National Health Laboratory Service v Afrirent (Pty) Ltd (68231/17) [2020] ZAGPPHC 417 (21 August 2020)

THE HIGH COURT OF SOUTH AFRICA GAUTENG, PRETORIA

JUDGMENT

Reportable

Case No: 68231/17

In the matter between:

NATIONAL HEALTH LABORATORY SERVICE

APPLICANT

And

AFRIRENT (PTY) LTD

RESPONDENT

Neutral citation: National Health Laboratory Service v Afrirent (Pty) Ltd (6823/2017) [2020] ZAGP (21 August 2020)

Coram: Hughes J

Heard: 24 April 2020

Delivered: 21 August 2020

Summary: Administrative Law – review of own award – declaration sought of invalidly and the setting aside of applicant’s

own award – declaration that subsequent contracts concluded are invalid and are to be set aside – legality review - delay - section 172(1)(a) and (b) of the Constitution – just and equitable relief.

ORDER

(a) The applicant’s decision to award tender RFP001/15/16 for an amount of R72 127 790.42 (inclusive of vat) on 26 August 2016 is reviewed and declared constitutionally invalid.

(b) The subsequent contracts concluded, being: A Service Level Agreement of 13 October 2016, an Addendum E on 30 November 2016 and the Master Rental Agreement on 13 December 2016 are declared constitutionally invalid.

(c) The order of constitutional invalidity in (a) and (b) above does not have the effect of divesting the respondent of any rights it would have been entitled to under the awarding of the tender and the subsequent contracts, but for the declaration of invalidity.

(d) The applicant is ordered to pay the costs of the respondent such costs to include the costs of counsel.

Hughes J

Introduction

[1] On 26 August 2016 the applicant awarded the respondent a tender under contract RFP001/15/16, in terms of which, the applicant leased motor vehicles from the respondent. The contract was for a period of five years and the amount awarded for the rendering of such services was R72 127 790.42.

[2] Pursuant to the award, a Service Level Agreement (SLA) was concluded on 13 October 2016 and the Addendum thereto on 30 November 2016. The Master Rental Agreement was concluded on 13 December 2016.

[3] The applicant seeks to review and set aside the awarding of the tender and the aforesaid contracts. This review was initially launched in terms of Promotion of Administrative Justice Act, 3 of 2000 (PAJA) read with section 53 of the Uniform Rules of Court. Notably the review was brought way after the prescribed 180 days prescribed by section 7(1) of PAJA. The applicant sought an extension of the 180-day period,[1] alternatively condonation for filing the review out of time.

[4] It transpired that before the respondent filed its answering affidavit the applicant amended the basis upon which it sought the review by filing a supplementary founding affidavit. Supplementation was that the applicant, in the alternative, sought the review based on the principle of legality and section 217 of the Constitution of the Republic of South Africa, 1996. According to the applicant, the supplementation was necessary in light of the pronouncement of the Constitutional Court in State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited.[2] As is sought by the applicant in this case Gijima also concerned an organ of state seeking to review its own decision in awarding a tender.

[5] The crisp basis upon which the applicants seek to review its own decision is that there was lack of the requisite authority to approve the award of the tender and conclusion of the subsequent contracts. On the other hand, the respondent opposes the application on the premise that there was indeed the relevant authority to both award the tender and conclude the contracts.

[6] The applicant is a juristic person listed as a public entity in terms of schedule 3 of the Public Finance Management Act, 1 of 1999 (PFMA). Hence the applicant during the course of procurement of services has to give effect to section 217 of the Constitution. In that, when procuring services as a public entity it has to ensure that fair, equitable, transparent, competitive and cost-effective principles are adhered to. Failure to comply results in the procurement process being declared invalid, unlawful and not within the prescripts of the Constitution. The aforesaid in this instance ought to be read with section 51(1)(a)(iii) of the PFMA[3], which requires accounting authorities of a public entity to ensure that the procurement or provision system is fair, equitable,

transparent, competitive and cost-effective.

The Relief sought in the Notice of motion

[7] I set out below the relief sought by the applicant as it becomes pertinent further in the judgment. The relief in the notice of motion filed with the registrar on 4 October 2017 was coached as follows:

‘1. The period of 180 days prescribed in section 7(1) of the Promotion of Administrative Justice Act, 3 of 2000 is extended to permit the determination of this application, alternatively, the late institution of this application is condoned;

2. Reviewing and setting aside the following:

2.1 the decision of the chief executive officer of the applicant taken on or about 23

August 2016 to award a tender to the respondent under contract number

RFP001/15/16, which was communicated to the respondent by letter dated 26

August 2016;

2.2 the service level agreement concluded by the applicant, represented by the chief

executive officer, and the respondent on 13 October 2016;

2.3 the addendum concluded by the applicant and the respondent on 30 November

2016; and

2.4 the master rental agreement concluded by the applicant, represented by the chief

executive officer, and the respondent on 13 December 2016.

3. Ordering the respondent to pay the costs of this application, including costs of two counsel, should respondent oppose the application.

