Work In Solutions

Tourism, Hospitality & Sports Education & Training Authority v TMS-Shezi Industrial Services

Labour Court Johannesburg: 26 July 2007

The Tourism, Hospitality & Sports Education & Training Authority, a SETA, concluded an agreement in terms of which the defendant would provide training for learners under the Skills Development Act 97 of 1998 (”Skills Development Act”). After two years, the SETA sued the defendant in the High Court for R9 859 005, being the amount it had allocated in the form of grants for training and learner allowances to the defendant in that period. The defendant’s response was to file an exception to the plea on the basis that it did not disclose a cause of action.

Summary of Judgement: The court held that the SETA’s case was premised on an allegation that the defendant had breached its obligations under the Act, as read with the applicable learnership agreements, which breach made it impossible for the SETA to provide the learners with certificates as evidence of successful completion of their courses. The Skills Development Act is silent on whether the SETA may claim damages in such circumstances. “Damages” may entail either delictual or contractual damages, but if the claim was neither delictual nor contractual, it could only be founded on the provisions of a statute. The question was accordingly whether a claim for damages could be inferred from the Act or SAQA (South African Qualifications Authority) and/or the PFMA (Public Finance Management Act). In this regard, the court held that the first principle of interpretation was that the words of a statute must be given their ordinary, literal meaning. Any implied provision have to be reasonable, or necessary to give effect to the obvious intention of the Legislature. The court held that the PFMA provides a framework within which the SETA as an accounting authority could put in place measure, policies and procedures to protect the interests of public entity. In this case, for instance, it could have put in place policies and procedures to deal with payment of grants the consequences of failure to comply with the provisions of such policies. The court further held that the SETA had incorrectly assumed that it was itself a party to learnership agreements. Such agreements created contractual relationships between employers and individual employees. The SETA’s role is limited to assisting employers and employees to conclude agreements and to registering them. The Court held that, if the Legislature had wished to confer on SETAs the right to reclaim grants by way of actions for damages, it would have said so in clear terms. However, the Act goes no further than to confer the right to withhold funds if an employer or training provider fails to comply with stipulated conditions. Finally, the SETA did not quantify its damages as required by the rules of the court, as a result of which the defendant was unable to assess what was being claimed from it in each case and to that extent, the pleading was vague and embarrassing. As a result the court upheld the exception that the plea did not disclose a cause of action.

As a result we may accept that the courts will not allow Setas to reclaim grants to service providers which have allegedly failed to comply with conditions of grants.