IN THE CONSTITUTIONAL COURT OF SOUTH AFRICA In the matter between ELECTRONIC MEDIA NETWORK LTD and e.ty (PTY) LTD. NATIONAL ASSOCIATION OF MANUFACTURERS OF ELECTRONIC COMPONENTS (First Grouping) $.0.S SUPPORT PUBLIC BROADCASTING COALITION MEDIA MONITORING AFRICA MINISTER OF COMMUNICATIONS MINISTER OF TELECOMMUNICATIONS AND POSTAL SERVICES INDEPENDENT COMMUNICATIONS AUTHORITY OF SOUTH AFRICA UNIVERSAL SERVICE AND ACCESS AGENCY OF SOUTH AFRICA SOUTH AFRICAN BROADCASTING CORPORATION SOC LIMITED ASSOCIATION OF COMMUNITY TELEVISION — SA SOUTH AFRICAN COMMUNICATIONS FORUM SENTECH SOC LTD CC CASE NO: SCA CASE NO: 1039/2015 GP CASE NO: 2616/2015 Applicant First Respondent (First Appellant in the Court a quo) Second Respondent (Second Appellant in the Court @ quo) Third Respondent (Third Appellant in the Court a quo) Fourth Respondent (Fourth Appellant in the Court a quo) Fifth Respondent (First Respondent in the Court @ quo) Sixth Respondent (Second Respondent in the Court a quo) Seventh Respondent (Third Respondent in the Court a quo) Eighth Respondent (Fourth Respondent in the Court a quo) Ninth Respondent (Fifth Respondent in the Court a quo) Tenth Respondent (Seventh Respondent in the Court a quo) Eleventh Respondent {Eighth Respondent in the Court a quo) Twelfth Respondent (Ninth Respondent in the Court a quo)CELL ¢ (PTY) LTD Thirteenth Respondent (Tenth Respondent in the Court a quo) TELKOM SOC LTD Fourteenth Respondent (Eleventh Respondent in the Court @ quo) TELLUMAT (PTY) LTD Fifteenth Respondent (Twelfth Respondent in the Court a quo) NATIONAL ASSOCIATION OF Sixteenth Respondent MANUFACTURERS OF ELECTRONIC (Thirteenth Respondent in the Court a COMPONENTS (Second Grouping) quo) NOTICE OF MOTION: APPLICATION IN TERMS OF RULE 19(2) OF THE RULES OF THE CONSTITUTIONAL COURT KINDLY TAKE NOTICE that the applicant hereby applies for an order in the following terms: 4. Granting the applicant leave to appeal against the whole of the judgment and order handed down by the Supreme Court of Appeal on 31 May 2016 under case number 1039/2015, which is annexed as ‘B’ to the affidavit used in support of this application. 2. Directing that the costs of this application be costs in the appeal. 3. Granting the applicant such further andlor alternative relief as this Court considers appropriate in the circumstances.TAKE NOTICE FURTHER that the affidavit of YOLISA SANDRA PHAHLE will be used in support of this application TAKE NOTICE FURTHER that the applicant has appointed the address of its attorneys (as set out below) as the address at which it will accept service of all documents in these proceedings. TAKE NOTICE FURTHER that within ten days from the date on which this application is lodged, a respondent may respond to it in writing, in accordance with Rule 19(4)(a) of the Rules of this Court, indicating whether or not the application for leave to appeal is opposed, and if so the grounds for such opposition, DATED at SANDTON on this the 21° day of JUNE 2016. WERKSMANS ATTORNEY: Attorney for Applicant 155 — 5" Street ‘Sandown, Sandton, 2196 Private Bag 10015 Sandton, 2146 E-mail: aarmstrona@werksmans.com / jstockwell@werksmans,com Tel: (011) 535 8101 Fax: (011) 535 8601 Ref: A Armstrong / J Stockwell / MULT2300.3To: AND To: AND TO: AND TO: THE REGISTRAR CONSTITUTIONAL COURT OF SOUTH AFRICA 4 Hospital Street Constitution Hill Braamfontein E-mail: registrar@concourt.ora.za NORTON ROSE FULBRIGHT SOUTH AFRICA INC First Respondent's Attorneys 15 Alice Lane Sandton Tel: 011 685 8860 Email: aslam moosajee@nortonrosefulbriaht.com Ref: Mr Moosajee/ETV1 GILDENHUYS MALATJI ATTORNEYS Fifth Respondent's Attorneys Katherine & West Building, 114 West Street Sandton Tel: 012 428 8683 E-mail : hchaane@amine.co.za/ kmokaba@aminc.co.za Ref, H Chaane/km/01743660 NCUBE INCORPORATED ATTORNEYS Ninth Respondent's Attorneys Rosebank Terrace North 25 Sturdee Avenue Rosebank Tel: 011 880 4204 E-mail: Bafana@neubeinc.co.za Ref: Mr B NoubeAND TO: AND TO: NORTONS INCORPORATED Second to Fourth Respondents’ Attorneys: Daisy Street Office Park 135 Daisy Street Sandton Tel; (011) 666 7560 E-mail: anthony@nortonsinc.com/ Ann@nortonsine.com Ref: Mr A Norton / Ms A Ashworth MOTA ATTORNEYS Sixteenth Respondent's Attorneys 3rd Floor, Regus Building clo January Masilela & Amarand Avenue Waterkioof Glen, Extension 2 Pretoria Tek: (012) 940 1249 Email: martin. mota@mota-attorneys.co.zaIN THE CONSTITUTIONAL COURT OF SOUTH AFRICA In the matter between: ELECTRONIC MEDIA NETWORK LTD and ety (PTY) LTD NATIONAL ASSOCIATION OF MANUFACTURERS OF ELECTRONIC COMPONENTS (First Grouping) 8.0.S SUPPORT PUBLIC BROADCASTING COALITION MEDIA MONITORING AFRICA MINISTER OF COMMUNICATIONS. MINISTER OF TELECOMMUNICATIONS AND POSTAL SERVICES INDEPENDENT COMMUNICATIONS AUTHORITY OF SOUTH AFRICA UNIVERSAL SERVICE AND ACCESS AGENCY OF SOUTH AFRICA SOUTH AFRICAN BROADCASTING CORPORATION SOC LIMITED ASSOCIATION OF COMMUNITY TELEVISION — SA SOUTH AFRICAN COMMUNICATIONS FORUM SENTECH SOC LTD }039/2015 GP CASE NO: 26166/2015 Applicant First Respondent (First Appellant in the Court a quo) Second Respondent (Second Appellant in the Court a quo) ‘Third Respondent (Third Appellant in the Court a quo) Fourth Respondent (Fourth Appellant in the Court a quo) Fifth Respondent (First Respondent in the Court a quo) Sixth Respondent (Second Respondent in the Court a quo) Seventh Respondent (Third Respondent in the Court a quo) Eighth Respondent (Fourth Respondent in the Court a quo) Ninth Respondent (Fifth Respondent in the Court a quo) Tenth Respondent (Seventh Respondent in the Court a quo) Eleventh Respondent (Eighth Respondent in the Court a quo) Twelfth Respondent (Ninth Respondent in the Court a quo) ai)CELL ¢ (PTY) LTD Thirteenth Respondent (Tenth Respondent in the Court @ quo) TELKOM SOC LTD Fourteenth Respondent (Eleventh Respondent in the Court a quo) TELLUMAT (PTY) LTD Fifteenth Respondent (Twelfth Respondent in the Court a quo) NATIONAL ASSOCIATION OF Sixteenth Respondent MANUFACTURERS OF ELECTRONIC (Thirteenth Respondent in the Court a COMPONENTS (Second Grouping) quo) AFFIDAVIT: APPLICATION IN TERMS OF RULE 19(2) OF THE RULES OF THE CONSTITUTIONAL COURT |, the