4. Further and/or alternative relief.’

The case of the applicant

[8] The tender as mentioned above was awarded on 23 August 2016 and the respondent was notified thereof on 26 August 2016. The tenders

received were evaluated and adjudicated upon before it was eventually awarded to the respondent. The applicant explains that as a result of the enforcement of section 217 of the Constitution and section 51(1)(a)(iii) of the PFMA, the applicant was obliged to enforce and maintain a Supply Chain Management Policy (SCM policy). In terms of section 49(2) (a) of the PFMA such responsibility falls within the realm of the Board of Directors, who are the accounting authority[4], so the applicant contends.

[9] In terms of the applicant’s SCM policy, as at May 2016 when the tender was awarded to the respondent, the conditions and limitations to comply with in the procurement and award of tenders was exclusive to the Board and not the Chief Executive Officer (CEO). Further, the applicable SCM policy was that the award of any tender in a competitive tender process of procurement to the value of five

million Rands had to be approved by the Board before it is awarded and this was not disputed by the respondent. The applicant’s

version is that the tender awarded to the respondent far exceeded five million Rands, but approval thereof was only obtained from the CEO and not from the Board, as required by the SCM policy.

[10] The applicant contends that the CEO did not have the authority to grant the tender without seeking the approval and adoption thereof from the Board in terms of the SCM policy. Thus, the conduct of the CEO was in contravention of section 57(d) of the PFMA, which requires officials of the applicant including the CEO to comply with the PFMA. This would include delegations or instructions in terms of section 56(2)(a) and (c)[5] of the PFMA, so they argue. The applicant further argues, that any delegation to the CEO was subject to the limitations and conditions imposed by the SCM policy. This would include that in respect of the limitations of procurement and tender process applicable to those tenders which are valued at or above five million Rands, requiring the approval of the Board prior to being awarded. Hence the applicant submits that the contracts arising thereof would also be contrary to the SCM policy, absent the mandate by the Board.

The case of the respondent

[11] On the other hand, the respondent raised some point in limine. Firstly, it contends that the deponent to the applicant’s affidavit does not have knowledge of the facts deposed to as he was not involved in the process of adjudication and awarding of this tender. In addition, no confirmatory affidavit has been filed by someone who was actually involved in the process of this specific tender. Thus, argues the respondent, the facts deposed to in the affidavit are hearsay. Second, the applicant ought to have launched this review application timeously and has failed to do so. I propose to deal with the points in limine raised and the defence of the respondent below.

[12] The respondent’s case is simply that the CEO’s authority to award the tender rests in Clause 15.4.4(i) of the SCM policy read with the delegations of authority of the applicant. Clause 15.4.4(i) states as follows:

‘(i) The Bid Adjudication Committee shall consider the BEC [Bid Evaluation Committee] report and recommendations and make a final award in line with the Delegations of Authority.’

[13] In respect of the lease transaction the respondent contends that in terms of Treasury Regulation 13.2.4 authority is given to an

accounting officer,[6] who in this instance is the CEO, to enter into operating leases on behalf of the public entity. Treasury Regulation 13.2.4 reads as follows:

‘The accounting officer of an institution may, for the purpose of conducting the institutions business, enter into lease transactions

without any limitations provided that such transactions are limited to lease operations’.

[14] The respondent argues that if the court finds that the CEO was not authorised then this court should apply section 172(1)(b)[7] of the Constitution and craft a just and equitable remedy.

The lack of authority of the deponent re: the issue of the SCM and procurement being ‘hearsay’.

[15] The respondent argues that the deponent is a Company Secretary of the applicant and thus cannot speak to the issue of procurement. Further, the deponent does not have the authority to speak to any issue related with the SCM as he was not involved in the evaluating or awarding of the bid. In addition, no confirmatory affidavit has been filed by those who were involved in these processes.

[16] The applicant argues that the deponent is the Company Secretary and as such he is a custodian of all Board records, inclusive of ‘the Board’s approval of SCM policies’ and their discussions of approvals and awarding of tenders including the conclusion of contracts arising therefrom.

[17] The respondent further argues that the failure to file the affidavits of those who had personal knowledge and were involved in the proceedings exacerbates the situation, especially so from those involved in the process leading up to the awarding of the tender.

[18] On the other hand, the applicant argues that the deponent has gone through lengths to set out those involved in the process and their role or positions in detail. In addition, a detailed explanation is advanced regarding the failure to attach confirmatory affidavits. In any event, the applicant points out that the explanation on the procurement policy advanced by the deponent is not at all contradicted by the respondent. Thus, the applicant contends that this could not be regarded as being hearsay.

