Ed-U-College (P.E.) (Section 21) Inc v Permanent Secretary of the Department of Education of the Government of the Eastern Cape Province and Another (1769/98) [2000] ZAECHC 19; 2001 (1) SA 257 (SE) (11 September 2000)

IN THE HIGH COURT OF SOUTH AFRICA

(SOUTH EASTERN CAPE LOCAL DIVISION)

Case No.: 1769/98

Date delivered:

In the matter between:

ED-U-COLLEGE (P.E.) (SECTION 21) INC Plaintiff

and

THE PERMANENT SECRETARY OF THE First Defendant

DEPARTMENT OF EDUCATION OF THE

GOVERNMENT OF THE EASTERN

CAPE PROVINCE

THE MEMBER OF THE EXECUTIVE COUNCIL Second Defendant

RESPONSIBLE FOR EDUCATION OF THE

JUDGMENT

LEACH, J:

The plaintiff is an independent school registered under s. 46 of the South African Schools Act No. 84 of 1996. During 1995 and 1996 the Department of Education and Culture in the Province of the Eastern Cape paid subsidies to the plaintiff calculated in terms of a formula of R1 560,00 per pupil in respect of the number of learners who were then enrolled in the school’s grades 1 to 7 and R2 340,00 per pupil in respect of the learners enrolled in grades 8 to 12. These subsidies were paid up to April 1997 but, for the period April 1997 to March 1998, the second defendant, the member of the executive council responsible for education in the Eastern Cape, reduced the subsidy allocation to R700,00 in respect of learners in grades 1 to 9 and R1 000,00 in respect of learners in grades 10 to 12. It was this reduction which ultimately led to these proceedings.

In July 1998 the plaintiff instituted this action, alleging (a) that the subsidies due to it in respect of the financial year 1 April 1996 to 31 March 1997 had not been paid in full, (b) that the reduction of the subsidies for the period April 1997 to March 1998 was unlawful and violated its rights under the Constitution, (c) that it was therefore entitled to receive subsidy payments in terms of the same formula and at the same rate as had been paid before the reduction, and (d) that taking into account various payments which had been made in respect of subsidies, a total amount of R1 252 706,50 was due to it in respect of subsidies. The plaintiff therefore sought judgment in that sum, together with interest thereon at the prescribed rate. In the alternative it sought an order setting aside the second defendant’s decision to reduce the subsidy payments in respect of learners, alternatively, declaring that it is entitled to receive subsidy payments in terms of the same formula and in the same amounts in respect of the 1996/1997 and 1997/1998 financial years as had been paid during the 1995/1996 financial year.

In response, the defendants pleaded, inter alia, as follows:

“8.2.1 The question of subsidies to all schools in the Eastern Cape, including independent schools (including Plaintiff) was dealt with in the budget presented to the Eastern Cape provincial legislature by Second Defendant on 23rd April 1997. During the budget speech on that date, the then M.E.C. for Education for the Eastern Cape gave notice of the amount his department suggested should be allocated to independent private schools in the Eastern Cape for the financial year April 1997 to March 1998.

8.2.2 In the said budget, suggested allocations for subsidies were made for the financial year April 1997 to March 1998.

8.2.3 The said budget was accepted and confirmed by the provincial legislature on the 15th May 1997, as appears from minutes of proceedings annexed hereto, marked “A”.

8.2.4

8.2.4.1 In confirming the said budget, the provincial legislature

appropriated funds for independent schools in the Eastern Cape for the financial year April 1997 to March 1998 in an amount of

R8,450,000.00.

8.2.4.2 The amount of R8,450,000.00 was less than the amount appropriated for the financial year April 1996 to March 1997, which latter amount was R10,320,000.00.

8.2.4.3 Consequently, the Eastern Cape legislature legislated specific

amounts for the appropriation of funds for subsidies to all schools in the Eastern Cape.

