Manufacturing, Engineering and Related Services Sector Education and Training Authority v Social Enterprise Trust [2026] ZALCJHB 380

Seat of Court: Labour Court, Johannesburg

Date Delivered: 13 October 2026

Case No: JR907/2024

Name of Judge(s): Munsamy AJ

Factual Summary:

merSETA had awarded the Social Enterprise Trust discretionary-grant funding of some R119 million under a 2021 Memorandum of Agreement to implement skills programmes. Relying on a forensic report of January 2023, it terminated the agreement with immediate effect and in 2024 launched a legality self-review to set aside the award, contending that it was procurement subject to section 217 of the Constitution and had been concluded by an official without authority. In its principal judgment of 15 June 2026 the Court dismissed the self-review, upheld SET's counter-application declaring the termination invalid, directed merSETA to perform under the agreement subject to its terms and the statutory framework, and awarded costs including those of Senior Counsel.

merSETA applied for leave to appeal against the whole judgment, reformulating its case around want of authority, the procurement character of the agreement, the PFMA, delay, the termination, alleged expiry of the agreement, a question of public importance and costs; its written submissions were delivered late without condonation. The issue, decided in chambers, was whether the requirements of section 17(1)(a) of the Superior Courts Act were satisfied.

Legal Questions Considered:

[7] ‘The threshold is not whether the grounds are arguable or whether a different conclusion is conceivable. There must be a sound and rational basis for concluding that an appeal would have a realistic prospect of producing a different result.[1]’

[11] ‘Written Submissions cannot enlarge a notice of application for leave, still less cure deficiencies in the founding papers in the review itself. The absence of condonation is not inconsequential. Nevertheless, because SET answered the Submissions fully and because the application can be disposed of decisively on its merits, I shall assume in merSETA’s favour, without deciding that the non-compliance is condoned, that the Submissions may be considered. That assumption does not convert Submissions into evidence or pleadings.’

[13] ‘The judgment also held that merSETA did not establish a lawful unilateral power to terminate the MOA as it did. The counter-application followed from that conclusion. Thus, even success on the characterisation of the MOA would not, without more, displace the independent findings on pleading, proof, disputed facts, delay and termination.’

[14] ‘Leave is directed at the result, not isolated statements of reasoning. merSETA must therefore demonstrate reasonable prospects of overcoming each independently dispositive obstacle. Its application does not do so.’

[15] ‘Motion proceedings are determined on the case made in the affidavits. An applicant must set out the material facts and legal basis for relief in its Founding Affidavit. It may not leave the respondent and the Court to construct the case from annexures, nor may it repair a defective cause of action in reply, argument or on appeal.[4]’

[17] ‘Those references were sufficient to signal topics in controversy. They were not a substitute for pleading the material content of the instruments relied upon, the precise power reserved to the Chief Executive Officer, the distinction between approval of a grant and signature of an implementing MOA, the identity of the decision-maker who actually approved the allocation, and the evidential facts establishing that no lawful delegation, authority or ratification existed.’

[18] ‘That is a materially more developed case than the one pleaded and proved.’

[19] ‘The conclusion does not follow from the premise. A person may lack power to approve an allocation yet possess authority to sign the instrument recording an allocation approved elsewhere. Whether that distinction applied depended on the terms and operation of the Delegation of Authority Framework, the grant process, the approval decision, and the evidence concerning Ms. Nomvete’s office and authority. Those matters could not be replaced by assertion in written argument.’

[20] ‘The Framework was not pleaded with the particularity necessary to establish the proposition now advanced. The submissions quote selected allegations from the Founding Affidavit, but repetition is not proof. Nor did the absence of a simple admission by SET relieve merSETA of its burden to establish its review ground. In legality review, as elsewhere, the Applicant bears the burden of putting up the facts from which unlawfulness follows.’

[21] ‘The same problem attends the contention that SET was involved in Ms. Nomvete’s alleged irregularities. The founding case depended substantially on conclusions in the forensic report. SET denied collusion and impropriety and gave a materially different account of the feasibility-study communications, the grant process and implementation. The allegation of complicity is neither common cause nor a permissible premise for determining delay or remedy.’