[19] I am guided by the dicta in President of the Republic of South Africa and Others v M & G Media Ltd[8] where Cameron J for the minority stated:

‘[O]ne can gain personal knowledge… by experiencing it directly; by receiving a report that it happened (which is hearsay); or by deducing from other signs that it took place.[9]

The opportunity to acquire knowledge may emerge from the duties of the deponent and the office he or she occupies, as well as the seniority of the deponent within the office and his or her prior experience with similar activities or procedures within the office… The nature of the deponent’s office may therefore provide evidence that the deponent would, in the ordinary course of his or her duties, acquire personal knowledge of the information in question. In addition to the standard operating procedures of an office and the post occupied by a deponent proving a basis for alleging personal knowledge of certain facts, circumstances specific to the particular record at issue and the specific exemption claimed could support a deponent’s claim to personal knowledge.’[10]

[20] The applicant in these circumstances was forced to place reliance on hearsay evidence as he explains that some employees had left the employ of the applicant and some were still employed.

[21] In light of the above, in my view, even in the absence of the direct experience of the deponent, by virtue of the position he held and his explanation advanced on how he acquired the knowledge, this to me is sufficient to conclude that he had gained personal knowledge.

[22] Likewise, in Swifambo Rail Leasing (Pty) Limited v Passenger Rail Agency of South Africa[11] the Supreme Court of Appeal (SCA) condoned the absence of confirmatory affidavits in the face of a reasonable explanation for the non-ability to attain same when necessary, such as the case at hand. In that case the SCA was convinced that a reasonable

explanation was more than provided in the circumstances.

[23] As the applicant points out there is no contradiction by the respondent regarding the explanation advanced by the deponent on the procurement policy, thus this stands uncontested. In these circumstances, ‘whilst hearsay evidence is generally permitted in affidavits, where there is no reason to doubt the reliability of the allegations made, they are uncontested, and the deponent believes them to be true, they will be admissible.’[12]

[24] There was an attempt by the respondent to also rely on Rule 30 of the Uniform Rules of Court. This proposition does not stand as the failure to file a confirmatory affidavit in these circumstances does not constitute an irregular step as is envisaged by Rule 30 of the Uniform Rules of Court.[13] This is also evident from the fact that the respondent did not pursue such an application knowing full well it would have failed as in terms of the said rule such applications are not reserved for omissions but rather for positive steps to the proceedings that would bring the proceedings closer to finality.

[25] That being said the deponent is able to speak to these concerns raised by the respondent. In the circumstances, these points raised as regards the founding affidavit and the confirmatory affidavits have no merit and accordingly must fail.

The supplementary Founding Affidavit filed

[26] Initially the indulgence sought by the applicant was the extension of the 180-days period in terms of section 9 of PAJA, alternatively condonation. The pronouncement in Gijima then led to the filing of further papers. The applicant seeks that this court allows the filing of its supplementary founding affidavit.

The respondent opposes the relief sought and was at pains to point out that review proceedings ought to have been launched timeously, as the rights of the parties are affected.

[27] A court is not permitted to allow the admission of new evidence via a supplementary founding affidavit that clearly supplements the applicants case as the applicant stands and fall by the case it has made out in its founding papers.[14] However, a litigant is able to amend their pleadings up and till judgment. The court may in its discretion permit the filing of further affidavits in terms of rule 6(5)(e). To put this aspect to bed I refer to the dicta in Shepherd v Mitchell Cotts Seafreight (SA) (Pty) Ltd where the court held that ‘…the general rule that in motion proceedings a party has to make out his case in the Founding Affidavit and may not

introduce new matters in the Replying Affidavit is not absolute. This general rule would not find application where it is overridden by the court’s discretion and in exceptional circumstances. In Registrar of Insurance v Johannesburg Insurance Co Ltd, Hiemstar J said ‘since rules of procedure are made to facilitate litigation, they are always subject to the overriding discretion of the Court.’[15]

[28] In exercising this court’s discretion, it ought to be born in mind, that such discretion is exercised judiciously and not capriciously. The supplementation of the founding affidavit was as a result of the pronouncement in the interpretation of the law in Gijima, as already discussed above. That being so it was prudent for the applicant to abandon the PAJA basis and proceed on the principle of legality. The parties are entitled to attain finality regarding this matter. In order to facilitate that such finality is attained, it is in the interest of justice that the supplementation of the founding affidavit be permitted. None of the parties are prejudiced by this court exercising its discretion to allow the supplementation of the founding affidavit. In the circumstances of this case, I would have exercised my discretion judiciously.

The delay

[29] The respondent contends that by January/February 2019, after the tender was awarded in August 2016, the applicant received information from a whistle blower advising that the tender was not granted according to due process and procedures in terms of section 217.

[30] It is trite that a review application ought to be brought within a reasonable time. This is so, as the decisions having awarded the tender remains in place, until reviewed or set aside. According to the applicant it was advised at the end of January or beginning of February 2017 that the tender awarded and the conclusion of the contracts were to be reviewed. Thus, the respondent argues that when the review was in fact initiated by the applicant a reasonable time to had come and gone.