undersigned, YOLISA SANDRA PHAHLE do hereby make oath and state that: 1. Lam the Chief Executive Officer of the applicant, Electronic Media Network Ltd (M-Net), at Multichoice City, 144 Bram Fischer Drive, Randburg 2. | am duly authorised to bring this application and depose to this affidavit on behalf of M-Net.3. The facts deposed to in this affidavit are to the best of my knowledge true and correct and, save where the context indicates otherwise, fall within my personal knowledge. Where | make legal submissions, | do so on the advice of M-Net's legal representatives. THIS APPLICATION 4, This application concems a policy amendment made by the Minister of Communications (the Minister) regarding five million set-top boxes (STBs) which the government has decided to subsidise in full to ensure that the poorest South African television households will be able to receive free-to- air broadcast signals after the completion of the process known as ‘digital migration’, whereby viewers of terrestrial television will migrate from receiving analogue broadcasts to receiving them in digital form. 5. The Broadcasting Digital Migration Policy (the BDM Policy) was published on 8 September 2008 in terms of section 3(1) of the Electronic Communications Act, 36 of 2005 (the ECA) to ‘inform and guide’ the digital migration process.On 18 March 2015 the Minister amended the BDM Policy to provide that the STBs which the government will subsidise in full (the subsidised STBs) will contain a ‘control system’ which will not incorporate the capability to decrypt encrypted signals (encryption capability). The relevant clause, clause 5.1.2(B)(a) of the BDM Policy, reads as follows: “The STB contro! system for the free-to-air DTT STBs shall...not have capabilities to encrypt broadcasting signals for the subsidised STBs”. It is this amendment (the encryption amendment) which is the subject of the appeal which M-Net seeks leave to bring to this Court In an application brought in the Gauteng Division of the High Court, Pretoria (the High Cour), the first respondent, e.tv (Pty) Ltd (e.tv), sought the review and setting aside of the encryption amendment on various grounds under the Promotion of Administrative Justice Act, 3 of 2000 {PAJA) and the constitutional principle of legality (the review application). In a judgment and order handed down on 24 June 2016 (the High Court decision, annexure ‘A' to this affidavit), the High Court dismissed the review application with costs.10. "1. 12, 10 Following an appeal against the High Court decision by e.tv and three of the respondents in the review application, the Supreme Court of Appeal (the SCA) on 31 May 2016 handed down a judgment and order (the SCA decision, annexure ‘B' to this affidavit) in which it upheld the appeal and replaced the High Court's order with an order in the following terms: “(a) The application is granted with the costs of two counsel where so employed. (b) Clause §.1.2(8)(a) of the Digital Migration Policy is declared unlawful and invalid and is accordingly set aside.” M-Net seeks leave to appeal to this Court against the whole of the SCA decision. ‘The parties to this application were parties to the review application before the High Court and the appeal before the SCA (the SCA appeal). 12.1, The applicant, M-Net, a subscription terrestrial television broadcaster which opposes the inclusion of encryption capability in the subsidised STBs, was the sixth respondent in the review application and the SCA appeal. 512.2. 12.3. 12.4, 12.6. 1 ‘The first respondent, e.tv, a commercial free-to-air terrestrial television broadcaster which (alone among South African free-to-air broadcasters) wishes to encrypt its free-to-air broadcast signals and seeks the inclusion of encryption capability in the subsidised STBs, was the applicant in the review application and the first appellant in the SCA appeal. The second respondent, a grouping of the National Association of Manufacturers of Electronic Components (NAMEC) which supports the inclusion of encryption capability in the subsidised STBs (the NAMEC first group), was a respondent in the review application and the second appeliant in the SCA appeal. The third and fourth respondents, $.0.S Support Public Broadcasting Coalition (SOS) and Media Monitoring Africa (MMA), respectively a civil society coalition and a non-profit organisation which have lobbied for the inclusion of encryption capability in the subsidised STBs on public interest grounds, were respondents in the review application and, respectively, the third and fourth appellants in the SCA appeal The fifth respondent is the Minister, who effected the encryption amendment concerned in this appeal and was the first respondent in the review application and the SCA appeal,13. 14. 12 12.6. The ninth respondent is the South African Broadcasting Corporation, (the SABC), a public free-to-air terrestrial television broadcaster which does not support the inclusion of encryption capability in the subsidised STBs and which was the second respondent in the review application and the SCA appeal. 12,7. The sixteenth respondent, a grouping of NAMEC which is opposed to the inclusion of encryption capability in the subsidised STBs (the NAMEC second group), was a respondent in the review application and the SCA appeal. 12.8. The remaining respondents were respondents in the review application which elected to abide the outcome of the review application, | set out in what follows the key findings of the SCA, the scope of the appeal for which leave is sought, and the grounds on which M-Net seeks to appeal the SCA decision, | submit, for reasons which will follow, that the appeal raises important constitutional matters, that it is in the interests of justice that the appeal be heard by this Court, and that M-Net has good prospects of success in such an appeal | | |13 THE SCA FINDINGS 15. ‘The SCA upheld the appeal before it on all three grounds on which the appeliants contended that the eneryption amendment, as an exercise of public power, was reviewable under the constitutional principle of legality, namely — 15.1, that the Minister should have consulted with interested persons and with the Universal Service and Access Agency of South Africa (USAASA) before making the encryption amendment, and that her failure to do so rendered the amendment procedurally irrational and unlawful (the procedural finding); 15.2. that the encryption amendment was substantively irrational because (a) _ the Minister's objective was to allow free-to-air broadcasters the freedom to encrypt their signals, and the amendment made it impossible for them to do so; and (b) the Minister was confused about the effect of the encryption amendment because her answering affidavit contained contradictory statements that (i) there would be no encryption of subsidised STBs; and (ji) e.tv could investigate the possibility of encrypting its broadcast signals ‘through the government subsidized STBs' (the rationality finding); and16. 