[22] ‘The leave submissions also seek to develop the PFMA case. Yet they do not identify a particular provision of the Public Finance Management Act[5] that rendered the Award or MOA unlawful, nor connect admissible proved facts to such a provision. A general invocation of the PFMA and “internal policies” cannot carry the constitutional consequence sought.’

[23] ‘The Court accepts that a litigant may refine a legal argument on appeal where the point is covered by the pleadings and all relevant facts are common cause. This is not such a case. The refinement now proposed depends upon contested facts and upon the content and application of instruments that were not properly proved as the decisive source of invalidity. Allowing the case to be reconstructed at the leave stage would deny SET the case it was entitled to meet and would invite an appeal court to decide issues without necessary factual findings.’

[25] ‘The language relied upon shows that SET undertook obligations in implementing a training programme. It does not answer the anterior question under which statutory and regulatory system was the funding allocated and the MOA concluded. Substance, source, purpose and governing framework must be considered together. The presence of deliverables does not, without more, transform every statutory grant into ordinary supply-chain procurement.’

[26] ‘The principal judgment therefore did not hold that public power exercised through grants is unregulated or immune from section 217 values. It held that merSETA was required to identify and prove the breach of the system applicable to this award.’

[27] ‘That approach accords with Chief Executive Officer of the South African Social Security Agency NO v Cash Paymaster Services (Pty) Ltd[7]. Section 217 requires a compliant system to be established by legislation or regulation, and lawfulness is then assessed with reference to that system. Even if section 217 applied at a constitutional level, it did not dispense with the need to identify the operative statutory or regulatory rule and prove its breach.’

[28] ‘It does not establish the categorical proposition that every grant-funded arrangement with a non-profit organisation is ordinary procurement. The statutory source, process and terms in this matter required their own analysis.’

[29] ‘Most importantly, merSETA’s argument concentrates on the first step whether services were present and assumes the next two which system governed the Award and what material breach of that system was proved. The principal judgment answered the latter questions against merSETA. The proposed appeal does not demonstrate reasonable prospects of reversing those findings.’

[31] ‘The leave application does not cure that defect. It attempts instead to isolate the alleged want of authority as independent of the report. But whether Ms. Nomvete lacked the relevant power, whether the application was prematurely approved, whether SET participated in wrongdoing, and whether the process contravened the applicable grant framework were precisely among the matters requiring proper proof.’

[32] ‘SET placed a detailed contrary version before the Court. The principal judgment expressly found that the disputes were genuine and material and that SET’s version was detailed, coherent and supported by the contractual and statutory context. merSETA’s submission that the Court made no finding of genuine factual disputes is therefore incorrect.’

[33] ‘Under Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd[8], final relief on motion was to be determined on the admitted facts and SET’s version unless that version was so far-fetched or untenable that it could be rejected. The leave papers do not identify a basis upon which an appellate court could properly reject SET’s version on the papers.’

[34] ‘Section 172(1)(a) does not relieve a litigant of proving the unconstitutional conduct it asks a court to declare invalid. Gijima establishes legality review as the route by which an organ of state challenges its own decision. It does not make allegations self-proving.’

[35] ‘Delay is an independent answer to the proposed appeal.’

[36] ‘Investigation is relevant, but it is not a complete explanation. An organ of state bears institutional knowledge of its own decisions and must account fully for the entire period of inactivity, especially while another party is performing and incurring obligations in reliance on the decision.’

[37] ‘The final forensic report was dated 17 January 2023. merSETA treated it as sufficient to justify immediate termination on 20 January 2023. Yet the review was instituted only in 2024. Even if time is counted generously from receipt of the report rather than from the Award and conclusion of the MOA in 2021, the material period after January 2023 remained inadequately explained.’

[38] ‘There is a contradiction in asserting that the report was adequate to justify the drastic act of immediate termination but that further investigation prevented a timely approach to court. The leave papers do not resolve it nor do they identify a material misdirection in the Court’s evaluation of the explanation.’