[31] The respondent contends that the reason advanced for the delay in filing the review was not fully and adequately explained by the applicant. To this end the respondent places reliance on Van Wyk v Unitas Hospital and Another (Open Democratic Advice Centre as Amicus Curiae),[16] in that the applicant seeking condonation is required to explain fully and frankly, thus, demonstrating that the applicant has some prospects of success. In Van Wyk it was held:

‘[20] This Court has held that the standard for considering an application for

condonation is the interests of justice. Whether it is in the interests of justice to grant condonation depends on the facts and

circumstances of each case. Factors that are relevant to this enquiry include but are not limited to the nature of the relief

sought, the extent and cause of the delay, the effect of the delay on the administration of justice and other litigants, the reasonableness

of the explanation for the delay, the importance of the issue to be raised in the intended appeal and the prospects of success.

…

[22] An applicant for condonation must give a full explanation for the delay. In addition, the explanation must cover the entire period of delay. And, what is more, the explanation given must be reasonable. The explanation given by the applicant falls far short of these requirements. Her explanation for the inordinate delay is superficial and unconvincing. It amounts to this. During the entire period of approximately eleven months she was considering whether or not to appeal the decision of the Supreme Court of Appeal. During this period, she sought advice from a number of individuals whom she has not disclosed. In addition, she alleges that she does not have unlimited funds although she admits that this is not a compelling reason for the delay. She has not furnished any explanation as to why it took approximately

eleven months for her to decide whether or not to appeal. Nor has she furnished any explanation how she overcame her funding

difficulty.’ [Footnotes omitted]

[32] The respondent further contends that the applicant was informed, by a whistle blower as far back as January or early February 2017 that processes had not been adhered to in adjudication and awarding of the tender, and likewise, in the conclusion of the agreements between the applicant and respondent. According to the respondent as the applicant consulted with its counsel on the matter on 19 July 2017 when it was requested to supply further documents to pursue this matter, it should have done so earlier than 18 August 2017, as it did. It took the applicant an entire month to supply its counsel with the documents requested, bearing in mind, that the decision to award the tender was made on 23 August 2016 and communicated to the respondent on 26 August 2016, this was an entire year ago. The respondent argues that the explanation for the delay advanced by the applicant is lacking and does not constitute a full and detailed explanation there being an unexplained period totalling some 23 days.

[33] In dealing with the issue of delay this court has to take into consideration the applicant’s reasonable prospects of success in the main application and the time period that has elapsed. As regards the latter it must be established whether same was unreasonable and undue, and whether a full explanation has been proffered for such period. I propose to deal with the evolution of the case law on ‘delay’, then I will address the issue of delay in the context of the relevant circumstances of this case.

The law in respect of delay

[34] The requisite of a delay rule in review matters was considered in Khumalo and Another v MEC for Education, Kwazulu Natal[17] Skweyiya J set out two requirement when applying this rule. The first being a determination of whether the delay is unreasonable or undue, and if it is unreasonable, then the courts discretion comes into play, whether the delay should be overlooked in order for the review to be adjudicated.

[35] Time is of the essence, thus undue delay in the institution of a review is crucial as it ensures certainty and promotes legality. To this end Cameron J had this to say in Marafong City Local Municipality v AngloGold Ashanti Limited ‘The rule against delay in instituting review exist for good reason: to curb the potential prejudice that would ensue if the lawfulness of the decision remains uncertain. Protracted delays could give rise to calamitous effects. Not just for those who rely upon the decision but also for the efficient functioning of the decision making body itself.’[18]

[36] Whether to permit the delay, if such is reasonable was considered in Department of Transport v Tasima and the Constitutional Court said:

‘While a court ‘should be slow to allow procedural obstacles to prevent it from looking into a challenge to the lawfulness of an exercise of public power’, it is equally a feature of the rule of law that undue delay should not be tolerated. Delay can prejudice the respondent, weaken the ability of a court to consider the merits of a review, and undermine the public interest in bringing certainty and finality to administrative action. A court should therefore exhibit vigilance, consideration and propriety before overlooking a late review, received or otherwise.’[19]

[37] Then came along State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited where the court stressed that no discretion could be exercised in the air to overlook an inordinate delay without a basis for doing so. The foundation of such basis emerges from the facts placed before the court and what can be gathered from the objective facts.[20] It further emerged from Gijima that once the facts and the basis is examined and a negative result arises then that is the end of the enquiry.

[38] However, the application of section 172 of the Constitution has to be applied, especially so in constitutional matters. The interest of justice and the just and equitable argument of legality provides the court with a wide discretion to make a just and equitable order. This was acknowledged as such in Gijima, however, the Constitutional Court found that once invalidity was established, results in an application of section 172 (1)(a) and a declaration of invalidity must be made thus trumping the delay question.[21]

[39] The applicant then filed supplementary heads of argument and placed reliance on the dicta set out in Buffalo City Metropolitan Municipality v Asla Construction (Pty) Limited.[22] I do not propose to set out the entire dicta, as was done by the applicant. This case advocates that when dealing with a PAJA delay it differs from how one will deal with a principle of legality delay. This is so as the reasonableness of the delay is considered and if it is found to be unreasonable, one then looks at whether the interest of justice dictates that such unreasonable delay be overlooked.[23]

[40] That being said Buffalo City, makes it clear that once a ground for review has been established a court has no discretion but to declare the award of the tender and the contracts which follow invalid. However, where a review is brought on the basis of legality, the court has to be flexible in its approach, and as such no formal application for condonation is even required. The main consideration of the court, according to Buffalo City, is whether the court is able to overlook the delay in the prevailing circumstances.