17. 18, 14 15,3, that the encryption amendment was ultra vires because the Minister, by using the words ‘shall not have’, purported to make a binding determination when she did not have the power to do so (the lawfulness finding), ‘On the papers filed in the review application, there was a factual dispute on the question whether or not the encryption of free-to-air broadcast signals is required in order for free-to-air broadcasters to be able to obtain high- definition content, and thus compete effectively. The contention that encryption is required for this purpose was the cornerstone of e.tv’s arguments regarding the importance of the review application, its right to be consulted, and the rationality of the encryption amendment. The Minister, the SABC, and M-Net denied that eneryption is required for this purpose, and furnished in support of their denial evidence that the majority of free-to-air broadcasters internationally do not encrypt their broadcast signals, and that leading programme suppliers do not require encryption of their programmes.19. 15 (Their evidence also canvassed the far-reaching adverse implications of including encryption capability in the subsidised STBs, which include: (a) significant initial and ongoing costs for government and consumers and, (b) most pertinently, the permanent dependence of South African consumers on STBs, which were intended to be an interim solution and a temporary feature of broadcasting in South Africa until such time as all viewers have digital television sets.) In the SCA decision Lewis JA noted thet this was not an issue which it was necessary to determine,’ but nevertheless accepted that encryption is required for free-to-air broadcasters ‘to access high definition content that can compete with the pay-television broadcasts'.* This factual finding (the encryption finding) impacted on the SCA’s reasoning in respect of both the procedural finding and the rationality finding SCOPE OF THE APPEAL 20, M-Net seeks leave to appeal against the whole of the SCA decision, specifically the procedural finding, the rationality finding, the lawfulness finding (the principal findings) and the encryption finding. The grounds on which it does so are set out below. * See paras 7 and 12 of the SCA decision * Para 80 of the SCA decision 1016 GROUNDS OF APPEAL The encryption finding 21. | deal first with the encryption finding, as it was the factual premise for key aspects of the SCA’s reasoning and impacted in important respects on the principal findings. 22. The SCA found that - 22.1. once the analogue signal is switched off, free-to-air broadcasters will not be able to encrypt their signals and all those with television sets that do not have STBs with encryption ability ‘will not be able to access high-definition content that can compete with the pay- television broadcasts’ 22.2. the effect of the encryption amendment is that ‘high-quality television will not be available to the poorest in our society, and competition will be stifled’.* * Para 80 of the SCA decision * Para 50 of the SCA decision 1 cz23, 17 On the papers before the SCA, the Minister, the SABC and M-Net denied that encryption is required to enable free-to-air broadcasters to obtain high- definition content. M-Net furnished specific evidence that- 23.1 23.2. 23.3, the majority of free-to-air terrestrial television broadcasters worldwide (including the BBC, ITV, and Channel § in the United Kingdom, and PBS, ABC, NBC and CBS jn the United States) broadcast their signals unencrypted, and are nevertheless able to, and do, obtain high-definition television content from international studios and other sources; leading international programme suppliers (including CBS Studios International and the Walt Disney Company Limited) do not require encryption of their programmes on free-to-air terrestrial networks; and in most jurisdictions worldwide the free-to-air DTT STBs which have been introduced to the market have not contained encryption capability, 1224, 25. 26. 27. 18 The SCA erred in accepting the version of the appellants on this factual issue,® where it should have found that encryption is not required by free- to-air broadcasters to obtain high-definition content. e.tv sought to review the encryption amendment on motion proceedings, and was consequently bound by the Plascon-Evans rule, according to which disputes of fact in applications for final relief must be determined on the respondent's version.’ The SCA disregarded this rule in making the encryption finding | respectfully submit that the SCA erred in making the encryption finding, which ought to be corrected on appeal. Before | set out the grounds on which M-Net seeks to appeal against each of the principal findings, | deal with a conceptual error which | respectfully submit underpins the SCA's reasoning in respect of each of those findings. The error relates to the legal nature and effect of the BDM Policy. © While the NAMEC first group, SOS and the MMA, as respondents in the review application, supported e.tv's contentions on this issue, | am advised that their version must be taken to be the applicant's version for the purposes of applying the Plascon-Evans rule. * Plascon-Evans Paints Lid v Van Riebeeok Paints (Ply) Lid 1984 (3) SA 623 (A) at 634E-635C. 1319 The SCA’s approach to policy 28. _ In determining the substantive and procedural standards applicable to the encryption amendment, and in applying those standards, the SCA failed to appreciate the distinctive legal nature and effect of the BDM Policy, as compared with legislation and administrative action. 