[39] ‘The prejudice was not confined to whether SET might formulate an enrichment claim. It included implementation already undertaken, expenses incurred, service-provider commitments, beneficiary arrangements, exposure to claims, disruption and the loss of the contractual position. A possible enrichment claim is not the contractual bargain and does not restore accrued rights or remove litigation risk.’

[40] ‘The submission that SET was implicated in the irregularity cannot answer prejudice because that alleged implication was disputed and not proved by admissible evidence. The narrow principle discussed in Gijima and Buffalo City that clear and indisputable unlawfulness may still require a declaration despite delay does not apply where unlawfulness itself depends on unresolved factual disputes and inadmissible material.’

[41] ‘There is accordingly no reasonable prospect that an Appellate Court would disturb the finding that the delay was unreasonable and should not be overlooked. Because that finding independently sustains refusal of the self-review, it is fatal to leave even if another court might debate the characterisation of the MOA.’

[43] ‘An administrative decision exists in fact and has legal consequences until set aside by a court. An organ of state may not treat its own decision as a nullity merely because it considers it unlawful.[11]’

[44] ‘That principle does not prevent reliance on a valid contractual or statutory termination power. But merSETA was required to establish such a power and compliance with its conditions. SET relied on clauses 20 and 21 of the MOA, including notice, an opportunity to respond and a staged dispute-resolution process. The termination letter did not establish compliance with those mechanisms and purported to terminate immediately on the asserted voidness of the Award.’

[45] ‘The principal judgment therefore committed no appealable error in finding the termination unlawful. Once merSETA had not established the invalidity of the award and had not proved a lawful entitlement to terminate in that manner, the declaratory relief in the counter-application followed.’

[48] ‘Properly read, the order does not revive the MOA for a new four-year term, create new milestones, require payment for unperformed future services, or extend the contractual period. It requires merSETA to honour only those obligations that remain enforceable under the MOA. Expiry does not retrospectively validate the termination of 20th of January 2023, nor does it necessarily extinguish rights and liabilities that accrued before expiry.’

[49] ‘The expiry contention was not developed as a defence in the affidavits or determined on a factual record identifying the milestones achieved, payments approved, amounts accrued or remaining obligations. An Appellate Court cannot undertake that accounting exercise for the first time. Any concrete dispute as to whether a particular obligation accrued must be decided under the MOA and the qualification in the order.’

[50] ‘There is therefore no reasonable prospect that the performance order, read in context, will be overturned on the basis now advanced.’

[52] ‘The legal character of any future agreement will depend on its enabling statute, regulatory regime, source of funds, selection process, purpose, substance and terms. This judgment does not create a legal vacuum. It identifies the SDA, the Skills Development Levies Act, the Grant Regulations and merSETA’s discretionary-grant framework as the operative regime for this MOA, while recognising that constitutional legality and section 217 values remain applicable where their requirements are engaged.’

[53] ‘In any event, an appellate pronouncement on the abstract section 217 question would not dispose of this case unless merSETA also overcame the findings on proof, the forensic report, disputes of fact, delay and termination. It has no reasonable prospect of doing so. A legal question which cannot alter the outcome is not a compelling reason to prolong the litigation. Any pronouncement would risk being obiter and detached from a proper factual foundation.’

[55] ‘Those were relevant considerations within the Court’s discretion. No material misdirection is identified. The challenge to the costs order therefore has no independent prospect of success.’

[56] ‘The same considerations of law and fairness apply to this application. SET was required to answer an attempted reformulation of the review case and a challenge to each part of the order. Costs should follow the result, including the costs consequent upon the employment of Senior Counsel.’

[59] ‘There is no sound and rational basis for concluding that the Labour Appeal Court would reach a different result. The asserted question of public importance is neither capable of deciding this appeal nor suitable for abstract determination on this record. The requirements of section 17(1)(a)(i) and (ii) of the Superior Courts Act are not satisfied.’

Relief: The application for leave to appeal was dismissed, and merSETA was ordered to pay SET's costs on scale C, including the costs of Senior Counsel.

Judgment on SAFLII