1
IN THE CONSTITUTIONAL COURT
OF SOUTH AFRICA
CCT Case no: 279/2020
SCA Case no: 1050/2019
GP Case no: 34523/2017
In the matter between:
THE MINISTER OF FINANCE Applicant
(Respondent in SCA Case No: 1050/2019
and Respondent in GP Case No: 34523/2017) and
AFRIBUSINESS NPC Respondent
(name changed to Sakeliga NPC)
(Appellant in SCA Case No: 1050/2019
and Applicant in GP Case No: 34523/2017)
RULE OF LAW PROJECT Amicus Curiae
FILING NOTICE
2
DOCUMENTS TO BE FILED:
AMICUS CURIAE’S PRACTICE NOTE
AMICUS CURIAE’S SUBMISSIONS
LIST OF AUTHORITIES
FILED BY: KRIEK WASSENAAR & VENTER INC ATTORNEYS FOR THE RULE OF LAW PROJECT (APPLICANT) Ref: P Wassenaar/R Eloff/QB0845 Tel: 012 756 7566 / Fax: 086 596 8516 E-mail: [email protected] / [email protected] Care of: NEL DU TOIT INCORPORATED 14 TOKTOKKIE AVENUE WELTEVREDENPARK ROODEPOORT Tel: 065 828 1891 E-mail: [email protected]
TO: THE REGISTRAR THE CONSTITUTIONAL COURT OF SOUTH AFRICA via email: [email protected]
AND TO: THE STATE ATTORNEY ATTORNEYS FOR THE APPLICANT SALU BUILDING 255 THABO SEHUME STREET CNR FRANCIS BAARD STREET PRIVATE BAG X91, PRETORIA 0001 3
DOCEX: 298, PTA Tel: (012 309 1575 Fax: (012) 309 1649 E-mail: [email protected] [email protected] [email protected] C/O STATE ATTORNEY – JOHANNESBURG 10TH FLOOR ALBERTINA SISULA STR, CNR KRUIS STREET Ref: V.DUHLAM/ E-mail: [email protected]
AND TO: HURTER SPIES INC ATTORNEYS FOR THE RESPONDENT FLOOR 2, BLOCK A LOFTUS PARK 416 KIRKNESS STREET ARCADIA PRETORIA Tel: (012) 941 9239 Fax: (012) 644 1997 E-mail: [email protected] Ref: M VAN SCHALKWYK / MAT290 Care of: NELSON BORNMAN ATTORNEYS 17TH FLOOR SCHREINER CHAMBERS 94 PRICHARD STREET (CORNER KRUIS STREET) E-mail: [email protected] Tel: (011) 886 3675 Fax: (010) 601 6048 Rohann Eloff
From: Rohann Eloff Sent: Tuesday, 11 May 2021 14:18 To: [email protected]; [email protected]; [email protected]; [email protected]; [email protected] Cc: Elbie Swanepoel; Lewellan Nel Subject: RULE OF LAW PROJECT - IN RE THE MINISTER OF FINANCE/AFRIBUSINESS NPC CCT CASE NO: 279/2020 - AMICUS CURIAE Attachments: Filing notice - Amicus curiae 2021-05-11.pdf
TrackingTracking: Recipient Delivery [email protected]
Elbie Swanepoel Delivered: 2021/05/11 14:18
Lewellan Nel
Good day
The above matter refers.
Kindly find attached hereto a filing notice for the amicus curiae’s practice note, submissions and list of authorities. Kindly further acknowledge receipt of same.
We trust you find the above in order.
Yours faithfully
Rohann Eloff
Kriek Wassenaar & Venter Ing
Kandidaatprokureur / Candidate Attorney
• (t) (+27) 12 803 4719 • (f) (+27) 86 596 8797
• (a) 3de Vloer / 3rd Floor, HB Forum Gebou / Buidling, Stamvrugstraat 13 Stamvrug Street, Val de Grace, Pretoria, 0184
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1 IN THE CONSTITUTIONAL COURT
OF SOUTH AFRICA
CCT Case no: 279/2020
SCA Case no: 1050/2019
GP Case no: 34523/2017
In the matter between:
THE MINISTER OF FINANCE Applicant
(Respondent in SCA Case No: 1050/2019
and Respondent in GP Case No: 34523/2017) and
AFRIBUSINESS NPC Respondent
(name changed to Sakeliga NPC)
(Appellant in SCA Case No: 1050/2019
and Applicant in GP Case No: 34523/2017)
RULE OF LAW PROJECT Amicus Curiae
AMICUS CURIAE PRACTICE NOTE
1. NAME OF THE MATTER AND CASE NUMBER
The names of the parties and the case number are reflected above.