[41] The difference between Buffalo City and Gijima is that the latter’s approach is only applicable ‘where the unlawfulness of the impugned decision is clear and not disputed’.

However, both cases concur that where the explanation of the delay is reasonable and justified then the merits of the review may be considered. The Buffalo City approach goes a step further in the face of an unreasonable delay in a legality review. It advocates that this cannot be evaluated in a vacuum and as such one looks at whether the delay can be overlooked by the court exercising its discretion to do so in the interest of justice. The exercise of such discretion will only come into play if there is a basis to do so on the available facts or objectively available facts.[24]

[42] Overlooking a delay is thus seen to be flexible in a legality review. Thus, in overlooking the delay one has to look at the nature of the impugned decision and in doing so this calls for an examination of the merits. Consideration of the nature and extent of the illegality may also be considered and as such this would require assessing the lawfulness of the contract under the principle of legality. A further factor that ought to be considered when overlooking the delay is the conduct of the applicant especially so where a State organ seeks to review its own decision. Lastly, delay may be overlooked if it is constitutionally compelled to do so in terms of section 172(1)(a) of the Constitution where a declaration of invalidity is imperative where conduct is found to be inconsistent with the Constitution.[25]

Is the delay unreasonable and undue?

[43] The award of the tender was made on 23 August 2016 though it was communicated to the respondent on 26 August 2016. Thus, the commencement date in the assessment of delay is 23 August 2016 when the tender was awarded, whilst these proceedings commenced on 21 September 2017. The applicant in explaining the delay states that it received information from a whistle-blower at the end of January or beginning of February 2017 that proper processes might not have been followed in the awarding of the tender.

[44] Mr Mphelo, the deponent to the applicant’s affidavits, having received this information only sought to communicate same to the chairperson of the finance committee on 28 February 2017. This is a month later and the explanation advanced is that he was studying the minutes of the Board to make a determination. I agree with the respondent that the explanation advanced for this delay period is not adequate at all. Mr Mphelo does not explain why it would have taken him an entire month to examine minutes of the Board which sit only quarterly. Clearly he has failed to take this court into his confidence by adequately explaining what difficulties, if any, he encountered which resulted in taking an entire month to go through minutes of the Board.

[45] There is yet another delay of 23 days which is unexplained by the applicants. A decision was taken to refer the irregularity to the Chief Procurement Officer of the National Treasury, but this meeting only took place on 24 March 2017 that being 23 days after the decision was taken. No explanation is advanced at all for that delay. Mr Mphelo here again fails to place the fact which are within his knowledge before this court.

[46] Having met with treasury on 24 March 2017 the information regarding the relevant contracts to be investigated is only transmitted to them on 11 May 2017. For this period of six weeks and six days yet again no explanation is at hand. There is also the delay in seeking legal advice, consulting with counsel and drafting application papers. This period spans from 8 May 2017, then an attorney was approached on 18 August 2017 when the final documents where provided to counsel. It took a month to attain these documents after the initial consultation with counsel on 19 July 2017. Strangely these documents were in safekeeping with either the CEO or CFO. No explanation for the month’s delay.

[47] The onus lies with the applicant to put forward facts at its disposal explaining fully the reasons for the delay[26] and if that is not done then the delay is unreasonable and undue.[27] In the circumstances set out above the applicant has failed to provide a full, detailed and honest explanation for the periods of delay. The applicant merely having received the information on possible irregularities dragged its feet and took its time to get the process in motion with no urgency whatsoever being displayed. Even though on its own version the respondent was benefiting millions from an irregular contract.

Can the delay be overlooked?

[48] In Allpay Consolidated Investment Holdings (Pty) Ltd & others v Chief Executive Officer, South African Social Security Agency &

others[28] the Supreme Court of Appeal sounding the following warning of which I am mindful:

‘There will be few cases of any moment in which flaws in the process of public procurement cannot be found, particularly where it is scrutinized intensely with the objective of doing so. But a fair process does not demand perfection and not every flaw is fatal.’

As alluded to by Lewis JA in Westinghouse v Eskom Holdings,[29] the aforesaid principle was not attacked when Allpay was adjudicated in the Constitutional Court.

[49] It is trite that the fundamental right to just administrative action is entrenched in section 33 of the Constitution.[30] That being said, the Constitutional Court in Gijima found that reference to ‘everybody’ in section 33 is not inclusive of the State, especially so when the State seeks to review its own decision.[31] Therefore, if section 33 does not cover the State in that specific instance it then stands to reason that PAJA is also not applicable, where an organ of State seeks to review its own decision. This is in keeping with that established in Gijima.[32]

[50] However, a State organ seeking to review its own decision is not without a remedy. This is so in terms of the rule of law. This is where the principle of legality comes into the fray, pertinently ‘it seems central to the conception of our constitutional order that the Legislature and Executive in every sphere are constrained by the principle that they may exercise no power and perform no function beyond that conferred upon them by law.’[33] The legality principle simply put is that in terms of the rule of law all State actions are to comply with the law, especially so the Constitution. The jurisdiction of a State’s action is limited to that power conferred upon it by law and no more.