29. In the scheme of the ECA, a key objective of which is ‘to provide a clear allocation of roles and assignment of tasks between policy formulation and regulation within the ICT sector,” 29.1. the Minister's powers in respect of information and communications technology (ICT) matters are limited to the making of policy and the issue of policy directions; 29.2. the power to make regulations lies with the Independent Communications Authority of South Africa (ICASA), in accordance with the requirement in section 192 of the Constitution that broadcasting be regulated by an independent authority; and 29.3. USAASA has the power to make the decisions required to carry out its functions under Chapter 14 of the ECA. ” Section 24) of the ECA 1430. 31. 32. 33. 20 Policy made by the Minister in terms of the ECA has no binding legal effect, nor does it dictate any outcome. It is merely to be considered by ICASA and USAASA, as the case may be, in exercising their powers and performing their duties in terms of the ECA. Having no concrete or finite results, it is at most a precursor to administrative action. It is USAASA, the entity which has issued and awarded a tender for the manufacture of the subsidised STBs, which may determine whether or not these STBs will include encryption capability. ‘As will appear from what follows, the SCA assumed, erroneously, that the BDM Policy (and the encryption amendment) had a legal binding effect and impacted on rights. The SCA erred in finding that (a) the effect of the encryption amendment was that ‘encryption capability was dropped from the subsidized ST boxes® and ‘the subsidized ST boxes will not have encryption capability’."° The SCA’s failure to appreciate the allocation of powers under the ECA, and the nature and effect of policy made thereunder, impacted fundamentally on its reasoning in respect of the procedural finding, the rationality finding, and the lawfulness finding. ® Section 3(4) of the ECA ° Para 17 of the SCA decision Para 19 of the SCA decision 1621 The procedural finding 35. The SCA found that section 3(5) of the ECA required the Minister to consult with interested persons and with USAASA before making the encryption amendment and that, in any event, the constitutional principle of legality required such consultation. | respectfully submit that the SCA’s reasoning on both scores was flawed. Consultation requirement under the principle of legality 36, 37, ‘The SCA found that the Minister was required by the principle of legality ‘to consult the statutory bodies and all broadcasters with an interest in the digital migration process’. In so finding the SCA — 37.1. failed to appreciate the scope of the procedural rationality standard applicable to the formulation of ministerial policy, both under section 85(2)(b) of the Constitution and under section 3(1)(d) of the ECA; and 37.2. failed to distinguish among the procedural standards applicable to policy formulation as an exercise of executive power, and legislation and administrative action. ™ para 45 of the SCA decision 16 |38. 39, 40. A. 22 As this Court held in the case of Democratic Alliance v President of South Atrica and Others"? an executive decision will be reviewable for procedural rationality only if, considering the process as a whole, a particular step (a) bears no rational relation to the purpose for which the power was conferred; and (b) the absence of this connection ‘colours the process as a whole and hence the ultimate decision with irrationality’. This low threshold for validity, the Court pointed out, preserves for executive decisions their rightful role in a democratic society. '* The Minister's policy-making power under section 3(1)(d) of the ECA was conferred to enable the Minister to make non-binding, guiding policy on, among other things, issues falling within the broad category of ‘the application of new technologies pertaining to broadcasting services’. The BDM Policy was published to ‘inform and guide’ the digital migration process, and the encryption amendment was effected to stale a policy choice of government, namely to avoid additional costs to government arising from its prior policy decision to provide five million subsidised STBs. * 2013 (1) $A.248 (CC) para 37 S Democratic Alliance, above, para 42 742, 43, 44, 46. 23 4g This is not a purpose in the pursuit of which consultation was required as a matter of rationality. Neither ICASA nor USAASA is obliged to follow this policy choice in any decision within its powers. Nor were any rights affected or outcomes dictated by the BDM Policy or the encryption amendment. ‘An obligation to consult in respect of policy which is non-binding, and neither affects rights nor dictates any outcome, would undermine the flexibility and responsiveness which are integral to government's ability to meet the exigencies of the time, and defeat the rationale for the restraint required by the procedural rationality benchmark In any event, the second part of the test laid down in Democratic Alliance is not satisfied. It cannot be said, in respect of the encryption amendment, that the absence of consultation coloured the entire process and the ultimate decision. In Democratic Alliance this requirement was met where the mis-step was ‘wholly inconsistent with the end sought to be achieved’. It is respectfully submitted that this cannot be said of a failure to consult in respect of non- binding policy on a narrow, public resource-related issue. * Democratic Alliance, above, para 8946. 47. 48. 49. 24 In all these circumstances it is submitted that the Minister's decision to effect the encryption amendment without following a consultation process was not procedurally irrational. In finding otherwise, the SCA disregarded the fundamental principles set out in Democratic Alliance, and imported procedural standards which are applicable to legislation and administrative action, but not to policy such as the BDM Policy, essentially finding that this ‘seemed! to be ‘quintessentially a situation where a member of the Executive should be consutting on important matters of public concern’."