2. COUNSEL FOR THE APPLICANT
2.1. Ngwako Hamilton
Maenetje SC Cell
+27(83) 4596358
E-mail: [email protected]
2.2. Mkhululi Duncan
Stubbs Cell
+27(79) 886 9520
E-mail: [email protected]
3. COUNSEL FOR THE RESPONDENT
3.1. J.G. Bergenthuin
SC Cell +27(83)
264 5374
E-mail: [email protected]
3.2. M.J. Merabe
Cell +27(71) 204 2370
E-mail: [email protected]
4. COUNSEL FOR THE AMICUS CURIAE 4.1. M Oppenheimer
Cell + 27(83) 983 5848
E-mail: [email protected]
5. NATURE OF PROCEEDINGS
The Applicant (“the Minister”) seeks leave to appeal against the
whole judgment and order handed down by the Supreme Court of
Appeal (“SCA”) on 2 November 2020 in terms of which the
Preferential Procurement Regulations, GNR.32 of 20 January
2017 (Government Gazette No. 40553) (“the 2017 Regulations”)
were declared invalid and inconsistent with the Preferential
Procurement Policy Framework Act 5 of 2000 (“the PPPFA”).
6. THE ISSUES
6.1. Whether leave to appeal should be granted.
6.2. Whether the Minister has the power to determine preferential
procurement policy in the regulations.
6.3. Whether the Minister has the power to preference racial
groups in the regulations.
6.4. Whether the Regulations are ultra vires the PPPFA and
Section 217 of the Constitution.
7. PORTIONS OF RECORD RELEVANT TO THE MATTER
7.1. As indicated by the parties.
8. DURATION OF THE ARGUMENT
It is estimated that the parties will need at least half a day to argue the matter.
9. SUMMARY OF AMICUS CURIAE ARGUMENT
The 2017 regulations are ultra vires for two separate reasons.
First, they give the Minister the power to determine preferential
procurement policy, when the Act makes it clear that this power lies
with specific organs of state and not the Minister.
Second, they prefer people designated as “Black” as opposed to
those who were historically disadvantaged on the grounds of race,
sex, and disability.
10. AUTHORITIES ON WHICH PARTICULAR RELIANCE IS PLACED
Cases
10.1. United Democratic Movement v President of the Republic of South Africa and Others (African Christian Democratic Party and Others Intervening; Institute for Democracy in South Africa and Another as Amici Curiae) (No 2) 2003 (1) SA 495 (CC). 10.2. Minister of Home Affairs v National Institute for Crime Prevention and the Re-Integration of Offenders (NICRO) and Others 2005 (3) SA 280 (CC). Legislation
10.3. PREFERENTIAL PROCUREMENT POLICY FRAMEWORK ACT: NO 5 OF 2000 10.4. PREFERENTIAL PROCUREMENT REGULATIONS, 2001 PERTAINING TO THE PREFERENTIAL PROCUREMENT POLICY FRAMEWORK ACT: NO 5 OF 2000 10.5. PREFERENTIAL PROCUREMENT REGULATIONS, 2017 PERTAINING TO THE PREFERENTIAL PROCUREMENT POLICY FRAMEWORK ACT: NO 5 OF 2000
Textbooks
10.6. LAWSA, Administrative Justice 10.7. Sebastian Seedorf & Sanele Sibanda, CLOSA, Separation of powers
Article 10.8. David Benatar, Justice, diversity and racial preference: A critique of affirmative action, 2008 SALJ 279f
Other Documents
10.9. Freedom Charter, Adopted at the Congress of the People at Kliptown, 1955. 10.10. Constitutional Principles for a Democratic South Africa
MARK OPPENHEIMER COUNSEL FOR THE AMICUS CURIAE CHAMBERS 11 MAY IN THE CONSTITUTIONAL COURT
OF SOUTH AFRICA
CCT Case no: 279/2020
SCA Case no: 1050/2019
GP Case no: 34523/2017
In the matter between:
THE MINISTER OF FINANCE Applicant
(Respondent in SCA Case No: 1050/2019
and Respondent in GP Case No: 34523/2017) and
AFRIBUSINESS NPC Respondent
(name changed to Sakeliga NPC)
(Appellant in SCA Case No: 1050/2019
and Applicant in GP Case No: 34523/2017)
RULE OF LAW PROJECT Amicus Curiae
AMICUS CURIAE WRITTEN SUBMISSIONS
INTRODUCTION
1. The Rule of Law Project supports the Judgment delivered by the
SCA and is of the view that the Minister’s application for leave to
appeal should be dismissed.