8.2.4.4 The whole amount of R8,450,000.00 was utilised for the benefit of independent schools in the Eastern Cape for the financial year April 1997 to March 1998.

8.2.5 The appropriation by the provincial legislature of the amount of R8,450,000.00 for independent schools resulted in the allocation of a flat rate subsidy of R700,00 per learner in respect of all learners in Grades 1 to 9 in all independent schools in the Eastern Cape, and a flat rate subsidy of R1,000.00 per learner in respect of all learners in Grades 10 to 12 in all independent schools in the Eastern Cape. In respect of those students who did not enroll for all subjects in the year, an amount of R166.00 was paid per annum, per subject.”

The defendants went on plead that all amounts to which the plaintiff had been entitled as subsidies in respect of its learners had been paid to it. The defendants further pleaded that the additional money which the plaintiff seeks to recover was neither budgeted for nor legislated upon by the Eastern Cape Government and that they therefore are not in a position to effect payment of the amount

claimed as no funds are available for that purpose.

It is on these issues that the parties came to trial. It is readily apparent that the essential issue is whether the second defendant’s

decision to reduce the subsidy allocation with effect from April 1997 breached the plaintiff’s right to fair administrative justice enshrined in the Constitution and was therefore of no force and effect. As a result of this, and in the light of the other issues in the pleadings that I have adverted to, the parties requested me to exercise my discretion under Rule 33(4) by determining the following stated questions as separate issues from all other issues raised in the matter:

“1. Whether the amount set aside for private independent schools in the Eastern Cape was a matter of legislation by the Eastern Cape Legislature;

2. Whether the question of the allocations of money to private independent schools in the Eastern Cape for the financial year April 1997 to March 1998 is a matter on which this Honourable Court has jurisdiction to adjudicate, alternatively should adjudicate?”

I must immediately remark that I did not find that the questions as formulated by the parties were as specific as I would have liked them to have been, and I therefore asked counsel for both sides to see if they could not circumscribe the issues more closely. Unfortunately, beyond agreeing that the stated questions should be determined in the light of the issues as raised in the pleadings, counsel found themselves unable to do so. As a result, it is my intention to decide the questions as I see them in the light of the pleadings and, hopefully, my decision will cover the issues as counsel may have envisaged them.

The only evidence adduced by the parties during the hearing before me was the testimony of one Trent, the leader of the Democratic Party in the provincial legislature (who is also Chair of the Public Accounts Committee and a member of the Finance Standing Committee in the Eastern Cape legislature) as well as a bundle of documents handed in as an exhibit with the parties agreeing that they were what they purported to be. Mr Trent’s evidence in the main described the legislative process. As appears from his evidence and the standing rules of the provincial legislature, the following procedure is adopted:

(a) Prior to the enactment of a money bill, different government departments make submissions regarding their needs and priorities which information is then accumulated and collated.

(b) The member of the executive counsel (MEC) thereafter introduces the bill in open sitting of the provincial legislature whereafter the bill is “laid upon the table” in terms of standing rule 145(2).

(c) In terms of standing rule 145(3) the bill is then deemed to have been duly introduced and read a first time. Each member of the house then receives a printed copy of the bill and the papers laid upon the table - standing Rule 145(4).

(d) The debate is adjourned and the bill is then referred to the Standing Committee on Financial Business for deliberation under standing Rule 147(1).

(e) In due course, the bill is debated before the committee which then reverts to the legislature with its recommendations.

(f) The report of the committee is then presented to the house whereupon the bill is read a second time. Any estimates of expenditure contemplated in the bill for the appropriation of any part of a provincial revenue fund, together with annexures thereto, are thereafter referred to the Committee of the Whole House under standing Rule 149.

(g) After the Committee of the Whole House has deliberated and presented its report, the provincial legislature considers the bill together with the estimates of expenditure contemplated therein. The bill is then voted upon and, if passed, is read for the third time. It is then referred to the Premier of the province for signature whereafter, on publication, it becomes law.

