e) of the Broad-Based Black
Economic Empowerment Act 53 of 2003 to make eligibility for assistance from
the Tourism Relief Fund subject to the Tourism Sector Code made in terms of
that Act; and
(b) the direction was consequently unlawful.
2. The order in paragraph 1 above does not authorize or oblige the Minister of Tourism
to recover funds already disbursed from the Tourism Relief Fund.
3. The respondents are directed to pay the costs of the applicant, including the costs
of two counsel.’

____________________
C Plasket
Judge of Appeal

APPEARANCES:

For the appellant, Afriforum:

M Engelbrecht SC (with J Hamman)
(Case no. 499/2020)

Instructed by:

Hurter Spies Inc, Pretoria

Claude Reid, Bloemfontein

For the appellant, Solidarity:

C Goosen (with D J Groenewald)
(Case no. 498/2020)

Instructed by:

Serfontein, Viljoen & Swart, Pretoria

Claude Reid Inc, Bloemfontein

For the respondent:

AE Bham SC (with J Mitchell and M Ramaili)
Instructed by:

The State Attorney, Pretoria

The State Attorney, Bloemfontein

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
22 September 2021
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Afriforum NPC v Minister of Tourism and Others; Solidarity Trade Union v Minister of
Small Business Development and Others (499/2020 and 498/2020) [2021] ZASCA
121 (22 September 2021)
MEDIA STATEMENT
The Supreme Court of Appeal (SCA) today granted leave to appeal to Afriforum NPC
and Solidarity Trade Union, and upheld their appeals against the Minister of Tourism
(the Minister) and other state respondents.
The national government established a Tourism Relief Fund (the Fund) of
R200 million, and the Minister issued a direction in terms of the regulations made
under the Disaster Management Act 57 of 2002 (the DMA), in order to provide once-
off grant assistance for small businesses in the tourism industry to mitigate the
impact of Covid-19. In the direction, the Minister included as a criterion for eligibility
for funding the Broad-Based Black Economic Empowerment status levels of
applicants. The central issue in the appeals was whether she was entitled to do so.
The Minister asserted that she had no choice but to do so. She was legally
obliged by s 10(1)(e) of the Broad-Based Black Economic Empowerment Act 53 of
2003 (the B-BBEE Act), she said, to apply the Tourism Sector Code in ‘determining
criteria for the awarding of . . . grants . . . in support of broad-based black economic
empowerment’. The SCA found, however, that the Minister empowerment to make

the direction was sourced in the DMA and its regulations – for the purposes of
dealing with and mitigating the effects of the national disaster proclaimed as a result
of the Covid-19 pandemic – and not the B-BBEE Act. The result was that the grants
were not grants in support of B-BBEE. The Minister had misinterpreted the B-BBEE
Act and had been led by that misinterpretation to believe that she was legally obliged
to include the status levels of an applicant for funds as a criterion for eligibility. She
had thereby committed a material error of law.
As the R200 million in the Fund had been disbursed, little purpose would have
been served in reviewing and setting aside the Minister’s direction. Instead, following
the setting aside of the court below’s orders, the SCA issued a declaratory order to
the effect that the Minister 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 Sector Code
made in terms of that Act, and that her direction was consequently unlawful.