2. These submissions will address two issues which demonstrate that
the Minister’s 2017 Regulations were ultra vires the Preferential
Procurement Policy Framework Act1 (“the Act”) and the Constitution.
ISSUES
3. First, who must determine a preferential procurement policy?
4. Second, who is entitled to be preferred under such a policy?
LAW: PROCUREMENT POLICY
5. In terms of the S2(1) of the Act:
An organ of state2 must determine its preferential
procurement policy and implement it within the following
framework:… [Emphasis added]
1 No 5, 2000 2 In terms of the definitions section of the Act “organ of state” means— ., (a) - a national or provincial department as defined in the Public Finance Management Act, 1999 (Act No. 1 of 1999); (b) a municipality as contemplated in the Constitution; 6. In terms of S5(1) of the Act:
The Minister may make regulations regarding any matter
that maybe necessary or expedient to prescribe in order
to achieve the objects of this Act.
7. The objects of the Act are:
To give effect to section 217(3) of the Constitution by
providing a framework for the implementation of the
procurement policy contemplated in section 217(2) of the
Constitution; and to provide for matters connected
therewith.
(c) a constitutional institution defined in the Public Finance Management Act, 1999 (Act No. 1 of 1999); (d)Parliament; (e) a provincial legislature; (f) any other institution or category of institutions included in the definition of “organ of state” in section 239 of the Constitution and recognised by the Minister by notice in the Government Gazette as an institution or category of institutions to which this Act applies; In terms of S239 of the Constitution “organ of state” means— (a) any department of state or administration in the national, provincial or local sphere of government; or (b) any other functionary or institution— (i) exercising a power or performing a function in terms of the Constitution or a provincial constitution; or (ii) exercising a public power or performing a public function in terms of any legislation, but does not include a court or a judicial officer;
8. In terms of S217 of the Constitution:
(1) When an organ of state in the national, provincial or
local sphere of government, or any other institution
identified in national legislation, contracts for goods or
services, it must do so in accordance with a system which
is fair, equitable, transparent, competitive and cost-
effective.
(2) Subsection (1) does not prevent the organs of state or
institutions referred to in that subsection from
implementing a procurement policy providing for—
(a) categories of preference in the allocation of contracts;
and
(b) the protection or advancement of persons, or
categories of persons, disadvantaged by unfair
discrimination.
(3) National legislation must prescribe a framework within
which the policy referred to in subsection (2) must be
implemented.
9. S4(1) of the 2017 Regulations state:
Pre-qualification criteria for preferential procurement
If an organ of state decides to apply pre-qualifying criteria
to advance certain designated groups, that organ of state
must advertise the tender with a specific tendering
condition that only one or more of the following tenderers
may respond-…
10. S4(2) of the 2017 Regulations state:
A tender that fails to meet any pre-qualifying criteria
stipulated in the tender documents is an unacceptable
tender.
APPLICATION OF THE LAW: PROCUREMENT POLICY
11. Lawfulness requires that the exercise of power must be sourced in
law; actions performed without lawful authority are illegal (ultra
vires), as are the actions which exceed powers expressly or
impliedly conferred.3
12. S2 of the Act read with section 217 of the Constitution explicitly
designates the authority to determine and implement the policy
3 LAWSA, Administrative Justice, para 14 relating to preferential procurement to the specific procuring organ
of state.
13. However, the regulations passed by the Minister usurp this power
from the organs of state by creating pre-qualifying criteria and
determining a closed list of entities to fulfil those criteria.
