ConCourt refuses to hear Tourism Ministry’s appeal against Supreme Court ruling on BEE criteria and Covid relief

8 Feb 2023

The apex court has now ruled that the case is moot because there is no longer a live dispute or controversy between the parties which would be practically affected in one way or another by a court’s decision, or which would be resolved by a court’s decision.

The Constitutional Court has refused to hear an appeal against a ruling that found that Broad-Based Black Economic Empowerment (BBBEE) should not have been used as a criterion for the government’s Covid-19 tourism relief grants.

Brought by the Minister of Tourism and Others to appeal a Supreme Court ruling in favour of AfriForum and Solidarity, the application sought legal certainty on whether the minister was obliged or entitled to include BBBEE status among the criteria that the Department of Tourism used to select small businesses (SMMEs) that qualified for the Tourism Relief Fund.

The Supreme Court had ruled that the minister was neither obliged, nor was she entitled, to include race-based information in the selection criteria used to select SMMEs to be given the grants.

In March 2020, after the Minister of Cooperative Governance and Traditional Affairs had declared a state of disaster in the country, the national lockdown forbade those who were not essential services workers from travelling for work or social visits – and only businesses that delivered essential services were allowed to operate.

The fallout was calamitous for the economy, as businesses and workers were unable to earn an income. Many businesses shut permanently and thousands lost their jobs.

By October 2020, Stats SA reported that more than 600,000 formal sector workers had lost their jobs.

World Bank data suggest low-wage workers suffered almost four times more job losses than high-wage workers.

A National Income Dynamics Study-Coronavirus Rapid Mobile Survey revealed in July 2020 that women were more severely affected than men in the early phase of the crisis (hard lockdown).

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Net job losses between February and April 2020 were higher for women than for men, with women accounting for two-thirds of the total net job losses. Among those who remained employed, women experienced a bigger reduction in average hours worked per week than for men.

To mitigate against the adverse economic and financial impact of the lockdown on tourism sector SMMEs, the minister established the Covid-19 Tourism Relief Fund, setting aside R200-million for recipients to receive R50,000 each – but only for qualifying BBBEE entities.

Arguing that excluding white businesses from receiving the grants was irrational, AfriForum and Solidarity took the matter to court, seeking to set aside the race-based criteria.

The then Tourism Minister, Mmamoloko Kubayi-Ngubane, argued in the Pretoria High Court that she was obliged by law to include the selection criteria taken from the Tourism BBBEE Sector Code of Good Practice, because one of the goals of her department was the transformation of the tourism industry.

She said there was no reason why, in seeking to alleviate, prevent or contain the economic effects of the pandemic on SMMEs, the department could not have due regard to the transformation agenda of the department for the tourism industry.

On 30 April 2020, Judge Jody Kollapen agreed with the minister, concluding that her decision was not irrational because the criteria neither excluded white applicants, nor did they “seal in an advantage” for black candidates, but rather provided those candidates with a head start.

After the applicants were refused leave to appeal, AfriForum and Solidarity then petitioned the Supreme Court for leave to appeal. This was granted.

The latter court upheld the appeal with costs, including the costs of two counsel, and set aside the high court’s decision, ruling that she was not legally obliged to make eligibility for assistance from the fund subject to the Tourism Sector Code in terms of the BBBEE Act, and barring the minister from recovering funds already disbursed.

The Tourism Ministry then took it to the Constitutional Court.

The apex court has now ruled that the case is moot because there is no longer a live dispute or controversy between the parties which would be practically affected in one way or another by a court’s decision, or which would be resolved by a court’s decision.

Citing the court’s substantially increased workload, Chief Justice Raymond Zondo wrote that the court is less inclined to entertain moot matters – not that it would not, if there are proper grounds, but that it would rather wait for another matter that will not be moot before it pronounces on an issue.

“This is something practitioners should bear in mind when advising litigants in matters that have become moot. It is not in the interests of justice for this court to grant leave to appeal and determine the appeal.” BM/DM

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