In the present case, the Appropriation Bill was presented by the MEC on 23 April 1997. In a schedule thereto, a sum of R5 450 199 million was allocated as a charge to the revenue account for the Department of Education, Culture and Sport. In a more detailed explanatory memorandum, the sum of R8, 45 million was allocated for private ordinary schools, a sum substantially less than the R10,32 million allocated for such purpose the previous year. The bill was considered and debated on 14 May 1997 and, the following day, was read a second time and then considered by the Committee of the Whole House, voted upon and passed. The minutes of the proceedings of 15 May 1999 show that the bill was then read a third time. The assent of the Premier was then obtained and, on 10 July 1997, it was published as the Appropriation Act (Eastern Cape) No. 4 of 1997. The schedule to this Act is exactly the same as the schedule that was annexed to the bill in which the sum of R8,45 million was allocated for private independent schools.

It is clear from this that the Appropriation Act, 1997 (Eastern Cape) was legislation. Indeed, as I understood counsel for the parties, it is common cause between them that the allocation of a globular amount for a department under the Act constitutes legislative action. The issue, as I understand it, is whether the utilization of such funds within a department by the allocation of subsidies should also be viewed as being legislation or whether it amounts to “administrative action” as envisaged by the Constitution.

Counsel for both sides referred to s. 48(2) of the South African Schools Act No. 84 of 1996 which provides:

“48(2) A Member of the Executive Council may, out of funds appropriated by the Provincial Legislature for that purpose, grant a subsidy to an independent school (my emphasis)”.

Mr De Bruyn, who appeared on behalf of the defendants, therefore argued that a member of the executive council (in casu the second defendant) may only grant a subsidy if funds were appropriated by the legislature for that specific purpose (in this case, to provide subsidies for learners at private independent schools), that the amount of R8,45 million was appropriated by the provincial legislature for that purpose, and that the subsidies must therefore be regarded as having been legislated as the sum used was granted by the legislature for that purpose. Relying upon the decision in Middelburg Municipality v Gertzen 1914 AD 544 at 554, he further submitted that this Court had no power to interfere with the grant of the amount of the subsidies for private individual schools as the appropriation of the amount of funds for that purpose is a political decision, and not a judicial one.

As against that, Mr Buchanan who appeared on behalf of the plaintiff, argued that it was the uncontested evidence of Mr Trent that the provincial legislature of the Eastern Cape has always exceeded its budget and has been obliged to seek additional finance from outside sources and that the Provincial Exchequer Act in any event provides a mechanism whereby moneys appropriated in respect of a certain purpose may be moved for other purposes. He therefore argued that although a specific sum may have been earmarked in the Appropriation Act to provide subsidies for private independent schools, that sum was not “cast in stone” and could be altered, inter alia by moving funds earmarked for other projects to provide subsidies for schools. He therefore argued that although the allocation of a globular amount within a budget may be a legislative action, the utilization of such funds within a department, in particular in allocating the amounts to be paid as a subsidy for learners in private independent schools, constituted an administrative action which may be tested against the usual rules and safeguards relating to all administrative actions.

In my opinion, it is not necessary to have regard to all the factors relied upon by Mr Buchanan. Even if one accepts that the provincial legislature allocated a fixed sum of R8,45 million to provide subsidies for private individual schools, it did not prescribe the formula under which the allocation was made. It certainly did not legislate a subsidy allocation of R700,00 in respect of learners in grades 1 to 9 and R1 000,00 in respect of learners in grades 10 to 12. That allocation was provided by the second defendant in the exercise of his discretion under s. 48(2) of the South African Schools Act No. 84 of 1996 (quoted above). Essentially it seems to me that the legislature provided the cake which the second defendant, in the exercise of his discretion under s. 48(2), was left to slice up. Although, in exercising his discretion, the second defendant may have been influenced by political or policy considerations and by having regard to the number of learners and the amount that had been budgeted for subsidies at private independent schools, his decision was not legislation but an “administrative action” as contemplated by s. 33 of the Constitution (as to the meaning of which see: President of The RSA & Others v SARFU & Others 2000 (1) SA 1 (CC); 1999 (10) BCLR 1059 (CC); at para 140).

