• Required signed audited financial statements
• Required the same name throughout all the documents submitted:  the registration certificate, Constitution, Articles and Memorandum of Association or Trust Deed …..

The NLB claimed that in the Claremont Methodist Church Social Impact Ministry, Sikhula Sonke applications, there was a lack of consistency in the use of the names, also a set of unsigned financial statements had been submitted in the ninth application.

Status of the DA’s Guidelines
The Judge decided to examine the stance adopted by the NLB that the applicants failed to comply with the criteria set out in the guidelines.  His view was that the DA had no statutory or regulatory power to make binding rules on applicants.  He also then outlined several applicable principles or rules contained in the legislation which ensure that organisations applying for funds are credible and financially secure. 
The advocate for the NGOs argued that the guidelines cannot be interpreted as peremptory rules imposed by the DA’s which have to be strictly obeyed.
The advocate for the NLB argued that any decision made by the NLB would have to be rational and “that is the end of the matter”
The Judge was of the view that the guidelines issued by the DA are non-legislative “guiding policies” and therefore cannot override, amend or be in conflict with the relevant legislative provisions.  He also expressed the view that such guidelines set a useful purpose to enable the DA’s to apply some measure of uniformity when considering applications for funding.  He also referred to the fact that the Minister as at that time had not published regulations dealing with the criteria.
(Note:  The Minister has done so subsequently in July 2010.)

CONSIDERATION OF THE UNSUCCESSFUL APPLICATIONS
Audited Financial Statements
The NLB had rejected the seventh application as it had not been “audited”.  The financial statements had not been signed by an auditor but by a Fellow of the Institute of Management Accountants.  The Judge found that the NLB had applied this rule inconsistently.

Inconsistent Name
Even the Advocate of the NLB conceded that this refusal was reviewable and the judge found that the NLB had clearly failed to apply its mind to this application.

Memorandum and Articles of Association
The applicant did not submit its Memorandum and Articles of Association but its Certificate of Incorporation and argued that the NLB caused confusion by the inarticulate description of the requisite supporting documents.  Both the applicant and its legal representative had however submitted the Articles of Association.  The NLB wanted to satisfy itself that the organisation actually had charitable purposes.
The Judge found that the applicant had supplied what was required and found that the NLB had committed three reviewable errors:
a. an error of law
b. it was swayed by irrelevant considerations
c. it failed to consider other documentation filed.

Only one set of financials filed
The applicant claimed that two sets of financials had been submitted.  The NLB claimed entirely different reasons for refusal that the financials were not signed by an independent accounting officer, that the name of the auditor was not specified and there was no proof of the accounting officer’s present registration.  The judge quotes a judgement that these were second thoughts designed to remedy an otherwise factual error.

Misjoinder
Subsequently, the NLB also claimed that it was wrong for the applicants to refer to seven or eight applications in a single case.  The Judge found that there was no question of a misjoinder.  But in fact it was a tactic employed by the Applicants.

Costs
The parties also argued the costs in the matter.

Institutional Disarray
The Judge agreed with the Advocate for the NLB that there is not sufficient material before the court to conclude that institutional disarray exists at the NLB.  He concluded however that he would fail in his duty if he did not express reservations about the functioning of the NLB.  He noted that organisations are being denied the opportunity to deliver social services, and it is unacceptable that they should wait long periods to access needy funds.  He conceded that the NLB had to ensure that there were no fraudulent applications.  But he failed to understand why in an era of transparency where fair and administrative action is entrenched why NGOs had to partake in a “game of administrative snakes and ladders “.

The Order

1. The Judge set aside the NLB’s refusal to fund three of the applications made to it.
2. Ordered the NLB to reconsider the three applications and make decisions within 60 days of the order.
3. That if the NLB declines to grant any of the applications, it should provide the unsuccessful application(s) with reasons for the refusal in the communication of its decision.
4. The NLB should bear the costs of this suit.

Summary prepared by
Phiroshaw Camay
Co-operative for Research and Education
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Read more on the NLDTF here:
http://www.forum.org.za/Lobbying-for-Changes-to-the-Lotterys-Fund
http://www.forum.org.za/Gauteng-NGOs-challenge-the-Lottery
http://www.forum.org.za/CBOs-and-the-NLDTF
http://www.forum.org.za/Funding-Workshops-for-CBOs-in-Limpopo

http://www.forum.org.za/The-Forums-Position-on-the-National-Lottery-Fund
http://www.forum.org.za/Summary-of-Resolutions-NWF-Policy-Positions-October-2009

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