Govan Mbeki Municipality v New Integrated Credit Solutions (Pty) Ltd (121/2020) [2021] ZASCA 34; [2021] 2 All SA 700 (SCA); 2021 (4) SA 436 (SCA) (7 April 2021)

Govan Mbeki Municipality v New Integrated Credit Solutions (Pty) Ltd (121/2020) [2021] ZASCA 34; [2021] 2 All SA 700 (SCA); 2021 (4) SA 436 (SCA) (7 April 2021)

The Supreme Court of Appeal held that the contract between Govan Mbeki Municipality and New Integrated Credit Solutions (Pty) Ltd was unconstitutional and invalid due to egregious non-compliance with procurement regulations and constitutional imperatives. The inclusion of a 2.5% commission for debts younger than 60 days was not subjected to a competitive bidding process, lacked demonstrable benefits, and was unfair to other bidders. The municipality's delay in seeking self-review was unreasonable and not overlooked, but the court was compelled to declare the contract invalid. Applying section 172(1)(b) of the Constitution, the court granted a just and equitable remedy: the contract was...

Citation
[2021] ZASCA 34
Parties
Appellant: Govan Mbeki Municipality; Respondent: New Integrated Credit Solutions (Pty) Ltd
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
7 April 2021
Case Number
121/2020
Procedural Posture
Civil Appeal / Appeal From the Mpumalanga Division of the High Court, Middelburg
Outcome
Appeal and cross-appeal succeed only to the extent reflected in the substituted order. No order as to costs.
Judges
Navsa, Dambuza, Mocumie, Kgoele, Goosen
Legal Topics
Public Procurement, Municipal Supply Chain Management, Delay in Self Review, Just and Equitable Remedy, Contract Invalidity, Accrued Rights
Constitutional Law Administrative Law Commercial and Corporate Public Procurement Municipal Supply Chain Management Delay in Self Review Just and Equitable Remedy Contract Invalidity +1 more

Case Brief

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Parties

Govan Mbeki Municipality

Appellant

New Integrated Credit Solutions (Pty) Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal From the Mpumalanga Division of the High Court, Middelburg

Legal Issues

  1. 1 Whether the debt management services contract between Govan Mbeki Municipality and New Integrated Credit Solutions (Pty) Ltd was unconstitutional and invalid for non-compliance with procurement regulations and constitutional imperatives.
  2. 2 Whether the delay by the municipality in seeking self-review should be overlooked.
  3. 3 Whether a just and equitable remedy should preserve accrued rights under the contract despite invalidity.

Ratio Decidendi

The Supreme Court of Appeal held that the contract between Govan Mbeki Municipality and New Integrated Credit Solutions (Pty) Ltd was unconstitutional and invalid due to egregious non-compliance with procurement regulations and constitutional imperatives. The inclusion of a 2.5% commission for debts younger than 60 days was not subjected to a competitive bidding process, lacked demonstrable benefits, and was unfair to other bidders. The municipality's delay in seeking self-review was unreasonable and not overlooked, but the court was compelled to declare the contract invalid. Applying section 172(1)(b) of the Constitution, the court granted a just and equitable remedy: the contract was...

Court Disposition

Appeal and cross-appeal succeed only to the extent reflected in the substituted order. No order as to costs.

Orders

  • The contract for the provision of debt management services concluded in September 2015 is declared unconstitutional and invalid but is set aside only in relation to recovery by the defendant of the commission of 2.5% in respect of debts younger than 60 days, so as to preserve the accrued rights of the defendant as...
  • The defendant is not precluded from recovery of the commission of 16.5% on debts older than 60 days in the amount calculated by the arbitrator, Justice Harms.