Support for this conclusion is found in the decision in Premier, Mpumalanga v Association of State-Aided Schools [1998] ZACC 20; 1999 (2) SA 91 (CC); 1999 (2) BCLR 151 (CC). In that matter the respondent organisation, acting in the interests of its members who were the governing bodies of a number of state-aided schools, challenged a decision by the MEC for education in Mpumalanga to terminate the payment of tuition, transportation and boarding bursaries which had previously been paid to the benefit of pupils enrolled in “Model C” State-aided schools. The bursaries in question had benefited mainly white pupils and the decision to cut them was made in order to achieve a more equitable distribution of state education funds. It was only on 5 August 1995 that the MEC, at a meeting with the school principals, had first proposed that no bursaries at all would be paid for the budget year that had commenced on 1 April 1995. Later he made it plain that bursaries would be paid for the second term of the school year from April to June 1995. On 31 August 1995, a letter was sent to the school principals informing them that a final decision had been made to cut subsidies with effect from 1 July 1995.

The respondent alleged that this decision was procedurally unfair and unjustifiable and therefore breached s. 24 of the Interim

Constitution, Act No. 200 of 1993 (the provisions of which are similar but not identical to s. 33 of the current Constitution). A Provincial Division accepted this contention and granted an order (i) setting aside the MEC’s decision, and (ii) directing the applicants to pay the bursaries until 31 December 1995. The applicants then approached the Constitutional Court for direct access to determine the matter.

Dealing with the merits of the dispute, the Constitutional Court held that it was clear that the governing bodies of the schools concerned had enjoyed a legitimate expectation that the State would continue to pay the bursaries during the 1995 school year subject only to reasonable notice by the government of its intention to terminate payment, and that the MEC had therefore been barred from cutting the bursaries without giving such notice. The legitimate expectation was one that had both substantive and procedural aspects in the sense that the governing bodies of the schools had enjoyed expectations both of a substantive and a procedural benefit. The Court held further that neither the notification at the meeting of 5 August 1995 nor the letter of 31 August 1995 constituted reasonable notice of the bursaries being terminated with effect from July 1995. The Court remarked further that although a court should not as a rule impose obligations upon government which would inhibit its ability to make and implement policy effectively, the principle of procedural fairness was flouted where retroactive decisions were implemented without affording parties an effective opportunity to make representations and that the decision of the MEC to terminate the payment of bursaries with retroactive effect and without affording the schools an effective opportunity to be heard, breached their right to procedural fairness enshrined in s. 24(b) of the Interim Constitution. The decision in the Provincial Division was therefore confirmed.

It is apparent from this that the Constitutional Court had no difficulty in finding that the High Court had enjoyed the necessary jurisdiction to decide upon the validity or otherwise of the MEC’s decision to terminate the payment of bursaries to a particular category of schools. It therefore recognised that the decision of the MEC to terminate the payment of bursaries had been an “administrative

action” justiciable in the High Court. This decision seems to me to be on all fours which the decision which I have been called on to make.

In seeking to persuade me that the determination of the level of subsidies was a legislative and not an administrative act, Mr De Bruyn for the defendants however relied in particular upon the decision in Fedsure Life Assurance Ltd & Others v Greater Johannesburg Transitional Metropolitan Council & Others [1998] ZACC 17; 1999 (1) SA 374 (CC); 1998 (12) BCLR 1458 (CC). In that case, the appellants attacked the lawfulness of an increase in a general rate levied on property and rights in property within a metropolitan substructure. Although different conclusions were reached on the merits of the appeal, the members of the Court were unanimous on the issue that the resolutions taken by the local authority could not be classified as an “administrative action” as contemplated by s. 24 of the Interim Constitution. In reaching that conclusion, Chaskalson P, Goldstone J and O’Regan J said the following at [45]:

“It seems plain that when a legislature, whether national, provincial or local exercises the power to raise rates or taxes or determines

appropriations to be made out of public funds, it is exercising a power that under our Constitution is a power peculiar to elected

legislative bodies. It is a power that is exercised by democratically elected representatives after due deliberation. There is no dispute that the rate, the levy and subsidy under consideration in this case were determined in such way. It does not seem to us that such action of the municipal legislatures in resolving to set the rates, to levy the contribution and to pay a subsidy out of public funds, can be classified as administrative action as contemplated by s. 24 of the interim Constitution.”

The decisions in the Premier, Mpumalanga and Fedsure Life cases are, in certain respects, difficult to reconcile - see for example Klaaren “Redlight, Greenlight” (1999) 15 SAJHR 209. But the two cases are clearly distinguishable on the facts. In the Fedsure Life case, supra the decision had been taken by an elected legislative body after due deliberation whereas, on the other hand, in the Premier, Mpumalanga case, supra, the decision was one taken by a public official vested with a discretion and was not the product of deliberation by a democratically elected body of representatives. In casu there was also no deliberation by a legislative body on the reductions of the subsidies, merely the exercise of a discretion vested in a public official. Clearly in this case as well, the second defendant’s decision is therefore justiciable and, as I have said, there seems to me to be nothing distinguishing the present case from the Premier, Mpumalanga case.

In arguing that the second defendant’s decision to reduce the subsidy allocation was not subject to judicial review, Mr De Bruyn also relied heavily upon the decision of the Constitutional Court in President of the R.S.A. & Others v SARFU & Others supra, and submitted that where a decision is one of policy (which in casu he submitted was the case) it is not an “administrative action” as envisaged by s. 33 of the Constitution. In my view,

however, the decision in the SARFU case is in fact authority for the contrary proposition. During the course of its judgment, the Full Court said the following:

“[142] As we have seen, one of the constitutional responsibilities of the President and cabinet members in the national sphere (and premiers and members of executive councils in the provincial sphere) is to ensure the implementation of legislation. This responsibility is an administrative one, which is justiciable, and will ordinarily constitute ‘administrative action’ within the meaning of section 33. Cabinet members have other constitutional responsibilities as well. In particular, they have constitutional responsibilities to develop policy and to initiate legislation. Action taken in carrying out these responsibilities cannot be construed as being administrative action for the purposes of section 33. It follows that some acts of members of the executive, in both the national and provincial spheres of government will constitute ‘administration action’ as contemplated by section 33, but not all acts by such members will do so.”

I interpose to mention that in a footnote to this paragraph, the Full Court referred to the case of Premier, Province of Mpumalanga supra as an example of an act of a member of the executive which constituted “administrative action” as contemplated by s.

33 of the Constitution. Be that as it may, the judgment continues thus:

“[143] Determining whether an action should be characterised as the implementation of legislation or the formulation of policy may be difficult. It will as we have said above, depend primarily upon the nature of the power. A series of considerations may be relevant to deciding on which side of the line a particular action falls. The source of the power, though not necessarily decisive, is a relevant factor. So too is the nature of the power, its subject matter, whether it involves the exercise of a public duty, and how closely it is related on the one hand to policy matters, which are not administrative, and on the other to the implementation of legislation, which is. While the subject matter of a power is not relevant to determine whether constitutional review is appropriate, it is relevant to determine whether the exercise of the power constitutes administrative action for the purposes of section 33. Difficult boundaries may have to be drawn in deciding what should and what should not be characterised as administrative action for the purposes of section 33. These will need to be drawn carefully in the light of the provisions of the Constitution and the overall constitutional purpose of an efficient, equitable and ethical public administration. This can best be done on a case by case basis.”