® The Court’s reasoning, | respectfully submit, was based on at least the following errors. The SCA, while recognising that ‘[{here are of course differences between bylaws, administrative decisions and policies’, erroneously went on to state that nonetheless ‘the same principle underlies the requirement of publication of @ policy for comment: openness and accountability, the foundations of @ democratic State, require the participation of those affected." * Para 33 of the SCA decision. Emphasis added ‘© Para 37 of the SGA decision 19 |25 49 50. The SCA also found that ‘fwjhere a policy or policy amendment impacts on | rights (and in this case on powers and duties in the case of ICASA and USAASA) it is only fair that those affected be consulted’, failing to appreciate that (a) the encryption amendment does not impact on right and (b) an impact on ‘powers and duties’ is not a cognisable impact for the purposes of determining whether consultation is required. 51. The authorities from which the SCA purported to derive the principles of procedural rationality involved decisions which were distinguishable from the Minister's decision to effect the encryption amendment. 51.1. The decisions in Albuit v Centre for the Study of Violence and Reconciliation & Others,"® Democratic Alliance, and Minister of Home Affairs & Others v Scalabrini Centre & Others'® either impacted on rights or directed a specific outcome. 51.2. Kouga Municipality v Bellingan & Others” concerned a by-law passed by @ municipality and Earthlife Africa (Capo Town) v Director-General: Department of Environmental Affairs and Tourism & Another" involved a decision which amounted to admi action reviewable under PAJA. ¥ para 38 of the SOA decision £8 2010 (8) SA 283 (CC) 5 2013 (6) SA 424 (SCA) 2012 (2) SA.95 (SCA) *'2005(3) SA 186 (C)26 4 51.3. The English authorities R (on the application of Moseley) v Haringey London Borough Council”? and R v Brent London Borough Council, ex p Gunning” concerned decisions taken by local authorities which amounted to administrative action reviewable under the English common law. 52, _ | respectfully submit that the SCA erred in finding that procedural rationality required consultation in respect of the encryption amendment, and that the procedural finding on this basis ought to be corrected on appeal. 53. The principles enunciated in the SCA decision have far-reaching consequences for the manner in which government goes about policy formulation, and it is important that this Court clarify the matter. 54. In circumstances in which, in M-Net’s submission, procedural rationality does not require consultation in respect of policy such as the BDM Policy, | submit that section 3(5) of the ECA, in requiring consultation for the ‘issuing’ of policy, goes beyond what is required by the Constitution. This, as | explain in what follows, impacts upon its proper interpretation. 2 (014) UKSC 56 * (1985) 84 LGR 16827 Consultation requirement under the ECA 55, 56. 57. In accordance with the applicable principles of interpretation, section 3(5) of the ECA must be construed in its context and in accordance with the purpose of the ECA.* A key objective of the ECA is to distinguish between policy-making and rule-making functions in the ICT sector. As the South Gauteng High Court found in a 2012 application relating to STBs: “The primary object of the ECA is to provide for the regulation of electronic communications in the Republic in the public interest and for that purpose, inter alia, (0 provide a clear allocation of roles and assignment of tasks between policy formulation and regulation within the ICT sector’.”> Thus, as | have indicated, the ECA provides for: the making of policy and the issue of policy directions by the Minister; the making of regulations by ICASA; and decisionmaking by USAASA in terms of its powers under Chapter 14 of the ECA. This overall statutory scheme informs the interpretation of section 3(6). * Cool Ideas 1186 CC v Hubbard and Another 2014 (4) SA 474 (CC) para 28 ® o.tv (Ply) Ltd v Minister of Communications and Others Case No 34694/2012 para 2828 23 58. Section 3(5) must also be read in the context of the scheme set out in sections 3(5) to 3(8), which provide as follows: “(5) When issuing a policy under subsection (1) or a policy direction under subsection (2) the Minister- (a) must consult the Authority or the Agency, as the case may b and (0) must, in order to obtain the views of interosted persons, publish the text of such policy or policy direction by notice in the Gazetto- () declaring his or her intention to issue the policy or policy direction; (ii) inviting interested persons to submit written submissions in relation to the policy or policy direction in the manner specified in such notice in not less than 30 days from the date of the notice; () must publish a final version of the policy or policy direction in the Gazette, [Subs. (5) substituted by s. 3 of the Act 1/2014 w.e.f. 21 May 2014) (6) The provisions of subsection (5) do not apply in respect of any amendment by the Minister of a policy direction contemplated in subsection (2) as a result of representations received and reviewed by him or her after consultation or publication in terms of subsection @). (7) Subject to subsection (8), a policy direction issued under subsection (2)inay be amended, withdrawn or substituted by the Minister.59, 29 (8) Except in the case of an amendment contemplated in subsection (6) the provisions of subsection (3) and (5) apply, with the necessary changes, in relation to any such amendment or substitution of a policy direction under subsection (7).” In this scheme — 59.1. A distinction is drawn between a ‘policy’ and a ‘policy direction’. 59.2. A distinction is drawn between the ‘issue’, ‘amendment ‘withdrawat and ‘substitution’ of a policy direction, while in relation to a policy, only its ‘issue’ Is regulated. 