[51] In addressing the breach of legality, the applicant submits that there were two jurisdictional factors which resulted in this breach, significantly so in the awarding of the tender and the conclusion of the subsequent agreements. The first of these being, that the CEO had failed to attain approval before he/she authorised the award of the tender and the conclusion of the contracts. This approval was supposed to be attained from the Board of Directors of the applicant, who are the accounting authority in terms of section 49(2) (a) of the PFMA, prior to the awarding of the tender. The second being that the awarding of the tender was not referred to Finance Committee Board (FinCom). The FinCom was responsible for vetting the tender process before the awarding of the tender. Thus, so argues the applicant, on a procedural level the award of the tender and the subsequent conclusion of the contracts in relation thereto are rendered irrational. I deal with these alleged jurisdictional breaches below.

[52] The applicant argued that the tender was unlawfully concluded as the CEO failed to attain approval from the Board of directors prior to awarding the tender in terms of the SCM policy. Notwithstanding the aforesaid, the tender breached the provisions of the PFMA sections 51(1)(a)(ii), 56(2)(a), 57(d) and section 217 of the Constitution. To this end the applicants state that through the SCM policies the Board delegated powers to the CEO however that delegation in terms of section 56(2) (a) and (c) of the PFMA did not divest the Board of is responsibility concerning the exercise of such delegation. Further, that such delegation is subject to limitations and conditions imposed by the Board. The crux of this argument is that the CEO was bound by the limitations imposed by the Board under the SCM policy as regards the amount he was authorised to expend without prior authority of the Board.

[53] At the time that the tender and the contracts were concluded the value there was a limit on the value that the CEO could contract without the approval of the Board. This was an amount of R5 000 000. 00, having followed the correct procurement process in term of section 217. It must be stated that the previous SCM policy in terms of clause 5.11.2.1 made provision for transactions to the value of R15 000 000.00 instead. Anything over these amounts had to be referred to the Board for approval. Notably, the current tender in question is valued at R72 127 790.42. Hence, the applicant argues that under both SCM policies the CEO was obliged to get the prior approval of the Board before awarding the tender and concluding the subsequent contracts related thereto.

[54] Notably the process of the awarding of the tender ticked all the boxes, but for, the referral of the recommendation to the FinCom and the Board that the respondents were to be awarded the tender. After the tender was awarded the Internal Audit Department compiled a report on 9 September 2016 and they concluded that the process leading to the award of the tender complied with the SCM policy. It was post this validation that the contracts (the Service Level Agreement, Addendum and Rental Agreement) were concluded.

[55] The failure of the applicant to refer the tender to FinCom and the failure of the CEO in obtaining approval from the Board, taking into account the value of the tenderer awarded, clearly is in disparity with the edicts of section 217 of the Constitution, being said which advocates for fair, equitable, transparent, competitive and cost effective process be adhered to in the awarding of tenders. It stands to reason that in a legality review whatever flows from an invalid award of a tender is unlawful. One cannot say the contracts duly concluded which arise from the invalid and unlawful award are lawful and are to be allowed to stand.[34] That being said and in the exercise of my discretion, on an examination of the facts before me there exists a basis upon which

the delay can be overlooked.

[56] The combination of the delay being unreasonable and undue, together with the contravention of section 217 in awarding the tender, does not put an end to the enquiry. In terms of Gijima the contract having been found to be unlawfully concluded and invalid must lead to a declaration of invalidity in terms of section

172(1)(a) of the Constitution[35] and as such must be set aside. Hence, the award of the contract is declared invalid.

Relief

[57] In addressing the issue of relief it is trite that in the adjudication of a constitutional matter a court has a wide discretion to make any order that is just and equitable, in terms of section 172(1) (b). It goes without saying that in fashioning the remedy and exercising its wide remedial powers a court places reliance on consideration of justice and equity.[36] In achieving an appropriate and effective remedy I am mindful that the primary focus of judicial review is in correcting and reversing the unlawful administrative action.[37] In doing so it is prudent to heed what was stated in Steenkamp NO v Provincial Tender Board, Eastern Cape: ‘It goes without saying that every improper performance of an administrative function would implicate the Constitution and entitle the aggrieved party to appropriate relief. In each case the remedy must fit the injury. The remedy must be fair to those affected by it and yet vindicate effectively the right violated. It must be just and equitable in light of the facts, the implicated constitutional principle, if any, and the controlling law’.[38]

[58] In light of the aforesaid at the remedial stage of the enquiry it would be prudent to take into account that there was in some instances absent an explanation and in others there was inadequate explanation, coupled with the fact that the delay in instituting these proceedings was an entire year and some 28 days. Not to forget that the entire process was audited by the Internal Audit Department on 9 September 2016 and the conclusion was that the entire process complied with the SCM policy. In balancing what is just and equitable relief, the following must be considered: the fact that the respondent has performed in respect of the tender, couple with the fact that at this stage there is only one year left for the respondent to render service to the applicant.