The Full Court went on to hold that the President, in appointing a commission of inquiry (into the administration of rugby in this

country), was exercising an original constitutional power vested in him alone and was not implementing legislation so that neither the subject matter, nor the exercise of that power, were administrative in character. It therefore found that the appointment of the commission did not constitute “administrative action” within the meaning of s. 33 of the Constitution - see para [147]. In casu, however, s. 48(2) of Act 84 of 1996 bestowed a discretion upon the second defendant, as the responsible member of the executive

council, to grant subsidies out of funds appropriated by the provincial legislature for that purpose (to slice up the cake that

had been legislated). In determining the subsidy allocation, the second defendant was not about a non-administrative matter of policy but, rather, was exercising an administrative function implementing legislation (i.e. he was slicing up the cake which the provincial legislature had provided). Far from persuading me that the determination of subsidy allocation was an act legislative in nature, the decision in the SARFU case therefore reinforces my view that the decision of second respondent to reduce the subsidy allocation to private independent schools constituted “administrative action” within the meaning of s. 33 of the Constitution.

That conclusion leads me to consider the first part of the second question which was raised for this Court’s decision, namely, whether the question of the allocation of subsidies to private individual schools for the financial year in question is a matter on which this Court has jurisdiction to adjudicate. In the light of my decision that the subsidy allocation was not a matter of legislation by the Eastern Cape legislature but was “administrative action” as envisaged by s. 33 of the Constitution, this question must be answered in the affirmative. The review of administrative actions falls squarely within this Court’s powers. The High Court has never shirked its responsibility to interfere with unlawful administrative actions as it did in the Premier Mpumalanga case and there is no reason for it to do so now. The far more difficult question is that in the second half of the question posed

for decision, namely, whether this Court should adjudicate upon the question of the allocation of money to private independent schools in the Eastern Cape for the financial year under consideration.

In arguing that this Court should not adjudicate upon the issue, Mr De Bruyn referred, inter alia, to the Premier, Mpumalanga case where at [51] O’Regan J said:

“In my view ... s. 32 of the Act reserves the decision as to what grants should be made to State-aided schools to the second applicant, a duly elected politician, who is a member of the executive council of the province. By definition, therefore, the decision to be made by the second applicant was not a judicial decision but a political decision to be taken in the light of a range of considerations. For the reasons given by Lord Hailsham in the Evans case, a Court should generally be reluctant to assume the responsibility of exercising a discretion which the Legislature has conferred expressly upon an elected member of the executive branch of government. Accordingly, the Court should be slow to conclude that there is bias such as to require a Court to exercise a discretion, particularly where the discretion is one conferred upon a senior member of the executive branch of government.”

Counsel also referred to decisions such as Chairman, Public Service Commission v Zimbabwe Teachers’ Association 1997 (1) SA 209 (ZSC) at 215 C and Soobramoney v Minister of Health, Kwa-Zulu Natal 1997 (12) BCLR 1696 (CC) where at [29] Chaskalson P said:

“A court will be slow to interfere with rational decisions taken in good faith by the political organs and medical authorities whose responsibility it is to deal with such matters”.

However, even if it is generally not its function to tell the government of the country where and how to spend its money, this Court should not hesitate to set aside an administrative action by a member of the executive of a provincial legislature which is unfair and invalid. The problem is whether the decision in casu to reduce the subsidy allocation should be set aside

There is no ready answer to this question. There is no simple litmus test which can be applied to any given set of facts to decide whether judicial intervention is justified or not, and each case must be considered in the light of its own particular facts and

circumstances. For example, in the Premier, Mpumalanga case the Court was prepared to intervene as, in the light of the circumstances there prevailing, the schools had enjoyed the legitimate expectation that the bursaries which they had received would continue to be paid subject only to reasonable notice by the government of its intention to terminate payment thereof, and the bursaries could therefore not be terminated without giving such notice. The legitimate expectation there in issue arose from the facts of the case and not from any generally applicable legal principle. Consequently the outcome of the matter may have been different in another factual context.