59.3. The section 3(5) consultation requirements apply to - 59.3.1. the ‘issuing [of] a policy under subsection (1), where subsection (1) empowers the Minister to ‘make policies ‘on matters of national policy applicable to the ICT sector?” 59.3.2. _ the ‘issuing [of] a policy direction under subsection (2), where subsection (2) empowers the Minister to ‘issue policy directions’ to CASA or USAASA;”? and 2% Emphasis added. 2 Section 3(5) read with section 3(1) of the ECA ® Section 3(6) read with section 3(2) of the ECA. The consultation requirements do not apply to the issue of a policy direction under section 3(1A) of the ECA 2430 59.3.3, the ‘amendment or substitution of a policy direction’, save where such amendment is the result of representations received and reviewed by the Minister after consultation or publication in terms of section 3(6).7* 59.4. No consultation requirements are laid down for the amendment of a policy. 60. _ In finding that the ECA obliged the Minister to consult before effecting the encryption amendment, the SCA both disregarded and disrupted the scheme in sections 3(5) to 3(8). 61, The SCA noted ‘the ECA's silence on the requirement of consultation in respect of the amendment of the policy’° but found a duty to consult not in what was stated in the ECA, but (by default) in what was not stated in one subsection Section 3(8) read with section 3(6) of the ECA ® Para 45 of the SCA decision 2562, 63. 34 Finding it unnecessary to ‘strain at the construction of the word “issue” in section 3(5) (which the appellants contended and the respondents denied should be interpreted as encompassing amendments), Lewis JA considered section 3(6) in isolation and found that since section 3(6) exempts from the section 3(5) consultation requirements ‘only amendments to policy directions, made as a result of representations received, the ‘default position’ is that ‘policy amendments must be published for comment and there must be consultation about them’*" This construction is, with respect, insupportable. 63.1. It disregards section 3(8), in which the legislature made express provision for the application of the section 3(5) consultation requirements to amendments of policy directions, while making no such provision in respect of amendments to policy. 63.2. It renders section 3(8) superfluous and redundant insofar as it provides that the section 3(5) consultation requirements are applicable to policy directions, since on the SCA’s construction this is implicit in section 3(5). * Para 34 of the SCA decision 26 |65. 32 63.3. It further disrupts the legislative scheme by introducing a more rigorous standard for the amendment of policies than for the amendment of policy directions: policy amendments resulting from representations after consultation will not be exempted from the ‘section 3(5) consultation requirements, while the amendments of policy directions will. This is irrational in light of the nature and impact of policy directions under the ECA. 63.4. It amounts to a finding, by ‘reverse engineering’, that the word ‘issuing in section 3(5) encompasses amendments. The SCA should have found that in the scheme of sections 3(5) to 3(8), only amendments to policy directions require consultation. It is not reasonably possible, as the appeliants contended before the SCA, and as the SCA has accepted by default, to interpret the word ‘issuing’ in section 3(5) as meaning ‘amending’ in circumstances in which — 65.1. the legislature expressly used the words ‘amendment’ and ‘amended when it intended to regulate amendments to policy directions in sections 3(6), 3(7) and 3(6) of the ECA; a33 og 65.2. to render amendments to policy subject to the section 3(8) consultation requirements without upsetting the legislative scheme, the words ‘policy direction’ in sections 3(6), 3(7) and 3(8) must be supplemented to read ‘policy or policy direction’. This would involve the technique of ‘reading in’, which is permissible only upon a declaration of constitutional invalidity, and beyond the power of the court under section 39(2) of the Constitution; 65.3. the interpretation sought by the appellants would offend against the central constitutional principle of the separation of powers, which requires the Court to exercise caution in burdening the executive with procedural obligations; and 65.4, the interpretation for which the appellants contended finds no ‘support in the constitutional requirement of procedural rationality. In circumstances where section 3(5) goes beyond what the Constitution requires, there is no warrant for an expansive reading of the provision, 66, | respectfully submit that the SCA erred in finding that the ECA required consultation in respect of the encryption amendment, and that the procedural finding on this basis ought to be corrected on appeal.34 The rationality finding 67. 68, 69, 70, The encryption amendment was accompanied by another amendment which introduced clause §.1.2(C), which states that ‘individual broadcasters may at their own cost make decisions regarding encryption of content. The SCA found that the objective of clause 5.1.2(C) was defeated by the encryption amendment because the encryption amendment made it ‘impossible’ for e.tv to encrypt its broadcast signals. Lewis JA’s reasoning was as follows: “By procluding the subsidized ST boxes from having encryption capability the Minister has made it impossible for e.tv and other broadcasters to broadcast encrypted signals to television viewers who have subsidized ST boxes. This may place e.tv in breach of its license conditions. It is not possible for ¢.tv ~ or anybody else ~ to fit these ST boxes with encryption capability after manufacture. It would be required to manufacture additional ST boxes for the five million households that cannot afford them and distribute them at no charge. It cannot do that. The cost would exceed two years of its revenue, some R3 billion.” There are, | respectfully submit, three fundamental flaws in the SCA’s reasoning. First, the SCA conducted the ‘means and end’ exercise required by the rationality standard with reference to the purpose of clause 5.1.2(C) instead of the purpose of the encryption amendment itself. * Para 49 of the SCA decision 2971. 