[59] Hence, as was the relief fashioned in Gijima to my mind is the appropriate remedy to be made in these circumstances. Therefore, the award of the tender and subsequent contracts are declared invalid. However, the declaration of invalidity does not have effect of divesting the respondent of any rights it would be entitled to under the tender and subsequent contracts.

Costs

[60] Turning to the issue of costs though the applicant was successful in declaring the tender and the contracts invalid, it is the respondent who is the overall successor in these proceedings. It is noted that during some stages of the proceedings there were two counsel employed. To that extent the costs of two counsel is permitted where so employed.

The order

W Hughes

Judge of the High Court

Gauteng Division, Pretoria

APPEARANCES

For the Applicant:

Adv. NGWAKO MAENETJE SC

Adv. BUHLE LEKOKOTLA

Instructed by:

Gildenhuys Malatji Attorneys

For the Respondent: Adv. KGAOGELO RAMAIMELA

Instructed by:

Geyser & Coetzee Attorneys

[1] In terms of section 9 of PAJA.

[2] State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited 2018 (2) SA 23 (CC).

[3] Section 51(1)(a)(iii) of PFMA reads: 51 General responsibilities of accounting authorities (1) An accounting for authority for a public entity- (a) must ensure that public entity has and maintains- (i) … (ii) … (iii) an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost-effective;

[3] Section 51(1)(a)(iii) of PFMA reads:

51 General responsibilities of accounting authorities

(1) An accounting for authority for a public entity-

(a) must ensure that public entity has and maintains-

(i) …

(ii) …

(iii) an appropriate procurement and provisioning system which is fair, equitable,

transparent, competitive and cost-effective;

[4] ‘Accounting Authority’ means a body or person mentioned in section 49 of the PFMA states: 49. Accounting authorities. -(1) Every public entity must have an authority which must be accountable for

the purposes of this Act. (2) If the public entity— (a) has a board or other controlling body, that board or controlling body is the accounting authority for

that entity; or (b) does not have a controlling body, the chief executive officer or the other person in charge of the

public entity is the accounting authority for that public entity unless specific legislation applicable to

that public entity designates another person as the accounting authority. (3) The relevant treasury, in exceptional circumstances, may approve or instruct that another functionary of a

public entity must be the accounting authority for that public entity. [Sub­s. (3) substituted by s. 28 (a) of Act No. 29 of 1999.] (4) The relevant treasury may at any time withdraw an approval or instruction in terms of subsection

(3) [Sub­s. (4) substituted by s. 28 (b) of Act No. 29 of 1999.] (5) A public entity must inform the Auditor­General promptly and in writing of any approval or instruction in

terms of subsection (3) and any withdrawal of an approval or instruction in terms of subsection (4).

[4] ‘Accounting Authority’ means a body or person mentioned in section 49 of the PFMA states:

49. Accounting authorities. -(1) Every public entity must have an authority which must be accountable for

the purposes of this Act. (2) If the public entity— (a) has a board or other controlling body, that board or controlling body is the accounting authority for

that entity; or (b) does not have a controlling body, the chief executive officer or the other person in charge of the

public entity is the accounting authority for that public entity unless specific legislation applicable to

that public entity designates another person as the accounting authority. (3) The relevant treasury, in exceptional circumstances, may approve or instruct that another functionary of a

public entity must be the accounting authority for that public entity.

[Sub­s. (3) substituted by s. 28 (a) of Act No. 29 of 1999.] (4) The relevant treasury may at any time withdraw an approval or instruction in terms of subsection

(3)

[Sub­s. (4) substituted by s. 28 (b) of Act No. 29 of 1999.]

(5) A public entity must inform the Auditor­General promptly and in writing of any approval or instruction in

terms of subsection (3) and any withdrawal of an approval or instruction in terms of subsection (4).

[5] Section 56 (2)(a)-(c) states: (2) A delegation or instruction to an official in terms of subsection (1) – (a) is subject to any limitations and conditions the accounting authority may impose; (b) may either be to a specific individual or to the holder of a specific post in the relevant public entity; and (c) does not divest the accounting authority of the responsibility concerning the exercise of the delegated power or the performance of the assigned duty.

[5] Section 56 (2)(a)-(c) states:

(2) A delegation or instruction to an official in terms of subsection (1) –

(a) is subject to any limitations and conditions the accounting authority may impose;

(b) may either be to a specific individual or to the holder of a specific post in the relevant public entity; and

(c) does not divest the accounting authority of the responsibility concerning the exercise of the delegated power or the performance of the assigned duty.

[6] PFMA’s definition of ‘Accounting Officer’ means the person mentioned in section 36 which states that: 36 Accounting officer- (1) Every department and every constitutional institution must have an accounting officer. (2) Subject to section (3)- (a) the head of s department must be the accounting officer for the department; and (b) the chief executive officer of a constitutional institution must be the accounting officer for that institution….