Unfortunately the relevant facts in the present matter have not been fully ventilated before me. This is apparent from an examination of the pleadings. Although the pleadings on both sides can hardly be described as a model of clarity, they do reveal the following:

(a) The plaintiff alleges that the pupils who attend its school are from previously disadvantaged groups whose parents are either poor or from the lower income groups and have to make provision well in advance for payment of school fees. Most surprisingly, the defendants plead that they have no knowledge of these allegations.

(b) The plaintiff alleges that subsidy allocations are of material importance to it in determining its fees. Although I would have expected this to have been common cause, the defendants specifically deny this allegation.

(c) The plaintiff allege that at all times the defendants were aware of its allegations as set out in (a) and (b) above, alternatively, should reasonably have been aware thereof. This too is specifically denied by the defendants.

(c) The plaintiff alleges that the second defendant, unilaterally and without any proper consultation, materially changed the formula in terms of which the subsidy payments for learners had previously been determined and paid. The defendants deny that there was a “formula” which was changed but go on to plead that R8,45 million had been appropriated for the financial year April to March 1997 for independent schools in the Eastern Cape, that this was less than the R10,32 million allocated for the previous year, and that the appropriation by the provincial legislature of the lesser amount of R8,45 million “resulted” in the allocation of a lower subsidy.

(d) The plaintiff alleges that the payment of the lesser subsidy amounted to an unlawful violation of its right to fair administrative justice as the defendants had, inter alia, (i) failed to notify the plaintiff prior to the commencement of the 1997 academic year of the intention to reduce the subsidy payments (ii) failed to give the plaintiff an opportunity to make written representations as to why the subsidy should not be reduced, and (iii) essentially failed to afford the plaintiff a hearing in regard to the reduction of the subsidy payments. All of these allegations were specifically denied by the defendants.

I must immediately comment that I doubt whether the pleadings properly reflect the defendants’ case. It seems to be implicit in the way their case was both pleaded in certain respects and managed thus far - including their request for me to decide the particular issues which were separated for decision under Rule 33(4) - that the defendants contend that the subsidy allocation was not a matter upon which the plaintiff had any right to be heard before the subsidies were reduced. However, in their plea, the defendants specifically deny that they failed to notify the plaintiff prior to the commencement of the 1997 academic year of the intention to reduce the subsidy payments, or that they failed to give the plaintiff an opportunity to make representations as to why the subsidies should not be reduced, or that they failed to afford the plaintiff a reasonable opportunity for a hearing. That being so, the defendants’ plea must be construed as alleging that they had notified the plaintiff prior to the commencement of the 1997 academic year of the intention to reduce subsidies payments, that they had given the plaintiff an opportunity to make written representations in regard thereto and that they had afforded the plaintiff a reasonable opportunity for a hearing in regard to the reduction of the subsidies in question. Not only is this inconsistent with the way in which the defendants’ case appears to have been conducted but, if the defendants had in fact given notice and afforded the plaintiff an opportunity for a hearing, it was in my view incumbent upon them in their pleadings to allege when, where and in what manner they had done so. After all, pleadings are there to define the issues between litigating parties and not to obfuscate them. However the defendants

did not make such allegations, and I have been left with the unfortunate impression that their pleadings were more designed to

throw dust in the air and to smudge the true issues than to crisply define what is in issue between the parties.