72. 73, 74, 35 The Minister's rationale for the encryption amendment was to avoid the additional costs to government (in terms of both financial and human resources) of incorporating encryption capability in the subsidised STBs. The encryption amendment is rationally connected to this purpose and no party has contended otherwise. Second, and in any event, the encryption amendment did not render it ‘impossible’ for free-to-air broadcasters to encrypt their broadcast signals. Here the SCA confused what is ‘impossible’ with what is ‘commercially unfeasible’ for e.tv. It is both technologically possible and legally permissible for free-to-air broadcasters to encrypt their signals. If free-to-air broadcasters cannot encrypt their signals at government's expense, their election not to encrypt due to the cost of furnishing their own STBs will be the result of a commercial decision, and not the encryption amendment. The SCA’s reasoning is permeated by the erroneous assumption (based upon its acceptance that encryption is required for free-to-air broadcasters to be competitive) that e.tv must be assisted to realise its commercial ambition of encrypting its broadcast signals. In its focus on this objective, the SCA disregarded the legitimate and publicly important rationale for the encryption amendment: the avoidance of unnecessary public expense. 3075. 76. 77. 78. 36 This leads to the third flaw in the SCA’s reasoning, which is a failure to distinguish between rationality review and review on the grounds of reasonableness. The SCA’s rationality finding is in essential respects based on its view that the encryption amendment was unreasonable, because it made it commercially unfeasible for e.tv to encrypt its signals and thereby achieve the (alleged) advantages of encryption - e1v’s ability to compete effectively, and the public's access to quality programming. Thus the SCA stated, in dealing with the substantive rationality of the encryption amendment, that “once the analogue signal is switched off, free-to-air broadcasters will not be able fo encrypt their signals and all those with television sets that do not have ST boxes with encryption capability will not be able to access high- definition content that can compete with the _pay-television broadcasts... The effect of the amendment is that high-quality television will not _be available to the poorest in our society, ani tition will be For reasons set out above, the SCA erred in making this factual finding, in circumstances where it was disputed by the respondents in the review application * Para 80 of the SCA decision 31 -379, 80. 81 82. 83, 37 in making a rationality finding based on the perceived unreasonableness of the encryption amendment, the SCA essentially substituted its own policy preference for the Minister's, In so doing it strayed outside of the boundaries of legality review and into the terrain of the executive, misconceiving the applicable review standard and disregarding the fundamental constitutional principle of the separation of powers. The SCA also found that the ‘irrationality’ of the encryption amendment was ‘exacerbated by the Minister's own misunderstanding of the effect of the amendment. ‘This finding was based on the contradiction between two statements in the answering affidavit filed on behalf of the Minister. On the one hand, it was stated that the subsidised STBs would not be able to decrypt encrypted signals because the government would not spend money to install encryption capability in those STBs. On the other hand, it was stated that e.tv could investigate the possibility of enerypting its broadcast signals ‘through the goverment subsidized STBs as long as it pays for it. Lewis JA stated: ‘The Ministers confusion as to the effect of the amendment shows its irrationality, and for that reason too it is in breach of the principle of legality and invalid’. ® 3284, 85. 86. 38 In so finding, the SCA failed to appreciate that the irrationality standard is an objective one. As this Court has explained, in making that point, “Otherwise a decision that received objectively, is in fact irrational, might pass muster simply because the person who took it mistakenly and in good faith believed it to bo rational. Such a conclusion would place form above substance and undermine an important Constitutional principle. ‘The converse must also hold. A decision which, received objectively, is rational, cannot be rendered irrational by an indication after the decision was made that the decision maker misunderstood its effect. This would render the rationality of a decision dependent upon whether or not the decisionmaker subsequently pronounced upon her or his understanding of it Ex post reasoning, it is submitted, should play no role in the determination of rationality | respectfully submit that the SCA erred in making the rationality finding, which ought to be corrected on appeal °* Para 61 of the SCA decision * Para 54 of the SCA decision * Pharmaceutical Manufacturers Association of SA and Another: in re ex parte President of the Republic of South Aftica and Others 2000 (2) SA 674 (CC) para 86 3339 The lawfulness finding 87. The lawlulness finding was based on two premises: first, that the encryption amendment had_binding legal effect; and second, that the Minister purported to make a binding determination. Neither premise is, with respect, sustainable. No binding legal effect 88. 89. In finding that the encryption amendment had a binding legal effect, Lewis JA said the following: “But the offect of tho encryption amendment, as the Minister states in response to the application, is that the government will not subsidise the costs of encryption. The subsidized boxes will have no such capability. That has the effect of requiring free-to-air broadcasters to procure ST boxes will encryption capability for the eight million households that rely on terrestrial television, It will not be able to recover the costs from the five million households that cannot afford them. That seems fo me to be a decision that has binding effect." In so finding the leamed judge disregarded the provisions and the scheme of the ECA, which accords the power to make binding decisions to ICASA and USAASA, and accords to the Minister only the power to make policy and policy directions which must be considered by ICASA or USAASA, as the case may be, in exercising their powers and functions under the ECA. ®” Para 60 of the SCA decision |40 The Minister did not purport to make a binding determination 90. ot. 92. 