14. The issue, therefore, is an issue of separation of powers. Neither
the Act nor the Constitution allow for a centralised decree by the
national executive regarding the content of a preferential
procurement policy.
15. The learned authors of the Constitutional Law of South Africa state
that:
The idea behind separation of powers is that a
concentration of power will most likely lead to self-
interested action and abuse of power for personal gain.
Historical experience suggests that benign dictators, who
rule wisely, judge fairly and generally advance everyone's
welfare, are very hard to find — if such people ever
existed. The underlying idea beneath any separation of powers doctrine is thus the sceptical assessment that
good governance is more likely when political power is
distributed between different institutions and persons.4
Separation of powers means that specific functions, duties
and responsibilities are allocated to distinctive institutions
with defined areas of competence and jurisdiction.5
16. Organs of state are better placed than the Minister to determine their
own procurement policies, because they are embedded in local
communities and are more sensitive to the needs of those
communities. A rural municipality, or a provincial department of
health, is more likely to know the consequences of a procurement
policy on those participating in a tender a process and those that will
reap the effects of the goods and services produced by the
successful tenderer. The Constitution vesting this authority in
specific organs of state, rather than a single minister, was therefore
for good reason.
17. The regulations constitute subordinate legislation to the Act. The
Rule of Law doctrine implies that the structure of primary legislation
4 Sebastian Seedorf & Sanele Sibanda, CLOSA, Separation of powers, OS 06-08, ch12-p1
5 CLOSA, p2 constrains the powers of the Minister. The powers granted to the
Minister in the Act do not extend to issues that Parliament has not
explicitly considered. The Minister's powers are executive in the
nature; therefore, he cannot create new legislation via regulations.
18. S5 of the Act only empowers the Minister to make regulations to
promote the Act's objectives. The Act's objectives are to provide a
framework in which preferential procurement as set out in section
217(2) of the Constitution is applied. The powers of the Minister are
restrained by the framing of the Act itself. To allow the executive,
being the Minister, the power to 'create' legislation does not adhere
to the Rule of Law standard required by section 1(c) of the
Constitution.
19. S2 of the Act grants organs of state a specific power, while S5 of the
Act grants the Minister a general power. In terms of the maxim
generalia specialibus non derogantthe specific trumps the general.
This limits the Minister's power in creating regulations that conflict
with the Act's specific provisions. The regulations exceed the power
granted to the Minister by S5 of the Act. They circumvent, nullify and
avoid the application of S2 of the Act. Therefore, the Minister's
regulations are ultra vires.
LAW: PREFERENCED GROUPS
20. S271(2)(b) of the Constitution refers to the “the protection or
advancement of persons, or categories of persons, disadvantaged
by unfair discrimination.”
21. S2(d)(i) of the Act states that “the specific goals may include
contracting with persons, or categories of persons, historically
disadvantaged by unfair discrimination on the basis of race, gender
or disability.”
22. S4 of the 2017 Regulations list the pre-qualifying tenderers as
follows:
(a) a tenderer having a stipulated minimum B-BBEE
status level of contributor;
(b) an EME or QSE;
(c) a tenderer subcontracting a minimum of 30% to-
(i) an EME or QSE which is at least 51% owned by black
people;
(ii) an EME or QSE which is at least 51% owned by black
people who are youth; (iii) an EME or QSE which is at least 51% owned by black
people who are women;
(iv) an EME or QSE which is at least 51% owned by black
people with disabilities;
(v) an EME or QSE which is 51% owned by black people
living in rural or underdeveloped areas or townships;
(vi) a cooperative which is at least 51% owned by black
people;
(vii) an EME or QSE which is at least 51% owned by black
people who are military veterans;
(viii) an EME or QSE.
23. The 2001 Regulations did not refer to racial groups. Instead, the
term Historically Disadvantaged Individual (“HDI”) was used as the
preferential category. The term was defined as:
A South African citizen –
(1) who, due to the apartheid policy that had been in place,
had no franchise in national elections prior to the
introduction of the Constitution of the Republic of South
Africa,1983 (Act No 110 of 1983) or the Constitution of the Republic of South Africa,1993 (Act No 200 of 1993) (“the
Interim Constitution”); and / or
(2) who is a female; and / or
(3) who has a disability:
Provided that a person who obtained South African
citizenship on or after the coming to effect of the Interim
Constitution, is deemed not to be an HDI;6
LAW: NON-RACILIASM
24. Section 1(b) of the Constitution provides:
[The Republic of South Africa is one, sovereign, democratic
state founded upon the following values:] Non-racialism and
non-sexism.