Be that as it may, on the pleadings as they stand, the defendants deny the essential factual basis upon which the plaintiffs rely in support of their contention that they had a legitimate expectation to a hearing prior to the decision being taken to reduce the subsidy allocations. Moreover, strictly speaking, by denying that they failed to afford the plaintiff the opportunity for a hearing, the defendants must be taken to allege that the plaintiff was in fact afforded such an opportunity. Whether or not the plaintiff was given the opportunity for a hearing and to what extent the parties are, in truth, at issue in regard to the relevant circumstances which prevailed and in respect of which the plaintiff relies in support of its allegation that it had a legitimate expectation to a hearing, are not issues which I can determine without evidence. On the evidence placed before me, which related solely to the legislative process, I therefore cannot determine whether this is a case in which the plaintiff had a legitimate expectation to be heard and whether or not that expectation was breached.

If the facts alleged by the plaintiff in its pleadings were to be established in evidence, the defendants may well be hard-pressed to avoid liability, especially in the light of the judgment in the Premier Mpumalanga case. But I cannot speculate on whether the facts as pleaded are indeed correct nor whether the plaintiff can make out a case which on the facts will justify judicial interference. Accordingly, in my view, beyond stating that if the plaintiff indeed had a legitimate expectation of a hearing before the subsidies in question were reduced and was denied the opportunity for a hearing (in which case this Court would undoubtedly intervene) I cannot determine whether this is a case in which this Court should adjudicate on the question of the subsidy allocations in the years under consideration.

As the plaintiff bore the onus of establishing that the defendants’ decision to reduce the subsidy allocation should be set aside, I considered granting an order of absolution as the plaintiff has not led any evidence in regard to the necessary factual circumstances to which this Court would have to have regard in deciding this particular issue. However it seems to me that it would not be appropriate to do so. The parties attempted to curtail the issues, essentially by arguing on whether in principle this Court should adjudicate on the issue and neither party, in presenting argument, made any mention of the factual circumstances which have to be determined. It was clearly the intention of the parties to avoid leading evidence in regard to the relevant facts and

circumstances and I therefore do not think that it would be correct to non-suit the plaintiff at this stage because it failed to lead evidence in regard thereto. The matter would seem to be best dealt with by me recording the findings that I have made and postponing the matter for further adjudication on the remaining issues.

That brings me to the question of costs. It was submitted on behalf of the plaintiff that if I should find for it in respect of the separated issues, the defendant should pay the costs of the separated hearing, including the costs of two counsel, but that if I should find in respect of the defendants in respect of either of the separated issues, the plaintiff’s claim should be dismissed with costs. The defendants of course urged me to grant the latter the order. My finding is essentially in favour of the plaintiff both on the first question and in regard to the first alternative of the second question. Nevertheless, in my view, it is premature to make a costs order as, once evidence has been ventilated, the possibility exists that I may find that although this Court has jurisdiction, the plaintiff has not made out a proper case for the second defendant’s decision to reduce the subsidy allocation to be set aside. Such a finding would of course be material to a decision in regard to costs. In my view, then, it would be best to reserve the question of costs for later adjudication.

In the light of all the above, I make the following order:

1. In regard to the issues raised for separate adjudication under Rule 33, I find as follows:

(a) The passing of the Appropriation Bill first presented to the Eastern Cape Legislature on 23 April 1997, which became the Appropriation Act, 1997 and which allocated R8,45 million for private ordinary schools, was a matter of legislation by the Eastern Cape legislature;

(b) The decision to allocate a subsidy of R700,00 in respect of learners in grades 1 to 9 and R1 000,00 in respect of learners in grades 10 to 12 for the period April 1997 to March 1998 constituted an “administrative action” as envisaged by s. 33 of the Constitution;

(c) The question of the allocation of money to private independent schools in the Eastern Cape for the financial year April 1997 to March 1998 is a matter upon which this Court has jurisdiction to adjudicate;

(d) Whether this Court should adjudicate upon the question in (c) above is a question which cannot be resolved without evidence being led by the parties in regard to the issues relevant thereto raised in the pleadings.

2. The matter is postponed to a date to be arranged with the Registrar for the further continuation of these proceedings in the light of the rulings set out 1, above.

3. The costs are reserved for later determination.

L.E. LEACH

JUDGE OF THE HIGH COURT