93, Lewis JA’s reasoning in finding that the Minister purported to make a binding determination was as follows: “In my view, Minister Muthambi has issued an edict. She has decreed that the subsidized ST boxes shail not have encryption capability. USAASA has said nothing on this score. It cannot make a financial decision that is not consonant with the policy. The Minister's decision does purport to bind. And that is borne out by the statements in the answering affidavit that say that goverment will not bear the costs of encryption and that if e.tv wishes to broadcast an encrypted signal it must provide the ST boxes to consumers at its cost. This reasoning is based on the flawed proposition that the Minister, by using the words ‘shal! not have’ in the encryption amendment, purported to make a binding decision. On a proper interpretation — considering the words used in their context and all relevant circumstances — the encryption amendment did not purport to create binding obligations. There is express recognition in the BDM Policy that it ‘provides the framework for digital migration’,°° was published ‘to inform and quide the digital migration process’,*° and aims to ‘establish a policy environment within which broadcasting digital migration is implemented’.** 3* Para 66 of the SCA decision % Clause 3.2 of the 2015 Policy, vol 1, p97. Emphasis added * Clause 3.2 of the 2015 Policy, vol 1, p98. Emphasis added. “ Clause 1.2.3(a) of the 2015 Policy, vol 1, p103. Emphasis added,94, 95, 96, 97, 98. 41 The words ‘will’ and ‘shall’ are also used interchangeably in the Policy, without any indication that the word ‘shall! connotes a binding decision rather than a policy determination.*® Itis evident from the answering affidavit fled on behalf of the Minister that the Minister was aware that she was making policy and not creating binding obligations. On all of these grounds the encryption amendment is distinguishable from the notice which in Minister of Education v Harris (a case relied upon by the SCA) was found to be a purported edict. In that case, the wording used in the notice was consistently peremptory; the objective of the notice was to extend a rule made under the Schools Act to independent schools;** and the Minister of Education did not deny that he had purported to create binding obligations. ‘As a matter of interpretational principle, furthermore, a court should not lightly conclude that an exercise of public power is illegal when there is a reasonable construction which supports its lawfulness. | respectfully submit that the SCA erred in finding that the encryption amendment was an edict and was therefore ulfra vires, and that the lawfulness finding ought to be corrected on appeal. © para 2, Executive Summary, 2016 Policy, vol 1, pp 100-104 #2001 (4) SA. 1297 (CC) “* Minister of Education v Harris, above, para 4420 7 LEAVE TO APPEAL 99. 100, 101 102, For all the reasons set out in this affidavit, | submit that M-Net has good prospects of success on appeal in respect of the principal findings and the encryption finding The appeal for which leave is sought concerns the legal nature and effect of ministerial policy, as an exercise of public power, and the nature and scope of the standards to which it is subject under the constitutional principle of legality. The procedural finding raises the issue of the reach of the procedural rationality benchmark, and the balance which must be struck between the constitutional values of accountability and openness, on the one hand, and on the other, the separation of powers and the fiexibility required for the exercise of executive power. Also pertinent to the procedural finding is the distinction between ‘reading down’ in terms of section 39(2) of the Constitution, and ‘reading in’ following a declaration of constitutional invalidity in terms of section 172(1) of the Constitution. * Minister of Education v Harris, above, para 5(a) —103, 104. 108, 108. 407, 43 The rationality finding raises the issue of the scope of substantive rationality review under the principle of legality, and in particular the boundary which must be drawn between rationality and reasonableness grounds. The lawfulness finding raises the question whether executive action may be rendered ultra vires by a choice of words alone. These are constitutional matters of manifest importance, impacting on the principle of the separation of powers, the role of executive decisions in a democratic society, and the extent to which the principle of legality may be broadened to encompass standards applicable to administrative action and legislation. The facts on which these issues turn concer South Africa’s digital migration, a process of significant public interest, and the STBs which government has decided to subsidise in the interests of ensuring access to terrestrial broadcasting by the five million poorest television households. | respectfully submit that in all these circumstances it is in the interests of justice that M-Net be granted leave to appeal against the SCA decision, and that the constitutional issues which such an appeal would raise be determined by this Court. 3844 39 WHEREFORE | pray for an order in terms of the Notice of Motion to which this affidavit is attached, spnoule I hereby certify that: 1 YOLISA SANDRA PHAHLE ‘The deponent acknowledged to me that: 4.1 she knows and understands the contents of this declaration; 4.2 she has no objection to taking the prescribed oath; 4.3. she considers the prescribed oath to be binding on her conscience, ‘The deponent thereafter utterad the words: "I swear that the contents ofthis declaration are true, so help me God" ‘The deponent signed this declaration in my presence at the address, set out hereunder on 2 June 2046, 1884 S-G (y7 J qin | | | | |