25. The principle of non-racialism was a potent rallying cry against the
Apartheid regime. It permeates the text of the Freedom Charter,
which includes the following proclamations:
6 PREFERENTIAL PROCUREMENT REGULATIONS, 2001 PERTAINING TO THE PREFERENTIAL PROCUREMENT POLICY FRAMEWORK ACT: NO 5 OF 2000 “South Africa belongs to all who live in it, black and
white...”; “The rights of the people shall be the same,
regardless of race...”; “ALL NATIONAL GROUPS SHALL
HAVE EQUAL RIGHTS!”; “ALL SHALL BE EQUAL
BEFORE THE LAW!”; and “All laws which discriminate on
grounds of race...shall be repealed”.7 [as from original
text]
26. In 1991 the ANC produced a document entitled “Constitutional
Principles for a Democratic South Africa”, which proclaimed that:
A non-racial South Africa means a South Africa in which
all the artificial barriers and assumptions which kept
people apart and maintained domination, are removed. In
its negative sense, non-racial means the elimination of all
colour bars. In positive terms it means the affirmation of
equal rights for all.
27. As its pedigree shows, non-racialism is framed as the absence of its
opposite — racialism or racial prejudice. Thus, non-racialism cannot
7 Adopted at the Congress of the People at Kliptown, 1955. be achieved without the acknowledgment that its opposite,
racialism, actually exists; that its effects should be countered and its
power neutralised. Non-racialism cannot imply some form of
judicially imposed collective amnesia or feigned blindness. Rather,
it must imply that the Constitution is founded on the imperative to
counter and surmount racialism by all lawful means.
28. This Court has pronounced on the role of founding values in a line
of cases. In the UDM Case the Court held that:
These founding values have an important place in our
Constitution. They inform the interpretation of the
Constitution and other law, and set positive standards with
which all law must comply in order to be valid. 8
29. In the NICRO case Chaskalson P noted:
The values enunciated in section 1 of the Constitution are
of fundamental importance. They inform and give
substance to all the provisions of the Constitution. They
do not, however, give rise to discrete and enforceable
rights in themselves. This is clear not only from the
8 United Democratic Movement v President of the Republic of South Africa and Others (African Christian Democratic Party and Others Intervening; Institute for Democracy in South Africa and Another as Amici Curiae) (No 2) 2003 (1) SA 495 (CC) at para 19. language of section 1 itself, but also from the way the
Constitution is structured and in particular the provisions
of Chapter 2 which contains the Bill of Rights. 9
30. Whilst there is no enforceable ‘right to the Rule of Law’ or ‘right to
non-racialism’ on which relief may be sought directly, in our
submission, the courts must draw on these values in the
adjudicative exercise when interpretation of legislation.
APPLICATION OF THE LAW: PREFERENCED GROUPS
31. The prequalification criteria set out in section 4 of the 2017
Regulations exceed the powers granted to the Minister by section 5
of the Act.
32. The criteria refer almost exclusively to the racial ownership of the
companies that are entitled to submit tenders.
33. Section 217(2)(b) of the Constitution does not refer to racial groups
but rather to those disadvantaged by unfair discrimination. While it
is the case that many people who are classified as “black” were
9 Minister of Home Affairs v National Institute for Crime Prevention and the Re-Integration of Offenders (NICRO) and Others 2005 (3) SA 280 (CC), at para 21. disadvantaged by unfair discrimination this is not necessarily the
case for all people classified as “black”.
34. The Act does not seek to advance members of particular racial
groups, instead it gives preference to those that have suffered
historical unfair discrimination on the grounds of race, sex, and
disability.
35. “Black” people are not interchangeable with each other. Justice
requires compensating those particular people who were historically
disadvantaged on the grounds of their race. It is unjust to
compensate those who were not historically disadvantaged on the
grounds of race but happen to look like people who were.10
36. A “black” person who was denied the right to vote and the right to
live and work in an area of their choosing because of their race is
not the same as someone who was born after the fall of Apartheid,
participates in democratic elections, receives a world class
education at a private school and lives in an opulent suburb and
happens to be “black”.