[6] PFMA’s definition of ‘Accounting Officer’ means the person mentioned in section 36 which states that:

36 Accounting officer-

(1) Every department and every constitutional institution must have an accounting officer.

(2) Subject to section

(3)-

(a) the head of s department must be the accounting officer for the department; and

(b) the chief executive officer of a constitutional institution must be the accounting officer for that

institution….

[7] Section 172(1)(b) of the Constitution: ‘When deciding a constitutional matter within its powers, a court – … (b) may make any order that is just and equitable, including – (i) an order limiting the retrospective effect of the declaration of invalidity; and (ii) an order suspending the declaration of invalidity for any period and on any conditions, to allow the competent authority to correct the defect.’

[7] Section 172(1)(b) of the Constitution:

‘When deciding a constitutional matter within its powers, a court – …

(b) may make any order that is just and equitable, including –

(i) an order limiting the retrospective effect of the declaration of invalidity; and

(ii) an order suspending the declaration of invalidity for any period and on any conditions, to allow the competent authority to correct the defect.’

[8] President of the Republic of South Africa and Others v M & G Media Ltd 2012 (2) SA 50 (CC).

[9] Ibid para 107.

[10] Ibid para 31.

[11] Swifambo Rail Leasing (Pty) Limited v Passenger Rail Agency of South Africa 2020 (1) SA 76 (SCA) at para 18 -20.

[12] Swifambo para 19.

[13] SA Metropolitan Lewensversekeringsmaatskappy Bpk v Louw NO1981(4) SA329 (O) at 333G-H where Flemming J stated: ‘I have no doubt that Rule 30(1) was intended as a procedure whereby a hindrance to the future conducting of the litigation, whether it is created by non-observance of what the Rules of Court intended or otherwise, is removed.’

[14] Director of Hospital Services v Mistry 1979 (1) SA 626 (A).

[15] Shepherd v Mitchell Cotts Seafreight (SA) (PTY) Ltd 1984 (3) SA 202 TPD.

[16] Van Wyk v Unitas Hospital and Another (Open Democratic Advice Centre as Amicus Curiae) [2007] ZACC 24; 2008 (2) SA 472 (CC) at paras 20 & 22.

[17]Khumalo and Another v MEC for Education, Kwazulu Natal 2014 (5) SA 579 (CC) at para 49.

[18] Marafong City Local Municipality v AngloGold Ashanti Limited 2017 (2) SA 211 (CC) at para 73.

[19] Department of Transport v Tasima 2017 (2) SA 622 (CC) at para 160.

[20] Gijima at para 49.

[21] Gijima at para 52-52.

[22] Buffalo City Metropolitan Municipality v Asla Construction (Pty) Limited 2019 (4) SA 331 (CC) para’s 45 to 63.

[23] Ibid para 50.

[24] Ibid para 52-52

[25] Ibid para 54-63.

[26] Tasima at para 153.

[27] Khumalo at 49-51.

[28] Allpay Consolidated Investment Holdings (Pty) Ltd & others v Chief Executive Officer, South African Social Security Agency & others 2013 (4) SA 557 (SCA) at para 96.

[29] Westinghouse v Eskom Holdings (476/2015) [2015] ZASCA 208 (9 December 2015) at para 36.

[30] Section 33 of the Constitution: Just Administration: (1) Everyone has the right to administrative action that is lawful, reasonable and procedurally fair. (2) Everyone whose rights have been adversely affected by administrative action has a right to be given written reasons.

[30] Section 33 of the Constitution:

Just Administration:

(1) Everyone has the right to administrative action that is lawful, reasonable and procedurally fair.

(2) Everyone whose rights have been adversely affected by administrative action has a right to be given written reasons.

[31] Gijima para 27.

[32] Gijima para 38.

[33] Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council [1998] ZACC 17; 1999 (1) SA 374 (CC) at para 58.

[34] Oudekraal Estates (Pty) Ltd v City of Cape Town 2004 (6) SA 222 (SCA) at para 36.

[35] Section 172(1) provides: ‘When declaring a constitutional matter within its powers, a court – (a) must declare that any law or conduct that is inconsistent with the Constitution is invalid to the extent of its inconsistency; and (b) may make any order that is just and equitable, including – (i) an order limiting the retrospective effect of the declaration of invalidity; and (ii) an order suspending the declaration of invalidity for any period and on any conditions, to allow the competent authority to correct the defect.’

[35] Section 172(1) provides:

‘When declaring a constitutional matter within its powers, a court –

(a) must declare that any law or conduct that is inconsistent with the Constitution is invalid to the extent of its inconsistency; and

(b) may make any order that is just and equitable, including –

(i) an order limiting the retrospective effect of the declaration of invalidity; and

(ii) an order suspending the declaration of invalidity for any period and on any conditions, to allow the competent authority to correct the defect.’

[36] Gijima at para 53.

[37] AllPay Remedy at para29-30.

[38] Steenkamp NO v Provincial Tender Board, Eastern Cape 2007 (3) SA 121 (CC) at para 29.