10 David Benatar, Justice, diversity and racial preference: A critique of affirmative action, 2008 SALJ 279
37. The 2001 Regulations demonstrate that it is possible to target those
who were historically subject to unfair discrimination on the grounds
of race without referring to particular racial groups.
38. The 2017 Regulations restrict the power of organs of state to give
preference to those actually targeted by the Act.
39. Instead of assisting those who have been disadvantaged by unfair
discrimination, the prequalification criteria in the regulations target
companies that tender for contracts which are 51% “black” owned.
This focus on racial ownership is a blunt instrument that serves to
advance those who are already in a privileged position since they
own companies.
40. No mention is made of those communities who are meant to be
assisted by the projects which have been put out for tender. The
narrow focus exclusively on the race of the owners flies in the face
of the value of non-racialism which is entrenched in the Constitution.
41. Section 217(1) specifically requires that all government
procurement be fair, equitable, transparent, competitive and cost-
effective. A pre-requirement of race in the procurement process will distort the state's ability to determine market prices if not all potential
service providers in the pool of offerees are able to lodge a tender.
42. Section 217(2) is constrained by the requirement of a fair,
competitive and cost-effective government set out in section 217(1).
Section 217(2) is not an “exception” to section 217(1), but a
clarification of its application. Section 217(2) therefore does not (as
a so-called “exception”) conflict with section 217(1), but must be
regarded as harmonious with it, with section 217 being a single
whole. Therefore, the Minister's regulations are also
unconstitutional due to its distortion of the state's ability to determine
fair market prices.
43. Section 217(1) implies that state procurement should aim to
maximise public funds to the public's benefit as beneficiaries of
service delivery. By limiting the state's ability to determine actual
competitive market prices by excluding business which are less than
51% “black” owned from tendering, the Minister has shifted the
focus of procurement from benefitting the public at large to a narrow
set of empowered businessmen with a particular race. The focus
shift ignores the need to provide cost-effective services to the
especially needy and vulnerable. Using race as the most important
pre-requirement consideration for awarding contracts will defeat the purpose of section 217, which is specifically aimed at improving the
lives of the previously disadvantaged by ensuring that goods and
services are procured for their benefit. The regulations improperly
shift the focus away from the persons in need of service delivery to
the service provider's race.
44. The 2017 regulations focus on “black” ownership is ultra vires the
Act and the Constitution.
CONCLUSION
45. The 2017 regulations are ultra vires for two separate reasons.
46. First, they give the Minister the power to determine preferential
procurement policy, when the Act and the Constitution make it clear
that this power lies with specific organs of state and not the Minister.
47. Second, they prefer people designated as “black” as opposed to,
the prescripts of the Act which targets those who have been
historically disadvantaged by unfair discrimination on the basis of
race, gender or disability, or the Constitution which targets those
that have been unfairly discriminated against on the grounds of race,
sex, and disability.
48. Therefore, the Minister’s application for leave to appeal should be
dismissed.
Mark Oppenheimer
Counsel for the Amicus Curiae
11 May 2021
Authorities
Cases United Democratic Movement v President of the Republic of South Africa and Others (African Christian Democratic Party and Others Intervening; Institute for Democracy in South Africa and Another as Amici Curiae) (No 2) 2003 (1) SA 495 (CC).
Minister of Home Affairs v National Institute for Crime Prevention and the Re-Integration of Offenders (NICRO) and Others 2005 (3) SA 280 (CC).
Legislation Preferential Procurement Policy Framework Act: No 5 Of 2000
Preferential Procurement Regulations, 2001 Pertaining to The Preferential Procurement Policy Framework Act: No 5 Of 2000
Preferential Procurement Regulations, 2017 Pertaining to The Preferential Procurement Policy Framework Act: No 5 Of 2000
Textbooks LAWSA, Administrative Justice
Sebastian Seedorf & Sanele Sibanda, CLOSA, Separation of powers
Article David Benatar, Justice, diversity and racial preference: A critique of affirmative action, 2008 SALJ 279f
Other Documents Freedom Charter, Adopted at the Congress of the People at Kliptown, 1955.
Constitutional Principles for a Democratic South Africa